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Tsc v Kwh And Others

Judgment Cited authorities 11 Cited in Precedent Map Related
Vincent
Judgment Date15 June 2016
Subject MatterMatrimonial Causes
Judgement NumberFCMC2755/2014
CourtFamily Court (Hong Kong)
FCMC2755/2014 TSC v. KWH AND OTHERS

FCMC 2755 / 2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 2755 OF 2014

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BETWEEN
TSC Petitioner

and
KWH 1st Respondent
AJ Limited 2nd Respondent
JG Holdings Limited 3rd Respondent
KFC 4th Respondent
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Coram: Deputy District Judge Grace Chan in chambers (not open to public)
Dates of trial: 14 – 18 September 2015
Date of Petitioner’s written closing submission: 10 November 2015
Date of 1st-3rd Respondents’ written closing submission: 16 November 2015
Date of 4th Respondent’s written closing submission: 25 November 2015
Date of oral closing submission: 30 November 2015
Date of judgment: 15 June 2016

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JUDGMENT

(preliminary issue on 3rd party’s interest in landed properties)

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Introduction

1. This is a trial of the preliminary issue on the beneficial ownership of 4 properties registered in the name of the 1st respondent (“wife”) or companies controlled by her, ie the 2nd and 3rd respondents,[1] before the parties can proceed further in the ancillary relief proceedings to the stage of financial dispute resolution (FDR). The wife claims that she is holding 50% of the interest in these properties in trust for the 4th respondent, ie her elder sister (“Sister”). The said 4 properties (collectively the “4 Properties”), estimated by her to worth about $55.5 million, include:

Property (Date of completion) Legal Owner Price
(1) Shop at Lyndhurst Terrace
(17/11/2004)		 wife $5,680,000
(2) Office premise in Hongkong House, Wellington Street (3/10/2007) 2nd respondent $2,030,000
(3) Residential flat at Hang Fai Building, Pofulam (16/10/ 2007) 3rd respondent $1,920,000
(4) Workshop in Kut Shing Street, Chai Wan (3/6/2011) 3rd respondent $2,700,000

2. On 1 December 2014, the petitioner (“husband”) took out a summons for joinder of the 2nd and the 3rd respondents and the Sister into this case, and invites this court to try as a preliminary issue the beneficial ownership of the 4 Properties in accordance with the procedural approach set out in the English authorities of TL v ML & Other (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263, which was adopted by the Court of Appeal in Hong Kong in LWYA v KYW & others (unrep) CACV 151/2013, judgment dated 4 December 2014.

3. In TL v ML (supra), Mostyn, QC, sitting as a Deputy High Court Judge, described the task of a judge determining a dispute between a spouse and a third party in ancillary relief and the procedure that should be followed in this way:

“ [34] It is to be emphasised, 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 to 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.

…

[37] In my opinion, it is essential in every instance where a dispute arises about the ownership of property in ancillary relief proceedings between a spouse and a third party, that the following things should ordinarily happen: (i) the third party should be joined to the proceedings at the earliest opportunity; (ii) directions should be given for the issue to be fully pleaded by points of claim and points of defence; (iii) separate witness statements should be directed in relation to the dispute; and (iv) the dispute should be directed to be heard separately as a preliminary issue, before the [Financial Dispute Resolution].”

4. In this trial, pleadings are settled by senior counsel or counsel (as the case may be). The Sister, the wife and the husband all gave evidence. The wife also called her friend (“Anita”) as her witness. The husband’s witness is an estate agent (Mr Woo), but neither the wife nor the Sister required him to attend the trial for cross examination.

Background facts

5. For the purpose of this trial, the parties have agreed on a chronology and a property list for preliminary issue.[2] I do not propose to set out all the facts therein. I would only highlight the salient facts, to be supplemented by those relevant facts which are not disputed or are indisputable upon conclusion of the trial, unless expressly stated the otherwise.

(i) The parties

6. The couple of this case was married in 1988. They have a son and a daughter, both now over 18. Marital discord began to take shape in/about early 2000s. They finally separated in January 2014, when the husband moved out of the matrimonial home. He presented his petition 2 months later. By then, the marriage lasted for 26 years.

7. The husband is now 56 years old and has been practising as a medical doctor for about 30 years. He is a very meticulous record-keeper. His list of documents filed for this trial, containing 463 items of documents with many dating back to the early 1980s, can serve to prove how meticulous he can be. He literally recorded in every detail the money he spent every day since 1993 and kept cheque stubs spanning back to the 1990s.

8. Before the 2000s, he was rather active in property investment and usually acquired properties via property-holding companies, including “MF” [3] and “MI”. [4] It is indisputable that he was the dominating party in the marriage who was in control of the finances of the family at all material times. Although the wife was a director of MF, it was he who exercised de facto control over it. Despite his repeated allegation in his affidavit that MF is a family company, it is fair to say that he actually treats it as his own company. All the company records and accounts are kept by him. His dominance can also be shown by the fact that many of the cheque stubs spanning through the 1990s to early 2000 of the wife’s personal bank account were written by him. He has even kept the documents of the estate of the late mother of the wife, eg the IRD questionnaire in respect of Mei King Mansion.[5] Even for the home mailbox, he has not denied that he was the only person with access.

9. The wife is 56 years old now. She was an air hostess before the marriage. Since about the marriage, she has become a housewife. It is a common ground that she is not a good record-keeper.

10. Her maiden family has an unfortunate history. Her late father ran a tailoring business and had another family in Japan, though he continued to provide for the family in Hong Kong financially. Her late mother (“Mother”) was an illiterate and could not speak the Cantonese dialect. The Mother led a very frugal life in order to save up for the future of her only son who, sadly, was mentally retarded at all material times (“Brother”). The wife is the youngest child of her maiden family. She has 2 elder siblings:

(1) the Sister, 73 years old and totally illiterate. She was divorced from her husband in/about 1995. They have 3 children, a daughter (who is alienated from the family for over 20 years) and 2 sons (“Nephews”) who are both mentally retarded. Upon divorce, a property settlement order was made to the effect that her husband would hold their matrimonial home at Po Tech Building in trust for the Nephews. Upon her husband’s death, she, together with the wife, become the trustees of the Nephews.

(2) the Brother who is, as said, mentally retarded and has to rely on the others for his daily care. He was never married. He died in 2000, due to an alleged medical negligence incident, intestate and leaving no issue.

11. In such circumstances, it is indisputable that the wife, being the only literate and educated child in the family, had to take up the burden of managing her maiden family matters at a young age. In fact, though disputed in his point of defence, [6] the husband concedes during cross examination that it was the wife who helped managing the Mother’s financial matters before her death, and that the Sister and the Brother both trusted her with their money.[7] It is also accepted by the husband that the wife has been very loyal and supportive to her elder siblings.[8]

(ii) Death of the Mother

Letters of administration was granted to the wife as the sole administratrix on 19 March 1992. The net principal value of the Mother’s estate as stated in the schedule attached to the Letters of Administration (“Schedule”) was about $1,423,000, comprising of:

(1) a property at Mei King Mansion (“Mei King Mansion”) then worth of about $800,000;

(2) bank accounts and safe deposit box worth about $363,000;

(3) household goods and personal effects worth about $260,000.

13. The actual total worth of the Mother’s estate is in dispute, because the wife alleges that its actual total value is more than what appeared in the Schedule. More will be discussed later in this judgment.

(iii) Purchase of Tong Building & Shop B

14. It is indisputable that the source of fund for the purchase of the 4 Properties come from the sale proceeds of the following 2 properties:

(1) A flat in Pofulam (“Tong Building”);

(2) A shop in the western district (“Shop B”).

15. Tong Building was purchased in the sole name of the wife on 14 February 1992, which pre-dated the Letters of Administration. She claims that it was purchased with the Mother’s money, to which the husband denies and/or puts her to strict proof. But it is a common ground that the purchase price did not come from the husband direct. Since its purchase, Tong Building was solely occupied by the Sister and/or Brother (until his death in 2000) and/or the Nephews at different stages.

16. In 2004, the High Court endorsed the application of...

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