LAU LAP CHE, RICHARD v. WONG SUT FAN, VILLETTE

IN THE COURT OF APPEAL

1995, No. 186
(Civil)

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J U D G M E N T

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Nazareth, V.-P.:

1. This is an appeal by the husband against the order of His Honour Judge Hartmann sitting in the divorce jurisdiction of the District Court, by way of ancillary relief. That is all this Court is concerned with, not the divorce but merely the ancillary relief which is embodied in the order made by the judge in these terms:

"1. That within one hundred and twenty days from the date of this order the husband shall transfer to the wife all his right, title and interest in and to the matrimonial home known as Flat A2402, 24th Floor, Westland Gardens, 4 Westlands Road, Quarry Bay, Hong Kong subject to the following terms and conditions:

(a) that simultaneously with that transfer the Petitioner shall register a legal charge over the property in favour of the Respondent in a sum equivalent to fifteen percent of the value of the property at the time the charge is executed subject to the condition that this charge shall not be executed before the 1st August 1998;

(b) that the costs of transfer shall be paid by the Petitioner [wife], the costs of registering the legal charge by the Respondent [husband] ;

(c) that should the Respondent [husband] neglect or refuse to effect transfer as ordered, all necessary papers may be signed on his behalf by the Registrar of the Supreme Court and all wasted costs incurred thereby shall be paid by the Respondent [husband];

(d) that there be liberty to apply;

(e) that the Respondent [husband] shall in any event vacate the property within the one hundred and twenty day period.

2. That the Respondent [husband] shall pay nominal periodical maintenance to the Petitioner [wife] in the sum of $1.00 per annum, the first payment to be made upon decree absolute.

3. That the Petitioner's [wife's] claim for a lump sum payment be dismissed.

4. That the Petitioner's [wife's] claim for maintenance for her son, Johnny, be dismissed together with the Respondent's [husband] claim for monthly maintenance against the Petitioner [wife]."

Later, following argument, he gave the wife her costs.

2. The husband has appealed against that order of ancillary relief in a home-made notice of appeal. Also, he has put in a written submission prepared by the counsel who appeared for him in the proceedings below but does not appear before us. And he amplified these to some extent before us.

3. In seeking variation of the judge's order as to ancillary relief, what the husband primarily asks for is indicated in grounds (6) and (7) of his notice of appeal. These are phrased in the following way:

"6. The Judge erred in law and in fact by only allocating 15 per cent of the equity in the matrimonial home to him. In all the circumstances he shall have been allocated 50 per cent.

7. Alternatively, and in any event the Judge erred in law and in fact by ordering that he cannot execute the legal charge in his favour for a period of 3 years. He needs the money for his business now and a delay of 3 years will ruin any chances he has of saving his business."

4. In seeking to vary the exercise of the judge's discretion, for that is what the husband seeks to do, the husband has to cross a very high threshold. This was explained by Lord Diplock in Hadmor Productions v Hamilton (HL(E)) [1991] AC 220. A Court of Appeal does not interfere with a judge's discretion merely because it might have taken a different view. It will interfere only if the judge's exercise of discretion is based upon a misunderstanding of the law or of the evidence before the court or if the judge's decision is plainly wrong.

5. In questioning the exercise of the judge's discretion, the husband, as he makes clear in his notice of appeal, challenges a number of the judge's findings of fact. Again, he has to discharge the heavy onus of challenging findings of fact (see Hongkong and Shanghai Banking Corpn v Chan Yiu-wah and Another [1988]1 HKLR 457), particularly as these have been made by the judge on the basis of the evidence given by the parties, and in the light of his seeing the parties and, as the judge himself put it in his judgment, cautiously observing their demeanour.

6. With those preliminary remarks, I now turn to the manner in which the judge reached his findings of fact and exercised his discretion in his long and very careful judgment. I should add that the husband, having confined the essential nature of his appeal to the exercise of the judge's exercise of discretion in his award, it is not necessary for me to outline the entire history of the marriage. It is sufficient to say that the husband and wife were married in 1968, i.e. some 26 years ago. The marriage has therefore been a lengthy one. There are two children of the union, both boys who are now grown-ups. The wife is about 48 years old and the husband 9 years older. When the boys grew up, she undertook a secretarial course and then went to work in a trading company called General Medical Ltd.

7. The dispute between parties, to a minor extent, involved the family assets and to a greater extent, their earnings and the individual contribution to the family finances. The dispute, as the judge put it, lay in the husband's allegation that the wife had misrepresented her true earnings over the previous 4 or 5 years, attempting to disguise her true financial worth. The wife made exactly the same allegation against the husband. The judge observed in his judgment that neither of the parties came to the marriage in 1968 with assets of note. In the earlier part of her marriage, she looked after the children. Before that, she was employed as a clerk and continued to work until early 1972 when one son was born.

8. Having recounted those facts in some detail, the judge mentioned three points:

(1) That the husband explained his refusal to give any moneys to his wife by saying that since she resumed full-time employment in about 1984, she had effectively ceased being a wife to him.

(2) That whatever the husband's motives for ceasing to contribute to the family expenses, and even though the matrimonial home may have been held loan free, it was highly relevant that for a period of over ten years, apart from donating some moneys to his son Joseph, the husband, while living in the matrimonial home, had neglected to pay his own way.

(3) That in 1992, the wife, at her own cost with no contribution from the husband, undertook extensive renovations to the matrimonial home - the Westland Gardens flat - at a cost of some $450,000.

9. The judge then identified the main family assets as two properties (1) the matrimonial home which I have mentioned and (2) the property known as Unit 26, Chee On Building.

10. The judge found that the Chee On unit was family property in terms of s.7 of the Matrimonial Proceedings and Property Ordinance, Cap. 192, and that it was sold later, in March 1994 for a sum of $2.6m, none of which found its way to the wife, although in his finding, she should have received about $900,000.

11. The judge also found that the Westland Gardens apartment, i.e. the matrimonial home, was a family asset. He noted that the wife had shares which she had purchased for some $137,000 but which she said at the trial were worth $100,000.

12. The wife was questioned at some length concerning her jewellery which, it was suggested, must have a value of some $100,000. The wife accepted that over the years she had received jewellery as gifts and claimed she had never had them valued. In all the circumstances, the judge decided that he would not place the jewellery into the balance of things. I have to say in regard to this that he was somewhat generous in doing so. He could and should have required the wife to value the jewellery and taken the results into account. But having regard to the broad approach he adopted, I do not think this relatively small item could have affected his conclusion or indeed his award in the exercise of his discretion.

13. The judge then pointed out that the husband had put his money largely into his various business enterprises. I shall return to that aspect. The husband had purchased two real estate properties in China - a shop premises purchased in 1994 for some $200,000 and the other for some $213,000 making a total of a little over $400,000. He also recorded that in respect of those properties, the husband only revealed their existence after the wife had stumbled upon the purchase and sale documents.

14. Having dealt with the known capital assets of the parties, the judge addressed the highly contentious issue of their respective earnings. The husband, having contended very strongly that the wife was more than a paid employee in General Medical Ltd. However, in the end the judge found that the wife was at all times an employee of General Medical, that her HongkongBank account was used essentially, as she contended, and not as part of an independent business concern, and that the wife's income from her employment consisted of salary in excess of $33,000 per month and of bonuses, entertainment and the use of a company car.

15. It is of significance in arriving at that conclusion he made the following observations and assessments:

"Having heard the wife give evidence in relation to her bank account and having cautiously taken note of her demeanour, I am satisfied that she was essentially a witness of the truth. I found her, in fact, to be an impressive witness who remained at ease even in the midst of the most intricate questioning on her account. ... Although a suspicion lingers, I am not satisfied on a balance of probabilities that the wife earned any substantial commissions from her commissions from her association with the company and I reject counsel's submission that the wife has 'other financial resources' which generate 'huge income' for her."

He then turned to address the allegations against the husband, that he had earned more money and had greater financial worth than he was prepared to admit. He said:

"While I found the wife to be an essentially truthful witness, relaxed under cross-examination, I cannot say the same for the husband. I found him to be constantly on the defensive, vacillating and strangely ignorant at times when ignorance, far from indicating perhaps an understandable slip of memory, pointed to the last hiding hole of an untruth. For example, he was forced several times to admit that very substantial sums of money must have come from an account under his control which he had not revealed to the Court but, when asked to identify that account, could only profess ignorance of when he had operated it or even where and with which bank, only coming up with unsubstantiated and frankly unconvincing answers the next day. ...

I have already pointed to the fact that the husband admitted attempting to conceal the existence of two properties in China ...

In respect of the husband's evidence as to his general trading there was simply no firm ground on which I could stand. Even the company accounts for APD/HK [one of the husband's two businesses] were shown on his own admission to be inaccurate. His memory of bank account activities was woeful. ...

When the Chee On property was sold by the husband ... he received $2,668,000. He said he paid just over $1,000,000 to the Kincheng Bank to clear APD/HK's overdraft, paid approximately $65,000 towards legal costs of this action, paid the required deposits on his two Chinese properties and, as his counsel put it in written submissions, put the 'majority of the remaining sum' into the toothbrush venture.

But even here I found it difficult to place any reliance on the husband's evidence. For example, it was accepted that the Chinese authorities demanded that the husband invest $1,500,000 in his toothbrush venture. The husband's China Re-Entry Permit showed that on 13th January 1994 he took HK$950,000 into China and on the 22nd February a further sum of $450,000. In answer to the wife's request for further particulars concerning these sums of money, the husband accepted that he had instructed his lawyers to reply that these moneys had been (and I quote) derived from the Kincheng Bank overdraft facilities and proceeds of Chee On Building respectively. However, in cross-examination, with there being no corresponding debit in the Kincheng bank account to show the removal of funds and in light of the fact that the Chee On property had not been sold until March, the husband explained this apparently extra $1,400,00 - that could not have come from his previously stated sources - by saying that the declarations were false, that he had never taken such large amounts across the border into China, that he couldn't remember exactly how much he had taken but it was certainly nothing like the sums shown, and that he had made the false declarations so that there was some evidence that he had satisfied the investment criteria of the authorities."

The judge concluded:

"Having heard his evidence in respect of his trading activities and his finances, I am satisfied that the husband has failed to make a full and frank disclosure to this Court. Considering his evidence as a whole, I am compelled to make the adverse inference that there can be only one reason for his studied vagueness, his protestations of forgetfulness and his admitted false statements; namely, an intentional concealment of assets. As to the exact nature of these assets, as I have already said, I am at a loss. From a general study of the known accounts, I do not believe them to be great but I reject outright the suggestion by the husband that his trading activities have been marked by a bumbling ineptitude that has brought him no rewards. ...

Just as the husband attempted to conceal his two China properties, so I am satisfied on the balance of probabilities that he has other assets which he has concealed; in short, that he is not living from hand to mouth in the manner which he would wish the Court to accept."

16. The judge then turned to s.7 of the Matrimonial Proceedings and Property Ordinance, Cap. 192, pointing out that it required him to have regard to the conduct of the parties and all the circumstances of the case including their needs and responsibilities now and in the foreseeable future, their means and earning capacity, their ages and so forth. He proceeded to do so and referred to the several matters I have mentioned. He had, of course, mentioned that he was in no position to determine precisely what the husband's assets were. He had regard to the husband's non-disclosure and to his rejection of the husband's evidence. He referred to the family history which I have touched upon. He pointed out that with the resolution of all the divorce matters, the situation of the husband and wife living under the same roof would come to an end. And in that regard, he took account of the wife's renovation, that the husband had sold the Chee On property and kept the proceeds, the wife had not received the $900,000 which he thought appropriate. He noted that Westland Gardens had been the matrimonial home for 20 years and adverted to the wife's request that she should receive the matrimonial home. He said:

"I have given long (indeed anxious) consideration to this but at the end of the day I am satisfied that it would not be right, despite the husband's failure to deal fully and openly with his finances, to deprive the husband totally of his interests in that property."

He then came to the first of the two main respects in which the husband seeks variation of his order and he decided them in this way:

"I am satisfied that the general equities of the matter demand that he [the husband] be left with some share which in the future, if necessary, he can use to secure his old age or purchase a place for himself. However, I do not consider that should be granted more than a 15% share. In addition, to avoid the debt forcing the wife to sell the apartment or place herself in a parlous position, being satisfied that the husband does not desperately need the money now, I will order that the 15% share be secured by a legal charge against the property which can only be executed in three years time. That will give the wife some 'breathing space' but will ensure too that the husband does not have to wait too long."

17. The latter part of that passage is of course the subject of the second respect in which the husband seeks variation of the judge's awards. The fact that I might think that the husband should have received somewhat a larger share of the equity in the matrimonial home, would not entitle me to interfere in the judge's awards. As I have pointed out, to interfere with the judge's exercise of his discretion, I have to meet the much higher test in Hadmor. Likewise, I can see nothing wrong in principle in the judge giving the wife a "breathing space" of three years. The husband says he had no assets, and that this will prevent him from getting his business on its feet or operating it, but that submission cannot succeed in the light of findings of fact that the judge made; findings that were made on the evidence, observation and demeanour of the parties, with which therefore it is not easy for this Court to interfere. Having come to the conclusion that he was not able to determine the amount of the husband's assets, the judge was entitled to treat the husband as having sufficient assets and not only to give the husband a 15% equity in the matrimonial home and to require it to be charged, but also to defer enforcement of that charge for three years.

18. One cannot but have some sympathy for the husband. Like so many cases of the break-up of marriages, this is a sad case. The husband seems basically a decent man who had regard for his family notwithstanding his non-disclosure of assets. The judge was faced with a marriage having broken up and the judge did his best to divide the family assets justly. As I have said, I can find no significant mistake of fact on his part, no evidence that he wrongly took into account, no error of principle, nor can be said to be plainly wrong. In those circumstances the appeal must be dismissed.

19. There remains one matter that I must advert to. It is apparent from the paragraph of the judge's judgment in dealing with the 15% share that it makes two erroneous references to "executed". It is plain that when he said that the legal charge against the property can only be executed in three years time, what he meant was that it should not be enforced for three years. Therefore in making our order dismissing the appeal, I would appropriately clarify para.1(a) of the judge's order.

Bokhary JA:

20. This case, like so many cases in this branch of the law, is an unfortunate and even sad one.

21. The appellant husband, appearing before us in person, has argued his appeal with courtesy and restraint despite his obvious strong feelings about the matter.

22. I feel bound to acknowledge that it is possible legitimately to question certain aspects of judge's reasoning. But, at the same time, it seems to me that his result is justified. And, at the end of the day, no other result emerges as plainly preferrable.

23. In those circumstances, I too would dismiss the appeal subject to varying the order appealed against so that the word "executed" used twice in paragraph 1(a) thereof be replaced each time by the word "enforce". The need for such variation has been, I should mention, accepted by counsel for the wife.

Ching, J.A. :

24. I am not to be taken to be agreeing with all of the reasoning contained in the judgment of the Judge below. It was, I think, wrong not to take the value of the wife's jewellery into account and perhaps there was an over-emphasis on the ownership of the land and properties but in the circumstances it is not necessary to elaborate on these matters.

25. Crucial to the judgment is the finding that the husband has not made full and frank disclosure of his assets with the well-known consequences that such a finding entails. On that basis and on the evidence accepted by the Judge the result arrived at by him was well within the wide ambit of permissible disagreement that exists in cases such as these. We have not been shown any ground upon which we can interfere and I too would dismiss the appeal with whatever amendments that may be necessary to paragraph 1(a) of the order.