FCMC 9079 of 2002
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
NUMBER 9079 OF 2002
Coram : Her Honour Judge Chu in Chambers
Date of Hearing : 12, 13, 14 & 15 October 2005 (half day)
Date of Handing Down of Judgment : 7 November 2005
J U D G M E N T
1. The main dispute in this ancillary relief application is over the present matrimonial home (2nd Property), which is the major asset of the Petitioner (W) and the Respondent (H) and where they still reside.
2. H and W were married in China in December 1990, and they have a child, who is now 12 years of age.
3. In March 2000, the parties started to sleep and occupy separate rooms, and they started to lead separate lives, but they have remained residing under the same roof. Their marital relationship was thus slightly over 9 years.
4. W petitioned for divorce in August 2002 based on the parties having lived apart for over two years, and obtained a Decree Nisi of divorce on 5th February 2004.
5. The parties had bought another property (1st Property) which was sold before the purchase of the 2nd Property.
6. It was W’ case that H’s beneficial interest in the 2nd Property was not more than 20%, and she was seeking an order that for H to transfer to her all his interest, on the basis that she would be fully responsible for her own maintenance, and the maintenance of their child, including all the child’s education expenses.
7. H’s case was that W should pay him a lump sum of HK$700,000, being about 30% interest in the 2nd Property, and that he would be willing to contribute HK$3,000 per month for the maintenance of the child out of the sum of $700,000 received by him.
8. The question is whether W should be entitled to all the interest in the 2nd Property and the main issues are : -
(i) In relation to a payment of HK$500,000 from H’s father to H for the purchase of the 1st property, whether this was a loan from the H’s father to H and W jointly
(ii) In relation to the sums paid by W’s mother, Madam Wong,
(a) whether a sum of about HK$2.20 million Madam Wong paid at the time of purchase of 2nd Property was financial assistance to W or a promise made by Madam Wong to H to pay the insufficient funds for the purchase of the 2nd Property
(b) whether the partial repayments made by W towards the 2nd Property with funds from Madam Wong in May 1998 and January 1999 were financial assistance to W or a promise by Madam Wong to H for a share of profits of Madam Wong’s business (“the Business”) or profits in the sale of waste materials from the Business
(c) whether the regular remittances from Madam Wong to W were financial assistance to W or a share of profits in the sale of waste materials.
(d) whether Madam Wong remitted a sum of $700,000 to W for discharge of the mortgage in about 1998 which W failed to do
(iii) In relation to contributions by the parties towards the family,
(a) what were the respective amounts of money made by H and W towards the purchase price of the 2nd Property
(b) what were the contributions made by the parties towards the welfare of the family
B. PURCHASE OF THE 1ST PROPERTY
9. The parties purchased the 1st Property in August 1993 at a price of HK$1,263,000. H paid HK$500,000, which he said was a loan from his father to both him and W, and W paid HK$170,000 towards the down payment, about HK$100,000 of which was from Madam Wong and about $70,000 from W herself.
10. The parties obtained a mortgage loan, and the monthly repayments were paid by the parties jointly, from August 1993 until the 1st Property was sold in July 1997.
11. It was not disputed that during this period, W had made 7 partial payments of a total of HK$557,537.74 towards the mortgage loan, which funds were provided to W by Madam Wong. There was also another partial payment of HK$30,000, which was paid from the parties’ joint account.
12. The 1st Property was sold in July 1997 for HK$2,090,000, and the net proceeds were used for the payment of the matrimonial home.
C. PURCHASE OF THE 2ND PROPERTY
13. The 2nd Property was purchased on 31st July 1997 in the joint names of the parties at a price of HK$5,200,000, and the payments were as follows : -
(i) The net sale proceeds from the 1st Property of $2,090,000 was used for part of the down payment.
(ii) The balance of the down payment of about HK$1,600,000 was paid by W with funds from Madam Wong
(iii) The other expenses, such as stamp duty, estate agent commission and expenses for decoration, of a total of about HK$600,000 were paid by W with funds from Madam Wong
(iv) There was a mortgage loan, initially from First Pacific Bank for a loan of HK$1.5m, and the monthly repayments were about HK$16,000 per month. Madam Wong was a joint guarantor of H & W for the mortgage loan.
(v) W made 2 partial repayments on 29th May 1998 (HK$541,569.09) and 30th January 1999 (HK$160,541.86), which funds were from Madam Wong.
(vi) After the 1st partial repayment of HK$541,569.09, the monthly mortgage was reduced to about HK$10,900 per month, which was further reduced to about $10,300 per month after the 2nd partial repayment.
(vii) The 2nd Property was re-mortgaged to Chiyu Bank in April 2001 and the monthly mortgage repayments were further reduced to about HK$4,300 per month.
14. The parties agreed that the market value of the 2nd Property is now HK$3.05 million, and the present outstanding mortgage loan is about HK$579,480.75, i.e. about $580,000, making a net equity of about HK$2.47 million.
D. THE ISSUES
15. I now turn to consider the Issues.
16. For the avoidance of doubt, in so far as the matters set out in this judgment differ from the evidence of H & W, this is because I have preferred the evidence of the other party, because I consider that the documents produced confirmed my finding of fact and further, I have been able to observe the demeanour of the parties.
(i) Whether the sum of HK$500,000 from H’s father to H for the purchase of the 1st Property was a loan from H’s father to H and W jointly
17. This was not an issue originally raised and was only raised by H in his oral evidence and was a relatively simple and short issue. H alleged that the sum of HK$500,000 paid by him towards the purchase price of the 1st Property was a loan from his father to both him and W, and the loan is still outstanding and that W has to be responsible for the repayment of half the amount of the loan to his father.
18. This sum of HK$500,000 was paid in 1993, over 12 years ago. H agreed that his father had never pressed him for any repayment.
19. In H’s Form E filed in September 2005, under the heading of “Liabilities”, he only listed an outstanding amount of about HK$6,000 in his credit card account, although in his first affirmation of means of 7th July 2003, he referred to the loan from his father. In neither affirmation did he say it was a loan which W had a liability to repay one half of. In his mother Madam Zheng’s affirmation or oral evidence she referred to lending $500,000 to H and again she did not say it was a loan for which W had to repay half.
20. There was no other evidence to indicate that W should be responsible for repayment of one half of this loan, apart from what H said in his oral evidence. The alleged loan was made over 12 years ago and no repayment had ever been sought by H’s father from either H or W. I therefore do not find there was any evidence that W had to be responsible for repayment of one half of this loan.
(ii) In relation to the sums paid by Madam Wong,
(a) whether the sum of about HK$2.20 million from Madam Wong paid at the time of purchase of 2nd Property was financial assistance to W or a promise made by Madam Wong to H to pay the insufficient funds for the purchase of the 2nd Property
21. It was not disputed that throughout the marriage, Madam Wong had provided financial assistance.
22. It was further agreed that about HK$2.20 million, being the total of the sums mentioned in paragraph 13 (ii ) & (iii) above, came from Madam Wong.
23. Madam Wong set up a business in 1994 (“the Business”) for manufacturing paper carton boxes in mainland China for only one client, which was the brewery company of which Madam Wong’s husband (i.e. W’s father) used to be the manager. The Business ceased in 2000 after W’s father retired from the brewery company in about November 1999.
24. It was also not disputed that H started to work for Madam Wong in the Business in March 1996 for a salary of RMB10,000 per month, with free meals and accommodation, and air tickets for him to return to Hong Kong to visit his family about once a month. In H’s first Affirmation of Means, he alleged that Madam Wong had promised him a share of the profits from the Business to enable him to buy a bigger flat, namely the 2nd Property, as “a reward” for his effort in promoting the Business. In his 2nd Affirmation, H alleged that in order to make him “feel comfortable” working in mainland China for such a long time and to enable W and him to “improve their living condition”, Madam Wong offered to act as a guarantor for the mortgage loan for the 2nd Property and “to set aside part of the profits from the Business” to pay off the loan. H alleged that as a result of these promises and offers, Madam Wong had paid the various sums for the purchase of the 2nd Property, and that she did become a guarantor for the mortgage; as otherwise, there was no way that H or W could afford to buy the 2nd Property on their own. H worked for the Business from March 1996 until August 1998.
25. There were two affirmations from...