NGAI WONG YUN PING v. NGAI YUN LUNG

IN THE COURT OF APPEAL

1996, No. 50
(Civil)

- Headnote -

Property transfer order made under s6(a) Matrimonial Proceedings and Property Ordinance, Cap 192 - Flat purchased under the Home Ownership Scheme - Court made an order that the flat be transferred into the joint names of husband and wife, upon a trust for sale, to be sold when the youngest child of the family reached 18 years of age.

Held (Court of Appeal): There were two defects in the order:

(1) Despite the Court of Appeal's suggestion in Cheung Wong Kim-ching, Esther v. Cheung Chai-kong [1991]1 HKLR 698 at 704 that legislation similar to section 24A of the English Matrimonial Causes Act 1973 be enacted to fill the legislative gap in the Matrimonial Proceedings and Property Ordinance, this in fact has not been done and the District Judge had no power to make the order for sale.

(2) At the time of the order the flat was under the statutory constraints on alienation in the schedule to the Housing Ordinance, Cap 283 and the court should not have made the transfer of property order without the consent of the Housing Authority.

IN THE COURT OF APPEAL

1996, No. 50
(Civil)

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J U D G M E N T

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Litton, V.-P.:

Introduction

1. This case concerns a property transfer order made under s6(a) of the Matrimonial Proceedings and Property Ordinance, Cap 192. The appellant is the wife, the defendant the former husband. The decree nisi of divorce, made on the wife's petition, was pronounced in March 1991. On 15 November 1991 HH Judge Gould, pursuant to the wife's application for ancillary relief, made the following order:

" IT IS ORDERED that the matrimonial home known as Flat 1, 29th Floor, Block A, Wang Fuk Court, Tai Po, New Territories is to be transferred from the Respondent to the joint names of the Respondent and the Petitioner within one month from date of this order at the cost in all things of the Respondent. The Respondent and the Petitioner shall hold the matrimonial home as trustees upon trust for sale until the younger child of the family reaches 18 years of age (the sale date). Until the sale date Petitioner and the two children of the family shall enjoy occupation of the matrimonial home free of rental or other charges except for rates, utilities and management fees which shall be paid by the Petitioner.

IT IS FURTHER ORDERED that until the sale date or until the existing mortgage is redeemed whichever is the earlier, the Respondent shall pay and be liable for the instalments due under that mortgage.

IT IS FURTHER ORDERED that upon the sale date, the Petitioner and the Respondent shall hold the matrimonial home for themselves absolutely in the proportion 40% for the Petitioner and 60% to the Respondent.

IT IS FURTHER ORDERED that costs of this application to be paid by the Respondent and to be taxed unless otherwise agreed.

IT IS FURTHER ORDERED that the occupancy rights given to the Petitioner and the children of the family shall be to the exclusion of the Respondent; and to that end, the Respondent is ordered to vacate the matrimonial home within one month of today and penal notice to be endorsed on this order but personal service of this order on the Respondent be dispensed with."

2. The flat, as stated in the Judge's order, was the former matrimonial home. The younger child referred to in the order is Ngai Hoi-yi, now aged 151/2 years. She will be 18 in February 1999 when, as envisaged in the order, the flat will be sold and the proceeds distributed, with 40% going to the wife and 60% to the husband.

3. In fact, the husband did nothing to put the flat into the parties' joint names as ordered and it appears that since September 1992 he has not made the mortgage repayments either. These have been discharged by the wife. As things stand today the mortgage has been fully discharged.

4. Moreover, the wife's statement on affidavit that since October 1992 the husband has not paid maintenance for the two children remains uncontradicted: despite deputy judge de Souza's order of 9 July 1991 that the husband should pay $1,500 per month for each of the two girls.

The appeal

5. The fundamental point taken on this appeal by counsel for the wife is that Judge Gould had no jurisdiction to order the sale of the matrimonial home. The point seems well-taken. This is clear from a plain reading of s6(a) of the Matrimonial Proceedings and Property Ordinance. Whether the court ought to have such a power is not a point we have to consider. A similar lacuna existed in the English statutory scheme until it was filled by s24A of the Matrimonial Causes Act 1973. Despite this court's suggestion in Cheung Wong Kim-ching, Esther v. Cheung Chai-kong [1991]1 HKLR 698 at 704 that similar legislation should be enacted in Hong Kong to fill the gap, this has not been done. So the position was, in November 1991 when Judge Gould made the order, and remains today, that the order for sale has no juridical foundation and must necessarily be set aside.

6. The matter does not end there. The order for sale is not free-standing. It cannot be severed, leaving the rest of Judge Gould's order intact. It was an integral part of the arrangement he made.

Fetter under the Home Ownership Scheme

7. There was in fact another fundamental defect in Judge Gould's order which only emerged in the course of the hearing before us in May this year. The flat was bought by the husband in April 1983 under the Government Home Ownership Scheme. In November 1991, when the husband was ordered to transfer the flat into the joint names of the parties, the fetter on alienation imposed under the schedule to the Housing Ordinance Cap 283 still applied. Accordingly the judge could not have made the property transfer order under s6 of the Matrimonial Proceedings and Property Ordinance without the consent of the Housing Authority. The Housing Authority was never consulted before the order was made.

What should be done now?

8. It follows from what has been said earlier that the entire order of 15 November 1991 is flawed and must be set aside. The question then arises: What is the proper order now to be made?

9. Unfortunately, the husband has neither been full nor frank in his disclosures of means. The material before the court suggests that the husband is in control of assets more extensive than he is prepared to admit. The basis upon which Judge Gould ordered, in effect, that the husband should have 60% equity in the flat (and 60% of the proceeds of sale) is obscure. It would be fruitless to go back to the situation of the parties some five years ago, as things have moved on since then. The fact is that for the past four years or so the wife has had the entire burden of the mortgage repayments for the flat, the rates, management fees and other outgoing: and the financial burden of raising the two daughters. In principle, the right order to make now must be that the entire beneficial and legal interest in the flat be transferred to the wife. There is no impediment now, as far as the Housing Authority is concerned, as more than 10 years have elapsed since the flat was first purchased. This has been ascertained in correspondence with the Housing Authority.

10. There is, however, one complication: back in 1987, some time before the presentation of the petition leading to the divorce, the husband lost an action in the District Court to a person called Lai Lai-lin. The judgment debt for $60,000 is secured by a charging order on the flat.

11. Counsel for the wife originally sought an order that the husband should convey the flat to the wife free from encumbrances.

12. But the wife's solicitors have had difficulty in ascertaining the status of this debt. We do not even know whether Lai Lai-lin is still alive. The practicality of the husband being able to discharge the debt and free the flat from the encumbrance has therefore not been explored.

13. Before us this morning Miss Remedios accepts that the phrase in her draft "free from encumbrances" should be deleted.

14. In my judgment Miss Remedios is correct in her submissions and I would be prepared to make an order in the terms of her draft suitably amended as follows:

1. That the Order of HH Judge Gould dated 15th November 1991 be set aside.

2. That the Respondent do transfer and assign to the Appellant all his right, title and interest, legal and beneficial, in the property known as Flat 1, 29th Floor, Block A, Wang Fuk Court, No. 3821, Tai Po Road, Yuen Chau Tsai, Tai Po, New Territories, Hong Kong. (All that 14/25,794th parts or shares of and in The Remaining Portion of Tai Po Town Lot No. 27).

3. That within 21 days from the date of the Order herein, the Respondent do file in Court an Affidavit stating what (if any) deeds and other documents relating to the title of the said property are in his possession or power and whether any deeds or other documents relating to the said title are known to him to be in the possession or power of any person or persons and if so stating the name and address of every such person.

4. That the Respondent do within 21 days from the date of the Order herein, lodge at Court all (if any) such deeds and documents relating to the said property as are stated by him to be in his own possession or power.

5. That the Respondent do within 21 days from the Order herein, lodge at the Court authorisation in writing, enabling the Appellant to obtain the deeds and documents from the person or persons specified under clause 3 hereinabove.

6. That the deeds, documents and authorisations deposited in Court pursuant to clauses 4 and 5 hereinabove be released and handed over to the Appellant or as she shall direct.

7. That in the event that the Respondent refuses, neglects or fails to transfer the property within 14 days after being called upon to do so, the Registrar of the Supreme Court be directed pursuant to Section 26 of the Matrimonial Proceedings and Property Ordinance, Cap 192 to prepare and execute a proper assignment giving effect to the transfer of the said property.

8. That the costs and disbursements of and incidental to the said transfer be paid by the Respondent.

9. That the Respondent pay to the Appellant the costs of this appeal, to be taxed unless otherwise agreed.

10. That the Appellant's own costs be taxed in accordance with the Legal Aid Regulations.

11. For the avoidance of doubt, in the event of the judgment creditor in District Court Civil Jurisdiction Action No. 344/87 seeking to enforce her judgment debt against the property, the appellant be at liberty to apply for a lump sum or other relief.

15. IT IS DECLARED THAT the Court is satisfied that the arrangements for the children of the family to whom Section 18 of the Matrimonial Proceedings and Property Ordinance, Cap 192 applies have been made and are satisfactory.

16. And the order should be endorsed with the PENAL NOTICE to this effect:

PENAL NOTICE

17. TAKE NOTICE that unless you obey the directions contained in this Order you will be guilty of contempt of Court and will be liable to be committed to prison.

Godfrey JA:

18. I agree that the Judge's order must be set aside for the reasons given by my Lord the Vice-President and I do not think there is anything I can usefully add.

Ching JA:

19. I too agree with the reasons and the order proposed by the learned Vice-President and I have nothing to add.