CHUNG CHIU HA v. BILLY KAI TSOI

CACV 611/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 611 OF 2000

(ON APPEAL FROM FCMC NO. 9122 OF 1999)

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J U D G M E N T

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Hon Rogers VP:

1. This is an appeal from a decision of Deputy Judge Chainrai given on 17 July 2000 after a hearing which took place on 1 June 2000. The hearing itself was an adjourned hearing. Shortly prior to the hearing of the summons on 1 June, the respondent in this case had produced an affidavit which was filed on 1 June. There was no application to adjourn the hearing of the summons so that that affidavit could be answered. Today the appellant who is the petitioner sought to file further evidence in reply to that affidavit. That was refused at the commencement of this hearing after hearing submissions. In short, there was no valid reason for permitting new evidence on appeal when the matter could have been available below. If the appellant had seen it necessary to file evidence the proper course would have been to have sought an adjournment to file the evidence on the application.

2. The summons which the judge was dealing with was a summons seeking an order that the respondent should answer interrogatories and also provide further discovery. The judge made a number of orders. In particular, the judge ordered that the respondent should answer the interrogatories and should provide audited accounts for various companies. The three companies in particular in respect of which the judge ordered accounts to be produced were Outstanding Engineering (Hong Kong) Limited, North Ocean Engineering (Hong Kong) Limited and Outstanding Engineering Company Limited. Some of the accounts have not yet been prepared and therefore have not been provided.

3. Before this court the appellant said that in addition to the audited accounts the respondent should produce on discovery the bank statements of these three companies. The judge below had refused to make such an order and she said quite simply:

"A bank statement does not, of itself, convey any significant information. Reference to cheques, etc. are by numbers only and most entries in bank statements are cryptic rather than revealing in nature. I do not see the need for the production of these. The Petitioner's application for the production of the bank statements in respect of these 3 companies is refused."

4. I do not feel that I can do better than echo those words and I simply say that the bank statements on their own are going to be of little use.

5. On behalf of the appellant today it was argued that there were a number of items in respect of which the appellant would like to see where the money went to and where it came from. Miss Fung, on behalf of the appellant, could not demonstrate any practical use which the bank statements would give the appellant. On the contrary, it seems to me that the production of the bank statements being internal documents of the companies would be privy to them and secondly would provide no practical use to anybody even if attempts were made to correlate them with the audited accounts. Insofar as there are specific items about which the appellant would wish to make further inquiries, it may be that there are vouchers, it may be that there are book entries in the respective companies that would be of assistance, but the bank statements in themselves would be of no assistance whatever.

6. The next item of which the appellant complains is that the judge did not order the production of either the audited accounts or the bank statements of a company by the name of Hung Hing International Engineering Company Limited. Quite simply the evidence in relation to that is that that company has a shareholding which is 50% in the name of the respondent and 50% in the name of a Mr Lam. The evidence of both respondent and Mr Lam is quite simple that although the 50% shareholding is in the name of the respondent, the beneficial interest in that shareholding is held by Mr Lam. This is summarised by what was said by Mr Lam in para. 4 of this affirmation:

"Again the Respondent indicated that he did not have the funds to inject into such business. It was therefore agreed between the Respondent and I that, similarly, the shares registered in the name of the Respondent would be held for me beneficially until such time as the Respondent could pay for the same."

Mr Lam then went on in para. 6 to say:

"As far as I am aware, the Respondent has not invested funds into Hung Hing since the company was reactivated and he has not paid me for the shares registered in his name. As such I consider myself to be the sole beneficial owner of the company and I object to the release of the company's documents for the purposes of the private matrimonial affairs of the Respondent."

7. In relation to this the judge below referred to Mr Lam's affirmation and in particular to his objection. She concluded that there was no evidence that this was contrived to frustrate the court's power. On that basis the petitioner's application that the respondent produce the relevant audited accounts and bank statements of Hung Hing International Engineering Company Limited was refused.

8. In my view the Deputy Judge's approach cannot be faulted. The evidence is clear as to the beneficial ownership and no beneficial ownership residing in the respondent has yet been established. The best the respondent would have would be a contingent interest should he pay for the shares. I would also add that it is not clear to me that this company has been trading in any substantial way, as yet anyway. In my view there is no ground here for disturbing the conclusion to which the judge below came.

9. The last items which are prayed for on this appeal are the audited accounts and the bank statements of Everwin Venture Limited and Spacetop Limited. These companies are joint venture companies.

There are altogether 8 shareholders in these joint venture companies. As appears from the papers, each of the shareholders in those companies appears to have put in half a million dollars to provide working capital for those companies. The papers in the case show that, for example, the shareholding in Spacetop Limited is held by a nominee secretarial company and which has made a declaration of trust in favour of Outstanding Engineering Company Limited.

10. Here it seems to me the interest which the respondent has in these joint venture companies is remote. Insofar as there is any benefit to the respondent it is through Outstanding Engineering Company Limited in respect of which he owns 33% of the shares. I would add that another company Merit Youth Limited owns 1% of Outstanding Engineering Company Limited and the appellant herself has a 50% shareholding in Merit Youth Limited, so there is indeed some connection also between the appellant and these joint venture companies.

11. Likewise here the Deputy Judge below came to the conclusion that she was not satisfied as to the relevance and importance of these documents nor as to the hardship likely to be caused to the appellant by the non-disclosure. In my view, in view of the remoteness, the Deputy Judge was correct. Insofar as Outstanding Engineering Company Limited has an interest in these companies it is a minority shareholder with 7 other shareholders. Those other shareholders are, seemingly at any rate on the face of the documents, quite distinct and unconnected insofar as control is concerned from Outstanding Engineering Company Limited. Insofar as there is any benefit to Outstanding Engineering Company Limited from the activities of these two companies Everwin and Spacetop, that will be reflected, as and when that benefit is realised, in the audited accounts of Outstanding Engineering Limited.

12. In summary, therefore, I have come to the conclusion that the Deputy Judge below was correct in her conclusion and came to the correct decision and I would, therefore, dismiss this appeal.

Hon Woo JA:

13. I also agree.

Hon Mayo VP:

14. I agree entirely and there is nothing I can usefully add.

[After hearing submissions]

Hon Mayo VP:

15. The respondent will have the costs of this appeal. The costs of the preparation of the first batch of appeal bundles, not in accordance with the Practice Directions, shall be borne not by the appellant but by her solicitors, unless the solicitors within 14 days make representation to this Court under Order 62, rule 8 of the Rules of the High Court.