DD v. LKW

[English Translation - 英譯本]
CACV 216/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 216 OF 2013

(ON APPEAL FROM FCJA NO.597 OF 2003)

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REASONS FOR JUDGMENT

Hon Cheung JA (giving the Reasons for Judgment of the Court):

Background

1. On 5^th March, 2008, the Court of Appeal held that the Second Applicant (hereinafter known as “the husband”) had to pay a sum of $1,735,460.00 (“maintenance”) to the First Applicant (hereinafter known as “the wife”) as full and final settlement for the wife’s application for financial relief. Further, in the proceedings over the years, two costs orders had been granted in favour of the wife by the court against the husband. On 25^th January 2007 and 10^th October 2008, following taxation, the relevant costs were assessed at $950.14 and $75,569.43 respectively, making a total sum of $76,519.57 (“costs”).

2. Later, both parties filed into court the Consent Summons and on 14^th September 2011, the District Court made an order in terms of the Consent Summons for the sale of the former matrimonial home. The said matrimonial home was sold on 17^th May 2012 at a consideration of $2,730,000.00. On 18^th May 2012, the wife received a sum of $1,811,979.57 (inclusive of the maintenance and the costs referred to in paragraph one above) and she vacated the former matrimonial home. Upon deducting relevant expenses incurred for the sale of the property as well as paying off the bank mortgage, the balance in the sum of $345,923.93 was paid into court. The wife subsequently also received out of this sum interests on the costs in the amount of $18,699.68. The balance currently kept in court amounts to $327,224.25. In accordance with the Matrimonial Proceedings and Property Ordinance, Cap.192 (“the Ordinance”), the wife applied for an order that the husband should pay interests on the said maintenance and costs. The husband opposed her application. Deputy District Judge Grace Chan refused the wife’s application, and the wife now appeals against the refusal.

Section 28AA of the Ordinance

3. Section 28AA (2) of the Ordinance provides:

“Where a maintenance order has been made against a judgment debtor, and the judgment debtor fails to make full and punctual payment in compliance with the maintenance order, the judgment creditor is entitled to interest in respect of arrears of maintenance which accrue on or after the commencement date.”

4. Section 28AA of the Ordinance also provides that the judgment debtor is entitled to object to payment of interest. The relevant provisions are set forth as follows:

“ (7) A judgment debtor who considers that he has reasonable grounds not to pay the interest under subsection (2) may, within a reasonable time after having knowledge of the requirement to pay, apply by summons to the court not to pay the interest, and shall set out the grounds in the application.

(8) If an application is made under subsection (7), in deciding whether to require the judgment debtor to pay interest and, if so, the amount of interest, the court shall take into account all the circumstances of the case, including (but not limited to) the following—

(a) whether the judgment debtor has a reasonable excuse for his failure to comply with the maintenance order;

(b) whether the judgment debtor has evaded service of court documents;

(c) the judgment debtor’s past record and conduct in connection with the making of maintenance payments to the judgment creditor pursuant to the maintenance order or an undertaking in any proceedings;

(d) whether the judgment debtor has given the judgment creditor a reasonable explanation for his failure to comply with the maintenance order; and

(e) the judgment debtor’s ability to pay.”

5. Interest is calculated under section 50 of the District Court Ordinance, Cap. 336:

“(1) Judgment debts are to carry simple interest—

(a) at the rate the Court orders; or

(b) in the absence of an order, at the rate the Chief Justice determines by order,

on the total amount of the judgment debt, or on the part that for the time being remains unpaid, from the date of the judgment until payment.”

6. Provisions regarding interest on arrears of maintenance are also set out in section 53A of the Matrimonial Causes Ordinance, Cap.179.

Maintenance Order

7. The maintenance order by the Court of Appeal states as follows:

1) The husband is required to pay the wife $1,735,460.00 as full and final settlement of the wife’s application for financial relief.

2) The husband is required to pay the said sum within three months.

3) The wife is required to vacate the former matrimonial home within three months. The payment of $1,735,460.00 is to be made to the wife at the same time as she vacates from the former matrimonial home.

8. The husband did not pay the said maintenance to the wife within three months as ordered by the Court of Appeal, whilst the wife also did not vacate the former matrimonial home within three months in accordance to the said order.

This Court’s Opinion

9. The husband argued that he did not have the monies needed for paying the said maintenance to his wife. Deputy District Judge Chan refused to accept this explanation on the grounds that the Court of Appeal had its judgment accepted the findings of the District Court at trial that the husband had concealed assets in the amount of $2,950,000.00. The reason for Deputy District Judge Chan not to accede to the wife’s application for interest was that she considered that according to the order of the Court of Appeal, the stipulations requiring the husband to pay to the wife a lump sum maintenance payment within three months, and requiring the wife to vacate the former matrimonial home also within three months should be carried out concurrently. She therefore regarded that it was unfair for the wife to demand the husband to comply with the relevant court order first, despite she herself had not complied with it.

10. This Court does not accept Deputy District Judge Chan’s view of the order of the Court of Appeal, namely the view that the respective stipulations relating to the husband and the wife should be carried out concurrently. The stipulation stating that the husband must pay the said maintenance within a period of three months was the main provision of the said order, whilst the stipulation requiring the wife to vacate the former matrimonial home was subject to the husband’s payment of the maintenance to the wife within the specified period in compliance with the Court’s order. If the wife did not receive the maintenance within three months and yet still had to vacate the former matrimonial home, what she could only do was to apply for an order for sale of the said former matrimonial home by auction pursuant to the “charging order” in order to obtain her maintenance. Such was not the intended purpose of the Court of Appeal. When dealing with matrimonial relief matters relating to properties, the court’s primary objective is to ensure that the wife is provided with residential accommodation. In this regard, Deputy District Judge Chan’s comprehension of the Court of Appeal’s order was contrary to the said important underlying principle. The Court of Appeal could not have ordered the wife to vacate the former matrimonial home in the circumstances that she had not received her maintenance, particularly when the Court of Appeal had already made a finding that the husband had concealed assets. Hence, this Court held that the interest on maintenance shall be calculated as from three months from the date of the order of the Court of Appeal, i.e. from 5^th June 2008 until 17^th May 2012, i.e one day before the wife obtained the said maintenance. The amount of interest accrued from 5^th June 2008 until 17^th May 2012 is $553,695:

Judgment Debt Sum	Period	No of days	Judgment Rates (% per annum)	Interest
1,735,460.00	5/6/2008- 30/6/2008	26	9.398	11,586.234
	1/7/2008- 30/9/2009(sic)	92	8.353	36,438.780
	1/10/2008-31/12/2008	92	8.250	35,989.457
	1/1/2009- 31/3/2009	90	8.192	35,055.341
	1/4/2009-31/12/2009	275	8.000	104,603.068
	1/1/2010-31/12/2010	365	8.000	138,836.800
	1/1/2011-31/12/2011	365	8.000	138,836,800
	1/1/2012-17/5/2012	138	8.000	52,348.302
			Total	553,694.783
				=========

11. Although the wife did not receive the said maintenance, she continued to reside in the former matrimonial home until 16^th May 2012. She agreed that she in some respects had benefited from it. Although she held a different view as to the calculation method of the relevant benefits, she agreed that one of the calculation methods is for her to pay half of the market rental price of the said former matrimonial home. The reason is that in actual fact the husband all along had been entitled to half of the ownership rights, as well as entitled to half of the right to occupation in respect of the said former matrimonial home. The fact that he seldom came back to the former matrimonial home subsequently was only a matter of his personal choice and did not arise out of the wife’s occupation. The following is a list of the monthly rentals in respect of some rental transactions relating to similar type of premises as set out by the wife:

1)	12/2008	$7,300
2)	5/2009	$6,900
3)	12/2010	$8,800
4)	3/2012	$10,000

12. This Court is of the view that the wife shall pay half of the average market rental price in respect of similar type of premises as stated above. This Court agrees that within the period when the wife was still residing in the said premises, the husband shall be entitled to half of the rights in respect of the said premises. Given the average monthly rental is $8,250, the wife should pay half of the amount, i.e. $195,430.

Period	No of days	Total amount
5/6/2008-31/12/2008	210	56,803.279
1/1/2009-31/12/2009	365	99,000.000
1/1/2010-31/12/2010	365	99,000.000
1/1/2011-31/12/2011	365	99,000.000
1/1/2012-16/5/2012	137	37,057.377
		390,860.656
		===========
	Half:	$195,430

13. The difference between the aforesaid interest sum and the rental amount is $358,265 ($553,695 - $195,430).

Conclusion

14. This Court sets aside the order made by Deputy District Judge Chan and directs that there be no order as to costs. This Court further orders that that the sum of $327,224.25 kept in court is to be released to the wife in payment of the $358,265 which she is entitled to. In view of the fact that the litigation between both parties had dragged on for quite some years already, and that notwithstanding the monies kept in court is insufficient to defray the wife’s entitlement to interest, the amount derived from her own calculation is also less than the interest this Court has granted to her, this Court would therefore like to advise the wife to discontinue any further litigation to enable both parties to move on and begin a new chapter in life.