CHOI SUNG PO v. LAI WOON LAN

HCMP 2354/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2354 OF 2011

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BETWEEN

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J U D G M E N T

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1.  This is an application by the plaintiff, Mr Choi, to vacate the registration by the defendant, Madam Lai, of a notice of application for ancillary relief dated 6 September 2011 (“the second Form A”) against two properties at the Land Registry.

Background

2.  Mr Choi is the former husband of Madam Lai.  The marriage was divorced upon the petition of Madam Lai filed on 13 May 2010.  The ground of divorce was two years’ separation.  The decree absolute of the divorce was made on 28 September 2010. 

3.  The properties are Flat G, on the 49th Floor of Tower 1, Metro Town, No. 8 King Ling Road, Sai Kung, the New Territories (“49G”) and Flat H on the same floor of the same building (“49H”).  49G is owned by Mr Choi and Mr 49H is owned by Mr Choi and one Madam Sun Hong Xia as joint tenants.  The two properties were acquired by Mr Choi and Madam Sun by agreements registered at the Land Registry on 8 April 2010 and assignments registered on 3 June 2010. 

4.  When Madam Lai filed her petition on 13 May 2010, she also filed a notice of application for ancillary relief dated 12 May 2010 (“the first Form A”).  In her petition, she claimed maintenance pending suit, periodic payments, lump sum and a transfer of properties order.  The transfer of properties order as pleaded is a general one.  It is to include, but not limited to, eight local and foreign properties particularised therein.

5.  The first Form A covered five of the eight properties in the petition.  These five properties all situate in Hong Kong. Their owners are three companies.  Madam Lai’s case is that they were purchased with family assets.  The first Form A seeks a settlement of property order and a property transfer order in respect of these properties.  The first Form A was sent to the Land Registry for registration against these five properties but the registration was somehow withheld.

6.  Mr Choi, in a Form E filed on 2 August 2010 in the matrimonial proceedings, disclosed to Madam Lai the ownership particulars of 49G and 49H.  His Honour Judge F Yiu of the Family Court made an order in the matrimonial proceedings on 16 August 2010 that, among other matters, Madam Lai and Mr Choi do use their best endeavours to agree on the value of various properties, including 49G and H.  The solicitors for the parties then agreed the value for these two flats by correspondence exchanged on 30 August and 3 September 2010. 

7.  Madam Lai, on 6 December 2010, applied in the matrimonial proceedings to set aside various dispositions by Mr Choi, including his disposition of interest in 49H to Madam Sun.  The application was made under section 17 of the Matrimonial Proceedings and Property Ordinance, Cap. 192.  Madam Lai also applied to join Madam Sun as the 2nd respondent in those proceedings.  Madam Lai said in an affidavit filed on 6 December 2010 that she wanted a declaration that Madam Sun held 49H as nominee of Mr Choi.  These applications were settled by a consent order of Deputy Judge S Lo dated 1 June 2011.  The order provided for various matters, including the inclusion of the value of 49H in the matrimonial assets for consideration of the ancillary relief application. 

8.  In the negotiation for the consent order, Madam Lai’s solicitors stated in a letter dated 18 May 2011 that the value of the properties had changed since the previous agreement on values made on 3 September 2010 and an updated assessment of the value had to be done when the trial was near.  The consent order indeed did not contain any figure on the value of the properties mentioned therein, including 49H. 

9.  Madam Lai then issued the second Form A and registered it at the Land Registry on 6 September 2011.  This form covered the same five properties as in the first Form A and also 49G and H.  Madam Lai again seeks a settlement of property order and a transfer of property order in respect of the same properties.  Her solicitors then served a copy of the form on Mr Choi’s solicitors on 4 November 2011.  Mr Choi’s solicitors objected to the registration of the second Form A against all seven properties.  They said in a letter dated 9 November 2011 that the registration of the second Form A as a lis pendens at the Land Registry was wrongful and inappropriate for want of a legal basis. 

Madam Lai’s offer to withdraw the registrations and these proceedings

10.  As a result of Mr Choi’s objection, Madam Lai agreed to vacate the registration in respect of the five properties held by companies.  However, she refused to vacate the registration of the second Form A from 49G and H.  She however made an open offer on 17 November that if Mr Choi could undertake not to sell, dispose of or otherwise deal with 49G and H, she would withdraw the registration against them.  Mr Choi declined the offer and instituted these proceedings on the same day.  Madam Lai’s solicitors then revised her offer to withdraw the registration as follows:

“Your client do undertake to our client and to the court that he will not dispose of or transfer or deal in or with 49G Property and/or the 49H Property until final resolution of our client’s claim for ancillary relief, subject to the modification of such undertaking, that your client shall be allowed to sell the 49G Property and/or the 49H Property, where any such sale is (a) after prior notification to our client in writing and copy memoranda and/or agreements for sale and purchase having been provided to our client; (b) at a fair market price and on usual commercial terms (c) with the net sale proceeds (that is after deduction of redemption moneys, reasonable agency commission at not more than 1% of the sale price (if any) and reasonable legal fees and other reasonable expenses) stakeheld by us or deposited into court until final resolution of our client’s claim for ancillary relief or further court order.”

11.  However, Mr Choi still found the revised offer unacceptable and he continued with these proceedings.  Madam Lai then issued a summons to stay the proceedings. 

12.  Mr Mak, counsel for Mr Choi, made a number of points in support of these proceedings.  One of the points is the validity of the service of the second Form A, but Mr Mak confirmed to me this morning that this point is no longer pursued. 

First point - no leave to amend the first Form A

13.  The first point made by Mr Mak is that the second Form A does not contain a valid claim for ancillary relief.  He submitted that Madam Choi had not applied for or obtained any leave from the Family Court under Rule 68 of the Matrimonial Causes Rules, Cap. 179A, to amend the first Form A in terms of the second Form A to include 49G and H in her claim for ancillary relief.  Rule 68(1) and (2), insofar as they are relevant, provide:

“68(1) Any application by a petitioner, or by a respondent spouse who files an answer claiming relief, for-

…

(e) a settlement of property order;

(f) a transfer of property order;

…

(2) 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;

…”

14.  Mr Mak relies on the case of Chow So Kam Lin v Chow Shu Sun [1986] HKC 72.  In that case, the wife sought periodical payments for the maintenance of herself and four children.  She later gave notice of application for a lump sum payment of $500,000 and periodic payments of $5,000 per month for maintenance.  She did not obtain leave under Rule 68(2)(a) to make this claim for further relief.  She filed affidavits which referred to her further claims and gave evidence to support them.  She also said in evidence that she proposed to move out of the matrimonial home with the children as she could not get along with her mother-in-law who also stayed in the matrimonial home. 

15.  The husband filed very full affidavits in reply.  The judge then ordered the transfer of the matrimonial home to the wife.  The husband appealed on the ground that the order was made without jurisdiction since the only application properly before the court was the application for periodic payments. 

16.  The Court of Appeal took the view that the wife had, by indicating her intention to move out of the property, implicitly renounced any claim to the property.  The court was also assured by counsel for the husband, Mr Patrick Chan, that had a claim for transfer of the property been made by the wife, the case would have proceeded differently.  The Court of Appeal therefore allowed the husband’s appeal and ordered a retrial with a remark that the wife could apply for leave to claim other relief at the retrial.

17.  The facts in the present case are different. From the order of HH Judge F Yiu requiring the parties to agree on the values of, among others, 49G and H and the parties’ subsequent agreement on their values, Mr Choi is fully aware of Madam Lai’s claim over 49G and H.  He cannot say that he has been prejudiced by the lack of leave under Rule 68 to include these two flats in Madam Lai’s claim for ancillary relief.  Madam Lai’s application under section 17 of the Matrimonial Proceedings and Property Ordinance is a further manifestation of her desire to include Madam Sun’s interest in 49H in the pool of family assets for her ancillary relief claim. The consent order by Deputy Judge S Lo is a vindication of her desire. 

18.  Apart from the lack of prejudice to Mr Choi, I also note that under Rule 68(2), leave for making ancillary relief can be granted at the trial. 

19.  Mr Chan, counsel for Madam Lai, also relies on Doherty v Doherty (1975) 2 All ER 635.  In that case, the husband filed a petition for divorce in November 1972.  The wife did not defend the petition but filed an acknowledgement of service in which she indicated her intention to apply in due course for periodical payments and a lump sum provision.  She did not indicate an intention to apply for a settlement or transfer of property order. The husband was later granted a decree nisi and then a decree absolute. On 18 February 1974, the wife’s solicitors wrote to the husband’s solicitors, claiming a 50 per cent interest in the former matrimonial home which was the substance of her claim from then onwards.  She then served two notices to claim a transfer of property order and maintenance and any further order the court may see fit to make, but in neither of those notices was there any reference to a lump sum.

20.  On 29 March, the husband remarried and, on 9 November, the wife remarried.  Meanwhile, the husband had sold the former matrimonial home and bought another property.  At the hearing of the wife’s applications, the husband submitted that in the circumstances there was no effective application before the court for a lump sum order under section 23 of the Matrimonial Causes Act 1973 and that having remarried, the wife was barred by section 28(3) of the said Act from filing a notice of application for a lump sum under section 23.

21.  The judge upheld these submissions and held that he had no jurisdiction to entertain the applications or to allow any amendment to be made to the notices.  The wife appealed.  The Court of Appeal held that the court had jurisdiction to entertain the applications without amendment of the two notices.  Omrod LJ said:

“In my judgment, r 68 of the Matrimonial Causes Rules 1973 simply requires a notice to be given of the nature of the application to be made, and it is common form in prayers in petitions and answers merely to refer to the nature of the order that is being sought. In my experience, for what it is worth, those prayers rarely, if ever, contain any particulars as to the quantum of the lump sum which is being claimed or as to the identity of the property to be claimed. I see nothing in the rules which requires the applicant for such orders to particularise them, and there may well be cases in which a wife in particular could be in great difficulty in giving any particulars at all of the property in relation to which she was seeking an adjustment order. Until she has details of her husband’s assets, and so on, it may well be impossible for her to give anything more than an indication of her intention in due course to apply for an adjustment of their property position. If that is an acceptable situation, as it plainly is, so far as prayers or petitions and answers are concerned, it would seem to me quite unreasonable that any greater degree of particularity should be required where a party is proceeding under r 68(3). It should be sufficient, in my judgment, to indicate the nature of the relief that is being sought. I doubt very much whether it is right to refer to these notices as pleadings in the full sense. They are very much more in the nature of an indication of the claim, the details of which would normally be elaborated in the affidavit which will be filed in due course in support of the notice.”

22.  In the light of the facts of this case, I do not think I should follow Chow So Kam Lin.  I would follow Doherty and hold that despite leave has not been given under Rule 68 of the Matrimonial Causes Rules, Madam Lai is still entitled to include 49G and H in her claim for ancillary relief.  This is particularly so when her petition has asked for a general transfer of properties order which is not limited to the eight properties particularised therein. 

Second point – Lack of bona fides in registration

23.  Mr Mak’s second attack is that Madam Lai did not register her claim against 49G and H with bona fides.  He submitted that there is no application by Madam Lai under section 17 of the Matrimonial Proceedings and Properties Ordinance against these two properties.  The parties had agreed on the values of the two properties and Madam Lai had withdrawn her application under section 17 in relation to Madam Sun’s interest in 49H.  Furthermore, the values of the two properties only constitute about 10 per cent of the total matrimonial assets claimed by Madam Lai.  The transfer of the two properties to her would leave Mr Choi, Madam Sun and their two children without a roof. There was also an unexplained delay on the part of Madam Lai. 

24.  Regarding the point of the lack of any application by Madam Lai under section 17 of the Matrimonial Proceedings and Properties Ordinance against the two properties, I do not think any such application has to be made in respect of 49G.  49G is registered in Mr Choi’s sole name and is naturally included in Madam Lai’s claim for ancillary relief. 

25.  Regarding 49H, Madam Lai had indeed issued a section 17 application directed at Madam Sun’s interest therein as a joint tenant.  However, this application was settled in favour of Madam Lai and the value of Madam Sun’s interest in this flat is now included in the family assets for Madam Lai’s claim for ancillary relief.  Madam Lai is now entitled to include Madam Sun’s interest without the need to apply to set aside Madam Sun’s interest.  If Madam Lai’s section 17 application had not been settled, she would have been entitled to register the application against Madam Sun’s interest in 49H at the Land Registry. 

26.  Even if I should be wrong on this and that the settlement of the section 17 application by the inclusion of the value of 49H in the matrimonial assets in the order of Deputy Judge S Lo merely had the effect of including the value of 49H in the matrimonial assets and not the flat itself, it simply means that Madam Lai cannot register her ancillary relief claim against Madam Sun’s interest in 49H.  The order of Deputy Judge S Lo does not say that Madam Lai has lost the right to register her claim against Mr Choi’s interest in 49H.  Furthermore, the second Form A is only directed at Mr Choi and not Madam Sun, hence the settlement of the section 17 application does not affect Madam Lai’s right to register her claim to 49H as against Mr Choi. 

27.  I would also observe that the order of Deputy Judge S Lo to include the value of Madam Sun’s interest in 49H in the matrimonial assets is only effective as against Mr Choi and not against Madam Sun. 

28.  Hence Mr Mak’s point on the lack of section 17 application for the two flats fails.

29.  Regarding the agreement by the parties on the values of the properties made pursuant to the order of Judge F Yiu, Mr Mak submitted that Madam Lai had, by entering into such agreement and agreeing on the values, abandoned her claim to the properties themselves.  I disagree.  The agreement on values of the properties merely dispensed with the need for expert evidence on valuation.  Madam Lai’s claim for settlement of property and property transfer orders over these properties has not been converted by the agreement on values into a claim for money only.  Hence the agreement on value point fails.

30.  Mr Mak’s next point is the relatively small value of 49G and H vis-à-vis the total value of the matrimonial assets.  The total value of 49G and H is only about 10 per cent of the total assets.  I do not think the value of the two properties in comparison with the total matrimonial asset value is a relevant consideration on whether Madam Lai is entitled to register her claim against the two properties. 

Selective registration against 49G and H

31.  Mr Mak also submitted that Madam Lai had been selective in registering her second Form A as she agreed, upon Mr Choi’s objection, to withdraw the registration against five other properties.  Madam Lai’s lawyers explained that Madam Lai agreed to withdraw the registration against these five properties because they were not held in Mr Choi’s name but in the names of companies.  Mr Mak, however, submitted that Madam Lai could also have registered against these five properties on the strength of the decision by Deputy Judge Harris, as he then was, in Lau King Ting v Cheng Miu Har [2008] 4 HKLRD 563. 

32.  Regardless of whether Mr Mak is right, if Madam Lai’s lawyers considered, rightly or wrongly, that Madam Lai was legally not entitled to register against those five properties as they are owned by companies, then it was their decision made after due deliberation on the law and not for selectively targeting at 49G and H.  The attack of selective registration thus fails.

Third point – Leaving Mr. Choi and his family without a roof

33.  For the next point, that Madam Lai’s claim will leave Mr Choi, Madam Sun and their children without a roof, Mr Mak relies on Martin v Martin [1977] 3 All ER 762. However, in that case, the only available asset was the matrimonial home which was occupied by the wife.  If the property should be ordered to be sold, the wife would be left without a roof.  That is very much different from the facts of this case. 

34.  However, Mr Mak submitted that Mr Choi, Madam Sun and their children should be entitled to keep 49G and 49H as their roof. This is particularly so when Madam Lai is living in a family property the value of which is more than double of that of 49G and H put together.  This submission may well motivate the judge hearing the ancillary relief proceedings not to make any settlement or transfer of property order in relation to 49G and/or H, but this is not a matter for me to decide.  It is a matter for the Family Court.

Fourth point - delay

35.  Mr Mak also submitted that Madam Lai was guilty of delay, but I note that the delay is only on the issuance and registration of the second Form A.  Madam Lai’s claim to include 49G and H in her ancillary relief claim has been made long ago.  It was dealt with in the order of Judge F Yiu dated 16 August 2010.  This claim is still in progress.  I can see no prejudice to Mr Choi by the mere fact of the registration of the second Form A against 49G and H in September 2011.  This attack therefore fails.

Fifth point – no risk of dissipation of assets

36.  Mr Mak also submitted that there is no risk of dissipation of assets by Mr Choi and hence no need to have the registration against the two flats.  However, that is not the view of Madam Lai.  She has said on affidavit of her fear of dissipation by Mr Choi.  Her revised offer to Mr Choi for withdrawing her registration also shows her concern of dissipation.  From the terms of her revised offer, she does not appear to mind about the sale or disposal of 49G and/or H provided the net assets are in safe custody.  In any case, the lack of risk of dissipation does not make a registrable claim unregistrable.  The burden is on Mr Choi to show why the second Form A, which is prima facie registrable against 49G and H at the Land Registry, should be vacated from the Registry.  The lack of risk of dissipation of assets by him is not enough to warrant the vacating of the registration.  Registration of the second Form A is to give the public notice of Madam Lai’s claim.

Sixth point - Madam Sun’s interest

37.  Finally, Mr Mak submitted that Madam Sun’s interest in 49H is being affected, but Madam Sun has not applied to vacate the registration against 49H insofar as her interest is concerned and I will say no more about that. 

38.  In the premises, Mr Choi has failed in this application. 

Madam Lai’s summons to stay

39.  Regarding Madam Lai’s summons to stay the proceedings, I do not think it is necessary to deal with it as I have held against Mr Choi in his application.  I also do not see the need of the summons.  I therefore make no order on it.  The fate of the registration of the second Form A at the Land Registry will be decided by the Family Court in the ancillary relief proceedings.

Costs order nisi

40.  Finally, I make a costs order nisi that Mr Choi do pay Madam Lai the costs of these proceedings, save that there be no order as to costs on Madam Lai’s summons to stay.  These costs are to be summarily assessed if not agreed.  Madam Lai’s solicitors do file and serve on Mr Choi’s solicitors a bill of costs within the next 28 days but outside the next 14 days.  Mr Choi’s solicitors do file and serve a list of objections, if any, within the next 14 days.  The parties do fix a 9.30 am hearing for summary assessment.