H v. T
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FCMC No. 7159/2009 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 7159 OF 2009 ---------------------------- BETWEEN
---------------------------- Coram : Deputy District Judge Yim in Chambers (Not open to public) Date of Hearing : 24 August 2011, and 3 October 2011 Date of Judgment : 4 October 2011 ----------------------- J U D G M E N T ----------------------- Introduction 1.This is an application by the petitioner wife for direction in relation to the redacted bank statements provided by the respondent husband. In the summons dated 11 March 2011, the wife applied for an order that the husband do provide unredacted statements in general. 2.The information redacted was said to be stock code and stock name in the open market. The petitioner did not appear to argue to the contrary. 3.The respondent said the information redacted is irrelevant to the cause of the matter and to provide the information would be out of proportion in term of time and costs. The petitioner said the respondent is under an obligation to provide full particular of his financial position during all the material period of time and the information is, in any event, relevant to the cause of the matter. Background 4.The couple commenced their co-habitation as husband and wife since 1989 and married in January 2001. They purchased their first matrimonial home as joint tenants in 1991. The child of the family was born in July 2003. Since late 2007 the relationship of the couple began to wane and the respondent has refused since November/December 2007 to inform the petitioner of his office address and/or his work telephone number. 5.In October 2008 the petitioner and the child were asked by the respondent to move out of the matrimonial home. The respondent also moved to new accommodation in January 2009 and did not inform the petitioner of the details of his residential address. 6.The petitioner filed her petition on 12 June 2009, the respondent indicated his intention to defend the case, parties subsequently came into agreement in regard to the divorce. The amended petition was filed on 17 August 2009 and the divorce suit proceeded under the undefended cause. 7.Pursuant to PD15.11, the respondent filed his first Form E on 31 August 2009 enclosing among others:
8.Pursuant to the questionnaire of the petitioner dated 12 October 2009 in relation to the Form E filed on 31 August 2009, the respondent provided among others the following:
9.Following the exchange of subsequent correspondence between the parties, the respondent provided the following:
10.The respondent filed another form E on 28 December 2010 enclosing among others:
11.Further document provided by the respondent in August 2011 pursuant to the questionnaire dated 12th October 2009:
12.Thus the statements concerned related to the securities accounts with American Express Bank Ltd, Standard Chartered bank (Hong Kong) Limited, and UOB Kay Hian (Hong Kong) Limited. The account with American Express was closed in July 2008 while the account with Standard Charter was effectively closed in October 2008. The case for the Petitioner 13.Mr Lynn for the Petitioner submitted that according to PD 15.11, either party has a mandatory duty to provide all of his or her bank statements covering the last 12 months from the date of Form E for each bank account, and where the account was closed within the last 12 months, covering the preceding 12 months from the closure (referring to part 2.3 of form E). Accordingly the statements concerned are within this stipulated period. And in any event, the information redacted is relevant to the cause of the matter. The case for the respondent 14.Mr Chan for the respondent submitted that the statements concerned are not bank statements and do not fall within the stipulated period. The accounts in concern are investment accounts and are governed by part 2.7, where one is only required to provide copy of the latest statement for each account. Further, PD 15.11 is implemented for the Financial Dispute Resolution Pilot Scheme (FDR) and the present case has proceeded beyond the stage of FDR. The petitioner is effectively asking for further discovery at the pre trial review stage and the Rules of High Court shall apply with the necessary modifications (Rule 3 Matrimonial Causes Rules). It is for the petitioner to make out her case, yet her application is not necessary and the information redacted is irrelevant to the cause of the matter. Issues 15.The following issues now need to be determined by the court:
Practice Direction 15.11 16.It is common ground that saves for application for nominal maintenance and cases where parties have reached agreement on ancillary relief, parties are obliged to file and exchange Form E as annexed to the Practice Direction together with supporting documents specifically sought. And this is a continuous obligation. So for the latest unredacted statement for each investment account as at the date of the related Form E would in any event be required to be enclosed in the Form E. 17.Part 2 of Form E dealt with assets, of which part 2.3 concerned bank accounts and part 2.7 concerned stocks, bonds and other quoted securities. The level and extent of disclosure are not the same in these two parts. Part 2.3 directs the parties to :-
While part 2.7 directs the parties to:-
Meaning of bank account/ bank statement within part 2.3 18.Nowadays banks tend to diversify in their business. Modern bankers do not only focus on conventional banking. As in the present case, the accounts concerned are investment account with banks (American Express and Standard Chartered) and investment company (UOB). The investment account and the bank account with the same bank are separate accounts as they are subject to different legislations and regulations. I consider and agree with Mr Chan that account for securities dealing with a bank just like an account with a stock broker, it is not a bank account as such. 19.It is further noted that part 2.3 referring to “bank statement”. Having considering the distinction between a bank account and an investment account as mentioned above, I considered that a bank statement referring to statement of banking transaction which is distinct from securities transaction. Otherwise one would have difficulty to reconcile the different disclosure requirement for investment account with bank and investment account with a stock broker. Thus, the accounts in question are not bank accounts and they are not within the scope of part 2.3. 20.With my ruling that the accounts concerned are not bank accounts, further consideration as to the scope of part 2.3 would be academic, however, for clarification I would go further to consider the extent of the period stipulated by part 2.3. Mr Lynn submitted that the phase “the last 12 months’ meant the last 12 months from the date of the Form E for existing account and the last 12 months from the date of closure for closed account. Mr Chan submitted that the phase meant the last 12 months from the date of the Form E for whatever account. 21.It noted that the requirement to provide details of closed account and the requirement to provide bank statements are put in separate sentence, and both sentence adopted the phase “the last 12 months”. I consider and find that the same phase “the last 12 months” as adopted in two separate sentence, referring to the last 12 months from the date of the Form E. 22.The interests of the parties concerning disclosure are, however, protected under PD15.11. Where parties consider further disclosure is necessary they can always request by way of questionnaire and PD15.11/5 provided that at the First Appointment the Judge, with the objective of defining the issues and saving costs shall determine the extent to which each such questionnaire and/or request for particulars shall be answered, and such documents produced, and shall give directions as to the production of future and up-dating documentation. 23.It is noted that despite a series of correspondence exchange, no formal application was made to court for unredacted statements until the present summons. The redacted statements were provided by the husband voluntarily upon request and were not subject to any court order. The husband has stated under oath that the redacted information is stock code and stock name and is irrelevant to the cause of the matter. The wife does not agree that the redacted information is irrelevant, yet it is for the wife to show the redacted information is relevant. The application of the Rules of High Court 24.Matrimonial Causes Rules 3 provided that:
As the majority of the redacted statements are not within the ambit of Form E, save except the latest statement of the investment accounts as at the date of the related Form E, the rules of High Court would apply as to discovery subject to modifications. 25.The underlying objectives of the rules of High Court are now set out in Order 1A rule 1:
26.It should be noted that PD15.11/5 also provided that at the First Appointment the Judge, with the objective of defining the issues and saving costs shall determine the extent to which each such questionnaire and/or request for particulars shall be answered, and such documents produced, and shall give directions as to the production of future and up-dating documentation. Thus the concept of proportionality and relevancy come into play at the stage of First Appointment. The law of discovery in matrimonial proceedings vs. ordinary civil proceedings 27.Both parties referred me to the Court of Appeal decision in GE Capital corporate Finance Group Ltd v Bankers Trust Co and Others [1995] 2 ALL ER, though for different purpose, it was held that:
28.Mr Lynn submitted that the regime of discovery in matrimonial proceedings is very different from ordinary civil proceedings; the issue of relevancy should be treated differently in ancillary relief cases as compare to general civil cases, and referred me to a passage by Dunn J in B v B [1979] 1All ER:
29.I was also referred to Imerman v Tchenguiz [2011] 2 WLR by both parties, this is a case concerns wrongful access to confidential information. Relevance was not an issue in that case. The mandatory duty as to disclosure related to Form E discussed in that case is accepted by the respondent. Mr Chan drawn my attention to para.28 a reference to the “overriding objective” in dealing with ancillary relief cases, the relevant part is as follow:-
The relevance of the unredacted statements to the cause of the issue 30.It is submitted on behalf for the wife that she needs to tidy up her knowledge with the statements, if the statements do not reflect her knowledge, it would mean something is missing. Having considered the wife’s affidavit dated 18 August 2011, it appears that the purpose of obtaining the details of the covered entries is to verify whether the husband has another share dealing account or whether he has hidden up another quantity of stock, and not to gather information directly relevant to the amount of assets owned by the husband. So long as the husband has provided an opportunity for the verification, it would be sufficient for the wife’s purpose. 31.The husband has provided opportunity for the wife’s solicitor and counsel to inspect, this was refused. It is submitted on behalf of the wife that the inspection offered was not practicable. It is the wife’s case that she has knowledge of certain stocks that the husband should have in his possession at various period of time; if so she could have provided the details of such to her solicitor enabling her to do the verification with the checklist. If the details were there, the verification is achieved. If not, then the husband may well be hiding some of his assets. 32.It is a case of whether the stocks as alleged by the wife are there or not, it would not be opened for the husband to argue otherwise, therefore, there is no need for the wife to obtain the details of the relevant covered up entries. Where the husband disputes the allegation of the wife that he is hiding some of his assets, it is a matter for trial, but the unredacted statement would not assist the wife’s case. 33.Mr Lynn submitted that where the information was covered up only on the ground of irrelevance, then it is simpler to disclose it, with the protection of collateral undertaking, which would provide sufficient protection; I do not agree, as this would against the objective of defining the issues and saving costs as stated in PD15.11/5. Mr Lynn further submitted that without knowledge of the redacted information, the wife would not be able to know whether the husband was trading in certain sector of the stock and securities market, and that redacting the statement reduce the intelligibility. 34.Mr Chan submitted that knowledge of the stock code and stock name is not relevant to the cause of issue, I agreed. Mr Chan also submitted that the trade history does not suggest any financial misconduct; to redact the statements was to avoid the wife making a case of financial misconduct only base on the losing transaction. By financial misconduct, Mr Chan must be referring to irrational trading, as the duty of the family court is to ascertain the assets instead of making enquiry of any criminal activities. The husband may be overcautious but this is not material, the redacted statements were provided voluntarily upon request, the husband has long maintained that the covered up information is not relevant to the cause of issue and an offer for inspection by a representative of the wife’s solicitor and counsel was made on 10 June 2011 after the issue of the summons. 35.I noted that all the investment transactions concerned were through the open market and there was a general growth in the investment accounts. I considered that with only the stock code and stock name covered up the intelligibility of the statements would not be reduced and I also considered that if the wife is minded to make out a case of financial misconduct, namely irrational trading, on the part of the husband, the unredacted statements would not assist her any further, I would refer to this again. 36.Mr Lynn emphasised that because of the nature of the matter, the law of discovery to Ancillary Relief should be different from that of the general civil cases, and referred to a passage in “Resolution Guides to Good Practice” a publication about the practice of ancillary relief in UK:-
37.Mr Chan on the other hand referred to the preceding paragraph of the same publication, which dealt with the overriding objective applicable in the matrimonial proceedings:
38.It should be noted that apart from the abovementioned purpose that transpired in the wife’s affidavit, other possible reasons for the discovery of the unredacted statements as suggested in the Petitioner’s submission would be to ascertain whether there is dissipation of assets or irrational trading on the part of the husband. As the only information redacted is the stock name and code, for any dissipation of assets, if existed, this could be identified in the redacted statements. For irrational trading, the wife would need to resort to expert evidence that no reasonable man would have entered into the same transaction, yet it is not dispute that there was a general growth in the investment accounts. There is nothing suggesting that the husband was engaging in irrational trading. I do not consider the unredacted statements would assist the wife’s case any further. 39.For the aforesaid reasons, I refuse the wife’s application except for the latest statement of the investment accounts as at the date of the related Form E. It is noted that the offer for inspection remained open after the hearing adjourned part-heard on 24 August and extended to the wife accompanied by a representative of her solicitor and her counsel but this was not taken up by the wife. Costs 40.In substance, the wife’s application for unredacted statements has been unsuccessful. However, I considered there is a justification for the wife to issue the summons in the first place, yet the wife has been unreasonable in refusing the offer of inspection made on 10 June 2011. Hence I make an order nisi that parties to bear their own costs incurred before the petitioner turned down the offer of inspection, costs incurred thereafter from 21 June 2011 to the respondent, to be taxed if not agreed. Counsel certificate allowed.
Petitioner : represented by Mr Andrew Lynn instructed by Messrs. Hampton, Winter and Glynn Respondent : represented by Jeremy Chan instructed by Messrs. Haldanes | |||||||||||