C v. H

HCMC 3/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO 3 OF 2011

(TRANSFERRED FROM FCMC 17014 OF 2010

AND FCMC 14600 OF 2009)

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BETWEEN

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Reasons for Decision

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A. INTRODUCTION

1.  Part IIA of the Matrimonial Proceedings and Properties Ordinance, Cap 192 (“MPPO”) came into force in March 2011.  It enables a spouse to apply for financial relief after the marriage had been dissolved or annulled in a foreign jurisdiction. Procedurally, the first step that the spouse must take is to obtain, ex parte, leave from the court for making the substantive application.  Here, the Wife took out the leave application in December 2011.  On 14 March 2012, I granted her leave after hearing her counsel.  As this is the first leave application ever brought, it provides the court with the opportune moment to lay down the proper approach in the infancy of the new enactment.  The Wife has already agreed that this Reasons for Decision should be published for the benefit of the profession and the public alike.

2.  Her application arose in this way.

B. BACKGROUND

3.  The Wife is now aged 49, the Husband, 50.  They were married in Thailand on 15 March 1989.  They have a daughter, 18 and a son, 14.  Both children are studying at a local international school.

4.  The Wife had been a TV star since 11.  When the couple first met in 1987, she was already a famous actress and hostess in Hong Kong and Southeast Asia.  It is her case that when she married the Husband, he paid her HK$3 million in return for her giving up her career.  Throughout the marriage, she had remained wholly dependent on the Husband.  The Husband’s case is that the said sum of HK$3 million was the consideration for a pre-nuptial agreement, under which the Wife is not entitled to claim any further financial relief upon divorce.  However, he is unable to produce the agreement or even a copy.

5.  The Husband came from a famous family.  He is a businessman.  He is the shareholder and director of a number of Hong Kong and overseas companies.  The worth of these companies is enormous.  According to a report prepared by a certified public accountant in 2002, the Husband’s interest in four of the more substantial companies alone amounted to some HK$5.1 billion.  It is now his case, strongly disputed by the Wife, that he holds the shares registered in his name on trust for his mother.

6.  During the marriage, the couple and their children had a very comfortable life style indeed.  The couple had a matrimonial home of over 7,000 square feet in Mid-Levels and another extended matrimonial home of about 1,600 square feet on Robinson Road.  They have been members of various clubs in Hong Kong and Beijing.  They always travelled first class and stayed in 5 star hotels when taking family trips every year.  The children have been studying at a renowned international school since kindergarten with private tutors for all sorts of extra-curricular activities.

7.  On 20 November 2009, the Wife presented the divorce petition in the Family Court.  On 13 August 2010, the Family Court ordered the Husband to pay maintenance pending suit by way of a periodic payment of HK$323,000 per month (“the MPS Order”).  The case was then ordered to be transferred to the High Court.

8.  In the meantime, the Husband commenced divorce proceedings in Thailand on 9 December 2009.  He obtained a decree of divorce on 4 October 2010.  The Thai court however did not make any order for custody or financial provision.

9.  The Wife initially refused to recognize the Thai decree.  She applied to the Thai court to have it set aside.  The hearing of her application was to take place before the Thai court in May 2011. Separately, the Wife applied to this court for non-recognition of the Thai decree.  However, upon further legal advice by her Thai lawyers, she decided not to dispute the Thai decree anymore.  Instead, she took out the present application for leave to commence Part IIA proceedings on 21 December 2011.

C. PART IIA OF MPPO

C.1. Background to Part IIA

10.  Before the enactment of Part IIA of MPPO, once a marriage was dissolved or annulled in a foreign country and the foreign divorce or annulment was recognized by the Hong Kong court, the parties were regarded as no longer married from the time when the foreign decree was pronounced.  The Hong Kong court could no longer make any order under MPPO dealing with financial provisions, which would have to be dealt with in the foreign jurisdiction : ML v YJ (2010) 13 HKCFAR 794, per Litton NPJ at paras 137-139.  Occasionally, a party to the marriage, usually the wife, might suffer real hardship if only meagre or even no financial provision is available in that foreign jurisdiction.  As much as the Hong Kong court might wish to redress the injustice, it could simply do nothing at all.

11.  In ML v YJ, the Court of Final Appeal echoed the calls made by the courts below for urgent legislative reform to give the court jurisdiction to grant ancillary relief despite an overseas divorce decree in an appropriate case : per Litton NPJ at paras 144-148.

12.  As a result, Part IIA was introduced in March 2011.

C.2. Outline of Part IIA

13.  Section 29AB(1) empowers the court to grant financial relief after a marriage had been dissolved or annulled in a foreign country and such divorce and annulment is recognized as valid by the law of Hong Kong.

14.  A filter mechanism is established in section 29AC :

“ (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.”

15.  When leave is granted under section 29AC, the court may make interim orders for maintenance under section 29AD.

16.  Section 29AE sets out the formal jurisdictional requirements thus :

“ (a) either of the parties to the marriage was domiciled in Hong Kong—

(i) on the date of the application for leave under section 29AC; or

(ii) on the date on which the divorce, annulment or legal separation obtained in the place outside Hong Kong took effect in that place;

(b) either of the parties to the marriage was habitually resident in Hong Kong—

(i) throughout the period of 3 years immediately before the date of the application for leave under section 29AC; or

(ii) throughout the period of 3 years immediately before the date on which the divorce, annulment or legal separation obtained in the place outside Hong Kong took effect in that place; or

(c) either of the parties to the marriage had a substantial connection with Hong Kong—

(i) on the date of the application for leave under section 29AC; or

(ii) on the date on which the divorce, annulment or legal separation obtained in the place outside Hong Kong took effect in that place.”

17.  Section 29AF imposes a duty on the court to consider whether Hong Kong is the appropriate venue for the application :

“ (1) Before making an order for financial relief, the court must consider whether in all the circumstances of the case it would be appropriate for the order to be made by a court in Hong Kong, and if the court is not satisfied that it would be appropriate, the court must dismiss the application.

(2) The court must in particular have regard to the following matters—

(a) the connection that the parties to the marriage have with Hong Kong;

(b) the connection that those parties have with the place where the marriage was dissolved or annulled or where they were legally separated;

(c) the connection that those parties have with any other place outside Hong Kong;

(d) any financial benefit that the applicant or a child of the family has received, or is likely to receive, in consequence of the divorce, annulment or legal separation, by virtue of any agreement or the operation of the law of a place outside Hong Kong;

(e) if 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—

(i) the financial relief given by the order; and

(ii) the extent to which the order has been complied with or is likely to be complied with;

(f) any right that the applicant has, or has had, to apply for financial relief from the other party to the marriage under the law of any place outside Hong Kong and, if the applicant has not exercised that right, the reason for that;

(g) the availability of any property in Hong Kong in respect of which an order for financial relief in favour of the applicant may be made;

(h) the extent to which any order for financial relief is likely to be enforceable;

(i) the length of time that has elapsed since the date of the divorce, annulment or legal separation.”

18.  At the substantive hearing, the court has the power under section 29AG(1) to make any one or more of the orders that it could make under section 4, 5 or 6 if a decree of divorce had been granted in Hong Kong. It may also under section 29AG(2) make an order for sale of property pursuant to section 6A(1).

19.  In deciding whether to exercise its powers under section 29AG, and if so, in what manner, the court must make its decision in accordance with section 29AH.  Section 29AH(2) to (5) then specify the matters to which the court must have regard.

20.  Section 29AI applies the provisions in MPPO as set out there to an order made under section 29AD or 29AG.

21.  Section 29AJ deals with avoidance of transactions intended to defeat applications for financial relief under section 29AD or 29AG.

22.  Section 29AK concerns the prevention of transactions intended to defeat prospective applications for financial relief.

23.  Section 29AL ensures that the general power of the High Court to grant interlocutory injunction is not affected by sections 29AJ and 29AK.

C.3. Procedure for the leave application

24.  Rule 103A(1) of the Matrimonial Causes Rules (“MCR”) lays down the procedure for the leave application.  It must be made ex parte in the prescribed form.  Further, the application must be :

“(b) supported by an affidavit by the applicant stating the facts relied on in support of the application with particular reference to the matters set out in section 29AF of [MPPO].”

25.  Rule 103A(2) provides :

“(2) The affidavit in support must give particulars of the judicial or other proceedings by means of which the marriage to which the application relates was dissolved or annulled, or by means of which the parties to the marriage were legally separated, and must state, so far as is known to the applicant—

(a) the names of the parties to the marriage and the date and place of the marriage;

(b) the occupation and residence of each of the parties to the marriage;

(c) whether there are any living children of the family and, if so, the number of the children and each child’s full names (including surname) and date of birth or, if it be the case, that he or she is over 18;

(d) whether either party to the marriage has remarried;

(e) the full particulars of each party’s property and income; and

(f) the grounds on which it is alleged that the court has jurisdiction to entertain an application for an order for financial relief under section 29AB of [MPPO].”

C.4. Guidance provided by the English case law

26.  Part IIA is modeled on Part III of the English Matrimonial and Family Proceedings Act 1984 (“the 1984 Act”).  (For ease of reference, I attach to this Reasons for Decision a comparison table setting out each of the provisions in Part IIA of MPPO against its English equivalent.)  The Hong Kong provisions do not copy the English counterparts verbatim but have made certain modifications on drafting. However, for all intents and purposes, the substance is just the same. Valuable judicial guidance can therefore be derived from the English case law to inform our approach to Part IIA generally and on its interpretation and operation specifically.

27.  The English case law had developed since the 1980s principally at the level of first instance courts and the Court of Appeal.  In 2010, an appeal eventually reached the Supreme Court for the first time : Agbaje v Agbaje [2010] 1 AC 628.  After carefully examined the legislative intent of Part III of the 1984 Act and reviewed the relevant case law, the Supreme Court authoritatively laid down the proper approach for both the leave and substantive application. For present purposes, I only need to focus on the former.

C.5. Threshold at the leave stage

28.  To obtain leave under section 29AC(2), the applicant must pass the threshold of satisfying the court that there is substantial ground for the making of the substantive application.  Lord Collins explained the threshold in Agbaje v Agbaje thus :

“33. In the present context the principal object of the filter mechanism [that is, section 13 of Part III of the 1984 Act] is to prevent wholly unmeritorious claims being pursued to oppress or blackmail a former spouse. The threshold 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 this context ‘substantial’ means ‘solid’. …”

I hold that the same threshold applies to section 29AC of Part IIA.

29.  The applicant bears the burden of meeting the threshold : Z v Z (foreign divorce: financial provision) [1992] 2 FCR 152.  In discharging the burden, the applicant must present before the court all the relevant facts in support.  And the court will consider all the circumstances of the case to see if the burden is discharged.  In this connection, I wish to mention three points.

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.  This point needs further explanation.

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 the 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). Little assistance can therefore be obtained from the stay cases (and still less from the anti‑suit 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.”

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 : Jordan v Jordan [2000] 1 WLR 210; approved in Agbaje v Agbaje, per Lord Collins at paras.60-64.  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.  He or she should take heed of what Lord Collins said in Agbaje v Agbaje :

“65 But equally it is not the intention of the legislation in England and Wales to allow a simple ‘top-up’ of the foreign award so as to equate with an English award. …”

His Lordship then went on to explain the point by distinguishing Part III of the 1984 Act from the Scottish provisions and observed :

“70 … Instead a more flexible approach was deliberately adopted. There will be some cases, with a strong English connection, where it would be appropriate to ask what provision would have been made had the divorce been granted in England. There will be other cases where the connection is not strong and a spouse has received adequate provision from the foreign court. Then it will not be appropriate for Part III to be used simply as a tool to ‘top-up’ that provision to that she would have received in an English divorce.”

He later reiterated :

“72 It is not the purpose of Part III to allow a spouse (usually, in current conditions, the wife) with some English connections to make an application in England to take advantage of what may well be the more generous approach in England to financial provision, particularly in so-called big-money cases. There is no condition of exceptionality for the purposes of section 16, but it will not usually be a case for an order under Part III where the wife had a right to apply for financial relief under the foreign law, and an award was made in the foreign country. In such cases mere disparity between that award and what would be awarded on an English divorce will certainly be insufficient to trigger the application of Part III. …”

36.  Any intended applicant should firmly bear these judicial observations in mind and think through his or her case very carefully before commencing proceedings under Part IIA.

C.6. Conditions and case management directions

37.  Under section 29AC(4), leave may be granted subject to any conditions the court thinks fit.  The conditions which can be attached to leave, together with its general case management powers, enable the court to define the issues and to limit the evidence to be filed for the substantive application.  This is to ensure that the Part IIA jurisdiction is tailored to the needs of the individual case so that the grant of leave does not inevitably trigger a full blown claim for all forms of financial relief : Agbaje v Agbaje, per Lord Collins at para 73.

C.7. Setting aside

38.  Although MCR does not expressly make any rules for a subsequent application to set aside the leave granted, the court no doubt has jurisdiction to do so as a fundamental rule of procedure.  The experience in England suggests that too much time and costs had been wasted on the setting aside applications.  Now after Agbaje v Agbaje, once leave is granted, absent a knock-out blow from the respondent, the court will use its case management powers to adjourn the application to be heard with the substantive application : per Lord Collins said at para 33.  In my respectful view, this practice makes perfect sense and fully accords with the spirit of our CJR.  It should apply in Hong Kong equally.

D. THE PRESENT CASE

39.  I now turn to the present case.

D.1. Formal jurisdictional requirements

40.  There can be no doubt that all the three formal jurisdictional requirements in section 29AE are satisfied in the instant case. At the time of the leave application, the Husband and the Wife were domiciled in Hong Kong, were habitually resident in Hong Kong and had a substantial connection with Hong Kong.

D.2. Hong Kong as appropriate venue

41.  The Wife has also satisfied me provisionally that Hong Kong is the appropriate venue for an application for financial relief to be made under section 29AF.  I will go through the factors listed in section 29AF(2) below.

(a) Section 29AF(2)(a) – connection with Hong Kong

42.  As said, the family has substantial connection with Hong Kong.  The Husband and the Wife were born in Hong Kong and have been living here for all their life up till now.  They are in fact known as celebrities in Hong Kong.  Since their marriage, they spent their entire married life here. Their two children were born and raised in Hong Kong and are now studying at a local international school.  All the significant family assets, whether disputed by the Husband or not, and the various businesses run by the Husband are effectively located or based in Hong Kong.

(b) Section 29AF(2)(b) – connection with Thailand

43.  It is true that they were married in Thailand. But according to the Wife, they chose to marry in Thailand because they wished to avoid publicity and they both liked Thailand.  Right after the marriage, they flew back to Hong Kong on the very same day.  The Husband had obtained the divorce in Thailand and the Wife has now decided not to set aside the Thai decree.  But other than the Husband’s assertion that he carries on some business in Thailand, the parties have little if any connection with Thailand.

(c) Section 29AF(2)(c) – connection with other place

44.  The parties, especially the Husband, appear to have some connection with Macau.  But it has little bearing on the Wife’s application for financial relief.

(d) Section 29AF(2)(d) – any financial benefit obtained or obtainable      outside Hong Kong

45.  Significantly, the Thai court has made no order for financial provision for the Wife or the children.  (In fact, the Husband had not asked for any ancillary relief or custody order in the Thai proceedings other than the dissolution of the marriage.)  Neither the Wife nor any of the two children has received any benefit from the Thai proceedings.  Since the Wife will not pursue any financial relief in the Thai proceedings, the chance of her and the children receiving any benefit from those proceeding is practically nil. 

46.  As noted, it is the Husband’s case that the parties had entered into a pre-nuptial agreement, which is hotly disputed by the Wife.  Now is not the occasion to go into the parties’ case in detail.  For present purpose, it is sufficient to note what the Wife’s Thai lawyers had said about the validity of the pre-nuptial agreement under Thai law.  In gist, under section 1466 of the Civil and Commercial Code of Thailand, a pre‑nuptial agreement is void if it is not entered into the marriage register at the time of the marriage. Since there is no such registration for the pre‑nuptial agreement, even if it existed as alleged by the Husband, it would not be enforceable.  Accordingly, the pre-nuptial agreement would not affect the Wife’s entitlement to claim for financial provision under Thai law.

(e) Section 29AF(2)(e) – any order by a foreign authority

47.  As noted, the Thai court has made no order whatsoever for financial provision.

(f) Section 29AF(2)(f) – right to apply for financial relief outside     Hong Kong

48.  The Wife can theoretically apply for financial relief before the Thai court.  But the Wife has been advised by her Thai lawyers that based on the Thai’s conflict of law principles, the court in Thailand would apply Hong Kong law in that regard.  All the major family assets are, disputed or otherwise, located in Hong Kong.  It would appear that the events leading to those disputes happened in Hong Kong and the witnesses including the Husband’s mother are located in Hong Kong.  In the circumstances, it is perfectly understandable and reasonable for the Wife to apply for financial relief in Hong Kong as opposed to Thailand.

(g) Section 29AF(2)(g) – availability of property in Hong Kong

49.  As already alluded to, all the major family assets including the two matrimonial homes available for distribution are located in Hong Kong.

(h) Section 29AF(2)(h) – enforceability

50.  There is no difficulty for an order for financial relief to be enforced in Hong Kong.

(i) Section 29AF(2)(i) – lapse of time since divorce

51.  The lapse of time since the Thai divorce up to the date of the present application is almost 14 months.  At first glance, it seems to be rather long.  But I think the Wife has adequately explained the delay.  In gist, she had to take legal advice from the Thai lawyers on the effect of the Thai decree and weigh up the options available to her for claiming financial relief.  I do not think the delay is a sufficient ground for refusing leave.

D.3. The only practicable option

52.  Another factor, which is quite unique to the present case, which favours the Wife’s application, is this.  But for the Thai decree, the Hong Kong divorce proceedings would have continued and the Wife’s application for ancillary relief would have been disposed of in the usual manner.  Because of the Thai decree, the Hong Kong court ceases to have jurisdiction to grant any ancillary relief.  In fact, I have already ordered the Hong Kong divorce proceedings to be stayed when I gave the Wife leave to commence the Part IIA proceedings.  Consequently, she cannot proceed with her application for ancillary relief in the divorce proceedings any further.  But, as said, applying for financial relief before the Thai court does not appear to be advisable or practicable in the special circumstances of this case.  So the only option left for the Wife is to take out proceedings under Part IIA.  Leave should be granted to enable her to do so.

E. DISPOSITIONS

53.  For the above reasons, I granted the Wife leave.  I also ordered, among other things, that the MPS Order shall continue to have effect notwithstanding the general stay of the divorce proceedings. Finally, I fixed a directions hearing on 14 May 2012 so as to expedite the Part IIA proceedings.

Annex