Wan Sui Ha Alice v. Ng Wing Yan and Another

DCCJ 316/ 2019

[2019] HKDC 821

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION No. 316 OF 2019

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Coram: His Honour Judge Kent Yee in Chambers

Date of Hearing: 12 June 2019

Date of Decision: 18 June 2019

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D E C I S I O N

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Introduction

1.This is an appeal of Madam Ng from the decision made by a master on 28 February 2019 (“the Decision”) whereby her application for a stay of the present action (“DCCJ”) pending the determination of the matrimonial proceedings under FCMC X/2018 (“FCMC”) by her summons dated 19 February 2019 (“the Summons”)was dismissed.

2.DCCJ is a writ action brought by Madam Wan and she is the mother of Mr Wu.  Mr Wu is the respondent in FCMC and the ex-husband of Madam Ng. Madam Ng is the petitioner in FCMC.  She appeared in person before the master at the first hearing of the Summons and all the evidence before the master was her supporting affirmation only.  Mr Wu did not appear at that hearing and his position was unknown.  After hearing the submissions of the solicitors for Madam Wan and Madam Ng, the master made the Decision.  I can discern no reasons for the Decision given by the master on the record.

3.Madam Ng is now represented by Mr Lai, who has presented her appeal with skills and clarity.  Mr Ah-Weng, for Madam Wan but not at the previous hearing, opposes the appeal on behalf of Madam Wan.

Applicable general principles

4.An appeal from the master to a judge in chambers is dealt with by an actual rehearing of the application led to the order under appeal: Hong Kong Civil Procedure 2019, Volume 1, §58/1/2 at p.1151.

5.The refusal to grant a stay is a case management decision involving the exercise of discretion of the master.  An appellate court would not lightly interfere with such a case management decision unless the decision of the master was founded on some errors of principles or was clearly wrong: Yong Li Investments Ltd v Lee Sing Leung Robin [2018] HKCFI 1711, per DHCJ Keith Yeung SC at §15, X v Dr Hung Cheung Tsui, unreported, HCPI 67/2014, 23.5.2017 per Chow J at §10 and Ng Wing Man v Everbest Port Services Ltd, unreported, HCPI 780/2012, 21.3.2013 per Bharwaney J at §8.

The stay application

6.DCCJ concerns the beneficial interest in a property known as 2^nd Floor, No. 238 Mong Tseng Wai, Yuen Long (“the Property”). Madam Wan alleges that the Property albeit registered in the joint names of Mr Wu and Madam Ng actually belongs to her by reason of her provision of all the purchase monies.  Hence, the registered owners merely hold the Property on trust for her and she is the sole beneficial owner of the Property. She seeks two declarations to this effect.

7.FCMC was commenced by Madam Ng in April 2018.  As an ancillary relief, Madam Ng prays for an order that the interest of Mr Wu in the Property should be transferred to her. A decree nisi was granted on 18 September 2018.  In October 2018, Mr Wu filed a Form E and there he alleged that he has zero interest in the Property and all the purchase monies in the sum of HK$1.68 million was paid by Madam Wan.

8.Madam Ng points out and now Mr Ah-Weng accepts that the common issue in DCCJ and FCMC is the beneficial ownership of the Property (“the Ownership issue”).

9.In her supporting affirmation, Madam Ng set out the basic factual basis for her present application.  The documents filed in FCMC were exhibited thereto and they evidence the progress and development in FCMC.

10.Madam Ng further avers that Madam Wan made the down payment for the purchase of the Property as a gift to Mr Wu and Madam Ng for their marriage in September 2014 and the Property became their matrimonial home until she was evicted by Madam Wan and Mr Wu in April 2015.  Thereafter Madam Wan and Mr Wu reside in the Property.

11.Madam Ng avers that Madam Wan is all along aware of FCMC and she should have applied to intervene instead of the institution of the present proceedings.  She alleges that DCCJ is a waste of judicial resources and the Ownership issue should not be tried in two different sets of legal proceedings.

12.I further take note of a letter issued by the solicitors for Madam Wan dated 15 June 2018 (“the Letter”).  The Letter referred to FCMC and there Madam Wan claimed beneficial interest in the Property alleging that Madam Ng merely holds the Property on trust for her.  She, however, commenced only DCCJ 7 months later.  The Letter confirms the knowledge of Madam Wan in respect of FCMC.

13.Mr Lai pertinently refers to the following instructive guideline set out by Deputy Judge Mostyn QC (as he then was) in TL v ML & Ors (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263 at §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 (FDR).”

14.At §37, Deputy Judge Mostyn QC explained the advantages of this approach in the following terms.

“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 and a meaningful FDR can take place. It also means that the expensive attendance of the third party for the entire duration of the trial can be avoided.”

15.At §34, Deputy Judge Mostyn QC pointed out that 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.

16.This approach is repeatedly adopted in Hong Kong family courts and the beneficial interest in a property will first be determined as a preliminary issue to an order for ancillary relief: Do Ye Tong Doreen v Wai Hei Wan Wesley [2011] 1 HKLRD 318 per Le Pichon JA at §17.  For the resolution of such a preliminary issue, parties will be ordered to file pleadings and the conventional steps of a civil action such as discovery will be taken.

17.Another example of the adoption of this approach can be found in LWYA v KYW and Anor., unreported, CACV 151-152/2013, 4.12.2015. There, Kwan JA (at §31) emphasized that the procedure mentioned in TL v ML is essential for the proper resolution of a dispute between a spouse and a third party as to the beneficial ownership of property in a matrimonial suit.    

18.Mr Lai fairly accepts that there is no authorities suggesting that a family court should always be preferred to a civil court to resolve the dispute over the beneficial ownership of a matrimonial property between a third party and the spouse.  However, he highlights that FCMC was commenced well before DCCJ to the knowledge of Madam Wan and the Ownership issue is common to both suits.  To avoid inconsistent findings, multiplicity of proceedings, wastage of judicial resources and unnecessary costs, the Ownership issue should be determined in FCMC as a preliminary issue and in the meantime DCCJ should be stayed.

19.In light of the authorities above, I have no hesitation in accepting Mr Lai’s submissions.  There is no reason why the Ownership issue should not be tried in FCMC in accordance with the approach of TL v ML and instead allow DCCJ to take over the jurisdiction of the family court to resolve the same.

20.I see no reason why neither Mr Wu nor Madam Wan applied for a joinder in FCMC before the commencement of DCCJ. The first hearing of FCMC took place in November 2018 and it was very clear that the Ownership issue had to be resolved and Madam Wan is a necessary party. That said, for present purposes, I need not go so far as to conclude that it was an abuse of the court process for Madam Wan to institute DCCJ particularly in the absence of any evidence filed by her.

21.After the dismissal of the Summons, Madam Ng took out a summons in FCMC to join Madam Wan on 8 March 2019 (“the Joinder Summons”).  The hearing of the Joinder Summons has been adjourned to 23 September 2019 together with the first hearing of the petition.

22.Mr Ah-Weng first invites the attention of this court to Fisher Meredith LLP v JH [2012] 2 FLR 536 at §§42-44, another decision of Mostyn J.  He makes the point that where a party in a matrimonial suit says that property to which he has legal title is beneficially owned by a third party, the duties 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 are by no means so clear cut.  Such a scenario is different from where a claimant says that a property held in the name of a third party is the property of the respondent.     

23.However, as rightly pointed out by Mr Lai, Mostyn J actually opined that in such a scenario, as in the present case, the duty to bring the claim of the non-legal-owner third party (Madam Wan) before the court lies primarily and equally on the respondent (Mr Wu) and on the non-legal-owner (Madam Wan) and not on the claimant (Madam Ng).

24.On this authority, it appears to me that Madam Wan and Mr Wu should share the primary duty to bring the claim of Madam Wan before the family court in FCMC.

25.In Fisher Merdith, Mostyn J, at §53, further referred to his another decision in Gourisaria v Gourisaria [2011] 1 FLR 262 as an illustration of a case in the said scenario.  At §53 in Gourisaria, Mostyn J had this to say,

“I reiterate my view that if a third party is aware that there are ancillary relief proceedings between husband and wife, and wishes to make a claim to the subject matter of those proceedings, then in my opinion, the only proper procedure, in order to avoid the spectra of inconsistent judgements, and to ensure that all disputes are resolved in one fell swoop, is for him to apply to intervene in the ancillary relief proceedings.” (my emphasis)

26.When the Court of Appeal dealt with the appeal from Mostyn J in Gourisaria, Hughes LJ qualified the foregoing reference of Mostyn J to the only appropriate procedure. Hughes LJ said this at §§22-23,

“[22] It is plain to my mind, equally, that Mostyn J, in the passage which I have cited, in his reference to “the only appropriate procedure” was not to be taken as having meant any universal proposition for every case. He undoubtedly meant that it was the only proper course, as he saw it, in this case, given the advanced stage of the proceedings.

[23] Accepting as I do the general proposition that it is highly desirable that issues between a third party and spouses should be resolved at the same time as the issue between the spouses, there will be some cases in which it simply cannot be done and there will be others where it could be done only at the cost of the price which ought not to be paid.”

27.Thus, albeit not of universal application, the general proposition advanced by Mostyn J is highly desirable and I see no reason why it should not be adopted unless there are special factors.  In the present case, I can see none and Mr Ah-Weng is unable to identify any.

28.DCCJ is still at its infant stage whereas FCMC is at a much more advanced stage.  The Statement of Claim filed by Madam Wan in DCCJ can be used in FCMC for the purpose of the trial of the preliminary issue and the costs of preparing the document will not be wasted.  

29.In the premises, I come to the conclusion that the claim of Madam Wan should best be resolved in the ancillary relief proceedings in FCMC.

30.Mr Ah-Weng further submits that the Joinder Summons is an abuse of process in light of the dismissal of the Summons.  Strictly speaking, this is a non-issue but I have to make it clear that I do accept this submission.  In my view, Madam Ng is merely ensuring that the established procedure is followed in FCMC in accordance with TL v ML in the event that the stay of DCCJ is allowed.  Madam Ng cannot be faulted and the Joinder Summons is by no means a back-door appeal of the Decision.  Whatever the outcome of the present appeal, I opine that the joinder of Madam Wan is a proper step.

31.To be fair to Mr Ah-Weng, the bulk of his submission is about the high threshold to meet so that an interference with a case management decision involving exercise of discretion of a master can be justified.  I certainly bear it in mind.

32.At the hearing, Madam Ng could not be expected to give proper assistance to the master and the master did not refer to TL v ML apparently.  Being unable to assess the basis of the exercise of the discretion resulting in the Decision, this court finds no difficulties in departing from the same and proceeds to exercise the discretion afresh.  I opine in the particular circumstances of this case, it clearly calls for a stay of DCCJ and a joinder of Madam Wan in FCMC in light of the established principles explained above.

Conclusion and Orders

33.For the reasons given, this court concludes that a stay in DCCJ should be granted and the claim of Madam Wan herein should be determined in FCMC.  Accordingly, the appeal should be allowed and the Decision should be set aside.  The Summons should be granted.

34.I further make a costs order nisi that Madam Wan should forthwith pay Madam Ng her costs of the Summons including the hearing before the Master and the present appeal, to be taxed if not agreed, with certificate for counsel. Madam Ng’s own costs should be taxed in accordance with the Legal Aid Regulations.

35.As regards Mr Wu, he has not taken any meaningful part in this appeal. I shall not make any costs order concerning him.

36.Lastly, I thank Mr Lai and Mr Ah-Weng for their helpful assistance in this matter.

Mr Jonathan Ah-Weng, instructed by Messrs Raymond Lam & Associates, for the plaintiff

Mr Alex Lai, instructed by Messrs Hon & Co assigned by Director of Legal Aid, for the 1^st defendant

The 2^nd Defendant was not represented and appeared in person