YY v. AW

FCMC 15574 / 2017

[2024] HKFC 71

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER FCMC 15574 OF 2017

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Decision
(Sale of Property)

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Introduction

1.  This is the respondent’s (“the Husband’s”) application to seek further orders for sale of property pursuant to section 6A of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“the MPPO”) in relation to a consent order made by DDJ KK Pang (as he then was) dated 30 October 2018 (“the Consent Order”).

Background

2.  The petitioner (“the Wife”) and the Husband were married in 2009 with two twin sons now aged 7 years old. Subsequent to the settlement of both custody and ancillary relief issues by way of the Consent Order, decree absolute was pronounced on 25 January 2019.

3.  Briefly, regarding children of the family, the Wife was granted with sole custody of both children with reasonable access to the Husband. The Husband shall pay the Wife children maintenance for both children at HK$12,000 per month until both children reach the age of 18 years or complete full time education or training for a trade, profession or vocation, whichever is later. The Husband was also ordered to pay the Wife nominal maintenance at HK$1 per year during joint lives of the parties or until the Wife remarries, whichever is shorter.

4.  The dispute arose in relation to a property located at Harbour Green, No.8 Sham Mong Road, Hong Kong (“the Property”) which was jointly owned by the parties as joint tenants. Speaking of the Property, it is still subject to mortgage, the outstanding amount as at 28 December 2022 was about HK$2,353,817. The monthly mortgage repayment is around HK$16,500. The Property is not their matrimonial home, it was leased with a monthly rent of HK$21,500. The rental income received is meant to cover the mortgage repayments, any excess will go to settle children expenses.

5.  In the Consent Order, it is ordered the Wife shall buy out the Husband’s share in the Property and in turn the Husband shall transfer his share to the Wife within 12 months from the decree absolute. The Order was granted by way of an undertaking that the Wife shall pay an agreed sum to the Husband on the same day of transfer of the Husband’s share. The particulars of the undertaking and the order are as follows:

“F. AND UPON the undertaking of the Respondent and the Petitioner to each other and the Court that the transfer as referred to in paragraph 4 of the order hereinbelow by the Respondent to the Petitioner of the property known as [the Harbour Green Property] being held by the Petitioner and Respondent as joint tenants to the Petitioner within twelve (12) months from the date of Decree Absolute (“the Transfer”) be subject to the following conditions:

(a) The Respondent and the Petitioner shall agree within 12 months from the date of Decree Absolute on the sum being the settlement of the Transfer to be paid by the Petitioner to the Respondent on the same day of the Transfer;

(b) The Petitioner is able to mortgage and/or charge and/or refinance the Property with a licensed bank in Hong Kong prior to the Transfer;

(c) The Transfer is subject to an exemption of the BSD (Buyer’s Stamp Duty);

(d) The Petitioner and the Respondent shall respectively bear her and his own legal costs and expenses of and incidental to the Transfer of the Property (excluding stamp duty (if any); and

(e) All stamp duty of and incidental to the Transfer (if any) be borne by the Petitioner solely.”

…

It is ordered that, [inter alia]

“4. Subject to paragraph F hereinabove, the Respondent shall transfer and assign all his entire rights, title, benefit and interests in the property known as [the Harbour Green Property] being held by the Petitioner and the Respondent as joint tenants to the Petitioner within twelve (12) months from the date of Decree Absolute, to the intent that the Petitioner shall become the sole owner of the Property.”

(collectively referred to as the “Transfer Order”)

6.  It is the Husband’s case that the Wife has been repeatedly refusing to agree on a sum as stated in Undertaking F(a) to carry out the Transfer Order. The Husband named the following attempts to discuss with the Wife without positive response:

(i)  On 28 January 2019, the Husband reminded the Wife of the Transfer Order. The Wife’s response was “let’s discuss this later”.

(ii)  On 7 July 2019 (6 months from decree absolute), the Husband proposed to the Wife that he was willing to accept HK$5,000,000 to transfer his interest of the Property to her, the Wife did not respond.

(iii)  On 26 April 2020 (15 months from decree absolute), the Husband brought the issue to the Wife again. The Wife refused to agree on a sum and replied she preferred to keep cash with her.

(iv)  On 6 July 2020 (18 months from decree absolute) the Husband urged the Wife to decide jointly to sell the Property in open market. For the first time, the Wife indicated she would like to keep the Property for the children.

(v)  On 19 December 2021 (35 months from decree absolute), the Husband proposed to the Wife to sell the Property again, the Wife replied the same way that she intended to keep the Property for the children.

(vi)  On 30 December 2021, the Husband informed the Wife to apply for further directions with Court in event of continuing refusal of implementation of the Transfer Order.

(vii)  On 14 January 2022 (36 months from decree absolute), the Wife avoided discussion with the Husband on sale of the Property.

7.  The Husband had waited until 6 September 2022 (43 months from decree absolute) to instruct his legal representatives to seek directions from Court for implementation of the Transfer Order. The summons was taken out on 9 February 2023 (48 months from the decree absolute).

The Wife’s opposition

8.  In the Wife’s affirmation filed on 28 April 2023, she explained she has no intention not to comply with the Transfer Order. She said,

(i)  she believes the Husband and herself shall come to a consensus to deal with the Property within one year from the decree absolute, failing which the parties shall continue to negotiate until an agreement can been reached;

(ii)  the economic environment since decree absolute was not satisfactory, it was not a good time to sell the Property;

(iii)  she had undergone a surgery in November 2019;

(iv)  she did not consider selling the Property on Covid days;

(v)  she did not see the Husband was keen to sell the Property since the decree absolute, the Husband was out of town and was silent on this issue from July 2019 to July 2021; and

(vi)  the Property was rented to various tenants, a new lease was entered in October 2021.

9.  The Wife further blamed the Husband of not paying children maintenance on time. The Husband has only settled the outstanding sum for the period from October 2021 until June 2022 upon numerous reminders. The Husband has not paid her children maintenance of February and March 2023.

10.  Notwithstanding the above, during the hearing, the Wife counter proposed to sell the Property and sharing the sale proceeds in equal shares, in doing so, parties shall each contribute HK$1 million to a joint bank account for the children’s education expenses[1]. The Husband refused to accept the Wife’s proposal.

Statutory provisions of the MPPO

11.  The law is trite. The Transfer Order falls within sections 6(1)(d) and 6(1)(e) of the MPPO, the court made an order to extinguish the interest of the Husband under a settlement in form of a sale of property to the Wife. The relevant section reads,

“6. Orders for transfer and settlement of property and for variation of settlements in cases of divorce, etc.

(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation, or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of sections 10 and 25(1), make any one or more of the following orders, that is to say –

(a) …

(b) …

(c) …

(d) an order extinguishing or reducing the interests of either of the parties to the marriage under any such settlement;

(e) an order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion, and for the use of the proceeds of such sale,

and the court may make an order under paragraph (c) notwithstanding that there are no children of the family.

(2) Subsections (2) to (6) of section 6A apply in relation to orders under subsection (1) (e) as they apply in relation to orders under subsection (1) of that section.”

12.  To implement or to enforce the Transfer Order, which was so ordered under section 6 of the MPPO, the Court is capable to give further orders pursuant to Section 6A of the MPPO, which reads,

“6A. Orders for sale of property

(1) Where the court makes an order under section 4, 5 or 6 then, on making that order or at any time after the making of that order, the court may make a further order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion.

(2) Any order made under subsection (1) may contain such consequential or supplementary provisions as the court thinks fit and, without affecting the generality of the preceding words of this provision, may include

(a) provision requiring the making of a payment out of the proceeds of sale of the property to which the order relates; and

(b) provision requiring any such property to be offered for sale to a person, or class of persons, specified in the order.

(3) Where an order is made under subsection (1), the court may direct that the order, or such provision of the order as the court may specify, shall not take effect until the occurrence of an event specified by the court or the expiration of a period so specified.

(4) …

(5) …

(6) …

Issues

13.  The issue to be determined here is whether the Husband’s application for further order under section 6A of the MPPO is justified and what order(s) shall be made.

Discussion

14.  I do not accept the Wife’s explanation of not complying with the Transfer Order within the prescribed time. I see from the Husband’s chronology that he has tried his best endeavour to discuss with the Wife. The Wife, on the other hand, had evaded conversations on this issue.

15.  The Wife emphasized she is “striving for more benefits for the children” by keeping the Property for them. In the alternative, she agrees to sell the Property by imposing an additional condition that the parties shall each pay an extra HK$1 million as the children’s future educational expenses. This is blatantly a change of stance on her part which goes against what has been ordered in the Consent Order.

16.  The Wife’s argument the Husband did not pay children maintenance to her on time could not stand. In situation of outstanding children maintenance due from the Husband, the Wife could have taken out relevant application(s) to enforce payment.

17.  On the point that the Wife seeks both parties to set aside HK$1 million from the sale proceeds of the Property is in fact an application to vary the Transfer Order. I am aware the Wife has taken out a Form 8 but it was not formally filed at time of the hearing.

18.  For reasons of the foregoing, I failed to see the Wife has reason not to comply with the Transfer Order. The Husband has given his utmost tolerance to seek further orders to implement the same more than 3 years after decree absolute.

19.  The next step is to ascertain what further order(s) shall be made pursuant to section 6A of the MPPO. The Husband stated in his summons the following:

(i)  The Property shall be sold in the open market;

(ii)  The sale of the Property shall be completed by a certain date;

(iii)  The parties are free to engage their own estate agents for the sale of the Property;

(iv)  The Wife shall allow requests from the parties’ respective estate agents for prospective purchasers to inspect the Property within reasonable time/on reasonable notice given by the estate agents;

(v)  The purchase price of the Property shall not be lower than the valuation as published online by The Hongkong and Shanghai Banking Corporation (HSBC) as at the date of signing of the preliminary sale and purchase agreement; for avoidance of doubt, neither party shall refuse to sign the preliminary sale and purchase agreement as long as the purchase price is not lower that the said online valuation;

(vi)  The formal sale and purchase agreement shall be executed by a certain date and the date of completion shall be within 3 months from the date of formal sale and purchase agreement;

(vii)  The parties shall execute all the necessary conveyance, contract or documents incidental to the sale of the Property;

(viii)  In the event either party is unable to be present physically in Hong Kong at the time of signing of the preliminary or final [sic] sale and purchase agreement or the assignment, such party shall appoint and authorize a power of attorney for the signing of preliminary or formal agreement (as the case may be), upon the requests of the respective party and estate agent;

(ix)  All costs, expenses, stamp duty and related expenses for the sale of the Property shall be equally shared between both the Wife and the Husband; and

(x)  The net sale proceeds of the Property, being the sale proceeds net of outstanding mortgages, estate agent commission, reasonable legal costs and disbursements, shall be shared between the parties equally.

20.  I have hesitation to order paragraph 19(v) above by sole reliance of an online valuation of one commercial bank in Hong Kong. To be fair to both parties, I see fit to order the Husband to compile a solo valuation report to value the price of the Property. The said report shall be compiled within 28 days hereof and costs shall be shared equally. The selling price of the Property shall not be lower than the valued amount.

21.  The Wife did not object the sale proceeds of the Property to be shared equally, in all fairness, I so order the same be shared equally between the parties net of outstanding mortgages, estate agent commission, stamp duty, costs of valuation report, legal costs and disbursements and all related expenses.

Costs

22.  Costs should follow the event. I order the Wife to pay the Husband’s costs of his summons. The Husband seeks costs on an indemnity basis on grounds the Wife’s uncooperative conduct and unreasonable opposition. It remains a discretion of the Court to order costs on indemnity basis. (See: Town Planning Board v Society for Protection of Harbour Ltd (No 2) (2004) 7 HKCFAR 114). Whilst agreeing with the Husband that the Wife’s conduct is uncooperative and the time of non-compliance of the Transfer Order is over 4 years, I bear in mind that the Wife is acting in person and does not have the benefit of legal advice. I do not think an order on costs be in an indemnity basis is appropriate. I order the Wife to pay the Husband’s costs of his summons on a party and party basis, with certificate for counsel, to be taxed if not agreed.

Orders

23.  With reasons of the foregoing, I make the following order:

(i)  The Husband do compile a valuation report of the Property within 28 days. The valuation report shall be filed and served within 7 days thereof.

(ii)  The costs of the valuation report shall be borne by the parties equally.

(iii)  The Property shall be sold in open market and such price shall not be lower than the price valued in the valuation report.

(iv)  The parties are at liberty to engage their own estate agent(s) for sale of the Property.

(v)  The Wife shall allow requests from the parties’ respective estate agents for prospective purchasers to inspect the Property within reasonable time and on reasonable notice given by estate agents.

(vi)  The formal sale and purchase agreement shall be executed no more than 3 months from the date of preliminary sale and purchase agreement and the date of completion shall be no more than 3 months from the date of formal sale and purchase agreement;

(vii)  The parties shall execute all the necessary conveyance, contract or documents incidental to the sale of the Property;

(viii)  In the event either party is unable to be present physically in Hong Kong at the time of signing of the preliminary or formal sale and purchase agreement or the assignment, such party shall appoint and authorize a power of attorney for the signing of the preliminary, formal agreement or assignment (as the case may be), upon the requests of the respective party or estate agent;

(ix)  The net sale proceeds of the Property, being the sale proceeds net of all outstanding mortgages, estate agent commission, stamp duty, cost of valuation report, legal costs and disbursements and all related expenses, shall be shared between the parties equally.

(x)  The Wife to pay the Husband’s costs of this summons on a party to party basis, with certificate for counsel, to be taxed if not agreed.