BC v. MSH also known as H, MSO AND OTHERS

FCMC 13741/2019

[2022] HKFC 216

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13741 OF 2019

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DECISION

( Unless order ; Relief against sanction )

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1.  The petitioner of this case is the wife. The 1^st respondent is the husband. The 2^nd to 4^th respondents are the parents of the respective parties, but they do not feature in this application.

2.  After a failed financial dispute resolution before HH Judge Melloy, this case was transferred to this court for further case management hearings and ancillary relief trial. In one of the case management hearings, I made a series of unless orders against the husband. He fails to comply with these unless orders by the deadline. This is his application for relief against sanction taken out on 29 April 2022 (“Relief Summons”).

The unless order

3.  By her summons dated 19 July 2021, the wife sought discovery of certain documents from the husband. On 9 August 2021, HH Judge Melloy ordered that he do provide the following documents to the wife on/before 18 August 2021 (“Melloy Order”):

(1)  to produce a signed copy of Form TD 25 required by the Transport Department as proof of sale of his Ferrari car in May 2019;

(2)  to answer Question 13.3 of the wife’s questionnaire filed on 10 June 2021 with respect to Homeaway.com, and not homestay;[1]

(3)  to provide a schedule of his rental income, and Notice of Property Tax Returns, and not just made reference that they are in his HSBC account.

4.  By way of background, the husband owned a Ferrari car which he said was already sold in 2019. The wife did not believe this and asked for documentary evidence of such sale. On the other hand, the husband has investment on some business ventures related to on-line travel industry. He also owns some properties which are/were rented out. The wife wishes to know about the income/profit of such businesses.

5.  The husband failed to comply with the Melloy Order, which triggered the wife to take out her summons asking the court to impose a penal notice on him to comply with the Melloy Order.

6.  On return day of the wife’s summons on 3 March 2022 and upon hearing from both parties, I imposed an unless order on the husband (“Unless Order”) that he had to comply with the Melloy Order (with some fine-tuning) by 4 pm of 31 March 2022 by way of an affirmation as follows:

“1. Unless by 4:00 p.m. of the 31^st day of March 2022, the [husband] do comply with the paragraph 3 of the [Melloy Order], i.e. produce a signed copy of Form TD 25 required by the Transport Department as proof of the sale of his Ferrari car in May 2019, or any other documentary proof that he had sold the same, the [husband] shall be debarred from doing so and adverse inference be drawn that he still owns the said Ferrari car which is worth about $1 million.

2. Unless by 4:00 p.m. of the 31^st day of March 2022, the [husband] do comply with the paragraph 4 of the Order, i.e. answer Q13.3 of the [wife’s] Questionnaire filed on the 10^th day of June 2021 with respect to Homeaway.com, the [husband] shall be debarred from doing so and adverse inference be drawn that he shall have the financial resources and financial means to pay whatever maintenance for the children of the family as ordered by the Court.

3. Unless by 4:00 p.m. of the 31^st day of March 2022, the [husband] do comply with the paragraph 5 of the [Melloy Order], i.e. provide a schedule of his rental income, and notice of property tax return, the [husband] shall be debarred from doing so and adverse inference be drawn that he shall have the financial resources and financial means to pay whatever maintenance for the children of the family as ordered by the Court.

4. For avoidance of doubt, the said schedule of rental income in the paragraph 3 shall cover (a) Wo Yick Mansion (full address), (b) Hoi Sing Building (full address) and (c) Luen Tak Building (full address)that were/are rented out by the [husband] on his behalf or on behalf of any alleged third party, and shall include:

(i)  gross monthly rental income;

(ii)  monthly expenditure, such as management fees or government rates and rent; and

(iii)  the net rental income after deducting the monthly expenditure;

from 12 months prior to his 1^st Form E and up-to-date.

5. The [husband] shall comply with the aforesaid paragraph 1 to 4 by way of an affirmation with all supporting documentary evidence.”

7.  There is no appeal lodged in respect of the Unless Order.

8.  Due to the Covid-19 pandemic, the Judiciary announced that there was the General Adjournment of Proceedings (“GAP”) from 7 March to 11 April 2022.

9.  As the deadline for the compliance with the Unless Order fell within the GAP, I gave further written directions to the husband on 18 March 2022 as follows (“GAP Order”):

“(a) the [husband] shall formally file his affirmation pursuant to paragraph 5 of the Unless Order within 7 days upon the resumption of the business of the Family Court Registry;

(b) for avoidance of doubt, the [husband] shall comply with the Unless Order by the deadline stipulated in the Unless Order by serving his affirmation on the [wife].”

10.  It turned out that the husband “filed” his affidavit on 22 April 2022 pursuant to the GAP Order,[2] but he did not “serve” the same on the wife by the deadline set out in the Unless Order (and reinforced in the GAP Order). He “served” his affidavit on her only on 20 April 2022, [3] which is 20 days after the deadline of the Unless Order.

Applicable legal principles

11.  Rule 3 of the Matrimonial Causes Rules, Cap 179A, provides that the Rules of High Court (“RHC”) shall apply with the necessary modifications to the matrimonial proceedings pending in the District Court.

12.  Order 2 rules 4-5 of the RHC provides:

“4. Sanctions have effect unless defaulting party obtains relief (O. 2, r. 4)

Where a party has failed to comply with a rule or court order, any sanction for failure to comply imposed by the rule or court order has effect unless the party in default applies to the Court for and obtains relief from the sanction within 14 days of the failure.

5. Relief from sanctions (O. 2, r. 5)

(1)  On an application for relief from any sanction imposed for a failure to comply with any rule or court order, the Court shall consider all the circumstances including—

(a)  the interests of the administration of justice;

(b)  whether the application for relief has been made promptly;

(c)  whether the failure to comply was intentional;

(d)  whether there is a good explanation for the failure to comply;

(e)  the extent to which the party in default has complied with other rules and court orders;

(f)  whether the failure to comply was caused by the party in default or his legal representative;

(g)  in the case where the party in default is not legally represented, whether he was unaware of the rule or court order, or if he was aware of it, whether he was able to comply with it without legal assistance;

(h)  whether the trial date or the likely trial date can still be met if relief is granted;

(i)  the effect which the failure to comply had on each party; and

(j)  the effect which the granting of relief would have on each party.”

13.  In Darach E. Haughey & Anor v Lam Mui & Others, HCMP 1593 of 2014, [2021] HKCFI 441, Au-Yeung J explained an unless order and sanction as follows:

“13. Once a court order is disobeyed, the imposition of a sanction is almost always inevitable if court orders are to continue to enjoy the respect which they ought to have: Global Torch Ltd v Apex Global Management Ltd (No.2) [2014] 1 WLR 4495, §23, Lord Neuberger.

14. It is difficult to have much sympathy with a litigant who has failed to comply with an unless order when the original order was in standard terms, when the litigant has been given every opportunity to comply with it but has failed to come up with a convincing explanation as to why he has not done so: Global Torch, at §24.

15. Refusal of relief from sanction is not limited to intentional and contumelious defaults. Depending on the circumstances, failure to comply through negligence, incompetence or sheer indolence may be such as to lead the court to conclude there is an existence and degree of fault which warrants a refusal of an extension of time, so as to decline relief. Any other conclusion would be to ignore the positive duty placed on parties to assist the court to further the underlying objectives of Order 1A, rule 3 and on the court to do so by actively managing cases Order 1A rule 4(1). See Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606, §41, Fok J (as he then was).”

14.  I beg to agree with the comment of the learnt judge.

Discussion

15.  I shall now go through each of the circumstances in the sequence set out in Order 2 rule 5 (1) of the RHC.

16.  In respect of (a), it must be true that the interests of the administration of justice require that orders of the court should be complied with and that the parties are held to their obligation to assist the court in furthering the underlying objectives of the RHC. Such obligation applies equally to lawyers, as well as litigants in person. It is not in the interests of the administration of justice to relieve a party from his obligation under an unless order in circumstances in which he has decided not to comply with it.

17.  In the context of ancillary relief within the matrimonial proceedings, a party’s obligation to comply with an order to provide an answer to the questionnaire and/or to disclose his financial means is of vital importance. The failure to do so would not only cause delay, but would also increase time and costs and further diminish the parties’ pool of assets, which negatively affects the interest of the parties and more importantly, the interest of their young children (if any). It is thus well-known that there is a positive duty on each party to give full and frank disclosure, and that his answers to the questionnaires of the opposing party “are not a game of hide and seek” (L v L [2006] 1 HKFLR 121 at §198).

18.  As for (b), the wife submits that the husband failed to comply with Order 2 rule 4 of the RHC in taking out the Relief Summons within 14 days of his failure to comply with the Unless Order. I do not agree. Court hearings were generally adjourned and the court registries were closed from 7 March to 11 April 2022. Hence, time did not start to run until the Family Registry was re-opened on 20 April 2022 (section 71(1A), Interpretation and General Clauses Ordinance, Cap 1). The Relief Summons, taken out on 29 April 2022, was thus filed within time. In any event, it is my view that the husband’s application for relief was made promptly.

19.  I shall deal with (c) and (d) altogether. I am of the view that the husband’s failure to comply with the Unless Order was intentional, and that the explanation provided by him is obviously not enough, nor worthy of believing, because:

(1)  the deadline for him to “serve” his affidavit on the wife was clearly spelt out in the Unless Order and the Gap Order, such that there was no room for any misunderstanding, in particularly in view of the high education standard of the husband;

(2)  In his affidavit in support of the Relief Summons, he claimed that hefailed to comply with the Unless Order as “[he] thought [he] must file a copy [of his affidavit] to the Court first (received a stamp from the Court) before serving it to [the wife]”. However, and in fact, he served the affidavit on the wife on 20 April 2022 “before” he filed the same with the court on 22 April 2022. This is an obvious and stark contradiction which is detrimental to his application for relief against sanction.

20.  Regarding (e), the husband has failed to comply with the Order made by HH Judge C K Chan on 17 December 2021 to file and serve his narrative affirmation regarding the matters at section 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192 within 28 days, which was extended to 8 February 2022 by another order made by the Family Court. In addition, he has failed to comply with my order made on 20 April 2022 that he should lodge the single joint expert report on valuation of various properties by 5 September 2022. Above all, the wife submits, and he does not seem to object, that he has failed to pay the interim maintenance of the children since December 2021 pursuant to the Order of HH J Judge Melloy made on 19 April 2021. It is plain and clear that he does not have a clean record of compliance with court orders.

21.  As for (f) and (g), the husband was represented at the beginning of this case, but has been acting in person since 10 September 2020. However, he has a sound education background. He emigrated with his family to Canada in 1989, when he was about 13 years old. He received a Bachelor Degree in Applied Science in Electrical and Computer Engineering in Canada, and a Master Degree in Business Administration awarded by University of Southern California, the USA. He worked at top management posts and/or directorate level of different online travel agencies, such as Priceline.com. In my view, he should not have any difficulty in understanding the court orders, and/or in complying with the same without legal assistance.

22.  I shall consider (h) to (j) together. It is clear to me that the husband’s affidavit dated 22 April 2022, said to be filed in purported compliance with the Unless Order, is clearly not enough. The said affirmation (namely Schedule D therein) has failed to fully address/reply to Question 13.3 of the wife’s questionnaire (re-worded as per the Melloy Order), and thus the Unless Order. The said Question 13.3 requires him to provide documentary evidence of his income received from Homeaway.com for the years from 2016 to 2019. Yet, Schedule D is allegedly the financial report given by Homeaway covering the period from 1 January 2019 to 31 December 2021 only; the financial report(s) for the years of 2016 to 2018 is clearly missing. Schedule E therein gives a table of the gross and net rental income and expenses of the properties rented out by the husband, but no supporting documentary evidence, such as tenancy agreement, management fee invoices are provided.

23.  It is unknown how long the husband would take to fully answer and disclose all the information and documentary evidence required by the Unless Order. Notably, he got hold of a letter issued by the Transport Department dated 10 January 2022 showing that period of his ownership of the Ferrari car, but for unknown reason(s) to the court, he chose to disclose it only in his said affidavit of 22 April 2022.

24.  The trial of the ancillary relief, including the husband’s application made under section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192, has already been fixed and will commence on 13 December 2022, which is about 2 months away.

25.  Under such circumstances, if the court was to grant the relief in favour of the husband, it is not moonshining to say that the trial dates may be affected. This will not be in the interest of the parties nor their children, as this case has been going on for almost 3 years.

Conclusion

26.  For all the reasons set out above, and looking at the matter in its totality, I conclude that the husband’s Relief Summons should be dismissed, with an order nisi that costs of and occasioned by the Relief Summons be to the wife, to be taxed if not agreed.

27.  Accordingly, his affidavit dated 22 April 2022 should be struck out, and it is so ordered.