Sze v Yiu

Court:Family Court (Hong Kong)
Judgement Number:FCMC1158/1997
Judgment Date:18 Jan 2000
FCMC001158/1997 SZE v. YIU

FCMC001158/1997

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 1158 OF 1997

_________________

BETWEEN
SZE Petitioner
AND
YIU Respondent

AND BETWEEN
YIU Applicant
AND
SZE 1st Respondent
LEE 2nd Respondent

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Coram: H.H. Judge Bruno Chan in Chambers

Date of Hearing: 18-21, 25-26, 28-29 January, 12-14, 24-28 May, 10-11, 29-30 June, 2 July, 16-18, 20, 27-28 August and 23 November 1999

Date of Handing Down of Judgment: 18 January 2000

_________________

J U D G M E N T

_________________

1. This is the Respondent Husband (Applicant)'s application under Section 17 of Matrimonial Proceedings and Property Ordinance to set aside a disposition of about $8.6 million by the Petitioner Wife (1st Respondent) to her mother (2nd Respondent) which he says was the sale proceeds of their matrimonial asset.

2. First, a few words about the strange heading as appeared in this proceedings where the Petitioner is also referred to as 1st Respondent, whilst the Respondent is also called the Applicant, and the Mother-in-law as 2nd Respondent. According to the Matrimonial Causes Rules, the party who issues the petition is the petitioner whilst the other party, i.e. the spouse, is the respondent, whereas Rule 13 specifically provides that where a petition alleges that the other party to the marriage has committed adultery or has been guilty of an improper association with a named person, that named person shall be made a party to the proceedings unless the court otherwise directs. There is no rule for making any other named person involved either in custody or ancillary relief applications a party to the proceedings. Such person, for instance, may apply under Rule 92 for custody without obtaining leave to intervene in the cause or being made a party to the proceedings, whereas Rule 69 provides certain persons such as the guardian of any child of the family or any person who has obtained leave to intervene in the cause may apply for ancillary relief for a child without any specific provision for that person to be made a party to the proceedings.

3. In the present case the Section 17 Application for avoidance of disposition was taken out by the Husband who is the Respondent in the cause as the Wife is the one who issued the petition and hence she is the Petitioner. The Section 17 Application is part of the ancillary relief proceedings between the parties in the cause and not some separate proceedings which require a separate heading in which the Husband becomes the Applicant and the Wife and the Mother-in-law respectively the 1st and 2nd Respondent. It is true that Section 17 refers to the person who brings the proceedings as "the applicant" and the person against whom the proceedings are brought as "the other party", such references are used only in that Section and do not mean to infer a different title to the parties originally named in the proceedings. The Mother-in-law in this case could have been simply referred as "Intervening Party" or "Intervener". The present heading is extremely inconvenient and confusing and there is simply no rule which allows this. As the heading now stands, I will just refer to the parties as the Husband and Wife whilst the Mother-in-law as Madam Lee in this judgment.

Background

4. The parties were married on 10th October 1993 and there is one child of the marriage, a daughter born on 4th October 1995 who is now 4 years old. The Husband was a real property investor and a director of an estate agency known as U P Agency Ltd. The other director of the limited company was the Husband's sister who used to run an estate agency known as U P Agency until about June 1996 when it was incorporated into U P Agency Ltd. The Husband was also a director and shareholder of a real estate investment company known as JP Ltd. which he incorporated in 1990 with his father with each holding 1 nominal share. After the marriage the Wife was made a director and shareholder of the company also holding 1 share. She was all along in the insurance business and was a manager in AIA during the marriage.

5. Prior to the marriage the Wife resided in a City Garden property with her parents. The property was purchased in her name but she alleges that it belonged to her mother Madam Lee and that it was registered in her name because her mother wanted to make use of the low-interest loan which the Wife was able to obtain from AIA.

6. After the marriage the Wife moved to live with the Husband and his parents at a Beverly Hill property which was owned by JP.

7. In February 1996 a property at Flat A, 23/F, Block 11, Provident Centre, No. 40 Wharf Road, Hong Kong ("The Provident Centre Property") was purchased in the sole name of the Wife for $8,383,000. The provisional sale and purchase agreement was signed on 3rd February 1996 and the assignment was executed on 30th September 1996.

8. The property was later sold by the Wife in early 1997 for $11,880,000. The provisional agreement for sale was signed on 16th January 1997 and the completion took place on 5th March 1997. The net sale proceeds of $8,600,000 was then put in the bank account of the Wife's mother Madam Lee.

9. On 17th January 1997 the Wife left the matrimonial home at Beverly Hill after a heated argument with the Husband's mother on the evening of 16th January 1997. On 1st February 1997 she issued a petition for divorce in the present proceedings based on the Husband's behaviour. The petition was dated 20th January 1997 and in it the Wife also sought custody of the daughter and general ancillary reliefs. The petition became defended when the Husband filed an Answer and also cross-petitioned for divorce based on the Wife's behaviour. In his Answer the Husband also sought custody of the daughter and ancillary relief specifically for transfer and settlement of property order.

10. The proceedings were bitterly contested on all front and there were numerous interlocutory applications, but for the present purpose I shall only mention those that are more relevant.

11. On 12th May 1997 the Husband applied for an injunction restraining the Wife from, inter alia, disposing of or otherwise dealing with the proceeds of sale of the said Provident Centre Property. The matter came before Deputy Judge Saunders on 27th May 1997 when the Wife revealed that her mother Madam Lee was in fact the beneficial owner of the property and that after its sale, the proceeds had been returned to her mother.

12. As a result the hearing was adjourned to 19th June 1997 and Madam Lee was ordered to be joined in the proceedings. At the same time the Husband took out the present Section 17 Application for an order that the disposition by the Wife to Madam Lee of the sale proceeds of the Provident Centre Property be set aside. On 19th June 1997 after hearing argument from the parties and Madam Lee who was also represented, Deputy Judge Saunders granted the injunction against Madam Lee in respect of the sale proceeds until further order. The net sale proceeds of HK$8.6 million have since been frozen in an interest-earning bank account under the name of Madam Lee pending the determination of the Section 17 application.

13. The Husband and Wife were eventually able to first settle their dispute over the divorce when on 2nd June 1998 the decree of divorce was granted to the Wife, and later on custody when it was granted to the Wife on 9th March 1999 with defined access to the Husband, leaving only the Section 17 Application and the ancillary relief application which I had originally directed to be heard together. Unfortunately it turned out that the hearing of the Section 17 Application had taken up so much of the time allocated for the trial of both matters that it was agreed that the Court should give its decision on the Section 17 Application first whilst the ancillary relief hearing should be adjourned to a later stage.

14. Both parties and Madam Lee have filed substantive affirmations in the Section 17 Application and have given lengthy oral evidence at the hearing, with final written submissions made to save time and costs which, I understand, amount to more than $3 million in total. There is one small episode, though, that I ought to mention. During the course of her being cross-examined, the Wife suffered some sort of nervous breakdown which required medical attendance. Instead of adjourning the trial, it was agreed amongst the parties, and quite rightly so, that Madam Lee should start and finish her evidence before the Wife returned to complete her evidence. The medical report produced by the Wife later confirmed her situation and was not challenged by the Husband.

The Husband's Case

15. The Husband's case is that he and the Wife jointly purchased the Provident Centre Property as their home as they intended to move from their Beverly Hill property to the Provident Centre which was close to his office and that it was also more convenient to his mother who had to go to the wet market to purchase grocery twice a day. He says although there was no expressed discussion with the Wife as to their respective share of interest in the property, as he had contributed about $1.5 million towards the purchase price, legal costs and stamp duty, he believes he should have 1/3 share in the property with 2/3 to the Wife.

16. He explains that the property was purchased in the name of the Wife because she suggested to make use of the low-interest loan from AIA to finance the purchase and that registering the property in her sole name was the only way to obtain the loan.

17. Although the provisional sale and purchase agreement was signed on 3rd February 1996, the Husband says that the completion date was not until...

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