Hannelore De Lasala-debring v. Ernest Ferdinand Perez De La Sala

HCMP 1029/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1029 OF 2013

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JUDGMENT
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Introduction

1.This is an appeal by the plaintiff ex-wife against Master Simon Lo’s decision of 25 November 2014 ordering her to provide security for the costs of the defendant ex-husband  in her present action.

2.For ease of reference, I shall call the plaintiff W, the defendant H, and their son E in this judgment.

3.W in the present action was seeking to set aside a consent order for ancillary relief made as far back as more than 45 years ago (“Consent Order”) on the basis that, among other things, H was guilty of fraudulent misrepresentation and material non-disclosure such that had the court and W not been thereby misled, a substantially different order for ancillary relief would have been made, not only in relation to W but to E.

General Legal Principles on applications for security for costs

4.It is trite that an appeal from the master to the judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time[1].

5.Order 23 rule 1 RHC provides, among other things, that where a plaintiff is ordinarily resident out of the jurisdiction, then if, having regard to all circumstances of the case, the court thinks just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action as it thinks just.  

6.The court’s powers under Order 23 rule 1 RHC are discretionary.  It has been said that where a plaintiff is ordinarily resident out of the jurisdiction and has no fixed assets in the jurisdiction, the court would be inclined towards making an order to provide for security for the costs of the defendant[2].

7.It was further held in Tagliani v Lee Wai Ying Elvis [2006] 2 HKC 194 by Deputy Judge Muttrie that: “it is prima facie unjust that a foreign plaintiff, who is more or less immune against costs if he is unsuccessful, should be allowed to proceed without making funds available within the jurisdiction, against which any costs order against him may be executed”[3].

8.Although the merits of a plaintiff’s claim may be a relevant consideration in deciding whether security should be ordered, this is to be approached in a broad-brush manner. It is not the function of the court to make a preliminary run at deciding the ultimate success or failure of the claim and parties shall not attempt to go into the merits of the case unless it can be clearly demonstrated that the plaintiff has a high degree of probability of success[4].

9.In Lim Yi Shen v. Wong Yuen Yee [2012] 3 HKLRD 505, Recorder Horace Wong SC has cautioned against forming any view on the merits simply on paper, especially if the facts are likely to be sensitive to oral evidence, and he held that the threshold of demonstrating probability of success in the context of a security for costs application is “very high”, and that the practice of going into the merits of the case in such application is “to be deplored” unless the merits are clear.  

10.Similarly, although the Court will also consider whether the defendant has an arguable defence, this should also be approached in a broad-brush manner rather than embarking on an assessment exercise as though it were considering an application for summary judgment[5].

11.In cases of impecuniosity, and where the plaintiff asserts that an order for security would stifle the claim, the onus is also on the plaintiff to show that it is unable to raise the amount of security from other sources or by other means[6].

12.In exercising its discretion to order security for costs under Order 23 rule 1(1) RHC where the plaintiff is ordinarily resident out of the jurisdiction, the court will also take into account matters like the ease of registration and enforcement of a costs order in the foreign jurisdiction[7].

13.As regards quantum of security, the court has unfettered discretion to order such amount as it thinks just taking into account all circumstances of the case and adopting a “broad-brush” approach and not by a line by line evaluation of the bill of costs[8] . 

14.The above general legal principles on security of costs submitted by H’s Counsel Ms Sara Tong were not really disputed by Mr Coleman SC appearing for W. Mr Coleman had further submitted that when engaging in a balancing act, the court should take into account the bona fide nature of the plaintiff’s claim with a strong chance of success, and in an appropriate case, the court should exercise its discretion not to order security if this would result in stifling the plaintiff’s case.

15.With the above principles in mind, I now turn to consider the present application.

Brief Background

16.This case has a very long history. 

17.H and W were married on 17 February 1966 in Hong Kong and their son E is now about 48 years old.  H had previously been married and had a son Robert from his former marriage of whom H was granted custody in 1967.  Robert was about 7 years old at the time and lived with the parties for about two years, and was accepted by W to be a child of the marriage.  

18.On 1 November 1969, W issued her 1^st divorce petition against H, based on grounds of sodomy and cruelty[9] (“1^st Petition”). From the date of the marriage to the date of the 1^st Petition, the marital relationship between the parties lasted less than 4 years.  At about the same time, W also issued wardship proceedings in respect of E.

19.W was at that time represented by Mr Tisdall of Messrs Johnson, Stokes & Master and Counsel Mr Jackson-Lipkin, as he then was.  H was represented by Mr Moore of Messrs Deacons.

20.In her 1^st Petition, W had applied for financial provision for herself and E under the then Matrimonial Causes Ordinance[10]. On 11 December 1969, Messrs Deacons sent a letter on behalf of H to Messrs Johnson, Stokes and Master to intimate that if certain arrangements as to custody and finance were acceptable to W and if she would agree to a petition for divorce based solely on the ground of adultery, H would not defend that petition or cross petition[11] (“Deacons’ Letter”).  H and W subsequently came to an overall agreement in relation to the divorce, E’s custody, and financial provision for W and E (“Agreement”).

21.An application was then issued on 14 January 1970 by W under section 15(2) of the then Matrimonial Causes Ordinance, supported by W’s affidavit of the same date, seeking leave from the court to implement the Agreement (“S 15(2) Application”).

22.On 15 January 1970, Mr Moore had made an affidavit on behalf of H, stating, among other things, that he had been given details of H’s assets and means and on the facts and circumstances of the case known to him, he verily believed that the amounts offered by H to W and E were no less that the court would properly order if W were to succeed in contested proceedings against H (“Moore’s Affidavit”).

23.Leading Counsel appeared for W at the hearing on 16 January 1970 before Briggs J, as he then was, and H was also represented by Counsel.  Upon reading W’s affidavit of 14 January and Moore’s Affidavit and upon hearing Counsel, Briggs J handed down a judgment granting leave to W to file a further petition based on H’s adultery, and also granting leave the parties to implement the Agreement including the financial arrangements made between them (“Briggs’ Judgment”)[12].

24.W duly filed her  2^nd petition on 23 January 1970, and on 22 May 1970, the parties signed the Deed of Arrangement, and on 23 May 1970, Briggs J granted her a decree nisi of divorce based on the 2^nd petition, and further, by consent, made orders for custody and access, approved the Deed of Arrangement and ordered that upon the payment of the monies agreed to be paid under the Deed of Arrangement and upon the coming into force of the 2 Trust Deeds, W’s prayers for maintenance a lump sum payment and secured provision for herself and Ernest should stand dismissed (“Consent Order”)[13].  The monies under the Deed of Arrangement were paid and the 2 Trust Deeds came into force on 30 May 1970, upon which the decree nisi of divorce was made absolute.

25.Briefly, the financial provisions in the Consent Order included the following:

(i) A sum of HK$500,000 be settled on trust for E under a trust deed of which H and a well-known bank’s trustee company were trustees;

(ii) H to pay a lump sum of HK$850,000 W ;

(iii) H to pay to the bank trustee company of the sums of  HK$400,000 and HK$50,000 on trust for the purchase of a residence (to be selected by W)  and furniture for it, for the use of W during her lifetime and of E until E reached the age of 21, W to be responsible for rates, repairs and other outgoings;

(iv) There was a remainder over to E contingent upon his attaining 25 years.

26.Thereafter, following major reforms in England, sections 4 and 6 of the Matrimonial Proceedings and Property Ordinance (MPPO) came into effect in 1972 and superseded the relevant sections in the then Matrimonial Causes Ordinance.

27.Under the Matrimonial Causes Ordinance in force at the time of the making of the Consent Order, the court had power to make only two different types of orders for financial provision for a wife: (a) periodical payments, both secured and unsecured; and (b) a lump sum.  Orders of the former type could be varied or discharged by the court upon subsequent application by either spouse, but lump sum orders were once-for-all, and could not subsequently be varied.  There was no power at the time of the Consent Order for the court to make any order for the transfer of property between spouses or for the settlement of property for the benefit of a spouse, which power was only conferred in 1972 by section 6 of MPPO[14] .

28.On 1 August 1975, W issued a summons to set aside or vary the Consent Order[15], and applied for orders for financial provision for herself and E, including transfer/settlement of property orders.  She later further amended to include an application for variation of the financial arrangements contained in the three deeds, namely the Deed of Family Arrangement and the 2 Trust Deeds (“1975 Proceedings”).  In effect, she was seeking orders including the following:

(i) H to pay W reasonable periodical payments for her maintenance, and such be secured;

(ii) H to pay to W  reasonable lump sum/sums for herself, and such be secured;

(iii) H to pay to W lump sum/sums for the benefit of E, and such be secured;

(iv) H to make such reasonable provision/further provision for the maintenance of E and such be secured;

(v) H to transfer a property in Australia and/or other property  to W or to E, or  to such person or to settle such property for the benefit of W and/or E;

(vi) The financial arrangements in the Deed of Arrangement and the 2 Trust Deeds be varied or revoked.

29.Huggins J, as he then was, of the then Supreme Court of Hong Kong, disclaimed jurisdiction orally on 23 January 1976, based upon the dismissal by consent of the claim for ancillary relief at the time of granting the decree, and that he found that W’s application was incompetent under the law as it stood in Hong Kong[16]. He subsequently gave an extensive written ruling on 14 February 1976 in which he seemed to have changed his mind and intimated that, as later advised, he would have been prepared to hold that he had the jurisdiction to deal with W’s then application upon the ground that her consent to the financial arrangements made for herself and E were due to mistake upon her part and H’s misrepresentation.

30.Both W and H appealed from the oral and/or written rulings of Huggins J.

31.Their appeals were heard by Pickering JA and McMullin and Leonard JJ in the Court of Appeal and by majority, W’s appeal was allowed and H’s cross appeal was dismissed on 17 December 1976, and W’s application was remitted to the judge below to be dealt with upon its merits.  McMullin J, as he then was, dissented and was of the view that the proceedings before Huggins J were not competent.

32.H then appealed to the Privy Council, and eventually Lord Diplock, on behalf of all the Lord Justices, delivered a landmark decision on 4 April 1979[17].

33.It was held by the Privy Council[18], among other things, that:-

(i) The Supreme Court of Hong Kong had no jurisdiction under sections 4 and 6 of MPPO to make the orders applied for by W, after an earlier application had been dismissed.

(ii) Although sections 4 and 6 of MPPO gave power to the court to make a wider range of orders than had been possible when the Consent Order was made, the sections conferred no new jurisdiction on the court, and accordingly, the court had no power under the sections to set aside or vary the once-for-all provision contained in the Consent Order.

(iii) That where an arrangement between spouses had become the subject of a consent order the arrangement was no longer a “subsisting maintenance agreement” but a final order of the court and that, therefore, the Supreme Court of Hong Kong had no jurisdiction under section 15 of MPPO to entertain W’s application to vary the deed or arrangement.

(iv) That, since the consent order was final order of the Supreme Court of Hong Kong it could not be challenged by W in the matrimonial proceedings on the grounds of fraud or mistake and this would require a fresh action brought for that purpose.

34.It was conceded on behalf of H at the hearing before the Privy Council, although contested before the Court of Appeal, that the Supreme Court of Hong Kong had jurisdiction to re-open the question of financial provision for E by way of periodical and lump sum payments.

35.To summarise, the Privy Council allowed H’s appeal in so far as it related to W’s application for further financial provision for herself but dismissed in so far as it related to her applications for further financial provision for the benefit of E, and those applications concerning E were remitted to the judge in Hong Kong for further hearing, at which the Lord Justices had expressed their view that it would be appropriate for E to be separately represented[19].

36.After the Privy Council decision in April 1979, W took no further steps to pursue her claim to set aside the Consent Order by way of a fresh action.  Nor did she proceed with her application for financial provision for the benefit of E, which she could have done.

37.About a year later, on 15 March 1980, W remarried.

38.It was only 34 years after the Privy Council decision, in 2013, that W commenced the present proceedings, initially by way of an originating summons, seeking to set aside the Consent Order on grounds of fraud, misrepresentation and material non-disclosure on the part of H.

39.W is now 75 and living in Germany.  H is 83, and appears to be based in Singapore and/or Australia.

40.In the present action, W purported to rely on extracts of evidence filed by various persons in an action currently being litigated in Singapore (the “Singapore Proceedings”), which are ongoing, judgment having not yet been rendered.  The Singapore Proceedings were claims by 6 family companies against H over various assets and H had counterclaimed against the 6 family companies and 3 others including his nephew Edward De La Sala (“Edward”) and a Mr James Copinger-Symes, a director of the 6 family companies.  

41.The present action came before Anthony Chan J for directions on 13 March 2014, and he decided that the matter should proceed by way of writ.  His reasons for his decision were handed down on 20 March 2014[20] (“Reasons”).  The learned Judge had observed that W’s purported reliance on H’s own evidence in the Singapore Proceedings as to his asset position was an “over simplistic view” of the matters, as one could not simply say that W had an asset without any regard to the liability incurred by him in acquiring the same[21].  The learned Judge was further concerned over the delay and observed that these proceedings were a second attempt to impeach the Consent Order which had been brought “very late in the day[22].”

42.Thereafter, W filed her statement of claim on 2 April 2015 (“SOC”) in which she claimed, among other things, the Consent Order be set aside on the basis of fraud, misrepresentation, deceit and/or material non-disclosure by H, re-assessment of an appropriate award of ancillary relief for herself and E, and damages to be assessed[23]. This was followed by H’s request for further and better particulars, to which W filed answers in May 2014.  H then filed his defence (later amended on 17 July 2014) (“Defence”) and W had filed a reply on 23 July 2014. 

43.On 31 July 2014, H issued a summons for an order that W to pay security for his costs in the sum of HK$ 3m (up to and including the Pre-Trial Review hearing) or such sum the court deemed fit (“H’s Summons”).

44.H’s Summons came before Master Simon Lo on 25 November 2014 who ordered W to provide security for H’s costs in the sum of HK$1.5m, up to and including the Pre-Trial Review within 28 days from the date of the order, failing which W’s claim against H be dismissed with costs without further order of the court (“Master’s Order”).  In the meantime, all further proceedings in respect of W’s claim were stayed.  H was given liberty to apply for further security, and also W was ordered to pay costs summarily assessed at HK$227,100 forthwith.

45.W issued a notice to appeal against Master’s Order on 9 December 2014, and on the same day, she also issued a summons for stay of execution of that order.  On 12 December 2014, Master S Lo ordered there be a stay of execution pending the outcome of W’s notice of appeal.

Evidence before the court

46.Apart from the pleadings filed by the parties as aforesaid mentioned, W had filed 2 affidavits, and her present solicitor Ms Heathfield had filed one on W’s behalf. H’s solicitor Mr Johnson had filed 4 affidavits on behalf of H.

47.W had issued a summons on 11 March 2015 under Order 58 rule 1(5) of RHC, seeking leave to file her 3^rd affidavit updating information as to her finances.  There was no supporting affidavit and her summons was opposed by H. 

48.Ms Tong then made submissions on W’s 3^rd affidavit on de bene esse basis.  

49.Order 58 rule 1(5) states as follows:

“No further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds.”

50.Order 58 rule 1(5) was introduced to curb the undesirable practice before the Civil Justice Reform when parties sought to adduce a further round(s) of evidence on appeal after an unfavourable decision from a Master, and aims at effecting a change of culture so that parties should prepare their application properly prior to the hearing before a Master.  Also, the phrase “special grounds” is the same expression as in RHC Order 59, rule 10(2) and requires the conditions laid down in Ladd v Marshall [1954] 1 WLR 1489 to be satisfied[24].

51.W’s solicitors had written a letter dated 12 November 2014 to H’s solicitors prior to the hearing before Master S Lo, setting out W’s financial position and that W, who had remarried after her divorce from H, did not inherit anything from her deceased 2^nd husband[25].  This letter was in fact in reply to queries made by H’s solicitors.  W’s 3^rd affidavit purported to put formally before this court the information she had already supplied to H by the letter dated 12 November 2014, plus updating information on her financial situation including producing updated bank statements.

52.The updated bank statements would not have been available at the hearing before Master S Lo.  The evidence was credible and that, although not decisive, in my view could have an important influence on the issue of whether W was impecunious and the result of H’s application.

53.There was also no evidence of any prejudice to H, and allowing W to file her 3^rd affidavit would not have sparked off a further round of evidence being filed.   I accordingly grant leave as sought by W, and will make an order nisi that there be no order as to costs, which shall be made final after 21 days.

H’s grounds in support of his application for security

54.H’s grounds were as follows:

(i) W was ordinarily resident out of jurisdiction

(ii) W was, on her own case, impecunious

(iii) H’s difficulties in enforcing any costs order in Germany

55.It was not disputed that W was/is ordinarily resident out of jurisdiction, in Germany.

56.W had herself said she was impecunious.  Notwithstanding she had lost the 1975 Proceedings at significant expense to her, she  brought the present action, which H’s Counsel, Ms Sara Tong, submitted was “another bite at the cherry”. 

57.Anyway, W has no assets in Hong Kong against which any costs order may be enforced.  W is now elderly and is unlikely to be earning any income, and she only receives a small monthly pension.

58.H had also produced a legal opinion as to the difficulties of enforcement under the German law form the German office of his present solicitors[26].

59.Mr Coleman, however, referred the court to the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap 319, which extends to judgments of the superior courts of the Federal Republic of Germany under paragraph 3 and Schedule 2 of the Foreign Judgments (Reciprocal Enforcement) Order, Cap 319A.

60.In particular, paragraph 3(1) of Cap 319 states :

“(1) The Governor in Council, if he is satisfied that, in the event of the benefits conferred by this Ordinance being extended to judgments given in the superior courts of any foreign country, substantial reciprocity of treatment will be assured as respects the enforcement in that foreign country of judgments given in the superior courts of the Colony, may by order direct-

(a) that the provisions of this Ordinance shall extend to that foreign country; and

(b) that such courts of that foreign country as are specified in the order shall be deemed superior courts of that foreign country for the purposes of this Ordinance.”

61.Thus, by order directing Federal Republic of Germany be  included in Schedule 2, clearly, the then Governor in Council must have been satisfied that substantial reciprocity of treatment would be assured as respects the enforcement in Federal Republic of Germany of judgments given in the superior courts of Hong Kong.

62.The legal opinion produced by H did not refer to the above provision or any provisions in Cap 319, such as on the registration procedure of a foreign judgment and enforcement proceedings on a registered foreign judgment.

63.I do not see any sufficient grounds as to why a German Superior Court would not enforce a Hong Kong judgment.  However, I would accept that, as with all enforcement proceedings in a foreign country, this may take time.  Further, as W resides out of Hong Kong, and has no assets within jurisdiction, and only a small income and limited assets in Germany, I accept that H had grounds to seek security for costs.

W’s grounds to oppose security

64.W ‘s grounds were :

(i) She has a genuine and strong claim;

(ii) An order for security would stifle her claim.

W’s claim

65.Consent orders can be challenged on a number of grounds including fraud, non-disclosure or misrepresentation[27].

66.W relied on all of the above categories.  Mr Coleman submitted that as the claim here had been for ancillary relief, for which the duty of full and frank disclosure was imposed, material non-disclosure would be sufficient to found a case to set aside, without the need to prove “fraud” within the usual meaning of the term. 

Material Non Disclosure

67.Mr Coleman had referred to comments of Thorpe LJ in Shaw v Shaw [2002] 2 FLR 1204 (as well as the dicta of the House of Lords in Livesey v Jenkins [1985] AC 424):

“During the course of argument there has been some debate as to whether a distinction is to be drawn between the various vitiating factors including: fraud, mistake, misrepresentation, duress and material non-disclosure. The authorities suggest that in other fields fraud stands alone, such is the public interest in its suppression. However the duty of full and frank disclosure that operates in ancillary relief litigation is distinctive. In almost every case the application to reopen will rest on an allegation of material non-disclosure. Litigants are invariably informed of the duty. I find it hard to conceive of non-disclosure, material because of its significant scale, that was unwitting or unintentional. At some level of consciousness the party in breach of the duty acts in the hope or with intention of diminishing the other party’s allocation. Thus differing degrees of culpability depend upon either the scale of the undisclosed asset or the lengths to which the offender has gone. But distinctions important in other fields, such as the distinction between innocent and false misrepresentation, do not seem to me to have much validity in ancillary relief litigation. In practice there is probably but a single vice, namely intentional non-disclosure achieved by active concealment or passive failure to mention[28].”

68.Mr Coleman submitted that the evidence W had would establish not only “passive failure to mention” but also “active concealment” on the part of H.  

69.As submitted by Mr Coleman, the court in matrimonial proceedings has a quasi-inquisitorial role to “investigate” and does not simply “rubber stamp” a consent summons.  Hence, the ongoing duty on a party is owed not only to the other party but also to the court, even where the proceedings are not contested.

70.Further, as seen in Livesey v Jenkins,the duty applies “not only to contested proceedings but also to exchanges of information between parties and their solicitors leading to consent orders without further inquiry by the court”.

71.Lord Brandon in Livesey v Jenkins had equated the power and duties to make consent orders with the power to do so after contested trial:

“… there is no difference in this respect between a judge’s powers to make such orders after a disputed hearing involving evidence on both sides, and his powers to make such orders by the consent of the parties without having heard any evidence at all. …” [29]

“It follows that, in proceedings in which parties invoke the exercise of the court’s powers under section 23 and 24, they must provide the court with information about all the circumstances of the case, including inter alia, the particular matters so specified. Unless they do so, directly or indirectly, and ensure that the information provided is correct, complete and up to date, the court is not equipped to exercise, and cannot therefore lawfully and properly exercise, its discretion in the manner ordained by section 25(1) [30].”

“… It follows necessarily from this that each party concerned in claims for financial provision and property adjustment (or other forms of ancillary relief not material in the present case) owes a duty to the court to make full and frank disclosure of all material facts to the other party and to the court. This principle of full and frank disclosure in proceedings of this kind has long been recognized and enforced as a matter of practice. …”

“… once it is accepted that this principle of full and frank disclosure exists, it is obvious that it must apply not only to contested proceedings heard with full evidence adduced before the court, but also to exchanges of information between the parties and their solicitors leading to the making of consent orders without further enquiry by the court. If that were not so, it would be impossible for a court to have any assurance that the requirements of section 25(1) were complied with before it made such consent orders[31]. (at page 438A)”

72.Lord Brandon had also quoted with approval[32]  the dicta of Ormrod LJ in Robinson v Robinson (Practice Note) [1982] 1 WLR 786:

“It is essential in these cases that the court retains its power to protect both parties against injustice which may arise from failure to comply with their obligations to disclose. In other words there is a lot to be said for the principle of the clean break but I have no doubt that Lord Scarman, when he used the phrase, had in mind that the break should be clean in more senses than one.”

73.As stated in Jackson’s Matrimonial Finance, there is no doubt that a duty of full, frank and clear disclosure exists in relation to consent orders^[33]. 

74.However, I note that all the above cases and authorities are post 1970.

75.Anyway, Mr Coleman submitted that W has a high degree of probability of success in showing the “single vice” necessary to set aside the Consent Order.

The alleged non-disclosure

76.In the 1975 Proceedings, W had said that as a result of`` “extensive and protracted inquiries” made by her solicitors in 1975, she disputed the veracity of the representations made to her and to her then legal advisers by H through his solicitors in 1969 and 1970 concerning his financial position at the time.

77.The Privy Council had  summarized W’s then allegations as follows:

“Finally it was suggested that there was evidence before the Hong Kong court that the wife had been induced to agree to the consent order of May 23, 1970 (a) by misrepresentations by the husband as to his financial position at the time and (b) by the bad advice she had received from her then legal advisers as to what her tax position would be… Since their Lordships have already held that Hugging J in the exercise of the divorce jurisdiction of the Supreme Court of Hong Kong (not its appellate jurisdiction) had no power to vary the consent order made by Briggs J on May 23 1970, the only means now open to the wife to set it aside on grounds of fraud or mistake would be by bringing a fresh action for this purpose. It is, however, only fair to the husband to say that her allegations of fraud are couched in terms that suggest that she is willing to wound and yet afraid to strike… Reports of inquiry agents made in 1973 and 1974, to which she refers as supporting this half-hearted charge, go nowhere near doing so and would be insufficient to justify English counsel in putting his name to a statement of claim in an action claiming to set aside the consent order of May 23 1970 on the ground it was obtained by fraud[34].”

78.It appeared from the above that in the 1975 Proceedings, W was not relying on material non-disclosure, nor misrepresentation, but only on grounds of fraud or mistake to set aside the Consent Order. 

79.As mentioned earlier, after the Privy Council decision, W did not proceed with any application to set aside the Consent Order.

80.W’s explanation was that she was unable to substantiate her then challenge with sufficient evidence because H had succeeded in hiding his assets from her, and that she did not discover evidence that he had done so until recently when she came to know about the Singapore Proceedings.  She had also said that since the Consent Order, she had lived in straightened circumstances with E, and that on 15 March 1980, believing that she would never be able to prove the misrepresentations by H, and in substantial debt from maintaining herself and E as well as arising from legal proceedings, she re-married and moved to live in Vechta, Germany[35].

81.However, if she had to incur “substantial debt” from maintaining herself and E, one would have thought she could have at least proceeded with her variation application in respect of E in the 1975 Proceedings, after the Privy Council decision. 

82.According to W, she was approached in July 2012 by some De La Sala family members who were engaged in the Singapore Proceedings in respect of H’s alleged misappropriation of substantial funds and assets belonging to those companies and his alleged breach of director’s duties with regard to those companies[36].

83.It was W’s case that she learnt that amongst other things H was claiming in the Singapore Proceedings during the late 1960s even before his father’s death on 25 May 1967 which was more than 2 years before the divorce proceedings, H had acquired all of the assets and wealth built up by his father in the family businesses, by buying out the interests of his mother, brothers and sister.

84.W had filed an affidavit in the Singapore Proceedings to support the plaintiffs therein, and had sought and granted permission in the High Court of Singapore to obtain copies of the papers filed in the Singapore Proceedings.  Upon consideration of the same, she believed that cogent evidence had come to light, including H’s own sworn statements, supported by his sister, as to his wealth at the time of the divorce, the fraudulent misrepresentations he caused to be made and the active steps he took to conceal the extent of his wealth and assets at the time of the divorce.

85.According to H’s 1^st affidavit filed on 5 April 2012 in the Singapore Proceedings, his father, who was born in Manila,  had worked , from the age of 14, for a company called John Manners and Company Limited (“JMC”) which was incorporated in Hong Kong in 1916.  JMC was the ultimate holding company of various subsidiary companies (together referred to as “JM Group”).

86.H’s father worked his way up to become Managing Director and Chairman of Directors of JMC/JM Group in 1949.  H joined JM Group in Sydney in 1951, working for one of its subsidiaries, and became a director in 1954.  In 1956, H became a Joint Managing Director with another person in 1957.  It would appear by then, H’s father was considering retirement in Sydney.

87.According to H, his father had in 1939 established a company later renamed as Northern Enterprises Limited (“NEL”), to hold his personal wealth and to provide for his wife and 4 children (“JERIC”).

88.In the Singapore Proceedings, the plaintiffs had produced annual returns of NEL and JMC for various years.

89.According to the annual returns of NEL, it would appear that the corporate records showed that there were 6,000 issued shares of NEL and :

(i) In 1957, each of JERIC held 1,080 shares, and H’s father held 598 shares, and 2 shares  were held by  nominees[37];

(ii) On 24 November 1958, H’s father divested all of  the 6,000 shares in NEL to JERIC, namely 1,200 share each[38];

(iii) On 26 August 1967, 3 months after death of H’s father, 5999 shares were held by San Roberto Steamship Company (“San Roberto”) and 1 share was held by H[39].

90.According to annual returns of JMC, there were 8,000 shares in JMC and:

(i) In 1961, H held 2,960 shares, a nominee company Strath Nominees held 3,840 shares, the remaining 1,200 shares held by 3 other directors, Mr Ostenfeld, Mr Morrison and Mr Williams, each 400 shares[40];

(ii) In 1966, H held 2,960 shares, a nominee company Overseas Nominees held 3,600 shares, and Mr Ostenfeld’s shares were increased to 640 shares, with the others remaining the same, each holding 400 shares[41];

(iii) The annual return dated 1 September 1970 showed that H’s shares were reduced to 2,000 shares, Compass Enterprises Inc (“Compass”) held 3,600 shares, and there were 5 other persons/directors holding the remaining[42].

91.The information, according to the annual returns, showed that H held 2,000 shares, or 25%, in JMC in his personal name in 1970.  It would appear that H’s case in the Singapore Proceedings was that he was the beneficial owner of the 3,600 shares held by Compass in 1970, but Edward’s/plaintiffs’ case was that those shares were held for the benefit of H’s mother and his 3 other siblings (“JRIC”).

92.Anyway, in the Defence herein, H admitted setting up a new corporate structure on around 19 December 1969, and that he had said in 1969, H was the beneficial owner of 27% of JMC (2,160 shares), and that by 1970, he had become the beneficial owner of 70% of JMC (5,600 shares)[43].

93.W relied on the following to demonstrate that there had been non-disclosure on the part of H :

(i) Extracts from H’s 1^st affidavit in the Singapore Proceedings[44] in which H himself had claimed that all of NEL’s assets were sold and funds distributed to JERIC by late 1950s/early 1960s, and after the sale of the entire assets of NEL, save for its shares in JMC shares, H had proceeded to purchase the JMC shares from NEL/JRIC in the 1960s, by making payment for those shares to his mother and his other siblings[45].  From then on, JRIC no longer held any interest in NEL, JMC and/or JM Group having transferred their shares to H and/or to his nominee exclusive shareholder, and H accordingly became the sole and exclusive shareholder of NEL[46].

(ii) A Record of Dividend Payments of JMC dated 13 January 1996 disclosed by the plaintiffs in their list of documents in the Singapore Proceedings[47] (“Dividend Record”), to show the amount of dividends H had received.

(iii) A letter written by H to his mother and siblings on 8 November 1969, a week after W filed her 1^st Petition in which W was referred to as “bitch” (“Bitch Letter”) and in which H indicated he was arranging for his then financial controller of the worldwide organization of the JM Group Mr Mitford to come to Hong Kong to “perfect the security of my assets etcetra”[48].

(iv) Mr Mitford’s note  (“Mitford’s Note”) [49] and Mr Mitford’s handwritten remarks on a Journal Voucher dated 17 October 1977 [50] (“Mitford’s Remarks”), indicating steps taken by Mr Mitford to conceal H’s assets.  Such documents were apparently disclosed during employment proceedings issued by Mr Mitford in 1977 in Alaska against 23 defendants, namely H and 22 companies including JMC and NEL (“Mitford Proceedings”), and relied on by the plaintiffs in the Singapore Proceedings.       

(v) The failure of H to file any affidavit of means in the Hong Kong divorce proceedings and Moore’s Affidavit was filed after all of the above steps had been taken by H.

94.W only produced extracts of H’s 1^st affidavit in the Singapore Proceedings and the said affidavit had not been produced in its entirety.   As I have mentioned earlier, what was stated  by H was disputed by Edward and Mr Copinger-Symes and the plaintiffs in the Singapore Proceedings, and it was their case that H did not beneficially own (or only owned a minimal share of) the assets which in the present action which W asserted that he did.

95.Ms Tong submitted that the Singapore Proceedings were then still pending and no findings of fact had yet been made by the Singapore Court.  Be it as it may, if one were to cast back to 1969/1970, it would appear that H would have regarded himself as being 70% shareholder of JCM, instead of only 25%, in 1970, having bought out the interests of JRIC.

96.H had chosen not to file any affidavits in the present proceedings, and instead instructed his solicitor Mr Johnson to file 4 affidavits on his behalf.

97.In Mr Johnson’s 2^nd affidavit, he had said he was instructed that H would be filing further evidence in the Singapore Proceedings to state that the consideration for the purchase of JRIC’s shares in NEL/JMC was US$10m, and the shares were purchased in the name of H’s nominee San Roberto.  Thus, whilst it was H’s case that he did acquire the shares from JRIC in the 1960s, he also incurred a debt of US$10m in the acquisition, namely US$8m to JRIC and the remainder representing the value of the shares in NEL previously owned by H personally and later held by San Roberto, and Mr Johnson had said that all this meant “his financial position remained the same”[51].

98.W alleged that the loan H claimed to have taken for the acquisition in NEL/JMC of JRIC’s shareholding, namely the US$10m,   appeared to be “merely a book entry”[52].

99.It was not clear whether W meant, that H did not need to pay for the acquisition of those shares, or that H did not need to take out any loan for the acquisition.  It was also not quite clear as to whether W was challenging the value of those shares.

100.According to W, H had stated in his affidavit of 3 January 2014 in the Singapore Proceedings that NEL had an asset value of HK$50,932,890 in 1967 and that JMC had an asset value of HK$26,450,250 in 1967 rising to HK$33,515,422 in 1970[53].

101.So far as the above figures of JMC were concerned, these seemed to be lifted from the Dividend Record, which were the figures for the “Shareholders Funds” in JMC.

102.According to the Dividend Record, it can be seen:

Year	Capital	Shareholders Funds	Dividends
1968	HK$8m	HK$30,770,718	HK$8.8m
1969	HK$8m	HK$33,515,442	HK$8m
1970	HK$8m	HK$36,049,824	HK$8m

103.It would appear that according to the Dividend Record, and also the Mitford Note referred to below, JRIC’s interest in NEL/JMC would be of substantial value, and it would seem unlikely that H would not have to pay for them,  if he did acquire JRIC’s interest.

104.I thus agree with the comments made by A Chan J in his Reasons, namely W’s case based upon H’s own evidence in the Singapore Proceedings was an over simplistic view of those matters, as one could not disregard liability incurred by H in acquiring the same[54]. W could not simply look at assets.

105.In the Bitch Letter, H referred to “perfect the security” of his assets, shortly after he was served with the1^st Petition. 

106.According to the Mitford Note, in about June 1967, shortly after H’s father’s death, H purchased from JMC the issued capital of San Roberto, and then H sold San Roberto’s issued capital to another company San Miguel Navigation Co SA (“SM Navigation”), as a result of which San Roberto became an wholly owned subsidiary of SM Navigation. Subsequently, SM Navigation’s shares were sold to Compass on 22 December 1969, as a result of which Compass then owned SM Navigation.

107.Thus, according to the Mitford Note, on 29 August 1969, H owned SM Navigation, which owned San Roberto and in turn owned NEL, and  the balance sheet of SM Navigation as at 31 March 1970 had a net worth of about US$15m (namely HK$90 m @  HK$6/US$1) .

108.In the Mitford Note, it was stated that the purpose of the various sales/transfers was to conceal H’s ownership of SM Navigation from W in the divorce proceedings.

109.H did not deny that in December 1969, after the incorporation of Compass, there was a change of the corporate structure of NEL/JMC/SM Navigation.

110.Whatever was the reason for the change in the corporate structure, I would accept that the consequence was that thereafter it would be more difficult for W, or indeed anyone, to ascertain what H’s beneficial interest was in NEL and/or JMC at that time.

111.Mr Copinger-Symes had in his affidavit of 3 September 2012 produced journal vouchers of SM Navigation, one in particular dated 17 October 1977 which appeared to indicate that was a distribution of the sale proceeds of some land in Australia, and there was an amount to the credit of “CIA Oriente”.  This journal voucher bore the alleged handwritten Mitford Remarks “Use of CIA Oriente as alternative name for EFL (referring to H).  Adopted to prevent former wife from tracing estate”[55]. There was, however, no information as to when “CIA Oriente” was adopted by SM Navigation to refer to H.  The date of the journal voucher was in 1977, and although it was in the midst of the 1975 Proceedings, it was long after the Consent Order.

112.To summarise, according to the Dividend Schedule, it would appear that 70% of the Capital, Shareholders’ Funds, and Dividends of JMC would be respectively an average of about HK$5.6m, HK$23.4m and HK$5.8m each year for the 3 years 1968-1970. 

113.However, as I have said earlier H said he had incurred a debt of US$10m for the acquisition of the shares of JRIC. Also, H had further denied the receipt of those dividend payments set out in the Dividend Schedule, and said the amounts paid into his current account with SM Navigation of about US$364,211 between March 1968 and March 1970, approximately US$300,000 was transferred from his account to JRIC’s respective current accounts with SM Navigation between May 1970 and September 1970.

114.It was not clear from the present evidence as to whether during the 3 year period 1968-1970, H held other assets or had other liabilities.  It was also not clear whether H had other income and what his expenses were.  Nor was W’s own financial position in 1968 – 1970 clear.

115.It was common ground that at the time of the Agreement, and later at the Consent Order, neither H nor W had filed any affidavit of means setting out their respective assets, income, liabilities and expenses.

116.The only financial disclosure by H at that time seemed to be certainalleged oral representations made directly to W (“Oral Representations”)[56], and representations allegedly made by Mr Moore to Mr Tisdall during their discussions.  The only disclosure in writing was the Moore’s Affidavit.

117.I accept that what was said by Moore’s Affidavit was vague and based solely on H’s instructions.  There was no dispute that there was no direct disclosure by H in that he had not filed any affidavit of means. In fact, in my view there was non-disclosure on both parties.

118.Having said this, there was no evidence that H was required to file any detailed affidavit of means, nor vice versa.  The evidence showed instead W or her legal advisers accepted what was said in the Moore’s Affidavit, so did Briggs J at the hearing on 16 January 1970, when Briggs J gave approval to the Agreement, and further subsequently at the hearing of 23 May 1970 when the Consent Order was made.

119.Mr Coleman submitted that there was not only non-disclosure, but there was active concealment of H of his assets and that Brigg J was misled.  This may not matter in light of the majority view in a recent UK Court of Appeal  in S v S [2014] EWCA Civ 95,[214] 2 FCR 189[57], where it was held that a failure to give full and frank disclosure, whether innocent,negligent or deliberate, is a serious abuse of the process of the court, and in an appropriate case, the court has power to set aside an order, whether made by consent or otherwise, and the critical factor is the effect of the non-disclosure on the court’s own decision embodied in the order and that whether the judge would have made a substantially different order if the facts had been disclosed was an essential element of the test for setting aside an existing order because it was for the court, not the parties, to determine what order should be made[58].(emphasis added)

120.Moore-Bick LJ, one of the majority Lord Justices had distinguished the facts in S v S from Livesey v Jenkins, as the husband inS v S did not merely fail to disclose information, he “deliberately and dishonestly concealed” it[59]. Notwithstanding this, Moore-Bick LJ did not believe that the husband’s dishonesty added anything of significance to the case.  Macur LJ concurred, although Briggs LJ dissented as he was of the view that the husband’s fraudulent non-disclosure should have been the end of the matter and negated the order.

Effect of the non-disclosure

121.I would point out at the outset that the law today is quite different from that 45 years ago.

122.The legislative requirement for filing of affidavits of means is now contained in rule 73 of the present Matrimonial Causes Rules (MCR) and Rule 77 provides for further disclosure and investigation by the court in an application for ancillary relief, but the current provisions seemed only to have come into effect in 1972, after MPPO came into effect on 1 July 1972.  Further, it seemed to be not until 1996 that a prescribed form for the affidavit of means was set out in PD 15.5[60].

123.Rule 73 states:

“(1) A petitioner or respondent spouse who has applied for ancillary relief in his petition or answer and who intends to proceed with the application shall, subject to rule 82, file a notice in Form 9 and serve a copy on the other spouse.

(2) Where a respondent spouse or a petitioner is served with a notice in Form 8 or 9, or where an applicant in a joint application is served with a notice in Form 8B, 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. (L.N. 172 of 1996)

(3) …” (emphasis added)

124.Thus, if the parties are agreed upon the terms of the order, even under Rule 73, it appears that it is not mandatory that an affidavit of means has to be filed.

125.W had not produced to this court the matrimonial law and rules in force in Hong Kong in 1969 or at the time of the Consent Order in 1970, and it was not clear what the provisions were in those days, nor was the court’s then approach in financial disclosure clear.

126.W had produced an opinion from Mr Joseph Jackson QC, the then leading matrimonial silk in England to support her case in the 1975 Proceedings.  The opinion from Mr Jackson QC was dated 29 June 1972[61]  and was headed “Further Opinion”, and he had referred to his earlier opinion given on 21 September 1971.  Unfortunately, his earlier opinion had not been produced.   

127.Mr Jackson QC had said that with the information set out in W’s 1^st Petition, he would not have accepted the terms of the Consent Order, and that as the judge was not supplied with an affidavit of means by H, he did not see how it could be said that the judge was properly appraised of the relevant facts when “approving” the agreement.  

128.Mr Jackson QC did not refer to the Moore Affidavit, nor W’s own affidavit filed in the S 15(2) Application, in which she had apparently said “I have also discussed with my said Solicitors and my Counsel the financial provisions that are being offered by the Respondent and I am advised and I verily believe that the offers being made by the Respondent are just a proper having regard to our respective means.” (which she now said was untrue and she was mistakenly and wrongly persuaded to file that affidavit) [62]. Nor did Mr Jackson QC refer to any Oral Representations.

129.It was clear from the Further Opinion that at the time, W was suggesting that she was not competently advised by  her  then Counsel, ie Mr Jackson-Lipkin.  Mr Jackson QC had however pointed out that W and her Counsel Mr Jackson-Lipkin did not agree on certain important matters of facts.

130.Mr Jackson QC did refer to the filing of an affidavit of means in his Further Opinion, and it would appear that it was at least  a practice, if not a requirement, in England in 1969/1970, for an affidavit of means to be placed before a judge prior to the judge being asked to “approve” an agreement.

131.Further, from evidence produced by W, H seemed to be aware that he could be required to file an affidavit of means at the time of the divorce proceedings.

132.In any event, whether there was such a requirement or not, as I have said, there was no evidence that W/her then legal advisers had required H to file such an affidavit prior to her agreeing to the terms of the Agreement or seeking approval from Briggs J to the Agreement and/or the Consent Order.  There was also no evidence that H had refused to file any affidavit of means.  

133.Mr Tong had referred to W’s subjective knowledge at the time of H’s means.

134.Notwithstanding W saying that she had little information as to H’s wealth, in her 1^st Petition, what W set out was that H possessed capital believed to be in excess of HK$50m and was in receipt of income believed to be in excess of HK$250,000 per annum, not “in the region of” as she now seemed to be saying.  H was described therein as a company director, and the parties’ matrimonial home was at Estoril Court.

135.Further, in her affidavit in the 1975 Proceedings, W had deposed as to her high living standard during the marriage, and she had further said  that she had been informed by H that his father died in 1967, leaving an estate valued in excess of AUD 100m and that H received not less than 1/5 of this sum[63]. She had also said frequently during the marriage, H told her that it would be difficult to find out what he was worth because his wealth was so tied up with various companies and other interests[64].

136.W had also admitted giving Mr Tisdall  a list of assets which she believed were owned by H, and such information regarding H’s assets and financial resources as she was able to furnish, including certain press clippings relating to the estate of H’s father and instructed Mr Tisdall to ascertain what the  “de Lasala family” owned[65].

137.She then alleged that Mr Tisdall made no independent enquiries into H’s financial resources or means at that time, as such would be very expensive and time-consuming[66]. However, she had also said she was advised by Mr Tisdall and by Mr Jackson-Lipkin at the time that she had reasonable grounds for expecting from H a settlement of some HK$1.5m for herself and HK$2m for E[67].  Thus, even on her own case, W did receive some advice on what to expect, based on her then instructions to her legal advisers, and the then information available to her.  Further, although it was unclear what Mr Jackson-Lipkin’s advice as to quantum was based on, it did not appear to be based on any division of assets, and appeared to be based on her and E’s reasonable needs.

138.What she later agreed to was HK$850,000 for herself plus a total of HK$450,000 for a residence with furniture on trust for her during her lifetime, plus HK$500,000 on trust for E.

139.Although, the lump sum was much less than the amount in the legal advice given to her, namely HK$650,000 less, she had the benefit of a HK$450,000 furnished residence for the rest of her life.

140.As to reasons why she agreed to the Consent Order, W had said Mr Tisdall had told her that Mr Moore had told him that H was not as wealthy as she had thought, and that the amounts offered by H were “still a lot of money” and that she would get all she needed because she would have free accommodation and all of E’s expenses would be paid by the trust.  Mr Tisdall further advised her that H would not offer more and if she did not accept she would be faced with difficult and lengthy proceedings, which might result in her losing custody of E and receiving no more, and possible less than the amount offered by H, and that he further told her that there was a risk that she would not obtain a divorce at all[68].

141.W had also said that during meetings with her solicitor and Counsel, and also with H’s solicitor and representatives of the trustees, she verily believed that she could look forward to a gross return in the region of 13% on the capital sums which H proposed, and that such sums would produce an income, after tax, in the region of HK$6,000 per month for W and E.

142.As Ms Tong had submitted that whatever W may now said, what one could glean from the evidence was as follows:

(i) The marriage between H and W was of a very short duration (ie less than 4 years), and there was the position of the child to be considered [69];

(ii) W’s 1^st Petition was based on grounds of sodomy and cruelty, which were grounds for divorce under the then Matrimonial Causes Ordinance.  Separately, there were also wardship proceedings issued by W in relation to E.  The allegations in the 1^st Petition were strenuously contested and that a cross-petition was intended to be filed by H on the ground of cruelty against W[70]. The result of the Agreement would be that the 2^nd petition would be an undefended petition.  If the 1^st Petition were to be tried as a defended suit there would be considerable publicity of the evidence called to support the grounds for the petition, which would be objectionable to the parties, and to the child[71];

(iii) W had subjective knowledge and understanding at the relevant time of H’s financial position and resources as evident from her 1^st Petition and her affidavit filed in the 1975 Proceedings;

(iv) Briggs J  approved the terms of the Agreement and later the Consent Order, having  before him, W’s affidavit in the S 15(2) Application, Moore’s affidavit and what W had stated in her 1^st Petition in relation H’s means.

143.If I may also add to the above, most of H’s assets appeared to be inherited or pre-marital assets. Further, on W’s own evidence, the reasonable needs of her and E totaled in the region of HK$6,000 per month.  W did not refer to any Oral Representations in her affidavit in the S 15(2) Application, and also, the terms of the Consent Order were part and parcel of the Agreement.

144.The law of ancillary relief in 1969/1970 was significantly different from that of present days.

145.Having considered the above, even if there had been non-disclosure on the part of H as alleged by W, I am of the view that at this stage W simply had not provided this court with sufficient information  to demonstrate that the effect of such non-disclosure would result in the court  making a substantially different order in 1969/1970.

Fraud, misrepresentation

146.So far as the alleged Oral Representations, W did not refer to any in her affidavit filed in 1970 in the S15(2) Application.  She first mentioned such representations in the 1975 Proceedings, that H went to visit her on several occasions in November and December 1969 and represented to her that he was in circumstances of acute financial difficulties and embarrassment, and that he would have bouts of weeping[72] .

147.H denied that he had made any of the alleged Oral Representations.  There were no evidence produced by W at present to support her allegations of Oral Representations, and it seemed to be only her word against H’s, and both elderly, over what was said over 45 years ago.

148.In W’s 2^nd affidavit, she had referred to what was alleged to be taped recordings made by Hof his conversations with Mr Mitford shortly after W filed her divorce proceedings, and also conversations with his mother and sister after 8 November 1969 at the time of the divorce[73]. W had set out certain written extracts of some of the relevant parts of the transcript of the tape recording.  The extract of conversation with Mr Mitford indicated that H was asking Mr Mitford to get his mind working on certain things of how he could “camouflage” what he had, as he might be compelled to make an affidavit on assets.  H did not at this stage accept the authenticity of these tape recordings.

149.W’s solicitor had also produced information from the website of H’s solicitors indicating that the claim in the Singapore Proceedings was one of the largest ever trust claims in the Singapore Courts involving assets valued at between US$600-US$800m[74].  I do not think such information is relevant, since the value referred would be the current value.

150.W’s allegations of fraud, misrepresentation and deliberate concealment of information were strenuously contested by H.  Further, for any allegations involving fraud, it would be incumbent on W to produce cogent and compelling evidence to substantiate the allegations. The extent and state of knowledge of W at the time she agreed to the terms of the Consent Order would also be an issue of substantial dispute in the present action.  Even though W’s claim may be bona fide, I am unable to say at this stage that such is a strong claim.

151.Mr Coleman’s submissions were mainly based on the “single vice” of material non-disclosure.  In any event, in my view, whether there had been fraud/fraudulent misrepresentation or deliberate concealment on the part of H or not, in light of the majority views in S v S, and in light of what I have said earlier, namely W had not been able to demonstrate that the court would have made an ancillary relief order which would be “substantially different”, or as she had claimed would have “far exceeded” the terms of the Consent Order, had H made full disclosure of his assets.

H’s Defence

152.In the Defence,  H was also contending, among other things, that W’s claim was time barred pursuant to the provisions of the Limitation Ordinance, that it was an abuse of process on the part of W to bring the present action after over 40 years, that W’s gross delay in commencing the present action had resulted in serious prejudice to H, and that by not commencing fresh action after the Privy Council decision,W had affirmed the underlying agreement between the parties upon which the Consent Order was based , and due to the long lapse of time since the Consent Order, restitution of the parties to their original positions would no longer be possible.

Degree of success

153.The present action is at present at an early stage, with pleadings only just closed and there has not yet been discovery.  Having considered all the above, I have come to the view that at this stage and on the present evidence, W has not been able to persuade this court that her case has a high degree of probability of success.

Whether an order for security would stifle W’s claim

154.The burden ison W to demonstrate that her claim will be stifled if the requested security is granted.  She has to establish that she cannot raise funds from other sources.

155.Ms Tong submitted that W’s allegation that she has no sources of funding to provide security for costs is unbelievable, as throughout these proceedings, she has had no difficulty in funding her own legal costs, and that she had been represented by solicitors and Counsel (Senior and/or Junior Counsel) throughout.  W had also paid promptly H’s cost for the hearing before Master S Lo summarily assessed at HK$227,100.

156.Mr Coleman appeared in the appeal before me but informed the court that he was appearing on pro bono basis, and so was Ms Corinne Remedios.  W has also applied for legal aid earlier this year. 

157.W had set out her financial situation in her 2^nd affidavit filed herein.  She mentioned that she had a small pension of EUR 221.05 per month, that she owns two adjacent terraced houses worth together approximately EUR 300,000 to 400,000.  She had sold an adjacent plot of land on 22 August 2014 for EUR 285,000 out of which she had to repay a mortgage in the sum of EUR 84,790 plus daily interest, in order to pay for her own on-going legal costs.  She also owns some miscellaneous antique furniture and bric a brac in her house for which she has great difficulty finding any interested purchasers, and if sole, she would need to purchase replacement furniture.  She also owed a friend Doris Nordman and to LSB Bank in the total sum of EUR 217,662.

158.In her 3^rd affidavit, which I earlier granted leave for her to file, there were some updated bank statements which were in German.  There seemed to be two amounts of EUR 110,000 and 20,000 credited into her account on 24 November 2014, from another of her account.  She had attached an asset schedule as at 13 November 2014 to show her net assets to be between EUR 228,371 to EUR 288,371.

159.Ms Tong submitted that even if W had no assets in her own name, which was not admitted by H, it would nonetheless be incumbent on W to demonstrate that she had no other means of obtaining funding.  I accept that W had not explained as to why Ms Nordman or the bank could not lend her further funds.  There was no evidence of any attempt by W to request/apply for further loans from banks/Ms Nordman/other parties, or their refusal to extend such loans.  There was no evidence that she had exhausted all means to raise funds.

160.In any event, even if W can show her claim will be stifled if security is ordered, this is only one of the factors to be taken into account. 

Exercise of Discretion

161.Mr Coleman submitted that the action arises out of a claim for ancillary relief, and that it is virtually unheard of for a husband to seek security for costs against a wife living abroad in her claim for ancillary relief.  Mr Coleman referred the court to Bradley v Bradley All ER Official Transcripts 8 May 2008 [2008] All ER (D) (May 2008).  In that case, it appeared that the lower court had concluded that there was no power to order security of costs.  It was not clear on what basis was that conclusion made.  Under Rule 3 of our Matrimonial Causes Rules, the Rules of the High Court shall apply with necessary modifications in matrimonial proceedings.  In any event, the present action, even though it arose out of an ancillary relief claim, is in my view no different from any other civil action to which the Rules of the High Court apply.

162.Mr Coleman further referred the court to In re Greater Beijing Region Expressways Ltd (No. 3) [2000] 2 HKLRD 776, and submitted that as H had  so successfully hidden his assets that the trial Judge was misled, and W and E had  been unjustly deprived of proper financial support.  Those circumstances would make it “neither just nor right” for an order for security in the claim by which W seeks redress for herself and E, and he quoted from Le Pichon J, as she then was, like exacting “a premium from (the) victim who is seeking redress”[75]. However, the facts of that case were completely different, as in that case it was the alleged wrongful conduct which caused a change of residence from Hong Kong and what the Learned Judge said had to be viewed in that context.

163.Mr Coleman submitted that W only had modest means, and there would be an inequality of arms, as H had the huge means to delay and prolong the case and put W to strict proof on every issue.

164.However, with or without security, this would still be the case, and this should be well within W’s knowledge particularly from the evidence she herself had produced, and one would have thought this would be a matter W should have considered when commencing the action.

165.Mr Coleman also submitted that there is a causal link between D and P’s impecuniosity, where her impecuniosity stemmed from lack of financial provision, whether justifiable or otherwise.  Mr Coleman referred the court to Tri-Tech Metals Co Ltd v YKK AP HK Ltd (HCCT 60/2004) where Burrell J was persuaded that where the plaintiff had been solely dependent on the defendant, the defendant’s application for security should be dismissed, and that a similar point was made in the case of Owners of Fishing Vessel “Nan AO3306” v The Owners and/or the Demise Charterers of the ship or vessel “Silver Dawn” CACV 171/1992.

166.However, the fact that W has limited funds today, 45 years after the Consent Order, does not mean she has always had limited funds, and also she remarried 10 years after the Consent Order.  I do not think there is sufficient evidence to say her present impecuniosity stems from lack of financial provision from H.

167.Due to the long delay, it may not now be possible to retrieve records or documents from the parties then respective solicitors at the time of 1969/1970.  W’s then lawyers, Mr Tisdall, Mr Miles Jackson-Lipkin, and also Mr Jackson QC, and H’s then solicitor Mr Moore are no longer with us.  Nor is Mr Mitford.  As A Chan J pointed out, this action has been brought “very late in the day”.  

168.Ms Tong submitted that this court will also have to weigh in the balance the unfairness to H in having to expend considerable sums in defending this action whilst taking the risk of not being able to recover any part of his costs should W fail in her claim.    

169.Having considered all the circumstances of this case, I am of the view that security should be ordered.

Quantum  

170.As this is a rehearing of the Summons,H seeks the quantum should be increased to HK$3m, as sought originally in the Summons, and Ms Tong submitted that the amount ordered by Master S Lo was unjustifiably low, and was on a broad brush basis.

171.H had produced a bill of costs[76], which indicated that costs of about HK$5m, being costs already incurred of about HK$3m and estimated future costs up to and including the PTR hearing of about HK$2m.

172.W submitted that the bill was “grossly exaggerated”. 

173.As pointed out by Master S Lo, the hourly rate of the fee earners Mr Johnson and his associate was much higher than the usual HK$ 4,000 which is the ceiling on party and party.  I also note that for Part A of the bill, for work done in connection with perusing documents, reviewing the writ and the SOC, taking instructions, attending conferences and drafting Defence etc alone was about HK$2.5m, with 112 hours of work by Mr Johnson, 175 hours by his associate, and 174 hours by Ms Tong.  This seems on the high side.

174.Bearing in mind that the usual costs order would be based on party and party basis, I agree with Master S Lo that, on a broad brush basis, HK$1.5m would be appropriate in the circumstances.  I will not disturb the quantum ordered.

Conclusion 

175.In light of the above, I will dismiss W’s appeal.  Master S Lo’s order of 25 November 2014 is to stand, save that I will allow a further 21 days for W to pay the security, and that stay of execution is to be extended accordingly.  In the meantime, all further proceedings in respect of W’s claim be stayed.

176.W is to pay H’s costs of the appeal to include her application for stay of execution, to be taxed if not agreed, on party and party basis.

Mr Russell Coleman SC and Ms Corinne Remedios, instructed by Howse Williams Bowers, for the plaintiff

Ms Sara Tong, instructed by Clifford Chance, for the defendant