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F v F

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
Judgment Date08 February 2005
Year2005
Judgement NumberFCMC11295/2001
Subject MatterMatrimonial Causes
CourtFamily Court (Hong Kong)
FCMC011295/2001 F v. F

FCMC 11295/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 11295 0F 2001

________________

BETWEEN

F Petitioner
and
F Respondent

_________________

Coram : Deputy Judge C.K. Chan in Chambers

Date of Hearing : 2, 4 February 2005

Date of Ruling : 8 February 2005

Reasons for Ruling

1. This is an application of the petitioner wife against the respondent husband for the discovery of information and documents in respect of 2 trusts in which the respondent husband is one of the discretionary beneficiaries.

2. For convenience, I shall call the petitioner the wife and the respondent the husband herein below.

Background

3. The parties married in Hong Kong on 18.5.2000. The wife gave birth to a girl on 21.2.2001. She moved out of the matrimonial home on 28.10.2001 and petitioned for divorce on 2.11.2001 on the ground of unreasonable behaviour.

4. As far as the child is concerned, before the petition for divorce was issued, there had been a wardship proceeding in the High Court whereby the custody of the child was granted to the wife. Leave was also granted to the wife to remove the child to live in Portugal. The husband is now paying voluntary interim maintenance to the wife and the child at the rate of Euros 3,000 per month.

5. Decree Nisi was granted on 15.3.2002 and the question of ancillary relief was adjourned for the parties to file and serve their respective affidavits of means. The trial of the ancillary relief application has now been fixed to be heard on 1.3.2005 with 7 days reserved.

6. I think there is no dispute that the husband comes from a very wealthy family which controls a public company. The consolidated annual accounts of the company for the year ended 31.12.2000 shows that the turnover of the company amounted to HK$ 922,877,282 with a profit after tax of HK$ 106,599,467. Dividends declared for that year amounted to HK$ 94,794,995 and the net assets of the company valued at HK$ 450,094,986.

Application for discovery

7. During the discovery process, it has come to the wife’s attention that the husband is a beneficiary under 2 discretionary trusts. This information can be seen from the financial statements of the public company. Under the item of Directors’ Interests, the accounts disclosed that 342,575,601 shares in the company were held by 2 discretionary trusts, the beneficiaries of which included the husband, his brother and the other family members.

8. Under the item of Related Party Transactions, the accounts also disclosed that the company has paid rental to a related company (later known as SLCL) amounting to HK$ 3,931,960 in which again the husband and his brother had beneficial interests. As later explained by the husband, this SLCL is also part of the 2 discretionary trusts which he believed to be set up by his parents for him and the other family members.

9. Upon such discovery, the wife’s solicitors have since 9.4.2002 requested the husband to produce documents and information concerning the trusts. For present purposes, it suffices just to start with the wife’s solicitors’ letter dated 3.2.2004 which has set out the information and documents requested by the wife concerning the 2 discretionary trusts. They include:

(i) All details of Discretionary Trust(s);
(ii) Copies of the Discretionary Trust(s) Deeds;
(iii) Names of the Trustees;
(iv) Classes and names of all the beneficiaries;
(v) Dividend and income derived by the Respondent out of such Discretionary Trust(s); and
(vi) Copies of the annual accounts/financial statements of the Trust(s) for the last three years.

10. The first response from the husband’s solicitors on this issue was not received until 3 months later. On 12.5.2004, the solicitors for the husband replied and said that the husband only had limited rights in terms of the information he could secure from the trusts and he would make appropriate enquiries and to incorporate as much information as he could get into the 4th affirmation that he planned to file, which was supposed to be not later than 3.7.2004. That deadline was passed without the filing of the necessary affirmation as promised by the husband.

11. Being not satisfied with the husband’s delay, the wife took out a summons on 3.12.2004 seeking the production of the information as itemised in paragraph 9 above.

12. Subsequently, a consent summons was entered into between the parties on 10.12.2004 and on the issue of discovery, they have agreed on the following term:

“ 2. the Respondent is to include in the said Affirmation such information as he can provide regarding the discretionary Trust(s) in which the Respondent and his brother are discretionary beneficiaries, as first requested in the letter from Messr Stevenson Wong & Co dated the 3rd February 2004, a copy of which is attached herewith;”

13. In other words, the husband has agreed to provide such information as he could in respect of the 6 items as requested by the wife.

14. On 6.1.2005, the husband finally filed his 4th affirmation. Concerning the enquiries on the discretionary trusts, he had this to say in paragraph 17 of the affirmation (p.2781 of the Pleadings Bundle):

“ 17. The Petitioner has enquired as to any interest that I might have in any Discretionary Trust. I have no details of any Trust information save and except as has been disclosed in the annual report of the public company. I am aware that there is a Discretionary Trust, and I can also confirm I have received no payments out or benefits of which I am aware from the Trust and I have not settled any money into the Trust. Any Trust that might have been established would have been done so by one or other of my parents for the benefit of the family, but I have no knowledge or expectations in connection with the same. I am unable to give details concerning the Trustees, or any other of the information sought by the Petitioner, as I have no knowledge of the same.”

15. So what the husband was saying was that, after over 7 months’ inquiries, he had no information on the trusts except:

(1) There are 2 discretionary trusts in which he is one of the beneficiaries;
(2) The trusts might have been set up by one or other of his parents;
(3) He has not settled any money into these trusts;
(4) He has received no payments or benefits from the trusts

16. Not being satisfied with the husband’s answers, the wife’s solicitors took out the present summons asking for an order for discovery from this court. In the summons, the wife prayed for an order for the husband to provide the 6 items of information on the 2 discretionary trusts as listed out in paragraph 9 above. They are exactly the same items that they have asked for in the earlier summons.

17. There have been 2 developments since the filing of the summons. The first one being that the solicitors for the husband had written to his father on 25.1.2005 to enquire about the information on the trusts. The father, through his solicitors, wrote back to say that he did create 2 family trusts and he had never provided with details on those trusts including copies of the trust deeds to the husband. He further said as a settlor of the trusts, he had parted with the properties to the trustees and he had no further legal interests in the trust properties and he had no right to information from the trustees. The names of the trustees were provided with their respective addresses in Jersey and Guernsey, Channel Islands. The solicitors for the father went on to pass some comments on the duties of trustees to provide information on the trusts to discretionary beneficiaries which they said would very much depend on the law of the relevant jurisdictions and the terms of the trust deeds. They further said should proceedings be commenced against the trustees or the settlors, they would probably intervene in the proceedings.

18. The second development was that the solicitors for the husband then wrote to the trustees for the information. One of the trustees, CTL, replied on 1.2.2005 saying that the beneficiary himself should make the request instead of through his solicitors.

19. There is no reply yet received from the other trustee up to the date of the hearing of this summons.

The wife’s arguments

20. The 1st argument put forward by the wife was that she was entitled to investigate into the husband’s entitlement or potential entitlement under the 2 discretionary trusts. Her counsel, Mr. Pilbrow relies on Rule 77(4) of the Matrimonial Causes Rules, which read as follows:

“ (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.”

21. Mr. Pilbrow further submitted that the information they now require from the husband are all within his power to get. If those information or documents are within his power to obtain from the trustees, then the husband has a duty to disclose them: O.24 r.2 (1), R.H.C.

22. It is further argued on behalf of the wife...

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