吳 v. 李

FCMP 156/2018

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 156 OF 2018

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Reasons for Decision

(Leave for s 29AC MPPO Application)

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1.  This is the Applicant’s ex parte originating summons for leave under Part IIA of the Matrimonial Proceedings and Property Ordinance Cap 192 (“MPPO”) to apply for financial relief against her former husband, the Respondent upon the dissolution of their marriage by a court in the People’s Republic of China (“PRC”).

2.  At the hearing on 27 September 2018, I granted the Applicant leave with reasons for decision to be handed down later, which I now do.

Relevant Factual Background

3.  The Applicant and the Respondent, businesswoman and businessman were married in 1993 in Guangzhou PRC. In 2006 they acquired resident status in Hong Kong under the investment entrant scheme. In 2013, the Respondent and their three sons became permanent residents of Hong Kong.

4.  In contemplation for a divorce, the parties by the agreement dated 15 October 2007 reached an agreement on distribution of their family assets which included, inter alia, four properties in Hong Kong registered in the Respondent’s name (“the 2007 Agreement”)

5.  Pursuant to the 2007 Agreement, the Applicant would beneficially own three properties, one at 九龍大角咀海泓道帝柏海灣3座 and two at 九龍佐敦儉德大樓 (“the Applicant’s three Properties”); while the Respondent would keep the property at 九龍大角咀海泓道帝柏海灣2座 (“the Respondent’s one Property”).

6.  The contemplated divorce was subsequently withheld. In around April 2011, the parties orally agreed to apply sale proceeds of the four properties (sold or to be sold) to purchase a bigger apartment in Hong Kong at 九龍大角咀海泓道帝峰皇殿 (“the 帝峰皇殿 Apartment”) as their matrimonial home (“the 2011 Agreement”).

7.  The Applicant deposed that she agreed to enter into the 2011 Agreement in reliance of the Respondent’s representation that the total value of the Applicant’s three Properties was equivalent to that of the Respondent’s one Property. Hence, using sale proceeds of the four properties to purchase the 帝峰皇殿 Apartment would mean each party was contributing to half of the purchase.

8.  The sale and purchase of the Applicant’s three Properties were handled by the Respondent; proceeds thereof were deposited into his bank account with the Bank of China in Hong Kong.

9.  The 帝峰皇殿 Apartment was purchased in the joint names of the parties on 15 April 2011 with the said sale proceeds and a mortgage loan. Contrary to the 2011 Agreement, the Respondent did not apply the sale proceeds of the Respondent’s one Property  to the purchase. In fact, he only sold it in July 2012 and has never accounted for the sale proceeds thereof.

10.  When the 帝峰皇殿 Apartment was subsequently sold in March 2014, the Respondent wrongfully kept half of the net sale proceeds to himself although he did not contribute to the purchase.

11.  Further, it was subsequently discovered that the Respondent has applied family funds to purchase three other properties in Hong Kong under his sole name:

(1) a property at 九龍尖沙咀君臨天下purchased in September 2014 at HK$20,822,000 (now at an estimated value of  HK$60,000,000);

(2) a property at九龍將軍澳峻瀅 purchased in July 2012 at HK$4,202,000 (now at an estimated value of HK$8,000,000); and

(3) another property at九龍將軍澳峻瀅purchased in July 2012 at HK$5,843,000 (now at an estimated value of HK$10,000,000).

12.  In 2012, the Applicant commenced divorce proceedings in the Guangzhou People’s Court. In the PRC proceedings, the Applicant was unable to seek redress regarding family assets in Hong Kong because the PRC Court denied jurisdiction to deal with the parties’ assets outside PRC.

13.  Pursuant to the mediation conducted by the PRC court, the parties entered into an agreement dated 23 May 2017 to settle their disputes over their PRC assets (“the 2017 Settlement Agreement”). The agreement did not deal with any family assets in Hong Kong.

Statutory Framework

14.  Section 29AB of the MPPO empowers the Court to grant financial relief if a marriage has been dissolved in a place outside Hong Kong and such divorce is recognized as valid by the law of Hong Kong. This applies to the present case.

15.  A “filter mechanism” is said to be established in section 29AC which provides that:

“(1) No application for an order for financial relief may be made unless the leave of the court has been obtained in accordance with rules of court.

(2) The court must not grant leave unless it considers that there is substantial ground for the making of an application for an order for financial relief.

(3) The court may grant leave under this section despite the fact that an order has been made by a competent authority outside Hong Kong requiring the other party to the marriage to make any payment or transfer any property to, or for the benefit of, the applicant or a child of the family.

(4) Leave under this section may be granted subject to any conditions the court thinks fit.”

16.  As stated above, section 29AC(2) requires an applicant for leave to pass the threshold of satisfying the court that there is substantial ground for the making of the substantive application.

17.  In C v H (Foreign Decree; Part IIA) [2012] HKFLR 199, the very first case in which a leave application was brought under section 29AC, Poon J (as he then was) explained at §28 that:

“The threshold [for showing substantial ground] is not high, but is higher than ‘serious issue to be tried’ or ‘good arguable case’ found in other contexts. It is perhaps best expressed by saying that in the context ‘substantial’ means ‘solid’…”

18.  At §§30-36, the following three points were also highlighted:

“30. First, the applicant must satisfy one of the three formal jurisdictional requirements in section 29AE. This is obvious. If none of those formal requirements is satisfied, the court simply does not have jurisdiction to entertain the substantive application for financial relief. It would be clearly wrong for the court to grant leave.

31. Second, the applicant must also satisfy the court that provisionally it would be appropriate for the order to be made by a court in Hong Kong under section 29AF…

35.  Third, while Part IIA aims at remitting the presence of a failure in a foreign jurisdiction to afford appropriate financial relief, the statutory test does not require the applicant to prove hardship, injustice or exceptionality as a pre-condition in order to obtain leave… Such factors, if present, are cogently relevant to the court’s consideration for granting leave. Their absence is however not fatal. But it does not mean that whenever a spouse is dissatisfied with the financial provision obtained in a foreign jurisdiction, he or she should be encouraged to apply for further financial relief under Part IIA. Part IIA does not give the spouse a free ticket to do so…”

See, also, SPH v SA (2014) 17 HKCFAR 364 at §§56-61 where the Court of Final Appeal outlined the statutory framework under Part IIA of the MPPO.

Jurisdictional Requirements

19.  Under section 29AE, jurisdiction of a Part IIA application can be established on either party’s domicile in or having a substantial connection with Hong Kong either at the time of the application for leave or on the date on which the divorce or annulment obtained in the place outside Hong Kong took effect in that place. Alternatively, jurisdiction can be established if either party was habitually resident in Hong Kong throughout the period of 3 years immediately before either the date of the application for leave or the date on which the divorce or annulment took effect in the place outside Hong Kong.

20.  The present application for leave was taken out on 31 July 2018. The marriage was dissolved in PRC on 25 May 2017.

21.  As said, the Respondent has become a permanent resident of Hong Kong since 2013. To the best of the Applicant’s knowledge, the Respondent has been living in Hong Kong and has substantial assets here. As for the Applicant, although she currently lives in PRC, she has since 2004 been coming to Hong Kong on a frequent basis to manage her business. She is a Hong Kong resident and has substantial savings in local banks.

22.  As such, I am satisfied that the substantial connection requirement under section 29AE is shown.

Hong Kong as Appropriate Forum

23.  As discussed at §§32-34 in C v H:

“32. Under section 29AF(1), the court is under a duty to consider at the substantive hearing whether Hong Kong is the appropriate venue for the application for financial relief. The English courts have consistently taken into account the criteria set out in section 16 of the 1984 Act (the English equivalent of section 29AF of Part IIA) and the relevant circumstances in considering leave. As explained in Rayden and Jackson on Divorce and Family Matters, 18^th Edition, para 26.10:

‘The duty imposed under the MFPA 1984, s 16 to consider at the substantive hearing whether England or Wales is the appropriate venue for an application for financial relief is a matter for consideration at the leave stage. If on the application for leave to apply it is clear that if leave were given the application must founder at the first hurdle of s 16(1), then it would clearly be wrong for the court to grant leave to apply in the first instance.’

33. At the leave stage, the court cannot and will not come to a definitive view if Hong Kong is the appropriate venue. Therefore, it should be sufficient if the applicant can establish, provisionally, that Hong Kong is the appropriate venue in order to pass the threshold for obtaining leave.

34. Now, in considering section 29AF(1), the court is required to have regard to the factors listed in section 29AF(2). And many of the factors are common with those which would be relevant in a forum non conveniens inquiry. Before Agbaje v Agbaje, when considering the section 16(2) factors in the 1984 Act, the English authorities had demonstrated a consistent approach of refusing leave where a foreign court was, or had been, seized of the matter on the ground that comity required that foreign orders should be recognized and respected and forum shopping should be discouraged: see Rayden, supra, para 26.11. This is no longer the law after Agbaje v Agbaje, which held that forum conveniens and stay principles are not engaged in Part III cases. As Lord Collins expounded:

’49 But the forum non conveniens principles were developed to deal with cases in which it was necessary to decide which of two jurisdictions was the appropriate one in which proceedings were to be brought. Section 16 does not impose a statutory forum non conveniens test. It does not require the court to determine the only appropriate forum where the case may be tried more suitably for the interests of the parties and the ends of justice. No choice between jurisdictions is involved. The whole basis of Part III is that it may be appropriate for two jurisdictions to be involved, one for the divorce and one for ancillary relief.

50 Many of the factors in section 16(2) have much in common with those which would be relevant in a forum non conveniens enquiry, but they are not directed to the question of which of two jurisdictions is appropriate. They are directed to the question whether it would be appropriate (which is the meaning of the word conveniens in forum conveniens) for an order to be made by a court in England and Wales when ex hypothesi there have already been proceedings in a foreign country (including proceedings in which financial provision has been make [sic]). Little assistance can therefore be obtained from the stay cases (and still less from the antisuit injunction case) in the Part III exercise. The task for the judge under Part III is to determine whether it would be appropriate for an order to be made in England, taking account in particular of the factors in section 16(2), notwithstanding that the divorce proceedings were in a foreign country which may well have been the more appropriate forum for the divorce.

51 The next question is whether principles of comity will add anything useful to the analysis. ……

52 First, comity is sometimes used not simply in the sense of courtesy to foreign states and their courts, but also in the sense of rules of public international law which establish the proper limits of national legislative jurisdiction in cases involving a foreign element. In that sense it will be contrary to comity for United Kingdom legislation to apply in a situation involving a foreign country when the United Kingdom has no reasonable relationship with the situation. That is not the case here. There is nothing internationally objectionable in legislation which gives a court power to order financial provision notwithstanding a foreign decree of divorce, whether or not the foreign court has ordered financial provision, provided that the forum has an appropriate connection with the parties or their property. The whole point of the factors in section 16(2) is to enable the court to weigh the connections of England against the connections with the foreign jurisdiction so as to ensure that there is no improper conflict with the foreign jurisdiction. That is why in Holmes v Holmes [1989] Fam 47, 53, Purchas LJ was right to note that section 16 reflected the principles of comity as between competent courts.’”

24.  Applying the principles above and for the reasons that follow, I find that the factors under section 29AF point to Hong Kong as being the appropriate venue for the intended application for financial relief.

(a) Section 29AF(2)(a) – connection with Hong Kong:The parties’ connections with Hong Kong have been discussed above. The parties’ tie with Hong Kong has been long-standing and substantial both during and after their marriage.

(b) Section 29AF(2)(b) – connection with PRC: It is apparent that the parties do have some connection with PRC; they were married and divorced there, they have had properties and businesses there, and the Applicant currently lives in PRC. However, now that the marriage is dissolved and the parties are closely and substantially connected to Hong Kong; I do not think the connection with PRC should prejudice the Applicant’s present application.

(c) Section 29AF(2)(c) – connection with other place:In addition to having assets in Hong Kong and Guangzhou, the Applicant also owns a property in Los Angeles United States. It is for the accommodate of her three sons who are studying there. Subject to that, the Applicant and the Respondent have no other connection with the United States or elsewhere.

(d) Section 29AF(2)(d), (e) and (f) - any financial benefit obtained or obtainable outside Hong Kong/any order by a foreign authority/any right to apply for financial relief outside Hong Kong:By reason of the Respondent’s conduct and the PRC court’s denial of jurisdiction to deal with the parties’ assets in Hong Kong, the Applicant has been unable to seek relevant financial relief or redressin the PRC divorce proceedings.

(e) Section 29AF(2)(g) – availability of property in Hong Kong: The assets in Hong Kong are substantial and comprise valuable landed properties under the Respondent’s sole name.

(f) Section 29AF(2)(h) – enforceability of any financial order: There is no question of enforcing any order for financial relief in Hong Kong as the Respondent is a permanent resident and has multiple landed properties under his name.

(g) Section 29AF(2)(i) – lapse of time since divorce:There was only slightly more than one year between the date of divorce and date of application. Taking into account the time required to seek legal advice and to prepare for the present application, I do not think there has been any unreasonable lapse of time or delay.

25.  By reason of the above, I find that the Applicant has demonstrated for the purpose of obtaining leave that Hong Kong is the appropriate forum for an order for financial relief.

Basis of Application

26.  Finally, regarding the third point highlighted in C v H, it has been observed by the CFA in SPH v SPA at §61 that:

“As regards the basis for an order, the UK Supreme Court held [in Agbaje v Agbaje] that hardship was not a pre-condition of the exercise of the power, and there was no rule that the court would only make an award to the minimum extent necessary to remedy injustice ([60]-[63]); but it was not the intention of the legislation to allow a simple “top-up” of the foreign award so as to equate with a forum award ([65]); nor was it the purpose of the legislation to allow a spouse to make an application in order to take advantage of the more generous approach in England (and Hong Kong) in “big-money” cases ([72])”.

27.  I do not think the present case involves any attempt of simply “topping-up” her award or forum shopping. There is a genuine and practical need for the Applicant to seek financial relief in Hong Kong whensubstantial assets are here.

Conclusion

28.  It is for all these reasons I granted leave to the Applicant, with the direction to fix a hearing for her Part IIA proceedings.

29.  Costs of the application is reserved.