NHUT v. WKM

FCMC 8223/2020

[2024] HKFC 39

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. FCMC 8223 OF 2020

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  Leave to appeal

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Introduction

1.  The respondent’s (“the Husband’s) filed his summons on 28 November 2023 for leave to appeal against my decision handed down on 12 October 2023 (“the Decision”). In the Decision, I dismissed the Husband’s application to join his sister as the 2^nd intended respondent (“the Husband’s Sister”) as a party to this ancillary relief proceedings.

2.  The Husband’s summons should be filed by 26 October 2023, his application was made out of time for a period of 33 days.

3.  The Husband’s summons was served on both the petitioner (“the Wife”) and the Intervenor (“Madam L”) and the Husband’s Sister. The Wife takes a neutral stance in Husband’s leave to appeal application.

4.  I shall adopt the same abbreviations used in my Decision.

Background

5.  By way of background, the Wife and the Husband settled the ancillary relief by filing a consent summons on 14 September 2020.  The settlement involved a transfer of property (“the two Units”) by the Husband to the Wife at nil consideration within 90 days after the making of decree absolute.  The registered owners of the two Units are the Husband and his sister as joint tenants.  To carry out the settlement between the Husband and Wife, an order of severance was obtained by the Husband on 16 September 2020 that the Husband and sister to hold the two Units as tenants-in-common.  The Wife’s position on ancillary relief settlement was in line with the above arrangement, being ½ share of the two Units, i.e. the Husband’s share only.

6.  Subsequently, Madam L, the Husband’s mother intervened aiming to claim the entire beneficial interest of the two Units saying that both the Husband and his sister have been holding the title of the two Units on trust for Husband’s later father of whom has passed away on 24 November 2018. Subsequently, on 22 July 2019, Madam L obtained letters of administration of the late father’s estate. Madam L said, at all times, the Husband is not the beneficial owner of the two Units and therefore has no right to transfer the same to the Wife.  The Husband’s sister acceded to Madam L’s saying, as expected, the Husband opposed.

7.  After Madam L’s intervention, the Husband changed his stance substantially by saying, he has beneficial interest of the entire two Units.  The Husband said he who has paid for all purchase price of the two Units, his sister has been holding title and interest on trust for and on his behalf.  The situation shifted in a way that the Husband is competing for beneficial interest in the two Units with Madam L. Not only this, the Husband expanded his case by seeking an order to determine the ratio of beneficial interest between himself and his sister.  By reason of this, the Husband applied to join his sister as a party (the intended 2^nd respondent) in the ancillary relief proceedings.  

8.  I dismissed the Husband’s application to join the intended 2^nd respondent because the requirements of joinder pursuant to Order 15(6) of the Rules of High Court, Cap 4A are not met.  Briefly, the issue of determining beneficial interest (and ratio) between himself and his sister is a non-issue in the ancillary relief hearing.  The Wife’s claim is only ½ share of the Husband’s title and interest in the two Units.

Applicable Legal Principles

9.  Section 63A of the District Court Ordinance, Cap 336 states leave to appeal shall not be granted unless the appeal has a reasonable prospect of success or there are some other reason in the interest of justice that the appeal shall be heard.  A reasonable prospect of success is that the prospect of succeeding is reasonable, more than fanciful but without having to be probable. (see Hong Kong Civil Procedure 2024, Vol 1, para 59/2A/4)

The grounds of appeal

10.  Ms Lam, counsel for the Husband submitted I have erred in refusing the Husband’s Sister to join the proceedings, more particularly failed to have considered a two-limb test pursuant to Order 15 rule 6(2)(b),

“[the Court may]…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.”

11.  The Husband submitted, notwithstanding his sister and himself are the legal owners of the two Units, his sister is holding beneficial interest of her share for and on behalf of the Husband.  On the other hand, the Intervenor’s and his sister’s case is that, notwithstanding the Husband and her sister are legal owners of the two Units, the estate of the late father shall have beneficial interest of the entire two Units.  The issue in dispute is the beneficial ownership of the two Units. For this reason, the Husband’s Sister  has to be joined as party for determination of an outcome.

12.  The two-limb test shall be applied in the context of ancillary relief issues between the Husband and the Wife.  When the Wife’s claim is aiming at ½ share of the two Units held by the Husband, by joining Madam L as an intervenor, the disputed issue, being the beneficial ownership of the Husband’s ½ share of the two Units is able to be “effectually and completely determined and adjudicated upon”.

13.  The other ½ share of the two Units (the Husband’s Sister as legal owner) is an issue between the Husband and his sister, not an issue of the ancillary relief between the Husband and Wife.  There is no competing claim between the Wife and the Husband’s Sister on the other ½ share of the two Units.

14.  Ms Wong, counsel for Madam L and the Husband’s Sister has correctly cited LLC v. LMWA [2019] HKLRD 529, at paragraph 25, Hon Lam Acting CJHC (as he then was) gave clear guidance on this matter,

“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. [emphasis added]”

15.  The above judgment also covers the present situation when the Husband makes claim to compete beneficial ownership with his sister, the latter shall be bound by the judgment if she elected not to join as a party once being notified. (See: Order 15 rule 13(A)(4) of the Rules of the High Court, Cap 4A):

“….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 added]”

16.  I do not accept there is question or issue arising out of the relating to or connected with the beneficial ownership of the two Units between the Husband and his sister. In my opinion, it is not be just and convenient to determine this said dispute in this ancillary relief proceedings.

17.  The Husband’s ground of appeal is unmeritorious.

Time extension of application for leave to appeal

18.  The principles of leave to appeal out of time is well established.  The Court will take into account the length of delay, reasons of delay, the chances of appeal if an extension of time is granted and the degree of prejudice to the other party if the application was granted. (See Tang Chai On v. Tan Sing Ki [2016] 5 HKLRD 104)

19.  The present application was taken out 33 days after the 28-day prescribed period, the delay in lodging the appeal is substantial. (See Carl International (HK) Limited v. Ernest Komrowski Co [1996] 2 HKC 490 and Re: Ireland Muhammad (unrep, CAMP 112/2018, 14 December 2018)

20.  The Husband was legally represented, he admitted he was duly informed by his legal representative the time limit for applying leave to appeal.

21.  The Husband explained he did not have the financial means to retain his solicitors and to instruct counsel.  He deposed in his affirmation filed on 28 November 2023 that, he was only able to settle his legal fees after salary payment by the end of October 2023.  However, I note from the Husband’s Statement of Costs, the costs of this application is as high as HK$179,552, a sum exceeded his monthly salary HK$60,630.  Apart from this, the Husband claimed he has only HK$5,000 disposal monthly after paying all expenses.  In light of the disparity of figures, I do not accept the Husband’s means is a reason for delaying this application for leave to appeal.

22.  Even so, nothing has barred the Husband to apply for an order of time extension to apply for leave to appeal before the prescribed period.

23.  Madam L was joined as an Intervenor as early as 11 May 2021, trial of preliminary issue cannot be fixed for reason of the Husband’s chance of stance. Bearing in mind to dispose ancillary relief in an expeditious manner, the Husband’s delay in taking out application for leave to appeal is unacceptable and it will cause prejudice to the Wife. 

24.  I refuse to accept the Husband’s application for leave to appeal out of time.

Conclusion

25.  With reasons of the foregoing, the Husband’s ground of appeal demonstrates no reasonable prospect of success and there is no other reason in the interests of justice why the appeal should be heard.

Orders

26.  I make the following orders:

(i) The Husband’s summons filed on 28 November 2023 be dismissed.

(ii) An order nisi that (i) the Husband do pay Madam L’s and the Husband’s Sister’s costs of his summons filed on 28 November 2023 forthwith, with certificate for counsel, to be taxed if not agreed; (ii) the Wife’s costs of his summons be reserved.

(iii) The order nisi be made absolute in absence of application to vary by summons within 14 days hereof.

FCMC 8223/2020

[2023] HKFC 203

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER FCMC 8223 OF 2020

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DECISION
(Joinder)

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Introduction

1.  This is an application taken out by the respondent (“the Husband”) by way of a summons filed on 28 June 2022, inter alia, for an order to join the Husband’s sister (“H’s sister”) as the 2^nd respondent. The application here only deals with joinder of parties.

Background

2.  The petitioner (“the Wife”) and the husband were married in 2009. On 11 September 2020, the wife petitioned for divorce on ground of two-year separation. They have two children, the elder daughter is over 18; an order of joint custody of the younger son was granted to the parties on 26 August 2022 with care and control to the Wife and reasonable access to the Husband.

3.  Previously on 14 September 2020, the parties filed a consent summons for settlement of all ancillary reliefs, inter alia, the Husband agreed to transfer his title and interest in the property, namely Unit 916 & Unit 918 of [address] (“the two Units”) at nil consideration to the Wife within 90 days after the making of decree absolute (“the Consent Summons”).

4.  The dispute emerged when the Husband’s mother, in the capacity of the administratrix of the Husband’s late father (“Madam L”), intervened and claimed beneficial interest in the two Units. On 11 May 2021, Madam L was joined as an intervenor. By reason of Madam L’s application, the Consent Summons on settlement on ancillary relief is unable to be approved. As at today, decree nisi has not been granted.

5.  The case of Madam L is that the Husband has no right to transfer his title and interest in the two Units to the Wife because the beneficial interest of the two Units is however rested with the Husband’s late father (“Mr W”). The Husband’s share of the two Units does not form part and parcel of the matrimonial asset in these proceedings. In Madam L’s Points of Claim filed on 8 June 2021, she pleaded for a declaration that (i) the Husband has no beneficial interest in the Units; and (ii) the Husband is holding half share of the Units on trust for and on behalf of Mr W (and now Madam L).

6.  On 26 August 2022, the Consent Summons was withdrawn by consent, with no order as to costs.

7.  By way of background the two Units were purchased by the Husband and H’s sister on 12 February 1999 as joint tenants. On 16 September 2020, an order of severance was made where it was ordered that the Husband and H’s sister as tenants in common of the two Units.

8.  According to the Consent Summons, the transfer of the Husband’s title and interest to the Wife was meant to be the Husband’s share (being ½ share) of the two Units. Presumably, I accept that this is also the ancillary claim of the Wife here.

9.  Nonetheless, after Madam L intervened, the Husband changed his stance to that of claiming beneficial interest of the entire two Units by saying he had paid for all purchase money. The Husband said her sister (H’s sister) has no interest therein because she made no contribution to both the acquisition and maintenance of the two Units. It was commonly intended and understood between them that the Husband had acquired the two Units with his own money save and except his sister (H’s sister) was named as one of the registered owner merely for holding the two Units on trust for the Husband. In other words, as clarified by the Husband during hearing on the first appointment on 19 September 2023, he intended to transfer all the interests two Units to the Wife as settlement of ancillary relief.

10.  Ironically, the Wife sees it differently and had made clear her ancillary claim is only half share of the two Units. The Wife gave her confirmation that this has been her position all along.

11.  Directions on pleadings on preliminary issues were duly given and complied with, while the application was on the verge of setting down for trial, on 28 June 2022, the Husband applied to join his sister (H’s sister) as the 2^nd respondent. The Husband applied for a declaration which mirrored the above saying that her sister (H’s sister) has been holding the title and interest of the two Units for and on behalf of him.

12.  While the Wife maintained a neutral stance, both Madam L and H’s sister opposed to this application. They share the same position that the H’s sister has been holding her title and beneficial interest of the two Units on trust for and on behalf of the late father, not the Husband.

The legal principles

13.  Order 15 rule 6(2)(b) of the Rules of High Court states the requirement of a joinder application:

“Misjoinder and nonjoinder of parties (O. 15, r. 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—

(a) order any person who has been improperly or unnecessarily made a party or who has for any reason ceased to be a proper or necessary party, to cease to be a party;

(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.”

14.  While it is understood that the test of joining a party, being the Husband’s sister, is whether there is a bona fide claim and a proper question to be tried between them, the joinder must be necessary or just and convenient to reach a resolution. HHJ Melloy in NLT v. LYKJ (FCMC 8680/2012; [2020] HKFC 75) in light of a Court of Appeal case, LLC v. LMWA [2019] 2 HKLRD 529 as follows:

“8. In addition, it is accepted by both sides that the correct approach to matters of this nature was originally set out by Mostyn J in Fisher Meredith v JH and PH (Financial Remedy: Appeal: Wasted Costs) [2010] 2 FLR 536. This approach has also been recently approved by our own Court of Appeal in LLC v LMWA [2019] 2 HKLRD 529, where Lam J said that generally speaking it was not necessary to join a third party unless there was a request for a particular order to be made against him or her. In that judgment Lam J stated inter alia as follows:

[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.

My view

Generally

15.  The requirements of Order 15(6) are twofold: first, joinder of parties must relate to any question or issue arising out of or relating to or connected with any relief or remedy claimed; secondly, it must be just and convenient to determine between the parties to the cause or matter. The principles of these tests are to prevent the same related or connected issues being tried again with possible different results. (See: Idmiston Ltd v. Asian Master [1988] 1 HKC 588 at 594H)

16.  I note, however, there are some differences on the scope of “the question and issue arising out of or relating to or connected with any relief or remedy claimed”. Madam L’s case is that of determination of beneficial interest solely on the Husband’s share in the two Units, whereas the Husband’s case is for determination of beneficial interest of the two Units, between himself, Madam L and also his sister (H’s sister).

17.  The Husband invited the Court to join H’s sister in the preliminary issue hearing for the purpose to identify family assets, he also relied on the order given by DDJ R Chow on 11 May 2021 that the scope of such determination includes the ratio of beneficial interest between the husband and his sister (H’s sister).

18.  Notwithstanding the order of DDJ R Chow, Madam L did not plead the issue of ratio between herself and H’s sister in her Points of Claim filed on 8 June 2021, her pleaded case is only limited to beneficial interest between the Husband and herself. The particulars of the Points of Claim are as follows:

“介入人現向呈請人及答辯人申索：—

1) 法庭作出聲明：答辯人在該兩個單位沒有任何實質權益；

2) 法庭作出聲明：答辯人在法律構定信託/或歸復信託下以信託人身份持有該兩個單位各一半的業權；

3) 法庭作出聲明：該兩個單位並不是本訴訟中的婚姻財產。…”

19.  The Husband then argues the scope of determination has been defined in the order of DDJ R Chow’s order. I do not consider this is correct, the issues at trial shall be defined by pleadings.

20.  Pausing here, I pay special attention to the Consent Summons for settlement between the Husband and Wife. Although it has been withdrawn, the intention of settlement is of importance. In the Consent Summons, the Husband agreed to transfer his title and interest of the two Units to the Wife, without mentioning anything relating to his sister’s (H’s sister’s) share. Having reconfirmed with the Wife, she only intends to seek ancillary relief of half share of the two Units, the ratio of the beneficial interest between the Husband and H’s sister is therefore a non-issue here.

21.  It is obvious that joinder applications in the Family Court’s jurisdiction shall be considered in light of reliefs and/or claims between the parties to the marriage. The case of the Wife is clear to ask for half share of the two Units, whereas the case of Madam L is also clear to have pleaded a declaration of half share of such interest. A battle on determination of beneficial interest shall be limited to the half share of the two Units between the Husband and Madam L only.

22.  I am not prepared to accept the Husband’s change of stance, resulting a declaration from Court on the ratio of beneficial interest between himself and H’s sister shall be tried. The H’s sister has deposed clearly in her affirmation that she has been holding her half share of title and interest of the two Units on trust for Mr W, her late father. In other words, H’s sister’s share of beneficial interest in the other half of the two Units has no bearing in the ancillary relief claim between the Husband and Wife. The Husband is now reaching out to broaden his claim of beneficial interest over his sister’s (H’s sister’s) share. I bear in mind the Court has a duty to prevent an issue to be re-litigated in other Courts, however, the Husband’s claim vis-à-vis his sister (H’s sister) falls beyond the ambit of this matrimonial proceedings. It is definitely not just and convenient to join H’s sister as the 2^nd respondent in the ancillary relief proceedings.

23.  The Husband further said joining his sister (H’s sister) as a party in the preliminary issue hearing is necessary so as to make her be bound by the judgment. As the share of the two Units between the Husband and her sister (H’s sister) is a non-issue in the ancillary proceedings, the Husband’s argument is rejected.

24.  I dismiss the Husband’s application on joinder together with the consequential directions sought in his summons.

Costs

25.  Both Madam L and H’s sister succeeded in opposing the Husband’s summons. I see nothing before me that costs should not follow the event. I make an order nisi that the Husband do pay the costs of Madam L and H’s sister of his summons filed on 28 June 2022, with certificate for counsel, to be taxed if not agreed. The Wife maintained a neutral stance, I so order costs of the Wife shall be reserved. The order nisi be made absolute in absence of application to vary by summons within 14 days from date of this judgment.

Orders

26.  With reasons of the foregoing, I make the following orders:

(i)  The Husband’s summons filed on 28 June 2022 be dismissed.

(ii)  An order nisi that (i) the Husband do pay Madam L’s and H’s sister’s costs of his summons filed on 28 June 2022 forthwith, with certificate for counsel, to be taxed if not agreed; and (ii) the Wife’s costs of his summons be reserved. The order nisi be made absolute in absence of application to vary by summons within 14 days from date of this judgment.

Messrs MK Lam & Co. for the petitioner

Ms Yanky Lam instructed by Messrs Yu Sun Yau Mak & Lawyers for the respondent

Ms Dora Chan instructed by Messrs Ma Tang & Co. for the intervenor and the intended 2^nd respondent