M v. S

FCMC 10790 of 2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 10790 OF 2004

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R U L I N G

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INTRODUCTION

1. There are two preliminary issues in the Petitioner’s ancillary relief application in these matrimonial proceedings, namely :

(i)	whether the Petitioner is barred from applying for ancillary relief under s. 9 of the Matrimonial Proceedings and Property Ordinance (“MPPO”) by reason of his remarriage.
(ii)	whether leave should be given to the Petitioner to apply for ancillary relief under Rule 68 (2) of the Matrimonial Causes Rules (“MCR”);

BRIEF BACKGROUND

2. The Petitioner and the Respondent were married on 18^th February 1984.  For ease of reference, I shall refer to the Petitioner as H and the Respondent as W in this Ruling, although they have now been divorced for over 2 years and both remarried.  There are two children of the family, both daughters.  The elder daughter was born on 10^th November 1984, now 22, and the younger daughter was born 11^th February 1988, now 19.  The elder daughter is now working in Hong Kong, although H said due to financial problems, she did not complete her Hotel Management Course which she was attending in Adelaide, Australia, and if possible, she would like to complete the course, which required another 6 months.  The younger daughter is now in the United States, and it appears that W is now looking after her.

3. On 5^th October 2004, H issued the petition herein through his then solicitors.  There were no claims for ancillary relief set out in the prayer of his divorce petition.

4. H’s petition was served by way of substituted service, and on 19^th April 2005, a Decree Nisi of divorce was granted to him, and at the same time, H was granted custody of the two children of the family.  The Decree was subsequently made absolute on 15^th June 2005.

5. On 11^th July 2005, W entered into the picture.  She instructed solicitors to file a Notice to Act for her in the present divorce proceedings.  Although it was her case that the Decree Nisi and / Decree Absolute was obtained by H deliberately without notice to her, she did not apply to set aside the Decree.

6. From the affirmations filed by the parties, it appears that the parties bought their lst matrimonial home shortly after marriage, which was later sold after birth of their first daughter.  About 18 months after their second daughter was born, they bought their 2nd matrimonial home in 1989, in joint names.

7. In about 1992, a business was started by the parties in the sales of plastic mould nozzles.  W resigned from her then job with a bank to start running the business.  According to H, he later also resigned from his then job to work full time for the business.  The business was later incorporated into a limited company (Fully).

8. Thereafter, in about 1994 / 1995, a property was bought in Guangzhou at Ying Yuan Building, in the sole name of W, which W said was purchased with money from her father (“Ying Yuan Property”).  Thereafter, in 1996, the parties sold their 2nd matrimonial home and bought a 3rd matrimonial home, which was purchased in W’s sole name.  It appears that the parties resided in their 3rd matrimonial home for about 6 years until about 2001 / 2002.  In June 2001, the parties bought their 4th and last matrimonial home, at Park Avenue (“Park Avenue Property”) in the name of Fully, where they moved to in about middle of 2002, and where they resided until their separation.

9. Apart from the various matrimonial homes, it would appear that W purchased at least two other properties in her sole name, one at Fu Li Ban Dao in Guangzhou, which for awhile was for the family’s holiday use, and another flat at Tai Kung Building in Hong Kong which was rented out.  W’s case was that H did not contribute towards the purchase monies for these properties.

10. H first petitioned for a divorce in June 2003, but proceedings wee later dismissed.  At that time, the parties signed a simple divorce agreement with provisions for custody and maintenance of the children, and the transfer of the Ying Yuan Property to H.  I will refer to this agreement again later in this Ruling.

11. In 2004, W sold the Ying Yuan Property.

12. After W learnt of the present divorce proceedings, instead of applying for adjustment / division of property orders in the matrimonial proceedings, she decided to petition for winding up of Fully and for sale of the Park Avenue property held by Fully (HCCW 123 / 2006) alleging loans owing to her from Fully.  The company was subsequently ordered to be wound up and liquidators were appointed, and the Park Avenue property was sold and the sale proceeds are currently held by the liquidators.  Upon W petitioning for winding up of Fully, H’s new solicitors who came on the scene on 23^rd August 2005 filed on H’s behalf on 4^th May 2006 :

(i)	a Form A Notice indicating that he intends to apply to the Court for various ancillary relief including orders in respect of 3 properties, namely  the Park Avenue Property, Ying Yuan Property, and the Fu Li Ban Dao Property for himself and for the children of the family.
(ii)	a summons, purportedly under s. 6A, 10 and 17 (1) (b) of MPPO for various ancillary relief orders including setting aside certain dispositions.

13. At the first hearing of the H’s summons, on 13^th June 2006, this Court pointed out to the parties that there were some procedural defects regarding H’s summons, and further, in relation to Form A, H would require leave to apply for ancillary relief for himself.  Subsequently, H’s summons in (ii) above was adjourned sine die with liberty to restore.

14. H then apparently made an application for legal aid, but such application was turned down in October 2006.  On 4^th December 2006, H filed a Notice to Act in person since when he has been representing himself.  A further direction hearing was fixed on 18^th January 2007.

15. As H’s claims for ancillary relief were not set out in his divorce petition, under Rule 68 (2) of the Matrimonial Causes Rules (“MCR”), he would require leave of the court before he could apply subsequently.  As H was acting in person, he did not make any formal application for leave.  At the hearing on 18^th January 2007, when this was pointed out to the parties, W’s solicitors initially indicated that they would not oppose to H applying for ancillary relief, and thus on this basis, this Court gave directions for a 1st Appointment hearing to be fixed under PD 15.11 for FDR, and further gave directions for the filing of Form Es by both parties.

16. Pursuant to the directions, H filed his Form E on 30^th January 2007.  In his Form E, he disclosed for the first time that he has remarried in Mainland China on 15^th June 2006, two days after the first hearing.

17. W’s Form E was first attached to her solicitor’s affirmation filed on 15^th February 2007, and it transpired that she also remarried in the United States on 19^th October 2006, where she now lives.

18. This Court first learnt of H’s remarriage at the 1st Appointment hearing on 13^th March 2007.  Directions were then given for, inter alia, written submissions to be made by both parties as to whether this Court has jurisdiction to deal with H’s application for ancillary relief, in light of his remarriage.

19. W’s solicitors lodged their first written submissions on 27^th March 2007 (“1st Written Submissions”).

20. There was another direction hearing on 3^rd April 2007.  Notwithstanding that they had lodged their 1st Written Submissions, W’s solicitors applied for further and better particulars from H, in particular a copy of his marriage certificate, as they wanted to be certain as to the date of H’s remarriage.  The direction hearing was then adjourned for H to produce a copy of his marriage certificate.

21. H eventually only managed to produce a copy of the marriage certificate on 2^nd July 2007.  At the resumed direction hearing on 13^th July 2007, W’s solicitors indicated to this Court that they had conducted further research and wanted to reverse their position and sought leave to withdraw their 1st Written Submissions and to file revised written submissions.  Leave was given and their revised written submissions were filed on 21^st July 2007 (“2nd Written Submissions”).

22. In their 2nd Written Submissions, W’s solicitors submitted that H had failed to apply for leave in time, i.e. before his remarriage, and therefore his application for ancillary relief was “void and null”.  They further opposed leave to be granted to H to apply for ancillary relief.  Upon receipt of W’s solicitors’ 2nd Written Submissions, this Court then requested the parties to appear at a further short direction hearing on 27^th July.  H, however, did not turn up at this hearing.  During this hearing, this Court gave directions, including directing H to file a further affirmation stating the reasons why he did not apply for ancillary relief in his petition, or at the time of the divorce.

23. The matter was then adjourned until 31^st August 2007, but had to be adjourned again when H turned up to indicate that he wished to apply for legal aid.  Finally, the parties made their final submissions on 2^nd October.

THE LEGAL PRINCIPLES

The Statutory Provisions

24. Section 6 of the Matrimonial Proceedings and Property Ordinance (“MPPO”) sets out the powers of this Court to make orders for ancillary relief for a party to a marriage, on granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter.

25. Under Rule 68 (1) of the Matrimonial Causes Rules (“MCR”) , any application by a petitioner, or by a respondent spouse who files an answer claiming relief shall be made in the petition or answer.  Rules 68 (2) of MCR goes on to state that :

“	Notwithstanding anything in paragraph (1), an application for ancillary relief which should have been made in the petition or answer may be made subsequently-
	(a)	by leave of the court, either by notice in Form 8 or at the trial; or
	(b)	where the parties are agreed upon the terms of the proposed order, without leave by notice in Form 8”.

26. In relation to remarriage of a party, S. 9 of MPPO states that :

“If after the grant of a decree dissolving or annulling a marriage either party to that marriage remarries, that party shall not be entitled to apply for an order under section 4, 6 or 6 A against the person to whom he or she was married immediately before the grant of that decree ……”.

On Meaning of “to apply” and Effect of Remarriage under s. 9 of MPPO

27. W’s solicitor, Mr Sun , has referred this Court to a number of authorities on this issue.

28. In the case of Jackson v Jackson (1973) Fam 99, the parties entered into settlements made in consideration of that marriage.  After the marriage had broken down, the wife therein petitioned for divorce and obtained a decree nisi which was made absolute.  In her petition, the wife had prayed for ancillary relief, including variation of the settlements.  After the decree was made absolute, both parties respectively remarried.  Thereafter, they agreed on terms varying the settlements and the wife sought an order varying the settlements.  On the question as to whether there was jurisdiction to entertain the application in view of the parties’ respective remarriages, it was held that although the application could not be made after remarriage under section 7 (4) of the Matrimonial Proceedings and Property Act 1970, “to apply” in that section referred to the initiation of the proceedings and not to the time when the court entertained the application and since, by rule 68 of the Matrimonial Causes Rules 1971 an application under section 4 (c) of the Act could be made in the petition, the wife had made her application to vary the settlements before the date of her remarriage and, accordingly, the court had jurisdiction in the matter.

29. Section 7 (4) of the UK Matrimonial Proceedings and Property Act 1970 was similar to the present s 9 (4) of our MPPO, and their rule 68 was similar to the present rule 68 of our MCR.

30. For ease of reference, I would refer to s. 7 (4) of the UK Act and our s. 9 (4) of our MPPO as “the Provision” hereinafter.

31. Mr. Sun has also set out a summary of the following cases : -

(i)	Doherty v Doherty (1975) 2 ALL ER 635, where the Court of Appeal held that they could substitute an application for a transfer of property order by an application for a lump sum order made out of the sale proceeds of the property, and that this power to amend was not barred by the fact that the applicant had remarried since the issue of her notice of application.
(ii)	Pace (formerly Doe) v Doe (1977) Fam 18, where a wife, after remarriage, sought to apply to vary a maintenance agreement, and the Court refused by reason of the Provision.
(iii)	Nixon v Fox (formerly Nixon) 1978 Fam 173 where a wife initially applied for periodical payments for her children only, and then later applied to include a lump sum order for herself.  The Court held that the wife was barred by the Provision from making an application for financial provision for herself by her failure to issue a notice of application for ancillary relief for herself before her remarriage.
(iv)	Jenkins v Hargood (formerly Jenkins) (1978) Fam 148 where a wife who had remarried and who had failed to file a notice of application for ancillary relief before remarriage applied to amend her acknowledgment of service so as to comply with the wording required of such a notice.  The Court held that her affirmative reply to questions relating to an ancillary relief in the acknowledgment of service were only an indication of her intention to apply for ancillary relief in future and could not constitute an application in substance or form.  Thus her application was dismissed.

32. From the above, it can be seen that merely indicating in the acknowledgment of service that one wishes to apply for ancillary relief is not sufficient.  The application has to be made in the petition, or answer, or by Form 8 notice BEFORE the remarriage, but once made, the applicant is not barred by reason of any amendments made after the remarriage.

On Application for leave under Rule 68 (2) of MCR

33. It is clear that leave to apply for ancillary relief not made in the petition is not the applicant’s for the asking.  In Marsden v Marsden 1973 2 ALL ER 851, it was held that a reason or explanation must be given for the omission of the ancillary relief claim from a petition.  In that case, the parties came to an agreement about the custody of the children, and other matters were agreed on the basis that the wife had an interest in the matrimonial home.  The husband was then granted a decree nisi and the decree absolute was expedited so that the wife could remarry.  After the wife’s remarriage, the husband applied for leave to apply for a transfer of property order and for variation of the settlement.  Leave was refused.  It was held that since the husband had given no reasonable excuse or explanation for the absence of an application for a transfer of property or variation of settlement order in his petition, and there was no prospect that the orders would be made, the court would not exercise its discretion to grant leave.

34. As set out in paragraphs 16.6 and 17.5 of Rayden and Jackson On Divorce and Family Matters (18th Ed), there is no statutory time limit on when an application for ancillary relief has to be made.  It is common practice for such an application to be made at the same time, or shortly after the petition has been issued.

35. Further, the court ought not to refuse leave to apply in any case in which on the evidence the applicant has or appears to have reasonable prospects of obtaining the relief claimed, or, to put it another way, has a seriously arguable cases (see Chaterjee v Chaterjee 1976 Fam 199).

36. In the Hong Kong Case Chow So Kam Lin v Chow Shu Sun 1986 HKC 72, the Court of Appeal applied Wilson v Wilson 1976 Fam 142.  In Chow, the wife only applied for periodical payments for herself in her petition.  Subsequently, the lower court made an order for transfer of property for W instead of the relief sought.  On appeal by the husband, the Court of Appeal held that there was no jurisdiction for the lower court to make a transfer of property order as the only application before court was the application for periodical payments made in the petition.  The Court of Appeal further said that the question was whether there was any question of the husband “being lulled into a false sense of security”, and the matter was remitted to the District Court for a new trial of the application for periodical payments, it being open to the wife, if advised, to apply for leave to make application for other relief.

THE ISSUES

On the 1st Issue

37. H initiated his application by issuing a Notice of an Application for Ancillary Relief on 4^th May 2006.  The Notice was titled “Form A”, but it is the same as the statutory Form 8 in the Matrimonial Causes Rules.  I understand that the form is called Form A under the Practice Direction 15.11 for the FDR procedures.

38. There is no requirement that leave has to be obtained prior to Form 8 Notice being issued.  As set out in paragraph 17.5 of Rayden, “if the applicant for leave appears to have an arguable case the proper place to argue it is on the substantive application ……”

39. The usual practice in the Family Court is that if there appears to be any substantial dispute as to whether leave should be given, there would be a preliminary hearing on this issue after the filing of the Form 8 Notice, such as in one of my earlier Judgments in FCMC 680 / 1996.  If leave is granted at such preliminary hearing, then the application set out in the original Form 8 Notice simply proceeds to be set down for trial, or if PD 15.11 applies, proceeds to a FDR hearing.  There is no requirement to file any other application post granting of leave.  It would thus appear that leave, if granted, is deemed to have been granted from the date of the filing of Form 8 Notice

40. Once the Form 8 Notice has been filed by the applicant, it can be amended after the applicant’s remarriage.  (See Doherty ).

41. Having considered the above, I am of the view that by issuing the Form 8 / Form A Notice, H has “initiated” his application and that as his application was initiated before his remarriage, it was not barred by s. 9 of MPPO.

On the 2nd Issue

42. From H’s submissions, his reasons as to why his application was omitted from his petition appear to be :

(i)	He first applied for a divorce on 3rd June 2003.  He was unrepresented.  There was a divorce agreement signed between him and W on 16th May 2003 whereby :
	·	H was to pay W a sum of HK$ 1 per annum as nominal maintenance
	·	W was to have custody of the two daughters with reasonable access to H
	·	W would be responsible for the education and maintenance expenses for the two daughters until they reach 18
	·	Both parties were to be jointly responsible for the education and maintenance expenses for the two daughters after they reach 18 until they complete their first university degree
	·	W was to transfer to H the property at Ying Yuan Property.
(ii)	Although W signed the above agreement in person, she instructed a firm of solicitors to act for her subsequently and on 15th July 2003, her solicitors lodged a consent application on her behalf for the proceedings to be dismissed.  The consent application was purportedly signed by H.
(iii)	In H’s affirmation of 16th August 2007, he appeared to be claiming that it was not he who signed the consent application, and that thereafter W refused to communicate with him.  In his earlier affirmation of 27th December 2006, he was saying that it was W who asked him to dimiss the proceedings, and to leave all matters to her solicitors to be dealt with, and that she would give him the Ying Yuan Property first.  However, just on this point, it is quite clear to me that whether it was his signature on the consent application or not, H knew at the time that the proceedings would be at least stayed.
(iv)	H said that in the Consent Application, W’s then solicitors applied also for the return of the original marriage certificate for the purpose of issuing another divorce proceedings.  Thus, H submitted that it was clear that the parties would eventually proceed to a divorce, and that the divorce agreement should be presented to the Court for approval at that the time, and therefore he now seems to be saying that at the least, this Court should give the approval to the divorce agreement.  This, however, is not possible since Ting Yuan Property had been sold.
(v)	H further said when he instructed solicitors in 2004 to issue the present proceedings, he was advised by his then solicitors that as she had already obtained so many assets, she would not return, and also if she had incurred debts, he could be responsible for such debts.  He said he was therefore advised by his solicitors to apply for a divorce first, and then subsequently, he could make a claim for the assets.  W claims that the alleged advice from H’s then solicitors did not make sense.
(vi)	H said in this affirmation of 16th August 2007 that after the proceedings in 2003, and when he issued the present proceedings, he was not able to contact W and that was why he had to apply for substituted service of the present petition.  This issue was, however, hotly challenged by W in her 3rd affirmation filed in connection with the winding up proceedings.  It is W’s allegation that H knew very well at the time of the petition as to how to contact her, and that he deliberately chose to proceed unilaterally for reasons of his own.  Further, Mr. Sun has submitted that H’s affirmation in support of his application for substituted service was full of untruthful statements, and therefore H’s own evidence in this respect was not consistent.  H denied these allegations and maintained that he was not able to contact W at the time when he issued the petition herein.  I accept that H’s evidence in this respect contained some inconsistencies, but it would only be during a trial that one could investigate further as to whether H’s version or W’s version is correct.

43. H obtained the Decree Absolute in June 2005, and only about one month later, in July 2005, W instructed solicitors to file a Notice to Act in these proceedings.  W clearly found out about the divorce proceedings at that time.  Notwithstanding her complaints that H had been untruthful in obtaining an order for substituted service, she did not take any steps to set aside the Decree.

44. Although the divorce was finalized, clearly the parties’ interest in their company Fully and / or their last matrimonial home, i.e. the property at Park Avenue had not yet been dealt with and would need to have to be resolved.  “It is desirable that one court should exercise jurisdiction over all financial and property adjustment disputes between husband and wife”.  (see para 16.7 of Rayden).  However, instead of coming back to the Family Court to deal with this matter, W chose to go to the High Court and issued a winding up petition in respect of Fully (HCCW No. 123 of 2006).

45. According to the Judgment of Madam Justice Kwan of 11^th December 2006 in the HCCW No. 123 of 2006, W first instructed solicitors in August 2005 to write to the company Fully to seek repayment of a loan, and that she subsequently petitioned for winding up of Fully on 8^th March 2006.  H also instructed solicitors to appear for him at the winding up action initially.  A number of affirmations were filed by the parties and eventually, on 11^th December 2006, H turned up in person to indicate that he would no longer oppose the winding up of Fully, and the company was then wound up, and liquidators were appointed.

46. W is now saying that she was “lulled into the belief that all claims for ancillary relief had been dealt with”, but on the other hand it is her case that she did not even know about the divorce proceedings.

47. I accept that when W found out about the divorce proceedings and found that no claims for ancillary relief were made by H, she might be under the belief that H was not going to make any financial claims against her.  Mr. Sun relied on the case of Marsden, referred to above, where, when refusing leave, the Court of Appeal further held that the husband by remaining silent about his intention to ask for ancillary relief had caused the wife to put herself in a position whereby she remarried without seeking to make an application for ancillary relief and had acted to her detriment by agreeing to pay costs when there was no claim against her and, in those circumstances, the husband was estopped from the application for ancillary relief.  However, in the case of Marsden, at the time of the divorce, the parties had reached an agreement over children, and certain other financial matters, but the husband applied for further ancillary relief after the wife’s remarriage.  Here, H issued his Form A / Form 8 Notice before W’s remarriage.  If W had so wished or had been so advised, she could have issued her own Form A / Form 8 Notice before her own remarriage.  In fact, it appears that if not for H’s remarriage, W would not even have opposed leave for H to apply for ancillary relief for himself.

48. The issue in cases such as Wilson and Chow So Kam Lin was whether the respondents to the ancillary relief applications were “lulled into a false sense of security”.  Here, W knew there were still property / company matters between them unresolved.  A month after she found out about the divorce, she was instructing solicitors to write to Fully.  Parties were involved in litigation over the winding up proceedings.  Further, from the W’s affirmation of 6^th September 2006 filed in connection with the winding up proceedings, she knew that H was alleging that she had cheated on him on the various properties held by her, and that any of the sale proceeds which she had retained should be his, and W had said that if H wished to claim any interest in properties, she would ask him to prove his contributions.

49. Although the Park Avenue Property has now been sold, there is still the question as to how the sale proceeds, currently held by the liquidators, are to be dealt with.  On the evidence before me, I am of the view that W was not “lulled into any false sense of security”.  So far as prejudice is concerned, there is no evidence of any prejudice, as W had said she did not intend to raise any issue on this point.

50. At the hearing on 18^th January 2007, W did not raise any objection to filing her Form E and in paragraph 5.5 thereof, she gave details of circumstances which she considered could significantly affect the extent of any financial provision.

51. Whether H did or did not receive proper legal advice at the time of his issuing the present proceedings is a matter which can be further investigated during a trial.  So far as delay or effect of delay is concerned, this is also a matter which the Court can deal with at a trial.

52. On 13^th March 2007, this Court made an order, inter alia, that subject to the consent of the liquidators, all sums to be paid to W under HCCW No. 123 of 2006 shall be paid into this Court pending the determination of H’s application for ancillary relief.  This Court was told on 2^nd October 2007 that the net sale proceeds are about HK$2 m, excluding the liquidators’ costs and expenses.

53. H has set out in his various affirmations history of the marriage and his contributions throughout the marriage which was of at least 18 years’ duration.  W has disputed all his allegations, and basically claimed that he had made little / no contribution to the building up of the family assets.  However, H did work for Fully.  There was a divorce agreement signed by W, which was filed with the Court and eventually it did not receive the Court’s approval as the 2003 proceedings were stopped.  Certainly at the time of signing, W had intended to transfer to H the Ying Yuan Property.  W had her own explanations including that H had withdrawn some HK$200,000 from Fully thereafter.  Without a full trial, his Court is not able to accept / reject either party’s allegations, or to conduct any detailed investigation into the factors listed in s. 7 of MPPO, including the parties’ finances and contributions, which could be in cash or in kind.

54. Having considered all the above circumstances, I am of the view that H has a seriously arguable case for ancillary relief for himself.  Thus, I will grant leave for H to apply for ancillary relief.

55. I will reserve the question of costs.

56. My order is thus :

(i)	Leave be granted to the Petitioner to apply for ancillary relief for himself
(ii)	The FDR be set down for hearing on 26th November 2007 at 2:30 p.m. (half day reserved).  Both parties shall attend the said hearing.  The directions given on 13th March 2007 regarding the FDR hearing do stand.
(iii)	Costs of this application be reserved.