MKKWH v. RKSH

CACV 197/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2012

(ON APPEAL FROM HCMC 9 OF 2010)

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REASONS FOR DECISION

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Hon Cheung JA (giving decision of the Court) :

1.  Both the wife and the husband applied for leave to appeal to the Court of Final Appeal against this Court’s judgment of 24 September 2013 (‘the leave application’). They also applied to amend their respective notice of motion on the grounds in support of their application (‘the amendment application’).

2.  Originally the parties agreed to deal with the leave application on paper but due to disagreement on the amendment application, the matter had to be listed for hearing.  At the conclusion of the hearing we dismissed all the applications for reasons which we now give.

Wife’s applications

1) Leave application

3.  In respect of the wife’s leave application, she says, first, that the following questions of great general or public importance are involved in respect of the husband’s expenditure on his non-marital families :

(1) Given the Court’s goal in granting ancillary relief is to achieve fairness between the parties, whether expenses incurred by a spouse in respect of non-marital families (i.e. mistresses and children born out of wedlock) should prima facie be added back to the matrimonial pot for distribution on the basis that it is unfair to hold the other spouse to an involuntary subsidy of such expenses, regardless of whether or not such expenses could be characterized as reckless, extravagant and/or wanton, and provided that such expenses are not de minimis;

(2) If expenses incurred in respect of non-marital families (i.e. mistresses and children born out of wedlock) should prima facie be added back to the matrimonial pot, whether a distinction should be drawn between expenses incurred before separation and expenses incurred post separation;

(3) Whether ‘recklessness’, ‘extravagance’ or ‘wantonness’ are the only bases on which a Court in granting ancillary relief could order expenses incurred by a spouse to be added back to the matrimonial pot for distribution or whether there is some other basis or bases for so doing; and

(4) Given the existence of two alternative routes to achieving fairness inter partes in ancillary relief in dealing with non-marital expenses, namely,

(a) the adding back of specific sums; or

(b) a departure from equal distribution, 

whether the threshold for adding back (including ‘wantonness’, ‘recklessness’ and ‘extravagance’) is higher than the threshold for departure from equal distribution (being the presence of conduct which is ‘so obvious and gross that it would be inequitable to disregard’).

4.  We are of the view that while some interesting questions arise on this topic, this is ultimately a fact specific issue and unique to the circumstances of the case.  On the facts of this case we do not agree that the questions framed by the wife are engaged.

5.  The wife also relies on the ‘or otherwise’ ground in respect of the following topics :

(1) Non-marital expenses;

(2) The claw back provision;

(3) The provision giving liberty to the husband to apply for the discharge of the claw back order;

(4) The findings made in respect of the Chinese Paintings and the Modern Paintings which are plainly wrong and which operate a grave injustice against the wife; and

(5) The fundamental arithmetic error in the amended order by allowing a set off of HK$30 million against the husband’s payment to the wife instead of HK$15 million (being the correct amount).

6.1   We have already dealt with the non-marital family expenditure point. 

6.2   In respect of the wording of the claw back provision, we do not see how this would constitute grave injustice to the wife in order to engage the ‘or otherwise’ ground.

6.3   In respect of the missing painting point, namely, certain paintings that the husband alleged the wife had removed and so found by the judge below in fact turned out to be in the possession of the son. Both parties were aware of the new evidence by the time of the hearing of the appeal.  The husband’s solicitors by letter dated 31 May 2013 informed the wife’s former solicitors of this.  The husband did not disclose the discovery to the Court.  The husband now says that it was an honest mistake and had the wife raised this at the appeal, it would be addressed.  In our view the issue here is not about why the allegation was made by the husband in the first place but rather why disclosure was not made to this Court after the discovery.  The connection between the paintings found in the son’s home and the missing paintings which were the subject matter of adverse findings by the judge below must be apparent when this issue was focused by the exchange of written submissions and oral arguments.  The husband ought to have disclosed the matter.  However, the wife had also not raised this matter before us.  In the circumstances we proceeded to address the issue on the state of the evidence before us.  The wife’s explanation for not raising the matter was :

‘ To the best of my recollection, I had not been informed at the material time that the Chinese Paintings and the Modern Paintings were recovered by the husband until recently when the husband and I proceeded to distribute the remaining Schedule 2 items between us;’

Leaving aside the husband’s present offer to give credit for those items in the son’s possession, we do not see how this matter can be raised afresh by way of a further appeal in the light of the wife’s stand. 

6.4   The issue of set off was again not raised in the hearing before us.

6.5   We do not agree that the ‘or otherwise’ ground has been engaged.  Accordingly we refused the wife’s leave application.

2) Amendment application

7.  The proposed amendment is in the main on the missing painting point and set off point.  We have already considered these matters when we dealt with the leave application.  As we have refused leave, we see no reason to allow the amendment.

Husband’s applications

1) Leave application

8.  The husband says that the following questions of great general or public importance are engaged in respect of the claw back provision :

(1) Whether it is wrong in principle to grant the claw back order in a case where the property in question is not owned by the parties but by a company which is a subsidiary of a publicly listed company, especially in circumstances where the company would require further injection of capital;

(2) Whether it is open to the Court of Appeal to impose a claw back order when the same was not sought at trial and where the parties agreed on the valuation of the matrimonial asset in question;

(3) Whether a claw back order is contrary to the clean break principle and/or the principle of fairness which is fundamental in ancillary relief proceedings and, if so, what are the circumstances and/or conditions in which it should be invoked and applied.

9.  We disagree.  The imposition of the claw back provision is clearly fact specific and unique to the circumstances of this case. 

10.  The husband also relies on the great general or public importance ground in respect of this Court’s judgment on the valuation of the Company.  The husband has not framed a proper question on this issue.  We really do not see how this Court’s decision on the valuation can be dressed up in the guise of an issue of great general or public importance.  We further do not see any inconsistencies in the judgments of this Court.  Fok JA’s (as he then was) view was focused solely on the non-marital family expenditure.  Any perceived doubt on paragraph 102 of Fok JA’s judgment is made clear by his paragraph 109. 

11.  The husband no longer seeks leave based on this Court’s judgment on costs. 

12.  Accordingly we refused the husband’s leave application.

2)    Amendment application

13.  For the same reason given in the wife’s application, we refused the husband’s amendment application which was on the valuation point as well.

14.  In addition we would like to comment on paragraphs 22 and 23 of the husband’s proposed amendment on the shell value.  They referred to the post judgment directions made by the Court.  In the first place, we do not see the relevance of these directions in the husband’s challenge on the valuation.  Second, these two paragraphs do not provide a full picture.  The husband’s solicitors by letter dated 16 October 2013 sought ‘clarification’ and ‘direction’ on paragraph 87 of our judgment by reference to the evidence on valuation.  The Court responded on 8 November 2013 that there would be no change in respect of that paragraph.  Despite this, the husband’s solicitors, by letter dated 12 November 2013, persisted with their view of the shell value and sought further clarification.  This resulted in this Court’s letter dated 12 November 2013 stating that the judgment is on the basis of a shell value of $258 million and calling upon the husband’s solicitors not to waste further time on the matter. 

Content of the Notice of Motion

15.  Both parties have loaded their notices of motion with unnecessary details and arguments.  Practitioners are reminded of the requirement contained in Rule 4(1) of the Court of Final Appeal Rules (Cap 484 sub. leg. A), namely, that the Notice of Motion is to state all such facts and matters as may be necessary for the leave application ‘succinctly’ and ‘to deal with the merits of the case only so far as is necessary to explain the grounds upon which leave to appeal is sought.’ Given that a judgment of this Court is already in existence and written submissions will be lodged in support of the application for leave, our view is that the notice of motion should contain no more than a succinct statement, if leave is sought on the ‘as of right’ ground, why the threshold is engaged and if the application is based on the discretionary ground, a properly framed question or questions on the great general or public importance point or a succinct statement why the ‘or otherwise ground’ is engaged.  This will enable the parties to focus on the real issues to be determined on the leave application.

Costs

16.  The wife and husband will each bear the costs of the other party’s applications with certificate for two counsel.