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

Kcma v Abc

Judgment Cited authorities 12 Cited in Precedent Map Related
Vincent
Judgment Date21 November 2019
Neutral Citation[2019] HKCFI 2822
Year2019
Judgement NumberHCMC1/2019
Subject MatterMatrimonial Causes
CourtCourt of First Instance (Hong Kong)
HCMC1/2019 KCMA v. ABC

HCMC 1/2019

[2019] HKCFI 2822

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 1 OF 2019

________________________

BETWEEN

KCMA Petitioner
and
ABC Respondent

________________________

Before: Hon B Chu J in Chambers (Not Open to the Public)
Date of Hearing: 24 September 2019
Date of Decision: 21 November 2019

________________________

D E C I S I O N
(on Joinder)

________________________

1. These are matrimonial proceedings and presently before this Court is a summons issued by the petitioner wife (“W”) for joinder, interlocutory injunction and disclosure against the husband (“H”) and other non-parties as set out below (“Summons”).

2. The application for joinder (“Joinder Application”) is to join :

(1) Mr Paras B Barnett (“PBB”), in his capacity as trustee (“Trustee”) of two trusts which I shall refer to as (i) the Family Trust and (ii) the Education Trust (collectively “US Trusts”);

(2) The father (“K”) of H, to whom H had transferred an apartment in India (“Indian Apartment”) in September 2016, which was later settled by K in a trust in India (“Indian Trust”);

3. The application for injunctions (“Injunction Application”) is sought by W respectively against H, the Trustee and K restraining, amongst other things, each of them in dealing with the disputed assets under the US Trusts and/or the Indian Apartment.

4. The application for specific discovery (“Discovery Application”) is sought by W against (i) H and the Trustee for various information/documents including the trust accounts of the US Trusts, and (ii) H and K to account for and to provide information including trust accounts of the Indian Trust now holding the Indian Property.

5. This decision is on the Joinder Application only.

6. Counsel Mr Richard Todd appeared at the hearing for W and Mr Robin Egerton appeared for H and his father K. Mr Leon Ho appeared for PBB in his capacity as the Trustee of the Family Trust only. PBB in his capacity as the Trustee of the Education Trust had no legal representation and was absent at the hearing.

Brief Background

7. H and W met in August 1999 and were married in October 2001. They separated in late 2016. There are three children of the family, the eldest being a boy now aged 15, and the two younger children being girls, now aged 13 and 9 respectively (collectively “Children”).

8. W is a full time housewife and has not worked since 2000. The Children now live with W in a property at South Bay Close, Hong Kong.

9. It was W’s case that in about 2006, the parties bought the Indian Apartment with their family funds and that the Indian Apartment was purchased in H’s sole name by reason of him being an Indian national. Subsequently, on 12 September 2016, H transferred the Indian Apartment into his father K’s name, and later on 30 August 2017, K settled the apartment into the Indian Trust. The Indian Apartment is said to be worth about US$2.3m.

10. On the other hand, it was H’s case that the Indian Property was a co-investment by him and his father K and that it was initially purchased in H’s name as they could take advantage of his non-resident Indian status and to obtain preferential mortgage lending rates from local Indian banks. It is further H’s case that K had contributed towards the expenses and that the apartment would be made available for the use of H’s parents. According to H, there was considerable delay in construction and handover of the Indian Apartment and eventually it was on 12 September 2016 that the title was conveyed into H’s name and on the same day it was further conveyed by H to K. As said earlier, K later transferred the Indian Property to the Indian Trust. The Children, K and K’s wife (H’s mother) are named among the 5 beneficiaries. Both H and W have been excluded.

11. It was not disputed that H had set up two BVI companies which shall simply be referred to as (i) Intero and (ii) Bremen respectively on 2 July 2009 and on 3 July 2012[1]. At the time, H was the sole shareholder holding one share in each company and he was the sole director of each company. Intero was said to have been set up to facilitate a capital injunction into an investment management company of which H works as a “Partner” and H is said to hold an interest in the holding and/or related companies through Intero. Bremen was set up to hold 3 pieces of land in St Thomas in the US Virgin Islands.

12. According to a “Trust Structure” produced by H, there was also a trust set up by him in 2013, with W and the Children as beneficiaries, which I shall simply call “Insurance Trust”[2]. There is not a subject matter of the Summons.

13. In 2015, the marriage went into difficulties. According to W, on 6 July 2015, H transferred a total of HK$7.5m from his personal account to Intero[3].

14. The parties underwent marriage counselling between September 2015 until March 2016 and it was during this period that H set up the two US Trusts, according to W, without her knowledge and/or consent.

15. The Family Trust was set up by H on 1 November 2015, initially as a New Hampshire trust.

16. Upon setting up the Family Trust on 1 November 2015, H transferred his one share (100% shareholding) in Intero to the then New Hampshire trustee of the Family Trust[4]. This was followed by H transferring HK$2.2m from his personal bank account to Intero[5].

17. It would appear on 1 November 2015 that H also transferred his one share (100% shareholding) in Bremen to then new Hampshire trustee of the Family Trust[6]. On 1 July 2016, H formally set up the Education Trust, also initially as a New Hampshire trust. On the same day, the one share in Bremen was transferred to the Education Trust[7].

18. Further, on 1 July 2016, the Family Trust entered into a sale and purchase agreement to “sell” the 100% shareholding in Intero to Bremen. Bremen then borrowed a sum of US$10.5m from the Family Trust for the “purchase” and Bremen issued a promissory note dated 1 July 2016 for US$10.5m to the Family Trust (“Promissory Note”). The maturity date of the Promissory Note is 31 December 2026 and Bremen agreed, amongst other things, to pay interest to the Family Trust on the unpaid principal amount at the rate of 5% compound annually until the date such accrued interest is repaid in full.

19. In short, as a result of the above transactions on 1 July 2016, the assets of the Family Trust comprised of primarily the Promissory Note, whereas 100% of the shareholding in Intero is now owned by Bremen, and in turn 100% of the shareholding in Bremen is owned by the Education Trust of which H and W are not beneficiaries. Bremen’s assets are said to be worth about HK$93m, consisting of[8]:

(i) 3 pieces of land in US Virgin Islands worth net of about HK$42,381,300

(ii) 100% shareholding in Intero worth about HK$50,650,393

20. W issued the divorce petition in November 2016.

21. According to W, it was only when she received H’s Form E filed on 1 February 2017 that she discovered H’s setting up of the US Trusts and the transfers into the US Trusts and also the Indian Apartment being transferred into K’s name. She had pointed out that Intero and Bremen had been held by H in his personal name for over 6 years until the respective transfers into the US Trusts which were effected as said earlier, after the parties attended marriage counselling in September 2015.

22. Shortly before H filed his Form E, the Family Trust and the Education Trust were relocated by H from New Hampshire to Nevada USA in January 2017.

23. In so far as the Family Trust is concerned, a trust deed was executed on 1 January 2017 under the Nevada law, with H as the initial “Settlor” and PBB as the Trustee (“Trust Agreement”)[9]. The Trustee acknowledged receipt of property received from the prior trustee and agreed to administer that property and all other property received in accordance with the provisions of the Trust Agreement. The Family Trust is said to be irrevocable.

24. H is named as the sole “Investment Director” as well as the “Trust Protector” in the Trust Agreement. Section 4.3 sets out that the successor Trust Protector shall be a committee comprising of H’s father K, H’s brother, H’s “Spouse”, and two of H’s friends.

25. “Beneficiary” is defined in Section 5.1 to be (i) H, (ii) W, (iii) the descendants of H and W, (iv) certain charitable organizations as contingent beneficiaries, and (v) any person whom the Trustee adds as a “Beneficiary” under the Trust Agreement. Section 5.2 provides for the distributions of the “Trust Property” by the Trustee. Further, under section 5.4, the Trustee has the power to add or exclude “Beneficiaries” and the Trustee has the power to exclude irrevocably any person (other than H or W) as a “Beneficiary”. The spouses of the “Beneficiaries”, save H and W, are “Excluded Persons”

26. As for the Education Trust, according to a summary produced by W[10], the “Investment Director” is H and the “Protector” is also H with power to appoint, failing which, a committee comprising of (i) H’s father K, H’s brother, and a friend. The “Beneficiaries” of the Education Trust are (i) H’s descendants, (ii) W’s descendants (by name) including those born after divorce. Thus, the Children are “Beneficiaries” and both H and W are “Excluded Persons”.

27. On 29 August 2017, W issued a Notice of Application (“Notice”) for, amongst other things, (i) an avoidance of dispositions order under section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (MPPO) (“s17 Application”); (ii) a variation of nuptial settlement under sections 6(1)(c) and (d) of the MPPO (collectively “s6(1)(c) Application”).

28. By the s17 Application, W is seeking to set aside, amongst other things, the following dispositions made by H[11]:

In relation to the US...

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