KHL v. ZWP

FCMC10908/2012

[2020] HKFC 93

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 10908 OF 2012

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REASONS FOR DECISION

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1.  The petitioner (“W”) commenced divorce proceedings in 2012 and the respondent (“H”) registered the Notice of Application for Ancillary Relief (“Form A”) in the Land Registry against the property owned by W (“Braemar Hill Property”) in Oct 2012.

2.  Subsequently, the parties fully and finally settled with their ancillary relief claims by signing a Consent Summons which was endorsed in the form of the Consent Order dated 21 February 2019 (“Consent Order”). H also registered the Consent Order in the Land Registry against the Braemar Hill Property in March 2019.

3.  The relevant parts of the Consent Order are as follows.

4.  Recital I of the Consent Order sets out W’s undertakings to pay H a sum of $21m briefly in the following manner:

i. $1.5m by 21 August 2019;

ii. $19.5m by 21 February 2020;

iii. If W fails to complete the sale of the Braemar Hill Property by 21 February 2020, she will pay the $19.5m by utilizing her other personal properties and assets.

5.  Recital J(i) sets out H’s undertaking that upon receipt of the full amount of $21m, H will procure his solicitors to deliver a signed Consent Summons to CRB (W’s solicitors in these proceedings) to vacate the registration of Form A on the same day as receipt of payment to the effect that Form A be discharged.

6.  Para 1 of the Consent Order expressly provided that the caveat of Form A lodged against the Braemar Hill Property shall be vacated from the Land Registry without the need for further order or direction upon H receiving the $21m in accordance with Recital I.

7.  Before me, there are 3 related summonses as follows:

i. W’s summons dated 21 February 2020 seeking extension of time of 8 months to pay $19.5m;

ii. H’s summons dated 10 March 2020 seeking an order that W to pay H forthwith $19.5 m[1] together with interest;

iii. W’s intended Summons dated 6 April 2020 seeking discharge of her undertaking in Recital J(i), variation of para 1 of the Consent Order by vacation of the registration of Form A and the Consent Order forthwith.

8.  On 23 March 2020, W entered into a formal sale and purchase agreement with a purchaser in respect of the Braemar Hill Property, a term of which requires the encumbrances in these proceedings registered in the Land Registry be vacated prior to completion. As the sale and purchase is scheduled for completion on 12 May 2020, I am satisfied that the parties’ applications are urgent and essential which shall be dealt with in the General Adjourned Period announced by the Judiciary (“GAP”).

9.  W said that due to social unrest, international trade war, outbreak of corona virus and the Braemar Hill Property being a haunted house, it took over a year to lock down a potential purchaser.  In my view, all these excuses are unacceptable since price fluctuation of the property market in HK is always very huge and the situations mentioned by W are not unforeseeable.  More importantly, W undertook in Recital I(i) and (iii) that $19.5m will be paid by the latest on 21 February 2020 and she will utilize her personal properties and assets if the sale of the Braemar Hill Property cannot be completed by 21 February 2020. Bearing in mind that the relevant Consent Summons was drafted by W’s solicitors, I consider that W should have been advised and already contemplated the possibility of utilizing her other assets in order to fulfil the obligation to pay the $19m by latest 21 February 2020 whether or not the Braemar Hill Property can be successfully sold before that date.

10.  Indeed, I consider that if W decided to accept the purchaser’s request for vacation of the registration of Form A and the Consent Order before completion on 12 May 2020 when signing the sale agreement, she should be prepared to utilize her other assets to pay the $21m to H first.  W is legally represented throughout.

11.  It is also the bare assertion of W that she has no other substantial assets than the Braemar Hill Property. She only chose to disclose one of her HSBC bank accounts in her affirmation but not all her accounts as shown in the Agreed Schedule of Assets used for the trial of the ancillary relief in January 2019, such as the properties in New York, Singapore and Citibank account. I thus find that she has failed to make full disclosure of all her assets for the purpose of her applications.

12.  Mr Chan for W submitted that in reliance of IDC v SSA [2018] HKFC 91, registration of Form A shall be vacated.  I consider that this case is distinguished and inapplicable as it concerns vacation of registration of an undecided variation summons whereas in the present case, para 1 of the Consent Order expressly states that upon H receiving the 21m, registration of Form A shall be vacated from the Land Registry without the need for further Order or direction. The condition for vacation is the full payment of $21m by W to H on 21 February 2020 which is not dependent on the sale of the Braemar Hill Property. But W fails to pay as agreed in Recital I.

13.  As para 1 of the Consent Order already governs as to when and how the Form A lodged against the Braemar Hill Property shall be vacated, I accept the submission of Ms Liu for H that I has no power to set it aside or vary it (See LCKLM nee CKLM v LWK FCMC 11425/2011, 26 February 2016, paras 56-57).  Even if I have such power, I am not satisfied that there is any material change of circumstances on the part of W justifying the variation.  Furthermore, she has failed to make full disclosure of all her assets.

14.  Mr Chan for W submitted that Form A was wrongly registered in the first place. I think that it is too late for W to argue in this way.  If this argument is correct, I doubt very much as to why the solicitors for W would draft the Consent Summons in this way and advised W to sign on it.  In my view, it is fair and reasonable for H to stick to the terms in the Consent Order and agree to vacate the registration of Form A only upon receipt of $21m but not before. 

15.  Mr Chan for W tried to propose some undertakings to be given by either W or CRB (W’s solicitors in these proceedings) to tender and/or stakehold the split cheques to be drawn by the purchaser’s solicitors upon receiving of the sale proceeds from Messer HY Leung (W’s conveyance solicitors) in order to obtain an order for vacation of Form A from the court.  I consider that there can be a lot of reasons as to why Messer HY Leung are unable to give the sale proceeds to W and/or CRB and that H will be subject to a high risk of losing the security by way of the registration of Form A as agreed in Recital I.  The saga was created by W’s own breaches. In the circumstances, I refuse W’s applications for discharge of her undertaking in Recital J(i) and for variation of para 1 of the Consent Order by vacation of the registration of Form A forthwith.

16.  However, in respect of the registration of the Consent Order, I disagree that H has to do so in order to obtain further security for the payment of $21m by W since Form A has been registered already. Nothing in the Consent Order says that the registration of the Consent Order will be vacated upon receipt of $21m by H. Hence, if H is uncooperative for some reasons, W may have to make application to the court before the completion even if $21m has been paid to H. I therefore allow W’s application for vacation of the registration of the Consent Order in the Land Registry.

17.  For W’s application for extension, I fail to see any good reason on her part for extension of 8 months to pay $19.5m to H as agreed under Recital I, especially when I have found that she fails to make full disclosure of all her assets. If Mr Chan for W considers that registration of Form A is wrong in law and should be vacated, W’s conveyance lawyers can insist that good title of the Braemar Hill Property has been proved and W does not need 8 months extension for payment of $19.5m to H, but may be just few days after completion.  Her application for extension must be dismissed.

18.  As to H’s application for an order for payment of $19.5m, para 4 of the Consent Order states “liberty to apply in respect of the implementation of the Recitals therein and this order”. I find that W is in clear breach of the Recital I and W is therefore ordered to pay the $19.5m to H forthwith.

19.  Regarding paras 2 and 3 of H’s Summons for interest, as there is no urgency to deal with them, they are adjourned to a date to be fixed for argument with 2 hours reserved and parties do comply with PD 5.4.

20.  To conclude, I make the order as follows:

i. By consent, upon the undertaking of the parties to file the original summonses together with the relevant affirmations, leave be granted to file W’s intended Summons dated 6 April 2020 during GAP and service be dispensed with;

ii. W’s Summons dated 21 February 2020 and paras 1 and 2 of W’s Summons dated 6 April 2020 be dismissed;

iii. Order in terms of para 3 of W’s summons dated 6 April 2020 and para 1 of H’s Summons as amended by deleting the words “there be a Judgment/an Order that”. 

21.  Having considered the outcome of these 3 applications, I make a costs order nisi that 2/3 of the costs of W’s 2 Summonses and para 1 of H’s Summons be to H with Certificate for Counsel, to be taxed if not agreed, which shall be absolute unless any of the parties apply to vary it within 14 days.  I also order costs of paras 2 and 3 of H’s Summons be reserved and to be determined at the adjourned hearing.