LYCV v. CYY

FCMC 11209/2022

[2024] HKFC 69

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 11209 OF 2022

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D E C I S I O N

(DISCOVERY & COSTS)

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1.  This is a hearing of the parties’ respective application for discovery against each other.

2.  The Petitioner wife (“W”) filed her summons on 26 June 2023 (“W’s Discovery Summons”) (A/23-26) asking the Respondent husband (“H”) to:

(1)  Allow W and/or her representative to enter the office of their family owned factory in the Mainland (it is common ground that the Factory is being registered in H’s brother’s name but held on trust for both parties through their jointly owned Hong Kong company) (“the PRC Factory”) for the purpose of carrying out an inspection; and/or

(2)  Produce certain company documents of the PRC Factory, covering the period from 1 January 2016 to 1 January 2023.

W’s Discovery Summons was originally fixed for substantive argument on 4 December 2023. But on 17 November 2023, W filed a summons asking for the 4 December hearing to be adjourned, which was granted and so the hearing was re-fixed to today for substantive argument, and to be heard together with H’s application for discovery against W.

3.  However, shortly before today’s hearing, W issued a further summons to withdraw W’s Discovery Summons (“W’s Withdrawal Summons”) (I/5-6) and asked for no order as to costs to be imposed on such withdrawal. H raised no objection to W’s Withdrawal Summons but the parties could not agree on the issue of costs, of which a decision from this court has become necessary.

4.  As far as H’s discovery application is concerned, it was contained in H’s summons filed on 4 December 2023 (“H’s Discovery Summons”) (I/1-4) in which he asked for:

(1)  W to file and serve an affirmation to confirm whether she was in possession of some company documents of 3 BVI companies for past 3 years;

(2)  W do permit H to inspect and to obtain copies of the above documents within 7 days; and

(3)  W to file and serve a Further Answer to certain outstanding Questions as contained in H’s 2^nd Questionnaire.

5.  W objected to H’s Discovery Summons.

W’s Withdrawal Summons & Costs

6.  With no objection from H, I grant an order in term of paragraph 1 of W’s Withdrawal Summons, namely that W is granted leave to withdraw W’s Discovery Summons.

7.  What remains is the parties’ argument on costs.

8.  Ms. Tjia for H asked for costs to be given to H. I accept Ms. Tjia’s submission that the starting point must be that the party who is seeking leave to withdraw shall bear costs. In order to persuade the court to order otherwise, the minimum that the withdrawing party has to do is to show that the discontinuance is for a reason other than an acknowledgment of defeat or likely defeat. The most direct way to show that the withdrawing party would have succeeded if the application had been proceeded with: Hong Kong Civil Procedure 2024, Vol.1, §21/6/1.

9.  In W’s Discovery Summons, she was basically asking for an order that she or her representative be allowed to enter the PRC Factory to carry out inspection of and/or for H to produce certain company documents.

10.  H’s stance is that W was all along a joint shareholder and director (until her resignation as a director only in January 2024) of the Hong Kong family company which owns the PRC Factory. R also contends that W was all along being heavily involved in the management of the Hong Kong family company and the PRC Factory. There has never been any impediment for her to enter and to inspect company documents of the PRC Factory. As a matter of fact, even according to W’s own evidence, her representative did enter the PRC Factory on certain dates and company documents were produced or inspected. Although W might be alleging that some documents were still missing, the fact remains that she was in contact with the PRC lawyers representing the PRC Factory for such purpose. Therefore, there is no ground to support W’s Discovery Summons, which was rightly withdrawn but W has to bear the costs consequence.

11.  W, through her solicitors, has filed a supporting affirmation (2^nd Affirmation of LSKC) (J/77-80) and stated at §§6-7 therein:

“6. In view of the reply from GXLO, [W] considers that the further financial information documents could not be obtained even if [W] continues with her Discovery Summons.

7. Therefore, it is not desirable to continue the Discovery Summons and to save the Court’s time and costs, [W] would like to withdraw the Discovery Summons…”

12.  By reading the reasons for withdrawing W’s Discovery Summons and despite the able submission of Mr. Surman, I cannot be satisfied that if W should proceed with her Discovery Summons, she would succeed in getting what she has asked for in the first place. Under these circumstances, I am satisfied that H should be given the costs of W’s discovery application, including the withdrawal application.

H’s Discovery Summons

13.  In H’s Discovery Summons, his application can basically be divided into 2 parts. Firstly, he asked for W’s confirmation on whether she was in possession of some company documents of 3 BVI companies, namely GDIL, GCP and SIL, and H be permitted to inspect and to obtain copies of those documents. Secondly, he asked W to file a further Answer to some of the Questions in H’s 2^nd Questionnaire, namely Questions 1(3) to 1(4), 2(5) to 2(8), 3(1), 4 and 6 (H is no longer insisting on 5(1) to 5(4)) to which W has failed to give a satisfactory answer despite already being ordered to do so previously.

14.  According to W, and there is no reason to believe otherwise, that all 3 BVI companies have already been wounded up due to the non-payment of maintenance fees. Mr. Surman submitted that such discovery is unnecessary and reference was made to the voluntary disclosures by W through her expert’s 2^nd Report dated 22 January 2024, W’s 5^th Affirmation dated 22 January 2024 and the letter dated 1 March 2024.

15.  As I understand it, both W and H were registered shareholders and directors of 2 of those BVI companies, i.e. GDIL and GCP. As H was also a shareholder and director of those 2 companies, I see no reason why he could not get those information, if still available, himself. Therefore, I am not minded to make discovery orders on GDIL and GCP.

16.  As far as SIL is concerned, the fact that W’s voluntary discovery was only made after the issuance of H’s Discovery Summons indicating that the issuance of such application was not unnecessary or futile. Therefore, I am minded to grant paragraphs 1 and 2 of H’s Discovery Summons except that such order only concerns SIL but not the other 2 BVI companies; and as far as paragraph 2 is concerned, there is no need for W to provide the bank documents which were already produced by the 2^nd Lee Report.

17.  As far as the outstanding Questions on H’s 2^nd Questionnaire is concerned, I searched through Ms. Tjia’s written submissions but found not much discussion on the topic of Questionnaire. In any event, according to Ms. Tjia, the court has already made such orders previously for W to answer them. If that is the case, there is no point in ordering a second time and W will be responsible for whatever consequence arising out of such failure. I am not minded to make any order on paragraph 3.

18.  At one stage, I was referred to a Without Prejudice letter which was agreed to be opened for the Court’s consideration. In the letter, H seems to accept not to proceed with H’s Discovery Summons provided W would bear his costs and fulfil some other conditions. Obviously, such offer was not accepted by W. It is my view that such concession by H but with conditions which were not fulfilled has no bearing on the discretion to be exercised by this court on costs and I will say no more on that.

Conclusion and Orders

19.  Based on the above discussion, I now grant the following orders:

(1)  Leave to W to withdraw W’s Discovery Summons; and

(2)  For H’s Discovery Summons:

(a)  Order in terms of paragraphs 1 and 2, except that:

(i)  Such discovery is only restricted to SIL; and

(ii)  W needs not provide the bank documents which have already been produced in the 2^nd Lee Report.

(b)  No order to be made in respect of paragraph 3.

Costs

20.  Costs to follow event. W’s Discovery Summons was withdrawn and H should be entitled to all the costs in respect of W’s Discovery Summons and W’s Withdrawal Summons, including all costs reserved, if any, with certificate for one counsel, such costs are to be taxed if not agreed.

21.  H succeeds in just a very small part of H’s Discovery Summons with the majority of his prayers being rejected. Although H could be regarded as the winner but I have decided to exercise my discretion to allow him half of the costs of H’s Discovery Summons only, including all cost reserved, if any, with certificate for one counsel, such costs are to be taxed if not agreed. This will be in the form of an order nisi to be made absolute after the expiry of 14 days from the handing down of this Decision.

Representation: