Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Fok Hei Yu And Chow Wai Shing Daniel, Joint And Several Trustees In Bankruptcy Of The Property Of Chen Yen Fei, A Bankrupt v Chen Yen Fei And Others

Judgment Cited authorities 8 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date10 April 2024
Neutral Citation[2024] HKCFI 914
Subject MatterMiscellaneous Proceedings
Judgement NumberHCMP701/2023
Year2023
HCMP701/2023 FOK HEI YU and CHOW WAI SHING DANIEL, Joint and Several Trustees in bankruptcy of the Property of CHEN YEN FEI, a bankrupt v. CHEN YEN FEI AND OTHERS

HCMP 701/2023

[2024] HKCFI 914

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 701 OF 2022

_______________

IN THE MATTER of Section 58 of the Bankruptcy Ordinance (Cap 6), Section 6 of the Partition Ordinance (Cap 352) and the Inherent Jurisdiction of the Court
and
N THE MATTER of the ESTATE of CHEN YEN FEI, a bankrupt

_______________

BETWEEN
FOK HEI YU and CHOW WAI SHING DANIEL,
Joint and Several Trustees in bankruptcy of
the Property of CHEN YEN FEI, a bankrupt
 Applicants
and
CHEN YEN FEI 1st Respondent
LEE YUK SUET 2nd Respondent
HOPECORNS INDUSTRIAL LIMITED 3rd Respondent
NO.1 PRINTING FACTORY LIMITED 4th Respondent

_______________

Before: Deputy High Court Judge Jat SC in Court
Date of Hearing: 4 - 5 and 7 March 2024
Date of Judgment: 10 April 2024

________________

J U D G M E N T

________________

Introduction and Parties

1. Mr Chen Yen Fei (“Mr Chen”) and Mdm Lee Yuk Suet (“Mdm Lee”), the 1st and 2nd Respondent respectively in these proceedings, were married to each other in Mainland China in 1967. They were divorced in Hong Kong on 3 December 2020 when a Divorce Decree Absolute was granted in FCJA 895/2016. Pursuant to an order made by HH Judge KK Pang dated 31 July 2020 (“Ancillary Relief Order”), Mr Chen’s “legal and beneficial interests” (法律及實益擁有權) in the following properties were to be transferred to Mdm Lee upon making of the Decree Absolute:

1.1. Flat D (together with the balcony and utility platform thereof) on 29th Floor of Tower 2, Serenade, No. 11 Tai Hang Road, Hong Kong (“Serenade Flat”);

1.2. Car Parking Space No. 37 on L3 Floor, Serenade, No. 11 Tai Hang Road, Hong Kong (“Serenade CP”);

1.3. Unit B on 17th Floor, Fok Ying Building, Nos. 379 & 381 King’s Road, Hong Kong (“Fok Ying Flat”);

1.4. 50% shares of and in Hopecorns Industrial Limited (“Hopecorns”), the 3rd Respondent; and

1.5. 55% shares of and in No. 1 Printing Factory Limited (“No.1 Printing”), the 4th Respondent.

(For convenience, unless the context indicates otherwise, the three landed properties will be collectively referred to as “Properties”, while all the properties will be collectively referred to as “Subject Assets”.)

2. Both Hopecorns and No. 1 Printing (collectively “Companies”)　are Hong Kong incorporated companies. Mr Chen and Mdm Lee are the only registered shareholders of the Companies, with Mdm Lee holding 50% of the shares of Hopecorns and 45% of the shares of No.1 Printing. Based on the records of the Land Registry, Hopecorns owns the following landed properties in Hong Kong:

2.1. 4th Floor including Portion of the Flat Roof thereof, Hong Kong Chinese Bank Causeway Bay Centre, 42-44 Yee Wo Street, Hong Kong; and

2.2. Flat A on 12th Floor & Portion of Roof, Luen Wo Apartments, No 308 Electric Road, Nos. 9, 11, 13, 13A, 13B & 15 Tin Chong Street, Hong Kong.

3. On 18 June 2020, a Bankruptcy Order was made against Mr Chen in HCB 6092/2019. The Applicants are Mr Chen’s Trustees in Bankruptcy.

4. As will be immediately seen from the brief chronology set out above, the Bankruptcy Order was made (18 June 2020) prior to the grant of the Ancillary Relief Order (31 July 2020) and the Decree Absolute (3 December 2020).

5. By the Originating Summons issued herein on 8 May 2023, the Applicants apply for various relief, the principal ones being:

5.1. An order setting aside the Ancillary Relief Order and vacating the registration of the Ancillary Relief Order against the Properties at the Land Registry;

5.2. Declarations that Mr Chen’s interest in the Properties and the Companies have vested in the Applicant pursuant to s.58 of the Bankruptcy Ordinance (Cap. 6) and that Mdm Lee is not entitled to Mr Chen’s interest in the Properties or shareholding of and in the Companies;

5.3. An account of all and any rental proceeds received from the Properties since the Bankruptcy Order made on 18 June 2020;

5.4. An order for sale of the Properties pursuant to s.6 of the Partition Ordinance (Cap. 352) and consequential directions; and

5.5. An order that the Applicants be registered as the shareholder of the Companies in respect of Mr Chen’s shareholding.

6. Mdm Lee served a Counter Notice, seeking inter alia, a declaration that Mr Chen’s interest in the Subject Assets have been held on trust for Mdm Lee and that the Applicants are not entitled to them, and for the Bankruptcy Order registered at the Land Registry against the Properties be vacated.

Procedural Irregularities

7. A number of procedural irregularities need to be addressed before I turn to consider the substantive issues in this case.

8. First, Mr Chen did not file any Acknowledgment of Service. According to him, he resides on the Mainland and seldom returns to Hong Kong unless there are specific matters he has to deal with here. It is not clear whether he had received the Originating Summons, but he has made an affirmation on behalf of Mdm Lee in which he described himself as the 1st Respondent. He was present at the hearing, apparently for the purpose of being cross-examined on his affirmation. What he was asked whether he was only attending as a witness of Mdm Lee, he appeared not to appreciate that he was a party to the proceedings. After having been explained the difference between participating as a party, or only as a witness, he elected to participate as a party. Mr. Nicholas Oh, counsel for the Applicants, sensibly did not object to Mr Chen participating in that capacity.

9. Another procedural irregularity is that the Companies have no legal representation, and no leave has been applied for or obtained to allow the Companies to be represented by one of its directors. Mdm Lee, who filed Acknowledgment of Service on behalf of the Companies, is legal represented but Mr Ivan Cheung, counsel for Mdm Lee, informed me that he and his instructing solicitors have no instructions to act for the Companies. Accordingly, the Companies are acting in person and absent at the hearing.

10. As will be explained presently, these irregularities did not create any insurmountable difficulties to the hearing. However, it is nonetheless regrettable that the parties’ legal advisers failed to address these “loose ends” prior to the hearing (in this connection, I pause to observe that the main responsibility would lie with the Applicants, being the main party prosecuting the case, to have attended to these).

11. Thirdly, the Applicants made an application to amend the Originating Summons on the second day of the hearing. This was prompted by questions from the Court as to whether this Court has jurisdiction to set aside the Ancillary Relief Order made by the Family Court, and whether the Applicants had locus to set aside the Ancillary Relief Order. The amendment sought was to change Relief (1) from an order setting aside the Ancillary Relief Order to declaratory relief that certain paragraphs of that Order are null and void. This is unsatisfactory because Mr Chen understandably had difficulty in appreciating how the amendment might affect him, and that the Companies are absent. I will return to the application to amend later in this Judgment.

Issues for Determination

12. Turning to the substantive issues that arise for determination, the Applicants’ case is simple:

12.1. As from 18 June 2020 when the Bankruptcy Order was made, Mr Chen’s properties became vested in his bankruptcy estate: Bankruptcy Ordinance (Cap. 6), ss. 43 and 58.

12.2. On the other hand, the Ancillary Relief Order, being what is known as “property adjustment orders”, does not take effect until the Decree Absolute is granted: Matrimonial Proceedings and Properties Ordinance (Cap.192), ss. 6, 25(1)(b), which did not take place until 3 December 2020.

12.3. Accordingly, this is a straight forward case of the Applicants taking priority over the purported transfer of the Subject Assets.

13. In support of his main submissions, Mr Oh relies on Re Flint [1993] Ch 319 and McGladdery v McGladdery [1999] 2 FLR 1102.

14. In McGladdery, Thorpe LJ observed that a section in the then 17th edition of Rayden and Jackson on Divorce and Family Matter was erroneous:

“The section [in Rayden and Jackson] is expressed thus:

‘The effect of an adjudication that a spouse is bankrupt is to vest his assets in his trustee [in] bankruptcy. Despite this, the court in family proceedings has jurisdiction to make an order for a lump sum or a property adjustment order against the husband whilst he remains bankrupt. Such an order also cannot be made against the trustee in bankruptcy.’

The authorities on the point seem to me to be quite clear. The case of re Holliday [1981] 1 Ch 405 establishes that the property adjustment order cannot be made against a bankrupt former spouse because the property of the bankrupt vests in the trustee in bankruptcy against whom an order under section 24 [of the Matrimonial Causes Act 1973] cannot be made.”

15. In Re Flint at 325C-E, Deputy High Court Judge Nicholas Stewart QC accepted that in what is called a “phase 3” case, the transfer of properties in the matrimonial proceedings is void against the trustee in bankruptcy:

“The new law in relation to personal insolvency, governed mainly by the Insolvency Act 1986, involved three phases: (1) up to presentation of a petition; (2) from presentation up to the making of a bankruptcy order; and (3) after the bankruptcy order, when the trustee acquires title to the bankrupt’s estate, but not so as to relate back to the period before the order.

… during phase 3 it was no...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT