CHAN MAN KI v. YAU CHUN FOR

CACV 9/2019

[2021] HKCA 393

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 9 OF 2019

(ON APPEAL FROM DCCJ NO. 1564 OF 2018)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Lam VP:

1.  On 30 April 2019, after hearing counsel, we dismissed the appeal with costs. At the same time, we also granted a stay of DCCJ 1564 of 2018 pending the determination of the defendant’s application to the Family Court for ancillary relief in respect of the various items referred to as the Gifts in this Reasons for Judgment (see [17] below). We also gave the defendant 21 days to make such application to the Family Court in FCMC 6399 of 2017.

2.  Presently, Chu JA will give reasons for our judgment (with whom I respectfully agree).  I however wish to impress upon the parties and those advising them again (as I did at the hearing) to put in serious and greater efforts to resolve this dispute (if necessary through mediation) rather than continuing with the litigation.

3.  The subject matters of the parties’ dispute were estimated to have a total value of $242,888.77[1].  Up to the hearing of the appeal, based on information given to us by counsel, the plaintiff has incurred $156,629 in this appeal and another sum of $180,000 in the court below in this action. She obtained costs orders in her favour in respect of the costs of the striking out application and this appeal. As regards the defendant, he incurred $253,317 in this appeal and another sum of $220,000 as his own costs in the court below.

4.  The costs liability of the defendant stemmed from the orders of costs made against him has already exceeded the total value of the Gifts.

5.  The total costs incurred in the action up to the time of the appeal hearing added up to more than $800,000 which is already more than thrice the value of the Gifts.  As we said at the hearing, if the dispute is to be litigated, the matter would not end with this appeal.  The defendant would have to make an application in the Family Court and substantially more costs and time would have to be spent on such process.  The ultimate figure for costs would certainly be much higher than $800,000.  The burden of such costs would have to be borne by one party or shared between them.

6.  Irrespective of the ultimate incidence of such burden, it is plain that the costs of this piece of litigation is already grossly disproportionate to the subject matters of the claim.  Both parties have legal representation in the action.  From what we have seen in the papers, neither of them is so well off that costs should not be something to worry about.  We have not investigated into how the lawyers had allowed their respective clients to fall into such position without regard to potential costs liabilities.  In the recent judgment in LLC v LMWA [2019] HKCA 347, I had to remind litigants and practitioners that in this type of cases one should always proceed with a sense of proportionality.  Even though in the present case the parties did not have any children out of the marriage, it still does not make sense for them to squander away their resources in this manner.  It is worthwhile and equally apposite in the present context for me to repeat what I said at [37] in that judgment,

“No matter how one sees it, legal costs had run out of control and it is high time someone should instil a heavy dose of realism and proportionality on the conduct of this piece of litigation.”

7.  At [46] in that judgment, I remarked that it is imperative for the parties, their lawyers as well as the court to take a strong proactive approach to steer the parties to the efficient and proportionate mode of dispute resolution.  And those advising the parties should also note [64] where I said,

“We must stress the importance of the duty of those advising the parties to provide them with a correct understanding on the burden of costs on matrimonial disputes. Since the parties shall undergo FDR … we urge them (with the assistance of their lawyers) … to bear in mind the heavy financial burden of costs of litigation … We believe this is essential to the adoption of the correct attitude in the participation in FDR and other alternative dispute resolution process in the future.”

8.  In the context of the defendant’s intended application to the Family Court, there would have to be a FDR before a trial of the same. Further, I cannot see any reason why the parties should not attempt to resolve the matter through mediation before the FDR. If mediation cannot lead to a settlement, parties should also consider seeking a direction that the FDR should be held with the assistance of the mediator as per the practice in LLC v LMWA, supra, at [68] and [69]. I would also draw the attention of the parties and their advisers to [51] to [53] in LLC v LMWA, supra, concerning the duty of the parties in participating in mediation and similar process.

9.  I would also state briefly the reasons for awarding costs of the appeal to the plaintiff against the defendant. The defendant aimed at having the claim struck out. As explained by Chu JA, he utterly failed in this regard.

10.  Though we ordered a stay of DCCJ 1564 of 2018, the defendant did not seek such relief in the court below. He only added such relief by amending the Notice of Appeal after the court had raised the question at the hearing. Further, the stay does not mean that the commencement of that action is an abuse of process given the lack of indication by the defendant (until the filing of Defence) that the Gifts were matrimonial assets and his earlier indication of willingness to return all the items to the plaintiff.  After raising the issue of matrimonial assets in the Defence (which should have been raised by the defendant by way of ancillary relief in the Family Court), questions relating to the distribution of the various gifted items should be determined by the Family Court as that court has a wider discretionary power over such assets than the District Court in its general civil jurisdiction.

11.  But for the claim for ancillary relief to be made by the defendant, I agree with Chu JA that DCCJ 1564 of 2018 could proceed.

12.  It is thus a matter of indulgence granted by this Court to the defendant (given his failure to file an ancillary relief application in the Family Court) to order a stay for good case management of these proceedings rather than such stay representing a success of the defendant in the appeal. The plaintiff did not put up much resistance to the stay. Hence we considered it appropriate to order the defendant to pay all the costs of the appeal.

Hon Chu JA:

A. Introduction

13.  This is the defendant’s appeal against the decision[2] of His Honour Judge KC Chan given on 28 September 2018 dismissing his application to strike out the plaintiff’s claim as an abuse of process.

14.  At the conclusion of counsel’s submissions, we dismissed the appeal and ordered a stay of the plaintiff’s claim against the defendant in respect of the Gifts (as defined in [17] below[3]) in DCCJ 1564 of 2018 pending an ancillary relief application in respect of the Gifts to be made by the defendant in the Family Court within 21 days from the date of the order.  We also ordered the defendant to pay the plaintiff the costs of the appeal, including costs of his application for leave to appeal in CAMP 192 of 2018, summarily assessed at HK$156,629.00.  Our reasons appear below.

B. The facts

15.  The plaintiff and the defendant were married on 18 October 2015.  On 30 October 2015, the plaintiff moved in to live with the defendant and his family at a flat in Hoi Fu Court in Mongkok, Kowloon (“Hoi Fu Court”).  That evening they held a wedding banquet.

16.  A few days prior to 30 October 2015, the plaintiff’s parents delivered to Hoi Fu Court a set of cooking ware (“the Cooking Ware”) and a jar of dried tangerine peel (“the Tangerine Peel”) as wedding gifts to the plaintiff.

17.  During the wedding banquet on 30 October 2015, the plaintiff and/or the couple had received some gold ornaments from their respective families, relatives and friends.  The Cooking Ware, the Tangerine Peel and those gold ornaments (“the Gold Ornaments”) gifted to the plaintiff by her family, relatives and friends (collectively “the Gifts”) are the subject matter of the dispute between the parties in DCCJ 1564/2018 (“the DCCJ Action”).

18.  After the wedding, the Gifts were kept at Hoi Fu Court with the Gold Ornaments being put inside a safe placed underneath the bed.

19.  In March 2016, the plaintiff moved out of Hoi Fu Court but returned after a few days.  In December 2016, the plaintiff left Hoi Fu Court again and thereafter did not return to live in the flat.  It is common ground that when the plaintiff left Hoi Fu Court in March and December 2016, she did not take with her the Cooking Ware and the Tangerine Peel.  It is the plaintiff’s case, but disputed by the defendant, that she had left the Gold Ornaments at Hoi Fu Court.

20.  On 22 May 2017, the plaintiff petitioned for divorce in the Family Court under FCMC 6399 of 2017 (“the Family Court Proceedings”).  There was no claim for ancillary relief in the petition.

21.  On 25 May 2017, the plaintiff made her first demand to the defendant for the return of the Gifts via WhatsApp messages.  She asked the defendant to help her pack her belongings, in particular, the Gifts, and told him she would arrange her friend, Ms Chan Mei Ting (“Ms Chan”), to collect them.  In response, the defendant asked whether she would split the gold ornaments or whether she wanted all of them.  The plaintiff replied that they would be shared.

22.  The defendant did not contest the petition.  Neither did he seek ancillary relief.  On 16 October 2017, a decree nisi was granted.

23.  On 28 November 2017, Ms Chan sent a WhatsApp message to the defendant to ask whether the Gifts had been packed and were ready for collection.  Upon Ms Chan proposing to hire a van to come to fetch them on 9 December 2017, the defendant replied that he was going hiking on the day and asked her to contact his sister to make arrangement.  Importantly, the defendant said that the gold ornaments had been divided and offered to provide a list of them. He did later message Ms Chan a list of jewellery items and also a picture showing some items of jewellery.  Ms Chan replied with a picture that depicted a piece of jewellery, pointing out that the item was missing from the list.  The defendant appeared to acknowledge this. 

24.  On 30 November 2017, the plaintiff applied for the decree nisi to be made absolute. 

25.  It would appear that at some point, Ms Chan had contacted the defendant’s sister (“the Sister”).  It is not clear from the materials before the Court what exactly happened or was said between them.  What is clear is that Ms Chan did not succeed in making arrangement for the collection with the sister.

26.  On 8 and 9 December 2017, a series of WhatsApp messages were exchanged between the plaintiff and the Sister.  In gist, the plaintiff asked repeatedly for the return of the Gold Ornaments to which the Sister repeatedly stated that there was simply none.  The Sister also stated that the petition for divorce did not mention financial matters or disputes between the plaintiff and the defendant.  At a later stage, the Sister also said that the Tangerine Peel had all been consumed while the Cooking Ware was gone and they were thus no longer available.

27.  Also on 8 December 2017, the plaintiff sought to clarify the position with the defendant after she exchanged messages with the Sister. In reply to the plaintiff’s message asking for the return of her belongings, the defendant stated that she had got what she wanted and he had given everything back to her.  He also said he would be temporarily “blocking” the plaintiff, and told her to contact the Sister and he would leave everything to be handled by the Sister and lawyer.

28.  On 13 December 2017, the plaintiff through her solicitors made a further demand to the defendant for the return of the Gifts.  There was no reply to it.

29.  On 19 December 2017, the decree nisi was made absolute.

C. The DCCJ Action

30.  On 19 April 2018, the plaintiff commenced the DCCJ Action in the District Court claiming against the defendant in detinue and alternatively in conversion for the return of the Gifts or damages in lieu in the sum of $242,888.77.

31.  The defendant filed a Defence on 1 June 2018.  His defence may be summarised as follows:

(1) The Tangerine Peel had been consumed during the marriage, the Cooking Ware were thrown away in October 2017 and the Gold Ornaments were taken away by the plaintiff. 

(2) The Gifts were part of the matrimonial assets, and the plaintiff should have claimed ancillary relief in the Family Court Proceedings.  Since she did not make any claim for ancillary relief in the Family Court Proceedings, the plaintiff was estopped and precluded from claiming the matrimonial assets in the DCCJ Action. 

(3) The defendant would set off the claim for the Tangerine Peel against the mobile phone fees he had paid for the plaintiff from March 2016 to November 2017.     

32.  The plaintiff filed a Reply on 2 January 2019. In gist, she disputed that the Tangerine Peel had been consumed and did not admit that the Cooking Ware had been thrown away.  She denied she had taken away the Gold Ornaments.  She also denied that the Gifts were matrimonial assets and/or that she had abandoned or waived her claim to them.  She also disputed the set-off put up by the defendant.

D. The defendant’s striking out application

33.  By summons filed on 13 June 2018, the defendant applied to strike out the plaintiff’s claim.  The application was initially based on five grounds.  At the hearing before the Judge, the defendant only relied on the single ground that the DCCJ Action was an abuse of process that ought to be struck out.

34.  The defendant’s argument, in a nutshell, is that the plaintiff’s claim was res-judicata in the wider sense (i.e. Henderson v Henderson type of abuse) in that the plaintiff could have, and should have, brought her claim in the Family Court Proceedings but she chose not to do so.  Furthermore, as the plaintiff failed to seek an order in the Family Court for transfer of property under section 6 of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“MPPO”), she was to be treated as having abandoned any claim over the Gifts.

35.  The plaintiff disagreed that it was an abuse to bring a civil claim in the District Court.  She argued that the Family Court did not have jurisdiction to order the return or delivery up of the Gifts or damages in lieu in conversion, it was thus not an abuse for her to commence the DCCJ Action.

E. The Judge’s decision

36.  By his decision handed down on 28 September 2018, the Judge dismissed the defendant’s application summons with costs to the plaintiff. 

37.  The Judge referred to the principles relevant to the Henderson v Henderson[4] type of abuse as stated in Johnson v Gore Wood & Co (a firm)[5] and the Hong Kong cases of Ko Hon Yue v Chiu Pik Yuk[6] and Chiang Lily v Secretary for Justice[7].  In particular, he Judge pointed out that it was essential when striking out a claim on the basis of abuse of process to recognise that the abuse lied in seeking to raise in subsequent proceedings claims or issues which could and should have been raised in earlier proceedings.  In other words, just because a point could have been raised in earlier proceedings did not of itself mean that it should have been made. 

38.  The Judge accepted that the Family Court has power to order the return of the Gifts to the plaintiff under the regime of ancillary relief and in accordance with the principles and considerations governing the granting of ancillary relief, which included the guidelines laid down in LKW v DD[8].  He, however, pointed out that under the ancillary relief regime, whether to return the Gifts to the plaintiff would be decided as a matter of discretion with the overriding aim of achieving a fair financial outcome in a matrimonial context.  He further observed that the parties would be put to expend substantial time and efforts to fill out the Financial Statement (Form E), which may rekindle a sense of distrust and reopen other disputes in the already distressed relationship.   

39.  On the issue of whether the plaintiff should have brought her claim in the Family Court Proceedings, the Judge had regard to the fact that the plaintiff’s claim is a straightforward claim based on her assertion of a property right.  He considered that there was no compelling reason why the plaintiff should, in effect, be forced to bring her claim by way of an ancillary relief application and be shut out from a claim as of right based on her property right in the civil court.  He therefore did not agree that the plaintiff should have made the present claim by an ancillary relief application in the Family Court Proceedings.   

40.  In coming to this view, the Judge rejected the defendant’s argument that there would be a risk that divorcing spouses might cherry-pick valuable matrimonial properties and claim them in civil proceedings so that they will not be subject to distribution under the claim for ancillary relief. The Judge was of the view that the Family Court in dealing with the claim for ancillary relief could, and would, where appropriate, include the value of such properties in the calculation of the spouse’s financial resources.

41.  The Judge also concluded that the defendant was not vexed by the plaintiff’s claim in the DCCJ Action, having regard to the fact that (1) the issues involved in the DCCJ Action had not previously been litigated and there was no suggestion that the parties had reached some settlement or accord from which the plaintiff was seeking to resile; and (2) it is not disputed by the defendant that he could have sought redress by way of an ancillary relief application had he considered that allowing the plaintiff to claim her property right on the Gifts would disturb what was otherwise a fair distribution of the matrimonial properties.

42.  The Judge concluded that the plaintiff’s claim was not an abuse of process.  He accordingly dismissed the defendant’s summons with costs to the plaintiff.

43.  The defendant’s subsequent application to vary the costs order nisi and also for leave to appeal was dismissed by the Judge[9].

44.  On 8 January 2019, this Court granted the defendant leave to appeal from the Decision.  

F. The defendant’s grounds of appeal

45.  In this appeal, the defendant advanced a total of eight grounds of appeal as follows:

(1) The Judge failed to appreciate the commencement of the DCCJ Action was wholly misconceived and unnecessary since the plaintiff should have applied for ancillary relief and sought the necessary declarations and determinations in the Family Court Proceedings.

(2) The Judge pre-judged the DCCJ Action in taking the view that the return of the Gifts was a matter of property right only with no matrimonial implication.

(3) The Judge erred in law in effectively permitting the Plaintiff to choose which court she considered appropriate to resolve the dispute over the Gifts.

(4) The Judge failed to appreciate that allowing the plaintiff to choose and pick the court for resolving the dispute over the Gifts defeats the public policy and the underlying objectives of the Civil Justice Reform of saving costs and time.

(5) The Judge failed to sufficiently consider that:

(a) The Gifts arose out of the matrimonial relationship of the parties;

(b) The dispute over the Gifts arose and was not settled when the Family Court Proceedings were ongoing;

(c) The Family Court did not make any order on the financial matters of the parties when the decree nisi was made absolute; and

(d) The Family Court still has jurisdiction to deal with the dispute over the Gifts, including determining the ownership, transfer and/or fair distribution of the Gifts.

(6) The Judge misapprehended the facts and misunderstood the Defendant’s case.

(7) The Judge took into account irrelevant matters, which included:

(a) In the Family Court Proceedings, the parties would need to file their respective Form E, which required expending substantial time and effort;

(b) The filing of Form E might rekindle a sense of distrust and open up areas of dispute in the already distressed relationship; and

(c) The defendant could have sought leave and made an application for ancillary relief in the Family Court for a fair distribution of the Gifts.

(8) The Judge erred in law in finding the defendant was not “vexed” or “oppressed” or “unjustly harassed” when the plaintiff’s conduct in commencing a second action asking for relief that might have been sought or obtained in the Family Court Proceedings is by itself vexatious.

G. Our reasons for judgment

G1. Henderson v Henderson type of abuse

46.  Counsel has no disagreement on the law governing the Henderson v Henderson type of abuse of court process.  The Judge had in [22] to [26] of his decision set out the relevant principles.  As the Judge correctly held, the present state of the law is as stated in Johnson v Gore Wood[10], which has been followed by our Court of Final Appeal in Ko Hon Yue v Chiu Pik Yuk & Ors[11]. See also Chiang Lily v Secretary for Justice[12].

47.  For the purpose of this appeal, it is only necessary to highlight the following:  

(1) The essence of the doctrine of Henderson v Henderson is that a party ought not be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings.  The abuse would usually take the form of the other party being vexed by the subsequent set of proceedings.

(2) When the court is dealing with the Henderson v Henderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel.  Instead the court is required to assess a number of factors and balance competing interests.

(3) There is conceptually an important distinction between absolute bars such as issue estoppel and the Henderson v Henderson type of abuse.  In the former situation, the party who seeks to re-litigate an issue or cause of action has already had his day in court, whereas in the latter situation, that party has not.  It is one thing to refuse to allow a party to re-litigate a question which already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which is not previously being adjudicated upon[13]. 

(4) Hence as observed by Kwan JA (as she then was) in Total Lubricants HK Ltd v De Chanterac (No 2)[14], whether an action is an abuse of process as offending against the public interest in the finality of litigation should be judged broadly on the merits taking account of all the public and private interests involved and all the facts of the case.  It would be wrong to hold that because a matter could have been raised in earlier proceedings it should have been so raised, so as to render the raising of it in later proceedings necessarily abusive.

(5) The decision on whether there is the Henderson v Henderson type of abuse is an exercise of judicial discretion.  The appellate court is obliged to pay sufficient regard to the decision of the court below and should be reluctant to interfere where the decision is based on the assessment or balancing a number of factors.

G2. The issues in this appeal

48.  The Judge had held that the Family Court does have jurisdiction to adjudicate the parties’ dispute over the Gifts, including whether they are matrimonial assets and/or whether they should be shared between the parties.  It follows that the plaintiff could have claimed the Gifts by way of a claim for ancillary relief in the Family Court Proceedings.  This is not challenged by the plaintiff in this appeal.  

49.  In the premises, the core questions with which this appeal is engaged, notwithstanding the many grounds of appeal advanced by the defendant, boil down to: (1) whether the plaintiff should have made the claim in the Family Court Proceedings such that the commencement of the DCCJ Action is an abuse; and (2) whether the defendant is vexed by the DCCJ Action.   

G3. Should the plaintiff have made the claim in the Family Court Proceedings?

50.  On the first issue, the starting point is to note that this is not a case where the plaintiff is seeking to re-litigate a dispute that has been determined by the court, and there is no absolute bar against the bringing of the DCCJ Action.  The question of whether she should have made her claim over the Gifts in the Family Court Proceedings has to be judged against the relevant facts and all the circumstances of the case.  

51.  The Judge had alluded to the differences between litigating over the Gifts in the Family Court Proceedings and under the civil jurisdiction of the District Court.  He concluded that there was no compelling reason why the plaintiff must bring her claim by way of an ancillary relief application instead of making a straightforward claim based on her assertion of a property right in the civil court. 

52.  Mr Fong for the defendant disagreed with the Judge’s conclusion.  The thrust of his submission is that the Gifts arose out of the parties’ matrimonial relationship and the Family Court has wide jurisdiction over any property dispute between them; hence the dispute over the Gifts should be resolved once and for all in the Family Court Proceedings, and it was wrong to allow the plaintiff to cherry-pick which court to pursue her claim. 

53.  I accept that it is a pertinent consideration that the parties were husband and wife and were involved in divorce proceedings.  Generally speaking, it is desirable that one court should exercise its jurisdiction over all financial and property disputes between husband and wife.  Ordinarily it would be appropriate to transfer financial and property claims that fall within its jurisdiction to the Family Court, provided that such a course will not do injustice to either party.  

54.  In Matz v Matz [1984] FLR 392, a case that we drew counsel’s attention to, the parties, who were husband and wife, were partners in a business and lived in a property that was the asset of the partnership held in their joint names.  When their relationship broke down, the wife terminated the partnership and took out proceedings in the Chancery Division claiming the usual partnership relief, including the sale of the property.  She later petitioned for the dissolution of the marriage with claims for ancillary relief.  The husband cross-petitioned for financial provision and property adjustment.  His application in the Chancery Division to transfer the partnership proceedings to the Family Court to be heard together with the claims under the Matrimonial Causes Act 1973 was refused and an order was made for the sale of the property.         

55.  In dismissing the husband’s appeal, the English Court of Appeal held that there is no principle that, whenever proceedings between husband and wife have been instituted under the Matrimonial Causes Act 1973 in which one or both are preferring financial claims against the other, any other litigation between them should as a matter of course be transferred to the Family Division so that all the issues, the subject of litigation between the parties, may be dealt with in one court in the Family Division.  The correct proposition was said to be much more restricted, which is that:[15]

“It is always desirable, if it can be achieved without injustice, that one court should exercise its jurisdiction over all financial claims, or claims for property, between husband and wife and where the claims as in Williams v Williams[16] include claims under the Matrimonial Causes Act 1973 for ancillary relief and also claims under s.30 of the Law of Property Act 1925, it will in the ordinary course be right that proceedings in the Queen’s Bench Division or Chancery Division should be transferred to continue in the Family Division where the Family Division will also be seized of the jurisdiction under ss.23, 24 and 25 of the Matrimonial Causes Act 1973, giving the court wide power to modify and vary strict property rights of husband and wife one against the other. That course should usually be regarded as the correct course if the transfer can take place without injustice to either party. That qualification is a necessary and central qualification of the general principle that it is likely to be desirable that the Family Division should be seized of all proceedings existing between parties who are husband and wife and who have instituted financial property claims under the Matrimonial Causes Act one against the other.”

56.  The Court further pointed out that the question to be asked was whether, in all the circumstances, it was just and equitable to transfer the other proceedings and to stay the other proceedings pending the determination of the broader claims made under the matrimonial jurisdiction of the court.  On the facts of the case, the Court considered it would be unfair and inequitable to hold up the partnership proceedings pending the resolution of the husband’s claims in the Family Division because the proceedings in the Family Division would not be ready for hearing until after a considerable period of time due to the husband’s serious delay in formulating his claim for property adjustment.    

57.  In the present case, in considering whether the plaintiff should have made her claim over the Gifts in the Family Court Proceedings, it is necessary to have regard to the events leading up to the commencement of the DCCJ Action.  In this regard, the WhatsApp messages involving the parties, Ms Chan and the Sister are directly relevant.  They show that in May 2017 shortly after the divorce petition was issued, the plaintiff told the defendant she would arrange for Ms Chan to collect her things, including the Gifts.  The defendant neither disputed the plaintiff’s ownership and entitlement to the Gifts nor indicated that the items were no longer in existence or were not in Hoi Fu Court.  He only enquired whether the plaintiff wanted to have all the gold ornaments or only those gifted by her relatives and friends.  The impression he gave was that he was prepared to let the plaintiff have the Gifts.          

58.  This remained the position in late November 2017.  On 28 November 2017, two days before the plaintiff applied for the decree nisi to be made absolute, Ms Chan messaged the defendant to arrange the collection of the Gifts.  In reply to Ms Chan’s enquiry whether they were ready to be picked up, the defendant stated that he had divided up the gold ornaments and offered to provide a list for confirmation.  He later sent Ms Chan a list of jewellery and a picture depicting some jewellery.  Ms Chan then sent a picture of a piece of jewellery and reminded the defendant that one piece was missing.  The defendant did not raise any objection.  Instead he asked Ms Chan to collect the items from the Sister’s place in Choi Wan, so as not to bother his mother.     

59.  Accordingly, when the plaintiff applied for the decree nisi to be made absolute on 30 November 2017, there was no dispute between the parties over the ownership of the Gifts or that they should be given to the plaintiff.  At that point, there was neither reason nor basis for the plaintiff to seek ancillary relief over the Gifts in the Family Court Proceedings.

60.  It was only in the messages exchanged between the plaintiff and the Sister on 8 and 9 December 2017 that the Sister indicated that the Gifts no longer existed and could not be returned to the plaintiff. Even when the plaintiff messaged him on 8 December 2017 to follow up on the return of the Gifts, the defendant’s reply was she had got what she wanted and he had given everything back to her.  He did not say that the plaintiff was not entitled to the Gifts or they should not be returned to her.  A week later, the plaintiff through her solicitors sent a letter of demand to the defendant, to which there was no response.  In the meantime, on 19 December 2017, the decree nisi was made absolute.

61.  On these facts, it can hardly be said that the plaintiff should have claimed the Gifts in the Family Court Proceedings by applying for ancillary relief.  I do not understand the defendant to be disputing that prior to the commencement of the DCCJ Action, he had not indicated to the plaintiff that he disputed her ownership or entitlement to the Gifts.  It was only when he filed the Defence in the DCCJ Action that he asserted, for the first time, that the Gifts were matrimonial assets. 

62.  It is also of relevance to note that the defendant himself did not seek ancillary relief in the Family Court Proceedings.  When the divorce petition was served on him, the plaintiff had already messaged him about the Gifts.  Although he takes the view that the Gifts are matrimonial assets that should be distributed, he had up to the hearing of the appeal not taken any step to have the dispute resolved in the Family Court Proceedings.  Contrary to the defendant’s submission, the Judge did not err in pointing out that he could have sought ancillary relief if he disputes the plaintiff’s property claim and contends the Gifts are matrimonial assets that should be distributed.

63.  On the facts of this case, the defendant’s argument about allowing the plaintiff to cherry-pick which court to bring her claim is misplaced.  As pointed out above, all the time the defendant appeared to be agreeable to the plaintiff having the Gifts.  It was well after the application to make the decree nisi absolute that the defendant and the Sister resisted the plaintiff’s request to have the Gifts returned to her.  Importantly, the first time the defendant contended that the Gifts were matrimonial assets was after the commencement of the DCCJ Action when the decree absolute was already granted. 

64.  For the same reasons, there is no basis for the defendant’s complaint that to permit the plaintiff to bring the DCCJ Action would lead to multiplicity of proceedings that is against public policy and the underlying objectives of the Civil Justice Reform of saving time and costs. 

65.  In short, I do not accept that the Judge erred in rejecting the defendant’s case that the plaintiff should have claimed the Gifts by way of an ancillary relief application in the Family Court Proceedings.

G4. Was the defendant vexed by the DCCJ Action?

66.  It also follows from the above discussions that the bringing of the DCCJ Action does not amount to an abuse of process.  Nor can it be said that the defendant was vexed by the DCCJ Action.  Principally, as the Judge pointed out, the dispute over the Gifts had not previously been litigated.  It is important that a party ought not lightly to be deprived of the right to have a serious matter litigated[17].  On the facts as analysed above, the plaintiff cannot be said to have acted unreasonably, still less in a vexatious manner, in not claiming the Gifts in the Family Court Proceedings and/or in bringing the DCCJ Action.  Further, the defendant had not sought to resolve the dispute over the Gifts in the Family Court Proceedings despite asserting that they are matrimonial assets that have to be distributed. 

67.  Additionally, while the Family Court has jurisdiction to resolve the dispute over the Gifts including making an order of transfer under section 6 of the MPPO, it does not have jurisdiction to order the defendant to return the Gifts to the plaintiff if it were to decide that they should not be shared or redistributed between the parties.  Nor does it have jurisdiction to order damages if the defendant should refuse to deliver up the Gifts despite a finding against him.  Hence, depending on the decision of the Family Court, if the defendant ultimately refuses to deliver up the Gifts, the Plaintiff may be left with little resort but to seek redress by way of civil proceedings.  This serves to highlight why it is not an abuse to bring the DCCJ Action.  It also illustrates there are occasions where civil proceedings seeking financial or property relief may exist in parallel with matrimonial proceedings, a point that I shall return to when discussing the stay of the DCCJ Action below. 

G5. Conclusion on the appeal

68.  For the above reasons, there is no merit in the defendant’s striking out application and the Judge was right in dismissing it. Accordingly, we had dismissed the defendant’s appeal against the Judge’s refusal of the striking out application.

G6. Stay of the DCCJ Action

69.  We had at the hearing of the appeal raised with counsel the issue of the further conduct of the parties’ dispute over the Gifts.  This is because, on the one hand, we have held that the commencement of the DCCJ Action is not an abuse of process, and we have upheld the Judge’s refusal of the striking out application.  It is thus open to the plaintiff to continue with the DCCJ Action. 

70.  On the other hand, we were mindful of the desirability of having all financial and property disputes between husband and wife resolved in one court, which ordinarily is the Family Court having regard to its wide discretionary power to do justice between the parties under the MPPO.  Of course, as emphasized in Matz v Matz, such a course must not cause injustice to either party.  Since the defendant has asserted that the Gifts are matrimonial assets, if he were to make an ancillary relief application in respect of them in the Family Court Proceedings, it would be appropriate to order a stay of the DCCJ Action.  Until there is a decision by the Family Court on the dispute over the Gifts, including whether there should be a redistribution, there is no need or useful purpose to carry on with the DCCJ Action.    

71.  At the same time, however, for the reasons mentioned at [67] above, in the event the Family Court determines the dispute in favour of the plaintiff but the defendant refuses to deliver up the Gifts or make payment to the plaintiff as ordered, the plaintiff may have to continue with her claim in detinue and/or conversion to secure the return of the Gifts or to seek damages in the DCCJ Action.  

72.  Having regard to these considerations, it will be just and appropriate to stay the plaintiff’s claim in the DCCJ Action pending an ancillary relief application in respect of the Gifts to be made by the defendant to the Family Court, which will enable the dispute over the Gifts, including whether they are matrimonial assets and how they should be dealt with, to be resolved in the Family Court.  We had therefore allowed the defendant to amend the Notice of Appeal to add an alternative relief to this effect.  We further made the order staying the DCCJ Action as set out in [14] above.

H. Costs

73.  Both the plaintiff and the defendant asked for the costs of the appeal.  We take the view that there is no reason to depart from the normal rule of costs following the event, and had ordered costs against the defendant.  Lam VP has in [9] to [12] above indicated our reasons for the costs order, with which I respectfully agree.  I wish only say a few words about counsel’s arguments.

74.  For the defendant, Mr Fong argued that the defendant was successful in his argument that the Family Court had jurisdiction to deal with the ownership of the Gifts and the plaintiff’s contrary arguments had failed both before the Judge and in this appeal.  In support of his contention, he referred to [20], [27] and [31] of the Judge’s Decision as well as the plaintiff’s reliance on Lit Wing Yee v Tang Cheuk Lun[18].  

75.  Mr Lai on the other hand argued that it had always been the plaintiff’s position that the defendant could have right at the outset applied to the Family Court for ancillary relief so that the dispute could be resolved in the Family Court Proceedings.  The defendant, having chosen not to do so, and having failed in the appeal should bear the costs of the appeal.

76.  We agree with Mr Lai.  The plaintiff has maintained, correctly, that the cause of action in detinue or conversion is not available in the Family Court.  All that the Judge was saying in [27] and [31] of his Decision is that the Family Court has power to deal with the Gifts and may grant relief similar to, or the same as, relief that can be obtained in a claim in detinue or conversion, though this would be in a matrimonial context. 

77.  As the plaintiff had stated in her affirmation and Mr Lai had submitted in this appeal, it was incumbent on the defendant to make an ancillary relief application in the Family Court in relation to the Gifts.  We agree since it was the defendant who contended that the Gifts were matrimonial assets and the dispute should not be litigated by way of separate civil proceedings.  We do not agree with the defendant that it was for the plaintiff to make the ancillary relief application. 

I. Other matters

78.  Before leaving this Reasons for Judgment, I wish to express my respectful agreement to the comments made by Lam VP in [3] to [8] above.  As pointed out by His Lordship, the financial consequences of the litigation are already rather alarming.  It is in the best interest of the parties that their difference and disputes be resolved proportionately and amicably.  Like His Lordship, I would also encourage the parties to exercise a modicum of rationality and common sense in considering the further conduct of the litigations.