CHEN, LILY v. CHAN, LEO KWONG HO also known as CHAN KWONG HO LEO AND ANOTHER

HCMP 155/2018

[2018] HKCFI 2518

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 155 OF 2018

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J U D G M E N T

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Introduction

1.  The 2^nd respondent is the natural father of the 1^st respondent.  The applicant and the 1^st respondent were married on 2 June 2013, and have a daughter, Lydia, born on 6 January 2015 (“the Child”).   

2.  The applicant filed a divorce petition with the Family Court on 29 May 2015 (FCMC 6640/2015, hereinafter referred to as the “Family Court Proceedings”), and Decree Nisi was pronounced by the Family Court on 18 November 2015.  The ancillary relief proceedings are ongoing and pending for trial on a preliminary issue, ie, determination of beneficial interests of one of the properties in the family pot, namely the Metropolis Residence, not the subject property of the present application).  At present, the 1^st respondent is paying the applicant HK$10,000 each month as maintenance pending suit (“MPS”) for the applicant and the Child.

3.  The applicant issued the Originating Summons in these proceedings dated 2 February 2018.  According to the Originating Summons, the applicant is seeking inter alia: –

(1) Valuation of Flat B4, 12^th Floor, Block B & Car Parking Space No. 50 on the Ground Floor of Kingsland Villa, No. 19 Man Fuk Road (“the Property”);

(2) An order for sale of the Property; and

(3) Proceeds of the sale of the Property be divided into 3 equal shares and be distributed to the applicant, the 1^st respondent and the 2^nd respondent respectively.

(hereinafter referred as “the Partition Application”)

4.  By way of summons dated 27 March 2018, the respondents applied for the entirety of the Partition Application to be struck out on the grounds that: –

(1) The Partition Application is frivolous and/or vexatious; and/or

(2) It amounts to an abuse of the court’s process.

(hereinafter referred as “the Striking Out Application”)

Background

5.  The Property was jointly purchased by the 1^st and 2^nd respondents on 28 October 2009, before the applicant met the respondents.  On 13 January 2014, when the applicant and the 1^st respondent were still in the marriage, the respondents added the name of the applicant to the Property at nil consideration and all three of them thereafter held the Property under joint tenancy. 

6.  Since marriage on 2 June 2013 until August 2014, the applicant and the 1^st respondent resided in the Property as their matrimonial home.  From August 2014 to the end of March 2015, the applicant and the 1^st respondent rented and lived in another residence.  After the petition for divorce in May 2015, the applicant together with the Child moved to the Metropolis Residence.

7.  The ownership of the Property is not in dispute in the Family Court Proceedings, and both the applicant and the 1^st respondent have disclosed it as part of their matrimonial assets under their respective Form E.  The disclosures of assets in Form E are for the purpose of ascertaining the size of the matrimonial “pot” of assets before the Family Court can determine the appropriate distribution of the same in accordance with family law.

8.  As for interim relief, the applicant on 25 November 2016 took out a MPS application in the Family Court, seeking inter alia for a sum of HK$40,000 per month for the Child and herself.  The matter was fully heard and upon the judgment by Deputy District Judge KK Pang dated 22 February 2017, the 1^st respondent was ordered to pay HK$10,000 per month as MPS. 

9.  The ancillary relief proceedings in the Family Court are still ongoing.  It was the applicant who initiated intervening proceedings, with her mother as the intervener, in asserting third party beneficial interests in the Metropolis Residence.  As a result, the ancillary relief proceedings is put on a halt pending the determination of the claim of alleged beneficial interests as a preliminary issue by a separate trial before the same Judge in the Family Court.   

Relevant Legal Principles

10.  It is trite that only in plain and obvious cases that the court should exercise its summary powers to strike out a claim.  There should be no trial upon affidavit.  Disputed facts are to be taken in favour of the party sought to be struck out.  Nor should the court decide difficult points of law in striking out proceedings.  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out.

11.  The burden is on the party seeking to strike out to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail.

12.  A reasonable cause of action means a cause of action with some chance of success when only the allegations in the pleadings are considered.  So long as the pleadings disclose some cause of action, or raise some questions fit to be decided by a court, the mere fact that the case is weak, and not likely to succeed, is no ground for striking out.

13.  The expression “frivolous or vexatious” includes proceedings which are an abuse of the process.  A proceeding is frivolous when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed.  A proceeding is vexatious when it is oppressive and/or lacks bona fides.

14.  The court has an inherent jurisdiction to stay all proceedings before it which are obviously frivolous or vexatious.  The inherent jurisdiction is separate to that which exists under Order 18, rule 19 of the Rules of the High Court – the two may be invoked cumulatively or alternatively.

15.  In pursuance of its inherent jurisdiction, the court may strike out part of a pleading or will stay actions which it holds to be frivolous or vexatious.  This jurisdiction is not affected or limited by Order 18, rule 19.

16.  The power to stay or dismiss an action under the inherent jurisdiction of the court on the ground that it is obviously frivolous or vexatious is discretionary, just as it is under Order 18, rule 19.

Respondents’ case on the Striking Out Application

17.  The respondents’ submissions on abuse of process have been succinctly summarised in the applicant’s Skeleton Submissions as follows:

(1) The applicant is looking for financial benefit to be generated from the sale proceeds of the Property in the Partition Application;

(2) The applicant has other choices as regards alleviating financial hardship;

(3) The Family Court has jurisdiction to provide various interim relief;

(4) The applicant should have sought from the Family Court further relief if she sees the needs;

(5) The Family Court has no jurisdiction to order the sale of the Property at interim stages of the ancillary relief proceedings;

(6) Therefore, the Partition Application is an abuse of the process;

(7) If the Property is to be sold, the ascertainment of total family assets will be disrupted in the ancillary relief proceedings and in turn affect appropriate division of the same by the Family Court;

(8) The exclusion of the Property from the calculation (of family assets) will disrupt the calculation exercise and would make the eventual asset distribution exercise under section 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) impossible;

(9) The Property ought to remain in the pot of family assets for future calculation and distribution.

Applicant’s case in opposition

18.  The applicant submits that that she is “looking for financial benefit to be generated from the sale proceeds of the Property in the Partition Application” is irrelevant and immaterial, and that the applicant is simply seeking to enforce her rights as a co-owner of the Property.  The Partition Application does not need to rely on financial hardship.  Further, the parties’ respective shares of the sale proceeds would become part of the family assets for the purposes of calculation and distribution in the ancillary relief proceedings. 

Discussion

19.  The applicant’s right to apply for partition or sale of the Property stems from sections 2, 4 and 6 of the Partition Ordinance, Cap 352 (“the Ordinance”).

20.  It is not in dispute that the Property is held by 3 persons as joint tenants.  Therefore, pursuant to the Ordinance, the court may make an order under section 6 of the Ordinance for a sale of the Property.

21.  On making the order for sale, the court may direct a distribution of the proceeds of the sale and give all other necessary or proper consequential directions (section 6(4) of the Ordinance).

22.  It is not in dispute that the Family Court has no such jurisdiction to order a sale of the Property at interim stages of the ancillary relief proceedings.

23.  I agree that the Partition Application is not premised on the MPPO nor seeking of relief from the Family Court, but a separate and distinct application pursuant to the Ordinance.

24.  The fact that the Family Court does not provide a mechanism for selling a co-owned property does not preclude or debar the applicant from applying for relief provided under a different statute, unless the seeking of such relief is expressly prohibited.  This is particularly so when the marital status of the parties has nothing to do with the application, and that the right of the applicant pertaining to such application is independent of the marriage or divorce.

25.  The present case is similar to the situation in Lit Wing Yee v Tang Cheuk Lun [2018] 2 HKLRD 227 where during the course of matrimonial proceedings, the wife instituted another High Court Action against the husband for a debt of nearly HK$2 million and the husband sought to apply for a stay of the High Court Action.  Louis Chan J dismissed the husband’s application noting at paragraph 27 that “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 the marriage and of the child and to make reasonable distribution”, and that “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 (not referring to the ante-nuptial or post-nuptial settlement made on the parties to the marriage as defined in s.6(1)(c) above).  The provisions above do not empower the Family Court, in dealing with ancillary relief, to deal with these liabilities of a party to the marriage to the other party.” (Emphasis supplied)

26.  The Lit Wing Yee case illustrates that it is perfectly permissible, and not an abuse of process, for a party to seek to enforce his/her rights outside the Family Court when the claim is in respect of rights belonging to that party independent of the marriage (such as rights as a co-owner of land).

27.  Further, it is important to note that a party to the matrimonial proceedings is entitled to, subject to any constraints imposed by a court order or by agreement, freely dispose of his or her property even though the subject property is to be counted as part of the family assets – just that the proceeds from such disposal would be counted as part of the family assets in another form.  And there can be no objection to using such proceeds for his/her reasonable living expenses.

28.  By way of an example cited by the applicant, if the family assets include listed company shares, the shareholder would be entitled to sell the same for cash as he or she sees fit but the sale proceeds thereof would be counted as part of the family assets for the purpose of the ancillary relief proceedings.

29.  Thus analysed, I am of the view that it is not plain or obvious that the court should exercise its summary powers to strike out the Partition Application.

Conclusion

30.  For the reasons set out above, the Striking Out Application is dismissed.

31.  The parties agree that costs should follow the event.  Accordingly, I order that the costs of the Striking Out Application be paid by the respondents to the applicant, such costs are to be summarily assessed with the directions that (i) the applicant shall file and serve a costs statement within 14 days from the date hereof; and (ii) the respondents shall file and serve their grounds of objection within 14 days thereafter.  The summary assessment shall be conducted on paper unless otherwise directed by the court.

32.  Further, with the agreement of the parties indicated at the hearing, I give the following directions for the further conduct of the Partition Application: –

(1) Leave to the respondents to file and serve affidavit evidence in opposition to the Originating Summons herein within 28 days from the date of this order;

(2) Leave to the applicant to file and serve affidavit evidence in reply within 28 days thereafter; and

(3) The Originating Summons be adjourned for substantive hearing on a date to be fixed in consultation with counsel’s diary (with one day reserved).

33.  Finally, I express my gratitude to counsel on both sides for their helpful assistance in this matter.