DFR v. LYC

FCMC 16847 / 2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 16847 OF 2010

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D E C I S I O N

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1.  This is the application by the Petitioner Wife (“Wife”) against the Respondent Husband (“Husband”) by way of Summons dated 6 July 2012 for specific discovery as follows :-

“1. The Respondent do within 28 days from the date of order provide the details of all types of bank account (other than those accounts previously disclosed in his Form E dated 21^st April 2011) maintained with HSBC which the Respondent held solely and/or jointly with others since January 2008 including those bank accounts already closed and provide copies of bank statements thereof covering the period from January 2008 to the date hereof;

2.  The Respondent do within 28 days from the date of order provide a written confirmation issued by HSBC confirming the exhaustive list of all types of bank accounts which the Respondent held solely and/or jointly with others including those bank accounts already closed;

3.  The Respondent do within 28 days from the date of order provide the

details of all types of bank accounts (other than those accounts previously disclosed in his Form E dated 21^st April 2011) maintained with Hang Seng Bank which the Respondent held solely and/or jointly with others since January 2008 including those bank accounts already closed and provide copies of bank statements thereof covering the period from January 2008 to the date hereof;

4.  The Respondent do within 28 days from the date of order provide a written confirmation issued by Hang Seng Bank confirming the exhaustive list of all types of bank accounts which the Respondent held< solely and/or jointly with others including those bank accounts already closed.”

The Husband’s Form E

2.   The Husband filed his Form E on 21 April 2011.  The discovery sought was directed to the answers provided by the Husband at paragraph 2.3 in his Form E.  Before going to the answers given it is pertinent to set out what was being asked to provide under paragraph 2.3 of the prescribed Form E :-

“2.3 Give details of all bank accounts in Hong Kong or elsewhere, which you hold or in which you have an interest including those closed within the last 12 months. For joint accounts, state your interest and the names of the account holders. Attach copies of your bank statements covering the last 12 months for each account. For fixed or term deposits, attach copies of latest statements.”

3.   The Husband provided the following answers :-

Name of bank	Type of account (e.g. current)	Account number	Name of other account holder (if applicable)	Balance at the date of this form	Total current value of your interest
HSBC	Multi currencies	47x-2xxxx9-888		HK$582,882.00	HK$582,882.00
	RMB current	02x-7xxxx7-209		RMB6430	RMB6430
	HK$Savings	06x-0-0xxxx4		HK$804	HK$804
Bank of China	Savings Account	47xxxx6- 01xx-0xxxx8-3		RMB25819	RMB25819
		TOTAL value of your interest in all accounts (C)			HK$622,540.00

The Wife’s Questionnaires and Husband’s Answers

4.   The Wife has filed and served altogether 3 Questionnaires on the Husband on 11 October 2011, 3 February 2012 and 28 May 2012, which I will refer respectively as the 1^st, 2^nd and 3^rd Questionnaires.

5.  In the 1^st Questionnaire, the question posed as to the answers given by the Husband at paragraph 2.3, inter alia, was :-

“To confirm whether or not the Respondent ever holds, has held or has or has had an interest in any bank account (including fixed or term deposits, joint accounts, savings, current, foreign currency accounts and investments) in Hong Kong or elsewhere (including those closed within the last 24 months) other than those bank accounts disclosed in part 2.3 of his Financial Statement. If the answer is in affirmative, please give full particulars of such other bank account(s) and to produce copies of all bank statements covering the last 12 months for such account.”

6.  The Husband’s answer was :-

“Under part 2.3, the Respondent is only required to give details of all bank accounts in Hong Kong or elsewhere, which he holds or in which he has an interest including those closed within the last 12 months but not the last 24 months.”

7.  In the 2^nd Questionnaire, the similar question was posed except that the period of ‘24 months’ was amended to ‘12 months’.

8.  The Husband’s answer was :  “No.”

9.  In the 3^rd Questionnaire, the question was phrased slightly differently as follows :-

“To confirm whether or not the Respondent ever holds, has held or has or has had an interest in any joint account(s) in any bank(s) in Hong Kong or elsewhere (including those closed within the last 12 months preceding the date of the Respondent’s Form E), including but not limited to the joint account(s) with the Respondent’s parent(s), sibling(s), children and/or business partner(s). If the answer is in affirmative, please give full particulars of such other bank account(s) and to produce copies of all bank statements covering the last 12 months preceding the date of the Respondent’s Form E for each account.”

10.  The Husband’s answer was : “Please see Answer to Question 7 of the Petitioner’s 2^nd Questionnaire”.

The Husband’s contention

11.  In the Husband’s Affirmation in opposition dated 4 August 2012, he claimed to have made disclosure without reservation as to assets which belong to him beneficially.  As a practising lawyer, he admitted he is well aware of his duty to make full and frank disclosure. 

12.  His contention to the present application was set out in paragraphs 3 to 10 of his Affirmation under the heading ‘Malicious Intention of the Petitioner”.  Apart from these contentions, there are no other contentions raised.

The applicable principles

13.  There is no issue as to the provisions under which the Wife is seeking specific discovery.  The provisions under Rule 77(4) of the Matrimonial Causes Rules Cap.179A (“MCR”) provide :-

“(4) Any party to an application for ancillary relief may by letter require any other party to give further information concerning any matter contained in any affidavit filed by or on behalf of that other party or any other relevant matter, or to furnish a list of relevant documents or to allow inspection of any such document, and may, in default of compliance by such other party, apply to the court for directions.”

14.  Besides, Order 24 Rule 7 of the Rules of the High Court (“RHC”) which is applicable to matrimonial proceedings by virtue of Rule 3 of the MCR is also relevant.  I will consider the approach prevalently adopted in specific discovery applications in this decision.

15.  It is trite law that to invoke Order 24 Rule 7 of the RHC, there are 3 prerequisites, namely, relevance, existence and possession of the documents sought for discovery.  Once a prima facie case has been made out by the party seeking such order, the court has a discretion whether or not to order disclosure (see Paul’s Model Art GMBH & Co KG –v- UT Ltd [2006] 1 HKC 238).   It is then for the other party objecting to disclosure to show that it is not necessary for disposing fairly of the cause or issue in question or for the purpose of saving costs (see Hong Kong Civil Procedure 2012, Vol 1, para 24/8/1).

Is there a prima facie case ?

16.  The Husband had not referred specifically to this issue in his Affirmation in Opposition.  In his Counsel’s skeleton submissions, reference was made to the Wife’s 1^st questionnaire when she asked for transactions above $5,000 in Husband’s accounts.  There was a deposit of $9,500 into Husband’s Premier Account with HSBC on 3 January 2011.  The Husband gave the answer that it was from ‘his eldest brother’s bank account being contribution towards living expenses of their father’.  There was a further similar deposit on 1 February 2011.  In the bank statements, it shows a reference of ‘From Lxx, Lxx (surname + initials)’.

17.  It is the Husband’s case that the Wife had knowledge of the identities of those persons labelled by initials.  The fact that there was no follow up questions by the Wife in her 2^nd questionnaire showed she was satisfied with the answers given.  The Husband also challenged the Wife’s intended discovery being too wide in scope to cover all joint accounts in the name of the Husband and ‘others’ as well as the period sought was since January 2008.  

18.  Whether a prima facie case exists do not depend on knowledge of the parties but rather upon the surrounding circumstances considered objectively.  In my view, the Husband’s allegation that the Wife knew the identities of those initials labelled “From Lxx, Lxx (surname + initials)” is neither here nor there. Had the Wife known or been able to make a guess as to the identities of those initials to be the Husband and his siblings, it could not be said the Husband’s interests over the monies in such joint name accounts had been disclosed.  For fulfilling the duty on disclosure in the present case, it is for the Husband to say rather than the Wife to assume, be it on the identities or any interest over any monies. From reading of the wordings of paragraph 2.3, it is plain and obvious that it rests upon the party filling the form to give details.  

19.  I am satisfied a prima facie case exists for specific discovery.

Any justifiable grounds against specific discovery ?

20.  The contentions raised in paragraphs 3 to 10 of the Husband’s Affirmation in Opposition can be succinctly summarised as follows :-

(a) The Wife knew he had been a trustee holding bank accounts of his siblings not residing in Hong Kong (paragraph 3);

(b) He could have changed address had he wanted to conceal the fact of having joint accounts on trust (paragraph 4);

(c) He honestly believed the Wife would not and could not have taken issue on those joint accounts when he was only a bare trustee (paragraph 5);

(d) The Wife knew at the very beginning that there were those trust accounts but never requested him to give details (paragraph 6);

(e) The Wife was trying to gain tactical advantage over him by seeking specific discovery of the trust accounts (paragraph 7);

(f) The Wife had not denied she had knowledge of the trust  accounts and that she knew they did not belong to him beneficially (paragraph 8);

(g) The Wife’s present summons for specific discovery spoiled the chances of success at the adjourned FDR and causing more damage to the already hostile atmosphere between the parties (paragraph 9); and

(h) Husband repeating he does not have any beneficial interests in the trust accounts and is only a bare trustee (paragraph 10).

21.  As can be seen, the Husband had not addressed on any of the 3 pre-requisites of relevance, existence and possession of those documents presently sought for discovery nor did he raise any issue of hardship or prejudice.  There is no contention either as to the information sought not being available or cannot be arranged.  There is also no contention that the Wife is ‘fishing’ for evidence although, if so contends, is likely to fail.  The Husband being a practising lawyer, with the benefit of full legal advice, saw fit to focus his contention upon the Wife’s knowledge of the joint accounts in existence and details thereof and also the way in which the Wife conducted the case.  This is, in my view, unnecessary and uncommon if he had not entirely missed the point.

22.  In civil litigation, 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 possess which is relevant whether in advancing his or his opponent’s case or destroy his own case (see Compagnie Financiere du Pacifique –v- Peruvian Guano Conpany (1882) 11 QBD 55).   This is commonly called the ‘Peruvian Guano’ principle.

23.  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.”

24.  Given the Husband’s contentions in his Affirmation, there are no justifiable grounds by the Husband against the Wife’s application for specific discovery.  In my decision, a party against whom discovery was sought would not be exonerated from his continuing duty of disclosure of documents and information which are relevant and necessary even in a case where the party seeking discovery was proved to have possessed the documents or was aware of the information in question.  Any such unwarranted discovery would, in my view, only be the subject of any costs sanction rather than exonerating a party’s duty of disclosure.  

The Husband’s Answers

25.  It is plain and obvious that the Husband’s Answer to the 1^st Questionnaire is nothing more than a challenge to the period of disclosure of 24 months. There is nothing more than that.  As such, my finding is that no answer had been given by the Husband to the question posed in the 1^st Questionnaire in respect of his answers given in paragraph 2.3 of his Form E.

26.  In the 2^nd Questionnaire on the same question although the period was revised to 12 months, the Husband’s Answer was “No”.  The question asked was to confirm whether there are any joint accounts and; if so, give full particulars and attach relevant bank statements.  The simple and short answer of “No”, in my finding, not only lacks clarity or meaningless.  It is also inaccurate or untrue.

27.  It is undisputed by the Husband that he had joint accounts with his siblings. What was required of him in the question posed by the Wife was for him to confirm the existence and to give details of the joint accounts.  To give the answer “No”, however, implicates something contrary and in the negative.  The explanation given for providing such an answer was that the Husband had no interest in those existing joint accounts.  I can hardly accept such an explanation.  There is always a difference between confirming a state of affairs and asserting a position.  I do not believe such difference was not apprehended by the Husband.  The Husband was simply asserting the bare trustee position by providing a negative answer.  By giving the “No” answer, he had neither confirmed nor provided any details of the joint accounts.  As such, my finding is that the Husband had not answered the Wife’s 2^nd Questionnaire in relation to the answers given in paragraph 2.3 of his Form E.

28.  As to the Husband’s answer to the 3^rd Questionnaire on the same topic of joint accounts, he simply referred to and adopted the “No” answer given to the 2^nd Questionnaire.  For the reasons above, I also find the Husband was not responding to the Wife’s question in the 3^rd Questionnaire.

Relevance

29.  Although no issue was taken by the Husband on the 3 pre-requisites of relevance, existence and possession, it does not necessarily follow the question posed or discovery sought by the Wife will automatically be allowed.  It is pertinent for the Court, before making the order for specific discovery, to examine the questions asked, the answers provided (if any) and, justification of the further questions before ordering specific discovery.

30.  On the topic of ‘relevance’, I find the following passages from the judgment of Dunn J in the B –v- B case (supra) at pages 809 to 810 extremely useful  :-

“It is another feature of such proceedings that one party, usually the wife, is in a situation quite different from that of ordinary litigants. In general terms, she may know more than anyone else about the husband’s financial position : she will know at first hand of the standard of living of the family during the marriage; she will know about the furnishing and equipment of the matrimonial home, and of the physical possession of the Husband, and perhaps the approximate amount of cash kept in the house. She may also know, from conversation with the Husband in the privacy of a matrimonial home, the general sources of his wealth and how he is able to maintain the standard of living that he does. But she is unlikely to know the details of such sources or precise figures, and it is for this reason that discovery now plays such an important part in financial proceedings in the Family Division.

Applications for such discovery cannot be described as ‘fishing’ for information, as they might be in other divisions.  The wife is entitled to go ‘fishing’ in the Family Division within the limits of the law and practice”

31.  In the present case, there is no issue of the Wife ‘fishing’ for evidence.  In determining ancillary reliefs, the Court is to fulfil its quasi-inquisitorial function before it is in any position to make fair division of the matrimonial assets.  Section 7 of the Matrimonial Proceedings and Property Ordinance, Cap.192, imposes the duty upon the Court to consider those factors in the section which includes, inter alia, the financial resources the parties have or likely to have in the foreseeable future; the standard of living before the breakdown of the marriage.

32.  Considering the questions posed by the Wife in her 3 Questionnaires requiring the Husband to confirm and state his interests (if any) over any joint accounts, I am satisfied that such information are relevant and necessary for determining the Husband’s financial resources under section 7.

33.  As for the other 2 pre-requisites of ‘existence’ and ‘possession’, no such issue had ever been raised by the Husband.

34.  In conclusion, I find in favour of the Wife that the information sought is both relevant and necessary, subject to one clarification I set out at paragraph 36 below, which the Husband had failed to provide. 

Scope and ambit of discovery

35.  There remains the scope and ambit of discovery.  There is the contention that the discovery as per the terms in the Wife’s summons are too wide and extensive to also cover the Husband’s law practice as there are joint accounts with the other partners and/or the firm and/or trust accounts for his clients.

36.  I do not accept such contention for 2 reasons.  First, it is not the Wife’s case to seek discovery against the office account and clients’ account of the Husband’s law practice.  The term ‘others’ might have to be clarified by adding the words ‘not being business or work related’ to remove any possible ambiguity on interpretation.  Secondly, as stated in paragraph 23 of Wife’s Counsel written submission of which judicial notice will be readily taken, the common practice for law practices is for trust accounts with clients to be opened under the name of the law firm or a service company as opposed to be under the personal name of the lawyer.   

37.  The Husband also contended upon the period of discovery back to January 2008.  Again, I noted this was never raised as a contention in the Husband’s Affirmation in Opposition but came out in his Counsel’s written submission at paragraphs 10(1) to (5), details of which are as follows :-

“(1) Form E only requires the parties to give details of all bank accounts covering the last 12 months from the date of filing (Apr 2011). H has duly complied with his obligation in this regard;

(2) W did attempt to ask for bank statements going back to 24 months in her 1^st questionnaire. Upon H’s refusal to give his records covering that period, W changed her stance and limited her request to 12 months, just like the requirement in Form E

(3) At no time did she ever request H to provide his ban records dated back to Jan 2008;

(4) H’s ability to pay maintenance is and was never in issue. H has complied with all MPS orders;

(5) Before the present application, there was no real issue as to the living standard enjoyed by the family prior to separation. It is not W’s case that her living standard (supported by H’s MPS payments) had become dramatically different from before.

38.  Of sub-paragraph 10(1), I am not convinced the 12-month period of disclosure in the prescribed Form E prohibits discovery over 12 months.  There is no such limitation in the Matrimonial Causes Rules, Cap.179A.   I am inclined to find the 12 months was set as a minimum period rather than a maximum period.

39.  Of sub-paragraph 10(2), the change of 24 months in the 1^st Questionnaire to 12 months in the 2^nd Questionnaire would not, in my view, bar the Wife from seeking discovery over 12 months.  It is always for the Court to decide, taking into account all the circumstances and factors of each particular case, and considering prejudice and justice, what should be the appropriate period for discovery in a particular case.  In the present case, I accept discovery since January 2008 is fair and reasonable since the parties separated around October 2008.  Since the discovery relates to joint accounts which the Husband might have an interest as opposed to his own personal accounts, the Court may need to have a complete picture of funds movement in these accounts before and after the parties’ separation when making findings whether the Husband was merely holding funds as a bare trustee.  In my view, such discovery would assist the Court in fairly disposing of an issue in dispute and for saving costs.

40.  Of sub-paragraph 10(3), the fact that no request had been made for the Husband to provide bank records back to January 2008 would not prohibit this Court from so ordering for the same reasons I set out in paragraph 38 above.

41.  Of sub-paragraph 10(4), the Husband’s compliance with maintenance pending suit order and ability to pay maintenance is of no relevance to the period of disclosure.

42.  Of sub-paragraph 10(5), the period of disclosure would not be dictated by whether there is any change in living standard of the Wife.  I repeat my reasons given in paragraph 39 above since the specific discovery sought related to joint accounts.

Orders

43.  Based on the above, I will grant an Order in terms of the Wife’s Summons dated 6 July 2012 but with the clarification on the word ‘others’ which I set out in paragraph 36 of this Decision.

44.  As to the issue of costs, I fail to see why costs should not follow the event.  I therefore order that the Husband do pay the Wife’s costs of the Summons.  I also grant Certificate for Counsel.  This costs order nisi will be made absolute if no application for variation is made within 14 days.

Others

45.  I noted the Husband’s Summons dated 24 September 2012 seeking specific discovery against the Wife has now been scheduled for a 2-hour substantive argument on 8 March 2013.  There is also a hearing scheduled on 2 January 2013 for Financial Dispute Resolution (“FDR”).

46.  In light of this Decision and the Husband’s Summons yet to be decided, it is obvious that the FDR would have to be adjourned after the present specific discovery and disposal of the Husband’s Summons.

47.  I now also order that the hearing of the FDR on 2 January 2013 be vacated and adjourned to a date to be fixed by the parties with 2 hours reserved.