KGL v. CKY AND ANOTHER
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FCDJ 1453 of 2002
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
FAMILY COURT DIVORCE JURISDICTION
NUMBER 1453 OF 2002
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BETWEEN
| KGL | Petitioner | |
| and | ||
| CKY | 1st Respondent | |
| LSM | 2nd Respondent |
_________________
Coram : Her Honour Judge Chu in Chambers
Date of Hearing : 16, 17 & 18 August 2006
Date of Petitioner’s Final Submissions and Note : 13, 18 September, & 10th October 2006
Date of 2nd Respondent’s Final Submission : 22 September 2006
Date of Handing Down of Judgment : 18 October 2006
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J U D G M E N T
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Introduction
1. The Petitioner’s application for ancillary relief in these divorce proceedings began in February 2002, and have since gone along a rather tortuous and costly route. Firstly, the 1st Respondent decided to abscond from this jurisdiction in about the middle of 2003 and secondly the 2nd Respondent, a lady cited by the Petitioner in the amended petition, suddenly appeared on the scene in about November 2004, having not taken part in the proceedings previously, and decided to apply to set aside those orders made against her.
2. For convenience sake, although the Petitioner and the 1st Respondent are now divorced, I shall call them H and W, and the 2nd Respondent L in this judgment.
3. In November 2003 and September 2004, I made two orders setting aside dispositions by H to L. In early November 2004, L applied to set aside those parts of the two orders made against her, basically on the ground that she had no notice of the applications which led to those two orders. Eventually on 5th August 2005, I granted L’s application, and set aside my two orders and ordered this re-hearing of W’s two setting aside applications under s. 17 of the Matrimonial proceedings and Property Ordinance (MPPO).
4. W’s two setting aside applications were as follows :
(i) Notice of Application issued on 16th August 2002 to set aside, inter alia, H’s dispositions amounting to about HK $1.3m to L (1st s. 17 Application)
(ii) Notice of Application issued on 4th November 2003 to set aside the dispositions amounting to HK$245,000 by H to L (2nd s. 17 Application)
5. The two orders made by this Court setting aside the above dispositions were as follows :
(i) on 5th November 2003, an order setting aside the dispositions of about HK$1.3m by H to L (1st Disposition Order)
(ii) on 15th September 2004, an order, inter alia, setting aside dispositions of HK $245,000 by H to L, and the dispositions of HK$1.3m and HK$245,000 having been set aside, ordering that, L being indebted to H in the total sum of HK$1,545,000, H to transfer and assign this debt of HK$1,545,000 to W. (2nd Disposition Order)
6. As mentioned earlier, since about July 2003, H has decided not to take part and to ignore these proceedings. He is believed to be living somewhere in the United States.
Brief History
7. H and W were married in New York in February 1987, and after marriage they continued to live in the United States, although work constraints kept them living apart for most of the time. They do not have any children.
8. In 1992, H returned to Hong Kong to work for his father’s stockbrokering firm while W remained in the United States until sometime in 1994 when she returned to Hong Kong to live together with H at his parents’ home.
9. The circumstances as to how L met H or the parties were disputed. According to L, she first met both H and W in about July 1992 through L’s elder sister E whom she was visiting. This appears to be before H returned to work for his father in Hong Kong. L was at that time living and working in Hong Kong and only visited the United States occasionally. It was W’s case that L’s intimate relationship with H developed sometime in 1994, but this was strongly denied by L.
10. L said she met a man B when he was on vacation in Hong Kong in October 1994, and they took a liking to each other. In early 1995, L said she resigned from her job here in order to move to the United States to continue her relationship with B, whom she later married in about July 1997. According to L, soon after her marriage to B, marital problems developed mainly due to her poor relationship with her mother-in-law.
11. Further, according to L, her elder sister E started an ice cream parlour business in the States in about 1995 in which H had apparently invested. After L moved to the States, she said she was helping in the daily running of the ice cream parlour for E, and very occasionally L said her bank account would receive remittances from H in respect of on going expenses for the business. This was L’s explanation after seeing some remittance slips produced by W to show H was remitting money to L. L further said that H sometimes would telephone E over the business and if E was not around, L would talk to H about the business but not personal matters. Later, at about end of 1999, L said she was taking an examination for a stockbroker licence in the States, and after she failed in Part I of the examination, her elder sister told her to consult H, as he was a stockbroker. L did speak to H and she said H gave her some help over the telephone.
12. Going back to L’s marriage with B, L said by 2000 when she returned to Hong Kong, her marriage with B had in fact broken down. She said she was by then 35, and she would very much like to have a child, but B was not interested. She said the thought of undergoing artificial insemination had crossed her mind earlier, as B’s elder brother and his wife underwent artificial insemination.
13. Anyway, on 3rd January 2000, L returned to Hong Kong, which she said was for a holiday, and she was also trying to consult a dentist here in relation to her teeth problems. She said she took the opportunity to telephone H to thank him for his assistance in her examinations. They arranged to meet at a restaurant in Central called Golden Dragon Restaurant to have tea for “a bit more than an hour”. Then, according to L, while having tea at this restaurant, she found out that H was also wanting to have a child, and that he had thought of adopting a child. It is L’s case that rather than her undergoing artificial insemination with an anonymous donor, it would be better for the child to have a father, and thus a legally enforceable agreement was struck between the two of them, whereby if L agreed to undergo artificial insemination to conceive and to bear a child, H would support her during pregnancy, and later upon giving birth to a child, H would buy her a property and to support her and her child (the Alleged Agreement). The Alleged Agreement was also to be conditional upon L and the child moving back to Hong Kong to live here. I will return to the terms of the Alleged Agreement later.
14. L did undergo artificial insemination on 28th January 2000 in Hong Kong. This was evidenced by a medical certificate. However, it is L’s case that notwithstanding the Alleged Agreement with H, she and H did not become intimate until sometime around her birthday in October 2002.
15. After the insemination, L returned to her husband B in New York on 19th April 2000. She said she told B that she was pregnant through artificial insemination but did not disclose to B that H was the donor.
16. According to L, there was an agreement between B and her and that B would allow her to continue to live at his home, and to claim medical and birth expenses through his employer’s medical insurance policy and that after the child’s birth, L would move to her own apartment in New Jersey. According to L, although she and B had agreed to part ways, they were at that time on friendly terms.
17. The child C was born on 5th October 2000. Sometime in October 2000, L received a birthday card (Birthday Card) from H, which she said was the only written evidence of the Alleged Agreement.
18. According to L, after she left Hong Kong on 19th April 2000, she and H did not meet again until about the end of June 2001, when H and L went to Canada to bring C to visit H’s parents who were there at the time. C was by then about 8 1/2 months old. L said she had wanted to return to Hong Kong earlier with C, but after birth, both she and C were not in good health. In fact, according to L, C was diagnosed with mild psychomotor delay in about May 2001, but she said she kept this from H at the time.
19. Subsequently, L returned to Hong Kong with C on about 23rd August 2001 and initially they stayed in her sister’s home. She later found an apartment and her sister signed a short term 3 month lease on her behalf, as she had to return to the States on about the 15th January 2002. The short term lease was from 4th February 2002 to 31st April 2002. W returned to Hong Kong on about 4th February 2002 and started taking up residence at this rented apartment on Caine Road with C.
20. In the meantime, on 8th February 2002, W issued a divorce petition based on H’s unreasonable behaviour, and also issued her Notice for claiming ancillary relief (“W’s Notice”). H was served on 26th February 2002.
21. On 21st March 2002, H paid a sum of HK$600,000 to L, and on 27th March 2002, he paid another sum of HK$709,490.34 to L.
22. H moved out of his parents’ home where he and W had been living on about 19th April 2002. According to L, she was told by H that he had to move out and he asked to move in to share her accommodation, to which she agreed. H then moved in to share the rented apartment on Caine Road with L and C. L maintained that they were then merely friends sharing accommodation and there was no intimate relationship between them. L had said in an earlier hearing that she and C occupied one bedroom and H occupied another bedroom. Then, on about 30th April 2002, L left for the United States again, but this time C remained in Hong Kong, and according to L, C was being looked after by H assisted largely by L’s sister.
23. H eventually disclosed the two payments of about HK$1.3m to L in his 1st affirmation of means. H said these sums were for L to purchase a property which I will call the WT Property. These sums are the subject of W’s 1st s. 17 Application, and the subject of the 1st Disposition Order.
24. After the expiration of the short term lease, on about 30th April, 2002, when L was still in the United States, H and C moved into the WT Property. When L returned from the United States on 8th June 2002, she also moved into WT Property. Again, as mentioned above, even at this stage, L said she and H were merely friends and there was no intimate relationship between them and they were merely sharing accommodation.
25. Between February and June 2003, H had drawn 4 cheques totalling HK$245,000 in favour of L. L said these sums were gifts for H’s parents and for the mortgage payments of WT Property. W only found out about these payments in about November 2003, after H and L had already left for the United States. These payments are the subject of W’s 2nd s.17 Application and the 2nd Disposition Order.
26. Anyway, H and L and C continued to reside in the WT Property until 14th July 2003. L said that she had to go to the United States in July because of her green card requirements. According to L, H told her that his divorce proceedings had been finalized, and that he was only waiting for the final order, and therefore H decided to go with L and C. As L held a green card and was applying for US citizenship, she had to return to the States from time to time, and this explained her frequent trips to the States. However, it would appear that this time the trip turned out to be longer than usual.
27. They were flying to New Jersey from Hong Kong via San Francisco. Apparently, upon arrival in San Francisco for immigration clearance, L’s green card was taken away by the immigration authorities, and although they eventually left for their destination New Jersey, L said she and C could not return within a month as originally planned. They stayed on in New Jersey, but as C was not able to live in a cold climate, they later moved to San Francisco.
28. According to L, H also decided to stay on with L and C, and that he was living with L and C until some time in August 2004 when he found out about C’s psychomotor delay problems. L said he was very upset and left her and C saying that L had deceived him. L said after H had left, he initially did return home from time to time to pack his belongings and to see C but their intimate relationship finished in August 2004. L claims that she now does not know the whereabouts of H.
29. According to L, notice of 2nd Disposition Orders only came to her knowledge for the first time when her sister LMS, who was residing in WT Property, received a letter addressed to L from W’s solicitors enclosing a sealed copy of the 2nd Disposition order. Thereafter, L was alerted and she immediately made arrangements to return to Hong Kong with C on 26th October 2004. She said she then instructed solicitors and found out all about these proceedings.
30. Thereafter, L applied to set aside the two Dispositions Orders. I allowed her application and ordered this re-hearing.
31. L said H had lied to her about his divorce proceedings and his financial position and he lived with her savings for over a year from July 2003. She said there was no hope that he would provide for C’s future. About two weeks before this re-hearing, on 31st July 2006, L issued an originating summons in Hong Kong to claim child support from H for C.
The Law
32. In proceedings brought by an applicant for financial provision, this court has power to set aside certain dispositions under s. 17 of MPPO. In particular, s.17 (1) (b) sets out that this court may, on an application by the applicant :
“if it is satisfied that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies and if the disposition were set aside, financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payment or the disposal of any property);”
33. The “intention” referred to in s. 17 (b) is the intention of defeating the claim for financial provision. (see s. 17 (1) (a))
34. s.17 (1) (b) applies to any disposition made by the other party (whether before or after the commencement of the proceedings ) “not being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such intention as aforesaid on the part of the other party”.
35. Under s. 17 (4), it is stated, inter alia, that : -
“ …… “disposition” does not include any provision contained in a will or codicil but, with that exception, includes any conveyance, assurance or gift of property of any description, whether made by an instrument or otherwise;
and any reference to defeating an applicant’s claim for financial provision is a reference to preventing financial provision from being granted to the applicant, or to the applicant for the benefit of a child of the family, or reducing the amount of any financial provision which might be so granted, or frustrating or impeding the enforcement of any order which might be or has been made at the instance of the applicant under the relevant provisions of this Ordinance”.
36. s. 17 (3) sets out a presumption, which is : -
“Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application or to a disposition or other dealing with property which is about to take place and the court is satisfied –
(a) in a case falling within subsection (1) (a) or (b), that the disposition or other dealing would (apart from this section) have the consequence, or
(b) in a case falling within subsection (1) (c), that the disposition has had the consequence,
of defeating the applicant’s claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property”.
37. The presumption in s. 17(3) is rebuttable, and it is not disputed that the effect of subsection 3 is to shift the burden of proof away from the applicant.
The Issues
38. In his written “Opening Note”, Mr Pilbrow conceded that the payments in W’s 1st s. 17 and 2nd s. 17 Applications made by H to L were made within 3 years prior to W’s said applications, and therefore the presumption in s. 17 (3) comes into play. Thus during the present re-hearing, Mr. Clough and Mr. Pilbrow have both agreed that Mr. Pilbrow should open the case first on behalf of L.
39. In Mr. Pilbrow’s “Opening Note”, it was not challenged that the payments made by H to L fell within the definition of a “disposition” under s. 17(4). He conceded that the payments by H to L could have the effect of reducing the amount of any financial provision which might be so granted to W, but it was challenged by Mr. Pilbrow that the effect of the payments was to prevent financial provision being granted to W. It was, further “seriously” challenged by Mr. Pilbrow that the intention of H when making those payments was to defeat W’s claims for financial provision.
40. Mr Pilbrow submits that as the purpose of s. 17 is to give power to the court to prevent a party acting so as to diminish the assets of the family which would otherwise be available for consideration by the court when making orders for financial relief, and that in order for this Court to assess to whom the property disposed of rightfully belongs, this Court is required to examine the intent of the disponor at the time of the disposition. Mr Pilbrow further submits that “the intent” must be established at the time when the disponor became obligated to make the disposition, which he submits is in early 2000. Further, Mr. Pilbrow submits an applicant can only make a claim under the relevant provisions against property, which is rightfully owned by the other spouse, and not an asset which is in the name of the other spouse but which is beneficially owned by another. As H is under a legal obligation to make the disposition, this fact pertains not only to the intent but also to “defeating the applicant’s claim”.
41. Mr Pilbrow has also invited this Court to draw a distinction between sums paid by H towards purchase of WT property and sums intended for maintenance of C.
42. Further L says that H owes her about HK$480,000, which should be set off, in the event that the payments to her were set aside.
43. Thus, the main issues appear to me to be the following :
(i) Whether H’s intention was to defeat W’s claim, and whether this Court should look at H’s intention as in early 2000
(ii) whether the dispositions fall into the “exception” of s. 17(2) of MPPO
(iii) whether H owed L a sum of HK$480,000
The Evidence and the Submissions
44. L filed 4 affirmations in support of her case, 3 of which were filed for the purpose of the hearing in 2005 for her application to set aside the two Disposition orders (2005 hearing) and her last one was filed in February 2006. At this hearing, she confirmed and adopted the contents of these 4 affirmations as part of her evidence. L was the only witness called to give oral evidence at the re-hearing and she was cross examined.
45. W filed a total of 24 affidavits in the entire proceedings. W gave oral evidence at the hearing leading to the 2nd Disposition Order and in connection with her application for ancillary relief during which she confirmed the contents of all her affidavits then filed. Although she was present at this re-hearing and made herself available for cross examination, Mr. Clough did not call her and Mr Pilbrow decided not to cross examine her.
46. It appears that H filed a total of 5 relevant affirmations :
(i) an affirmation on 16th April 2002 in support of his application to discharge the injunction order of 12th April 2002
(ii) an affirmation on 17th April 2002 in support of his application to discharge the injunction order of 12th April 2002
(iii) an affirmation of means on 30th April 2002
(iv) an affirmation on 19th August 2002 to oppose W’s application for increase of her interim maintenance
(v) an updated affirmation of means filed on 9th July 2003
(i) whether H’s intention was to defeat W’s claims and whether this Court should look at H’s intention as in early 2000
47. Mr Pilbrow has referred me to two authorities K v K (Avoidance of Reviewable Disposition) 1983 4 FLR p. 31, and Kemmis v Kemmis (Welland and Others, Interveners) Lazard Bros & Co (jersey) Ltd. v. Norah Holdings Ltd and Others 1988 1 WLR 1307 in relation to the construction and application of s. 37 of the 1973 Matrimonial Causes Act in England. Both Mr. Clough and Mr. Pilbrow have agreed that although the wording of s. 37 of the 1973 Act is different from our s. 17 of MPPO, which appears to be based on s. 16 of the old 1970 Matrimonial Causes Act, the law as set out in s. 37 in the 1973 Act and our s. 17 should be the same.
48. On the standard of proof required to prove the intention to defeat a claim for financial relief, it was held in K v K that, inter alia, the criterion which brought a disposition within s. 37 of the 1973 Act was an intention to defeat a claim for financial relief; the standard of proof required was the judge must be satisfied that the disposition had been made with that intention, giving to “satisfied” the ordinary meaning of the word without the addition of any adverbial qualification such as “beyond reasonable doubt” or “on the balance of probability”. (see Headnote)
49. Again, on the standard of proof, in the case of Kemmis v Kemmis, Nourse L.J. had this to say :
“The submission here was that the standard of proof was higher than proof on the balance of probabilities. I do not accept the submission in that form, although I would agree that, since what had to be proved was not merely a dishonourable intention but a dishonest and fraudulent one, the evidence which was required to tip the balance had to be correspondingly more convincing”. (line D, p.1331)
50. It was further held in K v K that the burden of proof was with the person applying for the disposition to be set aside but, by virtue of s. 37 (5) of the 1973 Act (similar to our s. 17 (4)), the burden shifted to the other party where the disposition had been made within 3 years of the application.
51. On “intention”, Purchas LJ had this to say in Kemmis v Kemmis :
“The clear purpose of section 37 is to give power to the court to prevent a party acting so as to diminish the assets of the family which would otherwise be available for consideration by the court when making orders for financial relief. It is important to notice that the purpose of this section is to protect the family assets and is not to protect the interest, if any, enjoyed by the applicant party in any of those assets. Although an application under section 37 can only be made after proceedings for financial relief have been instituted, the section embraces dispositions which may have been made at an earlier date --- see section 37 (5) which provides that for a period of three years before the application under section 37 the necessary intention is to be presumed unless the contrary is shown. By inference, if the necessary intention can be proved, although this will become increasingly difficult with the passage of time, there is no limit provided in the section to its retrospective effect.
The intention must be subjective to the party against whom the order is sought and limited to defeating the applicant’s claim for financial relief or reducing the amount of that relief. Frequently, the beneficiary of the disposition is that party himself, but this is not always the case, and persons in whose favour the disposition is made are often third parties, e.g., the husband’s mistress or her children. In these circumstances it would be open to the court in cases not involving the presumption in section 37 (5) to conclude that in making the disposition either in favour of a third party — or to himself in order to support a lifestyle which could not otherwise be sustained --- that the party making the disposition knew and intended the inevitable result of his action. If this caused the diminution or loss of an asset which otherwise would be available to the court in an existing or anticipate application for financial relief it would be open to the judge to infer that the party concerned had the intention necessary to justify an application under section 37”.
(Line G, p.1315)
52. The present case is clearly not a case which falls within s. 17 (1) (a) or s.17 (1) (c).
53. For this case to fall within s. 17 (1) (b), this Court has to be satisfied that H has, with the intention of defeating W’s claim for financial provision made a disposition and if that disposition were set aside financial provision or different financial provision would be granted to W.
54. However, if the disposition/s took place less than 3 years before the date of the applications, and if this court is satisfied that the disposition/s would have the consequence of defeating W’s claim for financial provision, then it shall be presumed, unless the contrary is shown, that H disposed of the property with the intention aforesaid.
55. Mr Pilbrow submits that H was quite open about his moral/contractual/legal obligation to support and house his son C together with C’s primary carer, namely L, and further sets out the amounts to meet his obligations on a monthly basis, and claims them as necessary deductions against his income for the purposes of W’s application for interim maintenance. Thus, Mr. Pilbrow submits that it is difficult to see H’s intentions as being dishonest or fraudulent. Mr Pilbrow has further invited this court to examine the purposes for which H provided the funds to L, under which Mr. Pilbrow submits H was legally obligated to pay.
56. It is L’s case that the payments made to her were made pursuant to the Alleged Agreement which she said was a legally enforceable contract. Out of the sum of about HK$1.3m, (subject of the 1st s.17 Application), HK$950,000 was used as a down payment for WT Property, and about HK$69,250 was spent on commission, stamp duty and lawyers’ fees for the purchase of WT Property. According to L, the balance, together with the sums of HK$245,000 (subject of the 2nd S. 17 Application) were spent mainly on household expenses for H, L and C, and mortgage repayments. There was also a reimbursement of HK$87,800 to L’s father for expenses he allegedly incurred on behalf of L, and HK$45,000 was allegedly spent on H’s mother’s birthday gift and anniversary gifts to H’s parents.
57. Mr. Pilbrow submits that the intention of H was to meet his legal obligation to purchase a home for C and L, and that this intention did not have to be his sole or dominant intention but it must have played a substantial part in his intentions as a whole (per Nourse LJ in Kemmis v Kemmis). Mr. Pilbrow further submits that H’s intention, at the time when he funded the down payment, had nothing to do with any dishonest or fraudulent wish to defeat W’s claims for financial provision.
58. Mr Pilbrow further argues that one should look at the intention of H in 2000 when he incurred the liability to L pursuant to the Alleged Agreement.
59. There were no divorce proceedings in 2000, and thus nothing was filed at that time. Neither Mr. Pilbrow nor L, nor her solicitors, act for H, and therefore they could not put forward a case on behalf of H. Thus, this Court could only look at the documents filed after proceedings were commenced and the evidence before this Court, and also H’s conduct after he was served with the divorce proceedings, in order to try and ascertain his intentions.
60. Divorce proceedings were commenced by W on 8th February 2002, and W’s Notice was issued on the same day. After H was served with W’s Notice on 26th February 2002, a number of events took place before he absconded in July 2003, including the following :
(i) 2 days after H received W’s Notice, on 28th February 2002, H paid L HK$100,000 which was credited into L’s HSBC savings account. (This payment was not the subject of any s. 17 applications)
(ii) W’s Notice required H to file his affirmation of means by about 12th March 2002. W’s solicitors wrote to H on 18th March 2002 reminding him to file his affirmation of means. H replied to W’s solicitors on 20th March 2002 alleging that the request for him to file an affirmation of means was totally unreasonable and unnecessary as it was not necessary for W to apply for maintenance pending suit, and that he and W were negotiating for a settlement on ancillary relief.
(iii) One day after this letter, on 21st March 2002, H paid L HK$600,000, which was drawn from H’s margin account with Txxxxx and credited into L’s HSBC savings account. (This payment was the subject of W’s 1st s. 17 Application)
(iv) On 22nd March 2002, W’s solicitors issued a summons requiring H to file his affirmation of means, with a return date on 8th April 2002.
(v) On 27th March 2002, H wrote again to W’s solicitors reiterating that he refused to supply his affidavit of means on the grounds that W did not need to apply for interim maintenance and that they were negotiating the terms of settlement.
(vi) One day after his letter, on 28th March 2002, H paid L by a cheque of HK$702,490.34, which was again drawn from his margin account with Txxxxx and paid into L’s HSBC savings account. (This payment was subject of W’s 1st s. 17 Application)
(vii) On the same day, i.e. 28th March 2002, H wrote a letter to the Legal Aid Department complaining, inter alia, about the granting of legal aid to W, and about W’s solicitors’ request for him to file his affidavit of means.
(viii) On 3rd April 2002, L signed an agreement to purchase WT Property. She transferred HK$300,000 from her HSBC savings account into her current account. On 4th April she issued a cheque for HK$27,500 for commission for the property agent.
(ix) On 4th April 2002, W’s solicitors wrote to H complaining, inter alia, that he had been harassing W to force her to withdraw the application for him to file his affirmation of means, and to demand W to move out of the matrimonial home.
(x) On 8th April 2002, W obtained an order for H to file his affirmation.
(xi) On the same day, 8th April 2002, H wrote to W’s solicitors, inter alia, denying he had threatened W, stating that the matrimonial home was owned by his parents, accusing W of harassing him, and finally asking W to confirm when she would move out of the matrimonial home, claiming otherwise that his parents would take legal action accordingly.
(xii) On 9th April 2002, L issued a cheque for HK$275,000 for the down payment for WT Property. On 10th April 2002, she paid HK$41,750 for the stamp duty.
(xiii) On 11th April 2002, W obtained an ex-parte injunction order restraining H from dealing with his shares in PE and Txxxxx, two of his father’s companies.
(xiv) On 12th April 2002, not having yet been served with the injunction order, H signed Intruments of Transfers transferring all his shares in PE and Txxxxx to his father, which transfers he said were at his father’s request.
(xv) On 12th April 2002, W obtained another ex-parte order restraining H from disposing of his interest in any public listed shares held by him, in particular those shares held under the margin accounts with Txxxxx. (“2nd Injunction order”)
(xvi) On 15th April 2002, H was personally served with the two ex parte injunction orders. On the same day, L paid a further deposit of HK$675,000 towards the down payment.
(xvii) On 16th April 2002, H, acting in person, applied to discharge the 2nd Injunction Order.
(xviii) On 17th April 2002, H, acting in person, filed a further detailed affirmation to apply to discharge the 2nd Injunction Order, to allow him to sell existing publicly listed shares in the margin accounts. In this affirmation, H alleged, inter alia, that there was material non-disclosure on the part of the W.
(xix) On 18th April 2002, W applied for a non molestation order.
(xx) On 19th April 2002, the 2nd Injunction Order was varied to allow H to sell his shares in the margin accounts with Txxxxx on condition that all sale proceeds shall be retained in the said accounts until finalization of W’s ancillary relief application. Further, on the same day, H provided an undertaking not to molest W.
(xxi) On the same day, 19th April 2002, H moved out of his parents’ home where he and W were living, and moved into L’s premises on Caine Road.
(xxii) On 23rd April 2002, W issued a summons to name L as 2nd Respondent.
(xxiii) On 25th April 2002, a firm of solicitors, Messrs. Wong, Hui & Co filed a Notice to Act for H.
(xxiv) On 30th April 2002, H finally filed his affirmation of means pursuant to the order of 8th April 2002, in which he disclosed his payments of about HK$1.3m to L, and the transfers of all his shares in PE and Txxxxx to his father.
(xxv) On 2nd Mary 2002, L was ordered to be made a party to the divorce proceedings.
(xxvi) On 6th May 2002, the 2nd Injunction order was discharged, with an undertaking from H that he was to provide W with weekly statements of his stock trading margin accounts. At that time, Judge Gill found that W’s fears, with no other supporting facts, was not sufficient to establish at the time of her application that H was about to dispose of property with the intention to defeat her claims and also that there was lack of full and frank disclosure on W’s part, and the costs were awarded to H.
(xxviii) On 14th May 2002 H & W reached an agreement regarding interim maintenance, and this was recorded in a consent order.
(xxix) On 9th July 2002, W issued her summons for increase of her interim maintenance.
(xxx) On 16th August 2002, W issued her 1st s. 17 Application in respect of the payment of HK$1.3m by H to L.
(xxxi) On 17th August 2002, H went to see his solicitor Ms Hui, and L also went to the solicitors’ office. She claims that she was only waiting for H to go and collect a toy car with her from H’s brother. L was subsequently invited in to see Ms Hui briefly. (I had dealt with this meeting in my earlier judgment)
(xxxii) On 6th September 2002, an order was made whereby, inter alia, H was to pay HK $34,000 per month for W’s interim maintenance.
(xxxiii) On 29th October 2002 H appealed against this order.
(xxxiv) On 30th December 2002, H paid L HK$50,000. (This sum was not subject of any s. 17 application)
(xxxv) On 18th February 2003, H paid L HK$30,000. (This was part of the HK$245,000, the subject of the 2nd s.17 Application)
(xxxvi) On 25th March 2003 H’s appeal was dismissed.
(xxxvii) On 1st April 2003, H paid L HK $15,000. (This was part of the HK$245,000, the subject of the 2nd s. 17 Application)
(xxxviii) On 8th April 2003, H paid L HK$100,000. (This was part of the HK$245,000, the subject of the 2nd s. 17 Application)
(xxxix) On 6th June 2003, H paid L HK$100,000. (This was part of the HK$245,000,the subject of the 2nd s. 17 Application)
(xxxx) On 7th June 2003, H sent a without prejudice letter to W offering to pay her HK$2.3m as a settlement, which he said, plus the HK$1.8m which he already paid her, made a total of HK$4.1m. This offer was not accepted by W.
(xxxxi) In July 2003, H ceased to comply with the Court orders, namely providing weekly margin account statements to W, and further since about July/August 2003, he ceased to comply with the interim maintenance order for W. W later found out that he left Hong Kong on 14th July 2003 and disappeared.
61. It can be seen from the above that after H was served with W’s Notice he was fully aware that he was required by W to file an affirmation of means W’s Notice, and yet he refused to co-operate. He admitted to have repeatedly refused to file his affirmation of means but explained that was because he doubted W’s right to it at the early stage, and also claimed that there were ongoing negotiations between him and W. Instead of seeking proper legal advice upon being served with W’s Notice, he chose to take various steps as can be seen from the above, which included the transfer of all his shares in the companies PE and Txxxxx to his father, in addition to the payments of about HK$1.3m to L.
62. H’s intention and payments to L must be seen against the background of his various actions as set out above. Although in applying for the discharge of the 2nd injunction order, H did file an affirmation (2nd affirmation) in which he alleged that W had not made full and frank disclosure, that she failed to substantiate her allegations by any facts or materials, that she had fabricated facts and over-reacted, and that he had no intention to dissipate his assets, he did not disclose in this 2nd affirmation any of his payments to L or the transfers of his shares in Txxxxx and PE to his father.
64. H’s actions, as outlined above, after being served with W’s petition and W’s Notice appear to me to be buying time so that he could complete the various transfers to his father and the payments to L. By 8th April 2002, he knew he was required by a court order to file his affirmation of means. By the time when he eventually filed his affirmation of means, he had instructed solicitors, and no doubt he would be advised to disclose all the details relating to his transfers and payments. In this affirmation, in relation to W’s allegations that he had threatened to dissipate his assets, H explained that on one occasion, he might have been provoked by W by saying that he would rather give everything to L than W, but claimed that W should know that he did not mean it. He also said W was over reacting when she claimed that he might leave Hong Kong permanently. With hindsight, what W feared most and what W claimed H had threatened at that time did come true.
65. In H’s affirmation of means filed on 30th April 2002, there was no mention of the Alleged Agreement or indeed any legally enforceable agreement with L or was anything said about any legal obligation to make payments to L. What he said in relation to the HK$1.3m payment to L, was that :
“In early 2002, (L) told me she wanted to purchase a flat so that she and C could have a secure roof over their heads. Being a father, I have the responsibility to provide a secure home for my son and his mother and carer. Therefore, I gave her about HK$1.3m in March 2002. She signed a memorandum of agreement on 3rd April 2002 for the purchase of a flat at HK$2.75m”.
66. H acted as L’s guarantor for the mortgage loan of HK$1.8 m and he said that rates, mortgage payments of $9,299 per month, management fees of about HK$1,896 would be paid by him as part of L’s maintenance. H further said that “As (L)’s flat is of 12 years of age, substantial renovation needs to be done. I shall incur about HK$300,000 on renovation, new furniture and electrical appliances. We shall move from the aforesaid address which is rented at HK$10,500 per month to her new flat after renovation is completed……… This property is registered in the sole name of (L). The payment arrangement is similar to that of the Petitioner’s new flat. I do not mean to retain any interest in either property”. It would thus appear that H might have paid a further sum of HK$300,000 towards the renovation etc. but it is not clear how and when this sum was paid.
67. According to H’s above affirmation of means, his assets as then declared and disclosed by him, after transfer of the shares in PE and Txxxxx to his father, and after payments of about $1.3m to L, and after paying the down payment and other expenses of about $1.18m for W’s flat, were approximately as follows :
(i) cash at Hang Seng Bank Prestige A/C HK $1m (ii) 50% interest in a property at a commercial building bought in October 2001 for HK$1,237,000 and which was subject to a mortgage of HK$860,000 $180,850 (iii) MPF $27,875 (iv) Cash and Margin Accounts with Txxxx (in H’s name of which H said at least $3.55m belonged to his father) $7.32m (v) Margin Account with Txxxxx (held in W’s name) $1.3m
68. At the hearing leading to the making of the 2nd Disposition Order and order for ancillary relief, Mr Clough, on behalf of W, had prepared a schedule of unexplained withdrawals by H amounting to about HK$15m. L had recently challenged some of the withdrawals which she said could be explained and there could have been double counting on W’s part, to the extent of about HK$7.2m. Assuming L were correct, and deducting those amounts which L claimed were explained or double counted, there were still sums amounting to about HK$8 m which were unaccounted for by H when he absconded. H was aware of W’s allegations about his withdrawals, as she had referred to the same in her affidavit filed on about 8th July 2003, although at that time the amount she was referring to was less. H had not yet left for the United States, but there did not seem to be any attempt on his part to explain such withdrawals. Anyway, at the time of his filing his 1st affirmation of means, H regarded himself as having only about HK$6.3m of assets as set out above, excluding the amount of HK$3.55 m which he said was his father’s and including the margin account in W’s name. The shares he transferred to his father, and his payments to L were clearly excluded by him as part of the family assets available for distribution for W. Seen against the background of the above, I do not consider H was at all forthcoming at the time of the payment of HK$1.3m to L.
69. W filed her 8th affidavit on 15th August 2002 in support of her 1st s. 17 Application. Thereafter, it appears that H filed only two affirmations, one on 19th August 2002, which was to oppose W’s application for increase in her interim maintenance, and the last one was an updated affirmation of means on 9th July 2003. Thus, H never filed any affirmations to answer W’s 8th affidavit or to oppose her 1st s. 17 Application, although he was legally represented and was in Hong Kong at that time. In any event, in none of his 5 affirmations did he mention the Alleged Agreement, or any legally enforceable agreement with L or his legal contractual obligation to L formed in 2000. What H said was that he gave L HK$1.3m in March 2002. In the without prejudice letter dated 7th June 2003 disclosed by W in her 24th affidavit, H referred to the mortgage payments of WT Property as his “own house down payments”, although in another of his affirmations, he referred to the property being L’s. Whether H regarded himself as having any beneficial interest in WT Property or not, it was clearly H’s intention that the WT Property was not to be taken into account in calculating the amount of financial provision for W.
70. There was no evidence at all from H that he regarded himself as having entered into any legal contractual obligation in 2000 to pay L. Further for reasons set out later in this judgment, I am of the view there was no legally enforceable agreement in 2000 between H and L. The payments of about HK$1.3m to L were simply given to her to buy a flat. He might have the dominant intention of providing a secure home for L and C, but and in doing so, he had obviously also intended that such funds were to be removed from the “family assets”, and thus not available for distribution for W, and thus the effect of such payments to L would be to prevent adequate financial provision being granted to W.
As Nourse LJ had said in Kemmis v Kemmis:
“I agree with Purchas and Lloyd LJJ that what the judge had to find was a subjective intention on the part of the husband. Moreover, I think it clear that it did not have to be his sole or even his dominant intention. It was enough if it played a substantial part in his intentions as a whole. If it were otherwise, section 37 (2) would fail to catch the case where a husband makes a disposition with the dominant intention of gratifying his mistress and only the subsidiary intention of defeating his wife’s claim for financial relief. I feel sure that that was not the intention of Parliament”.
71. Mr. Pilbrow has asked the Court to draw a distinction between the sums paid for by H towards purchase of WT Property and the sums which were utilized for the general maintenance of C. There was no evidence that at the time of his payments of about HK$1.3m, H had intended that any part of those funds were for the maintenance expenses of C. H’s evidence was simply that the HK$1.3m were given to L to provide a secure home for her and C, that is for the purchase of a property. In fact, as referred above, H also said he would be incurring a further HK$300,000 for renovations, new furniture etc. In H’s affirmations, he had set out the expenses of him, L and C, and it is clear that those were set out as ongoing expenses which he said he had to pay and not on the basis that they had already been paid.
72. L also gave evidence that, in relation to the balance of the HK$1.3m, after the purchase of WT Property, she used $87,800 out of HK $ 100,000 to repay her father on 8th July 2002 and about HK$200,000 for investment in IPOs in July 2002. There was another HK$100,000 which she transferred to her new HSBC PowerVantage Account, and it appears this sum remained in her said account until about February 2003.
73. There were in fact other payments by H to L from February 2002 to December 2002, such as the HK$100,000 on 28th February, which L said was for living expenses and the HK$50,000 on 30th December 2002, which L said was for New Year expenses.
74. No doubt, being the mother, L might have spent some of the funds on C but the issue was H’s intention and not what L had later used the funds for. In the circumstances, I am of the view that there should not be any distinction between the sums used by L for purchase of WT Property and sums allegedly used by her for C’s general maintenance, since I find no such distinction was intended by H.
75. Having regard to all the above circumstances, I am satisfied that H’s payments of about HK$1.3m were carried out with the intention to defeat W’s claims, and that if the payments were set aside different financial provision would be granted to W.
76. In fact, as pointed out above, the dispositions of HK$1.3m were made within 3 years before W’s 1st s. 17 Application and as such dispositions would have the consequence of defeating W’s claims for financial provision, H is presumed to have made the payment with the intention of defeating W’s claims. I am satisfied that L has not succeeded in rebutting such presumption.
77. So far as the subsequent payments of about HK$245,000 are concerned, they were clearly payments made within 3 years before W’s 2nd s. 17 Application, and thus the presumption also kicks in. It is L’s case that such payments were made pursuant to the Alleged Agreement, and thus H was under a legal obligation to make such payments. As set out later in this judgment, I find there was no legally enforceable agreement between H and L in January 2000. L said the sum of HK$30,000 paid on 18th February 2003 and the sum of HK$15,000 paid on 8th April 2002 were for gifts for H’s parents, and the remaining two payments of HK $100,000 were for the payment of the mortgage repayments of WT Property.
78. H had not filed any evidence in answer to W’s 2nd s. 17 Application as by then he had absconded. It appears that H’s last affirmation filed was on 9th July 2003, and he did not disclose the payments of HK $245,000 to L. By 9th July 2003, he should be fully aware that his payments to L could be subject to a s. 17 application since he had already been served with W’s 1st s. 17 Application. Yet, he chose not to disclose nor explain these further payments to L in his last affirmation.
79. As set out later in this Judgment, I accept that the sums of HK$45,000 were not dispositions to L but to H’s parents. Regarding the sums of HK$200,000 to L, I find that the presumption in relation to such payments has not been rebutted.
(ii) whether the disposition/s fall into the “exception” in s. 17 (2) of MPPO
80. I now turn to consider whether the payments were dispositions which fall within s. 17 (2) of MPPO, namely whether the dispositions were made for valuable consideration and whether L acted in good faith and without notice of H’s intention to defeat W’s claims.
81. H has admitted on affirmation that he is the natural father of C. L has produced a medical certificate that the conception of C was by artificial insemination on 28th January 2000. As mentioned earlier in this Judgment, L says that the Alleged Agreement was a legally binding agreement reached in early 2000, and that it was confirmed by H in the Birthday Card he sent to L in about October 2000.
82. In the Birthday Card on which it was printed “WOW ! I LOVE YOU !” H has written :
“ I am anxious to see my son C. Take very good care of your health and hope you are recovering fast. Don’t worry financially. I will support C and you with good living and pay all your medical bills. Hope you two come back to Hong Kong earlier. Although the stock market dropped a lot since March, as I promised to buy you and C an apartment in January if you have our baby, now I can still afford to buy an apartment for HK$3.0 millions. I will buy an apartment as soon as you come back to H.K. The house price has dropped to a more affordable level now. I hope the house price will drop a little bit more so that you two can live in a larger place.”
83. Mr. Pilbrow has referred me to Ward v. Byham 1956 1 WLR 496, where Lord Denning held that a promise by the father of an illegitimate child to pay the mother maintenance provided she looked after their child was binding and enforceable.
84. Mr. Pilbrow has also referred me to Tanner v Tanner 1975 1 WLR 1346 as a further example in which a court will infer a contractual obligation by the father of illegitimate children to house those children during their schooling years, although in the case of Horrocks and Another v. Forray 1976 1 WLR 230 the court was unable to infer a contract in similar circumstances.
85. Mr. Pilbrow further submits in this case, the Alleged Agreement between the parties was a unilateral contract, which became executed/binding upon the birth of C, and relied on the well known principles in Carlill v Carbolic Smoke Ball Co. 1891-4 AER p. 127.
86. Mr Clough has referred me to authorities that the reasoning in Ward v Byham has been questioned.
87. In Ward v Byham, the facts were not disputed. The child was living with the father, who then made an offer to pay the mother an allowance provided the child was well looked after and happy. The mother then took the child away and maintained the child accordingly. The point taken by the father was there was no consideration for the promise as the mother was bound in law to maintain the child. Lord Denning held there was. In Tanner v Tanner, the father bought a house for his mistress and their children to live in. Later, the father wanted to evict the mistress. On appeal, on the facts of that case, it was held that the mistress had a contractual licence to live in the house. However, in Horrocks and Another v Forray,Tanner v Tanner was distinguished and it was held that there was no binding contract in the nature of a licence and no evidence justifying the inference that the mistress held a contractual licence to live in the house bought by the father (S) of her daughter. It was held, inter alia, that the fact that S intended to provide some security for his mistress was not sufficient to bring into existence a binding contract in the nature of a licence.
88. Each case obviously depends on its own facts. What Mr Clough submits in the present case is that L’s account of there being a legally binding contract is incredible and incapable of belief, and that there is no basis for the assertion that a legally enforceable contract was made at the January 2000 restaurant meeting.
89. It is L’s case at this re-hearing that there were 4 stages involved in the agreement between her and H, namely :
(i) 1st stage : before the surgery to undergo artificial insemination, when H made the offer that if L underwent artificial insemination and could successfully give birth to a baby, he would look after their livelihood and buy a property for them
(ii) 2nd stage : upon confirmation of pregnancy
(iii) 3rd stage : Upon the birth of the baby
(iv) 4th stage : Upon return of L and the baby
90. The 1st stage was when an offer was made to her by H in January 2000 at the Golden Dragon Restaurant when they were having tea, which she accepted. H then paid her HK$60,000 for the operation and as put by Mr. Pilbrow, she did go through the inconvenience and the trauma of carrying a child through the gestation period, suffered the pain of childbirth and thereafter has been bearing the responsibility of being the primary carer of C, and will have to do so until C reaches majority. Mr. Pilbrow submits that she accepted the offer and there was “valuable” consideration.
91. The 2nd stage was upon confirmation of pregnancy, H would pay for the maintenance of L.
92. The 3rd stage was when H would maintain the baby upon the birth of the baby.
93. The 4th stage was upon return of L and C to live in Hong Kong, H would purchase a property for them to live in.
94. Further, Mr Pilbrow submits that L acted in good faith and without notice of any intention by H to defeat W’s claims. The Alleged Agreement arose in January 2000, when Mr Pilbrow submits there was no evidence that L had knowledge of H’s dishonest intention, as it was 2 years before the issue of W’s petition, and that although L was aware of L’s marriage to W, there was no intent in her mind at that time that C’s birth would necessarily bring an end to such marriage.
95. L was cross examined on two occasions, one during the 2005 hearing, and now again at this re-hearing.
96. I have in my earlier judgment setting aside the Disposition Orders commented on the demeanour of L while giving her evidence. Since then, until just before this hearing, L had conducted efficiently directions hearings and a discovery application on her own. She was working as a secretary to the managing director of a large American international organization in Hong Kong before she moved to the United States in early 1995, and spent about 6 years there before moving back to Hong Kong with C. She eventually passed her stockbroker’s licence examination in the United States. She is an intelligent lady and she was cautious and guarded when giving her evidence.
97. L claimed that the ice cream parlour was her elder sister E’s. This ice cream parlour started in about 1995, and this would appear to be the same year L went to the United States, and co-incidentally, it closed in about 2001, the same year when L returned to Hong Kong. W alleged it was H who bought this business and that he also bought a property for L in the States, which L denied. W said that H’s contact with E’s telephone number in 1997 shows constant contact between L and H. L explained that the telephone numbers were that of E’s ice cream parlour and that of E’s home, and that H was only calling E and that L would only talk to H when E was not around. W has also produced several remittance slips which indicated that H transferred the following sums to L’s account :
(i) US $20,020 on 4th November 1996
(ii) US $2,510 on 21st June 1997
(iii) US $3,020 on 13th February 1998
98. L initially said in her 1st affirmation, inter alia, that prior to April 2002, apart from the fact that she knew H and W socially in around 1992, and H’s investment many years ago in her eldest sister’s ice cream parlour, the only connection between H and L arose from their individual hopes to have children.
99. After W produced the above remittance slips in her reply affirmation, L then filed a 2nd affirmation in which she produced a note from E stating that the above funds were “given” by H to E for use in her ice cream parlour in Guttenberg, New Jersey USA, that all such funds were repaid to H by E in April 1998 with interest, that although E was the sole owner of the store, L acted as the manager of the ice cream parlour and that L handled the transfer of these “and other funds” through her bank accounts. E later swore an affidavit to this effect.
100. L herself in her 2nd affirmation said the funds were relating to E’s business relationship with H and that as she was helping in the daily running of the ice cream parlour for E, very occasionally her bank account received H’s remittances in respect of ongoing expenses through L’s bank accounts, and that such sums were repaid to H by E in April 1998 with interest. E produced a confirmation from JP Morgan Chase of an amount of US $ 28,000 on 7th April 1998 from L to H.
101. Further L says H had another girlfriend in 1996/1997 by the name of J, and L said she found two remittances of sums of US $650 and US $500 respectively from H to this J at the WT property.
102. The amounts on the remittance slips produced by W were much greater than the remittances to J. There was no evidence as to the total amount of H’s total investment in the ice cream parlour, or the amount of on going expenses and there was no satisfactory explanation as to why these funds were not transferred to E’s own account. If the ice cream parlour was a proper business, then it should also have its own bank account. There was no satisfactory explanation as to why if it was an investment by H, the amount needed to be repaid. E used the word “given”. There was no evidence of any loan. I have to say that I find the information provided by E and L in relation to the ice cream parlour was very much lacking in details. Further, in L’s ex-husband B’s email to W of 2nd August 2001, he referred to L already owning the ice-cream store since 1996, and obviously he believed the ice cream parlour was owned by L. Thus, it does appear that W has reasonable grounds in alleging that the ice cream parlour was in fact L’s, and that H’s close relationship with her went back much earlier than 2000.
103. As earlier stated, L in her 1st affirmation said that prior to April 2002, the only connection between H and her arose from their individual hopes to have children. In her 2nd affirmation, L said in relation to the telephone calls H made to the ice cream parlour and E’s home, that whenever E was not around H would speak to her about the business, but L never spoke with him about personal matters, but knew him well as a general friend, and that it was a considerable shock to L in 2000 when H revealed to her his personal wish to have a child.
104. When L gave evidence at the present re-hearing, she revealed suddenly for the first time that she had sought help from H on the telephone in relation to her stock broker’s licence examinations at end of 1999.
105. L’s own evidence was inconsistent. In her 1st affirmation, she said the oral agreement between H and her was reached when her pregnancy was confirmed. She now says a legally binding agreement was reached at the Golden Dragon Restaurant during a lunch which lasted a bit more than an hour, which was before the artificial insemination. Previously, L never mentioned the Alleged Agreement involved 3 or 4 stages. All these details were only disclosed at this re-hearing. Further, L previously never said in any of her affirmations that she had contacted H to seek his advice over any stock broker licence examinations and this she disclosed only at the re-hearing.
106. I do not find L a frank and forthcoming person. Notwithstanding the fact that she maintained that she and H were only friends when the Alleged Agreement was reached, and that she was returning to live with her husband B in New York, she chose not to disclose to B the donor for the purpose of the artificial insemination was a friend. One would have thought there was no need to hide this from B especially when L said she and B had agreed to separate once the baby was born, and that her marriage had by early 2000 broken down already. L further said during the re-hearing that B was “super nice” to her during her pregnancy, and that her medical bills for giving birth to C were paid out of B’s medical insurance. She said in her 2nd affirmation that in 2000 she was entirely dependent on B and that she later worked only 3 days at weekends and trained to be a stockbroker, and yet in this re-hearing she admitted that H had been giving maintenance to her since she was conceived with L, which was in early 2000, and that she met hers and C’s expenses from those funds given by H. Further, on L’s own evidence, in about May 2001, C was found to be suffering from psychomotor delay, and notwithstanding her an intimate relationship with the father of her child since October 2002, she chose to keep their child’s health problems a secret from H until he found out himself in August 2004.
107. I further find L’s evidence not consistent with what H said in his affirmations.
108. In paragraph 17 of H’s affirmation filed on 30th April 2002, H said he moved out from home on 19th April 2002 to live with L and their son C. In paragraph 27 of the same affirmation, he said he had been giving maintenance to L ever since she was conceived with their son, and listed for himself, L and C “as a household” various expenses, including brunch and high tea on sundays and holidays, and various expenses for L and C. L said she helped H in putting those expenses together, but whoever drew up the lists of expense, it is clear that H referred to the three of them as one household.
109. In paragraph 31 of the same affirmation, H said he hoped that C would have the right of abode here after being legitimized by the marriage between L and him.
110. In paragraph 16 of H’s affirmation filed on 19th August 2002, H said he only incurred HK$500 on groceries and toiletries for “my present family of 3 persons plus a domestic helper”, and also expenses for trip to U.S.A. “to visit family twice a year”.
111. It is clear from H’s affirmations that he was not merely sharing a flat with L “as a friend”. The impression H gave in his affirmations is that he and L and C were living as a family unit and further he and L were planning to get married. In fact, in my earlier judgment on 5th August 2005, I had already said that I found that by the time of the artificial insemination, H and L must have been very close (paragraph 53)
112. Further as stated earlier in this Judgment, H never mentioned any 3 or 4 stage legally binding agreement with L in any of his affirmations.
113. So far as the Birthday Card is concerned, there was no evidence that it was indeed received by L in October 2000 apart from L’s own oral evidence. I further do not find that the Birthday Card was in support of H having any intention to enter into a legal relation with L in January 2000. Although H had written that he “promised” to buy L and C an apartment in the Birthday Card and L claimed he was referring the promise being made in January 2000, he did not refer to any such “promise” in his affirmation of means filed on 30th April 2002. In fact, I re-iterate in the said affirmation, he said it was in early 2002 that L said she wanted to purchase a flat.
114. According to L herself, she had only met H twice before January 2000, the first time being in 1992, and the second time being in 1995 before L moved to the States, and thereafter there were only some business telephone conversations and some telephone conversations over the stock broker licence examinations, if all this were true, they could not even be described as good friends. Then suddenly over a tea meeting for “a bit more than an hour”, a so called 3 or 4 stage legally binding contract was formed, whereby a male friend was asked to provide his sperms in a tube for artificial insemination and then she was to bear a child. I must say I do not find what L said credible at all.
115. According to L, H left her in August 2004 and H was still initially returning home to collect personal belongings and to see C. Why did L not start proceedings against H for child support in the United States then ? H had a driving licence there and there was no evidence that L had tried to trace H in the United States, although she had been going back to the United States since November 2004, and two years later, just before this re-hearing, she suddenly issued proceedings here for child support, and serving her originating summons on H’s last known address in Hong Kong, with full knowledge that he is not there. Furthermore, if there were indeed a legally enforceable contract by which H had to provide a property for her, why did she herself not sue H for enforcement of such contract for say, the payment of the mortgage instalments ?
116. Having considered all the circumstances, I reject L’s evidence about the Alleged Agreement, and find that there was no sufficient evidence of any legally binding contract entered into by L and H in January 2000. H could have promised to buy a flat for L and C but there was no sufficient evidence that such was in early 2000 and before the artificial insemination, or any evidence H had intended such promise, if any, as creating any legal relationship between him and L. I therefore find there was no valuable consideration for his payments to L.
117. As stated in my earlier judgment, I find that L’s relationship with H in early 2002 was much closer than she had said. They were living together as a family, and H’s actions showed that he was trying to pay over the sums to L before he had to file his affirmation of means. L only needed to pay the down payment for WT Property of HK$275,000 on 9th April 2002, and the further down payment of HK$675,000 on 15th April 2002, and yet the sums of HK $600,000 and HK$702,490.34 were paid to her at least 3 weeks earlier, i.e. respectively on 21st March and 28th March. She said she wanted the sums paid over before the provisional agreement was signed. In view of the close relationship between H and L, which I have found, and the timing of those payments, I am satisfied that L did not act in good faith and that she was aware or had notice of H’s intention to remove the sums of HK$ 1.3m from the family assets and to defeat W’s claims at the time of the payments.
118. By the time of the payments of HK$245,000, I am satisfied that in view of the intimate relationship between L and H, she ought to know W was making financial claims against H. According to L, $45,000 were used for gifts for H’s parents, namely a ruby ring for H’s mother, and some special Chinese herbs for his parents. There was, however, no satisfactory explanation as to why the two sums of HK$100,000 were paid to her in April and June respectively. L said these were for mortgage payments for WT Property, but at that time, H was still paying the mortgage instalments direct. L only withdrew the total sums of HK $200,000 on 25th June 2003 to transfer them to the Wing Lung Bank for the autopay arrangements for the monthly instalments from 26th July 2003 onwards, which was after H and she had left for the United States. L gave evidence that the payments of HK$ 200,000 were for the purpose of mortgage payments, if L knew already at the time of the payments of the HK $200,000 that those sums would be used for the autopay mortgage payments from 26th July 2003 onwards, then she and H must have been making plans to leave the jurisdiction!
119. As Mr Clough did not challenge L’s evidence about HK$ 45,000 being used for gifts to H’s parents, I find that such dispositions were therefore not to L but to H’s parents. I am, however, satisfied that L did not act in good faith in relation to the sums of HK$200,000, and that she had notice of H’s intention to defeat W’s claims for financial provision.
120. In the above circumstances, I find that H’s dispositions of HK$200,000 to L do not fall within the “exception” in s. 17 (2) of MPPO.
(iii) whether H owed L a sum of HK$480,000
121. L has produced a diary/account in which she said H had written down the amounts he owed her and she has further given oral evidence confirming this. The amount totalled about HK$480,000. There was no evidence to contradict what L said, and I therefore accept that H owed her HK$480,000. I am of the view that this sum is to be deducted/set off from the amounts of HK$1.5 m (HK$1.3 m + HK200,000), which I find L should pay back to H.
122. L tried to paint a picture of her being in poor financial circumstances. I find that she has a much higher earning capacity than what she claimed, with her qualifications and previous work experience. She has produced a valuation of WT Property, which was HK$4.17m early this year, and the outstanding mortgage was then about HK$1.55m. I am of the view that L should be able to comply with my order.
ORDER
123. My order is as follows :
(i) The dispositions of HK$1.3m made by the 1st Respondent to the 2nd Respondent are set aside.
(ii) The dispositions of HK$200,000 made by the 1st Respondent to the 2nd Respondent are set aside.
(iii) The above sums of HK$1.5m having been set aside, and the 2nd Respondent being indebted to the 1st Respondent in the sum of HK$1,020,000 (“the said debt”), the 1st Respondent is ordered to transfer and assign the said debt to the Petitioner within 21 days of the service of this order.
(iv) In the event that the 1st Respondent does not transfer his interest in the said debt to the Petitioner as ordered above, the Registrar of the High Court is directed to sign all relevant documents relating to this assignment of the said debt to the Petitioner for and on behalf of the 1st Respondent.
(v) The costs of and incidental to the said transfer and assignment of the said debt shall be paid by the Petitioner.
(vi) There be liberty to apply in relation to the implementation of the above.
124. So far as costs of the 2nd Respondent’s Summonses issued on 9th November 2004 and 18th April 2005, and any reserved costs, and the costs of the re-hearing, I will direct the following :
(a) The Petitioner shall submit her written submissions on costs within 21 days hereof,
(b) The 2nd Respondent shall submit her written submissions on costs within 21 days thereafter.
| ( Bebe P Y Chu ) District Judge |
Mr N Clough instructed by Messrs Chaine, Chow & Barbara Hung for Petitioner
The 1st Respondent absent
Mr D Pilbrow SC instructed by Messrs Boase Cohen & Collins for 2nd Respondent