Lhc v. Khs
Read the full judgment text of FCMC 3343/2015 on BabelCite. This Family Court judgment was delivered on 27 February 2018 before His Honour Judge I Wong.
Matrimonial proceedings – Costs – Specific discovery – Interlocutory proceedings – Withdrawal of summons – Conduct of parties – Appropriate costs order – Petitioner issued summons for specific discovery which was subsequently withdrawn – Court found some requests too wide and oppressive but 2nd Questionnaire largely justified – Costs split half to Respondent half no order – Petitioner to bear half costs
Legal issues: Costs order for interlocutory proceedings · Whether P succeeded on part of her case · Appropriate costs order
Outcome: Petitioner to pay Respondent half of the costs of her summons; no order as to costs for the other half.
Cited by 4 cases · Cites 2 cases
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FCMC 3343 / 2015 [2018] HKFC 23 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 3343 OF 2015 ----------------------------
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__________________ RULING __________________ 1.Before me is the question of costs of the petitioner’s summons dated 4 August 2015 for specific discovery against the respondent. 2.For convenience, I shall continue to refer the petitioner wife as “P” and the respondent husband “R” in this Ruling. 3.Since I have already set out the background of the parties in the previous Rulings dated 7 August 2017, I would not rehash the same here. It is only necessary for me to set out the chronology of events relevant to P’s summons. Chronology of Events 4.It should be recalled that at the beginning P petitioned for divorce on 4 January 2014 (“the 1st petition”) on the ground of 2-year separation. 5.On 12 March 2014 the parties exchanged their Form Es. 6.Then with the leave of the court, on 20 March 2015 P commenced another petition for divorce (“the 2nd petition”) on the ground of 2-year separation and unreasonable behaviour on the part of R. The 1st petition was stayed but the ancillary relief proceedings continued under the 2nd petition. 7.In both petitions it was pleaded that the separation date was March 2003. 8.On 12 May 2015, P filed her 1st Questionnaire (“the 1st Questionnaire”) on R’s Form E. In response, R filed his Answers on 9 June 2015 (“R’s Answers”). 9.P was not satisfied with R’s Answers. This prompted her to take out the present summons. The application was contested and the parties exchanged their affirmations. There was however never any determination by the court on this summons, the reason being that subsequently leave was granted on 2 February 2017 for P to have her summons withdrawn with the costs issue to be resolved by the court. 10.At about the same time, as far as the main suit is concerned, the court was informed during the 1st Appointment hearing of 16 November 2015 that P had agreed to one-year separation as from at least 4 January 2014 as the ground for divorce (“the Main Suit Agreement”) and for this purpose a consent summons would be prepared. Eventually, it was not until some 15 months later on 22 February 2017 that the consent summons was filed. I need to mention this development because the Main Suit Agreement bears some significance to Ms Chong’s arguments. 11.The decree nisi was finally granted on 4 January 2018. Applicable Legal Principles 12.Counsel have no argument over the applicable legal principles. The summons for discovery is an interlocutory proceedings and so Order 62, rule 3(2A) of the Rules of the High Court (“RHC”) governs the position. Sub-paragraph (2A) provides that,
13.Thus, “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 (2018) (Vol 1), §62/3/3B. 14.The court is required to take into account, where appropriate in the circumstances, the following special matters set out in Order 62, rule 5 of RHC,
15.As said by To J in §19 of Melvin Waxman v Li Fei Yu (unreported, HCA 1972/2012, 11 September 2013), in the exercise of its discretion, the court may take the issue-based approach or may take into account merit of the parties’ case or the possible outcome of the action. The circumstances of interlocutory proceedings are so numerous that it is impossible to make any general rule. Costs to follow the event and costs be to the successful party’s costs in the cause are obvious options. 16.As regards the onus of proof, again I need to refer to what To J said in §20 of Melvin Waxman v Li Fei Yu, supra:
Parties’ Stance 17.Ms Chong, on behalf of R, argued that, prior to P’s present application, the discovery R made had already provided sufficient information to ascertain his assets, liabilities and lifestyle, etc and to enable the court to exercise its power under section 7 of the Matrimonial Proceedings and Property Ordinance (Cap 192). Specifically, the period within which R was asked to produce his documents was unduly lengthy. Hence, the discovery sought was irrelevant, unnecessary and oppressive and could not be for the fair disposal of the parties’ disputes or for the purpose of saving costs. Yet, P unreasonably proceeded with the summons. When she came to realize that she had little prospect of success, she withdrew the application. On that basis, Ms Chong contended that since it was an outright withdrawal on the part of P, “costs follow the event” should apply unless she can persuade the court otherwise. 18.Mr Hariman, who appeared for P, argued that “costs follow the event” does not apply to the present case. He argued that some other or lesser order is appropriate. He relied on sub-paragraphs (e) (the conduct of all the parties) and (f) (whether a party has succeeded on part of his case, even if he has not been wholly successful) of Order 62, rule 5, RHC to say that the proper costs order should be no order as to costs; alternatively, it should be in the cause of the ancillary relief proceedings. 19.Before I come to parties’ arguments, it is necessary for me to deal with the general principles regarding discovery and to give an overview of P’s summons. The general principles 20.Order 24, rule 7, RHC is applicable to matrimonial proceedings by virtue of Rule 3 of the Matrimonial Causes Rules (Cap.179A). I believe the relevant legal principles are not in dispute. They have been set out by the Court of Appeal in Paul’s Model Art GMBH & Co. KG v. UT Limited [2006] 1 HKC 238, at para 24,
21.In the context of matrimonial proceedings, Rayden and Jackson on Relationship Breakdown, Finances and Children (July 2016) has this to say,
The Summons – An Overview 22.P’s summons consisted of 5 Paragraphs. Paragraph 1 23.Paragraph (1) requests for the production of a long list of documents, altogether 10 items –
24.At the beginning, both parties had their own application for discovery which came before me for callover on 21 September 2015. At that time, I commented that their summonses were too wide in ambit and lacked precision in respect of some of the items and I repeated the same remarks in the hearing of 16 November 2015. I urged the parties to consider amending their application. 25.Subsequently, R took appropriate actions in respect of his summons which has since been disposed of. As for P’s summons, she never took heed of my comments. As I see it, P’s summons was pregnant with problems. By way of an example, under the Form E a party is merely required to produce his bank statements in the past 12 months. At the time of filing the Form E, the parties were still under the 1st petition which was taken out on 4 January 2014. In her summons, P asked for the production of “copies of all bank statements”, “copies of all financial statements pertaining to investments and/or securities accounts”, “copies of all financial statements pertaining to insurance policies” and “copies of all financial statements pertaining to R’s MPF account” and “copies of all credit card statements” as from January 2010 up to the date of the summons (ie 4 August 2015). I questioned why P saw the need to trace all these documents 4 years back (as from January 2010). P’s only reason as set out in her supporting affirmation of 3 August 2015 was that January 2010 was the time when the parties’ relationship really broke down. Apart from this allegation, there was no specific allegation of fact that P wished to prove or further inquiry that P wished to make arising from the financial statements already disclosed by R. 26.With respect, this is not the criterion generally endorsed. Each case must depend on its own facts. There is simply no ground of justification on why disclosure could justly commence as from the time when the relationship broke down. In this regard, it should be borne in mind that at that time P still pleaded in her petition for divorce that she separated with R in March 2003. Even if P had an application under section 17 (Avoidance of Transactions) of the Matrimonial Proceedings and Property Ordinance, (Cap 192) in contemplation, this would not have been a justification for disclosure to commence as from P’s time, for the reason that there would be a presumption against the disposer if the disposition was made less than 3 years before the application for ancillary relief. Besides, P never said there are matters raising suspicion or concerns or there are special circumstances that warrant an extended period of disclosure. 27.Another striking feature is that some of the requests are apparently too board, imprecise or unnecessary. Item (b) requests for “all profit and loss accounts, balance sheets, auditor’s reports, bank statements and a list of assets and liabilities for and in respect of” the said MI Limited. Essentially, what P asks is for all the accounting documents of MI Limited. I am not quite sure whether P requested these documents for the purpose of doing the auditing again. If that was her intention, I must say there is no justification for her to do so. There is no valid explanation from P as to why the audited reports would not have served the purpose. 28.Item (c) asks for “all documents including but not limited to bank statements pertaining to details, whereabouts and application of sales proceeds arising and received from the sale of the Royal Ascot property by MI Limited”; and similarly, Item (d) asks for “all documents pertaining to the source of funding” of R’s mother’s property. I have no doubt that the request is too board and imprecise; and as such, it may amount to being oppressive. Further, I do not think item (c) is necessary because it seems to me clear that all P wants to know is the whereabouts of the balance of proceeds of sale after a portion of them have been utilized into the purchase of another property. This question can property be dealt with in P’s 2nd Questionnaire which forms part of her summons. 29.Item (g) asks for all financial statements pertaining to R’s MPF account. It is trite that R would not be able to cash his MPF until turning 65. This request seemingly does not serve any particular purpose. 30.Item (j) relates to the main suit and was subsequently withdrawn. It is not necessary for me to give any comments. Paragraphs 2 and 3 31.Paragraph 2 of the summons is to seek an order for R to produce “written confirmations issued by HSBC, Citibank, Bank of China and China Construction Bank confirming the exhaustive list of all types of bank accounts, investments and securities accounts and credit card accounts which R holds or held solely and/or jointly with others in Hong Kong and/or the People’s Republic of China including those accounts already closed”. 32.Alternatively, under Paragraphs 3 of the summons, if R is unable to provide any of these confirmations under paragraph 2, he is to file and serve an affirmation stating “whether such document(s) or category(ies) of documents are, or have at any time been, in R’s possession, custody or power; and if the same or any of them have been, but are not now in R’s possession, custody or power stating when R parted with them and what have become of them with detailed reasons”. 33.The problem with these 2 paragraphs is that, as far as the confirmation letters are concerned, it is certainly not her case that the letters were in existence at any time or in R’s possession, custody or power. Further, as I see it, it is highly questionable as to whether any bank would be willing to provide such a written confirmation. At the very least, I have not seen one before. It is too to be noted that P requires the confirmation to cover two jurisdictions and there is no limitation in time. The implication is that R might even have to go back to years well before January 2010. As set out in [20] above, the court order must identify with precision the documents or categories of documents which are required to be disclosed, for otherwise the person giving discovery may find himself in serious trouble for swearing to a false affidavit, even though doing his best to give an honest disclosure and discovery should not be oppressive. I have no doubt that request is oppressive. Paragraphs 4 and 5 34.Paragraphs 4 and 5 are to seek an order for P to file and serve a 2nd Questionnaire and for R to give the Answer within a prescribed time. I will deal with the 2nd Questionnaire below: [45] to [62]. Parties’ Arguments 35.I now turn to parties’ arguments. P’s Grounds (1) Whether P has succeeded on part of her case, even if she has not been wholly successful 36.Mr Hariman submitted that P’s summons has never been heard. It cannot be said with any degree of certainty that everything P sought for would have been allowed or rejected. He submitted that in fact, as a result of the application P obtained many documents that she had asked for. It was after she had taken out the application that R made disclosures in a bit by bit manner. Significantly, the first disclosure was given by R on 15 December 2015, the day following he filed his affirmation in opposition to the application. That was followed by further disclosures on 23 January 2016, 8 April 2016 and 29 April 2016. That, Mr Hariman argued, was clearly a concession on the part of R. If there were no application, there would not have been the disclosures. Though not all the documents P asked for were provided, on any view P had some success. It was upon these further disclosures that P decided not to proceed with the remainder of the summons. Therefore, it was not an all-out loss or withdrawal. The fair view is there was no overall victor. 37.Ms Chong did not deny the further disclosures that R made as outlined by Mr Hariman. In response, Ms Chong submitted that it was in view of P’s change of stance in arriving at the Main Suit Agreement with R and in order to save costs and unnecessary arguments, R went beyond the 12-month period as required under Form E by providing some of the statements and documents requested under Paragraph 1. Analysis 38.The undisputed fact is that subsequent to P’s summons and despite his opposition, from 15 December 2015 to 29 April 2016 R made a series of disclosures of documents covering item nos (a), (b), (e), (f), (g), (h) and (i) of Paragraph 1. Without descending onto the minutiae, it can be seen that many of these documents were of 2012 and some were as early as of January 2012. On Ms Chong’s contention that it was after the parties had reached the Main Suit Agreement that R provided the documents, with respect, I fail to see how this would have impact on the disclosure exercise that ought to have been carried out diligently by the parties. By his conduct R had tacitly agreed to make disclosure beyond the 12-month period. If these documents and statements are irrelevant, disproportional, unnecessary and fishing as contended by Ms Chong, the provisions of these documents would serve no purpose other than lading the court with excessive information, prolonging these proceedings and depleting parties’ resources. 39.It is apparent from R’s affirmation that while on the one hand, P’s application would be strenuously resisted; on the other, he was willing to make some concession. I have no doubt the proper and the preferred way to deal with disclosure is for the parties to engage in realistic and reasoned dialogues on why the documents concerned are needed. If the view taken is that the documents are irrelevant or unnecessary, that should be drawn to the attention of the court and, if necessary, for determination, otherwise, there would be a proliferation of documents to be used in trial. 40.Again, without dwelling into the details and in any event my attention was not drawn to any particular documents during the argument, as I see it, many of these documents such as those relating to R’s MPF account and betting accounts are of very marginal relevance. Ms Chong initially explained that the disclosure was to make P “happy”. Then she added that all these documents were provided out of goodwill and to save argument; and the documents would help the parties to decide how the division of the assets could be made. If the disclosure was simply for the purpose of making P “happy”, it must have been wrong for R to have done so because the result would be the inclusion of useless documents in the trial bundles. Doing so would be a waste of time and costs for which R should be penalized. If the disclosure was made for the purpose of assisting the parties in the division of their assets, I agree that P at the very least has achieved some success. (2) Conduct of the parties 41.Mr Hariman argued that it was after R had filed his affirmation in opposition that he started to make disclosures bit by bit; there was no explanation why he did so. In contrast, P was only able to evaluate her position after she had had a sight of the documents disclosed and she acted reasonably by withdrawing the summons. 42.Though Ms Chong did not expressly address this point, I note R made his position clear in his affirmation in opposition of 14 December 2015 that in order to save time and money from being wasted on unnecessary arguments, he was willing to accommodate P’s request but it took time and money for him to prepare the documents. He would in due course serve her with the additional documents. 43.Cleary, all these arguments advanced by the parties under this and the earlier ground (ie whether P has succeeded in part) centre on Paragraph 1 of the summons only; the same cannot be said for other Paragraphs. I consider that proper analysis cannot be done without giving due consideration to the remaining Paragraphs of the summons. What I have in mind is I need to consider whether it was reasonable for P to have raised the remaining Paragraphs including the 2nd Questionnaire: Order 62, rule 5(2)(a), RHC. Paragraphs 2 and 3 of the Summons 44.I have already made the point that Paragraphs 2 and 3 are devoid of merits. I am sure that they should not have been raised or pursued. Paragraphs 4 and 5 of the Summons 45.I will now deal with P’s 2nd Questionnaire that constitutes Paragraphs 4 and 5 of the summons. At issue is whether it was reasonable for P to have raised the questions. Since I am not dealing with the substantive application I would adopt a broad brush approach without venturing into a detailed analysis of the merit (or the lack of it) of each and every question. 46.As said, the 2nd Questionnaire was precipitated by R’s Answers. The Questionnaire contains 8 questions. Question 1 47.Question 1 is on the nature and categories of expenses that R said to have paid out of his Bank of China account in the Mainland. This account was not disclosed in his Form E and was only disclosed in R’s Answers upon being so asked by P. Mr Hariman informed the court that since R had provided the relevant bank statements under Paragraph 1(a) of the summons, P did not pursue this question. 48.Given that R claimed to have retired since December 2007 and in his Form E he disclosed no matters or business that required any regular payment of expenses in the Mainland, I incline to agree that P was justified in raising this question. Question 2 49.This question relates to a family company in the name of MI Limited of which both P and R used to be its directors. 50.It is not in dispute that MI Limited was used for the purpose of asset holding and rental income. The company sold a property in Royal Ascot (“the Royal Ascot Property”) for $12,380,000 in around December 2010 and made use of part of the proceeds of sale in the purchase of another property in Lohas Park (“the Lohas Park Property”) in September 2011 for $5,792,000, leaving a balance of $6,588,000. P asked the whereabouts of the balance. 51.In fact, P had earlier on in her 1st Questionnaire enquired about the proceeds of sale of the Royal Ascot Property. R’s answer was evidently evasive for he only explained that $5,792,000 was used for the purchase of the Lohas Park Property. It would be obvious to anyone that with this answer a sum of as much as $6,588,000 remains unaccounted for. Probably, R realised this and he further referred to the fact that P at that time was also a director of the company and she was well-conversant with the major decisions and books of the company. In response, P said despite being a director of MI Limited, it was R who was in charge of all the selling and buying decisions. She denied being well-conversant with its books and R never bothered to explain to her what she was signing. 52.Lam J (as he then was) said the following in L v L [2006] 1 HKFLR 121; (HCFC No. 1 of 2003, date of judgment: 18 November 2005),
53.The question is a simple and direct one. In my view, P was well justified to have asked this question and this question ought to be answered. It is no good for the other party to say that the questioner should be aware of the answer or to ask the questioner to dig out the answer from the documents supplied by him. Question 3 54.Question 3 is in respect of a property in Shenzhen (“the Shenzhen Property”) owned by a Madam Su. P claimed R had been maintaining an improper relationship with this lady but R said she was just the wife of one of his friends. In R’s Answers he denied having any proprietary interest in the property. Indeed, the effect of his answer is that he knew nothing about this property, be it the date of the purchase or its price. One of the questions being asked under this heading is whether R provided any assistance, be it financial and/or otherwise, to Madam Su in the purchase of the Shenzhen Property. Before me are the evidence adduced by P showing that R, together with Madam Su, were the occupants of this property. Added to this is the evidence that R was in possession of the access key card to this property. The implication of course is that he had (or still has) free access to this property. It is also to be recalled that there were photographs in P’s previous affirmation showing R went out with Madam Su in such a manner and body gesture that indubitably called for enquiry into their relationship. I am aware that R gave some explanations in his affirmation in opposition dated 14 December 2015 which may or may not be true and on which for the present purpose it is not necessary for me to give any views. It suffices for me to say that, on the evidence before me, it cannot be said that this question is not justifiable. P’s question on whether R provided any assistance in the purchase of the Shenzhen Property is for information which may lead to a line of inquiry which would disclosure evidence. P is not fishing: Re State of Norway’s Application [1987] QB 433, at p 482. Question 4 55.Question 4 relates to a property purchased in the name R’s mother. In her 1st Questionnaire, P had already asked about the source of funding for the purchase of this property. R’s answer was again evasive and he just said the sources of funds for the purchase do not concern the current proceedings and further that his mother had executed a will on 21 April 2015 giving the property to her grandson (ie the parties’ son). P therefore found it necessary to repeat the same question in Question 4 by asking whether R provided any assistance, be in financial and/or otherwise, to his mother in the purchase. 56.The property was purchased way back in June 2008. This alone, without more, would not be sufficient to justify the question. However, what followed the purchase was that, according to P, the mother executed a will in June 2012 bequeathing the property to R. Both P and R were present at the time of execution of the will. Hence, this property could be a financial resource that R may have in the foreseeable future. I believe P is well aware of the answer and the answer must be in the positive in that it was R who provided the purchase money. If this statement comes from P this would merely be an assertion on her part but if this comes from R, this would be an admission. Considering the assertion that there was a will of 2012 and that a new will was executed in the middle of the divorce proceedings in June 2015, the circumstances would have justified P raising this question. At any rate, this question requires a simple and straightforward answer only. Question 5 57.This question deals with R’s betting account maintained with the Hong Kong Jockey Club from January 2013 to January 2014. Mr Hariman said P did not insist on this question because relevant statements had been supplied by R on 23 January 2016. I have already given my view that these statements, which touch upon R’s spending pattern, are of very marginal relevance. Question 6 58.This question repeats the same question raised in P’s 1st Questionnaire to which R did not give his answers. This is on R’s deposits and withdrawals of substantial sums of money ranging from $57,000 to $3,000,000 from May 2010 to January 2015. Mr Hariman informed the court that P chose to deal with these transactions in the trial. 59.I cannot accept Ms Chong’s submission that P can employ an accountant to analyse the transactions. As can be seen from the paragraphs that I quoted from L v L, supra, in [52] above, this is the wrong approach. I accept that some of deposits or withdrawals may be too stale for them to have been raised but the same cannot be said for the more recent ones. In my view, sums of substantial amount that apparently were not day-to-day transactions and that resulted in significant change in assets would justify raising questions. Question 7 60.This question is in respect of R’s credit card liability of $669,707 that he owed to Citibank. In R’s Answers he said this was the result of an accumulation of credit card debts over the years. P asked which credit cards were involved and their numbers. Again, Mr Hariman said P did not insist on an answer at this stage and would pursue it in trial. 61.Leaving aside the question of why R, as a retiree, would have accumulated credit card liability of such an extent, I consider this question is legitimate and well justified. R could have easily provided an answer. Question 8 62.This question is on R’s monthly expenditure, specifically, on R’s alleged travelling expenses of $3,000, trips to Taiwan and the monthly insurance premium. Given that this case is not a ‘big money’ case, it cannot be said that P’s question is unnecessary, irrelevant or excessively oppressive. The Appropriate Costs Order 63.I have come to the conclusions that:
64.The ultimate question is what the appropriate costs order should be on the basis of these conclusions. When approaching this question, I need to remind myself of “the long-established principle that costs are determined not by dividing litigation into quantifiable subjects and figures, like a profit and loss account, but rather by way of overall impression”: per Hartmann J (as he then was) in §22 of F v F (No 2) [2003] 3 HKLRD 976. 65.I do not consider it is apt for the costs to be in the cause of the ancillary relief as contended by Mr Hariman. As the learned author of Hong Kong Civil Procedure (2018) commented, “Costs in the cause” is an inappropriate order because there is no certainty that the order for disclosure will lead to a claim or cause against the respondent: §24/7A/10. Equally, I am not persuaded that “no order as to costs” is appropriate. I believe that the appropriate order should be one that reflects the court’s disapproval over the haphazard summons prepared by P. Taking all the matters in a round, I believe the proper order should be one for P to bear half of the costs and as for the other half, there should be no order as to costs. Orders and Conclusion 66.For the above reasons, I give an order that the petitioner do pay the respondent half of the costs of her summons and that there be no order as to costs for the other half; with counsel certificate, and if agreement cannot be reached, to be taxed on party and party basis. As for the costs of the arguments, I also give the same order, by way of an order nisi. 67.Throughout the last couple of years, despite my repeated exhortations, the parties have been fighting over satellite litigations. Inclusive of this Ruling, I have already handed down 5 Rulings, of which 4 are mainly on costs, not to mention the other countless rulings that I gave during the many hearings when the parties came before me. Rather than focusing on pushing the ancillary relief forward with a view to having a Financial Dispute Resolution hearing or to trial as soon as practicable, the parties (and, I believe, their legal representatives as well) are apparently obsessed with the determination of winning over the other side on any issues, no matter big or small, that came before them. It is not without regret to see that as of now, the parties are nowhere nearer to the resolution of their financial disputes than they were 2 years ago. As I see it, the parties could have adopted a more objective and realistic approach in dealing with their disputes. Both have retired and have been living on the family assets amassed during their heyday. It is not necessary for me to remind them that all the legal costs incurred would, in one way or the other, have to be borne by the parties out of their matrimonial assets. It is hopeful that this Ruling should finally clear the way for the parties to move forward to resolving the financial dispute between them.
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 |
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