WJT v. YATM

FCMP 79/2017

[2018] HKFC 225

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 79 OF 2017

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D E C I S I O N
( Specific Discovery )

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Introduction

1.  The Applicant is the Mother (“the Mother”) and the Respondent is the Father (“the Father”) of the child born out of the wedlock in 2013 in USA. The Mother is claiming financial reliefs for the child which includes a lump sum and/or periodical payments as the Court thinks reasonable.

2.  On 9^th July 2018, the Mother took out a Summons for specific discovery (“Mother’s Discovery Summons”) against the Father seeking disclosure of various documents and information.

3.  On 10^th July 2018, the Father also took out a Summons for specific discovery (“Father’s Discovery Summons”) against the Mother seeking disclosure of various documents and information.

4.  The present hearing is to deal with both parties’ aforesaid summonses.

The applicable principles

5.  Orders for discovery are governed by Order 24 rules 3, 7 and 8, of the rules of the High Court, Cap.4A (“RHC”). 

6.  Order 24 rule 7 of the RHC is applicable to matrimonial proceedings by virtue of Rule 3 of the Matrimonial Causes Rules, Cap.179A (“MCR”).

7.  In particular, Order 24 rule 8(1) provides :-

“on the hearing of an application for an order under 3 or 7 the court, if satisfied that discovery is not necessary, or not necessary at that stage of the case or matter, may dismiss or, as the case may be, adjourn the application and shall in any case refuse to make such an order if and so far as it is of opinion that discovery is not necessary either for disposing fairly of the cause or matter or for saving costs.”

8.  The principles governing specific discovery have also been succinctly summarised by Hon Ng J in the decision of Jade’s Realm Ltd v. Director of Lands (HCA No.1509/2012) dated 9 January 2015 where His Lordship said as follows :-

“(1) There is no jurisdiction to make an order for specific discovery under RHC O.24 r.7 unless there is sufficient evidence or prima facie case that : (a) the documents or classes of documents exist which the other party has not disclosed; (b) the documents relate to a matter in issue in the action; and (c) the documents are in the possession, custody or power of the other party;

(2) Once it is established that those three prerequisites for jurisdiction do exist, the court has a discretion whether or not to order discovery.

(3) The Court will not make an order unless the discovery sought is necessary either for disposing fairly of the cause or matter or for saving costs.

(4) The Peruvian Guano test remains the test of relevance, A document is relevant if :

(i)   it is reasonable to suppose that it contains information which may, not must, either directly or indirectly enable the party requiring the same either to advance his own case or to damage the case of his adversary; or

(ii)  it is a document which may fairly lead the party to a train of inquiry which may have either of those two consequences.

(5) For the purpose of discovery, the pleadings have to be looked at broadly.

(6) The order must identify with precision the documents or categories of documents which are required to be disclosed, for otherwise the person giving the discovery may find himself in serious trouble for swearing to a false affidavit, even though doing his best to give an honest disclosure.

(7) Notwithstanding the Peruvian Guano test, ‘fishing’ is not allowed, and discovery should not be oppressive.

(8) The respondent may answer an application for specific discovery by an affidavit stating that he does not have the documents, and this will be conclusive at the interlocutory stage.”

9.  Full and frank disclosure is an important role and also a continuing obligation of the parties with no exception in matrimonial cases.  The rationale behind is to reveal all documents and information one party has or possesses which is relevant (my emphasis) whether it advances his or his opponent’s case or destroys his own case (see Compagnie Financiere du Pacifique -v- Peruvian Guano Conpany (1882) 11 QBD 55). This is commonly called the ‘Peruvian Guano’ principle.

10.  ‘Relevance’ is to be determined by reference to the pleadings (see Re Estate of Ng Chan Wah [2003] HKEC 317). In the context of ancillary reliefs applications between spouses where there are no pleadings exchanged, the Court is entitled to consider the issue of relevance by reference to the disclosure of assets under the parties’ Form E or answers to questionnaires.

11.  As regards the ‘existence’ of a document, Deputy High Court Judge Queeny Au-Yeung (as she then was) in the case of Ngan In Leng v. Chu Yuet Wah [2013] 1 HKLRD 717 had said :-

“42. A prima facie case on existence may be established on merely showing the probability arising from the surrounding circumstances or on specific facts deposed to : Hong Kong Civil Procedure 2012, Vol.1, para.24/7/1, at pg 554. For example, a prima facie case on existence may be established simply by assessing whether it is business practice for a certain type of document to exist : Union Bank of India v. General Nice Resources (Hong Kong) Ltd , HCA 299/2007, 10 May 2010, Bharwaney J at para 10.”

12.  In the case of B v. B (matrimonial proceedings : discovery) [1979] 1 All ER 801 where Dunn J summarised the law on discovery in ancillary relief application at page 811 :

“I will conclude the part of my judgment by summarising my conclusions as to law.

(1)  A party to a suit must disclose all the documents in his possession, custody or power which are relevant to the matters in issue.  The court has discretion whether or not to order him to make such disclosure, and also has discretion whether or not to order him to produce the documents for inspection by the other party or the court.

(2)   …………….

(3)   …………….

(4)   …………….

(5)  The discretion is a judicial discretion, and in exercising it the court will have regard to all the circumstances.  The court will balance the relevance and importance of the documents and the hardship likely to be caused to the wife by the non-production against any prejudice to the Husband and third parties likely to be caused by production………..…..  The court will not order production unless it is satisfied that production is necessary either for disposing fairly of the issues between the parties or for saving costs.”

13.  It is also stated that in B v. B at 805b-d that :

“Although in practice it will often be convenient to deal with discovery in one piece, it is important to remember that under the terms of the rules discovery proceeds by stages, and different considerations may apply at each stage. The order in this case was an order under RSC Ord. 24 r 7, for the discovery by the husband of specific classes of documents and for their production for inspection by the wife’s solicitor. Before any question of discretion arises, however, the court has no jurisdiction to make an order for discovery or production unless, firstly the person against whom discovery is sought is a party to the suit, secondly, the documents are in his possession, custody or power, and thirdly, the documents relate to matters in question in the proceedings. These requirements must be satisfied before discovery is ordered even if hardship is thereby caused to one party to the suit; see James Nelson & Son Ltd v Nelson Line (Liverpool) Ltd…”

14.  Guided with the above principles, I now consider the Mother’s and the Father’s Discovery Summons.

Discussion

15.  The Mother’s claim was based upon Section 10 of the Guardianship of Minors Ordinance (“GMO”) Cap.13 which provides for financial reliefs to be made for the future support of child of unmarried couples as well as for enabling any liabilities or expenses reasonably incurred before the making of the Order to be met (see Section 10(2)(a)).  Thus, it also covers reimbursement so to speak.  For future payments, the two predominant factors to be decided by the Court are the needs of the child and the parent’s ability to pay. For reimbursement, it refers to reasonableness of the expenses incurred and spent.

16.  The Mother submitted that the relevant considerations that the court is required to take into account when determining a claim of this nature are summarized in Re P (Child : Financial Provision) [2003] 2 FLR 865 :-

“(i) The welfare of the child while a minor, although not paramount, is naturally a very relevant consideration as one of ‘…all the circumstances…’of the case.

(ii) Considerations as to the length and nature of the parents’ relationship and whether or not the child was planned are generally of little if any relevance, since the child’s needs and dependency are the same regardless : J v C (Child : financial Provision)[1999] 1 FLR 152 at 154B.

(iii) One of the ‘…financial needs of the child…’(to which by para 4(1)(c) the court must pay regard) is for him or her to be cared for by a mother who is in a position, both financial and generally, to provide that caring. So it is well established that a child’s need for a carer enables account to be taken of the caring parent’s needs : Haroutunian v Jennings (1980) 1 FLR 62 at 66C; and A v A (A Minor) (Financial Provision)[1994] 1 FLR 657 at 665G.

(iv) By paras 4(1)(a) and (b) of Sch. 1, the respective incomes, earning capacities, property and other financial resources of each of the parents must be taken into account, together with their respective financial needs, obligations and responsibilities. So’…the child is entitled to be brought up in circumstances which bear some sort of relationship with the father’s current resources and the father’s present standard of living…”- per Hale J in J v C (Child : Financial Provision)[1999] 1 FLR 152.

(v) However, at this latter concept lends itself to demands going potentially far wider than those reasonably necessary to enable the mother properly to support the child,’…one has to guard against unreasonable claims made on the child’s behalf but with the disguised element of providing for the mother’s benefit rather than for the child…’ – J v C (Child : financial Provision)[1999] 1 FLR 152.

(vi) In case where the father’s resources permit and the mother lacks significant resources of her own, she will generally need suitable accommodation for herself and the child, settled for the duration of the child’s minority with reversion to the father; a capital allowance for setting up the home and for a car; and income provision (with the expense of the child’s education being taken care of, generally, by the father direct with the school).

(vii) Such income provision is reviewable from time to time, according to the changing circumstances of the parties and of the child.

(viii) The overall result achieved by orders under Sch. 1 should be fair, just and reasonable taking into account of all the circumstances.) (emphasis added)

17.  The Mother further submitted that as to the relevance of the standard of living enjoyed by the child during pre-separation cohabitation, it is also useful to refer to F v F [2005] 1 FLR 261.

18.  The Mother submitted that judging from the evidence filed by the parties and in light of the law they referred to, the Mother is of the view that the core issues that fall to be determined by the Court at trial are :-

(i)     What are the reasonable financial needs (including but not limited to living, housing and education expenses) of the child in California, USA, commensurate with the financial resources and social status of the Father and all circumstances of the present case (including but not limited to the standard of living enjoyed by the child in Hong Kong)?

(ii)    What proportion of the child’s reasonable financial needs as determined under Issue (i) above should the Father be responsible for and for how long should the Father be responsible for (if any), having regard to all the circumstances of the present case?

(iii)   For the purpose of determining Issue (ii) above, what are the parties’ respective financial resources and earning capacities?

(iv)   Should an element of carer’s allowances be included having regard to all the circumstances of the present case and for how long?

(v)    Should the order for child maintenance in the present case be backdated and if yes, to what extent?

19.  The Mother’s Questionnaire is attached to Mother’s Discovery Summons, and it contained 15 questions, and in gist the Father asserts that the Mother’s requests are “irrelevant” because the Father is taking a view that the Father can meet any reasonable order that the court may make.   

20.  The Father submitted that it is not quite correct to suggest that the previous standard of living is significant; what is significant is: the actual expenses incurred by the child, the actual cost of any helpers allowance (if any), the Mother’s own resources and having those expenses ‘bear some sort of relationship with the Father’s current standard of living’.

21.  The Father further submitted that “social status” plays no part in assessing any financial award under the law in Hong Kong.

22.  The Father relied on Re A (A Child)(Financial Provision : Wealthy Parent) [2014] EWCA Civ 1577 and is of the view that a detailed analysis of the Father’s financial affairs is not required, since he has stated that he can meet any reasonable order made by the Court.

23.  The Mother submitted that even in a real “millionaire defence”, the Court still needs to look at the Father’s wealth to ensure that the child is brought up in circumstances which ‘bear some sort of relationship with the Father’s resources and standard of living.

24.  In addition, the Mother submitted that the present case is not a real “millionaire defence”. The Mother further submitted that though the Father is saying that the ability to pay is not in dispute, if one looks at the Father’s Form E, that is not entirely consistent with the stance taken by the Father and the Court will have to satisfy itself whether the Father really has the ability to pay.

25.  My view is that sufficient information relating to the Father’s resources needs to be shown to satisfy the Court that the Father has the ability to pay, because the Court is not bound to accept the bare assertion of any party, in particular the payer, and the Court is required by law to look at the financial means of the paying parent when determining the reasonableness of any award to be made.

26.  I also find that quite apart from the issue as to whether the Father has the ability to pay the amount claimed, the Court, when deciding the reasonableness of the amount sought, will necessarily have to have regard to the current financial resources of the Father and also the previous standard of living enjoyed by the child.

27.  I will now move on to the criteria laid down by his Lordship in the Jade’s Realm case (supra); namely, relevance, existence and possession which is also set out under Order 24 Rule 7 of the Rules of the High Court (“RHC”). As said in the Jade’s Realm case, even if the Peruvian Guano test is applicable, ‘fishing’ is not allowed and discovery should not be oppressive.

28.  It is trite law that if the party seeking discovery establishes a prima facie case, it is for the other party objecting to the order for discovery to satisfy the court that the discovery is not necessary either for disposing fairly of the cause or matter in question or for saving costs (see paragraph 24/7/1 of the Hong Kong Civil Procedure 2017).

The 3 pre-requisites under Order 24 Rule 7 of the RHC

The Mother’s Questionnaire

29.  Question 1 : The Father alleges in part 1.16 of his Form E that his son from his former marriage lives with the Father and the Mother under the same roof in Hong Kong. However, the Mother (who lived in the same address before relocating to USA) understands that the Father’s son is actually studying in the UK. The Mother is asking the Father to clarify this.

30.  The Mother submitted that the Father’s financial capability to maintain his another child and how that child has been raised are naturally very important considerations that the Court is entitled to take into account at trial.

31.  The Father submitted that it is a private matter of the Father and other members of the family and it is not relevant to the present case.

32.  My view is that it is relevant because it relates to the Father’s ability to pay in the present case if the Father still needs to support the other child because the child is currently receiving education. Question 1 is therefore allowed.

33.  Question 2 : relate to the true value of three pieces of landed property indirectly but solely owned by the Father. The Mother’s understanding is that Broom Road Property has been bequested to the Father by his late parents. The Clinic Property and the Warehouse were 100% beneficially owned by the Father (albeit through corporate vehicles)(see part 2.2 of his Form E).

34.  The Mother submitted that given that the Father claims that his monthly income (see part 3 of his Form E) is almost used up to pay for his own monthly expenditure (see part 4 of his Form E) plus he claims that he may retire any time (see part 5.5 of his Form E), the Court and the Mother are certainly entitled to be apprised of the value of the Father’s capital assets and his capability to utilize/deploy the same to generate funds to meet any on-going child’s maintenance ordered by the Court in the years to come.

35.  The Mother further submitted that the Court will have to look at what other financial resources the Father has, including his capital assets, and that the value of those properties will certainly inform the Court the standard of living enjoyed by the child before his relocation with the Mother to USA.

36.  Question 2(A) and (B) is about the other resources of the Father and 2(C) is about the standard of living that the child enjoyed in Hong Kong.

37.  The Father submitted that a proper valuation from a recognised property agent for the properties the Mother asked for are irrelevant, oppressive and unnecessary.

38.  I agree with the Father’s observation that it is unnecessary to obtain a valuation report to ascertain the value of those properties. Parties do have some general idea of the value of those properties already and this information is sufficient for the purpose of the coming trial, in particular the Father confirmed that he had the ability to pay HK$140,000 per month as claimed by the Mother if the Court find that the claims is reasonable. Question 2 is not allowed.

39.  Question 3 : The Mother asked the Father to confirm if the accounts listed in his Form E represent the full list of all accounts for the past 2 years in Hong Kong or else where that he holds or has held. The Mother argued that the Father had given an evasive answer by saying ”full disclosure has been made”. The Mother asked the Court to direct the Father to confirm whether he has disclosed all his bank accounts that he holds or has held in the past 2 years.

40.  My view is that if the answer given by the Father is full disclosure has been made, there is no need to have any further clarification. Question 3 is not allowed.

41.  Question 4 – 9 : The Mother submitted that the Father refused to disclose the value of the companies 100% owned by the Father, and that the Court and the Mother are certainly entitled to be apprised of the value of the Father’s capital assets, including his shareholdings in private companies, and the incomes that he has been (and is capable of) deriving from these private companies, for purpose of meeting any on-going child’s maintenance ordered by the Court in the years to come.

42.  The Mother submitted that these companies are actually the alter ego of the Father as the Father claimed in his Form E that he owns these companies directly or indirectly, so the situation is that the bank statements of the companies are akin to the bank statements of the Father himself, and these companies form part of his capital assets.

43.  It is also the Father’s case that he has been and is deriving monthly income from these companies, so the financial statement of these companies will inform the Court how much actually the Father has been receiving from these companies.

44.  The Father replied that because the Father and the Mother had been living together for 4 to 5 years and the Mother will be able to describe their living standard, and since the Father confirmed that he is able to pay HK$140,000 per month, so the information requested by the Mother is unnecessary and oppressive.

45.  I agree with the Mother’s observation that the value of the Father’s capital assets and also the income deriving from the companies is relevant, because it relates to the financial means of the Father, and the Court is required by law to look at the financial means of the paying parent when determining the reasonableness of any award to be made.

46.  By reasons of my observation at paragraph 28 and 29 above, I will allow Question 4(a), 4(b) and 4(d), and I will not allow 4(c), as providing the bank account statements for the past 2 years of the company is totally unnecessary and oppressive if 4(a), 4(b) and 4(c) had been answered.

47.  Likewise, Question 5(a) will be allowed and I disallowed Question 5(b).

48.  I will also allow Question 6(a), 6(b) and 6(d); Question 7(a), 7(b) and 7(d); Question 8(a), 8(b), 8(c) and 8(e); and Question 9 for the reasons given above.

49.  Question 11 & 12 : The Mother submitted that these two questions can be considered together because the information requested go directly to the veracity of the Father’s assertion that he has a monthly income of HK$180,000 only and the true position of his income.

50.  The Father replied that since he confirmed that he can pay HK$140,000 per month, question 11 and 12 will no longer be relevant for the purpose of the trial.

51.  My view is that Question 11 and 12 aimed at asking the Father to confirm how he arrived at the figure of HK$180,000 per month, and since there is no issue of the Father’s ability to pay HK$140,000 per month if the Court made such order, I agree with the Father’s observation that question 11 and 12 is no longer relevant. I disallow Question 11 and 12.

52.  The Father confirmed that he will answer Question 15(a) and 15(b).

53.  The Mother confirmed that she no longer needed Question 2, 10, 13, 14 and 15(c) and 15(d) to be answered.

The Father’s Questionnaire

54.  The Father will only pursue the following questions in his questionnaire, namely Question 2(a) and 2(d), Question 9(a), (b), (c) and (d), Question 10(a), (iii) and (iv), Question 19, Question 21(a), Question 22(a)(iv) and (viii), Question 33 and Question 37.

55.  Question 2(a) and (d) : The Father said that these questions had not been properly answered, and the Father’s concern is that both these daughters were supported by one of the former husbands of the Mother, and both of those former husbands provided some sort of support. If one or both of these daughters are living in a flat or an apartment or a house in California with the Mother, then it becomes important because the costs of that housing are split between a variety of different people and those children are being supported by one of the former husbands.

56.  In relation to Question 2(d), the Father also asked the Mother to provide the maintenance orders in relation to the other children.

57.  The Mother submitted that she had set out her case about the actual apportionment of expenses in her answer to Question 2(c), and provided the relevant bank statements as documentary evidence. I found that the Mother had provided her answer to Question 2(d) satisfactorily.

58.  I found that Question 2(a) and 2(d) had been answered satisfactorily by the Mother.   

59.  Question 9(a), (b), (c) and (d) : The Father also said that these  questions had not been properly answered. The Mother said that she had already shown the bank statements evidencing the regular payments received from her former husband. I found that the Mother had answered these questions satisfactorily.

60.  Question 10(a), (iii) and (iv) : The Father also said that these questions had not been properly answered. The Mother had already given her answer and I found that she had answered these questions satisfactorily and further exploring is unnecessary. 

61.  Question 19 : The Father also said that this question had not been properly answered. The Mother submitted that she had already given her answer and I found that she had answered these questions satisfactorily.

62.  Question 21(a) : The Father also said that this question had not been properly answered. The Mother submitted that she had already given her answer and I found that she had answered this question satisfactorily.

63.  Question 22(a) (iv) and (viii) : The Mother confirmed at the hearing that she will answer question (a)(iv) again, and I found that question 22(a)(viii) had been satisfactorily answered.

64.  Question 33 : I found that Question 33(b), 33(d), 33(e) and 33(f) had not been answered satisfactorily and these questions are relevant and necessary question. The Mother submitted that the receipt of the sale proceeds is evidenced by the bank statement at bundle 2, 440 and the Mother said that that should be sufficient for the purpose of the issues at the trial of this case which I do not agree.

65.  The agreement for sale and purchase or its US equivalent, the repayment of any mortgage, any rental income achieved during ownership of this property and the tax returns in respect of rent and in respect of the sale of the property should be provided to the Father.

66.  Question 37 : The Father also said that this question had not been properly answered. The Mother submitted that she had already given her answer and I found that she had answered this question satisfactorily.

Conclusion

67.  For the reasons aforesaid, I find that the Father shall file and serve upon the Mother the answers to the Mother’s Questionnaire/Request for Further and Better Particulars of the Father’s Form E filed on 6^th April 2018 in relation to those Questions that I have allowed above.  

68.  For the reasons aforesaid, I find that the Mother shall file and serve upon the Father the answers to the Father’s Questionnaire filed on 5^th June 2018 in relation to those Questions that I have allowed above.

Costs

69.  Both parties agreed during the hearing that the costs of the Mother and the Father discovery summons be costs in the cause of the trial of the child maintenance.

Orders

70.  I now make the following Orders :-

(a)  the Father shall file and serve upon the Mother the answers to the Mother’s Questionnaire/Request for Further and Better Particulars of the Father’s Form E filed on 6^th April 2018 in relation to Question 1, 4(a), 4(b), 4(d), 5(a), 6(a), 6(b), 6(d), 7(a), 7(b), 7(d), 8(a), 8(b), 8(c), 8(e), 9, 15(a) and 15(b) within 21 days from the date of the order i.e. on or before 28^th December 2018;

(b)  the Mother shall file and serve upon the Father the answers to the Father’s Questionnaire filed on 5^th June 2018 in relation to Question 22(a)(iv), 33(b), 33(d), 33(e) and 33(f) within 21 days from the date of the order i.e. on or before 28^th December 2018; and

(c)  all the costs of and occasioned by the Mother and the Father Discovery Summons, including all costs reserved be costs in the cause of the trial of the child maintenance.

71.  This is a Costs Order Nisi which will become absolute if no application is made within 14 days from the date hereof.

Representation: