Ckp v. Syk

FCMC 2441 / 2017

[2024] HKFC 217

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 2441 OF 2017

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J U D G M E N T

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Introduction

1.There are 3 applications before the Court for determination.  All of them are discovery applications against non-party to these proceedings taken out by the Respondent wife (“W”) under Order 24 Rule 7A of the Rules of the High Court (“RHC”) and section 42 of the High Court Ordinance, Cap 4.

2.The parties against whom discovery was sought are (i) JTC (an accounting firm) (“JTC”); (ii) Bank of Communications (HK) Ltd (“BOC ”)/Bank of Communications Co. Ltd (“BOCC”) and (iii) Overseas-Chinese Banking Corporation Limited (“OCB”).

3.The 3 Summonses (“TP Summonses”) were all filed on 18/7/2023 and had been brought forward and re-scheduled for call-over on 21/8/2023.  Although the Petitioner husband (“H”) was legally represented throughout these proceedings, neither H nor his lawyers was named in any of the 3 Summonses[1].

4.At the call-over hearing on 21/8/2023, H engaged Counsel Mr Eugene Yim who appeared and opposed the TP Summonses.  It transpired that the TP Summonses and W’s supporting Affirmations were only “served” upon H’s lawyers on 9/8/2023 (i.e. 2 weeks before the call-over hearing)[2].

5.For the supporting Affirmations, W filed her 9^th Affirmation[3] in support of the BOC and OCB Summonses (which I will refer to them collectively as “Bankers’ Summonses”) and her 10^th Affirmation[4] in support of the JTC Summons.

6.H filed his 14^th Affirmation[5] in opposition and W filed her 12^th Affirmation[6] in reply.  No affirmation was filed by the banks or JTC or any representative of them turned up at the call-over hearing.

A brief overview

7.In around October 2014, parties separated.  This is a long marriage since 1977 and 3 children was born in 1980, 1984 and 1990.

8.In March 2017, H filed the Petition for divorce and Form Es were filed and exchanged by the parties. Decree Nisi was granted in October 2018 and was made absolute 2 months later in December 2018.   Given that all the children are of adulthood and self-supporting, the only outstanding matter is ancillary reliefs.

9.Financial disclosure have always been an issue which ended up with 2 rounds of discovery applications taken out by H in the past.  The first discovery application was taken out by H on 22/2/2019.  This came shortly after W took out her Summons under Rule 6 of the Matrimonial Causes Rules, Cap.179A (“MCR”) on 11/2/2019 seeking an Order against H to show cause as to why he should not be bound by some written document(s) signed around the time of separation as to split on finances.  Both applications was fully argued and a Judgment was handed down by me on 22/1/2021.  W’s Rule 6 Summons was dismissed with costs.  H’s Summons for discovery was only successful in part with 60% costs awarded in his favour.

10.On W’s answers and discovery provided pursuant to the said Judgment dated 22/1/2021, H took out a second specific discovery application on 9/8/2021.  On 29/11/2023, I handed down my 2^nd Judgment

whereby this time H’s Summons for specific discovery was dismissed with costs.

11.Against such background, this was the 3^rd application in terms of parties’ discovery but this time was taken out by W against non-party and co-incidentally today is the anniversary of my 2^nd Judgment dated 29/11/2023. 

Background leading to the present applications

12.Around 1995 to 1996, parties started their family business[7] trading iron ore in Hong Kong and Mainland China.  The family business was conducted by a group of companies, namely, FRL, PNK and AM which collectively referred as the “F Group”[8] in this Judgment.

13.Around 2004, the F Group entered into an investment project with an Australian mining company by the name “Mxxx”.

14.In around 2006, the F Group entered into a Deed of Release with Mxxx whereby FRL would receive commission for iron ore pellet sold by Mxxx at an agreed rate specified under the said Deed.

15.In around September 2022, the parties’ son whom I will refer to him as “ML” discovered that there was commission payments made by Mxxx to which FRL was entitled to receive.  According to the invoices issued to Mxxx, there was at least US$24,587,645 commission paid in respect of which FRL ought to have been the recipient.  Further, according to the documents, H had directed Mxxx to pay the commission into an account opened with UOB Bank in Singapore with the Account No.375-xxx-xxx-9 (“UOB Account”).  According to W, this was a new bank account that had not been disclosed by H in his Form E. Further, W’s case was that being a director and 50% shareholder of FRL, she was not aware of any board resolution that had been passed to open the UOB Account. The commission was paid by Mxxx in or around 19/10/2019.

16.There followed a series of correspondence exchanged between the parties’ lawyers on such commission as to details and whereabouts of it.  This ended up with W to come to Court and obtained an interim Mareva Injunction (by way of ex parte on notice application) on 7/11/2022.  The amount restrained was up to US$12,293,822.50, that is 50% of the said commission revealed as per the invoices issued to Mexx.

17.Apart from the interim Mareva injunction reliefs, there was also an order granted at the same time (“7/11/2022 Order”) (with penal notice endorsed) directed H :-

(a)  to file and serve an affirmation to disclose all his assets of an individual value of HK$100,000 or more; wherever situated, and to disclose the whereabouts of the said commission paid by Mxxx; and

(b)to provide answers to W’s 2^nd questionnaires attached to the W’s ex parte Summons when she sought the said interim Mareva injunction.

18.I will refer to the affirmation that was required from H under the 7/11/2022 Order as the “Disclosure Affirmation” and the answers which H was ordered to provide as “Answers” in the following paragraphs of this Judgment.

19.H filed his 10^th Affirmation to be the Disclosure Affirmation and also his 11^th Affirmation and Answers within the time extended for him to do so.

20.At paragraphs 17 to 25 of W’s 9^th Affirmation[9], she complained the extent and disclosure by H in his 10^th and 11^th Affirmation and the Answers, all filed in purported compliance with the 7/11/2022 Order, was insufficient and incomplete.  At paragraphs 26 to 35 of the said 9^th Affirmation[10], W went further to try to elaborate the “missing” details which H should have, or should have been able to, provided and disclosed for compliance with the terms of the 7/11/2022 Order.  W also discovered H had acquired/incorporated various other companies which bear strong resemblance to the name of the F Group of companies, some of them were incorporated in other jurisdictions[11].  W further discovered that H and his brother CKF are either director or shareholder of those other newly incorporated companies.

21.At paragraph 36 of the said 9^th Affirmation[12], W said :-

“36. All in all, after taking out injunction, the Petitioner did not comply with the Order completely. The Petitioner did not answer questions set  out in my 2^nd Questionnaires, instead divert attention, avoided the questions and so far none of the questions regarding the Commission Proceeds have been answered.”

22.In her 9^th Affirmation, W made specific reference to a company by the name FEHL which was incorporated in July 2020 with H himself as the sole shareholder and director.  H had not disclosed this company in his Form E.  According to H’s admission under his disclosure, there was a time deposit around US$12.5 million placed with the BOC under the name of FEHL.  Besides, there was another company by the name of “KRL” which H also had not disclosed voluntarily in his Form E.

23.In April 2023, W received from the son ML a pile of documents which W said at first she thought they were documents from or related to the family business or family companies.  When she went through the pile of documents, there were different names of companies which resembled the F Group or the family companies[13]. Upon her legal advice, the papers given to her by the son ML were sent to H’s lawyers for H to consider disclosing same should the documents be relevant to these proceedings[14].

24.There was no reply from H’s lawyers until May 2023 when they replied and contended that H had fully complied with the 7/11/2022 Order and that full and frank disclosure had been made[15]. It was further contended that the information requested in relation to the time deposit held by FEHL was subject to the protection of H’s privilege against self-incrimination[16]. H’s voluntary disclosure of the same in his Affirmation did not amount to waiver of the privilege and would not prevent him from claiming such privilege[17].

25.There was no further disclosure by H on W’s other requests for information in respect of H’s Disclosure Affirmation and the Answers filed.  Given the above, it was W’s position that H was in breach of the 7/11/2022 Order.  W had warned H for issuing committal proceedings against him.[18]

The Committal Proceedings

26.On 10/5/2023, W filed her 8^th Affirmation seeking leave to apply for committal order against H.  In line with the rules and procedures,

W sets out the factual background in her 8^th Affirmation and produced as her Exhibit “SYK8-1” the Statement required under Order 52 rule 2 of the RHC setting out the background and particulars of the alleged breaches by H upon which the committal was sought. In a gist, it was also about alleged breach of the 7/11/2022 Order.

27.On 3/7/2023, leave was granted to W to issue a Committal Summons.

28.On 4/7/2023, W issued the Committal Summons and the returnable date for call-over was fixed for 21/8/2023[19].  As said, the initial call-over hearing of the TP Summonses was, upon request by W’s lawyers, brought forward to be heard on the same day of 21/8/2023 together with the Committal Summons.

29.Directions were granted for exchange of affirmation evidence in opposition and in reply in respect of the Committal Summons.  It was further directed that the Committal Summons be set down for trial (2 days reserved) in consultation with Counsels’ diaries, and further that with consensus from both parties, the TP Summonses be proceeded first.

30.As at the date of this Judgment, no attempt was made to fix the trial dates of the Committal Summons.

The 7/11/2022 Order

31.On 13/12/2022, H took out 2 Summonses seeking separately to discharge the interim Mareva injunction and to stay the execution of the 7/11/2022 Order pending disposal or further hearing.  Both applications were listed for substantive argument on 8/8/2024 with 1 day reserved.

32.Somehow, for reasons which I set forth in my written Decision (Leave to Appeal) dated 9/9/2024[20], W’s interim Mareva injunction was also scheduled for substantive argument together with H’s aforesaid applications on 8/8/2024.

33.On 8/8/2023, H’s said applications for discharge and for stay together with W’ Inter Partes Summons for the returnable hearing of the ex parte interim Mareva injunction was heard together in “one-go” and decision reserved.

34.On 8/5/2024, I handed down my written Decision whereby W’s interim Mareva injunction dated 7/11/2022 was discharged.  Accordingly, H’s application for stay of execution of the 7/11/2022 Order became nugatory and his application for stay was dismissed as a matter of course.

35.On 22/5/2024, W filed a Summons seeking leave to appeal my Decision on 8/5/2024.

36.On 9/9/2024, I refused W’s application for leave to appeal on merits (that is, there was no reasonable prospect of success on the grounds of appeal put forward).  However, I granted leave to appeal to W on the “interests of justice” ground.  I also directed that there be a stay of my 8/5/2024 Decision pending final determination of the substantive appeal by the Court of Appeal such that W’s appeal would not become nugatory in the event that it was successful.

37.As at the date of this Judgment, the substantive appeal has yet to be heard by the Court of Appeal.

38.I will now deal with W’s TP Summonses in context.

The Bankers’ Summonses

39.The Bankers’ Summonses against BOC/BOCC and OCB are largely identical on the reliefs sought which are, inter alia, as follows :-

“1. ….... provide to the Respondent’s solicitors copies of all documents and records (including documents and records that are stored electronically, microfiche or by any other means) that are in the possession, custody or power of [BOC/OCB] relating to (i) any accounts held in the name of FEHL, (ii) any accounts in the name of the Petitioner or the said CKF , (iii) any accounts which the Petitioner or the said CKF have signatory rights or mandates, and (iv) any accounts of any company in which the Petitioner or the said CKF is a director or shareholder or in partnerships in which the Petitioner or the said CKF if partner for the purposes of these proceedings, including but not limited to :
       a. Account opening form;
       b. Board Resolution approving opening of the account;
       c. Account statements from date of opening up to date;
       d. Withdrawal or deposit slips of amount over HK$10,000;
       e. Transfer instructions; and
       f. Cheques.

2.   All documents and information related to the Deed of Charge Over Deposit(s) registered by BOC against FEL on 1 April 2021 including but not limited to loan agreement, banking advices, destination(s) of the money withdrawn. (For BOC Summons)

2.All documents and information related to the Trade Finance Security Assignment dated 16th April 2020 registered by OCB against FEL, registered on 30 December 2020 including but not limited to loan agreement, banking advices, destination(s) of the money withdrawn. (For OCB Summons)

3.In the event BOC [OCB] claims the said records are not in their possession custody or power, authorised representative from BOC [OCB] shall provide the Respondent’s solicitors an affirmation/affidavit confirming the same with reasons and/or explanation.

4.…… ”

The JTC Summons

40.The reliefs sought are :-

“1. ……provide to the Respondent’s solicitors copies of all documents and records (including documents and records that are stored electronically, microfiche or by any other means) that are in the possession, custody or power of JT for the purposes of these proceedings in relation to (i) FEHL, and (ii) any company in which the Petitioner or the said CKF is a director or shareholder or in partnerships in which the Petitioner or the said CKF is partner, including but not limited to :-

a.  Financial statements;
b.  Management accounts, income statement and balance sheet;
c.  Full particulars of assets held by the company including but not limited to all real properties (including full address and particulars of mortgages and charges), bank and securities accounts (including location of the account, name of financial institution and account number);
d.  Receipts, invoices, bank statements, ledgers, accounting and payment records.

2.Liberty to apply;……”

41.There was no issue that the person CKF named in all TP Summonses is the brother of H.

42.There was also no issue that the name “FEL” in the Banker’s Summonses should have been “FEHL”.

H’s grounds of opposition

43.H’s Counsel in his Written Submissions succinctly put forward 4 grounds in opposition under the following headings, namely :

-  (a) Lack of relevance;

-  (b) Unnecessarily and disproportionately wide;

-  (c) Pre-mature exercise; and

-  (d) Claim of privilege against self-incrimination (“PSI”).

Lack of relevance

44.For opposition for lack of relevance, H first submitted the whole purpose of W’s TP Summonses appeared to be to locate the whereabouts of the commission paid by Mxxx.  This was irrelevant to the ancillary relief proceedings given that what was relevant should be the value of the parties’

shareholding in the companies, which would form part of the matrimonial pot, rather than the value of the companies’ assets.

45.It also appeared that W had assumed that the commission paid into the UOB Account had been dissipated by H despite that there was no evidence of dissipation.  H’s admission of the time deposit of US$12.5 million placed with BOC could not be supportive of W’s assumption that the rest (or balance) of the commission paid by Mxxx had therefore been dissipated by H. 

46.The mere fact that the UOB Account was held under the name of a different company not the same as FRL could not be taken to mean that H intended to deprive W from her interests in the commission.

47.Further, W was not asking for records of the UOB Account or the financial records of FRL in Hong Kong or those other companies with identical name of FRL but incorporated in Seychelles by H without W’s knowledge, when such records or documents would be much more relevant to the TP Summonses, namely, the whereabouts of the commission. 

48.Lastly, there was no explanation from W as to her suspicion that the commission went to the hands of H, let alone his brother CKF who had no interests or involvement in the F Group of companies or H’s family business or dealings with Mxxx.

Unnecessarily and disproportionately wide

49.The point taken by H was that the scope of the discovery sought by W was too wide.  The period of time for the discovery in each of the TP Summonses was also too wide.

50.For the Bankers’ Summonses, W was trying to find out who else might have had received the commission.  W could and should have focused on FEHL, H and perhaps his brother CKF only.  There was no time frame qualifying the “all documents and records” she sought in paragraph 1 of the Bankers’ Summonses.

51.For the JTC Summons, W was seeking information in relation to all (emphasis added) companies in which H or his brother CKF has a stake without any specificity except FEHL.  The information sought was widely-casted.  There was also no time limit specified and thus it was said that W simply targeted for an unlimited period of time. 

52.Finally, it was submitted that the financial position of companies could and should be ascertained from its audited accounts and statements.  It was unnecessary for W to go beyond them at this stage by seeking all documents and records and that this might end up with voluminous documents which might not even be relevant.

Pre-mature exercise

53.It was submitted that W could have been able to obtain the documents within her role and capacity as director and 50% shareholder of FRL with the aid of company law principles.

54.Given that it was FRL Hong Kong which was entitled to receive the commission paid by Mxxx, W as director and shareholder of FRL Hong Kong could have asked Mxxx on the commission that they paid in around October 2019 and not taking out the Bankers’ Summonses.

55.That said, W also had not taken out any specific discovery application against H.  W had not exhausted the procedure against H before issuing the TP Summonses.

PSI

56.H’s Counsel conceded the difficulties in this contention of privilege against self-incrimination (“PSI”) insofar as discovery against a third party, in this case the banks, to produce documents having an existence independently of the person claiming the privilege (i.e. H in this case) (per Malayan Banking Berhad, Singapore v Legend Six Holdings Ltd [2020] HKCFI 990).  However, H’s Counsel maintained such contention would still be relevant in the exercise of my discretion to refuse W’s TP Summonses.

57.Reference was then made in particular to the JTC Summons.  This has become a significant and imminent concern given that JT (that is, the proprietor of JTC) had now filed a police complaint pertaining to FEHL and also presented copies of documents of FEHL which H had lost in an incident of burglary at H’s office.

58.On 23/8/2023, H was stopped from entering his office in Tsim Sha Tsui by the management office staff.  On that occasion, he could only get in his office with the assistance of police.  Upon entry, H discovered that a burglary had happened and various confidential documents relating to the F Group of companies and FEHL were found missing.

59.On 29/8/2023, H made a statement to the police on the incident of burglary.

60.That said, compelling disclosure of potentially incriminating documents where the police might be investigating may erode H’s privilege against self-incrimination and his right to a fair trial embraced under Article 10 of the Hong Kong Bill of Rights.

Applicable legal principles

61.Order 24 Rule 7A of the Rules of the High Court (“RHC”) is the governing rule on discovery against non-party in all civil proceedings.  It is also applicable to matrimonial proceedings by virtue of Rule 3 of the Matrimonial Causes Rules, Cap.179A (“MCR”). 

62.Order 24 rule 7A of the RHC provides, inter alia :

“(1) ……….

(2) An application after the commencement of proceedings for an order under section 42(1) of the Ordinance for the disclosure of documents by a person who is not a party to the proceedings shall be made by summons, which must be served on that person personally and on every party to the proceedings other than the applicant.

(3) A summons under paragraph (1) or (2) shall be supported by an

affidavit which must –

(a) In the case of a summons under paragraph (1), state the grounds on which it is alleged that the applicant and the person against whom the order is sought are likely to be parties to subsequent proceedings in the Court of First Instance;

(b) In any case, specify or describe the documents in respect of which the order is sought and show, if practicable by reference to any pleading served or intended to be served in the proceedings, that the documents are relevant to an issue arising or likely to arise in the proceedings and that the person against whom the order is sought is likely to have or have had them in his possession, custody or power.

(3A)   ……..

(4)  A copy of the supporting affidavit shall be served with the              summons on every person on which the summons is required to be served.

(5)  An order under section 41 or 42(1) for the disclosure of documents made be made conditional on the applicant’s giving security for the costs of the person against whom it is made or on such other terms, if any, as the Court thinks just, and shall require the person against whom the order is made to make an affidavit stating whether any documents specified or    described in the order are , or at any time have been, in his possession,                                                         custody or power, when he parted with them and what has become of them.

(6)  No person shall be compelled by virtue of such an order to produce any documents which he could not be compelled to produce –

(a)   …….

(b)   In the case of a summons under paragraph (2), if he had been served with a writ of subpoena duces tecum to produce the documents at the trial.

(7)  ……..

(8)  For the purposes of rules 10 and 11 an application for an order under section 41 or 42(1) shall be treated as a cause or matter between the  applicant and the person against whom the order is sought.”

63.Further, Order 24 rule 7 of the RHC provides :

“Subject to rule 8, the Court may at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified or described is, or has at any time been, in his possession, custody or power, and if not then in his possession, custody or power when he parted with it and what has become of it.”

64.Finally, Order 24 rule 8 of the RHC provides :

“On the hearing of an application for an order under rule 3, 7 or 7A the
Court, if satisfied that discovery is not necessary, or not necessary at that stage of the cause or matter, may dismiss or, as the case may be, adjourn the application and shall in any case refuse to make such an order if and so far as it is of opinion that discovery is not necessary either for disposing fairly of the cause or matter or for saving costs.”

Cases and Authorities

65.There are a number of cases and authorities referred to me by H’s Counsel Mr Eugene Yim.

66.In the case of Global Gaming Philippines LLC v Deutsche Bank AG, Hong Kong Branch [2019] HKCFI 405 where Lisa Wong J sets out in great detail the principles in non-party discovery as follows :-

“39. Non-party discovery is granted by the discretionary exercise of the power vested in the court by s.42 of the HCO and Order 24 rule 7A(2) of the RHC and there is no existing ‘right’ or ‘entitlement’ to such discovery vested in a plaintiff: per Bharwaney J in Chan Yim Wah Wallace v New World First Ferry Services Limited [2015] 3 HKC 382 at [18].

40. Such exercise of discretion involves the conventional consideration of ‘existence, relevance and necessity’ under Order 24 rules 7A and 8(2) as well as a balancing exercise of the need for disclosure in the interest of the administration of justice to ensure a fair trial on full evidence and applicable countervailing factors: see again Chan Yim Wah Wallace at [19].

41. So at the first stage, the usual criteria of existence, possession custody or power, relevance and necessity apply equally to discovery from a non-party.

42. The Peruvian Guano test applies to determine whether the documents sought from the non-party are relevant to an issue arising out of the claim that has been made: per To J in Tullen Prebon (Hong Kong) Limited v Chan Yeung Fong Nick, HCA 219/2009, unreported, 9 June 2011 at [74] and [76].

43. Nevertheless, the need to ensure reasonable proportionality and procedural economy in the conduct of proceedings under Order 1A may inhibit the court from granting non-party discovery under s 42 and Order 24 rule 7A(2) for background or ‘chain of inquiry’ documents: Chan Yim Wah Wallace at [20] and [53].

44. When what is sought is a class of documents, each document of the class must be relevant in the Peruvian Guano sense. The court has power to order a non-party to disclose relevant documents which meet the Peruvian Guano test but has no power to order disclosure of documents that do not. This principle cannot be circumvented by including the relevant documents in a class which also includes documents which do not meet the Peruvia Guano test. See Tullen Prebon (Hong Kong) Limited at [81] – [84], where To J adopted what Chadwick LJ said in Three Rivers District Council v Bank of England (No.4) [2003] 1 WLR 210 (CA) at [34]-[38].

45. Fishing expedition with a view to hunting around the documents in the hope that they will reveal some improprieties on the part of the opposite party or will provide information for the applicant to pursue more inquiries is not permitted. See Ngan In Leng v Chu Yuet Wah (No.1) [2013] 1 HKLRD 717, per Deputy Judge Queeny Au-Yeung (as her Ladyship then was) at [26] and [62(5)].

46. The court must also consider whether disclosure is necessary in order to dispose fairly of the claim or to save costs. The following considerations are relevant: (1) how important is the information to the issues; (2) has the applicant taken appropriate steps to obtain the information within the proceedings before seeking discovery rom the third party; (3) would it be sufficient to adverse inferences on the basis that the party from whom the information was sought within the proceedings has failed to supply the information; (4) what is the nature of the relationship, if any, between the parties to the proceedings and the third party; and (5) if disclosure is necessary and proportionate, will the editing of documents protect private information ? See Tullen Prebon (Hong Kong) Limited at [85] at which To J adopted, for the purposes of considering whether to exercise his discretion to order non-party disclosure, Hartmann JA’s approach in SMSE v KL (No.2), HCMC 2/2006, unreported, at [63]in the context oif an application to set aside a subpoena duces tecum.

47. The condition of necessity requires the court to focus on the necessity of the third party being required to make discovery. A third party should not be ordered to make discovery if it is not necessary to do so, e.g. where the information can be obtained from within the proceedings or other sources: Chan Yim Wah Wallace v New World First Ferry Services Limited at [55].

48. If there is no other route to obtain the relevant and necessary information, the court must in the third and final stage proceed to balance the different interests: Chan Yim Wah Wallace v New World First Ferry Services Limited at [60].

49. The third party’s right to privilege is preserved by Order 24 rule 7A(6).

50. Where the non-party is a foreign person, as in this case, additional considerations must be made. A non-party can only be compelled to produce documents that are abroad in exceptional circumstances of urgent necessity. See: Dicey, Morris and Collins on The Conflict of Laws, 15^th edition, Volume 1, at 8R-067, 8-069, 9-072 and 8-073. Where it is necessary to obtain evidence under compulsion from a third party who is outside the jurisdiction, the proper procedure should be, inter alia, by way of a letter o request to the foreign court.  See Dicey, Morris and Collins   on The Conflict of Laws, supra, Rule 23(3) at paragraph 8R-067 and     paragraph 8-740 and Mackinnon v Donaldson, Lufkin & Jenrette         Securities [1986] Ch 482 at 499F-H.”

67.Whilst the TP Summonses were pursued under Order 24 rule 7A of the RHC, I am minded to go through briefly some of the conventional pre-requisites for specific discovery applications which also applies to third party discovery applications.

68.The principles governing specific discovery have been succinctly summarised by Hon Ng J (as he then was) in the case of Jade’s Realm Ltd v. Director of Lands (HCA No.1509/2012) dated 9 January 2015 where His Lordship said as follows :-

“(1)  There is no jurisdiction to make an order for specific discovery under RHC O.24 r.7 unless there is sufficient evidence or prima facie case that : (a) the documents or classes of documents exist which the other party has not disclosed; (b) the documents relate to a matter in issue in the action; and (c) the documents are in the possession, custody or power of the other party;

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

(3)  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.

(4)  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.

(5)  For the purpose of discovery, the pleadings have to be looked at broadly.

(6)  The order must identify with precision the documents or categories of documents which are required to be disclosed, for otherwise the person giving the discovery may find himself in serious trouble for swearing to a false affidavit, even though doing his best to give an honest disclosure.

(7)  Notwithstanding the Peruvian Guano test, ‘fishing’ is not allowed, and discovery should not be oppressive.

(8)  The respondent may answer an application for specific discovery by an affidavit stating that he does not have the documents, and this will be conclusive at the interlocutory stage.”

69.Full and frank disclosure is always an important part in civil proceedings.  This is a continuing obligation of the parties in the proceedings with no exception in family cases.  The rationale behind is to reveal all documents and information one party has or possesses which is relevant (my emphasis) even if it advances his or his opponent’s case or destroys his own case (see Compagnie Financiere du Pacifique –v- Peruvian Guano Conpany (1882) 11 QBD 55).   This is commonly called the ‘Peruvian Guano’ principle.

70.‘Relevance’ is to be determined by reference to the pleadings (see Re Estate of Ng Chan Wah [2003] HKEC 317).  For family cases involving parties’ ancillary reliefs where there are no pleadings exchanged, the court is entitled to consider the issue of relevance by referring to the parties’ affirmations, disclosure of assets under their Form Es or the answers given to questionnaires.

71.‘Existence’ of a document has been considered by Deputy High Court Judge Queeny Au-Yeung (as she then was) in the case of Ngan In Leng v. Chu Yuet Wah [2013] 1 HKLRD 717 where it was said :-

“42. A prima facie case on existence may be established on merely showing the probability arising from the surrounding circumstances or on specific facts deposed to : Hong Kong Civil Procedure 2012, Vol.1, para.24/7/1, at pg 554. For example, a prima facie case on existence may be established simply by assessing whether it is business practice for a certain type of document to exist : Union Bank of India v. General Nice Resources (Hong Kong) Ltd , HCA 299/2007, 10 May 2010, Bharwaney J at para 10.”

72.In the English case of B v. B (matrimonial proceedings: discovery) [1979] 1 All ER 801, Dunn J summarised the law on discovery in ancillary relief application at page 811 as follows :

“I will conclude the part of my judgment by summarising my conclusions as to law.

(1) A party to a suit must disclose all the documents in his possession, custody or power which are relevant to the matters in issue. The court has discretion whether or not to order him to make such disclosure, and also has discretion whether or not to order him to produce the documents for inspection by the other party or the court.

(2) …………….

(3) …………….

(4) …………….

(5) The discretion is a judicial discretion, and in exercising it the court will have regard to all the circumstances.  The court will balance the relevance and importance of the documents and the hardship likely to be caused to the wife by the non-production against any prejudice to the Husband and third parties likely to be caused by production………...  The court will not order production unless it is satisfied that production is necessary either for disposing fairly of the issues between the parties or for saving costs.”

Discussion

Any evidence of breach ?

73.From reading W’s application(s) in their full context, and being the docket judge overseeing this case and having granted the interim Mareva injunction (and the 7/11/2022 Order for the Discovery Affirmation and the Answers) and the subsequent discharge of the same, it was clear that one of the reasons for W to take out the TP Summonses was that H was said to have breached (emphasis added) the 7/11/2022 Order for (a) not fully and frankly disclose all his assets over the value of HK$100,000 in the Disclosure Affirmation and (b) failed to answer a number of questions in her 2^nd Questionnaire in the Answers provided.

74.Further, W’s said it was apparent from the lawyers’ correspondence exchanged that she would not be able to obtain anything further from H apart from what H had already disclosed, without the aid of this Court through third party discovery applications.

75.That said, W being fully advised, saw fit and proper to take out committal proceedings citing H for contempt for breaching the 7/11/2022 Order.  In W’s 8^th Affirmation for leave to issue committal proceedings, she sets out largely the same set of underlying facts as what she now said in her third party discovery applications.  Despite directions were granted for the trial of the committal proceedings, W had not proceeded with scheduling the trial dates. 

76.I noted that BOC had adopted a neutral stance and their legal representatives had come to some sort of arrangement with W’s lawyers on the requested disclosure as per the TP Summons against them.  In my view, this would not be a factor for me to take into account of when exercising my discretion on the TP Summons against BOC.

77.From reading H’s Counsel’s grounds of opposition[21], there was no issue on the pre-requisite factor of “existence” and “possession” of the information and documents sought.  “Relevance” was the main contention as the information and discovery sought by W does not form any part of the issue over parties’ ancillary reliefs but rather relating to locating the whereabouts of the commission.  According to H, the commission was assets belonged to the corporate vehicle (that is, FRL) under the Deed of Release[22] rather than assets belonged to him or W personally.

78.In the present case, there was no finding of fact (emphasis added) by me as to breach of the 7/11/2022 Order by H despite W’s Counsel Mr Jeremy Chan emphasised and so submitted to me at the TP Summonses hearing.  Breach of court orders is a serious matter, let alone the 7/11/2022 Order in this case which was granted at the same time along with the interim Mareva injunction.  In the absence of the court’s finding that a breach having been successfully proved, it would be wrong for a party to be able to assert or allege that his or her opponent had breached (emphasis added) the court order simply because the opponent had not produced the documents that was expected from the opponent or the opponent had not provided the answer(s) that he or she expected to receive.

79.Having said, breach of court orders could still be readily found without any court’s findings when there was no compliance at all (emphasis added) of the order in question.  Partial or incomplete compliance of orders, no matter how unsatisfactory it was; in terms of disclosure of documents or providing answers so to speak, would still require inquiry or follow up as to the reason(s), if any, causing the partial or incomplete compliance before the party could be said to have breached the order in question.

80.The commonly seen avenue was to take out a specific discovery application so that the court would be able to rule upon whether the “missing” document(s) or the “outstanding” answer(s) need to be provided.  It also affords the party who seeks disclosure to re-consider whether or not to insist pursuing the original requests after seeing the opponent’s response or limited response.

81.The other avenue, as in the present case, was to take out committal proceedings with confidence to compel compliance with court orders under the threat of contempt. Such coercive and draconian step should only be attempted in cases where the non-compliance or the breach was clear and undisputable as a matter of law or fact.  Given that the party citing the other party for contempt bears the burden of proof to the criminal standard of “beyond reasonable doubt”, this procedure was not commonly seen when there was partial or incomplete compliance as opposed to complete non-compliance of court orders.

82.These 2 options of specific discovery and committal proceedings are not mutually exclusive and could take place one after the other if circumstances so require.

83.At this juncture, I wish to refer to the judgment in the case of CLS v LPKP [2018] 1HKLRD 786 at paragraphs 72 to 74 which I find useful and instructive :-

“72.  Although the law allows a party to proceedings to seek discovery against a third party or a banker, I have to say bluntly that in the circumstances of this case, it is totally inappropriate and unnecessary for the wife to direct the discovery against the banker, instead of the husband. The fact that the husband refused her discovery request, is not a good and sufficient reason for her to trigger an application against the banker. To involve a third party, ie the banker, will achieve nothing but only complicate the procedures and escalate unnecessary costs. It is by no means the “cheapest and most efficient” way to achieve her request for discovery. Fortunately, Mr Chan has not sought to advance his argument along that line and has accepted that the applicable rule should be the said O.24 r.7.

73.  I thus remind the family practitioners that in similar situation like this, the applicant spouse should not attempt to achieve his/her discovery request by ex parte application for writ of subpoena/writ of subpoena duces tecum, nor by discovery directed to the banker. I hold the further view that this is a “back-door” tactic which should not be encouraged. And in saying so, I would make it very clear that neither party, especially the applicant spouse, should labour under the wrong impression that green light will automatically be given by the court, without hearing from the responding spouse, once the banker indicates that it would not object to the production of bank statements.

74.  The proper application in such circumstances is to take out a specific discovery summons pursuant to the said O.24 r.7 against the responding spouse. It is also suggested that the responding spouse should, as the husband here has done, write to his/her banker to have the bank records preserved pending the determination of the court.”

84.At the end, the wife’s summons in the CLS case was dismissed with costs and with Certificate for Senior Counsel.

85.Co-incidentally, I noticed that the wife in the CLS case was also represented by the same law firm Messrs. Chaine, Chow & Barbara Hung & Co., and also the same Counsel Mr Jeremy Chan for W in the present case.

86.On the above reasoning, I have 4 observations to make :

(a)  Given that W’s Committal Summons was not pursued[23], and no special reasons were provided for not pursuing it save for it to be dealt with after the TP Summonses, there was thus no finding of contempt against H for breaching the 7/11/2022 Order for W to rely upon as evidence of breach against H in the present TP discovery application(s).

(b)  For reasons that I have set forth in the preceding paragraphs, this was not the type of cases where H completely ignored the 7/11/2022 Order and chose not to file the Disclosure Affirmation and the Answers.  What had happened was in the opposite.  Hence, whether there was breach of the 7/11/2022 Order (in terms of the contents of the Disclosure Affirmation and Answers) was for the Court to consider and decide rather than for W to merely say so.  There might always be questions which are not properly raised or being a “fishing expedition” or that the answers sought might be protected by privilege from disclosure.  It is premature for W to simply come up with her case (one sided) that H had breached the 7/11/2022 Order without all related matters being scrutinised by the court, to the very least, through the process of specific discovery application against H.

(c)  As said, the interim Mareva injunction and the 7/11/2022 Order had been discharged on merits (whilst W’s leave to appeal was only successful on the “otherwise” ground)[24], it thus remain to be seen whether the 7/11/2022 Order would be reinstated on the substantive appeal.

(d)  Taking on board the premise that (i) H was in breach of the 7/11/2022 Order (which I made no such finding at this stage); (ii) the 7/11/2022 Order would be reinstated on appeal; and (iii) W’s subjective views on H’s Disclosure Affirmation and Answers being inadequate on the perspective of compliance, to substantiate W’s TP discovery applications would be highly prejudicial and grossly unfair.

87.In summary, I do not agree with W’s Counsel’s submission that given H had “breach” the 7/11/2022 Order and refused to provide the requested documents and information, W could just go directly to seek third party discovery from the banks and H’s accountant JTC.

The 4 grounds of opposition

88.Much has been said on matters of general principles and procedure, I would now turn to each of H’s reasons of opposition in their order of sequence.

89.It is trite that when considering “relevance” in discovery applications in matrimonial cases where generally there are no pleadings (with the exception of preliminary issues determination under TL v ML (Ancillary Relief: Claim Against Assets of Extended Family))[25], the court can refer to the supporting affirmation of the applicant, that is, W in this case[26].

90.W’s 9^th Affirmation was filed in support of the Bankers’ Summonses against UOB and BOC/BOCC.  Having set out the underlying facts and background, the objective for issuing the Bankers’ Summons  could be seen from reading the following paragraphs[27] of W’s 9^th Affirmation :-

“49. As stated in paragraph 30 above, the Petitioner incorporated a company named “FRL” in Seychelles. I suspect the Petitioner has either illegally divert the Commission Proceeds into his own pocket by incorporating a company of identical name (such as “FRL” incorporated in Seychelles), or he has, through illegitimate means, opened a secret account under FRHK (that is the UOB account), and diverted the Commission Proceeds into the said account. Either way, it proves the Petitioner’s intention to deprive me from my interests to these Commission Proceeds which undeniably form part of the matrimonial assets.

50. As the Petitioner refused to provide further information of FEHL   and/or his other accounts which is held under his name or other companies he has incorporated and in control, I could only turn to third           parties, including banks and accountants, for information and documents   in relation to the undisclosed companies, in particular FEHL, which I logically assume the Petitioner has used to receive part or all of the Commission Proceeds.”

91.It was clear from the above paragraphs that the objective of the Bankers’ Summons was related to locating the whereabouts of the commission but not anything close to or connected with parties’ ancillary reliefs.  Although this might not be viewed upon as “fishing expedition” in the broad sense, I am satisfied that this was a kind of “tracing” exercise of the commission in aid of which third party discovery against the related banks was invoked.  Targeting BOC/BOCC was due to the Time Deposit of US$12.5 million having been placed there.  Targeting UOB was that this was a bank account discovered by W and that the commission received from Mxxx had once deposited.

92.As rightly submitted by H’s Counsel Mr. Yim, referring to the case of Global Gaming (supra), that the need to ensure reasonable proportionality and procedural economy in the conduct of proceedings may inhibit the court from granting non-party discovery for background or “chain of inquiry” documents.  Further, W has to demonstrate a genuine suspicion as opposed to unfounded and never ending question marks before third party discovery can be justified; for otherwise, it would only be a disguised “fishing expedition”. I agree with H’s Counsel.

93.Putting W’s case to the highest, the discovery sought under the Bankers’ Summonses, even successful to the fullest extent, tended to reveal only the flow of funds between companies and the assets value.  It does not and indeed cannot be counted into the ledger as parties’ personal finances for computation of the matrimonial pot.  As a matter of corporate law, it was the share values of the parties in the companies that count and not the company’s assets values to be considered when it comes to identify parties’ financial portfolio for determination of ancillary reliefs.   

94.I find W fails in showing “relevance” of her Bankers’ Summonses to the issue of her on-going ancillary relief claims.

95.Further, from reading the terms of the Bankers’ Summonses, I have no hesitation but to agree with H’s Counsel that the scope (ambit) of discovery sought was casting too wild and also that the period of discovery (duration) was unspecified.

96.Viewing upon the factors of ambit and duration, W’s Bankers’ Summonses must be dismissed.  Even if the pre-requisite factors of  existence, relevance (which I have just found against W) and possession can be established, it is trite that discovery (inter-partes and non-party alike) would only be granted if it was necessary either for disposing fairly of the cause or matter or for saving costs (see Jade Realm Ltd v Director of Lands (supra).

97.Having said, how could a widely-casted discovery request and also without limit on the period of disclosure be justified for saving costs or was needed to dispose of a cause or matter fairly ?  In my decision, the answer must be in the negative.

98.I find W’s Bankers’ Summons for discovery against UOB and BOC/BOCC was also unnecessarily and disproportionately wide, despite that they also fail on the pre-requisite of “relevance” I set out above.  Both of the Bankers’ Summonses fail and be dismissed.  

99.H’s other contention of “pre-mature exercise” was based upon W not taking other means to obtain the documents and information which she wanted to obtain before issuing the present TP Summonses for discovery.  W had not made use of her directorship and shareholdings in FRL under the company law principles, she did not but could have been able to contact Mxxx on the commission issue; and she did not file any specific discovery application against H.

100.With all due respect, this was not a matter of “mature” or “pre-mature” exercise.  It was rather a matter of necessity of action to be taken to fit in the circumstances of the case at different stages of the play.  There is no hard and fast rule, time wise or strategy wise, as to when would be the appropriate time to take out third party discovery applications.  Each case depends on its own facts.

101.For the JTC Summons, I stand by my views and findings as to W’s failure to establish “relevance” and that the discovery sought from JTC, as per the JTC Summons, was likewise widely casted.  I decided the JTC Summons must also be dismissed.  

102.For the contention of PSI, I find it improper to take this contention into consideration upon the limited information and details available at this stage.

Documents potentially illegitimately obtained

103.There was the further contention from H on the issue of potentially illegitimately obtained documents[28]. H referred me to 2 documents in particular; namely, (a) the purported financial statement of FEHL for the period from 22/7/2020 to 31/12/2021 prepared by the accountant JTC which W located from the pile of papers given to her by the son ML after the incident of burglary in August 2022; and (b) the list[29] purportedly listing out the Returning Documents attached to W’s lawyers letter dated 12/4/2023[30]. 

104.H said those documents appeared to touch upon the very personal and confidential matters of H and his private companies that do not concern W or their son ML. Despite requests, W did not disclose the source of those documents except to say that their son ML handed over to her a pile of papers.  I was invited not to consider them when considering the TP Summonses.

105.I decided not to make any observation or comment or finding  on this topic given that there was insufficient information on hand for consideration of the legal ramifications of materials which may be obtained illegitimately.

Conclusion

106.For all the above reasons, I decided that all the TP Summonses dated 18/7/2023 against BOC/BOCC, UOB and JTC fail and be dismissed.

Costs

107.Given this Court’s decision that W completely failed in all the TP Summonses, I see no reason why costs should not follow the event.  And I will order accordingly.

108.W to pay H all the costs of the TP Summonses, including costs reserved, to be taxed if not agreed.

109.Given that none of the third parties engaged legal representation for this hearing nor any of them filed any affirmation in opposition, there should be no order as to costs between W and any one of the third parties.

110.I also grant Certificate for one Counsel for H.

Orders

111.I now grant the following Orders :-

(a)  W’s TP Summonses against BOC/BOCC, UOB and JTC all dated 18/7/2023 be dismissed;

(b)  W to pay H the costs of the said TP Summonses, including all costs reserved, to be taxed if not agreed;

(c)  There be no order as to costs between W and BOC/BOCC, UOB and JTC;

(d)  There be Certificate for one Counsel for H.

112.This is a costs order nisi which will become absolute if no application to vary the same was filed within 14 days from the date of this Judgment.

113.Last but not least, I wish to express my gratitude to parties’ Counsel and their legal teams for their valuable assistance to the Court.

Mr. Eugene Yim and Miss Christine Y Leung instructed by Messrs. Choi, Leung & Associates, Solicitors for the Petitioner

Mr. Jeremy S.K. Chan instructed by Messrs. Chaine, Chow & Barbara Hung, Solicitors for the Respondent