Chj v. Lsr

FCMC 12018 / 2022

[2024] HKFC 224

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 12018 OF 2022

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J U D G M E N T

( JOINDER )

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The Applications

1.On 11 July 2023 the Petitioner (Wife) applied by Summons (“s. 17 Summons”) to set aside the transfer by the Respondent (Husband) of all his shares in a company SS (China) Limited (“SS Ltd”) to his sister (“LSH”) and for LSH to be joined in these proceedings as 2^nd Respondent. The transfer of the shares had taken place on 3 November 2021. The s. 17 Summons additionally sought an order restraining LSH from disposing of or dealing with the shares or the property.

2.SS Ltd is the registered owner of a residential apartment in Shenzhen (“Shenzhen Property”). Rental income from the Shenzhen Property is paid into H’s bank account with Shanghai Pudong Development Bank Account (“Pudong Account”).

3.It is W’s case that the transfer of the shares in SS Ltd, which she says took place 4 – 5 months before H first told her in late March 2022 that he wanted a divorce, was an effort by H to put matrimonial assets beyond the reach of any claim by her to them. H denies this, and says that although the shares in SS Ltd were held by him for many years, at all times they were held on trust for his father (who died in 2019) and his mother.

4.The Wife only learned of the transfer of the SS Ltd shares from H’s Answers to Questionnaire filed 17 April 2023. Para 5.1 of H’s Form E, dated 3 February 2023, which required him to state whether there had been any significant change in his assets in the preceding 36 months, had been left blank. On 19 May 2023, W’s solicitors (CRS) wrote to H’s solicitors (Haldanes) invited him to agree that his sister should be joined as a party. On 2 June 2023 Haldanes responded, denying that the SS Ltd shares and the Shenzhen Property had ever been beneficially owned by H.

5.On 2 August 2023 the s. 17 Summons, W’s supporting affirmation (her 1^st) and the Form F were served on LSH.

6.In September 2023, W learned from H that LSH and the mother LKOR had come to Hong Kong to seek legal advice on W’s application. On 21 September 2023 CRS wrote to LSH at her address in Hong Kong, asking her to consent to being joined in the proceedings and that she provide an undertaking not to dispose of the shares in SS Ltd or sell the Shenzhen property. There was no immediate response to this letter.

7.On 14 November 2023 Chaine Chow & Barbara Hung (CCBH) wrote to Haldanes on behalf of LKOR and LSH, giving notice that LKOR intended to be joined in the proceedings as intervener to “safeguard her interests” in various assets set out in the letter.

8.The next day, 15 November 2023, (one day before the First Appointment Hearing), CCBH wrote to both CRS and Haldanes, confirming that they had instructions to act for LKOR and LSH, and giving notice of LKOR’s claim to the beneficial ownership of

(i)  The shareholding in SS Ltd and the income generated from rental of the Shenzhen property

(ii)  Rental income generated by another Shenzhen property held by WG (HK) Ltd and received by H

(iii)  The two Shenzhen properties

(iv)  An investment account with Credit Suisse (“CS Account”)

(v)  The sum of HK$15.8M which had been transferred from LKOR to H on 24 December 2014 together with interest and investment income thereon.

(“Disputed Assets”)

9.CCBH’s letter of 15 November 2024 explained LKOR’s claimed interest in the listed assets. This included the following statements about the SS Ltd shares:

(1)  On 9 September 2013 the shares were transferred by the father and LKOR to H for him to hold them for the benefit of his father and LKOR and upon the father’s passing, for LKOR;

(2)  On 3 November 2021 the shares were transferred to the sister, LSH, for the sister to “continue to hold the same trust” for LKOR;

(3)  On 9 November 2023, LSH transferred the shares back to LKOR, the true beneficial owner of SS Ltd.

10.Copies of the Instruments of Transfer of the shares in SS Ltd for the 9 September 2013 transfers and the 9 November 2023 transfer were attached to CCBH’s letter, which concluded by stating that LKOR agreed to be joined as Intervener in the proceedings and suggesting that W withdraw her s. 17 Summons “as the shares are no longer held in the name of [LSH], and the real dispute lies in the true beneficial ownership of the shares in [SS Ltd].”

11.W viewed the transfer of the SS Ltd shares by LSH to LKOR, which was made after LSH had notice of W’s claim by service of the s. 17 Summons, as an attempt to defeat the s. 17 Summons. On 7 December 2023, pursuant to leave, the s. 17 Summons was amended to set aside the 9 November 2023 transfer of the SS Ltd shares by LSH to LKOR in addition to the earlier 3 November 2021 transfer by H to LSH:

“2. For the purposes of giving effect to paragraph 1 above:-

(1) the subsequent disposition made by the intended 2^nd Intervener by way of transfer of all of the Shares (and hence the Property) to the Intervener, LKOR, on 9 November 2023 be set aside; and

(2) the Respondent, the Intervener and/or the intended 2^nd Intervener are directed to take all other necessary steps and execute all necessary documents to facilitate procure and effect the return of the Shares (and the Property) to the Respondent so that the same is brought back into parties’ matrimonial assets.”

3. The intended 2^nd Intervener LSH be joined as a party to the proceedings.”

12.The issue for determination is whether the Court should grant the Order sought by paragraph 3 of the s. 17 Summons, joining LSH as an additional party to these proceedings. On 18 November 2024 the Court heard full argument and reserved its decision.

Evidence

13.In addition to W’s supporting Affirmation dated 11 July 2023, I have considered the unsigned Affirmation of the sister LSH (exhibited to an affirmation of her solicitor dated 25 March 2024) and W’s 2^nd Affirmation in reply, together with the rest of the papers in the Hearing Bundles.

Background

14.W and H are from South Korea. They dated for about 2 years before marrying in October 2004. They have one child, J, a son aged 16, who is at boarding school in Canada. After the marriage they moved to Hong Kong so that H could assist in his late father’s businesses in Hong Kong and Mainland China. In 2006, W obtained work in private banking with an investment bank. J was born in April 2008. W later returned to work and is now with another investment bank, a position she started in September 2024. In 2011, H established his own business trading in household products, LI Ltd and this continues to operate as a going concern.

15.The Petition was filed 8 December 2022, with H moving out of the former matrimonial home in October 2023.

16.The Order dated 16 November 2023 granting leave to LKOR to intervene gave consequential directions for the filing of formal pleadings. These have been filed and they set out the claim of the Intervener to the Disputed Assets, H’s support of that claim and W’s opposition to it.

17.In summary, it is the Intervener’s case as set out in her Amended Points of Claim filed 5 June 2024 that the father arranged for the Disputed Assets to be transferred to H and to the sister for them to manage and invest, with the clear intention that they would be held by H and the sister on trust for the father and the Intervener, and that after the father’s death, the Disputed Assets would belong to the Intervener absolutely (§16) (“Trust Arrangement”).

18.W’s Amended Points of Defence and Counterclaim assert that the transfers to H were of the full legal and beneficial title to them: that they were gifts by the father, and that no trust relationship was intended nor established (§§18 – 20).

Section 17, MPPO

19.Section 17 of the Matrimonial Proceedings and Property Ordinance (“MPPO”) empowers the Court to set aside a disposition or transfer of property made with the intention of defeating a claim for financial provision and to “give such consequential directions as it thinks fit for giving effect to the order” including directions requiring the making of any payment or the disposal of any property: s. 17(1)(b). Where the application is filed with respect to a disposition made less than 3 years before the date of the application and the Court is satisfied that the disposition or other dealing would have the consequence of defeating the applicant’s claim for financial provision, then it is presumed, unless then contrary is shown, that the other party disposed of the property with the intention of defeating the claim: s. 17(3).

20.It is common on applications of this nature for the recipient of the transfer to be joined in the proceedings including so that the property in question may be preserved either by interim order or undertaking, and so that all issues relating to the property may be properly addressed and determined.

21.In this case the question arises as to whether it is appropriate for LSH to be joined, or whether, as submitted by the Intervener and LSH, there is “no discernable purpose” in her being joined given that she has now disposed of the shares.

22.In opposing the joinder application, Ms. Bonnie Cheng, for the Intervener and LSH,[1] argued that, having regard to the re-transfer of shares from LSH to the Intervener, the s. 17 Summons was doomed to fail. She submitted that, from the plain language of the Section and as confirmed in several authorities, the Court has no power under s. 17 to set aside a subsequent transfer/disposition.

23.For W, Mr. Eugene Yim argued that s. 17 should not be read as narrowly as this, and he cited authorities in support of the contention that s. 17 enables a Court to make orders which would have the effect of reversing a disposal of property by a person or entity which is not a party to divorce proceedings.

24.First, he referred the Court to Kemmis v Kemmis [1988] 2 FLR 223. In that case, the English Court of Appeal considered whether the mortgaging of a house property held in by a company under the husband’s control constituted a reviewable disposition under s. 37 of the Matrimonial Causes Act 1973, being the UK equivalent provision to s. 17 MPPO. In the course of his judgment, Nourse LJ considered whether, under such circumstances, s. 37(2)(b) applied so as to enable the transaction to be avoided (at p246):

“In the present case the property was vested in the company as such a nominee or trustee for the husband. That gave him an absolute and uncontrolled power to procure the company to dispose of the property for such purpose and in such manner as he might direct. He did procure the company to create the mortgage. In these circumstances, and while it is true that the company is not the other party to the proceedings, I baulk at construing s. 37(2)(b) so as to allow and encourage its avoidance by the simple device of vesting assets in a mere nominee or bare trustee. That was the approach of [the first instance Judge] Wood J and I entirely agree with him. I think that the most satisfactory basis for a decision of this point may be to hold that s. 37(2)(b) looks to the effective disposition, which in the circumstances of this and similar cases, is made when the other party to the proceedings at one and the same time procures the nominee or trustee to make the actual disposition; and see s. 37(6), which provides that the expression ‘disposition’ includes any assurance of property of any description, whether made by an instrument or otherwise. Alternatively, it could be said that ‘the other party to the proceedings’ must include a mere nominee or bare trustee for that party.” (Emphasis in the original)

25.Mr. Yim then referred to Ansari v Ansari [2009] 1 FLR 1121. In that case, the husband, without the knowledge of the wife, sold the matrimonial home and the buyers subsequently arranged a mortgage on the property. The question was whether the mortgagee bank’s charge over the property was a reviewable disposition.

26.The English Court of Appeal held that it was not, but in the course of his judgment (with which the other members of the Court of Appeal agreed), Longmore LJ considered whether there could ever be circumstances in which a subsequent transaction by a person with knowledge of the requisition intention of the party i.e. to defeat the other party’s claim, could be caught by s. 37 of the UK Act, and in particular whether such power stems from s. 37(3) of the Act, which requires the Court setting aside a transaction to give “such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payment or the disposal of any property)”:

“[19] The words of subs (3) are undoubtedly very wide. Eastman J decided in Green v Green (Barclays Bank, third party) that they were not wide enough to set aside a disposition other than that made by a party to the proceedings for financial relief and His Honour Judge Raynor correctly held that he was bound by that decision. We are not bound and can consider the matter afresh.

[20] The broad question is whether the court can set aside a disposition which is made subsequently to the reviewable disposition. One can envisage a case in which a husband sells to X who knows the husband intends to defeat the wife’s claim and X then sells to Y who likewise knows that such is the husband’s intention. If all parties conspire to defeat the wife’s claim, the wife should surely be able to set aside both dispositions. The second disposition is not a reviewable disposition for the purpose of subs (2) because it was not made by the husband. It could only be set aside by invoking subs (3) but, for my part, I can see no reason not to invoke the subsection in those circumstances. If it cannot be invoked, there would be an easy way to defeat a wife’s legitimate claim.

[21] So I would not say that the subsection can never be used to set aside a subsequent disposition. Eastham J merely accepted the bank’s submission in Green v Green (Barclays Bank, third party) that the words ‘consequential directions’ are largely or entirely restricted to directions about repayment of moneys. But I do not think the subsection is as narrow as that.”

27.These are obiter remarks, as ultimately the Court of Appeal in that case dismissed the wife’s appeal against the first instance refusal to order the bank charge to be set aside. Nonetheless, W puts forward this passage in Ansari as authority for the proposition that the Court may, as part of the “consequential directions”, direct that a subsequent transfer should also be set aside for the purpose of “giving effect to” the order.

28.In K v K (FCMC 5641/2001, 6 August 2003), HH Judge Bruno Chan heard and granted an application to set aside a transfer by the wife of her interest in a company to her brother, despite the fact that the evidence revealed that her brother had transferred his interest to 2 other persons. The husband issued a second s. 17 application targeting the subsequent transfer. Having set aside the transaction Chan J directed the parties to return to Court for consequential directions.

29.Mr. Yim also referred the Court to the decision of Mostyn J in AC v DC and others (Financial Remedy: Effect of s. 37 Avoidance Order) [2013] 2 FLR 1483, in which the learned Judge determined, having considered the plain wording of s. 37 and authorities including Kemmis v Kemmis, that such orders operated retrospectively to void the transaction ab initio, having the consequence of rendering subsequent transfers/dispositions liable to be set aside: at [19] – [22]. This would not prejudice purchasers who had in good faith acquired the property:

“[23]. The fact that an order under s 37 operates to avoid a transaction ab initio does not mean that innocent third parties who have subsequently acquired the property in question in good faith will be prejudiced. Put another way, avoidance ab initio can co-exist with the preservation of subsequently completed transactions entered into in good faith. …”

30.Ms. Cheng referred the Court to Rogers VP’s judgment in HKCB Finance Ltd v Yuen Yi Wan Sandy (CACV 355/2005, 1 August 2006). The Plaintiff in that case was a mortgagee bank of a property which had been sold by a husband (not a party to the proceedings) without notice to his wife (the 2^nd Defendant). The property was subsequently sold on by the purchaser to the 1^st Defendant, who mortgaged the property to the Plaintiff. The 2^nd Defendant/wife applied under s. 17 to set aside the first sale, and this was granted by the Family Court (Judge Gill). No order was made by Judge Gill that the mortgage should also be discharged.

31.The issue on case was whether the bank’s interest under the mortgage should rank after the 2^nd Defendant wife’s half interest in the property. The Court of Appeal decided that it should.

32.In the course of his judgment, Rogers VP, having recited the terms of section 17, noted as follows:

“7. It is significant to note that that section gives power to the court to set aside a transaction made by “the other party” but subject to the limitation in subsection (2). The “other party” at the commencement of subsection (1) as being the person against whom the relief is sought under the provisions of the Ordinance, that is somebody against whom an order for maintenance is sought. Hence in those circumstances the order made by HH Judge Gill did not, and could not have, set aside the mortgage granted by the first defendant to the plaintiff.”

33.Ms. Cheng then referred to C v T (Section 17 Application) [2010] HKFLR 38. The case involved a divorcing couple who owned a substantial number of residential properties, some of which had been sold in the period after they separated and following divorce proceedings. Both parties filed s. 17 Summonses seeking to set aside the transfers of properties made by the other party. Three of the properties sold by the wife had been sold on to other persons. The husband’s Summons also sought to set aside these subsequent sales.

34.The Court refused the husband’s application to set aside the dispositions of the flats which had been further transferred, on the basis that such subsequent dispositions could not as a matter of law be set aside. In the dealing with the wife’s submission that the husband could not seek the reversal of any subsequent transfer, HH Judge Melloy referred to HKCB Finance Ltd and Ansari v Ansari and said this:

“43. In support of this proposition he [the wife’s counsel] refers to two cases namely McGladdery v McGladdery [1999] 2 FLR 1102 and HKCB Finance Ltd v Yuen Yi Wan Sandy and Wong Chiu Mui CACV 355/2005. I was also referred to the case of Ansari v Ansari [2008] EWCA Civ 1456, which is a new Court of Appeal decision out of England. Although this is concerned with a slightly different point, it nevertheless reconfirms the basic proposition that a disposition must be by a party to the ancillary relief proceedings.

44. When I put this to Ms Irving [counsel for the husband] in the last hearing she conceded that this was probably right. Consequently I intend to proceed on the basis that the husband’s application to set aside the dispositions referred to in paragraphs 1, 2 and 4 of his Notice of Application cannot as a matter of law succeed because in each case the properties have been transferred on by the disponee.”

35.I accept that HKCB Finance Ltd, being a decision of the Court of Appeal, is binding on this Court. However, in my view the learned Vice President’s statement at paragraph 7 of his judgment is entirely consistent with the English Court of Appeal’s decision in Ansari v Ansari. Rogers VP’s view was that the mortgage granted by the 1^st Defendant disponee of the property to the Plaintiff bank could not constitute a reviewable transaction. Similarly, in Ansari v Ansari the Court of Appeal held that the mortgage arranged by the purchasers of the property sold to them by the wife was not a reviewable transaction.

36.Longmore LJ’s remarks (again, for emphasis, with which the other two Court of Appeal judges, both of whom subsequently served on the UK Supreme Court, agreed), albeit obiter, commence his remark that the powers in s. 37(3), for the Court to “give such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payments or the disposal of any property)” are “undoubtedly very wide”. The wording in s. 17(1)(b) MPPO is the same, albeit that the wording in s. 37(3) is preceded by the word “shall” whereas the Hong Kong equivalent is expressed in discretionary terms: “may”.

37.LSH’s affirmation stressed that the transfer of the SS Ltd shares on 9 November 2023 was made at the request of the Intervener and had the effect of returning the shares (and therefore the Shenzhen Property) to their rightful owner, the Intervener, who has and always has had beneficial ownership of them.

38.For H, Cristian Tsang, submitted that, in accordance with Yuen Tam Wan v Ho Chan Yuet Lan and Another [1993] HKEC 358, the starting point is if could not be established that H was the beneficial owner of the SS Ltd shares and the Shenzhen Property, then the s. 17 claim would fail.

39.The claim that the beneficial interest did not pass with the transfer of the shares in September 2013 is disputed by W: her position that the SS Ltd shares and the Shenzhen Property were legally and beneficially owned by H since 9 September 2013, more than 8 years before the 3 November 2021 transfer, and covering approximately half of the marriage, was clearly set out in her Affirmation in support of the s. 17 Summons. H, LSH, and the Intervener all had notice of W’s claim that the SS Ltd shares and the Shenzhen Property were matrimonial assets. Further, it seems clear from LSH’s evidence that the further transfer on 9 November 2023 was prompted by the s. 17 Summons including the prospect that LSH might be drawn into the proceedings if she kept hold of the shares. At §24 of her affirmation, LSH says that “this transfer of shares [i.e. the transfer on 9 November 2023] was made under my Mother’s instructions and with the intention of simplifying the dispute among [H], the Petitioner and my Mother without having to unnecessarily involve me in as well.”

40.Disposals of property by one party to a divorce seeking to defeat another party’s claim for ancillary relief undermine the Court’s duty to achieve a fair distribution of assets, the implicit aim of the s. 7, MPPO exercise: LKW v DD (2010) 13 HKCFAR 537. Section 17 would be significantly weakened in its remedial power to prevent or reverse such transactions if the transferee could simply dispose of the property to another person after having received notice of a claim by the party seeking to set a transaction aside.

41.Naturally, this is not a Judgment which concerns the merits of the claim of beneficial ownership of the Disputed Assets. That will only be decided after a Trial.

42.Further, my remarks in this Judgment are not to be taken as deciding, definitively, the question of whether s. 17 empowers the Court, in the circumstances of this case, to reverse the transfer of shares from LSH to the Intervener on 9 November 2023 as part of its consequential directions should it decide in favour of W and that the earlier transfer on 3 November 2021 had the effect of and was made with the intention of defeating W’s claim for ancillary relief. That again is a matter for Trial.

43.For the purposes of the application for joinder it is sufficient for me to conclude that it is arguable that in the particular circumstances of this case, s. 17 operates in the way submitted by Mr. Yim on W’s behalf, i.e. that as part of the consequential directions the Court may make for the giving effect of an order that the first transaction be set aside, the subsequent transfer made on 9 November 2023 made with full knowledge of W’s claim, can also be set aside.

Joinder

44.Mr. Yim argued that in s. 17 cases, it is a routine direction/order that the disponee of a transaction is joined in the proceedings. That may be so, but it is still necessary for the Court to consider whether, in the circumstances of this case, it is appropriate to order that LSH be joined, having regard to the applicable principles and the underlying objectives of O. 1A, r.1.

45.An application for a person to be joined as a party to existing proceedings is made under DCR Order 15 rule 6, which relevantly provides:

“(2) Subject to 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-

(a) …

(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.”

46.Ms. Cheng helpfully summarized the principles applicable to joinder of parties on avoidance of disposition applications, by reference to three authorities KMCA v ABC (On Joinder & Service) [2019] HKFLR 548 (B Chu J), Elysium Ltd v Sum Ka Kuen Dominic [2023] HKCFI 1690 (DHCJ Norman Nip SC); Y, JYW v Y, SC [2019] HKFC 322 (HH Melloy J).

(1)  For Order 15 rule 6(2)(b)(i), the supporting evidence should identify clearly (1) the matter in dispute between a party and the proposed new party and (2) the connection to the main matter in dispute between the parties;

(2)  For Order 15 rule 6(2)(b)(ii), the supporting evidence should identify clearly (1) the existing question or issue between the proposed new party and any party in the matter and (2) the relief or remedy claimed in the new matter out of which the existing question or issue is said to be related to or connected with;

(3)  On whether a new party should be joined, the test is whether there is a bona fide claim and a proper question to be tried between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between plaintiff and defendant in the proceedings;

(4)  The Court retains a discretionary power to refuse the Order or to impose terms;

(5)  The Court could review the position of joinder at any stage of the proceedings

(6)  Prima facie, the plaintiff is entitled to choose the person against whom to proceed, but the plaintiff’s choice is not conclusive and is subject to the powers of the Court. The Court’s objective is to ensure that (i) all issues in dispute be effectively adjudicated upon by the Court and (ii) all relevant parties are before the Court. The Court can on such terms as it thinks just, give leave for a person to be joined as a defendant and allow him to participate in the proceedings to the extent permitted by the Court.

(7)  It is not necessary to join a third party unless there is a request for a particular order to be made against him/her. Further, the Court will not exercise its discretion in favour of joinder if it is plan and obvious that the joinder of the proposed party would be pointless and futile.

47.As noted above, paragraph 2 of the Amended s. 17 Summons seeks relief against both the Intervener and the intended 2^nd Intervener, LSH. Mr. Yim submitted that refusing the application for LSH to be joined would effectively decide the s. 17 application summarily. Ms. Cheng argued that the burden of demonstrating beneficial ownership of the Disputed Assets will be on the Intervener, but Mr. Yim submitted that this was no answer to the fact that a non-joinder would effectively deprive W of the ability to rely on the statutory presumption under s. 17(3), MPPO.

48.Ms. Cheng submitted that the Court should refuse the application to join LSH, as it would serve no useful purpose, given that the beneficial interest in the SS Ltd shareholding is already in issue, has already been pleaded, and all necessary parties are already before the Court. Ms. Cheng further submitted that joining the sister, LSH, is neither necessary and nor is it proportionate to the issues involved, and would serve only add to delay and to increase costs, draining the resources of the parties further. She reassured the Court that LSH would be prepared to serve as the Intervener’s witness given that she was privy to the Trust Arrangement and other matters concerning the issue of beneficial ownership of the Disputed Assets.

49.LSH lives in South Korea, as does the Intervener. She has an apartment in Hong Kong, which she occupies when she visits.

50.Ms. Cheng urged the Court to bear in mind the additional costs which would inevitably be incurred as a consequence of joining another party to the proceedings. I have this firmly in mind, but in my view this element should not be exaggerated. LSH’s case is fully aligned with the Intervener’s. She makes no claim to the SS Ltd shares or the Shenzhen Property, nor as far as I can tell from the papers, to any of the other Disputed Assets.

51.The Intervener’s case on the Disputed Assets has already been fully pleaded, including the explanation advanced by the Intervener in her Points of Claim for each of the transfers of the SS Ltd shares, in 2013, 2021 and 2023 and W’s Points of Defence on this issue. The Intervener has filed Points of Reply. The pleadings have closed. It seems likely the consequential amendments to the pleadings will be formal rather than substantial. It is also difficult to see how the making of an order that LSH be joined will cause any delay in the matter proceeding to an FDR/Trial.

52.LSH did not attend the hearing on 18 November 2024, and spends most of her time in South Korea. I would anticipate that on future hearings, other than the Trial, the Court might well consider favourably a request that she be excused from attendance.

53.In respect of the Trial, Ms. Cheng has already said that LSH would be called as a witness for the Intervener. There will be no additional costs over and above what would have been incurred in any event in preparation of written evidence she will give for the Trial, and her 1^st Affirmation in opposition to the s. 17 Summons already sets out in detail what her evidence will be.

54.Whether or not there is a separate Trial of the issue of beneficial ownership of the Disputed Assets and whether this should be fixed for dates before or after the FDR is a matter for consideration at the Case Management Hearing, bearing firmly in mind the remarks of the Court of Appeal in LLC v LMWA [2019] 2 HKLRD 529 and crafting directions designed to achieve the most efficient and cost-effective disposal of the case. The parties might well consider that this as an appropriate case for it to proceed to an FDR without first having a preliminary issue Trial, and for the involvement at the FDR of a mediator: see LLC v LMWA, at [68]; also WW v LLN (No. 2) [2020] 2 HKLRD 487 at [66]; Chan Man Ki v Yau Chun For [2021] HKCA 393, at [8].

Conclusion and Order

55.I am satisfied that it is appropriate for LSH to be joined in these proceedings. Given that she is not making any claim to the Disputed Assets including the SS Ltd shares, I consider that it is more appropriate that she be joined as the “2^nd Respondent”, rather than “2^nd Intervener”. The Respondent will, consequently, become the “1^st Respondent”.

56.I direct the parties to write to the Court with agreed directions for the filing of amended pleadings, within 14 days, and to include any other directions sought. The directions will be given on paper. I grant liberty to apply.

57.I further make order that the costs of the contested hearing on 18 November 2024 be costs in the cause of the Amended s. 17 Summons, including counsel certificate (if any).

58.W’s solicitors are to draw up the Order for approval in the usual way.

Mr. Eugene Yim instructed by CRS for the Petitioner

Mr. Cristian Tsang instructed by Haldanes for the Respondent

Ms. Bonnie Cheng and Mr. Alexander Burg instructed by Chaine Chow and Barbara Hung for the Intervener and intended 2^nd Intervener