Mpy v. Wyc

FCMC 3297 / 2022

[2023] HKFC 107

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER FCMC 3297 OF 2022

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BETWEEN

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DECISION
(Transfer of Proceedings)

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Introduction

1.The petitioner (“the husband”)  applies for an order to transfer this proceeding to the Court of First Instance pursuant to rule 32(1)  & rule 80 of the Matrimonial Causes Rules (Cap 179A)  (“the MCR”)  with reference to Practice Directions 15.14.

Background

2.The husband and wife met at very young age when studying in an evening school in 1981, after getting married in 1983, they set up family business carrying on trading in fabric materials. Apparently the family business went well and had extended to landed properties developments. The husband is now in his sixties whereas the wife in her late fifties, they have two sons and one daughter who are all above 18 years of age.

3.On 11 May 2022, the husband filed a petition on ground of unreasonable behaviour, decree nisi was granted on 12 October 2022. The only outstanding issue to be determined is ancillary relief.

4.This is a big money case where both parties claimed the value of matrimonial assets are over hundred million of RMB, amongst them, the assets involved companies and properties all over mainland China. One of the items with significant value was RMB 535 million, being sale proceeds of a piece of land in mainland China in which the sale has already been completed in or about July 2019. The wife claimed the husband has deposited the said sale proceeds to a bank account of a family company (“the HTSP company”)  of which the husband was a director and a shareholder. There have been allegations made by the wife that the husband has dissipated the proceeds by selling and transferring the shares of the HTSP company to third parties.

5.Because of this, the wife is dissatisfied that a large extent of family asset, being RMB 535 million, has been depleted. The wife also disagreed the husband has only some RMB 131 million left with him now. On 30 June 2022, the wife took out a section 17 application for setting aside the transaction relating dissipation of the abovementioned family asset.

6.Three months later, on 9 December 2022, the husband applied for an order to transfer this proceeding to the Court of First Instance for determination. Briefly, the husband submitted apart from the huge size of family pot, there existed complicated commercial issues to be canvassed, coupled with the fact that the wife has, at some point, agreed to transfer, his application should be granted.

Applicable legal principles

7.Rule 32(1)  of the MCR reads,

“The court may order that a cause or application pending in the District Court be transferred to the Court of First Instance, where, having regard to all the circumstances including the difficulty or importance of the cause or application or of any issue arising therein, the court thinks it desirable that the cause or application should be heard and determined in the Court of First Instance.”

8.Rule 80 of the MCR is the general provisions for a transfer application from District Court to Court of First Instance.

9.It is accepted that the Family Court has an unfettered discretion at any stage of the proceedings to order a transfer up the proceedings to be determined in the Court of First Instance. Paragraph 2 of Practice Directions 15.14 clearly stated the fundamental principle of such transfer is whether in light of the overall circumstance including the nature of the issues of fact or law involved, the proceedings or part of them are more desirable to be dealt with in the Court of First Instance.

10.Such principles have in fact widely laid down in H v. H (FCMC 7173 of 2000, 1 February 2002, unreported), the test is that there must be cogent reasons why a case should be removed from the ambit of a group of specialist judges. On sole reason that very large sums of money alone will rarely be sufficient to justify an order of transfer.

11.The principles stated by HHJ Hartmann in Jack v. Jack (DJ No. 3782 of 1995)  are still good law and such were cited by DDJ Jenkins in B v. B (FCMC 3105 of 1999, unreported).

“I believe that the following matters referred to by HH Judge Hartmann (as he was then)  in Jack v. Jack and another (DJ No 3782 of 1995)  are relevant considerations and should properly be taken into account in deciding whether to order a transfer, they are:

“where there is a matter of public interest; where there are novel or difficult points of law to be resolved; where delay will work a clear injustice and/or where there is unduly complicated or conflicting evidence the resolution of which is likely to be so protracted that it will unduly prejudice the Family Court lists and this work against the interests of other litigants”.

In my view none of these factors are present in this case and further none of the specific matter matters in r.80(5)  apply either.”

12.In summary, in granting an order of transfer up, there must be cogent reason(s)  for this Court to exercise its unfettered power to remove this proceeding from specialist judges and to order a transfer up in whole or in part, issues on law or on fact to the Court of First Instance for determination. In considering such reason(s)  and seeing all circumstances, the Court shall particularly look into matters in light of (i)  public interest; (ii)  difficult point of law; (iii)  injustice caused by delay; and/or (iv)  complicated or conflicted evidence which the resolution is likely to be protracted and prejudiced the interest of other litigants. Solely on size of matrimonial pot is certainly not a good reason for transfer. The conclusion drawn must be that it is more desirable for the proceeding (whole or in part)  to be determined in the Court of First Instance.

Discussions

Misappropriation of RMB535 million

13.Firstly, on the wife’s allegation that the husband had misappropriated more than RMB535 million by transferring HTSP company to third parties, the husband envisaged proceedings will be taken out by non-parties on company issues. The husband particularly raised the following complex issues in his affirmation:

“(i)  whether the Family Court can make orders purporting to let the wife, an indirect shareholder, recover losses allegedly suffered by HTSP, when HTSP is not even a party to these proceedings, and any recovery by the wife on HTSP’s and any recovery well established company law principles;

(ii)  whether the rule against reflective loss precludes the wife from using these proceedings to obtain monetary relief against the husband in respect of the alleged misappropriation; and

(iii)  whether the wife is allegedly entitled to share in the allegedly misappropriated sum, when on her own case, the sum rightfully belongs to HTSP rather that to either of the parties.”

14.In essence, the wife sees the above issues are unrelated to the ancillary relief proceedings, her case concerns the husband’s hidden asset of RMB535 million and if the Court found in favour of her, such amount should be added back to the matrimonial pot.

15.I share same view with the wife. Although the husband has raised the issues broadly from company law perspective, I am not aware there is litigation pending in the Court of First Instance. The best case the husband is putting forward here is only an anticipated scenario which might be happening in the future. As at this stage, the husband’s evidence does not justify a transfer. This ground has no merit.

Complex factual issues & conflicts of laws

16.Secondly, the husband said the issues raised above would generate complex factual disputes, this is particular so when the family companies and landed properties are all over mainland China. Inevitably, a high likelihood cross boarder elements would surface because he has connections with  mainland authorities for more than 16 years. Issues on conflict of laws may also arise.

17.On this point, I only see the husband has stated in his supporting affirmation that he has anticipated a likelihood of such phenomenon. I failed to see the husband has substantiated the precise complex factual issues or the conflict of law issues in his affirmation. Again, I see no merit here.

Substantive matrimonial pot

18.This case concerns a huge size of matrimonial pot. The husband said it is worth around HK$250 million whereas the wife has pitched as high as  HK$800 million. Nonetheless, it is clearly stated in in H v. H, the size of the matrimonial asset is by no means a good reason why this case should be removed from the ambit of a group of specialist family judges.

The wife’s consent

19.Lastly, the husband relied on the wife’s consent in (i)  letters by the wife’s solicitors dated 6 December 2022 and 9 December 2022 and (ii)  speaking note lodged by the wife’s counsel for the First Appointment hearing on 15 December 2022. Broadly, she has accepted “the issues involved warrants a transfer of this case to the Court of First Instance” save and except such order is premature. 

20.Nonetheless, the wife’s stance has no bearing. Although the wife might have indicated (at some point in the future)  that the proceedings is appropriate to be transferred up, this Court will not grant such order by consent handily. An order of transfer up should be granted in light of the legal principles stated above.

Outcome

21.With the foregoing reasons, I am not persuaded in light of all circumstance of this case that this cause, wholly or in part, on issue of law or fact, is more desirable to be determined in the Court of First Instance. The husband has failed to substantiate the precise complex legal or factual issues to be heard. There is nothing relating to public interest. I can see at this stage this Court is to make decision on voluminous matrimonial assets both within and outside jurisdiction, be it complicated, the task is assumed by specialist judges in the Family Court regularly. What is left behind is the mega amount of matrimonial pot which the husband has some concern. It is trite that solely on the amount of matrimonial asset could not justify a transfer up of proceedings. I see no prejudice will be caused to either parties that the ancillary relief be determined in this Court, and as a result, the husband’s summons shall be dismissed.

Costs

22.The outcome of this application warrants costs to follow event, I make an order nisi that the husband to pay the wife’s costs of his summons filed on 9 December 2022 forthwith, to be taxed if not agreed. I also grant the usual order that this costs order nisi shall be made absolute in absence of application to vary by way of inter parte summons within 14 days from the date of this decision.

Orders

23.With reasons of the foregoing, I make the following orders:

(i)  The husband’s (petitioner’s)  summons filed on 9 December 2022 be dismissed.

(ii)  A costs order nisi that the husband (the petitioner)  do pay the wife’s (the respondent’s)  costs of this summons forthwith, to be taxed if not agreed.  This costs order nisi shall be made absolute in absence of application to vary by way of inter parte summons within 14 days from the date of this decision.

Mr Bernard Man SC and Mr Cristian Tsang instructed by Messrs Haldanes for the petitioner  

Ms Lily Yu instructed by Messrs Withers for the respondent