PWHA formerly known as PKL v. TKS

FCMC 8394 / 2021

[2025] HKFC 26

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 8394 OF 2021

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BETWEEN

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DECISION

(Joinder)

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A. The Application

1.  By a Summons filed on 16 November 2023 (“Summons”), the Petitioner (“W”) applied for an order to join M as the intended 2^nd Respondent in the proceedings of the ancillary relief dispute for the purpose of determining whether the Respondent (“H”) has beneficial interests in 4 companies (collectively the “Companies”) which are holding respectively 10 businesses operating as restaurants in the name of “XX XXXX XXX” (collectively the “Restaurants”).

2.  W also sought in the Summons orders for specific discovery against M. It was agreed that the discovery application should be dealt with at a later stage depending on the outcome of the joinder application.

B. Background

3.  W claims ancillary relief in this divorce petition presented in 2021 after their marriage of about 8 years. One of the major issues in dispute is whether H has beneficial interests in the Companies which shall form part of the matrimonial assets to be considered or distributed between the parties.

4.  H and M are friends known to each other since around 2008.

5.  The Restaurants were opened in sequence since around 2019. M is the sole legal shareholder and director of the Companies.

6.  W contended that by an agreement with M, H holds 50% of the beneficial interest in the Companies.

7.  H and M denied the existence of such agreement. Their case is that H was employed as the manager of the Companies and did not own any beneficial interest in the Restaurants or the Companies. M considered H as his lifelong and loyal friend. He has therefore entrusted H with the authority to handle and manage the preparation, opening and operation of the Restaurants.

C. Relevant legal principles

8.  W relied on Order 15 rule 6(2)(b)(ii) of the Rules of the High Court under which the court may order the following persons to be added as a party:

“(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.”

9.  I have summarised the applicable legal principles on joinder in PCML also known as LMC also known as KLMC v AKK and others [2023] HKFC 34, §§35 to 49. See also LLC v LMWA [2019] HKLRD 529 §25; Man Whi Chung v Man Ping Nam [2003] 1 HKC 549 §§12-24. These principles are not in dispute.

10.  In essence, under Order 15 rule 6(2)(b)(ii),

10.1. W shall establish that there is a bona fide claim or a proper question arising out of or connected with the relief claimed in the cause, which would be just and convenient for resolution between W and M as well as between W and H in these proceedings.

10.2. If it is satisfied that there is such bona fide claim or proper question to be tried, the court retains a discretion having regard to matters including prejudice to the parties, the stage the action has reached and the delay that may be caused.

10.3. The court will not engage in a detailed scrutiny of the applicant’s case or adjudication of the disputed facts.

10.4. If M and H who opposed the joinder show that it is plain and obvious that W has no case against M and H, a joinder shall not be ordered.

D. Joinder

11.  Having considered the parties’ submission and evidence, I am satisfied that:

11.1. The first step in the adjudication of W’s ancillary relief claims against H is to ascertain their assets. Whether H has beneficial interests in the Companies is a pertinent issue at the trial.

11.2. The employment relationship between H and the Companies does not necessarily exclude the holding of a beneficial interest in the Companies.

11.3. H told W’s mother in one of the Whatsapp messages that he did not have the funds to repay W’s mother because he had to pay a substantial sum of not less than HK$2 million for the renovation and setting up of one of the Restaurants. The need to pay such a substantial amount for the setting up of the Restaurants is inconsistent with the role of an employee, especially it is H’s case that he did not have the financial resources to invest in the Companies. The evidence that H had assisted to pay first and be reimbursed later due to M’s frequent absence from Hong Kong and their good relationship is noted. These are matters to be tried in the proceedings for the determination of the beneficial interest.

11.4. The existence of a joint investment agreement contended by W, though disputed, could not be classified as plainly and obviously unarguable in view of the evidence before the court.

11.5. The other evidence including the level of H’s participation in the setting up and management of the Restaurants, including (a) the signing of cheques by H on behalf of the Companies, (b) H had been the named beneficiary of the Restaurants’ Food Panda account, and (c) H’s role as the Company Secretary, are matters require further examination before one can reach the conclusion of whether these matters support H’s ownership of beneficial interest or are merely tasks undertaken by H as manager.

11.6. Without a detailed scrutiny of the evidence nor an adjudication on the beneficial ownership of the Companies, having regard to the evidence before the court, it is not a plain and obvious case that H has no beneficial interests in the Companies.

12.  M is the sole legal owner and sole director of the Companies that own the Restaurants. On the claims of beneficial ownership, W relied on the agreement between M and H. The parties agree that involvement of the Companies is not required on this preliminary issue.

13.  M is directly connected to the question of whether H has beneficial interest in the Companies. M shall be joined to the ancillary relief proceedings so that the preliminary issue on the beneficial ownership in the Companies can be adjudicated effectually with the presence of all relevant parties before the court.

14.  I make the following orders:

14.1. The question of whether H has a beneficial interest in the Companies be tried as a preliminary issue in the ancillary relief proceedings.

14.2. M be joined as a respondent in the preliminary issue.

14.3. M be named as the 2^nd Respondent and H be renamed to be the 1^st Respondent in these proceedings.

14.4. The prayers in the Summons for discovery be adjourned to the case management hearing of the preliminary issue to be fixed.

14.5. Following the event, costs of the Summons be paid by H and M to W, to be taxed if not agreed with certificate for one counsel.

14.6. W’s own costs be taxed in accordance with the Legal Aid Regulations.

15.  [Consequential case management directions after submission by the parties.]