V,DS v. C, RF also known as C, RF

FCMC 14131/2019

[2020] HKFC 222

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 14131 OF 2019

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J U D G M E N T

(Bifurcation and stay of Proceedings)

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Introduction

1.  This is an application by a Respondent husband as follows:

1.   There be a general stay of these proceedings and for the divorce suit herein and any ancillary relief matters to be bifurcated and dealt with by the French Court – the Tribunal de grande instance de Paris, under action number RG nb19/3XXXX;

There are no further applications from the husband. In particular, it is of note that neither party seeks an order for a section 18 declaration nor for the decree nisi, which was pronounced on the 21 May 2020, to be made absolute. There is currently only one other outstanding summons, which was issued by the Petitioner wife and is dated the 24 June 2020. This is a request for interim maintenance and litigation funding. Whether or not that application will proceed is largely dependent on the outcome of this summons.

2.  A number of orders have been made in the course of the Hong Kong proceedings, including an order made by consent dated the 6 July 2020, in which it was agreed that the Petitioner wife would relocate back to France with the two children of the family, both girls now aged 10 and 7 years of age. The husband had relocated back to France in February 2020. It was further agreed that the parties would have joint custody of the children, with care and control to the wife and reasonable access to the husband to include certain defined terms. It was also agreed that a mirror order reflecting these arrangements would be obtained in France. There is therefore no doubt that the children’s habitual residence is now in France and that the jurisdiction with respect to children’s matters now lies with the French courts.

3.  In addition, on the 16 September 2020, this court made an order for interim interim financial support for the wife and the two children of the family in the sum of €4,000 per month, the first sum to be paid forthwith and thereafter to be paid on the 16 day of each month pending the determination of this application.       

Background

4.  Both parties have filed expert legal opinion from France. In the husband’s first legal opinion from Mdm A M-B, the background to the parties’ marriage is helpfully summarized in brief as follows:

RFC [the husband] was born on XX February 1977 in France; DSV [the wife] on XX January 1978, also in France. Both are French nationals. After having lived separately in France, they lived in London for 3 years before moving to Hong Kong in 2010, where they resided for 10 years.

Before relocating to Hong Kong, they married in France on XX May 2010. Prior to their union, on 22 April 2020, they signed a prenuptial marriage contract opting for the “participation aux aequets” regime (regime of separation during the marriage and provision for defined sharing of net acquired assets in the event of death or divorce).

The spouses have two children:

-   SLC, born in London on XX November 2009;

-   AAC, born in Hong Kong on XX January 2013.

While the family was living in Hong Kong, both children attended the French International School there.

The family purchased various assets between 2013 and 2017, all of which are located in France.

R issued divorce proceedings in France on 27 November 2019.

D filed her petition for divorce in Hong Kong on 28 November 2019.

In February 2020, R moved back to France and has been living in Paris since.

D and the children relocated to France in July 2020; they now live in O. Both children will start school in France in September 2020.

5.  A number of points flow from this. Firstly, it is not disputed that the parties are a French couple who have conducted their entire married life in Hong Kong. It is also not disputed that they originally had jurisdiction to issue divorce proceedings in both Hong Kong and France. It is also of note that they now all live in France and that almost all of their assets and certainly all of their assets of any note, are situated in France. As indicated above, it is also clear that the French courts now have exclusive jurisdiction with respect to the children.

6.  At the hearing on the 16 October I asked counsel for the wife, namely Mr Jeremy Chan, whether or not it was his client’s intention to seek a stay of the French proceedings. He confirmed that this was his client’s intention.

7.  Consequently, given that I had heard nothing further from either side on this issue, I sent the following Memo dated the 27 October to the parties’ lawyers in which I sought further clarification as follows:

At the hearing on the 16 October both sides made mention of a Conciliation hearing in France on the 21 October 2020.

Can the parties please let HH Judge Melloy know the outcome of that hearing.  In particular, did either side make any further applications in France? Did the wife apply to stay the French proceedings as had been intimated on the 16 October? And was a compensatory award made for the wife and the two children and if so in what amount? Other than that were any other interim orders made?

Given that time is of the essence, please respond by close of business on the 29 October 2020.  

8.  I have since been informed that the wife did apply to stay the French proceedings at the Conciliation hearing on the 21 October and that the French court is expected to hand down its Ruling in that respect on the 20 November 2020. Further the wife’s application for an interim stay was refused. No further orders were made by the French court. In particular no orders were made for a compensatory or interim award and it seems that the French court had noted the interim interim order that had been made by this court.     

Issue

9.  There is then only one issue to be determined at this juncture, namely whether or not there should be bifurcation of the proceedings. In other words, should the proceedings in Hong Kong be stayed on the premise that both the divorce and/or the ancillary relief proceedings, be determined by the courts in France? In that event how should the decree nisi be dealt with, given that no specific applications have been made in that regard?   

The law

10.  It would be fair to state that applications of this nature are very rare. I have only heard a disputed application of this type once before and I have forwarded a copy of that judgment to both sides, namely SMM v TWM, JR FCMC 11230 of 2008 unreported, dated the 17 May 2011. Ms Rattigan for the husband was also counsel on that occasion. As before she relies on the court’s inherent jurisdiction and the same case law from England and Wales namely W v W (financial relief: appropriate forum) [1997] 1 FLR 257, D v P (forum conveniens) [1998] 2 FLR 25 and Krenge v Krenge [1999] 1 FLR 969. These cases support her contention that although unusual, in appropriate circumstances it is possible to separate out different aspects of a divorce. This would then enable the parties to determine issues related primarily to finances in another jurisdiction – here in France.  As indicated previously this concept is also in line with the approach now taken in Part IIA of Cap 192 which relates to applications for ancillary relief in Hong Kong, after a divorce has been pronounced in a different jurisdiction.

11.  In Ms Rattigan’s written submission, she also states inter alia as follows:

Stay of Proceedings: Legal Principles

19. Pursuant to Order 1B rule 1 of the Rules of the High Court (“HCR”) the Court has the power to “stay the whole or part of any proceedings or judgment either generally on until a specified date or event”.

20. Section 48 of the District Court Ordinance (“DCO”) also provides for the Court to stay any proceedings "where it thinks fit to do so".

21. The Court’s power to stay proceedings pursuant to its inherent jurisdiction is wide and unfettered. Proceedings can be stayed at any time and at any stage: see Reichhold Norway ASA & Anor v Goldman Sachs International [2000] 1 W.L.R. 173 where the UK Court of Appeal upheld the decision of Moore- Bick J wherein he had stated that:

“The court’s power to stay proceedings is part of its inherent jurisdiction which is expressly preserved by section 49(3) of the Supreme Court Act 1981. It is exercised under a wide range of circumstances to achieve a wide variety of ends. Subject only to statutory restrictions, the jurisdiction to stay proceedings is unfettered and depends only on the exercise of the court’s discretion in the interests of justice.”

12.  She reiterated, both in her written submission and orally, that the husband is not challenging the wife’s initial ability to issue divorce proceedings in Hong Kong. It is also accepted that the husband did originally accede to the jurisdiction of the Hong Kong court. This is not disputed. The husband simply says that it would now be more appropriate for the matter to be dealt with in France given the change of circumstance and the fact that the whole family is now living there.    

13.  It is Mr Chan’s position, on behalf of the wife, that having submitted to the jurisdiction of Hong Kong, that it is now too late for the husband to make this application. He also argues that in the circumstances of this particular case, the husband’s application cannot succeed as in truth he has not made an application to bifurcate, given that if he succeeds nothing will be left in Hong Kong (save presumably for the original children’s order). Instead, Mr Chan says that the husband is seeking a stay of all outstanding matters under the guise of bifurcation. He explores this theme in his written submissions where he states inter alia as follows:

20. … the Husband is contemplating that the parties will divorce in France instead of Hong Kong. Once there is a French divorce, the Hong Kong Decree Nisi automatically falls away and the entire FCMC proceedings automatically end. There is nothing ‘left behind’ in Hong Kong; there is no ‘bifurcation’.

21. It is common ground that the French Courts are competent to order divorce [E3/514, §b] and Part IX MCO (Cap.179) (Sections 55 et seqq.) applies - in other words, the moment that there is a French divorce in place, Hong Kong law will automatically recognise the French divorce; and there will never be a Hong Kong Decree Absolute (the Hong Kong Decree Nisi will also fall away), nor can there ever be any Hong Kong ancillary relief (except perhaps under Part IIA, which is a different matter altogether).

22. …

23. …

24. In Hong Kong right now, there is a Decree Nisi granted, but no Decree Absolute - this is to be expected, because there is no financial ancillary relief award yet nor is there any Section 18 Declaration. There is also no application for acceleration of Decree Absolute.

25. Once there is a foreign divorce, the Hong Kong FCMC proceedings automatically terminate; there is no more jurisdiction in Hong Kong and the Decree Nisi can never be made Absolute, nor can there be ancillary relief.

26. This is not ‘bifurcation’ - this is in fact staying the Hong Kong proceedings altogether (in the conventional FNC sense), awaiting a French final divorce, whereupon the Hong Kong FCMC proceedings then completely terminate.

14.  The case of W v W (financial relief: appropriate forum) [1997] 1 FLR 257 makes reference to a similar situation when discussing the prospect of parallel proceedings in England and Canada. Just as in this instance, it is clear that whether or not the French proceedings continue is a matter for the French courts and the French courts alone. Similarly, the Hong Kong court’s decision is ours, and ours alone. In that case it was held as follows:    

(1)  The question of whether the court in Alberta had jurisdiction to determine the proceedings brought in that court by the wife was a question for that court alone.  The court would approach the matter on the basis that the court in Alberta did have jurisdiction, although if that court did not have jurisdiction then any stay of the English proceedings could be lifted.  As regards the English proceedings, it was logical to consider the wife’s application to stay first, since, if granted, the husband’s application for injunctions must fail.

(2)  It had been argued for the husband that the court had no power to stay the ancillary relief application without reference to the criteria laid down in s 25(2) of the Matrimonial Causes Act, since a decision as to whether to stay proceedings was a decision whether to exercise the court’s powers under s 25(1), in which case s 25(2) would apply.  That argument ignored the fact that whilst the jurisdiction to grant ancillary relief was founded on statute, the discretion to stay proceedings was a discrete matter, founded upon the inherent jurisdiction of the court, to which well-established principles, and not s 25 of the 1973 Act, applied.

(3)  The burden rested on the wife to show that there was another available forum which was clearly or distinctly more appropriate than the English forum.  On discharging that burden, the court would ordinarily grant a stay unless the circumstances of the case required otherwise.  In the present case, Alberta was plainly the more natural forum.  The parties’ entire background and upbringing was in Canada, and the majority of their lives had been spent there.  Whilst the husband still lived in England, the wife had returned to Alberta.  The parties had not bought a home in England and the majority of their assets were in Alberta.  On the face of it, therefore, this would be an appropriate case in which to order that the English proceedings be stayed.

(4)  …..

(5)  The husband has argued that since divorce and ancillary relief were part and parcel of the same thing, it was too late for the wife to seek a stay given that a decree had been pronounced, since an application for a stay should be made at as early as possible a stage in the proceedings.  In reality, however, divorce per se is, under the law as it now stands, a discrete issue from that of finance.  Any injustice done to the husband could, in the circumstances of the case, be remedied by way of appropriate orders relating to costs.  Accordingly, a stay would be granted.  It was not therefore necessary to consider the husband’s injunction applications.

15.  With respect I agree with this analysis. I accept therefore that as things stand and although unusual, it is possible for the court to consider the summons issued by the husband. As in SMM v TWM, JR I intend to rely on the three reported decisions from England and Wales and to proceed on the basis that in the right circumstances bifurcation is an appropriate remedy and one that can be exercised under the District Court’s limited inherent jurisdiction.

16.  In so far as Mr Chan’s points are concerned, it seems to me that just as in both W v W and SMM v TWM, JR it is possible for the parties to conclude the divorce in Hong Kong and for both a section 18 declaration to be made and a decree absolute granted, if the right assurances are given with respect to the children’s maintenance. I also accept however, that this may have other ramifications in France and that the parties may wish to consider this further before proceeding. I am particularly alive to the suggestion that this may make it difficult for the wife to seek a compensatory award. As things stand therefore I am proceeding on the husband’s application to bifurcate the ancillary relief proceedings only. The decree nisi shall continue to stand and the parties will need to give further consideration as to whether or not they wish to obtain a decree absolute from Hong Kong at this stage. In the event that either of them does wish to do so then the appropriate application should be made.       

Should the ancillary relief proceedings only be bifurcated given the circumstances in this particular case?

Stay of Proceedings

The law

17.  As Ms Rattigan points out, the most recent reference to the law on forum non conveniens in matrimonial proceedings can be found in the further restatement of the same in the Court of Final Appeal’s decision in SPH v SA [2014] 3 HKLRD 497 as follows:

VI Forum non conveniens: principles

50.   It is now well established in Hong Kong that the general principles of forum non conveniens apply to the stay of matrimonial proceedings: Johnston, Conflict of Laws in Hong Kong (2nd ed 2012), para 7.104.

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.”

52.   The Court of Appeal in that case (as in the present case) emphasised that the husband was entitled to sue in Hong Kong as of right. Where jurisdiction is founded in the Hong Kong court as of right (as in divorce proceedings like the present case), the party seeking the stay has to establish that there is another available forum which is clearly or distinctly more appropriate than the Hong Kong forum.  This derives from what Lord Goff said in Spiliada (at 477), which has been regularly applied in Hong Kong: e.g. The Kapitan Shvetsov [1997] HKLRD 374 at 377; The Peng Yan [2009] 1 HKLRD 144, at [22].

Discussion

Stage I – Appropriate Forum

18.  The burden is on the husband to show that Hong Kong is not now the natural or most appropriate forum to deal with the issue of ancillary relief and that France is “clearly or distinctly more appropriate than Hong Kong”.

19.  To that end reference should be made to the husband’s affidavits where he sets out his case. I do not intend to repeat the background again here, but in summary it is clear that this is a quintessentially French family. The husband further argues that it follows therefore that the matter should now proceed in France. In his first affidavit dated the 11 September 2020, he says that:

37. In summary, the French Court is simply in a much better position to consider and determine the outstanding aspects of our financial settlement given that the family finances are all inevitably connected with France, including: -

a.   The costs of living/rental in France

b.   Government allowances for single parents and child-care expenses in France

c.   French taxation. which is very complex

d.   Social security contributions in France

e.   Pension provision by the State in France

f.   Costs of schooling, both public and private in France

g.   Public and private healthcare coverage, costs and reimbursements

h.   The inflation rate in France

38. Added to these location-specific factors which a French Court will be much better placed to ascertain, there would be inevitable costs and delays occasioned by the need for the Parties to attend Court hearings in Hong Kong, for additional expert evidence to be adduced to assist the Court in its fact-finding jurisdiction when faced with potentially contrary evidence on each side, and for critical documents to be certified and translated should the proceedings in Hong Kong continue. Further, if D [the wife] and I both need to attend hearings in Hong Kong, even if we are able to travel without restriction, the Children will be left in France, or taken out of school to travel with us and alternate child care arrangements will need to be made, causing unnecessarily disruption to the children as well adding further cost and inconvenience to the family as a whole.

20.  In his second affidavit, attached to his solicitors 2^nd affirmation dated the 7 October 2020, he added that:

5.   I would like the Court to note at this stage, that the significant inconvenience, time delay and costs of proceeding in Hong Kong is already apparent from the little progress which has taken place thus far:

a.   Neither I nor D [the wife] are able to affirm and file documents on time without our Hong Kong lawyers having also to draft and affirm additional documents;

b.   There is considerable inconvenience and expense in having to give instructions from afar, and to notarise and courier original documents from France to Hong Kong;

c.   Neither I nor D have thus far been able to attend Court hearings in Hong Kong, which affects our capacity to give timely instructions, and when factoring in time difference, means additional complications, and we take up Court time disproportionately;

d.   D and I naturally communicate with each other and with our friends and family in French. Both of us have needed to exhibit documents in French and the expense of providing proper translations to assist the Court in Hong Kong is an expense and an added layer of administration that is burdensome and costly on all sides. I note that D has exhibited several French documents but not all have been properly translated, or translated at all, leaving our Hong Kong lawyers and the Court in the dark as to the contents of those documents (see exhibits DSV2-6 and DSV2-7 of her 2^nd affirmation); and

e.   We already find ourselves having to explain matters to the Court in Hong Kong that will be simply be known by the Courts in France, such as the Notary function and procedure, our Hybrid Pre-Nuptial agreement, the workings of the Participation aux Acquêts regime, and there are nonetheless elements necessarily “lost in translation”. In time, this will only become more difficult, if we are obliged to convey to the Hong Kong Court details of the cost of living in France (in O, a small coastal town with just 5,000 inhabitants and in Paris) including schooling, food, transport, housing, medical/dental, household, rental, clothing, sundries and holidays; the situation with our assets (all largely in France, including several French landed properties); and the tax regime in France, to name a few. In time, we would also have to explain the social security framework in France (for which D has already applied, seeking considerable government benefits. I understand these should include benefits for the Children, her household, and herself. likely requiring adducing more expert evidence to assist, and translation, all at great cost, and effort. On the other hand, these would be common knowledge and/or easily digested/calculated by a French Judge.

21.  I agree with this analysis. Thus, and notwithstanding the wife’s arguments to the contrary, and despite the fact that she did issue her divorce petition as of right, I nevertheless accept that in these circumstances it is clear that Hong Kong is NOT NOW the natural or most appropriate forum to deal with the issue of ancillary relief and that France is now clearly and distinctly the more appropriate forum.

22.  From a more general perspective, it is also accepted as set out in paragraph 11 above, that the court does have the power to make this order and that that power is unfettered.  

23.  I accept that this conclusion should really be the end to the matter – but in order that there can be no doubt I will nevertheless briefly consider the remaining two limbs of the exercise.

Stage II: Juridical Advantage

24.  Will then the wife be deprived of a “legitimate” personal or juridical advantage if this matter proceeds in France? This question is always difficult and I accept that one person’s advantage is often another person’s disadvantage. I also accept that this issue can only be considered broadly. In this instance there can be no doubt that France is a first world country with a well- developed legal system. Thus in broad terms it is accepted that justice will be done in the event that the matter proceeds there. The fact that there may be differences in approach between the two jurisdictions with respect inter alia to the issue of discovery and the weight to be afforded to pre-nuptial agreements does not, in my view, negate this. There is also a potential enforcement issue if the matter proceeds in Hong Kong.

Stage III: The balancing exercise

25.  If the Court finds that there is another more appropriate forum (Stage I), as here, but that there are advantages to one party in remaining in this jurisdiction (Stage II), then the court is tasked with balancing the advantages of I over the disadvantages of II as described by Lord Brandon in the Abadin Daver and Hunter JA in the Adhiguna Meranti. However, in this instance the court has found that France is clearly the more appropriate forum and that there is no legitimate advantage to the ancillary relief matter remaining in Hong Kong. In that case there is no need to balance the one against the other. For the avoidance of doubt however, I am satisfied that justice will be done in France in the event that the issue of ancillary relief (finances) is determined there.

26.  In conclusion then I shall make the order that the husband seeks but limited to ancillary relief matters only. In the event that the French courts decide that it would be more appropriate for the ancillary relief matters to remain in Hong Kong then an application may be made to uplift the stay.

Costs

27.  Costs shall be reserved.                                                         

Order

28.  The order shall read as follows:

a)  There shall be an order in terms of paragraph 1 of the Respondent’s summons dated the 9 September 2020 in so far as it relates to ancillary relief matters only.

b)  The application to stay and/or bifurcate the divorce suit shall be adjourned sine die with liberty to restore.

c)  The Petitioner’s summons dated the 22 June 2020 shall be adjourned sine die with liberty to restore.

d)  Costs shall be reserved.

e)  There shall be liberty to apply generally.