SA formerly known as SA v. SPH

HCMC1/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 1 OF 2011

(TRANSFERRED FROM FCMC NO. 13327 OF 2010)

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BETWEEN

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D E C I S I O N

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A. INTRODUCTION

1.  When a marriage with an international dimension breaks down and proceedings are commenced, a dispute about jurisdiction may readily arise.  Typically, the dispute about jurisdiction is based on the juridical advantages perceived by the parties in the respective jurisdictions, and in particular those related to financial relief obtainable in different fora.  The dispute becomes more acute where substantial marital assets are involved and the parties had made a nuptial agreement for financial provisions in the event of a divorce or dissolution of the marriage.  For different jurisdictions may well deal with the nuptial agreement and its effect differently, thereby resulting in disparate financial treatments.

2.  The question as to how a nuptial agreement factors into the consideration of the dispute about jurisdiction had been judicially discussed in a number of cases in England since the 1990s.  See, for example, the decisions of the Family Division in R v R (Divorce: Stay of Proceedings) [1994] 2 FLR 1036; S v S (Divorce: Staying Proceedings) [1997] 2 FLR 100; C v C (Divorce: Stay of English Proceedings) [2001] 1 FLR 624; K v K (Ancillary Relief: Prenuptial Agreement) [2003] 1 FLR 120 and the Court of Appeal in Ella v Ella [2007] 2 FLR 35.

3.  In Hong Kong, our courts undoubtedly have extensive experience in dealing with disputes about jurisdiction in matrimonial cases.  Louvet v Louvet & Another [1990] 1 HKLR 670 and DGC v SLC (née C) [2005] 3 HKC 293 are two examples where the disputes went up to the Court of Appeal.  However, a nuptial agreement rarely featured in the debate.  It would appear that the only case where a nuptial agreement was briefly considered in the context of a stay application was H v H, FCMC1895/2007, unreported, 12 September 2007, Judge Bruno Chan;  HCMP2213/2007, unreported, 27 November 2007, Court of Appeal (Rogers VP and Le Pichon JA).  

4.  With the wider use of nuptial agreements nowadays, how they would impact on the dispute about jurisdiction in international matrimonial proceedings commenced in Hong Kong will inevitably become more frequent.  This stay application therefore provides the court with the opportunity to examine the question and the underlying principles more closely and to give, hopefully, some useful guidance for the approach to similar disputes in the future.

B.      THE DISPUTE IN A NUTSHELL

5.  Shortly put, the Husband (“H”) here applied for stay of the present divorce proceedings in favour of Germany on the ground of forum non conveniens, or alternatively if a stay were not granted and the divorce proceedings were allowed to continue, he would be legitimately disadvantaged. The Wife (“W”) strenuously opposed the application, contending that Germany is not the appropriate forum or, alternatively, that if a stay were to be granted, she would suffer a juridical disadvantage.

6.  The parties’ case on juridical disadvantage hinges largely on the two nuptial agreements that they signed in Germany.  Both were written in German.  The first one was a pre-nuptial agreement made when they were contemplating marriage dated 17 December 2007 (“the Pre-nuptial Agreement”).  The other was a separation agreement signed on 9 September 2010 (“the Separation Agreement”) soon after the decision to divorce was firmed up.  The Agreements, if held to be valid, would curtail W’s entitlement to financial provisions rather substantially.

7.  H contended that the Agreements are valid and binding on the parties under Germany law and should be upheld by the German court, thereby limiting, quite properly, his exposure to W’s claim for financial relief.  If the divorce proceedings were to continue here, he would be deprived of the legitimate and juridical advantage that he would have had in Germany.  W argued that the Agreements are liable to be set aside because of various vitiating factors.  Further, the German court would simply enforce the Agreements, if held to be valid, while the Hong Kong court, which is most likely to follow the recent decision of the English Supreme Court in Radmacher (Formerly Granatino) v Granatino [2010] 2 FLR 1900, would only do so if it were fair in all the circumstances.  So if a stay in favour of Germany were granted, she would suffer from a substantial juridical disadvantage.

C.      BACKGROUND

8.  All stay applications are facts sensitive.  This application is no exception.  A fuller description of the background facts is therefore necessary.  I will also highlight some of the more important factual disputes in the narrative below.

C.1.       Courtship and marriage

9.  H is a German.  He is now 47.  He is a successful specialist in luxury hotel interior design.  His business is based in Cologne, Germany, which he began some 20 years ago.  It has since grown internationally over the years.  He now has a business presence in different parts of the world including Hong Kong, which he regards as a gateway to enter into the Mainland and Asia Pacific.  In around 2006, he set up Company A, a hotel interior design company, in Hong Kong.  He is its CEO.  Company A’s business is funded with loans from HSBC in the tune of HK$6 million.  He paid income tax in Hong Kong.

10.  W is also a German.  She is 44.  She has been living in Hong Kong for over a decade and is a permanent resident.  She used to work as a general manager for a German based Hong Kong company.  She quitted in January 2007 and joined Company A.  She also operated her own company here, that is, Company B.  Throughout their marriage, Company B had been managed by H and derived its business mainly from referrals from H’s businesses.  She also paid income tax here.

11.  H and W first met in Hong Kong in 2005 when H was on a business trip here.  Their relationship soon flourished.  There is a dispute as to when they started to live together before marriage.  W said H moved into her then apartment on Conduit Road in August 2006.  H said the cohabitation started in September 2007 after he rented an apartment on Coombe Road under Company A’s name.  This dispute is of little significance for present purposes.

12.  H proposed to W in early 2007, which she said she happily accepted there and then.  W went on to say that H decided to postpone the announcement of their engagement until the 9 carat diamond engagement ring that he had ordered was ready.  H said when he proposed, W was unhappy about the size of the engagement ring.  So he proposed again in August 2007 when he got the 9 carat diamond ring ready.  H even went on to say that because of this incident and W’s obsession of personal status, he wanted to end their relationship in February 2008.  It was only after W’s rescue efforts that he decided to get on with the marriage.  This dispute appears to be minor at a first glance.  I nevertheless mention it because it seems to me that it is H’s theme that W is always money conscious and knows how to protect her interest on financial matters.  Her story of how she entered into the two nuptial agreements under the alleged vitiating circumstances is therefore doubtful.  He may well wish to rely on this incident as a snapshot of W’s real personality.

13.  Continuing with the narrative, I come to how the Pre-nuptial Agreement came into existence.

C.2.       Pre-nuptial Agreement

14.  H said that shortly after their cohabitation, they discussed their future together and the idea of marriage.  H had just separated from his wife from the first marriage and would apply for a divorce. (He obtained the divorce in July 2007).  W was well-informed of the background as well as details of his marriage settlement with his ex-wife, including the fact that he had a similar pre-nuptial agreement with her.  Under that pre-nuptial agreement, his ex-wife transferred a castle in Germany (“the Castle”) to Company C, a company of H’s.  In return, H paid her €2 million, which he said was raised by a bank loan.  H told W that as they had already accumulated substantial portions of wealth before meeting each other, their finances including those assets accumulated before and after marriage should remain independent and separate from each other.  H thought at the time that it would be in her benefit as well as his that their finances remained independent of each other. W agreed with H’s opinion and suggested that they should sign a pre-nuptial agreement.  H was worried that signing such agreement would not be beneficial to their relationship but W probably knew what she was doing.  W knew that he had to carry a lot of business loans after his divorce with his ex-wife.  As he would be free from any claim against her business and assets, she would be free from any potential claims from his creditors.  So he agreed with her suggestion.  H then instructed his lawyers to draft a pre-nuptial agreement to reflect their views.  On 17 December 2007, H and W flew back to Germany to execute the Pre-nuptial Agreement before a notary (“the Notary”), who explained the contents and legal effect to them beforehand.

15.  W’s case is diametrically different.  She denied that H had told her about how much his ex-wife had received, or that he had to raise loans to pay her.  In fact, H did not show any sign of suffering from any financial difficulty during the time of his divorce or thereafter.  She denied that she was aware of H’s financial background.  W also complained that H had not made proper financial disclosure before the Pre-nuptial Agreement was signed.  She had not been given any documents regarding his assets.  She strongly denied that it was she who suggested that they should have a pre-nuptial agreement.  The idea came from H who said that it was for her protection and for the purpose of keeping them safe, just in case if he had to go bankrupt, or had to let his companies go bankrupt, so that she would be safe and they could live on building on her business.  She received no independent legal advice before signing the Pre-nuptial Agreement before the Notary, a long term person friend of H’s.

16.  Under the Pre-nuptial Agreement, the marriage was to be governed by German law.  H and W further agreed that the businesses and assets listed shall be excluded from their family assets after marriage and free from any matrimonial claims.  On its part, H’s assets comprised of his interest in the two companies set up in Hong Kong, including Company A, and some other companies in Germany and elsewhere.

C.3.       Marriage

17.  They were eventually married at the Hong Kong Peninsula Hotel on 15 February 2008.  It is H’s case that the Notary registered the marriage for them in the Family Court of Berlin, Germany.

18.  During their marriage, the couple enjoyed an opulent lifestyle.  In particular, they shared the luxury hobby of playing polo and horse riding.  They flew to different parts of the world including, England, Dubai, Germany and Argentina, to play polo.  H is interested in hunting as well.  He leased extensive hunting grounds in Lechtal in Tirol, Austria.  Apart from various polo and hunting trips, the couple travelled extensively due to their business commitments worldwide.   It is H’s case that he spent about 2/3 of his time outside Hong Kong.

19.  They have no children.

C.4.       Separation Agreement

20.  It is H’s case that marital discord subsequently arose and their relationship began to turn sour in February 2010.  When he discussed W’s behavioural problems, she said that if the marriage failed, she would need to get €2 million from him.  Their relationship worsened in the following months.  In August, while celebrating W’s birthday at a bar of a London hotel, W publicly insulted him and shouted at him, saying that if they were to divorce, she would expect him to give her €2 million at least.  H could not put up with W any longer.  He decided to divorce W.  Then on 4 September 2010, he told W that he wanted a divorce.  W had no objection and went straight into monetary compensation and asked him what she would get from the divorce.  They then discussed about the terms of the divorce on the following day.  H then asked his lawyer to draft a separation agreement based on their discussion.  On 7 September 2010, the Notary faxed a copy of a draft separation agreement to H’s office in Hong Kong.  H’s secretary said she printed it out and gave it to H and W, who then discussed it.  Minor amendments were made.  W denied that she saw the draft as alleged.  In the same evening, H and W left for Germany separately.

21.  On 9 September 2010, W signed the Separation Agreement before the Notary.  She also made amendments in her own handwriting.  H was not present.  He authorized a tax advisor (“the Tax Advisor”) to sign it on his behalf.

22.  W said that there was no sign or indication from H that he had any problem with their marriage.  In the beginning of September 2010, they just moved into a new matrimonial home on Old Peak Road. Then on 4 September 2010, while she and H were discussing some business at the office, H suddenly told her that they were to separate and that she had to sign a separation agreement.  He told her later that day that he had instructed his lawyers in Germany that she had to sign a separation agreement when he was there.  He asked her to fly back to Germany immediately to inform her parents of their separation and if she were not to sign the separation agreement, she would be left with nothing.  H then presented to her orally a list of terms to be included in the agreement.  W was worried about her parents, who were then staying in the Castle and in particular her mother who had just undergone a serious heart surgery when H had made her to break the sad news to them.  On 9 September 2010, she was collected from the Castle by the Tax Advisor, a friend of H’s, who drove him to the Notary’s office.  It was during the journey that the Tax Advisor showed her, for the first time, a copy of the Separation Agreement.  W declined as she was already very upset and could not read while in a car.  When they arrived at the Notary’s office, she was presented with the original document and was told to sign.  She had not received any financial disclosure or any legal advice nor was there any time to consider the contents away from H’s representatives.  She felt very much pressured to sign.  And her mother was seriously ill.  W complained that her signature was procured by H through his representatives while she was under duress.

23.  H denied any duress as alleged.  H in particular relied on the fact that W had made various handwritten amendments to the Separation Agreement.

24.  Under the Separation Agreement, H would pay for the tenancy of the matrimonial home until 30 September 2012.  His company would continue to pay W the existing agreement (which is a monthly payment of £10,000 until 30 September 2012).  W would sell a wine collection to a company owned by a friend of H’s at the costs price of €200,000.  H would continue to bear the monthly fee of €500 for the accommodation of a horse he previously bought W as a gift for 2 years.  He would pay W for a period of 2 years her insurance in Germany of €1200 per month.  H agree to pay W’s parents an allowance of €20,000 should Company C terminate the tenancy which enabled them to stay at the Castle.  It was finally agreed that all the claims for compensation and all possible divorce consequences had been arranged for. Mutual claims shall not exist anymore after the execution of the Separation Agreement.  Mutual maintenance shall not be owned as both are in a position to support oneself.  In any event, the parties would waive the maintenance mutually.  In the event of the initiation of a divorce proceeding only one of them shall be represented by counsel.

25.  H said that he had already performed the Separation Agreement partially by making some of the payments as stipulated.  W said H had in fact beached the Separation Agreement.  For present purposes, I need not dwell on the parties’ allegations on this topic.

D.      DIVORCE PROCEEDINGS

26.  In October 2010, W commenced the present divorce proceedings in the family court.  W also applied for maintenance pending suit (by summons dated 15 October 2010) and transfer to the High Court (by summons dated 19 November 2010).  H took out the present application on 23 November 2010.  Judge Melloy gave directions for future conduct of the applications.

27.  On 27 January 2011, the parties appeared before Judge Melloy upon her own initiative.  Apparently, the judge, after reading the affidavit evidence filed so far, took the view that it would be beneficial to first determine the weight to be attached to the Pre-nuptial Agreement and the Separation Agreement before any other applications. She then gave directions for filing of evidence, which the parties had since fully complied with.  On 21 March 2011, the judge acceded to W’s application and transferred the case to the High Court.

28.  The matter eventually came before me.  On 24 May 2011, after hearing the parties, I set the stay application down for argument within the first two weeks of September.  The intention was to get on with it first.  I also directed the preliminary issue as to the weight of the Agreements to be dealt with prior to the determination of other issues of ancillary relief and gave consequential directions.  The parties have since filed both factual and expert evidence on the preliminary issue.  The preliminary issue is scheduled to be heard on 17 to 21 September 2012.

29.  As referred to in his German law expert’s opinion dated 6 September 2011, H had on 30 December 2010 commenced divorce proceedings in the family court of Germany.

E.      GENERAL PRINCIPLES OF STAY

30.  The general principles applied by the Hong Kong courts to stay of proceedings on the ground of forum non conveniens are derived from the leading decisions of the House of Lords in Abidin Daver [1984] AC 398; Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 and de Dampierre v de Dampierre [1988] 1 AC 92.  The Court of Appeal first applied them to matrimonial proceedings in Louvet, supra, per Hunter JA at pp.674I-675D, and more recently in DGC, supra, per Cheung JA at para. 11 at pp.297G-298B.  The principles are summarised as follows.

31.  The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, that is, in which the action may be tried more suitably for the interests of all the parties and the ends of justice.  In answering the question, the court embarks on a three-stage inquiry :

(1)     Is it shown that Hong Kong is not only not the natural or appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate than Hong Kong?  Appropriate and natural forum means the forum with which the action has the most real and substantial connection.  Connecting factors include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transactions, and the place where the parties respectively reside or carry on business.  The evidential burden here is on the applicant.  Failure by the applicant at this stage is normally fatal.

(2)     If the answer to (1) is yes, will a trial at this other forum deprive the plaintiff of any legitimate personal or juridical advantage?  The evidential burden here lies upon the plaintiff.

(3)     If the answer to (2) is yes, the court has to balance the advantages of (1) against the disadvantages of (2).  Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that substantial justice will be done in the available forum.  The applicant bears this ultimate burden of persuasion. He needs to establish that on balance the other forum is more suitable for the interests of all the parties and the ends of justice.

32.  Three additional points are to be noted.

33.  First, the connecting factors relevant to stage 1 as to the appropriateness of the rival forum may equally have significance as juridical advantages at stage 2 as well : de Dampierre, supra, per Lord Goff at p.109A-D and Louvet, supra, per Hunter JA at pp.678H-679E.

34.  Second, typical examples relied on by a plaintiff as juridical advantages include damages awarded on a higher scale, a more complete procedure of discovery, a power to award interest or a more generous limitation period.  As a general rule, the court should not be deterred from granting a stay simply because the plaintiff will be deprived of such an advantage provided that the court is satisfied that substantial justice will be done in the available appropriate forum : Spiliada, per Lord Goff at p.482E-F.  That said, the underlying principle requires that regard must be had to the interests of all parties and the ends of justice.  These considerations may well lead to different conclusions in different cases : Spiliada, per Lord Goff at p.483C.  So ultimately, much depends on the actual circumstances of the case.

35.  Third, stage 3 is the most delicate and difficult aspect of the inquiry because it involves balancing the interests of justice in the broadest sense of that word.  The task is most difficult because a juridical advantage to a party almost inevitably results in a disadvantage to the other. When looking at the advantage to the plaintiff, the court does not measure it by the standards of the plaintiff’s forum, for example, Hong Kong.  The court applies the more international concept of justice to both parties.  See Louvet, supra, per Hunter JA at pp.676H-J.  Hunter JA went on to explain at pp.677A-G :

“ In the matrimonial context I do not think it is difficult to see why. It is, I believe, notorious that most contested matrimonial suits come down to arguments on custody or maintenance or both. It is inevitable that the advantage say to the wife petitioner produces an identical corresponding disadvantage to the husband respondent. If measured solely by the local standards of different tribunals, justice to one must equal injustice to the other. De Dampiere, and indeed this case has, I think, shown that the French law of maintenance is by the standards of the UK and of Hong Kong 20 or 30 years out of date. Fault still plays a potentially significant role, and a finding of sole fault against a wife, produces what used to be called in earlier days a compassionate allowance. Years ago this was recognised as unjust or unfair to the wives in the UK and in Hong Kong, and was rejected. It is therefore pertinent to ask upon what basis did the House of Lords compel a wife to submit to a regime which by UK domestic standards alone was apparently unjust.

The answer, I believe, is that the Lords faced the problem which had been most succinctly put by Oliver, L.J. in Spiliada in the Court of Appeal [1985] 2 Lloyds Rep 116 at p.135 :

‘The difficulty that I felt about this initially was that what is one man’s advantage must be another’s disadvantage. If one is to look at it as a matter of abstract justice why should a defendant who has a juridical advantage in the jurisdiction in which he ought, prima facie, to be sued, be brought into a jurisdiction where he ought not, prima facie, to be sued, simply because that jurisdiction deprives him of that advantage and confers a corresponding advantage on his opponent?’

It is, I think, significant that Oliver, L.J. was saying that the problem only arose when the defendant was taken out of what was prima faciethe appropriate jurisdiction.  If he was, it is quite plain that you cannot judge by the standards of the individual jurisdictions because you reach a headlong conflict.  There is no half-way house.  You have to recognize that there is going to be one loser and one winner in the result.  The court has accordingly to resort to wider considerations, to perhaps a supra-national standpoint, and try to determine in each case which is the fairer jurisdiction to the parties collectively or, perhaps putting it more brutally, which overall produces the least unjust result.  That I believe is basically the de Dampierre test.”

36.  In my view, the approach propounded by Hunter JA applies equally to the treatment of nuptial agreements as a juridical disadvantage or otherwise at stage 3 of the inquiry.

37.  With the above general principles in mind, I now turn to consider if H has discharged his burden at the first stage of the inquiry.

F.       STAGE 1—THE MORE APPROPRIATE FORUM

38.  A number of factors point to Hong Kong as the appropriate forum.

39.  W is a permanent resident who has lived and worked in Hong Kong for over 10 years.  She runs her own company in Hong Kong and will most likely continue to do so.  H established two companies in Hong Kong in about 2007 including Company A and has since been using Hong Kong as the gateway to the Mainland and Asia Pacific for his businesses.  Both of them paid tax in Hong Kong.  The parties met in Hong Kong and their relationship budded, blossomed and withered here.  During their marriage, they took Hong Kong as the family base, although they travelled quite substantially.  W has clearly commenced the divorce proceedings here as of right.

40.  On the other hand, there are factors which connect the case to Germany.

41.  Both parties are German nationals with family ties there.  They went back to Germany for family and vacation purposes on a number of occasions during their marriage.  H’s business is essentially based in Cologne, Germany although he has an international business presence at different places including Hong Kong.  H often flew back to Germany to attend to his business.  He also has a flat in Germany.  H has already commenced divorce proceedings in Germany.  Additionally, two factors are of particular importance.

42.  First, there is a hot dispute as to whether H still owns the Castle.  If so, it would form part of the marital assets to which W may have access.  Indeed, it is her stated wish to have access to the Castle for her financial claims.  H alleged that when his ex-wife transferred the Castle to Company C, for tax reason, 94% of the interest in Company C was transferred to Company D, the holding company of all his design companies while the 6% was transferred to his sister.  He faced tremendous financial difficulties after the global financial tsunami towards the end of 2008.  He was forced to sell all the said 94% interest to a buyer introduced by his bank, which is a private wealth management company.  The Castle together with other assets of Company C, including the polo ponies and the dressage horse, ceased to be owned by him since May 2009.  As to the 6%, H said that W told him a few months after the sale of his interest in Company C that she had acquired the same from his sister.  W tried to convince him that one day they would have the Castle back.  Eventually, W sold the 6% back to H’s sister for CHF2,500 on 9 September 2010, the same day when the Separation Agreement was signed.

43.  W alleged that the Castle is still owned by H. She transferred the 6% interest to his sister because he threatened her that if she did not, he would take all the money out of the Castle and put a loan on it and she would be left with a great debt.

44.  While, as Cheung JA observed in DGC, supra, at para. 15 at pp.298I-299B, Hong Kong courts have vast experience in dealing with family cases, including the valuation of overseas properties and the making of orders in respect thereof, investigations into the controversy surrounding the Castle are best carried out and determined in Germany.  I note that the alleged buyer of H’s 94% is a Swiss company.  But I reject the submission of Mr Coleman, SC, for W, that it is a “Swiss” transaction.

45.  The second major factor is the Pre-nuptial Agreement and the Separation Agreement.

46.  Both Agreements were executed in Germany.  In fact, the parties flew back to Germany in order to sign them.  Both were written in Germany.  There is an express choice of law clause in the Pre-nuptial Agreement for German law.  Although there is no similar express provision in the Separation Agreement, quite plainly the parties intended that German law was to apply as well.

47.  Clause 16 of the Separation Agreement further provides that all the agreements to be made between the parties have been arranged for, in the event of the initiation of a divorce proceeding, only one of the parties shall be represented by counsel and H will bear the costs thus arising.  According to German law, a husband and wife must live apart for one year before a divorce can be granted.  H’s case is that as the parties had already made all the necessary arrangements, the procedure of divorce would be summary and straightforward.  Thus they agreed that only one of them would be represented by counsel in the divorce proceedings and he agreed to bear the costs.  In my view, it is reasonably arguable that the parties had, by necessary implication, designated Germany as the forum for their divorce under Clause 16.

48.  The validity of the Pre-nuptial Agreement and the Separation Agreement is seriously disputed by the parties.  H fully accepted that W is entitled to challenge their validity before a German court.  (I note by passing that H did not seek to argue that when challenging the validity in a German court, Clause 16 of the Separation Agreement would prevent W from having her own separate legal representation.) In resolving the question of validity, Germany is distinctly the more natural and appropriate forum.  Most of the vitiating events relied on by W took place in Germany.  Both the Notary and the Tax Advisor were allegedly involved.  They are material witnesses located in Germany.  Germany law is also involved, which is best dealt with by a German court.

49.  Mr Coleman submitted that the parties have already complied with the court’s directions for filing evidence, both factual and expert, on the weight of the Agreements, including validity.  H has not caused the Notary and Tax Advisor to file any evidence, which suggests that H is able to tackle validity without their evidence.  And a Hong Kong court has no difficulty to deal with the experts’ evidence on German law.  It would be a huge waste of costs if the matter were not heard here.

50.  I recognise the force in Mr Coleman’s submission but I do not think it distracts from my conclusion that Germany is the best forum to determine the question of validity.

51.  I digress to dispose of another point raised by Mr Coleman on the preparatory steps taken by the parties pursuant to the court’s directions.  He submitted that such steps amounted to submission to jurisdiction by H.  With respect, this submission is misconceived.  For H has already submitted to jurisdiction.  What he now seeks to do is to stay the Hong Kong proceedings.  In any event, the preparatory steps were taken plainly with the dispute about jurisdiction in mind.  They ensured that the proceedings could be expedited should the court refuse to grant a stay.  I fail to see how in the circumstances they can possibly amount to any submission to jurisdiction or bar against H from disputing jurisdiction.

52.  Having considered all the circumstances and the connecting factors, I am satisfied that Germany is clearly and distinctly the more natural and appropriate forum.

G.      STAGE 2—JURIDICAL DISADVANTAGE

53.  I next come to stage 2 of the inquiry.

54.  As already noted, W is entitled to dispute the validity of the Agreements before a German court with her own legal separation.  There is no suggestion that a German court will not entertain her challenge.  So W will not suffer any disadvantage in this regard.  Nor is it suggested that should W succeed in her challenge and the Agreements are set aside, she will suffer any real prejudice, financial or otherwise, in the German court.

55.  W’s case is that she would suffer serious juridical disadvantage because if the Agreements are held to be valid, the German court will simply apply them, thus severely restricting her entitlement to financial relief.  She contended that if the ancillary relief is to be heard in Hong Kong, the court will most likely follow and apply the decision of the English Supreme Court in Radmacher, supra.  That is to say, the court should give effect to a pre-nuptial agreement that was freely entered into by each party with a full appreciation of its implication unless in the circumstances prevailing it would not be fair to hold the parties to their agreement : see the majority judgment at paras. 75 and 129 at pp. 1927 and 1938.  Mr Sussex, SC, for H, readily accepted that the courts in Hong Kong will most likely follow and apply the Radmacher principle.

56.  For present purposes, it is not necessary for me to come to a definitive view on the applicability of the Radmacher principle.  In light of the parties’ submissions, I will proceed on the basis that it will apply.

57.  For the Separation Agreement, the English Court of Appeal had already held in 1980 that if properly and fairly arrived at with competent legal advice, separation agreements should be given effect to unless good and substantial grounds were shown for concluding that injustice would be done by holding the parties to the terms of the agreements : Edgar v Edgar [1980] 1 WLR 1410.  The Edgar principle was recently applied by our Court of Appeal in L v C [2007] 3 HKLRD 819.

58.  W argued that under the Radmacher principle and the Edgar principle, the courts in Hong Kong will consider the unfairness that she would suffer financially if she were to be held to the terms of the Agreements.  That is a juridical advantage she would be deprived of if the matter is to be heard in Germany.

59.  Mr Sussex submitted that whether W will be subject to a legitimate juridical disadvantage in Germany cannot be answered until it is known whether the German court determines that the Agreements are enforceable.  But he rightly submitted that for present purposes, this court does not go into the vitiating circumstances relied on by W.  For as Wilson J said in S v S, supra, at p. 103D :

“The matter must be left open and on the footing that, were she to be enabled to claim ancillary relief in England, the wife might secure an award of substantial further provision.”

Wilson J’s approach was accepted by the Court of Appeal in Ella v Ella, supra, per Thorpe LJ at para. 24.

60.  Proceeding on that footing and applying the Radmacher principle and the Edgar principle, I am satisfied that W will be deprived of the juridical advantage in Germany as contended.

61.  This brings me to stage 3 of the inquiry.

H.      STAGE 3—THE BALANCING EXERCISE

62.  In my view, central to the balancing exercise is how to address the respective need of H and W to pursue what they perceive to be their juridical advantage, assuming that the Pre-nuptial Agreement and the Separation Agreement are valid and binding.  To recap, H wants to have the Agreements applied to their full terms without ado.  W wants to avoid their application on the ground of unfairness.

63.  In assessing the balance, I remind myself of the approach propounded by Hunter JA in Louvet, supra, at p.677A-G as set out in paragraph 35 above.  In my view, it will be most unjust if only either H or W is able to pursue his or her juridical advantage exclusively, thereby imposing on the other a corresponding juridical disadvantage with no or little redress.  The balance of fairness is best struck at the point where both of them are able to further their quest for the juridical advantage.

64.  At a first glance, this seems to be an impossible task.  The stark difference in the judicial treatment of the Pre-nuptial Agreement and the Separation Agreement in Hong Kong and Germany means that, depending on where the proceedings are conducted, H or W will definitely be deprived of his or her the right to claim the juridical advantage.  Thanks to the new provisions recently introduced in Part IIA of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“the Ordinance”), the task is now made possible.

65.  In gist, section 29AB of the Ordinance now confers jurisdiction on the Hong Kong court to make orders for financial relief where a marriage has been dissolved by means of judicial proceedings elsewhere.  Under section 29AC, with leave of the court, an application for an order for financial relief may be made.  And the court must not grant leave unless it considers that there is a substantial ground for the making of an application for an order for financial relief.  This jurisdiction exists even if a foreign court has made an order for financial relief.

66.  Accordingly, if the German court finds that the Agreements are valid and simply apply them, W may still come back to Hong Kong to make an application under Part IIA for additional financial relief which she said she has been unfairly deprived of.

67.  In my view, the balance of fairness is achieved by staying the proceedings in favour of Germany without prejudice to W’s right to make an application under Part IIA of the Ordinance after the conclusion of the German proceedings.  It will enable the parties’ disputes to be resolved in the most natural and appropriate forum.  There, W can challenge the validity of the Agreements as she sees fit.  If she succeeds, then her financial relief will be determined without reference to the Agreements.  She will not suffer any prejudice, financial or otherwise.  H can on the other hand legitimately claim his juridical advantage if he can satisfy the German court that the Agreements are valid.  If the German court does find that the Agreements are valid and simply apply them, W still retains her juridical advantage in Hong Kong.  For she may still claim for additional financial relief by making the necessary application under Part II A of the Ordinance, if she can satisfy the Hong Kong court that she has suffered substantial unfairness.  This, I believe, “overall produces the least unjust result”.

68.  I note that in Ella v Ella, supra, the English Court of Appeal came to a similar view when it resolved the issue of whether a juridical disadvantage, in terms of substantially less financial provisions in the rival forum, militated against the granting of stay, by concluding that a stay would not foreclose the possibility of proceedings under the English statutory equivalent of Part IIA : per Charles J at para. 56.

69.  I fully appreciate that should W need to come back to Hong Kong to take out a Part IIA application, additional costs and inconvenience will be incurred.  But by then, most of the disputes between the parties would have been determined by the German court already.  What remains outstanding is the unfairness circumstances that W seeks to rely on.  Given the limited scope of the further inquiry, the additional costs and inconvenience should not be substantial and in any event would not be sufficient to militate against staying the current proceedings in favour of Germany now.

70.  To complete the discussion, I turn to Mr Coleman’s submission.  He effectively submitted that the juridical disadvantage suffered by W in Germany is so great that fairness demands the case to be tried in Hong Kong so as to enable her to invoke the Radmacher principle.  I am unable to accept his submission because he has completely ignored the juridical disadvantage that H might suffer if the proceedings were conducted in Hong Kong.

71.  Mr Coleman placed heavy reliance on H v H, supra.  There, Judge Bruno Chan, having refused the husband’s application to stay the proceedings on the ground that Germany was not the appropriate forum, went on to observe at para. 58, obiter, that if the proceedings were stayed in favour of Germany, the nuptial agreement would constitute a juridical disadvantage to the wife because it would substantially restrict her financial claims.  In refusing the husband’s leave to appeal (HCMP2213/2007, unreported, 27 November 2007), Rogers VP echoed the observation of the learned family judge, commenting at para. 10 that if the terms of the nuptial agreement were adhered to to any significant extent a grave injustice would be likely to be done to the wife.  Mr Coleman even went so far as submitting that H v H is binding on me.  I disagree.  With no disrespect to Judge Bruno Chan, whose experience in matrimonial matters always commands great respect, his decision is not binding on this court.  In any event, his observation about the juridical disadvantage imposed by the nuptial agreement is obiter.  While Rogers VP endorsed Judge Chan’s observation, I do not think his remark, undoubtedly directed to the particular facts of the case, laid down any general proposition of universal application about the effect of a nuptial agreement on stay irrespective of the facts of the case.  Finally, H v H was decided before the enactment of Part IIA of the Ordinance, the effect of which this court is entitled to take into account in balancing the parties’ competing interests.

72.  Mr Coleman also relied on R v R, supra, where the English Family Division held that since the Swedish court could do no more than apply Swedish law and enforce the marriage contract, resulting in substantially less favourable treatment to the wife, justice demanded that the stay of the English proceedings should be refused.  How the court should perform the balancing exercise must depend on the actual facts of the case.  Accordingly, how a court has assessed the balance against certain facts does not provide much assistance to another court faced with different facts.  It is the principles derived from the cases that inform the approach to the balancing exercise : see Hunter JA’s observation in Louvet, supra, at p.678F.

I.       ORDERS

73.  I accordingly allow H’s application for stay. The stay is, however, made without prejudice to W’s right to take out an application under Part IIA of the Ordinance after the conclusion of the proceedings in Germany, if so advised.

74.  I further direct that the hearing dates for the preliminary issue on the weight of the Pre-nuptial Agreement and the Separation Agreement in September 2012 be vacated.

75.  Costs should follow the event.  I will make an order nisi that H shall have the costs of the application, to be taxed if not agreed.