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HCMP 2192/2011
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
MISCELLANEOUS PROCEEDINGS NO. 2192 OF 2011
(ON AN INTENDED APPEAL FROM HCMP 243/2011 AND HCMP 522/2011)
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HCMP 243/2011
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IN THE MATTER of the Land Registration Ordinance, Cap 128
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and
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IN THE MATTER of Units “A” and “B” on the 1st Floor, Garden “B”, and Car Parking Spaces No. 7 on the Ground Floor of Block A and Nos. 2 and 3 on the Ground Floor of Block B of No. 3 Severn Road, Hong Kong (as more particularly described in Schedule A and Schedule B hereto) upon Rural Building Lot No. 155 and the extension thereto (the “Properties”)
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and
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IN THE MATTER of a resulting or constructive trust whereunder the Properties are held for the Plaintiff by the 1st Defendant hereto
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and
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IN THE MATTER of Order 113 of the Rules of High Court, Cap 4A
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AND
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HCMP 522/2011
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IN THE MATTER of Order 113 of the Rules of High Court, Cap 4A
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and
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IN THE MATTER of the land and premises known as:
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(a) Unit A of the 1st Floor, Severn Villa, 3 Severn Road, The Peak, Hong Kong; |
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(b) Unit B of the 1st Floor, Severn Villa, 3 Severn Road, The Peak, Hong Kong; |
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(c) Car Park Space Nos. 1 to 5 on the Ground Floor of Block B, Severn Villa, 3 Severn Road, The Peak, Hong Kong |
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BETWEEN
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MIMI KAR KEE WONG HUNG |
Plaintiff |
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(also known as MIMI KAR GEE WONG HUNG) |
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and
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SEVERN VILLA LIMITED |
1st Defendant |
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APPLIED DEVELOPMENT
HOLDINGS LIMITED |
2nd Defendant |
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RAYMOND KIN SANG HUNG |
3rd Defendant |
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(Consolidated by the Order of Deputy High Court Judge Carlson dated 7 June 2011) |
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Before: Hon Kwan and Fok JJA in Court
Date of Decision: 12 January 2012
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DECISION
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Hon Kwan JA:
1. This is an application for leave to appeal an interlocutory order made by Deputy Judge Carlson on 24 October 2011. The applicant and intended appellant is Mimi Kar Kee Wong Hung (“Ms Wong”). The respondents are Severn Villa Limited (“SVL”) and Applied Development Holdings Limited (“ADHL”). Ms Wong is the plaintiff and SVL and ADHL are the 1st and 2nd defendants in HCMP 243/2011. SVL and ADHL are the 1st and 2nd plaintiffs in HCMP 522/2011 and Ms Wong is the defendant. HCMP 243/2011 and HCMP 522/2011 have been consolidated by the Judge on 7 June 2011. Ms Wong was ordered to be the plaintiff in the consolidated proceedings, and SVL, ADHL and Raymond Kin Sang Hung (“Raymond Hung”) were ordered to be the 1st, 2nd and 3rd defendants respectively. Raymond Hung does not take part in the present application.
2. Both parties have lodged a total of four box files in this application. This court has power to determine the application on the basis of written submissions only without a hearing. I consider it appropriate to adopt this course, as the issues for resolution are relatively simple and have been presented clearly in the written submissions in the court below and in the summary written arguments to this court.
The background
3. Ms Hung and Raymond Hung used to be married and they founded Applied Electronics Limited, the original holding entity of the electronics business which has become the listed group of companies led by ADHL since 1989. Ms Wong had served as the chairman and an executive director of ADHL from May 2005 to June 2010 and Raymond Hung has been the managing director from 1988 to April 2011.
4. In 1989, a plot of land in Santa Monica, California was purchased and four townhouses were constructed on the land. Ms Wong was the registered owner of the landed property in Santa Monica (“the Santa Monica Property”).
5. In 2001, the Santa Monica Property was sold at a profit. A substantial part of the proceeds of sale were used to acquire four units in Severn Villa at No. 3 Severn Road, Hong Kong (“the SV Investment Properties”). The balance of the purchase price was funded by mortgage loans obtained from banks. SVL is the registered owner of the SV Investment Properties. It is a wholly owned subsidiary of ADHL. Since 2003, Ms Wong has resided in two of the units of the SV Investment Properties (“the Severn Road Property”).
6. In 1999 Ms Wong petitioned for divorce in FCMC 1802/1999 and a decree nisi was granted in June that year. The parties executed a deed of divorce dated 20 November 2001. Notwithstanding that deed, final resolution of their respective financial shares in the matrimonial estate has yet to be determined. In August 2010, Ms Wong and Raymond Hung obtained an order by consent for the ancillary relief proceedings in FCMC 1802/1999 to be transferred to the High Court in HCMC 9/2010. The Judge has characterised this as very hostile litigation from the start with nobody prepared to give any quarter[1].
7. In December 2010, SVL and ADHL served a notice to quit on Ms Wong giving her one month to vacate the Severn Road Property.
8. In January 2011, Ms Wong applied to join SVL and ADHL as parties to the application for ancillary relief in HCMC 9/2010 with a view to have the beneficial ownership of the Severn Road Property determined. This was opposed by SVL and ADHL. On 18 February 2011, she issued the originating summons in HCMP 243/2011 seeking declarations that she is the beneficial owner of the Severn Road Property under a constructive or resulting trust, notwithstanding that the legal title is in the name of SVL. How this issue is to be determined would affect an important asset of a publicly listed company and delay in resolving this may result in ADHL being de-listed[2].
9. On 25 March 2011, SVL and ADHL issued the originating summons in HCMP 522/2011, seeking a possession order directed to remove Ms Wong from her residence at the Severn Road Property.
10. The two originating summonses were scheduled to be heard over two days on 8 and 9 June 2011.
11. On 11 May 2011, Ms Wong filed her affirmation in reply and her solicitor Mr Glynn also filed an affidavit. The contents of these affidavits challenged the whole basis of ADHL and SVL’s claim for possession. As there would need to be cross-examination on the affidavits filed, the trial of the two originating summonses could not proceed in June.
12. On 7 June 2011, the Judge gave a number of case management directions to deal with the escalation of the factual dispute. He consolidated HCMP 243/2011 and HCMP 522/2011 and joined Raymond Hung as the 3rd defendant in the consolidated proceedings. Following the procedure in TL v ML [2006] 1 FLR 1263 where the ownership of property by a third party is affected by an ancillary relief application, he directed that the consolidated proceedings should be heard and determined first, as the outcome of who is the beneficial owner of the Severn Road Property would have a very important impact on the ancillary relief application. Hearing dates over 16 days in October and November 2011 were provided for the trial of the consolidated proceedings, with tentative dates fixed in March 2012 for the hearing of the ancillary relief application.
13. The Judge also directed the parties to serve pleadings in the consolidated proceedings, as if the proceedings were commenced by writ. He made directions for the filing of further trial affirmations and the further discovery of documents. As the Judge has remarked, the case has grown to become so unrecognisable from what had been expected in March 2011 when two days in June were provided for the hearing of the originating summonses[3].
14. The factual disputes as summarised by the Judge[4] are along these lines.
15. Ms Wong has alleged that in 1989, her brother, then a building contractor in Los Angeles, told her of a building plot in Santa Monica for development. She put down a deposit of US$25,000 using her personal cheques. The balance of the purchase price of US$825,000 was paid by her by means of loans advanced to her by ADHL or one of its subsidiaries. Four townhouses were built in the early 1990s. Again this was done by further loans advanced to her by ADHL or one of its subsidiaries. The townhouses were rented out at first and sold at a profit in 2001. A substantial part of the proceeds of sale, having been channelled back into the ADHL group, were used to purchase the SV Investment Properties.
16. For their part, SVL and ADHL (supported factually by Raymond Hung) have alleged that all the purchase and construction funds for the Santa Monica Property were provided by the ADHL group, and when the Santa Monica Property was sold, the proceeds came back into the group. The SV Investment Properties were purchased as an investment by ADHL through SVL and it was financed by a combination of cash provided by the group and a substantial balance was raised on mortgage. There was never any loan to Ms Wong. Although the Santa Monica Property may have been purchased through her, this was done by her for the ADHL group which she and Raymond Hung controlled and were directors of. The purchase of the SV Investment Properties was a separate investment and a part of it, namely, the Severn Road Property, was provided to Ms Wong as a residence as part of her benefits as an executive director of ADHL.
17. Given the parties’ respective stances, the internal accounting treatment by ADHL of the funds used for the acquisition of the Santa Monica Property and the proceeds of sale from this property, and the manner in which such proceeds were channelled towards the acquisition...
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