Chiu Yee Mui v. Fung Yuen Kwan, Veronica

HCA 148/2024

[2025] HKCFI 3207

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 148 OF 2024

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BETWEEN

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D E C I S I O N

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A. INTRODUCTION

1.By summons dated 21 May 2024, the Defendant sought (i) to strike certain pleas and prayers in the statement of claim[1]; and/or (ii) an order that the present proceedings be stayed in favour of the ancillary relief proceedings in FCMC Proceedings.[2]

2.On 24 October 2024, a master (the “Master”), on his own volition, ordered that upon the Defendant’s undertaking to intervene in FCMC 10614/2023 to raise the issue of whether the Plaintiff is the lawful wife of Sam Pa (徐京華) (the “Validity of Marriage Issue”), the present proceedings be stayed pending the resolution of the Validity of Marriage Issue in the FCMC Proceedings (including any appeal therefrom) (the “Stay Order”).

3.On 31 October 2024, the Plaintiff took out a notice of appeal.

4.On 6 December 2024, the Plaintiff further took out a summons seeking to lift the Master’s Stay Order upon amending her statement of claim[3].

5.This is the substantive hearing in respect of the Plaintiff’s appeal and summons dated 6 December 2024.

B. MATERIAL BACKGROUND

6.Sam Pa (徐京華)[4] is a successful entrepreneur who has a colourful private life.

7.The Plaintiff claims that she was lawfully married to Sam Pa in Las Vegas back in 1990.

8.The Defendant claims that she was married to Sam Pa on 7 December 1998 in Cambodia.

9.According to the Plaintiff, Sam Pa purportedly married 4 women in various places all over the world during the period from 1998 to 2011, and the Defendant was one of them.

10.It is not in dispute that in October 2015, Sam Pa suddenly disappeared in Beijing. Since then, his whereabouts have been a mystery.

11.On 15 September 2023, the Plaintiff commenced FCMC 10614/2023. There, she made claims for ancillary relief against Sam Pa.

12.On 24 January 2024, the Plaintiff commenced the present action against the Defendant.

13.The Plaintiff’s claims against the Defendant in the present action concern the interests in a company incorporated in the British Virgin Islands (hereinafter “BVI”) named “Peterson Enterprises Ltd” (the “Company”).

14.The Plaintiff’s case can be summarized as follows:-

(1) The Company is the owner of a luxurious property in Shanghai (the “Shanghai Property”).

(2) Since 2007, the Shanghai Property has been occupied by Madame Li Liya (who is one of Sam Pa’s purported wives or mistresses) together with her children born to Sam Pa.

(3) However, Sam Pa was (i) the sole legal and beneficial owner of the sole share (hereinafter the “Share”)[5] in the Company; and (ii) the sole director of the Company.

(4) It transpired that from 31 May 2017 to mid-June 2017, the Defendant submitted a series of forged documents (the “Disputed Documents”)[6] to the Company’s registered agent. By virtue of these forged documents, the Share in the Company was purportedly transferred from Sam Pa to the Defendant, and the Defendant was purportedly appointed as the Company’s sole director.

(5) In his oral submissions, Mr Anson Wong SC (for the Plaintiff) submitted that the alleged forgery was evidenced by overwhelming documentary evidence. For instance, a contemporaneous email dated 5 November 2017[7] showed that at the time, the Defendant did not know whom the Company’s shareholder(s) and director(s) was/were. Whilst Mr Wong accepted that this was not the occasion for determining substantive merits, he stressed that the Defendant had no answer to the Plaintiff’s complaint.

(6) In the prayers of the statement of claim, the Plaintiff seeks the following reliefs against the Defendant:-

(a) declarations that the Disputed Documents were forged;

(b) declarations that Sam Pa is still the sole shareholder and sole director of the Company;

(c) an injunction restraining the Defendant from (i) disposing of or dealing with the Share in the Company; (ii) acting as a director of the Company; and (iii) disposing of or dealing with the assets of the Company; and

(d) an account for the assets and profits held by the Defendant as a constructive trustee and equitable compensation.

15.For completeness, it should be mentioned that the Company was dissolved and struck off from the BVI company register on 4 July 2023, and it appears that this was due to failure to pay annual license fee. However, pursuant to section 218(1) of the BVI Business Companies Act, a person “who can establish an interest in having a company restored to the Register” may make an application to the BVI court for restoration.

16.On 21 May 2024, the Defendant took out a summons seeking:-

(1) to strike out the pleas and prayers in the statement of claim that are unrelated to the ownership of the Share in the Company; and

(2) an order that the present proceedings be stayed pending the final determination of the ownership of the Share in the Company as a preliminary issue in the ancillary relief proceedings in FCMC 10614/2023 (including any appeals therefrom).

17.The Defendant’s summons dated 21 May 2024 came before the Master on 24 October 2024. As shown by the transcript of the hearing, the Master took the view that in light of the way in which the Plaintiff’s case was framed, her locus standi in seeking the declaratory reliefs in question was based on her alleged status as Sam Pa’s lawful wife. Thus, the question of whether the Plaintiff is Sam Pa’s lawful wife (ie the Validity of Marriage Issue) should be determined in FCMC 10614/2023 before the civil court proceeds to resolve the parties’ substantive dispute.

18.In these premises, the Master made the Stay Order.

19.Whilst the Plaintiff took out a notice of appeal on 31 October 2024, she also took out a summons on 6 December 2024 seeking to lift the Master’s Stay Order upon amending her statement of claim[8].

20.The purpose of the proposed amendment is to make clear that the bases of the Claimant’s claims for ancillary relief against Sam Pa in FCMC 10614/2023 are (i) the making of a decree of divorce; or alternatively (ii) the making of a decree of nullity of the marriage.

21.Put simply, the Plaintiff contends that even if she were not Sam Pa’s lawful wife (which is denied), she is still entitled to seek ancillary relief against Sam Pa on the ground of a decree of nullity. As such, irrespective of whether the marriage is lawful, the Plaintiff does have locus standi to pursue the declaratory reliefs sought in these proceedings, and these proceedings should not be stayed pending the resolution of the Validity of Marriage Issue.

C. THE SUBSTANTIVE APPEAL

22.It is trite that an appeal from a master’s decision to a judge in chambers is a de novo hearing, and the judge will deal with the matter in question as if it came before him or her for the first time: see Hong Kong Civil Procedure (2025) at para 58/1/2.

C1. Staying the present Action in favour of the Ancillary Relief Proceedings in FCMC 10614/2023

23.In light of Sam Pa’s disappearance, the Plaintiff commenced the present action in order to protect and/or preserve her interests relating to the claims for ancillary relief in FCMC 10614/2023. In her statement of claim and draft amended statement of claim[9], the Plaintiff extensively pleaded her interests under the ancillary relief proceedings in FCMC 10614/2023.

24.With no disrespect to the pleaders (who are not Mr Anson Wong SC and Mr Martin Kok), I am doubtful whether the Plaintiff’s claims in the present action have been properly constituted. It appears that the pleaders assumed that the declarations sought would necessarily bind the whole world, including Sam Pa. This assumption is incorrect.

25.Si Tou Choi Kam v Wealth Credit Ltd [2018] 4 HKC 247 is a pertinent decision. In that case, a husband and a wife were registered owners of a property. The husband was indebted to a judgment creditor, who obtained charging orders against the property. The wife commenced an action by originating summons and sought a declaration that the husband’s interests in the property were held on trust for her sole benefit. Although the judgment creditor was served a notice, he did not participate in the proceedings. Upon obtaining a declaration that she was the sole beneficial owner of the property, the wife sought to discharge the charging orders (see paras 2 to 4). The question before the court was whether the declaration in question was binding on the judgment creditor.

26.Whilst Cheung CJHC (as Cheung CJ then was) held that the judgment creditor was, by reason of his unjustifiable inaction, estopped from disputing the wife’s beneficial interests in the property (see paras 27 to 39), His Lordship held that the declaration granted by the court under the originating summons proceedings was a judgment in personam, rather than a judgment in rem (see para 19). As such, the declaration could not ipso facto bind the judgment creditor. His Lordship summarized the relevant legal principles and addressed the argument as follows:-

“21. … As has been explained by Lord Mance in Pattni v Ali [2007] 2 AC 85, paras 20 and 21, a decision in rem may be described as one by a tribunal with jurisdiction to determine not merely on the rights of the parties, but also on the disposition of the thing. The importance of this distinction is that a judgment in personam binds only the parties to the proceedings, as distinguished from one in rem which fixes the status of the matter in litigation once for all, and concludes all persons. Spencer Bower & Handley, Res Judicata(4th Ed) puts the distinction this way (pp 58 and 157):

'4.20 Whether a foreign judgment is in rem or in personam is a question of fact. A judgment in rem deals with the status of persons or things, or effects a disposition of movable or immovable property. Judgments in rem derive their validity from the situation of the person or property within the jurisdiction. Judgments dealing with status, to be effective, must bind the so called world because status must be generally accepted. If the action is in rem service on or notice to the defendant must still be proved.'

…

10.01 A decision in rem conclusively determines the status of a person or thing; that is its jural relation to persons generally, not just parties and privies. It is sometimes said to be binding on the world, unlike decisions in personam which determine the jural relation of persons to each other.'

22. In the present case, the declaration determined the trusteeship of the husband of the property in favour of the plaintiff. It did not deal with any disposition of the trust property. It could not possibly prevent, as a hypothetical example, a close relative of the couple, who had been unaware of the High Court proceedings, from emerging subsequently and making a claim to the property as being the real person who had contributed to the purchase of the property: see the example given by Lord Mance in Pattni (para 29) of a third party making a claim subsequent to the relevant judgment there. As explained by his Lordship:

' ... in order for a judgment to have in rem effect. .. , the determination must be a determination regarding the status or disposition of property which is to be valid as against the whole world. The fact that a judicial determination determines or relates to the existence of property rights between parties does not in itself mean that it is in rem.' (para 23)”

(emphasis added)

27.For the reasons explained in Si Tou Choi Kam, even though the Plaintiff’s case is established at the end of the day, the declarations granted by the court in these proceedings could not constitute a judgment in rem. It is in personam in nature and thus incapable of binding the whole world. Since the Plaintiff has not joined Sam Pa as a party to the present proceedings, it does not appear that the declarations would be binding on him. Accordingly, it is uncertain whether the Plaintiff could rely on the court’s declarations and findings in these proceedings for the purposes of claiming ancillary relief against Sam Pa in FCMC 10614/2023.

28.I accept Mr Wong’s observations that it would be difficult to effect service on Sam Pa as he has disappeared. However, this is not a good reason to leave out Sam Pa as a party to the present proceedings. I also accept that the Plaintiff may seek leave to amend the writ of summons. However, there has been no application before the court. This is notwithstanding the fact that these proceedings were commenced back in January 2024.

29.In any event, putting aside the uncertainty discussed in paragraphs 24 to 27 above, for the following reasons, I am of the view that the appropriate avenue for resolving the dispute in respect of the ownership of the Share in the Company is the ancillary relief proceedings under FCMC 10614/2023.

30.First of all, whilst the Plaintiff and Sam Pa are parties to the ancillary relief proceedings under FCMC 10614/2023, the Defendant is willing and able to participate in the ancillary relief proceedings for the purposes of asserting lawful ownership over the Share in the Company. In the circumstances, there is no question that the Family Court’s findings will be binding on all necessary and relevant parties, ie the Defendant, Sam Pa and the Plaintiff.

31.In this connection, it is not seriously in dispute that where a spouse (ie the Plaintiff) in ancillary relief proceedings claims that a property held in the name of a third party (ie the Defendant) belongs to the other spouse (ie Sam Pa), the Family Court has jurisdiction to resolve the dispute under the TL v ML procedure: see TL v ML [2006] 1 FLR 1263. As pointed out by Mr Victor Dawes SC (for the Defendant), it is for the first spouse (ie the Plaintiff) to join the third party (ie the Defendant) in the ancillary relief proceedings, such that the ownership of the disputed property can be determined as a preliminary issue: see Fisher Meredith LLP v JH [2012] EWHC 408 (Fam) at para 43 (per Mostyn J).

32.In my view, it would be appropriate to invoke the TL v ML procedure for resolving the dispute regarding the ownership of the Share. After all, the Family Court is duty-bound to make a finding on the size of the “matrimonial pot”: see Lit Wing Yee v Tang Cheuk Lun [2018] 2 HKLRD 227 at para 29 (per Louis Chan J). The matrimonial assets may or may not include the Share in the Company. This is a matter in respect of which the Family Court will have to arrive at a conclusion.

33.Second, it appears to me that the origin and substratum of the present dispute are the ancillary relief proceedings under FCMC 10614/2023. After all, it is the Plaintiff’s stance that she has an interest in relation to the Share in the Company by reason of the claims for ancillary relief against Sam Pa in FCMC 10614/2023. It would thus be natural for the Family Court to determine the extent of the ancillary relief to which the Plaintiff is entitled and the related question as to whether the Share in the Company falls within the “matrimonial pot”.

34.In this connection:-

(1) I do not lose sight of the following observations made by Lam Acting CJHC (as Lam PJ then was) in LCC v LWMA & Anor [2019] 2 HKLRD 529 at paras 22 to 23:-

“22. One must not lose sight that the dispute on ownership in these cases often [arises] from matrimonial proceedings. But for the breakdown of marriage and the application for ancillary relief by one spouse in a divorce petition, there would not be any claim on the property. In other words, the parties only raise the issues on beneficial ownership for the court to determine because of the matrimonial proceedings.

23. The underlying matrimonial dispute and the application for ancillary relief, in our judgment, is the origin and the substratum for the litigation on ownership irrespective of the procedural routes adopted by the parties and the court to resolve the same….” (emphasis added)

(2) Mr Dawes also referred me to GM-SA v DDPJ (No 2) [2020] 6 HKC 360 at para 53. There, Lam VP (as Lam PJ then was) stated:-

“Where there will, of course, be cases where the family court judge will direct that a preliminary issue as to ownership of assets, involving a third party, be heard in another Division as a preliminary issue, the better course is normally for the family court to determine the issue…Continuity of judicial involvement is desirable both for efficiency and consistency of decision-making. There will be cases where it may be appropriate to hive off some issues and send them to another Division of the High Court, but it should only be when relatively technical issues, outside the familiar family law territory, are likely to be raised and to play an important role.” (emphasis added)

35.Third, having said that the Family Court is, in the course of assessing the size of the “matrimonial pot”, bound to arrive at a conclusion as to whether the Share in the Company is an asset belonging to Sam Pa, it is necessary to avoid duplication or multiplicity of proceedings. The underlying objectives of the Rules of the High Court include promoting a sense of reasonable proportion and procedural economy in the conduct of proceedings: see Order 1A, rule 1(c). To this end, Order 1B, rule 1(2)(e) expressly empowers the court to stay the whole or part of any proceedings until a specified event. In this connection, it is pertinent to refer to Wong Chiu Pui v Wong Kit Wah [2022] HKCFI 1645. In that case, a third party (who was the parent of one of the spouses) sought to assert beneficial ownership over various properties by commencing a writ action (see paras 5 to 14). Recorder Maurellet SC ordered that the writ action be stayed pending the Family Court’s determination of the issues regarding beneficial ownership (see paras 3 to 19 and 54). The learned Recorder stated:-

“46. This [is] consistent with the concerns expressed as early as 2012 by Jeremy Poon J (as the CJHC then was) and as relayed in Bar Circular 030/12. The aim (which is entirely consistent with the underlying objectives) is to avoid parallel proceedings with duplication of costs, time and possibly even inconsistent decisions:

‘Family related proceedings in the High Court

The Family Law Special Committee wishes to draw members’ attention to the concerns expressed by Mr. Justice Poon who is in charge of the Civil List and the Family Law List of the High Court as follows:

1. Parties who are involved in matrimonial proceedings in the Family Court for matters which arose from or are closely connected with the extant disputes in the High Court have (most regrettably) failed to inform the Court of the existence of concurrent proceedings.

2. Parallel proceedings in the High Court and the Family Court on the same or substantially the same subject matters or disputes with close connection should be avoided as far as practicable Legal advisers handling such proceedings all have a positive duty to assist the Court in this regard.

3. They should properly advise their clients as to the undesirability of commencing parallel and concurrent proceedings in both Civil List and Family Law List of the High Court.

4. Where such proceedings are to be or have been commenced, parties’ legal representatives should immediately inform the Courts of the same in full and seek appropriate directions from the Court.

5. Any failure to do so may attract adverse costs orders against not only their clients but also the legal advisers.’

47. Consistent with these principles, I therefore invited the parties to consider staying the present proceedings so that the issue of ownership of the Flat to be determined in the Family Court. Since all the parties will be before it (and therefore are bound by it), this will avoid the existence of parallel proceedings and possibly an application for transfer of the Family Court proceedings to the High Court, which might otherwise have been made.”

36.Fourth, I do not lose sight of Mr Wong’s contention that the Family Court is unable to make the necessary declarations regarding the ownership of the Share. This was a factor that Recorder Maurellet SC took into account in Wong Chiu Pui (supra) at paras 48 to 50, and he had this to say:-

“48. Even if the Family Court might not be able to formally grant declaratory relief regarding ownership or transfer of the Flat by reason of its rateable value, if the issue is substantively dealt with there while the present proceedings are stayed, findings which are made will therefore binding on all the parties and later on, the stay might then be lifted so that the High Court could grant formal declarations. It is unlikely that there would be any complications.

49. A stay can be granted either by reason of the Court’s inherent jurisdiction or more appropriately in the present case pursuant to its statutory powers under the Rules of the High Court, in particular, O.1A rule 2(e).

50. A loose analogy could be drawn with winding up of companies where there is a shareholder agreement with an arbitration clause. Whereas an arbitral tribunal does not have the statutory power to order to wind up companies (as such jurisdiction is solely vested in the Court) upon a petition being filed, the Court can stay the petition pending the conclusion of the arbitral proceedings upon which the Court may lift the stay and consider whether to grant a winding up order based on the findings of fact which have been made: see Re China Europe International Business School v Chenwei Evergreen Capital (unrep. Judgment of Linda Chan J. dated 22/11/2021) and Re Quicksilver Glorious Sun [2014] 4 HKLRD 759 at paragraph 23 where Harris J held that.

‘23. In the present case the dispute between the parties concerns the basis upon which the joint venture is to end. In broad terms Glorious Sun says that Quicksilver should sell its shares and grant a new licence in respect of the trademarks. Quicksilver say, although only recently, that Quicksilver Glorious Sun JV and Quicksilver Glorious Sun Licensing should be wound up. These issues can be determined by arbitration. If the arbitrators conclude that Quicksilver is correct an application can then be made to the Court for winding-up orders. As Petitions have already been presented this will only require that the stays of the Petitions that I have ordered be lifted. This Court will not need to rehear the substantive arguments. In my view it is both permissible for the Court to stay the winding-up Petitions pending the outcome of the arbitration. It is also practical and desirable. The arbitration is underway and it is undesirable that two sets of proceedings continue in parallel. The arbitration can address both claims and make an award, which gives the successful party what it wishes, although in the case of Quicksilver an award in its favour will require the stay to be lifted and the Court invited to make a winding-up order. The Court cannot deal with Glorious Sun’s claim.’”

(emphasis added)

37.Since the findings made by the Family Court will bind all the relevant parties, it is doubtful whether it is practically necessary for the High Court to make some declarations that merely mirror the Family Court’s findings. In any event, I respectfully agree with the learned Recorder’s analysis. Having said that the Family Court’s findings will bind the parties, the parties can subsequently ask the High Court to lift the stay and formally grant the declarations sought (as well as the injunctive reliefs sought), if it transpires that there is a practical need to seek these reliefs in the circumstances. As pointed out by the learned Recorder, it is unlikely that there would be any complications.

38.Fifth:-

(1) Mr Wong emphasized that the Company has been dissolved. Whilst Mr Wong relied on Lau Yun Lin v Kwan Tseung Co Ltd [2017] 5 HKC 500 at para 7[10], he pointed out under section 6(1) and 6A(1) of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”), the Family Court may only make an order concerning a property to which a spouse is entitled. Mr Wong skillfully submitted that since the Company has ceased to exist as a legal entity, the Share may no longer be a property that exists. Thus, the Family Court may have no jurisdiction to determine the question of ownership. Mr Wong further submitted that it would be risky to ask the Family Court to adjudicate the dispute when its jurisdiction is doubtful.

(2) Despite Mr Wong’s most attractive presentation, I have difficulty in accepting his submissions, which effectively elevate form over substance.

(3) The reality is that both parties have all along acted on the basis that the Share is a valuable property. If the Share were a nullity as alleged, the Plaintiff would not have commenced the present action to assert that Sam Pa is the lawful owner thereof; nor would the Defendant be eager to intervene in the ancillary relief proceedings in FCMC 10614/2023 for the purposes of asserting ownership over the Share.

(4) As Mr Wong fairly accepts, under section 218(1) of the BVI Business Companies Act, a person who can establish an interest in the Company may make an application to restore the registration.

(5) There is no question that the owner of the Share enjoys a bundle of rights in relation to the affairs of the Company. It is true that the Company is deregistered now. However, the owner of the Share is a person having an interest in the Company, and he or she will be in a position to make an application for reinstating the Company. Upon the application being granted, the owner of the Share can exercise all the rights and powers as the Company’s sole shareholder. In this sense, the owner of the Share, at least, enjoys a bundle of rights that is exercisable upon the restoration of the Company. It cannot be said that the Share is a nullity.

(6) In my view, there is no reason why the Family Court may not, in the course of determining the extent of the appropriate ancillary relief to which the Plaintiff is entitled, take into account the fact that the Company is tentatively struck off from registration, but it is open to the sole shareholder or an interested person to apply to restore the registration. As pointed out by Mr Dawes, under section 7(1) of the MPPO, in the course of determining the appropriate ancillary relief, the Family Court has wide powers to take into account “all the circumstances of the case”. The Family Court shall definitely take the aforesaid matter into account.

(7) Further, as pointed out by Mr Dawes, if Mr Wong’s argument were correct, a spouse who owns shares in a company can always defeat the other spouse’s claim for ancillary relief in respect of such shares by causing the company to be deregistered, thereby stripping the Family Court of the jurisdiction under sections 4, 5, 6 and 6A of the MPPO. It would be absurd if this technique were workable.

(8) For completeness, it should be pointed out that Lau Yun Lin (supra) does not support Mr Wong’s contention that the Share is not a property for the purposes of MPPO. In that case, the plaintiff, who was the purchaser of a property, sought to compel the defendant company, who was the vendor, to execute a confirmatory assignment. However, the defendant company had been dissolved when the application was heard. Against this background, DHCJ Douglas Lam SC dismissed the application on the basis that a dissolved company could not be sued and could not do any legal act (see para 7). Unsurprisingly, the learned Deputy Judge did not even embark on a discussion on the status of the shareholding in the defendant company.

(9) For the above reasons, I find it difficult to accept the suggestion that the Share is a nullity, such that the Family Court will not be in a position to (i) determine the ownership thereof; and/or (ii) take into account the ownership of the Share in the course of determining the extent of the ancillary relief to which the Plaintiff is entitled. It would be surprising if this were the position. As pointed out by Deputy Judge Nicholas Mostyn QC in TL v ML (supra) at paras 33 and 34:-

“33. It is well-established that a dispute between a spouse and a third party as to the beneficial ownership of property can be adjudicated in ancillary relief proceedings…

34. It is to be emphasized, however, that the task of the judge determining a dispute as to ownership between a spouse and a third party is, of course, completely different in nature from the familiar discretionary exercise between spouses. 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” (emphasis added)

(10) In any event, at the hearing, Mr Dawes put forward a pragmatic solution that addresses Mr Wong’s contention. Mr Dawes, on behalf of the Defendant, provided undertakings that the Defendant should (i) make an application to restore the Company in the BVI forthwith; (ii) prosecute the application with due diligence; and (iii) keep the Plaintiff informed of the proceedings relating to the application.

(11) Put bluntly, Mr Dawes’s proposal is strategic move that effectively demolishes Mr Wong’s contention. Once the Company is reinstated, it is no longer open to the Plaintiff to contend that the Share may not constitute a property within the meaning of MPPO and that the Family Court may not have jurisdiction over the matter.

(12) Knowing the practical implication, Mr Wong expressed concern about Mr Dawes’s proposal. He submitted that since it is doubtful as to whether the Defendant is the lawful owner of the Share, the BVI court may order that there be a trial in respect of the question of ownership. If this happens, the parties will effectively be forced to resolve their dispute in the BVI, which is not a convenient forum.

(13) However, the question before the BVI court is simply whether the registration of the Company should be restored or not, and the Defendant, being the registered shareholder, must have, to say the least, a prima facie interest in restoring the Company. Although the Plaintiff disagrees that the Defendant is the lawful owner of the Share, it does not mean that she has to oppose the restoration application. These are 2 different matters. In my view, the Defendant should support (or at least consent to) the application on the basis that no admission is made as to whether the Share is lawfully owned by the Defendant. The BVI court does not need to make any finding as to whether the Defendant acquired ownership of the Share by forgery. Since the Plaintiff has an interest by reason of the ancillary claim against Sam Pa (who is, on her case, the lawful owner of the Share), it appears to me that the Plaintiff has every reason to support the restoration application. It is in her interest to do so. I do not see any valid reason why the Plaintiff should oppose the application.

(14) Based on the materials before this court, it does not appear to me that the restoration application will be complicated, and I do not see any significant obstacle. If the parties act in good faith and are sensible, it is envisaged that the restoration order (which appears to be straightforward) will be granted in the foreseeable future[11]. In any event, as pointed out by Mr Dawes, if the application fails or some complications arise, it would be open to the Plaintiff to ask this court to revisit the matter.

(15) For the above reasons, I am minded to accept Mr Dawes’s undertakings. I am of the view that these undertakings are capable of addressing the Plaintiff’s contention and concern.

39.Sixth:-

(1) Mr Wong submitted that even if the Family Court has jurisdiction to determine the ownership of the Share, the Family Court will not be in a position to determine the dispute regarding the directorship of the Company. As such, the implication is that the parties’ dispute will have to be resolved in 2 tranches, and there will be 2 trials in 2 different courts. This is undesirable and inconvenient.

(2) In response to Mr Wong’s submissions, Mr Dawes asked me to adopt a pragmatic approach. He submitted that the practical reality is such that once the Family Court determines the ownership of the Share, it is most unlikely that the parties will have a live dispute regarding the question of directorship.

(3) I see the force of Mr Dawes’s submissions.

(4) Technically speaking, it can be said that the issues regarding the ownership of the Share are separate from the issues regarding the directorship in the Company.

(5) However:-

(a) The Disputed Documents (which concerned both the ownership of the Share and the Company’s directorship) were all dated 31 May 2017, and they were provided to the Company’s registered agent during the period from 31 May 2017 to mid-June 2017. In the circumstances, if the Court finds that the Disputed Documents regarding the ownership of the Share were forged, it is hard to see how the Defendant could seriously insist that those Disputed Documents regarding the Company’s directorship are genuine. I cannot see how the Defendant could insist on acting as the Company’s director.

(b) If the Court finds that the Disputed Documents regarding the ownership of the Share were genuine, the implication is that the Defendant is lawful and sole shareholder of the Company. As such, she is capable of causing the Company to pass the necessary resolution to confirm her appointment as a director of the Company. She can also cause the Company to pass a shareholder’s resolution to appoint any person that she nominates to act as the Company’s director. It would be practically futile for the Plaintiff to insist on contesting that those Disputed Documents regarding the Company’s directorship were forged. In this scenario, the Plaintiff does not even have the locus standi to meddle the affairs of the Company (as the Defendant is the sole owner of the Company and the Share does not belong to Sam Pa at all).

(6) In the premises, I accept Mr Dawes’s submissions that Mr Wong’s concern is a theoretical one, and the practical reality is that once the dispute regarding the ownership of the Share is resolved, it is unlikely that the dispute regarding the directorship of the Company will still be “alive”.

40.Seventh, Mr Wong suggested that the Plaintiff would suffer irreparable prejudice due to delay (given that there is a 5-year time limit for applying to restore the Company in the BVI). Mr Wong’s suggestion is premised on an assumption that the present dispute will be resolved much earlier if the same is contested in the High Court rather than the Family Court. This is not necessarily the case. Like the High Court, the Family Court is also capable of providing robust case management directions for the dispute to be resolved expeditiously. Further, it is important not to lose sight of the fact that the present proceedings are still at an infancy stage. Whilst the pleadings have not been closed, as discussed, Plaintiff’s pleaded claims have not even been properly constituted.

41.Eighth, importantly, in the course of exercising my case management powers, I take into account that the present dispute has a strong domestic element. It involves and affects the interest of 3 women (namely the Plaintiff, the Defendant as well as Madame Li Liya) who had domestic relationships with Sam Pa. All these women have children who are born to Sam Pa. In light of the Family Court’s expertise, experience and unique procedure, I am of the view that the Family Court is in an ideal position to facilitate dispute settlement. This is one of the underlying objectives of the Rules of the High Court: see Order 1A, rule 1(e). In LCC v LWMA (supra) at para 49, Lam Acting CJHC (as Lam PJ then was) pointed out that “judges in the Family Court should exercise their case management powers to direct a process akin to [financial dispute resolution] (with modified directions) to take place involving third party”. His Lordship stated:-

“49. Bearing in mind the origin of such ownership dispute and the above analysis regarding the underlying character of these proceedings, and in light of our above observations on the implications for the third party if he or she has to undergo a full blown trial to resolve the dispute, in appropriate cases judges in the Family Court should exercise the case management power to direct a process akin to FDR (with modified directions) to take place involving the third party. The exercise of case management power to facilitate settlement of dispute is one of the underlying objectives provided for under Order 1A Rule 1(e) of the Rules of the High Court and the power to give a direction for a modified FDR to be held can be derived from Order 1B Rule 1(2)(l). Practice Direction 15.12 paras 6 and 8 underscore the applicability of these provisions to matrimonial proceedings of which the trial of preliminary issue, as discussed above, is part of such proceedings. See also Practice Direction 15.10 para 1.1.” (emphasis added)

42.I am of the view that the parties could benefit from the aforesaid procedure, which is designed for resolution of disputes in a domestic context. In this connection, I do not lose sight of Mr Wong’s observation that the parties have been very hostile to each other. This may be true. However, many matrimonial disputes also involve spouses who are very hostile to each other. This is not uncommon. The Family Court is often able to facilitate these hostile spouses to resolve their disputes, despite their mutual animosity.

43.Ninth, Mr Dawes pertinently pointed out that under the ancillary relief proceedings in FCMC 10614/2023, the Plaintiff has attempted to join the Defendant in relation to the dispute regarding the ownership of the 70% shareholding in another company named New Bright International Development Ltd. The Defendant has agreed to the Plaintiff’s proposal[12]. I see no reason why the parties should not attempt to resolve the 2 sets of disputes at one go. I accept that the commercial background regarding the 2 sets of disputes is different. However, it appears to me that the 2 sets of disputes involve some common factual background. For instance, the court needs to form a view as to the relationships, financial dealings and financial arrangement amongst Sam Pa, the Plaintiff and the Defendant. In my view, it would be convenient for the Family Court to resolve the 2 sets of disputes together, and this is consistent with the underlying objectives under Order 1A, rule 1(c) and (e). In this connection, there is also no reason why the “modified” financial dispute resolution should not cover the 2 sets of disputes concurrently.

44.Mr Wong, citing Pa Sam Nang & Ors v The Hongkong and Shanghai Banking Corporation Ltd [2024] HKCFI 2767 at paras 24 and 28; Gourisaria v Gourisaria [2011] 1 FLR 262 at paras 23-28; and A v A [2007] 2 FLR 467 at paras 23 to 24, reminded me that:-

(1) There is no special rule that whenever there are divorce proceedings consisting of disputes between a spouse and a third party as to ownership of a property, such a dispute would need to be tried in the Family Court.

(2) When there is the same dispute between a spouse and a third party concerning ownership of property, the Family Court and the High Court could exercise their respective case management powers to manage its resolution.

(3) There are cases where the dispute between the third party and the spouses should be resolved at the same time as issues between the spouses, but there are also cases where this simply cannot be done.

(4) Ultimately, the question is one of case management.

45.Whilst I have no quarrel with these legal principles, I also accept Mr Wong’s observations that the present case involved some unusual features in that one of the spouses (ie Sam Pa) has disappeared and thus is unable to protect his own interests.

46.However, despite Mr Wong’s submissions, for the reasons canvassed in paragraphs 30 to 43 above, I am minded to exercise the court’s case management powers to stay the present proceedings in favour of the Family Court pursuant to (i) Order 1B, rule 1(2)(e); (ii) section 16 of the High Court Ordinance; and (iii) the court’s inherent jurisdiction.

47.Upon the Defendant’s undertakings to (i) make an application to restore the Company in the BVI forthwith; (ii) prosecute the application with due diligence; and (iii) keep the Plaintiff informed of the proceedings relating to the application (see paragraph 38(10) above), I make an order that the present proceedings be stayed pending the final determination of the ownership of the Share in the Company as a preliminary issue in the ancillary relief proceedings in FCMC 10614/2023 (including any appeals therefrom).

C2. Striking out the Pleas and Prayers that are not related to the Ownership of the Share in the Company

48.In light of my order under paragraph 47 above, I am inclined to the view that it is unnecessary to deal with the Defendant’s application to strike out the pleas and prayers in the statement of claim that are unrelated to the ownership of the Share in the Company.

49.However, for completeness, I will set out my views succinctly as follows.

50.The statement of claim contains pleas and prayers that are said to be unrelated to the ownership of the Share in the Company. For instance, the Plaintiff seeks:-

(1) declarations that Sam Pa is still a director of the Company and that the letter regarding Sam Pa’s purported resignation as the Company’s director is forged;

(2) an injunction restraining the Defendant from exercising (i) the power or right as a purported director of the Company; and (ii) any power or right that may diminish the value of the Share or any asset of the Company; and

(3) an order that (i) the Defendant do provide an account for the assets of the trust and/or profits as trustee; (ii) there be equitable compensation; and (iii) there be interest.

51.The Defendant accepts that in light of the claims under the ancillary relief proceedings in FCMC 10614/2023, the Plaintiff has an interest in respect of the ownership of the Share. However, Mr Dawes (for the Defendant) contends that:-

(1) the Plaintiff has no locus standi to seek declaratory and injunctive reliefs relating to Sam Pa’s status as the Company’s director as these claims do not concern the interests in the Share; and

(2) the Plaintiff also has no locus standi to seek reliefs for enforcing or securing the alleged trust over the Share as Sam Pa is beneficial owner under the alleged trust and the Plaintiff is not in a position to represent Sam Pa.

52.It is trite that the court will only strike out a pleading when the applicant has shown it is plain and obvious that the other party’s case is bound to fail, obviously unsustainable and/or unarguably bad: see Lai Chik Kun Michael & Ors v The Baptist Convention of Hong Kong [2022] HKCFI 728 at para 71 (per Wilson Chan J).

53.Insofar as the pleas and prayers relating to Sam Pa’s directorship in the Company are concerned:-

(1) In his submissions, Mr Wong, referring to Koo Ming Kown v Mok Kong Ting [2018] HKCFI 967 at paras 15 to 20 (pe DHCJ To); Convoy Global Holdings Ltd v Kwok Hiu Kwan [2021] HKCA at para 30 (per Kwan VP); and Lai Chik Kun (supra) at para 73, pointed out that:-

(a) The court’s jurisdiction to grant declaratory relief is extremely wide, and such jurisdiction may be invoked by an applicant who does not have any cause of action against the adverse party.

(b) The court shall adopt a “practical utility approach” and will not impose “nice tests” to determine the precise legal standing of the applicant.

(c) However, the applicant has to satisfy the court that (i) he has a real interest in the subject matter of the declaration (the “Real Issue Requirement”); (ii) he has a real interest in obtaining the declaration from the court against an adverse party (the “Real Interest Requirement”); and (iii) the adverse party is a proper contradictor with a true interest to oppose the declaration sought (the “Proper Contradictor Requirement”).

(2) I am of the view that each of the aforesaid Requirements are satisfied:-

(a) It cannot be said that the question of directorship is academic or hypothetical. The question of whether the Defendant lawfully and validly replaced Sam Pa as the Company’s sole director involves a “real interest of material character to be enforced or protected”: see Lai Chik Kun (supra) at para 82(1). The Real Issue Requirement is satisfied.

(b) As regards the Real Interest Requirement, it is obvious that the change of directorship in the Company has a real impact on, inter alios, how the assets of the Company are deployed and how the affairs of the Company are managed. This obviously affects the interests relating to the Share. The Real Interest Requirement is satisfied.

(c) The Proper Contradictor Requirement is also satisfied. Relying on the Disputed Documents in question, the Defendant became the Company’s sole director. In such capacity, she has been exercising exclusive control over the Company. The Defendant must have a true interest to oppose the declaration sought: see Koo Ming Kwan (supra) at para 19.

(3) In the premises, I am not of the view it is plain and obvious that the pleas and prayers relating to the directorship of the Company are liable to be struck out. I am of the view that the declarations sought by the Plaintiff are of “practical utility”, and it is neither inappropriate nor abusive for the Plaintiff to seek the declarations in question.

54.Insofar as the claims for injunctive relief regarding the Share in the Company are concerned:-

(1) Mr Wong referred me to Sir Elly Kadoorie & Sons Ltd v Bradley [2024] 4 HKLRD 428 at paras 34, 35, 42 and 58(1). There, Chow JA held that:-

(a) The court has wide and flexible powers to grant injunctions, whether final or interlocutory (at para 34).

(b) The powers of the courts with equitable jurisdiction to grant injunctions are, subject to any relevant statutory restrictions, unlimited. There is no supposed limiting rule or principle apart from justice and convenience which equity has regarded as sacrosanct over time (at para 34).

(c) The grant of injunctive relief is not always conditional on the existence of a cause of action. The court has jurisdiction to grant a “free-standing” injunction, regardless of whether the plaintiff can sue the defendant in its own capacity (at paras 35, 42, 58(1))

(2) In my view, the facts of the present case are unusual and indeed unique. Whilst Sam Pa is said to be the true owner of the Share, he is, by reason of his inexplicable disappearance, not in a position to take steps to protect the interests relating to the Share and/or the Company. Meanwhile, the Plaintiff has brought a claim for ancillary relief against Sam Pa, alleging that the Share is part of the matrimonial assets. There is no question that the Plaintiff has an interest in the Share by reason of her claim in the ancillary relief proceedings in FCMC 10614/2023. If the Plaintiff were not in a position to seek an injunction against the Defendant, the Defendant, as the sole director of the Company, will be at liberty to take steps to diminish the value of the Share. It could not be the case that the Plaintiff is not in a position to seek relief to remedy the injustice (if any) and to protect her interests. Such an outcome will be absurd and unacceptable.

(3) In the premises, it is, to say the least, arguable that the Plaintiff is entitled to seek a “free-standing” injunction against the Defendant, such that her interests relating to the Share and/or the Company could be safeguarded. In light of the propositions propounded by the Court of Appeal in Sir Elly Kadoorie & Sons Ltd (supra) at paras 34, 35, 42 and 58(1), I am not of the view it is plain and obvious that the Plaintiff’s claim for injunctive relief is abusive and/or doomed to failure.

55.As regards the claim for account for trust assets/profits and equitable compensation:-

(1) In the amended statement of claim, there are no pleas suggesting that the Defendant has received any assets and/or profits deriving from the Share in the Company (which is said to be held on constructive trust for Sam Pa).

(2) It is not suggested that the Company has been carrying on business as an ongoing concern and that dividend has been declared; nor is it suggested that the Shanghai Property (which has been occupied by Madame Li Liya and her children) has been rented out for rental profits.

(3) In the premises, I cannot see the factual basis on which the Plaintiff may allege that the Defendant is holding some assets and/or profits deriving from the Share in the Company on trust for Sam Pa. I am not of the view that prayers (11)[13] and (12)[14] are supported by the pleas in the amended statement of claim.

(4) More fundamentally, it is doubtful as to whether the Defendant has locus standi to enforce the obligations owed to Sam Pa under the alleged trust. In this connection, Mr Dawes referred me to Lewin on Trust (20^th Ed, 2020) at para 41-071:-

“Who may sue the trustee for breach of trust or take other steps to secure the trust fund?

…It is our view that only beneficiaries, that is those to whom the trusts are liable to account, who have a present or future interest or potential interest in the subject-matter of the claim, and the other trustees, have standing to take proceedings in respect of a breach of trust. This would exclude from this right other parties who may have an indirect interest in the affairs of the trust, such as settlors, protectors and the beneficiaries’ family members. The trustees do not stand in a fiduciary relationship to such persons.”

(5) On the strength of the authorities, I am not of the view that it is open to the Plaintiff (who merely has a claim for ancillary relief against Sam Pa) to enforce the obligations under the alleged trust. These alleged obligations are owed by the Defendant to Sam Pa, and the Plaintiff is not a representative of Sam Pa at all.

(6) At the hearing, Mr Wong indicated that the Plaintiff no longer insisted on maintaining the claims under prayers (11) and (12)[15]. In my view, this concession was fair and appropriate.

56.For the above reasons, had it been necessary to deal with the Defendant’s striking-out application substantively, I would only have struck out prayers (11) and (12) in the amended statement of claim. For the reasons elaborated in paragraphs 52 to 54 above, I would not have struck out the pleas and prayers relating to the directorship in the Company as well as the Plaintiff’s claims for an injunction that the Share be preserved and protected.

D. THE MASTER’S STAY ORDER

57.The Stay Order made by the Master has effectively been superseded by my order under paragraph 47 above.

58.In any event, in light of the clarification under the amendments to the statement of claim, it does not appear that the outcome of the Plaintiff’s claims depends on the Validity of Marriage Issue. It appears that even if the marriage between the Plaintiff and Sam Pa is null and void, the Plaintiff is still in a position to seek ancillary relief against Sam Pa on the grant of a decree of nullity.

59.In the premises, I will set aside the Master’s Stay Order.

60.It follows that it would be unnecessary to deal with the Plaintiff’s summons dated 6 December 2024 seeking to uplift the Master’s Stay Order. I thus make no order in respect thereof.

61.However, for the avoidance of doubt, it is still open to the Defendant to challenge the Plaintiff’s alleged status as Sam Pa’s lawful wife in FCMC 10614/2023 (if she takes the view that it would be advisable and/or meaningful to do so).

E. DISPOSITION

62.I make an order in terms of paragraphs 47 and 59 above[16].

63.I direct the parties to lodge submissions on the question of costs within 14 days. The submissions should be limited to 5 pages.

64.Mr Anson Wong SC and Mr Martin Kok (for the Plaintiff) as well as Mr Victor Dawes SC, Ms Bonnie Cheng and Mr Alexander Burg (for the Defendant) ably conducted these proceedings in a manner that was helpful and proportionate. I express my gratitude to each of them.

Mr Anson Wong SC and Mr Martin Kok, instructed by KCL & Partners, for the Plaintiff

Mr Victor Dawes SC, Ms Bonnie YK Cheng and Mr Alexander Burg, instructed by Dentons Hong Kong LLP, for the Defendant