Li Lihong v. Choi Tung Chi and Another

HCA 3310/2016

[2018] HKCFI 2344

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3310 OF 2016

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(By Original Action)

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(By Counterclaim)

Before:  Deputy High Court Judge William Wong SC in Chambers

Date of Hearing:  5 October 2018

Date of Decision:  15 October 2018

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D E C I S I O N

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1.This is the Plaintiff’s (“Mr Li”) (by original action) applicationby summons dated 29 June 2018 (the “Summons”) against the 1^stDefendant (“Madam Choi”) and the 2^nd Defendant (“Madam Cheung”) (by original action) for specific discovery under Order 24, rules 3, 7, 9 and 10 of the Rules of the High Court (Cap 4A).

2.The classes of documents to be discovered are set out in Schedule 1 and Schedule 2 of the Summons as follows:

“ Schedule 1

1. The Summons and all affidavits/affirmations filed in the Family Proceedings in support of an application made by the 1^st Defendant (by original action) to vary an Order of the Family Court on custody and access arrangements so as to enable her and her daughter to relocate to the United States of America which contain any reference concerning or in relation to (1) theintention of the 1^st Defendant (by original action) to relocate tothe United States of America or (2) the financial circumstancesof the 1^st Defendant (by original action) or her parents includingthe 2^nd Defendant (by original action) or her parents including the2^nd Defendant (by original action) (the ‘Variation Application’).

2. All exhibits to the affidavits/affirmations filed in the Family Proceedings in relation to the Variation Application which containany reference concerning or in relation to (1) the intention of the1^st Defendant (by original action) to relocate to the United Statesof America or (2) the financial circumstances of the 1^st Defendant (by original action) or her parents including the 2^nd Defendant (by original action).

3. All Forms E with exhibits or any other form of financial disclosure made by the 1^st Defendant (by original action) or her parents including the 2^nd Defendant (by original action) in the context of the Variation Application, whether filed with the Court or otherwise.

4. The Order, Judgment and Reasons for Decision for the VariationApplication which contain any reference concerning or in relation to (1) the intention of the 1^st Defendant (by original action) to relocate to the United States of America or (2) the financial circumstances of the 1^st Defendant (by original action) or her parents including the 2^nd Defendant (by original action).

5. All correspondence between solicitors for the 1^st Defendant (byoriginal action) and the Respondent from 2009 to the conclusion of the Variation Application in the Family Proceedings and/or his solicitors which contain any reference concerning or in relation to the intention of the 1^st Defendant (by original action) to relocate to the United States of America.

6. The audited financial statements of Kwun Wah International Limited for the financial years 2009 and 2010.

Schedule 2

1. The tax returns filed by, for or on behalf of the 2^nd Defendant (by original action) for the years 2009 and 2010.

2. The audited financial statements for Kwun Wah International Limited for the financial years 2009 and 2010.”

3.Class 6 of Schedule 1 and Class 2 of Schedule 2 are identical.

4.Mr Man SC, for the Plaintiff, fairly pointed out that a large number of the documents to be discovered were previously filed in FCMC 5468/2003, the divorce proceedings between Madam Choi and her ex-husband, Mr Chan (“Mr Chan”).  It is accepted that Classes 1 and 4 of Schedule 1 are caught by Rule 121(2) of the Matrimonial Causes Rules (Cap 179A) (“MCR Rule 121(2)”) and the usual implied undertaking.

5.It is an established law that a party who obtains discovery may use the documents disclosed to him only for the proper purposes of conducting his own case, and there is an implied undertaking by him not to use them for any collateral or ulterior purpose.  (See Matthews and Malek, Disclosure (5^th ed, 2017) at paras 19.12 and 19.14.)

6.The proper forum to seek leave for the use of the documents covered by MCR Rule 121(2) and the implied undertaking in FCMC 5468/2003 is the Family Court (see Nayler v Beard [2001] 2 FLR 1346 per Wilson J (as he then was) at para 25 and per Hale LJ (as she then was) at para 49).  The rationale of such practice is that the other party to the family proceedings (here, Mr Chan) should be allowed a voice in the debate, and this voice is likely going to be given proper attention in proceedings towhich he is a party.  As such Mr Man SC, for the Plaintiff, suggested that the properapproach is for this court to decide on whether the documents sought underboth Schedules 1 and 2 are discoverable under Order 24 first before proper applications were to be taken out before the Family Court.  This is the approach that I will adopt.

APPLICABLE LEGAL PRINCIPLES

7.The legal principles for specific discovery of documents are well established.  In Paul’s Model Art GmbH & Co KG v UT Ltd & Ors [2006] 1 HKC 238, at paras 24 and 25, Cheung JA said:

“24. The relevant principles for specific discovery under O 24 r 7 of the Rules of the High Court can be summarised as follows:

(1) There is no jurisdiction to make an order under RSC, O 24 r 7 for the production of documents unless

(a) there is sufficient evidence that the documents exist which the other party has not disclosed;

(b) the document or documents relate to matters in issue in the action;

(c) there is sufficient evidence that the document is in the possession, custody or power of the other party.

(2) When it is established that those three prerequisites for jurisdiction do exist, the court has a discretion whether or not to order disclosure.

(3) The order must identify with precision the document ordocuments or categories of document which are requiredto be disclosed, for otherwise the person making the listmay find himself in serious trouble for swearing to a false affidavit, even though doing his best to give an honest disclosure. (See: Berkeley Administration v McCelland [1990] FSR 381)

The real issue of relevance

25. The real issue that has been focused at this hearing is whether the documents sought to be disclosed are relevant to theissues in this case between the plaintiff and the fourth defendant.  In this context the issue must be one identified in the pleadings: Sun Yuet Tai Ltd v British American Tobacco Co (HK) Ltd (CACV 95/1999, unreported).  On the other hand the fact that an issue is raised in the pleadings is not determinative as to whether it relates to a matter.  Discovery is not required of documents which relate to irrelevant allegations in pleadings which even if substantiated could not affect the result of the action: Allington Investments Corp & Ors v First Pacific Bancshares Holdings & Anor [1995] 2 HKC 139.”

(Emphasis added)

8.Further, the following legal propositions are well established:

(1) The court will not make an order unless the discovery sought is necessary either for disposing fairly of the cause or matter or for saving costs.

(2) The Peruvian Guano test remains the test of relevance.  A document is relevant if: (i) it is reasonable to suppose that it contains information which may, not must, either directly or indirectly enable the party requiring the same either to advance his own case or to damage the case of his adversary; or (ii) it is a document which may fairly lead the party to a train of inquiry which may have either of those two consequences.  For the purpose of discovery, the pleadings have to be looked at broadly.

(3) In relation to relevance, it is for the party seeking specific discovery to demonstrate a prima facie case for the relevance of the documents sought to the “matters in question”.

(4) The relevance of the documents under application is to be determined by pleadings.  (FBC Construction Co Ltd vBig Island Construction (HK) Ltd (unreported, HCA 1363/2008, [2010] HKEC 1646).  In the context of relevance, if a matter has not been identified in pleadings, it does not become an issue simply because it is hotly contested in affirmations in interlocutory proceedings, witness statements or expert reports: Bruce James Stinson v Gu Ming Gao (unreported, HCA 2352/2012, [2016] HKEC 452), CFI.

(5) However, although the pleadings and particulars will usually determine relevance to a matter in question, it may be wider thanthis: “the obligation to provide discovery…does not necessarily mean a matter on which issue has joined in the pleadings, but the documents must be matters to which an inference can properly be drawn that they are subject to controversy between the parties” (Wu Ching Sau v New World First Bus Services Ltd (unreported, HCPI 767/2009, [2010] HKEC 1393).

(6) Specific discovery will be deemed to be a fishing exercise if theallegedly relevant issue was never part of the issues identified in the listing questionnaire filed by the applicant’s solicitors or in the pleadings.  (Joyce T Ongsip v Pimatronics Ltd (unreported, HCA 611/2010, [2012] HKEC 1328.)  (See: Hong Kong Civil Procedure 2018 Vol 1 at §24/7/3.)

9.In Moulin Global Eyecare Holdings Ltd (In Liq) v Olivia Lee Sin Mei (No 2) [2013] 4 HKC 592, Fok JA (as he then was) at para 56 said:

“It seems to me that the concept of the fair disposal of a cause ormatter must entitle and require the court to make an assessmentof the ‘degree of relevance or importance of the document to thatmatter’ as the Judge held. As the defendant submitted, this is animportant safeguard deliberately put in place to allow the court to assess each case in its context and determine whether production is warranted under the particular circumstances of the case.”

ISSUES IN THIS ACTION

10.In order to assess the issue of relevance of the classes of documents to be discovered, I am of the view that it is important to have a clear understanding of the issues to be resolved in the present action and the factual issues stated in the affirmations in support and in opposition to the present application.

Pleaded issues

11.The starting point is that there is no dispute that Madam Choi and Madam Cheung are the registered owners of the property located at Flat B on the 7^th Floor of Block 17, No 53 Wharf Road, Provident Centre, Hong Kong (“the Property”).  By an assignment dated 13 July 2009, between Riccox Engineering Limited as the vendor and Madam Choi and Madam Cheung as the purchasers, the Property was conveyed into the joint names of Madam Choi and Madam Cheung.

12.On 16 December 2016, about six years after the acquisition of the Property, the Plaintiff commenced the original action to claim that he is the true beneficial owner of the Property.  The Statement of Claim was amended on 16 October 2017.  In his Amended Statement of Claim, the Plaintiff pleads that:

“4. The Deposit and other payments relating to the transaction were paid by the Plaintiff out of his own money on 2 June 2009 and the Balance was paid by the Plaintiff out of his own money on 7 July 2009.

5. In the premises, the Property belongs to beneficially to the Plaintiff.  The 1^st and 2^nd Defendants have no beneficial interest in the Property, be it jointly or severally.”

(Emphasis added)

13.Hence, at trial, the burden falls squarely on the Plaintiff to makegood his case that he paid for the totality of the purchase price of the Property. He has to adduce sufficient factual evidence, including his bank statements and other documentary evidence to prove that he paid (i) HK$280,000 as initial deposit, (ii) HK$630,000 as further deposit, (iii) HK$8,190,000 as the balance of the purchase price and (iv) other payments relating to the acquisition such as estate agency commission, stamp duty, conveyancing fee etc.

14.If he can discharge that burden of proof, then, presumably, by the operation of a resulting trust, the court could declare him as the 100% beneficial owner of the Property.  If he fails to discharge his burden of proof, then his challenge to the beneficial ownership of Madam Choi and MadamCheung collapses and they will remain as the legal and beneficial owners of the Property.  Madam Choi and Madam Cheung put the Plaintiff to strict proof thereof.  (See paragraph 4(j) of the Amended Defence and Counterclaim.)

15.Madam Choi’s case is also very simple.  She and her mother Madam Cheung are the legal and beneficial owners of the Property.  The Property was a gift by Mr David An, her former boyfriend, to her absolutely and beneficially. Similarly, Madam Choi and Madam Cheung carry the burden of making good their counterclaim that the Property was gifted to them by Mr David An.  Paragraph 4 of the Amended Defence and Counterclaim of the 1^st and 2^nd Defendants reads:

“Paragraphs 4 and 5 are denied. It is averred that:

a. After the 1^st Defendant became David An’s girlfriend, he asked the 1^st Defendant to quit her job and to accompany him;

b. David An promised the 1^stDefendant that he would look after her and would purchase a landed property to give her adequate financial protection (“the Promise”);

c. In reliance of the Promise, the 1^stDefendant left her employment in or about April 2009;

d. The 1^st Defendant then began to look for a suitable property for the use of her family. David An also inspected a few properties in the mid-levels with the 1^st Defendant;

e. The 1^st Defendant eventually decided to acquire the Property with her mother in joint names;

f. On 29 May 2009, the Defendants entered into a Provisional Sale and Purchase Agreement (‘PS&A’) with the vendor. To the best of the available records, the 1^st Defendant issued a personal cheque (with cheque number 505741) drawn on Hongkong and Shanghai Banking Corporation Limited and in the sum of HK$280,000 to the vendor as initial deposit. The Defendants reserve the right to plead further upon retrieval of the bank records and discovery.

g. After signing the PS&A, the 1^st Defendant informed David An of her choice on the Property. David An then told the 1^stDefendant to liaise with the Plaintiff in relation to the purchase of the Property, and stated that the Plaintiff will handle the purchase on his behalf;

h. The Plaintiff then contacted the 1st Defendant and arrangedfor the solicitors for the Defendants to complete the purchase;

i. In the premises, it is averred that the Plaintiff was only acting as an agent and/or representative for and on behalf ofDavid An in the payments of the Balance and other outgoings (if any);

j. The Defendants had no knowledge and were never informed that the Plaintiff had paid any money out of his pocket in respect of the Property. The Plaintiff is put to strict proof thereof, and in particular, the money he paid did not originate from David An;

k. During their love relationship, David An had repeatedly reassured the 1^st Defendant that the Property had already been given to her (‘the Reassurance’);

l. Relying on the aforesaid Promise and the Reassurances, the Defendants have acted to their detriment, in that:

(i) After the purchase of the Property, they had spent over a total sum of HK$1,500,000 to renovate the Property in 2009 before moving in;

(ii) Ever since the Defendants have acquired the Property, they have been responsible for all the outgoing expensesof the Property, including management fees, government rates and rents;

(iii) Between December 2009 and August 2016, the estate underwent some major refurbishments and the Defendants have contributed a total sum of around HK$170,000 to the expenses incurred by the incorporated owners of the estate.

(iv) In around October 2013, the Property was damaged by water seepage from the upper floor of the Property (‘Flat 8B’). The Defendants have continuously liaised with the owner of Flat 8B and tried to resolve the matter but in vain. In about December 2015 the Defendants commenced a legal action against the owner of Flat 8B and have spent around HK$400,000 legal fee up to date;

(v) On 10 October 2000, the Defendants purchased with the2^nd Defendant’s own money a car parking lot within thesame estate known as Car Parking Space No.101 on theBasement Floor of Provident Centre, Nos.21–53 Wharf Road, Hong Kong at a consideration of HK$662,000. This car parking space was assigned to the Defendants on 22 November 2010.

m. By reason of the matters pleaded above, the Property was a gift from David An to the Defendants absolutely and unconditionally;

n. Alternatively, it is inequitable and unconscionable for David An and/or the Plaintiff to go back on the Promise and the Reassurances, and a promissory and/or proprietary estoppelhas arisen against David An and/or the Plaintiff to deny the Defendants’ legal and beneficial interest in the Property;

o. Save as the aforesaid, Paragraphs 4 and 5 are denied.”

(Emphasis added)

16.It is important to note that in the Plaintiff’s Amended Reply and Defence to Counterclaim dated 21December 2017, the Plaintiff made the following averments in paragraphs 4(e), 4(o) and 4(r):

“ (e) In about May 2009, Mr An informed the Plaintiff that hewanted to help improve the 1^stDefendant’s living environment and suggested that the Plaintiff allow the 1^st Defendant to stay temporarily in the Property that the Plaintiff was about to acquire until Mr An’s relationship with the 1^st Defendant matured over the next couple of years to a point that Mr An would feel comfortable about buying a property for him and the 1^st Defendant to live together. Mr An promised that he would transfer a property in Guangzhou to the Plaintiff in consideration of the rent which the Plaintiff would have to forego.

(o) Shortly after completion, in about September 2009, Mr An kept his promise and transferred to the Plaintiff a property situate at No.53 Huang Pu Da Dao Xi, Tianhe Qu, Guangzhou,China (‘Guangzhou Property’), which had a market value of about RMB1,000,000 at the time. This was more sufficient to cover the rent which the Plaintiff would have received from renting out the Property for a few years.

(r) For the 8 years from October 2008 to November 2016, Mr An paid the 1^st Defendant various sums of cash from time to time in excess of HK$14,000,000 to cover the 1^st Defendant’s living expenses, including management fees, government ratesand rents and utilities for the Property.  It also included moniesfor investment for the 1^stDefendant, part of which she had toldMr An she was going to use to fund the purchase of a car parking space at Provident Centre, No.21–53 Wharf Road, Hong Kong in late 2010.  There were also valuable gifts, such as handbagsand watches, made to the 1^stDefendant.  All these cash and gifts were made to the 1^st Defendant by Mr An directly.”

(Emphasis added)

17.It is important to note that it is the Plaintiff’s own averments that the temporary stay was for a couple of years and the Guangzhou Property with a market value of RMB 1,000,000 was meant to cover the rent for the Property for a few years. 

18.Mr David An is the 2^nd Defendant by counterclaim.  He fileda Defence and Counterclaim on 8 January 2018 which pleaded the following three important matters:

(1) First:

“ 15.2 All the money for the purchase of the Property was provided solely by the Plaintiff. For the avoidance of doubt,David An did not contribute to the purchase price of the Property in any way.”

“ 19.3(b) All renovation expenses incurred were initially advanced by the 1^stDefendant, but subsequently fully reimbursed by the Plaintiff. In June or July 2009, the Plaintiff paid to the 1^st Defendant a total sum of HK$600,000, as reimbursement for (i) the Initial Deposit (HK$280,000) advanced by the 1^st Defendant on 29 May 2009; and (ii) the costs of renovating the Property.”

“ 19.3(d) This sum of HK$600,000 was paid to the 1^stDefendant in cash through David An.”

(2) Secondly, in relation to the issue of gift, it is Mr David An’s pleaded case that:

“ 16.1 During their relationship, David An had never promisedor assured the 1^stDefendant that he would purchase any property for her and/or her family.

16.2 David An proposed the Arrangement solely with the intention of improving the living condition for 1^stDefendant andher child out of sympathy, without any commitment or promise on his part.

16.3 It is specifically denied that David An had any legal or beneficial interest in the Property at any point in time.  Paragraphs 15.2 and 15.3 above are repeated.” 

(Emphasis added)

I am of the view that it is of critical importance that there is no plea that Mr David An’s subjective intention or thinking at the time when the Property was acquired was that (a) he had any concern that his romantic relationship with Madam Choi was at an infant stage filled with uncertainty and that (b) such uncertainty was reinforced by Madam Choi’s intention to relocate to the USA with her eight year old daughter, which would make it less likely, as Mr Man SC submitted, for Mr David An to give an out and out gift to Madam Choi at thematerial time. Rather, the positive plea by Mr David An is that he proposed the arrangement for Madam Choi to temporarily stay in the Property “solely with the intention of improving theliving condition for 1^st Defendant and her child out of sympathy.”

(3) Thirdly, it is admitted that Mr David An did pay substantial amount of cash as gifts to Madam Choi.  Paragraph 19.4 reads:

“ As regards paragraphs 4(1)(ii) to (v), it is averred that between October 2008 and November 2016, David An had gifted the 1^st Defendant over HK$14 million in cash (‘Sum’) and approximately HK$1.5 million worth of expensive gifts (‘Gifts’), such as watches and handbags.

19.4(a) The Sum was used to pay for (inter alia) the 1^st Defendant’s living expenses, which included all outgoing expenses (including management fees, government rates and rents) at the Property (paragraph 4(l)(ii)); refurbishment costs of the building (paragraph 4(l)(iii)); legal costs in relation to the water seepage problem in relation to Flat 8B (paragraph 4(l)(iv); and car parking space no 101 on the basement floor of Provident Centre (paragraph 4(l)9v)).

19.4(b) The Sum also included the payment of HK$1 million by David An to the 1^stDefendant in or about October or November 2016, not long before the events described in paragraph 18.1, which was used to pay for the 1^stDefendant’s daughter’s studies in the United Kingdom.

19.4(c) At all material times since April 2009, the 1^stDefendant had no independent source of income, and relied on the Sum and Gifts from David An to pay for her daily expenditure and maintain her lifestyle.”

19.In the Plaintiff’s Interrogatories on 1^st Defendant, Madam Choi, it is the Plaintiff’s case that:

“ 9. With respect to paragraph 4(q), 4(r) of the R&DC and Answer 9 of P’s Answers, please state whether the 1^stDefendantadmits, does not admit or denies that she had received each of the following from Mr David An from October 2008 to November 2016:-

(a) On or shortly after 14 October 2008, cash in the sum of HK$500,000

(b) On or shortly after 6 January 2009, cash in the sum of HK$1,000,000

(c) In or about June/July 2009, cash in the sum of HK$1,000,000

(d) On or shortly after 8 September 2009, cash in the sum of HK$2,000,000

(e) On or shortly after 25 October 2010, cash in the sum of HK$2,000,000

(f) On or shortly after 1 April 2011, cash in the sum of HK$300,000

(g) On or shortly after 9 February 2012, cash in the sum of HK$1,000,000

(h) On or shortly after 2 May 2012, cash in the sum of HK$500,000

(i) On or shortly after 3 October 2012, cash in the sum of HK$500,000

(j) On or shortly after 6 July 2012, cash in the sum of HK$1,000,000

(k) On or shortly after 10 February 2014, cash in the sum of HK$2,000,000

(l) On or shortly after 3 September 2014, cash in the sum of HK$1,000,000

(m) On or shortly after 9 June 2015, cash in the sum of HK$1,000,000

(n) On or shortly after 2 August 2016, cash in the sum of HK$1,000,000

(o) In or about October 2016, cash in the sum of HK$1,000,000

(p) From October 2008 to November 2016, various gifts such as handbags and watches worth approximately HK$4,000,000.”

Affirmation evidence

20.It is also important to understand the parties’ affirmation evidence so far filed in relation to the issues to be resolved in this action.  The following extracts are from the 3^rd and 4^th Affirmation of the Plaintiff:

(1) “ In about May 2009, Mr An informed me that he wanted to help improve Madam Choi’s living condition.  He asked if I could lether stay temporarily in the property that I was about to purchase for a while until his relationship with Madam Choi matured to a point that he would feel comfortable about buying a property for him and Madam Choi to live together.”

(Para 6 of the 3^rd Affirmation of the Plaintiff)

(2) “ I understood from Madam Choi that she was looking to relocate with her daughter Chan Yuen Man (‘Easter’) to the United States of America (‘US’) for Easter to pursue her education there.  At that time, Easter was about 8 years old.  This culminated in her application to vary an existing Order of the Family Order on custody and access arrangements (‘Variation Application’).  Madam Choi’s intention to relocate to the US at the material times, as exemplified by her making the Variation Application, isfundamentally inconsistent with the Defendant’s case that Mr An bought for her to live in permanently.”                                                 (Emphasis added)

(Para 15 of the 3^rd Affirmation of the Plaintiff)

(3) “ In the event of a dispute arising from the redactions, I would propose that an independent Senior Counsel primarily engaged incivil practice in Hong Kong be jointly appointed by the parties to review the redacted information and to come to a view as to whether or not any of the redacted information should be disclosed.  I invite Madam Choi and Madam Cheung to consider and comment on my proposal, which I believe is fair and reasonablein the circumstances, and would obviate the need for the parties tocome before the Court again in the event of a dispute or concernover the redactions.” (Para 38 of the 3^rd Affirmation of the Plaintiff)

(4) “ She had been telling me since as early as April 2009 that she was looking to relocate with Easter to the US.  Her intention was formed before the Property was purchased.  Her intention to relocate with Easter eventually culminated in her Variation Application which was taken out in June 2010.  I verily believe the issue of whether and importantly, when Madam Choi formedan intention to relocate with Easter to the US would be borne out in Classes 1, 2, 4 and 5 of Schedule 1 of the documents sought in this application. I verily believe there would have been pre-action correspondence exchanged before the Variation Application as it is usual practice for solicitors to attempt to resolve matters prior to resorting to litigation.”

(Para 4 of the 4^th Affirmation of the Plaintiff)

(5) “ I also reject the suggestion that the disclosure of the bank statements of Madam Cheung and Madam Choi is sufficient proof of their independent source of wealth (see paragraph 25(2) of Madam Choi’s 2^nd Affirmation).  I understand from Mr An that Madam Choi had told him from time to time between early 2009 to November 2016 that she would deposit most of his cashgifts to her into her mother’s bank account because she wanted tokeep the true extent of her wealth out of the purview of the Court and her ex-husband as this could affect her position of monthly maintenance.  The independent financial means of Madam Choiand Madam Cheung are relevant to whether or not they have actedin detriment as a result of the alleged promises and reassurances made by Mr An.  Classes 3 and 4 of Schedule 1 and Class 1 of Schedule 2 are relevant to determining the independent financial means of Madam Choi and Madam Cheung.”

(Para 6 of the 4^th Affirmation of the Plaintiff)

21.In Madam Choi’s 2^nd Affirmation, it is stated that:

“15. In or about April 2009 to 2010, Mr Li assisted me in the matrimonial proceedings with my ex-husband under the instructions of Mr An (see the 3^rd Affirmation of the Plaintiff paragraph 14).

16. In June 2010, Mr An suggested to me to send my daughter (‘Easter’) to the United States of America (‘the States’) to study aboard and offered to pay for her tuition and living expenses. As a mother, I believe that it was of Easter’s benefit to study aboard. Mr An therefore suggested me to file for an application before the Family Court of Hong Kong on custody and access arrangements.

17. Mr Li alleged that my action of making the Variation Application is fundamentally inconsistent with my case because Mr An would not have bought the Property for me to live in permanently if I were to relocate to the States. First, as the mentioned above, the application was for Easter to study in theStates, but not to move there permanently, I do not see how any suggestion that such an application would be relevant or not Mr An gifted me the Property about 1 year ago. Secondly, had I ever had any plans to relocate to the States permanently, I would not have purchased the Car Parking Space about 1 year ago as I was the only user of it. Thirdly, Mr An promised to take care of me, even if I were to go with Easter to the States for studies, I would still need a place to live in Hong Kong when I travel back to Hong Kong from time to time.

25(2)   …We have already provided my mother and my bank statements which indicate that we have the means to fund the items listed in paragraph 12 hereinabove, therefore, the requested information is redundant.  Moreover, my family’s financial circumstances itself is immaterial to the present case.”

22.It is important to note that Mr David An, a chief character in the present action, has not filed any affirmation to state, for example, his state of knowledge about Madam Choi’s subjective intention to relocate to the USA, his thinking or feeling about his relationship with Madam Choi at the time when the Property was purchased.

GROUNDS OF THE PLAINTIFF’S APPLICATION

23.The Plaintiff’s grounds for the present application are set out in paragraph 25 of his 3^rd Affirmation which reads:

“ 25. I am advised by my legal advisers and I verily believe that:-

(1) Classes 1, 2, 4 and 5 of Schedule 1 are relevant to the issue of whether and when Madam Choi formed an intention to relocate to the US, which is in turn relevant to whether the Property was purchased with a view to allowing Madam Choi to live there temporarily (my case), or permanently as part of the Alleged Promise and Alleged Repeated Reassurances of Mr An to her (Madam Choi’s and Madam Cheung’s case.)

(2) Classes 3 and 4 of Schedule 1 and Class 1 of Schedule 2 are relevant to the issue of whether Madam Choi and Madam Cheung have acted to their detriment as a result of the Alleged Promise and Alleged Repeated Reassurances of Mr An in that they are evidence of the financial means of Madam Choi and Madam Cheung independent of Mr An’s cash gift at the material time.”

ANALYSIS

Classes 1, 2, 4 and 5 of Schedule 1 of the Summons

24.It is submitted that the documents as set out Classes 1, 2, 4 and5 of Schedule 1 of the Summons are relevant to the question of whether and when Madam Choi formed the intention to relocate to the USA which will, in turn, shed light on whether the Property was purchased with a view to allowing Madam Choi to live there temporarily or permanently.

25.As the financial sustainability of Madam Choi’s relocation plan was an issue in the Variation Application whereupon Madam Choi was required to file evidence relating to her and/or her parents’ (including Madam Cheung’s) financial means, it is submitted that such documents will shed light on Madam Choi and her parents’ independent financial means. 

26.I shall deal with the relevance of Madam Choi’s intention to relocate to the USA first and then deal with the relevance of Madam Choi and her parents’ independent financial means together with the other classes of documents.

27.First and fundamentally, the issue of relevance has to be analyzed according to the pleaded issues.  I have gone through the pleadings carefully including, importantly, Mr David An’s pleadings.  There is no pleaded issue that the alleged intention of Madam Choi to relocate to the USA is a factual issue that the trial judge will have to resolve. Neither the Plaintiff, nor Mr David An has relied on the alleged intention of Madam Choi to relocate to the USA as a basis or material fact to defeat or challenge Madam Choi’s case of a gift from Mr David An.  Mr David An is the best person to rely on such alleged intention to relocate if he wishes, but he chooses not to do so.

28.Mr David An has the opportunity to rely on the same in his ownpleadings.  He also did not file any affirmation to raise this issue.  Indeed, it could well be argued that Mr David An’s positively pleaded case that “David An proposed the Arrangement solely with the intention of improvingthe living conditions for 1^st Defendant and her child out of sympathy, without any commitment or promise on his part” does not sit perfectly well with thesuggestion of an intention on Madam Choi’s part to relocate to the USA in April 2009.  But what is certain is that there should be no difficulties for Mr David An to put forward his case on Madam Choi’s intention to relocateto the USA and how it impacted on his thinking at the material time in view of the status of his romantic relationship then.

29.Secondly, it must be remembered that the original basis of the application on this ground is that “Madam Choi’s intention to relocate to the US at the material times, as exemplified by her making the Variation Application, is fundamentally inconsistent with the Defendants’ case that Mr Au bought the Property for her to live in permanently.”

30.I am of the view that such contention is incorrect.  Madam Choi’s case as pleaded in paragraph 4 of her Amended Defence and Counterclaim is that the Property was gifted to her by Mr David An absolutely and unconditionally.  After the Property was gifted and registered under the names of Madam Choi and Madam Cheung, it was up to them to decide on how to use the Property.  They could sell the Property ifthey like.  In fact, the plea is that the Property was purchased “to give heradequate financial protection”.  It is not Madam Choi and Madam Cheung’scase that the Property was acquired for Madam Choi to live in permanently. 

31.I also note that the alleged intention of Madam Choi to relocate to the USA is not even raised or pleaded as a basis to allow Madam Choi to reside in the Property on a temporary basis.  On the Plaintiff’s case, the temporary stay as pleaded in the Amended Reply and Defence to Counterclaim is qualified by a temporal limit of a couple of years and as a consideration for the Guangzhou Property with a market value of RMB 1,000,000, which was transferred to the Plaintiff to cover “the rent which the Plaintiff would have received from renting out the Property for a few years.”

32.Hence, even on the Plaintiff’s case, the intention then was for Madam Choi to live in the Property for a few years.  It follows that whether and when Madam Choi formed an intention to relocate to the USA as evidenced in the Variation Application in June 2010, in my view, is irrelevant, to the issues to be resolved by the court in this action.  That should be enough to dispose of the first ground of the present application as set out in paragraph 25 of the Plaintiff’s 3^rd Affirmation.

33.Thirdly, Mr Man SC, for the Plaintiff, during his oral submissions, argued forcefully that the relationship between Mr David An and Madam Choi was then at its infant stage, and that their romantic relationship was uncertain at such an early stage.  Mr Man SC submitted that he is entitled to cross-examine Madam Choi on her intention to re-locate to the USA with the need to take care of her 8 year old daughter because the possibilityof a long distance relationship would affect the likelihood of Mr David An’s giving an out and out gift to her.  In other words, these documents are relevant to assess the credibility of Madam Choi’s case of gift.  Mr Man SC submitted that applying the Peruvian Guano test, he is entitled, at the trial, to test the likelihood of Madam Choi’s case of an out and out gift with the documents that she filed in the Family Court evidencing her intention to relocate to the USA. 

34.I am not convinced that the above analysis is correct.  First, we are not in a general philosophical debate as to the nature of relationshipwhen a man and a woman are at the infant stage of their romantic relationship.  Is that relationship more stable or uncertain (as Mr Man SC contended)?  Is a long distance relationship inherently unstable, with modern transport and communication convenience etc?  I do not think that questions like these can have generalized answers.  It must be case specific, person specific or relationship specific.  A fundamental difficulty with Mr Man SC’s submission is that there is no evidential basis to support his submissionthat an intention to relocate to the USA would affect the thinking and hencethe intention of Mr David An at the material time.  It could well be that someone with a more conventional or conservative way of thinking would fit into Mr Man SC’s analysis, but a man who travelled frequently could well actually consider a long distance relationship a plus given that he had a wife of his own.  This looks like a classic case of fishing expedition to me. 

35.Indeed, Mr Wong, for Madam Choi and Madam Cheung, pointed out that on the Plaintiff’s case with the knowledge that Madam Choihad the intention to relocate to the USA in April 2009, Mr David An showeredMadam Choi with HK$2.5 million cash gift between October 2008 to Juneor July 2009.  In 2009 alone, Mr David An gifted HK$6,000,000 cash and luxury handbags and watches to Madam Choi. 

36.Further, as pleaded in paragraph 4(r) of the Plaintiff’s Amended Reply and Defence to Counterclaim, it was Mr David An, not Madam Choi, who paid for the car parking space.  His intention was to let Madam Choi keep it as an investment property.

37.Hence, in the absence of evidence from Mr David An, I do not think it is right to engage in general speculations on whether it is more or less likely that a man would gift a property to his lover if their relationship was to be long distance in nature.  Indeed, Mr David An’s pleaded case is that his intention was to improve the living condition of Madam Choi and her daughter out of sympathy, presumably even with the knowledge that she had the intention to relocate to the USA.  If Mr David An then had no knowledge about Madam Choi’s intention, then Madam Choi’s then subjective intention is simply irrelevant.

38.Crucially, I am of the view that even if the Plaintiffwere allowed to explore generally the impact of a long distance relationship on the likelihood of a man gifting a property to his lover, the key is not Madam Choi’s subjective intention, but Mr David An’s knowledge, subjectivebelief and thinking of such intention at the material time.  The intention to gift is that of Mr David An.  There is no plea or evidence on Mr David An’s state of knowledge about Madam Choi’s alleged intention to relocate and its impact on his intention to gift.  In the absence of such plea or evidence, it is difficult to see why it is helpful to cross-examine Madam Choi on the impact, if any, of her intention to relocate to the USA on Mr David An’s intention to gift the Property to her.  It is Mr David An’s perception, thinking and values that matter. 

39.Fourthly, this Court, in the exercise of its discretion, has to decide whether the above classes of documents are necessary for the fair disposal of the cause or matter or for saving costs.  Mr Wong, for Madam Choi and Madam Cheung reminded me that Fok JA (as he then was) in Moulin Global Eyecare Holdings Ltd (in liq) v Olivia Lee Sin Mei (No 2), supra, at paragraph 56 said:

“ It seems to me that the concept of the fair disposal of a cause ormatter must entitle and require the court to make an assessment of the ‘degree of relevance or importance of the document to that matter’ as the Judge held. As the defendant submitted, this is an important safeguard deliberately put in place to allow the court to assess each case in its context and determine whether production is warranted under the particular circumstances of the case.” (Emphasis added)

40.For the reasons set out above, I am of the view that the classes of documents relating to the alleged intention of Madam Choi to relocate to the USA with her daughter is irrelevant to the issues to be determined in this action.  Even if they are marginally relevant, I am of the view that this court should not allow the legal costs in this action to be escalated by, as Mr Wong submitted, engaging in extensive discovery in matrimonial proceedings documents including having a senior counsel to adjudicate on redactions with the possibility of further disputes and interlocutory applications arising from such an expensive exercise. 

41.For all the reasons I set out above, I am of the view that the documents filed in the Family Court relating to Madam Choi’s intention to relocate are not relevant and in any event are not necessary for the fair disposal of a cause or a matter in this case.It certainly will not save costs.   I am of the view that this case should proceed to trial as soon as possible.

Classes 3 and 4 of Schedule 1 and Class 1 of Schedule 2 of the Summons

42.It is submitted that these documents are relevant to the determination of the issue of detrimental reliance, namely, whether Madam Choi and Madam Cheung have acted to their detriment as a result of the Promise and the Reassurances by Mr David An as pleaded.  Again, it is important to first understand the parties’ pleaded cases.

Plead issues

43.Paragraph 4(l) of the Amended Defence and Counterclaim of Madam Choi and Madam Cheung relies on the following particulars:

“ (i) After the purchase of the Property, they had spent over a total sum of HK$1,500,000 to renovate the Property in 2009 before moving in;

(ii) Ever since the Defendants have acquired the Property, they have been responsible for all the outgoing expenses of the Property, including management fees, government rates and rents;

(iii) Between December 2009 and August 2016, the estate underwent some major refurbishments and the Defendantshave contributed a total sum of around HK$170,000 to theexpenses incurred by the incorporated owners of the estate.

(iv) In around October 2013, the Property was damaged by water seepage from the upper floor of the Property (“Flat 8B”). The Defendants have continuously liaised with the owner of Flat 8B and tried to resolve the matter but in vain. In about December 2015 the Defendants commenced a legal action against the owner of Flat 8B and have spent around HK$400,000 legal fee up to date;

(v) On 10 October 2000, the Defendants purchased with the 2^nd Defendant’s own money a car parking lot within the same estate known as Car Parking Space No 101 on the Basement Floor of Provident Centre, Nos 21 – 53 Wharf Road, Hong Kong at a consideration of HK$662,000.  This car parking space was assigned to the Defendants on 22 November 2010.”

44.The Plaintiff, in his Amended Reply and Defence to Counterclaim, at paragraphs 4(q) and 4(r) pleaded:

“ (q) Through Mr An, the Plaintiff reimbursed the 1^st Defendant in cash for the initial deposit and the renovation works carried out to the Property, which came to be a total of about HK$600,000. Mr An also gave an additional HK$400,000 to the 1^stDefendant to buy furniture and appliances. The total amount of HK$1,000,000 was paid to the 1^st Defendant in cash.

(r) For the 8 years from October 2008 to November 2016, Mr An paid the 1^st Defendant various sums of cash from time to time in excess of HK$14,000,000 to cover the 1^st Defendant’s living expenses, including management fees, government ratesand rents and utilities for the Property. It also included moniesfor investment for the 1^stDefendant, part of which she had toldMr An she was going to use to fund the purchase of a car parkingspace at Provident Centre, Nos.21–53 Wharf Road, Hong Kongin late 2010. There were also valuable gifts, such as handbagsand watches, made to the 1^stDefendant. All these cash and gifts were made to the 1^stDefendant were made to the 1^stDefendant by Mr An directly.”       (Emphasis added)

45.Also, Mr David An’s case is that he gifted the sum of HK$14 million to Madam Choi and then Madam Choi used the said sum to pay for her own living expenses which included all outgoing expenses (including management fees, government rates and rents) at the Property, refurbishment costs of the building, legal costs in relation to the water seepage problem in relation to Flat 8B and car parking space no 101 on the basement floor of Provident Centre.

46.It appears that the Plaintiff’s and Mr David An’s answers to Madam Choi’s particulars of detrimental reliance come down to the suggestion that Madam Choi paid for the various expenses from the HK$14 million that was gifted to her by Mr David An.  First, with respect, so what?  There is no plea of any causation or reasoning as to why Madam Choi’s payment of various expenses from monies gifted to her by Mr David An cannot constitute detrimental reliance.  That, in my view, really is the end of the matter.

47.Secondly, a gift is a gift.  Once money, in whatever amount, was gifted to Madam Choi by Mr David An for whatever reason, they wereMadam Choi’s personal assets.  Madam Choi alone could determine howshe would use those cash gifts.  There is no plea that those cash gifts were subject to some kind of Quistclose trust.  For example, she could choose to commence an action against the owner of Flat 8B or not.  It was entirely up to her.

48.Mr Man SC, for the Plaintiff, submitted that if Mr David An had directly paid for all the renovation expenses to the contractors or builders, then Madam Choi could not be said to suffer any detriment because she didnot pay for the same herself.  What difference, Mr Man SC, asked rhetorically, does it make if Mr David An instead of paying the contractors or builders directly, he paid Madam Choi first and then Madam Choi paid the contractors or builders.  It is submitted that as the money came from Mr David An, Madam Choi suffered no detriment.

49.Despite Mr Man SC’s eloquent arguments, I am not convincedthat his analysis is correct.  First, it is both the Plaintiff and Mr David An’s pleaded case that the sum of HK$14 million was gifted to Madam Choi.  As I said earlier, a gift is a gift.  Madam Choi then had a free choice to decide how to use the gifted money.  Both in law and in equity, those cash gifts were treated as her own money.  Secondly, absent fraud and/or illegality, I do not see why the source of money matters at all.  Madam Choi could have obtained the renovationmoney from his ex-boyfriend, Mr David An, or from his father, or even from winning a lottery.  Had her father paid the renovation expenses for her, I do not see why that could not be counted as an act of detrimental reliance.  But for the need to pay for the renovation expenses, she could have spent the gifted money for other purposes. I also do not see any difference between her father paid for it and her ex-boyfriend paid for it.

50.Mr Man SC, also referred to paragraph 5(d) of the Plaintiff’s Amended Reply and Defence to Counterclaim and submitted that it is prayed that “it is denied that the grant of full beneficial title to the Defendants is the relief which represents the minimum equity to justice to the Defendants, and the Defendants are put to strict proof as to what such relief should be”. Hence, it is necessary to discover to what extent Madam Choi and Madam Cheungused their own money, instead of cash gifts from Mr David An, to finance theitems relied upon by them as evidence of detrimental reliance.  Mr Man SC, pointed out that, for example, Answer 36 in Answer to the Plaintiff’s Request for Further and Better Particulars of the Defence and Counterclaim filed on 25 January 2017 states that “The funds came from the 2^nd Defendant.”

51.However, in view of my ruling that it would not be less a detrimental reliance simply because the relevant payments originated from Mr David An’s cash gifts, I do not find that evidence of the independent financial means of Madam Choi and Madam Cheung (excluding Mr David An’scash gifts) at the material time is relevant to the issue of detrimental reliance.

52.Further, I have also taken into consideration that both Madam Choi and Madam Cheung have already disclosed their bank statements. 

53.Again, I do not consider that the disclosure of these classes of documents is necessary for the fair disposal of the cause or matter or for saving costs.  (See Moulin Global Eyecare Holdings Ltd (in liq) v Olivia Lee Sin Mei (No 2), supra)

54.Finally, insofar as the Plaintiff’s pleaded case of his reimbursement of HK$600,000 to Madam Choi is concerned, the burden rests on the Plaintiff to make good his case at trial.  Madam Choi and Madam Cheung’s independent financial means has no relevance to this particular issue.

CONCESSIONS

55.One day before the hearing, Mr Wong, on behalf of Madam Choi and Madam Cheung filed a supplemental skeleton submission.  Paragraph 4 reads:

“4. In respect of P’s application for specific discovery, the following concessions are made:

(1) Under Summons §2, D1 no longer objects to an order for specific discovery in respect of Schedule 1 Classes 3 and 4. It should be pointed out that, subject to further verification, the specific discovery affidavit will likely depose to the fact that no documents exists in respect ofSchedule 1 Classes 3 and 4, in that no financial disclosure was made in the context of the Variation Application (as defined in the Summons) and there was no Order, Judgment and Reasons for Decision for the Variation Application as the said application was not pursued to its finality.

(2) Under Summons §3, D2 no longer objects to an order forspecific discovery in respect of Schedule 2 Class 1 (andits consequential inspection under Summons §5(a), there being no requirement to obtain leave from the Family Court.)”

56.As there is a consent from Madam Choi and Madam Cheung, I will make a consent order in terms of the concessions made.

Class 6 of Schedule 1 and Class 2 of Schedule 2

57.These are the audited financial accounts for the years 2009 and 2010 of Kwun Wah International Limited of which, it is submitted that, both Madam Choi and Cheung are shareholders and directors (alongside Madam Choi’s father, Mr Choi Yau Tam).

58.Mr Wong submitted that for the period for which financial statements were sought, Madam Choi and Cheung were neither shareholders nor directors.

59.From the Affirmation of Leung Vivien Yuen Man filed on behalf of the Plaintiff, it can be seen that the father of Madam Choi was the 95% shareholder and a director for the years 2009 and 2010.  The other 5% shareholder and director was Choi Tung Chung, Edmond.

60.It is difficult to fathom why Madam Choi’s father’s financial position is relevant to the issue of detrimental reliance in the present case.   There is not even a pleaded issue as to whether Madam Choi’s father contributed to the purchase and/or upkeep of the Property.

61.Accordingly, I do not consider that the financial position of Madam Choi’s father is relevant.

FURTHER AND BETTER LIST OF DOCUMENTS

62.As Madam Choi and Cheung had made concessions, I agree with Mr Man SC, that they need to file and serve a further and better list of documents in relation to those concessions.  Class 1 of Schedule 2 documents have to be reflected in a further and better list of documents.

DISPOSITION

63.For all the reasons set out above, I make the following orders:

(1) Paragraph 1 of the Summons dated 29 June 2018 is allowed;

(2) By consent, the Plaintiff’s application for Classes 3 and 4 of Schedule 1 and Class 1 of Schedule 2 documents is allowed;

(3) The Defendants are to file a further and better list of documentscovering the documents set out in (2) above and file and serve an affirmation/affidavit verifying such list;

(4) Subject to (1) to (3) above, the Plaintiff’s Summons dated 29 June 2018 is dismissed.

(5) I also make a costs order nisi that the Plaintiff is to pay 80% of the costs of the Defendants, on a party to party basis, with a certificate for two counsel, to be taxed if not agreed.  The costs order nisi will become absolute unless parties make an application to vary the same within 14 days from the date of the order herein.

64.Finally, it remains for me to thank Mr Man SC and Ms Fan for the Plaintiff and Mr Wong and Mr Li for the Defendants for their helpful assistance rendered to this court.

Mr Bernard Man SC, leading Ms Jennifer Fan, instructed by Withers, for the plaintiff (by original action) and the 1^st defendant (by counterclaim)

Mr Jonathan Wong and Mr Kevin Li, instructed by Ford Kwan & Co, for the 1^st and 2^nd defendants (by original action) and the 1^st and 2^nd plaintiffs (by counterclaim)

Linklaters, for the 2^nd defendant (by counterclaim), absent