LCYP v. JEK

HCMC 3/2018

[2019] HKCFI 237

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 3 OF 2018

________________________

________________________

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R E A S O N S

(Joinder)

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1.  The background of this matrimonial matter has been set out in this Court’s two earlier decisions, one on 16 August 2018 in relation to an application by the Wife for litigation funding/costs provision and one on 18 December 2018 in relation to the Husband’s applications for variation of the interim maintenance order and the costs provision order. I shall follow the definitions in those decisions, unless otherwise indicated.

2.  Presently, the Wife has issued a summons under section 17(1) of the Matrimonial Proceedings and Property Ordinance, Cap 179 (“s 17 Summons”) in which she is seeking (i) to set aside the Husband’s transfers of a total sum of US$ 10,165,308.90 to a trust referred to as JK Trust, of which the trustee is a trust company called Commonwealth Trust Company in Delaware, USA (“CTC”) (“ Setting Aside Application”) and (ii) for such purpose CTC be joined in these proceedings as a party[1] (“Joinder Application”).

3.  At the hearing on 21 January 2019, and as agreed by the parties, I directed that the trial of the Setting Aside Application to take place at the same time as the main trial of the Wife’s application for ancillary relief, and that directions for the further conduct of the Setting Aside Application will be made at the PTR which has now been fixed on 31 January 2019.  The only matter which the Court had to decide at the hearing on 21 January 2019 was the Joinder Application, namely whether the CTC should be joined as a party. 

4.  Having heard the submissions from the parties, I ordered that CTC be joined and named as 2^nd respondent.  The Husband should be renamed 1^st respondent.  My reasons are set out herein.

Service

5.  Service of the s 17 Summons and the Wife’s supporting affirmation was first sent to CTC by air-mail at its last known address in Delaware on 31 October 2018.  The s 17 Summons was first fixed for a call over direction hearing on 19 November 2018 before this Court when directions were given for, amongst other things, leave to the Wife to amend the s 17 Summons, leave to the Husband and CTC to file their affirmations in opposition to the Joinder Application within 21 days, and that the Joinder Application be fixed for argument at a two hour hearing.

6.  Thereafter, the amended s 17 Summons was sent again to CTC at its last known address on 21 November 2018, together with the Wife’s supporting affirmation and this Court’s order of 19 November 2018.  On 6 December 2018, the Wife’s solicitors received an email from a Cynthia DM Brown, President of CTC, attaching thereto a letter dated 5 December 2018 from CTC to the Wife’s solicitors[2].

7.  CTC stated in the their above letter that the attempted service of the amended 27 Summons was improper and not in compliance with the laws of the United States or the State of Delaware, and further, CTC is a Delaware company and, as such, is not subject to the jurisdiction of courts in Hong Kong and accordingly, CTC will not respond in the improperly served summons and will not appear in any court proceedings in Hong Kong.

8.  Due to CTC’s complaint that the service was improper, the Wife’s solicitors then instructed a process server in Deleware to serve again the s17 Summons and accompanying documents.  The Wife’s solicitor had filed an affirmation in relation to service on CTC and an affirmation of service by a process server was exhibited.  The process server had in his affirmation of service confirmed that service of the amended s17 Summons and all accompanying documents stated therein had been effected on CTC pursuant to the laws of Delaware on 13 December 2018 at the office of CTC.[3]

9.  Having considered the affirmations of service from the Wife’s solicitor and the Delaware process server, and there being no contradictory evidence, I was satisfied that service of the amended s 17 Summons (including the Joinder Application), the Wife’s supporting affirmation, the order of 19 November 2018 and/or other accompanying documents had been duly effected on CTC on 13 December 2018 in accordance with the laws of Delaware, USA.

10.  No affirmation had been filed by CTC in opposition to the Joinder Application, and CTC was absent at the hearing before this Court.

The Husband’s position

11.  The Husband also did not file any affirmation. His solicitor, Mr Dearle, who attended the hearing on behalf of the Husband, explained that this was because the Husband was not opposing the Joinder Application, for the reasons given in an affirmation dated 17 January 2019 filed by Mr Dearle one day before the hearing (“Dearle Affirmation”).

12.  First of all, no leave had been obtained for the Dearle Affirmation to be filed for the purpose of or in relation to the Joinder Application.  Secondly, the Dearle Affirmation was filed in support of another summons which was taken out on behalf of the Husband on 17 January 2019 in relation to the Husband’s application for directions to be given for the instruction of a single joint expert in respect of the enforceability in Delaware USA of any set aside order, if made by this Court.  Thirdly, that last minute summons was only filed on the Thursday prior to the Monday hearing, and was opposed by the Wife.

13.  At the outset of the hearing, I indicated that I would decline to deal with the Husband’s last minute summons due to short notice and non- compliance with the rules.  I subsequently adjourned it to the PTR for directions.

14.  In any event, Mr Dearle had made it clear throughout the hearing that the Husband would not oppose the Joinder Application.

The Joinder Application

15.  Mr Dearle had referred the Court to the English appeal case of Hamlin v Hamlin [1986] Fam 11 in his submissions. 

16.  In the Hamlin case, the wife obtained an order ex parte under section 37 (2)(a) of the Matrimonial Causes Act 1973 to restrain the husband from disposing of a villa which he owned in Spain which Judge Oddie refused to continue at the inter partes hearing on the ground that he court had no jurisdiction to make an order under section 37 in respect of foreign realty.  Section 37 of the MCA 1973 contained similar provisions as s 17 of our MPPO.  On appeal, Kerr LJ allowed the appeal and held that that “any property” in section 37 (2)(a) of MCA 1973 was not restricted to property in England and Wales but included real and personal property situated abroad and accordingly the court had jurisdiction to make an order under that subsection in respect of realty abroad; although the court would not exercise its discretion to make an order concerning foreign property which could not be enforced, and that in exercising its jurisdiction under section 37 the court was determining rights and obligations arising out of divorce proceedings and exercising jurisdiction in personam against a respondent amenable to the court’s jurisdiction. The matter was then remitted to the county court judge for the wife’s application to be heard on its merits.

17.  In the Hamlin case, the issue was whether the court had any jurisdiction to grant an injunction against the husband over overseas property.  It is not clear how the Hamlin case would assist the Husband in the present case.  The Setting Aside Application is against the Husband personally, and the Court will be exercising its jurisdiction under s 17 in personam against the Husband and any setting aside order, if made by this Court, will be an order made against the Husband personally.

18.  According to Mr Dearle’s submission, it seemed that although the Husband was not opposing the Joinder Application, it was stressed on behalf of the Husband that his was contention that even CTC were joined, that order could be enforced against it in Delaware.

19.  Mr Yim, the Wife’s Counsel, has referred this Court to T v T and Others (Joinder of Third Parties) [1996] 2 FLR 357. In that case, the husband transferred his interest in the business which he had built up to the trustees of a settlement which he had set up in Jersey. On the breakdown of the parties’ marriage, the wife sought a Mareva injunction prohibiting the husband from disposing of the assets of the trust.  The husband asserted that he had no effective control over the assets of the trust fund and the trustees of the fund were accordingly joined as respondents to the proceedings by Wilson J at the hearing of the Mareva injunction.

20.  The trustees then made an application to set aside the joinder order.  That application was opposed by both the wife and by the husband who repeated his assertion that he did not have overall control over the fund.

21.  Wilson J refused the trustees’ application to set aside the joinder order and held, amongst other things, that Order 15 r 6(2)(b) of the Rules of the Supreme Court in UK provided that the court could join as a party to the proceedings any other party whose presence before the court was necessary, or where it was just and convenient to determine an issue arising between either party to the proceedings and that other party as well as the substantive proceedings.  Wilson J had said that a crucial matter during the substantive proceedings would be the extent to which the husband had real control over the assets of the Jersey trust.  Furthermore, in the court’s view, the enforcement of any order which might ultimately be made would be greatly facilitated by the trustees remaining parties to the proceedings.  For these reasons Wilson J held that under both parts of the provision of Order 15 rule 6 (2)(b) of RSC the wife had established that the trustees should remain parties to the proceedings. 

22.  Order 15 rule 6 (2)(b) of our Rules of the High Court is similarly worded as Order 15 rule 2 (b) of RSC in England.  At the hearing, this Court had asked Mr Yim whether the Wife was relying on rule 2 (b) (i) or rules (b) (ii).  Mr Yim had at first indicated rule 2 (b) (i) but later indicated under both parts, following T v T.

23.  As stated in paragraph 15/6/1 of the Hong Kong Civil Procedure Vol 1 2019 Ed, a liberal application should be given to Order 15 rule 6, particularly in the aftermath of the Civil Justice Reform so as to ensure that, as far as possible, all matters in dispute between the parties are completely and finally determined, and all multiplicity of legal proceedings with respect to any of those matters is avoided. 

24.  In the present case, the JK Trust was set up by the Husband on 26 November 2012 and between September 2014 and September 2015, he made the following injections into the JK Trust:

8 September 2014	US$5,508,007.90
31 October 2014	US$50,000
17 December 2014	US$4,107,300
10 September 2015	US$500,000
Total	US$10,165,307.90

25.  This would be about HK$79,000,000.

26.  The Husband’s position was that the funds in the JK Trust were not financial resources available to him.  As I had said earlier in the Costs Provision Decision, since the Husband had admitted having an extra-marital affair with a woman called Anee prior to April 2012, the Wife was not unjustified to be suspicious of the Husband’s actions in relation transactions involving assets (of which the Wife is contending to be family assets) placed out of her reach.  Thus, whether the funds in the JK Trust are financial resources available to the Husband will be a seriously disputed issue.

27.  If the funds in the JK Trust were held to be financial resources available to the Husband, they could be subject to any enforcement proceedings the Wife may take in the United States, if the Husband should fail to comply with any orders made by this Court, and joining CTC could facilitate such enforcement proceedings.

28.  Having considered the above, and all the circumstance in this case, I was of the view that the Wife had satisfied the Court that CTC should be joined whether under Order 15 rule 6 (b) (i) or (ii).

29.  The above are my reasons for making the order for joining CTC as the 2^nd respondent in the s 17 Summons.  I had ordered that costs be in the cause of the s 17 Summons.