L v. E
Family Law - ancillary relief - deed of separation whether parties should be held to prior agreement dividing their assets.
IN THE DISTRICT COURT OF
THE HONG KONG SPECIAL ADMINISTRATIVE REGION
NUMBER 7178 OF 1998
Coram: Deputy Judge Jenkins in Chambers
Date of Hearing: 11 - 14 & 19 October 1999
Date of Judgment: 19 November 1999
1. The parties in this case whom I will refer to as Husband and Wife were married in Hong Kong on 9th June 1990. On 8th October 1993 a child was born to the wife. The Husband is not the natural father of this child.
2. The wife's claim is a simple one. She seeks a sum of Singapore $410,000 plus the return of two sums of money loaned to the husband of HK$59,000 and Singapore $5,000. The wife says that in March 1998 the husband agreed to pay her the sum of S$410,000 and that this agreement was confirmed in an exchange of letters between their respective solicitors in April 1998. The husband does not dispute this. His case is that he is not bound by the agreement because of the circumstances that led to it and that because of his present financial position it would be unjust to hold him to it.
3. I will relate so much of the background as is relevant to the issues.
4. At the time of the marriage the husband was Vice President And Regional Director for international corporation. The wife was the Regional Director of Sales (China) for a hotel group. They lived at a property in Sai Kung which had been bought by the husband in 1986 for HK$1,230,000. In May 1991 the husband and wife bought a flat in Singapore for S$835,000. The husband paid S$155,000 towards this sum the balance being funded by a mortgage. The wife is able to identify the sum of S$62,000 as her contribution to the mortgage installments between 1993 and 1996 with the remaining installments being paid by the husband. The flat was tenanted and the rent paid into a joint account in the names of the wife and her father who lives in Singapore.
5. Another property bought during the marriage was a house in France. The husband was solely responsible for the financing of this purchase.
6. Each of these properties has now been sold. In July 1999 the property in Sai Kung was sold the net proceeds being $1,712,622.59 and in accordance with an order of Deputy Judge Leung dated 12th December 1998 this sum has been paid to the wife's solicitors as stakeholders. The sale of the French property was agreed at about the same time but was only completed recently. According to the husband the net proceeds are 1,017,084 Francs. On 8th October 1999 I made an ex parte order restraining the husband from dealing with $400,000 of the proceeds of that sale.
7. The Singapore property has too been sold I will deal with the circumstances of the sale and the disposal of the proceeds at a later stage of this judgment.
8. I turn now to the marriage itself. It is plain that for the first three years or so the marriage was happy and uncomplicated. Both were in well paid employment, the wife earning $30,000 a month and the husband earning in the region of $130,000 a month. They enjoyed a comfortable life style with both contributing financially.
9. In about April 1993 the wife was three months pregnant. By chance the husband found a letter that the wife had written but not yet posted to another man S. It seems that this letter was in intimate terms and to put it mildly caused great shock to the husband. The man involved whom the husband had briefly met in 1992, but had no reason to suspect (until the letter) was having an illicit relationship with his wife. The husband spoke to the wife about the letter and the man. The contents of this conversation were disputed with the wife saying that she admitted to her husband that the relationship was a sexual one but that she did not know who was the father of her unborn child. The husband's account was that her explanation was that the relationship was not a sexual one and that the child was definitely his. It was also the wife's evidence that she told her husband that she could not promise not to see S in the future. I am inclined to accept the husband's version of the conversation but do feel that despite it he must have harboured a doubt as to who was the father of his wife's child.
10. In any case it is plain that both parties wanted their marriage to survive. Both the husband and the wife are intelligent, mature and civilized people. For the next two years after the birth of the child; a daughter called WY, the marriage continued and the husband seemed prepared to treat WY as his own daughter. But the wife continued seeing S and by the end of 1995 had decided to leave her husband. At this time the husband was having problems in his relationship with his employers. He was able to engineer a situation whereby he was dismissed with a substantial pay off. On 26th January 1996 he received $7,717,028.18 from his employer. On 31st January 1996 he remitted $5,550,000 to Singapore in order to repay the mortgage on the Singapore flat.
11. The husband and wife went their separate ways. She and her daughter went to Singapore to live with S and he took himself off for a year travelling. They remained in touch and in January 1997 met up in Singapore. She had had a DNA test which confirmed that S was the father of WY. The wife told the husband this and suggested a divorce which the husband refused hoping for a reconciliation. Eventually though and after reflection he accepted that the marriage was over.
12. The wife (I think more so than the husband) was anxious to settle the financial side of things. In March 1997 they agreed to sell the Singapore flat. It was sold for S1,170,000. The wife's evidence was that they agreed that she would receive S$600,000 with the balance going to her husband. She said she in fact received only S$400,000 as her husband requested from her a loan of S$200,000 as he was about to set up a business. This loan was to be repaid within five years, and was evidenced in a promissory note dated 2nd May 1997.
13. The husband's account of this transaction was rather different. He said that the agreement was that his wife would receive only S$400,000 but that he would in the future give his wife a further S$200,000 to be used for the benefit of WY if it was needed. He felt that WY was S's responsibility but his wife told him that she did not think S would provide for his daughter and she was reluctant to ask him to do so. Therefore the husband agreed to make S$200,000 available for WY.
14. The difficulty with the husband's version is that it is not supported by two subsequent documents. The promissory note of 2nd May 1997 is in these terms:-
"Five years after the date hereof, I E promise to pay to L or order the sum of Singapore dollars two hundred thousand (S$200,000) value received" (emphasis added).
15. The Husband explained that he only signed this document at his wife's insistence because otherwise "she would take legal action".
16. And then there is the deed of settlement. This is dated 23rd June 1997. It recited that the parties had lived apart since 1st February 1996 and that the husband would institute divorce proceedings based on one year's separation. The promissory note was referred to. The operative part of the deed provided that the husband was to contribute one third of the educational expenses of WY and her other expenses at his discretion. The husband also covenanted to provide medical insurance for both the wife and daughter and to allow the wife to visit and stay in his house in France. The deed provided that apart from these provisions neither party was to have any financial claim against the other.
17. It is plain from these documents that the S$200,000 referred to in the promissory note was a straight loan from the wife to the husband and was not, as the husband, claimed a future provision for WY.
18. Two weeks after the deed was executed the husband sent a fax to the wife. In this document (dated 5th July 1997) he suggests that he does not owe his wife any money saying:-
"The S$200,000 you refer to is totally covered in what you owe me for the Singapore house rental which was paid to your parents, all the money I have spent on WY over the last four years."
19. This was followed up by a letter from the husbands solicitors to the wife's solicitors of 21st July 1997 stating, inter alia, that "after much reconsideration [the husband] has decided in the best interests of WY E he should serve all relationships with her." The letter also referred to a fax dated 26th June 1997 from the husband to the wife which stated that the husband would not be assuming any financial obligations in respect of WY. The wife's solicitors took the view from this letter and the earlier faxes that the husband had repudiated the deed and by letter of 28th July 1997 to the husband's solicitors accepted that repudiation.
20. Matters than rather drifted. The wife spent some time in Nepal with S and the husband was busily engaged in setting up his own recording and music publishing business. Two companies were incorporated in June 1997 and in November 1997. A number of artists have been signed up but it is evident that the business has not prospered. The accounts for the company, from its incorporation up to 31st December 1998 show a loss of HK$4,029,558 with an unsecured loan to the husband of $4,576,323. For the same period another company had a loss of $1,268,180 with the husband being owed...