ZC v. CN

CACV 255/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 255 OF 2013

(ON APPEAL FROM FCMC NO. 6643 OF 2012)

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J U D G M E N T

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Hon Cheung CJHC :

1.  I agree with the judgment of Cheung JA.

Hon Cheung JA :

The appeal

2.  The issue raised in this appeal is whether the petitioner wife is substantially connected with Hong Kong for the purpose of invoking the divorce jurisdiction of the Family Court.  A subsidiary question is whether, in any event, the wife’s divorce petition should be stayed on the ground of forum non conveniens. H H Judge Melloy refused the respondent husband’s jurisdictional challenge to the wife’s petition.  The husband now appeals.

The background

3.1   The parties were married in Hong Kong on 31 December 2005.  The husband is 52 years of age and the wife is about ten years younger. The husband was born in the Mainland but came to Hong Kong as a teenager and acquired permanent residence status here.  He moved back to the Mainland and based himself in Shenzhen since 1982 and has been engaged in the entertainment business in the Mainland.  He met the wife in 1995 and cohabitated with her soon afterwards although he was only recently married to another woman (‘the first wife’) at that time.  The wife was a singer when she met the husband. She quitted her job and became a housewife and assisted him with his business whenever she could.

3.2   On 3 July 2004 the husband petitioned to divorce his first wife in Hong Kong.  According to the husband’s divorce petition he relied on the fact that both he and his first wife were domiciled in Hong Kong.  The petition stated that the husband was a restaurant manager living in Hong Kong and that his first wife was a housewife with two residential addresses - one in Hong Kong and one in Shenzhen.

3.3   The parties married after the husband obtained the decree absolute against the first wife.

3.4   The husband said they had lived at two properties in Shenzhen.  The first was a place known as Jinhu Villas.  In early 2012, they moved to another flat in a place known as the Park Lane Manor.

3.5   Although the husband said that in 2006, the wife applied for permanent residence in Hong Kong and obtained permanent residence in 2010, in fact the wife was only granted an exit permit (commonly known as the one way permit) to come to Hong Kong by the Mainland authorities in May 2010.  Previously she travelled to Hong Kong on a two way permit renewable every 12 months.  She obtained a Hong Kong identity card in June 2010 but she is still not a permanent resident.

3.6   The couple also maintained properties in Hong Kong.  They first bought a flat in Wonderland Villas in Kwai Chung in December 2007.  It was sold in 2011.  In May 2008 another flat in a complex known as the Palazzo in Shatin was bought.  According to the wife the two flats had been the homes of the parties in Hong Kong.  The husband said the Wonderland Villas flat was never used as their matrimonial home since they were living in Shenzhen. The flat was bought for his mother but as she did not like it, it was then rented out.  The Palazzo flat was also used by his mother when she came back to Hong Kong from Australia where she spent part of the year.  The couple only stayed in the Palazzo flat no more than ten days a year.

3.7   The wife is now currently residing in a serviced apartment in Hong Kong.  She claimed that the husband had arranged to shut her out from the Palazzo flat.

3.8   The wife said that they married in Hong Kong because it was their intention to give birth to children and set up their family in Hong Kong.  Between November 2007 and August 2012, the wife received fertility treatments in Hong Kong but they were unsuccessful.

3.9   Since 2010, the husband was diagnosed to have serious lumber spinal illness which is potentially life threatening and may lead to paralysis.  He has been seeking treatment from doctors in Hong Kong and the Mainland.

3.10   The relationship of the parties went sour and on 15 May 2012 the wife petitioned for divorce in Hong Kong based on the husband’s unreasonable conduct.  For the purpose of this appeal I will refrain from dealing with the wife’s allegations of the husband’s conduct in the petition and in her submission in Court since they are not relevant to the issue we have to address. 

3.11   In the petition the wife said that the parties are domiciled in and also have a substantial connection with Hong Kong.  The wife relied on the following in support of her jurisdictional connection :

1) The parties were married in Hong Kong.

2) She has a Hong Kong identity card.

3) She has maintained an active bank account in Hong Kong.

4) The parties purchased the flat in the Palazzo and she has been residing there as her home when she is in Hong Kong.

3.12   The wife relied on the following in support of the husband’s jurisdictional connection :

1) He is a Hong Kong permanent resident and holds a Hong Kong identity card.

2) He is the co-owner of the flat in the Palazzo.

3) He is a director and 40% shareholder of a Hong Kong company which owns substantial investments in two provinces in the Mainland.

4.   The husband then issued his jurisdictional challenge to the wife’s petition. 

The Judge’s decision

5.1   The Judge found that the parties are not domiciled in Hong Kong but they have substantial connection here.  The Judge’s decision on domicile is not appealed against by the wife.

5.2   The Judge summarised the wife’s travel to Hong Kong from 2006 to August 2012 as follows :

Prior to 2010

2006 — 21 visits.  Of those 20 were same day visits.

2007 — 22 visits.  Of those 20 were same day visits.

2008 — 51 visits.  Of those 8 were 1 night stay or longer.  The rest were same day visits.  [43 same day return.]

2009 — 56 visits.  Of those 20 were overnight stays or longer.  The rest were same day visits.  [36 same day return.]

2010 onwards

2010 — 40 visits.  Of those 24 were overnight stays or longer.  There was one lengthy stay from 4 to 23 June.  [16 same day return.]

2011 — 34 visits.  Of those 8 were overnight stay or longer.  [26 same day return.]

Until August 2012 — 33 visits, the majority of which were overnight stays or longer.

5.3   The husband’s travel to Hong Kong from August 2002 to July 2012 is summarised as follows :

Prior to 2010

2002 — 2 visits.  Of those 1 were same day visit and 1 was 1 night stay visit.

2003 — 12 visits.  Of those 8 were same day visits and 2 were 1 night stay visit.

2004 — 14 visits.  Of those 13 were same day visits and 1 was 2 night stay visits.

2005 — 13 visits.  Of those 9 were same day visits and 3 were 2 night stay visits and 1 was 5 night stay visits.

2006 — 21 visits.  Of those 18 were same day visits and 2 were 1 night stay visits and 1 was 2 night stay visit.

2007 — 24 visits.  Of those 20 were same day visits and 3 were 1 night stay visits and 1 was 2 night stay visit.

2008 — 34 visits.  Of those 28 were same day visits and 3 were 1 night stay visits, 2 were 2 night stay visits and 1 was 3 night stay visit.

2009 — 25 visits.  Of those 18 were same day visits and 5 were 1 night stay visits and 2 were 2 night day visits.

2010 onwards

2010 — 14 visits.  Of those 1 was same day visit, 9 were 1 night stay visits and 4 were 2 night stay visits.

2011 — 4 same day visits.

2012 — 6 visits.  Of those 5 were same day visits and 1 was 1 night stay visit.

Divorce jurisdiction of the Hong Kong Court

6.  Section 3 of the Matrimonial Causes Ordinance, (Cap 179) provides that the divorce jurisdiction is based on the following grounds:

1) Either of the parties to the marriage was domiciled in Hong Kong at the date of the petition or application;

2) Either of the parties to the marriage was habitually resident in Hong Kong throughout the period of three years immediately preceding the date of the petition or application; or

3) Either of the parties to the marriage had a substantial connection with Hong Kong at the date of the petition or application.

I) Domicile

7.1   Rule 4 of Dicey, Morris & Collins: The Conflict of Laws, (15^th ed.) Chapter 6, para 6R-001 states :

‘ RULE 4—(1) A person is, in general, domiciled in the country in which he is considered by English law to have his permanent home.

 (2) A person may sometimes be domiciled in a country although he does not have his permanent home in it.’

7.2   To elaborate on this rule the authors state that :

̒ 6-004   Permanent home.  The notion which lies at the root of the concept of domicile is that of permanent home. …… A person may be said to have his home in a country if he resides in it without any intention of at present removing from it permanently or for an indefinite period.  But a person does not cease to have his home in a country merely because he is temporarily resident elsewhere; and a person who has formed the intention of leaving a country does not cease to have his home in it until he acts according to that intention.

6-005  While the notion of permanent home can be explained largely in the light of commonsense principles, the same is certainly not true of domicile.  Domicile is “an idea of law” which diverges from the notion of permanent home in two principal respects.  In the first place, the elements which are required for the acquisition of a domicile go beyond those required for the acquisition of a permanent home.  In order to acquire a domicile of choice in a country a person must intend to reside in it permanently or indefinitely. …… Secondly, domicile differs from permanent home in that the law in some cases says that a person is domiciled in a country whether or not he has his permanent home in it……’

7.3   The words ‘by English law’ in Rule 4 mean in the context of this case ‘by Hong Kong law’.  This rule together with the concept of acquiring a domicile by choice are reflected in our Domicile Ordinance (Cap 596) which is an ordinance to consolidate and reform the law for determining the domicile of individuals.  Section 3 provides that :

̒ 3.  General rules

 (1) Every individual has a domicile.

 (2)  No individual has, at the same time and for the same purpose, more than one domicile.

 (3)  Where the domicile of an individual is in issue before any court in Hong Kong, that court shall determine the issue in accordance with the law of Hong Kong.’

7.4   Section 5 further provides that :

̒ 5.  Domicile of adults

(1) On becoming an adult, an individual retains (subject to subsection (2)) the domicile that he had immediately before he becomes an adult.

(2) Subject to sections 6, 7 and 8, an adult acquires a new domicile in a country or territory if—

 (a) he is present there; and

 (b) he intends to make a home there for an indefinite period.’

7.5   An adult may be lawfully present in Hong Kong in order to acquire a domicile in Hong Kong (section 6).

7.6   In W v C [2013] 2 HKLRD 602 this Court adopted the list of factors identified by Chu DJ in Y v W [2012] 2 HKC 455 which may be taken into account in determining an individual’s intention whether to make a permanent home in a particular place :

1) Length of residence;

2) Condition of residence: Purchased property?  Leased property?  Furnished lodgings?  Hotels?;

3) Marriage with a local partner;

4) Whereabouts of the family;

5) Business interest;

6) Whereabouts of personal belongings;

7) Whereabouts of the person’s property and investments;

8) The fact of naturalisation;

9) Decision made as to the nationality of the children;

10) Education of the children;

11) Memberships of clubs or religious associations;

12) Place of work;

13) Relation between a man and his family.

II)  Habitual residence

8.1   Habitual or ordinary residence refers to ‘a man’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether of short or of long duration.  It is necessary that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled’ : R v Barnet London Borough Council, Ex p Nilish Shah [1983] 2 AC 309, judgment of Lord Scarman at page 340-344.  Lord Scarman applied the natural and ordinary meaning approach in construing the words ‘ordinarily resident’ of the United Kingdom Education Act 1962.

8.2   The same meaning of habitual or ordinary residence is to be given to the family law legislation : Ikimi v Ikimi [2002] Fam 72 Thorpe LJ at page 82, reaffirmed in Mark v Mark [2006] 1 AC 98.

8.3   Unlike domicile, one may have habitual or ordinary (the terms are the same) residence in two places at the same time : Ikimi.

8.4   In the recent case of Vallejos v Commissioner of Registration (2013) 16 HKCFAR 45, the Court of Final Appeal construed ‘ordinarily resident’ in Article 24(2)(4) of the Basic Law. The Court of Final Appeal emphasised the purposive and contextual approach in statutory interpretation (paragraph 50) and qualified the natural and ordinary meaning approach of Lord Scarman by regarding it only as a starting point but not decisive (paragraph 80).  Ma CJ held that :

̒ 81.  It is always necessary to examine the factual position of the person claiming to be ordinarily resident to see whether there are any special features affecting the nature and quality of his or her residence.  If such features exist, one asks whether they result in that person’s residence being qualitatively so far-removed from what would traditionally be recognised as “ordinary residence” as to justify concluding that he or she is not “ordinarily resident”.  This is necessarily a question of fact and degree and the outer boundaries of “ordinary residence” are incapable of precise definition.  But the exercise is necessary since the meaning of “ordinary residence” in art.24(2)(4) can only be considered in the factual context presented by the person claiming to come within the meaning of that concept.’

III)  Substantial connection

9.1   In line with the modern approach of statutory interpretation, one should not simply look at the natural and ordinary meaning of the words ‘substantial connection’ but also the context and purpose of this term.

9.2   The requirement of substantial connection was introduced in 1970 as part of the marriage reform which, among other things, restricted marriages in Hong Kong to that of monogamous marriages, see a summary of the change in Jean Michel Savournin v. Lau Yat-fung [1971] HKLR 180.  However no discussion was made to the meaning of substantial connection in the legislative debate, see Hong Kong Legislative Council, Official Report of Proceedings,3^rd June 1970, pages 676-682.

9.3   The term ‘substantial connection’ is also used in the recently introduced Part II of the Matrimonial Proceedings and Property Ordinance (Cap. 192) where a party may seek financial relief in Hong Kong in respect of an overseas divorce, see CMU v WPM (Part IIA Application) [2012] HKFLR 245.

9.4   Whether a person has a substantial connection with Hong Kong is clearly a question of fact.  No definition for this term will be succinct or comprehensive enough.  What one may do is to look at the surrounding factors to see whether that person is substantially connected with Hong Kong at the time of the petition.  As a starting point, one begins to see if that person has connection here and then decide whether that connection is a substantial one, see S v S [2006] 3 HKLRD 751 paragraph 15.  In terms of connection, there must be physical presence in Hong Kong, this must be the ground rock of invoking the divorce jurisdiction.  But because of the requirement of ‘substantial’, the presence cannot be of a transitory nature otherwise this will encourage ‘fly in’ and ‘fly out’ divorces, a theme that the Court has consistently emphasised, see, for example, Griggs (nee Sharp) v Griggs [1971] HKLR 299, Ta Tran Thi Thanh v Ta Van Hung and Another [1981] HKDCLR 37 and more recently S v S, B v A [2008] 1 HKLRD 43.

9.5   In the majority of cases, where a married couple is in Hong Kong, the Court will have no difficulties in ascertaining whether they have a substantial connection here.  Thus in RI v SSH [2010] 4 HKC 588, this Court held that :

̒ 4. …… Hence in order to see whether the proceeding has a real and substantial connection to Hong Kong one must, first of all, ascertain whether at the time of its commencement the parties have substantially conducted their matrimonial life in Hong Kong.  Hong Kong being an international commercial city, the identification of this issue is most acute for expatriate families who live in Hong Kong.  The relevant considerations are, for example, whether the parties’ matrimonial home is here, what is their past pattern of life; do they regard Hong Kong as their home for the time being even if their life style may indicate that they may not take root in one place for too long a time.  Related to the issue are matters such as the place of work of the spouses : do they choose to work here; even if one of them has to ‘commute’ overseas to work, is Hong Kong still treated as their home base.  Likewise for the children of the family: are they studying here or spending their vacations here even if they are studying abroad.’

See also LN v SCCM (CACV 62/2013), Judgment dated 4 June 2013 and DGC v SLC (née C)[2005] 3 HKC 293.

9.6   While the discussion in RI v SSH was in the context of forum non conveniens, the question of forum is dependent on the place where the parties have the most real and substantial connection with the action.  Hence the suggested factors are clearly applicable to the present discussion.

9.7   Traditionally, the discussion of this topic mainly centred on the foreign expatriate community who are present in Hong Kong because of business commitments or to avail themselves of the opportunities in this international commercial city, see, for example, S v S, B v A, G v G [2005] 1 HKFLR 182 and Z v Z (Substantial Connection and Forum) [2012] HKFLR 346.  Increasingly in recent years this issue is extended to many of the Hong Kong and Mainland China families who have homes or businesses both here and in the Mainland.  Examples can be found in this and other cases such as LS v AD (Forum; Discovery in the PRC) [2012] HKFLR 376 and YS v TTWD (Substantial Connection : Forum) [2012] HKFLR 129.  The focus of discussion in these cases is not about mainlanders who came here on visitors’ two way permit but those who have resident status in Hong Kong.  Needless to say, the same approach of looking at the surrounding circumstances in order to ascertain the presence of substantial connection is to apply to these parties as well. 

9.8   The fact that a party has resident status which allows him or her to live here legally is only a factor to be taken into account.  He or she may not be living here on a long term basis and only comes here occasionally.  No doubt one has to look at other factors such as the party’s past pattern of life, the frequency of his visit to Hong Kong, the length and purpose of the stay, whether the party is engaged in business or work here, whether the rest of the family is here and whether a home has been established here and whether the children are at school here.  It is also important to bear in mind that since the legislation only requires the party to establish a substantial connection in Hong Kong, he or she at the same time may have a substantial connection elsewhere, see S v S.  In my view, if a party is shown to have substantial connection elsewhere by reason of his home or work, this may be used to contrast with the connecting factors he has in Hong Kong to see whether the Hong Kong connection is a substantial one.

9.9   It is said in Savournin at page 184 (and also B v A at paragraph 20) that a meaning must be given to substantial connection wider than domicile or three years’ ordinary residence.  But this is not intended to be interpreted so loosely as to encourage residence of passage (Indyka v Indyka [1969] 1 AC 33 at 105) or divorce of convenience.  At the same time it will be unduly restrictive if one confines the connecting factors solely to that of a family context, namely, accommodation in a matrimonial home and presence of spouses and children.  While in the majority of cases, family context is the focus of the inquiry and a material factor, there may well be situations where a party is in Hong Kong without the presence of his family, but nonetheless is able to show that he has a substantial connection here.  It really depends on the circumstances of the case.  Such cases, however, must be regarded as exceptional.

The present case

10.1   The Judge held that the parties have substantial connection with Hong Kong :

‘ 27. In summary both parties have permanent residency in Hong Kong. They jointly own the “Shatin property”. The husband has an interest in a Hong Kong based company, although according to the tax returns this company appears to be a holding company which to all intents and purposes is not operable in Hong Kong. In addition both parties have come to Hong Kong at times for medical treatment. The husband presently receives treatment from the Hong Kong Sanatorium hospital. In addition he attends other hospitals on the Mainland and uses traditional Chinese medical practitioners to assist him. The wife has recently rented a flat in Hong Kong where she resides when she is in the Territory. She rents this on a month by month basis. As I have said I accept that to an extent this rental appears to be self serving. There are some bank accounts in Hong Kong that have been used inter alia for investment purposes and to service the mortgage and other outgoings on the “Shatin property”. The parties have not however resided in Hong Kong as man and wife save possibly for the odd day here or there.’

10.2   In respect of the wife, the Judge further held that :

̒ 28. …….  Although on the lower end of the scale it seems to me that the wife does have a substantial connection with Hong Kong and that is it therefore possible for her to issue divorce proceedings here on that basis.  I say that because taking all of the different factors together ‒ i.e. her permanent Hong Kong ID, the jointly owned property in Shatin, her frequent visits to Hong Kong and the bank accounts, it is clear that her connection is significant.  Although she also has a substantial connection with Shenzhen that does not in my view negate her connection with Hong Kong.’

My view

11.1   With respect to the Judge, she was plainly wrong on the finding on substantial connection.  The overall view that emerges from the parties’ pattern of life is that they conducted their matrimonial life in the Mainland prior to the wife’s petition.  Let us look at the position of the husband first.  For the past 30 years he has conducted his life away from Hong Kong in the Mainland where he has his business and matrimonial home.  He still lives in Shenzhen.  The wife in her oral submission said that the husband spent his time in other parts of the Mainland as well, namely, Shanghai and Zhanjiang.  But this does not detract from the fact that the husband’s life has been spent away from Hong Kong.  The fact that the husband has Hong Kong properties where he can stay while in Hong Kong, local bank accounts and also a company registered in Hong Kong does not necessarily establish a substantial connection here.  It is not uncommon for someone in this modern age of globalization to hold foreign properties, bank accounts and companies, particularly in light of the close proximity between Hong Kong and the Mainland and the large volume of commuters crossing the Mainland borders to Hong Kong. While the husband is a Hong Kong permanent resident, his travel record clearly reveals that his entry into and stay in Hong Kong is really in the nature of a residence by passage only.  They consist of frequent same day returns and short overnight stays.

11.2   The fact that the husband had in his earlier divorce petition in Hong Kong relied on his domicile in Hong Kong is irrelevant to the issue now under consideration.  The Court in the previous proceedings had not made any determination on that point.

11.3   In respect of the wife, her travel pattern also reveals the same transitory nature of her stay in Hong Kong.  Her more frequent entries to Hong Kong between 2008 and 2010 to seek fertility treatment do not turn an otherwise unsubstantial connection into a substantial one.   The reality is that by the time of her petition she has not spent any substantial part of her life here.  This is a point recognised by the Judge when she was dealing with the parties’ domicile.  While I accept that the concept of domicile is different, I find it odd that this impediment has not been recognised in the inquiry on substantial connection.  The other factors that the Judge relied upon, namely, the wife is a Hong Kong resident (but not a permanent resident) with an Hong Kong identity card and her ownership of the flat in Palazzo (initially as joint tenant, now as tenants in common) are clearly not enough to tip the scale in her favour.

11.4   While the concept of substantial connection is wider than domicile and habitual residence, I agree with Mr Dennis Kwok, counsel for the husband, that the line has never been as low as where the Judge in this case has set it, namely, where the parties have never lived or worked in Hong Kong throughout their entire marriage, but only established their ties with Hong Kong through their real estate investment and bank accounts, and their frequent daily visits to Hong Kong.

12.   In my view on the facts as found by the Judge she ought to have held that neither of the parties has a substantial connection with Hong Kong.

Forum non conveniens

13.   The Judge also found Hong Kong is the proper forum.  As the wife has not established her jurisdictional connection, it is academic to deal with the issue of forum non conveniens, but I will briefly address three points.

14.  First, the Court of Final Appeal in the recent case of SPH v SA (formerly known as SA) FACV No. 22 of 2013 (Judgment dated 9 June 2014) addressed the issue of forum non conveniens thus :

‘ 51. We adopt the re-statement of the principles in matrimonial proceedings by the Court of Appeal (Cheung JA and Tang JA (as he then was) in DGC v SLC (née C) [2005] 3 HKC 293, 297-298, applying Spiliada Maritime Corporation v. Cansulex Limited [1987] 1 AC 460, 477 and Louvet v. Louvet [1990] 1 HKLR 670,674-675:

“ 1. 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 an action i.e. in which the action may be tried more suitably for the interests of all the parties and the ends of justice?

2. In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (‘appropriate’ in this context means the forum has the most real and substantial connection with the action) and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong. Failure by the applicant to establish these two matters at this stage is fatal.

3. If the applicant is able to establish both of these two matters, then the plaintiff in the Hong Kong proceedings has to show that he will be deprived of a legitimate personal or juridical advantage if the action is tried in a forum other than Hong Kong.

4. If the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer. Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the Court’s satisfaction that substantial justice will be done in the available appropriate forum.” ’

15.  Second, the Judge held that since the husband has indicated that he has no intention to bring divorce proceedings in Shenzhen, it is difficult to see how he can show that it is more appropriate for the Court in Shenzhen to deal with this matter.  In my view this is irrelevant.  The issue is simply whether the divorce brought by the wife can be more suitably tried in Shenzhen.

16.  Third, the Judge referred to the Mainland legal expert’s opinion and held that there is no evidence before the Court that the parties are able to provide proof of habitual residence in Shenzhen for them to invoke the jurisdiction of the Shenzhen Court.  But as Mr. Kwok submitted,   given that it is the Judge’s own finding that the parties lived in Shenzhen and that it was the place of their matrimonial home (paragraph 24 of the judgment below), there is ample evidence to answer the question posed by the joint Mainland legal expert in the legal opinion, namely, proof of the parties’ habitual residence in Shenzhen.  The Judge’s conclusion is self-contradictory.  Since both parties have their habitual residence in Shenzhen, this, according to the joint legal expert, is sufficient for the Shenzhen Court to exercise jurisdiction over the divorce proceedings.

Conclusion

17.  I would accordingly allow the appeal, set aside orders below and dismiss the petition.  I would order the wife to pay the husband the costs of the appeal and below, to be taxed if not agreed.

Hon Chu JA :

18.  I agree with the judgment of Cheung JA.

Hon Cheung CJHC :

19.  We accordingly dispose of this appeal as indicated in paragraph 17 above.