CWYW v. CPLA

FCMC 13307 of 2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13307 OF 2012

----------------------------

----------------------------

-------------------------

R U L I N G
(Preliminary issues)

-------------------------

Introduction

1.  This is a preliminary issues hearing to determine whether or not the sum of HK$1,770,800 given to the parties by the Respondent husband’s parents was a gift or a loan. There is no dispute about the sum of money involved or the fact that the money was given in order to assist the parties in the purchase of a small property which was to become their matrimonial home. The only issue is whether or not in the circumstances it could be inferred that this was a gift or a loan.

Background

2.  The parties married in January 2010 after a relationship of some four years. They have one child – a little girl who was born in  July 2011 and is now 2 years of age. They separated for the first time in October 2011 and then finally in February 2012 when the Petitioner wife moved out with the child. This was then a short marriage of approximately 2 years duration that produced one child.

3.  It is not disputed that the parties purchased a property in Tseung Kwan O prior to the marriage in or about June 2009. The property was purchased for HK$2,920,000 and the Respondent’s mother paid for the initial deposit (HK$90,000), a second deposit (HK$202,000), a further HK$1,178,800 being the balance of the purchase price after the parties had arranged to take out a mortgage and an additional HK$300,000 for decoration costs, new furniture etc. The Respondent’s mother was able to evidence all of this save for the whole of the HK$300,000 referred to above. The wife however does not dispute that this sum is also included.

Discussion 

4.  Having read all of the pleadings and having heard the parties in the witness box it seems that the main difficulty is that nothing was stated explicitly to the wife about this money. At no point did the husband or indeed his other family members tell her that this was a loan that might need to be repaid at some point in the future. Neither, however was she specifically told that it was a gift. There was simply no discussion about it at all. It should also be noted that the wife did not raise any query about it herself. Rather the wife simply assumed that the money was a gift because she thought that the parents were rather affluent and nothing had been said to her about it otherwise.

5.  The mother for her part said that this had been discussed with the Respondent i.e. her son in conversations that took place between herself her husband and the Respondent over Chinese New Year in February 2009. She said that it was always understood that this was a loan but that as it was between family members that the couple could take time to repay. It was on this basis that the money was given. She also said that the amount of the mortgage was determined after discussion on the basis of what the couple were likely to be able to afford to pay.

6.  The husband confirmed that there had been no specific discussion with the wife about this and that he had not stated clearly to her that this money was a loan because he was “embarrassed”.

7.  Given the above I do not doubt the credibility of any of the parties. I accept that there was confusion surrounding these funds and that each made certain assumptions based on their own understanding of the situation.

8.  What then is the court to do?

9.  It is not uncommon in the Family Court for there to be issues around the existence or otherwise of “soft loans” between family members. It has been suggested that a loan cannot be implied and that given that there is no paper work as such and that the wife was not aware of it that I must draw an inference that no loan existed. With respect I do not agree. Each case must be decided on its own merits and on its own facts. In this case there is no doubt that the mother believed that she and her husband were lending the Respondent and his new wife money in order that they might start their married life in their own apartment. There was never any suggestion by the parents that this was an outright gift to the couple. I do not accept the argument that they are so affluent that they could forgive such a large sum easily. There is also very little evidence to support that point. The mother says that she would describe her family as middle classed. They run a pharmacy and own or have owned some real estate. Even on the wife’s own evidence it is clear that the mother was very involved in the purchase of this property. She viewed potential properties with the couple and her decorator did the renovation work on the property. I agree that this is more indicative of the money being lent as opposed to being gifted.

10.  Consequently having taken all of these factors into account I find that this sum of money i.e. HK$1,770,800 was a loan as opposed to a gift.

11.  In so far as costs are concerned given the circumstances here and the fact that understandable confusion surrounded this issue which might have been avoided had the parties simply been more straightforward about it in the first place I will make an order nisi that there be no order as to costs to be made absolute in 14 days time.