A A
B B
FCMC 7628 / 2023
[2025] HKFC 56
C C
D IN THE DISTRICT COURT OF THE D
HONG KONG SPECIAL ADMINISTRATIVE REGION
E E
MATRIMONIAL CAUSES
F
NO. 7628 OF 2023 F
----------------------------
G G
BETWEEN
H H
SQW Petitioner
I I
and
J J
LPC Respondent
K K
NRCL Intended Intervener
L L
----------------------------
M M
Coram: Her Honour Judge Elaine Liu in Chambers (Not Open to Public)
N N
Date of Hearing: 19 March 2025
O Date of Decision: 19 March 2025 O
P P
___________________________________________________
Q Q
REASONS FOR DECISION
(Joinder, Forum involving 3rd party charging order)
R R
____________________________________________________
S S
T T
U U
V V
- 2 -
A A
A. The Application
B B
1. This is NRCL’s application by a Summons dated 18 October
C C
2024 (“the Summons”) for joinder in these matrimonial proceedings as
D intervener “on the issue of interest in and/or disposition of the matrimonial D
home property” (“Joinder Application”).
E E
F 2. After hearing the parties’ substantive argument, I made the F
following orders in the Joinder Application:
G G
H 2.1. NRCL be joined in the ancillary relief proceedings of this H
action on the issue of NRCL’s interest in the parties’
I I
matrimonial home (“MH”), if any.
J J
2.2. The Respondent be renamed as the 1st Respondent in this
K K
action.
L L
2.3. NRCL be renamed as the 2nd Respondent in this action.
M M
N
2.4. Costs of the Joinder Application (except for today’s hearing) N
O
be in the cause of the question whether the 2 nd Respondent O
shall receive an award out of the value of the MH.
P P
Q 2.5. The 2nd Respondent do pay the Petitioner and the 1st Q
Respondent’s costs of today’s hearing to be taxed if not
R R
agreed on party and party basis, with certificate for counsel.
S S
2.6. The Petitioner and the 1st Respondent’s own costs be taxed in
T T
accordance with the Legal Aid Regulations.
U U
V
- 3 -
A A
B 3. These are the reasons for my decision. B
C C
B. Background
D D
4. The parties were married in February 2005. This is a long
E E
marriage of 18 years. They have a child born in December 2006, now aged
F 18. F
G G
5. The major family asset of the parties is the MH acquired by
H the Respondent (“H”) prior to their marriage. H is the sole legal and H
beneficial owner of the MH. Both parties and the adult child are residing
I I
in the MH.
J J
6. NRCL is a moneylender who had lent a loan to H in the sum
K K
of $350,000 on 17 June 2019. Subsequently on four occasions, NRCL
L granted loans to H for refinancing of his then existing liabilities. L
According to NRCL, the latest one was granted in January 2023 in the sum
M M
of $980,000 (“the Loan”).
N N
O
7. On 11 July 2023, the Petitioner (“W”) presented a petition for O
divorce on the ground of unreasonable behaviour (“FC Action”). She
P P
registered a Form 251 in the Land Registry against the MH on 1 August
Q 2023. Q
R R
8. About a week later (8 August 2023), NRCL sent H a demand
S letter for his defaulted repayment of the Loan. H did not make the S
T T
1
Notice of Intention to Proceed with an Application for Ancillary Relief.
U U
V
- 4 -
A A
repayment. On 16 August 2023, NRCL issued a writ in the District Court
B (“DC Action”) against H for recovery of the outstanding Loan and interest. B
C C
9. On 19 September 2023, H and W appeared in person at a first
D appointment hearing in the FC Action before Deputy Judge J Chow (as she D
then was). The Deputy Judge made orders for directions on their ancillary
E E
relief dispute and recorded in the Recital the following consent of the
F parties and H’s undertaking in Chinese (“September Consent”): F
G G
“又基於雙方同意 ，在房委會的同意下，答辯人以低
H H
（sic） 價港幣 2,000,000 元出售【地址】，扣除所有
I 出售開支，及清還該物業的押記令負債後，答辯人向 I
呈請人及法院承諾，承諾（sic）餘款須於成交後 7 天
J J
之内繳存法院”
K K
L 10. W contended that she did not consent to the settlement of the L
outstanding Loan from the sale proceeds of the MH. She (acted in person)
M M
took out a Summons in the FC Action on 3 April 2024 seeking to remove
N from the September Consent the phrase “及清還該物業的押記令負債後” N
(“April Application”). W also took issue of H’s failure to serve (while he
O O
acted in person) his evidence in opposition within the time allowed in the
P unless order given by Master TK Lam. H (through his counsel) submitted P
today that he will take out an application for relief from sanction.
Q Q
R 11. In the meantime, NRCL continued its claim in the DC Action R
as follows:
S S
T T
U U
V
- 5 -
A A
11.1. On 6 December 2023, NRCL entered a judgment in default of
B H’s appearance (“DC Default Judgment”). B
C C
11.2. On 9 January 2024, NRCL applied in the DC Action for a
D charging order over the MH. D
E E
11.3. In February 2024, Master Li raised requisitions on clerical
F errors and calculations of interest on the judgment debt. F
NRCL answered these requisitions by supplemental
G G
affirmation.
H H
11.4. On 25 March 2024, in default of H’s appearance, Master Li
I I
granted a Charging Order Nisi (“Charging Order Nisi”) over
J the MH in favour of NRCL. J
K K
11.5. On 13 June 2024, the Charging Order Nisi was made absolute
L (“Charging Order Absolute”) by an order made by Master L
Chak, again in default of H’s appearance.
M M
N N
12. As W is not an owner of the MH nor a party to the Loan, she
O
did not have notice of the above proceedings in the DC Action. O
P P
13. W through her solicitors assigned by the Director of Legal Aid
Q discovered in early June 2024 from the land search records of the MH a Q
registration of the Charging Order Nisi.
R R
S 14. W (with legal representation) took out a Summons in the DC S
Action (“W’s DC Summons”) on 24 July 2024, seeking orders that:
T T
U U
V
- 6 -
A A
14.1. W be joined as a party to the DC Action;
B B
14.2. the Charging Order Absolute be set aside;
C C
D 14.3. the Charging Order Nisi be stayed, and the application for D
making the Charging Order Nisi absolute be adjourned to be
E E
dealt with in the FC Action.
F F
15. On 28 August 2024, DC Master J Chow granted an order to
G G
join W as an intervener in the DC Action and adjourned the argument of
H W’s DC Summons to 21 November 2024 before another DC Master. H
I I
16. As mentioned above, NRCL took out this Joinder Application
J in the FC Action in October 2024. J
K K
17. DC Master R Chu heard the parties’ substantive argument on
L W’s DC Summons on 21 November 2024, and made the following orders L
(“DC Adjournment Order”):
M M
N
“Upon the undertaking of [NRCL] to stay the proceedings N
O
and to withhold from and/or stay execution of the O
Charging Order Absolute dated 13 June 2024 until the
P P
ancillary relief matter in FCMC 7628/2023 has been
Q determined by the Family Court, Q
R R
IT IS ORDERED that:
S 1. [W’s DC Summons] be adjourned sine die with S
liberty to restore on a date not before the
T T
U U
V
- 7 -
A A
determination of [NRCL]’s Summons dated 18
B October 2024 to intervene in FCMC 7628/2023; B
C C
2. Liberty to apply;
D D
3. Costs reserved …”
E E
F 18. This Court was not provided with the transcript of the hearing F
before Master R Chu nor the reasons for his decision. For want of evidence,
G G
I declined to accept the parties’ submissions on the suggested reasons for
H the DC Adjournment Order. On a plain reading of the Order, its practical H
effect is:
I I
J 18.1. W’s DC Summons was adjourned pending the determination J
of the Joinder Application by this Court. In other words, the
K K
parties may restore the hearing in the DC Action after
L determination of the Joinder Application. L
M M
18.2. No order was made to transfer the application before the DC
N N
to the FC Action.
O O
18.3. Substantive arguments on the setting aside of the Charging
P P
Order Absolute was heard in the DC Action. Decision on
Q merits has not been (or yet to be) made. Q
R R
18.4. There was an undertaking from NRCL not to execute the
S charging order until after the determination of the ancillary S
relief in the FC Action.
T T
U U
V
- 8 -
A A
C. NRCL’s Joinder Application
B B
19. In the margin of the Summons, NRCL stated that it relied on
C C
Order 15 Rule 6(2) of the Rules of the High Court (“RHC”) and inherent
D jurisdiction. D
E E
20. This Court is a division of the District Court which was
F established by statute. Ms Leung for NRCL rightly confirmed at today’s F
hearing that NRCL could not rely on any inherent jurisdiction which this
G G
Court does not have.
H H
21. The other legal basis advanced is Order 15 Rule 6(2) of RHC.
I I
2
NRCL has not made clear on papers, including its written submission ,
J which limb of Order 15 Rule 6(2) it relied on. Upon the Court’s enquiry at J
today’s hearing, Ms Leung told the Court that NRCL relied on Order 15
K K
Rule 6(2)(b)(ii) only, that is the joinder of :
L L
“(ii) any person between whom and any party to the cause or
matter there may exist a question or issue arising out of or relating
M M
to or connected with any relief or remedy claimed in the cause or
matter which in the opinion of the Court it would be just and
N convenient to determine as between him and that party as well as N
between the parties to the cause or matter.”
O O
22. I have set out the relevant legal principles in §§35 to 45 of
P P
PMCL aka LMC aka KLMC v AKK aka KAK & others [2023] HKFC 34
Q which I apply here. In gist, this Court shall be satisfied that: Q
R R
22.1. there is a bona fide claim and a proper question to be tried as
S between the parties herein and NRCL; and S
T T
2
Not prepared by Ms Leung.
U U
V
- 9 -
A A
B 22.2. it is just and convenient to join NRCL for the resolution of the B
questions or issues between the parties and NRCL as well as
C C
between the parties herein (i.e. H and W).
D D
23. To determine whether there is a proper question to be tried
E E
and whether the proposed joinder is just and convenient for resolution of
F the question, we have to consider NRCL’s intended scope of the joinder. F
G G
24. NRCL prayed in the Summons for joinder “on the issue of
H interest in and/or disposition of the [MH]”. In the FC Action, the interest H
in and/or disposition of the MH is to be determined in the ancillary relief
I I
dispute.
J J
25. In NRCL’s supporting affirmation 3 , it suggested that the
K K
issues of the validity and/or effect of the Charging Order Absolute (or the
L Charging Order Nisi) has arisen as a preliminary issue in W’s ancillary L
relief proceedings. NRCL had not made application for a hearing of the
M M
4
validity or effect of the charging order as a preliminary issue. Even if it
N N
had, it is inappropriate in this case to hear and determine the validity and
O
effect of the charging order separate from the determination of the ancillary O
relief dispute.
P P
Q Q
R R
3
1st Affirmation of Wong for NRCL §9(e) : “It appears that the issue of the validity and/or effect of the
Charging Order Absolute (or in the event that the Charging Order Absolute would be side (sic) aside, the
S related charging order nisi) made in favour of the Intended Intervener has arisen as a preliminary issue S
in the Petitioner’s application for ancillary relief in these proceedings. Therefore, it is necessary to join
the Intended Intervener in these proceedings”
T T
4
NRCL contended that the issue of validity should be determined by the DC which has heard the parties’
substantive argument.
U U
V
- 10 -
A A
26. The Joinder Application was first heard on 25 November 2024
B for call over (“Call Over Hearing”). Prior to the Call Over Hearing, H B
indicated his neutral stance on the Joinder Application, and W has no
C C
objection to the joinder provided that it was limited to NRCL’s interest in
D the MH. D
E E
27. Unexpectedly, at the Call Over Hearing, the Solicitor
F appeared for NRCL adamantly and repeatedly maintained that (1) NRCL F
did not want to participate in the April Application or the ancillary relief
G G
proceedings; and (2) the issues relating to the Charging Order Absolute has
H to be determined in the DC but not to be transferred to the FC. H
I I
28. This Court asked what exactly did NRCL want to join in this
J case as the competing claims between the parties and NRCL over the MH J
is a matter to be considered in the ancillary relief dispute, and the April
K K
Application would have a material impact on the manner in which the MH
L is to be dealt with. Regrettably, NRCL failed to give any meaningful L
answer.
M M
N N
29. It is in these circumstances that the Court has to adjourn the
O
Joinder Application to today for substantive argument with directions for O
the parties to file evidence and submission. It was also because of NRCL’s
P P
stance at the Call Over Hearing that both H and W opposed the Joinder
Q Application. Q
R R
30. The above pertinent question of the Court was not answered
S in the submissions and evidence filed by NRCL (not prepared by Ms S
Leung).
T T
U U
V
- 11 -
A A
31. It was only at today’s hearing and upon enquiry by this Court
B that we heard NRCL’s final position, that is, contrary to the submissions at B
the Call Over Hearing, NRCL is seeking to join in the ancillary relief
C C
proceedings on the question regarding NRCL’s interest in the MH; and is
D also seeking to participate in the April Application. D
E E
32. On this note and with consent of all parties, I made an order
F to join NRCL as a party to the ancillary relief proceedings in terms set out F
in paragraph 2.1 above.
G G
H 33. Today’s hearing would not be necessary but for the H
ambiguous and shifting stances held by NRCL. It is fair that H and W’s
I I
costs of today’s hearing be paid by NRCL, hence my order at paragraph
J 2.5 above. J
K K
D. Case Management
L L
34. I fixed a Case Management Hearing to be heard immediately
M M
after the Joinder Application with a view to expedite the conduct of these
N N
proceedings, bearing in mind the potential costs and proportionality in the
O
conduct of this litigation. O
P P
35. The parties’ substantial matrimonial asset is the MH which
Q was estimated to worth about $2 million. The current outstanding principal Q
and interest owed to NRCL accumulated to more than $1 million, with an
R R
interest of 26% per annum accruing until payment5. It is obvious that the
S parties have a pressing need to resolve their disputes in a cost effective S
manner.
T T
5
DC Default Judgment §1.
U U
V
- 12 -
A A
B 36. One of the purposes for joinder is to avoid multiplicity of B
proceedings. In light of the procedural history outlined above, irrespective
C C
of my decision on the Joinder Application, the parties’ disputes remain to
D be heard in different courts as the parties will have to go back to the DC D
for a determination on the validity of the Charging Order Absolute which
E E
has been heard in the DC.
F F
37. I have explored with the parties the possibility of an
G G
agreement to transfer the dispute on the Charging Order to this Court,
H
hopefully to save some costs. The parties could not reach an agreement to H
transfer mainly, as I understand, because of the costs already incurred in
I I
the DC for the substantive argument of W’s DC Summons.
J J
38. On case management, I made directions on the disputes
K K
relating to W’s April Application. I made clear to the parties that they
L shall restore the DC hearing as soon as possible so that the necessary L
information on the outstanding issues will be available at the next Case
M M
Management Hearing to enable this Court to give directions to advance the
N case in a more sensible and proportionate manner. N
O O
E. Forum to decide the making of charging order over
matrimonial property owned by a party in divorce
P P
proceedings
Q Q
39. I have heard some submissions on the appropriate forum to
R deal with matters on third party charging order over a property owned by a R
party who has divorce proceedings on foot. I take this opportunity to
S S
summarise the relevant legal principles and approaches below.
T T
U U
V
- 13 -
A A
40. Section 52AB(3) of the District Court Ordinance (equivalent
B to Section 20B of the High Court Ordinance) provides that a charge B
imposed by a charging order shall have the like effect and enforceable in
C C
the same manner as an equitable charge created by the debtor by writing.
D D
41. Hence, a charging order, which has the effect of an equitable
E E
charge, does not confer any legal or equitable ownership of the property on
F the chargee. A charging order confers on the chargee rights to apply to the F
court for an order for sale or for the appointment of a receiver, but not the
G G
right to foreclose or take possession of the property, nor any proprietary
H right or title in the property. The rights conferred by the charging order H
are different from the rights enjoyed by a mortgagee. These principles on
I I
the effect of a charging order were set out in Sino Billion Ltd v Lam Chok
J Wai [2003] 2 HKC 167, §12; confirmed by the Court of Appeal in Leader J
Screws Manufacturing Company Limited v Huang Shunkui [2023] HKCA
K K
1193, §43.
L L
42. A charging order nisi, when made absolute, related back to the
M M
date of the order nisi, thus takes effect from the date of the order nisi. This
N N
does not detract from the fact the order is defeasible if sufficient cause was
O
shown: Hong Kong Civil Procedure 2025 §50/9A/17. O
P P
43. In deciding whether to make a charging order, pursuant to
Q Section 52A(2) of the District Court Ordinance (equivalent to Section 20(3) Q
of the High Court Ordinance), the court has to take into account all
R R
circumstances of the case, in particular, any evidence before it as to (a) the
S personal circumstances of the debtor; and (b) whether any other creditor of S
the debtor would be likely to be unduly prejudiced by the making of the
T T
order.
U U
V
- 14 -
A A
B 44. In cases where the property is owned by a party who has B
divorce proceedings on foot, the protection of the needs of the children and
C C
the interest of the spouse in the property are held to be circumstances ought
D to be considered when making a charging order. The need to consider D
such protection applies equally to cases where the property is held by one
E E
or both parties of the divorce proceedings. It is “all circumstances of the
F case” that the court has to consider before granting a charging order. See F
the English Court of Appeal decisions in Harman v Glencross [1986] 1 All
G G
ER 545 and Kremen v Agrest [2013] EWCA Civ 41; and the Hong Kong
H Courts decisions in Chan Ting Wai, William v Lam Sai Pak & ors, HCA H
2587/1997, 8 December 1998; IISW v SDS-W & ors, FCMC 1399/2006,
I I
23 July 2014; and SJH v CYHC, FCMC 4264/2012, 26 May 2016.
J J
45. With the helpful guidance laid down by the English Court of
K K
Appeal and the Hong Kong Courts in the above decisions, I summarise
L below the appropriate forum in different scenarios: L
M M
45.1. Where a judgment creditor has obtained a charging order nisi
N N
over a matrimonial property and the application to have that
O
order made absolute is heard before a divorce petition was O
presented, it is difficult to see why the civil court can refuse
P P
to hear the application as there is no other court to which the
Q application can be transferred. Q
R R
45.2. If before the application for making the charging order
S absolute is heard, a divorce petition was presented irrespective S
of whether ancillary relief application has been made, the civil
T T
U U
V
- 15 -
A A
court should consider whether it is proper for it to make the
B charging order absolute. B
C C
45.3. Unless it appears to the civil court hearing the application that
D the circumstances are so clear that it is proper to make the D
charging order absolute at that time, it is more prudent to
E E
transfer the application to the family court before the civil
F court hears the matter substantively so that the application can F
be heard together with the application for ancillary relief. In
G G
which case, one court can be in a position to consider “all the
H circumstances of the case”, and be able to strike a balance H
between the interests of the judgment creditor and the interests
I I
of the spouse and the children. Generally, the interests of the
J judgment creditor should be respected, save to the extent that J
it is necessary to override them in order to make appropriate
K K
provisions for the spouse and any children. The family court
L can also consider options other than an immediate sale of the L
property, or an immediate full repayment to the judgment
M M
creditor from the sale proceeds of the property if it has to be
N N
sold. The availability of a financial dispute resolution
O
procedure in the family court would also provide a platform O
to all parties (the husband, the wife and the judgment creditor)
P P
to explore effective resolution of their disputes by settlement.
Q Q
45.4. After the charging order absolute has been made, it would
R R
normally require some special circumstances, such as the
S other spouse had no proper opportunity to put his/her case S
before the court making the charging order absolute, to set
T T
aside the charging order absolute.
U U
V
- 16 -
A A
B B
C C
D D
( Elaine Liu )
E E
District Judge
F F
G G
Mr. Simon Wong of Lam, Lee & Lai, assigned by Director of Legal Aid,
H for the Petitioner. H
I I
Mr. Esmond Wong instructed by Cheng & Co., assigned by Director of
J Legal Aid, for the Respondent. J
K K
Ms. Sabrina Leung instructed by Gloria Chan & Co. for the Intended
L Intervener. L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V
A A
B B
FCMC 7628 / 2023
[2025] HKFC 56
C C
D IN THE DISTRICT COURT OF THE D
HONG KONG SPECIAL ADMINISTRATIVE REGION
E E
MATRIMONIAL CAUSES
F
NO. 7628 OF 2023 F
----------------------------
G G
BETWEEN
H H
SQW Petitioner
I I
and
J J
LPC Respondent
K K
NRCL Intended Intervener
L L
----------------------------
M M
Coram: Her Honour Judge Elaine Liu in Chambers (Not Open to Public)
N N
Date of Hearing: 19 March 2025
O Date of Decision: 19 March 2025 O
P P
___________________________________________________
Q Q
REASONS FOR DECISION
(Joinder, Forum involving 3rd party charging order)
R R
____________________________________________________
S S
T T
U U
V V
- 2 -
A A
A. The Application
B B
1. This is NRCL’s application by a Summons dated 18 October
C C
2024 (“the Summons”) for joinder in these matrimonial proceedings as
D intervener “on the issue of interest in and/or disposition of the matrimonial D
home property” (“Joinder Application”).
E E
F 2. After hearing the parties’ substantive argument, I made the F
following orders in the Joinder Application:
G G
H 2.1. NRCL be joined in the ancillary relief proceedings of this H
action on the issue of NRCL’s interest in the parties’
I I
matrimonial home (“MH”), if any.
J J
2.2. The Respondent be renamed as the 1st Respondent in this
K K
action.
L L
2.3. NRCL be renamed as the 2nd Respondent in this action.
M M
N
2.4. Costs of the Joinder Application (except for today’s hearing) N
O
be in the cause of the question whether the 2 nd Respondent O
shall receive an award out of the value of the MH.
P P
Q 2.5. The 2nd Respondent do pay the Petitioner and the 1st Q
Respondent’s costs of today’s hearing to be taxed if not
R R
agreed on party and party basis, with certificate for counsel.
S S
2.6. The Petitioner and the 1st Respondent’s own costs be taxed in
T T
accordance with the Legal Aid Regulations.
U U
V
- 3 -
A A
B 3. These are the reasons for my decision. B
C C
B. Background
D D
4. The parties were married in February 2005. This is a long
E E
marriage of 18 years. They have a child born in December 2006, now aged
F 18. F
G G
5. The major family asset of the parties is the MH acquired by
H the Respondent (“H”) prior to their marriage. H is the sole legal and H
beneficial owner of the MH. Both parties and the adult child are residing
I I
in the MH.
J J
6. NRCL is a moneylender who had lent a loan to H in the sum
K K
of $350,000 on 17 June 2019. Subsequently on four occasions, NRCL
L granted loans to H for refinancing of his then existing liabilities. L
According to NRCL, the latest one was granted in January 2023 in the sum
M M
of $980,000 (“the Loan”).
N N
O
7. On 11 July 2023, the Petitioner (“W”) presented a petition for O
divorce on the ground of unreasonable behaviour (“FC Action”). She
P P
registered a Form 251 in the Land Registry against the MH on 1 August
Q 2023. Q
R R
8. About a week later (8 August 2023), NRCL sent H a demand
S letter for his defaulted repayment of the Loan. H did not make the S
T T
1
Notice of Intention to Proceed with an Application for Ancillary Relief.
U U
V
- 4 -
A A
repayment. On 16 August 2023, NRCL issued a writ in the District Court
B (“DC Action”) against H for recovery of the outstanding Loan and interest. B
C C
9. On 19 September 2023, H and W appeared in person at a first
D appointment hearing in the FC Action before Deputy Judge J Chow (as she D
then was). The Deputy Judge made orders for directions on their ancillary
E E
relief dispute and recorded in the Recital the following consent of the
F parties and H’s undertaking in Chinese (“September Consent”): F
G G
“又基於雙方同意 ，在房委會的同意下，答辯人以低
H H
（sic） 價港幣 2,000,000 元出售【地址】，扣除所有
I 出售開支，及清還該物業的押記令負債後，答辯人向 I
呈請人及法院承諾，承諾（sic）餘款須於成交後 7 天
J J
之内繳存法院”
K K
L 10. W contended that she did not consent to the settlement of the L
outstanding Loan from the sale proceeds of the MH. She (acted in person)
M M
took out a Summons in the FC Action on 3 April 2024 seeking to remove
N from the September Consent the phrase “及清還該物業的押記令負債後” N
(“April Application”). W also took issue of H’s failure to serve (while he
O O
acted in person) his evidence in opposition within the time allowed in the
P unless order given by Master TK Lam. H (through his counsel) submitted P
today that he will take out an application for relief from sanction.
Q Q
R 11. In the meantime, NRCL continued its claim in the DC Action R
as follows:
S S
T T
U U
V
- 5 -
A A
11.1. On 6 December 2023, NRCL entered a judgment in default of
B H’s appearance (“DC Default Judgment”). B
C C
11.2. On 9 January 2024, NRCL applied in the DC Action for a
D charging order over the MH. D
E E
11.3. In February 2024, Master Li raised requisitions on clerical
F errors and calculations of interest on the judgment debt. F
NRCL answered these requisitions by supplemental
G G
affirmation.
H H
11.4. On 25 March 2024, in default of H’s appearance, Master Li
I I
granted a Charging Order Nisi (“Charging Order Nisi”) over
J the MH in favour of NRCL. J
K K
11.5. On 13 June 2024, the Charging Order Nisi was made absolute
L (“Charging Order Absolute”) by an order made by Master L
Chak, again in default of H’s appearance.
M M
N N
12. As W is not an owner of the MH nor a party to the Loan, she
O
did not have notice of the above proceedings in the DC Action. O
P P
13. W through her solicitors assigned by the Director of Legal Aid
Q discovered in early June 2024 from the land search records of the MH a Q
registration of the Charging Order Nisi.
R R
S 14. W (with legal representation) took out a Summons in the DC S
Action (“W’s DC Summons”) on 24 July 2024, seeking orders that:
T T
U U
V
- 6 -
A A
14.1. W be joined as a party to the DC Action;
B B
14.2. the Charging Order Absolute be set aside;
C C
D 14.3. the Charging Order Nisi be stayed, and the application for D
making the Charging Order Nisi absolute be adjourned to be
E E
dealt with in the FC Action.
F F
15. On 28 August 2024, DC Master J Chow granted an order to
G G
join W as an intervener in the DC Action and adjourned the argument of
H W’s DC Summons to 21 November 2024 before another DC Master. H
I I
16. As mentioned above, NRCL took out this Joinder Application
J in the FC Action in October 2024. J
K K
17. DC Master R Chu heard the parties’ substantive argument on
L W’s DC Summons on 21 November 2024, and made the following orders L
(“DC Adjournment Order”):
M M
N
“Upon the undertaking of [NRCL] to stay the proceedings N
O
and to withhold from and/or stay execution of the O
Charging Order Absolute dated 13 June 2024 until the
P P
ancillary relief matter in FCMC 7628/2023 has been
Q determined by the Family Court, Q
R R
IT IS ORDERED that:
S 1. [W’s DC Summons] be adjourned sine die with S
liberty to restore on a date not before the
T T
U U
V
- 7 -
A A
determination of [NRCL]’s Summons dated 18
B October 2024 to intervene in FCMC 7628/2023; B
C C
2. Liberty to apply;
D D
3. Costs reserved …”
E E
F 18. This Court was not provided with the transcript of the hearing F
before Master R Chu nor the reasons for his decision. For want of evidence,
G G
I declined to accept the parties’ submissions on the suggested reasons for
H the DC Adjournment Order. On a plain reading of the Order, its practical H
effect is:
I I
J 18.1. W’s DC Summons was adjourned pending the determination J
of the Joinder Application by this Court. In other words, the
K K
parties may restore the hearing in the DC Action after
L determination of the Joinder Application. L
M M
18.2. No order was made to transfer the application before the DC
N N
to the FC Action.
O O
18.3. Substantive arguments on the setting aside of the Charging
P P
Order Absolute was heard in the DC Action. Decision on
Q merits has not been (or yet to be) made. Q
R R
18.4. There was an undertaking from NRCL not to execute the
S charging order until after the determination of the ancillary S
relief in the FC Action.
T T
U U
V
- 8 -
A A
C. NRCL’s Joinder Application
B B
19. In the margin of the Summons, NRCL stated that it relied on
C C
Order 15 Rule 6(2) of the Rules of the High Court (“RHC”) and inherent
D jurisdiction. D
E E
20. This Court is a division of the District Court which was
F established by statute. Ms Leung for NRCL rightly confirmed at today’s F
hearing that NRCL could not rely on any inherent jurisdiction which this
G G
Court does not have.
H H
21. The other legal basis advanced is Order 15 Rule 6(2) of RHC.
I I
2
NRCL has not made clear on papers, including its written submission ,
J which limb of Order 15 Rule 6(2) it relied on. Upon the Court’s enquiry at J
today’s hearing, Ms Leung told the Court that NRCL relied on Order 15
K K
Rule 6(2)(b)(ii) only, that is the joinder of :
L L
“(ii) any person between whom and any party to the cause or
matter there may exist a question or issue arising out of or relating
M M
to or connected with any relief or remedy claimed in the cause or
matter which in the opinion of the Court it would be just and
N convenient to determine as between him and that party as well as N
between the parties to the cause or matter.”
O O
22. I have set out the relevant legal principles in §§35 to 45 of
P P
PMCL aka LMC aka KLMC v AKK aka KAK & others [2023] HKFC 34
Q which I apply here. In gist, this Court shall be satisfied that: Q
R R
22.1. there is a bona fide claim and a proper question to be tried as
S between the parties herein and NRCL; and S
T T
2
Not prepared by Ms Leung.
U U
V
- 9 -
A A
B 22.2. it is just and convenient to join NRCL for the resolution of the B
questions or issues between the parties and NRCL as well as
C C
between the parties herein (i.e. H and W).
D D
23. To determine whether there is a proper question to be tried
E E
and whether the proposed joinder is just and convenient for resolution of
F the question, we have to consider NRCL’s intended scope of the joinder. F
G G
24. NRCL prayed in the Summons for joinder “on the issue of
H interest in and/or disposition of the [MH]”. In the FC Action, the interest H
in and/or disposition of the MH is to be determined in the ancillary relief
I I
dispute.
J J
25. In NRCL’s supporting affirmation 3 , it suggested that the
K K
issues of the validity and/or effect of the Charging Order Absolute (or the
L Charging Order Nisi) has arisen as a preliminary issue in W’s ancillary L
relief proceedings. NRCL had not made application for a hearing of the
M M
4
validity or effect of the charging order as a preliminary issue. Even if it
N N
had, it is inappropriate in this case to hear and determine the validity and
O
effect of the charging order separate from the determination of the ancillary O
relief dispute.
P P
Q Q
R R
3
1st Affirmation of Wong for NRCL §9(e) : “It appears that the issue of the validity and/or effect of the
Charging Order Absolute (or in the event that the Charging Order Absolute would be side (sic) aside, the
S related charging order nisi) made in favour of the Intended Intervener has arisen as a preliminary issue S
in the Petitioner’s application for ancillary relief in these proceedings. Therefore, it is necessary to join
the Intended Intervener in these proceedings”
T T
4
NRCL contended that the issue of validity should be determined by the DC which has heard the parties’
substantive argument.
U U
V
- 10 -
A A
26. The Joinder Application was first heard on 25 November 2024
B for call over (“Call Over Hearing”). Prior to the Call Over Hearing, H B
indicated his neutral stance on the Joinder Application, and W has no
C C
objection to the joinder provided that it was limited to NRCL’s interest in
D the MH. D
E E
27. Unexpectedly, at the Call Over Hearing, the Solicitor
F appeared for NRCL adamantly and repeatedly maintained that (1) NRCL F
did not want to participate in the April Application or the ancillary relief
G G
proceedings; and (2) the issues relating to the Charging Order Absolute has
H to be determined in the DC but not to be transferred to the FC. H
I I
28. This Court asked what exactly did NRCL want to join in this
J case as the competing claims between the parties and NRCL over the MH J
is a matter to be considered in the ancillary relief dispute, and the April
K K
Application would have a material impact on the manner in which the MH
L is to be dealt with. Regrettably, NRCL failed to give any meaningful L
answer.
M M
N N
29. It is in these circumstances that the Court has to adjourn the
O
Joinder Application to today for substantive argument with directions for O
the parties to file evidence and submission. It was also because of NRCL’s
P P
stance at the Call Over Hearing that both H and W opposed the Joinder
Q Application. Q
R R
30. The above pertinent question of the Court was not answered
S in the submissions and evidence filed by NRCL (not prepared by Ms S
Leung).
T T
U U
V
- 11 -
A A
31. It was only at today’s hearing and upon enquiry by this Court
B that we heard NRCL’s final position, that is, contrary to the submissions at B
the Call Over Hearing, NRCL is seeking to join in the ancillary relief
C C
proceedings on the question regarding NRCL’s interest in the MH; and is
D also seeking to participate in the April Application. D
E E
32. On this note and with consent of all parties, I made an order
F to join NRCL as a party to the ancillary relief proceedings in terms set out F
in paragraph 2.1 above.
G G
H 33. Today’s hearing would not be necessary but for the H
ambiguous and shifting stances held by NRCL. It is fair that H and W’s
I I
costs of today’s hearing be paid by NRCL, hence my order at paragraph
J 2.5 above. J
K K
D. Case Management
L L
34. I fixed a Case Management Hearing to be heard immediately
M M
after the Joinder Application with a view to expedite the conduct of these
N N
proceedings, bearing in mind the potential costs and proportionality in the
O
conduct of this litigation. O
P P
35. The parties’ substantial matrimonial asset is the MH which
Q was estimated to worth about $2 million. The current outstanding principal Q
and interest owed to NRCL accumulated to more than $1 million, with an
R R
interest of 26% per annum accruing until payment5. It is obvious that the
S parties have a pressing need to resolve their disputes in a cost effective S
manner.
T T
5
DC Default Judgment §1.
U U
V
- 12 -
A A
B 36. One of the purposes for joinder is to avoid multiplicity of B
proceedings. In light of the procedural history outlined above, irrespective
C C
of my decision on the Joinder Application, the parties’ disputes remain to
D be heard in different courts as the parties will have to go back to the DC D
for a determination on the validity of the Charging Order Absolute which
E E
has been heard in the DC.
F F
37. I have explored with the parties the possibility of an
G G
agreement to transfer the dispute on the Charging Order to this Court,
H
hopefully to save some costs. The parties could not reach an agreement to H
transfer mainly, as I understand, because of the costs already incurred in
I I
the DC for the substantive argument of W’s DC Summons.
J J
38. On case management, I made directions on the disputes
K K
relating to W’s April Application. I made clear to the parties that they
L shall restore the DC hearing as soon as possible so that the necessary L
information on the outstanding issues will be available at the next Case
M M
Management Hearing to enable this Court to give directions to advance the
N case in a more sensible and proportionate manner. N
O O
E. Forum to decide the making of charging order over
matrimonial property owned by a party in divorce
P P
proceedings
Q Q
39. I have heard some submissions on the appropriate forum to
R deal with matters on third party charging order over a property owned by a R
party who has divorce proceedings on foot. I take this opportunity to
S S
summarise the relevant legal principles and approaches below.
T T
U U
V
- 13 -
A A
40. Section 52AB(3) of the District Court Ordinance (equivalent
B to Section 20B of the High Court Ordinance) provides that a charge B
imposed by a charging order shall have the like effect and enforceable in
C C
the same manner as an equitable charge created by the debtor by writing.
D D
41. Hence, a charging order, which has the effect of an equitable
E E
charge, does not confer any legal or equitable ownership of the property on
F the chargee. A charging order confers on the chargee rights to apply to the F
court for an order for sale or for the appointment of a receiver, but not the
G G
right to foreclose or take possession of the property, nor any proprietary
H right or title in the property. The rights conferred by the charging order H
are different from the rights enjoyed by a mortgagee. These principles on
I I
the effect of a charging order were set out in Sino Billion Ltd v Lam Chok
J Wai [2003] 2 HKC 167, §12; confirmed by the Court of Appeal in Leader J
Screws Manufacturing Company Limited v Huang Shunkui [2023] HKCA
K K
1193, §43.
L L
42. A charging order nisi, when made absolute, related back to the
M M
date of the order nisi, thus takes effect from the date of the order nisi. This
N N
does not detract from the fact the order is defeasible if sufficient cause was
O
shown: Hong Kong Civil Procedure 2025 §50/9A/17. O
P P
43. In deciding whether to make a charging order, pursuant to
Q Section 52A(2) of the District Court Ordinance (equivalent to Section 20(3) Q
of the High Court Ordinance), the court has to take into account all
R R
circumstances of the case, in particular, any evidence before it as to (a) the
S personal circumstances of the debtor; and (b) whether any other creditor of S
the debtor would be likely to be unduly prejudiced by the making of the
T T
order.
U U
V
- 14 -
A A
B 44. In cases where the property is owned by a party who has B
divorce proceedings on foot, the protection of the needs of the children and
C C
the interest of the spouse in the property are held to be circumstances ought
D to be considered when making a charging order. The need to consider D
such protection applies equally to cases where the property is held by one
E E
or both parties of the divorce proceedings. It is “all circumstances of the
F case” that the court has to consider before granting a charging order. See F
the English Court of Appeal decisions in Harman v Glencross [1986] 1 All
G G
ER 545 and Kremen v Agrest [2013] EWCA Civ 41; and the Hong Kong
H Courts decisions in Chan Ting Wai, William v Lam Sai Pak & ors, HCA H
2587/1997, 8 December 1998; IISW v SDS-W & ors, FCMC 1399/2006,
I I
23 July 2014; and SJH v CYHC, FCMC 4264/2012, 26 May 2016.
J J
45. With the helpful guidance laid down by the English Court of
K K
Appeal and the Hong Kong Courts in the above decisions, I summarise
L below the appropriate forum in different scenarios: L
M M
45.1. Where a judgment creditor has obtained a charging order nisi
N N
over a matrimonial property and the application to have that
O
order made absolute is heard before a divorce petition was O
presented, it is difficult to see why the civil court can refuse
P P
to hear the application as there is no other court to which the
Q application can be transferred. Q
R R
45.2. If before the application for making the charging order
S absolute is heard, a divorce petition was presented irrespective S
of whether ancillary relief application has been made, the civil
T T
U U
V
- 15 -
A A
court should consider whether it is proper for it to make the
B charging order absolute. B
C C
45.3. Unless it appears to the civil court hearing the application that
D the circumstances are so clear that it is proper to make the D
charging order absolute at that time, it is more prudent to
E E
transfer the application to the family court before the civil
F court hears the matter substantively so that the application can F
be heard together with the application for ancillary relief. In
G G
which case, one court can be in a position to consider “all the
H circumstances of the case”, and be able to strike a balance H
between the interests of the judgment creditor and the interests
I I
of the spouse and the children. Generally, the interests of the
J judgment creditor should be respected, save to the extent that J
it is necessary to override them in order to make appropriate
K K
provisions for the spouse and any children. The family court
L can also consider options other than an immediate sale of the L
property, or an immediate full repayment to the judgment
M M
creditor from the sale proceeds of the property if it has to be
N N
sold. The availability of a financial dispute resolution
O
procedure in the family court would also provide a platform O
to all parties (the husband, the wife and the judgment creditor)
P P
to explore effective resolution of their disputes by settlement.
Q Q
45.4. After the charging order absolute has been made, it would
R R
normally require some special circumstances, such as the
S other spouse had no proper opportunity to put his/her case S
before the court making the charging order absolute, to set
T T
aside the charging order absolute.
U U
V
- 16 -
A A
B B
C C
D D
( Elaine Liu )
E E
District Judge
F F
G G
Mr. Simon Wong of Lam, Lee & Lai, assigned by Director of Legal Aid,
H for the Petitioner. H
I I
Mr. Esmond Wong instructed by Cheng & Co., assigned by Director of
J Legal Aid, for the Respondent. J
K K
Ms. Sabrina Leung instructed by Gloria Chan & Co. for the Intended
L Intervener. L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V