CHEUNG v. ZHANG AND ANOTHER

FCMC 1289 / 2016

[2025] HKFC 76

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 1289 OF 2016

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DECISION
( To set aside a disposition made after ancillary relief trial )

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Introduction

1.  The petitioner of this case is the husband. The 1^st respondent is the wife. The 2^nd respondent is the father of the husband (“Grandfather”).

2.  By her summons filed on 15 January 2024, the wife seeks to set aside a Deed of Gift executed by the husband in favour of the Grandfather in respect of a cubicle flat in Tsuen Wan. The husband has been the sole registered owner of the Tsuen Wan property since 1998.

3.  The wife’s summons was served on the husband and the Grandfather pursuant to an order made by a Master of the Family Court on 8 October 2024. The order provides that service should be by ordinary post to the address in Shek Lei Estate (being the public housing unit occupied by the Grandfather and his family), by leaving at the same address in Shek Lei Estate, and by way of WhatsApp messages.

4.  An affirmation of service dated 4 March 2025 was filed by the wife confirming that service of the summons was duly done.

5.  The wife’s summons was transferred to my court for pre-trial review hearing (PTR) fixed for 10 March 2025.

6.  The husband and the Grandfather did not appear before me in the PTR. For the matters set out aforesaid, I was satisfied that they were duly notified of the summons. They chose not to appear before this court, or in any previous hearings. They also chose not to file any affirmation(s) in opposition to the wife’s summons.[1]

7.  In view of the history and all the circumstances of this case, and for the purpose of saving costs and time, I exercised my case management discretion and took the view that the summons should be disposed of by way of paper disposal without hearing oral evidence. In all fairness to the husband and the Grandfather, I directed that they might file and serve their written submission within 14 days upon service of my court order. I ordered that my court order made in the PTR shall be served by ordinary post to the last known address of the husband and the Grandfather, namely the Shek Lei Estate, as well as by leaving at the said last known address.

8.  An affirmation of service in respect of my court order was filed by the wife[2], showing that it was duly served on the husband and the Grandfather at the Shek Lei Estate by ordinary post on 14 March 2025 and by leaving at the same address on 20 March 2025. They chose not to file any written submission by 3 April 2025.

9.  The following is my decision and reasoning in respect of the wife’s summons.

The AR judgment

10.  This case has a very long history. The parties were married in 2012. Their only daughter was born in 2013. The divorce was commenced by the husband in 2016. By an Order made on 14 November 2018, the Family Court granted the daughter’s custody, care and control to the wife.

11.  The ancillary relief matters were handled by different judges at different stages. When I first seized of this case, it was already the final trial. The husband was unrepresented. The wife was represented by Chui & Co on the assignment of the Director of Legal Aid.

12.  On 10 March 2021, I handed down my judgment on the ancillary relief matters written in Chinese (“AR Judgment”). In the AR Judgment, I have set the background and procedural history of this case including the orders for maintenance pending suit and interim maintenance, and their variations at [1] to [17]. I shall not repeat the same in this decision.

13.  The main disputes in the ancillary relief trial were (i) whether and if so how much child maintenance the husband should pay the wife for the daughter, and (ii) whether and if so how the Tsuen Wan property should be shared. The parties’ respective case and open offer can be seen at [18] to [29] of the AR Judgment.

14.  Pausing here, I wish to mention at this stage that on Day 1 of the trial, the Grandfather had come before me in respect of the allegation of the beneficial interest of the Tsuen Wan property. More will be said about this topic later in this decision.

15.  In the AR Judgment at [173], I order, among other things, that:

(a)  The husband shall pay the wife for the benefit of the daughter a sum of $6,575 per month from 1 July 2021 until 31 August 2025, and thereafter in the sum of $4,930 per month until the daughter reaches 18 or completes full time education, whichever is the later;

(b)  The husband shall sell the Tsuen Wan property within 3 months from the grant of decree absolute;

(c)  The net sale proceeds shall be applied or handled in the following sequence:

(i)  the husband shall pay a sum of $660,000 into court, which shall be paid out monthly to the wife in the amount of the monthly child maintenance as ordered by the court as aforesaid;

(ii)  a lump sum of $230,000 shall be paid to the wife;

(iii)  the remaining balance shall be paid to the husband.

16.  Importantly, there is no appeal in respect of the AR Judgment.

After the AR Judgment

17.  Since the handing down of the AR Judgment, the husband has not engaged any further in this case.

18.  He did not apply for decree absolute. The court granted an order for the wife to apply for the same by an order made on 29 July 2021. Decree absolute was finally pronounced on 18 August 2021.

19.  He did not comply with the AR Judgment ordering him to sell the Tsuen Wan property, either. Hence, the wife took out an application on 13 January 2023 to obtain vacant possession of the Tsuen Wan property and to have the conduct of sale of it. On 27 February 2023, I made an order that the husband shall deliver vacant possession of the Tsuen Wan property to the wife and that the wife shall have the conduct of sale of the Tsuen Wan property (“Vacant Possession Order”).

20.  Affirmations of service of the aforesaid summons and the Vacant Possession Order were duly filed by the wife’s solicitors.

21.  Pausing here, it must be true that the husband, as well as the Grandfather, were aware of the wife’s summons filed on 13 January 2023 and the Vacant Possession Order, because they had written separately to the court by letters dated 28 January 2023 (from the husband) and 20 March 2023 (from the Grandfather). The general sentiment expressed therein was about their complaint of how evil the wife and her legal team have been in trying to “snatch” the Tsuen Wan property from the Grandfather. Such letters obviously cannot be regarded as evidence.

22.  Shortly after these letters and without the knowledge of the wife, the husband executed a Deed of Gift dated 28 April 2023, gifting his interest in the Tsuen Wan property to the Grandfather. The Deed of Gift was registered at the land registry on 15 June 2023.

23.  On the other hand, the wife proceeded with the execution of a Writ of Possession dated 6 July 2023 and finally obtained vacant possession of the Tsuen Wan property on 20 August 2023, after which she found out, upon an updated land search, about the said Deed of Gift.

24.  Therefore, she took out this summons to join the Grandfather into the proceedings and to set aside the Deed of Gift.

The law

25.  The current application is premised on section 17 of the Matrimonial Proceedings and Property Ordinance (“MPPO”) as follows:

“(1) Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as ‘financial provision’) are brought by a person (hereafter in this section referred to as ‘the applicant’) against any other person (hereafter in this section referred to as ‘the other party’), the court may, on an application by the applicant –

(a) if it is satisfied that the other party is, with the intention of defeating the claim for financial provision, about to make any disposition or transfer out of the jurisdiction or otherwise deal with any property, make such order as it thinks fit for restraining the other party from so doing or otherwise for protecting the claim;

(b) if it is satisfied that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the other (including directions requiring the making of any payment or the disposal of any property);

(c) if it is satisfied, in a case where an order under the relevant provisions of this Ordinance has been obtained by the applicant against the other party, that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies, make such an order and give such directions as are mentioned in paragraph (b);” (the underlined is my emphasis)

26.  Of direct relevancy to this application is section 17(1)(c) set out above, which caters for the scenario where a judgment or an order on ancillary relief is made.

27.  Further, section 17(2) of the MPPO provides that section 17(1)(b) and (c) apply respectively to any disposition made by the other party, except being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such intention as aforesaid on the part of the other party.

28.  “Disposition” is defined at section 17(4) of the MPPO to include “any conveyance, assurance or gift of property of any description, whether made by an instrument or otherwise”, but does not include any provision contained in a will or codicil.

29.  There is a presumption under section 17(3) of the MPPO as follows:

“(3) Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application or to a disposition or other dealing with property which is about to take place and the court is satisfied –

(a) in a case falling within subsection (1)(a) or (b), that the disposition or other dealing would (apart from this section) have the consequence, or

(b) in a case falling within subsection (1)(c), that the disposition has had the consequence,

of defeating the applicant’s claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property.” (the underlined is my emphasis)

30.  The effect of an order to set aside a disposition is to void the transaction ab initio (See: AC v DC (financial remedy: effect of s37 avoidance order) [2012] EWHC 2032 (Fam)).

Allegation of beneficial interest in the trial

31.  As said, I came to have seizure of this case on Day 1 of the final ancillary relief trial. Before evidence was heard, the husband told that the Tsuen Wan property did not belong to him, because he was only 18 years old when it was purchased, he simply did not have the financial means to buy it. He said that the purchase price was paid by the Grandfather, and thus the Grandfather was the actual and beneficial owner of the property.

32.  The wife did not seem to dispute that the Grandfather paid for the purchase of the Tsuen Wan property, and was of the view that the Grandfather gifted it to the husband who was thus the legal and beneficial owner.

33.  I thus briefly adjourned the trial, so that the husband could bring the Grandfather to the court, in order to deal with the allegation/dispute of the beneficial ownership of the Tsuen Wan property.

34.  The Grandfather duly came before me at about 3.15 pm on Day 1 of the trial. I explained to the husband and the Grandfather that if they alleged that the Tsuen Wan property was not beneficially owned by the husband, but by the Grandfather, the Grandfather should be joined into these proceedings and pleadings would need to be prepared. This was in accordance with the principles propounded in TL v ML & Others (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263, which was adopted by the Court of Appeal in Hong Kong in LWYA v KYW & others (unrep) CACV 151/2013, judgment dated 4 December 2014, and in Leung Wing Yi Asther v Kwok Yu Wah & others (2015) 18 HKCFAR 605. Further, they bore the burden of proof. It was very likely that the trial would have to be adjourned for pleadings and affirmations to be prepared.

35.  The husband asked for a short adjournment for 30 minutes to discuss with the Grandfather.

36.  At around 4.20 pm, the case was called again. The husband confirmed that he did not wish to join the Grandfather into these proceedings and asked for time to negotiate with the wife to see if a global settlement could be reached. The Grandfather, on the other hand, queried why he should be joined into the proceedings, because according to him, it was a hard fact that he had paid for all the purchase price of the Tsuen Wan property and thus he would arrange to make a will to leave it to his offsprings.

37.  On their request, I adjourned the case for their negotiation for settlement.

38.  At around 5.30 pm, the parties returned before me and told that no settlement could be reached. I explained to the Grandfather, once again, that if he did not join into these proceedings, he would have no locus to fight for his alleged beneficial interest in the Tsuen Wan property. In response, the Grandfather indicated that he understood the court’s explanation but chose not to be joined into the ancillary relief trial.

39.  As to the husband, he confirmed that he would not dispute that he was the legal and beneficial owner of all the interest in the Tsuen Wan property.

40.  Since the husband and the Grandfather chose not to dispute/argue that the beneficial ownership of the Tsuen Wan property was different from the legal ownership, the Grandfather was allowed to leave the court. And the ancillary relief trial proceeded on the common basis that the husband was the legal and beneficial owner of the Tsuen Wan property.

41.  In my view, the above events that took place on Day 1 of the trial must form the backdrop to the analysis of this application.

Was a disposition made?

42.  There is no doubt in my mind that a “disposition” by way of a Deed of Gift has been made by the husband in respect of the Tsuen Wan property in favour of the Grandfather.

43.  The Deed of Gift falls squarely within the meaning of a “disposition” under section 17(4) of the MPPO. And since the Deed of Gift states that the Tsuen Wan property is assigned by the husband to the Grandfather without any valuable consideration, it is also caught by section 17(2) of the MPPO.

Intention of defeating the ancillary relief claim

44.  In my view, the close proximity in time of the Vacant Possession Order, the letters from the husband and the Grandfather mentioned at [21] above and the date of the Deed of Gift is very telling.

45.  Upon due consideration of the backdrop mentioned aforesaid, the AR Judgment and the chronology of events that took place thereafter, I have no difficulty in coming to a conclusion that the husband assigned his interest in the Tsuen Wan property to the Grandfather by way of gift with the intention of defeating the AR Judgment and the orders given therein.

Conclusion

46.  For all the matters set out above, I conclude that the Deed of Gift should be set aside. I thus make the following order:

(1)  The Deed of Gift made on 28 April 2023 in respect of the Tsuen Wan property (full address be inserted in the draft order) and registered at the land registry on 15 June 2023 (memorial number to be inserted in the draft order) shall be set aside, and be vacated from the registration at the land registry;

(2)  The husband and the Grandfather should bear the costs of this application, including costs reserved, to be taxed if not agreed;

(3)  The wife’s own costs shall be taxed in accordance with the Legal Aid Regulations.