NLT v. LYKJ

FCMC 8680/2012

[2020] HKFC 97

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO 8680 OF 2012

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R U L I N G

(Release of funds)

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Introduction

1.  This is the Petitioner’s summons dated the 19 December 2019 as follows:

A.  Pursuant to the Order made by H.H. Judge Melloy on 8 June 2018, in which the Respondent undertakes to the Petitioner and the Court that half of the proceeds of sale of the RG Property, i.e. a Sum of HK$3,064,000 be paid to Lily Fenn & Partners, Solicitors for the Respondent as stakehold money (‘the Stakehold Money’) and such sum shall not be released to any party until further order by the Court

1.   Leave be. granted for the Petitioner to make an interim payment out of the Stakehold Money to meet the monthly maintenance payable to the two children of the family and the Petitioner in the sum of HK$59,000 per month commencing from 1^st March 2020 until further order by the Court;

2.   The aforesaid payment out shall not prejudice to the final adjustment at the trial hearing of the ancillary relief; and

3.   Costs of this application be to the Petitioner and the Petitioner’s own costs be taxed in accordance with Legal Aid Regulations.

2.  The application was originally set down for hearing on the 25 March 2020 at 2:30 pm. Unfortunately, however, this hearing was caught by the General Adjournment of Court Proceedings [the GAP] arising out of the global pandemic caused by COVI-19 and as a result it was determined that this matter should be decided by way of a paper disposal.    

Background

3.  This case has a long and very protracted history covering a period of over 7 years and includes a trial on a defended suit, several hearings with respect to interim financial support, a trial with respect to the final arrangements for the children, which followed several Children Dispute Resolution hearings and other miscellaneous hearings including applications for leave to appeal. As things stand the decree nisi was granted on the 25 October 2013 and the parties also have an order for joint custody of the two children of the family, with care and control to the Petitioner mother and reasonable access to the Respondent father as set out in the judgment dated the 3 November 2016. Of late the focus has shifted to final ancillary relief and to that end reference should also be made to this court’s most recent Ruling dated the 23 March 2020 on joinder and transfer up. In summary the court joined three small companies to this litigation and dismissed the husband’s application to transfer the matter up to the High Court. There are several issues to now be determined including a preliminary issues matter and it is anticipated that it could be some time before there is a judgment on final ancillary relief. It is therefore imperative that the mother and children are properly supported from a financial perspective in the interim.

Discussion

4.  I should say at the outset that I intend to make an order in terms of the wife’s summons as set out above. The husband’s main argument in opposition is that the Stake hold money is question relates to a property that was originally pre-marital and as such it should be excluded from any potential “matrimonial pot” and in particular it should not be relied upon now to support the wife and children in the short term. The husband makes no other proposals for payment of the ordered amount of HK$59,000 per month or for supporting the wife and children otherwise. Further he says that he has difficulty making ends meet and that he needs access to these funds in order to pay his legal bills.

5.  In so far as the law is concerned, reference has been made by the solicitors for the husband to a judgment from this court where the issue of pre-marital assets was discussed in the context of final ancillary relief. The case in question is WT v YLC, [2018] HKFC 38. In that case I referred to the law and stated as follows:       

In addition, both sides have referred me to the relevant sections of LKW v DD, which sets out the appropriate approach to be taken when determining whether or not to depart from the yard stick of equality. Mr Justice Ribeiro PJ discusses the various alternatives when dealing with part 4 of his protocol. Reference should be made to paragraphs 86 – 98 of the judgment for a full discussion of the topic. In so far as pre-marital assets are concerned, paragraphs 90 – 93 are particularly pertinent.

E.5.a.i  Assets independently acquired

90.  In White v White, Lord Nicholls gave as examples of assets within this class, “property acquired during the marriage by one spouse by gift or succession or as a beneficiary under a trust” and “property acquired before the marriage”.[1] 

91.  He made it clear, however, that there is no hard and fast rule as to whether such property should be excluded. It is very much a matter within the judge’s discretion to be exercised taking account of all the circumstances of the particular case:

“... when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered.”[2]

92.  However, an important factor which comes into play is the duration of the marriage, the factor mentioned in section 7(1)(d).  As Baroness Hale[3] pointed out, “the importance of the source of the assets will diminish over time”.  Her Ladyship explained:

“As the family's personal and financial interdependence grows, it becomes harder and harder to disentangle what came from where.”[4]

93.  So where it is a short marriage, the court may well be inclined to regard as excludable non-matrimonial property, assets acquired by one of the parties before the marriage or acquired in the course of the marriage from some wholly external source.  But after a long marriage, those factors are likely to have much less weight.  Thus, in White v White itself, Mr White had benefited from an initial cash contribution made by his father but, as Lord Nicholls commented, that could not carry much weight 33 years later.[5]

6.  In this instance the parties married on the 16 May 2004 and initially separated in May 2009. They then resided under the same roof from May 2011, but they did not reconcile. The following year, in June 2012, the Petitioner wife issued the petition for divorce and the decree nisi was eventually pronounced in October 2013. It is then in these circumstances that the court will eventually need to consider whether or not the RG property can properly be regarded as a pre-marital asset. Even then it is with respect, very clear from the paragraphs above that although a court may justify a departure from an equal division of property, in a prima facie “sharing” case, because a property was infact pre-marital, there are no hard and fast rules and whether this is an appropriate course of action will very much depend on the circumstances of each individual case. In addition, this approach is less likely to be taken where there is simply not enough money to go around and the court is approaching the division of assets on the basis of need. Further even if a property is regarded as pre-marital it does not necessarily follow that it will be excluded from the “matrimonial pot” as of right.

7.  In this instance, the wife has been receiving maintenance from funds originally paid into court, being the net proceeds of sale from a property where there could be no argument that the monies in question were “matrimonial”. I am told that these monies were all used up by the end of March 2020. The wife and children must be supported pending the conclusion of these proceedings. Given the lack of any other alternative therefore an order shall be made in terms of paragraphs 1 and 2 of the summons referred to in paragraph 1 above.  

Costs

8.  Again I can see no reason why costs should not follow the event in the normal way. Consequently, there shall be an order nisi to be made absolute in 28 days’ time, that the Respondent husband shall pay the Petitioner wife the costs of and arising out of her summons referred to above on a party and party basis to be taxed if not agreed.     

Further directions

9.  As indicated in the Ruling dated the 23 March 2020, I shall further order and direct that

i)  The First Appointment hearing and callover in relation to the joinder application shall be adjourned to the 27 August 2020 at 9:30 am.

ii)  Both parties do personally attend that hearing. Further a representative from ZT Limited, P Asset Management Limited and JG Limited shall also be invited to attend that hearing.