Cyw v. Cch
Read the full judgment text of FCMC 10082/2002 on BabelCite. This Family Court judgment was delivered on 10 October 2005 before Her Honour Judge Chu.
Civil procedure – Matrimonial causes – Joinder of third party – Ancillary relief – Nominee company – Costs – Whether T Ltd should be joined to ensure effectual determination of ancillary relief application – Application allowed – Costs ordered against T Ltd and Respondent
Legal issues: Joinder of T Ltd · Costs of the joinder application
Outcome: Joinder application allowed; T Ltd added as party to ancillary relief application
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FCMC 10082 of 2002 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 10082 OF 2002 _________________ BETWEEN
_________________ Coram : Her Honour Judge Chu in Chambers Date of Hearing : 27 September 2005 Date of Handing Down of the Reasons : 10 October 2005 ___________________________ REASONS FOR DECISION ___________________________ (Joinder Application) INTRODUCTION 1. The Petitioner (“the Wife”) and the Respondent (“the Husband”) are in the midst of an ancillary relief trial, with the Wife having given evidence, and the trial has been adjourned part-heard, to be resumed on 17th October 2005. 2.One of the major issues in the ancillary relief application is the extent of the Husband’s assets. There had been lengthy discovery of the Husband’s means prior to the commencement of the trial. In answer to one of the Wife’s questionnaires, in February this year, the Husband disclosed, for the first time, that he was an authorized signatory of two bank accounts held by a company T Ltd with the HSBC. What the Husband said at that time was that T Ltd was beneficially owned by his friend, a Mr. Lam, who is a PRC citizen who was working and living in Mainland China. In answer to further questionnaires, the Husband said that he did not have any information as to the director or shareholder of T Ltd, and that although he was a signatory to two of its accounts, Mr Lam had never asked the Husband to help in effecting transactions in relation to T Ltd, and thus the Husband had no knowledge as to the transactions of T Ltd. 3.During the adjournment, the Wife continued with her investigations of the Husband’s means, and found out the following :
4.The above discovery led the Wife taking, inter alia, the following steps :
5.The Wife’s s. 17 application had been served on T Ltd, and I gave directions for the application to be heard together with the Wife’s ancillary relief application, and leave for T Ltd to file an affirmation in opposition. 6.The Wife will also be asking this Court to declare that T Ltd holds the two properties as nominees or in trust for the Husband in the ancillary relief trial and it is for this purpose that the Wife issued the joinder application which was before me. T Ltd opposed the joinder application. Initially, the Husband took a neutral position, but by the time the application was heard before me, he also opposed the application. 7.As the trial is due to re-commence in about 3 weeks’ time, after hearing the arguments, I made an order on the same day that T Ltd be added as a party, with reasons to be handed down later. Here are my reasons. LEGAL PRINCIPLES 8.The Wife’s joinder application was made under O.15 R. 6 (b) of the Rules of the High Court, and there is no dispute regarding the legal principles. This court may order T Ltd be joined if : -
UNDISPUTED FACTS 9.By the time of the hearing, further matters had been disclosed by Ms Lam, and the undisputed facts were as follows :
T Ltd’s CASE 10. T Ltd is a company incorporated in British Virgin Islands on 18th November 2002, and Ms Lam is the only registered shareholder with her address given as the Park Tower Property. Ms Lam claimed that it was her brother Mr. Lam who asked her to set up the company and that T Ltd was in fact at all material times beneficially owned by her brother Mr. Lam. She said it was Mr. Lam who instructed T Ltd to purchase the two properties and that all the monies required for the acquisition belonged to Mr. Lam. According to Ms Lam, her brother Mr Lam has been trading in antiques for many years, and that around 1995 to 2000, he had made profits of tens of millions from trading in antiques. Ms Lam said that the Husband is a good friend of Mr. Lam’s. 2 Payments to T Ltd HK$500,000 11.I now turn to consider the payments by the Husband to T Ltd. The Husband’s and Ms Lam’s explanation about the payment of the sum of HK$500,000 to T Ltd was essentially the same, which was in late 2001, the Husband had borrowed RMB530,000 in cash from Mr. Lam to purchase a confiscated car sold under public auction in PRC, and the HK$500,000 was the repayment from the Husband to Mr Lam. The Husband had produced a copy of the registration record of a car being registered in his name as evidence of his purchase. 12.In 2003 the Husband said as Mr. Lam would like to invest in a property in Hong Kong, Mr. Lam had asked the Husband to make repayment of the RMB530,000, which the Husband rounded it up to be HK$500,000 and which the Husband, at Mr Lam’s direction, paid to T Ltd’s bank account. The $500,000 was thus a repayment of the RMB530,000 for the purchase of the car. Neither the Husband, nor Ms Lam, had produced any evidence to show there was a payment of RMB530,000 from Mr Lam to the Husband in 2001 nor was there any evidence of how the car was paid for. HK$360,000 13.In relation to the payment of the $360,000, in answer to one of the Wife’s questions in relation to the transactions in his Standard Chartered Bank account, the Husband said that he was asked by Mr Lam to deposit a cheque of HK$363,769.84 on 16th January 2003 into the Husband’s account with Standard Chartered Bank, for Mr. Lam’s purpose of an intended antique transaction, and on 24th February 2003, the Husband was asked by Mr Lam to withdraw the amount of HK$360,000 and to transfer the sum into the Chartered Bank account of T Ltd, again for the purpose of Mr Lam’s transaction of antiques. A copy of the $363,769.84 cheque was not produced and even if it was produced, there was no evidence that it was for any transaction of antiques or that it came from Mr Lam. Also, I cannot understand why these transactions had to be conducted through the Husband and not through Ms Lam, Mr Lam’s own sister, or T Ltd, allegedly Mr Lam’s own company. Signatory to two of T Ltd’s Bank Accounts 14.To explain why the Husband is the signatory of 2 of T Ltd bank accounts, the Husband’s and Ms Lam’s explanation seemed to be that Mr. Lam would come to Hong Kong from time to time to take care of his various property investments here, but there were times when Mr. Lam could not come personally, and that he had asked Ms Lam to be a signatory of T Ltd’s bank accounts, and further, as the Husband was an old customer with T Ltd, Mr. Lam had asked the Husband to be a 2nd signatory of the two bank accounts with HSBC as well, to facilitate T Ltd ’s dealings with HSBC. Again, I do not quite understand this explanation, namely how being a signatory would facilitate T Ltd’s dealings with HSBC. There is also no information as to what dealings T Ltd is having with HSBC. The Two Guarantees 15.Regarding the two guarantees, Ms Lam said that in order to obtain the mortgage from the Standard Chartered Bank for the purchase of the Park Tower Property, she and Mr. Lam understood that it was a requirement from the banks to have someone to act as a guarantor. She said that Mr. Lam asked her to seek assistance from the Husband to act as a guarantor, to which the Husband agreed. 16.Similarly, at the time of the purchase of the Island Resort Property, HSBC required a guarantor, and Mr Lam again asked Ms Lam to ask the Husband to help, and the Husband agreed to act as a joint guarantor with Ms Lam. CONCLUSION 17.Notwithstanding that the s. 17 application and the joinder application were served on T Ltd sometime in August 2005, Mr Lam, who is the key character, being the sole beneficial owner of the company according to Ms Lam and the Husband, has not filed any affirmations. There is also no documentary evidence that Mr Lam ever paid any funds directly for the purchase of the two properties. Further I note that notwithstanding that Ms Lam had told this court that she would put Mr Lam’s address in her affirmations, she failed to do so, apart from producing a copy of Mr Lam’s membership card of the Guangdong Province Collectors’ Society showing a correspondence address in 2002 and an employee card (validity date from 1st October 2003 to 30th September 2008) showing that he was employed by an insurance company in PRC. 18.Ms Lam denied that she was the mistress or girlfriend of the Husband. She referred him as her boss in a letter dated 11th August 2005 she sent to the court. There was, however, no explanation from her or the Husband as to why the Husband’s address on the guarantee provided for the mortgage loan for the purchase of the Park Tower Property was given as the Park Tower Property, the same address as Ms Lam. 19.The question is a simple one : who provided the funds to T Ltd for the purchase of the 2 properties ? 20.I would also add, at this stage, that the two payments of HK$500,000 and HK$360,000 by the Husband to T Ltd fall within the presumption of s. 17 in that these payments were presumed to have been made by the Husband with the intention of defeating the Wife’s application for ancillary relief, and the burden is on the Husband and / or Ms Lam to prove that these payments were not made with such an intention. 21.Counsel for T Ltd, Ms Wong, submitted that Ms Lam had explained the purpose of the two payments from the Husband. With respect, these were mere assertions on Ms Lam’s part, with no supporting evidence and also it is not at all clear whether these were the only payments from the Husband, as Ms Lam was vague in her affirmation, saying that “although some of the monies were given by the Respondent to T Ltd, they all in fact were repayment of loans that my brother advanced to the Respondent in the past ……”. In fact there was also a transfer of HK$4m on 23rd November 2002 to the Husband’s account, which was transferred out on 25th November 2002 to an unknown person, allegedly again pursuant to Mr. Lam’s request. At this stage, we do not know whether this transfer had anything to do with the purchase of the two properties, although the Husband said not. 22.The Husband’s evidence in relation to T Ltd was clearly inconsistent and contradictory, since earlier in February, he said he knew nothing about the company’s transactions, and now it turned out that he had signed two guarantees for the purchase of the properties. No doubt, Ms Lam’s and the Husband’s evidence will be tested in the forthcoming trial. 23.The Wife said that neither Ms Lam or Mr Lam would have the funds to purchase the two properties and the funds came from the Husband, and that T Ltd holds the two properties as nominees or in trust for the Husband. T Ltd says the properties are held for Mr. Lam. 24.In the ancillary relief trial, I will need to decide whether the two properties or T Ltd form part of the Husband’s assets and this would obviously affect T Ltd. 25.At the commencement of the hearing, all counsel have agreed that if I were to allow the joinder application, to save costs for T Ltd, T Ltd needs only to appear during the Husband’s evidence and after the Husband’s case has closed. 26.Having considered all the above circumstances, I am of the view the T Ltd ought to be joined as a party to ensure all matters may be effectually and completely determined and adjudicated upon, and also it would just and convenient to determine as to whom the two properties beneficially belong. COSTS 27.I agree with counsel for the Wife, Ms Wee, that the joinder application was a “stand alone” application and I had dealt with costs at the hearing. I set out hereafter again my orders. 28.There were three hearings : - (i) 26th August 2005
(ii) 20th September 2005
(iii) 27th September 2005
29.Having heard the three counsel, I made no order as to costs for the hearing on 26th August 2005 and 20th September 2005 as those were hearings when directions were given for T Ltd to provide further documents. So far as 27th September 2005 is concerned, there is a general rule that costs should normally follow the event and I see no reasons to depart from this. Both T Ltd and the Husband opposed the application and as the Wife had succeeded, I ordered that T Ltd and the Husband do pay the Wife’s costs equally, to be taxed if not agreed, on party and party basis, with certificate for counsel.
Ms J Wee instructed by Tony Kan & Co for Petitioner Ms L Remedios instructed by Tsang, Chan & Wong for Respondent Ms Wong instructed by m / s K C Ho & Fong for T Ltd. | ||||||||||||||||||||||||||