YU SIU FUNG v. CHEUNG CHIN WAI

IN THE COURT OF APPEAL

1997, No. 135
(Civil)

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J U D G M E N T

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Mortimer, V.-P.:

1. This is an appeal from Deputy Judge Carlson's decision of 2 May 1997 in the wife's application for ancillary relief. After his judgment the order was drawn up by the wife's solicitors. Unfortunately the order as drawn up did not reflect the judge's decision. For the order as drawn up required that the matrimonial home be sold and the proceeds of sale be divided between the parties as to $500,000 as lump sum payment to the wife within 3 months and the balance for the respondent.

2. At the time of the judge's decision, the amendment which now appears as s.6A of the Matrimonial Proceedings and Property Ordinance Cap. 192 and which gives the court power to make an order for sale of property had not come into force. It would appear that the draft order submitted was not put in front of the judge and was probably approved in his clerk's room. Be that as it may, the parties agree that the order as drawn was not one which the court had power to make at that time.

3. When one reads the judgment it is clear that the judge did not have such an order in mind although he wanted to achieve the same result. With that in mind, I turn to the judgment. He set out the history of the marriage which is not relevant for our purposes. The application for ancillary relief by the wife he refers to at p. 2. I, for my part, am happy to adopt what he said about the issue which was before him. He said:

"... central to this application ... is the former matrimonial home ... This property was purchased under the Home Ownership Scheme. Its present value has been agreed at $1.09 million. That is the price which the Housing Authority will pay for it. It is at present subject to the restrictions on sale for such properties. Those restrictions will not expire for another 2 years. Although it is difficult to be precise about this, the parties are agreed form available current transactions, that the value of similar flats in this locality without the current restrictions on sale is in the region of $2.2 million. One must then deduct from that gross figure a premium which is payable to the Housing Authority. I have been told for the purpose of guidance that after that premium is deducted the proceeds of sale would be about $1.7 million. That is of course before any outstanding mortgage is repaid. Such a figure can only be for guidance because of course one can never predict with any sort of reliability what the property market will be in Hong Kong in 2 years time. The issue on the house can be stated very simply. The wife would like the matrimonial home to be transferred into her name subject to a charge over to the husband to fall in upon the child's 18th birthday or cessation of full-time education whichever is the later of those two events. The size of the charge would be of course a matter of Court but in her Petition she has indicated that the husband should get 50%. The reasoning behind that submission is that the wife should have the security of a home during the child's growing years. The husband's case is that the property should be sold now and the wife should receive $500,000 from the net proceeds of sale with the balance going to the husband."

The matrimonial home is occupied by the wife and the child of the parties now a girl of about 5 years old.

4. With those matters in mind, the judge had to approach what solution he could achieve for these parties with the unfortunate background that the husband was very seriously in debt to the extent of some $300,000. What is more the consequence of the indebtedness was that the husband was spending some $12,500 a month more than he earned. Most of that money was going in service of debts and a mortgage on the matrimonial home.

5. The problem which the judge faced was that the wife and child both required maintenance. On that there was little dispute and the judge's order has not been appealed. He ordered that the husband should pay $4,500 per month to the wife and $4,000 for the child. The question was how those sums of money were to be paid if the wife was to continue to live in the matrimonial home. The judge appreciated that was the ideal solution. He said having weighed these matters:

"I am bound to say had I considered that there was any realistic prospect of this home being maintained that is the course that I would have taken. Alas that simply is not an option on the evidence."

6. Mr Tsui for the wife appellant seeks to persuade this Court that the judge's exercise of discretion was wrong in that he did not take into account properly all the matters under s.7 of the Matrimonial Proceedings and Property Ordinance and in particular that he did not take into account the husband's behaviour in the sense that he had brought much of the indebtedness upon himself.

7. We have considered these matters with some care and for my part, I cannot fault the reasoning of the judge who clearly took into account all the matters that he is enjoined to take into account under s. 7. He also was well aware of the behaviour of the husband but he had to achieve a result which was the best for the parties - and particularly the wife and child. As I see it, although Mr Tsui has urged a number of matters upon us, those matters do not in any way demonstrate that the judge exercised his discretion wrongly or took into account any matters that he should not have taken into account.

8. Finally, there is the question of costs. The judge was aware of the approximate amount of costs related to the ancillary relief hearing which had been expended by both the wife and the husband. The wife's costs were approximately $30,000 and the husband $40,000. On that he said:

"It seems to me that if I were to order the husband to pay the wife's costs that would put him in a situation where he would not able to clear his indebtedness sufficiently to enable him to pay the maintenance that I have ordered. If I therefore leave the wife to pay the own costs that would not make any severe inroads into the lump sum award that I have given her which would disturb what I have in fact tried to achieve for both these parties."

So in those circumstances he made no order for costs save for an order for taxation in accordance with the Legal Aid Regulations.

9. That is challenged. It is submitted that the judge ought to have given the wife her costs because these proceedings were brought about by the husband. It is, however, clear that there was a basis upon which the judge could exercise his discretion in the way that he did. He no doubt took into account the position taken up by the parties at the beginning of the ancillary relief proceedings. On that it could be said that the wife really failed but more importantly, there was no conduct in relation to these ancillary relief proceedings which it was necessary for the judge to take into account. This was an order he made having regard to the miserable resources which were available to the parties.

10. In those circumstances, so far as the judgment is concerned, I would not in any way disturb what the judge said.

11. Unfortunately, appeals are not against judgments but against orders of the court. Here, we have an order which the parties are agreed, was not within the Court's powers so far as to the order for sale of the matrimonial home was concerned. It, therefore, falls to the Court to rectify the order and to that extent allow the appeal and substitute for the order made by the judge an order for the payment of a lump sum in the sum of $500,000 with consequential orders upon which I would, for my part, want to hear counsel.

12. To that extent only, I would allow the appeal.

Barnett, J.:

13. For the reasons given by my Lord, I agree that this appeal must be allowed to the limited extent indicated. That is to say that part of the judge's order directing that the matrimonial home be sold, a power which was not then available to the judge, should be deleted from the order. Otherwise, I agree that the substantive decision of the judge is unassailable.

14. The judge set out the background with some care and then on p.6 of his judgment, he said

"I am bound to say had I considered that there was any realistic prospect of this home being maintained that is the course that I would have taken. Alas that simply is not an option on the evidence."

15. On the evidence which we have reviewed in the judge's judgment, plainly it was not an option. The judge then went on to say in his judgment:

"The order I make therefore is that the husband is to pay the wife a lump sum payment of $500,000.00 within three months."

16. I observe that nothing could be clearer than that statement of the judge's order. So it is a matter of some concern to me that the formal order should have been wrong as it was. Be that as it may, I am satisfied that that is the order which the judge should have made and, indeed, I cannot see that there was any other order which he could properly have made given the facts found by him.

17. I also agree that the order which he made as to costs, namely that there should be no order, was legitimate in the circumstances of this case.

V. Bokhary, J.:

18. For the reasons given by my Lord, the Vice-President and Barnett J, I too would allow this appeal to the extent indicated by my Lord, the Vice-President.

[Counsel were heard on costs and the form of the order]

Mortimer, V.-P.:

19. There will be no order for costs on the appeal and the parties' own costs will be taxed in accordance with the Legal Aid Regulations.

Order

20. Upon the respondent, undertaking to the Court and to the appellant to pay the sum of $500,000 out of the proceeds of sale and/or proceeds of mortgage loan of the property at Flat B, 10/F, Block 7, Tsui Chuk Garden, No.8 Chui Chuk Street, Kowloon ("the property").

21. Upon the respondent, undertaking to the Court and to the appellant to pay all initial deposit(s), further deposit(s) and balance of purchase price(s) and/or balance of mortgage loan of the property to Messrs Ivan Tang & Co, being his solicitors responsible for the sale and/or mortgage of the property, as and when the same is received by the Respondent.

22. Upon Messrs Ivan Tang & Co., in their capacity as the respondent's solicitors responsible for the sale and/or mortgage of the property, undertaking to pay the sum of $500,000 out of the proceeds of sale and/or mortgage loan after payment of principal and interest owing on the existing mortgage of the property to the appellant; provided that the said proceeds of sale and/or mortgage loan after deduction of the said existing mortgage, both principal and interest, is not less than $500,000.

23. Upon the respondent, undertaking to the Court and to the appellant to continue to pay the existing mortgage loan, both in respect of principal and interest prior to payment of the sum of $500,000.

24. Upon the appellant, undertaking to the respondent and to the Court to allow estate agents and/or potential buyers of the property to enter and view the property upon reasonable notice being given by the respondent.

It is ordered that the appeal be allowed only to the extent that paragraphs 1 and 2 of the Order of Deputy Judge Carlson dated 1 May 1997 be set aside and be substituted with the following Orders:

(a) The appellant do give vacant possession of the property to the respondent within 28 days of being required to do so in writing by the respondent.

(b) The respondent do pay the appellant the sum of $500,000 within 14 days thereafter and in any event not exceeding 3 months from the date of this order.

And it is further ordered:

(a) There be no order for costs of this appeal save that the appellant's own costs be taxed in accordance with the Legal Aid Regulations.

(b) There be liberty to apply to the Court below on the time limits and for the carrying out of the orders.