CTYM v. WYT

FCMC 15990/2017

[2021] HKFC 222

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 15990 OF 2017

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D E C I S I O N

(Joinder)

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Introduction

1.  The Petitioner is the Wife (“W”)  and the Respondent is the Husband (“H”).  The Proposed Intervening Party is the mother of H whom I will refer to her as (“M”)  in this Decision.

2.  On 7/12/2017, W filed the Petition for divorce relying on the fact of “One Year Separation and Consent”.  Actually there were 2 other sets of divorce proceedings filed by the parties earlier, namely, by H at the Family Justice Courts of the Republic of Singapore with Case No. FC/D 2746/2016 and by W in Hong Kong under FCMC No.8855/2016.  Those earlier divorce proceedings were stayed upon the issuance of the present proceedings.

3.  Decree Nisi was granted on 4/5/2018.

4.  There is one child of the family born in November 2000.  When the Decree Nisi was granted, the child was turning to 18 years in 6 months’ time.  W was granted the custody, care and control of the child with reasonable access to H.

5.  Apart from multiple divorce proceedings having been issued, parties are unable to compromise on ancillary reliefs which have gone a long way down the road. There was exchange of financial statements (Form Es)  followed by a few rounds of questionnaires and answers throughout the past few years.

6.  On 4/2/2019, W filed her ‘composite’ Summons seeking :-

(a)  Leave be granted for the Proposed Intervening Party, that is, M to be joined as the 2^nd Respondent in these proceedings (“the Joinder application”); and

(b)The dispositions made by H to M in respect of his estate, rights, benefits and interests in 3 landed properties be set aside (“the Section 17 application”)  and

(c)  An order to restrain M from charging, dealing or otherwise disposing the 3 landed properties pending determination of W’s ancillary reliefs in these proceedings (“the Injunction application”)[1].

7.  The dispositions of the 3 landed properties in respect of which the Section 17 application relates are :-

(a)  One landed property in Singapore disposed of in or around May 2010 at a consideration of SGC 100,000 (“Amber Road property”);

(b)One landed property in Yau Tong Industrial Building, Kowloon, Hong Kong, disposed of on 13/12/2010 at a consideration of HK$700,000 (“Unit E”); and

(c)  One landed property also in Yau Tong Industrial Building, Kowloon, Hong Kong, disposed of on 13/12/2010 at a consideration of HK$700,000 (“Unit G”).

8.  Admittedly by H, all the 3 landed properties were disposed of at an undervalue for the fact that at all times he was only holding the properties as trustee for his parents for easy management with no beneficial interests therein whatsoever.

9.  At the hearing on 8/4/2019, the Court ordered that the Section 17 application be adjourned sine die with liberty to restore.  Leave be granted for W to withdraw the Injunction application.  Leave was also granted to W to withdraw her Notice of Application for Ancillary Reliefs dated 4/2/2019[2].

10.  Today was the substantive trial of the Joinder application.  All parties relied upon their respective affirmations and the exhibits produced thereunder without any viva voce evidence.

Background

11.  On 18/2/1997, parties registered their marriage in Singapore.

12.  After the marriage, the parties first lived at a unit in Block O Telford Gardens owned by H’s parents.  Around the year 2000 when W was pregnant, the parties purchased another property at Block N in Telford Gardens with the assistance of H’s parents providing them with HK$1 million along with a 10-year mortgage (“FMH”).

13.  At all material times, H was working in his parents’ company LS which was a manufacturing business of metal springs.  The company LS first started as a sole proprietorship business by H’s father in 1975.  In 1984, M joined in and LS became a partnership business.  In 2005, H joined LS in replacement of H’s father and thereafter H and M were partners until 2010 when the business was closed down.  H became unemployed since then. 

14.  It is common ground that H, W and M together with the child went for a trip to South Africa in Chinese New Year around February 2010.  W had lost her mobile phone in this trip.  According to W, there was a heated quarrel between her and H which also involved M.  This was actually the catalyst for the further breakdown of their relationship.  What had then happened was that within the same year, H first closed down the 35-year business of LS in March and chose to stay unemployed at his age of 46.  H was born in 1964; he then disposed of his shares in the Amber Road Property in May to his mother M; he also disposed of his shares in both Units E & G in December to his mother M.  According to W, the business of LS was profitable at that time and there was rental income from the other units.

15.  It is also common ground that H’s father passed away in March 2009 and that H and M had acquired H’s father’s interests, amongst others, in the 3 landed properties by way of survivorship out of their joint ownership. 

16.  Further, it is rightly conceded by W at the outset that given the disposal took place in 2010, which is 9 years before her Section 17 application was taken out, she had lost the 3-year statutory presumption in her favour and would have to bear the burden of proving all of the disposals, for the purpose of this trial, the 3 landed properties back in 2010 was made with intention of defeating her ancillary reliefs.

17.  The crux of W’s case was that their marital relationship turned sour as early as in 2007. From October 2007 to October 2008, both of them received marital counselling services.  As H’s father’s health deteriorated around 2008 and that H had to spend time in Singapore with his parents, the counselling services then stopped without any progress or improvement on their relationship.  Sadly, H’s father passed away in March 2009. 

18.  W filed her 5^th Affidavit in support of the Joinder application and her 6^th Affidavit in reply.  H filed his 3^rd Affirmation in Opposition and, with directions from this Court, M also filed her Affirmation in Opposition which was affirmed in Singapore before a notary public.

The Law

19.  There is not much dispute as to the law on joinder application generally.  There may have some peculiarities in the context of matrimonial litigation which I will deal with them as and when it arises.

20.  Order 15 rules 6(2)(b)  and (3)  of the Hong Kong Civil Procedure 2021 provides :-

“ 6(2)  Subject to the provisions 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 person 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.

(3)   An application by any person for an order under paragraph (2)  adding him as a party must, except with the leave of the Court, be supported by an affidavit showing his interest in the matters in dispute in the cause or matter or, as the case may be, the question or issue to be determined as between him and any party to the cause or matter.”

21.  All parties have referred me to a number of cases and authorities on joinder applications. Broadly speaking, the Court retains a discretionary power to order joinder. There are 2 basic questions to be asked for considering joinder, namely, (i)  whether there is a bona fide claim and (ii)  there is a proper question to be tried between the applicant for the joinder and the intended party to be joined as well as between the applicant and the other party in the proceedings.

The Husband’s case

22.  It is H’s position that the 3 landed properties at all times were beneficially owned by his parents and, after the demise of his father in 2009, solely by his mother M. Despite being one of the joint owners, he was merely holding the properties on trust for his parents and, after March 2009, for his mother.[3]

23.  Further, H’s other contention was that it was around 9 years after the dispositions were made and W then took out her Section 17 application; or that it was 6 years after W issued her divorce proceedings.[4]

The Mother’s case

24.  M in her Affirmation in Opposition, apart from stating her case in respect of W’s anticipated Section 17 application, raised an issue as to the jurisdiction of Hong Kong Courts over the Amber Road Property which is in Singapore.[5]

25.  At this trial, such issue was no longer pursued by Senior Counsel Mr. Man.  For W’s Joinder application, the line of argument put forward are, namely, (i)  delay and prejudice; and (ii)  no bona fide claim.[6]

26.  M’s challenge was that it was a delaying tactic for W to wait for  2.5 years before taking out her Joinder application in order to pursue her Section 17 application.  Such delay had caused prejudice to M who is now aged 81 and, if M was successfully joined, M would have to give evidence on events happened some 29 years ago. This is an extra-ordinary burden for M and also causing prejudice to her.

27.  For the contention that there was no bona fide claim, there are undisputable facts of rental income coming from Units E and G were paid into

M’s sole name account throughout the years.  This is consistent with M’s case on beneficial ownership of Units E and G.  As for the Amber Road Property,

it was inherently unlikely that H would have any beneficial interest.  This property was purchased in 1992 when other siblings of H never have any interests in it at all.  Besides, it has been used as the matrimonial home of H’s parents ever since they immigrated to Singapore in 1995.

Discussion

28.  First and foremost, I have reminded myself that the present application restricted to W’s Joinder application.  This should not in any way be linked to her Section 17 application contemplated in the “composite” Summons dated 4/2/2019 which had yet to be determined later at the substantive trial.   

29.  As submitted by W’s Counsel Mr. Li in his written submissions[7], which I agree, since this hearing was narrow in nature as it only concerns the issue of joinder, it is unnecessary for W to open up or expand arguments as to the merits of her Section 17 application.  This application simply focuses on whether, on the strength of the background and circumstances of the case, it would be necessary or just and convenient (emphasis added)  to add M as the 2^nd Respondent in these proceedings.

30.  In the case of KCMA v. ABC [2019] HKFLR 548 where Hon B Chu J on the topic of ‘Joinder’ said[8] :

“Joinder

68. There is no rule that the trustees and/or settlor in a variation of settlement case or the disponee in an avoidance of disposition case or any non-party served with a Form 25 is to be automatically joined. If the applicant in Form 25 wishes to apply to join the non-party who has been duly served, or the non-party duly served wishes to make an application to intervene/join as a party in the application, an application for joinder should be made by issuing an inter-partes summons accompanied by a supporting affidavit.

69. Unlike England, where some of their Civil Procedures Rules have been incorporated into their Family Procedure Rules 2010, there are no specific provisions in the MCR in relation to the procedure on joinder of non-parties in a variation of settlement/an avoidance of disposition case. The relevant provisions are to be found in Order 15 of the RHC.

70. ………

71. The proper procedure for an application for the joinder of a trustee and settlor in a variation of settlement application or a dispone and other non-parties directed to be served in an avoidance of disposition application should be Order 15 rule 6(2)(b)  of RHC.”

31.  At paragraphs 77 to 78 of the same Judgment, Her Ladyship went on to consider the legal principles for determining joining or not joining a non-party :-

“To join or not to join – the legal principles

77. As said above, upon being served with the Form 25 and the Form F, the non-party may decide to intervene or to join as a party in the application, or the applicant in the application may decide to apply to join that non-party as a party.

78. Paragraph 15/6/1 of the Hong Kong Civil Procedure Volume 1 2020 sets out the effect of Order 15 rule 6. Paragraph 15/6/6 is in relation to adding or substituting defendants and paragraphs 15/6/7 – 15/6/11 are in relation to interveners. Suffice to say, it can be seen, amongst other things, as follows :

(i)  On whether a new party should be joined, the test is whether there is a bona fide claim and a proper question to be tried between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between plaintiff and the defendant in the proceedings;

(ii)  The court retains a discretionary power to refuse the order or to impose terms;

(iii)  A court could review the position of joinder at any stage of the proceedings;

(iv)  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.  Under this rule, the court has power on the application to add or substitute a defendant, and the object is to ensure that (a)  all issues in dispute be effectively adjudicated upon by the court and (b)  all relevant parties are before the court.  The court can on such terms as it thinks just give leave for a person to be joined as a defendant and allow him to participate in the proceedings to the extent permitted by the court.”

32.  Where the dispute concerns whether a third party has any beneficial interest in the property, the presence of that party would be necessary even though he or she was at advanced age (emphasis added).  It was said at paragraph 134 of the same Judgment :

“134. There is clearly a matter of dispute as to whether H was in fact the sole beneficial owner of the Indian Apartment or it was a co-investment between H and K and that K also had beneficial interest therein before the transfer to the Indian Trustee, and in my view K’s presence before the Court is necessary to ensure that all matters in dispute in relation to whether K had any beneficial interest in the Indian Apartment may be effectually and completely determined and adjudicated upon. There is clearly also a question or issue arising out of W’s claims which in my view it would be just and convenient to determine as between W and K as to whether the entirety of the Indian Apartment would be available for sharing by W in her application for ancillary relief against H. Even though K is now about 86 years old (emphasis added), he is able to make an affirmation in these proceedings which indicates he is capable of understanding what the allegations are against him.” 

33.  In the often cited case of LLC v. LMWA [2019] 2 HKLRD 529 where Hon Lam, ACJHC (as he then was)  saw the distinction between a property held under the name of a third party and where the third party merely asserted a beneficial interest in the property without himself or herself holding the legal title of it.  It was said :-

“25. ……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….”

34.  The factual background put forward by H and W; in particular, the time as to when their relationship had turned sour sharply diverged for, say, 6 years between 2007 (as in W’s case[9])  and after the end of 2013 (as in H’s case[10]). It then somehow happened that the 3 disposals in issue, in respect of which W’s Section 17 application relates, took place within the 12 months of the same year of 2010 (emphasis added).  There was also the sale of the FMH at Block N Telford Gardens around June in the same year of 2010[11] (emphasis added)  (when it was just 3 months ahead of full payment of the 10-year mortgage)  although it fell outside the 3 disputed disposals save and except W’s case that H had kept the net proceeds of sale around HK$1.5 million in his sole name account.

35.  On the above facts and circumstances, clearly there is the issue of whether the 3 disputed disposals arose as a matter of pure coincidence (neither party said so), or necessity (as per H’s case)  or premeditation (as per W’s case)  or otherwise.  This issue could only be resolved by findings of fact by this Court after the substantial trial of W’s Section 17 application.

36.  It is worth to also mention that with H chosen to close down the partnership business of LS (with M as the other partner)  in March 2010 (emphasis added)  at his age of 46 with no accountable proceeds of sale available and thereafter stayed unemployed for 9 years until present and that the disposition of the 3 landed properties all of which at a nominated undervalue to his mother M (who was then 71-year old in 2010 and had immigrated to Singapore around 1990)  with nil consideration involved, there was virtually nothing left over in terms of W’s ancillary reliefs despite the fact that this was a long marriage of around 20 years. 

37.  Whilst I have repeatedly reminded myself that all the above circumstances are historic events which should not be the Court’s primary consideration when determining W’s Joinder application, I however do see the need to take note of the fact that had the disposals of the 3 landed properties been successfully set aside by W (which should not be considered as any indication or decision of this Court), the amount at stake would be around HK$12.80 million in total if not more when comparing with the present situation where virtually there was nothing left over for ancillary reliefs in these divorce proceedings. 

38.  Given that M was the disponee of all the 3 landed properties and fully supporting H’s case in defending the said disputed disposals, I decided that it is “necessary or just and convenient” to join M in these proceedings in line with the principles set out in the KCMA v. ABC case (supra)  so that all issues can be effectively adjudicated upon.  Such course may also facilitate conducting a 3-party FDR[12].

39.  With respect, I am not convinced by Senior Counsel’s submission that these proceedings have progressed to an advanced stage and that there was delay which had caused prejudice[13] to M.  As early as 15/9/2018 when W sworn her 3^rd Affidavit in these proceedings (FCMC No.15990/2017)  to support her earlier Summons seeking leave to file 4^th Questionnaire, she had already reserved her position on joining M as a party[14].  The 3^rd Affidavit was then filed on 2/10/2018[15] which was about 2 years after W filed her Form E dated 15/10/2016[16] in the preceding proceedings (FCMC No.8855/2016)[17].  Counting these two dates, there was a gap of around 2 years.

40.  The gap of “delay of 2.5 years” so submitted by Senior Counsel counted the time between W’s Form E in FCMC No.8855/2016 and her “composite” Summons issued on 4/2/2019[18] in FCMC15990/2017.  As said, there was sequential Petition of “Unreasonable Behaviour” in the preceding FCMC No.8855/2016 followed by the present Petition of “One Year Separation and Consent”.  It is fair and reasonable to say some time must have been spent by parties with the assistance of their lawyers on negotiation for taking such sensible and costs saving course to dissolve their marital relationship.

41.  Whilst W might be said to have delayed in issuing her “composite” Summons which also included the Section 17 application, of which W was deprived of the 3-year statutory presumption, this should not affect or prejudice her right to seek joining M if it was “necessary or just and convenient” to do so.  In any event, this is not a case of complete inactivity on the part of W.  The litigation has all along been ongoing during the 2.5 years.  The period of 2.5 years was not inordinate or substantial to disentitle W’s right to join M when the hard facts are that H had disposed of most, if not all, of assets under his legal ownership to M within a short span of 12 months in 2010. 

42.  Further, the 3 disputed disposals which took place pre-separation in 2010 (the parties agreed in the Petition that they separated in July 2016), that is to say, around 6 years before those earlier divorce proceedings in Singapore and in Hong Kong[19] were commenced or, as at present, around 9 years prior to W’s issuing her Section 17 application in February 2019[20], would only be depriving W from the 3-year statutory presumption in her favour at the trial of her Section 17 application.  In my decision, it is wrong to accept any such contention as viable defence to W’s Joinder application.  Had such contention been a viable one, which I do not accept, the Court would be mixing up the legal principles on joinder application with the 3-year statutory presumption in determining setting aside dispositions application.  The former being a procedural right affordable to W in the course of litigation whereas the latter being a presumption applicable at the time of the substantive trial.   

43.  I am also satisfied that it was “necessary or just and convenient” to join M despite the fact that she has been and is now still residing overseas in Singapore.  M is now at the age of 81.  Given the advance technology nowadays and M was legally represented by experienced law firm and leading Counsel, the geographical issue and the age issue could be easily resolved.  As decided in the KCMA v. ABC case (supra), advanced age should not be an issue provided that the party intended to be joined was capable of understanding what the allegations are against him or her.  Given that M was able to make her affirmation contesting W’s Joinder application, she has overcome the age issue.

44.  As to any prejudice caused to M by W’s Joinder application, it is only fair to say that the prejudice, if there is any, only tips the balance in W’s favour rather than upon M.  With respect to Senior Counsel, I do not accept M’s submissions of any prejudice that would be caused to her.  M’s 14-page Affirmation containing 45 paragraphs with all sorts of details back to a few decades since the 60’s/70’s[21] convinced me that M’s memory and capability of recalling past events are sound.  I do not see any prejudice on M had she been joined as a party.

45.  As to the contention of no “bona fide case” for W, it was M’s case that W’s “composite” Summons should have been issued much earlier at the commencement of these divorce proceedings[22]. There were also the hard facts that the rental income from Unit E and Unit G had been deposited to M’s sole name account throughout the years.  Further, the Amber Road Property

was the matrimonial home of M and her late husband, of which M is still residing by herself at present.

46.  Whilst these submissions from M may sound interesting and persuasive, they would still need to be fully tested at the trial of W’s Section 17 application.   If the Court is to take those submissions as proved facts (emphasis added)  at this stage or, as defence to W’s Joinder application, it would be pre-judging W’s case under her Section 17 application.  This is plainly wrong. 

47.  H’s submissions largely replicated those of his mother M’s case.  I also decided that H fails in his contention to W’s Joinder application.

Conclusion

48.  For all the above reasons, I decided that M should be joined a party in these proceedings in respect of ancillary reliefs.

Orders

49.  For all the above reasons, I now grant the following Orders :-

(a)  H’s mother (that is, M)  be joined as a party in these proceedings and be named as the 2^nd Respondent, limited to the issue of ancillary reliefs; and

(b) H be named as the 1^st Respondent.

Costs

50.  On the question of costs, I decided that H and M should pay the costs of W’s Joinder application, including all costs reserved, to be taxed if not agreed.

51.  And I will so order.

52.  I will also grant Certificate for Counsel.

53.  This is a costs order nisi which would become absolute if no application to vary the same is made within 14 days from the date of this Decision.

54.  Last but not least, I wish to thank Senior Counsel and Counsel for their valuable assistance to this Court.