CKP v. SYK

FCMC 2441/2017

[2021] HKFC 14

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 2441 OF 2017

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J U D G M E N T

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Introduction

1.  There are 2 applications before the Court for determination.

2.  The Respondent wife, whom I will referred to her as “W”, filed a Summons on 11/2/2019 pursuant to Rule 6 of the Matrimonial Causes Rules, Cap.179A (“MCR”) (the “Show Cause Application”). In the Summons, she sought for an order that the Petitioner husband, whom I will refer to him as “H”, to show cause why he should not be bound by the parties’ agreement on finances recorded in 2 documents labelled as :-

(i)   “Split of Liquid Assets Agreement” signed on 13/10/2014; and

(ii)  “Authorization Letter (委托書)” dated 18/10/2015,

collectively called the “Oral/Written Agreement”.  Both documents were attached to H’s Petition for divorce filed on 1/3/2017.

3.  On 22/2/2019, H issued a Summons pursuant to Rule 77 of the MCR, Order 24 r.7 of the Rules of the District Court (“RDC”) and inherent jurisdiction (the “Discovery Application”).

4.  In the Summons, H sought for the production of bank statements of different bank accounts either under W’s personal name or of under those companies set up by W which H only discovered after the Oral/Written Agreement was entered into.

5.  Leave was granted by the Court on 23/10/2018 for H to file his questionnaires on those bank accounts with requests for statements.  H’s Questionnaires was filed on 25/10/2018.  W’s Answers was filed on 22/11/2018 which came up with identical answers to each of the questions that parties had reached settlement on finances upon their separation in October 2014 as per the 2 documents which contained the Oral/Written Agreement.  H’s requests in the Questionnaires for documents and details in respect of sums exceeding HK$100,000 from January 2012 to October 2014 was considered by W to be oppressive.

6.  Once there was dispute between Counsel for the parties as to which of the 2 Summonses should be heard first. On 16/7/2019, this Court directed that both Summonses to be heard together at the same hearing.

Background

7.  Parties married in September 1977.  There are 3 children born out of the marriage all of whom are of adulthood and self-supporting.

8.  On 1/3/2017, H filed a Petition for divorce (2-year separation) attached with 3 documents which contains the 2 documents as per the Oral/Written Agreement and also an untitled document marked with the date of 28/9/2014 and signed by H only.  Undisputedly, the Petition was amended twice with the 3 documents attached throughout.

9.  Decree Nisi was granted in October 2018.  Decree Absolute was granted a month later in December thus ending this 41-year long marriage.

10.  Parties’ ancillary reliefs thus became the only outstanding matter.

11.  Given the nature of the 2 applications which intrinsically are intertwined, I decided to deal with W’s Summons followed by H’s Summons in this Judgment.

W’s Summons (the “Show Cause Application”)

12.  Mr. Robert Pang SC for H raised 2 preliminary clarifications on Rule 6 of the MCR in pursuance thereof W grounded her “Show Cause Application”.  First, Rule 6 does not stipulate anywhere for a party to “show cause”.  Secondly, the rule provides that the Court may express an opinion, should it thinks desirable to do so, on the reasonableness of the agreement of the parties and may give directions as it thinks fit.

13.  Counsel Mr. Jeremy S.K. Chan for W in his Skeleton Submissions emphatically made reference to the Oral/Written Agreement

having been repeatedly accepted by H thrice in his Petition, Amended Petition and Re-amended Petition to be the agreed terms with W on finances.  Substantial financial disclosure had already taken place which was more than sufficient for the parties’ financial reliefs in light of the Oral/Written Agreement which was in place.

14.  Rule 6 of the MCR provides, inter alia, as follows :-

“6. Application to court to consider agreement made in contemplation etc. of divorce or judicial separation

(1) On application made either before or after the presentation of a petition for divorce or judicial separation, or the making of a joint application, as the case may be, the parties to the marriage or either of them may refer to the court any agreement or arrangement made or proposed to be made between them which relates to, arises out of or is connected with, the proceedings which are contemplated or have begun.

(2) ……

(3) ……

(4) An application made after the presentation of a petition or the making of a joint application, as the case may be, shall be made by summons to a judge of the District Court and shall, unless otherwise directed, be heard in chambers.

(5) At the time of the filing of an originating application or notice of application or the issue of a summons under this rule, there shall be filed an affidavit by the applicant or applicants setting out particulars of the agreement or arrangement in question and the grounds on which the application is made, and every copy of the originating application, notice or summons served on a respondent shall be accompanied by a copy of the affidavit.

(6) An application under this rule shall be heard by a judge and, unless otherwise directed, shall be heard in chambers.

(7) On the hearing of an application under this rule the judge may express an opinion, should be think it desirable to do so, as to the reasonableness of the agreement or arrangement and may give such directions, if any, in the matter if he thinks fit.

(8) A respondent to an application under this rule may not be heard without filing an affidavit in answer to the application.”

15.  Upon considering Rule 6, I agree with Senior Counsel Mr. Pang that the rule does not provide any “show cause” regime for H and that, if he fails to do so, he would then be bound by the terms contained in the Oral/Written Agreement so prayed for in the terms of W’s Summons.  Rule 6 and the sub-rules, in their entirety and upon their true construction, does not operate in a way that if a party was unable to “show cause” as to why he/she should not be bound by the agreement or arrangement laid before the Court, then he/she would be bound by it.

16.  In matrimonial cases where finances are involved, it is always the statutory duty of the Court that it shall (emphasis added) look into those factors under Section 7 of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”).  Unlike other civil cases generally, where the “show cause” regime under Order 49 (Garnishee Proceedings) and Order 50 (Charging Orders) of the RDC are readily applicable, there is no “show cause” regime in the matrimonial context. 

17.  If one looks at Practice Direction 15.12 (Matrimonial Proceedings and Family Proceedings) paragraph 9 under Heading G - “New Measures under the Civil Justice Reform”, it can be seen that only some of the orders under the RDC are for general application to matrimonial proceedings.  They are namely Order 2; Order 22A; Order 24 r 15A; Order 35 r 3A; Order 38 r 4A; Order 38 Part IV; Order 41A; Order 62 and Order 62A.     

18.  In my view, Rule 6(7) of the MCR provides an assurance that the statutory duty of the Court under Section 7 of the MPPO would not be swiped away by the parties’ agreement in that it provides an avenue for the Court to give directions and, if it thinks fit, to express any opinion over the reasonableness of the parties’ agreement before it.

19.  Paragraph 7 of the Petition for divorce, which is a prescribed form, is only part and parcel of the background and details of the case for the Court’s information before the Petitioner moves on to the final part where we commonly called the ‘prayer’ of the Petition.

20.  H in the “prayer” of his Petition, Amended Petition and Re-amended Petition had throughout maintained his claim for a series of ancillary reliefs under the MPPO as may be just rather than simply seeking an order to be made directly as per the terms of whatever he had set out in paragraph 7 therein to be the ancillary reliefs. That said, it is wrong to say that H had “resiled” from what he had agreed with W and that he should be bound by it unless he was able to, so to speak, “show cause”.

21.  In my view, whatever agreement or arrangement referred to or set forth under paragraph 7 of a Petition for divorce could not be metaphorically taken as being final and conclusive unless it was expressly prayed for in the “prayer” of the Petition.  However, even if so, it could hardly escape the scrutiny of the Court.  This explains for the common practice of the need of separate “Consent Summons(es)” to include whatever terms agreed for the ancillary reliefs for the Court’s approval. 

22.  Now I will deal with those cases cited by W’s Counsel Mr. Chan in his able submissions.  Reference was made to the UK Supreme Court decision in Vince v. Wyatt[1] approving the Crossley v Crossley[2] procedure for the family courts to develop the “show-cause” procedure for determining certain types of financial application.  However, the Supreme Court also stressed that the “show-cause” procedure did not (emphasis added) obviate the need for the court to discharge its duty under s 25 of the 1973 Act (which is the equivalent of s 7 of the MPPO in Hong Kong) which fits in my construction of Rule 6(7) of the MCR and the observation above. 

23.  Reference was also made to the cardinal case of SPH v SA[3]

where the Court of Final Appeal (“CFA”) in principle accepting the UK decision of Granatino v Radmacher[4] for the court to give appropriate weight to an agreement made by the parties prior to and in contemplation of their marriage, and in appropriate circumstances, the court could hold parties to their agreement, ante-nuptial or post-nuptial alike, even when the result would be different from what the court would have otherwise ordered for ancillary relief. 

24.  However, at paragraph 33 of the CFA Decision where it was said :-

“33. In particular, an agreement would carry full weight only if each party had entered into it of his or her own free will, without undue influence or pressure, having all the information material (emphasis added) to his or her decision to enter into the agreement and intending that it should be effective to govern the financial consequences of the marriage coming to an end…………”

25.  H’s main contention that the Oral/Written Agreement not to be upheld is that W had been withholding material information as to her personal assets and/or the finances of the group of companies owned by them over the years at the time of the alleged financial settlement between them.  This is the crux of H’s case in respect of the Discovery Application of his Summons.  In the absence of any Court’s finding as to W’s disclosure being sufficient, H could not be said “to have all the information material to his decision” when the Oral/Written Agreement was entered into.  That said, the facts in this case is readily distinguishable from SPH v SA (supra).

26.  Reliance was then placed by W’s Counsel on the case of S v S[5]

which involved a long marriage of 29 years and an Edgar-agreement where the Court found that there was a factor of “magnetic importance” in the parties’ settlement agreement for a “notice to show cause” to be regarded as just and proper route for determination by the Court against the backdrop of a consideration of the s 25 factors.  

27.  With respect, I can hardly accept that the facts of the present case tally with W’s Counsel’s submission on S v S (supra).  It is W’s case and indeed common ground that at the material time, the Oral/Written Agreement does not embrace 3 landed properties which had yet to be negotiated or otherwise agreed by them. Thus it lacks finality on the substantive issue as to assets attributable for distribution when compared with the case where a concluded agreement of 45% to the wife and 55% to the husband had not only be achieved, quantified but also implemented, leaving behind only the costs associated with the implementation was in issue. The factor of “magnetic importance”, namely, an all-round concluded agreement having been achieved, quantified and implemented, simply does not exist on the facts of this case.  

28.  For all these reasons, I find against W on her “Show Cause Application” and her Summons dated 11/2/2019 must be dismissed with costs.

H’s Summons (the “Discovery Application”)

29.  I will first start with the legal principles on discovery.     

The applicable principles

30.  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”).  There is no issue between parties that the provisions under RDC are equally applicable to the family courts.

31.  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.”

32.  Full and frank disclosure is an important part in litigation 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 or her own case (see Compagnie Financiere du Pacifique v Peruvian Guano Conpany (1882) 11 QBD 55).   This is commonly called the ‘Peruvian Guano’ principle.

33.  ‘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 application between spouses in family court cases 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 Es or the answers to questionnaires raised subsequent thereto.

34.  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.”

35.  In the English 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 as follows :

“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) …………….

(6)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.”

36.  Guided by the above principles, I will go through each of the paragraphs in H’s Summons by their paragraph numbers cross referenced to the question numbers in H’s Questionnaires.  Whenever appropriate, I will also refer to W’s 3^rd Affirmation by their paragraph numbers.

H’s case

37.  It is H’s case that at the time of the Oral/Written Agreement, he was only aware of 3 main funds that could be split, namely, (i) a sum of USD 15 million coming from one of the group of their companies by the name E Limited; (ii) a sum of HK$15 million coming from the sale proceeds of a property in Hong Lok Yuen, New Territories; and (iii) a sum of RMB 5 million being repayment of a loan from a PRC company in Beijing, China.

38.  As to the rest of assets and finances, H relied heavily on W to provide him with full and frank disclosure of all her personal assets and that of their group of companies given the fact that W was and has all along been responsible for the financial and accounting of their group of companies throughout their marriage.

39.  It is also H’s case that W had only showed him 3 of her bank savings books at the time of discussion of the Oral/Written Agreement.  One of the bank passbooks showed W’s savings from her annual salary around HK$2.5 to HK$2.6 million.  The other 2 passbooks only had negligible amount of savings in there[6].

40.  W’s first contention was that H had failed to state what “material information” that allegedly she had failed to disclose[7]. All the group of companies’ documents including bank statements were kept in the family office which was under H’s control[8]. It is W’s position that H’s application for discovery and allegations of material non-disclosure is malicious and unmeritorious law suits against her[9].

41.  Prior to the hearing, Counsel has helpfully produced a Schedule 1 summarising the W’s position on each of H’s requests under his Summons.  There was a Schedule 2 referred to 5 bank accounts not within the scope of H’s Summons which allegedly contained transactions somehow connected with W which had not been disclosed by W.

42.  Before going through H’s requests, it is pertinent for me to go through quickly the commonly used and identical (emphasis added) answers given by W on 22/11/2018 in reply to most, if not all, of H’s questions in his Questionnaire filed on 25/10/2018 upon which H’s Summons was now issued.

43.  W’s commonly used and identical answers are as follows :-

“The parties have reached settlement upon their separation in October 2014 to split all of their liquid assets (all of the cash in their bank accounts, whether in individual name or joint names or Family Companies’ names) equally, “Split of liquid assets agreement” dated 13^th October 2014 has been exhibited in the divorce petition. The discovery period from January 2012 to October 2014 is therefore irrelevant to the issue of the parties’ financial issues to be determined in these proceedings, i.e. (i) the former matrimonial home (House xx, xxxxxxxxx, Tai Po held by the parties as joint tenants (ii) Unit xx, xx Floor, xxxxx Tower, xxxxx Plaza, No.xx Science Museum Road, Kowloon, Hong Kong held in Respondent’s sole name, and (iii) PRC property held in Petitioner’s sole name. Furthermore, the Respondent used these bank accounts for both family and companies’ use, and she does not have in possession bank statements or records and cannot recall details of the transactions in these bank accounts. Lastly, the request to provide documents and details relating to all sums exceeding HK$100,000 paid into and out from January 2012 to October 2014 is oppressive.”

(I will refer to this as “W’s common answer” in this Judgment)

44.  In H’s Summons, there are altogether 5 paragraphs (from (a) to (e)) and within paragraph (e), there are 14 sub-paragraphs (from (i) to (xiv)).

Is there a prima facie case for specific discovery?

45.  All the documents sought to be discovered are bank statements either of W’s accounts at various banks or those bank accounts under W’s personal companies’ with HSBC or companies solely controlled by W[10].

46.  Given my finding against W on her “Show Cause Application” and thus the question of ancillary reliefs remained unresolved and had yet to be determined, coupled with the fact that W had been assisting H on the business ventures during the subsistence of the marriage, I am satisfied that bank statements of the parties’ accounts or belonged to companies owned by or related to either of them is a class of relevant documents readily discoverable subject only to the scope and period of discovery.

47.  The party seeking specific discovery must satisfy the Court that the scope of discovery is within the parameters where there is an issue in existence being unresolved.  Falling outside such a scope may be categorised as “fishing expedition”.  The period of discovery must also not be excessive.  Actually, it is a case-sensitive question as to how long the period of discovery should go in order to assist the Court to determine the unresolved issue.

48.  In the present case, I accept the bank statements sought to be discovered by H in his Summons fall within the class of documents and scope for specific discovery.  W had not taken any issue in her affirmation in opposition or in her answers filed to questionnaires that the period of discovery from January 2012 (or earliest available) was excessive.  Rather, W contended that such period of discovery being irrelevant to the other remaining financial issues to be determined, namely, the 3 landed properties.  W further submitted that H’s requests are unfounded fishing expedition wasting her time and legal costs and abuse of legal process[11]. In W’s common answer, she protested against discovery for sums exceeding HK$100,000 to be oppressive.

49.  Given careful consideration to the parties’ cases and issues, I am satisfied that there is a prima facie case for ordering specific discovery against W.  W’s submission that the period of discovery was irrelevant to the unresolved financial issues was premised upon a finding in her favour that the Oral/Written Agreement was upheld by the Court.  Such finding, however, had not been forthcoming at this trial.  Hence, W’s contention as to relevancy fails.  Lastly, I do not accept discovery for sums exceeding HK$100,000 to be excessive without any convincing reasons for W to say so.

50.  Now I will deal with each of the requests under H’s Summons as to whether the other criteria of “existence” and “in possession, custody or power” for specific discovery are met.  The paragraph numbers referred to H’ Summons (the Discovery Application) and Request numbers referred to H’s Questionnaires filed on 25/10/2018.

Paragraphs 1(a) & (b) – Request 1 of Questionnaires

51.  W’s position was that the 2 bank accounts with HSBC, namely, account no. 559-xxxxxx-833 and 559-xxxxxx-888 were shown to H at the time of the Oral/Written Agreement.   W’s common answer was given as her reply to Request 1 of H’s Questionnaires.

52.  W’s answers in her 3^rd Affirmation in opposition[12] implicated that the requested bank statements did exist and were in her possession, power or custody.  Whether they had actually been revealed and shown to H requires fact finding by the Court after trial.  For specific discovery purposes, I see no reason why those statements should not be produced again if that had been done in the past.

53.  W’s common answer was filed on 22/11/2018, which is well within the usual time frame of 7 years to apply for the statements from the bank had she lost them but wished to produce it.  Having said, the second

part of W’s common answer that she did not have those bank statements in possession could not accepted. 

54.  Had W no longer in possession of the bank statements at present and was unable to apply for them since it is over 7 years by now, W only had herself to blame and adverse inference might be drawn against her in appropriate circumstances.  Had the bank accounts been closed in 2016 so alleged by W, W would still be obliged to produce the statements as per H’s Request 1 which was made to her back in 25/10/2018.

55.  For these reasons, I would grant an Order for specific discovery for paragraphs 1(a) and (b) of H’s Summons.

Paragraph 1(c) – Request 2 of Questionnaires

56.  W’s position was that the bank accounts with Bank of East Asia, namely, account no. 015-151-xx-xxxx-0 were shown to H at the time of the Oral/Written Agreement. W’s common answer was given as her reply to Request 2 of H’s Questionnaires.

57.  W’s answers in her 3^rd Affirmation in opposition[13] implicated that the requested bank statements did exist and were in her possession, power or custody.  Whether they had actually been revealed and shown to H requires fact finding by the Court after trial.  For specific discovery purposes, I see no reason why those statements should not be produced again if that had been done in the past.

58.  W’s common answer was filed on 22/11/2018, which is well within the usual time frame of 7 years to apply for the statements from the bank had she so wished to produce it.  Having said, the second part of W’s common answer that she did not have in possession those bank statements could not be accepted. 

59.  Had W no longer in possession of the bank statements at present and was unable to apply for them since it is over 7 years by now, W only had herself to blame and adverse inference might be drawn against her in appropriate circumstances. 

60.  For these reasons, I would grant an Order for specific discovery for paragraph 1(c) of H’s Summons.

Paragraph 1(d) – Request 2 of Questionnaires

61.  This paragraph was withdrawn for duplicity with paragraph 1(c) and typographical error of the name of the bank.

62.  No Order for specific discovery would be granted on this paragraph.

Paragraphs 1(e)(i) & (ii) – Request 3 of Questionnaires

63.  Paragraph 1(e)(i) referred to 5 bank accounts at Bank of China under account numbers 031-376-x-xxxxxx-7 (HKD savings); 012-883-x-xxxxxx-4 (CNY); 012-833-x-xxxxxx-7 (HKD); 031-376-x-xxxxxx-7 (HKD); and 012-883-x-xxxxxx-4 (USD).

64.  Paragraph 1(e)(ii) referred to a Hong Kong dollars current account at Bank of China under account number 012-883-x-xxxxxx-7.

65.  W’s answers in her 3^rd Affirmation in opposition[14] was that all those are integrated accounts with a main account which had been cancelled in about August 2016.  H in his reply affirmation[15] re-iterated that even though the accounts were integrated ones, W still missed the point that those accounts had not been shown to him at the time of discussion of the Oral/Written Agreement.  Even though the accounts had been cancelled and no longer existed when she filed her Form E so alleged by W in her answers to questionnaires[16], W had not produced any letter from Bank of China to confirm what she said[17].

66.  It is H’s case that he discovered W had caused a sum of USD5.24 million transferred from the bank account of their company E Limited with ANZ Bank Singapore to her personal bank account and other entitles/individuals with no business relationship with E Limited or their Group of Companies.  According to ANZ Bank’s letter of reply dated 29/6/2016[18] that for the year 2012 to 2013, there were altogether 8 payments made, of which 6 of them were made to W as beneficiary to her account at the Bank of China account no. 012-883-x-xxxxxx-4.  The sums are as follows :-

Date	Amount (USD)
17/1/2013	$ 500,000
17/1/2013	$ 680,000
18/1/2013	$ 500,000
18/1/2013	$ 680,000
8/4/2013	$ 400,000
8/4/2013	$ 400,000

67.  For the remaining 2 payments, they were as follows :-

Date	Amount (USD)
20/7/2012	$ 500,000 (to BF xxxxxx Limited) - Loan
14/8/2012	$ 680,000 (to W’s account No. 0xxxxx40)

68.  W in her 1^st Affirmation[19] provided answers to account for the USD 5.24 million withdrawn from E Limited.  W also provided a flow chart[20] for elaboration of the funds allocation.  In a gist, there were transactions of currency exchange between USD and RMB via Bank of China’s designated corresponding bank (中轉行戶口) involving funds deposit with cross border bank such as Shenzhen China Construction Bank into W’s sole name bank account.  There were also transactions involving purchase of residential properties for the eldest daughter in Hong Kong and PRC; investment project in Beijing for RMB6,800,000; purchase of factory premises at Hebei San He; loan made out to one Mr. Y in the PRC; and loan repayment to W of USD300,000.

69.  Given the significant amount of USD 5.24 million (which is around HKD 40,000,000) which is in issue, I am minded to say H is entitled to seek and inspect all those bank statements of W’s accounts where the funds were allegedly credited and/or debited rather than accepting the mere “say-so” of W or her explanation (and the flow chart prepared) at their face value even though they were made under oath.  It is insufficient for W to provide the simple answers that those bank accounts were integrated accounts which were all cancelled when she filed her Form E.  W is, in my view, avoiding the questions fairly raised by H rather than responding to them.  I have reminded myself at the stage of specific discovery, parties’ credentials and affirmation evidence had yet to be tested.

70.  For these reasons, I would grant an Order for specific discovery for sub-paragraph 1(e)(i) and (ii) of H’s Summons.

Paragraph 1(e)(iii) – Request 4 of Questionnaires

71.  H accepts Annexure 3 attached to W’s 1^st Answers filed on 19/1/2018 and withdraw paragraph 1(e)(iii) of his Summons.

72.  No Order for specific discovery would be granted on this sub-paragraph.

Paragraph 1(e)(iv)

73.  H accepts W’s Standard Chartered Bank account number 978-x-xxxx18-3 no longer exists at the time of her Form E. 

74.  Further, H accepts that the account was for deposit of sale proceeds of a property in Hong Long Yuen which was then evenly split and the account was then closed.

75.  No Order for specific discovery would be granted on this sub-paragraph.

Paragraph 1(e)(v) – Request 5 of Questionnaires

76.  This sub-paragraph was withdrawn for duplicity with sub-paragraph 1(e)(iv) and typographical error of the bank account number.

77.  No Order for specific discovery would be granted on this sub-paragraph.

Paragraph 1(e)(vi) – Request 6 of Questionnaires

78.  This paragraph referred to an account held by W with ICBC Bank under account number 62220xxxxxxxxxx1962.  H in his 4^th Affirmation[21] disagreed with W’s explanation in her 3^rd Affirmation[22] that this account was in fact the same account under the number 95588xxxxxxxxxx7670 she held with ICBC.  W’s case was that one number was for the ATM bank card and the other number was for the bank passbook.  W further said the ICBC account was opened in December 2014 after the separation with H.

79.  In W’s Form E dated 26/7/2017 at Annexure 2.3 on bank accounts[23], she disclosed one account with ICBC bank account number 62220xxxxxxxxxx1962.  H produced as exhibit “CKP4-1”[24] photocopies of 3 transaction receipts all with W’s name as account holders for this account and the other account number 95588xxxxxxxxxx7670 with ICBC Bank.  The dates shown on these 3 receipts are 13/4/2012 (for account number 95588xxxxxxxxxx7670) and 21/4/2016 (for account number 62220xxxxxxxxxx1962).

80.  H in his 3^rd Affirmation[25] produced exhibit “CKP3-14”[26] which is a transaction slip of ICBC Bank bearing W’s name and her account number 95588xxxxxxxxxx7670 with the date of the document on 13/12/2010 (emphasis added).  This shows W’s case that she opened her ICBC Bank account (which she maintained there was only 1 account despite H revealed 2 account numbers) in December 2014 is plainly untrue. 

81.  All the above shows W’s case is sceptic and dubious which called for specific discovery of her account(s) with ICBC.

82.  I noticed that W just provided the W’s common answer as her reply to Request 6 of H’s Questionnaires[27]. In my decision, this is insufficient disclosure.

83.  For these reasons, I would grant an Order for specific discovery for sub-paragraph 1(e)(vi) of H’s Summons.

Paragraph 1(e)(vii)

84.  For the reasons set forth on Paragraph 1(e)(vi) above, I would grant an Order for specific discovery for sub-paragraph 1(e)(vii) of H’s Summons.

Paragraph 1(e)(viii) – Request 7 of Questionnaires

85.  This paragraph referred to an account held by W with Bank of China under account number 60138xxxxxxxxxx4544. 

86.  W’s answers given to H’s Request was that this account was opened by W with her share of the family assets after the separation[28]. 

87.  I noticed that there was no other contention from H after W’s answers to his request was given.  No submission was made by H’s Counsel either on W’s answers to such Request.

88.  No Order for specific discovery would be granted for this sub-paragraph.     

Paragraph 1(e)(ix)

89.  This paragraph referred to 2 accounts held by W with Bank of China under account numbers 47727xx-xxxx-xx25189 and 47727xx-xxxxxxxxxx13503. 

90.  According to H, these accounts were amongst several other bank accounts, transactions and information which W had failed to reveal at any time or in her Form E but was discovered by him after the Oral/Written Agreement was signed[29]. 

91.  H’s evidence in support of the existence of the account number

47727xx-xxxx-xx25189 came from an application form for remittance marked as exhibit “CKP3-10”[30]. For account number 47727xx-xxxxxxxxxx13503, the evidence came from a copy receipt under exhibit “CKP3-9”[31].

92.  In her 4^th Affirmation, W explained account number 47727xx-xxxx-xx25189 was in fact the same as account number 60138xxxxxxxxxx4544, reason being that the former number was the bank account number whereas the latter being the bank card number[32]. W had already disclosed the account number 60138xxxxxxxxxx4544 in her Form E. There is no issue as to non-disclosure.

93.  As for account number 47727xx-xxxxxxxxxx13503, W’s answer was that the evidence produced by H under exhibit “CKP3-9” was a withdrawal receipt upon maturity of a fixed time deposit.  The account number of 47727xx-xxxxxxxxxx13503 was merely a time deposit account numbered integrated with her Bank of China card number 60138xxxxxxxxxx4544 which she had already disclosed in her Form E.  Again, there is no issue as to as non- disclosure.

94.  I accept W’s explanation for account number 47727xx-xxxx-xx25189 which was supported by evidence.  However, W’s explanation for account number of 47727xx-xxxxxxxxxx13503 requires further evidence from the Bank of China that fixed deposit would be given a separate account number.  Such evidence is wanting.

95.  For these reasons, I would grant an Order for specific discovery for sub-paragraph 1(e)(ix) of H’s Summons but limited to account number 47727xx-xxxxxxxxxx13503 only.

Paragraph 1(e)(x) – Request 8.1 of Questionnaires

96.  This paragraph referred to W’s bank account number 43674xxxxxxxxx78827 with China Construction Bank which had been disclosed in her Form E.

97.  W provided the W’s common answer as her reply to Request 8 of H’s Questionnaires[33]. In her 4^th Affirmation, W gave an explanation[34] on her 3 account numbers with China Constructions Bank amongst which H also made specific discovery application in sub-paragraph 1(e)(xi) of his Summons for the other 2 undisclosed account numbers. 

98.  In a gist, W said the account number 43674xxxxxxxxx78827 disclosed in Form E was actually a bank card number where there was a time deposit account number 72003xxxxxxxxx07993 (undisclosed in Form E). The bank account number was actually for the savings account number 72003xxxxxxxxx88600 (undisclosed in Form E).  H produced as his exhibit “CKP3-11”[35] the 2 application forms for special arrangement which bear the same time deposit account number 72003xxxxxxxxx07993. 

99.  H produced as his exhibit “CKP3-12”[36] the receipt for bank charges for replacing the loss card bearing card number 43674 xxxxxxxxx34533.  H also produced another exhibit “CKP3-13” which was the receipt for bank charges on loss card replacement where it shows the account number 43674xxxxxxxxx78827.  Putting them together, W said it could prove that both card numbers (that is, the lost one “34533” and the replaced one “78827”) referred to the same bank account of 72003xxxxxxxxx88600.

100.  Given careful consideration, I am not convinced with W’s explanation that disclosure of the card number under a particular bank account could be accepted or taken as having disclosed that particular bank account.  This is more so when different numbers are allotted for the same account but for different purposes.  Different banks may have different scheme of arrangement of their account numbers.  It is fair to say all account numbers, irrespective of the purpose of that account, should be on the table for discovery purposes.

101.  It is tricky, if not dishonest, for W to say that she had fulfilled her duty of disclosure by providing the 16 digits or more imprinted on the bank card to be equivalent to or as good as putting down the actual account number of the bank account and any integrated accounts.   Such disclosure also falls short of providing straightforward and direct answers.  

102.  In L v L [2006] 1 HKFLR 121 where Lam J (as he then was) said :-

“197. ….The party who gives disclosure also carried the obligation to present the information in a way that could be readily comprehensible to his opponent. Straightforward and direct answers could have been given by the Wife to questions like how much has been invested into a business and what were the sources of fund. A good limus test for distinguishing a bona fide fulfilment of the duty to give disclosure from an attempt to obfuscate is to ask whether the answer or the material can on its own meaningfully assist in informing others as to the means of that party. I regret to say that having regard to the way in which the Wife had given disclosure of her means throughout the course of these proceedings, it is clear to me that she deliberately chosen not to give meaningful disclosure of her means.

198. It is high time that litigants in matrimonial proceedings and those advising them should appreciate that affirmation of means and answer to questionnaire are not a game of hide and seek. Too much legal costs and judicial time had been spent on such wasteful exercise. As stressed by Mr Mostyn, the onus falls squarely and fairly on a party to give full and frank disclosure of his or her own means. To adopt a wait and see approach with a hope that the opponent might fail to ask the right question is a tactic to be deplored. That by itself is a breach of the positive duty to give disclosure. As Coleridge J put it recently in J v V [2004] 1 FLR 1042, “all cards must be on the table face up at the earliest stage if huge costs bills are to be avoided.

199. …….

200. If the court shall come to the conclusion that a litigant has been recalcitrant in failing to come clean in giving full and frank disclosure of his or her means, it should not hesitate to draw adverse inference against such a litigant, see Baker v Baker [1995] 2 FLR 829.”

103.  For these reasons, I would grant an Order for specific discovery for sub-paragraph 1(e)(x) of H’s Summons.

Paragraph 1(e)(xi) – Request 8.2 of Questionnaires

104.  For the same reasons under Paragraph 1(e)(x), I would grant an Order for specific discovery for sub-paragraph 1(e)(xi) of H’s Summons.

Paragraph 1(e)(xii)

105.  This paragraph referred to bank statement from January 2010 to December 2012 of the company “F Shipping PTY BVI” with HSBC under account number 636-58xxxx-838 (“636-58 account”).  H said this company was held in the name of a British Virgin Islands (BVI) company also known as “F Shipping Limited”[37].

106.  H’s case is that this is the bank account of one of the 3 offshore entities which he discovered upon investigation into the financial affairs of the Group of Companies owned by him and [38]after their separation.  Bank accounts of the other 2 offshore entities are the subject matter of paragraphs 1(e)(xiii) and (xiv) hereunder.

107.  H in his 1^st Affirmation filed on 27/4/2018 for leave to serve Questionnaires, H attached as exhibit “CKP-5”[39] those bank statements of HSBC starting from November 2005 to December 2009 of the company by the name “F Shipping PTY Limited” under the “636-58 account” which he found in the family office.  W in her 3^rd Affirmation[40] in reply said as far as she could remember, the company was closed or deregistered in about 2012.  All the documents of the company were stored in the family office in H’s room and she had no access to them.  In her 4^th Affirmation[41], W further said she was not sure if she was the sole director or shareholder of the company.  To rebut H’s contention that he only discovered existence of the company after their separation in 2014, she produced exhibit “SYK4-3”[42] a copy fee note of “F Shipping Ltd. B.V.I.” dated 7/4/2008 allegedly that it was signed by H.

108.  I noticed that in H’s 1^st Affirmation, he also produced another exhibit “CKP-4”[43] for those bank statements of HSBC of the company by the name “F Shipping Ltd” largely from December 2006 to June 2012 (with some missing months).  The account number was 636-42xxxx-838 (“636-42 account”).  

109.  For the “636-58 account”, the statement date was on the 19^th day of each month.  For the “636-42 account”, the statement date was on the 1st day of each month.  Apparently, these are 2 separate and independent bank accounts.

110.  Comparing those statements under the 2 exhibits, that is, “CKP-4” and “CKP-5”, there is an overlapping period between December 2006

and December 2009 where there are monthly statements for both the “636-42 account” and “636-58 account”.  This suggests the 2 bank accounts were running in parallel and were separate from each other with the names of the account holders quite similar.

111.  It is unclear when W said the company was closed or deregistered in 2012, presumably that company’s bank account would also be closed, that she was referring to “F Shipping PTY Limited” account holder of “636-58 account” or she was referring to “F Shipping Ltd”, account holder of “636-42 account” with HSBC.

112.  Whilst there may be an issue as to when H came to know the existence of the company, or to be precise which company, and whether it was before or after the separation, the question which need to be looked at for the present specific discovery application is whether the bank statements sought by H in his Summons fall within the criteria for specific discovery laid down in the Jade’s Realm Ltd case (supra).

113.  Given the fact that W was in charge of the finances for the parties’ business ventures over the years and the issue required to be determined is whether there was material non-disclosure of finances by W, I am satisfied that the statements sought are of relevance calling for specific disclosure.  I noted that the period for disclosure fall outside the usual period of 7 years counting backwards from now, I would only repeat what I said in paragraph 59 of this Judgment.

114.  For these reasons, I would grant an Order for specific discovery for sub-paragraph 1(e)(xii) of H’s Summons.

Paragraph 1(e)(xiii)

115.  H accepts W’s answers in her 3^rd Affirmation and seeks withdrawal of this sub-paragraph.

116.  No Order for specific discovery would be granted for this sub-paragraph.     

Paragraph 1(e)(xiv)

117.  This paragraph referred to bank statements of the company BF Enterprises Limited Mauritius from January 2007 to December 2009 under account number 500-xxxxxx-838 with HSBC.

118.  Similar to the situation with F Shipping PTY, H was only able to find bank statements of this company for the period from August to October 2009[44]; and from September 2011 to April 2014[45].

119.  In her 3^rd Affirmation, W repeated her answer that all the company documents were stored in the family office.  As far as she could remember, the company was closed down in about 2014 to 2015.[46]

120.  In her 4^th Affirmation, W added that the bank account was either closed or left idle for a long time before their separation negotiation with no or negligible balance.

121.  The statements sought by H under this paragraph for a 3-year period, namely, 2007, 2008 and 2009.  According to H’s Petition for divorce, the separation started on or about 1 October 2014.  H’s case, insofar as ancillary reliefs is concerned, that there was material non-disclosure by W at the time of negotiating the Oral/Written Agreement around 2014/2015, which is almost 5 years after 2009.

122.  All the bank statements of this HSBC account produced by H shows the address was the former matrimonial home in Tai Po where they were both residing.  This is different from those bank statements of the F Shipping PTY Limited (holder of the “636-58 account”) or F Shipping Limited (holder of the “636-42 account”) both with HSBC.  From an objective observation on the time factor and the statement address, I find it more probable than not that those statements sought would not be of any relevance to the issue in dispute

123.  In any event, H was not able to show necessity of the statements sought under this sub-paragraph for fairly disposing of the issue in question or for saving costs.  Thus, I decided that this sub-paragraph fails.

Others

124.  As I mentioned in paragraph 41 of this Judgment, there was produced to the Court Schedules 1 and 2 prior to this trial.  Since those bank accounts listed in Schedule 2 was not within the scope of H’s Summons (the “Discovery Application”), I do not intend to venture into any of those bank accounts set out therein.  

Costs

125.  Given this Court’s decision that W completely failed in her Summons (the “Show Cause Application”), I see no reason why H should not be awarded costs of the application, including all costs reserved, to be paid by W, to be taxed if not agreed.

126.  Given this Court’s decision on each of the paragraphs in H’s Summons (the “Discovery Application”), I would say H had not achieved complete success and it is fair that he should be awarded a portion of the costs of his application, including all costs reserved, to be taxed if not agreed.

127.  Counting the number of paragraphs made in his Summons, out of the 18 paragraphs H only succeeded on 11 of them with the remaining 7 withdrawn or dismissed.  Amongst the 11 paragraphs, H was partially successful on paragraph 1(e)(ix). 

128.  On a broad assessment, I decided the portion that H be awarded his costs of the Discovery Application to be 60%.

129.  I also decided that there be Certificate for Senior Counsel.

Orders

130.  I now make the following Orders :-

W’s Summons dated 11 February 2019 (“Show Cause Application”)

(1)  W’s Summons dated 11 February 2019 be dismissed; and

(2)  W (Respondent) do pay to H (Petitioner) the costs of the Show Cause Application, including all costs reserved, to be taxed if not agreed.

H’s Summons dated 22 February 2019 (“Discovery Application”)

(3)  There be an order in terms on paragraphs 1(a) , (b), (c), (e)(i), (ii), (vi), (vii), (x), (xi) and (xii);

(4)  There be an order in terms on paragraph 1(e)(ix) but limited to account number 47727xx-xxxxxxxxxx13503 only;

(5)  Paragraphs 1(d), (e)(iii), (iv), (v), (viii), (xiii) and (xiv) be dismissed;

(6)  W (Respondent) do pay to H (Petitioner) 60% of the costs of the Discovery Application, including all costs reserved, to be taxed if not agreed; and

(7)  There be Certificate for Senior Counsel.

131.  This is a costs order nisi which will become absolute unless any party apply to vary the same within 14 days from the date of this Judgment.

132.  Last but not least, I wish to express my gratitude to Senior Counsel and Counsel and the legal teams for their valuable assistance to the Court.