YXY v. YYW

FCMP 7 /2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 7 OF 2013

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

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Foreword

1.  The Applicant is the Mother and the Respondent is the Father of the child born out of the wedlock in 2007 in Hong Kong.  The Mother is claiming financial reliefs for the child which includes a lump sum of HK$10 million, periodical payments of HK$55,000 a month and a settlement order of the property where the Father is currently residing with his Wife and 2 daughters at the age of 18 and 24. 

2.  On 19 November 2015, the Applicant took out a Summons for specific discovery (“Discovery Summons”) against the Respondent seeking disclosure of a Report and related documents submitted by him when he applied for immigration to Hong Kong under the “Capital Investment Entrant Scheme” (“CIES”) back in 2009. For the sake of brevity, I will refer to the documents sought under the Discovery Summons as “2009 Report”.

3.  There is no issue that the Respondent was successful in obtaining his permanent resident status in Hong Kong through the CIES when, at the time of his application under the Scheme, the capital investment threshold was to have minimum net asset value of HK$6.50 million (of which real estate was a kind of permissible investment asset under the CIES) and have it maintained throughout the period of the Scheme.  There is also no issue that the CIES applicant would have to make a declaration to the Immigration Department every 12 months or as when so required by the Director of Immigration Department to confirm that he or she remained the absolute beneficial owner of the assets since his or her last declaration so made.

4.  Suffice to say is that these proceedings commenced in 2013 and, with the filing of Form Es and exchange of Questionnaires and Answers by the parties throughout these years, extensive discoveries have already been made as to finances.  The 1^st Pre-Trial Review (“PTR”) was held on 19 November 2015 which was adjourned sine die with liberty to restore.  On the same day, the Discovery Summons was issued.  The 2^nd PTR was later scheduled to be heard on 26 September 2016. 

The Specific Discovery application

5.  The Affirmation in support of the Discovery Summons was filed by the Applicant’s legal advisers Miss Yeung attached with a 1-page extract of the CIES as exhibit downloaded from the website of the Immigration Department. Such exhibit shows the capital investment threshold under the CIES was increased from HK$6.5 million to HK$10 million commencing 14 October 2010.

6.  Miss Yeung’s Affirmation contained only 4 short paragraphs.   She made reference to the Respondent in his Form E and Affirmation had confirmed that he acquired Hong Kong residency through the CIES (paragraph 1).  She then referred to the Respondent, as a CIES applicant and to be so eligible, need to submit proof of assets (paragraph 2).  According to Miss Yeung’s belief, the Respondent would have engaged Chartered Accountant to compile a Report on proofs of his financial capabilities to fulfil the capital investment requirements under the CIES (paragraph 3).  Lastly, she sought for the filing and service of the 2009 Report and related documents submitted by the Respondent to the Immigration Department (paragraph 4).

The Respondent’s stance

7.  The Respondent in his Affirmation dated 28 December 2015 confirmed he no longer had in his possession, power or control the 2009 Report although he once had it. In 2009 when he submitted his application under the CIES to the Immigration Department, the 2009 Report had parted his possession and he had no idea as to the condition of the 2009 Report after it was being received by the Immigration Department. 

8.  Moreover, the Respondent contended that discovery of the 2009 Report would not be for the fair disposal of the trial or for saving costs.  Apart from there bearing no relevance to the subject matter of the Applicant’s claim, the Applicant already had had extensive questions and answers for the past years and issuing the Discovery Summons at this late stage of the PTR was delaying tactics and abuse of process. 

9.  Moreover, the Applicant all along aware that the Respondent’s residency was acquired through the CIES but nonetheless chose to raise such specific discovery at the PTR stage to increase legal costs for the Respondent. 

The applicable principles

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

11.  The principles governing specific discovery have 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.”

12.  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.

13.  ‘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.

14.  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.”

15.  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.”

16.  Guided with the above principles, I now consider the Applicant’s Discovery Summons.

Is there a prima facie case for specific discovery ?

17.  To start with the jurisdiction needed to make an order for specific discovery stated in the Jade’s Realm case (supra), there is little room for debate that the 2009 Report had existed since the Respondent had affirmatively said so in his Affirmation.  Thus, the next question to be considered is whether the 2009 Report related to a matter in issue (my emphasis) in the action. 

18.  The Applicant’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 children 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.

19.  Although broadly speaking the matter in issue is about the child’s financial needs and that the 2009 Report contains proof of the Respondent’s financial ability, I am not convinced that the ‘linkage’ between the Applicant’s claim and the 2009 Report are so proximately related that there exist a prima facie case in favour of production of the 2009 Report. 

20.  The Applicant in her Affirmation dated 17 January 2013 filed in support of the Originating Summons had not specified in any detail as to the item of the lump sum of HK$10 million was for future expenses or reimbursement.  The Applicant at paragraph 5.5 of her Form E dated 13 June 2013 asserted that since the Respondent’s leaving the child (when the child was 1 year old), she relied upon financial assistance from siblings and friends to support the child.  The total amount spent on the child added up to around RMB1.75 million (which is around HK$2 million) plus an insurance premium of US$43,544.  Given the fact that the child was only at the age of 6 when these proceedings were commenced, I would have thought such lump sum claim of HK$10 million included the expenses incurred in the past with the remaining lump sum of, say, roughly around HK$8 million catered for the child’s future expenses.  This may also be the reason why Applicant’s Counsel Mr. Hung had taken me through paragraphs by paragraphs of the Court of Appeal’s decision in the case of IDC v. SSA [2014] 4 HKLRD 220 where the question of jurisdiction in making lump sum orders for immediate and non recurring needs was discussed in detail. 

21.  The Respondent in his Form E dated 18 June 2013 deposed to having 2 landed properties in Hong Kong (including his present matrimonial home “MH”) and the other one in Wong Tai Sin which was rented for HK$17,000 a month.   As the landlord he has to pay rates, government rent and management fees, thus the net rental income was around HK$14,000.  He has 3 landed properties in Mainland China but all were ‘frozen’ by the PRC Government and vacant for the reason that the Applicant had reported him to the PRC authorities for having committed bigamy.  He even dared not return to Mainland China.

22.  The Respondent declared in his Form E having savings around HK$110,000, liabilities around HK$196,000.  He had sold a Porsche with proceeds of HK$122,000 and was looking for buyer of his other Toyota vehicle.  At the time of the Form E in 2013, he was unemployed and relying upon rental income from the Wong Tai Sin property and bank loans.  He was planning to further mortgage the MH.  His monthly expenses were around HK$44,227.20 a month. 

23.  The Respondent also declared in his Form E that the Wong Tai Sin landed property was purchased in July 2011 to fulfil the capital investment threshold of the CIES of HK$6.5 million at that time.  Thus he could not sell the Wong Tai Sin property until July 2017. 

24.  As said earlier, his latest financial status had been updated through series of exchange of Questionnaires and Answers.

25.  In my view, it is undisputed that the Respondent must have satisfied the minimum capital investment threshold CIES of HK$6.5 million in 2009 for otherwise he would not have acquired Hong Kong residency.  The real question is whether disclosure of the 2009 Report would assist the Applicant’s case any further. Counsel Mr. Hung submitted that disclosure would lead to a train of inquiry into the Respondent’s disclosed finances in his Form E to see if it was a complete picture.  With respect, I do not agree with Mr. Hung.

26.  Since the Respondent has already declared under oath that the Wong Tai Sin property was purchased for HK$7,075,600 in July 2011 for fulfilling the capital investment threshold under the then CIES (which was only HK$6.5 million at the time), there is no ground for the Applicant to say the 2009 Report would lead to further inquiries.  Unless there is evidence rebutting the Respondent’s reason for the purchase of the Wong Tai Sin property or the CIES financial threshold in 2009 was more than the purchase price of the Wong Tai Sin property, then I would have thought the 2009 Report might probably lead to further inquiries that the Respondent to fulfil the CIES threshold which he had not disclosed in his Form E.  Thus, it is my view that the Applicant is unable to justify her case that the 2009 Report would lead to further inquiries, if not ‘fishing’ for further information.  This follows that there is also no justification for disclosure of the subsequent declarations in the following years where the applicant was only required to confirm he or she still maintained beneficial ownership of the assets already disclosed under the CIES which, in the present case for the Respondent, is his Wong Tai Sin property.

27.  Thus, I find the Applicant is unable to establish sufficient evidence or prima facie case that the 2009 Report (including the declarations that follow) if disclosed, would either fairly disposing the case or for saving costs.

28.  Nonetheless, I will now move on to the third limb 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”).

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

(a)  Relevance

29.  Counsel Mr. Hung submitted that the 2009 Report was relevant in that it may lead to a train of inquiry which might either have the consequences of advancing the Applicant’s case or damaging the Respondent’s case (see Peruvian Guano, supra).  Mr. Hung also referred to the Respondent’s Form E filed in these proceedings which could be cross referenced with the 2009 Report and if so, might shed some light on the veracities of the Respondent’s finances in his Form E.  With respect, I do not agree.

30.  Although disclosure of the 2009 Report might tend to lead to some inquiries over the Respondent’s finances at the time of the Report, it could hardly be said that such inquiries would have either one of the two consequences given the fact that the finances were all historic figures in 2009.  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.  

31.  In my view, to order specific discovery of a 6-year old Report in 2009 which is not otherwise justified on other grounds but simply for the purpose of undermining, through the process of comparison, drawing inferences or otherwise, the truth and veracities of the contents of the Form E filed in 2013 or financial standing at present in 2016 is oppressive on the party against whom such discovery was made.  This is not a genuine case of leading up to a train of inquiries.  Rather this is tentamount to coercing the paying parent to ‘explain or account for’ the washout of his or her finances and in so doing, might be reversing the requisite burden of proof required of the receiving parent (Applicant) to prove the paying parent (Respondent) has the means to pay child’s maintenance.

32.  I find in favour of the Respondent that disclosure of the 2009 Report fails on this factor of “relevance”.

(b)  Existence

33.  As said, there is no dispute that the 2009 Report had once existed.  Since it was prepared for the purpose of the CIES for the Immigration Department, I find that on all probabilities and immigration record purposes and practice, the 2009 Report still exists (see Ngan In Leng, supra).

34.  On this factor alone, I find in favour of the Applicant.

(c)   Possession

35.  An issue was raised in submission by Counsel Mr. Hung that even if conceding the Respondent does not have the 2009 Report, he could always apply for a copy either from the Immigration Department or the Chartered Accountant who prepared it.  The Respondent had never done so. 

36.  Counsel Mr. Poon in his reply submission was unable to tell this Court precisely the stance of the Respondent on such factor.  At one time Counsel Mr. Poon said the Respondent does not have the power to apply for copies.  Further on, he then withdrew such submission but only prepared to concede that the Respondent had not so applied but not further than that.  However, Counsel Mr. Poon then made the further submission that the discovery sought was not necessary either for fairly disposing the case or for saving costs.  In my view, whatever the Respondent’s stance was, the fact is that no such copy is now available. 

37.  Whilst there is no evidence that the Respondent does have the 2009 Report at present, what really need to be considered is whether the Respondent could have or probably should have applied for copies, either from the Immigration Department or his Chartered Accountant who prepared it ?

38.  In my view, the answer must be premised upon whether a prima facie case for disclosure was successfully shown by the Applicant.  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). 

39.  As the Applicant is unable to establish a prima facie case, I find the Respondent was not required to apply for copies of the 2009 Report. 

40.  Had I been wrong on the finding of prima facie case against the Applicant, I believe the Respondent would succeed in the contention that the 2009 Report was not necessary for the fair disposal of the Applicant’s present claim for the fact that such Report contains only past and historic financial information in 2009.  Also, the disclosure sought would certainly not for savings costs.

41.  On this factor, I find in favour of the Applicant.

Conclusion

42.  For the reasons aforesaid, I find the Applicant unsuccessful in her application.  The Discovery Summons should be dismissed.

Costs

43.  Given the decision of this Court, I find it fair and reasonable for costs to follow the event.

44.  I do not find this application is of any complexity or involve any difficult questions of law which justify engaging Counsel. 

45.  Accordingly, I do not grant Certificate for Counsel.

Orders

46.  I now make the following Orders :-

(a) The Applicant’s Summons dated 19 November 2015   (“Discovery Summons”) be dismissed; and

(b) The Applicant do pay the Respondent all the costs of and occasioned by the Discovery Summons, including all costs reserved, to be taxed if not agreed.

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