PMCL also known as LMC also known as KLMC v. AKK also known as KAK AND ANOTHER

FCMC 11521 / 2015

[2024] HKFC 219

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11521 OF 2015

----------------------------

----------------------------

_____________________________________

REASONS FOR DECISION
(H’s Application for adjournment of Trial)

_____________________________________

1.  Today is the first day of the trial on ancillary relief dispute and preliminary issue (the “Trials”). This court was informed that the 1^st Respondent (“H”) applied by letter (“the Letter”) for an adjournment of the Trial on medical grounds. He enclosed with the Letter a sick leave certificate issued by Dr Chan of Hong Kong Adventist Hospital stating that H has received examination / treatment on 29 November 2024. The diagnosis is left sciatica and that H should be off from 29 November 2024 to 6 December 2024 (inclusive) (“Sick Leave Certificate”).

2.  H and the 2^nd Respondent (“ZL”), who are acting in person, are absent today. ZL had not participated in the proceedings since early 2023. She had not filed any pleadings nor evidence in the preliminary issues.

3.  The Petitioner (“W”) opposed to H’s application for adjournment.

4.  Having considered the Letter and the Sick Leave Certificate and heard the submission made by Mr Nagpal (with Ms Cheng), counsel for W, I agreed with Mr Nagpal that H has not adduced sufficient evidence to justify an adjournment of the Trials. At the end of the hearing, I made the following orders:

4.1.  The Trials be adjourned to 4 December 2024 and personal attendance of all parties are required.

4.2.  If H intends to seek adjournment of the Trials for medical reasons, he shall lodge and serve prior to the adjourned hearing medical evidence for the court’s consideration by producing a medical report prepared by a medical practitioner registered in Hong Kong certifying:

(1)  detailed diagnosis of H’s medical condition;

(2)  that H is unable to attend the Trials because of his medical condition;

(3)  any ameliorative measures can be taken to accommodate H’s physical condition for his attendance at the Trials, and if no such measures, why not; and

(4)  if it is opined that H is unfit to attend the Trials due to his medical condition, the likely time frame for his recovery and attendance at the Trial.

4.3.  Costs of today’s hearing be reserved.

5.  I now set out the reasons.

6.  The trial dates are milestones dates. A court will only vary a milestone date if there are exceptional circumstances justifying the variation: Rules of the High Court (“RHC”), Order 25 rule 1B(3).

7.  The court has a positive duty to exercise its case management power with a view to furthering the underlying objectives of the rules, including to ensure that cases are dealt with as expeditiously as is reasonably practicable. In the exercise of case management power, the primary aim is to secure the just resolution of disputes in accordance with the parties’ substantive rights. (RHC, Order 1A rules 1 and 4; Law Yin Pok Bosco v Dr Chan Yee Shing[1] at §18)

8.  The relevant principles for an adjournment of trial on grounds of medical illness of a party or a necessary witness can be found in the Court of Appeal’s decision in Law Yin Pok Bosco, per Fok JA (as he then was) (applied in Elijah Saatori v Raffles Medical Group (Hong Kong) Limited[2]at §11) as follows:

“9. In the ordinary course of events, milestone dates such as the dates fixed for trial of an action must, on occasion, yield to the vicissitudes of life. The illness of a party or a necessary and important witness may, depending on the circumstances of the case, justify vacating and re-fixing the trial dates. This is simply a manifestation of the principle recognised in Dick v Piller [1943] 1 KB 497, the headnote of which reads:

“When a witness in, or a fortiori a party to, an action in a county court is alleged to be prevented by illness from attending the court for a hearing of the case and the judge is satisfied of the fact of his illness and of the materiality and importance of his evidence and that the granting of an adjournment will not cause an injustice to the other party which cannot be reduced by costs, it is the duty of the judge to grant an adjournment, it may be on terms, and failure on his part to do so constitutes a miscarriage of justice which necessarily involves an error of law on which an appeal may be founded.”

…

11. However, in order for an adjournment to be granted on this basis, the court is entitled to be satisfied that the inability of the litigant to be present is genuine and the onus is on the applicant for an adjournment to prove the need for such an adjournment: Teinaz v Wandsworth London Borough Council at §21.

…

18. A court will only vary a milestone date if there are exceptional circumstances justifying the variation. The court has a positive duty actively to manage cases with a view to furthering the underlying objectives of the rules, one of which is to ensure that cases dealt with as expeditiously as is reasonably practicable. Of course, it remains nevertheless necessary for the court to recognise that its primary aim in the exercise of its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties.

19. Against this background and bearing in mind what we have said above, we would make the observation that it would in future be more helpful if medical experts were made aware of the court’s concerns about varying a milestone date and, when preparing reports in support of an application for an adjournment, the relevant experts should be asked to consider what ameliorative measures could be put in place if the party or witness were to have to give evidence and to explain, if this were the case, why such ameliorative measures might not be sufficient to address the perceived difficulties. This would assist the court in making an assessment on an informed basis as to whether an adjournment was warranted at that particular stage. An unexplained recommendation for an adjournment, even if accompanied by a diagnosis of the condition of the patient and the proposed course of treatment, does not serve the same purpose. Needless to say, such experts must also be prepared to come to court to give evidence to support his or her opinion if necessary, although as we observe below, it is not intended that applications of this nature become mini-trials in themselves.”

9.  This court retains a full discretion to manage cases litigated before it. The question whether the Trials shall be adjourned due to a party’s medical condition is a case management decision to be made by the court, but not a matter determined by medical expert: Law Yin Pok Bosco at §22.

10.  The Sick Leave Certificate, being the only evidence adduced by H, does not justify an adjournment of a milestone date: see also CKC v SHTH[3]. The Certificate does not address the issue in question, that is whether H is unfit to attend the Trials because of his medical condition. As Au-Yeung J rightly observed in Tsang Wing Kwai v Wong Wing Sze Tiffany[4]at §13, not all illness or medication required complete rest. There is also no evidence that H cannot attend the Trials with or without ameliorative measures implemented.

11.  H has actively participated in the proceedings. He made various interlocutory applications and attended hearings of these applications recently. The last application was by a Summons on 28 October 2024. That application was dismissed after a hearing on 6 November 2024[5]. H has lodged into the court his opening submissions for the Trials on 25 and 28 November 2024. Although H had mentioned in previous hearings that he had some pain, he had not suggested that he is not able to attend the Trials because of medical condition. On some of the previous occasions, H attended and completed the hearings with leave to address the court on his seat. In the last hearing on 6 November 2024, H made most, if not all, of his submissions on his feet without difficulties.

12.  The petition was commenced in 2015, almost a decade ago. The trial dates were fixed in December 2023. H had twice unsuccessfully applied for a stay or adjournment of the Trials on other grounds by Summonses dated 28 December 2023 and 4 October 2024. W has an interest and entitlement to have this protracted litigation be brought to a conclusion without unnecessary delay.

13.  The present case is different from Elijah Saatori, where the plaintiff produced a number of certificates to the effect that he was hospitalised and medically unfit to attend the trial. Chow J (as he then was) granted an adjournment on terms that the plaintiff paid all the taxed costs due to be paid to the defendant and a further sum into court as security for costs ordered to be paid and thrown away by the adjournment, failing which his claim shall stand dismissed.

14.  We have originally reserved 10 days for the Trials on the basis that H, W and ZL will give evidence. As ZL has not filed any evidence in the proceedings, there should be sufficient time to complete the Trials with a short adjournment.

15.  Having considered all the relevant circumstances before me, I allowed a short adjournment of the Trials to enable H to file sufficient evidence to support his case before the adjourned hearing if he has a real cause. In the absence of evidence adduced before the next hearing that justifies an adjournment, the court may consider proceeding with the Trials in the absence of the respondents.

Mr. Deepak Nagpal and Ms. Bonnie Cheng instructed by Chaine Chow & Barbara Hung, Solicitors for the Petitioner.

The 1^st Respondent was not represented and did not appear.

The 2^nd Respondent was not represented and did not appear.

FCMC 11521 / 2015

[2024] HKFC 205

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11521 OF 2015

----------------------------

BETWEEN

----------------------------

_____________________________________

DECISION
(R1’s Summons dated 28 October 2024)

_____________________________________

A. The Summons

1.  The Trial on ancillary relief dispute and preliminary issue of this case (with 10 days reserved) will commence on 2 December 2024, about 3 weeks from today. The Trial dates were fixed last year on 22 December 2023.

2.  On 28 October 2024, R1 took out a Summons (“Summons”) for the following relief:

2.1. Paragraph 1 - leave to take out the Summons ex parte;

2.2. Paragraph 2 – direct both parties to release all funds in the KPL account, and to distribute according to the respective urgent needs of each party, to be accounted for at the AR Trial. P shall have cash of HK$3,000,000 (already distributed) and the remaining be distributed to R1, or to be distributed urgently in the proportion deems fit by the court;

2.3. Paragraph 3 - leave be granted to R1 to adduce further evidence one week before the AR Trial;

2.4. Paragraph 4 – direct P to forthwith make full and frank disclosure of the statements of a bank account at the Standard Chartered Bank held in the joint name of P and her late father (“SCB Account”) from September 2014 to reflect the historical transactions and the closing balance.

3.  On the factual background and procedural history of this case, I refer to my previous decisions, in particular [2023] HKFC 34 on R1’s application for joinder, discovery and section 18 declaration, [2024] HKFC 99 on P’s application to compel the filing of Form E, and [2024] HKFC 125 on R1’s MPS and stay of proceedings application.

4.  The relief sought by the Summons will affect not only the conduct of the AR Trial but also the parties’ substantive rights. Both parties have the right to be heard. There is no reason to hear this Summons ex-parte.

5.  On 28 October 2024, I directed that a hearing be fixed for today to consider whether leave should be granted to R1 to take out the Summons, and if leave is granted, the Summons is to be heard immediately thereafter.

6.  P appeared at today’s hearing by her legal representative. P’s primary position is to oppose leave for the reasons that this is a very late application (about one month before the commencement of the trial), and R1 did not even mention his intention to issue the Summons at the PTR hearing on 7 October 2024. If this court is minded to grant leave to R1, solely for practical reason, P will remain neutral and raise no opposition.

7.  There is no reason for the extreme lateness of the Summons. R1 has not even explained why he chose to take out the Summons at this very late stage. His supporting affirmation is by and large a regurgitation of the matters previously raised by him and rejected by the court. Nonetheless, solely for case management and expedient disposal of the matter, I hear the Summons today. The parties should not take this as their entitlement to have any late Summons be heard before the AR Trial.

8.  The parties have attended the hearing and argued the Summons, Paragraph 1 of the Summons is therefore overtaken by event.

9.  The issues to be dealt with today are thus:

9.1. Specific discovery of SCB Account statements;

9.2. Leave to adduce further evidence; and

9.3. Distribution of KPL funds.

B. SCB Account Statements

10.  R1 sought discovery of the statements of the SCB Account, which is a joint account held by P and her late father.

11.  One of the questions in R1’s 3^rd Questionnaire is the production of statements of this bank account from September 2014 onwards in P’s possession, custody and power. P was ordered to answer this question by an order dated 13 February 2023.

12.  P answered on 14 April 2023 that she did not have any recollection of having this bank account with her late father, she would make enquiry with the bank for copies of the statements and would provide the same to R1 when available.

13.  At the hearing, the parties agreed that P has recently provided R1 with the bank statements of this account from December 2016 onwards showing zero balance, but not those dated earlier. Thus, the scope of R1’s application today is limited to the production of bank statements from September 2014 to November 2016.

14.  P said that the bank statements dated earlier than December 2016 are not in her possession, custody and power as she does not have those records and was told by the bank that it no longer has such records.

15.  R1 argued (which P denied) that P deliberately withheld the request for statements from the bank until after the expiry of the 7 years storage period. R1 also contended that this is one of the bank accounts where P hid her money. These are matters that R1 may argue at the AR Trial if he so wishes.

16.  The court has already made an order on 13 February 2023 requiring the production of the bank statements (including the period from September 2014 to November 2016) that are in P’s possession, custody and power. There is no evidence that the bank statements for September 2014 to November 2016 are within P’s possession, custody and power. I do not see any basis for this court to make another order compelling the production of these bank statements.

17.  For completeness, R1 has also said at the hearing that P failed to produce these statements pursuant to an order made by Judge Melloy in September 2019. However, upon checking by this court, Judge Melloy’s order dated 11 September 2019 does not cover the SCB Account. The parties agreed.

C. Leave to File Further Evidence

18.  The application for leave to file further evidence (Paragraph 3 of the Summons) is devoid of merits. R1 has made similar applications to the court and failed. The latest application was made by R1 on 4 October 2024 which was dismissed. There is nothing new in the present application.

19.  R1 had already been reminded in previous hearings that (1) the court will not give blanket permission for the filing of new evidence, the applicant has to produce draft affirmation or draft witness statement intended to be adduced for the court’s consideration; and (2) given the closeness to the trial, the court will very unlikely allow the filing of new evidence save for exceptional circumstances with very good reason for the delay, which are to be proved by the applicant. It is with regret to note that despite these reminders from this court, R1 took out the present application once again without explanation for the delay, and without any draft affirmation nor draft witness statement, nor particulars of further evidence that he wishes to adduce at trial. This application is bound to be dismissed.

D. KPL Funds

20.  The KPL funds is a main part of the matrimonial assets. I was informed by the parties that upon R1’s request for the distribution of the KPL funds to pay legal fees, the parties agreed to the withdrawal of HK$3 million from the funds by each of the parties last month (October 2024). No Notice to Act is filed for R1 so far. P opposed the withdrawal and distribution of the remaining funds in the KPL account prior to the determination of the AR Trial.

21.  It is R1’s case that he and the children need the funds for daily expenses. He said that the family assets had been controlled by P and they have been cash starved by P. R1 relied on sections 4 to 8 of MPPO for this application.

22.  This is another attempt of R1 to raise the same argument made in his MPS Summons dated 7 December 2023. Although R1 has not specifically referred to the release of KPL funds in the MPS Summons, the substance of his argument is the same. I have dismissed the MPS Summons for the reasons set out in the decision numbered [2024] HKFC 125, in particular paragraphs 19 to 34. The same reasons apply.

23.  The distribution of matrimonial assets, if any, is an issue to be determined at the AR Trial. There is no basis to order a distribution of these funds without both parties’ consent prior to the determination of the ancillary relief dispute at the AR Trial.

E. Conclusion

24.  This is R1’s another attempt to re-argue the same matters which had been determined by the court in previous applications. It is an abuse of process, and is frivolous and vexatious. P has by correspondence invited R1 to withdraw the Summons to save costs. No response was received from R1.

25.  By reason of the above, the Summons is dismissed.

26.  [submission on costs]

27.  There is no reason to depart from the starting point that R1, the unsuccessful party, shall pay P’s costs of the Summons. Accordingly, R1 is ordered to pay P forthwith the costs of this Summons summarily assessed at HK$20,000.

28.  P do draw up, file and serve this order.

Ms. Kitty Chan of Chaine Chow & Barbara Hung, Solicitors for the Petitioner.

The 1^st Respondent appeared in person.

The 2^nd Respondent was not represented and did not appear.

FCMC 11521 / 2015

[2024] HKFC 125

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11521 OF 2015

----------------------------

----------------------------

__________________________

DECISION
(MPS, Stay of Proceedings)

__________________________

A.  The Applications

1.  Before this court are two Summonses (“Summonses”) issued by the 1^st Respondent husband (“R1”) against the Petitioner wife (“P”).

2.  The first one is a Summons dated 7 December 2023 (“MPS Summons”) for the following:

2.1.  Maintenance pending suit to R1

2.1.1.  at a monthly sum of HK$168,000 from 1 January 2024;

2.1.2.  a lump sum of over HK$19 million for maintenance pending suit from 1 January 2013 (which is before the petition); and

2.1.3.  a lump sum payment of over HK$10 million for R1’s 2024 medical insurance and medical expenses, expenses relating to the purchase of a car and renovation of the matrimonial home etc.

2.2.  Interim children maintenance be paid to R1

2.2.1.  at US$10,600 monthly for the Daughter[1] from 1 January 2024 onwards;

2.2.2.  a lump sum payment of US$150,000 for the purchase of cars for the Son[2] and the Daughter; and

2.2.3.  a lump sum payment of over HK$9.5 million as interim maintenance for the two adult children for the period from 1 January 2013 (which is before the petition).

2.3.  Legal costs provisions to R1

2.3.1.  at HK$360,000 per month from 1 June 2023; and

2.3.2.  a lump sum of HK$10.8 million as legal costs provisions from 4 September 2015.

2.4.  Security for payment.

3.  The second one is a Summons dated 28 December 2023 (“Stay Summons”) in gist for a stay of all proceedings in this action, except the MPS Summons, pending the final determination (including any appeal) of the MPS Summons.

4.  I directed these Summonses to be dealt with by paper disposal. This is my decision.

B.  Relevant facts and procedural history

5.  P is about 58 years old and R1 is about 62. They graduated from a university in the United States in 1988[3]. R1 further obtained his master’s degree in Chemistry Engineering in 1990[4]. They got married in 1990 and have two adult children. The elder son (“Son”) was born in 1998 and the younger daughter was born in 2000 (“Daughter”). P presented the petition in September 2015. Decree Nisi was pronounced in February 2016.

6.  In April 2021, pursuant to the order of HHJ Melloy, the parties have filed their section 7 narrative affirmations as evidence for their ancillary relief dispute.

7.  In October 2021, R1 took out 3 applications for the following reliefs:

7.1.  for a joinder of 6 intended respondents for determination of the beneficial ownership of 13 landed properties in Hong Kong and the Mainland (“Joinder Summons”);

7.2.  for leave to file a 3^rd Questionnaire (“Questionnaire Summons”); and

7.3.  for a section 18 declaration on the ground that the two children have attained majority and therefore no children to whom section 18 applies.

8.  After a 3-days hearing, by an order made on 13 February 2023, I dismissed the Joinder Summons, partly allowed the Questionnaire Summons, and made a section 18 declaration.[5]

9.  By an order dated 9 March 2023, R2 was joined as the second respondent for the determination of, inter alia, the beneficial ownership of the shares in SSEL (a family company) which R1 had transferred to her in July 2021 (“Preliminary Issue”)[6].

10.  On 18 August 2023, R1 took out a Summons seeking leave to apply ex-parte for a decree absolute (“DA Summons”).

11.  P did not oppose the DA Summons. On 9 November 2023, I granted leave to R1 to apply ex-parte for a decree absolute. R1 then lodged the application and the Decree Nisi was made absolute on 13 November 2023.

12.  Less than a month after the Decree Absolute was pronounced, R1 took out the MPS Summons on 7 December 2023.

13.  At the case management hearing on 22 December 2023, case management directions were made (“2023 CMH Order”). Below are the directions relevant to these applications:

13.1.  the trial of the parties’ ancillary relief dispute and the Preliminary Issue was fixed for 10 days commencing on 2 December 2024;

13.2.  a second case management hearing and a pre-trial review hearing were fixed for mid-August and early October 2024 respectively; and

13.3.  both parties do file and exchange an updated Form E on or before 2 February 2024.

14.  On 28 December 2023, R1 took out the Stay Summons.

15.  In breach of the 2023 CMH Order, R1 did not file an updated Form E. This resulted in an unless order made by this court on 7 May 2024[7], under which, unless R1 files and exchanges an updated Form E on or before 4 June 2024, R1’s MPS Summons stands dismissed.

16.  R1 filed the updated Form E on 4 June 2024.

17.  This court was informed that apart from the present dispute, R1 had commenced or caused to commence other litigation in Hong Kong and the Mainland disputing the ownership of certain properties of the parties. These actions include:

17.1.  A High Court action (“HC Action”) commenced by some family companies against P and her maiden family members. The statement of claims of the HC Action was verified by a statement of truth signed by R1.

17.2.  A recent action commenced by R1 in the Mainland against P in relation to certain properties in Guangzhou, which properties were part of the subject matters in these ancillary relief proceedings.

17.3.  A recent action commenced by R1 in the Mainland against a third party over certain property. That third party has applied to join P as a party to that action.

C.  MPS Summons

18.  Having considered the evidence and submissions, I dismissed the MPS Summons for the following reasons.

19.  Firstly, it is clearly outside the court’s power under section 3 of MPPO[8] to award maintenance pending suit for any time before the date of presentation of petition (i.e. 4 September 2015) and after the date of the determination of the suit, which is the date of the Decree Absolute (i.e. 13 November 2023).

20.  Section 3 of MPPO provides:

“either party to the marriage to make to the other such periodical payments for his or her maintenance and for such term, being a term beginning not earlier than the date of the presentation of the petition … and ending on the date of the determination of the suit, as the court thinks reasonable.”

21.  Legal costs provision is part of maintenance pending suit: A v A (Maintenance Pending Suit: Provision of Legal Fees)[9]; LCYP v JEK[10].

22.  Secondly, although R1 has indicated in his Form 4 filed on 11 December 2015 that he wished to be heard on the issue of, inter alia, maintenance pending suit, he had not made any application in accordance with Rule 68 of the Matrimonial Causes Rule prior to the Decree Nisi being made absolute.

23.  Thirdly, after the pronouncement of Decree Absolute, it is too late to obtain a maintenance pending suit as there is no suit pending.

24.  The learned author of Rayden & Jackson on Relationship Breakdown, Finances and Children has cited M v M[11] as an authority and said:

“[11.72] After decree absolute in suits for … dissolution of marriage, … it is too late to obtain an award of maintenance pending suit, even upon an application presented and prosecuted with due diligence before the final decree, for there is then no suit pending”

25.  R1 had sought on his own volition leave to apply ex parte for a decree absolute. After he obtained the leave, he took out the application and a Decree Absolute was pronounced. All along, he had not made any application for maintenance pending suit nor made mention of his being or having been in any immediate reasonable needs that call for an award of maintenance pending suit.

26.  The authorities cited by R1 (namely: C v F[12]; HJFG v KCY[13]; Currey v Currey[14]; AD (aka AT) v RT[15]) do not assist his application.

27.  Fourthly, R1 failed to establish any reason that this court shall allow his claim for interim children maintenance.

28.  The children are now aged 25 and 24. The Son has been in gainful employment since about 2022[16].

29.  When R1 applied for a section 18 declaration in 2021, he offered in §29 of his 11^th Affirmation filed on 8 October 2021 an undertaking to take full financial responsibility for both children:

“For the best interest of the children, I am willing to undertake to take full financial responsibility for both of the Children and I believe the Petitioner will agree to this for the sake of the children. Therefore, I would humbly ask that a section 18 Declaration under the Matrimonial Proceedings and Property Ordinance be granted so that the parties could apply for the Decree Absolute.”

30.  In his application for a section 18 declaration, he relied on the ground that the two children have attained majority, hence there was no child of the family to whom section 18 applies. It was on this basis that a declaration under section 18(1)(a) of MPPO was made on 13 February 2023.

31.  In R1’s affirmation filed on 18 August 2023 in support of his DA Summons, he again confirmed that there was no child to whom section 18 of MPPO applies. He made no mention of any need nor intended claim for interim children maintenance.

32.  Furthermore, R1’s assertion that he is maintaining the adult children was not supported by any proof.

33.  Fifthly, in any event, the evidence before this court does not support the exercise of discretion in favour of allowing backdated payments or any sums claimed by R1. His financial situation was not as dire as he sought to portray.

33.1.  R1 had engaged 8 solicitors firms, senior and junior counsel to represent him at different stages of the proceedings.

33.2.  His updated Form E filed in June 2024 showed that he has assets of a value over HK$13 million.

33.3.  His claim of having incurred an indebtedness over HK$42.5 million (compared to HK$19.6 million in his 2020 Form E) was not particularised nor supported by proof. R1’s case of having incurred such huge debts demonstrated his ability to raise funds, thus negate any suggestion that he should be entitled to legal costs provisions under the Currey test.

33.4.  He is receiving rental income of various matrimonial properties.

33.5.  He is residing in the former matrimonial home which is mortgage free.

33.6.  He has not disclosed particulars about his inheritance from his mother who passed away in March 2023.

33.7.  He has resources to commence and continue various litigation in Hong Kong and Mainland against P and/or third parties.

33.8.  There is a lack of evidence on the expenses claimed in his updated Form E (general expenses of HK$81,300 and personal expenses of HK$266,200 including HK$90,000 for holiday/entertainment, HK$19,300 for household food and household expenses and HK$143,600 for children expenses) which are prima facie excessive.

34.  Sixthly, R1 has failed to establish any merits on his maintenance pending suit claims. There is no need to consider his claim for “guarantee” or “security”. In any event, he has not advanced any basis for this relief.

D.  Stay Summons

35.  The legal principles summarized by Au-Yeung J in Poon Ka Man Jason v Cheng Wai Tao & ors[17]are well established. A stay on case management ground should only be granted when there are “very good reasons” and in “rare and compelling circumstances”:

“36. The court has discretion, as a matter of case management, to grant a stay of proceedings generally or until a specified date or event: High Court Ordinance, Section 16(3); Order 1B, rule 1(2)(e) of the Rules of the High Court (“RHC”).

37. Where, as here, the action was commenced as of right, the court should only grant a stay when there are “very good reasons” and in “rare and compelling circumstances”. The stay must not cause injustice to the Plaintiff, and the Defendants must show that continuing the proceedings would be unjust to them. See: Zhang Xiuhong v Liu Wenchen & ors (HCA 2118/2012. 20 July 2017), §34, per Au-Yeung J, citing Ng J’s judgement in AIG Europe Ltd & ors v Fast-Link Express Ltd & ors (HCAJ 114/2014, 10 January 2017), §§9-13. The ultimate question is what would serve the ends of justice.

38. Exercise of discretion would involve balancing between (1) possible wastage of Court’s time and resources and also parties’ time and costs (if there is no stay) on the one hand and (2) possible delay of the proceedings for a short period of time (if there is a stay) on the other hand: see The Al Dhabiyyah [1999] 4 HKC 414 at p 420A-F.

39. The court must bear in mind that the underlying objectives of the court is to increase cost-effectiveness of court proceedings; ensure that a case is dealt with as expeditiously as is reasonably practicable; promote reasonable proportion and procedural economy in the conduct of the proceedings; and to facilitate settlement of disputes: Order 1A, rule 1(a), (b), (c) and (e) of the RHC.”

36.  R1 has not shown a “very good reason” nor “rare and compelling circumstances” that calls for a stay of these proceedings pending the determination of the MPS Summons.

37.  R1’s MPS Summons was dismissed for the reasons set out above.

38.  This divorce petition was presented in 2015. The parties have a duty to ensure that the case is dealt with as expeditiously as is reasonably practicable, and with a sense of reasonable proportion and procedural economy in the conduct of the proceedings: Order 1A rules 1 and 3, Rules of the High Court.

39.  The milestone dates, including PTR and Trial were fixed last year. A stay of proceedings will inevitably derail these milestone dates. There is no exceptional circumstance justifies a variation of the milestone dates: Order 25 rule 1B (3), Rules of the High Court.

40.  If there is any real financial needs that requires maintenance to R1, this will be heard and considered by the court at the ancillary relief trial in December 2024.

41.  The other arguments advanced by R1 are either misconceived, irrelevant or red-herring.

41.1.  R1 argued that as P has engaged her team of lawyers but he does not have the resources to do so, there is no equality of arms, and the due process has not been observed. He cited the decision of European Court of Human Rights in Airey v Ireland[18] and the Bill of Rights Ordinance. I repeat the facts set out in paragraph 33 above. R1 has not proved that he does not have the resources to engage lawyers. Notably, he had recently commenced or caused to commence other litigation in Hong Kong and the Mainland.

41.2.  R1 argued that trial is not the only way to settle a dispute. For the obvious reason, this argument is red-herring. There have been plenty of opportunities for the parties to explore settlement. R1 has not adduced any evidence to show that a stay will have a real practical effect on achieving settlement. The parties are free to explore settlement for their disputes without a stay in any event.

E.  Costs

42.  The legal principles for an award of costs are well established. There is no reason to depart from the starting point of costs follow the event. P is the successful party in these two applications. She is entitled to costs.

43.  I have directed the parties to lodge statement of costs and statement of objections for summary assessment of costs.

44.  P asked the court to take into account R1’s litigation misconduct, especially R1 has repeatedly acted in defiance of court orders and withheld documents from P notwithstanding court’s directions:

44.1.  R1 defied the 2023 CMH Order and failed to file and exchange an updated Form E within the stipulated time. This resulted in an unless order directing R1 to file and exchange his updated Form E on or before 4 June 2024. R1 waited until the deadline of 4 June 2024 to file his updated Form E. There was an inordinate and inexplicable delay of over 4 months.

44.2.  By orders dated 31 January 2024 and 7 May 2024, R1 was directed to lodge and serve submissions in support of his Stay Summons on or before 9 May 2024 and P was directed to lodge and serve submissions in opposition on or before 16 May 2024. Notwithstanding the above orders, R1 only emailed a 56-page document to P’s solicitors in the afternoon of 14 May 2024 despite he had lodged the submissions with the court in time on 9 May 2024.

44.3.  Similarly, by order dated 12 June 2024, R1 was directed to lodge and serve written submissions on the MPS Summons on or before 26 June 2024 and P was directed to lodge and serve hers on or before 10 July 2024. While R1’s written submissions were lodged into the court on 26 June 2024, he did not serve it on P in disregard of the court’s order, and waited until the night of 28 June 2024 to email his 18-page document to P’s solicitors.

45.  I agree with counsel for P that the court shall register its disapproval to the above unacceptable litigation misconduct. R1 acting in person is no excuse for repeatedly defying court orders and delaying service of his submissions to the other side thereby shortened the time that P’s side should have in preparing their submissions.

46.  The MPS Summons and the Stay Summons are totally unmeritorious.

47.  The amounts claimed by P in the statements of costs are reasonable and proportionate.

F.  Disposition

48.  By reasons of the above, I order that:

(1)  The MPS Summons and the Stay Summons be dismissed.

(2)  R1 do forthwith pay P the costs of the MPS Summons summarily assessed at HK$73,660.

(3)  R1 do forthwith pay P the costs of the Stay Summons summarily assessed at HK$65,800.

(4)  P do draw up, file and serve this order.

Ms Bonnie Cheng instructed by Chaine Chow & Barbara Hung, Solicitors for the Petitioner.

The 1^st Respondent appeared in person.

The 2^nd Respondent was not represented and did not appear.

FCMC 11521 / 2015

[2024] HKFC 99

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11521 OF 2015

----------------------------

BETWEEN

----------------------------

______________________

DECISION
(Form E Summons)

______________________

1.  This is P’s Summons dated 13 March 2024 (“Form E Summons”) for an order to require R1 to file his further updated Form E on a specified date despite the time for filing the same pursuant to the CMH Order (defined below) has expired.

2.  On 16 April 2024, I directed, inter alia, (a) the parties to lodge and serve their submissions on the Form E Summons and address its impact on R1’s application on 7 December 2023 for maintenance pending suit (“MPS Summons”), and (b) the Form E Summons to be determined by paper disposal. This is the decision.

3.  The petition was presented in 2015. The parties have filed their Form Es in 2015/2016, and an updated Form Es in July 2020.

4.  On 7 December 2023, R1 took out the MPS Summons. The substantive hearing was fixed for 23 May 2024.

5.  At the Case Management Hearing on the preliminary issue and the ancillary relief claims on 22 December 2023 (“CMH”), I directed P and R1 to file and exchange a further updated Form E within 42 days from the date of the order, that is on or before 2 February 2024 (“CMH Order”).

6.  The trial of the ancillary relief claims was fixed for December 2024.

7.  On 28 December 2023, R1 took out a Summons for stay of the preliminary issue and ancillary relief proceedings pending the determination of the MPS Summons, including appeal (“Stay Summons”). The Stay Summons was directed to be heard on 23 May 2024 together with the MPS Summons.

8.  P filed her further updated Form E on 2 February 2024 pursuant to the CMH Order. R1 failed to do so.

9.  R1 was present at the CMH. The CMH Order was served on him by email and by post on 9 January 2024. There is no dispute that R1 was fully aware of the CMH Order.

10.  His failure to file and exchange the further updated Form E within the stipulated time is a blatant breach of the CMH Order. R1’s assertion that the further updated Form E should be filed after the decision of the MPS Summons is devoid of merits. R1’s argument of inequality because he is acting in person is also unmeritorious.

11.  Solicitors for P has written to R1 on 7 February 2024 and 4 March 2024 demanding him to file the further updated Form E in compliance with the CMH Order. There was no reply from R1.

12.  R1 asserted that the further updated Form E is not relevant to the MPS Summons as he only relied on the Form E filed in 2016 and 2020. This is wrong. In considering whether MPS shall be awarded, the parties’ current financial condition is one of the matters for consideration. The parties have the duty to provide full and frank disclosure.

13.  In view of the history of this case and R1’s continuing breach of the CMH Order by refusing to file the further updated Form E, an unless order is appropriate to prevent further delay. The CMH Order was made in December 2023. R1 should have filed the further updated Form E on 2 February 2023. R1 has already got about 3 months more than the original deadline. I will give him a further 28 days to file and exchange the further updated Form E on an unless basis.

14.  Having considered all the relevant materials, I order that:

(1) Unless R1 do file and exchange a further updated Form E within 28 days from today (i.e. on or before 4 June 2024), R1’s MPS Summons do stand dismissed.

(2) The substantive argument of the MPS Summons be adjourned to a date to be fixed. The hearing fixed for 23 May 2024 at 10 am at court 40 be vacated.

(3) The Stay Summons be dealt with by paper disposal.

(4) For the avoidance of doubt, paragraphs 6 and 7 of the Order dated 31 January 2024 (i.e. directions for filing submissions and authorities on the Stay Summons 14 days or 7 days (as applicable) before 23 May 2023) do stand.

(5) The parties do lodge and serve proposed case management directions for MPS Summons within 14 days after the filing of further updated Form E by R1 pursuant to (1) above.

(6) R1 do pay the costs of and occasioned by P in the Form E Summons at an amount to be summarily assessed.

(7) R1 do, within 14 days from today, lodge and serve a succinct statement of objection, if any, to the statement of costs for summary assessment lodged by P dated 23 April 2024. The statement of objection is limit to 2 pages of A4 size, font size 14 and double line spacing with margin of not less than 1 inch.

(8) P do draw up, file and serve this order.

Chaine Chow & Barbara Hung, Solicitors for the Petitioner.

The 1^st Respondent acting in person.

FCMC 11521 / 2015

[2023] HKFC 155

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11521 OF 2015

----------------------------

----------------------------

_____________________________

DECISION
(Leave to Appeal Out of Time
and Stay of Execution)

_____________________________

A.  INTRODUCTION

1.  This decision should be read together with the Reasons for Decision on the March Order (“Reasons”)[1]. The definitions and abbreviations in the Reasons are adopted here.

2.  On 1 June 2023 (almost 3 months after the March Order), ZL took out two Summonses.

3.  By the first Summons (“First Summons”), ZL applied for, inter alia,

(1)  leave to appeal against the September Order[2] and the March Order[3] out of time (“Leave Application”); and

(2)  a stay of execution of the September Order and the March Order until determination of the intended appeal (“Stay Application”).

4.  W opposed the applications. H has not indicated any stance. In line with the established practice, the above applications were dealt with on paper without an oral hearing.

5.  By the second Summons (“Second Summons”), ZL asked for a temporary suspension of paragraph 7 of the March Order until determination of the intended appeal (“Para 7 Stay Application”). Paragraph 7 of the March Order is an unless order directing ZL to file and serve her Points of Defence by 1 June 2023, failing which she will be debarred from filing any Points of Defence in the preliminary issue.

6.  W opposed while H supported the Second Summons.

7.  This is the decision on the Leave Application, Stay Application and Para 7 Stay Application.

8.  These proceedings, including the hearings and submissions leading to the September Order and the March Order, were in English. This decision is also written in English. If ZL and H consider necessary, they may make an appointment with the Court for interpretation of this decision into Putonghua to them in the Court building.

B.  THE BACKGROUND

9.  The relevant background and procedural history are in [5] to [16] of the Reasons.

10.  The Summons dated 6 September 2022 (“W’s Summons”) was issued by W with leave granted by the September Order. The substantive argument of paragraphs 2, 6 and 7 of W’s Summons (Joinder Application and Interim Injunction Applications) was heard on 9 March 2023 (“March Hearing”). All parties (W, H and ZL) were represented by counsel at the March Hearing. The March Order was made at the end of the March Hearing: [72] of the Reasons.

11.  On 23 March 2023 (the last day to apply for leave to appeal against the March Order), ZL filed a Notice to Act in Person. According to W, the above notice was not served on her or her solicitors CCBH in accordance with Order 67 rules 1 and 4 until 5 June 2023.

12.  On 29 May 2023, H also filed a Notice to Act in Person in these proceedings.

C.  LATE APPLICATION FOR LEAVE TO APPEAL

13.  Pursuant to Order 58 rule 2(4)(c) of the Rules of the District Court, an application for leave to appeal from an interlocutory judgment, order or decision of a judge shall be made within 14 days from the date of the interlocutory judgment, order or decision.

14.  As acknowledged by ZL in the First Summons, her Leave Application was made out of time.

15.  It is well established that in considering whether discretion should be exercised to extend the time to take out an application for leave to appeal, the Court will consider (1) the length of the delay; (2) the reason for the delay; (3) whether the intended appeal has reasonable prospects of success; and (4) whether any prejudice would be caused to other parties if leave to appeal out of time is granted.

C1.  Length of delay

16.  The application for leave to appeal against the March Order was nearly three months late. It was made on the last day when ZL’s Points of Defence was due to be filed. This is not a short delay.

17.  The delay in her application for leave to appeal against the September Order is more serious. It was almost nine months late. ZL had participated in the March Hearing (which was fixed pursuant to the September Order) without questioning the force and effect of the September Order.

C2.  Reasons for the delay

18.  ZL set out in her affirmation filed on 1 June 2023 the reasons for her delay. I am not satisfied that these are good reasons.

19.  Her first two reasons were that (1) W or her solicitors deliberately failed to effectively serve the documents on her, she was excluded from participating the litigation; and (2) her legal representatives had not applied for an adjournment of the March Hearing on the ground of invalid service and lack of sufficient time to prepare her case in accordance with the proper procedures.

20.  The above are events happened before the March Order. They are not reasons for the delay.

21.  Her next reason was that a note of the March Hearing and orders made by the Court were received from her solicitors on 14 March 2023 after repeated requests. A copy of the March Order was received on 27 March 2023. She did not have the transcript of the hearing to verify what her solicitors had said.

22.  ZL was legally represented until the deadline for the leave application (23 March 2023). She had the written note of the March Hearing from her solicitors on 14 March 2023, which was 5 days after the hearing, and 9 days before the expiry of the statutory 14-day limit. This does not justify a delay of almost three months (in the case of March Order) nor a delay of almost nine months (in the case of September Order). There was no oral evidence heard at the March Hearing. ZL has the note of hearing from her solicitors. She prepared the First Summons and filed the papers for her intended appeal without the transcript. The claim that she did not have the transcript does not assist her.

23.  ZL then said that she does not know Hong Kong laws. She sought legal assistances from multiple sources and consulted Mainland lawyers. She spent a lot of times to study and analyse the documents in the litigation.

24.  The above assertions without particulars do not amount to a satisfactory explanation. She has not explained why she did not engage another legal representative in Hong Kong. She has not claimed a lack of funds to engage lawyers.

C3.  Prejudice against the other party

25.  Having regard to the nature of the orders subject to appeal, if leave is granted, there is no prejudice against the other parties that cannot be compensated by costs.

C4.  Prospect of success

26.  ZL has the burden to show that there is a reasonable prospect of success in her intended appeal. This is an important consideration in these applications, and is addressed at the next section.

D.  MERITS OF THE INTENDED APPEAL

D1.  Legal principles

27.  Leave to appeal should not be granted unless there is a reasonable prospect of success or some other reason in the interests of justice that the appeal should be heard: Section 63A of District Court Ordinance.

28.  A reasonable prospect of success involves the notion that the prospect must be more than fanciful, without having to be probable: SMSE v KL[4].

29.  Where an appeal is against the findings of fact or is involved the exercise of the discretion, the intended appellant must show that the decision was plainly wrong, or has taken into account irrelevant matters or omitted to have regard to relevant matters. The appellant must identify palpable errors in the judgment. An assertion that the finding is against the weight of the evidence or that the judge should have reached another conclusion because of the points advanced in the submissions are not errors within this category: TAC v VDC nee VDM[5]; China Gold Finance Limited v CIL Holdings Limited[6].

D2.  Attempt to rely on rejected/new evidence

30.  In the Draft Grounds of Appeal, ZL annexed and referred to an affirmation made by her dated 8 March 2023 on events relating to service of the documents (“March Affirmation”).

31.  I decline to grant leave to admit the March Affirmation for the intended appeal on the following reasons:

(1)  It appeared that the March Affirmation is the same Chinese affirmation (“Chinese Affirmation”) for which her counsel had sought leave to admit as evidence after lunch of the March Hearing. The Court has refused the application. I refer to [43] to [45] of the Reasons.

(2)  If the March Affirmation is different from the Chinese Affirmation, ZL failed to prove that all conditions in Ladd v Marshall[7] are satisfied:

(a)  This is not a document that ZL and her solicitors could not reasonably obtain prior to the March Hearing. The March Affirmation was made by her prior to the March Hearing. Her then solicitors’ (Kwong & Lee) name and address were printed on the backsheet.

(b)  The March Affirmation would not have an important influence on the result of the case. Most of the evidence in the March Affirmation overlapped with the contents in H’s 13^th and 14^th Affirmations. The Court has considered these Affirmations of H when determined the March Order. The other matters in the March Affirmation are either not relevant or would not change the decision made.

D3.  Intended Grounds of Appeal

32.  ZL did not seek to challenge the substantive merits of the decision to join her as a party and the interim injunction against her. She has no locus to appeal against paragraph 1 of the September Order, which was a matter between H and W.

33.  Her intended grounds of appeal are summarised below.

34.  Ground 1: ZL contended that because W and CCBH deliberately failed to effect proper service of the September Order and W’s Summons in time, she was “excluded” from participating in the litigation.

35.  Ground 1 has no reasonable prospect of success.

(1)  Contrary to ZL’s assertion, the evidence showed that CCBH had made many attempts to serve the documents on her. ZL and H had taken steps to evade or delay the service.

(2)  On 7 and 13 September 2022, CCBH had sent the Summons and related documents by ordinary mail to ZL at the FMH Address, which is ZL’s last known address. According to CCBH, these letters were not returned. This is prima facie evidence of service. H said that he returned a letter in mid-September. There is no evidence that CCBH knew at that time the September letters were returned and not passed to ZL.

(3)  ZL received Withers’ Email dated 17 September 2022 and has notice of the September Order. I have found that her subsequent assertion of doubt on Withers’ Email was not credible.

(4)  But for ZL/H’s steps to evade service, ZL ought to have sufficient time to prepare her case pursuant to the September Order.

(5)  Similarly, CCBH served further documents by letter dated 10 February 2023 addressed to ZL at the FMH Address. But for H’s deliberate return of the letter, ZL would have received the documents.

(6)  I have found that service of the documents was effected on ZL by Personal Service on 21 February 2023.

(7)  ZL had fully participated in the March Hearing through counsel. She was not “excluded” from the litigation as she asserted.

(8)  ZL failed to satisfy the Court that the intended Further Evidence is relevant to the Joinder Application and the Interim Injunction Applications. There is no prejudice against her if she could not adduce the Further Evidence before the making of the March Order.

(9)  The reasons for not admitting ZL’s Chinese affirmation dated 8 March 2023 were set out in [45] of the Reasons.

(10)  There was no merit in the other alleged problems of the September Order, for example, her assertion that a direction to file evidence within 42 days is unrealistic and unreasonable.

36.  Ground 2: ZL contended that service of the documents before 1 March 2023 was invalid.

37.  She essentially repeated the arguments in the March Hearing (see Section C of the Reasons). ZL could not identify any palpable error in the decision. Ground 2 has no reasonable prospect of success.

38.  Ground 3: W and her legal representatives advanced untrue submissions that the CCBH Letters were not returned.

39.  As set out in [26] to [28] of the Reasons, I have accepted H’s evidence that he had not opened the letters from CCBH and had not passed them to ZL. I have found that the posting of the CCBH Letters was not a valid service on ZL. There is no reasonable prospect of success in this ground.

40.  Ground 4: ZL complained that her legal representatives had not lodged the March Affirmation before or during the March Hearing, nor sought an adjournment of the March Hearing.

41.  I refer to [34] to [42] of the Reasons which relate to the issues of adjournment, and [43] to [45] of the Reasons which relate to the application to admit the Chinese Affirmation at the March Hearing.

42.  During the March Hearing, ZL’s counsel had sought leave to lodge the Chinese Affirmation (which appeared to be the same as the March Affirmation). It bears repeating that this application was rejected not only because of the extreme lateness, but more importantly, there will be no real prejudice against ZL if the same was not admitted since similar evidence has been produced by H and considered by the Court. Even if the March Affirmation/Chinese Affirmation was admitted, it would not result in a different decision by this Court.

43.  Other than the Further Evidence, ZL has not set out the evidence she intended to file if there was an adjournment. She was unable to show that an adjournment should be granted.

44.  Ground 4 has no reasonable prospect of success.

D4.  Conclusion on Leave Application

45.  As demonstrated above, there is no reasonable prospect of success in ZL’s intended appeal. The Leave Application is dismissed.

E.  STAY APPLICATION

46.  It is trite that an appeal does not operate as a stay of execution of the orders: Order 59 rule 13(1); Star Play Development Ltd v Best Fashion Management Co Ltd[8] [6].

47.  The Court will usually not exercise the discretion to grant a stay of execution unless the intended appellant can show that there is an arguable appeal (that is, one with reasonable prospects of success), and there is circumstance justifying the deprivation of the winning party of the fruit of judgment, for example having regard to the nature of the order that is the subject matter of the appeal, an appeal would be rendered nugatory without a stay of execution. A balancing exercise shall be conducted with common sense. It is impractical and undesirable to go deeply into the merits and strength of an appeal, but the court must form a preliminary view of the same: Star Play Development Ltd v Bess Fashion Management Co. Ltd.

48.  For the reasons set out above, ZL failed to show that this is an arguable appeal. She also failed to demonstrate any circumstances justifying a stay of execution. The compliance of the September Order and the March Order would not render her intended appeal nugatory.

49.  The Stay Application is dismissed.

F.  PARA 7 STAY APPLICATION

50.  The only ground for Para 7 Stay Application was the intended appeal against the September Order and March Order[9]. The submissions made by ZL and H at the hearing of the Second Summons were a repetition of their arguments in the Leave Application and Stay Application, which were dismissed in Sections D and E above.

51.  Paragraph 7 of the March Order is an unless order. The sanction has taken effect on 1 June 2023. ZL was debarred from filing Points of Defence in the preliminary issue: Order 2 rule 4. There is nothing to “stay”. The Second Summons is dismissed.

52.  If ZL wishes to be relieved from the sanction and asked for leave to file the Points of Defence notwithstanding her non-compliance with the unless order, she ought to apply promptly for relief from sanction under Order 2 rule 5.

53.  In an application under Order 2 rule 5, the Court will consider all the circumstances of the case and determine whether discretion shall be exercised to relieve a party from sanction of the unless order. The circumstances to be considered by the Court include, inter alia, (a) the interests of administration of justice, (b) whether the application for relief has been made promptly, (c) whether the failure to comply was intentional, (d) whether there is a good explanation for the failure to comply, (e) the extent to which the party in default has complied with other rules and court orders, (f) whether the failure to comply was caused by the party in default or his legal representative, (g) in the case where the party in default is not legally represented, whether he was unaware of the rule or court order, or if he was aware of it, whether he was able to comply with it without legal assistance, (h) whether the trial date or the likely trial date can still be met if relief is granted, (i) the effect which the failure to comply had on each party, and (j) the effect which the granting of relief would have on each party. The party in default is seeking an indulgence to be relieved from his default, he will usually be required to pay costs even if relief from sanction is granted.

54.  ZL has not taken out any application under Order 2 rule 5.

G.  COSTS

55.  There is no reason to depart from the general principle of costs follow the event. ZL failed in all the applications. Following the general principle, she has to bear the costs.

56.  On a nisi basis, ZL shall pay W the costs of the First Summons forthwith at an amount summarily assessed at HK$30,000.

57.  On a nisi basis, ZL shall pay W the costs of and occasioned by the Second Summons on a party and party basis with certificate for one counsel, at an amount to be taxed if not agreed.

58.  The above orders nisi will become absolute after 14 days in the absence of any Summons for variation.

H.  OTHER RELIEF

59.  The First Summons contained a plethora of prayers for reliefs. Apart from the Leave Application and the Stay Application, ZL also made a request for the setting up of a system of security monies (建立保證金制度) and other case management directions. If ZL wishes to pursue these other reliefs, she has to take out separate Summons for each of these other reliefs in accordance with the prescribed procedures.

First Summons

Second Summons

FCMC 11521 / 2015

[2023] HKFC 154

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11521 OF 2015

----------------------------

----------------------------

___________________________

REASONS FOR DECISION
(W’s Application for Joinder)

___________________________

A.  THE APPLICATIONS

1.  This is the Petitioner wife’s (“W”) application to join a third party (“ZL”) as the 2^nd Respondent (“Joinder Application”) for the determination of, inter alia, beneficial ownership of all the shares in SSEL (“SSEL Shares”) as preliminary issue[1]; and for interim injunctions restraining ZL and the Respondent husband (“H”) from disposing of, charging or dealing with the SSEL Shares, or causing any change to, or creating any encumbrance upon SSEL’s shareholding in NEPL or NEPL’s ownership in M Property (“Interim Injunction Applications”)[2].

2.  W, H and ZL were represented by counsel at the hearing.

3.  At the end of the hearing, I allowed the Joinder Application and the Interim Injunction Applications. In view of the long procedural history of this case and the need for active case management, I set a time table for further conduct of the case after considering the views of all parties through their legal representatives.

4.  This is the reason of my decision.

B.  RELEVANT BACKGROUND AND PROCEDURAL HISTORY

5.  SSEL was set up in around 2003. H and W were the initial shareholders. SSEL is the majority shareholder of NEPL and SEL. NEPL holds M Property which was purchased during the marriage of H and W.

6.  W’s case is that in around 2012, the parties heard that their business might encounter problem with the Chinese customs. They therefore transferred the SSEL Shares to W’s father for him to hold on trust for H and W. W was arrested in the Mainland for tax related charges in 2013. Her father became scared and did not wish to get involved in the parties’ business. He then transferred the SSEL Shares to H. Before W was released from prison and without notice to W, H transferred the SSEL Shares to a former employee, HHS, who held the same as nominee. W’s stance is that the SSEL Shares are part of the matrimonial assets and are beneficially owned by H and W.

7.  Prior to the present application, H’s position was that HHS held the SSEL Shares on trust for him alone, and he was the sole beneficial owner of the SSEL Shares. Thus, the SSEL Shares should also be part of the matrimonial assets.

8.  In H’s 13^th Affirmation filed on 18 November 2022 in opposition to the present application, he deposed that the beneficial ownership of the SSEL Shares has been transferred to ZL on 8 July 2021. ZL became the sole beneficial owner of SSEL. He no longer has any beneficial interest in the SSEL Shares. ZL and H were appointed as SSEL’s directors in place of HHS. H remained as a director to assist and take care of the company matters. H contended that the transfer of SSEL Shares to ZL is a bona fide transaction made in good faith to partially offset HK$8.4 million debt owed by H to ZL[3].

9.  W said (and not denied by H) that the share transfer to ZL was made without notice to her. She only came to know this when she had sight of the Statement of Claim dated 12 May 2022 filed in a High Court Action commenced, inter alios, by SSEL against her and her family members (“HC Action”). The plea in the Statement of Claim was verified by a Statement of Truth signed by H. H was in breach of his continuing duty of full and frank disclosure in these proceedings.

10.  W said that ZL is the long-term girlfriend of H[4]. H and ZL described ZL as a long-term friend of the family[5].

11.  Shortly before the hearing of a separate application in early August 2022 (“August Hearing”)[6], W applied for leave to issue an intended Summons (“Intended Summons”) for the following reliefs:

(1)  Paragraph 1: leave to issue the Intended Summons notwithstanding paragraph 2 of the Order dated 18 May 2021 made by DDJ M. Lam (“2021 Order”).

(2)  Paragraph 2: Joinder Application.

(3)  Paragraph 3: if ZL is joined, a determination that ZL holds (a) 50% of the SSEL Shares on trust for H and 50% for W; or (b) 100% of the SSEL Shares on trust for H and W as beneficial joint tenants or as beneficial tenants in common in equal shares; or (c) 100% of the SSEL Shares on trust for H.

(4)  Paragraph 4: an order to set aside the disposition of H’s beneficial interest in the SSEL Shares to ZL.

(5)  Paragraph 5: an order that ZL makes such transfer of the legal and beneficial title of the SSEL Shares, as may be necessary, to ensure the holding of beneficial ownership referred to in paragraph 3(a), (b) or (c).

(6)  Paragraph 6: an interim injunction against ZL.

(7)  Paragraph 7: an interim injunction against H.

12.  The background for paragraph 1 of the Intended Summons (“Leave Application”) was that pursuant to paragraph 2 of the 2021 Order, the time for the parties to take out interlocutory applications was extended to 31 May 2021. The above order was made upon the parties’ undertaking that the parties would not seek further time extension in relation to the taking out of interlocutory applications before the Case Management Directions hearing returnable on 25 June 2021.

13.  At the August Hearing, leading counsel for H asked for time to lodge further written submission on H’s opposition to the Leave Application and proposed directions if Leave Application was granted. He submitted that 2 days were needed.

14.  At the end of the August Hearing, I granted leave to H to lodge and serve submissions on issues concerning the Leave Application within 7 days, and leave to W to lodge and serve submissions in reply within 7 days thereafter. The matter would be determined by way of paper disposal.

15.  On 5 September 2022, I granted leave to W to issue the Intended Summons within 7 days notwithstanding paragraph 2 of the 2021 Order, and gave further case management directions as follows (“September Order”):

(1)  Paragraphs 2, 6 and 7 of the Intended Summons (being the Joinder Application and Interim Injunction Applications) be adjourned for substantive argument on a date to be fixed. Parties may provide their available dates for the hearing within a specified period.

(2)  Leave was granted to file evidence and submission on proposed directions in relation to the hearing for substantive argument within stipulated time.

(3)  Subject to the determination on the Joinder Application, paragraphs 3 to 5 and 8 to 9 of the Intended Summons (viz. application for declaration and set aside relief in connection with the SSEL Shares) be adjourned for substantive arguments.

(4)  Service of the Intended Summons on H be dispensed with.

(5)  H was directed to inform ZL forthwith the terms of the September Order.

16.  W formally took out the Summons (in terms of the Intended Summons) on 6 September 2022 (“the Summons”).

17.  This is the hearing on the substantive argument of paragraphs 2, 6 and 7 of the Summons, viz. the Joinder Application and the Interim Injunction Applications.

C.  SERVICE OF THE SUMMONS ON ZL

18.  H and ZL argued that the Summons were not validly served on ZL.

C1.  Relevant facts on Service

19.  The events relevant to the service of the Summons on ZL are as follows:

(1)  Pursuant to the September Order, H, through his then solicitors, Withers, sent the September Order to ZL by an email dated 17 September 2022 (“Withers’ Email”). According to Withers, the aforesaid email was not returned.

(2)  By various letters dated 7, 13 September 2022 and 31 January 2023 (“CCBH Letters”), CCBH (W’s solicitors) mailed the Summons, the September Order and other documents relating to the Summons (collectively the “Documents”) to ZL at the address of the parties’ former matrimonial home (“FMH Address”), which according to W, was the usual and last known address of ZL. CCBH said that none of the CCBH Letters were returned[7].

(3)  On 8 February 2023, CCBH received an email from ZL, in which ZL referred to Withers’ Email and stated that she appeared to have been dragged into a set of proceedings in Hong Kong. She claimed that (a) she always resides in the Mainland, (b) she had not been properly served with the documents in these proceedings and (c) she was not able to verify the authenticity of the “court letter” sent over by Withers.

(4)  On 21 February 2023, a process server served a sealed envelope containing the Documents on ZL (“Personal Service”).

(5)  On 1 March 2023, CCBH received a letter from Kwong & Lee requesting for service of the Summons, and stating that they have instructions to seek an adjournment for time to prepare ZL’s affirmation in opposition.

(6)  On 2 March 2023, Kwong & Lee filed a Notice to Act for ZL dated 1 March 2023.

20.  At the hearing, counsel for ZL, Mr Eric Leung, accepted that the Summons was served on ZL on 1 March 2023 (the date of Kwong & Lee’s letter to CCBH) but not earlier.

C2.  Relevant legal principles

21.  Under Rule 111(1)(b)(ii) of the Matrimonial Causes Rules (“MCR”), documents required to be served in any matrimonial proceedings on a person acting in person can be effected by delivering the document to him, or by leaving it at or sending it by post to his last known address if he has not given an address for service.

22.  Order 65 rule 5(1) provides that ordinary service of any document may be effected, inter alia, by leaving the document at the proper address of the person to be served, or by post. Order 65 rule 5(2) further provides that if at the time when service is effected, that person has no address for service, his proper address for service under Order 65 rule 5(1) shall be his usual or last known address.

C3.  Issues on Service

23.  The main issues in disputes were:

(1)  whether the FMH Address is ZL’s last known address for the purpose of service, and if so, whether the Documents were validly served by the CCBH Letters; and

(2)  whether the Personal Service was a valid service.

C3.  Last Known Address

24.  I am satisfied that the FMH Address was ZL’s last known address for the purposes of service for the following reasons:

(1)  In the ND2A Form signed by H on behalf of NEPL dated 11 September 2021 about the appointment of ZL as a director of NEPL, the FMH Address was stated to be ZL’s address. In the Consent to Act form signed by ZL, she stated the FMH Address as her address.

(2)  The same address was reported in subsequent Annual Returns of NEPL dated 23 February 2022 and Annual Returns of SEL dated 6 December 2022.

(3)  Notices on change of ZL’s address to an address in Shenzhen were filed with the Companies Registry in respect of NEPL and SEL on 8 August 2022. These notices were filed 4 days after the August Hearing during which W made her Leave Application.

(4)  W said that she did not know the above changes until H disclosed the same in November 2022.

(5)  Subsequently, in SEL’s Annual Returns filed in December 2022, the FMH Address was again reported to be ZL’s address.

(6)  I do not accept H’s assertion that ZL’s address reported in the above public documents are “clerical negligence”[8]. The clerical staff would not know the address of ZL. The address must be provided and/or confirmed by ZL or H who signed the above annual returns.

(7)  Despite the notices on change of address filed on 8 August 2022, ZL or H continued to state the FMH Address as ZL’s address in the annual returns filed subsequently in December 2022.

(8)  H contended that ZL’s residence shall be in Shenzhen.[9]

(9)  The requirement under Rule 111 (1)(b)(ii) and Order 65 rule 5(1) is to serve the documents at the party’s last known address. A person’s last known address is not confined to his residence.

(10)  In Guangdong International Trust & Investment Corporation Hong Kong (Holdings) Ltd v Yuet Wah (Hong Kong) Wah Fat Ltd[10], it was held that the reference to a defendant’s “last known address” in Order 10 rule 1(2)(b) on service of a writ was a reference to the defendant’s last address known to the plaintiff. A defendant’s last known address must have been intended to be an alternative to a defendant’s usual address in case the plaintiff was unaware of a recent change in the defendant’s usual address. A defendant may have more than one last known address. The above applies to service of a Summons under Order 65 rule 5(1) and Rule 111 of MCR.

(11)  ZL’s last known address for service essentially means the address last known to W from whatever source where ZL may be reached or where contact or communication in written form could be established. It is not necessarily the address where she may in most probabilities be reached. ZL can have more than one last known address. See: The Hong Kong Mortgage Corporation Ltd. v Ching Kit Yu and Another[11], Hong Kong Civil Procedure 2023 [65/5/5].

C4.  Ordinary Service by post

25.  I am satisfied that the CCBH Letters (with the Documents enclosed) were sent to ZL’s last known address by ordinary post on prepaid envelopes addressed to ZL. According to the evidence filed for W[12], the CCBH Letters were not returned. This is only prima facie evidence of ordinary service.

26.  H deposed in his 14^th Affirmation filed on 8 March 2023 (the day before the hearing) that:

(1)  In or around mid-September 2022, he received a letter addressed to the FMH Address and ZL as the recipient (“Brown Envelope”). He did not open it, marked “WRONG POST” on it and dropped it in one of those pillar post boxes in the neighbourhood around the same day.

(2)  On or about 10 February 2023, he received a sealed envelope addressed to the FMH Address and ZL as the recipient (“White Envelope”). It was marked “Strictly Private and Confidential”. He did not open it, marked “WRONG POST” with a blue marker on the front of the envelope, kept the rest intact and dropped the same in one of those pillar post boxes in the neighbourhood on the same day.

(3)  The same envelope was found in his letterbox again on 21 February 2023. The previous “WRONG POST” mark became “POST” with the word “WRONG” being scrapped off. He also noticed a new postmark on the back of the envelope affixed by the Central Mail Centre when they processed the return mail on 10 February 2023. H believed that the above envelope had been inserted into his letterbox again after the same had been returned.

27.  H exhibited photographs of the Brown Envelope and the White Envelope. The name and address of CCBH were printed on these two envelopes. It is more likely than not that H knew these are documents in relation to the present proceedings.

28.  The above evidence from H suggested that ZL did not receive the CCBH Letters. In the circumstances, I cannot conclude that the Documents were validly served on ZL by the CCBH Letters.

C5.  Personal Service

29.  According to the affirmation of the process server, he was provided by CCBH with (a) a sealed envelope containing the Documents (“Sealed Envelope”), (b) photographs of H, ZL, and a vehicle often used by H (the “Vehicle”). In the late morning of 21 February 2023, he arrived at the main entrance of the FMH, and noticed that the Vehicle was parked in the car park.

30.  In the evening of the same day, the Vehicle was seen driven away from the FMH. A male and a female were seen in the Vehicle. The process server followed. A while later, the Vehicle was found parked near a public pier. No one was seen in the car. The process server checked the vicinity and found a female resembling ZL (by comparing with the photo given to him) along with a male. He took photos of the female and the male and forwarded them via text messages to W and her younger brother. W’s younger brother confirmed that the female was ZL and the male was H.

31.  The process server approached ZL, addressed her by her name, passed her the Sealed Envelope and said to her in Cantonese and Mandarin that these were court documents for her. ZL refused to accept them. As a result, the Sealed Envelope dropped on the floor in ZL’s presence. ZL then left and walked towards the direction of the Vehicle with H.

32.  I am satisfied that the above was a valid personal service of the Documents on ZL. See: Cheung Ping v Cheung Wai Kit[13]; Hong Kong Civil Procedure 2023 [65/2/3]

C6.  ZL has notice of the proceedings in September 2022, long before the Personal Service

33.  ZL has notice of these proceedings, the intended joinder application and the directions in the September Order long before the Personal Service in February 2023. The following conducts of ZL and H were calculated to delay and/or evade service of the Documents and/or the hearing of the Summons:

(1)  ZL received Withers’ Email and the September Order in September 2022. Withers was the legal representative of H at that time. There was no apparent reason for her to doubt the email and its contents. If she was in doubt, she could easily write back and ask. However, she waited for about 5 months and only wrote to CCBH in February 2023 asserting that she was unsure of the authenticity of the court documents in Withers’ Email. I found that such assertion was not credible.

(2)  It was H’s own evidence[14] that he had been relying on ZL and communicating with her for collation of documents to prove the debts he owed to her, which was offset by the SSEL Shares for the purpose of these proceedings. ZL ought to have known the existence of these proceedings and that the debts and the transfer of SSEL Shares to her were in dispute.

(3)  ZL’s name was written in the September Order. The September Order contained directions with specific dates and timeline for filing of evidence, proposed directions and available dates for hearing.

(4)  If she was truly in doubt about Withers’ Email or its attachment, she would have enquired much earlier. However, she only wrote to CCBH about 5 months later. Her delay was, in my view, tactical.

(5)  The September Order was made on 5 September, a sealed copy of which was filed on 9 September.

(6)  H (not his solicitors) was directed to forthwith inform ZL of the September Order. There is no explanation as to why H had to wait until 17 September (12 days after the September Order) emailed the same to ZL through his solicitors.

(7)  Despite H and ZL had represented to the public by the annual returns that the FMH Address was the address of ZL, H deliberately returned the CCBH Letters with knowledge that they were from W’s solicitors.

D.  ADJOURNMENT APPLICATION NOT PROCEEDED

34.  Despite Kwong & Lee’s indication in its letter to CCBH that ZL would seek an adjournment of the hearing for time to file evidence, ZL has not taken out any Summons for adjournment.

35.  Mr Leung (counsel for ZL) stated in [5] of his written submissions that ZL was not given an opportunity to properly file an affirmation in opposition to the Joinder Application.

36.  I do not accept the above submission of Mr Leung. By reason of the findings in section C6 above, ZL’s predicament, if any, was of her own making.

37.  In [7] of the written submission, Mr Leung stated that ZL could have filed evidence on the following matters if she had been given the time to do so:

“7. … had [ZL] been given the sufficient time to file an Affirmation, she could have replied to many of the factually incorrect statements made in [W’s] 9^th and 10^th Affirmation, including, inter alia:

(1) That [ZL] is and was the “long-term” girlfriend of [H];

(2) That [H] could not have owed tens of millions to [ZL] because she was previously employed by him as a “shop manager” and that she would not have tens of millions to lend to him.

(3) [ZL] could also have dealt with the following areas, amongst others, in her intended Affirmation which may have assisted the Court’s determination on joinder:

(a) [ZL]’s personal friendship with [H] and [W];

(b) [ZL]’s financial circumstances and her ability to provide loans to [H];

(c) The accumulation of loans provided by [ZL] to [H] over the years

(d) The consolidation of [H]’s debt by [ZL].

(e) The “share swap” arrangement agreed by [ZL] and [H];

(f) Whether there are alternative arrangements that can be made that could avoid her being joined in the parties’ divorce proceedings.”

38.  At the joinder stage, the Court considers whether there is a bona fide claim. The Court shall not engage itself in adjudicating the disputed facts on the substantive issue.

39.  The evidence that ZL intended to file (“Further Evidence”) is relevant to the substantive dispute on beneficial ownership of the SSEL Shares, for which all parties (including ZL) will have an opportunity to file evidence if ZL was joined as a party.

40.  At the hearing, while we were on the topic of case management directions, I indicated that if an adjournment was to be granted, I inclined it to be a short adjournment of say 7 days for ZL to file evidence relevant to the Joinder Application and the Interim Injunction Applications, and a further 7 days for W to reply. Notwithstanding the very tight court schedule, an adjourned hearing could be fixed on a date in April. The parties are also reminded of the costs implication. I asked the parties to take instructions and make submission if they wish to do so.

41.  The reasons that only a short adjournment, if any, should be allowed are as follows:

(1)  This is a case with a long procedural history. The Petition was presented in 2015. There was a lack of proportionality in the conduct of this case. The parties ought to diligently proceed with the resolution of the dispute on ancillary relief. Active case management is necessary.

(2)  ZL had notice of the timetable for the filing of evidence, proposed directions and available days set out in September Order as early as on 17 September 2022 when she received Withers’ Email.

(3)  I do not accept that she was truly in doubt of the authenticity of Withers’ Email or its attachment.

(4)  I found that ZL, together with H, were playing delaying tactics, and had taken steps to delay or evade service of the Documents or the hearing of the Summons.

(5)  There is no prejudice against ZL if she could not adduce the Further Evidence at this stage as they are evidence relevant to the substantive dispute on beneficial ownership. ZL, if joined as a party, would have an opportunity to adduce them at a later stage.

(6)  ZL suggested that she could deal with the question of whether an alternative arrangement can be made that could avoid her being joined in these proceedings. She has not proposed any alternative arrangement. The Court will not entertain rhetorical question.

(7)  As service of the Documents was effected on 21 February 2023 by way of Personal Service, if ZL intended to file evidence that are truly relevant to the Joinder Application and Interim Injunction Applications, the Court may consider giving her an indulgence by granting a short adjournment, which in my view, ought to be sufficient in light of her prior notice of the proceedings and the confined scope of the issues involved.

42.  In the afternoon, Mr Leung informed the Court that having taken instructions, an adjournment was no longer necessary.

43.  Mr Leung then indicated that he would like to lodge a 4-page affirmation of ZL written in Chinese signed on 8 March 2023 (the day before the hearing) to deal with matters about her residence being in Shenzhen and the wrongly posted letters from CCBH. Mr Leung said it was his instruction that ZL wished to adduce this Chinese affirmation. Mr Leung accepted that most of the evidence in this Chinese affirmation could also be found in H’s affirmation.

44.  Mr Nagpal objected to the last minutes filing of this Chinese affirmation for lack of relevance and delay.

45.  Having heard the submission, I did not allow ZL’s last minute oral application for filing the Chinese affirmation for the following reasons:

(1)  This was introduced extremely late.

(2)  There was no mention of this affirmation at all until after lunch when Mr Nagpal (for W) and Ms Leung (for H) had finished their oral submissions, Mr Leung (for ZL) had made most of his oral submissions.

(3)  Most of the matters raised in the Chinese affirmation were also raised in H’s affirmations. It was not suggested that the contents of the Chinese affirmation were different from H’s evidence. There would be no real prejudice against ZL if the Chinese affirmation was not admitted because similar evidence was before the Court.

(4)  ZL accepted that service was effected by 1 March (although she disputed the service by post and the Personal Service). Mr Leung, after taken instructions, confirmed that no adjournment was sought (although Mr Leung had made some arguments for an adjournment in the early part of the hearing). In the circumstances, evidence about the service of the Documents is not relevant to the Joinder Application.

E.  JOINDER APPLICATION

46.  The legal principles on joinder application are not in dispute. I refer to [35] to [45] of the decision handed down by this Court on 13 February 2023[15].

47.  It is undisputable that prior to the present application, H contended that SSEL Shares were beneficially owned by him. The SSEL Shares were included as part of the matrimonial assets for consideration at the ancillary relief dispute. After the transfer to ZL, H and ZL said that ZL became the sole beneficial owner of the SSEL Shares. This raises a proper issue to be tried in W’s proprietary claim on 50% of SSEL Shares and the ancillary relief dispute.

48.  H and ZL contended that the transfer was a bona fide transaction made with a third party in good faith to partially offset the debts owed by H to ZL by HK$8.4 million.

49.  Mr Nagpal submitted that H and ZL’s contention on the nature of the transaction are not credible given:

(1)  the lack of particulars of the transaction, the underlying debts and the valuation of the SSEL Shares;

(2)  H remains a director and in control of SSEL and NEPL;

(3)  H’s relationship with ZL; and

(4)  ZL is more likely than not H’s nominee only.

50.  Mr Nagpal further submitted that if H has truly disposed of his beneficial interest in SSEL, W has a case to set aside the transaction pursuant to section 17 of the Matrimonial Proceedings and Property Ordinance (“MPPO”).

51.  W suggested that there is a practical need to seek a transfer of the SSEL Shares to her which will enable her to discontinue the HC Action, which she said, is vexatious and abusive. These are matters to be determined in the HC Action. This Court will not exercise discretion to allow the Joinder Application because W wants to gain control in SSEL to put a stop on the HC Action. Mr Nagpal confirmed at his oral submission that this is not his contention either.

52.  Mr Leung submitted that ZL did not want to be involved in this matrimonial dispute between H and W. Be that as it may, she had already got herself involved in the dispute when she accepted the transfer of the SSEL Shares, which is part of the subject property in the ancillary relief dispute.

53.  Ms Leung (for H) submitted that the proposed joinder is not necessary because there are sufficient assets to deal with W’s claim by way of addback. According to the previous schedule of assets of the parties, W would be the paying party, and the value of the SSEL Shares could be accounted for. Ms Leung submitted that the only substantial asset of SSEL is M Property which is a commercial property with no sentimental value. There is no need for a claim in species.

54.  I do not agree that the present dispute can be dealt with by a possible addback provision at the ancillary relief trial. This is not a matter that can be resolved by a simple balance sheet calculation as suggested by Ms Leung. There are certain thresholds to be met for an addback. The Court has to take into account all circumstances of the case. In this case, W beneficially owned 50% of SSEL when it was found. W was making a proprietary claim on the SSEL Shares. The SSEL Shares were transferred at a value (HK$8.4 million) much lower than the value previously agreed by the parties (HK$17 million). W has an alternative claim under section 17 of MPPO.

55.  Ms Leung also argued that there is a possible irregularity in the Summons because HHS is not a party to the proceedings and has not been notified or served with the Summons. Ms Leung submitted that HHS was the legal owner from whom the SSEL Shares were transferred to ZL. If W were to succeed in the setting aside application under section 17 of MPPO, the SSEL Shares would revert to HHS as the original legal owner and she ought to be joined. Ms Leung further submitted that the disposition that could be set aside under section 17 of MPPO must be against a party to the ancillary relief proceedings, but not between the disponee and a further party. Ms Leung relied on C v T[16] and HKCB Finance Ltd v Yuen Yu Wan Sandy[17]. Ms Leung later clarified in her oral submissions that she was not suggesting that the non-joinder of HHS was a defect in the Summons. She suggested that this might be an issue for considering whether an adjournment should be granted.

56.  In response, Mr Nagpal pointed out that the disposition being challenged by W is the disposition of beneficial ownership by H to ZL, but not the transfer of legal ownership by HHS. HHS had declared that she only held the SSEL Shares as a trustee, she never had any beneficial interest in them. This was not disputed by any of the parties. If W successfully sets aside the disposition, ZL may continue to be the legal owner of the SSEL Shares on trust for the beneficial owner to be determined by the Court. There is no need to join HHS to be a party in these proceedings.

57.  I tend to agree with Mr Nagpal. In any event, this matter was raised by Ms Leung with respect to the consideration for an adjournment. As there was no adjournment sought, this is not an issue for the present purpose.

58.  I am satisfied that there is a bona fide claim on beneficial ownership of the SSEL Shares and it is a proper question to be tried among W, H and ZL. ZL, who claims to be the beneficial owner, is a necessary party to this proprietary claim. It is necessary to join ZL as a party in these proceedings for the effective adjudication of the dispute on beneficial ownership of the SSEL Shares.

F.  INTERIM INJUNCTION

59.  This Court has power to grant injunction via two routes. One of them is under section 52B of the District Court Ordinance which provides that the Court may grant an interlocutory or final injunction in all cases in which it appears to the Court to be just and convenience to do so. The second route is pursuant to section 17(1)(a) of MPPO. The procedure or the test applicable under both routes do not differ: CCL aka L, CC v JRC aka C, JR[18].

60.  Mr Nagpal submitted that the first route (section 52B of District Court Ordinance) applies to the interim injunction application against H and ZL, and the second route (section 17 of MPPO) applies to the interim injunction against H. He invited this Court to grant an injunction against H and ZL under section 52B of the District Court Ordinance.

61.  Mr Nagpal informed the Court that on the day before the hearing, W discovered that M Property was marketed for sale. This reinforced the need and urgency for the granting of the interim injunction.

62.  Ms Leung submitted that the issue of injunction rises and falls with the joinder of ZL. In regard to the marketing of M Property for sale, Ms Leung said her instruction was that H, as director of NEPL, was putting M Property on market solely to test the price, there was no intention to sell.

63.  H was prepared to give an undertaking not to sell or create any encumbrances on M Property pending the determination on the remaining relief sought in the Summons.

64.  Mr Leung also informed the Court that ZL was prepared to give a similar undertaking.

65.  The legal principles on the granting of interlocutory injunction are not in dispute.

66.  I have decided that there is a serious issue to be tried on the beneficial ownership of SSEL Shares, and allowed the Joinder Application.

67.  By reason of the following facts, I am satisfied that there is a risk that the SSEL Shares or its underlying assets would be dissipated if H and ZL were not restrained from doing so:

(1)  H procured the transfer to ZL without notice to W or to the Court, whether before or after the transaction. This was in breach of his ongoing duty of full and frank disclosure.

(2)  When H made the transfer to ZL for partial settlement of his debts, H knew that these debts were in dispute.

(3)  H had not produced any evidence proving that a consideration was passed from ZL to him for the SSEL Shares.

(4)  In 2018, the market value of M Property assessed by an independent valuer was HK$17 million. In H’s Form E filed in July 2020, he estimated that the value of M Property was HK$14 million. In July 2021, H claimed to have transferred SSEL Shares to ZL to offset a debt of HK$8.4 million. There is no independent valuation to justify the figure of HK$8.4 million.

(5)  After the transfer to ZL, H remains to be a director and is in control of SSEL and NEPL. H continued to sign and verify the annual returns of SSEL, NEPL and SEL, caused these companies to commence the HC Action, and marketed the M Property for rent and for sale.

(6)  On the day before this hearing, W discovered that M Property was being marketed for rent and for sale.

68.  As the claim before the Court is of a proprietary nature, there is more need for the preservation of the asset.

69.  The undertakings offered by H and ZL are not adequate as it only covers M Property, but not the SSEL Shares or the NEPL Shares.

70.  Ms Leung submitted that if an injunction is to be granted, it suffices to restrain ZL only as H is not the shareholder of the SSEL Shares. I do not accept her submission as this ignored the fact that H is the director and he has been actively conducting the affairs of these companies, including putting M Property for sale and for rent.

71.  On a balance of convenience, it is just and convenient that the Interim Injunction Applications against H and ZL should be granted.

G.  CONCLUSION

72.  By reason of the above, I allowed the Joinder Application and the Interim Injunction Applications. Case management directions for the conduct of the case were given at the end of the hearing after considering the views of all parties through their legal representatives. A case management hearing was fixed in December 2023. Directions were made for the filing of pleadings and evidence within a duration confirmed to be acceptable by the parties and were on an unless basis so as to prevent further delay or derailment from the resolution of the parties’ dispute.

73.  I thank counsel for all parties for assistance.

Mr. Deepak Nagpal instructed by Chaine Chow & Barbara Hung for the Petitioner.

Ms. Vivien Leung instructed by Withers for the Respondent.

Mr. Eric Leung instructed by Kwong & Lee, Solicitors for the Intended 2^nd Respondent.

FCMC 11521 / 2015

[2023] HKFC 34

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11521 OF 2015

----------------------------

----------------------------

______________________

DECISION
(Joinder, Questionnaire,
Section 18 Declaration)

______________________

A.  THE 3 SUMMONSES

1.  Before this Court are three applications of the Respondent (“H”):

(1)  by a Summons dated 8 October 2021 as amended on 6 January 2022, for joinder of 6 intended respondents for the determination of beneficial ownership of 13 properties located in Hong Kong and the Mainland or their sales proceeds, and 3 Mainland bank accounts (“Disputed Assets”) (“Joinder Summons”). The 6 intended respondents are the Petitioner’s (“W”) parents and siblings, 3 of whom have passed away when the Joinder Summons was issued;

(2)  by a Summons dated 8 October 2021, for leave to file the Third Questionnaire (“Questionnaire Summons”) and;

(3)  by a Summons dated 8 October 2021, for a section 18 declaration (“Section 18 Summons”).

2.  This is a high conflict case and has a long procedural history. Both parties and W’s maiden family have substantial assets. Since W presented the divorce petition in 2015 to end their marital relationship of about 24 years[1], there were various interlocutory applications including specific discovery applications and preliminary issues on beneficial ownership. Both parties have made allegations against the other of dissipation of assets. After the unsuccessful FDR, on direction of the Court, the parties exchanged their affirmations in support of their respective claims for ancillary relief in about April 2021. There is interlocutory application yet to be finalised.

3.  In this hearing, H is represented by Mr Hectar Pun SC and Ms Vivien Leung, W is represented by Mr Deepak Nagpal and Ms Bonnie Cheng, the Intended 2^nd to 4^th Respondents are represented by Mr Val Chow. The Intended 5^th to 7^th Respondents have not appeared in these proceedings.

B.  JOINDER SUMMONS

B1.  The intended respondents

4.  By the Joinder Summons, H applied to join W’s parents and 4 siblings as respondents, 3 of whom, viz, W’s parents and elder brother, passed away. The 6 intended respondents are:

(1)  R2: W’s younger brother in his personal capacity.

(2)  R3: R2 in his capacity as the administrator of the estate of W’s father (“Father”), who passed away intestate in March 2015. W was entitled to one-eighth of Father’s estate.

(3)  R4: R2 in his capacity as the sole executor of estate of W’s mother (“Mother”), who passed away in January 2021. W is not a beneficiary under Mother’s will.

(4)  R5: W’s sister.

(5)  R6: another sister of W.

(6)  R7: the Personal Representatives of the estate of W’s elder brother (“Elder Brother”). The Elder Brother passed away intestate in February 2009.

B2.  The Disputed Assets

5.  The Disputed Assets listed in the Joinder Summons include the following landed properties (collectively “Disputed Properties”):

	Joinder Summons	Properties	Relevant Respondents[2]
(1)	§1a	HK#86	R2, R3, R4
(2)	§1b	GZ#175	R2, R3, R4, R5, R6
(3)	§1c	GZ#131_1F	R2, R3, R4, R5, R6
(4)	§1d	GZ#131_2F	R2, R3, R4, R5, R6, R7
(5)	§1e	GZ#3_3	R2, R3, R4, R5, R6
(6)	§1f	GZ#3_(5&9)	R2, R3, R4, R5, R6
(7)	§1g	GZ#3_4	R2, R3, R4, R5, R6
(8)	§1h	GZ#289	R4
(9)	§1i	HK#C1	R3, R4
(10)	§1j	HK#A (sold)	R3, R4
(11)	§1k	HK#25D (sold)	R3. The legal owner was OGT Ltd.
(12)	§10a	HK#2108 - returned deposit and compensation	Not specified by H.
(13)	§10b	HK#502 - net sale proceeds	Not specified by H.

6.  In addition, H asked the Court to make a ruling on W’s beneficial ownership in various bank accounts, if necessary. Paragraph 10 of the Joinder Summons reads as follows:

“10. If necessary there be a ruling on the Petitioner’s beneficial ownership of, inter alia, the assets listed below:

a. The returned deposit and compensation of [HK#2108];

b. Net sale proceeds of [HK#502];

c. Hang Seng Bank (China) Account with Customer Number xxx which include at least Hang Seng Bank (China) Account No. [HS-1], [HS-2], [HS-3], [HS-4], [HS-5] held under her name.

d. ICBC (China) Accounts No. [ICBC-1], [ICBC-2], [ICBC-3], [ICBC-4], [ICBC-5], [ICBC-6] held under her name.

e. CCB (China) Accounts No. [CCB-1], [CCB-2], [CCB-3], [CCB-4] held under her name.”

7.  The meaning of the words “if necessary” in Paragraph 10 is not understood. The words “inter alia” were inserted by amendment. The insertion is unhelpful. If H intended to include other assets, he should specify in the Summons so that the other sides could respond.

8.  The language of the Joinder Summons suggests that H is seeking a determination on the beneficial ownership of the assets. Mr Pun (not the drafter of the Joinder Summons) confirmed that H is not seeking a ruling in this hearing on the beneficial ownership of any assets. This is an application for joinder.

B3.  H’s case on joinder

9.  H’s case is mainly that the funds for the acquisition of the Disputed Properties (the “Funds”) were sourced from the companies owned by H and W (i.e. SSEL, NEPL and SEL) (collectively the “Companies”) and/or from the joint bank accounts of H and W (“Joint Bank Accounts”), therefore the Disputed Properties and the monetary returns derived therefrom are beneficially owned by H and W. The intended respondents are the respective legal owners of the Disputed Properties. They must be joined in these proceedings so that the judgment will be binding on them.

10.  H has not stated the legal basis on which he claims to have a beneficial interest in the Disputed Assets.

B4.  Relevant Facts

11.  By way of background, SSEL is a BVI company incorporated in around 2003. Initially, each of H and W held 1 share. Around the time when W was arrested for tax related charges in the Mainland in 2013, W transferred her share to Father. In September 2013, Father transferred this share to H. In around August 2014, H transferred the two shares in SSEL to a former employee, HHS. These shares in SSEL were further transferred to H’s girlfriend, ZL in around July 2021 (before the Joinder Summons was issued). Currently, H and ZL are the directors of SSEL.

12.  There are disputes on the beneficial ownership of the shares in SSEL. W’s case is that the shares in SSEL were held on trust for H and W in equal shares. H, however, contended that the shares were held on trust for him alone.

13.  NEPL was set up in 1995. Since 2003, SSEL became the majority shareholder of NEPL, holding 99% of its shares. W holds the remaining 1 % share. The current directors of NEPL are SSEL, H and ZL.

14.  SSEL also holds 88% shares of a company named SEL. The other shareholders of SEL are H (1%), W (1%) and a business partner K (10%). The current directors of SEL are H, ZL and K.

15.  In 2004, the Mainland authorities investigated the Shanghai branch of the parties’ business. H was incarcerated in the Mainland from July 2004 to January 2008 due to tax evasion charges in relation to their business. It is H’s case that after he was released from prison, the business of the family was in W’s full control. He was denied from access of the books and records of the business.

16.  From August 2013 to September 2014, W was incarcerated in Shenzhen due to tax evasion charges in connection with the business. It is W’s case that upon her release from prison, she discovered that H had emptied her bank accounts, took away her valuation items, procured the transfer of the shares in SSEL to HHS, and removed her account documents and records.

17.  W moved out from the former matrimonial home shortly after her release.

B5.  R5 to R7

18.  In the beginning of the hearing, I asked the following questions:

(1)  Whether the Joinder Summons was served on R5, R6 and R7 who have not appeared in these proceedings.

(2)  Whether the action against R7, described by H as “The Personal Representative of the estate of [Elder Brother], Deceased” was properly constituted. In this connection, I refer H to Order 15 Rule 6A of the Rules of High Court (“RHC”) if there is no grant of probate or administration for the estate of Elder Brother.

19.  In response, Mr Pun confirmed that H has no knowledge of whether probate or administration for the estate of the Elder Brother was granted, nor the identity of R7’s personal representative, if any. The Joinder Summons and the related papers have not been served on R7.

20.  As to service on R5 and R6, on 7 February 2022, H’s solicitors sent an envelope containing, inter alia, the Joinder Summons, H’s redacted 11^th Affirmation in support of the Joinder Summons, and the Order dated 5 January 2022, by courier through FedEx to the respective last known addresses of R5 and R6 in the United States[3]. The envelope sent to R6 was returned. There was no return of the envelope sent to R5. H contended that the Joinder Summons and the notice of this hearing were validly served on R5.

21.  H further submitted that he “would like to make an application under Order 15 r 6A(4) and (5)[4] for the Court to appoint the Official Solicitor to represent the estate of R7 and accept service of the originating summons”[5].

22.  There is no application under Order 15 rule 6A(4). If a representation order and/or carry on order under Order 15 rule 6A(4) is required, the expression of intention to apply one does not assist H. Order 15 rule 6A(5) governs where an order under rule 6A(4) is made.

23.  In respect of R6, H submitted that “an order for joinder could still be made against R6 and it is up to her to set aside any order made against her if she is so advised.”[6] H has not cited any authority in support. I do not agree this is the correct approach.

24.  Rule 3 of the Matrimonial Causes Rules (“MCR”) provides that RHC shall apply with the necessary modifications to the practice and procedures in matrimonial proceedings.

25.  It is elementary that an inter parte Summons has to be served on the respondent unless there is an order to dispense with service. Pursuant to Order 32 rule 3(1), the Joinder Summons must be served on every other party not less than 2 clear days before the day so specified.

26.  H delivered the papers to R5 and R6 outside the jurisdiction of Hong Kong.

27.  Rule 109 of MCR provides that documents in matrimonial proceedings may be served outside the jurisdiction without leave. It also expressly stipulated that the service shall be done in accordance with Order 11 rules 5 and 6.

28.  The operation of Rule 109 of MCR was explained by B Chu J in KCMA v ABC [2019] HKFLR 548 as follows:

“54. Under rule 109 of the MCR, any document in the matrimonial proceedings may be served outside jurisdiction without leave in accordance with Order 11 rules 5 and 6 of the Rules of the High Court (RHC). Even though no leave is required, the mode of service abroad should follow that set out in Order 11 rules 5 and 6 of RHC. Although Order 11 rules 5 and 6 refer to the service of a writ, ie an originating process, pursuant to rule 3 of MCR, they should apply to service of Form 25 for a variation of settlement/avoidance of disposition order, subject to necessary modifications. Further, after Order 11 rule 5A of RHC has been introduced in 1999, any service in Mainland China should be in accordance with that rule.

…..

58. As matters now stand, for service out of jurisdiction under Order 11 rule 5:

(i) The service effected in the foreign country/place has to comply with the law of the foreign country/place (rule 5(2));

(ii) The document needs not be served personally or by the applicant or an agent if served by a method in accordance with Order 11 rule 6 (rule 5(3));

(iii) If served through the foreign government, judicial authorities and British Consul under Order 11 rule 6, there has to be an official certificate that the application has been served with rule (5A) or rule (6) and the official certificate shall be evidence of the facts stated therein rule 5(5).

59. Order 11 rule 6 provides for service through foreign governments, judicial authorities and British Consul.”

(emphasis in bold added)

29.  Order 32 rule 5(2) of RHC provides that,

“(2) Before proceedings in the absence of any party the Court may require to be satisfied that the summons or, as the case may be, notice of the time appointed for the resumed hearing was duly served on that party.”

30.  The intention of this provision is obviously to ensure that the respondent to an application has proper notice of the hearing and the material upon which the applicant intends to rely on in the application.

31.  H took out the Joinder Summons on 8 October 2021. There was a period of about 10 months before the Summons was heard. H has ample time to serve the documents or take out application to deal with the issue of service. H have not done so.

32.  This is not an ex-parte application. H chose to proceed with the hearing despite non-service of the Summons and the relevant papers on R6 and R7. To proceed with the hearing under this circumstances deprives R6 and R7 of the opportunity to make representations.

33.  The position of R5 is slightly different in that the documents were sent to her by courier at her last known address in the United States without return. H suggested that this is a valid service. H has not adduced any evidence to prove that this is a valid mode of service under the laws of the United States, nor has he made any submission to satisfy the Court that the requirements under Order 11 rule 5 do not apply.

34.  I have at some stage pondered to give H a chance to adduce evidence to prove that the delivery of documents to R5 by courier is a valid mode of service under the laws of the United States. However, having considered the merits of H’s claim, this becomes unnecessary because even if there was valid service on R5, H’s application to join R5 would be dismissed for the reasons below.

B6.  Legal Principles relevant to the Joinder Summons

35.  Order 15 rule 6 of the RHC on joinder of parties applies to matrimonial proceedings.

36.  The object of Order 15 rule 6 is to ensure that:

(1)  all issues in the dispute be effectively adjudicated upon by the Court;

(2)  all relevant parties are before the Court;

(3)  there is a need for preventing the same related or connected issues being tried again with possibly different results;

(4)  multiplicity of actions is prevented

(See : Idmiston Ltd v Asian Master Enterprises Ltd [1998] 1 HKC 588 at 595F; Wong Chun Loony Tony v Ada Ltd [1991] 1 HKC 86 at 98B-C.)

37.  In Goldstone v Goldstone [2011] EWCA Civ 39 at [57], Lord Justice Hughes held that:

“[57] … it is desirable to equip a single court with the means of deciding all relevant connected issues within the same proceedings and to avoid a multiplicity of different and potentially conflicting proceedings … if a dispute emerges then either such person applies to intervene, and thus to became a party, or one of the other parties applies to join him.”

38.  H relied on the provisions of Order 15 rule 6(2)(b) of RHC as follows:

“6(2) Subject to the provision of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application—

….

(b) order any of the following persons to be added as a party, namely—

(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

39.  Prima facie, the plaintiff is entitled to choose the person against whom to proceed and to leave out any person against whom he does not desire to proceed.

40.  On joinder of a new party, the relevant approach to be adopted is whether there is a bona fide claim and a proper question to be tried as between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between the plaintiff and the defendant in the proceedings: Pang Kwok Lam v Schneider Electric Asia Pacific Ltd HCPI 90/2010, 5 January 2011 [73].

41.  The words “cause or matter” in the rule mean the action as it stands between the existing parties. The Court has no jurisdiction under this rule to order third parties to be added as defendants where the cause or matter is not liable to be defeated by the non-joinder, where the third parties were not persons who ought to have been sued in the first instance, and where the third parties were not persons whose presence as defendant was necessary to enable the Court effectually to adjudicate on all the questions involved: Hong Kong Civil Procedure 2023 Vol. 1 [15/6/6].

42.  If it is a necessary party, the party ought to be joined irrespective of the strength of the case: Wong Shan Shan v The Incorporated Owners of Yue Wah Mansions, HCA 1086/2013, 28 January 2015 [31] – [32].

43.  At the joinder stage, the Court will not engage itself in a scrutiny of the applicant’s case, or an adjudication of disputed facts. The Court will not exercise its discretion in favour of a joinder if it is plain and obvious that the plaintiff has no case against the proposed defendant. The burden of proof is on the party opposing the joinder: Advanced Connection Ltd v Able Technology (Hong Kong) Ltd[2019] HKCA 1092 [20] – [21]; Chen Hongqing v Liu Yiu Keung Stephen and others[2021] HKCFI 440.

44.  Once an applicant had passed the minimum requirement of showing a legitimate interest in the outcome of the proceedings, the Court still retained a discretion to decide whether an order should be made, having regard to: the prejudice to the parties, the stage the action has reached when the order was sought, the delay in making the application and any delay that may be caused should an order be made: Hong Kong Civil Procedure 2023 Vol. 1 [15/6/6].

45.  The above principles apply to matrimonial proceedings: KCMA v ABC [2019] HKFLR 548 per B Chu J [78].

46.  The adjudication on dispute between a spouse and a third party on the beneficial ownership of a property in ancillary relief proceedings must be approached on the same legal basis as if it were being determined in the civil court. This is well established in TL v ML [2006] 1 FLR 1263 where Mostyn QC sitting as Deputy High Court Judge held as follows:

“34. It is to be emphasised, however, that the task of the judge determining a dispute as to ownership between a spouse and a third party is of course completely different in nature to the familiar discretionary exercise between spouses. A dispute with a third party must be approached on exactly the same legal basis as if it were being determined in the Chancery Division.

…

36. In my opinion, it is essential in every instance where a dispute arises about the ownership of property in ancillary relief proceedings between a spouse and a third party, that the following things should ordinarily happen : (i) the third party should be joined to the proceedings at the earliest opportunity; (ii) directions should be given for the issue to be fully pleaded by points of claim and points of defence; (iii) separate witness statements should be directed in relation to the dispute; and (iv) the dispute should be directed to be heard separately as a preliminary issue, before the Financial Dispute Resolution.

37. In this way, the parties will know at an early stage whether or not the property in question falls within the dispositive powers of the court …”

47.  Mostyn J further stated in Fisher Meredith v JH and PH [2012] FLR 536 that:

“42. In my judgement there is a clear distinction to be drawn between the state of affairs where a claimant is saying that a property held in the name of a third party is the property of the respondent; and the situation (as here) where the respondent says that property to which he has legal title is beneficially owned by a third party.

43. In the former case I strongly endorse my discipline. In such a case there is a clear obligation on the claimant to apply to join the third party at an early stage and to seek to invoke the discipline in TL v ML (Ancillary Relief: Claim Against Assets of Extended Family). Only in this way can the pool of assets over which the dispositive powers of the court ranges be established …”

48.  This approach was widely endorsed by the Hong Kong Courts. In Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605, Stock NPJ said:

“29. ... In this regard, I endorse the practice commended by the Court of Appeal that in the context of matrimonial proceedings for ancillary relief, disputes between a spouse and a third party as to ownership of property should procedurally be approached as in standard claims for ownership of property : in other words, after a direction for trial of the dispute as a preliminary issue and the joinder of the claimant as intervener, by directions for the filing of pleadings on the preliminary issue and for witness statements and discovery relevant to that issue ...”

(emphasis in bold added)

49.  The Court of Appeal in LLC v LMWA[2019] HKCA 347 acknowledged this approach and set out the following guidance:

“25. Further, even in cases where a spouse seeks a proprietary order in respect of the disputed property, the third party must be involved only if he or she has a competing claim to that property. In this respect, there is a difference between cases where the third party is the legal owner or one of the legal owners of the disputed property and cases where a spouse claims that the third party has a beneficial interest in a property legally held under the name of that spouse. In the former case, the third party should be joined as a party since the legal title of the disputed property would have to be transferred or subject to encumbrance if the ownership issue is resolved by the making of a proprietary order. In the latter case, the third party should be notified of the claim and if he or she decides to contest the ownership issue, he or she should apply to be joined as party to the proceedings. If the third party does not apply to be joined, he or she shall be bound by the judgment: see Order 15 Rule 13A(4) of the Rules of the High Court, applicable by virtue of Rule 3 of the Matrimonial Causes Rules.”

(emphasis in bold added)

B7.  Are the intended respondents necessary parties’ to H’s claim on beneficial ownership of the Disputed Assets

50.  The first question is whether H has a bona fide claim against the intended respondents on beneficial ownership of the Disputed Properties.

51.  H contended that he has a prima facie case because there are evidence (cheque stubs and bank transfer slips) showing fund transfers from the respective Companies to Father or Mother or W. Some of these transfers were signed by the business partner, K on behalf of the company concerned. H also referred to cheque stubs and transfer records showing fund transfers from the Joint Bank Accounts to third parties or Father or Mother or W. H drew inference from the proximity between the transfer dates and the payment due dates in the conveyancing transactions, and/or the closeness of the amounts transferred as compared with the amounts due in the transactions.

B7a.  Cases where the Companies’ funds are involved

52.  It is trite that a company is a legal person on its own right, having a separate and distinct identity from its shareholders. As a general rule, a shareholder does not have legal or equitable interest in the property of the company. A shareholder has a right to the share in the profits of its business and to a distribution of any surplus on liquidation of the company.

53.  This fundamental legal principle was established since the case of Salomon v A Salomon & Co Ltd [1897] AC 22. Lord Sumption JSC recited the principle in an ancillary relief dispute in Prest v Prest [2013] 2 AC 415:

“8. Subject to very limited exceptions, most of which are statutory, a company is a legal entity distinct from its shareholders.It has rights and liabilities of its own which are distinct from those of its shareholders. Its property is its own, and not that of the shareholders. In Salomon v A Salomon & Co Ltd [1897] AC 22, the House of Lords held that these principles applied as much to a company that was wholly owned and controlled by one man as to any other company. In Macaura v Northern Assurance Co Ltd [1925] AC 619, the House of Lords held that the sole owner and controller of a company did not even have an insurable interest in property of the company, although economically he was liable to suffer by its destruction. Lord Buckmaster said, at pp 626-627:

“no shareholder has any right to any item of property owned by the company, for he has no legal or equitable interest therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplus assets when the company is wound up.”

In Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627, the House of Lords held that documents of a subsidiary were not in` the “power” of its parent company for the purposes of disclosure in litigation, simply by virtue of the latter’s ownership and control of the group.”

(emphasis in bold added)

54.  A shareholder may have control of a company’s asset, but that does not make a shareholder an owner of the company’s asset. Rimer LJ said in Lakatamia Shipping Co Ltd v Su [2015] 1 WLR 291:

“50. The assets that Burton J was considering in para 16 were the assets of the companies. There is no suggestion that such assets belonged beneficially to anyone other than the companies, and it is trite law that a company’s assets so held do not belong beneficially to their shareholders, not even to a shareholder in the position of the first defendant, who is, for all practical purposes, the sole owner of the companies. …

51. … The owner is of course able to control the destiny of the company’s asset. But that does not make them his assets; …”

55.  On the topic of presumption of resulting trust in a corporate context, the Court of Appeal summarised in Lo Man Yau v Chiu Sung Fai[2018] HKCA 387[7] the following principle and reaffirmed the general rule that a shareholder has no legal or equitable interest in the company’s assets:

“12. The present case concerned a property held by and in the name of a limited company but the purchase price partly came from the funds provided by its shareholder. In such a context, the legal principles governing how a resulting trust may arise can be briefly stated as follows. The summary below is largely taken from the judgment of Madam Recorder Linda Chan, SC in Re Fortune King Trading Limited, HCCW 432/2012, unreported, 19 May 2017, at [24] – [26] and [31].

(1) It is axiomatic that a company is in its own right a legal person having a separate and distinct identity from its shareholders. Therefore, as a general rule, a shareholder has no legal or equitable interest in the company’s property, as opposed to a right to share in the profits of its business and to a distribution of any surplus on liquidation. See Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1, per Ribeiro PJ [34].

(2) It follows that when the purchase of a property is made in the name of a company, the starting point is that the purchase was intended to vest both the legal and beneficial interest in the company. This is true even if the funds for the purchase are provided by a shareholder.

(3) Both (1) and (2) are general propositions. Combined together, they give rise to a normal, but rebuttable, inference that the beneficial interest of the property acquired in the name of the company with funds provided by the shareholder was intended to pass to the company. When the shareholder claims that by providing the funds, the equitable interest in the property was intended to be vested in him personally by way of a resulting trust, he bears the burden to rebut the inference by proving that the legal interest and the equitable interest of the property were so vested in the company and him separately.

(4) The time to take stock of the respective interest taken by the company and the shareholder in the property is the time of its acquisition. The focus is on the parties’ intention at the time of purchase: whether the parties intended to vest the beneficial interest of the property in the shareholder as the provider of the funds, having regard to all the circumstances.”

56.  There were circumstances in which the Court may “pierce the corporate veil” and disregard the separate identity of a company in carefully defined circumstance to prevent abuse. Lord Sumption JSC, after a review of the legal authorities, concluded in [35] of Prest v Prest (SC(E)):

“35. I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company’s separate legal personality. The principle is properly described as a limited one, because in almost every case where the test is satisfied, the facts will in practice disclose a legal relationship between the company and its controller which will make it unnecessary to pierce the corporate veil.

57.  The above principle of law applies in matrimonial proceedings without exception. In Prest v Prest, the Supreme Court rejected the majority view of the English Court of Appeal and held that there is no special and wider justification in matrimonial proceedings to justify an approach departing from this general principle of law. Lord Sumption JSC held in [37]:

“37. If there is no justification as a matter of general legal principle for piercing the corporate veil, I find it impossible to say that a special and wider principle applies in matrimonial proceedings by virtue of section 24(1)(a) of the Matrimonial Causes Act 1973. The language of this provision is clear. It empowers the court to order one party to the marriage to transfer to the other “property to which the first-mentioned party is entitled, either in possession or reversion”. An “entitlement” is a legal right in respect of the property in question. The words “in possession or reversion” show that the right in question is a proprietary right, legal or equitable. This section is invoking concepts with an established legal meaning and recognised legal incidents under the general law. Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts are suspended or mean something different. If a right of property exists, it exists in every division of the High Court and in every jurisdiction of the county courts. If it does not exist, it does not exist anywhere. It is a right to add that even where courts exercising family jurisdiction have claimed a wider jurisdiction to pierce the corporate veil than would be recognised under the general law, they have not usually suggested that this can be founded on section of the Matrimonial Causes Act 1973.”

(emphasis in bold added)

58.  Earlier, in A v A [2007] 2 FLR 467, Munby J (as he then was) remarked that the Court cannot grant relief over a third party’s property merely on the basis that arrangements made by a spouse is artificial, proper basis for the claim must be identified with reference to established principles:

“17. I wish also to make the point that, even in the Family Divisions, a spouse who seeks to extend her claim for ancillary relief to assets which appear to be in the hands of someone other than her husband must identify, and by reference to established principle, some proper basis for doing so. The court cannot grant relief merely because the husband’s arrangements appear to be artificial or even “dodgy”.”

(emphasis in bold added)

59.  In Tebbutt v Haynes [1981] 2 All ER 238, Lord Denning said that:

“… if an intervener comes in making a claim for the property, then it is within the jurisdiction of the judge to decide on the validity of the intervener’s claim. The judge ought to decide what are the rights and interests of all the parties, not only of the intervener, but of the husband and wife respectively in the property. He can only make an order for transfer to the wife of property which is the husband’s property. He cannot make an order for the transfer to the wife of someone else’s interest.”

(emphasis in bold added)

60.  Bearing also in mind that the dispute on beneficial ownership of a third party’s property in matrimonial proceedings is to be approached as the dispute is before a civil court, there is no reason to depart from the above principles well established in civil court.

61.  H and W are shareholders of SEL, and former shareholders of SSEL/NPEL. The Funds are the assets of the Companies, not the assets of H and W.

62.  H asserted that the funds in the Companies were treated as family funds.

63.  However, this does not sit well with the Companies’ assertion of proprietary rights over the Funds in the High Court action (“HC Action”) commenced by the Companies (viz: SSEL, NEPL and SEL) in 2020 against, inter alios, W and the intended respondents[8] for fraud, breach of director’s duties, and proprietary restitution. The pleas in the Statement of Claims filed in May 2022 were verified by a Statement of Truth signed by H.

64.  It is also of note that SEL has a third party shareholder. The Companies may also have creditors.

65.  H’s case that the Funds were used to acquire the Disputed Properties, if proved, may at best give rise to a dispute on beneficial ownership between the Companies (not H and W) and the legal owners. H has not raised any legal or factual basis to substantiate his personal claim on beneficial ownership of the Disputed Properties.

66.  Accordingly, even if it is established that the Funds were used to acquire the Disputed Properties, it does not give rise to a bona fide claim for proprietary order against the intended respondents over the Disputed Properties.

67.  H cited LWH, also known as WHHL v NKWS also known as KWSN, FCMC 2953/2015, unreported, 13 June 2017 where the Court found that a shareholder has the beneficial ownership of the property held in the name of a company. The issue of the beneficial ownership is fact-sensitive. Every case has its own facts. The finding in LWH does not assist H.

B7b.  HK#25D was not legally owned by the intended respondents

68.  H’s contention that the intended respondents are legal owners of the Disputed Properties does not hold truth insofar as HK#25D is concerned.

69.  The registered owner of HK#25D was OGT Limited, a company wholly owned by Father until he sold the entire shareholdings to a third party on 31 July 2014[9]. OGT Limited is not a party or intended party of the present proceedings.

B7c.  Cases where the funds of the Joint Bank Accounts are involved

70.  H contended that money in the Joint Bank Accounts were applied for payments in connection with HK#86, GZ#289, HK#C1 and HK#502.

71.  In connection with HK#86, H referred to copies of the following cheque stubs of the Joint Bank Accounts[10]:

(1)  A cheque stub with the word “Edward” written next to “PAY” and “750,000” written next to “THIS CHQ.” (“Stub A”).

(2)  A cheque stub with “11.1.28” written next to “DATE”, name of Father written next to “PAY” and “200000” written next to “THIS CHQ.” (“Stub B”).

(3)  A cheque stub with “11.1.[XX[11]]” written next to “DATE”, Mother’s name written next to “PAY” and “250,000” written next to “THIS CHQ.” (“Stub C”).

72.  H suggested that the word “Edward” means “Edward Lau, Wong & Lou”, Solicitors for the purchasers in the conveyancing transaction. The sum of $750,000 is for payment of further deposit due on 15 February 2011.

73.  H has not explained how are Stub B and Stub C (for a total sum of HK$450,000) related to the purchase of HK#86 save that the cheques were issued in January 2011 when the initial deposit for the purchase of HK#86 was due. Nonetheless, on the face of the preliminary sale and purchase agreement, the initial deposit was paid by a cheque in the sum of HK$300,000.

74.  In connection with GZ#289, H referred to a transfer of RMB 200,000 on 14 October 2011[12] from his bank account to W’s account[13], together with another transfer from SEL to W involving RMB 200,000 (no supporting document produced). H suggested that these tallied with the purchase of GZ#289 at the price of RMB500,000 on 12 December 2011.

75.  In connection with HK#C1, H referred to a copy of a cheque stub[14] (“Stub D”) of Joint Bank Accounts on which it was written “10 5 31” written next to “DATE”, “中原” “佣金” written next to “PAY”, “82,000” written next to “THIS CHQ.” H said this was for the payment of estate agents’ commission for the sale of HK#C1. H produced a temporary receipt dated 31 May 2010 and an official receipt addressed to Father, Mother and W for the sum of HK$82,000 being commission for the sale of HK#C1[15].

76.  HK#502 was purchased on 11 April 2012 and was registered in the name of W. H adduced 2 cheque stubs[16] of the Joint Bank Accounts and contended that they were made for payment in connection with HK#502:

(1)  A cheque stub with “13.5.31” written next to “DATE”, “One Midtown for 5-6月” written next to “PAY” and “5180” written next to “THIS CHQ.” (“Stub E”);

(2)  A cheque stub with “13.8.8” written next to “DATE”, “One Midtown 7-8月” written next to “PAY”, “5180” written next to “THIS CHQ.” (“Stub F”).

77.  The above cheque stubs, contended by H, showed that payment from the Joint Bank Accounts were used for payment of estate agents’ commission, 2 payments of $5,180 each in connection with HK#502, a payment made to the solicitors acting in the conveyancing transaction, some payments made to W’s parents and a transfer from H to W. The payments themselves, would not be sufficient to establish that beneficial ownership in the properties concerned.

78.  Even if the disputed facts are taken in favour of H at this stage, discretion should not be exercised in favour of a joinder because:

(1)  HK#C1 and HK#502 were sold to third parties in 2010 and 2013 respectively, no proprietary order could be sought against these properties;

(2)  the delay in taking out the Joinder Summons and the prejudice it will cause to W and the intended respondents (further discussed below),

(3)  the long procedural history and the parties have exchanged affirmations on ancillary relief matters after an unsuccessful FDR, and

(4)  disproportionality.

B7d.  W’s Accounts (paragraphs 10c to 10e of the Joinder Summons)

79.  H’s case on the bank accounts listed in paragraph 10c, 10d and 10e of the Joinder Summons (collectively “W’s Accounts”) is this. W maintained in her answers to questionnaires that the bank accounts listed W’s Accounts are held by her on behalf of her maiden family. She was only managing the funds for her maiden family. H did not accept this position and sought to join the intended respondents for the determination on the beneficial ownership.

80.  I disagreed that this is a reason for joinder. Equity follows the law. The starting point is that the legal owner of a property also has the beneficial interest in that property. The party who asserts that the beneficial ownership does not lie with the legal owner bears the burden of proving it: Stack v Dowden [2007] 2 AC 432, [56]. The burden is on W to prove that she does not have the beneficial interests in the funds in W’s Accounts.

B8.  Just and convenience

81.  I start by reciting the following passages in LLC v LMWA [2019] 2 HKLRD 529 on disputes on ownership in the context of ancillary relief litigation:

“22. One must not lose sight that the dispute on ownership in these cases often arisen from matrimonial proceedings. But for the breakdown of marriage and the application for ancillary relief by one spouse in a divorce petition, there would not be any claim on the property. In other words, the parties only raise the issues on beneficial ownership for the court to determine because of the matrimonial proceedings.

23. The underlying matrimonial dispute and the application for ancillary relief, in our judgment, is the origin and the substratum for the litigation on ownership irrespective of the procedural routes adopted by the parties and the court to resolve the same. If the underlying ancillary relief claim is settled or resolved satisfactorily between the spouse, often there would be no further need or justification for proceeding with a determination of a dispute on the ownership.

24. Alternatively, if the ancillary relief can be determined or settled without any adjustment to or encumbrances being imposed upon the title to and/or the proprietary interest in that property (eg where a spouse does not seek any transfer of property order or any charge being imposed on the same to secure a claim [a proprietary order], and content with the claim being satisfied by other properties in the matrimonial pot whilst having the value of the disputed property being taken into account), it may be possible to confine the dispute to one between the spouses.”

(emphasis in bold added)

82.  H contended that it is just and convenient to join the intended respondents “so that all relevant issues and evidence can be fully fleshed out”, and H can seek discovery from the intended respondents. H also submitted that there is substantial overlap of issues in these proceedings and the HC Action. If joinder is allowed, he may consider revisiting the application for a transfer of these proceedings to the High Court to avoid multiplicity of proceedings.[17]

83.  I do not see merits in this contention.

(1)  The Companies are not parties to this action.

(2)  The legal questions to be determined in the dispute on ancillary relief are different from questions to be determined in the HC Action.

(3)  There is a substantial delay on the part of H. Father and Mother passed away before the Joinder Summons. They could not give evidence on the intention and circumstances surrounding the acquisition of the Disputed Properties, which are pertinent matters in a dispute on beneficial ownership. There will be grave prejudice against W and the intended respondents if the Joinder Summons is allowed.

(4)  H is the director of SSEL, NEPL and SEL and should have access and control of the Companies. W was imprisoned from August 2013 to September 2014. She did not have access to the Companies’ documents and funds. H ought to be in a better position than W, to have access of the records and documents of the Companies and the Joint Bank Accounts.

(5)  H’s assertion that he could only discover the evidence to support the joinder application after W’s filing of the section 7 narrative affirmation could not be right. The narrative affirmations were exchanged. H had exhibited the evidence in his own narrative affirmation before he had sight of W’s.

84.  It appeared that H complaint was W’s unauthorised use of the funds of the Companies and those in the Joint Bank Accounts. If H can establish that there was wanton dissipation of assets, he may seek, for example, a claim for addback, in the ancillary relief proceedings.

85.  Mr Pun accepted that a claim for addback may provide redress to H, but he submitted that it is not viable in the present case because the value of the assets disclosed on the table (about HK$50 million) is not sufficient to satisfy H’s claim (HK$150 million). It seems to me that there are inflation in H’s claims. I am not of the view that joinder should be allowed for this reason.

B9.  Decision on Joinder Summons

86.  For the above reasons, I dismiss the Joinder Summons.

B10.  Issue Estoppel, Abuse of Process and Waiver

87.  The parties made substantial arguments on the defences of issue estoppel, abuse of process and waiver in respect of 8 of the Disputed Properties (i.e. paragraph 1a to 1h of the Joinder Summons). I briefly express my views.

88.  W submitted that the following facts gave rise to the above defences:

(1)  W disclosed in Form E dated 1 December 2015 her interests in HK#86 and GZ#3_3, GZ#3_4, GZ#3_(5&9) , GZ#175 and GZ#131_1F. She stated that these properties were held on trust for her parents who had funded the purchase of these properties.

(2)  In H’s Form E dated 22 January 2016, he claimed that his share of ownership or beneficial ownership of the above properties and GZ#131_2F is “50% of the Petitioner’s interest in the property and rental income”.

(3)  By an Order dated 5 April 2017, HHJ Melloy directed that the preliminary issue concerning the true legal and beneficial ownership of HK#86 and GZ#175, GZ#131_1F, GZ#131_2F, GZ#3_3, GZ#3_4 and GZ#_(5&9) be adjourned to a date, and the parties are to file pleadings on the preliminary issue.

(4)  On 5 June 2017, a consent order was made by HHJ Melloy (“Consent Order”) as follows:

“AND Upon the Petitioner undertaking, agreeing and acknowledging that the following properties are matrimonial assets beneficially owned and belonging to the Petitioner:

(1) 2/14 of all the interests in [GZ#131_1F] and 1/7 of all the interests in [GZ#131_2F];

(2) 1/4 of all the interests in [HK#86];

(3) 1/5 of all the interests in [GZ#3_3], [GZ#3_(5&9)] and [GZ#3_4];

(4) 1/3 of all the interests in [GZ#175];

(5) [a property in Guangzhou];

(6) 1/2 of all the interests in [GZ#289]

BY CONSENT, IT IS ORDERED THAT:

1. Paragraphs 1 to 4 of the Order dated 5^th April 2017 in relation to the preliminary issue concerning the true legal and beneficial ownership of the following properties be dismissed:

(1) [GZ#131_1F] [GZ#131_2F];

(2) [HK#86];

(3) [GZ#3_3], [GZ#3_(5&9)], [GZ#3_4];

(4) [GZ#175];

(5) [a property in Guangzhou];

(6) [GZ#289]. …”

89.  W contended that the question of legal and beneficial ownership of the properties listed in paragraph 1 of the Consent Order (“Consent Order Properties”) have been adjudicated and dismissed. The parties have compromised on the extent of W’s beneficial ownership in the Consent Order Properties. H is precluded by issue estoppel from disputing the beneficial ownership of the Consent Order Properties. Alternatively, it is an abuse of process to do so.

90.  W referred the Court to the following legal principles.

(1)  An order by consent or compromise embodied in a consent order gave rise to estoppel that precludes a party from raising the same issue in the same way as a judgment made after adjudication by the Court. It is intended to put a stop to litigation between the parties on the matter: Yung Hong Wai v Ng Kam Shing, HCSA 9/1994, unreported, 23 June 1994; TCWF v LKKS (No.1) [2014] 1 HKLRD 896 at [101], [102] and [105].

(2)  Alternatively, it is an abuse of process to reopen the issues. The Court should adopt a “broad, undogmatic and merits-based approach” and take into account all the facts of the case in determining whether there is such abuse: TCWF v LKKS (No.1) [106] – [144].

(3)  If a point was open to take on an earlier interlocutory application and was not pursued, it is not open for him to take the point at a later application when there has been no material change of circumstances and no new fact. The party has a responsibility to take the point when it is first reasonably available to him before the Court and that it would be an abuse of process to delay taking it until a subsequent application: Compania Sud Americana De Vapores SA v Hin-Pro International Logistics Ltd [2015] 2 HKLRD 458 [16] to [17], summarised the principle derived from Chanel Ltd v FW Woolworth & Co Ltd. As follows:

“16. The principle derived from Chanel Ltd v FW Woolworth & Co Ltd is that of a point was open to a party on an earlier interlocutory application and was not pursued, then it is not open to him to take the point at a later application when there has been no material change of circumstances and no new facts …

17. The Chanel Ltd v FW Woolworth & Co Ltd principle is founded on the basis that the party has a responsibility to take the point when it is first reasonably available to him before the court and that it would be an abuse of process to delay taking it until a subsequent application.: Gee, ibid …”

(4)  The principle applies also to a situation where there has been no determination by the Court: Wong Sze Ling v Young Cheung Lee[2021] HKCFI 892 [24] and [32].

(5)  On the issue of waiver, Gaudron J observed in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 482 that:

“If, in the course of litigation, a person fails to plead a matter, take an available objection or pursue a particular point of law, the matter proceeds on the basis that the point which might have been taken is not in issue. Were it otherwise the conduct of litigation would be unmanageable. Of course, leave may be granted if the point can be raised without injustice to the other party. That question may depend upon whether disadvantage to the other party can be avoided by adjournment or an appropriate costs order. But other issues may be taken into account. In Ketteman v Hansel Properties Ltd Lord Griffiths said “justice cannot always be measured in terms of money”. His Lordship then observed that there was to be weighted in the balance “the strain the litigation imposes on litigants…, the anxieties occasioned by facing new issues, the raising of false hopes”. Additionally, his Lordship noted the necessity to take into account “the pressure on the courts” and the public interest in “legal business [being] conducted efficiently”.

When a party to litigation deliberately chooses not to take a point or fails to take a point when it comes to notice, the courts may adopt a more stringent attitude, treating the point as having been irrevocably abandoned. Usually the party who has thus failed to take the point is said to have “waived” it.”

(6)  In Trafalgar House Construction (Asia) Ltd v The Owners and/or Demise Charterers of NV “Thor Scan” [1999] 2 HKLRD 136 at 148G -149H, the Court of Appeal held that:

“In my view, waiver does not operate only where a party has two or more alternative inconsistent options available to him, but can also operate in other situations. Whether there is a waiver depends on what a party has done or failed to do amounts to a clear and unequivocal indication that he has chosen not to pursue or exercise his right, then in law, he is taken to have waived his right. The choice of one option rather than the others merely illustrates his intention to waive his rights under the other options.”

91.  Firstly, the preliminary issue directed by HHJ Melloy was to determine whether W has, and if so, the extent of, beneficial ownership in the Consent Order Properties (“2017 Issues”). The parties’ compromise on the 2017 Issues was recorded in the Consent Order. There is no express reservation over the claims on the remaining interests of these properties.

92.  Secondly, H’s argument that the Consent Order does not cover H’s present preliminary issue claims “as the necessary parties on the Husband’s preliminary issue claim had not been joined”[18] bears no merits. H now sought for the determination of the beneficial ownership of the Disputed Properties as preliminary issue. This is the same as the 2017 Issues (except that the present claim covers more properties). H knew the identity of the legal owners of the properties concerned in 2017 but chose not to join them in 2017.

93.  Thirdly, there is no change of circumstances.

94.  Fourthly, H’s continual claims against W for appropriation of Companies’ assets for the benefit of herself and her family members are different from the claims on beneficial ownership of the properties concerned.

95.  It is an abuse of process to reopen the issues of beneficial ownership by the Joinder Summons.

C.  QUESTIONNAIRE SUMMONS

96.  The parties have a continuing duty to make full, frank and clear disclosure of their assets. In the exercise of case management power, the Court should regulate the extent of discovery. Request for discovery on documents irrelevant to the issue in dispute, or is oppressive or disproportionate should not be allowed. The Court should also guard against the use of discovery application as a fishing of information.

97.  Rayden and Jackson on Relationship Breakdown, Finances and Children states as follows:

“[13.104] … Questionnaires can, like interrogatories, request information as well as seek production of documents. As part of its case management role, the court should regulate the extent of the discovery of documents so that the exercise is proportionate to the issues in question, and to ensure that the discovery process does not become a fishing expedition approved by the court.

[13.105] In Imerman v Tchenguiz the Court of Appeal made two general observations in relation to discovery and disclosure:

“[33] In relation to these Rules we make two general observations. First, that the Rules do not provide for any disclosure of information or disclosure (discovery) of documents until a spouse has lodged his Form E. Second, and even more significantly, that the process of disclosure (discovery) of documents both then and thereafter is closely regulated by the Rules and, in accordance with the Rules, by the court. Although there is a general duty to make full disclosure of all relevant information, there is, despite the duty imposed on the court by s 25 of the 1973 Act, no duty of general disclosure (discovery) of documents of the kind required in ordinary civil proceedings by the CPR. And whereas in ordinary civil proceedings the parties can normally choose what documentary evidence to tender, it is the court which controls what documents are to be disclosed and tendered by way of evidence in ancillary relief proceedings.

[34] Thus, judges deciding such applications have a far greater control than they have under the CPR in normal civil proceedings, over which documents should or should not be produced in evidence.”

(emphasis in bold added)

98.  The following principles are summarised in B v B (matrimonial proceedings: discovery) [1979] 1 All ER 801 at 811c-g:

“I will conclude this part of my judgment by summarising my conclusions as to the law. (1) A party to a suit must disclose all the documents in his possession, custody or power which are relevant to the matters in issue. The court has a discretion whether or not to order him to make such disclosure, and also has a discretion whether or not to order him to produce the documents for inspection by the other party or the court. (2) The documents of a company are in the legal possession of the company. If they are or have been in the actual physical possession of a director who is a party to litigation they must be disclosed by that director, if relevant to the litigation, even though he holds them as servant or agent of the company in his capacity as an officer of the company. (3) Whether or not documents of a company are in the power of a director who is a party to the litigation is a question of fact in each case. ‘Power’ in this context means ‘the enforceable right to inspect or obtain possession or control of the document’. If the company is the alter ego of such a director so that he has unfettered control of the company’s affairs, he must disclose and produce all relevant documents in the possession of the company. (4) Where relevant documents in the possession of a company are disclosed by a director as being in his custody or power, the court has a discretion whether or not to order production of them. (5) The discretion is a judicial discretion, and in exercising it the court will have regard to all the circumstances. The court will balance the relevance and importance of the documents and the hardship likely to be caused to the wife by non-production against any prejudice to the husband and third parties likely to be caused by production. It has not hitherto been the practice of the court to order production of company documents to which the board of directors objects on affidavit, provided that the court is satisfied that the objection is not contrived for the purpose of frustrating the powers of the court. The court will not in the exercise of its discretion order parties to do that which they have no power to do. The court will not order production unless it is satisfied that production is necessary either for disposing fairly of the issues between the parties or for saving costs.”

99.  The party seeking discovery must base his belief that the document exists on proper grounds. It is insufficient for the applicant to assert that the document “might” exist, so they should be allowed to search for it: Chau Ka Chik Tso by its manager Chau Fuk Sze and others v Secretary for Justice HCA 10670/2000, unreported, 21 November 2005 [36], [39].

100.  A party may depose in affidavits that he in fact does not have the documents in his possession, custody or power. The affidavit in answer is conclusive in interlocutory stage: Re The Prudential Enterprise Ltd HCCW 594/1999, unreported, 10 August 2001, [6].

101.  In the context of an ancillary relief dispute, the Court also bears in mind the principle against minute retrospective investigation enunciated in LKW v DD :

“62. The fourth principle is that the court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tend to deplete the parties’ (and the courts’) resources and to increase antagonism and discourage settlement.

63. Such attempts have been encountered in various contexts, including disputes over the extent of a party’s assets; over the contribution made to the welfare of the family; over the parties’ conduct; over claims to be compensated for having suffered some disadvantage, and so forth.”

102.  H’s draft Third Questionnaire annexed to the Questionnaire Summons was revised twice, partly to narrow down the scope and partly to delete the questions answered by W. The latest version is the 14-page revised draft submitted on day 2 of the hearing (“Draft 3^rd Questionnaire”). It has 12 questions with sub-questions.

103.  In 2019 and before the FDR, H made an application for specific discovery of documents and information in connection with (a) Father’s estate; (b) the rental income from properties in Hong Kong and the Mainland; (c) three Hong Kong companies that were sold years ago; and (d) W’s bank accounts in Hong Kong and Mainland[19] (“2019 Discovery Application”). Many of the H’s requests in 2019 were rejected by HHJ Melloy (“2019 Ruling”).

104.  The documents and information requested in the Draft 3^rd Questionnaire are largely the same as those in the 2019 Discovery Application.

105.  The 2019 Ruling was made for the purpose of FDR. Nonetheless, I am of the view that most of the decisions in the 2019 Ruling apply to this application.

106.  W contended that the cut-off date for discovery decided in the 2019 Ruling (i.e. September 2014) should be maintained. I agreed.

Questions 1 to 3: in respect of Disputed Properties and 7 Properties held by W and/or with H

107.  Question 1 covers HK#C1, HK#A, HK#502, HK#25D and HK#2108, which have been sold between 2010 and 2014 (“Group A”). Question 2 covers HK#86, GZ#175. GZ#131_1F, GZ#131_2F, GZ#3_3, GZ#3_(5&9), GZ#3_4 and GZ#289 (“Group B”).

108.  H requested the production of documentary proof in connection with the source of fund towards the purchases and, in the case of Group A, the whereabouts of the sales proceeds; in the case of Group B, the mortgage loans and rental income, including bank statements and ledger account prepared by W for each of the rented properties.

109.  Similar requests made in the 2019 Discovery Application were refused. The Joinder Summons is dismissed. Production of further documents in connection with the purchase, mortgage, sale and rental of these properties are not necessary nor proportionate. W has deposed on affidavit that she does not have and would not be able to obtain further documents.[20]

110.  Questions 1 to 3 are not allowed.

Question 4: in respect of 28 bank accounts

111.  There are 10 sub-questions which relate to W’s bank accounts, which are relevant to the ancillary relief trial subject to the cut-off date of September 2014.

112.  The requests in question 4 were largely the same as the requests in the 2019 Discovery Application. H accepted that W has disclosed statements and records of the bank accounts covered in this question but the disclosure is not complete.

113.  The bank account referred to in question 4(9) is a repetition of the account in item 4(i) which was covered by question 4(1).

114.  W agreed to answer question 4(1) regarding bank statements and account opening forms since September 2014, except the two DBS accounts listed in item 4(xiii) and 4(xiv) which W said she does not know what these two accounts relate. Insofar as the two DBS accounts are concerned, if they are not W’s bank accounts, she may say in the answer.

115.  W shall answer question 4(1) to 4(8) and 4(10) and disclose the documents requested which are in her possession, power and custody, and subject to:

(1)  those prior to September 2014 are excepted;

(2)  the documents that had been disclosed to H in these proceedings are excepted; and

(3)  disclosure shall cover all those that are in W’s possession, power and custody. The production of answers from the bank or third parties to W’s requests for documents is just one of the possible evidence to prove that the documents are not in W’s power and custody.

Question 5: in respect of Father’s estate

116.  Question 5 relates to (1) Father’s Letters of Administration, Schedule of assets and liabilities of his estate or equivalent documents in other jurisdictions where Father had assets in, including the Mainland and the United States[21]; (2) financial statements of two companies from 2014 to present and supporting documents on the basis for valuation of these 2 companies in the Schedule of Assets and Liabilities of Father’s estate[22]; and (3) details of 7 bank transfers between Father’s estate and W in 2015[23].

117.  Father died intestate on 3 March 2015, which was after the parties’ separation in around 2014.

118.  H’s requests for discovery on information and documents relating to Father’s estate were held by HHJ Melloy as either unnecessary or irrelevant. HHJ Melloy took the preliminary view that W’s inheritance would be non-matrimonial.[24] It was also found that W and her brother have provided H with a great deal of information[25].

119.  I agree and disallow questions 5(1), 5(2) and 5(4).

120.  Question 5(3) relates to 9 specific bank transfers between the bank accounts of W and Father in 2015. This is relevant and W shall answer question 5(3).

Question 6: in respect of Mother’s estate

121.  Question 6 relates to Mother’s estate. W is not a beneficiary of Mother’s estate. The requests are not necessary and are fishing. Question 6 is not allowed.

Question 7: in respect of W’s loan from Mother

122.  W agreed to answer question 7(1) to clarify whether 3 liabilities disclosed in the 2 Form Es are part of the debts mentioned in W’s 5^th Affirmation.

123.  By question 7(2), H requested W to give a full and proper account in relation to the purpose of the loans received by W from Mother with supporting documents including ledger account and bank statements showing breakdown and destination of the funds received by W including those prior to April 2015. W had stated in her 5^th Affirmation breakdown of her loans from Mother with reference to bank statements. This is excessive and disproportionate. Question 7(2) is not allowed.

Questions 8 and 10: in respect of the net profits of SEL since 2003 and receivable for SEL since 2008

124.  These questions relate to the transactions concerning SEL since almost 2 decades ago.

125.  H is a director of SEL. H ought to have access of SEL’s financial information. The extensive period requested is not necessary. W has deposed on affidavit that she does not have further financial records of the companies.

126.  Questions 8 and 10 are not allowed.

Question 9: regarding money from the Companies to W or her maiden family members during marriage

127.  This question premised on H’s own assertion that W siphoned off money received from the Companies or joint account with him since 2006 which W denied. This is fishing. Question 9 is not allowed.

Question 11: about remortgage of former matrimonial home in 2008

128.  It is inappropriate to plough through the details during marriage nor to have a minute investigation of the events during marriage for the purpose of determining the ancillary relief. This request for a full account with documentary proof and bank statement on transaction in 2008 is unnecessary and rejected.

Question 12: with respect to funds withdrawn in 2014/2015 for repayment to Mother and W’s sister.

129.  H said that this relates to a sum of about HK$1.4 million withdrawn by W from the parties’ joint bank account shortly after she was released from imprisonment. W said that H owed her HK$1.39 million, therefore she withdrew the sum. H disagreed.

130.  This may be a matter for cross examination at the trial. The one who assert shall prove. It is for W to prove at the trial that H owed her the money.

131.  H’s requests for documents showing the destination of the sum withdrawn by W is disproportionate. This question is not allowed.

D.  SECTION 18 DECLARATION SUMMONS

132.  The parties have two children. They are now young adults aged 24 and 22. The elder son is attending university in Canada. The daughter is attending university in the United States.

133.  The decree nisi of divorce was pronounced on 20 January 2016. H applied for the Court’s declaration under section 18 of Matrimonial Proceedings and Property Ordinance on the ground that the children have obtained majority. Hence, there is no children to whom section 18 applies. H did not rely on the ground of section 18(1)(c) of MPPO. The requirement in section 18(2) of MPPO for an undertaking on the children arrangements does not apply.

134.  The Section 18 Summons is not opposed.

135.  As the children of the family are all over 18 years of age, I am satisfied that there is no child of the family to whom section 18 of MPPO applies and so declare.

E.  ORDER

136.  I make the following orders:

(1)  The Joinder Summons be dismissed.

(2)  Leave to H to file and serve a third questionnaire on questions 4(1) to 4(8) and 4(10) as referred to in paragraph 115 above, and question 7(1) as referred to in paragraph 122 above within 7 days from the date of this decision; and W to file and serve her answers thereto within 35 days thereafter.

(3)  There be a Section 18 Declaration as in paragraph 135.

137.  Costs should follow the event. I make the following costs order nisi to become absolute 14 days after this decision unless there is application for variation of the order nisi:

(1)  H do pay W, R2 to R4 the costs of and occasioned by the Joinder Summons on a party and party basis with certificate of two counsel, at an amount to be taxed if not agreed.

(2)  H do pay W 80% of the costs of and occasioned by the Questionnaire Summons on a party and party basis with certificate of two counsel, at an amount to be taxed if not agreed.

(3)  There is no order as to costs of the Section 18 Summons.

138.  I thank all counsel appeared at the hearing for their helpful assistance.