HHML v. RYD

HCMC 7/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 7 OF 2011

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REASONS FOR DECISION

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1. This is an application by the husband to stay the petition for divorce issued by the wife on 2 August 2011 on the ground that the Spanish court is the more appropriate forum for the hearing of the matrimonial dispute (“the Forum Application”). In the hearing on 27 April 2012, I refused the Forum Application and I now give my reasons.

Background

2. The parties are Spanish and married in Spain in 1995 after signing a marriage settlement in Madrid (“the Marriage Settlement”). The husband and the wife are aged 45 and 46 respectively.

3. There are 3 children: the eldest son aged 15 studying in England, the second son aged 10 and the youngest son aged 9 both studying in an international school in Hong Kong.

4. The wife has received much education having obtained an economics degree and a MBA degree and attended post-graduate courses in Marketing at Harvard University.  Prior to coming to Hong Kong, she had a respectable job with a decent income.  In 1999, she had to reduce her working hours in order to take care of the family.

5. The husband has been working in the information and technology industry.  The parties moved to Hong Kong in June 2002 when the husband was transferred here with his job.  Although his employment contract was initially for 2 years, this had been continually extended with the last extension up to June 2012.  The family are all permanent residents of Hong Kong.

6. The wife petitioned for divorce on the ground of unreasonable behaviour in the District Court in Hong Kong on 2 August 2011, and the proceedings were served on the husband on 22 August 2011.  The husband commenced divorce proceedings in Spain on 1 September 2011, and these proceedings were served on the wife in December 2011.

7. The husband took out the Forum Application in Hong Kong on 7 September 2011.

8. On 9 September 2011, the husband was confirmed to move back to work in Spain in January 2012.

9. On 20 September 2011, Deputy District Judge G Own of the District Court made an order to transfer the matrimonial proceedings to the High Court.

10. In the first hearing of the Forum Application on 21 November 2011, the court adjourned the application for argument with directions given for the filing of affidavit and expert evidence.

11. On 7 December 2011, the wife renewed her application for, inter alia, maintenance pending suit (“MPS”) and school fees.  On 15 December 2011, the court gave further directions in respect of the wife’s MPS application and the Forum Application.

12. After the service of the Spanish proceedings on the wife, she took out an application in such proceedings to challenge the jurisdiction of the Spanish court.  The application has yet to be determined.

13. Some time in December 2011, the wife indicated her intention to remain Hong Kong together with the children.  On 27 January 2012, the husband filed an application in the Hong Kong proceedings seeking for sole custody, care and control of the 3 children and for permanent removal of the children from Hong Kong (“the Husband’s Custody Application”).  In support of such application, the husband had secured schooling in Spain for the second and the third sons at a school which was attended by the eldest son before the parties came to Hong Kong.

14. On 2 March 2012, the wife applied for custody, care and control of the children (“the Wife’s Custody Application”).  Both the Husband’s Custody Application and the Wife’s Custody Application have now been fixed for substantive hearing on 9 October 2012 before Poon J with 5 days reserved.  There have been 2 social welfare reports prepared in respect of the welfare of the children and the social welfare officer is expected to give evidence in the hearing.

15. On 8 March 2012, the wife’s application for MPS was heard before Poon J, and the learned judge handed down the decision on MPS on 11 May 2012.

16. On the other hand, it seems that the proceedings in Spain have not progressed at all.  As the wife has lodged an application to challenge the jurisdiction of the Spanish court over the present divorce, there is an interim stay of the proceedings pending the final determination of the wife’s application.

Legal principles

17. Both parties agree with the following established legal principles for forum non conveniens applications laid down in the case of Louvet v Louvet & Anr. [1990] 1 HKLR 670 (adopting the well-known principles set out in Spiliada Maritime Corp v Consulex Ltd [1987] AC 460):

(i)  The court has to answer a single question, namely: Is there some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action, ie, in which the action may be tried more suitably for the interests of all the parties and the ends of justice?

(ii)  For the purposes of the analysis, it is convenient to view the problem at three separate stages:

(1)  Is it shown that Hong Kong is not only not the natural or appropriate forum for the trial, but that there is another available forum which is clearly and distinctly more appropriate than Hong Kong.  The evidential burden is here upon the applicant.  The emphasis is upon “appropriate” rather than “convenient” because this is not simply a matter of practical convenience. The purpose is to identify the forum “with which the action has the most real and substantial connection”.  Several relevant factors for deciding upon the natural and appropriate forum for the action have been identified by the courts:

(a)  the law governing the transaction;

(b)the place where the parties reside or carry on business;

(c)  the cost of the trial;

(d)the convenience of witnesses;

(e)  the place where the transaction giving rise to the litigation occurred;

(f)  the relative ease of execution; and

(g)  the avoidance of a multiplicity of actions.

Failure by the applicant at this stage is normally fatal.

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

(3)  If the answer to (2) is yes, a court has to balance the advantages of (1) against the disadvantages of (2).  Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that notwithstanding such loss “substantial justice will be done in the available appropriate forum”. The court must try to be objective.  Proof of this, which can fairly be called the ultimate burden of persuasion, rests upon the applicant for the stay.  By these means he establishes that on balance the other forum is more suitable “for the interests of all the parties and the ends of justice”.  This may be another way of saying that the plaintiff’s choice of forum has been shown to be so inappropriate as to deserve the pejorative description of “forum shopping” and to be restrained accordingly.

18. Hunter JA then applied these principles in the context of the matrimonial case in Louvet v Louvet, supra when he said:

“The final question, this being a matrimonial case, can perhaps be reformulated in the language of de Dampierre with the necessary adaptations in this way. In the language of Lord Templeman at p 101: is it just that the wife should be allowed to exploit her Hong Kong advantage and would it be unjust to confine her to her remedies in France? Or in the language of Lord Goff at p 110; ‘objectively speaking’, would justice be done if this petitioner was compelled to pursue her remedies in France? Those, it is common ground, are the applicable principles.” (at p 675)

19.  In the Stage I inquiry, the burden lies on the applicant to show not only that Hong Kong is not the appropriate forum, but that there is another forum and that forum is “clearly and distinctly” more appropriate than Hong Kong.  As pointed out by Cheung J, as he then was, in Yu Lap Man v Good First Investment [1998] 1 HKC 726 at p 734E, the right to commence proceedings should not be lightly disturbed as jurisdiction is properly founded in Hong Kong.  In that particular case, the defendant failed to discharge the burden in the Stage I inquiry, as it only managed to show that the courts in the Mainland were equally appropriate to deal with the case.

Stage I inquiry

20. I therefore start with the Stage I inquiry.  Mr Egerton, counsel for the husband, submits that the Spanish court is clearly the natural forum for the adjudication of the matrimonial dispute.

21. Firstly, the husband and the wife are both Spanish, and the couple were only in Hong Kong by virtue of the husband’s expatriate employment in Hong Kong.  Further, the couple had already planned to leave Hong Kong before the commencement of the divorce proceedings, and the wife only changed her mind in December 2011 when she indicated her intention to remain in Hong Kong.  According to Mr Egerton, this was a tactical move on the part of the wife with a view to “blackmail” the husband.

22. Secondly, both the husband and wife have no asset in Hong Kong.  The majority of the assets of the parties are in Spain, including some real properties and a few companies, and one real property in Morocco and another one in Macau.  The wife has raised issues as to further mortgages obtained by the husband over a property in Madrid in 2002, 2007 and 2010 and has made complaint as to the financial issues in Spain with the husband’s mother and the use of a power of attorney.  The wife also doubts whether the husband has made full disclosure of his assets.  Mr Egerton submits that the natural forum to determine these issues is Spain as the relevant documents and witnesses are in Spain and not in Hong Kong.

23. Thirdly, as the assets of the parties are mainly in Spain, quite a number of documents need to be translated from Spanish to English if the dispute is adjudicated in Hong Kong, and this would increase the costs of the litigation.

24. Despite Mr Egerton’s able submission, I do not accept that the husband has discharged the burden of showing that the Spanish court is clearly and distinctly the more appropriate forum to hear the divorce proceedings.  The parties are permanent residents of Hong Kong.  They have been here for over 10 years and have spent the majority of their marriage in Hong Kong and not in Spain.

25. More importantly, Hong Kong is the “home” for the children.  In fact, Hong Kong is the only home that the younger children have known, even the eldest son moved here when he was just 5 and he only went to boarding school in England in 2010.  Although it is fair to say that the family might have planned to leave Hong Kong in view of the intended relocation of the husband, it is quite proper for the wife to change her plan for the children and herself in light of the divorce between the parties.  I am given to understand that the wife now has a job in Hong Kong earning a modest income. Since the lease of their former home in Stanley has been terminated by the husband’s employer, the wife is now living in her friend’s house together with the two younger children.

26. The parties dispute as to whether moving back to Spain or remaining in Hong Kong is best in the interest of the 2 younger boys. As they have been living and studying in Hong Kong for quite some time, it would be more convenient to carry out the investigation relating to the welfare needs of the children in Hong Kong.  In fact, there have already been 2 social welfare reports prepared for the purpose of the coming hearing in October. 

27. To a certain extent, the husband also agrees that it would be more convenient to deal with the matters relating to the children in Hong Kong.  The Husband’s Custody Application was taken out in the Hong Kong court after the Forum Application.  If the Spanish court is the more appropriate forum, the application would have been made there.  In fact, there have already been a number of hearings in Hong Kong including a full MPS hearing.  Since the Hong Kong court has already started to deal with some of the substantive issues in the matrimonial proceedings, it would certainly be desirable for the Hong Kong court to continue with such proceedings.

28. Further, if the Forum Application is granted, it would virtually mean that there would be two separate proceedings: one in Hong Kong to deal with the children, and the other one in Spain to deal with the divorce and the distribution of the matrimonial assets.  This is certainly undesirable, as observed by Yuen JA in RI v SSH [2010] 4 HKC 588 at §42:

“… … … it is unrealistic to suggest that there should be two separate proceedings – one in Hong Kong to deal with the children, and the other in France to deal with divorce and distribution of the matrimonial assets. Provision for the children is inextricably tied up with the distribution of the matrimonial assets. It would also be a waste of the parties’ resources for litigation to be conducted on two fronts.”

29. There may also be other complications if the matrimonial proceedings are heard in the Spanish court.  Poon J has already given his decision on the MPS application.  One of the principles that is followed by the court in making a MPS award is that any unfairness in the interim award can be corrected by the final order made at the trial.  If a stay is granted, this cannot be done.

30. There is also uncertainty as to whether the Spanish court will decline jurisdiction based on the ground that the wife had filed her petition in Hong Kong first.  So far as I understand it, there is a rule in the European Community (EC) Regulations regarding international lis pendens in family matters: if parties to a matrimonial dispute have filed divorce proceedings in two separate EC countries, the court in which the proceedings were filed second in time would decline jurisdiction to deal with the matter.  The parties’ Spanish law experts disagree as to whether this rule is applicable to non-EC countries, but there are indeed precedents in which the courts in EC countries did grant a stay of proceedings in favour of the Hong Kong courts by reason of such rule.

31. As most of the assets of the parties are in Spain, there would be some inconvenience in hearing the matrimonial proceedings in Hong Kong.  Documents may have to be translated and witnesses may have to fly to Hong Kong to testify.  However, the Hong Kong courts have a lot of experience of dealing with foreign assets in matrimonial proceedings, and so this is not a strong factor in favour of the stay.  In any event, at least 2 real properties involved in the dispute are located outside Spain, and so even the Spanish court will have to deal with foreign assets in determining the issue of distribution of matrimonial assets.  Further, it has been repeatedly emphasised by the courts that in modern days, it would not be too inconvenient for overseas witnesses to come to Hong Kong to testify.  The parties may also make use of video link facilities to enable overseas witnesses to testify without coming to Hong Kong.  As the matrimonial assets mainly consist of real properties, there is also no indication that the financial issues between the parties are complicated to an extent that it is impracticable to deal with them in the Hong Kong court.

32. Based on these considerations, I do not accept that the husband has managed to establish that the Spanish court is clearly and distinctly the more appropriate forum to hear the matrimonial dispute between the parties.  As mentioned above, failure by the husband in this stage of the inquiry is normally fatal.

Observations about the Stages II and III inquiries

33. This would have been sufficient to dismiss the Forum Application.  However, as the parties have devoted considerable time in their submissions to deal with the personal or juridical disadvantages that may be suffered by the wife if the dispute is litigated in the Spanish court, I feel obliged to express my view on the Stage II inquiry as well.

34. The existence of the Marriage Settlement is certainly a factor to be taken into account in determining whether the wife will suffer personal or juridical disadvantages by having the matrimonial dispute be heard in the Spanish court.  In H v H [2007] HKFLR 125, the husband had commenced proceedings in Germany and sought to stay the subsequent proceedings brought by the wife in Hong Kong.  In the German proceedings, the wife would be at a considerable disadvantage as that court would strictly apply a marriage contract that severely limited the wife’s claim.  In the Hong Kong proceedings, it would only be one factor that the court would look at.  It was held by HH Judge Bruno Chan that this was a legitimate advantage of proceeding in Hong Kong which could prevent a stay even if a prima facie case for one was established under Stage I.

35. There is a dispute between the parties’ Spanish law experts as to the weight of the Marriage Settlement that would be attached by the Spanish court in determining the financial issues.  According to the husband’s expert, the Spanish court will take into account factors similar to those stated in s 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192 in determining the financial issues between the parties.  So far as the Marriage Settlement is concerned, like Hong Kong, this is only one of the factors that the Spanish court will take into account when exercising its discretion.

36. On the other hand, the wife’s expert claims that, under Spanish law:

(i)  by reason of the Marriage Settlement, there will be no transfer of assets and it is not possible for the wife to obtain the properties under the husband’s name;

(ii)  in view of the earning capacity of the wife, it may not be possible for her to receive maintenance from the husband, and in any event the maintenance would be limited to a short period of time between 2 to 4 years; and

(iii)  partly because the wife had enjoyed domestic help throughout the marriage, it may not be possible for the wife to obtain any compensation for her contribution in respect of household duties in the family.

37. In summary, the wife’s expert is of the opinion that the Spanish court will enforce the Marriage Settlement, and it is extremely unlikely that the wife will receive anything beyond that.  According to the wife’s calculation, after a long marriage, she will be left with approximately HK$6.39 million out of over HK$35 million in assets and no maintenance for herself if the matrimonial dispute is heard in the Spanish court, which is grossly unfair to her.  In particular, she had given up career for the family.

38. On the other hand, the Hong Kong court will follow the well-known principles laid down in LKW v DD (2010) 13 HKCFAR 537 in determining the issues of distribution of matrimonial assets and maintenance.  Whilst the Hong Kong court will take into account the Marriage Settlement, it will not be binding and the court will certainly look at matters such as overall fairness and the wife’s needs in determining the financial issues between the parties.

39. Although there is a dispute between the experts as to the approach that will be adopted by the Spanish court in determining the issue of distribution of matrimonial assets, it is fair for me to say that, since Spanish law has expressly recognised pre-nuptial agreement or marriage contract, the Spanish court, as compared with the Hong Kong court, will give more weight to such kind of agreement in determining the distribution of matrimonial assets between the parties.  If the dispute is heard in the Spanish court, the amount of assets that can be obtained by the wife may not be that small as alleged by her, but the difference in the approaches of the courts in dealing with the issue of pre-nuptial agreement or marriage contract and the risk of the Spanish court in strictly enforcing the Marriage Settlement are, in my judgment, sufficient for the wife to establish that she will be deprived of “the legitimate personal or juridical advantages” if the matrimonial dispute is heard in the Spanish court.

40. I therefore also rule the Stage II inquiry in favour of the wife.  As I find against the husband in both Stages I and II inquiries, the Forum Application should not succeed and it is quite unnecessary for the court to go to the Stage III inquiry.

Submission to the jurisdiction of the Hong Kong court

41. Ms Rattigan, counsel for the wife, further submits that as the husband has submitted to the jurisdiction of the Hong Kong court by making the Husband’s Custody Application, he is estopped from asserting that the Hong Kong court is not the appropriate forum to hear the matrimonial dispute.

42. This may be an attractive submission, in particular the husband could have made the custody application under the Guardianship of Minors Ordinance, Cap 13 without invoking the jurisdiction of the court in the divorce proceedings.  However, the matter may not be that simple.

43. Firstly, the Husband’s Custody Application was taken out on 27 January 2012 which was well after the Forum Application dated 7 September 2012.  In Hwoo Huang Linda v Fu Bing san & Ors, unreported, HCA 2888/2001 (decision on 10 April 2002), Reyes J said the following in §26(5) of his judgment:

“A party may be able to preserve an option to challenge forum, despite having engaged in conduct which might be regarded as submission to the jurisdiction, if before or at the time of such conduct he makes it clear that his action is without prejudice to the bringing of a challenge to forum.”

44. After the husband took out the Forum Application on 7 September 2011, he has all along indicated his intention to proceed with such application.  In such circumstances, even with the making of the Husband’s Custody Application, the husband has not given up his right to proceed with the Forum Application.  Hence, it is arguable that the husband has preserved the option to challenge forum according to the dicta of Reyes J in the Hwoo Huang Linda case.

45. Secondly, with a view to remove the previous confusion in the law as to what conduct amounts to submission to the jurisdiction of the court, O 12 r 8 of the Rules of the High Court, Cap 4, has been amended during the CJR exercise to provide a single mechanism for dealing with all forms of challenges to the jurisdiction of the court, including setting aside the writ for lack of jurisdiction and staying the proceedings on the ground of forum non conveniens (see: MGM Grand Paradise Ltd v Wong Sing Wa, unreported, HCA 2140/2011, decision of Lok DHCJ on 21 May 2012).

46. There is no corresponding rule in the Matrimonial Causes Rules, Cap 179, but s 10 of the Matrimonial Causes Ordinance, Cap. 179 provides that, if there is no special provision contained in the said Ordinance, the practice and procedure for the time being in force in the High Court in England with reference to matrimonial proceedings shall apply.  What then are the practice and procedure in the High Court of England relating to forum application and submission to the jurisdiction of the court? As both counsel have not addressed me on these particular issues, I am not prepared to make a ruling as to whether the husband has submitted to the jurisdiction of the Hong Kong court by the making of the Husband’s Custody Application.  For our present purpose, I just refuse the Forum Application on the ground that the husband has failed to establish that the Spanish court is clearly and distinctly the more appropriate forum to hear the matrimonial dispute between the parties.

47. These are the reasons for dismissing the Forum Application in the hearing on 27 April 2012.  I now also make an order nisi that the costs of the application be to the wife, which shall be made absolute 14 days after the date of the handing down of this Reasons for Decision.