Lhc v. Khs
Read the full judgment text of FCMC 3343/2015 on BabelCite. This Family Court judgment was delivered on 5 February 2016 before Deputy District Judge I Wong.
Matrimonial causes – Ancillary relief – Specific discovery – Costs – Petitioner failed to disclose bank account in Form E – Respondent entitled to discovery regarding Taiwan property and bank accounts – Costs awarded two-thirds to Respondent – Petitioner ordered to answer specific questions within 14 days – Costs to be taxed if not agreed.
Legal issues: Specific Discovery · Costs
Outcome: Orders made for specific discovery and costs allocation.
Cites 3 cases
|
FCMC 3343 / 2015 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 3343 OF 2015 ----------------------------
----------------------------
__________________ RULING __________________ Introduction 1.Before me is a summons taken out by the respondent husband on 8 October 2015 for a couple of matters:-
2.I will refer the petitioner wife as “P” and the respondent husband “R” in this Ruling. 3.When it came to the argument hearing, most of the differences were resolved. 4.First, at the invitation of the court, the parties were able to come to an agreement that the Property is to be sold in open market after which each party is to have $1.5 million out of the proceeds of sale and the balance will be paid into court pending the determination of the ancillary relief claim or until further order of the court. By consent, the court ordered that the Notice be vacated from registration on 2 February 2016. 5.Secondly, with the further disclosure by P subsequent to the taking out of the summons, R chose not to pursue further with paragraphs 3 and 4. 6.Thirdly, notwithstanding that there were 14 questions on R’s 2nd Questionnaire, the parties were able to narrow down their differences to one question only. 7.Fourthly, upon the court’s indication that it might be more prudent for the parties to up-date their financial situation by way of an up-dated Form E upon a failed FDR and before trial, Ms Chong, counsel for R, agreed to have the application adjourned so that the court may revisit it later as and when necessary. 8.Finally, as for paragraph 2 (ie the trial of a preliminary issue), it has already been adjourned sine die by the court in the call-over hearing of 16 November 2015 with costs reserved. Now with the concession made by P, there is actually no need for R to proceed with the matter. 9.Thus, what remain are essentially the outstanding question on R’s 2nd Questionnaire and the issue of costs. It turned out that the main battle field is on the issue of costs. Background 10.P was from Taiwan and R is a local Chinese. They married in Taiwan in December 1989 and thereafter P moved to live in Hong Kong. The couple has 2 children; a son now aged 25 and a daughter, now 22 years old. 11.On 4 January 2014, P petitioned for divorce on the ground that the parties had been living apart for a continuous period of at least 2 years immediately preceding the presentation of the petition, namely since March 2003. This was disputed by R who claimed they only lived apart from each other at a much later date, so much so that the period of separation is less than 2 years. 12.With the leave of the court, P then withdrew her petition on 20 March 2015 and lodged a new petition based on 2 grounds, namely, (1) 2-year separation; and (2) R’s unreasonable behaviour. In response, R cross-petitioned for divorce based on one-year separation since 4 January 2014 with consent and the unreasonable behaviour of P. 13.The matter as it now stands is that P has agreed to divorce on the ground of one-year separation with consent. The Outstanding Question on R’s 2nd Questionnaire 14.I now turn to the outstanding question on R’s 2nd Questionnaire. 15.R’s case is that P has an interest in a Taiwan Property that was purchased in the name of her brother back in 1984 but she failed to disclose this in her Form E dated 12 March 2014. P’s reply, in her Answers dated 9 June 2015, was that she has no proprietary interest in the Taiwan Property. She further disclosed that she had previously acted as連帶保證人 and權利人in respect of a bank loan taken out by her brother which affected the Taiwan Property. However, such is no longer the case as repayment of the bank loan was already made in full. In support of her answer, she provided a legal opinion from her lawyer in Taiwan. 16.The parties do not have the English translations for連帶保證人and權利人 nor has the legal opinion elaborated on what they actually mean. On the face of the words, it seems to me that the literally meaning of these two terms are somewhat similar to our concepts of “joint-guarantor” and “right-owner” respectively. Anyway, dissatisfied with her reply, R continued to press on with 6 questions in his 2nd Questionnaire: -
17.In her affirmation dated 11 December 2015 P confirmed that she has no proprietary interest in the Taiwan Property. She further explained that her role as a連帶保證人ie joint guarantor (my own English translation) rendered her a joint debtor so she was given a lien / security interest of TW¥ 5 million by her brother on the Taiwan Property, which could be exercised in the event of non-payment of the loan of the part of the brother; in which event, she would be entitled to take out a mortgage / charge up to TW¥ 5 million on the property to secure repayment of the loan. As the loan was repaid to the bank in around April 2012, the lien in her favour needed not be exercised and was discharged. 18.During the hearing, Ms Chong revised Question 6 and agreed to drop the remaining questions. The revised question is,
19.The serial numbers are the numbers recorded at the Taipei Land Registry which apparently show there were 2 transactions. To this, Mr Hariman, counsel for P, maintained that there was one transaction in 2008 only and he confirmed that P agrees to produce the relevant loan agreement. This may well be the case that there was only one transaction but in my view, this has to be clarified. 20.Mr Hariman emphasizes that P was not a guarantor but merely a joint debtor and on that footing, he elaborates in his written submissions that R’s application is misconceived. 21.To me, the terminology is immaterial. What is material is what actually happened in the transaction and what P’s role was. I find there is some force in R’s argument that for the reasons that P was not habitually resident in Taiwan nor did she have any active employment in Taiwan or elsewhere, it would not be reasonable for the bank to have accepted her, whether as a joint-debtor or a guarantor, for the loan. The question is whether P charged any of her assets to the bank in this loan transaction in order to enjoy the TW¥ 5 million lien / security over her brother’s property, bearing in mind that the original loan amount was for TW¥ 2 million only. It may well be that there was none but it is quite logical for R to have some reasonable suspicion that the only way P could have satisfied the bank as good security for the loan was that she had substantial assets in Taiwan so that her involvement stood as a better security; and these assets have not been disclosed. If there was any security, the same should have been recorded in the loan agreement. For this reason, I prefer R’s revised question no 6 and I will give an order accordingly. 22.Finally, Mr Hariman, on behalf of his client, also agreed to give an answer to confirm whether she has any other bank accounts in Taiwan apart from the Sunny Bank of Taiwan (Question no 11). I will also give an Order accordingly. According to R’s case, P in fact has two other bank accounts in Taiwan. There is also some evidence that the Sunny Bank account aside, P has at least another bank account with the Cathay United Bank. All these have yet to be confirmed by P. In this regard, I need to remind P that she has to give a full and frank disclosure of her financial situation. If any of the additional account has been closed, she should also provide the particulars including the date of closure. The Costs 23.I now come to the issue of costs. 24.It is trite that the issue of costs is a matter of discretion for the court. The discretion is a wide one and of course must be exercised judicially. In ancillary relief cases, it has been said by the Court of Appeal that because of the special dynamics of family litigation, the discretion may be broader than in civil matters generally: Z v X & C, (unrep., CACV 166/2011, 8 March, 2013) at § 10. 25.As far as the general principles are concerned, the relevant rules can be found in Order 62, rule 3, RHC. Sub-paragraphs (1) to (2A) of the rule state as follows:
26.Sub-paragraph (2A) was introduced in the Civil Justice Reform in 2009. Thus, under the post CJR regime, the principle that “costs to follow the event” is no longer the prescribed usual order but is instead just an option as regards costs in interlocutory proceedings: Hong Kong Civil Procedure 2016 Vol 1, §62/3/3B. The present position in this regard has been succinctly summarised by Hon To J in his judgment in Melvin Waxman v Li Fei Yu (unreported, HCA 1972/2012, 11 September 2013), which I gratefully adopt.
27.Further, in the exercise of its discretion, the court will have to take into account, where appropriate in the circumstances, the special matters set out in Order 62, rule 5, RHC,
28.Put in board terms, Mr Hariman’s submissions are that as far as R’s application for specific discovery is concerned, P was accommodating in the provision of answers and documents and as regards the Property, she was always amenable to the sale of it. Ms Chong’s counter-arguments are that R was justified in taking out the applications, that he won on some of the issues and that he also acted reasonably in not pursuing the rest of them. Discussion 29.As regards paragraph 1 of the application, ie the vacation of the Notice, as early as in his affirmation dated 9 October 2015, R already offered to undertake to sell the Property in open market at market price to independent third party purchaser and to hold the sales proceeds on account for P and him pending the final determination of these ancillary relief proceeding. He offered to keep P informed of the sales transaction and serve her with all the sales documents. If the Court deems necessary, he can also pay the sales proceeds into court after deducting the necessary transaction costs and reserving a portion for the interim living expenses for him, P and his household pending the determination of ancillary relief application. 30.In response, P, in her affirmation dated 11 December 2015, apart from raising various doubts over R’s assertion regarding the state of the Property and his financial situation, she however said that should R furnish further information, documentary evidence and details before the substantive hearing, she reserved her right to reconsider the position. She also mentioned that the proceeds should be paid into court and on the basis of fairness, any payment out made to R should be matched by an equivalent payment out to her. R, in his affirmation dated 11 January 2016, acceded to P’s requests for information of the sale and for payment of the sale proceeds into court. 31.Despite the apparent propinquity of the parties’ position, it was somewhat unfortunate that no agreement was reached before the hearing. As said, it was only at the court’s invitation that the parties finally managed to come to a solution. I consider it was reasonable for R to have taken out the application and the parties’ respective stance cannot be regarded as unreasonable. It was probably due to the mistrust that P had towards R that there was no fruitful solution prior to the hearing. 32.Paragraphs 3 and 4 of the summons are on P’s alleged medical expenses. The request was made against P’s allegation that she needs $12,800 per month for her medical care. R considered that P had been exaggerating her medical needs. In my view, in light of the apparent exorbitant amount, it was not unreasonable for R to have taken out such a request for further details such as the prescriptions for such medication, the type and quantity of the medication and the duration of time that such medication could last. P subsequently produced further documentary documents on her medical expenses. It is quite clear that after then what R was chasing after was the prescriptions issued by a Chinese medicine practitioner (“CMP”) in the name of Mr Shum who had for some time been consulted by P and for which P had incurred substantial sums of money. With the bulk of the documentary evidence subsequently disclosed, I consider it was sensible for R not to have pursued the matter further in the hearing. Before I leave this matter, I need to mention that it is hard to believe P did not have CMP Mr Shum’s prescriptions though I do not take the view that these documents are significantly material. R had been to Mr Shum for consultation and he was given the prescription. I think I am also entitled to take notice that the common practice in Hong Kong is for patients to be given their prescriptions upon consultation. There is nothing to suggest that Mr Shum’s practice deviated from the common practice. 33.However, one of his requests was for medical reports of P’s medical conditions to be compiled by all the practitioners from whom P sought consultation from 1 January 2012 to date. I reckon that there are altogether 5 professionals: a medical doctor, a clinical psychologist, a neuro-psychologist, a psychological counsellor and a Chinese medicine practitioner. Clearly, the reports have to be compiled by the professionals concerned upon the instructions from P; in other words they are yet to be created. There is nothing to suggest that these reports are already in existence. I wonder how they could be regarded as in the possession, custody or power of P. 34.Further, R, in paragraph 4 of his summons, also asked for an affirmation from P to explain her medical conditions. R has now withdrawn his application and so I do not have the benefit of arguments from counsel, nevertheless I do not consider such additional evidence is necessary at this stage. 35.I now turn to R’s 2nd Questionnaire. 36.I have already dealt with the questions in relation to the Taiwan Property. I consider it was quite reasonable for R to have put forward questions in this regard though the questions could have been better framed and their numbers reduced. On P’s side, it was not until the hearing that Mr Hariman agreed to produce the loan agreement. As I said, this issue warrants some clarification. R should be considered a winning party in this respect. 37.As for the bank accounts in Taiwan, the Sunny Bank account was not disclosed in her Form E dated 12 March 2014. It was only after R had raised the matter in his Questionnaire dated 12 May 2015 that P admitted this in her Answers dated 9 June, 2015. Despite her assertion that the account was opened before she married and was dormant for many years, the entries from the bank passbook reveal that there were frequent deposits and withdrawals before her Form E. The earlier bank statements that she produced in her affirmation of 11 December 2015 also show that there were a couple of transactions every year since 2011. It is also striking to note that subsequent to her Form E she deposited TW¥ 160,000 (or about $37,900) into this account on 30 May 2014. Her affirmation evidence is that she made use of the withdrawals from this account for her daily expenses and mandatory payments whenever she was back in Taiwan. Given all these, it is hard to believe that she could have forgotten about this account at the time of her Form E. 38.Further, R’s affirmation evidence is that P in fact has at least 2 other bank accounts in Taiwan. 39.Thus, I consider it was justified for R to have asked the questions. 40.As for the other questions in relation to P’s loan of $560,000 owed to her sister, her withdrawals from the Sunny Bank account, the source of the deposit of TW¥ 160,000 on 30 May 2014 and her National Health Insurance system, P gave her answers in her affirmation of 11 December 2015 subsequent to the summons. Whilst the alleged loan is of material relevancy, I do not think the same can be said of for the others. 41.With all these discussions, the conclusion I can come to is that by and large R is justified in taking out most of the items in the summons and is successful in a good portion of them, either by way of an order from the court or by a substantive response from P. This is a special matter that the court may take into account: Order 62, rule 5(1)(f), RHC. He acted quite sensibly in not pursuing the other items, some of which, even if pursued, such as paragraph 4 of the summons, would have been failed. It is not necessary nor is it possible for me to make a scientific stock-taking by itemizing the successful ones and the withdrawn ones in terms of their extensiveness of the evidence adduced or the time spent. Mr Hariman emphasizes that P had been accommodating and amenable in responding to R’s summons. I accept that it was case after the taking out of the summons; and this conduct is also a matter that the court may consider in the circumstances: Order 62, rule 5(1)(e) and (2)(b) and (d), RHC. Likewise, the conduct of R as discussed above would also have to be put into the balance. Last but not least, P was not truthful in respect of her bank account in Taiwan. Taking all the above into consideration and doing the best I can, I consider it is fair that R is to get two/third (2/3) of the costs in respect of paragraphs 1, 3, 4 and 5 of his summons. Orders 42.For the reasons aforesaid, I give the following orders:
Mr Wayne Hariman, instructed by Gilbert Tang & Co, Solicitors, appeared for the petitioner Ms Sezen Chong, instructed by K P Lam & Co, Solicitors, appeared for the respondent |
Cases cited in this judgment
Further hearings and rulings under FCMC 3343/2015