CCCR v. CLL

FCMC 17824 /2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 17824 OF 2013

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D E C I S I O N
(Disclosure of Documents)

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Introduction

1.  This is the Petitioner’s (Husband’s) Summons dated 19 January 2015 (“Disclosure Summons”) for disclosure of documents against the Respondent (Wife) for the filing and production of various documents more specifically set out in a Schedule (“the Schedule”) attached to the Disclosure Summons.  

2.  The Schedule contains 6 classes of documents which can be summarised as follows :-

“1. Bank Accounts statements of the Respondent (Items 1(a) to (c));

2. Credit Card statements of the Respondent (Items 1(d) to (h));

3.  Bank Account statements of the company DC Limited (Item 2);

4.  Documents in relation to the sale of landed properties in The Sorrento and a car park, a property at Ching Wah Court (Item 3) ;

5.  Documents in relation to the purchase of landed property in the Hong Kong Garden and a car park (Item 4);

6.  Documents under the names of various other parties (Item 5);

7.  Documents in relation to the proceeds of sale of a Mercedes Benz Model  CLS350 Licence Plate No.MY xxx for HK$230,000 (Item 6)”

3.  The Petitioner filed his 5^th Affirmation in support of this application.  The Disclosure Summons was scheduled for a call over hearing on 16 March 2015 which was then adjourned for argument with half day reserved. At the initial substantive hearing scheduled on 16 November 2015, the Respondent successfully obtained legal aid and Mr. B.C. Chow of Messrs. B.C. Chow & Co., solicitors, was assigned to represent her.  The Notice to Act was filed only 6 days ago on 10 November 2015.  Mr. Chow applied for adjournment due to late assignment and indicated that they might have to file affirmation after going through all the papers.  The adjournment application was granted and the hearing was re-scheduled to today.

4.  On 13 January 2016, the Respondent filed her 9^th Affirmation. The Petitioner’s solicitors opposed such 9^th Affirmation because it was filed without leave.  However, Mr. Kevin Ng for the Petitioner had already filed a Written Submission in reply to that of Mr. Chow’s Written Skeleton Submissions and made reference to certain matters raised in the Respondent’s 9^th Affirmation.  Having heard submissions from both parties, in particular with reference to the adjournment order granted in November 2015 did not prohibit the filing of further affirmation by either party, and also considering the indication made by Mr. Chow at that hearing as to possible filing of affirmation by the Respondent, retrospective leave was then granted for the filing and service of the Respondent’s 9^th Affirmation.       

5.  At the beginning of this hearing, Mr. Ng confirmed his instructions to withdraw Items (2) and (5)(a) to (d) of the Schedule in the Disclosure Summons. In the course of his submissions at the hearing today, Mr. Ng also withdrew Items 5(e) to (g) of the Schedule.  Accordingly, the only remaining items that have to be dealt with are Items 1(a) to (h), Items 3, 4 and 6 of the Schedule.

The Documents Sought

6.Items 1(a) and (c) relate to bank statements of 2 accounts of the Respondent with HSBC, namely, account no.432-xxxxxx-888 (“888 account’) and account no.432-xxxxxx-380 (“380 account”).  Item 1(b) relate to bank statements of an account with Bank of China, account no.32xxx551 (“551 account”).

7.  The periods of disclosure of bank statements sought are :-

    (a) “888 account” - January 2011 to May 2013; and

                                 June 2014 to November 2014;   

    (b) “ 32xxx551 account”- January 2011 to April 2013; and

                                           June 2014 to November 2014

    (c) “380 account”- January 2011 to November 2014

                                 (consolidated investment statements)

8.  The reasons for seeking these bank statements were that it was the Petitioner’s case that during the periods sought for disclosure, the Respondent had made various disposals of family assets.  The Court in the proper exercise of its inquisitorial role and function when determining ancillary reliefs and the Petitioner’s application under Section 17 of the Matrimonial Proceedings and Property Ordinance (“MPPO”) Cap.192 should have these documents for consideration.

9.  Mr. Ng in his Skeleton Written Submission referred to the decision of this Court in CWK v. YCHS [2015] HKEC 2719 where the following was said at paragraph 52 :-

“….the ultimate consideration is whether disclosure of the historic bank statements back to May 2011 is necessary and fair so as to ensure justice is done in the case with minimal prejudice (if any) or inconvenience to the party against whom discovery is sought.”

10.  As regards Items 1(d) to (h) which relate to 5 different credit card statements with HSBC and Bank of China covering periods of disclosure from January 2011 to November 2014, Mr. Ng addressed this Court as to their relevance to the Respondent’s case who allegedly to have used her credit cards to obtain and pay off loans but of which she produced no supporting credit card statements.  Mr. Ng later submitted that such credit card statements would also show the spending habit of the Respondent but he fairly conceded that such statements would not be relevant to any of the disposal of assets sought to be set aside by the Petitioner.

11.  Item 3 essentially related to transaction details of 3 major disposals, namely, the sale of a property at The Sorrento, a car park at The Sorrento and also a property in Ching Wah Court, of which proceeds of sale fall within the ambit of the Petitioner’s Section 17 application.

12.  Item 4 related to the documents about the purchase of a property in the Hong Kong Garden and a car park thereat in March 2011 by the Respondent as a gift to her daughter.  The grounds for such application being that the Respondent ought to produce the details of the purchase moneys which allegedly formed part of the family assets and of which the Respondent had disposed of within 3 years of the Petitioner’s avoidance of disposition application.

13.  Item 6 related to the documents about a Mercedes Benz vehicle belonged to the Petitioner which was sold by the Respondent for $230,000 but without accounting for the proceeds of sale.

The Respondent’s Opposition

14.  There is not much dispute as to the applicable law and principles relating to disclosure of documents. 

15.  Mr. Chow for the Respondent fairly conceded that documents sought under Item 3 related to the Petitioner’s Section 17 application and, more importantly, fall squarely within the legal requirements for disclosure and accordingly, agreed that the documents sought would be produced by the Respondent.

16.  Mr. Chow also confirmed Respondent’s agreement to the production of the documents sought under Item 6 of the Schedule by the Petitioner.

17.  On Items 1(a) to (c) as to the bank statements, and also Items 1(d) to (h) as to credit card statements, the Respondent’s contention was that the disclosure sought are too wide and oppressive.  At this hearing, Mr. Chow made reference to paragraph 6 of the Respondent’s 9^th Affirmation and submitted that the costs for obtaining the bank statements and credit card statements are in the region around HK$37,100.  The Respondent only had less than HK$30,000 to spend at the moment.

18.  Mr. Chow also made a ‘fall-back’ submission that in the event that disclosure was granted by this Court, the Respondent would be willing and prepared to give authorisation to the Petitioner to obtain those statements but at the Petitioner’s own costs and expenses.

19.  On item 4, the Respondent’s contention is that the purchase of Hong Kong Garden for the daughter was made in March 2011 which was more than the statutory 3-year presumption period under Section 17(3) of the MPPO Cap.192 as to avoidance of disposition.  The Petitioner’s Section 17 Notice was filed on 1 December 2014. Moreover, the Respondent has already provided her answer at paragraph 7 of her 3^rd Affirmation dated 25 July 2014 (Bundle 2: 259) and also repeated her answers again in paragraph 9 of her 9^th Affirmation, that the down payment for the purchase came from loans of her 2 HSBC credit cards which made up around 5% of the purchase price.  The remaining down payment came from loans from one Miss Lam ($70,000) and her sister ($130,000).  Since full and complete answers had been given, the documents sought need not be produced.

The applicable legal principles

20.  The Petitioner is relying upon Order 24 rule 7 of the Rules of the High Court (“RHC”) seeking the present disclosure which was applicable to matrimonial proceedings (see Rule 3 of the Matrimonial Causes Rules, Cap.179A).

21.  Order 24 rule 7 of the RHC provides :

“Subject to rule 8, the Court may at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified or described is, or has at any time been, in his possession, custody or power, and if not then in his possession, custody or power when he parted with it and what has become of it.”

22.  Order 24 rule 8 of the RHC provides :

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

23.  Moreover, Rule 77(4) of the Matrimonial Causes Rules Cap.179A (“MCR”) provides :-

“(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.”

The Court’s View

24.  Given the Respondent’s concessions on Items 3 and 6, and the Petitioner’s withdrawal of Items 2 and 5, the items which remain for determination are Items 1 and 4 only.

Items 1(a) to (c) – Bank Statements

25.  I have been reminded by Mr. Chow in his Written Skeleton Submissions that the Petitioner intends to rely upon the present application to support his Section 17 application.  I have also been reminded that paragraphs 4, 5, 6 and 8 of the Petitioner’s Section 17 Application had been withdrawn pursuant to leave granted on 23 December 2013.    

26.  Mr. Chow’s contention of “too wide and oppressive” was raised without further elaboration save and except that the costs needed for obtaining the same are substantial.  As I have said in the earlier case of CWK v. YCHS (supra), costs related contention should not be giving way to justice and fairness to parties in litigation when discovery application is considered.  The cardinal principle is, subject to those requirements of existence and possession, whether the disclosure sought is relevant, necessary and fair so as to ensure justice is done with minimal prejudice or inconvenience to the party against whom discovery is sought.

27.  In the remaining paragraphs 2 and 3 of the Section 17 Notice, the Petitioner is seeking to set aside those monthly transfers of $9,000 and $7,000 made by the Respondent to the daughter from January 2013 to July 2014 from the 888 account.   Any other withdrawals in the 888 account prior to 2013 relate to remittances made to other parties against whom the Petitioner had withdrawn his setting aside application (paragraphs 4 and 5 of the Section 17 Notice which had been withdrawn).

28.  I am satisfied that the bank statements for the 888 account (Item 1(a)) from January 2013 to July 2014 are necessary and relevant for the determination of the remaining paragraphs 2 and 3 of the Section 17 application and there are no issue as to their existence and possession with the Bank.   As to the costs of obtaining the same, I do not agree that the Petitioner should bear such costs simply for the reason of the impecuniosity of the Respondent; in particular, both parties are legally aided.            

29.  As to the disclosure sought under Items 1(b) and 1(c) of the Schedule, Mr. Ng for the Petitioner is unable to address to any specific issues where the probative value of the statements being sought calls for such period of disclosure beyond what is normally required of under the Form E.  In the absence of justification, the Petitioner is not entitled to go ‘fishing’ under the process of discovery application.  Therefore, items 1(b) and 1(c) are not allowed.

Items 1(d) to (h) – Credit Card Statements

30.  Credit card statements are, by their nature, records of spending rather than records of savings.  The fact that the Respondent alleged in her case of having obtained loans from her own credit cards and then repaid by monthly instalments does not provide justification for seeking extensive discovery.  In my view, this is not a case which justify seeking extensive discovery of documents in order to discredit the opponent’s case.  This is rather a case as to whether the Respondent is able to substantiate her own allegation with evidence which should be a concern for the Respondent, not the Petitioner’s concern.  In the event that the Respondent was unable to substantiate her case of having obtained loans from credit cards by showing those credit card statements, it would not strengthen the Petitioner’s own case or his credentials.  This would then be a matter for submission by the Petitioner on sufficiency of the evidence produced by the Respondent.

31.  Mr. Ng fairly conceded that such extensive disclosure of credit card statements would not be related to any of the disposals raised by the Petitioner in his Section 17 application but would rather tend to show the spending habits of the Respondent.  Having said, Mr. Ng is unable to go further to convince the Court that the spending habits are relevant and necessary to any specific issue which warrant the disclosure sought.  Thus, Items 1(d) to (h) are not allowed.

Item 4 – Documents for purchase of the Hong Kong Garden and car park

32.  The Petitioner’s Notice of Application for Ancillary Relief (Form A) was filed on 12 December 2013.  In this Notice, the Petitioner sought for, in so far as landed properties are concerned, (i) a settlement of property order; (iii) a transfer of property order and (iii) an avoidance of disposition order.  In respect of the settlement order and transfer order, there were marked an “*” with description of the address of the car park at Sorrento Tower.  In respect of the avoidance of disposition order, there was no description of any address at all.

33.  On 1 December 2014, the Petitioner filed the Notice of Avoidance of Dispositions of Assets (“申請撤銷財產處置通知書”) (hereinafter called “Notice of Avoidance”) with details of each of the dispositions he intended to set aside.  Amongst the dispositions there was the sum of $453,000 spent on or before 7 March 2011 by the Respondent towards down payment for the purchase of the Hong Kong Garden and a car park thereat.  This is the subject of Item 4 of the Schedule in the Discovery Summons.

34.  It is worth mentioning that the Petition dated 12 December 2013 was amended once on 24 December 2014.  The prayer of the Petition had not been amended notwithstanding that the Petitioner, if he was minded to do so, could have also included a claim for an avoidance of disposition order as he did so in the Notice of Avoidance filed 3 weeks ago on 1 December 2014.  In any event, the reliefs prayed for in the Petition (and Amended Petition), in so far as landed properties are concerned, are the same namely, “sums of sale, transfer and/or settlement of property may be agreed between the parties or otherwise as this Honourable Court may think just.”  There was no reference whatsoever in the Petition and Amended Petition as to seeking any avoidance of disposition order.  The only reference to such order is in the Form A dated 12 December 2013 (without details of dispositions sought) and the subsequent Notice of Avoidance dated 1 December 2014 (with details of each of the dispositions sought).

35.  Mr. Ng for the Petitioner attempted to argue that the 3-year period of presumption under Section 17 of the MPPO, Cap.192, could run from the Notice of Application for Ancillary Reliefs (Form A) and/or the Petition when it was issued, namely, both dated 12 December 2013.  Accordingly, the disposition of $453,000 on or around 7 March 2011 fell within the 3-year period.   Mr. Ng further contended that it is sufficient for the Respondent to have notice of the avoidance of dispositions by reference to the reliefs claimed in the prayer of the Petition or the Amended Petition and the Form A.  The reason for not specifying the dispositions in the Form A was that there was no sufficient information on hand at the time.  Mr. Ng finally submitted that a general prayer would be sufficient for the purpose of notice under Section 17 of the MPPO, Cap.192.

36.  Mr. Chow apparently argued otherwise.  Reference was made to the provisions in Section 17(3) of the MPPO, Cap.192, which could readily be construed for the need of a specific notice given in order to avoid or set aside dispositions made or to be made.  I agree with Mr. Chow.

37.  In my view, Mr. Ng’s contention must fail for the following reasons.  First, the Form A is a prescribed form under the Matrimonial Causes Rules 179A (“MCR”) whenever Rule 68 is applicable, namely, that ancillary reliefs are being claimed for but not otherwise made out in the Petition or Answer, as the case may be (Rule 68(1) of MCR Cap.179A).  Secondly, Rule 68(1) sets out different kinds of ancillary reliefs except avoidance of disposition order.  If one goes to the prescribed form of Form 25 in the Appendix of the MCR, it can be seen that Form 25 was under Rule 84A(3)(c) which stipulates that where Rule 68, 68A or 69 applies, any reference to Form 8 or 8B shall be construed as a reference to Form 25.  In my view, the prescribed Form A under the MCR Cap.179A could not be taken or treated as a notice issued for the purpose of obtaining avoidance of disposition orders under Section 17(3) of the MPPO, Cap.192.  Thirdly, the statutory provisions for obtaining avoidance of disposition orders are contained in a different statute, namely, the MPPO Cap.192 where it states at Section 17(3) as follows :

“(3) Where an application is made under this section (my emphasis) with respect to adisposition which took place less than three years before the date ofthe application(my emphasis) or to a disposition or other dealing with property whichis about to take place and the court is satisfied-

(a) in a case falling within subsection (1)(a) or (b), that thedisposition or other dealing would (apart from this section)have the consequence, or

(b) in a case falling within subsection (1)(c), that the disposition has  had the consequence,of defeating the applicant's claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property.”

38.  It is plain and obvious that the application to set aside dispositions must be made under Section 17(3) (my emphasis) and also that the 3 years period of presumption started to count backwards from the date of such application (my emphasis).  Accordingly, I find the Petitioner could not rely upon the Petition, Amended Petition or the Form A as giving the requisite notice to the Respondent under Section 17 of the MPPO Cap.192.  He could only rely upon the Notice of Avoidance dated 1 December 2014 issued specifically for the Section 17 application.  Given this finding, the 3 years presumption period counting backwards would then end on 1 December 2011.  Thus, the Respondent’s disposition of HK$453,000 on or around 7 March 2011 fell well outside the 3 years presumption period.

39.  Given such finding of the transaction of 7 March 2011 in respect of the disposition of $453,000 for the purchase of the Hong Kong Garden and car park, it is thus for the Petitioner to prove, rather than for the Respondent to rebut the statutory presumption of defeating ancillary reliefs, that the transaction and related disposal of moneys was done on purpose by the Respondent to defeat Petitioner’s ancillary reliefs.  There is no obligation for the Respondent to provide evidence to assist the Petitioner in discharging his burden of proof.  Item 4 is therefore not allowed.

Conclusion

40.  For the above reasons, the Petitioner only succeeds in Item 1(a) of the Schedule in the Disclosure Summons.

Costs

41.  The Petitioner has withdrawn 2 out of 6 items of documents.  The Respondent conceded to 2 out of the remaining 4 items of documents.  Of the remaining 2 items, the Petitioner is only able to succeed on 1 item.

42.  On the question of costs, I believe it is fair and reasonable to make no order as to costs in light of the outcome of the application.  Since both parties are legally aided, their respective own costs would be taxed in accordance with Legal Aid Regulations.

Orders

43.  I now grant the following Orders :

(a)  The Respondent do provide to the Petitioner all her bank statements with the HSBC under account no. 432-xxxxxx-888 (“888 account’) for the period from January 2013 to July 2014 inclusive within 42 days from the date of this Decision;

(b)  By consent, the Respondent do provide to the Petitioner all documents as to lawyers’ bills and receipts, mortgagee bank redemption schedules and bank credit records of the proceeds of sale in respect of :-

(i)    Sale of car park no.x on xx floor, The Sorrento, Austin Road West, Kowloon, on 20 January 2012;

(ii)   Sale of Room x, x floor, Ching Wah Court, Tsing Yi, New Territories, Hong Kong, on 24 May 2012;

(iii)  Sale of Flat c, xx floor, Block 3, The Sorrento, Austin Road West, Kowloon, on 18 June 2012.

(c)  By Consent, the Respondent do provide to the Petitioner all bank credit records as to proceeds of sale of $230,000 of Mercedes Benz Model CLS 350 with licence plate no. MY xxx between April and May 2012, within 42 days from the date of this Decision.  

(d)  There be no Order as to costs;

(e)  Both parties’ own costs be taxed in accordance with Legal Aid Regulations.

44.  This is a costs Order nisi which will be made absolute if no application to vary it is made within 14 days.