MKW v. LLY

FCMC 15680/2017

[2023] HKFC 14

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 15680 OF 2017

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D E C I S I O N

(Leave to Appeal)

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A.   Introduction

1.  On 1 August 2022, this Court handed down a judgment on final ancillary relief and application for variation of undertaking after a 2-day trial: see [2022] HKFC 151 (“Judgment”). I shall adopt the terms defined therein.

2.  For reasons set out in the Judgment, the following order was made on 1 August 2022 (“Order”), amongst others, that:

(1)  The Husband do pay the Wife the sum of HK$343,000, being arrears of interim maintenance from June 2021 to July 2022, within 56 days to a bank account to be nominated by the Wife; and

(2)  The Husband do pay the Wife HK$12,250/month for maintenance for each of the 2 Children, and thus a total of HK$24,500/ month, until each Child turns 18 or completes full time education, whichever is the later.

3.  No further order for ancillary relief between the parties has been made.

4.  On 5 August 2022, the Husband issued a summons (“Summons”)  seeking:

(1)  Leave to appeal the Order; and

(2)  Leave to file fresh evidence.  

5.  The Summons is supported by a letter to the Court from the Husband but not any affirmation/ affidavit (“Husband’s Letter”). I note that a request to “defer” payments under the Order until “a new reasonable order by [sic.] issued by the Court of Appeal” has been made in Husband’s Letter §34, somewhat akin to an application for stay of execution pending determination of the appeal. Although deficient in procedural propriety, I am prepared to deal with the request in my decision below.

6.  A draft Grounds of Appeal has been attached to the Summons, setting out 3 grounds as follows:

“(1)  New evidence of AIA Policy has been surrendered. It significantly changes the amount of my total asset (“Ground 1”);

(2)  Evidence of my partner’s income was so low to an amount below the personal taxable income proof provided by Inland Revenue Dep. [sic.] attached (“Ground 2”);

(3)  there are multiple contradictive [sic.] points in the court order by Judge Chow (“Ground 3”).”

7.  The Summons was met with the Wife’s statement in opposition dated 19 August 2022 (“Wife’s Statement”). Essentially, she opposes leave being granted to appeal the Order, or for the Husband to adduce any fresh evidence for such purpose.

8.  Both parties acted in person for the trial. Likewise, they were not legally represented for this application.

B.   Legal Principles

9.  Section 63(A)(2) of the District Court Ordinance (Cap. 336) provides that leave to appeal shall not be granted unless the court is satisfied that (a)  the appeal has a reasonable prospect of success, or (b)  there is some other reason in the interests of justice that the appeal should be heard.

10.  It is trite that primary findings of fact/evaluations of facts based on credibility, inferences and/or exercise of discretion in ancillary relief matters would not be lightly disturbed on appeal unless they are “plainly wrong” or “falling outside of the parameters of reasonable disagreement” between different judges. See:

(1)  HK v BD, CACV 252/2009 & CACV 71/2010, 15 October 2010 at §14 per Hartmann JA (as he then was):

“14. When determining matters of ancillary relief, in all but the simplest cases, a judge in the Family Court will be required to weigh up a large number of different considerations, giving to them what weight is appropriate in order to come to a decision as to the equitable distribution of the family assets. In making his determination, the judge will of course do so in fealty to the guidelines set down in s. 7 of the Matrimonial Proceedings and Property Ordinance, Cap. 192. But these guidelines, by their diversity and lack of hierarchy, are inherently flexible and purposefully so, designed to ensure a fair outcome in cases of widely different circumstance. But it has been said that fairness has a broad horizon. In seeking an equitable distribution of a matrimonial estate, an exercise based on judicial discretion, different judges will invariably come to different conclusions, each being reasonable. That being the case, it is only when a conclusion is plainly wrong, falling outside of the parameters of reasonable disagreement, that an appellate court will be entitled to interfere.” (emphasis supplied)

(2)  ZJW v SY(Jurisdiction; Substantial Connection) [2017] HKFLR 612, where Poon JA (as he then was)  identified the appellate Court’s approach in a challenge of a first instance judge’s findings of primary fact (§§28-32)  and that of findings based on evaluation of facts which is akin to the exercise of a discretion (§33). Notably, it is said that the same approach applies to a challenge of inferences drawn from primary facts as a challenge of primary facts themselves (§34), ie. the “plainly wrong” test.   

C.   Leave to Adduce Fresh Evidence (Grounds 1 & 2)

11.  The Husband sought to adduce the following new pieces of evidence, which were attached to the Husband’s Letter:

(1)  Ground 1 - Evidence that the AIA Policy (considered at Judgment §§61 & 64)  has been surrendered:

(a)  A payment advice for policy surrender from AIA dated 11 December 2019 stating that the net amount payable is US$38,019.34, and enclosing a cheque to the Husband of the same date in the sum of HK$297,740.86 (“2019 Surrender Advice and Cheque”);

(b)  Policy detail dated 4 August 2022 describing the status of the AIA Policy as “surrendered” (“Policy Details”).

(2)  Ground 2 – a letter from the Inland Revenue Department (“IRD”)  dated 5 August 2022 addressed to the Husband’s Partner and in reply to her letter of 5 August 2022, stating that the IRD has not issued any tax return form or assessment for salary/ profit tax to the Partner for the year of 2021-22, and that if her income did not exceed the net chargeable income, she may not have received such form/ assessment notice (“IRD Letter”).

12.  It is trite that an applicant has to satisfy the Ladd v Marshall test when seeking to adduce fresh evidence for purposes of appeal. See Hong Kong Civil Procedure 2023 [59/10/8], which provides that:

“…the Ladd v Marshall conditions apply to all appeals, ie further evidence is admissible on an appeal only where such evidence:

(i)  could not have been obtained at the trial with reasonable diligence;

(ii)  would or might, if believed, have a very important effect on the mind of the tribunal; and

(iii)  is of a sort which inherently is not improbable.

The Court adopts a strict approach in applying Ladd v Marshall: When a litigant has obtained a judgment in a court of justice … he is by law entitled not to be deprived of that judgment without very solid grounds…” (emphasis supplied)

13.  Specifically regarding the first condition, see Hong Kong Civil Procedure 2023 [59/10/9]:

“It is not sufficient that reasonable diligence was exercised by the legal advisers; the condition will not be satisfied if the party himself failed to exercise reasonable diligence… evidence not called at the trial is necessarily regarded with caution. It may be prompted or coloured by a knowledge of what happened in the court below; and in any case it is the duty of the party “to bring forward his whole case at once and not to bring it forward piecemeal as he found out the objections in his way…”(emphasis supplied)

14.  In WSW v YKK[2009] HKFLR 37 (CA), Yuen JA made clear at §32 that the Ladd v Marshall conditions are applicable in appeal against ancillary relief orders. The application to adduce fresh evidence of certain banking documents and contracts was dismissed in that case because either (i)  the husband had those documents at the time of the hearing but failed to disclose them previously (contrary to the 1^st condition)  or (ii)  the husband failed to provide credible and adequate particulars as to the source of certain documents (contrary to the 3^rd condition)  (§§33-36).    

15.  The Ladd v Marshall requirements are equally applicable on appeals against child maintenance orders. See HLF 訴MTC(unrep.)  HCMP 4117/2002 (20 January 2003)  per Cheung JA, applying the Ladd v Marshall test at §§15-19 in respect of an application for leave to appeal (out of time)  against ancillary relief orders including for children maintenance (§3).

Ground 1

16.  I do not accept that the Husband has satisfied the Ladd v Marshall conditions in respect of his application to adduce fresh evidence on his surrender of the AIA Policy.

17.  The 2019 Surrender Advice and Cheque addressed to the Husband should have been available to him before the trial. The Husband has not provided any explanation in the Summons or the Husband’s Letter as to why he is only producing these documents at this very late stage. Similarly, no explanation has been given on why the Policy Details was only dated 4 August 2022, and why a similar confirmation was not obtained prior to trial. The 1^st condition is not satisfied.

18.  In line with his duty of full and frank disclosure, the Husband should have disclosed such changes in his finances and whereabout of the payment received in his subsequent Form E filings in 2020 and 2021. Part 5.1 of Form E requires a party to state significant changes in assets during the last 36 months, and against the context of my finding that the Husband’s net worth is around HK$771,345, one would have expected explanations to be given if it is the Husband’s case that the surrender value of the AIA Policy is no longer available to him.

19.  The Husband would have been keenly aware of the Wife’s case, as presented in her schedule of parties’ assets and liabilities before trial commenced and updated during trial (Judgment §45 and Annex 1), that she did not accept the value of the AIA Policy is no longer with the Husband. She invited the Court to adopt HK$292,174.90 as its value.

20.  Notwithstanding, it was the Husband own oral evidence at trial that he did not surrender any policy since his 2019 Form E, although he might have taken money out from some of them (Judgment §64(1)). It was not his case that the omission of this AIA Policy from his subsequent Form Es means the value attributed to it in the 2019 Form E (HK$292,174.90)  was no longer available to him.

21.  As such and for completeness, it is not obvious to me that the second Ladd v Marshall condition is satisfied in the circumstances. Short of any evidence on the whereabout of the surrendered value, the effect of the 2019 Surrender Advice and Cheque are simply to demonstrate that the Husband has converted his asset from one form to another (from an insurance policy to cash). Such conversion has little impact on the analysis of the Husband’s resources or size of the family pot. A bare assertion in the Husband’s Letter that the money “has been spent” does not come close to properly addressing this issue.

Ground 2

22.  The Husband has not provided any explanation in the Summons or the Husband’s Letter as to why he is only producing materials pertain to his Partner’s earnings at this very late stage. While I note the IRD Letter itself is dated 5 August 2022 (in answer to the Partner’s letter of even date)  and therefore post-dates the Judgment, there was no explanation why a similar confirmation of the Partner’s tax filings for 2021/22 could not have been obtained before the trial with reasonable diligence.

23.  The Wife had been alluding to the undisclosed resources of the Husband’s Partner throughout these proceedings, including in her opening submissions for trial. Yet, as I have detailed in Judgment §§120-126, the Husband was decidedly opaque in this aspect of his financial disclosure. For reasons stated therein, I do not accept the relevant information would not be available to the Husband had he caused proper enquires to be made.  

24.  As such, the Husband failed to satisfied the first Ladd v Marshall condition.

25.  For completeness, I do not accept the second Ladd v Marshall condition has been satisfied either. As submitted in the Wife’s Statement, it is not clear what kind of disclosure the Partner has made to the IRD that resulted in the IRD’s decision not to issue to her any tax assessment form. It is unclear how the Partner’s yoga business is run and who/what would be the relevant entity to make any tax payments. Furthermore, the IRD Letter itself stated that the IRD does not guarantee the information stated therein is accurate or complete.

26.  Further, a holistic consideration of the Partner’s resources would not be limited to her taxable earnings in the 2021/22 financial year. It is difficult to see why the reasoning and inference drawn in Judgment §§120-132, that the Partner is in fact able to make greater contribution to meeting her family expenses with the Husband, should be disturbed.

27.  For reasons set out above, I dismiss the Husband’s application to adduce any fresh evidence for purposes of his Summons.

D.   Ground 3

28.  Ground 3 is wholly unparticularized. The Husband’s Letter raised a number of miscellaneous points seeking to challenge my factual findings on the following:

(1)  The Partner’s ability to cover the family’s expenses above the Husband’s contribution of HK$24,000;

(2)  The Husband’s net asset, in particular failing to apply a 50% liquidity discount to his insurance policy value;

(3)  Reasonable expenses of the Wife and the Children;

(4)  The Wife’s net assets.

29.  The issues identified above involve this Court’s findings of primary fact: ZJW v SY §§28-32. The Husband has not identified nor provided any cogent explanation on which part of my analysis/ findings had been “plainly wrong” or how I have fallen into “palpable error”.

30.  In dismissing Ground 3, I would simply refer to the Judgment, in particular (i)  the Court’s power to draw adverse inference (especially on the Partner’s resources), (ii)  the extent of KEWS support that can be expected of the Wife’s Father, and (iii)  the duty to generously interpret needs, in exercising the wide discretion in determining ancillary relief matters as discussed and applied therein.

31.  As a footnote, at times the Husband had sought to resile from his position at trial and put forth fresh arguments. This is of course impermissible:

(1)  Husband’s Letter §19 suggested that the Wife’s Citibank loan should not be taken into account as that was unnecessarily incurred. Yet at trial, the Husband did not dispute that loan was a genuine one, and he only took issue with the HK1.8M loan from the Wife’s Father, which I found to be a “soft loan”: Judgment §§48-55;

(2)  Husband’s Letter §11 suggested it is unfair that the Undertaking to Inform was extracted from him alone (Judgment §§42, 177(1)). No such complaint or conditions that it be reciprocated was raised when the Undertaking was given at trial. It is trite that undertakings can only be voluntarily given and not ordered.

32.  Furthermore, regarding the specific point raised about the alleged failure to apply a 50% liquidity discount to his insurance policy value (Husband’s Letter §18), I refer to Judgment §§87-89 and the decision of SSLT v SMFC [2019] HKFC 250 cited therein. Liquidity discount is sometimes applied to pension/ MPF because of the significant time gap before they can be realized upon retirement of the relevant party. In the present case, it would be another 24 years before the Husband can access his MPF funds.

33.  However, I have not been shown any evidence that a similarly prolonged time gap is applicable to the Husband’s insurance policies. In fact, it was the Husband’s own evidence that he was able to take money out from some policies (Judgment §64(1)), and by Ground 1 he says he had surrendered and cashed out the AIA Policy. I have difficulty accepting insurance policies are illiquid assets comparable to MPF that warrant any liquidity discount.

34.  For completeness, I consider liquid assets available to the Husband (ie. all his assets save MPF)  to be around HK$527,000 (Judgment §71). This is sufficient to meet the MPS arrears of HK$343,000 pursuant to the Order.

E.   Stay Application

35.  Since the Husband’s application for leave to appeal is rejected, it follows that any application for stay of execution (even if properly made)  does not arise.

36.  It is important to note that an order is enforceable once it is made in the absence of any stay or it being set aside. This should deal with the Wife’s concern expressed at Wife’s Statement §17.

F.   Order

37.  For all the matters set out above, I now order that the Husband’s Summons be dismissed with costs to the Wife, to be taxed if not agreed.