Lo Shiu Chun v. Law Ying Chee Fogg

CACV000130/1993

HEADNOTE

Application by wife that husband file an affidavit of means under rr 56B and 73 of Matrimonial Causes Rules refused in exercise of court's discretion in the particular circumstances, including the considerable wealth of the parties, which rendered further particulars of means unnecessary.

IN THE COURT OF APPEAL

1993, No 130
(Civil)

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Coram: Hon. Nazareth, Mortimer and Godfrey, JJ.A.

Dates of hearing: 1 and 2 February 1994

Date of-handing down judgment: 3 March 1994

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J U D G M E N T

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Nazareth, J.A.:

1. This is an appeal by the petitioner/husband against the order of His Honour Judge Gill made on 18th June 1993, by which the husband was ordered under r.73(2) of the Matrimonial Causes Rules to file an affidavit containing full particulars of his property and income (commonly referred to as an "affidavit of means").

2. The facts are as follows. The parties were married in 1967. There are three children, all male, now 25, 24 and 19 years of age. They are studying abroad and all very well provided for and of course there is no question of the wife applying for ancillary relief on their behalf.

3. A divorce decree nisi was granted on 28th October 1992 on the husband's petition for divorce based on two years' separation. On 4th November 1992 the wife filed a notice for ancillary relief in Form 8 under the Matrimonial Causes Rules. On 24th November 1992, she also filed a notice of application under r.56B of those Rules. Under rr.56B and 73 of the Rules, the husband then had to file an affidavit of means. However, by letters through his solicitors he contended, on the advice of his solicitors, that in the particular circumstances there was no obligation upon him to do so.

4. On 26th February 1992 the wife took out a summons asking for an order that the husband file an affidavit setting out full particulars of his property and income. The summons was fixed for hearing on 8th April 1993. On 3rd April 1993 the husband filed an affirmation in opposition to such an order, seeking an adjournment of the hearing of the summons, and, it is claimed on the husband's behalf, serving as an affidavit giving sufficient particulars of his property and income. The husband affirmed, (and I adopt here the judge's helpful summary of the material contents of the affirmation) that he was the director and or in addition legal or beneficial owner of shares in many private companies both in Hong Kong and overseas, and having regard to their diversity and in some cases places of incorporation an appraisal of their worth would be exceedingly difficult and expensive. These interests together with real estate and other family concerns put his estimated worth at in excess of $100 million; and this excluded $100 million he had settled on his sons in 1989 and a property bought for their use in USA worth US$400,000. He went on to estimate the wife's worth, which included cash payments made by him to her, a private portfolio of investments and an inheritance, at $51.2 million. Of that total he affirmed he had provided at least $22.5 million. He concluded by saying that given the financial positions of the parties and his ability to meet any reasonable order a court might make it would be a waste of time and expense to file an affidavit of means.

5. On 8th April 1993, the husband's application for adjournment of the summons was granted. The wife made an affirmation in support of her application on 20th May 1993. She stated that her monthly expenditure was $140,000 and her total assets approximately $35.5 million. Apart from that she did not deny the husband's averments and in effect admitted that the husband had provided approximately the amount he mentioned.

6. In a second affirmation dated 28th May 1993, the husband put the wife to proof of her monthly expenditure of $140,000, which he said was grossly exaggerated and repeated his opposition to the wife's application.

7. Rule 73(2) of the Matrimonial Causes Rules, under which the wife's, application for an order falls to be considered is in the following terms:

"Where a respondent spouse or a petitioner is served with a notice in Form 8 or 9 in respect of an application for ancillary relief, not being an application to which rule 74 or 75 applies, then, unless the parties are agreed upon the terms of the proposed order, he shall, within 14 days after service of the notice, file an affidavit in answer to the application containing full particulars of his property and income, and if he does not do so, the court may order him to file an affidavit containing such particulars."

8. It is clear and not in dispute that if no affidavit is so filed, the Court has a discretion to order the affidavit to be filed. If authority be needed for that proposition, it may be found in, e.g., Thyssen-Bornemisza v Thyssen-Bornemisza (No.2) [1985] FLR 1069, 1070F and H v H [1981] HKLR 376, 383C.

9. For the husband, Mr Gilbert Rodway QC, leading Miss Audrey Eu QC, submits that, in making his order, the judge misdirected himself in fact and in law by holding that the husband had not filed an affidavit in compliance with r.73(2), and upon that basis proceeding (as he seems to have done) to grant the wife's application and to make the order as a matter of course.

10. The following paragraph at p.6 of the judgment is a convenient starting point in the judge's reasons for making his order:

"I do not accept that the respondent's affidavit is an affidavit of means and is in compliance with rule 73(2) MCR. It was prepared and filed to support his application to adjourn the hearing of the respondent's application to file an affidavit of means and to oppose that application.(See clause 11 '... I believe it will be a waste of time and expense for me ... to file an affidavit of means....') Moreover it contains nothing more than the briefest of statements as to what his financial position is, with no figures, no valuations, no breakdown, no statement as to liquidity, reliability, income and so on, save his own estimation of his net worth. That he has made a concession that he can meet any reasonable court order is no shelter, for the court would be entirely unable to fulfil its function without the particulars contemplated and spelt out in rule 73(2) MCR."

11. The judge proceeded to address the husband's concern that much time and expense would be entailed in meeting the wife's request for disclosure. He observed that such was a natural and inevitable consequence of the diversity of the property affairs and extraordinary worth of the husband; but he suggested that the husband need not be troubled with detail that would not assist the court or influence the outcome. He added that if the husband was aggrieved at having to provide the particulars, and at the end of the day was upheld, and the wife's claim failed, the husband's remedy would be in costs. I pause to say that with respect, that cannot be right; costs would mitigate only part of the husband's expenditure and would not remedy or compensate the considerable inconvenience to the husband and the grave intrusion into his privacy.

12. The judge then turned to Mr Rodway's submission that there has been a trend by the courts in recent years, where a request for better particulars of a similar nature was resisted by wealthy parties, for a court to ask "What is the point? The man is so wealthy he can meet any order reasonably to be made and a statement and concession by him to that effect is all that is needed". The judge rejected that submission and proceeded simply to say: "The respondent's application is granted".

13. Plainly, in my view, the judge failed completely to exercise his discretion under r.73(2). Indeed, at that critical point in his reasoning, he totally overlooked the discretion. It follows therefore that his conclusion cannot stand and that either the matter must be remitted to the judge for the discretion to be exercised, or that discretion must be exercised by this Court. The matter would fall in either case to be considered upon affidavit evidence and in that respect can be as effectively dealt with by this Court as by the judge below, moreover with some saving of costs and without some delay that would otherwise be inevitable. In my view, therefore, this Court should proceed to exercise the discretion.

14. I turn then to the submissions that bear upon that matter. The associated principles of law and their application are by and large not disputed and upon the authorities are clear. It is clear that this is a case for a clean break and that no question of periodic payment or maintenance arises. In effect therefore, what is to be addressed is a lump sun award. The object of the affidavit of particulars sought by the wife under r.73(2) is to enable the court in granting ancillary relief under ss 4 and 6 of the Matrimonial Proceeding; and Property Ordinance (i.e. financial provision for a party to marriage in cases of divorce, and orders for transfer and settlement of property) to have regard to the various matters specified in s.7(1) of that Ordinance.

15. Dunn L.J. in Potter v. Potter [1983] 4 FLR 331, 334 with reference to that task of the court said this:

"... the proper approach of the court should be to take the wife's reasonable requirements and balance those against the husband's ability to pay. That involves a general consideration of his sources of income and capital and, in particular, of his liquidity. As this Court has said many times the best way to arrive at that is to rehearse the specific provisions of s.25 of the Matrimonial Causes Act 1973."

The provisions of s.7(1), similar in effect to those provisions, and are in the following terms:

"It shall be the duty of the court in deciding whether to exercise its powers [to make financial provision for a party to a marriage or for the transfer and settlement of the property of such a party] ... to have regard to the conduct of the parties and all the circumstances of the case including the, following matters, that is to say"

(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;

(b) the financial needs, obligations and responsibilities 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;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring."

16. The compendious reference to "the reasonable requirements" of the wife, earlier made by Ormrod L.J. in Preston v Preston (1982) Fam 17, was adopted by this Court in C v C [1990]2 HKLR 183, 186H, 190I as a "quantification of needs, of 'reasonable requirements' in the broadest sense of that phrase, of the claims of both parties to the assets in the light of all circumstances and of the considerations specifically named in s.7(1)". "A lump sum intended to provide income should be assessed on the basis not of return on the capital sum, but upon the basis that the capital would be exhausted during the wife's lifetime (C v C at p.186,187 following Preston; Duxbury v Duxbury (1987) 1 FLR 7 and Gojkovic v Gojkovic (1990) 1 FLR 140, 143) "Any assessment based upon reality and requirements necessarily has a ceiling" (C v C at p. 187G). The foregoing principles, as I understood the position, were not in dispute before this Court.

17. Proceeding from that position, Mr Rodway's submissions are that, given the husband's admissions and particulars such as they were, further particulars were neither necessary for nor would they assist the court in determining the ancillary relief, i.e. the lump sum, by balancing the reasonable requirements of the wife against the capital and liquidity of the husband; that therefore the order for particulars should not have been made; and that such would accord with the trend he propounded below. He developed his submission in the following way.

18. Taking the wife's admitted assets at HK$35m, it is unlikely in the extreme that she would need any addition to the income of that capital to meet her reasonable requirements. But if she did, that would be a relatively small sum. So that the wife's reasonable requirements, even if taken at their highest, would easily be met from the husband's very substantial capital and the income thereon. Thus the court should have sufficient information and evidence necessary for the performance of the balancing exercise under s.7(1). The ultimate test, Mr Rodway submits, is that stated by Sir John Arnold in Thyssen at 1079A:

"If the court comes to the conclusion that there is a sufficient admission in the evidence to justify the making of the largest order in favour of the wife which the court could reasonably make, is there any point in the exercise of what is plainly a discretionary jurisdiction in ordering further information to render more exact the material before the court for the measurement of the husband's fortune?"

19. Miss Leong Q.C. for the wife opposes those submissions and contends that without the particulars of the husband's property and income the Court cannot perform its statutory duty to have regard to s.7(1) in particular paragraphs (a) and (b). The necessity for those particulars was reflected in the mandatory requirement for an affidavit of those particulars in the first part of r.73(2), and, she submits, also in the Practice Direction given by the Chief Justice on the form of an affidavit of means.

20. Miss Leong seeks also to support the necessity for such particulars by reference to a number of authorities. In Lau v Lau [1989] 2 HKLR 470, 489, 491, she submits, Hunter J.A. recognised that the less stringent but similar obligation under s.17A(2) of the Matrimonial Causes Ordinance required the court to conduct a full inquiry into the parties' means and such inquiry, she says, cannot be conducted without those particulars.

21. H v H [1981] HKLR 376, upon which Miss Leong also sought to rely, is to be distinguished upon the basis it was in Thyssen. It was concerned not with the issue here, whether an order for particulars under the second limb of r.73(2) should be made (or should have been made). There, the judge had already exercised his discretion and ordered that an affidavit be filed; and, most significantly, there was no appeal against that order. The appeal was against a subsequent order for particulars of the affidavit provided in response to the former order. Likewise, Tao Chen Pi O v Tai Hsiuo Ming Civil Appeals No.37 and 38 of 1993, unreported, upon which Miss Leong relies heavily, may similarly be distinguished. Furthermore, I do not read the judgments of Silke J., as he then was, in the former or of Kempster V-P and Litton J.A. in the latter as pointing to any prescribed or minimum standard of particulars required, other than such as would be in the particular circumstances enable the court to discharge its relevant task. In the latter regard, Bokhary J. A. at pp.7 and 8 of the latter authority said this:

"Parties against whom financial relief is sought in matrimonial causes, generally although not exclusively husbands, have a duty to make such disclosure of their assets and income as is sufficient to enable the court adjudicating upon the application for such relief properly to perform its task. Since the circumstances vary so greatly from case to case, sufficiency does not readily lend itself to further definition. But, upon a level-headed consideration of the broad circumstances of each case, it should not be too difficult to recognize. If a party does not make sufficient disclosure, the court will, at the instance of the opposite party, compel him to do so. If, on the other hand, he does make sufficient disclosure, the court will protect him from the harassment of any application for further disclosure which the opposite party may make."

That is entirely consistent with Sir John Arnold's approach in Thyssen.

22. Finally, I would refer to Attar v Attar (No. 1) [1985] FLR 649, not only because it illustrates the approach to refusal of further particulars but does so in a similar context including similar disclosure and a similar stance by the husband. Booth J. said this at p.650H, 651G, 652:

"He [the husband] has made it quite clear in that affidavit that his ability to pay a reasonable lump sum as assessed by the court cannot be in doubt... The registrar took the view that where a husband, such as this husband, deposed on oath to being worth ￡2m, and in addition to having a substantial income, it was not necessary for the court to have any further details as to his means and his assets. That is a view which I wholly endorse. It seems to me that any claim for a lump sum that this wife could have after a 6 months' marriage could amply be satisfied by the￡2m, to which the husband has deposed in his affidavit, and that there is no necessity whatsoever for the court to look further or to know how that wealth is made up.

The husband has not pleaded in his affidavit that his wealth is tied up... The position might have been very different if he had... He has said that ￡2m is available from which to pay a lump sum and he can meet any such sum ordered by the court. It seems to me in those circumstances that it is entirely unnecessary for the court to go any further. Any lump sum that the wife is to be awarded can most certainly be satisfied out of that money,... I do not think that the wife's claim is likely to be enhanced in any way if this husband is shown to be worth more than ￡2m ... The... question... of ... enforcement... to my mind, simply does not arise at this stage."

I have cited the foregoing passages at some length simply because they appositely indicate the answers to the alleged deficiencies in the husband's answers of which Miss Leong complains and to which I shall turn shortly.

23. There is nothing of principle in the foregoing authorities that fetters or purports to fetter the court's discretion under the second part of r.73(2). The discretion must be exercised by reference to the purpose of the particulars to be provided i.e. to have regard to the matters specified in s.7(1) in awarding ancillary relief, in practical terms effected by the balancing exercise mentioned. If the particulars already furnished are sufficient for that purpose, it cannot be right to oppress a party with the burden and intrusion of privacy that providing further particulars will entail.

24. It is in any event trite law that the courts will not order that which is unnecessary to be done, a fortiori where it will cause expense and be a heavy burden not to mention an intrusion of privacy in a respect that in Hong Kong seems to be even more than usually valued.

25. As to the more generous scale of particulars usually provided or ordered, that I think must reflect the usual nature and circumstances of individual cases. Likewise the form of an affidavit of means in the Practice Direction mentioned is obviously intended to be adapted to particular cases; clearly it cannot be intended to require that the entire range of information there indicated, even if not required by the court in the particular case, is nonetheless to be provided.

26. Turning then to the question of whether the information provided was sufficient, Miss Leong claims deficiency in the following respects: the nature and details of the husband's private company shareholdings, real property, entitlement to family business and inherited property. This Miss Leong suggests poses potential problems of ability to transfer or realise, disentanglement, and liquidity, which may even impinge upon the quantum of a lump sum award. The wife may wish to select a particular property, but would only be in a position to do so if it is first disclosed by the husband. In any event the court has to be satisfied that the husband will be able to pay up the sum awarded and alternatively to effect necessary transfers. If the court does not do so, and the wife subsequently encounters difficulty in enforcing the award to her, it will the be too late for the court to retrace its steps.

27. These are plainly questions that must often arise, perhaps even usually arise. The question is whether they arise in this case, so that the information provided is not sufficient to address s.7(1) or perform the balancing exercise.

28. Reverting to the facts, here the husband affirmed that he had settled $100m in trust for the three sons, bought for their use a house in the U.S.A. for US$400,000, given the wife $22.5m, yet was worth about $100m and finally that he believed that he was able to meet any order that might be made, which imports the requisite degree of liquidity. The wife in her affidavit did not dispute any of that; on the contrary she confirmed receipt of approximately the amount he claimed to have given her. His counsel confirmed below and before us that the husband would not put up any liquidity problems in meeting whatever order the court might think It reasonable to make. In all the circumstances none of the sort of difficulties referred to by Miss Leong appears to me to arise. Clearly, in my view, the husband should be able to pay the highest lump sum that could reasonably be awarded., No further particulars of his property or income will assist or are required for the purposes of s.7(1) or the balancing exercise mentioned.

29. For all the foregoing reasons, the proper exercise of the court's discretion under r.73(2), in my judgment requires that no order for full particulars of property and income be made.

30. I should add that that conclusion is not one to which I have lightly arrived, not least because it is plain on the material put before us that such a conclusion is exceptional. In that sense and in the force with which it emerges from the particular facts, this must be an exceptional case. I do not see it as creating a novel approach, as Miss Leong fears. I have not found it necessary to take issue with any of the authorities cited. In those in which particulars have been ordered, that, as I see it, has been done in exercise of the court's discretion on the particular facts.

31. I would accordingly allow the husband's appeal, set aside the order of the 18th June 1993 and make an order nisi that the husband is to have the costs of his appeal.

Mortimer, J.A.:

32. I agree.

Godfrey, J.A.:

33. I also agree and do not wish to add anything.

Representation:

Mr Gilbert Rodway, Q.C. and Miss Audrey Eu, Q.C. (M/s Gallant Y.T. Ho & Co) for Appellant

Miss Jacqueline Leong, Q.C. and Miss Selina Lau (M/s Stevenson, Wong & Co) for Respondent