CHAN MAN KI v. YAU CHUN FOR

DCCJ 1564/2018

[2018] HKDC 1481

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1564 OF 2018

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BETWEEN
	CHAN MAN KI	Plaintiff
	and
	YAU CHUN FOR	Defendant

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Before:

Deputy District Judge K C Chan in Chambers (Open to Public)

Date of Hearing:	29 November 2018
Date of Decision:	29 November 2018

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DECISION

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1.  By a written decision handed down on 28 September 2018 (“the Decision”), I dismissed the defendant’s application by summons taken out on 13 June 2018 to strike out the Statement of Claim and to dismiss the action on the ground that it is an abuse of process in that it is re-judicata in the wider sense (or is otherwise known as the Henderson v Henderson abuse).

2.  By summons dated 10 October 2018, the defendant now seeks (a) leave to appeal against the Decision, and (b) to vary the costs order nisi made in the Decision.

3.  The plaintiff’s claim, the relevant background and my reasons for refusing to strike out the Statement of Claim and this action are set out in the Decision and I will not repeat them here.  For ease of reference, I adopt here the same abbreviations used in the Decision.

LEAVE TO APPEAL

Legal principles relevant to granting of leave to appeal

4.  Section 63A(2) of the District Court Ordinance Cap 336 provides that leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.

5.  It is trite that a reasonable prospect of success involves the notion that the prospect of succeeding must be reasonable and therefore more than fanciful, without having to be probable: SMSE v KL [2009] 4 HKLRD 125, KNM v HTF (unrep. HCMP 288/2011) and Hong Kong Civil Procedure 2017 §59/2A/4.

The proposed grounds of appeal

6.  The defendant raises 8 grounds of appeal in the draft Notice of Appeal annexed to its summons.  I will consider whether they have a reasonable prospect of success in turn.

Ground 1

7.  The proposed Ground 1 reads :

“The learned Deputy District Judge erred in law in refusing to strike out this fresh action on disputes of financial matters (arising out from the marriage) taken out by the Plaintiff after decree nisi was made absolute on 19^th December 2017 in FCMC6399/2017 (hereinafter refers as “Family Proceedings”) with the Plaintiff and Defendant as the Petitioner and Respondent thereof respectively on the ground that “… the plaintiff’s present claim is straight forward. It is based on a property right. The return of the Gifts is a matter of right” (Paragraph 33 of the Decision) and further held that by striking out the Plaintiff’s present action would effectively mean the Plaintiff be shut out from making a claim based on property right in civil court (Paragraphs 35 and 39 of the Decision) (Rossi v. Rossi [2007] 1 FLR 790, Lee Ming Mang Sharon v. Ng Siew Seng Richard & Others [2009] HKCFI 334 and Norman Eric Tomlin v. Michele Helene Tomlin [1994] HKCFI 127 and Park Young Sook v Chu Dean Yuan Franklin HCA 2353/2009, unreported, 15 July 2010). The leaned Deputy District Judge failed to appreciate that the commencement by the Plaintiff [sic] a separate set of civil proceedings for the similar relief was wholly misconceived and unnecessary and all that was necessary was for the Plaintiff to seek within the ancillary relief proceedings the necessary declarations and determinations. (Rossi v. Rossi [2007] 1 FLR 790 at §35)”

8.  The gravamen of this ground, as I understand it, is that this court “failed to appreciate that the commencement by the Plaintiff [sic] a separate set of civil proceedings for similar relief was wholly misconceived and unnecessary and all that was necessary was for the plaintiff to seek within the ancillary relief proceedings the necessary declarations and determinations”, citing Rossi v Rossi [2007] 1 FLR 790 at §35.  This quoted sentence in fact is an adaptation of what Mostyn QC said in paragraph 35 of the judgment in that case.

9.  Rossi v Rossi dealt with an entirely different factual scenario and the observation in paragraph 35 of that judgment was made pertaining to the facts of that case.  Rossi v Rossi was the consolidated trial[1] of the husband’s claims for ancillary reliefs and his claims by separate proceedings under the Partnership Act 1890 and the Trusts of Land and Apportionment of Trustees Act 1996 for declarations of beneficial interest and an account in relation to an antique business which he claimed had been a joint venture between him, the wife and her son from a former marriage, which after his arrest in 1993, was ran by the latter two alone.  There were thus the separate proceedings pursued along side the ancillary relief proceedings. In that setting, Mostyn QC held obiter and in gist, that the question of the husband’s claim of beneficial interest in the business could and should have been adjudicated within the proceedings for ancillary relief even though the interest of a third party (the wife’s former son) was involved as the son could and should have been joined; and he observed that “the two separate sets of civil proceedings under the Partnership Act 1890 and TOLATA was wholly misconceived and unnecessary”[2].  The husband’s claim for beneficial interest was dismissed as the judge found against it on the facts.

10.  The case is clearly distinguishable and is not an authority showing that the plaintiff’s present claim is “misconceived or unnecessary” and therefore an abuse under Henderson v Henderson.

11.  I am of the view that Ground 1 has no reasonable prospect of success.

Ground 2

12.  The proposed Ground 2 reads :

“In reaching the aforesaid Decision, the learned Deputy District Judge erred in law to have effectively pre-judged that the Plaintiff’s present action for the return of the Gifts was a matter of property right only and had no matrimonial implication and held that the Plaintiff should not make a claim during the Family Proceedings hence there was no abuse of court process for not seeking the remedies during the Family Proceedings. (Paragraphs 33, 39 and 44 of the Decision).”

13.  This ground is based on a misunderstanding or mis-reading of my Decision.

14.  In paragraphs 33, 39 and 44 of the Decision, I said

“33. In contrast, the plaintiff’s present claim is straight forward. It is based on a property right. The return of the Gifts is a matter of right, if the plaintiff establishes her ownership to the Gifts.”

“39. There is therefore no compelling reason advanced why the plaintiff should in effect be confined to making her present claim by way of an application for ancillary relief, and be shut out from making a claim based on property rights in the civil court. In my judgment therefore, I do not hold that the plaintiff should have made the present claim by an application for ancillary relief in the Divorce Proceedings, such as to make her present claim an abuse.”

“44. For the above reasons, I hold that the present claim is not an abuse of process and I dismiss the defendant’s summons with costs to the plaintiff to be summarily assessed on paper and paid forthwith with certificate for counsel. This costs order is nisi only and will become absolute unless an application to vary the same is made within 14 days hereof.”

15.  In paragraph 33 of the Decision, I observed what the nature of the plaintiff’s pleaded claim was as compared to the nature of a claim for ancillary relief (alluded to in paragraphs 28-32 of the Decision) as part of my analysis as to whether the claim could and should have raised in the Divorce Proceedings under the principles of Henderson v Henderson abuse.  There, I made no determination, as is complained here, “that the Plaintiff’s present action … had no matrimonial implication” (whatever that means).  Rather, as stated in paragraph 27 of the Decision, it is not disputed that it may be possible for the plaintiff to obtain the return of the Gift by an application for ancillary relief, but according to the governing principles and considerations thereunder.

16.  In the Decision, I have never “held that the Plaintiff should not make a claim during the Family Proceedings”.

17.  I conclude that Ground 2 has no reasonable prospect of success.

Ground 3

18.  The proposed Ground 3 is this :

“The learned Deputy District Judge erred in law to find effectively that the Plaintiff was entitled to choose whatever court that she found as appropriate and that she could decide not to stay with the Family Court to resolve the disputes on the Gifts that arose out of the matrimonial relationship of the Plaintiff and the Defendant (i.e. Cherry-pciking) (Lam Pak Cheung v Lin Zhen Lue [2009] 1 HKLRD 35, Collin Navigation Co SA v Perusahaan Pertambangan Minyik Dan Gas Bumi Negara [1986] HKC 78 (CA) and Far Wealth Ltd and another v Lo Ki Mou and another, HCA 1617/2016 unreported, 19 October 2017).”

19.  This ground presupposes that there is in existence some statute, rule of substantive or procedure law (other than Henderson v Henderson) that restrict the plaintiff to commence her present claim in the Family Court.  None was shown to me in the hearing of the striking out, or in this hearing for leave. The 3 cases cited in this ground all concerned factual situations where there were actually 2 parallel proceedings commenced and pursued in relation to the same claim(s) or subject matter(s).  That is not the situation in the present case.

20.  There is no reasonable prospect of success for Ground 3.

Ground 4

21.  The proposed Ground 4 is this :

“The learned Deputy District Judge failed to appreciate that Cherry-picking by the Plaintiff defeats the public policy and the underlying objectives of Civil Justice Reform in saving costs and time (Order. 1A rr.1 and 1(f) and Order 1A r.2 of the Rules of the District Court (same as Rules of High Court), particularly when the learned Deputy District Judge has rejected the Plaintiff’s only explanation (i.e. the circumstances) on why commencing a fresh action in the civil court instead of having the disputes resolved in the Family Court, i.e. the Family Court lacks jurisdiction to deal with the civil disputes between the parties (Paragraphs 20, 27, 28, 31, 32, 35, 38 and 39 of the Decision)”

22.  This argument (and the decision cited in support - Far Wealth Ltd and another v Lo Ki Mou HCA 1617/2016 unrep., 19 October 2017) was not raised before me during the hearing for striking out and is only raised for the first time now.  Whether it would be allowed to be so raised is a matter for the Court of Appeal.

23.  That notwithstanding, Far Wealth Ltd is a case where the claim in the subsequent High Court action could have been raised by way of counterclaim in the earlier and existing Vendor Purchaser summons between the parties. There Deputy High Court Judge Gilchrist, having held in gist that the same issues could be raised and adjudicated in the same manner, upheld the striking out by the Master upon consideration of the underlying objectives.

24.  Whereas in the present case, there are no parallel proceedings as the parties have never made any application for ancillary relief.  Moreover, my view is, as expressed in paragraphs 27 to 33 of the Decision, that there are significant differences in the nature, mode of proceeding and such between making a claim for the return of the Gifts by way of civil action and by way of an application for ancillary relief.

25.  It also seems to me that this proposed ground is predicated upon the wrong assumption that where an alternate venue for litigating is allowed, there would necessarily be an offence of the underlying objectives.

26.  Also, to be clear, I have not rejected the plaintiff’s point based on Lit Wing Yee v Tang Cheuk Lun[3], I only observed obiter that relating to a claim for the return of specific property, though the Family Court cannot made an order for its return or damages in lieu consequential upon an established property right (as decided in Lit Wing Yee), the result of its return may be achieved by an application for ancillary relief which however would be decided under the principles and considerations governing the granting of ancillary relief.

27.  This ground has no reasonable prospect of success.

Ground 5

28.  It reads :

“In reaching the aforesaid Decision, the learned Deputy District Judge also failed to consider sufficiently that:

(a) the Gifts arose out of the matrimonial relationship of the parties;

(b) the disputes on the Gifts arose and were not settled whilst the Family Proceedings were on-going in the Family Court;

(c) The Family Court did not make any order on the financial matters of the parties when the decree nisi was made absolute;

(d) the Family Court still have the jurisdiction to deal with the disputes on the Gifts which include the determination on the true ownership, transfer and/or fair distribution of the Gifts  (Wyatt v. Vince [2015] UKSC 14, Briers v Briers [2017] EWCA Civ 15, s.6(1) of the Matrimonial Proceedings and Property Ordinance Cap 192 and s.68 of Matrimonial Causes Rules Cap 179A).”

29.  In this ground, the defendant does not identify any principle or case law which state that these matters (even if they were correctly and accurately stated[4]) should carry such important weight (as the defendant seems to suggest) under the settled law regarding the Henderson v Henderson abuse analysis.  As can be seen in the Decision, I have these matters in view but did not consider them as important under the settled law.

30.  There is no reasonable prospect of success for this ground.

Ground 6

31.  It reads :

“In exercising his discretion of not striking out the Plaintiff’s claim, the learned Deputy District Judge based on a misapprehension of facts and misunderstanding of the Defendant’s case by saying at paragraph 16D of the Decision that “it is not disputed that the Jewellery now remain in the defendant’s possession” and at paragraph 43R of the Decision that “the defendant is just disappointed that he may not be able to keep what he though have been pocketed” when the Defendant has specifically pleaded at paragraph 9(f) of his Defence that the Jewellery were taken away from the Safe without the knowledge or consent of the Defendant.”

32.  The fact that the defendant disputes possession of the Jewellery was not mentioned in his written or oral submissions.  Paragraph 9(f) of the Defence, being the last sub-paragraph under sub-heading “A. Plaintiff’s Unrestricted Free Access to Matrimonial Home” under the big heading “After Brief Removal of the Plaintiff” did put in issue whether the defendant is in possession of the Jewellery, which matter therefore is not “not disputed” as I previously understood. Evidently from the reasoning in the Decision, this was a matter by way of background that was not part of my reasoning; and the Decision was not based on this.  This as a ground of appeal has no reasonable prospect of success.

Ground 7

33.  The proposed Ground 7 states :

“In exercising his discretion of not striking out of the Plaintiff’s claim, the learned Deputy District Judge took into account of irrelevant matters that includes:

(a) the parties need to file their respective Form E which requires parties to expend substantial time and effort (Paragraph 32L of Decision);

(b) the filing of Form E may rekindle a sense of distrust and open up areas of disputes in the already distressed relationship (Paragraph 32N of Decision); and

(c) the Defendant can seek leave and make an application for ancillary relief in the Family Court himself for fair distribution of the Gifts (Paragraph 42 of the Decision).”

34.  It is here barely asserted that they are irrelevant.

35.  Sub-paragraphs (a) and (b) above are relevant as pertaining to “the court … must now… bear in mind not just the parties before them in any particular litigation, but also the position of other litigants in the court process”, “to ensure that the resources of the court are distributed fairly” and “in examining aspects such as abuse, the court is concerned with balancing interests, not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice” (per Ma CJ, quoted in sub-paragraphs (4) and (5) in paragraph 23 of the Decision).  Sub-paragraph (c) clearly pertains to the position of the defendant.  In any event, they are but a few of all the considerations and they are not weighty considerations.

36.  Again, there is no reasonable prospect of success for this ground.

Ground 8

37.  The proposed Ground 8 states :

“The learned Deputy District Judge erred in law to find that “the defendant [was not] in any way “vexed” or “oppressed” or “unjustly harassed” (Paragraph 43 of the Decision) when the Plaintiff’s conduct of commencing a second action asking for relief which might have been sought or obtained in the first action is vexatious (Collin Navigation Co SA v Perusahaan Pertambangan Minyik Dan Gas Bumi Negara [1986] HKC 78 (CA) at page 84B-C).”

38.  Collin Navigation Co SA v Perusahaan Pertambangan Minyik Dan Gas Bumi Negara was not cited by the defendant in the hearing for striking out; and is only cited in this instance in support, as I understand it, of the position that the mere commencement of this “second action” by the plaintiff is itself vexatious.

39.  Collin Navigation Co SA was a 1986 decision that clearly was based on its very special facts.  In that case, and in the words of Kempster JA, “[this appeal] is but a long history of business dealings and litigation between the parties”[5]. Such long history took that learned judge almost 5 pages in the report to summarize.  It is outside the ambit of this decision to fully set them out save mentioning some markers.  The agreement whereby the 2 tugboats were contracted for was dated 1 July 1971.  Notice of their readiness was given in September 1972 which the defendants there did not act on.  A writ with leave to serve out of jurisdiction was issued only on 26 February 1980.  The boats were sold by the plaintiff on 29 December 1981 at a price higher than that payable by the defendants under the contract.  In a hearing on 4 February 1982, part of the claim (essentially a claim for the price) was struck out as being time barred. There were then a number of interlocutory proceedings and without prejudice contacts between the parties.  On 17 February 1984, the plaintiff obtained leave to serve a fresh writ out of the jurisdiction claiming damages for breach of contract, among others, under clause 7 which allow the defendants no credit for the difference between the contract price and the resale price. That leave to serve the writ out of jurisdiction was set aside by Mayo J.  The plaintiff then appealed against it.

40.  It was at the end of the judgment dismissing the appeal that Kempster JA said “It is the further well-known and analogous principle, not canvassed in argument, that it is vexatious to commence a second action asking for relief which might have been sought or obtained in the first …” (my emphasis). On the facts of that case (and though not mentioned in that sentence), the defendants there were clearly “vexed”.

41.  As I set out in paragraphs 22 to 26 of the Decision, the principles governing whether a claim is an abuse under Henderson v Henderson have been developed and explained in a number of subsequent cases cumulated to those clearly and succinctly summarized by Ma CJ in the Court of Final Appeal case of Ko Hon Yue v Chiu Pik Yuk[6].

42.  The passage by Lord Bingham in Johnson v Gore Wood & Co (a firm)[7] I quoted in paragraph 26 of the Decision is directly on point, and for ease of reference, I quote again with added emphasis:

“It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before.” (my emphasis)

43.  In my view therefore, the short sentence in Collin Navigation Co SAshould now be understood on its own facts and by reference to these now well developed and explained principles.

44.  It is therefore now clear that it is not the case that the maintenance of a claim that could have been part of an earlier claim per se would automatically amount to an abuse of process.  Every case has to be judged according to its facts and circumstances.  The court must now examine closely and carefully whether “an abuse is found to exist in seeking to raise in subsequent proceedings claims or issues which could or should have been raised in the earlier proceedings” and whether the other party is being “vexed” by the subsequent set of proceedings.

45.  Having applied these principles and so examined, I held in the Decision that there was no such abuse.

46.  I therefore conclude that there is no reasonable prospect of success on this ground.

47.  It is not advocated by the defendant that there is some other reason, nor do I see any, in the interests of justice why the appeal should be heard.

48.  For these reasons, I dismiss the application for leave to appeal.

VARYING COSTS ORDER NISI

49.  The defendant now asks that the costs order nisi be varied from the defendant paying the costs of the application to only paying 50% of such costs or paying such proportion as the court deems fit.

50.  The only ground, as explained in the 1^st affirmation of Tang Wing Lam David filed on 10 October 2018 and in gist, is that the defendant is successful as against the plaintiff’s argument that the Family Court has no jurisdiction to grant the relief sought by the plaintiff in this action; and such success merits the reduction sought.

51.  To state it as a matter of jurisdiction is too simplistic and inaccurate a characterization of the points involved, of the plaintiff’s argument or of my views thereon.  The plaintiff’s point, relying on Lit Wing Yee v Tang Cheuk Lun[8], is that the Family Court, in dealing with ancillary relief, cannot order a party to the marriage to discharge outstanding liabilities to the other party in contract, tort or a trust outside ancillary relief.  While the plaintiff very fairly did not dispute, as I so recorded in paragraph 27 of the Decision, that the result for the return of the Gift may be achieved by an application for ancillary relief, albeit it would then be a matter of discretion and to be decided under the principles governing the granting of ancillary relief.  My views thereon are expressed in paragraphs 27 to 31 of the Decision and paragraph 26 above, and I do not repeat them here.

52.  In my view, neither party can be said to be really “successful” or “unsuccessful” on this point, but the analysis and arguments by counsel on their behalf on this aspect were helpful.  I therefore do not think in the exercise of my discretion on costs that this matter could or should affect the general position of the costs following the event.

53.  I therefore refuse this application and make absolute my costs order nisi.

Disposal

54.  I dismiss the defendant’s both applications and now proceed to deal with costs.

 

 

	( K C Chan )
	Deputy District Judge

  

Mr Matthew Lai, instructed by Lo, Wong & Tsui, for the plaintiff

Mr Raymond Fong, instructed by Fung Wong Ng & Lam LLP Solicitors, for the defendant 

DCCJ 1564/2018

[2018] HKDC 1200

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1564 OF 2018

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BETWEEN
	CHAN MAN KI	Plaintiff
and
	YAU CHUN FOR	Defendant

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Before: Deputy District Judge K. C. Chan in Chambers (Open to Public)

Date of Hearing: 14 September 2018

Date of Decision: 28 September 2018

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DECISION

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1.  This is the defendant’s application by summons taken out on 13 June 2018 to strike out the Statement of Claim, and to consequentially dismiss the action, pursuant to Order 18 rule 19 of the Rules of the District Court and inherent jurisdiction.

2.  In the summons, 5 grounds are relied on.  At the hearing, the defendant abandons the other 4 grounds and relies solely on the ground that this action is an abuse of process and ought to be struck out.

Background and the action

3.  The plaintiff is the ex-wife of the defendant.  She now claims against the defendant, her ex-husband, for the return of certain jewelry and certain items given to her by her parents.

4.  The plaintiff and defendant were married on 18 October 2015.

5.  On 30 October 2015, a wedding banquet was held.  In the wedding banquet, the plaintiff received 21 items of jewelry (“the Jewelry”), all but one were gold ornaments.  These gold ornaments, not including 3 of them whose weight are not set out in the Statement of Claim, weigh totally more than 12 taels.  The one item which is not made of gold, is a jade pendant given to the plaintiff by her grandmother.

6.  It is the plaintiff’s case that she and the defendant had agreed prior to the wedding that the Jewelry would belong to her.

7.  The plaintiff’s parents also gave to her a jar of dried tangerine peels prepared by her father since her birth (weighted about a catty) and a set of cooking ware.  It is her case they were given as part of her dowry and therefore were owned by her solely.

8.  I shall refer to the Jewelry and these 2 items together as “the Gifts”.

9.  Unfortunately, the marriage was short-lived.

10.  On 22 May 2017, the plaintiff filed a petition for divorce under the one-year separation ground (“the Divorce Proceedings”).

11.  Three days later on 25 May 2017, the plaintiff first demanded the return of the Gifts which were in the possession of the defendant.  Two subsequent demands were also made - one on 28 November 2017, and another on 13 December 2017.  The last one was a formal demand made by the plaintiff’s solicitors. All these demands were refused.

12.  In the meantime, on 16 October 2017, the Decree Nisi was granted.  On 19 December 2017, the Decree Nisi was made absolute.

13.  Both the plaintiff and the defendant respectively chose not to make any claim for ancillary relief in the Divorce Proceedings.

14.  On 19 April 2018, the plaintiff commenced this action by issuing the Writ endorsed with a Statement of Claim claiming as owner of the Gifts for their delivery up or damages in lieu for conversion.

15.  On 1 June 2018, the defendant filed his Defence, in gist and among others, denying the existence of any agreement that the Gifts would belong to the plaintiff solely and claiming that the Gifts was “matrimonial assets” which the plaintiff is now estopped and precluded from claiming as she has not made a claim for the same in the Divorce Proceedings.

16.  It is not disputed that the Jewelry now remain in the defendant’s possession.  It is the defendant’s case that the dried tangerine peels have all been consumed during the subsistence of the marriage and the cookery set was thrown away sometime in October 2017.

The parties’ contentions

17.  The defendant contends that the plaintiff’s present claim is re-judicata in the wider sense (or is otherwise known as the Henderson v Henderson abuse) in that her claim could have been, but was not, brought in the Divorce Proceedings.

18.  The defendant places heavy reliance on the following observation of Lord Kilbrandon in the Privy Council case on appeal from Hong Kong of Yat Tung Investment Co Ltd v Dao Heng Bank Ltd and Another[1], that

“… But there is a wider sense in which the doctrine may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could have and therefore should have been litigated in earlier proceedings.”(the defendant’s emphasis)

19.  The defendant further contends that the plaintiff could have sought an order for transfer of property under section 6 of the Matrimonial Proceedings and Property Ordinance Cap 192 (“MPPO”) in the Divorce Proceedings by way of an application for ancillary relief; and not having done so, she should be treated as having abandoned the claim.  As such, it is contended, the claim falls into this observation of To J given in Park Young Sook v Chu Dean Yuan Franklin[2], which the defendant now relies heavily on, namely

“In my view, that a party chose to abandon his claim or not to make a claim at all before the Family Court in respect of family assets is no different from the case of a party whose claim had been contested and adjudicated by a court of competent jurisdiction against him. These two cases demonstrate the importance which the law attaches to the principle that the court requires the parties to put forward their whole case in one go whenever possible by the inclusion of all the relevant issues and arguments against all the proper parties and the jealousy with which this principle is guarded so as to ensure the machinery of the court will not be used as a means of vexation and oppression in the process of litigation. They also demonstrate that the Family Court has jurisdiction in distributing the family assets in such a way as could properly reflect the course of the marriage and the parties’ contributions thereto and that jurisdiction include jurisdiction to adjudicate on all civil disputes arising out of family assets between the parties to a marriage as well as non-parties. The Family Court is provided with the powers and jurisdiction to arrive at the most just disposition of financial disputes between spouses over family assets.”

20.  The plaintiff disputes the defendant’s contentions and also submits that the Family Court has no jurisdiction to make the order for delivery up or damages in lieu for conversion now claimed for in this action, relying on Lit Wing Yee v Tang Cheuk Lun[3].

The legal principles

21.  It is of course trite that the power to strike out is to be exercised only in plain and obvious cases.

22.  On the principles regarding this Henderson v Henderson abuse, the convenient starting point is the oft-cited passage of Sir James Wigram VC in that case[4], which was decided in1843:-

“…where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

23.  The law has since been developed and explained in a number of cases. The present law was summarized by the learned Chief Justice Ma in the Court of Final Appeal case of Ko Hon Yue v Chiu Pik Yuk[5], thus

“(1)  The starting point is to recognize that the doctrine is founded on an abuse of process.  As Lord Wilberforce said in Brisbane City Council v Attorney General for Queensland, “it ought only to be applied when the facts are such as to amount to an abuse: otherwise, there is a danger of a party being shut out from bringing forward a genuine subject of litigation” : at 425.

(2) This concern (that a party ought not lightly be deprived of the right to have serious matters litigated) was echoed by Lord Millet in Johnson v Gore Wood : at 59D-G.

(3) It must therefore be essential when striking out a claim on this basis (and thus preventing a litigation of that claim) that an abuse is found to exist in seeking to raise in subsequent proceedings claims or issues which could and should have been raised in earlier proceedings.  This abuse will usually take the form of the other party being “vexed” (or in some cases, the terms “oppressed”, “unjustly harassed” or “unjustly hounded” are used) by the subsequent set of proceedings: Johnson v Gore Wood at 31A-B.

(4) The abuse can also take the form of the administration of justice being brought into disrepute: see Chiang Lily at 256D-G (para 58) referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529.  With the procedural reforms introduced by the Civil Justice Reform in 2009, the courts in Hong Kong must now, when exercising their procedural powers, increasingly bear in mind not just the parties before them in any particular litigation but also the position of other litigants in the court process.  RSC O.1A r.1(f) states as one of the underlying objectives of the court’s procedural powers under the Rules to be “to ensure that the resources of the court are distributed fairly”.

(5) In examining aspects such as abuse, the court is concerned with balancing interests: not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice.  It is important therefore here to emphasize that when the court is dealing with the Henderson v Henderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel.  On the contrary, in considering this type of abuse, the court is required to assess a number of factors and balance competing interests.  See here, Bradford and Bingley Building Society at 1490F-H.  It is also worth making the following observations at this juncture:-

(a) There is conceptually an important distinction between absolute bars such as issue estoppel and the type of abuse with which we are concerned.  In the former situation, the party who seeks to re-litigate an issue or cause of action has already had his day in court, whereas in the latter situation, that party has not: cf Johnson v Gore Wood at 59D (“It is one thing to refuse to allow a party to re-litigate a question which already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which is not previously being adjudicated upon” per Lord Millett).

(b) The assessment of different factors and balancing competing interests can be said to be an exercise of a discretion.  A number of decisions of the English Court of Appeal have cast doubt on whether the court does indeed exercise a discretion as such: see Aldi Stores Ltd. v WSP Group Plc. [2008] 1 WLR 748, at 762C-D (para 16) and Stuart v Goldberg Linde (a firm) [2008] 1 WLR 823, at 845E-846C (para 81).  It is unnecessary for present purposes to decide whether or not a discretion is actually being exercised.  The more important point to bear in mind is that an appellate court is obliged to pay sufficient regard to the decision of the court below and should be reluctant to interfere where the decision is based on the assessment or balancing of a number of factors.  Nothing in the two said cases suggests otherwise; in fact, quite the contrary.”

24.  It is sufficiently clear from paragraph (3) of the above passage that in considering whether to strike out a claim on this basis, one of the essential matters to examine is whether the claims or issues could and should have been raised in the earlier proceedings.

25.  However, in view of the heavy reliance by the defendant on the observation of Lord Kilbrandon in the Yat Tung case, I should also refer to the following passage in the earlier judgment of the learned Chief Judge Ma (as the Chief Justice then was) in Chiang Lily v Secretary for Justice[6], which was agreed to by Stock VP and McMahon J:-

“I emphasize here the existence of two elements that have to be demonstrated by the party alleging abuse: that there exist matters that could and should have been litigated in earlier proceedings.  I am aware that in Yat Tung …, Lord Kilbrandon did refer to “matters which could and therefore should have been litigated in earlier proceedings” (my emphasis).  However, despite the reservations expressed by the court in ChenRoy v WanChingLamAnita [2006] 1 HKC 454 on whether this represents the law on this topic in Hong Kong (see in particular 463F–464E (paragraphs 26 and 27)), I think it is now clear that just because a point could have been raised in earlier proceedings did not of itself mean that it should have been.  This is consistent with the approach of this court in TsangYu v Tai Sang Container Cold Storage and Wharf Limited [2000] 1 HKLRD 780, at 784A-I and Ngai Few Fong v Cheung Kwai Heung…” (original emphasis)

26.  I also find the following observations of Lord Bingham of Cornhill in Johnson v Gore Wood & Co (a firm)[7] instructive:-

“It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.”

Could the plaintiff’s present claim been raised in the Divorce Proceedings and should it have been raised there?

27.  It is not disputed that it may be possible for the plaintiff to obtain the return of the Gifts through a transfer of property order under section 6 of the MPPO by an application for ancillary relief.  However, the merits and result of her claim in such an application, if made, would have to be adjudicated according to the principles and considerations governing the granting of ancillary relief.

28.  The difference in nature of litigating over the same subject matter by way of an application for ancillary relief in the Family Court and by way of a civil claim in the High Court has been considered by the learned judge L Chan J in the context of the recent case of Lit Wing Yee v Tang Cheuk Lun[8].

29.  In that case, the defendant husband applied to stay an action brought by the plaintiff wife for the repayment of debts owed by the husband to her totaling HK$1,844,891 on the ground that the same claim and issues were being litigated in the on-going ancillary relief proceedings between the parties.  The Master refused the stay and the appeal came to be heard by the learned judge who also refused the stay.  There, the learned judge cited inextenso the statutory framework providing for ancillary relief, namely, sections 3 to 7 and 25(1) of the MPPO and observed:-

(1)   “…the purpose of the Family Court’s making an order for ancillary relief is to deal with the respective financial resources and financial obligations of the parties to marriage and of the child and to make reasonable distribution.”[9]

(2)   “… the determination of the ownership of the beneficial interest of assets in the course of determining the ancillary relief application is used to calculate the net financial resources of each of the parties to the marriage.”[10]

(3)   “… ancillary relief is not related to whether or not a party to the marriage has to discharge liabilities in contract, tort or a trust outside the marriage.”[11]

(4)   “…the Family Court, in dealing with ancillary relief, cannot order a party to the marriage to discharge outstanding liabilities to the other party in contract, tort or a trust outside ancillary relief.”[12]

30.  In other words and to further illustrate, had the plaintiff made her claim for the return of the Gifts by way of an application for ancillary relief, according to the guidelines laid down by the Court of Final Appeal in LKW v DD[13]as to the interpretation and application of section 7 of MPPO,which section the court must have regard to when making orders for ancillary relief:-

(1)   The dispute as to the beneficial ownership of the Gifts (essentially the dispute in the present action) would be litigated, but only as part of the “First Step (identification of assets)” to ascertain the financial resources of each of the parties calculated as at the date of the hearing.

(2)   The Family Court may or may not litigate that dispute in the manner as this court would in the present civil claim as “The court should … carry out the first stage “with whatever degree is apt to the case””[14] and “not [countenancing] any attempt to engage in costly and often futile retrospective investigations of the failed marriage”[15].

(3)   The Family Court then would engage in the next 3 steps, which concern assessing parties’ financial needs, deciding whether to apply the sharing principle and whether there are good reasons for departing from equal division.  Along the way, the Family Court is duty bound to consider the conducts of the parties, the factors provided in section 7(1)(a) to (g) of MPPO and the decided cases guiding such exercises.

(4)   The Family Court would then decide the outcome.  The outcome, so far as concerns the Gifts, may include an order selling them and distributing the proceeds or an order transferring only some of the items in the Gifts to the plaintiff.

(5)   The outcome is the result of an exercise of discretion, the purpose of which is to achieve a fair financial outcome in a matrimonial context[16].

31.  So, strictly speaking, unlike the conclusion reached in Lit Wing Yee v Tang Cheuk Lun, the Family Court has power to order “the return” of the Gifts, but it would not be ordered as a relief against conversion.  It would be ordered, if at all, only under the regime of ancillary relief, which would entail the investigation and consideration of the above mentioned matters; and whether to return them would be decided as a matter of discretion under the overriding purpose of achieving a fair financial outcome in the matrimonial context.

32.  There is also the necessity of first filling out and filing the Financial Statement (Form E) by both parties prior to the 1^st Appointment hearing for ancillary relief which requires parties to expend substantial time and efforts.  It seems to me not unlikely that the filing of Form E may rekindle a sense of distrust and open up other areas of disputes in the already distressed relationship. 

33.  In contrast, the plaintiff’s present claim is straight forward.  It is based on a property right.  The return of the Gifts is a matter of right, if the plaintiff establishes her ownership to the Gifts.

34.  Therefore, given the above differences in the two claims, can it be said that the plaintiff should have made her present claim by way of an application for ancillary relief in the Divorce Proceedings such as to make her present claim an abuse of process?

35.  If the answer is “yes”, in my view the plaintiff is effectively compelled to give up her claim as of right based on ownership and is forced to make her claim by way of ancillary relief only.   That, in my view, falls within the danger “of a party being shut out from bringing forward a genuine subject of litigation” sounded out by Lord Wilberforce in Brisbane City Council v Attorney General for Queensland and the concern (that a party ought not lightly be deprived of the right to have serious matters litigated) echoed by Lord Millet in Johnson v Gore Wood & Co (a firm); both reiterated by the learned Chief Justice in Ko Hon Yue.

36.  Mr Fong, counsel for the defendant, submits that based on the observation of To J in Park Young Sook quoted in paragraph 19 above, the answer to the above question is “yes”.

37.  In Park Young Sook, the main claims were for HK$200 million based on the plaintiff’s alleged loss occasioned by the sale of the property conveniently termed there as the “Peak House” and an account of money allegedly the defendant owed her in connection with a series of property transactions which ended up in the acquisition of the “Peak House”.  These matters were not only litigated in the ancillary relief proceedings, the “Peak House” was in fact sold under a consent order made therein.  At the trial of the ancillary relief, the plaintiff left the court room and chose not to participate further after the judge there made certain ruling against her.  It was in that factual setting the learned judge To J held that the subsequent High Court action was an abuse of process.  It was also against such factual setting that the learned judge made that observation.  So understood and reading that passage closely, I do not think that it has the meaning of, or was intended to be, a general rule of such wide and sweeping effect (as the defendant now contends), the dogmatism of which was warned against by high authority of which no doubt the learned judge was well aware.  With respect, the defendant’s such reliance on it is misplaced.

38.  Mr Fong further submits that there is a risk that divorcing spouses may cherry-pick valuable matrimonial properties and claim them by civil action in an attempt not to make them subject to distribution under ancillary relief.  I do not think there is such a risk.  Such attempts of course would fail as the Family Court, upon the opposing spouse’s claim for ancillary relief, can and will, where appropriate, include the value of these properties in the calculation of that party’s financial resources in dealing with ancillary relief.  The courts would also make the appropriate case management decisions controlling the proper proceeding of the action in the civil court and the ancillary relief application in Family Court as the specific facts in that case may warrant.

39.  There is therefore no compelling reason advanced why the plaintiff should in effect be confined to making her present claim by way of an application for ancillary relief, and be shut out from making a claim based on property rights in the civil court.  In my judgment therefore, I do not hold that the plaintiff should have made the present claim by an application for ancillary relief in the Divorce Proceedings, such as to make her present claim an abuse.

Is the defendant being vexed by the plaintiff’s present claim?

40.  As mentioned, the law requires as being essential[17] that an abuse is found to exist, which abuse will usually take the form of the other party being “vexed”, “oppressed”, “unjustly harassed” or “unjustly hounded”.

41.  It is undisputed that the present claim and issues involved have never been litigated.  There is no suggestion that the parties have reached any settlement or accord that the plaintiff is now trying to break.

42.  It is not disputed that if the defendant takes the view that the obtaining of the Gifts by a property right on the part of the plaintiff upsets what he thinks is the otherwise fair financial distribution of matrimonial properties, he can always seek redress by seeking leave to make an application for ancillary relief.

43.  Despite Mr Fong’s efforts in putting forth all that could be said on behalf of the defendant, I do not find the defendant in any way “vexed” or “oppressed” or “unjustly harassed”.  In this connection, I note that the defendant’s present stance in his Defence is that, despite averring that the Gifts are “matrimonial assets”, he denies that the plaintiff is entitled to any interest in them at all because she is precluded from making this claim. If anything, the defendant is just disappointed that he may not be able to keep what he thought have been pocketed.  Such alone does not amount to being “vexed” at all.

Conclusion and disposal

44.  For the above reasons, I hold that the present claim is not an abuse of process and I dismiss the defendant’s summons with costs to the plaintiff to be summarily assessed on paper and paid forthwith with certificate for counsel. This costs order is nisi only and will become absolute unless an application to vary the same is made within 14 days hereof.

45.  For the purpose of summary assessment, the plaintiff do lodge and serve her statement of costs within 7 days if and after the above costs order becomes absolute, the defendant do lodge and serve his list of objections within 7 days then after, and the plaintiff do lodge and serve her reply to the objections (if any) within 3 days then after.

46.  I thank counsel for their assistance to the court.

	(K. C. Chan)
	Deputy District Judge

Mr Matthew Lai, instructed by Lo, Wong & Tsui, for the plaintiff

Mr Raymond Fong, instructed by Fung Wong Ng & Lam LLP Solicitors, for the defendant