Introduction

In the recent case of CLS v LPKP [2018] HKFC 6, the petitioner-wife in matrimonial proceedings applied for specific discovery against the banker of the respondent-husband. The Court dismissed the application on the grounds that the discovery sought was unnecessary for fair disposal of the matter and considered that it was inappropriate and unnecessary for the wife to direct the discovery application against the banker instead of the husband.

Background

The husband and wife were married in 1995. Since the wife discovered the husband had an affair with another woman (“Madam C”), the wife filed her petition for divorce in December 2014, claiming “unreasonable behaviour” on the part of the husband and, amongst others, seeking to set aside disposition made by the husband to Madam C back to almost 5 years from the date of the petition since April 2010.

After the husband refused her discovery request, the wife seek discovery against the banker of the husband for allowing her or her agent to inspect and photocopy the bank records of the husband account at the banker for the period from 1 April 2010 to 16 December 2011. The wife made this application since she believed that the husband had been in relationship with Madam C as early as 2010 and she considered that she must view the bank statements of the said account of the husband for the said period to ascertain how much had the husband transferred to Madam C since April 2010.

Although the banker did not oppose to the wife’s application, the husband opposed and argued that the wife’s request was not relevant or necessary for the fair disposal of the case.

The law

In an application for specific discovery against a third party, the applicant must satisfy 3 prerequisites, namely relevance, existence and possession of the documents sought for discovery. The other side could oppose the application by showing that the production of the documents is not necessary either for disposing fairly of the issues between the parties or for saving costs.

Decision

Amongst others, the wife intended to ascertain whether the husband had transferred more than he had already disclosed to Madam C.

First, the Court noted that the starting point for discovery in matrimonial proceedings is always the 12-month period stipulated in the Financial Statement (Form E). The discovery period could be extended to 3 years prior to the petition if there is evidence in the Form E that the spouse had transferred money/asset to a third parties. The Court stated that it should take into account this 3-year statutory period in determining whether the discovery is unnecessary or over-extensive.

Second, the Court considered that a spouse would need very strong reason or evidence to persuade the Court to allow discovery period that is beyond the statutory 3-year presumption period. Since “bank statements are cheap to obtain, but they are expensive to analyse”, the Court stated that every request for discovery must relate to an issue, the issue must be relevant and the request should be proportionate in the context of the case.

Third, the Court noted that only non-marital expenses with clear evidence of “dissipation of assets” that is “reckless”, “wanton” or “extravagant” shall be added back. The wife was seeking disclosure up to almost 5 years prior to the petition, however, it was difficult for the wife to show that money transferred from the husband to Madam C outside the 3-year statutory presumption period was made with an intention to defeat her ancillary relief.

Therefore, the Court rejected the wife’s request for the reason that it was unnecessary for fair disposal of the matter or for saving costs.

Discovery against bankers?

In this case, the Court noted that family judges would often receive discovery request directed to banker of the opposite side or ex parte application for writ of subpoena to banker of the opposite side for production of bank statements. The Court stated that it was a wrong impression of family practitioners that the Court would give green light automatically without hearing from the other side once the banker indicated that it would not object to the production of bank statements.

The Court also stated that, in this case, the fact that the other side refused his/her discovery request was not good and sufficient reason to direct a discovery request against the banker. The wife should not seek discovery against the bank as it would only complicate the procedures and incur unnecessary costs.

In the circumstances, specific discovery applications shall be made against the responding spouse and the responding spouse is highly recommended to write to his/her banker to have the bank record preserved pending the determination by the Court.

Conclusion

There is no blanket rule for discovery against banker of the other side, the court has discretion whether or not to order disclosure. However, if the court considered that the application would cause waste of time and/or costs, the court will not allow such discovery application. Parties are advised to seek legal advice before making any discovery applications in matrimonial proceedings.

For enquiries, please contact our Litigation & Dispute Resolution Department:

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.