WSW v. CSLPC

FCMC 7214/2019

[2023] HKFC 22

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 7214 OF 2019

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J U D G M E N T
(Leave to Appeal and
Leave to Appeal out of time)

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The Applications

1.  This is the Respondent Husband’s application for leave to appeal and the Petitioner Wife’s application for leave to appeal out of time, against a judgment on ancillary relief between the parties dated 12 August 2022 (“Judgment”). See: [2022] HKFC 155.

2.  In the Judgment, I apportioned the matrimonial pot be split between the Wife and the Husband on the ratio of 55: 45. The Husband’s share meant that he was entitled to HK$30,804,160.68 (i.e. HK$68,453,690.40 x 45%). The Husband contributed net assets of HK$17,734,529.09 to the matrimonial pot, therefore the Husband is entitled to a sum of HK$13,069,631.59.

3.  In the Judgment, the court made the following orders:

(1)  The Husband do transfer his 10% legal interest in CDL to the Wife within 3 months upon the grant of Decree Absolute;

(2)  Upon the grant of Decree Absolute, the Husband to retain all the interest, legal and beneficial ownership (including the Wife’s 1/3 beneficial interest) in NF Mansion;

(3)  The parties to cause CDL to transfer the title of the motor vehicle BMW 520i to the Husband within 3 months upon the grant of Decree Absolute;

(4)  The Wife do pay to the Husband a lump sum of HK$13,824,155.29 in 3 tranches namely HK$4,608,051.77 to be paid within 3 months upon the grant of Decree Absolute and 2 further tranches of HK$4,608,051.76 each, to be paid within 6 months upon the grant of Decree Absolute and within 9 months upon the grant of Decree Absolute;

(5)  Upon compliance with paragraphs (1), (2), (3) and (4) of this Order, both parties’ claims for ancillary relief do stand dismissed;

(6)  The Husband do pay a lump sum of HK$2,039,976 representing part of his contribution to the Children’s expenses up to their age of 18 within 3 months from the date hereof;

(7)  The Husband do pay to the Wife periodical payments for the Children of the family in the sum of HK$28,333 per month, the first payment to be made on the 1^st day of the month until J’s 18^th birthday. Upon each child reaches the age of 18, the Husband do pay to the Wife periodical payments for the Children of the family in the sum of HK$28,333 per month for each child, until each child cessation of full time education, or until further order;

(8)  Section 18 of MPPO declaration; and

(9)  An order nisi that there be no order as to costs of the ancillary relief (including all costs reserved).

4.  On 15 December 2022, I dismissed the Wife’s summons filed on 25 August 2022 to vary the costs order nisi. I made absolute the costs order nisi of the Judgment. See: [2022] HKFC 263

5.  The background to this case is set out in the Judgment. I do not propose to repeat them here. I shall for convenience adopt the abbreviations in the Judgment.

6.  I will deal with the application for leave to appeal separately below. Any points which are not specifically addressed in this judgment may be treated as dismissed for not satisfying the standard of leave to appeal to warrant appellate interference.

Legal principles on application for leave to appeal out of time and leave to appeal

7.  It is well settled principle that when determining an application for leave to appeal out of time, the Court will consider:

(1)  the length of the delay;

(2)  reasons for the delay;

(3)  whether the intended appeal has reasonable prospects of success; and

(4)  prejudice to other parties if leave to appeal out of time is granted.

8.  Under section 63A(2) of the District Court Ordinance (Cap.336), no leave to appeal shall be granted unless the Court is satisfied that the intended appeal has reasonable prospect of success or that there is some other reason in the interests of justice that the appeal should be heard.

9.  It is trite that “reasonable prospect of success” means that there is an arguable case such that the chance of success is more than “fanciful” but without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125 at [17].

10.  Furthermore, it is pertinent to bear in mind that even if there is a reasonable prospect of success on appeal, the court still retains a discretion whether to grant leave to appeal, although the fact that there is, ex hypothesi, a reasonable prospect of success would heavily influence the court’s exercise of discretion: see Ho Yuen Ki Winnie & Anor v Ho Hung Sun Stanley & anor, unreported HCA391/2006, 25 May 2009 at [3].

The Wife’s application for leave to appeal out of time and her proposed grounds of appeal

11.  The Wife says initially she decided not to pursue an appeal against the Judgment in the hope that the legal dispute between the parties would come to an end. However, she was surprised that the Respondent decided to lodge an application for leave to appeal on the last day of the deadline.

12.  The Wife takes the view that since she would need to incur further legal costs to resist the Husband’s intended appeal in any event, she decided to lodge an intended cross appeal on the following grounds:

(1)  The court erred in deciding to split the matrimonial pot between the parties on the ratio of 55:45 instead of 65:35;

(2)  The court erred in taking into account of the Husband’s legal costs calculated up to 3 May 2022 instead of the parties agreed cut-off date, i.e. 31 December 2021; and

(3)  The court should have ordered to the Wife to pay to the Husband a lump sum of HK$5,914,086.23 instead.

13.  The reason why the Wife decided to lodge this application for leave to appeal was that the Husband had decided to lodge an appeal against the Judgment which she had no alternative but to resist his application.

14.  The Wife relied on His Honour Judge Leung (as he then was) decision in Ghulam Rbani v Secretary for Justice and on behalf of the Director of Immigration, unreported DCCJ 531/2010, 9 February 2012 to justify her reasons for the delay.

15.  Paragraphs 15 to 17 of the said judgment said:

15.  It was submitted on behalf of the Director that the latter deadline was more apposite given that in most cases, the winning party would not consider lodging an appeal against a favourable judgment unless and until the losing party seeks leave to appeal against the adverse judgment. If the losing party chooses to make the application for leave just before the deadline expires (as in the present case on 9 November 2011), the winning party will be left in an almost impossible position to apply for leave to appeal by way of cross appeal within time.

16.  I do not agree with this argument. Otherwise, the court will be accepting different approaches to the same time limit for application for leave to appeal against the same judgment or decision. I do acknowledge the reality of the situation of a winning party as mentioned above, particularly, when he is normally not expected to take out academic appeal in the absence of the losing party appealing.

17.  But even short of a decision to appeal or not, the legal representatives of the winning party by reading the judgment should be in a position to form their view about the court’s decision on the issues in dispute as measured against their contentions during the trial. Whether they would wait to see if the losing party would appeal should not prevent the forming of such a view.

16.  The Wife had reasons for issuing her application after the initial deadline, but I cannot accept this to be a valid reason. As explained by His Honour Judge Leung in paragraph 16 of his judgment, the court shall not accept different approaches to the same time limit for application for leave to appeal.

17.  Further, the trigger for the Wife’s application was the Husband’s leave to appeal application. The Wife’s application in effect has an element of tit-for-tat, which should not be encouraged by the court.

18.  Even if I were to accept the Wife had valid reason for her delay (which I have found I should not), I am not persuaded that the Wife’s proposed grounds of appeal had any reasonable prospect of success.

The Wife’s intended grounds of appeal

Grounds 1 and 3 - The court wrongly decided the ratio of distribution of matrimonial assets

19.  The Court of Final Appeal in LKW v DD (2010) 13 HKCFAR 537 made it clear that section 7 of the MPPO confers a very broad discretion on judges dealing with financial provision and the court is required to have regard to “all the circumstances” of the case.

20.  Mr. Justice Peter Cheung in the case of YN also known as YN(A) v NA [2014] HKFLR 517 at 522, paragraph 4.2 said:

“….. Let me say at the beginning that the role of the Family Court in making financial provisions for a divorced couple is to ensure that the parties will receive a fair share of their entitlement. It is concerned that the ultimate award complies with the established principles now laid down by the Court of Final Appeal in LKW v. DD (2010) 13 HKCFAR 537 and the award can be satisfied from the available pool of assets. The Court is, however, not required to comb through every fine detail of the matrimonial history and financial information to arrive at a precise mathematical figure. A sense of proportion must be recognised by the parties and their lawyers having regard to the size of the available pool of assets and the costs of litigation. If there is an attempt by the parties to dwell on the minutiae then the trial judge will have to stop this from happening. The Court will not countenance any unhealthy trend in matrimonial litigation where a substantial portion of the parties’ available fund are unnecessarily spent on costs. Likewise the Court of Appeal will not be expected to review all the details that had been canvassed below as if it is trying the case afresh. The fact finding role of a trial judge will be given proper respect in accordance with the well-established principles. Any attempt to sidestep this demarcation will not be entertained. After all the whole ethos of the Civil Justice Reform is to ensure that the case is to be efficiently disposed of.” (with emphasis added)

21.  The Wife’s appeal is directed to my ruling made in the exercise of my discretion. It is trite to say that where the court below exercised a discretion, the appellate court would only intervene when the judge erred as a matter of law, misunderstood the evidence, took into account irrelevant factors, failed to take into account relevant factors or had acted blatantly outside the scope of the discretion that no reasonable tribunal would have done: CCMJ v SSM (Appeals; Bundles; Case management) [2016] HKFLR 22; GM-SA aka DG, M-S v DDPJ (Setting aside jurisdiction) [2020] HKFLR 418.

22.  I have fully considered a broad range of factors and adopted a holistic approach, including the parties’ respective contribution to the family, the indisputable fact that the Wife had made substantial contributions to the Children’s expenses for the period from September 2015 to June 2021, and their respective duties to contribute to the Children’s ongoing expenses. The reasoning was set out in paragraphs 123 to 142 of the Judgment. Suffice it to say that I stand by what is said in the Judgment.

23.  The Wife is unable to illustrate how the court erred in law or in fact. These grounds are unmeritorious.

Ground 2 – Took into account of the Husband’s legal costs up to 3 May 2022

24.  The parties did file a so-called “Agreed Schedule of Assets and Liabilities”, however, the Wife stated in the “Comments” column of the said schedule that she disputed many of the Husband’s liabilities. During cross examination and in the Husband’s closing submissions, the Husband raised the issue of unfairness, as the Wife had spent a substantial amount of her funds on her legal fees.

25.  I accept paragraph 43 of the Husband’ closing submissions filed on 8 June 2022 that the Wife did accept under cross examination that it would be unfair to require the Husband to bear his own legal costs in addition to half of the Wife’s legal costs.

26.  It cannot be emphasized enough that it was after consideration of all the evidence and the element of fairness before the court came to a decision which was set out in paragraphs 71 and 72 of the Judgment. I do not see any substance in this ground of appeal.

27.  By reason of the aforesaid, I conclude that there is no reasonable prospect of success of the Wife in her intended appeal against the Judgment. I refuse to grant her leave to file appeal out of time.

The Husband’s proposed grounds of appeal

28.  The Husband sought to set aside paragraphs (4), (6) and (7) of the orders of the Judgment. He raises six proposed grounds of appeal, where he says that I erred when coming to my decision.

29.  The Husband’s contentions can be categorised as follows:

(1)  The court erred in not adopting the mortgage balance outstanding as at 31 December 2021 as part of the Husband’s liabilities;

(2)  The court erred to depart from equality;

(3)  The court wrongly decided the Children’s needs and to include the Wife’s mortgage repayments;

(4)  The court erred in assessing the Husband’s ability to pay the Children’s maintenance;

(5)  The court erred in capitalizing any part of the Children’s maintenance; and

(6)  The court erred in requiring the Husband to pay the capitalization sum on a date potentially prior to the Wife being required to pay the first tranche of lump sum to the Husband.

The Husband’s proposed grounds of appeal

Ground 1 –  China Citic Bank Mortgage Loan

30.  It suffices to restate my conclusion in paragraph 86 of the Judgment that none of the funds that the Husband received upon the refinancing, nor the income producing the properties which the Husband used as security for the refinancing were used for the benefit of the family.

31.  The Wife made it clear at the outset that she disputed the 2^nd mortgage taken out in 2019. The Wife did not characterize the further re-financing as wanton, reckless or extravagant. I accept the Wife’s contention that it would be unfair for the further re-financing to be taken as liabilities of the matrimonial pot, when such liabilities were not used for the benefit of the family. In the circumstances, I fail to see any reason why the court should grant relief by way of adding back as part of the Husband’s liabilities.

32.  There is no substance in this ground of appeal.

Ground 2 –  Departure from equality

33.  There is no substance in this proposed ground of appeal.

34.  I have set out my reasoning for departure from equality in paragraphs 21 to 24 above.

Ground 3 –  Assessment of the Children’s needs

35.  I have set out my reasoning regarding the Children Expenses in paragraphs 113 to 122 and the Husband’s financial position in paragraphs 135 and 136 of the Judgment.

36.  The Husband submitted that the court erred in including the Wife’s mortgage at HK$14,000 per month per child as the Children’s expenses

37.  According to the custody order dated 23 January 2020, the Children only stayed at the Husband’s place from Friday afterschool to Sunday morning. The Children spent most of their time with the Wife. The Children need a place to live and it would not be free of charge.

38.  I hold the view that both money that goes towards rent and money that goes towards a mortgage loan ensure that the Children have a roof over their heads; it would not be appropriate for maintenance purposes to make distinctions merely by the way in which property is being held, such as whether the Children live as tenants, or the Mother owns a property which is subject to a mortgage: both are accommodation expenses which can be taken into consideration for maintenance purposes.

39.  The Wife’s financial means had been taken into consideration by the court, and she was ordered to bear half of the Children’s expenses which included the costs of and associated with the accommodation.

40.  I reiterate when I decided the ratio of distribution of matrimonial assets and the final order, I have considered all the circumstances of the case, including the financial needs, obligations, and responsibilities of the parties.

41.  If the Wife is expected to solely shoulder the Children’s accommodation expenses, the Wife’s entitlement to the matrimonial pot should be more than 55%.

42.  I do not see any merit based on such ground.

Ground 4 -  The Husband’s liability to pay the Children’s maintenance

43.  The Husband did not at any point during the trial or in his closing submissions ever suggested that he should pay less than 50% of the Children’s expenses.

44.  The Husband is in his mid-40s and is well educated. At the trial, he claimed that his business was making some profit and evidence showed that he made effort to expand his means of income, such as engaged in whisky business a year ago. The Husband also owns a number of properties. Even if he does not have adequate cash, he certainly has other capital assets, including the current distributions from the matrimonial pot which can be disposed of.

45.  Further, it is very telling in this leave to appeal application, the Husband engaged King’s counsel to represent him. This inevitably suggested that another round of substantial amount of legal costs would have to be incurred by him. I see no reason why the court should cast doubt on the Husband’s ability to support the Children.

46.  This ground is clearly devoid of merits.

Ground 5 –  Capitalising of the Children’s maintenance

47.  It was the Husband’s case that he had borrowed millions of dollars from his family members and friends over the years, but it was also his case that he made use of most of these alleged loans on investment activities or for personal purpose. The Husband had never voluntarily offer to shoulder the Children’s expenses even he had moneys in hands.

48.  As explained in paragraph 122 of the Judgment, I feel the need to secure the interests of the Children. The parties chose to have two children together. They must therefore do everything within their power to ensure that the Children’s financial needs are met.

49.  The Husband relied on the case of Her Royal Highness Haya Bint Al Hussein v His Highness Sheikh Mohammed Bin Rashid Al Maktoum [2021] EWFC 94 (“HRH v HH”) to substantiate his submissions that the court should not capitalize children maintenance unless there are very good reasons.

50.  With respect, the facts of the present case bear no resemblance to HRH v HH.

51.  The Husband’s assertion that there was only one reason given by the court in capitalising the Children’s maintenance is misconceived. The Husband seeks to cherry pick a paragraph of the Judgement, when indeed the whole Judgment has to be read, and that it is clear on a reading of Judgment in its entirety, the Husband’s credibility and conduct, including whether he had made timely contribution to the Children’s expenses in the past impacted my decision.

52.  I see no reasonable prospect of success relating to this proposed ground.

Ground 6 - Timing of payment of the lump sum

53.  As explained above, I see no reason why the court should cast doubt on the Husband’s ability to support the Children.

54.  On 9 November 2022, the Husband took out a summons to extend the time of his lump sum payment. On 11 November, I directed parties to take a practical and sensible approach to resolve this issue, in particular, I wrote:

  According to court record, since the court handed down the judgment on 12 August 2022, the Petitioner has not applied for the grant of decree absolute. The court holds the view that if the Petitioner did proceed to apply for decree absolute after the judgement was handed down, the present summons is unnecessary.

55.  The decree absolute was granted on 15 December 2022. By way of consent summons dated 13 January 2023, parties agreed that the Husband to set off his lump sum payment from the Wife’s 1^st instalment of lump sum payment.

56.  In my view, parties are just making things difficult for themselves. Ground 6 has no substance.

Conclusion

57.  The Husband has failed to show that the intended appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard. I refuse to grant leave to appeal to the Husband.

Cost

58.  Given that neither party can be considered as successful in his or her application, I consider that the appropriate costs order should be no order as to costs. In the absence of any application to vary within 14 days of handing down of this judgment, the costs order will be made absolute.