Wendy Wenta Seng Yuen v. Philip Pak Yiu Yuen

CACV000099/1984

Civil Appeal

No. 99 of 1984

Courts, practice and procedure -0.38 r.2

In matrimonial proceedings for ancillary relief, while good and sufficient reason must be shown by an applicant seeking to cross-examine a deponent on his affirmation, "special circumstances" do not have to be established.

IN THE COURT OF APPEAL

Civil Appeal

No. 99 of 1984

BETWEEN

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Coram: Cons, Yang and Fuad, JJ. A.

Date of hearing: 5th and 8th October 1984

Date of judgment: 8th October 1984

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JUDGMENT

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Fuad, J.A.:

1. This is an appeal from the decision of a judge of the High Court made on the 11th June this year when he ordered the husband (the respondent in matrimonial proceedings) to attend to be cross-examined upon his affirmation dated the 8th March, on his wife's application.

2. The background of the matter is this. The wife obtained a decree nisi against her husband on the 7th June 1983 in the District Court. Her claim for ancillary relief was later transferred to the High Court. The decree has yet to be made absolute. Affirmations have been filed on both sides, and one was, of course, the husband's affirmation of means.

3. At the end of October 1983 the wife's solicitors wrote to the husband's solicitors asking for further and better particulars of the husband's affirmation of means under various paragraphs. The husband is a partner in a solicitors' firm and among the further particulars sought was one about a paragraph in the husband's affirmation to the effect that his earnings as a solicitor were "$2m (roughly) for the last 12 months." He was asked to produce –

4. In November 1983 the husband's solicitors replied on these and other points raised on behalf of the wife. They said that the accounts were not drawn up in ac ordance with the dates mentioned and that the husband's partners had refused their consent to the production of the accounts. Copies of the tax returns requested were supplied, and as regards the bills it was pointed out that the request was manifestly unreasonable and oppressive. There were in excess of 50,000 such bills.

5. In January this year the parties appeared before the judge on an inter-partes summons. The wife was asking that her husband should be ordered to produce the audited accounts of the solicitors' firm of which her husband was a partner. The issue before the judge was whether the husband should be required to produce the accounts for inspection, covering the previous 5 years, despite the fact that his other partners had apparently objected to their production.

6. In an affirmation filed for this summons, the husband referred to the reply sent by his solicitors and confirmed what had been said on his behalf. He also averred that he had spoken to his partners and they objected to the production of the accounts. He added "They are all in the joint legal possession of the partners. "

7. In a reserved judgment dated the 24th February, the learned judge held that while it might be the case that the court had no power to order production once it is established that there has been an objection by a third party joint owner in good faith, the court was entitled to consider whether such an objection had indeed been made and whether good faith had been shown. It was, he held, for the respondent to justify the ground of protection and he must fail if he did not state the exact nature of the joint possession, whether or not he had tried to obtain the, consent of the, joint possessers and why they objected to the production of the firm's accounts. He felt that the respondent should be given an opportunity to furnish, in an affidavit, information on the following matters (I quote from p.15 of his judgment. )

8. Neither side appealed from the order reflecting this decision and it must be recognized, as Mr. Rodway pointed out, that it was very much in the nature of an interim order because a great deal would depend upon whether or not the husband accepted the opportunity afforded by the judge for filing the affidavit. He was certainly not ordered to do so.

9. On the 8th March the husband filed an affirmation. In view of the nature of the arguments addressed to us, I think it is desirable to read the material averments in full –

6.    The reasons given by those partners for their objections were as follows:-

10. The wife's affirmation in reply is dated the 27th March. She expressly denies the allegations made against her by her husband, and paragraph 5 of her affirmation is in these terms -

"I view with considerable scepticism the hearsay by the Respondent as to the views of his partners ........... and long experience of him and some of them leads me to believe that they will all do as he wants. "

She ends her affirmation by saying that neither she nor her advisers would be able to get anything like a true picture of her husband's financial position unless the partnership accounts were examined, and she still sought their production for this purpose.

11. Some further correspondence ensued and on the 1st May the wife took out a notice indicating that she intended to cross-examine her husband at the restored hearing of her application for discovery due to be heard on 18th May.

12. After hearing the matter out on that day, the judge reserved judgment until the 12th June and granted the wife's request to be allowed to cross-examine her husband and, as we have seen, the husband now appeals to the court.

13. It was submitted to the judge on behalf of the husband that these being proceedings of an interlocutory nature, no order for attendance for cross-examination should be made since no special circumstances had been shown. The judge reviewed the authorities cited to him and expressed the opinion that they established the following propositions (and I read from pp.5 and 6 of his judgment dated the 12th June) –

14. The learned judge held, therefore, that the requirement as to special circumstances was not one of general application where the court was called upon to decide whether or not a deponent should be, ordered to attend for cross-examination under 0.38 r.2.

15. As the judge understood the position taken by the wife, she wished to challenge both the assertion that her husband had never had any copy of the audited accounts and did not have such a copy now, and his assertion that his partners objected to their production.

16. The judge accepted that the wife desired to see the audited partnership accounts so that an assessment could be made with regard to the ancillary relief she was claiming. These accounts were relevant in those proceedings and would clearly be of assistance to her when formulating her claim. This was information which the husband would eventually have to disclose and he saw no reason to doubt her bona fides when she said that she wanted this information as early as possible so as to be able properly to formulate her claim.

17. The judge concluded his judgment, as follows:

"In the present circumstances an application is being made to cross-examine a deponent to test his good faith as regards facts sworn to in an affidavit made to resist an application for discovery a matrimonial proceeding. The cross-examination will not involve the canvassing of matters that will be in issue in the trial of the action. I am satisfied that it is proper to order the deponent to attend for cross-examination. I make an order nisi reserving the costs of the application. "

18. The matter was argued before the judge on the application of 0.24 r.7 (the first application) and 0.38 r.2 (the application from which this appeal arises). Strictly speaking, in my view, Mr. Rodway was right when he suggested that it is the powers given to a court under rule 77 of the Matrimonial Causes Rules that govern the question before us, although I am content to attempt to decide this appeal on what I might call "the White Book practice" for I do not think anything turns on the precise wording of the different sets of rules.

19. Mr. Charles Ching, who appeared for the husband, after giving us the history of the matter, began by submitting that he accepted that the partners might ultimately be served with process which they would have to answer. If they then did not put forward a good reason for refusing to allow the husband to produce the firm's account, they would be ordered to do so - he could not speak for them. At the moment all his client could say, and he had solemnly affirmed to that effect, was that his partners were refusing to allow production.

20. Mr. Ching suggested that the problem might easily be resolved (as it had been in other matrimonial proceedings in Hong Kong) if the wife would only accept their offer to produce a certificate from the senior partner or from the auditors, saying what the husband's earnings had been. He emphasized that the husband had complied with the Judge's earlier order and the order had not been the subject of an appeal.

21. Mr. Ching contended that this court could interfere with the Judge's undoubted discretion in the matter, on accepted principles, because he had misunderstood the law and the position as a whole. In his submission, the general principle (which was not limited to applications for interlocutory injunctions) was that cross-examination on affidavits should not be ordered in any interlocutory proceedings unless special circumstances required it.

22. He placed great reliance on a Hong Kong case decided by the Full Court (Scholes and Briggs, J.J.) - Oriental Pacific Mills (No.2) v. Nan Fung Woollen Mills Ltd. and others [1965] H.K.L.R. 703. This was an action, inter alia, for damages for breach of contract and fraud. The plaintiff applied by summons for the appointment of receiver's accounts, and preservation orders by way of injunction. There was also a summons designed to force the police to produce documents seized by them in criminal proceedings against the defendants which had not been proceeded with. There were filed what the judgment calls "voluminous" affidavits and the plaintiff applied to cross-examine the managing director of two of the defendant companies.

23. In construing the relevant rules of court then in force (not different in substance from the present rules) Scholes J. relied on Lord Greene, M.R.'s judgment in Lawson and another v. Odhams Press Ltd. and others [1949] 1 K.B. 129 and held that what lord Greene had said in that case should be followed in Hong Kong and that no order to show cross-examination in interlocutory proceedings should be made in the absence of special circumstances.

24. It must be acknowledged that the relevant rule gives the court an apparently unfettered discretion; to be exercised, of course, judicially and in accordance with well accepted principles laid down by the cases. But the facts in each case will be different and broad principles, unrelated to particular circumstances, ennuciated by judges must, in any judgment, be applied with the gravest caution.

25. As I understand the Lawson v. Odhams case, there the Court of Appeal in England was following a settled line of authority broadly to the effect that in actions against newspaper proprietors where publication is admitted, interrogatories as to the person who, provided the information on which the alleged libel is founded will not, as a rule, be allowed.

26. With the utmost respect to the Full Court in the Oriental Pacific Mills case, in my opinion, too much was read into the judgment of Lord Greene in Lawson v. Odhams. I will not read it out again since it is fully set out (the All E.R. version) in the judgment of the Full Court at p. 713. Lord Greene was clearly referring to cross-examination upon an affidavit "of this kind" - that is to say an affidavit in which the writer of a signed article had said, inter alia, that everything written by him in the course of his employment by the newspaper proprietor was based on information he obtained in the course of that employment and under the control and instructions of his editor. I find it difficult to accept that in every kind of interlocutory proceedings, whatever their nature, special circumstances must be made out before a deponent will be allowed to be cross-examined.

27. I would not, of course, presume to differ from the decision of the Full Court in Oriental Pacific Mills on the facts of the case, but would doubt whether the cases show a settled practice that at the interlocutory stage in every kind of proceeding, cross-examination upon an affidavit will not be allowed unless special circumstances are established.

28. I think that this is putting the matter slightly too high and the learned editors in various editions of the White Book have never gone so far in their commentaries on 0.38 r.2. As note 38/2/3 shows, the practice revealed by the cases there cited certainly indicate restrictions in certain circumstances, to give some examples: cross-examination of affidavits filed on a summons under s. 333 of the United Kingdom Companies Act 1948 (we have an equivalent section) will not be allowed except under special circumstances; there can be no cross-examination on an affidavit showing cause against a garnishee order nisi, nor on an affidavit disclosing persons constituting a firm under 0.81 r.2. The editors add: "There is a discretion as to ordering cross-examination on affidavits filed in interlocutory applications. Cross-examination on affidavits sworn in applications for interlocutory injunctions is very rare. "

29. I would mention that I derive some assistance from the very different wording of 0. 14 r. 4(b) which provides that in deciding whether to give leave to defend -

And it is to be noted that the expression "special circumstances" is also used, for example, in 0.44 r.23 and 0. 47 r.1.

30. As regard affidavits in general, there will be cases where the interests of justice dictate that a deponent should be subject to cross-examination. For example, where the motives of directors in exercising their powers is in issue, as in Smith and Fawcett [1942] 1 Ch.304. In other cases, in my judgment, the true rule must be that the court has an unfettered discretion to permit cross-examination on an affidavit but the applicant is not entitled to this right as of course. He has to establish that in all the circumstances of the case there is a good and sufficient reason for the application. He will not find this difficult where the evidence on the affidavits will result in what I might call a final order. He will find it more difficult in interlocutory matters, perhaps, for, as the judge below had in mind, great delay and expense might be entailed. It seems to me that what is essential for the applicant to show is that the proposed cross-examination might be productive of a useful result at the stage that the application is made. If no reason can be suggested for supposing that the cross-examination will then be helpful, the application will be refused in the discretion of the court, indeed, in certain circumstances it might be regarded as oppressive and, as such, an abuse of the process of the court.

31. And so, in my view, the judge applied the right test as the matter was argued before him. It is as well to recall his precise words. I am reading from p.6 of his judgment -

"The Court will, however, examine any request for attendance for cross-examination with care and will, bearing in mind the unnecessary expense and delay that will be caused if cross-examination is allowed in interlocutory proceedings on matters that should properly be canvassed at the hearing of the action, refuse to make any such order unless good reason is shown therefor. "

32. I say "as the matter was argued before him" because on the first day of the hearing of this appeal (which was Friday the 5th October) Mr. Ching raised a point not ventilated before the judge. I agreed with my brothers that the appellant's Notice of Appeal should be allowed to be amended to include this new ground, and that Mr. Ching should be permitted to argue it, but this necessitated an adjournment until today (Monday the 8th October) to enable Mr. Rodway (who appeared before us, as he did in the court below, for the wife) to deal with it.

33. The near point was this: that this was matter of discovery and since the husband had deposed to the facts that he did not have and never had had either originals or copies of the audited accounts, and that his partners had refused their consent to their being produced, the judge had no jurisdiction to order cross-examination on the affirmation or, alternatively, that the judge ought not to have ordered cross-examination on the affirmation.

34. Although the judge seems to have had in mind 0.24 r.7 when he gave his first judgment on the 24th February, his attention was not drawn to the commentary to that rule during the hearing of the application for cross-examination to be allowed. It is clearly stated in para.24/7/1 of the White Book that "It was well-established under the former 0.31 and in the days before discovery was given by lists, that statements in a party's affidavit of documents are conclusive - for example, on the question whether he has or has had any documents other than those disclosed. " The learned editors talk about two qualifications and it seems to me that for all practical purposes the procedure set out in the second qualification on p.410 of the latest edition of the White Book was followed here although the husband need not have obeyed the judge's suggestions and would then have had to face the consequences of having filed an inadequate affidavit.

35. I think it necessary to examine the affirmation filed by the husband very closely. There are certain things to be noted about it. One is that he talks about having access to the audited accounts but says that he had never had possession of them in original or copy form. He also says, as we know, that all his partners object strongly to their production. It is necessary to bear in mind (and I do not say this by way of criticism) that there is no affidavit from any of the other partners saying that they object and the reasons for their objection. Certain reasons were given, as we have seen, why the partners are said to object. It is difficult to know whether all the partners coincidentally came to the same conclusion on all the matters listed in sub-paragraphs (1) and (5) in para.6 of the affirmation. I merely mention sub-para. (3) which says "The Petitioner had often created scenes in the firm's office by making scandalous remarks of both me and my partners and the firm as a whole. In particular she exhibited a strong grudge towards Mr. Ping Tsun Yu. " And in sub-para.(4) "my partners had also had reports from various clients that the petitioner had telephoned them attempting to persuade them to take their business away from the firm. "

36. I do not want to say too much about this affirmation but wish simply to remark that it does not surprise me that those advising the wife thought it right, whatever the most suitable occasion might be, to seek an opportunity to cross-examine the maker of it.

37. I think it is essential to acknowledge that matrimonial proceedings for financial relief are rather different from the ordinary run of cases. The observations of Dunn, J. in B. v. B. [1978] Fam. 181, about the very wide ranging issues involved in such proceedings, and in particular the quotation he made from the judgment of Ormrod, L.J. in O'D. v. O'D. [1976] Fam.83 at p.191 of the report must be borne in mind. Those advising a party to proceedings of this kind will have to have an opportunity at some stage of scrutinizing audited accounts if they are eventually produced. If it is possible that they may have to be produced at the hearing proper of the claim for ancillary relief, I, for myself, cannot see any objection to the judge deciding, in the exercise of his discretion, that it is as well to get the particular matter out of the way as soon as possible. Certainly it would save an adjournment at the hearing itself if, after hearing the matter out, an order was made which resulted in the audited accounts seeing the light of day.

38. It seems to me essentially a matter of discretion in the judge and I am not prepared to hold that there is anything in the cases referred to by the learned authors of the White Book in their commentary on 0.24 r.7 that binds me to remove the discretion given to a judge in matrimonial proceedings, in the circumstances we have here, in the face of the express words of 0. 24 r.7, if that rule is applicable, or r.77 of the Matrimonial Causes Rules, if that rule is applicable.

39. In my view this is a somewhat unusual situation in the sense that the judge will have to be satisfied that the objections are genuine and that there was no contrivance to defeat the powers of the court; an important issue. It will have to be gone into at some stage. If a person says "I object to the production of this document" on a valid ground that may well be the end of it. But where someone is speaking for no less than eight, I think, other partners, I think the opposing arty is entitled to inquire into the full details of the objections, how the objections were expressed by each of the partners and the reasons each of them gave, for their objection. In my view the opposing party is also entitled to know whether these objections sprung from the bosoms of the other partners themselves or whether they yielded to a suggestion made that it might assist the husband if they went along with his desire (if that be the position) not to let his wife see the audited accounts. Again I make no aspersion against the husband but in my judgment these are matters into which the wife at some stage or another is entitled to enquire and, on the principles re-stated by Lord Diplock so firmly in Hadmor Productions Ltd. v. Hamilton [1982] 2 W.L.R. 322, I would hesitate long before I interfered with the judge's discretion, as I see it, to decide at what state these issues should be gone into so that they can be resolved. For these reasons I am quite unable to say that the judge wrongly exercised his discretion in ordering the cross-examination to proceed and I would dismiss the appeal.

Cons, J.A.:

40. The judge below accepted, when he gave his first judgment in these matters on the 24th February, that if the objection by the other persons in joint possession of the documents in question was not bona fide, but merely part of a contrivance to defeat the powers of the court, then the court was at least entitled, if it thought fit, to order production regardless.

41. In due course, as My Lord has outlined, the husband filed an affidavit setting out the objections of his partners. The wife was not satisfied and by further affidavit she suggested in effect, though not in actual words, that there was a contrivance to defeat the powers of the court. When the matter came before him again the judge obviously accepted for his part that there was sufficient in that challenge to warrant cross-examination upon this aspect. In my view that was very much a matter for the discretion of the judge. He would have, much better than we, the feel of the case as a whole and I would not interfere with his exercise of that discretion unless there were something in the law that forced me to do so. Atone stage I thought there might be something and that derives from the note in the White Book to which My Lord has already referred. ⁽¹⁾

42. Mr. Rodway seeks to distinguish that note. He says that what is said there relates only to what must be disclosed as opposed to what must be produced for inspection, the latter being a matter for discretion whereas the former is not. Such of the oases there referred to as I have been able to research during the adjournment seem to support that distinction, which in any event I find to accord with common sense view and the true interests of justice in the present situation. I therefore conclude that I am not constrained to interfere with the discretion of the judge below, at least as far as the contrivance aspect is concerned.

43. As to the question of having, or having at some time had, possession of copies of the original accounts, the position is not the same. This seems to me a matter of disclosure rather than inspection and I might have been inclined to say that there should be some variation to the judge's order had not two matters dissuaded me from that course. Firstly, it is a very small matter in comparison with the other and has hardly been dealt with before us; I think possibly it was not even appreciated by those advising the wife and husband until after the appeal had been opened, and secondly I note that the Notice of Appeal merely asks that the judgment be set aside. It's an all or nothing application. We are faced with only those two alternatives. In my view the husband ought to get nothing. I too would dismiss the appeal.

Yang, J.A.:

44. On the questions raised under 0.27 r.7(1) I agree entirely with the reasons and judgment of my brother Fuad J.A. and having nothing useful that I can add. On the question of the exercise of the judge's discretion, I agree with the reasons and judgments given by my brethren Fuad and Cons, JJ.A. I too would therefore dismiss the appeal.

(1)    24/7/1

Representation:

Mr. Charles Ching, Q.C. & Mr. William Stone (Helen A. Lo & Co. ) for the appellant/husband

Mr. Gilbert Rodway, Q.C., with Mrs. Penlington (Yu, Tsang & Loong) for the respondent/wife