Chp v. Fq
Read the full judgment text of FCMC 3884/2014 on BabelCite. This Family Court judgment was delivered on 19 June 2015 before Deputy District Judge G. Own.
Matrimonial Causes – Ancillary Relief – Specific Discovery – Prima Facie Case – Relevance – Existence – Possession – Costs – Bank Statements – Share Sale Proceeds – Court found prima facie case for discovery of bank accounts and share sale proceeds despite Husband's denial – Husband ordered to produce documents or explain possession – Costs awarded at half rate due to partial success
Legal issues: Service of Affirmation in Reply · New Allegations in Affirmation in Reply · Prima Facie Case for Specific Discovery · Costs
Outcome: Specific discovery order granted for Requests 1, 2, and 4; Costs awarded at half rate.
Cites 3 cases
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FCMC 3884 /2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 3884 OF 2014 ----------------------------
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------------------------- D E C I S I O N ------------------------- Background 1.The Petitioner is the Wife (“Wife”) and the Respondent is the Husband (“Husband”). 2.On 31 March 2014, the Wife presented a Petition for divorce relying upon the fact of 2 Years Separation with the Husband. There are 2 children of the family of the age 16 and 10 born out of the marriage. 3.Decree Nisi was granted on 28 October 2014. By a Consent Order dated 22 October 2014, the parties do have joint custody of the 2 children of the family, the Mother has the care and control with reasonable access to the Husband. At one stage there was a Children Dispute Resolution hearing on access scheduled for 9 December 2014 where the parties agreed on terms defining access and embodied in a consent order. The outstanding issues then remain is the ancillary reliefs. 4.Both parties filed and exchanged Form E. Questionnaires and Answers were filed and exchanged subsequently. 5.On 20 November 2014, the Wife who was then acting by herself issued a Summons (“Discovery Summons”) in the following terms :-
6.The Wife filed her supporting affirmation where she attached various documents with her views and comments endorsed on the documents for the Husband to explain. The Husband filed his Affirmation in Opposition on 12 December 2014. 7.By an Order dated 15 December 2014, the Wife was granted leave to file her Affirmation in Reply to the Husband’s Affirmation. The Wife filed her Affirmation in Reply on 12 January 2015. However, Mr. But for the Husband submitted that such Affirmation in Reply did not arrive his office until it came with the hearing bundle for today’s hearing which was only served at his office in the afternoon of 27 May 2015 (that is, 2 days before this hearing). This was the first occasion the Husband saw the Wife’s Affirmation in Reply. I will refer this submission as ‘service’ issue. 8.Moreover, Mr. But submitted there were new allegations raised by the Wife in her Affirmation in Reply which are out of place and which should have been made earlier. The Husband was thus deprived of the opportunity to reply. I will refer this submission as ‘new allegations’ issue. 9.Save for the above, Mr. But confirmed the Husband took no issue on requests (1) to (6) now set out by Counsel Miss Lam in her skeleton submission falls within the scope of the Discovery Summons which was issued by the Wife herself. Mr. But also confirmed no issue would be taken by the Husband on requests (5) and (6) of which information/documents would be provided by the Husband. Thus, the contention in so far as the Discovery Summons is concerned confined to requests (1) to (4) only, subject to the 2 other issues of ‘service’ and ‘new allegations’ above. The Wife’s Application 10.The Wife instructed lawyers to represent her on 15 May 2015. The Notice to Act was filed. At this hearing, the Wife also engaged Counsel Miss Yanky Lam. The Husband was legally represented by Mr. But who has all along been representing the Husband throughout these proceedings since the filing of the Form 4. 11.Counsel Miss Lam confirmed at the outset that reliance would be placed upon the contents of the ‘self made’ Summons and supporting affirmation of the Wife filed on 20 November 2014 without refinement. Miss Lam in her skeleton submission sets out the following documents and/or information are now being sought by the Wife as per the terms of the Discovery Summons.
12.For the sake of convenience, I will refer to the documents and/or information sought by their numerical numbers, say, requests (1) to (6) respectively. The Husband’s Form E 13.The Husband filed his Form E on 17 May 2014. At paragraph 2.3, he deposed having 3 bank accounts with HSBC. At paragraph 2.4, he deposed having no shareholding/beneficial interest in private companies in Hong Kong or elsewhere. The Wife’s Questionnaires and the Husband’s Answers 14.In respect of Request (1), the Husband had been asked by the Wife in her Questionnaires to confirm whether he is a beneficial owner or a person has rights and interest or a signatory of an account in the Industrial Bank. The Husband’s answer was :-
15.In respect of Request (2), the Husband had been asked to confirm whether he had shareholding and/or beneficial interest under a BVI incorporated company, namely Z Corp. The Husband was also asked to confirm whether he is a beneficial owner or a person has rights and interest or a signatory of the bank account no. 80x-45xxxx-838. The Husband’s answers respectively were :-
16.In respect of Request (3), the Husband had been asked to confirm whether he had shareholding and/or beneficial interest under a BVI incorporated company, namely Y Co. The Husband was also asked to confirm whether he is a beneficial owner or a person has rights and interest or a signatory of the bank account no. 40x-60xxxx-838. The Husband’s answers respectively were :-
17.In respect of Request (4), the Husband had been asked to provide bank statements/transaction details for the Business Agreement dated 1st of May 2010 showing the Respondent’s partial disposal of his shareholding in the high school for RMB 10.9 million with his signature. The Husband’s answer was :-
18.Mr. But submitted that he had once asked the Wife outside Court at one of the earlier hearings as to whether she had filed her Affirmation in Reply. The Wife gave a positive answer. He then requested a copy of it to be served but this was not forthcoming until his office received the documents bundle for this hearing where the Affirmation in Reply was in it. 19.The Wife was acting in person at the time of her Affirmation in Reply in January 2015. Her present lawyers only came on record in May 2015. No affirmation of service or any proof of service was produced by the Wife or her present lawyers before me for determination of the ‘service’ issue nor was any undertaking to do so was provided by the Wife. 20.Given the fact that the Husband was represented by lawyers throughout, it is my view that the lawyers would have the knowledge and experience of making search at Court files to ensure all documents filed by the opponent, especially when the opponent is a litigant in person, have been properly served. Apparently and noting Mr. But’s submission, this had not been done. I must emphasize that there is no adverse comment of this Court on Mr. But’s office for not having searched the Court file or suggesting any obligation for him to do so or displacing the rule on service of documents filed with the court. 21.Since it is the primary duty of a party to litigation to file and serve on the opponent any documents filed with the Court and to come up with proof of such service when service becomes an issue, it is my view that the Wife had not been able to show that she had properly served her Affirmation in Reply on the Husband’s lawyers. I would also add that the inclusion of her Affirmation in Reply in the documents bundle can hardly be accepted as proper service under the procedural rules. Having said, the next crucial question to be asked is whether the Husband had been prejudiced by such ‘service’ and lateness in so doing by the Wife ? 22.At the hearing, there is no strong contention on the issue of ‘service’ but rather the contention rests with ‘new allegations’ raised by the Wife in her Affirmation in Reply of which the Husband said he did not have a chance to reply or respond. 23.Counsel Miss Lam submitted the Husband has had the chance of responding to all questions in his answers to the questionnaires raised by the Wife. He also has had the chance of giving explanation in his Affirmation in Opposition. There was no issue of ‘new allegations” raised by the Wife in her Affirmation in Reply. 24.I do not agree there are ‘new allegations’ raised of which the Husband does not have a chance to reply or respond. Requests (1) to (4) had been raised as a question under paragraph 3 of the Questionnaire dated 23 September 2014. The Husband provided his answers also at paragraph 3 of his Answer dated 30 September 2014. The Husband also repeated his answers in his Affirmation in Opposition filed herein. Hence, the Husband despite the absence of proper service of the Wife’s Affirmation in Reply and the ‘lateness’ issue, nonetheless had not been deprived of the chance to reply and respond both in his Answer dated 30 September 2014 and also in his Affirmation in Opposition filed herein to those questions now forming Requests (1) to (4) in this application. The applicable principles 25.There is no issue as to the provisions under which the Wife is seeking specific discovery. The provisions under Rule 77(4) of the Matrimonial Causes Rules Cap.179A (“MCR”) provide :-
26.Order 24 Rule 7 of the Rules of the High Court (“RHC”) is applicable to matrimonial proceedings by virtue of Rule 3 of the Matrimonial Causes Rules, Cap.179A (“MCR”). I will consider the approach prevalently adopted in specific discovery applications in this decision. 27.The principles governing specific discovery have been summarised by Hon Ng J in a recent decision of Jade’s Realm Ltd v. Director of Lands (HCA No.1509/2012) dated 9 January 2015 as follows :-
28.Full and frank disclosure is an important role and also a continuing obligation of the parties with no exception in matrimonial cases. The rationale behind is to reveal all documents and information one party has or possess which is relevant whether in advancing his or his opponent’s case or destroy his own case (see Compagnie Financiere du Pacifique –v- Peruvian Guano Conpany (1882) 11 QBD 55). This is commonly called the ‘Peruvian Guano’ principle. 29.‘Relevance’ is to be determined by reference to the pleadings (see Re Estate of Ng Chan Wah [2003] HKEC 317). In the context of ancillary reliefs applications between spouses where there are no pleadings exchanged, I am entitled to consider the issue of relevance by reference to the disclosure of assets under the parties’ Form E or answers to questionnaires. 30.As regards the ‘existence’ of a document, Deputy High Court Judge Queeny Au-Yeung (as she then was) in the case of Ngan In Leng v. Chu Yuet Wah [2013] 1 HKLRD 717 said :-
31.In the case of B v. B (matrimonial proceedings : discovery) [1979] 1 All ER 801 where Dunn J summarised the law on discovery in ancillary relief application at page 811 :
Is there a prima facie case for specific discovery ? 32.The Wife’s Requests (1), (2) and (3) relates to discovery of bank statements in 3 separate bank accounts since March 2011. For the bank account with Industrial Bank (興業銀行), there was produced a photocopy of the front and the back of the bank card. The quality of photocopying is poor and the front of it could not be read. The Husband agreed the signature at the back is his signature. At one stage Mr. But on instructions submitted the front of the card did not bear the Husband’s name but, having been reminded of the potential criminal liability for a person to sign and use bank card of others, the latest instructions from the Husband was that he was not sure whether the front of this bank card bears his name. In any event, his answer provided earlier was that this card was given to him by his younger sister for use in Mainland China. 33.As a signatory to the signing place at the back of a bank card, he or she had accepted and agreed to be bound by all the terms and conditions of the issuing bank which, in my view, include and not limited to the exclusive use and non transferability of the card to persons other than the account holder. On such basis, and in the absence of other contrary evidence such as, so to speak, terms of non exclusive use and transferability from the Industrial Bank (興業銀行) of which I doubted there are any, I find it more probable than not that the Husband was or probably still is the account holder of the bank account with Industrial Bank (興業銀行). 34.In my decision, a prima facie case has been established by the Wife in favour of specific discovery of this bank account. 35.For the bank account under the name of Z Corp’s with HSBC, the evidence produced was again a photocopy of the bank card where the name of the Husband and the Z Corp can clearly be seen appeared on the face of it. There are also photocopies of bank slips showing a sum of HK$9,523,809 was deposited into this account, a transfer of HK$5,000,000 out of this account to the other account under Y Co’s name, transfer of HK$1,000,000 out of this account to the Husband’s personal account with HSBC account no. 61x-11xxxx-888. The Husband’s explanation was that he was only an authorized signatory of the account of Z Corp and he was to help with receipt of statements and writing cheques for payment of Z Corp’s annual management fee. Such arrangement was due to the convenience of his presence in Hong Kong at the material time. He re-iterated he was not a beneficial owner of the account. 36.The Wife also produced a fee note for Z Corp’s annual management fee of HK$5,680. 37.The fact that the Husband’s personal name appeared along with Z Corp on the bank account is dubious. In the normal course of events, a bank card would show the name of the account holder. If there is any difference for bank cards for accounts of BVI incorporated companies (which Z Corp is so), it is not difficult for the Husband to obtain evidence from HSBC. Since his name appears on the bank card which customarily and in the ordinary course of event would be the account holder or in some way connected with the account holder, it is part of his duty of disclosure to further explain the position with evidence. Such further evidence could be obtained from the bank easily. It is not sufficient for him simply to say that he was an authorised signatory. Moreover, as Counsel Miss Lam rightly pointed out, the amount shown on the bank slips is quite substantial when comparing with the company’s annual management fees. Why a sum of HK$1,000,000 would have to be transferred to the Husband’s personal account with HSBC if he was simply required to sign out cheque for few thousand dollars of management fees once a year (that is, annually) ? 38.In my decision, a prima facie case has been established by the Wife in favour of specific discovery of this bank account. 39.For the bank account under the name of Y’s with HSBC, the Wife relied upon the same bank slips for Request (2) where a substantial sum of HK$5,000,000 was seen to have been transferred out from Z Corp’s HSBC account to Y’s HSBC account on 16 November 2012. 40.The Husband had not addressed to this bank account anywhere in his Affirmation in Opposition. The Wife is now also seeking against the Husband further discovery of bank statements of this Y Company’s account with HSBC. 41.The bank slip showing transfer out of HK$5,000,000 from Z Corp to Y Company could not be supportive of a prima facie case for a specific discovery order. It could happen that such transfer originated from ordinary course of business dealings between 2 companies. Most importantly, at this stage there is no evidence whatsoever produced by the Wife which shows any link or connection between the Husband and Y Company. 42.In my decision, the Wife fails to show a prima facie case for specific discovery on this Request (3). 43.On Request (4), the Wife produced a 3-party Agreement in Chinese where the Husband was named as Party B and also signed on it. Under the terms of this 3-party Agreement, the Husband received payments in 3 stages totalling RMB 10.9 million (or about HK$13 million) for disposal of shareholdings in the “xxxx中學” in Mainland China. 44.The Husband’s answer was that he was merely acting as an authorised signatory for Z Corp since the company had no ‘presence’ in Hong Kong to sign the Agreement. The funds mentioned in the Agreement were subsequently deposited into the bank account of Z Corp with HSBC account no. 80x-45xxxx-838. The Husband further stated that the transfer of partnership shares that were initially purchased in 2008 with investments not from him or Petitioner’s source of funding. 45.I find the Husband’s answer highly suspicious. There is no reference at all to the company Z Corp anywhere in the Agreement nor is there anywhere mentioned Party B’s (that is, the Husband’s) was acting in a representative capacity or as an agent. Furthermore, from reading paragraph 1 of the Agreement, it referred to Party B and Party C each transferred funds to a party by the name ‘Cheung xx’. The paragraph reads :-
46.I have asked Mr. But the question that if the Husband’s role was merely acted as an authorised signatory as he so alleged, why this was not stated in the Agreement ? Also, why the funds would have to be paid to the Husband’s personal account and then transferred out to Z Corp and not directly paying into Z’s Corp account ? Mr. But did not have instructions to give any explanation to my questions. 47.Having said, I find a prima facie case has been established by the Wife on her Request (4) for further discovery against the Husband. 48.In conclusion, I am satisfied a prima facie case exists for specific discovery in respect of Requests (1), (2) and (4). The Husband’s Opposition 49.At paragraph 11 of the Husband’s Affirmation in Opposition, his contention was that full disclosure had been provided in his 2 Answers dated 11 August 2014 and 30 September 2014. There was no contention that the specific discovery sought is not necessary for disposing fairly of the cause or issue in question or for the purpose of saving costs. 50.Upon my finding of a prima facie case exists for Requests (1), (2) and (4), I now move on to the 3 pre-requisites of relevance, existence and possession under Order 24 Rule 7 of the Rules of the High Court (“RHC”). The 3 pre-requisites under Order 24 Rule 7 of RHC (a) Relevance 51.In my view, the documents and information sought as per Requests (1), (2) and (4) are clearly relevant for the matter at issue, namely, the Wife’s claim for ancillary relief. The discovery sought will assist the Court to perform its role under the requisite steps enunciated by the Court of Final Appeal in the leading case of LKW v. DD (2010) 13 HKCFAR 582 as to the process of identification of the parties’ assets. (b) Existence 52.Requests (1) and (2) relate to bank statements which must still be existed with the Bank as the period asked for started from March 2011 (that is, only 4 years ago) (see Ngan In Leng, supra). I also accept the period should extend beyond the usual minimum of 12 months for bank statements as required under the Form E. There is no question as to the documents sought under this Request are still in existence. 53.Request (4) is on the whereabouts and flow of proceeds of the RMB 10.9 million. The Husband was the receiving end of this RMB 10.9 million and in possession of it until he deposited to the bank account of Z Corp with HSBC. It is not sufficient for him to simply say the money had been deposited to Z Corp without accounting for the reason why the money had to pass through his personal account when he was being asked for the ‘flow’ of it. It is noted that the money involved is a substantial sum. The 3-party Agreement under which moneys were paid was dated 1 May 2010 (that is, less than 7 years ago from now), I believe the documents recording the flow of moneys are still in existence with the books and accounts of Z Corp (see Ngan In Leng supra). There is no question as to the information sought under this Request are in existence. (c) Possession 54.The Husband’s answer to Request (1) is a complete denial of himself being the account holder or a person with rights and interest or a signatory of the bank account with Industrial Bank Co Ltd (興業銀行). He deposed the card was an ATM card used by him and provided by his younger sister. The card was damaged and became unusable and subsequently cancelled. 55.With my finding that it is more probable than not that the Husband was or probably still is the account holder of the bank account with Industrial Bank (興業銀行), I believe the Husband would have in possession or would have been able to obtain the requested bank statements of this account with no difficulty. 56.With my finding of the dubious relationship between the Husband and Z Corp for Request (2) above, it is my decision that the Husband would have been able to obtain and produce the requested bank statements even if he is not in direct possession of them. 57.Again with my finding of the dubious relationship between the Husband and Z Corp, it is my decision that the Husband would have been able to provide more details as to the flow of the proceeds of sale of RMB 9.10 million since he received it under the 3-party Agreement before he paid into Z Corp’s bank account. 58.I am satisfied that the relevant documents sought by the Wife as per Requests (1), (2) and (4) existed and either had been in the Husband’s possession, custody or power or he may be ordered to depose to facts which adequately and clearly explain when he had parted with the specified documents which had been in his possession and what has become of such documents. Given consideration to the answers already provided by the Husband, it is my view that the Husband had not adequately explained what has become of the documents in question and accounted for the flow of proceeds of sale of RMB 10.9 million which now called for a specific discovery order to be granted against him. Conclusion 59.It is trite that the documents or categories of documents must be identified with precision (see Jade’s Realm Ltd supra) and that the terms of the Summons was ‘self made’ by the Wife, I will grant an Order for specific discovery against the Husband in the terms as follows :-
Costs 60.Out of the 6 Requests narrated by Counsel Miss Lam for the Wife’s Discovery Summons in her skeleton submissionwhich was only served shortly before this trial on the Husband’s Solicitors, 2 of the requests were conceded before trial and 1 of the request was unsuccessful, I believe it is fair and reasonable for the Wife to receive half of the costs of her Summons. 61.Accordingly, I decided that the Husband should pay half of the costs of the Wife’s Summons to be taxed if not agreed. Since the application does not involve any complexity or difficult questions of law which justify engaging Counsel, I do not grant Certificate for Counsel. Decision and Orders 62.There will be a specific discovery order against the Husband as per the terms under paragraph 59 (a), (b) and (c) above; 63.The Husband do pay half of the costs of the Wife’s Summons dated 20 November 2014, including any costs reserved, to be taxed if not agreed.
Miss Yanky Lam instructed by Messrs. Hon & Co., Solicitors for the Petitioner Mr. But Sun Wai of Messrs. W.K. To & Co., Solicitors for the Respondent |