CL v. ZRC

FCMC11118 / 2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES N0. 11118/2014

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Decision
(Jurisdiction)
(Forum non conveniens)

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Introduction

1.The Petitioner wife and the Respondent husband were Shanghainese. They were married in Shanghai in May 2011. During the marriage the husband has been working both in Hong Kong and Mainland. The marriage broke down in 2014 and there was no child out of their relationship. The wife alleged the husband had substantial connection with Hong Kong and presented a divorce petition in Hong Kong on 21 August 2014, at that time the husband was working in Hong Kong with Hong Kong permanent resident identity card and had various assets in Hong Kong while the wife was residing and working in Beijing.

2.On 1 September 2014 the husband commenced divorce proceedings in the Shanghai District Court and issued a summons to challenge the Jurisdiction of this court and or to stay the Hong Kong divorce proceedings on ground of forum non conveniens (the present application). It was the husband’s case that neither party had substantial connections with Hong Kong. Time being the wife challenged the jurisdiction of the Shanghai District Court and failed, the Appellant Court in Shanghai confirmed the jurisdiction of the Shanghai District Court on 27 November 2014.

Background

3.The parties were both born in Shanghai in December 1985, now aged 29. They were raised and grew up in Shanghai. They met in Shanghai during High School. In 2004 they attended university in Shanghai, and in the following year they moved to Hong Kong to study their first degree until June 2008. Thereafter the wife planned to start her second degree in Hong Kong but could not go through while the husband got employed in Hong Kong. All along the extended families of the parties were in Shanghai.

4.From February 2009 the parties lived together in Hong Kong. In May 2010 the husband purchased a property in Hong Kong for his residence (for the present purpose I would refer this property as the matrimonial home), the wife would stay in the matrimonial home during her stay in Hong Kong. The parties subsequently got engaged in January 2011 and married in Shanghai in May 2011. In the meantime, the wife’s visa to Hong Kong expired in January 2011, and she remained in Shanghai until her dependent visa was issued in November 2011. Time being the husband purchased another two properties in Huizhou in October 2011(the two PRC properties).

5.In November 2011 the wife joined the husband in Hong Kong. The parties resided in Hong Kong briefly and moved to Beijing in January 2012 after the husband took up an offer to work in Beijing. After settling in Beijing, the wife also looked for employment and eventually secured a job in Tsinghua University in February 2013. The parties worked and resided together in Beijing until July 2013 and had their wedding banquet in Shanghai in June 2013.

6.In August 2013 the husband moved to Hong Kong for his new employment and resided in the matrimonial home while the wife remained in Beijing for her employment. Later in October 2013 the husband made the wife to be the co-owner of the two PRC properties. Since then the husband flew to Beijing, and the wife flew to Hong Kong to visit each other. Further they could see each other occasionally when they visited their parents in Shanghai.

7.Given the time they spent apart, their relationship dwindled. The triggering incident happened on 8 August 2014, the wife having arrived Hong Kong late that night, returned to the matrimonial home, where the parties had an argument over the night until the early hours on 9 August, and the wife left Hong Kong to Beijing in the afternoon of 10 August 2014. Thereafter the husband lost contact with the wife; while in the meantime the wife made three short trips to Hong Kong between 13 August 2014 and 22 August 2014, during which she issued her divorce petition on 21 August 2014 on ground of unreasonable behaviour alleging domestic violence. The husband was served the petition on 22 August 2014, and he commenced his divorce proceedings on 1 September 2014 in Changning District Court, Shanghai (2014) CM4(M)CZNo.1317 on the ground that there was lack of love and respect on the part of the wife. The Shanghai District Court has summonsed the parties to attend the hearing fixed on 14 October 2014.

8.The husband took out the summons for the present application on 19 September 2014 returnable on 7 October 2014. On 7 October 2014, the parties gave an cross-undertaking that until determination of the present summons, they will not take further steps in the Shanghai District Court, save that both parties are at liberty to and shall answer and attend before the Shanghai District Court as may be summoned by that Court, and to inform that Court about these Hong Kong proceedings and its progress, and the wife be at liberty to apply for stay or dismissal of the Shanghai divorce proceedings.

9.The husband and his lawyer attended the Shanghai District Court hearing on 14 October 2014, while the wife was represented by her lawyer only. After the hearing, the husband in response to the unless order made by the Shanghai District Court, provided a list of his property to the Court as directed. At the meantime the wife attempted to challenge the divorce proceedings in Shanghai but failed. The Shanghai Appellant Court confirmed on 27 November 2014 the decision of the trial court that the Shanghai District Court has jurisdiction of the husband’s divorce application.

Issue in dispute

10.The wife relied on the husband’s substantial connection with Hong Kong in presenting her divorce petition to this court. It was not disputed that the husband studied at Hong Kong University from 2005 to 2008, lived and worked in Hong Kong from 2008 to January 2012 and returned to live and work again in Hong Kong since August 2013. It was again not disputed that the husband is a holder of Hong Kong permanent resident identity card and the owner of a Hong Kong property since May 2010. The wife did not allege any substantial connection with Hong Kong on her part.

11.The husband, however, considered neither party had substantial connections with Hong Kong, and in any event Hong Kong was not a natural and appropriate forum for their divorce proceedings. It was not disputed that both parties born, raised and grew up in Shanghai, with their respective extended family based in Shanghai. Although the parties have never worked in Shanghai, they still maintained their Shanghai household register and the husband made his contribution for his Mainland social security. The parties married and held their wedding banquet in Shanghai. The parties spent the early part of their married life together in Beijing and the wife continues her life in Beijing. The parties’ assets and liabilities were predominantly in Mainland. The Shanghai District Court had accepted jurisdiction, the wife attempted to challenge the jurisdiction of the Shanghai Court but failed, there would necessarily be Mainland PRC divorce proceedings in any event.

12.The wife alleged she would be deprived of her legitimate personal and juridical advantage and would be placed in a very disadvantaged position if the present proceedings are stayed. The husband disagreed and said the wife failed to identify any personal or juridical disadvantage. In broad terms there are four issues to be determined, namely:

1. Did the husband have substantial connections with Hong Kong at the time the wife presented her petition?

2. Where jurisdiction is founded as of right, is this court a natural and appropriate forum to the parties’ divorce proceedings?

3. If so, will the wife be deprived of any legitimate personal or juridical advantage if the action is tried in Shanghai Court?

4. If so, how should I exercise my discretion?

Discussion

Jurisdiction

13.Section 3 of the Matrimonial Causes Ordinance Cap.179 (MCO) provides that:

“The court shall have jurisdiction in proceedings for divorce under this Ordinance if:-

(a) either of the parties to the marriage was domiciled in Hong Kong at the date of the petition or application;

(b) either of the parties to the marriage was habitually resident in Hong Kong throughout the period of 3 years immediately preceding the date of the petition or application; or

(c) either of the parties to the marriage had a substantial connection with Hong Kong at the date of the petition or application.”

14.The only jurisdictional ground pleaded by the wife was that the husband had a substantial connection with Hong Kong. Mr Clough for the wife did not attempt to argue the presence of other jurisdictional grounds. Mr Clough emphasized the husband’s connection with Hong Kong while Mr Chan for the husband emphasized the parties’ connection with Mainland in their respective submission. It was common ground that the wife did not have substantial connection with Hong Kong. And in considering whether a party had substantial connection for the purpose of Section 3(c) this court is not to compare that party’s connection with Hong Kong and other jurisdiction and to see with which jurisdiction he/she had more substantial connection, though that a party had substantial connection elsewhere may be a relevant consideration in determining whether the Hong Kong connection is a substantial one. It may be that a party had a substantial connection to more than one jurisdiction. The ultimate question being: did the party have substantial connection with Hong Kong?

15.Recently in ZC v CN [2014] 5 HKLRD 43, the Court of Appeal has considered the meaning of the phase “substantial connection with Hong Kong”. In that case the husband was born in Mainland, but moved to Hong Kong as a teenager and became a permanent resident here. Since 1982, the husband had lived in Shenzhen and been involved in the entertainment business on the Mainland. The husband and wife met in 1995 and cohabited until the husband divorced his first wife. The couples married in Hong Kong in December 2005, but had their matrimonial home in Shenzhen. Time being they purchased properties in Hong Kong, stayed in their own property during their visits to Hong Kong. The wife travelled to Hong Kong for fertility treatment while the husband received medical treatment for a serious lumbar condition in Hong Kong and Mainland. In May 2010 the wife was granted a one-way exit permit to come to Hong Kong but she was not a permanent resident. The wife petitioned for divorce in Hong Kong on 15 May 2012, claiming that the parties had a substantial connection with Hong Kong, the husband disputed. The Court of Appeal overturned the trial judge’s decision and held that neither party had a substantial connection with Hong Kong.

16.The Court of Appeal judgment in ZC v CN was given by Cheung JA. In considering the meaning of the words “substantial connection”, Cheung JA referred to RI v SSH [2010] 4 HKC 588, in that case the Court of Appeal held that:

“… 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.”

17.The other two judges in ZC v CN concurred the judgment of Cheung JA. It was held that:

(1) The proper approach was not to simply look at the natural and ordinary meaning of a “substantial connection” but also the context and purpose of the term and the surrounding circumstances. Physical presence in Hong Kong was necessary, but it must be real, not transitory, or it would encourage “fly in and fly out” divorces of convenience.

(2) A party’s resident status was only one factor to be considered. Other factors included the party’s past pattern of life; the frequency, length and purpose of visits to Hong Kong; whether he or she did business or worked here; whether the rest of the family was here; whether there was a home here; and whether the children went to school here. Further, if a party had a substantial connection elsewhere by reason of his home or work, this could be contrasted with the connecting factors he had in Hong Kong to see if the latter connection was substantial one.

(3) Overall, the parties’ pattern of life was that they conducted their matrimonial life on the Mainland prior to the wife’s petition. For the past 30 years, the husband had his business and matrimonial home in Shenzhen. His Hong Kong properties, local bank accounts and company registered in Hong Kong did not necessarily establish a substantial connection here in this era of globalization, particularly given the close proximity of the Mainland to Hong Kong. While the husband was a permanent resident of Hong Kong, his frequent same-day visits and short overnight stays amounted to residence of passage only.

(4) The wife’s frequent stays in Hong Kong were also transitory. By the time of her petition, she had not spent any substantial part of her life here. The other factors relied on by the Judge, namely her resident status, Hong Kong identity card and ownership of the Flat were enough to tip the scale in her favour.

(5) On the facts as found by the Judge, … nether party had a substantial connection with Hong Kong. While the concept was wider than domicile and habitual residence, the parties had never lived or worked in Hong Kong throughout their entire marriage, but only established their ties here through their real estate investments, bank accounts and their frequent day visits to Hong Kong.”

18.In considering whether the husband had a substantial connection with Hong Kong at time the wife presented her petition, I bear in mind the approach adopted and approved by the Court of Appeal. Mr Clough emphasized on the husband’s connection with Hong Kong since 2005, his present employment, and the location of the matrimonial home, while Mr Chan attempted to contrast the husband’s connection with Shanghai/Mainland and persuaded the court to focus on the period after the couples’ marriage (May 2011).

19.The husband was present in Hong Kong when the wife issued her divorce petition on 21 August 2014 and he was served on the next day (22 August 2014). According to the husband’s evidence, his presence in Hong Kong was due to his job commitment. The husband first came to Hong Kong to study in 2005, after he graduated in 2008, he continued to stay and worked in Hong Kong until he accepted a Beijing offer and moved to Beijing with the wife in January 2012. The husband purchased the matrimonial home in May 2010 as his residence, as the parties have lived together since February 2009 in Hong Kong, the matrimonial home would inevitably have been used for their residence in Hong Kong since May 2010. The wife returned to Shanghai in January 2011 because her visa has expired and her dependent visa was only issued in November 2011, time being the parties decided to get married in Shanghai in May 2011. After the wife obtained the dependent visa she came to join the husband in Hong Kong until the husband took up a new job in Beijing in January 2012.

20.The wife’s travel record from May 2011 shown that the wife visited Hong Kong frequently after the parties married in May 2011. In my view in between January 2011 and November 2011, the wife spent most of her time in Shanghai to a great extent was influenced by the expiry of her visa and the parties’ decision to marry in May 2011 and the wife to continue her stay in Hong Kong under a dependent visa. At all material times the parties intended to carry out and continued their matrimonial life in Hong Kong after their marriage and supported their living here with the income generated by the husband’s employment. Given the proximity between Huizhou and Hong Kong, the purchase of two PRC properties in Huizhou in October 2011 was not inconsistent to the parties’ intention to have their home in Hong Kong after their marriage. It was not until the husband was offered a job in Beijing, that the parties changed their plan.

21.The income generated from the husband’s employment before the wife got her own job would have been was the main source of their family income. The fund for relocation to Beijing in January 2012 would have been come from the husband’s income generated in Hong Kong. The pattern of the husband’s employment shown he was prepared to work in different cities for the advancement of his career. Despite the husband was working in Beijing between January 2012 to July 2013, he still maintained his connection with Hong Kong, he continued to visit Hong Kong and resided in the matrimonial home during his stay.

22.The husband relocated to Hong Kong again in August 2013 after he took up his present employment while the wife continued to work and remained in Beijing. He moved back to the matrimonial home. The travel schedule of the husband shown that he made a lot of trips to Mainland after his relocation in August 2013 but only a few was to Beijing. Though the wife had not given up her job in Beijing, she did travel to visit the husband after he relocated to Hong Kong and before she issued her divorce petition in August 2014. Unlike the period between May 2011 and November 2011, the wife was working in 2013, thus she visited and joined the husband in Hong Kong less frequent than the period in 2011 is understandable. In my view the parties effectively maintained two matrimonial homes since August 2013, one in Hong Kong and one in Beijing, and the parties chose to live in the city where they worked.

23.The parties married in May 2011 and the wife petitioned her divorce in August 2014, during this period the husband moved to work in Beijing for 19 months to gain advancement in his career but he did not give up his connection with Hong Kong, in particular he preserved the matrimonial home for his residence during his and the wife’s stay in Hong Kong. Once he came up with an opportunity to work again in Hong Kong, he took it up and applied for his Hong Kong permanent resident identity card when he was qualified for such.

24.Though the parties’ extended families based in Shanghai, they married and held their wedding banquet in Shanghai, they did not conducted their matrimonial life in Shanghai, the main purpose they visited Shanghai during their marriage was to visit their respective parents. Overall, the parties’ pattern of life was that they conducted their matrimonial life both in Hong Kong and Beijing prior to the wife’s petition. It is the husband’s evidence that after he relocated to Hong Kong in August 2013, he wanted the wife to resign and moved to Hong Kong to live with him at the matrimonial home. In my view the husband had substantial connection with Hong Kong for the purpose of Section 3(c)of the MCO.

Forum non convenies

25.nbsp; Taking the words of Lord Templeman in Spiliada Maritime Corporation and Cansulex Ltd [1987] AC 460 (Spiliada), where the wife is entitled to commence her petition in Hong Kong, the court, applying the doctrine of forum non conveniens will only stay the proceedings if the husband satisfies the court that some other forum is more appropriate. But whatever reasons may be advanced in favour of the Shanghai Court, the wife will be allowed to pursue her petition in Hong Kong if it would be unjust to her to confine her to remedies elsewhere. In Spiliada His Lordship stated that:

“The factors which the court is entitled to take into account in considering whether one forum is more appropriate are legion. The authorities do not, perhaps cannot, give any clear guidance as to how these factors are to be weighed in any particular case. Any dispute over the appropriate forum is complicated by the fact that each party is seeking an advantage and may be

influenced by considerations which are not apparent to the judge or considerations which are not relevant for his purpose…. Domicile and residence and place of incident are not always decisive.”

26.In the present case, it is reasonably clear that the wife wants her divorce petition be heard in Hong Kong because she does not have confidence that the Shanghai Court would take into account the husband’s overseas assets in considering the property division between the parties. On the other hand, with the expert opinion he obtained, the husband wants to avoid fresh proceedings in Mainland for the recognition or enforcement of any Hong Kong divorce or property division order.

27.The main judgment of Spiliada was given by Lord Goff, after considering a number of earlier authorities, his Lordship summarized the principle as follows:

“(a) The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.

(b)… in general the burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay. It is however of importance to remember that each party will seek to establish the existence of certain matters which will assist him in persuading the court to exercise its discretion in his favour, and that in respect of any such matter the evidential burden will rest on the party who assets its existence. Furthermore, if the court is satisfied that there is another available forum which is prima facie the appropriate forum for the trial of the action, the burden will then shift to the plaintiff to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in this country(see (f) below).

(c) The question being whether there is some other forum which is the appropriate forum for the trial of the action, it is pertinent to ask whether the fact that the plaintiff has, ex hypothesi, founded jurisdiction as of right in accordance with the law of this country, of itself gives the plaintiff an advantage in the sense that the English court will not lightly disturb jurisdiction so established… In my opinion, the burden testing on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum… I may add that if, in any case, the connection of the defendant with the English forum is a fragile one…, it would be all the easier for him to prove that there is another clearly more appropriate forum for the trial overseas.

(d) Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum. The use of the word “convenience” in this context, I respectfully consider that it may be more desirable,… to adopt the expression used by Lord Keith, in The Abidin Daver [1984] AC 398, 415, when he referred to the “natural forum” as being “that with which the action had the most real and substantial connection.” So it is for connecting factors in this sense that the court must first look; and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction, and the places where the parties respectively reside or carry on business.

(e) If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay...

(f) If however the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this inquiry, the court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions One such factor can be the fact, if established objectively by cogent evidence, that the Plaintiff will not obtain justice in the foreign jurisdiction … on this inquiry, the burden of proof shifts to the plaintiff.”

28.The general principles of forum non conveniens apply to the stay of matrimonial proceedings. The re-statement of the principles in matrimonial proceedings by the Court of Appeal in DGC v SLC (née C) [2005] 3 HKC 293 have been adopted by the Court of Final Appeal in SPH v SA [2014] 3 HKLRD 497:

“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.”

Connection

29.In a stay application, we are not only focusing on whether one party has substantial connection with Hong Kong, but to which jurisdiction the parties have the most real and substantial connection. It was common ground that the Shanghai Appellant Court has confirmed the Shanghai District Court had jurisdiction to hear the husband’s divorce application and directed the husband to submit his property list. It was the husband’s case that their divorce should be heard in Shanghai District Court. It is, however, for the husband to establish Hong Kong is not the natural or appropriate forum, and that Mainland is distinctly more appropriate than Hong Kong.

30.The parties were both born, raised and grew up in Shanghai. They attended university in Shanghai in 2004 and came to Hong Kong to continue their education in 2005. Both parties have Shanghai “Hukou” (their Mainland registered address is with Shanghai). The wife was a Chinese citizen, worked and resided in Mainland. The husband resided and worked in Hong Kong but continued to pay Shanghai Social Security to the local authority as a Chinese citizen. How the husband able to maintain his Mainland “Hukou” after he obtained his Hong Kong permanent identity is not material, the fact that he tried to maintain his Mainland “Hukou” shown his desire to preserve his Mainland connection.

31.Both parties had their root in Shanghai, and they met while studying in Shanghai. Thereafter they moved to Hong Kong for education between 2005 and 2008 on student visa. They were married in Shanghai in May 2011, and held their wedding banquet in Shanghai in June 2013. During their relationship and marriage, their choice of residence was influenced by their choice of employment. The husband started to work in Hong Kong after he graduated in 2008, he moved to Beijing for employment in January 2012. The wife wanted to start her second degree in Hong Kong but could not go through, she was not working and supported by the husband. After relocation to Beijing, the wife looked for job and started to work since February 2013.

32.The parties conducted their matrimonial life both in Hong Kong and Beijing prior to the wife’s petition but they were approaching the verge of separation. After the triggering incident on 8 August 2014 in Hong Kong, the parties started to separate on 10 August 2014 after the wife moved back to Beijing. The period they actually lived together as married couples under one household was after the wife obtained her dependant visa to Hong Kong and during the time they relocated to Beijing. Thereafter the wife remained to stay and work in Beijing, and she was with the same employer since February 2013. They had lived together in Beijing for 19 months out of the 40 months of their marriage up to the time the wife petitioned her divorce, and this was the longest period they lived together under one household during their short marriage. And wherever they resided, they would visit their families in Shanghai frequently.

33.The husband purchased his first property (the matrimonial home) in May 2010 when he was working in Hong Kong for his residence here, and this was also the residence of the wife during her stay in Hong Kong and later became their matrimonial home after they married in May 2011. However, the husband’s further investment on landed property was made in Mainland, he purchased 2 PRC properties in October 2011 when he was still working in Hong Kong, and the wife was later made to be the co-owner in October 2013.

34.Given the time the parties spent together in Beijing, it is understandable that the several ‘incidents’ relied upon by the wife in her Petition to establish the husband’s unreasonable behaviour were happened in Beijing. Though divorce is the common goal of the parties, the husband through his counsel’s submission indicated that should proceedings continue in Hong Kong, he would dispute unreasonable behaviour. However, according to Article 31 of the marriage Law of the PRC, “Divorce shall be granted if husband and wife both desire it”. The PRC legal opinion obtained by the husband being:

“According to the above rule, if both the husband and the wife desire to divorce, the People’s Court can dissolve the marriage in a very simple way. It only has to confirm whether both parties consent to the divorce, and if both parties give their consent to divorce, the People’s court can dissolve the marriage according to the parties’ wishes, and no other additional reasons are required.”

35.Mr Chan submitted that the wife’s petition being a fault- based, it would require a finding of unreasonable behaviour. A trial of that Petition in Hong Kong is likely to be expensive and prolonged, and is extremely inconvenient, having regard to the numerous allegations made in the petition. By contrast, the Mainland PRC law and procedure is not ‘fault’ based and does not even require any witnesses, Mr Clough did not attempt to argue otherwise.

36.Where the common goal of the parties is to have dissolution of their marriage, it must be in their best interests to achieve a divorce through the no fault provision rather than bitterly contested proceedings (see Premising v Kishinani (CACV No.845 of 2000)). Unlike the wife in LS v AD FCMC 34/2012, the parties in the present case only separated on 10 August 2014, even with the husband’s consent, the wife would have to wait for more than 6 months to issue a new petition on one year separation.

37.However, the husband has stated in his affirmation dated 19 September 2014 that he was advised by is PRC lawyer that since their marriage took place in Shanghai, it is necessary that there be also a divorce in Shanghai because any divorce order in Hong Kong will not be recognized under the Mainland PRC law. With this belief, the husband will not agree to divorce in Hong Kong, where the wife wants to change her ground to two year separation, she will need to wait until August 2016.

38.As to recognition of Hong Kong divorce judgment, the PRC legal opinion obtained by the husband is as follow:

“From the judicial practice after the resumption of sovereignty over Hong Kong, the People’s Courts do not, at this stage, recognize the divorce judgment by Hong Kong courts.

On 8 June 2007, the High People’s Court of Guangdong Province, in the “Reply concerning the Temporary Non-recognition of the Divorce Judgment by the Hong Kong SAR courts” (i.e., YGFM 1 FZ [2007] No.6, replied to the Intermediate People’s Court of Zhongshan City that “Your Court’s ‘Request for Indication concerning Xuemei Xu’s Application for Recognition of Divorce Judgment made by the Hong Kong Court’ is acknowledged. After discussion, our reply is as follows: After the resumption of sovereignty over Hong Kong, the Hong Kong SAR and Mainland China have not yet made the relevant arrangement for mutual recognition of judgments. In relation to the divorce judgments made by the Hong Kong court, it is more appropriate to, at this stage, not recognize it. Your Court. When deciding not to recognise the legal effect of that divorce judgment, should inform the parties that they can commence divorce proceedings in Mainland China.”...

:

:

Concerning whether the divorce judgment in Hong Kong should be recognized by the People’s Courts and the procedure for such recognition, the corresponding regulations and arrangements can only be made by the National People’s Congress, the Standing Committee of the National People’s Congress and the Supreme People’s Court. Apart from that, other state organs have no authority to make such regulations. Therefore, before the National People’s Congress, the Standing Committee of the National People’s congress and the Supreme People’s Court have regulated the recognition of divorce judgments by the Hong Kong court, the stance taken by the High People’s Court of the Guangdong Province is completely within its scope of authority. The High People’s Court of the Guangdong Province or the High People’s Courts of other provinces, Autonomous Regions and Municipalities directly under the Central Government have, in reality, absolutely no authority to make arrangement and regulations for the recognition of divorce judgments by the Hong Kong court.

:

:

As of the date of the issuance of this legal opinion, there is still no arrangement between mainland china and Hong Kong as to how the People’s Court should recognize and enforce the divorce judgment made by the Hong Kong court. In other words, even if the Hong Kong court has already made a relevant decision, it will not be recognized by the People’s Court, not to even say being enforced in Mainland China.”

39.Mr Clough submitted that the wife disputed the husband’s expert opinion. Yet the wife’s expert’s opinion did not touch upon the question of recognition of Hong Kong divorce judgment in Mainland. Hence these aspects of the Mainland PRC law put forward by the husband expert are not challenged. Mr Clough attempted to put forward his understanding that Mainland may recognize divorce decree granted by Hong Kong Court, however, this is not supported by any evidence. Instead the wife offers, through her counsel’s written submission, by undertaking, to co-operate in effecting the recognition of the Hong Kong decree of divorce in the PRC and in the event that the PRC authorities refuse to recognise the Hong Kong divorce she will also co-operate in obtaining a divorce in the PRC. Although a no-fault divorce can be obtained within a relatively short time in either jurisdiction, unless there is strong reason, I fail to see the good to have two set of proceedings for dissolution of one marriage.

40.It should be noted that according to the wife’s expert opinion, the Shanghai Case in which the ordinary procedure is followed, shall be concluded within six (6) months from the date of docketing provided that there is no special circumstances. With the present Hong Kong law on divorce, procedure on matrimonial proceedings and family court diary, the husband’s Mainland divorce case would have been concluded well before the wife obtains her decree nisi.

41.Apart for divorce, the wife also prayed for ancillary relief here, while the husband prayed for assets division in his Mainland divorce proceedings. It is reasonably clear that the wife is aiming at the husband’s source of income and assets while the husband is aiming at the two jointly owned PRC properties and valuable jewelleries possessed by the wife in Mainland. The husband has personal and real property both in Hong Kong and Mainland. For the present purpose, I take the assets and liability schedule prepared and submitted to the Shanghai District Court by the husband representing the whole family assets.

42.The matrimonial home located in Hong Kong and the two PRC properties represent 77.9% of the family assets and 95% of the net family assets. The valuable jewelleries possessed by the wife represented 10.6% of the family assets and 12.9% of the net family assets. The husband stated specifically in the assets and liability schedule that the landed properties were completely funded by the husband and his parents and the valuable jewelleries were purchased by him and currently held by the wife. This is a strong indication that the husband objected to equal division of the assets. Any determination upon the beneficiary interest or financial contribution to these assets would inevitably involved Shanghai witnesses.

43.As stated above, the wife’s expert did not touch upon the question of recognition. The two jointly owned PRC properties were mortgage free, the value estimated by the husband being $1.5mil and $2.5mil respectively, which was more than 57% of the net family assets, were purchased by the husband in August 2011. To lessen the weight of this connecting factor, the wife offered through her counsel’s written submission, by undertaking, not to seek any order for transfer of the husband’s interest in the PRC landed properties. However, the two PRC properties were jointly owned since October 2013, at the end of the day a court order would be required to dispose these two properties, and such order would need to be enforced in Mainland.

44.Whereas the matrimonial home located in Hong Kong with a net value around $2.64mil as estimated by the husband, was heavily mortgaged, the outstanding mortgage was $3.36mil. Mr Chan submitted that neither party would be in a position to pay off the mortgage, Mr Clough did not suggest otherwise. I agree with Mr Chan that with the combination of the family assets and the fact that the matrimonial home being used by the husband as his residence; in considering the division of property, though the value of the matrimonial home would be taken into account in the computation process, it would be most unlikely that any transfer/settlement/sale order would be made against the matrimonial home.

45.Mr Chan submitted that there were extant Mainland PRC divorce proceedings between the same parties. The Mainland PRC Court had ‘accepted’ jurisdiction. The wife had attempted to challenge those proceedings but failed. The Shanghai District Court and the Shanghai Appellant Court both ruled (which ruling is final) that the Shanghai District Court had jurisdiction. Those decisions were made with the Shanghai Courts being fully aware that there were competing proceedings in Hong Kong. I agree with Mr Chan that it is plain and clear that there is an alternative available forum with competent jurisdiction to hear the parties’ divorce.

46.Mr Chan further submitted that the parties’ marriage was and is fundamentally a Mainland PRC one. They were married in Shanghai in May 2011. Mainland PRC law would not recognise a Hong Kong divorce – whether as to the divorce itself and/or as to financial orders / ancillary relief; the Hong Kong Orders (whether as to ‘divorce’ or as to divisions of assets) would not be recognised nor enforceable. Therefore, a Mainland PRC divorce would be necessary in any event. On the other hand, once there being a Mainland PRC divorce, it would be entitled to automatic recognition in Hong Kong pursuant to Part IX MCO Cap.179:

“S.56(1) The validity of an overseas divorce or legal separation shall be recognized if, at the date of the institution of the proceedings in the place in which it was obtained –

(a) either spouse was habitually resident in that place; or

(b) either spouse was a national of that place.”

And these provisions would apply to both parties (although either would be actually sufficient).

47.After due consideration, I am satisfied that the husband has established that Hong Kong is not the natural or appropriate forum, rather Mainland has the most real and substantial connection with this divorce case. And Shanghai District Court is clearly or distinctly a more appropriate forum than Hong Kong.

Personal and juridical disadvantage

48.Mr Clough submitted that the wife, who was first in time when she commenced these proceedings in Hong Kong, would be deprived of her legitimate personal and juridical advantage if the proceedings were to be stayed, and would be placed in a very disadvantaged position. As a matter of practice and procedure Courts in the PRC would be restricted and often deal only with assets within the PRC. The proceedings would have the advantage of being swift but rely on minimum documentation with no recourse to interlocutory procedures for the production of documents. Further interlocutory process in Hong Kong would extend to third party discovery whereas in PRC proceedings would largely dependent on what the parties choose to disclose. Mr Chan objected to this submission as this was not supported by evidence.

49.It is now for the wife to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in Hong Kong. The wife might have worries as to the practice and discovery process in Mainland but this is not enough; the burden is on her to establish her personal and juridical disadvantage by evidence. In response the husband stated in his third affirmation dated 14 January 2015 that he has submitted to the Shanghai Court a list of his assets. And as far as he was aware, the wife did not have any assets in Hong Kong. He considered it was the wife’s intention to exclude her assets outside Hong Kong from adjudication by flying in and out and leveraging the Hong Kong legal system as “Birds of Passage” to pursue divorce proceedings in Hong Kong.

50.At one stage Mr Clough attempted to persuade this court that the wife would suffer personal and juridical disadvantage by referring to earlier decision of the Hong Kong on PRC law. Mr Chan objected to this course and referred to the following passage in The Conflict of Laws in Hong Kong (2^nd Ed 2012) para 2.047:

“Decisions of the Hong Kong or English courts as to foreign law are not binding as precedents before a later Hong Kong court. One practical reason for this is that the foreign law in question may have changed between the relevant times in the two cases; but the point goes further – even if there has been no relevant change in the foreign law, it remains a “fact” which can be disputed anew in each case.”

51.The discovery process that complained by Mr Clough was not mentioned by the wife’s expert nor by the husband’s expert. Instead, the wife’s expert confirmed in his opinion that evidence exchange is part of the PRC procedure law. The disadvantage mentioned by the wife’s expert being:

“Under current PRC legal practice, it is fairly difficult for a court to dispose the assets not located in China. Moreover, the judgment issued by the PRC court cannot be directly enforced in other jurisdiction if there is no bilateral treaty between the jurisdictions. Based on this, we are of opinion that it would be inconvenient for the Petitioner to safeguard her legitimate rights and benefits derived from the assets outside China.”

52.Thus the wife’s expert opinion is consistent with the husband’s expert that there is no law or judicial interpretation which prohibits the Mainland Court to make judgment on overseas assets. Further, the wife’s expert only stated that it is fairly difficult for a Mainland court to dispose the assets not located in China, the expert did not go further to state that the PRC court would not take into account of the overseas assets in considering the merit of the matter. Indeed Mr Clough did not dispute the Mainland Court do have jurisdiction to divide overseas assets but submitted that in practice the Mainland Court would not do so. Mr Chan objected to this as this again was not supported by any evidence.

53.In the present case the husband only started working after he graduated in 2008. Since then he has changed his employment twice, but all these happened during the marriage, and the wife knew the identity of his employers. The wife stated in her second affirmation dated 15 September 2014 that amongst the main family assets are the matrimonial home, some funds held in the US by a friend of the husband, some funds similarly held in Hong Kong and two PRC properties. The husband in complying with the Shanghai Court has already submitted his assets schedule including his Hong Kong assets and no doubt he will disclose evidence about his and his parents’ financial contribution towards the landed properties, his purchase of the jewelleries and his bank loans in due course, the default of which will only to the wife’s advantage.

54.All the landed properties had been disclosed in the husband’s assets schedule, but there was no mention of any interest in any fund held by others. No evidence was provided by the wife in support her allegation that the husband had interest in some funds held by others. Yet the overall source of the husband’s income during the marriage can be easily identified, where any “funds” was purchased by the husband in the name of others, the flow of the husband’s income will give an answer to the wife’s allegation. The wife has been made the co-owner of the two PRC properties since October 2013. For the reasons mentioned above, it is most unlikely in the present case that any transfer/settlement/sale order will be made against the matrimonial home.

55.In my view the wife is not able to show that she will be deprived of any legitimate personal or juridical advantage or she will not obtain justice if the action is tried in Shanghai Court.

Conclusion

56.For all the reasons discussed above, I am of the view that the husband had substantial connection with Hong Kong at time of the wife’s petition. The jurisdiction is founded as of right. However, I am satisfied that Hong Kong is not the natural or appropriate forum for this case, the parties have the most real and substantial connection with Mainland, Shanghai is clearly or distinctly the more appropriate forum for the parties’ divorce and the subsequent ancillary relief matters. Further I am not convinced that the wife will be deprived of any personal or juridical advantage if the present proceedings are stayed.

57.In the circumstances I allow the husband’s application for stay on grounds of forum non conveniens in favour of the People’s Court of Changning District, Shanghai, namely (2014) CM4(M)CZ No.1317, with a costs order nisi to be made absolute at the expiration of 14 days that the wife is to pay half of the husband’s costs of this application, including all reserved costs, to be taxed if not agreed, with Certificate for Counsel.