Twf v. Hwkr
Read the full judgment text of FCMC 7615/2019 on BabelCite. This Family Court judgment was delivered on 10 December 2020 before Deputy District Judge M. Lam.
Matrimonial Causes – Discovery – Preliminary Issue – Beneficial Ownership – Third Party Interveners – Order 24 RHC – Order 26 RHC – Relevance – Fishing Expedition – Immigration Records – Bank Accounts – Sentosa Property – Dismissal of Summons – Costs Order – Wife claimed Husband sole beneficial owner of Sentosa Property – Siblings held shares on trust – Wife sought discovery of Siblings' bank accounts and immigration records – Court held Questionnaire under Matrimonial Causes Rules confined to spouses – Third parties require Order 24 or 26 – Immigration records irrelevant and no statutory power to order – Bank account transactions not pleaded and no solid linkage to Sentosa Property – Summons dismissed – Costs order nisi made with Wife paying costs thereafter.
Legal issues: Applicability of Questionnaire vs Order 24/26 · Relevance of Immigration Records · Relevance of Bank Account Transactions
Outcome: Two summonses dismissed; costs order made.
Cited by 2 cases · Cites 1 case
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FCMC 7615/2019 [2020] HKFC 258 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 7615 OF 2019 ________________________ BETWEEN
________________________ Coram: Deputy District Judge M. Lam in Chambers (Not open to public) Date of Hearing: 30 October 2020 Date of Decision: 10 December 2020 ________________________ D E C I S I O N ________________________ Application 1.This is the substantive hearing for the petitioner wife’s (“Wife”) second specific discovery summons against the two interveners. 2.The first intervener (“Brother”) and the second intervener (“Sister”), respectively the brother and the sister (collectively, the “Siblings”) of the respondent husband (“Husband”), are joined in the present action for the limited purpose to determine the beneficial ownership of a landed property in Sentosa Cove, Singapore (“Sentosa Property”) (“Preliminary Issue”). 3.Originally the present application was made by way of the Summons filed on 4 September 2019 (“Original Summons”). The Original Summons was issued under Order 24 rule 7 of the Rules of the High Court (“RHC”), Cap. 4A, whereby the Wife sought an order that the Siblings do answer her questionnaire (“Wife’s Questionnaire”). 4.In the Wife’s Questionnaire, the Siblings were asked to answer 26 questions (together with sub-questions) and to produce the related documents. Those questions focus on the Siblings’ respective personal bank accounts and their joint account. 5.At the direction hearing of the Original Summons, the Siblings volunteered to answer the Wife’s Questionnaire but reserved their positions to reject those questions they might find inappropriate. Accordingly, the Wife’s Questionnaire was served by consent. 6.The Siblings then filed the “1st and 2nd Interveners’ Voluntary Answers” but refused to answer 20 out of 26 questions in the Wife’s Questionnaire. An agreed list of issues to be argued at this hearing was jointly prepared by the Wife and the Siblings (collectively, the “Parties”) in November 2019. Thereafter, the Parties have exchanged extensive affirmations leading to the drop of the majority of the items sought by the Wife. 7.Helpfully the Senior Counsel and the Counsel have further reduced the questions in dispute to those set out in Annex II of the Skeleton Submissions for the Siblings (“Annex II”), namely, Questions 6, 7, 9-13, 20 and 21 of the Wife’s Questionnaire. 8.It is agreed that the only issue left to be determined at this hearing is whether the following documents and facts sought are relevant to the determination of the Preliminary Issue : -
9.The applicable legal principles governing the present application require clarification. A questionnaire is a mixture of discovery of facts and documents. I am not persuaded that this Court has the discretion to extend the scope of discovery of documents under Order 24 rule 7 to cover the discovery of facts which are broadly governed by Order 26. Nor do I think that I am empowered to order the interveners to answer a questionnaire involuntarily. 10.The use of questionnaire for discovery of facts and documents is provided by rule 77(4) of the Matrimonial Causes Rules, Cap.179A. It is however confined to discovery exercises between (ex-)spouses in ancillary relief applications in the matrimonial proceedings. Rule 77(4) provides : -
11.The relevant procedure is further elaborated in Practice Direction 15.11 and §17.30 of Rayden and Jackson on Relationship Breakdown, Finances and Children 18th Edition :
12.Apparently, discovery by means of a questionnaire is applicable to applications for ancillary relief between spouses or ex-spouses who have already filed Form Es. For dispute of beneficial ownership involving third parties, it was emphasized in the landmark case of TL v ML & Ors (ancillary relief: claim against assets of extended family) [2006] 1 FCR 465, §34 that it “must be approached on exactly the same legal basis as if it were being determined in the Chancery Division” and is “of course completely different in nature to the familiar discretionary exercise between spouses.” Pleadings are necessary for defining the scope of the dispute. 13.Thus analyzed, I am slow to consider questionnaire as a proper form for a contested application for discovery against the Siblings, who have neither made any claim for ancillary relief nor filed Form E. They are only involved in these proceedings for the sole purpose of determining the beneficial ownership of a property. 14.At the hearing, upon the consent of the Parties and their waiving their respective rights to issue and answer interrogatories without order as provided by Order 26 RHC, I granted leave to the Wife to withdraw the Original Summons upon issuance of two Summonses : one for discovery of documents as set out in paragraph 1 of Annex II pursuant to Order 24 rule 7 RHC (“Order 24 Summons”) ; and one for discovery of facts as set out in the remaining paragraphs of Annex II pursuant to Order 26 RHC (“Order 26 Summons”). The two Summonses to be treated as if they are the Summonses for the purpose of this hearing. 15.The application proceeded as scheduled. The Wife subsequently filed the two Summonses on 5 November 2020. Background Facts 16.The Sentosa Property consisted of a piece of land in Sentosa Cove, Singapore (“Sentosa Land”) and a house built thereon (“Sentosa House”). In the pleadings, the Wife claims that the Husband was the sole beneficial owner of the Sentosa Property and the sole source of funding for it and that the Siblings only held the shares of it on trust for him, and accordingly, it shall be considered as part of the family assets for distribution between the Husband and Wife in the ancillary relief application. 17.The Husband and the Siblings resist the Wife’s claim. They say that they had each contributed to the acquisition, construction, maintenance and expenses of the Sentosa Property and the beneficial interest followed the legal ownership. For the present purpose, I am invited to focus on the background facts relating to the funding of the Sentosa Property. 18.In a notice of transfer, the Sentosa Land is stated to have been purchased in September 2005 at SGD3.78 million by the Husband, the Brother and the Sister as tenants-in-common with each holding 10%, 40% and 50% respectively. 19.Ms. Yip, Senior Counsel for the Siblings, has summarized the funding of the Sentosa Property as follows. The purchase price of the Sentosa Land was met by :
20.The construction of the Sentosa House was completed in 2009 at the cost of SGD3,237,104.84, which was funded by :
(The Land Loan and the Construction Loan, collectively, the “Property Loans”) 21.The Land Loan was later repaid from 2005 to 2017. The Construction Loan was repaid from 2009 to 2017. Installment payments of the Property Loans were made through the OCBC Joint Account. The Sentosa Property was sold at SGD15,500,000 in October 2017. Procedural History 22.The Wife’s first discovery application under the Preliminary Issue proceedings was made by way of summons dated 5 October 2018 (“First Discovery Summons”). By the Order dated 9 October 2018 (“2018 Order”), the learned Deputy District Judge D. Cheung ordered the Husband and the Siblings to produce a number of bank statements between September 2005 and October 2017. Leave was also granted to the Siblings and the Husband to adduce and rely on expert evidence by way of the first report dated 18 October 2016 (“First RSM Report”) and further report to be obtained by then (“Second RSM Reports”), prepared and to be prepared by a firm of accountants in Singapore in respect of the purchase, development, maintenance and sale of the Sentosa Property. The Wife was at liberty to adduce expert report in response within 28 days after the determination of the First Discovery Summons. 23.The First Discovery Summons was argued before this Court on 12 April 2019. At that hearing, all four parties were legally represented. This Court took the opportunity to raise concerns about the further conduct of this case, in particular, the issues and areas upon which the expert(s) were to give opinion on, hence, direction for the parties to seek expert evidence directions after determination of the First Discovery Summons was given. 24.The decision (“Discovery Decision”) of the First Discovery Summons was handed down on 6 June 2019 (under the former action FCMC16534/2015). This Court then fixed a case management direction hearing to 27 June 2019 in order to expedite the Preliminary Issue Proceedings and to settle the contested main suit which had been left unresolved since 2015, ending up with the commencement of the present action. Parallel applications for maintenance pending suit, payment out, committal proceedings had been dealt with, followed by the present application. Grounds of Application 25.The Wife contends that the source of funds in the Siblings’ Accounts call for investigation because the Siblings have provided no justification of their ability to fund the Sentosa Property other than relying on two additional terms loans obtained from OCBC bank for their personal use. Siblings’ Opposition 26.The Siblings complain that the Wife’s Questionnaire was an ill-drafted request asking for details about the opening, purposes and operation of their personal accounts as well as all transactions over SGD2,000 and the counter-parties of some of those transactions. It was a fishing exercise which was designed to carpet search the Siblings’ personal accounts as if they were doing a questionnaire between the spouses for ancillary relief, aiming at hunting around the documents in the hope that they will reveal some information to pursue more inquires including, inter alia, the hidden assets of the Husband. Legal Principles 27.The applicable legal principles are not in disagreement. Preliminary Issue 28.It is well-settled law that for determination of ownership of landed property, the starting point is that equity follows the law and so beneficial interest follows the legal title. The burden rests on the party (the Wife in this case) who asserts the beneficial interest is different from the title to prove the contrary : Stack v Dowden [2007] 2 AC 432. 29.Procedurally, the TL v ML proceedings should be approached in the same way as a standard claim for ownership of property, where pleadings are filed to ensure that the real issues in dispute are defined: Leung Wing Yi Asther v Kwok Yu Wah (2015) HKCFAR 605. Order 24 rule 7 30.Order 24 rule 7 RHC is applicable to matrimonial proceedings by virtue of rule 3 of the Matrimonial Causes Rules (Cap 179A). The governing principles can be summarized as follows :
31.Relevance is to be determined by reference to the pleadings. While the matters in question may cover wider ground than the issues as disclosed in the pleadings, it is not the purpose of discovery to enable the applicant to turn a non-issue into an issue : Melvin Waxman v Li Fei Yu & Ors HCA 1973/2012 30 January 2015 § 61; or to let the applicant hunt around the documents in the hope that they will reveal some improprieties on the other party or will provide information for the applicant to pursue more enquiries : Re the Estate of Ng Chan Wah HCAP5/2003 5 March 2003 §16. Order 26 32.The principles governing interrogatories are similar to Order 24. The interrogatories must relate to a matter in question between the parties and they are necessary either for disposing fairly of the cause or matter or for saving costs. The test of relevance is akin to the Peruvian Guano test. “Fishing” interrogatories are not permitted. The questions must not be asked for the purpose of enabling a party to see if he can find a case, of which he presently knows nothing, which is different from the pleaded case he now makes : Lee Nui Foon v Ocean Park Corp (No 2) [1995] 222 33.With these principles in mind, I now turn to consider the arguments of the Parties. Analysis 34.In the Wife’s pleadings, the alleged trust was pleaded generally. The Wife’s position is highlighted in §11 of the Petitioner’s Skeleton Submissions, “At least this much can be said about the Wife’s pleaded case : ultimately the Wife claims that the Husband is the sole beneficial owner of the Sentosa Property, and that the [Siblings] held their shares (40% by the [Brother] and 50% by the [Sister]) on trust for the Husband. Of particular relevance is the Wife’s pleadings that the [Siblings] have conducted themselves in relation to the Sentosa House in a manner that is entirely inconsistent with ownership or otherwise having a proprietary interest.” 35.The Wife alleges that the Husband has throughout the years held assets through nominees and the Siblings have provided no justification of their ability to fund the Sentosa Property other than the two OCBC bank loans. It is now argued for her that “Without explaining where these funds came from the position may be that the Court will infer that the funds are not beneficially the [Siblings] but that they hold them on resulting trust for the person who provided the funds.” , hence, the source of funds in the Siblings’ Accounts call for investigation and the transactions involving some companies should be further scrutinized so as to ascertain the Siblings’ property ownership or entitlements to rental income of some other landed properties (other than the Sentosa Property). §§11-14 of the Wife’s written submissions. 36.However, the present application is not a discovery application between the spouses for ancillary relief. The sole issue in dispute in the Preliminary Issue proceedings is limited to the ownership of the Sentosa Property as defined in the pleadings. The pleadings define the battlefield and are fundamental to enabling every procedure facet to operate fairly. An issue that has not been pleaded is not an issue before court : Hong Kong Civil Procedure 2020 Vol.1 §18/0/3 and §18/8/3A. 37.In determining whether the Sentosa Property was or was not owned by the Husband, the court must apply law of property : Bhura v Bhura & Ors (No.2) [2015] 1 FLR 153 §7. Therefore, when perusing the bank statements disclosed by the Siblings, the focus is on the source of the funds to the Sentosa Property. Plainly the Wife is not entitled to stretch the arms of discovery beyond the matters in dispute so as to explore the ownerships of the companies having transactions with the Siblings by asking how and why such transactions took place apparently in the hope that she might find something indicating any involvement of the Husband. 38.The mere speculation that the Companies might be the nominees of the Husband or in some way linked to him because he had a practice of making investments through nominees does not advance the Wife’s position any further. Order for disclosure will not be made on mere speculation. Indeed, the Wife’s pleadings were silent on the Siblings’ Accounts or the Companies, or how they were operated by the Husband or belonged to him. 39.Some reliance has been placed on the Discovery Decision to argue that investigating into the in-out transactions in the Siblings’ Accounts are relevant to the matters in question in determining the Preliminary Issue. However, the Discovery Decision should be read as a whole and in light of the issues to be determined by then and the evidence then before the Court. 40.The First Discovery Summons was to determine whether the Siblings should disclose the bank statements of the Siblings Accounts without redaction. It was argued in view of the fact that some of those redacted statements had been referred to and relied on in the RSM Reports, which were adduced by the Siblings and the Husband in support of their respective cases (as endorsed by the 2018 Order). By then, not only the Wife’s challenge against the Siblings’ ability to fund the Sentosa Property met with no solid answer, her complaint that the redacted parts had rendered the sense of the rest of the banks statements problematic and misleading attracted no valid explanation from the Siblings. 41.In those circumstances, production of the unredacted bank statements of the Siblings’ Accounts was then ordered to allow the Wife to deal with the RSM Reports and to review those bank statements together with the bank statements and information provided (and to be provided) by the Husband. The Discovery Decision was specifically stated to be made as the state of the documents then stood. Further, the Wife’s request for details of the entries in the Siblings’ Statements was rejected and she was reminded that minute investigation would unlikely be necessary for the determination of the Preliminary Issue. 42.The present application goes to whether the opening, purpose, operation and in/out transactions of the Siblings’ Accounts, being the Siblings’ personal accounts, are relevant to the matters in question in the Preliminary Issue proceedings. The Wife essentially seeks to investigate into the source of the money in the siblings’ personal accounts. 43.I share the view of Ms. Yip that the Wife appears to have ignored the 5th affirmation of the Brother and the 5th affirmation of the Sister (collectively, the “Siblings’ Affirmations”) in this application. In those affirmations, the Siblings’ qualifications, work experience, assets, investment were accounted at some length which were absent at the hearing of the First Discovery Summons. At present, there is evidence that the Siblings had considerable local and overseas investments as well as some connections with Singapore. They could not be regard as plainly having no ability to invest in the Sentosa Property as the Wife sought to portray in the First Discovery Summons. The Brother’s Account was opened in 2000, long before the investment of the Sentosa Property. He has been granted the principle permanent residency in Singapore. 44.For the reasons set out below, I am further convinced that the documents and facts sought are not necessary or related to the matters in dispute. Issue (2) (a) : Q11 - 13 of the Wife’s Questionnaire ~ the Brother’s A/C # 2X0-X-1X8 45.In relation to Item (2) (a), I accept Ms. Yip’s submission that such account was neither referred to in the Wife’s pleadings nor has she produced any evidence to relate such account to the funds contributing to the Sentosa Property. A careful reading of the bank statements of such account for the period between January 2012 and October 2017 will find that:
46.Therefore, I am persuaded that the Wife fails to satisfy the test of relevance. Such information is not required to dispose the issues in dispute fairly. Item 2(b) (i) - (iv) : Q6, 7, 9, 10, 20, 21 ~ Transactions in the Siblings’ Accounts with the Companies 47.The Siblings are required to account for a number of transactions (both deposits and withdrawals) in their personal accounts relating to the Companies as well as the Siblings’ relationships with the Companies for the Wife’s investigation. 48.On the pleadings now stand, neither the ownership of the Siblings Accounts nor that of the Companies forms the subject matter of the pleadings. None of the Companies were referred to therein. The relationship between the Siblings and the Companies are not pleaded issues. The Preliminary Issue trial is not to determine the ownership of the Siblings’ personal accounts or that of the Companies. Needless to say, the Siblings are not parties to the ancillary relief application which entitles the Wife to look into all aspects of their personal assets. 49.Prima facie, the Siblings’ Accounts and the Companies do not belong to the Husband. The Sister’s husband was the sole director and owner of the WII Limited and PII Limited. The Wife has not justified the logical connection between the relationships among the Siblings and the Companies, and the ownership of the Sentosa Property. 50.The query concerning the transactions in the Siblings’ Accounts with the Companies only arose for the first time in the Wife’s affirmation in reply, her 15th Affirmation, when she claimed to have found some old documents (“Basement Documents”) at the basement of her home lately, i.e. allegedly a table of the Husband’s properties in Singapore in 1997. The authenticity and/ or genuineness of such documents are disputed by the Husband. She appeared to be suggesting that a number of companies were the Husband’s nominees. This has triggered another round of filing of evidence of all parties. 51.Looking at the Basement Documents closely, they could be at best arguably to have referred to WII Limited and RI LLC only ( to be elaborated further below), GCF (Q9-Q10) and PII Limited (Q20-21) were in fact not mentioned at all. The Wife has actually no evidence that relates GCF and PII Limited to the Husband other than bare allegation. Therefore, she has not made out a case on relevance in respect of these two companies. 52.As Ms. Yip points out, the Wife’s argument that WII Limited and RI LLC were referred to in the Basement Documents is convoluted. The fact that only the first two words of the name of RI LLC were mentioned in the Basement Documents renders the Wife’s argument unconvincing especially when there were at least 2 other companies share the same two words in their company names. 53.Insofar as the transaction between the Brother’s Account and RI LLC is concerned, it is a withdrawal of fund (Q7) from the Brother’s personal account to RI LLC (not the OCBC Joint Account, the designated account for funding the Sentosa Property). Details of such withdrawal are not relevant to the ownership of the Sentosa Property. The same logic applies to the withdrawals from the Sister’s Account to PII Limited (Q21) and, accordingly, that withdrawal is also irrelevant here. 54.Turning to the transactions between the Brother and WII Limited (Q6), the Wife fails to explain why those transactions are specifically relevant to the ownership of the Sentosa Property. She seems to suggest the discovery has a bearing on the Siblings’ ability to fund the Sentosa Property: §8 and §9 of her submissions, arguing that the Siblings do not have the ability to fund the Sentosa Property as they have alleged, i.e. the Brother made his total contributions at SGD2,524,360.17. However, the total sums under Q6 are SGD271,913.49 only, just about 10% of the total contribution claimed by the Brother. 55.In such circumstances, the discovery sought under Q6 is not necessary for the fair disposal of the issue whether the Brother has the ability to pay the total contribution of SGD2,524,360.17. Instead, the Siblings gave account of their financial resources as well as their financial arrangements among themselves and the Sister’s husband (i.e. through the latter’s companies, WII Limited and PII Limited), in their affirmations to undermine the Wife’s allegation of their inability to pay. 56.Even on the assumption that WII Limited and RI LLC were the companies referred to in the Basement Documents and belonged to the Husband (I have not so found but solely for analysis purpose), it is difficult to see how the Brother had transactions with these companies in his personal account will lead to a conclusion that the Brother’s Account belongs to the Husband. 57.For reasons set out above, I accept Ms. Yip’s submission that the Wife has not articulated any solid linkage of those transactions with the funds contributed towards the Sentosa Property. She failed to discharge her burden of showing relevance. Immigration Record 58.I shall now turn to consider the Wife’s request for the Siblings’ “Immigration Records by the Hong Kong Immigration Department for September 2005 to October 2017”. 59.To start with, the exact order sought remains unclear. The present Summons was issued under Order 24 rule 7 RHC for specific discovery of documents. Of concern is the fact that the Summons seeks specific discovery of “immigration records” which is not defined in the Summons, nor the exact form of the “documents” is specified. 60.In fact, I have not been referred to any statutory provision or legal authority upon which the Court has power to order a reluctant party to apply to the Immigration Department in order to produce such “immigration record” for the purpose of discovery. A review of the decided cases in this area will suggest the difficulty of this application. Absent any statutory provision or legal authority to extend the rights and duties of discovery in legal proceedings to require a party to apply to an authority in order to produce a “record” for the purpose of discovery, the Order 24 Summons shall be dismissed. 61.Even if I am wrong in the above-analysis, I take the view that the “document” sought is irrelevant, of little probative value and discovery of such is not necessary for disposing fairly of the cause or matter or for saving costs. 62.Mr Clough, Counsel for the Wife, contends that in light of the fact that there were a number of cash deposits and ATM withdrawals from the Siblings’ Accounts and the Siblings seldom travelled to Singapore, their “immigration records” concerning the dates of their departure from and arrival in Hong Kong and the in/ out control point, for the period between September 2005 and October 2017 are relevant to the operation of these accounts. They demonstrate whether the Siblings were out of Hong Kong at the time of those transactions. As a result, they will lead to a train of enquiry on who operated the Siblings’ Accounts, how they were operated and if, they were operated by the Husband. 63.Absent any slightest evidence that the Husband has ever operated those accounts, I am not convinced. Suffice it to say that the presence of the Siblings in Hong Kong at the time of those cash deposits and ATM withdrawals (even if that is the case, for analysis purpose) do not necessarily mean that those accounts were operated by the Husband. 64.As Ms. Yip submits, the Wife’s sole basis to seek the immigration record is, in fact, to cross-examine the Siblings on the cash deposits and ATM withdrawal of their bank accounts with reference to the “Immigration Record”. That shall not be allowed for it is trite law that the Court does not order discovery on matters which go solely to cross-examination: Thorpe v Chief Constable of Greater Manchester [1989] 2 All ER 827 CA. 65.Besides, the Wife suggests that there should be restriction on operation of the bank accounts by non-residents in Singapore. She nevertheless fails to explain what those restrictions were and how they are relevant to the matters in issue. Further, the period requested from 2005 to 2017 is extensive. The Siblings Statements only concerned the period after January 2012 (for the Brother) and after January 2013 (for the Sister). In my view, the “immigration record” sought is not necessary for a fair disposal of the disputed ownership of the Sentosa Property, nor for saving costs. 66.Confined to what the Order 24 Summons specifies, the Wife is not entitled to change to request affirmations of the Siblings on their history of previous visits to Singapore, time and purposes of those visits, and passport records in support by adding §25 to the Petitioner’s Skeleton Submissions. I accept Ms. Yip’s submission that such last-minute change by way of submission does not form the proper basis of a discovery application and hence, shall not be entertained. Sensibly, Mr Clough did not pursue such request further at the hearing. Conclusion 67.Having considered the Parties’ submissions and the evidence before me, I take the view that the Wife has failed to establish the legal basis for her present application. I order that the two summonses be dismissed. Case management directions for further conduct of the Preliminary Issue proceedings, including filing of witness statements, will be dealt with in the upcoming case management direction hearing. Costs 68.Of the issue of costs, I take into account that part of the requests of the Wife’s Questionnaire were acceded to by the Siblings who voluntarily filed the voluntary answers to it. Some of the remaining requests were answered in the Siblings’ affirmations, leading to the drop of most of those requests before this hearing. The remaining requests, being the subject matters of the present hearing, were disallowed after full arguments. I accordingly make a costs order nisi that : -
69.This costs order nisi shall become absolute at the expiration of 14 days after the date of this Decision. 70.I would like to thank the Senior Counsel and the Counsel for their valuable assistance.
Mr Neal Clough and Tony C.H. Chow, instructed by Messrs Ho & Ip, for the Petitioner Ms. Anita Yip, S.C leading Ms. Lily Yu, instructed by Messrs Chaine Chow & Barbara Hung, for the first and second interveners |
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