PMCL also known as LMC also known as KLMC v. AKK also known as KAK

FCMC 11521 / 2015

[2023] HKFC 34

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 11521 OF 2015

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______________________

DECISION
(Joinder, Questionnaire,
Section 18 Declaration)

______________________

A.  THE 3 SUMMONSES

1.  Before this Court are three applications of the Respondent (“H”):

(1)  by a Summons dated 8 October 2021 as amended on 6 January 2022, for joinder of 6 intended respondents for the determination of beneficial ownership of 13 properties located in Hong Kong and the Mainland or their sales proceeds, and 3 Mainland bank accounts (“Disputed Assets”) (“Joinder Summons”). The 6 intended respondents are the Petitioner’s (“W”) parents and siblings, 3 of whom have passed away when the Joinder Summons was issued;

(2)  by a Summons dated 8 October 2021, for leave to file the Third Questionnaire (“Questionnaire Summons”) and;

(3)  by a Summons dated 8 October 2021, for a section 18 declaration (“Section 18 Summons”).

2.  This is a high conflict case and has a long procedural history. Both parties and W’s maiden family have substantial assets. Since W presented the divorce petition in 2015 to end their marital relationship of about 24 years[1], there were various interlocutory applications including specific discovery applications and preliminary issues on beneficial ownership. Both parties have made allegations against the other of dissipation of assets. After the unsuccessful FDR, on direction of the Court, the parties exchanged their affirmations in support of their respective claims for ancillary relief in about April 2021. There is interlocutory application yet to be finalised.

3.  In this hearing, H is represented by Mr Hectar Pun SC and Ms Vivien Leung, W is represented by Mr Deepak Nagpal and Ms Bonnie Cheng, the Intended 2^nd to 4^th Respondents are represented by Mr Val Chow. The Intended 5^th to 7^th Respondents have not appeared in these proceedings.

B.  JOINDER SUMMONS

B1.  The intended respondents

4.  By the Joinder Summons, H applied to join W’s parents and 4 siblings as respondents, 3 of whom, viz, W’s parents and elder brother, passed away. The 6 intended respondents are:

(1)  R2: W’s younger brother in his personal capacity.

(2)  R3: R2 in his capacity as the administrator of the estate of W’s father (“Father”), who passed away intestate in March 2015. W was entitled to one-eighth of Father’s estate.

(3)  R4: R2 in his capacity as the sole executor of estate of W’s mother (“Mother”), who passed away in January 2021. W is not a beneficiary under Mother’s will.

(4)  R5: W’s sister.

(5)  R6: another sister of W.

(6)  R7: the Personal Representatives of the estate of W’s elder brother (“Elder Brother”). The Elder Brother passed away intestate in February 2009.

B2.  The Disputed Assets

5.  The Disputed Assets listed in the Joinder Summons include the following landed properties (collectively “Disputed Properties”):

	Joinder Summons	Properties	Relevant Respondents[2]
(1)	§1a	HK#86	R2, R3, R4
(2)	§1b	GZ#175	R2, R3, R4, R5, R6
(3)	§1c	GZ#131_1F	R2, R3, R4, R5, R6
(4)	§1d	GZ#131_2F	R2, R3, R4, R5, R6, R7
(5)	§1e	GZ#3_3	R2, R3, R4, R5, R6
(6)	§1f	GZ#3_(5&9)	R2, R3, R4, R5, R6
(7)	§1g	GZ#3_4	R2, R3, R4, R5, R6
(8)	§1h	GZ#289	R4
(9)	§1i	HK#C1	R3, R4
(10)	§1j	HK#A (sold)	R3, R4
(11)	§1k	HK#25D (sold)	R3. The legal owner was OGT Ltd.
(12)	§10a	HK#2108 - returned deposit and compensation	Not specified by H.
(13)	§10b	HK#502 - net sale proceeds	Not specified by H.

6.  In addition, H asked the Court to make a ruling on W’s beneficial ownership in various bank accounts, if necessary. Paragraph 10 of the Joinder Summons reads as follows:

“10. If necessary there be a ruling on the Petitioner’s beneficial ownership of, inter alia, the assets listed below:

a. The returned deposit and compensation of [HK#2108];

b. Net sale proceeds of [HK#502];

c. Hang Seng Bank (China) Account with Customer Number xxx which include at least Hang Seng Bank (China) Account No. [HS-1], [HS-2], [HS-3], [HS-4], [HS-5] held under her name.

d. ICBC (China) Accounts No. [ICBC-1], [ICBC-2], [ICBC-3], [ICBC-4], [ICBC-5], [ICBC-6] held under her name.

e. CCB (China) Accounts No. [CCB-1], [CCB-2], [CCB-3], [CCB-4] held under her name.”

7.  The meaning of the words “if necessary” in Paragraph 10 is not understood. The words “inter alia” were inserted by amendment. The insertion is unhelpful. If H intended to include other assets, he should specify in the Summons so that the other sides could respond.

8.  The language of the Joinder Summons suggests that H is seeking a determination on the beneficial ownership of the assets. Mr Pun (not the drafter of the Joinder Summons) confirmed that H is not seeking a ruling in this hearing on the beneficial ownership of any assets. This is an application for joinder.

B3.  H’s case on joinder

9.  H’s case is mainly that the funds for the acquisition of the Disputed Properties (the “Funds”) were sourced from the companies owned by H and W (i.e. SSEL, NEPL and SEL) (collectively the “Companies”) and/or from the joint bank accounts of H and W (“Joint Bank Accounts”), therefore the Disputed Properties and the monetary returns derived therefrom are beneficially owned by H and W. The intended respondents are the respective legal owners of the Disputed Properties. They must be joined in these proceedings so that the judgment will be binding on them.

10.  H has not stated the legal basis on which he claims to have a beneficial interest in the Disputed Assets.

B4.  Relevant Facts

11.  By way of background, SSEL is a BVI company incorporated in around 2003. Initially, each of H and W held 1 share. Around the time when W was arrested for tax related charges in the Mainland in 2013, W transferred her share to Father. In September 2013, Father transferred this share to H. In around August 2014, H transferred the two shares in SSEL to a former employee, HHS. These shares in SSEL were further transferred to H’s girlfriend, ZL in around July 2021 (before the Joinder Summons was issued). Currently, H and ZL are the directors of SSEL.

12.  There are disputes on the beneficial ownership of the shares in SSEL. W’s case is that the shares in SSEL were held on trust for H and W in equal shares. H, however, contended that the shares were held on trust for him alone.

13.  NEPL was set up in 1995. Since 2003, SSEL became the majority shareholder of NEPL, holding 99% of its shares. W holds the remaining 1 % share. The current directors of NEPL are SSEL, H and ZL.

14.  SSEL also holds 88% shares of a company named SEL. The other shareholders of SEL are H (1%), W (1%) and a business partner K (10%). The current directors of SEL are H, ZL and K.

15.  In 2004, the Mainland authorities investigated the Shanghai branch of the parties’ business. H was incarcerated in the Mainland from July 2004 to January 2008 due to tax evasion charges in relation to their business. It is H’s case that after he was released from prison, the business of the family was in W’s full control. He was denied from access of the books and records of the business.

16.  From August 2013 to September 2014, W was incarcerated in Shenzhen due to tax evasion charges in connection with the business. It is W’s case that upon her release from prison, she discovered that H had emptied her bank accounts, took away her valuation items, procured the transfer of the shares in SSEL to HHS, and removed her account documents and records.

17.  W moved out from the former matrimonial home shortly after her release.

B5.  R5 to R7

18.  In the beginning of the hearing, I asked the following questions:

(1)  Whether the Joinder Summons was served on R5, R6 and R7 who have not appeared in these proceedings.

(2)  Whether the action against R7, described by H as “The Personal Representative of the estate of [Elder Brother], Deceased” was properly constituted. In this connection, I refer H to Order 15 Rule 6A of the Rules of High Court (“RHC”) if there is no grant of probate or administration for the estate of Elder Brother.

19.  In response, Mr Pun confirmed that H has no knowledge of whether probate or administration for the estate of the Elder Brother was granted, nor the identity of R7’s personal representative, if any. The Joinder Summons and the related papers have not been served on R7.

20.  As to service on R5 and R6, on 7 February 2022, H’s solicitors sent an envelope containing, inter alia, the Joinder Summons, H’s redacted 11^th Affirmation in support of the Joinder Summons, and the Order dated 5 January 2022, by courier through FedEx to the respective last known addresses of R5 and R6 in the United States[3]. The envelope sent to R6 was returned. There was no return of the envelope sent to R5. H contended that the Joinder Summons and the notice of this hearing were validly served on R5.

21.  H further submitted that he “would like to make an application under Order 15 r 6A(4) and (5)[4] for the Court to appoint the Official Solicitor to represent the estate of R7 and accept service of the originating summons”[5].

22.  There is no application under Order 15 rule 6A(4). If a representation order and/or carry on order under Order 15 rule 6A(4) is required, the expression of intention to apply one does not assist H. Order 15 rule 6A(5) governs where an order under rule 6A(4) is made.

23.  In respect of R6, H submitted that “an order for joinder could still be made against R6 and it is up to her to set aside any order made against her if she is so advised.”[6] H has not cited any authority in support. I do not agree this is the correct approach.

24.  Rule 3 of the Matrimonial Causes Rules (“MCR”) provides that RHC shall apply with the necessary modifications to the practice and procedures in matrimonial proceedings.

25.  It is elementary that an inter parte Summons has to be served on the respondent unless there is an order to dispense with service. Pursuant to Order 32 rule 3(1), the Joinder Summons must be served on every other party not less than 2 clear days before the day so specified.

26.  H delivered the papers to R5 and R6 outside the jurisdiction of Hong Kong.

27.  Rule 109 of MCR provides that documents in matrimonial proceedings may be served outside the jurisdiction without leave. It also expressly stipulated that the service shall be done in accordance with Order 11 rules 5 and 6.

28.  The operation of Rule 109 of MCR was explained by B Chu J in KCMA v ABC [2019] HKFLR 548 as follows:

“54. Under rule 109 of the MCR, any document in the matrimonial proceedings may be served outside jurisdiction without leave in accordance with Order 11 rules 5 and 6 of the Rules of the High Court (RHC). Even though no leave is required, the mode of service abroad should follow that set out in Order 11 rules 5 and 6 of RHC. Although Order 11 rules 5 and 6 refer to the service of a writ, ie an originating process, pursuant to rule 3 of MCR, they should apply to service of Form 25 for a variation of settlement/avoidance of disposition order, subject to necessary modifications. Further, after Order 11 rule 5A of RHC has been introduced in 1999, any service in Mainland China should be in accordance with that rule.

…..

58. As matters now stand, for service out of jurisdiction under Order 11 rule 5:

(i) The service effected in the foreign country/place has to comply with the law of the foreign country/place (rule 5(2));

(ii) The document needs not be served personally or by the applicant or an agent if served by a method in accordance with Order 11 rule 6 (rule 5(3));

(iii) If served through the foreign government, judicial authorities and British Consul under Order 11 rule 6, there has to be an official certificate that the application has been served with rule (5A) or rule (6) and the official certificate shall be evidence of the facts stated therein rule 5(5).

59. Order 11 rule 6 provides for service through foreign governments, judicial authorities and British Consul.”

(emphasis in bold added)

29.  Order 32 rule 5(2) of RHC provides that,

“(2) Before proceedings in the absence of any party the Court may require to be satisfied that the summons or, as the case may be, notice of the time appointed for the resumed hearing was duly served on that party.”

30.  The intention of this provision is obviously to ensure that the respondent to an application has proper notice of the hearing and the material upon which the applicant intends to rely on in the application.

31.  H took out the Joinder Summons on 8 October 2021. There was a period of about 10 months before the Summons was heard. H has ample time to serve the documents or take out application to deal with the issue of service. H have not done so.

32.  This is not an ex-parte application. H chose to proceed with the hearing despite non-service of the Summons and the relevant papers on R6 and R7. To proceed with the hearing under this circumstances deprives R6 and R7 of the opportunity to make representations.

33.  The position of R5 is slightly different in that the documents were sent to her by courier at her last known address in the United States without return. H suggested that this is a valid service. H has not adduced any evidence to prove that this is a valid mode of service under the laws of the United States, nor has he made any submission to satisfy the Court that the requirements under Order 11 rule 5 do not apply.

34.  I have at some stage pondered to give H a chance to adduce evidence to prove that the delivery of documents to R5 by courier is a valid mode of service under the laws of the United States. However, having considered the merits of H’s claim, this becomes unnecessary because even if there was valid service on R5, H’s application to join R5 would be dismissed for the reasons below.

B6.  Legal Principles relevant to the Joinder Summons

35.  Order 15 rule 6 of the RHC on joinder of parties applies to matrimonial proceedings.

36.  The object of Order 15 rule 6 is to ensure that:

(1)  all issues in the dispute be effectively adjudicated upon by the Court;

(2)  all relevant parties are before the Court;

(3)  there is a need for preventing the same related or connected issues being tried again with possibly different results;

(4)  multiplicity of actions is prevented

(See : Idmiston Ltd v Asian Master Enterprises Ltd [1998] 1 HKC 588 at 595F; Wong Chun Loony Tony v Ada Ltd [1991] 1 HKC 86 at 98B-C.)

37.  In Goldstone v Goldstone [2011] EWCA Civ 39 at [57], Lord Justice Hughes held that:

“[57] … it is desirable to equip a single court with the means of deciding all relevant connected issues within the same proceedings and to avoid a multiplicity of different and potentially conflicting proceedings … if a dispute emerges then either such person applies to intervene, and thus to became a party, or one of the other parties applies to join him.”

38.  H relied on the provisions of Order 15 rule 6(2)(b) of RHC as follows:

“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—

….

(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.”

39.  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.

40.  On joinder of a new party, the relevant approach to be adopted is whether there is a bona fide claim and a proper question to be tried as between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between the plaintiff and the defendant in the proceedings: Pang Kwok Lam v Schneider Electric Asia Pacific Ltd HCPI 90/2010, 5 January 2011 [73].

41.  The words “cause or matter” in the rule mean the action as it stands between the existing parties. The Court has no jurisdiction under this rule to order third parties to be added as defendants where the cause or matter is not liable to be defeated by the non-joinder, where the third parties were not persons who ought to have been sued in the first instance, and where the third parties were not persons whose presence as defendant was necessary to enable the Court effectually to adjudicate on all the questions involved: Hong Kong Civil Procedure 2023 Vol. 1 [15/6/6].

42.  If it is a necessary party, the party ought to be joined irrespective of the strength of the case: Wong Shan Shan v The Incorporated Owners of Yue Wah Mansions, HCA 1086/2013, 28 January 2015 [31] – [32].

43.  At the joinder stage, the Court will not engage itself in a scrutiny of the applicant’s case, or an adjudication of disputed facts. The Court will not exercise its discretion in favour of a joinder if it is plain and obvious that the plaintiff has no case against the proposed defendant. The burden of proof is on the party opposing the joinder: Advanced Connection Ltd v Able Technology (Hong Kong) Ltd [2019] HKCA 1092 [20] – [21]; Chen Hongqing v Liu Yiu Keung Stephen and others [2021] HKCFI 440.

44.  Once an applicant had passed the minimum requirement of showing a legitimate interest in the outcome of the proceedings, the Court still retained a discretion to decide whether an order should be made, having regard to: the prejudice to the parties, the stage the action has reached when the order was sought, the delay in making the application and any delay that may be caused should an order be made: Hong Kong Civil Procedure 2023 Vol. 1 [15/6/6].

45.  The above principles apply to matrimonial proceedings: KCMA v ABC [2019] HKFLR 548 per B Chu J [78].

46.  The adjudication on dispute between a spouse and a third party on the beneficial ownership of a property in ancillary relief proceedings must be approached on the same legal basis as if it were being determined in the civil court. This is well established in TL v ML [2006] 1 FLR 1263 where Mostyn QC sitting as Deputy High Court Judge held as follows:

“34. It is to be emphasised, however, that the task of the judge determining a dispute as to ownership between a spouse and a third party is of course completely different in nature to the familiar discretionary exercise between spouses. A dispute with a third party must be approached on exactly the same legal basis as if it were being determined in the Chancery Division.

…

36. In my opinion, it is essential in every instance where a dispute arises about the ownership of property in ancillary relief proceedings between a spouse and a third party, that the following things should ordinarily happen : (i) the third party should be joined to the proceedings at the earliest opportunity; (ii) directions should be given for the issue to be fully pleaded by points of claim and points of defence; (iii) separate witness statements should be directed in relation to the dispute; and (iv) the dispute should be directed to be heard separately as a preliminary issue, before the Financial Dispute Resolution.

37. In this way, the parties will know at an early stage whether or not the property in question falls within the dispositive powers of the court …”

47.  Mostyn J further stated in Fisher Meredith v JH and PH [2012] FLR 536 that:

“42. In my judgement there is a clear distinction to be drawn between the state of affairs where a claimant is saying that a property held in the name of a third party is the property of the respondent; and the situation (as here) where the respondent says that property to which he has legal title is beneficially owned by a third party.

43. In the former case I strongly endorse my discipline. In such a case there is a clear obligation on the claimant to apply to join the third party at an early stage and to seek to invoke the discipline in TL v ML (Ancillary Relief: Claim Against Assets of Extended Family). Only in this way can the pool of assets over which the dispositive powers of the court ranges be established …”

48.  This approach was widely endorsed by the Hong Kong Courts. In Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605, Stock NPJ said:

“29. ... In this regard, I endorse the practice commended by the Court of Appeal that in the context of matrimonial proceedings for ancillary relief, disputes between a spouse and a third party as to ownership of property should procedurally be approached as in standard claims for ownership of property : in other words, after a direction for trial of the dispute as a preliminary issue and the joinder of the claimant as intervener, by directions for the filing of pleadings on the preliminary issue and for witness statements and discovery relevant to that issue ...”

(emphasis in bold added)

49.  The Court of Appeal in LLC v LMWA [2019] HKCA 347 acknowledged this approach and set out the following guidance:

“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.”

(emphasis in bold added)

B7.  Are the intended respondents necessary parties’ to H’s claim on beneficial ownership of the Disputed Assets

50.  The first question is whether H has a bona fide claim against the intended respondents on beneficial ownership of the Disputed Properties.

51.  H contended that he has a prima facie case because there are evidence (cheque stubs and bank transfer slips) showing fund transfers from the respective Companies to Father or Mother or W. Some of these transfers were signed by the business partner, K on behalf of the company concerned. H also referred to cheque stubs and transfer records showing fund transfers from the Joint Bank Accounts to third parties or Father or Mother or W. H drew inference from the proximity between the transfer dates and the payment due dates in the conveyancing transactions, and/or the closeness of the amounts transferred as compared with the amounts due in the transactions.

B7a.  Cases where the Companies’ funds are involved

52.  It is trite that a company is a legal person on its own right, having a separate and distinct identity from its shareholders. As a general rule, a shareholder does not have legal or equitable interest in the property of the company. A shareholder has a right to the share in the profits of its business and to a distribution of any surplus on liquidation of the company.

53.  This fundamental legal principle was established since the case of Salomon v A Salomon & Co Ltd [1897] AC 22. Lord Sumption JSC recited the principle in an ancillary relief dispute in Prest v Prest [2013] 2 AC 415:

“8. Subject to very limited exceptions, most of which are statutory, a company is a legal entity distinct from its shareholders. It has rights and liabilities of its own which are distinct from those of its shareholders. Its property is its own, and not that of the shareholders. In Salomon v A Salomon & Co Ltd [1897] AC 22, the House of Lords held that these principles applied as much to a company that was wholly owned and controlled by one man as to any other company. In Macaura v Northern Assurance Co Ltd [1925] AC 619, the House of Lords held that the sole owner and controller of a company did not even have an insurable interest in property of the company, although economically he was liable to suffer by its destruction. Lord Buckmaster said, at pp 626-627:

“no shareholder has any right to any item of property owned by the company, for he has no legal or equitable interest therein. He is entitled to a share in the profits while the company continues to carry on business and a share in the distribution of the surplus assets when the company is wound up.”

In Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627, the House of Lords held that documents of a subsidiary were not in` the “power” of its parent company for the purposes of disclosure in litigation, simply by virtue of the latter’s ownership and control of the group.”

(emphasis in bold added)

54.  A shareholder may have control of a company’s asset, but that does not make a shareholder an owner of the company’s asset. Rimer LJ said in Lakatamia Shipping Co Ltd v Su [2015] 1 WLR 291:

“50. The assets that Burton J was considering in para 16 were the assets of the companies. There is no suggestion that such assets belonged beneficially to anyone other than the companies, and it is trite law that a company’s assets so held do not belong beneficially to their shareholders, not even to a shareholder in the position of the first defendant, who is, for all practical purposes, the sole owner of the companies. …

51. … The owner is of course able to control the destiny of the company’s asset. But that does not make them his assets; …”

55.  On the topic of presumption of resulting trust in a corporate context, the Court of Appeal summarised in Lo Man Yau v Chiu Sung Fai [2018] HKCA 387[7] the following principle and reaffirmed the general rule that a shareholder has no legal or equitable interest in the company’s assets:

“12. The present case concerned a property held by and in the name of a limited company but the purchase price partly came from the funds provided by its shareholder. In such a context, the legal principles governing how a resulting trust may arise can be briefly stated as follows. The summary below is largely taken from the judgment of Madam Recorder Linda Chan, SC in Re Fortune King Trading Limited, HCCW 432/2012, unreported, 19 May 2017, at [24] – [26] and [31].

(1) It is axiomatic that a company is in its own right a legal person having a separate and distinct identity from its shareholders. Therefore, as a general rule, a shareholder has no legal or equitable interest in the company’s property, as opposed to a right to share in the profits of its business and to a distribution of any surplus on liquidation. See Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1, per Ribeiro PJ [34].

(2) It follows that when the purchase of a property is made in the name of a company, the starting point is that the purchase was intended to vest both the legal and beneficial interest in the company. This is true even if the funds for the purchase are provided by a shareholder.

(3) Both (1) and (2) are general propositions. Combined together, they give rise to a normal, but rebuttable, inference that the beneficial interest of the property acquired in the name of the company with funds provided by the shareholder was intended to pass to the company. When the shareholder claims that by providing the funds, the equitable interest in the property was intended to be vested in him personally by way of a resulting trust, he bears the burden to rebut the inference by proving that the legal interest and the equitable interest of the property were so vested in the company and him separately.

(4) The time to take stock of the respective interest taken by the company and the shareholder in the property is the time of its acquisition. The focus is on the parties’ intention at the time of purchase: whether the parties intended to vest the beneficial interest of the property in the shareholder as the provider of the funds, having regard to all the circumstances.”

56.  There were circumstances in which the Court may “pierce the corporate veil” and disregard the separate identity of a company in carefully defined circumstance to prevent abuse. Lord Sumption JSC, after a review of the legal authorities, concluded in [35] of Prest v Prest (SC(E)):

“35. I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company’s separate legal personality. The principle is properly described as a limited one, because in almost every case where the test is satisfied, the facts will in practice disclose a legal relationship between the company and its controller which will make it unnecessary to pierce the corporate veil.

57.  The above principle of law applies in matrimonial proceedings without exception. In Prest v Prest, the Supreme Court rejected the majority view of the English Court of Appeal and held that there is no special and wider justification in matrimonial proceedings to justify an approach departing from this general principle of law. Lord Sumption JSC held in [37]:

“37. If there is no justification as a matter of general legal principle for piercing the corporate veil, I find it impossible to say that a special and wider principle applies in matrimonial proceedings by virtue of section 24(1)(a) of the Matrimonial Causes Act 1973. The language of this provision is clear. It empowers the court to order one party to the marriage to transfer to the other “property to which the first-mentioned party is entitled, either in possession or reversion”. An “entitlement” is a legal right in respect of the property in question. The words “in possession or reversion” show that the right in question is a proprietary right, legal or equitable. This section is invoking concepts with an established legal meaning and recognised legal incidents under the general law. Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts are suspended or mean something different. If a right of property exists, it exists in every division of the High Court and in every jurisdiction of the county courts. If it does not exist, it does not exist anywhere. It is a right to add that even where courts exercising family jurisdiction have claimed a wider jurisdiction to pierce the corporate veil than would be recognised under the general law, they have not usually suggested that this can be founded on section of the Matrimonial Causes Act 1973.”

(emphasis in bold added)

58.  Earlier, in A v A [2007] 2 FLR 467, Munby J (as he then was) remarked that the Court cannot grant relief over a third party’s property merely on the basis that arrangements made by a spouse is artificial, proper basis for the claim must be identified with reference to established principles:

“17. I wish also to make the point that, even in the Family Divisions, a spouse who seeks to extend her claim for ancillary relief to assets which appear to be in the hands of someone other than her husband must identify, and by reference to established principle, some proper basis for doing so. The court cannot grant relief merely because the husband’s arrangements appear to be artificial or even “dodgy”.”

(emphasis in bold added)

59.  In Tebbutt v Haynes [1981] 2 All ER 238, Lord Denning said that:

“… if an intervener comes in making a claim for the property, then it is within the jurisdiction of the judge to decide on the validity of the intervener’s claim. The judge ought to decide what are the rights and interests of all the parties, not only of the intervener, but of the husband and wife respectively in the property. He can only make an order for transfer to the wife of property which is the husband’s property. He cannot make an order for the transfer to the wife of someone else’s interest.”

(emphasis in bold added)

60.  Bearing also in mind that the dispute on beneficial ownership of a third party’s property in matrimonial proceedings is to be approached as the dispute is before a civil court, there is no reason to depart from the above principles well established in civil court.

61.  H and W are shareholders of SEL, and former shareholders of SSEL/NPEL. The Funds are the assets of the Companies, not the assets of H and W.

62.  H asserted that the funds in the Companies were treated as family funds.

63.  However, this does not sit well with the Companies’ assertion of proprietary rights over the Funds in the High Court action (“HC Action”) commenced by the Companies (viz: SSEL, NEPL and SEL) in 2020 against, inter alios, W and the intended respondents[8] for fraud, breach of director’s duties, and proprietary restitution. The pleas in the Statement of Claims filed in May 2022 were verified by a Statement of Truth signed by H.

64.  It is also of note that SEL has a third party shareholder. The Companies may also have creditors.

65.  H’s case that the Funds were used to acquire the Disputed Properties, if proved, may at best give rise to a dispute on beneficial ownership between the Companies (not H and W) and the legal owners. H has not raised any legal or factual basis to substantiate his personal claim on beneficial ownership of the Disputed Properties.

66.  Accordingly, even if it is established that the Funds were used to acquire the Disputed Properties, it does not give rise to a bona fide claim for proprietary order against the intended respondents over the Disputed Properties.

67.  H cited LWH, also known as WHHL v NKWS also known as KWSN, FCMC 2953/2015, unreported, 13 June 2017 where the Court found that a shareholder has the beneficial ownership of the property held in the name of a company. The issue of the beneficial ownership is fact-sensitive. Every case has its own facts. The finding in LWH does not assist H.

B7b.  HK#25D was not legally owned by the intended respondents

68.  H’s contention that the intended respondents are legal owners of the Disputed Properties does not hold truth insofar as HK#25D is concerned.

69.  The registered owner of HK#25D was OGT Limited, a company wholly owned by Father until he sold the entire shareholdings to a third party on 31 July 2014[9]. OGT Limited is not a party or intended party of the present proceedings.

B7c.  Cases where the funds of the Joint Bank Accounts are involved

70.  H contended that money in the Joint Bank Accounts were applied for payments in connection with HK#86, GZ#289, HK#C1 and HK#502.

71.  In connection with HK#86, H referred to copies of the following cheque stubs of the Joint Bank Accounts[10]:

(1)  A cheque stub with the word “Edward” written next to “PAY” and “750,000” written next to “THIS CHQ.” (“Stub A”).

(2)  A cheque stub with “11.1.28” written next to “DATE”, name of Father written next to “PAY” and “200000” written next to “THIS CHQ.” (“Stub B”).

(3)  A cheque stub with “11.1.[XX[11]]” written next to “DATE”, Mother’s name written next to “PAY” and “250,000” written next to “THIS CHQ.” (“Stub C”).

72.  H suggested that the word “Edward” means “Edward Lau, Wong & Lou”, Solicitors for the purchasers in the conveyancing transaction. The sum of $750,000 is for payment of further deposit due on 15 February 2011.

73.  H has not explained how are Stub B and Stub C (for a total sum of HK$450,000) related to the purchase of HK#86 save that the cheques were issued in January 2011 when the initial deposit for the purchase of HK#86 was due. Nonetheless, on the face of the preliminary sale and purchase agreement, the initial deposit was paid by a cheque in the sum of HK$300,000.

74.  In connection with GZ#289, H referred to a transfer of RMB 200,000 on 14 October 2011[12] from his bank account to W’s account[13], together with another transfer from SEL to W involving RMB 200,000 (no supporting document produced). H suggested that these tallied with the purchase of GZ#289 at the price of RMB500,000 on 12 December 2011.

75.  In connection with HK#C1, H referred to a copy of a cheque stub[14] (“Stub D”) of Joint Bank Accounts on which it was written “10 5 31” written next to “DATE”, “中原” “佣金” written next to “PAY”, “82,000” written next to “THIS CHQ.” H said this was for the payment of estate agents’ commission for the sale of HK#C1. H produced a temporary receipt dated 31 May 2010 and an official receipt addressed to Father, Mother and W for the sum of HK$82,000 being commission for the sale of HK#C1[15].

76.  HK#502 was purchased on 11 April 2012 and was registered in the name of W. H adduced 2 cheque stubs[16] of the Joint Bank Accounts and contended that they were made for payment in connection with HK#502:

(1)  A cheque stub with “13.5.31” written next to “DATE”, “One Midtown for 5-6月” written next to “PAY” and “5180” written next to “THIS CHQ.” (“Stub E”);

(2)  A cheque stub with “13.8.8” written next to “DATE”, “One Midtown 7-8月” written next to “PAY”, “5180” written next to “THIS CHQ.” (“Stub F”).

77.  The above cheque stubs, contended by H, showed that payment from the Joint Bank Accounts were used for payment of estate agents’ commission, 2 payments of $5,180 each in connection with HK#502, a payment made to the solicitors acting in the conveyancing transaction, some payments made to W’s parents and a transfer from H to W. The payments themselves, would not be sufficient to establish that beneficial ownership in the properties concerned.

78.  Even if the disputed facts are taken in favour of H at this stage, discretion should not be exercised in favour of a joinder because:

(1)  HK#C1 and HK#502 were sold to third parties in 2010 and 2013 respectively, no proprietary order could be sought against these properties;

(2)  the delay in taking out the Joinder Summons and the prejudice it will cause to W and the intended respondents (further discussed below),

(3)  the long procedural history and the parties have exchanged affirmations on ancillary relief matters after an unsuccessful FDR, and

(4)  disproportionality.

B7d.  W’s Accounts (paragraphs 10c to 10e of the Joinder Summons)

79.  H’s case on the bank accounts listed in paragraph 10c, 10d and 10e of the Joinder Summons (collectively “W’s Accounts”) is this. W maintained in her answers to questionnaires that the bank accounts listed W’s Accounts are held by her on behalf of her maiden family. She was only managing the funds for her maiden family. H did not accept this position and sought to join the intended respondents for the determination on the beneficial ownership.

80.  I disagreed that this is a reason for joinder. Equity follows the law. The starting point is that the legal owner of a property also has the beneficial interest in that property. The party who asserts that the beneficial ownership does not lie with the legal owner bears the burden of proving it: Stack v Dowden [2007] 2 AC 432, [56]. The burden is on W to prove that she does not have the beneficial interests in the funds in W’s Accounts.

B8.  Just and convenience

81.  I start by reciting the following passages in LLC v LMWA [2019] 2 HKLRD 529 on disputes on ownership in the context of ancillary relief litigation:

“22. One must not lose sight that the dispute on ownership in these cases often arisen from matrimonial proceedings. But for the breakdown of marriage and the application for ancillary relief by one spouse in a divorce petition, there would not be any claim on the property. In other words, the parties only raise the issues on beneficial ownership for the court to determine because of the matrimonial proceedings.

23. The underlying matrimonial dispute and the application for ancillary relief, in our judgment, is the origin and the substratum for the litigation on ownership irrespective of the procedural routes adopted by the parties and the court to resolve the same. If the underlying ancillary relief claim is settled or resolved satisfactorily between the spouse, often there would be no further need or justification for proceeding with a determination of a dispute on the ownership.

24. Alternatively, if the ancillary relief can be determined or settled without any adjustment to or encumbrances being imposed upon the title to and/or the proprietary interest in that property (eg where a spouse does not seek any transfer of property order or any charge being imposed on the same to secure a claim [a proprietary order], and content with the claim being satisfied by other properties in the matrimonial pot whilst having the value of the disputed property being taken into account), it may be possible to confine the dispute to one between the spouses.”

(emphasis in bold added)

82.  H contended that it is just and convenient to join the intended respondents “so that all relevant issues and evidence can be fully fleshed out”, and H can seek discovery from the intended respondents. H also submitted that there is substantial overlap of issues in these proceedings and the HC Action. If joinder is allowed, he may consider revisiting the application for a transfer of these proceedings to the High Court to avoid multiplicity of proceedings.[17]

83.  I do not see merits in this contention.

(1)  The Companies are not parties to this action.

(2)  The legal questions to be determined in the dispute on ancillary relief are different from questions to be determined in the HC Action.

(3)  There is a substantial delay on the part of H. Father and Mother passed away before the Joinder Summons. They could not give evidence on the intention and circumstances surrounding the acquisition of the Disputed Properties, which are pertinent matters in a dispute on beneficial ownership. There will be grave prejudice against W and the intended respondents if the Joinder Summons is allowed.

(4)  H is the director of SSEL, NEPL and SEL and should have access and control of the Companies. W was imprisoned from August 2013 to September 2014. She did not have access to the Companies’ documents and funds. H ought to be in a better position than W, to have access of the records and documents of the Companies and the Joint Bank Accounts.

(5)  H’s assertion that he could only discover the evidence to support the joinder application after W’s filing of the section 7 narrative affirmation could not be right. The narrative affirmations were exchanged. H had exhibited the evidence in his own narrative affirmation before he had sight of W’s.

84.  It appeared that H complaint was W’s unauthorised use of the funds of the Companies and those in the Joint Bank Accounts. If H can establish that there was wanton dissipation of assets, he may seek, for example, a claim for addback, in the ancillary relief proceedings.

85.  Mr Pun accepted that a claim for addback may provide redress to H, but he submitted that it is not viable in the present case because the value of the assets disclosed on the table (about HK$50 million) is not sufficient to satisfy H’s claim (HK$150 million). It seems to me that there are inflation in H’s claims. I am not of the view that joinder should be allowed for this reason.

B9.  Decision on Joinder Summons

86.  For the above reasons, I dismiss the Joinder Summons.

B10.  Issue Estoppel, Abuse of Process and Waiver

87.  The parties made substantial arguments on the defences of issue estoppel, abuse of process and waiver in respect of 8 of the Disputed Properties (i.e. paragraph 1a to 1h of the Joinder Summons). I briefly express my views.

88.  W submitted that the following facts gave rise to the above defences:

(1)  W disclosed in Form E dated 1 December 2015 her interests in HK#86 and GZ#3_3, GZ#3_4, GZ#3_(5&9) , GZ#175 and GZ#131_1F. She stated that these properties were held on trust for her parents who had funded the purchase of these properties.

(2)  In H’s Form E dated 22 January 2016, he claimed that his share of ownership or beneficial ownership of the above properties and GZ#131_2F is “50% of the Petitioner’s interest in the property and rental income”.

(3)  By an Order dated 5 April 2017, HHJ Melloy directed that the preliminary issue concerning the true legal and beneficial ownership of HK#86 and GZ#175, GZ#131_1F, GZ#131_2F, GZ#3_3, GZ#3_4 and GZ#_(5&9) be adjourned to a date, and the parties are to file pleadings on the preliminary issue.

(4)  On 5 June 2017, a consent order was made by HHJ Melloy (“Consent Order”) as follows:

“AND Upon the Petitioner undertaking, agreeing and acknowledging that the following properties are matrimonial assets beneficially owned and belonging to the Petitioner:

(1) 2/14 of all the interests in [GZ#131_1F] and 1/7 of all the interests in [GZ#131_2F];

(2) 1/4 of all the interests in [HK#86];

(3) 1/5 of all the interests in [GZ#3_3], [GZ#3_(5&9)] and [GZ#3_4];

(4) 1/3 of all the interests in [GZ#175];

(5) [a property in Guangzhou];

(6) 1/2 of all the interests in [GZ#289]

BY CONSENT, IT IS ORDERED THAT:

1. Paragraphs 1 to 4 of the Order dated 5^th April 2017 in relation to the preliminary issue concerning the true legal and beneficial ownership of the following properties be dismissed:

(1) [GZ#131_1F] [GZ#131_2F];

(2) [HK#86];

(3) [GZ#3_3], [GZ#3_(5&9)], [GZ#3_4];

(4) [GZ#175];

(5) [a property in Guangzhou];

(6) [GZ#289]. …”

89.  W contended that the question of legal and beneficial ownership of the properties listed in paragraph 1 of the Consent Order (“Consent Order Properties”) have been adjudicated and dismissed. The parties have compromised on the extent of W’s beneficial ownership in the Consent Order Properties. H is precluded by issue estoppel from disputing the beneficial ownership of the Consent Order Properties. Alternatively, it is an abuse of process to do so.

90.  W referred the Court to the following legal principles.

(1)  An order by consent or compromise embodied in a consent order gave rise to estoppel that precludes a party from raising the same issue in the same way as a judgment made after adjudication by the Court. It is intended to put a stop to litigation between the parties on the matter: Yung Hong Wai v Ng Kam Shing, HCSA 9/1994, unreported, 23 June 1994; TCWF v LKKS (No.1) [2014] 1 HKLRD 896 at [101], [102] and [105].

(2)  Alternatively, it is an abuse of process to reopen the issues. The Court should adopt a “broad, undogmatic and merits-based approach” and take into account all the facts of the case in determining whether there is such abuse: TCWF v LKKS (No.1) [106] – [144].

(3)  If a point was open to take on an earlier interlocutory application and was not pursued, it is not open for him to take the point at a later application when there has been no material change of circumstances and no new fact. The party has a responsibility to take the point when it is first reasonably available to him before the Court and that it would be an abuse of process to delay taking it until a subsequent application: Compania Sud Americana De Vapores SA v Hin-Pro International Logistics Ltd [2015] 2 HKLRD 458 [16] to [17], summarised the principle derived from Chanel Ltd v FW Woolworth & Co Ltd. As follows:

“16. The principle derived from Chanel Ltd v FW Woolworth & Co Ltd is that of a point was open to a party on an earlier interlocutory application and was not pursued, then it is not open to him to take the point at a later application when there has been no material change of circumstances and no new facts …

17. The Chanel Ltd v FW Woolworth & Co Ltd principle is founded on the basis that the party has a responsibility to take the point when it is first reasonably available to him before the court and that it would be an abuse of process to delay taking it until a subsequent application.: Gee, ibid …”

(4)  The principle applies also to a situation where there has been no determination by the Court: Wong Sze Ling v Young Cheung Lee [2021] HKCFI 892 [24] and [32].

(5)  On the issue of waiver, Gaudron J observed in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 482 that:

“If, in the course of litigation, a person fails to plead a matter, take an available objection or pursue a particular point of law, the matter proceeds on the basis that the point which might have been taken is not in issue. Were it otherwise the conduct of litigation would be unmanageable. Of course, leave may be granted if the point can be raised without injustice to the other party. That question may depend upon whether disadvantage to the other party can be avoided by adjournment or an appropriate costs order. But other issues may be taken into account. In Ketteman v Hansel Properties Ltd Lord Griffiths said “justice cannot always be measured in terms of money”. His Lordship then observed that there was to be weighted in the balance “the strain the litigation imposes on litigants…, the anxieties occasioned by facing new issues, the raising of false hopes”. Additionally, his Lordship noted the necessity to take into account “the pressure on the courts” and the public interest in “legal business [being] conducted efficiently”.

When a party to litigation deliberately chooses not to take a point or fails to take a point when it comes to notice, the courts may adopt a more stringent attitude, treating the point as having been irrevocably abandoned. Usually the party who has thus failed to take the point is said to have “waived” it.”

(6)  In Trafalgar House Construction (Asia) Ltd v The Owners and/or Demise Charterers of NV “Thor Scan” [1999] 2 HKLRD 136 at 148G -149H, the Court of Appeal held that:

“In my view, waiver does not operate only where a party has two or more alternative inconsistent options available to him, but can also operate in other situations. Whether there is a waiver depends on what a party has done or failed to do amounts to a clear and unequivocal indication that he has chosen not to pursue or exercise his right, then in law, he is taken to have waived his right. The choice of one option rather than the others merely illustrates his intention to waive his rights under the other options.”

91.  Firstly, the preliminary issue directed by HHJ Melloy was to determine whether W has, and if so, the extent of, beneficial ownership in the Consent Order Properties (“2017 Issues”). The parties’ compromise on the 2017 Issues was recorded in the Consent Order. There is no express reservation over the claims on the remaining interests of these properties.

92.  Secondly, H’s argument that the Consent Order does not cover H’s present preliminary issue claims “as the necessary parties on the Husband’s preliminary issue claim had not been joined”[18] bears no merits. H now sought for the determination of the beneficial ownership of the Disputed Properties as preliminary issue. This is the same as the 2017 Issues (except that the present claim covers more properties). H knew the identity of the legal owners of the properties concerned in 2017 but chose not to join them in 2017.

93.  Thirdly, there is no change of circumstances.

94.  Fourthly, H’s continual claims against W for appropriation of Companies’ assets for the benefit of herself and her family members are different from the claims on beneficial ownership of the properties concerned.

95.  It is an abuse of process to reopen the issues of beneficial ownership by the Joinder Summons.

C.  QUESTIONNAIRE SUMMONS

96.  The parties have a continuing duty to make full, frank and clear disclosure of their assets. In the exercise of case management power, the Court should regulate the extent of discovery. Request for discovery on documents irrelevant to the issue in dispute, or is oppressive or disproportionate should not be allowed. The Court should also guard against the use of discovery application as a fishing of information.

97.  Rayden and Jackson on Relationship Breakdown, Finances and Children states as follows:

“[13.104] … Questionnaires can, like interrogatories, request information as well as seek production of documents. As part of its case management role, the court should regulate the extent of the discovery of documents so that the exercise is proportionate to the issues in question, and to ensure that the discovery process does not become a fishing expedition approved by the court.

[13.105] In Imerman v Tchenguiz the Court of Appeal made two general observations in relation to discovery and disclosure:

“[33] In relation to these Rules we make two general observations. First, that the Rules do not provide for any disclosure of information or disclosure (discovery) of documents until a spouse has lodged his Form E. Second, and even more significantly, that the process of disclosure (discovery) of documents both then and thereafter is closely regulated by the Rules and, in accordance with the Rules, by the court. Although there is a general duty to make full disclosure of all relevant information, there is, despite the duty imposed on the court by s 25 of the 1973 Act, no duty of general disclosure (discovery) of documents of the kind required in ordinary civil proceedings by the CPR. And whereas in ordinary civil proceedings the parties can normally choose what documentary evidence to tender, it is the court which controls what documents are to be disclosed and tendered by way of evidence in ancillary relief proceedings.

[34] Thus, judges deciding such applications have a far greater control than they have under the CPR in normal civil proceedings, over which documents should or should not be produced in evidence.”

(emphasis in bold added)

98.  The following principles are summarised in B v B (matrimonial proceedings: discovery) [1979] 1 All ER 801 at 811c-g:

“I will conclude this part of my judgment by summarising my conclusions as to the law. (1) A party to a suit must disclose all the documents in his possession, custody or power which are relevant to the matters in issue. The court has a discretion whether or not to order him to make such disclosure, and also has a discretion whether or not to order him to produce the documents for inspection by the other party or the court. (2) The documents of a company are in the legal possession of the company. If they are or have been in the actual physical possession of a director who is a party to litigation they must be disclosed by that director, if relevant to the litigation, even though he holds them as servant or agent of the company in his capacity as an officer of the company. (3) Whether or not documents of a company are in the power of a director who is a party to the litigation is a question of fact in each case. ‘Power’ in this context means ‘the enforceable right to inspect or obtain possession or control of the document’. If the company is the alter ego of such a director so that he has unfettered control of the company’s affairs, he must disclose and produce all relevant documents in the possession of the company. (4) Where relevant documents in the possession of a company are disclosed by a director as being in his custody or power, the court has a discretion whether or not to order production of them. (5) The discretion is a judicial discretion, and in exercising it the court will have regard to all the circumstances. The court will balance the relevance and importance of the documents and the hardship likely to be caused to the wife by non-production against any prejudice to the husband and third parties likely to be caused by production. It has not hitherto been the practice of the court to order production of company documents to which the board of directors objects on affidavit, provided that the court is satisfied that the objection is not contrived for the purpose of frustrating the powers of the court. The court will not in the exercise of its discretion order parties to do that which they have no power to do. The court will not order production unless it is satisfied that production is necessary either for disposing fairly of the issues between the parties or for saving costs.”

99.  The party seeking discovery must base his belief that the document exists on proper grounds. It is insufficient for the applicant to assert that the document “might” exist, so they should be allowed to search for it: Chau Ka Chik Tso by its manager Chau Fuk Sze and others v Secretary for Justice HCA 10670/2000, unreported, 21 November 2005 [36], [39].

100.  A party may depose in affidavits that he in fact does not have the documents in his possession, custody or power. The affidavit in answer is conclusive in interlocutory stage: Re The Prudential Enterprise Ltd HCCW 594/1999, unreported, 10 August 2001, [6].

101.  In the context of an ancillary relief dispute, the Court also bears in mind the principle against minute retrospective investigation enunciated in LKW v DD :

“62. The fourth principle is that the court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tend to deplete the parties’ (and the courts’) resources and to increase antagonism and discourage settlement.

63. Such attempts have been encountered in various contexts, including disputes over the extent of a party’s assets; over the contribution made to the welfare of the family; over the parties’ conduct; over claims to be compensated for having suffered some disadvantage, and so forth.”

102.  H’s draft Third Questionnaire annexed to the Questionnaire Summons was revised twice, partly to narrow down the scope and partly to delete the questions answered by W. The latest version is the 14-page revised draft submitted on day 2 of the hearing (“Draft 3^rd Questionnaire”). It has 12 questions with sub-questions.

103.  In 2019 and before the FDR, H made an application for specific discovery of documents and information in connection with (a) Father’s estate; (b) the rental income from properties in Hong Kong and the Mainland; (c) three Hong Kong companies that were sold years ago; and (d) W’s bank accounts in Hong Kong and Mainland[19] (“2019 Discovery Application”). Many of the H’s requests in 2019 were rejected by HHJ Melloy (“2019 Ruling”).

104.  The documents and information requested in the Draft 3^rd Questionnaire are largely the same as those in the 2019 Discovery Application.

105.  The 2019 Ruling was made for the purpose of FDR. Nonetheless, I am of the view that most of the decisions in the 2019 Ruling apply to this application.

106.  W contended that the cut-off date for discovery decided in the 2019 Ruling (i.e. September 2014) should be maintained. I agreed.

Questions 1 to 3: in respect of Disputed Properties and 7 Properties held by W and/or with H

107.  Question 1 covers HK#C1, HK#A, HK#502, HK#25D and HK#2108, which have been sold between 2010 and 2014 (“Group A”). Question 2 covers HK#86, GZ#175. GZ#131_1F, GZ#131_2F, GZ#3_3, GZ#3_(5&9), GZ#3_4 and GZ#289 (“Group B”).

108.  H requested the production of documentary proof in connection with the source of fund towards the purchases and, in the case of Group A, the whereabouts of the sales proceeds; in the case of Group B, the mortgage loans and rental income, including bank statements and ledger account prepared by W for each of the rented properties.

109.  Similar requests made in the 2019 Discovery Application were refused. The Joinder Summons is dismissed. Production of further documents in connection with the purchase, mortgage, sale and rental of these properties are not necessary nor proportionate. W has deposed on affidavit that she does not have and would not be able to obtain further documents.[20]

110.  Questions 1 to 3 are not allowed.

Question 4: in respect of 28 bank accounts

111.  There are 10 sub-questions which relate to W’s bank accounts, which are relevant to the ancillary relief trial subject to the cut-off date of September 2014.

112.  The requests in question 4 were largely the same as the requests in the 2019 Discovery Application. H accepted that W has disclosed statements and records of the bank accounts covered in this question but the disclosure is not complete.

113.  The bank account referred to in question 4(9) is a repetition of the account in item 4(i) which was covered by question 4(1).

114.  W agreed to answer question 4(1) regarding bank statements and account opening forms since September 2014, except the two DBS accounts listed in item 4(xiii) and 4(xiv) which W said she does not know what these two accounts relate. Insofar as the two DBS accounts are concerned, if they are not W’s bank accounts, she may say in the answer.

115.  W shall answer question 4(1) to 4(8) and 4(10) and disclose the documents requested which are in her possession, power and custody, and subject to:

(1)  those prior to September 2014 are excepted;

(2)  the documents that had been disclosed to H in these proceedings are excepted; and

(3)  disclosure shall cover all those that are in W’s possession, power and custody. The production of answers from the bank or third parties to W’s requests for documents is just one of the possible evidence to prove that the documents are not in W’s power and custody.

Question 5: in respect of Father’s estate

116.  Question 5 relates to (1) Father’s Letters of Administration, Schedule of assets and liabilities of his estate or equivalent documents in other jurisdictions where Father had assets in, including the Mainland and the United States[21]; (2) financial statements of two companies from 2014 to present and supporting documents on the basis for valuation of these 2 companies in the Schedule of Assets and Liabilities of Father’s estate[22]; and (3) details of 7 bank transfers between Father’s estate and W in 2015[23].

117.  Father died intestate on 3 March 2015, which was after the parties’ separation in around 2014.

118.  H’s requests for discovery on information and documents relating to Father’s estate were held by HHJ Melloy as either unnecessary or irrelevant. HHJ Melloy took the preliminary view that W’s inheritance would be non-matrimonial.[24] It was also found that W and her brother have provided H with a great deal of information[25].

119.  I agree and disallow questions 5(1), 5(2) and 5(4).

120.  Question 5(3) relates to 9 specific bank transfers between the bank accounts of W and Father in 2015. This is relevant and W shall answer question 5(3).

Question 6: in respect of Mother’s estate

121.  Question 6 relates to Mother’s estate. W is not a beneficiary of Mother’s estate. The requests are not necessary and are fishing. Question 6 is not allowed.

Question 7: in respect of W’s loan from Mother

122.  W agreed to answer question 7(1) to clarify whether 3 liabilities disclosed in the 2 Form Es are part of the debts mentioned in W’s 5^th Affirmation.

123.  By question 7(2), H requested W to give a full and proper account in relation to the purpose of the loans received by W from Mother with supporting documents including ledger account and bank statements showing breakdown and destination of the funds received by W including those prior to April 2015. W had stated in her 5^th Affirmation breakdown of her loans from Mother with reference to bank statements. This is excessive and disproportionate. Question 7(2) is not allowed.

Questions 8 and 10: in respect of the net profits of SEL since 2003 and receivable for SEL since 2008

124.  These questions relate to the transactions concerning SEL since almost 2 decades ago.

125.  H is a director of SEL. H ought to have access of SEL’s financial information. The extensive period requested is not necessary. W has deposed on affidavit that she does not have further financial records of the companies.

126.  Questions 8 and 10 are not allowed.

Question 9: regarding money from the Companies to W or her maiden family members during marriage

127.  This question premised on H’s own assertion that W siphoned off money received from the Companies or joint account with him since 2006 which W denied. This is fishing. Question 9 is not allowed.

Question 11: about remortgage of former matrimonial home in 2008

128.  It is inappropriate to plough through the details during marriage nor to have a minute investigation of the events during marriage for the purpose of determining the ancillary relief. This request for a full account with documentary proof and bank statement on transaction in 2008 is unnecessary and rejected.

Question 12: with respect to funds withdrawn in 2014/2015 for repayment to Mother and W’s sister.

129.  H said that this relates to a sum of about HK$1.4 million withdrawn by W from the parties’ joint bank account shortly after she was released from imprisonment. W said that H owed her HK$1.39 million, therefore she withdrew the sum. H disagreed.

130.  This may be a matter for cross examination at the trial. The one who assert shall prove. It is for W to prove at the trial that H owed her the money.

131.  H’s requests for documents showing the destination of the sum withdrawn by W is disproportionate. This question is not allowed.

D.  SECTION 18 DECLARATION SUMMONS

132.  The parties have two children. They are now young adults aged 24 and 22. The elder son is attending university in Canada. The daughter is attending university in the United States.

133.  The decree nisi of divorce was pronounced on 20 January 2016. H applied for the Court’s declaration under section 18 of Matrimonial Proceedings and Property Ordinance on the ground that the children have obtained majority. Hence, there is no children to whom section 18 applies. H did not rely on the ground of section 18(1)(c) of MPPO. The requirement in section 18(2) of MPPO for an undertaking on the children arrangements does not apply.

134.  The Section 18 Summons is not opposed.

135.  As the children of the family are all over 18 years of age, I am satisfied that there is no child of the family to whom section 18 of MPPO applies and so declare.

E.  ORDER

136.  I make the following orders:

(1)  The Joinder Summons be dismissed.

(2)  Leave to H to file and serve a third questionnaire on questions 4(1) to 4(8) and 4(10) as referred to in paragraph 115 above, and question 7(1) as referred to in paragraph 122 above within 7 days from the date of this decision; and W to file and serve her answers thereto within 35 days thereafter.

(3)  There be a Section 18 Declaration as in paragraph 135.

137.  Costs should follow the event. I make the following costs order nisi to become absolute 14 days after this decision unless there is application for variation of the order nisi:

(1)  H do pay W, R2 to R4 the costs of and occasioned by the Joinder Summons on a party and party basis with certificate of two counsel, at an amount to be taxed if not agreed.

(2)  H do pay W 80% of the costs of and occasioned by the Questionnaire Summons on a party and party basis with certificate of two counsel, at an amount to be taxed if not agreed.

(3)  There is no order as to costs of the Section 18 Summons.

138.  I thank all counsel appeared at the hearing for their helpful assistance.