K v. K

FCMC No. 6100/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 6100 OF 2006

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BETWEEN

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Coram: Deputy District Judge K.W. Wong in Chambers (not open to public)

Date of Hearing: 11^th April, 18^th July & 27^th August 2008

Date of Handing Down of Written Decision: 13^th October 2008

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DECISION

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1.This is the discovery application of the Respondent wife (“Wife”) against the Petitioner husband (“Husband”) by summons dated 25^th January 2008.

2.By this summons, the Wife asks the Husband to make extensive discovery relating to (1) transfer of 2 landed properties, (2) credit cards statements, (3) shareholding of 14 companies, mostly overseas and land holding, and valuations of these companies, and (4) providing answers to her questionnaire which the Husband is accused of not having fully answered. The Wife also asks that the discovery of documents should generally be dated back from 2002 instead of the usual two years from the date of the Husband’s petition issued in 2006. Save and except discovery of credit cards statements two years prior to petition and valuation of the matrimonial home as well as a company called K & K Limited, the Husband opposes the application.

The Application

3.It is in fact the third contested application before me in these proceedings. I have previously dealt with the Wife’s maintenance pending suit (“MPS”) application and her application for further costs provisions until FDR. As I have already set out the brief background of the marriage in my previous decisions I only set out those parts which are relevant to this application below.

4.The parties married on the 24^th August 1983 in Hong Kong. On 23^rd May 2006, the Husband issued a Petition based on two-year separation since about 10^th April 2004. This marriage was brought to an end when a decree nisi of divorce was granted on 26^th February 2007. The marriage lasted for about 23 years. At any rate, it can be regarded as a long marriage.

5.The Wife filed a Form A on 13^th July 2006 applying for financial provisions for herself and children of the family in the pending divorce suit. Her applications include, inter alia, periodical payments, lump sum payments and transfer of properties. Form Es were exchanged in or about September 2006. The parties have already issued questionnaires for further and better particulars of the information disclosed in the Form E.

6.At issue is the Wife’s questionnaire and request for further and better particulars dated 5^th January 2007 (“the said Questionnaire”) in respect of the Husband’s Form E. The Wife accused the Husband of failing or refusing to make full and frank disclosure. The Wife’s contention is that all documents relating to the Husband’s income, earning capacity, properties, business, financial resources which the Husband has had, or is likely to have, as well as documents evidencing the family’s lifestyle and living standard prior to the breakdown of the marriage should be disclosed so as to assist the Court exercising its discretion in making financial provisions according to section 7 of Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”).

7.Miss Remedios, counsel for the Wife submitted that given the extravagant life-style enjoyed by the family throughout the marriage and the values of the properties involved, this is a “Big Money” case. Miss Anita Yip, counsel for the Husband, submitted that the Husband is not “mega-rich” as alleged. She submitted that being the son of a very rich father, it does not mean the Husband himself is rich. However, whatever labels counsel used here there is in fact no dispute the Husband is the only son of a very wealthy traditional Chinese family. He is also a very successful businessman looking after the family’s business comprising substantial landed properties, including office blocks, shopping centres and residential properties in Hong Kong, Canada and USA held through a network of local and overseas companies. There is no dispute that these properties worth hundreds of millions dollars. The question is whether the Husband has beneficial interest in these properties or whether they are financial resources which the Husband can look upon. The Wife said the Husband had ever, when the marriage was intact, told her that he had interest in his family business. It is undisputed evidence that the Husband is either a director or key officer of these companies. The Wife therefore said the Husband must have beneficial interest in all these family companies and landed properties. The Husband denies. His case is that he is only assisting his father to look after the latter’s business empire. His father is the “king” of thisempire and everything belongs to his father. He is only paid salaries for his service but has no beneficial interest in the business and properties. Everything beyond his salary is entirely a matter for his father.

Request for Joint Valuations of Properties

8.At issues are several specific properties which the Wife would like joint valuations be made. For ease of reference they are listed below:

i) Shiu Fai Terrace, Hong Kong (“Matrimonial Home”);

ii) K.Y. Mansion, Hong Kong (“KY Mansion”);

iii) Quail Meadow (“Quail Meadow”);

iv) Don Mills, Canada (“Don Mills”); and

v) Tak Ku Ling Road, Kowloon, Hong Kong (“TKL”).

Matrimonial Home

9.The Husband’s position is this: save and except that of the Matrimonial Home which gives an indication of the standard of living of the family, he considers it “utterly improper and unprincipled”, to use the words of Miss Yip in her written submission, to compel him to do a joint valuation and bear half of the costs. All the above properties belong to third parties and the Husband has no beneficial interest in them. However, the Husband has no objection to the Wife doing her own valuations of these properties (except the Matrimonial Home).

KY Mansion

10.It is the Wife’s case that the Husband and the Husband’s father Mr. K had asked her to sign a pre-nuptial agreement, even before the marriage. She refused. However, on 31st August 1983, some 8 days after their marriage she signed a “Quitclaim” in respect of Don Mills upon request of the Husband. She alleged her signing of the document was without legal advice. As she refused to sign any pre-nuptial agreement, the Wife said that the Husband and the paternal family have sought to ring-fence the Husband’s legal or beneficial interest from the start of their marriage. The Wife said that despite the fact that the Husband was the registered owner of KY Mansion and in fact another unit of the same KY Mansion at the time of their marriage, the Husband chose to live in the Matrimonial Home which is in fact owned by one BC Company Limited(“BC”) since their marriage. Apparently, the Husband has no shareholding and is only one of the directors of BC.

11.In January 2002, KY Mansion was sold by the Husband to BC at a consideration of $5 million. The Wife’s case is that this is not a genuine transaction and is an attempt to put assets beyond her reach in the divorce.

12.The Husband considered this irrelevant as the transaction was at market price. Mr. K deposed to that the Matrimonial Home is provided to the Husband’s family free so that they could rent out theirs for a good income. Furthermore, his parents could not tolerate the spotting of his rooms by dogs which the Wife had failed to properly toilet-train.

Don Mills and Quail Meadow

13.The Wife also alleged Don Mills and Quail Meadow are the family’s secondary homes when the family is overseas.

14.For Don Mills, she said the family lived there while they were on holiday in Canada. When the two children were studying in Canada for about two years, the family also stayed there.

15.The same applied to Quail Meadow. She said whenever the family was in the States they lived there. Even her US driving licence was imprinted with the address of Quail Meadow. Furthermore, the Husband has once been the registered owner of Quail Meadow.Accordingly these properties are their family’s homes overseas and their valuations should be available to the Court.

16.The gist of the submission made on behalf of the Husband is that Don Mills is owned as an investment by one of the family’s companies called K & K Limited(“K & K”). It has never been intended as the family’s Canadian home. It is now being put up for sale. In any event the Husband is a 20% shareholder and a director of K & K. The company has agreed to provide the valuation of this company. The value of Don Mills will invariably be reflected in such valuation. It is therefore not necessary to provide a separate valuation for Don Mills.

17.As for Quail Meadow, the Husband’s case was that it was purchased by the father for the Husband and his little sister J in 1978 for US$1.3 million. It was registered in his sole name because J was then still a child aged about 9. Therefore since purchase he was holding half interest of Quail Meadow on trust for J. In 1984, his father made arrangement for his interest be transferred to J at a consideration US$650,000. Thereafter he held Quail Meadow solely on trust for J. Quail Meadow was later transferred back in 1996 to J who subsequently in 1998 put the property in her own trust of which the Husband said he has no interest. There is no suggestion at all anything untoward the marriage taking place at that time. For the 1984 transaction, the Husband exhibited a cheque dated 15^th October 1984 of US$450,000 drawn by J to him and a promissory note of US$200,000 issued by his father. The Wife refused to accept on grounds, inter alia, that J was only a teenager (aged about 15) when her cheque was issued. Apart from saying that the transaction is not genuine, the Wife also said that the transaction undervalue. The Husband asserted that it is not uncommon for one to live in close relative’s place, but such occupation will not give rise to any interest on the part of the occupiers.

TKL

18.The TKL was owned by one MYE Limited (“MY”) which purchased the same at about HK$107 million in October 1999. This MY is held by two shareholders, BI Corporation (“BIC”) holding 9,999 shares and SC Corporation (“SC”) holding 1 share. Both shareholder companies are incorporated in the States.

19.In fact there is another company which bears a very similar name to BIC. This company is called BI Holding Corporation (“BIH”). The Wife has raised several questions on BIH which is then abbreviated and referred to as “BI” by her in the said Questionnaire. However in order to avoid confusion in this decision I shall use “BIC” for the company whose name is without “Holding” and “BIH” for the one with “Holding”.

20.It is the Wife’s affidavit evidence that shortly after their marriage in or about 1984, the Husband started to work for his family business in USA and Canada. Her Husband then told her that the shareholding of the family companies was as to 49% to his father, 49% to himself and 2% to his mother (see: V p.61). It was a reward for his having to separate from his family in Hong Kong. As such the valuation of this TKL is relevant. The Wife said the TKL is now estimated to worth in excess of HK$150 million.

21.The Husband denies having any interest in TKL and its holding company. Although he had once said he held shares in BIH for his father’s trust and the same was transferred back in 2005, he retracted from such statement and now said this statement was an inadvertent mistake.

22.Miss Remedios submitted that it was quite impossible to make such mistake. He may have interest either in BIC or BIH or both. The Wife said that he had interest in both. It is fair to say that the parties do not dispute that BIC was incorporated in 1973 whereas BIH at a later date in 1997. According to the website of BIH exhibited by the Wife, BIH claimed to own these properties and provide property management for prospective business in San Francisco and Bay Area. The properties listed in the websites include:

i) S Building;

ii) AS Centre;

iii) 6X Battery Street;

iv) 7X Battery Street;

v) 1XX Sansome Street;

vi) EP Shopping Centre;

vii) A Plaza; and

viii) 5XX Sutter Street.

23.It is noted from the website, properties (i) to (v) above are expressly said to be owned by BIH. For the remaining, lease of the sameis said to be available from BIH.

General

24.The request for disclosure relating to these companies is vigorously contested. The Wife requested the Husband to state whether he had since 2002 any shareholding in the below companies, either in his own name directly or indirectly through nominees or a trust, and if so the percentage thereof, and in any event provide a valuation of the following companies including the assets held by the same:

i) BC;

ii) BIH;

iii) BIC;

iv) EH Corporation;

v) 100 BC;

vi) 300 PP;

vii) BTS Corporation;

viii) DC Corporation;

ix) SC;

x) AP Shopping Centre Inc.

xi) AP LLC;

xii) K & K;

xiii) KI N.V.; and

xiv) BL.

25.It is not in dispute that company (i) i.e. BC is a Hong Kong company, (ii) to (xi) are US companies, (xii) i.e. K & K is a Canadian company, and (xiii) and (xiv) are companies incorporated in other jurisdictions such as the Netherlands Antilles.

Hong Kong Company - BC

26.The Wife admitted the Husband is only its director but not its shareholder. However, the main ground of the Wife is that BC was involved in a series of suspicious transactions, including transfer of KY Mansion from the Husband to it in 2002 at $5 million. This company is a ring-fencing device of the paternal family because the Matrimonial Home is held by BC. Despite the explanation advanced by the Husband and the digging out of a copy cheque issued by BC in favour of the Husband for the said HK$5 million, the Wife refuses to accept the transaction being a genuine one. She believe the Husband do have interest in BC.

The 10 US Companies

27.As regards the 10 US companies and the properties, the Wife said that as the shareholding of these companies is not open to search by the public, she is unable to find out whether the Husband has beneficial interest in them. However, she manages to obtain information through their search agent in the States. The searches show that the Husband, his father Mr. K and his mother Madam K are the only 3 directors of these US companies. Apart from that, the Husband is either the Chief Financial Officer, and/or the agent for service of legal process and/or Vice President of these companies. Further these 10 US companies hold substantial landed properties and are inter-related. The Wife has summarized them in a schedule annexed to her 2^nd Affidavit. Coupled with what the Husband has told her about his beneficial interest in the US business as aforesaid, she said she has good reasons to believe that the Husband has beneficial interest in these companies and properties. It makes a lot of difference to the “size of the pot” if these properties and companies are excluded.

28.The Husband reiterated that he is not a shareholder of any of these companies nor is he interested in any of them. He said he has made a mistake regarding his own shareholding in BIH. His father has filed an affidavit in support of his assertion. He also produced ten letters each signed by her sister J for the board of directors of the above US companies to him warning him against disclosure of company information and financial reports to anyone on the ground he is only a director and not a shareholder. The contents of these 10 letters are identical except they are under the respective companies’ letterhead.

29.Further, at the last day of the hearing, solicitors for the Husband produced a letter of dated 25^th August 2008 issued by his US attorney, Gayle J. Chan Law Office. The letter purports to state that they have reviewed the relevant corporate and limited liability company documents relating to 11companies (the aforesaid 10 US companies plus a 300 PP, Inc). They confirmed the Husband is neither a shareholder of any of the corporations nor a member of the limited liability company. By a further letter from the same law office dated 28^th August 2008 submitted to me after the hearing, the same law office confirmed that the Husband is not and has not been a shareholder and member of the 11 entities for the past 10 years.

30.Miss Yip submitted that by reasons of the letters from the board of directors, the documents about these companies which the Wife seeks to discover are not within the Husband’s power and are not discoverable under Order 24 of the Rules of the High Court. The Husband has already deposed to the fact that he has neither shareholding nor interest in these companies and therefore the request of the Wife as per this summons has been complied with. She submitted that there is simply no ground for the Wife to pursue her application. Her application is a fishing exercise.

K & K Limited

31.The Husband agrees to release of information about K & K for the purpose of doing a valuation of this company. It is the Wife’s case that the accounts already discovered are not audited ones.

The said Questionnaire

32.Miss Remedios accused the Husband of failing and refusing to make full and frank disclosure of his assets and income. Many examples have been cited in her submission, including the Husband’s failure to disclose his securities trading accounts with Merrill Lynch and Mansion House Securities (F.E.) Limited, bank account with Washington Mutual and some other bank accounts. The Husband does not deny his failure to include such accounts but says that it is not deliberate. The Wife, however, pointed out further evidence of non-disclosure. She said the Husband has in his answer (filed on 30^th May 2007) disclosed that he has the use of cars belonging to his father or father’s companies, and is currently using a car belonging to a company called SF Investment Co Ltd (“SF”). However, the Wife exhibitsregistration evidence of 3 cars which are acquired by the Husband prior to the said answers, particulars of which are as follows:

Registration No	Make and Model	Registration Date	Price estimated by Wife
J-1	Mercedes S500L	29.3.2007	HK$1.6 million
J-2	Nissan Elgrand 3.5L	3.6.2005	-
J-3	Mercedes B200	18.1.2007	HK$0.3 million

33.According to the vehicle registration certificates exhibited by the Wife, J-1 and J-2 are registered in the personal name of the Husband while J-3 SF. The acquisition of these vehicles all pre-dates the said answer (30^th May 2007). Accordingly Miss Remedios submitted that the Husband is not making full and frank disclosure and is deploying “catch me if you can” tactics. Without Court’s intervention, the Court cannot discharge its investigation duty under section 7 of the MPPO to make a fair division thereunder.

34.One of the complaints of the Wife is that when the Husband is asked whether he holds or has held shares in a company (see for examples questions 1(b) and 3(b) of the said Questionnaire), the Husband’s answer is simply he has no shareholding but has not answered the second limb of the question. The answer given is thus incomplete.

35.The gist of Miss Yip’s submission is that the Husband has sufficiently answered the questions. Questions for information going back to 2002 or even as from 1990 (see. 6(g) [III p.8] are oppressive. Furthermore, the Wife has failed to meet the legal requirements of discovery. Miss Yip submitted the Husband has produced answers that are firm and clear. At this interlocutory stage these answers are conclusive. The court should not entertain challenges to discovery at interlocutory stage or permit cross-examination by discovery.

Discovery as from 2002 instead of 2 years from Petition

36.The Wife’s argument is simply this. The family is rich and used to enjoy comfortable life-style. The family travelled 2 to 3 times a year with long-haul flights to America and Europe by first or business class every year with cruise trips. The family also enjoyed use of luxurious cars and stayed in holiday homes in Canada and States. She also has $50,000 for her own on the top of unlimited credit card spending. Such lifestyle commensurates with a “Big Money” case. It is only when her relationship with the Husband had become sour in or about 2003 on her discovery of the Husband’s extra-marital affairs that her lifestyle was squeezed. The Wife also believed that since then the Husband had started to take active steps to put his assets beyond her reach. As the divorce is based on two years separation since 2004 without her consent, the Wife believed that unless the Court goes beyond the period when her lifestyle was squeezed and takes a snapshotof the family’s lifestyle and living standard prior to the breakdown of the marriage, the Court cannot properly do the section 7 exercise. The Wife therefore requests to date back the discovery two years from the latest affair, i.e. as from 2002.

37.The Wife has cited at least several incidents in support of her firm belief of the Husband’s extra-marital affairs which attributed to the breakdown of the marriage. The first was that in or about summer of 2003, she discovered the digital body weight in her bedroom in Quail meadow had stored data of a woman aged 30 with 5 feet 7 inches tall. This was neither hers nor the Husband’s sister or any member of the paternal family. The second was that in December the same year, she discovered Viagra and contraceptive pills from the Husband’s wardrobe. The Husband explained the pills and Viagra were purchased for their friend Mr. Fu. The Wife therefore returned the same to Mrs. Fu. However, she did not accept the explanation of the Husband as Mr. Fu was suffering from lung failure and even required oxygen bottle to assist breathing. Mrs. Fu was over 60. Both of them did not appear to her to need those pills.

38.The third incident was that she discovered a travel agent receipt showing the Husband and one Miss JK flying to Japan together in December 2003. They appeared to stay in the same hotel. From the mobile phone of the Husband she managed to find the phone number of this woman and even talked to her. This woman admitted to be the Husband’s girlfriend. She said she had confronted the Husband who admitted having an affair with this woman. The matter was brought up to the father Mr. K and before whom the husband agreed to stop the affair.

39.The Wife also exhibited credit card statements showing that the said JK was issued with a supplementary credit card. Shopping, locally and overseas, was done using this supplemental card.

40.The Husband denied the Wife’s allegation. He considered the digital weight allegation irrelevant. He also explained that JK was only an ordinary friend. The Japan trip was for business and it was his secretary who made all the arrangement for him. He admitted Miss JK travelled with him on the same flight but they did not stay in the same hotel.

41.Miss Yip submitted that save for exceptional circumstances which this case is not one, the parties should stick to the 2-year back-dating as prescribed by the relevant Practice Direction, otherwise the Court will be laden with excessive information. That will only serve to prolong the time and unnecessarily increase the costs.

The Applicable Provisions

42.The hotly dispute part of the summons is whether the Husband should make disclosure of documents relating to the companies in which the Wife alleges the Husband has an interest but the Husband denies. Although it has not been stated under which particular provision(s) the present application is founded, it appears to be common ground of the parties that Order 24 Rule 7 of the Rules of High Court (“RHC”), which is made applicable to matrimonial proceedings by Rule 3 of the Matrimonial Causes Rules (“MCR”), is relevant to the present application. Order 24 r.7(1) stipulates that:

“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.”

43.Order 24 r.8 RHC says:

“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.”

44.The above rules empower the court to order a party to the proceedings to make discovery of specific documents or a class of documents. Counsel for the parties have not suggested that Rule 77 of the MCR enlarges the court’s power to order discovery and inspection.

45.Counsel on both sides have helpfully referred the Court to a number of authorities on this subject, including C v C, CACA No.410 of 2005, 28th July 2006 (unreported), B v B (matrimonial proceedings: discovery) [1979] 1 All ER 801, Wu v Tsoi Kay & Anor, HCA No.A4983 of 1987, 1^st June 1992, Kaplan J, (unreported), Y v K HCMC No.2 of 2001, Hartman J 19^th July 2002, (unreported) Charman v Charman [2005] EWCA Civ 1606, Zakay v Zakay [1998] 3 FCR 35. After going through the authorities by the parties, I think it is useful to paraphrase the succinct summary of law relating to discovery in ancillary relief application made by the learned Dunn J in B v B (supra) at p.811:

“I will conclude the part of my judgment by summarizing 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)  The documents of a company are in the legal possession of the company. If they are or have been in the actual physical possession of a director who is a party to litigation they must be disclosed by that director, if relevant to the litigation, even though he holds them as servant or agent of the company in his capacity as an officer of the company.

(3)  Whether or not documents of a company are in the power of a director who is a party to the litigation is a question of fact in each case. “Power” in this context means “the enforceable right to inspect or obtain possession or control of the document”. If the company is the alter ego of such a director so that he has unfettered control of the company’s affairs, he must disclose and produce all relevant documents in the possession of the company.

(4)  Where relevant documents in the possession of a company are disclosed by a director as being in his custody or power, the court has a discretion whether or not to order production of them.

(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 non-production against any prejudice to the Husband and third parties likely to be caused by production. It has not hitherto been the practice of the court to order production of company documents to which the board of directors objects on affidavit, provided that the court is satisfied that the objection is not contrived for the purpose of frustrating the powers of the court. The court will not in exercise of its discretion order parties to do that which they have no power to do. 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.”

46.When the learned Dunn J was discussing “relevance” in B v B (supra) in the context of financial proceedings in matrimonial cases, he had the following observations at p.809i – 810a:

“It is another feature of such proceedings that one party,  usually the wife, is in a situation quite different from that of  ordinary litigants. In general terms, she may know more than  anyone else about the husband’s financial position: she will know at first hand of the standard of living of the family  during the marriage; she will know about the furnishing and    equipment of the matrimonial home, and of the physical  possession of the Husband, and perhaps the approximate  amount of cash kept in the house. She may also know, from    conversation with the Husband in the privacy of a  matrimonial      home, the general sources of his wealth and how    he is able to    maintain the standard of living that he does. But  she is unlikely to know the details of such sources or precise  figures, and it is for this reason that discovery now plays such  an important part in financial proceedings in the Family    division.

Applications for such discovery cannot be described as   “fishing” for information, as they might be in other  divisions. The wife is entitled to go “fishing” in the Family  Division within the limits of the law and practice.”

47.I consider the learned judge has accurately described the nature of financial relief application in matrimonial proceedings. It is against this special naturethat the relevance of a particular document or class of documents in matrimonial cases is determined. When the marriage is still intact, the wife may be happy with leaving the wealth creation task and financial matterto her husband. When they broke up, very often she only has a very vague idea of the family’s assets position. Very often the ignorant wife cannot identify for sure what documents there are or what financial arrangement has been made in respect of the family assets or financial resources. If the court is to fulfill its quasi-inquisitorial function and make a fair division of the matrimonial assets following divorce, apart from dependent on the frankness and cooperation of the now dissatisfied and resistant husband to make disclosure, the court should take a more robust approach in the matter. The court should oblige himself to investigate issues which he considers relevant to the outcome even if not advanced by a party. This duty is cast upon him by section 7(1) of the MPPO which expressly stipulates:

“It shall be the duty of the court in deciding whether to exercise its powers …and if so, in what manner, to have regard to the conduct of the parties and all circumstances of the case including …

(a)    the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

…

(c)  the standard of living enjoyed by the family before the breakdown of the marriage; …” (my emphasis)

48.Miss Yip said the Husband has already answered the Wife that he had no interest in the companies, particulars of which is now being sought by the Wife. In this regard, Miss Yip submitted, and I agree, that it is settled principle, that an affirmation confirming a list of documents or class of documents sought by the other side is conclusive at the interlocutory stage. The court will usually accept the affidavit at face value at the interlocutory stage and the party seeking discovery is not normally entitled to contravene what is sworn or affirmed by a further contentious affidavit or to cross-examine the other side at the interlocutory stage with a view to show that the person against whom disclosure is sought is a liar: see John Baptist Wu (Supra).

49.Miss Yip also said the Wife is “fishing” for evidence and her application should be disallowed. What in fact is “fishing” has been the subject matter of discussion in Charman v Charman (supra). It is accepted that “fishing” has become a term of art for the purpose of many of the procedural rules dealing with, inter alia, discovery. It arises in cases where what is sought is not evidence as such, but information which may lead to a line of inquiry which would disclose evidence. It is the search for material in the hope of being able to raise allegations of fact, as opposed to the elicitation of evidence to support allegation of fact, which have been raised bona fide with adequate particularization. A useful example referred in another authority was cited with approval in Charman v Charman: if raised with adequate particularization, a question whether X was the settler of a trust be legitimate but that, if the answer was negative, supplementary question as “who then, was it?” would be fishing: see Charman v Charman paragraphs 32 & 37.

50.The case of Peruvian Guano is the classic authority on relevance: a document is relevant if it helps, directly or indirectly, advance his or his opponent’s case or destroy his own case, or which leads to a train of enquiries achieving the same effect. This derives from Compagnie Financiere du Pacifique v Peruvian Guano Company (1882) 11 QBD 55. The relevance test catches those documents which are of direct and indirect relevance such as those background documents. The inclusion of the test of indirectly relevant documents has been much criticized to be too wide. However, the Peruvian Guano test survives the Civil Justice Reform to be implemented next year, though its scope will be restricted normally to those directly relevant documents supporting and adversely affecting each party’s case, and this court is contented with the narrow principle of Peruvian Guano. A document will not become irrelevant or ceases to be relevant simply because a party simply denies its relevance on oath. Likewise, that document will not become relevant only when someone says so without reasonable grounds. The party seeking discovery should put in sufficient affidavit evidence to justify the documents sought to be disclosed is relevant.

51.I would apply the above principles, whenever applicable, to the questions posed by the Wife’s present application.

Whether Discovery Generally as from 2002 or 2 Years from Petition

52.In paragraphs 6 to 14 of my written decision handed down on 29^th February 2008, I have summarized, based on the Wife’s affidavits, the background leading to the Wife application. Although the Husband has put up explanation for such decrease, it is fair to say that he did not deny the Wife’s supplemental credit cards had been cut since 2004 and club facilities entitlement suspended. It is not expressly denied for a particular month after the separation the Wife’s monthly maintenance was reduced to about $6,000 odd because her spending at the Hong Kong Country Club needed be deducted from the then $20,000 monthly maintenance. Taking into consideration the lifestyle that the Husband and this family used to enjoy when the family is intact, the Wife’s allegation that her lifestyle has been deliberately “squeezed” by the Husband during the separation period cannot be said ungrounded.

53.The Wife also based her application on her discovery in 2003 of the Husband’s affair which the Husband denied and accused of being a mere suspicion. I have no intention to pass on any value judgment on the alleged conjugal infidelity on the part of the Husband. However, apart from the “digital body data” ground, the Wife’s affidavit evidence on the “affair” ground is rather strong. I do not think it has been sufficiently rebutted. It would be difficult to understand why JK was issued with a supplemental card which has been used mainly for shopping, and in department stores such as Lane Crawford, Staccato Footwear, Giordano, Louis Vuitton, Gucci and other apparel outlets, if she is only an ordinary friend. Furthermore, while it may not be regarded as unusual for a gentleman asking his male friend for supply of Viagra for his own consumption, request for pills for his wife as well appears rather strange to me. So the Wife’s allegation of the said affair and the deterioration of their relationship since its discovery is, at least on affidavit evidence, well founded.

54.I have read the affidavit filed by Mr. K. I consider the values he advocated and his achievement admirable. However, he confirmed that he had requested all his 4 in-laws to sign pre-nuptial agreements. There is no dispute that the articles of K & K Limited have recently been amended such that only his lineal descendants with his wife can be directors. Although the Husband dismissed the Wife’s claim of having been asked to sign pre-nuptial agreement basing on flimsy evidence, Mr. K in fact supports the Wife’s case in this respect. Mr. K’s evidence is consistent with the “ring-fencing” allegation of the Wife. His evidence serves to reinforce rather than destroy the Wife’s case.

55.All documents relating to the income, earning capacity, properties and other financial resources of the Husband are relevant as are documents relating to the standard of living enjoyed by the family and the Wife before the breakdown of the marriage (my emphasis) in doing the section 7 exercise. By reasons of all the above, I consider the ring-fencing ground well-supported. This an appropriate case that warrants a departure from the usual 2 years before petition to 2 years from the souring of relationship, i.e. 2002. This helps the court take a snapshot of the family’s pre-braekdown lifestyle and obtain an overview of the asset position when the relationship is more or less intact.

Disclosure Relating to the 14 Companies

56.Counsel of the parties in fact have spent a lot of time addressing the court on whether or not the Husband is beneficially interested in these companies and in the landed properties which they now hold. Quite a number of affidavits were filed in this connection. However, until and unless the matter goes to trial at which the Husband and other witnesses, including perhaps family members, are cross-examined, it will be quite impossible for the court to come to a conclusion on this important question at this interlocutory stage. At this stage we are unable to deal with conclusively these questions basing on affidavit evidence. The court’s concern at this stage is to make directions on discovery of relevant documents which may eventually help dispose of these important questions.

57.I have gone through the affidavit evidence of the parties in the 6 bundles filed herein, including the one for the purpose of MPS. My view is that the Husband has not made good and sufficient discovery, at least in the following respects.

58.Firstly, although it is settled principle that affidavit regarding a list of documents or whether one has custody, possession and control of a document is conclusive, I do not consider that the Husband has made any statement or affidavit to that effect. What the Husband appears to have said in his statement or affidavit is simply this: he has no beneficial interest in these companies of which he is only a director. Miss Yip also seeks to argue on his behalf that he has no control of the information because all boards of these companies refuse disclosure. But the Husband has never deposed to the effect that he does not have, or has had but now has not had possession or custody of the requested documents. He disputes relevance but not existence of such documents nor having possession and custody of the documents sought. In my view what he has said only affords him limited defence to this application, i.e. only in the event I rule in his favour on the question of relevance.

59.On the question of “control”, before the shareholdings of the 10 US companies are known the court cannot conclude whether the Husband is the alter ego of these companies. Since even the Wife’s case suggests that the Husband only holds 49% of such companies, his father and mother appear to have the power of veto. In the circumstances, my view is that there is insufficient evidence to show that the Husband is the alter ego of the company and is in control of the same. However, that is not the end of what Order 24, r.7 (1) requires.

60.The other limbs of Order 24, r.7 (1) are still applicable. If relevant documents are in the actual physical possession of a director who is a party to the litigation, they must be disclosed even though he holds them as a servant or agent of the company in his capacity as an officer of the company. I think it is hardly believable that documents relating to shareholding, financial position, audited annual reports of these companies do not exist. The questions are whether they have, or have had been in the Husband’s possession and custody of the Husband. The Husband has never said anything about this, particularly on the custody and possession limbs. In the circumstances of this case, it is hardly believable that the Husband, being the director or key officer of the companies, does not have possession or custody of the companies’ documents.

61.Secondly, looking at the question of relevance, it is not denied that these US Companies own substantial properties. I have deliberately listed out all the landed properties appeared on the webpage of BIH in paragraphs 22 above. I have compared these properties with the schedule of properties held by these US companies annexed to the Wife’s affidavit, which is compiled based on materials obtained through company searches in the US. Each of the webpage properties is owned by one of these US companies. If what BIH holds out in its webpage is correct (and it has not been denied by the Husband so far), it goes to show that BIH and the rest of the US companies are closely related, and probably some of these companies are held or controlled by BIH, otherwise BIH would not have made such representation in its webpages.

62.As stated above, BIH was incorporated later than BIC. According to documents revealed by the Wife’s company search, when BIH was incorporated, the Husband signed as BIC’s Vice-President in a letter dated 6^th February 1997 consenting to the use of BIC’s name by BIH (IV p.244). Furthermore, by another document entitled “Grant Deed” dated 1^st December 2000 executed by the Husband as Vice-President of BIC in favour of the AP Shopping Centre Inc (which is one of the aforesaid 10 US Companies and the shopping centre it holds is listed in the website of BIH), it has been stated therein, inter alia, that the transfer of property is:

“… a transfer… from a parent corporation to a wholly owned subsidiary corporation wherein the beneficial ownership of the property remains the same. …”

63.The above shows that BIC and AP Shopping Centre Inc are related as parent and subsidiary. Since BIH and BIC are related and the rest of the companies are related to at least BIH, it can therefore be reasonably inferred that substantial landed properties in the States are held through the US companies with their shareholding related to either BIC or BIH or both.

64.The Husband in his answers dated 30^th May 2007 (answer to question 7(i) and was not under oath) confirmed his transfer of his shareholding in “BIC’s” to his father. When he referred to “BIC’s” in his answer he was then actually referring to BIH. It is fair to repeat his answer here:

“The Petitioner [Husband] transferred all of his shareholdings in BI’s [which he then means BIH] which he held on trust for his father’s trust in 2005 without consideration. The Petitioner [Husband] is not a beneficiary of his father’s trust.”

65.However, after commencement of this hearing and in his 4^th Affidavit made on 19^th May 2008, he said he had never ever held any shareholding in BIH and alleged he has made an inadvertent mistake. His answer in paragraph 23 of the said affidavit is repeated below:

“In response to paragraph 25 of the Respondent’s [the Wife’s] 4^th Affidavit, I need to clarify that I made an inadvertent mistake in paragraph 6(i) of my Answer to the Respondent’s [Wife’s] Questionnaire filed on 30^th May 2007. I have never ever held any shareholdings in “BI’s” [i.e. BIH is what was referred to in the context of the said Answer]. I had not noticed the mistaken answer until the Respondent raised this in her 4^th Affidavit.”

66.I am sure the Husband’s above answer is astonishing and will definitely excite anyone’s suspicion. In my judgment, his said statement in May 2008 denying his previous statement in 2007 without further explanation is totally unacceptable and insufficient. It has to be noted that his 2007 statement is not without particulars. It was provided voluntarily in response to a general question on share transfer. The Husband said positively he held shares for his father’s trust. He said the transfer took place in 2005. He said such transfer was without consideration. He identified the company concerned was BIH without being asked specifically on share transfer relating to BIH. Now he denied holding shares in BIH and thus any transfer of its shares. However he said nothing about transfer of any other shares, the trust and the consideration. While it is accepted that people do sometimes mess up companies with similar names or make silly mistakes, it will be quite extraordinary and unbelievable for one to mistakenly state a transfer with such particularity if in fact no transfer has ever existed. It is apparently not his answer that there has never been any transfer whatsoever. So, what has he mistaken BIH for? Has he only mistaken about the name of company and in fact he did transfer some shares other than BIH back to his father’s trust in 2005? If so, what has he actually transferred? Since he made the denial when he was answering question on the TKL which was held indirectly by BIC, so has he mistaken BIC to be BIH?

67.Questions 6(i) of the Questionnaire requests particulars of any transfer of shares since April 2002 (my emphasis). Even assuming the Husband has made a genuine and innocent mistake, he has to explain whether or not there has never been any transfer of shares of any companies ever taking place since 2002 or he has only messed up the identity of the shares which he has transferred. It has to be remembered that the parties here are not playing a game of semantics. They have a duty to make full and frank disclosure and this obligation is a continuing one. The said question 6(i) has not been answered or satisfactorily answered. The subject matter of this transfer must be fully disclosed.

68.As can be seen above, there is prima facie evidence showing that BIC and BIH are related, and BIH in turn holding other land-holding companies. By reasons of the Husband’s own evidence on BIH, I fail to see why the shareholdings, financial information and shareholding of these companies are not directly relevant to the present proceedings. They are obviously very relevant. Whether these companies or part thereof are matrimonial properties or financial resources which the Husband can look to will substantially affect the Wife’s claim for financial provisions. It makes a lot of difference to the size of the “pot”. They certainly help advance the Wife’s case.

69.The solicitors for the Husband have submitted letters confirming the Husband is not a shareholder of these 10 US Companies for the past 10 years. I do not think it assists the Husband in the present application. Shares of a company can be held through companies and trusts. The subject matter of the Husband’s recent retraction of share transfer speaks for this. It shows that the assets of this family may be held through trusts and/or corporate vehicles. The Court should go behind the corporate or trust veil in order to know what exactly the Husband has, in any in these company. I do not think the disclosure will prejudice the other parties as all of them are family members. Judging from what Mr. K has deposed in his affidavit, I believe that without court’s intervention, the Husband’s family members will act in concert with him to frustrate disclosure, as it is Mr. K’s position that everything belongs to him or other family members and the Wife should get nothing. Whether the Husband’s and Mr. K’s position of everything in this family belonging to the father/other members and has nothing to do with the Husband, in the light of the Wife’s evidence, is definitely a question for trial.

70.Miss Yip for the Husband submitted that the Wife is fishing. Applying the guidelines derived from Charman v Charman (supra) and B v B (supra) stated above, the evidence on relevance of the documents is raised bona fide by the Wife and with adequate particularization, as viewed in the context matrimonial proceedings. I do not think it is a fishing exercise. Schofield CJ in Zakay v Zakay (supra) has vividly described the situation like the present one as follows:

“The documents are more than likely in the possession of the applicant and are readily identifiable. Of course, it is impossible for the petitioner to know the specific identity of individual documents. … That is not a fishing expedition in the sense of casting a line in the hope that something will be caught: the fish has been identified and the court is endeavouring to spear it.”

71.Thirdly, I do consider the Husband evasive in his answers to the said Questionnaire. The followings are 2 examples which are self-explanatory of his evasive attitude:

i) Q1(b) Please state whether the petitioner holds or has held shares in BI’s [then referring to BIH] whether directly or indirectly through nominees or a trust. (my emphasis)

Answer: The Petitioner has no shareholding in BI’s [then referring to BIH].

ii) Q3(a) Please state what shareholding the Petitioner holds or has held in BC whether directly or indirectly through nominees or a trust. (my emphasis)

Answer: The Petitioner has no shareholding in BC.

72.In fact when the Husband filed his 3^rd Affidavit, he purported to deal with his beneficial interest in BC and the 10 US companies again. However, he only deals with whether he presently holds any interest in these companies without expressly dealing with whether he has ever held interest in these companies, directly or indirectly. I do not believe he does not know the purpose for which the Wife issues the Questionnaire or takes out the application. This is his choice of dealing with the Wife’s Questionnaire in the manner he now employed.

73.In relation to the Husband’s aforesaid answers, I would like to draw the Husband’s attention to an often-quoted passage in Rayden and Jackson on Divorce and Family Matters, 18^th ed. at paragraph 17.28, in which the learned author has succinctly and correctly set out the relevant principles in this respect:

“The importance of the duty of both husband and wife to make disclosure of their assets which is full, frank and clear cannot be overemphasized. Unless a court is provided with correct, complete and up-to-date information on the matters to which, under s.25 of the MCA 1973 [English equivalent to section 7 of the MPPO of Hong Kong], it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that section. The duty on each party is absolute, and it must be discharged regardless of whether the application for ancillary relief is adjudicated upon by the court after full evidence has been heard, or settled after an exchange of financial information between the parties leading to a consent order. The duty is also a continuing one; a party must not mislead the other party and the court into assuming that his financial situation is unchanged if it [in] fact it has changed. Any material changes in the financial situation of either party occurring between the filing of their Form Es and the final dispatch of the claims by the court must be brought to the notice of the other party and the court at the earliest opportunity. A party who seek to negotiate and secure a settlement without informing the other party about a material change in his or her financial circumstances runs the risk that, if a settlement is reached and a consent order is made, the consent order will be set aside by the failure to provided full, frank and timely disclosure. Shortcomings in disclosure will be visited by orders for costs against the offending party, often on the indemnity basis. Furthermore, deviation from the standard of disclosure required may be visited by the court drawing adverse inferences against the party in default.”

74.For BC, although the Husband has put in evidence showing that it is a company not belonging to him, it will be quite difficult for the court to come to the conclusion at this stage. Furthermore, the Wife’s query about the genuineness of its purchase of KY Mansion from the Husband and such sale being at an undervalue cannot be brushed aside. According to the valuation report of KY Mansion exhibited by the Husband (see IV p.150-163), even his own expert valued the property at $5.4 million instead of the actual sale price of $5.0 million. I notice that the valuation of $5.4 million was arrived at after taking into account of some renovation works of $0.765 million, otherwise the same would be around $6.18 million. In circumstances of this case, including the family choosing to live in the Matrimonial Property owned by BC rent-free throughout the marriage when the Husband possessed 2 units in KY Mansion and my provisional view as in paragraph 85 below, I think the Wife has sufficiently raised bona fide evidence that the Husband may be interested in BC. Accordingly for the fairly disposal of the matters in question, documents and valuation of BC should be disclosed.

75.For K & K, I understand the Husband is willing to do a valuation because of his 20% shareholding in it. The board of directors also consents to do a valuation of the company. I do consider it necessary for the Husband to disclose audited accounts of this company, if they are or have been in his possession, custody and control. Without such documents, it will be difficult for the Wife to do any realistic assessment of the value of the company.

76.For the 2 companies KI and BL, the Husband initially denied being a director nor shareholder of KI but later admitted. In the circumstances of this case, it is appropriate for the Husband to disclose documents of this company. However, for BL the Wife shows no evidence that the Husband is a director and/or shareholder other than her own assertion. I am not satisfied that the Wife has demonstrated relevance in respect of BL.

77.Except BL, I do think documents revealing shareholding, financial statements and audited accounts of the aforesaid companies do exist. They are relevant and are believed to be in the custody or possession of the Husband. I have no doubt that their disclosure is necessary for disposing fairly of the matters in dispute.

Valuation of Matrimonial Home, Don Mills, Quail Meadow, KY Mansion, TKL

Matrimonial Home and the alleged overseas homes (Don Mills and Quail Meadow)

78.The Husband agrees to do a joint valuation of the Matrimonial Home. The question is whether he should join in to do valuation of the other 4 properties. He has no objection to the Wife doing her own valuations for these 4 properties but does not want to be compelled to join in and pay half of the costs incurred.

Don Mills & Quail Meadow

79.Again the court cannot at this interlocutory stage conclude from affidavits whether or not Don Mills and Quail Meadow are the parties’ overseas homes. However the court has to form a provision view on whether this will be an issue to be tried and if so, whether this issue and other matters arising therefrom require expert evidence, and if the latter is answered in the affirmative, to appoint expert(s) to do the valuation. It has to be remembered that experts are there to assist the court and are not “hired guns” of the parties. Accordingly if expert evidence is required, it is more appropriate to appoint a single joint expert instead of allowing one party to go ahead first with the other joining in later, turning the trial into a battle between experts. In the present case, landed properties and companies are all over the world. A number of expert valuation reports on quite a number of areas may be required. If there is no proper control, the number of expert reports can easily be doubled.

80.From the affidavit evidence, no doubt whether the 2 properties are their overseas homes will be hotly contested. I consider the Wife has already put in sufficient evidence to support her present request. Apart from what has been set out above, it is not denied that the Wife’s belongings in Don Mills were shipped back and they were in 6 boxes. It can be seen that the returned items include all sorts of clothing and apparels which any lady may require for living in Canada round the year. There are a large number of T-shirts, swimwear, sun-glasses, female scarf, knit-wears, fleece gloves, fox fur coats, handbags, shoes, even undergarments, pantyhose and medicine. From the amount and sorts of clothing kept there and subsequently returned, it does not appear to me that when she was staying in Don Mills, she was staying at the home of relatives for a while. On the question of whether Don Mill is a second home in Canada and/or the size of the “pot” or their pre-marital living standard, its valuation is required.

81.I understand the Husband’s position that when he produces in due course K & K’s valuation, the value of this property will be included anyway. There is therefore no need for a separate valuation. However, if this is a second home of the family in Canada, it warrants a separate valuation, just like treatment of their Matrimonial Home in Hong Kong.

82.I can appreciate the force of the evidence from the Husband concerning his transfer to his sister J of Quail Meadow which took place long before their marital breakdown. However, I cannot ignore the Wife’s evidence in this respect, particularly a document relating to Quail Meadow entitled “Deed Of Trust” dated 17^th June 1988 executed by the Husband. I think this statement casts doubt on the Husband allegation that he was simply a trustee for J since 1984. By the said document the Husband disposed Quail Meadow in favour of AS Company as security for a loan of US$1.5 million granted by the Wells Fargo Bank to BIC (V p.123). In this Deed, the Husband warranted that he:

“… except as otherwise disclosed to the Beneficiary [Wells Fargo Bank] in a writing attached hereto as an exhibit and refers to this warranty [no attachment annexed], … lawfully possesses and hold the fee simple title to or a leasehold interest in the Subject Property [Quail Meadow] without limitation on the right to encumber, and that this Deed of Trust is a valid lien on the Subject Property [Quail Meadow]”.

83.He also described himself to be an unmarried person. This Deed was discharged in March 1990.

84.Several points can be gleaned from this document. Firstly the Husband’s description that he was then unmarried is obviously untrue. Secondly if he were then trustee of J, his warranties aforesaid and in the said Deed are also untrue. Thirdly, it is a reasonable inference that he is financially related to or even interested in BIC otherwise he would not have used “his own property” as security for BIC’s obligations.

85.No doubt this trust document is inconsistent with what the Husband has told the court about Quail Meadow, and the court must look at what he has said with skepticism. From the above, it also appears to me that the Husband and his extended family may hold properties in names of other family members and the paper title of a particular property may not be indicative of the true beneficial ownership.

KY Mansion

86.I do not intend to repeat what I have said about this property above. Its valuation is relevant to the Wife’s ancillary relief claim. Whether this property is disposed of at an undervalue and if so the extent may shed light on whether the Husband has interest in BC.

TKL

87.This property is owned by BIC and SC, 2 of the 10 US Companies referred to above. As discussed above, there is ample evidence showing the Husband having or having had interest in at least BIC. There is no direct evidence on the size of this centre. However by a glance of the land search documents, it is apparent that very substantial rental income can be generated from this property. There are entries in it showing that around 2002/2003, the total monthly rental for basement, ground floor, 1^st, 2^nd and 3^rd floor amounted to $504,000 (IV p.120-1). There is also an entry showing the rental for 4^th and 5^th floor for 2008 being $162,800 although it is unclear whether it is monthly or yearly rental. Valuation of this company obviously is relevant to determine the “size of the pot”.

88.I would direct valuation on these 5 properties be either agreed and in default of agreement, valuation reports be prepared, each by a joint single expert. If the Husband refuses to join in at this stage, unless otherwise with leave of the trial judge, he be debarred from calling his own valuation experts to contradict the reports prepared by the Wife. I notice that the Husband is director of all the land-holding companies and I direct that he should also try his reasonable endeavour to assist the Wife to do the valuation of these properties, in case he chooses not to participate in the valuation.

Specific Disclosure Relating to KY Mansion and Quail Meadow

89.In fact the Husband has voluntarily disclosed some documents relating to the 2 transfers to rebut the Wife’s case. However, in view of the apparently contradiction of facts between documents under his own hand and his affidavit evidence regarding Quail Meadow, and the transfer of KY Mansion being at an apparently undervalue, the 2 transfers should be viewed with skepticism. It has been suggested that if the Wife’s case is it being an undervalue transaction, she has to take out a section.17 MPPO application. Although a section 17 application may be relevant, I understand it is the Wife’s case that the Husband is beneficially interested in Quail Meadow and BC. The requested evidence serves to support her case and thus ascertaining the size of the pot or the Husband’s financial resources. In any event I do not think a section 17 application a pre-condition for discoveries in respect of these two transfers. As I have stated above, in the circumstances of the present case, it appears to the court that paper owners of the properties of the Husband’s extended family may not be the true owner. Otherwise the Husband would not have used a trust property as if his own and pledged for a business which he claims to has no interest. All documents of the 2 transactions need be disclosed to clarify the doubts.

Full Answers to the said Questionnaire

90.Miss Remedios has helpfully prepared in her submission a list of questions which the Wife’s has alleged the Husband not having fully answered. Many of these questions relate to the US companies and their assets. The Husband refused to answer on the ground he held no shareholdings or interest in these companies. As can be seen above, all these companies are inter-related and hold substantial landed properties. A number of these companies are very likely be ultimately held or controlled by BIH and/or BIC. Apart from being an officer of these companies, the Husband had ever confirmed he had shareholding in BIH. Although he later retracted and said he has made an inadvertent mistake, his retraction is difficult to accept without further explanation, given his previous clear statement. It is therefore highly suspicious that he has shares in BIC, if not in BIH, or even both. The pledging of Quail Meadow as security for BIC’s obligation to bank when he claimed himself to be a trustee only corroborated the Wife’s belief that the Husband holds interest in BIC. In light of all these evidence, his refusal to discover on the ground of having no interest is unreasonable. The fact that a party denies having any interest in a company or denies a document being relevant will not render documents irrelevant otherwise any discovery application will bound to fail. In the circumstances of the present case, all the requested information will be relevant for disposal of the questions of beneficial ownership of the Husband therein and thus his financial resources and “size of the pot” at trial.

91.I have also identified above certain questions to which the Husband chooses to answer in an evasive manner. I also consider that in the circumstances of this case, discovery should be from 2002 instead of 2 years from the divorce petition.

92.By reasons of the above I think the Husband has to provide further and better answers to he following questions of the said Questionnaire, namely, questions 1(b), (c), (d), 3(a), (e), 5(b), (c), (d), (e), 6(d), (e), (f), (g), (h), (i), 8(b), 9(a), (b), 10(a), (b), 12(a), (b), 13(a), (b), (c).

Wife to Adduce Valuation of The Companies in Question, If Appropriate

93.Valuation of business involves expert evidence. In view of the large number of companies involved, I think it will be more appropriate at this stage to order discovery of documents concerning shareholdings, audited accounts and assets of the companies (save and except K & K Limited of which the Husband has already consented to provide its valuation as well). Like the situation of landed properties, the parties should then try their best endeavour to agree on the valuation of the respective companies based on the accounts and information disclosed. Failing agreement, the parties should then jointly appoint a single expert to do to the valuation.

Conclusion and Order

94.By reasons of the above I shall make the following orders. I understand that there are orders which the Wife’s have not applied for. However, I consider that I have the jurisdictions to make these orders which are ancillary and incidental to her present application to order to enable the Court to discharge its quasi-inquisitorial functions in the financial relief application. My orders are:

i) Unless otherwise directed by the Court, the discovery of documents by the Husband shall be from 1^st January 2002 instead of 2 years from the date of the petition;

ii) The Husband do within 28 days file and serve an affidavit confirming whether he has or has had possession, custody and power of documents (not limited by the 2002 restriction above) relating to the transfer of:

a. KY Mansion from him to BC; and

b. Quail Meadow from him to J,

and if these documents are no longer in his possession, custody and power, state when he has parted with them and what has become of them;

iii) The Husband do within 14 days thereafter produce for inspection by the Wife of documents which are in possession, custody or power and referred to (ii) above;

iv) The Husband do within 28 days from today produce all credit card statements in respect of credit cards which he holds or has held since 2002 including but not limited to those set out in paragraph (b) of the summons;

v) Both parties do try their best endeavour to agree on the valuation of the following properties:

a. Matrimonial Home;

b. Don Mills;

c. Quail Meadow;

d. KY Mansion; and

e. TKL,

failing agreement within 14 days both parties shall, subject to the Husband’s election in (viii) below, appoint a joint expert to do a valuation report of the property which valuation the parties cannot agree upon within the following 14 days and the reports be filed with the Court 14 days before the FDR.

vi) The costs and expenses of the valuation report of the Matrimonial Home be shared equally by the parties.

vii) The fees of the joint valuation reports for the remaining four properties be initially settled by the parties in equal shares and the same together with costs and expenses incurred will be reserved as inter-parte costs;

viii) If the Husband elects not to jointly appoint a valuation expert with the Wife to do the valuation of any of Don Mills, Quail Meadow, KY Mansion and TKL within the time limited for appointment of the joint single experts, the Wife may proceed to appoint her own valuation experts in respect of that property and the Husband be debarred from calling his own valuation expert in respect of the said properties, unless with leave of the judge at the trial of the ancillary relief;

ix) The Husband do within 28 days from today file and serve an affidavit confirming whether he has or has had possession, custody and power of audited financial reports, financial statements, documents in connection with assets held and shareholdings of the following companies:

a. BC;

b. BIH;

c. BIC;

d. EH;

e. 100 BC;

f. 300 PP

g. BTS Corporation;

h. DC Corporation;

i. SC;

j. AP Shopping Centre Inc.;

k. AP LLC;

l. K & K; and

m. KI,

and if he has had but now has not had possession, custody and power of the said documents, state when he has parted with the documents and what has become of them.

x) The Husband do within 14 days thereafter produce for inspection by the Wife of documents which are in possession, custody or power and referred to (ix) above;

xi) In any event the Husband shall disclose in his affidavit required under (ix) above whether he has since 2002 any shareholding or beneficial interest (either in his own name directly or indirectly through nominees or a trust), and if so the percentage thereof in any of the companies and the properties held by it/them, as the case may be;

xii) The parties do try their best endeavour to agree on the valuation of the companies referred to in paragraph (ix) above, failing agreement within 14 days both parties shall, unless the Husband confirms in his affidavit that he has no possession, custody and power of the requested documents relating to (ix) above rendering valuation of any of the companies impracticable, jointly appoint a valuation expert to do the same within the following 14 days and the reports be filed with the Court 14 days before the FDR;

xiii) The fees of the single joint expert doing valuation reports of the companies be initially settled by the parties in equal shares and the same will be reserved as inter-parte costs;

xiv) The Husband do provide further and better answers to questions 1(b), (c), (d), 3(a), (e), 5(b), (c), (d), (e), 6(d), (e), (f), (g), (h), (i), 8(b), 9(a), (b), 10(a), (b), 12(a), (b), 13(a), (b), (c) of the said Questionnaire within 28 days from today; and

xv) There be liberty to apply relating to the above orders.

95.As there is obviously insufficient time for the Husband to comply with my aforesaid order before the FDR, the FDR scheduled for 17^th October 2008 be adjourned and be fixed to the next earliest possible date. The legal representatives of the parties will be notified in early course about the adjourned FDR date.

96.Regarding costs, I fail to see why costs should not follow the event. I therefore order that the Wife’s costs of this application be paid by the Husband, with certificate for counsel, and this order be made absolute if no application is made to vary it within 14 days.