H v. H

FCMC 1802/1999

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1802 OF 1999

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DECISION

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1. This is the hearing of the summons of the Husband Respondent dated 12^th June 2009 seeking leave, inter alia, to make absolute the Decree Nisi of Divorce, which was granted some 10 years ago on 23^rd June 1999. The Petitioner Wife opposed the application. For convenience, I shall refer the Petitioner and Respondent as “Wife” and “Husband” respectively in this decision.

2. In fact by the same summons the Husband also sought a declaration be made by this Court under section 18 of the Matrimonial Proceedings and Properties Ordinance (“MPPO”), Cap 192. That matter was disposed of on 13^th July 2009 in favour of the Husband. A declaration that the Court was satisfied there being no children of the family to whom section 18 of the MPPO applied was made for the obvious reason that the only minor child of the family has already reached majority and is self-supporting now.

Brief Background and the Application

3. The parities, both aged 61, are very successful businessman.

4. They were both brought up in Hong Kong and received their tertiary education in the States. They met at a university party in 1972 and their romance soon started. They married on 22^nd April 1973 in Honolulu, Hawaii on their way back to Hong Kong. There were 3 children born of the wedlock and are respectively aged 35, 32 and 27 now. All are now self-supporting.

5. In or about 1975 the parties started a small business as an original equipment manufacturer, making electronic products for famous US brand names.  They worked very hard in making this business a success. With their educational background and superb business skills, their hard work got paid off eventually. Their business grew rapidly and was extremely profitable. In 1986, their company was listed in the Stock Exchange.

6. Over the years they are able to build up a multinational organization with business in many parts of the world. Needless to say they are also able to accumulate substantial wealth from their business and through their investment. They have developed special interest in antique furniture and out of the profit from their business, they have built up a collection of antiques comprised mainly of Ming and Qing Dynasty furniture of over 100 pieces. This collection of Chinese furniture was estimated by the parties to worth about HK$200 million in 1998: see the 1998 Deed referred to in paragraph 8 below. The value of this collection of furniture grows extremely well. According to the Husband’s 6^th affirmation made on 30^th November 2009, they have been able to fetch a sum of HK$11.7 million by selling 2 pieces of the furniture recently. According to Miss Leong, SC for the Husband, the value of the furniture collection is now estimated to worth about US$42 million, which is roughly HK$328 million.

7. Their relationship, however, also started to deteriorate as their business grew and prospered. It is not in dispute that the Husband had association with different women. According to the Wife, he had fathered at least 3 children by 2 women other than her.

8. The parties signed a deed dated 5^th August 1998 providing for, inter alia, division of family assets referred to therein and sharing of their respective liabilities (“1998 Deed”). It was stated in the said Deed that the shares in the listed company in which they were beneficially interested be transferred to a trust to be set up by the HSBC Trustees Limited or other trustee company as may be agreed by the parties.  According to the 6^th Affirmation of the Husband, they also signed a Deed of Divorce on 20^th November 2001(“2001 Deed”) providing for, inter alia, setting up of a trust disposing of the family assets in a trust with HSBC. As the 2001 Deed has not been exhibited, it remains to be seen to what extent the 2 Deeds are similar and how family assets are disposed of and managed.

9. The Wife issued a Petition on 25^th February 1999 based on unreasonable behaviour of the Husband. In the Petition, she set out a full list of claims for ancillary relief. The Petition was initially contested. However, after watering down of the alleged behaviour the divorce was proceeded with on an undefended basis. A decree nisi of divorce was pronounced on 23^rd June 1999. At that court hearing, the appropriate orders for custody of the youngest child and filing of affirmations relating to financial matters were made, with the question of ancillary relief adjourned sine die with liberty to restore.

10. There has never been any hearing restored for the purpose of ancillary relief since then except the Husband’s present application. The last affirmation on ancillary relief was made by the Husband, and was filed on 23^rd December 1999.

11. It seemed that the parties had continued to engage on the question of financial matters for a while after the decree nisi. According to the Wife, the Husband had made known to her that he would not be going ahead with the trust referred to in the 2001 Deed by mid-2003. Miss Lisa Remedies, counsel for the Wife conceded, and I think correctly and reasonably, that the Wife had done nothing pressing ahead her ancillary relief claims since then. It is not in dispute that the Husband also took no steps in the proceedings until recently. So Miss Remedios submitted that both parties are at fault.

12. According to the Husband, he has recently revived his attempt to settle the financial aspects of his divorce with the Wife but without success or even progress.  According to him, his financial situation has changed over the years and the recent financial crisis has made things harder for him. It is also alleged that the Wife backed out from agreement of injecting her share of the sale proceeds of the Ming furniture in the business. On the other hand the Wife can be supported by the listed company. Further, his health has worsened. He has prostate problems and is considered to be cancer-risked. It is against this background that he says he takes out the present application.

The Wife’s Objections

13. Miss Remedios submitted that the Court has a discretion whether or not to make the decree absolute. She relied on the construction of Section 17 of the Matrimonial Causes Ordinance (“MCA”) and the English authority of Smith v Smith [1990] 1 FLR 438.  It is submitted on behalf of the Wife that she will suffer material prejudice if the decree is made absolute before concluding the ancillary relief proceedings. It is because she would then lose the status of being the “wife” of the Husband. All protection available to a spouse under any statue will then extinguish. On the other hand, as it is the parties’ common intention to speed up the process of ancillary relief, the Husband’s interest will not be adversely affected if the decree is to be made absolute only upon conclusion of the Wife’s claims. On the other hand, the granting of the decree absolute will not of itself speed up the ancillary proceedings. Miss Remedios submitted that on a balance, the Court should exercise its discretion not to make the decree absolute for the time being until after conclusion of the Wife’s ancillary relief claims.

14. It is fair to particularize the “prejudice” suffered by the Wife as advanced by Miss Remedios here.

15. The first prejudice allegedly suffered is under the Inheritance (Provision for Family & Dependants) Ordinance, Cap 481 (“IO”). Section 3 of the IO provides that a wife or an ex-wife can make a claim for “reasonable financial provisions” against the estate of her deceased husband or ex-husband who has not re-married (as the case may be). In the case of “wife”, reasonable financial provision means such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive, whether or not that provision is required for her maintenance (stress added by Miss Remedios): see section 3(2)(a)(i) of IO. For all other categories of prescribed relationship including ex-wife, reasonable financial provision means such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for her maintenance (stress added by Miss Remedios): see section 3(2)(b) of IO. It is therefore obvious, submitted by Miss Remedios, that “ex-wife” is in a less advantageous position than a “wife” under the IO. Since it is the Husband’s case that he is now suffering from ill health, should the Husband die before an order is made for the Wife’s ancillary application, but the decree has already been made absolute, the Wife would then become a second-class applicant as ex-wife under the IO. The financial provisions she is able to obtain then would be much reduced.

16. The second prejudice is said to be under the Wills Ordinance Cap 30 (“WO”). It is submitted that under Section 15(1)(b) of the WO, any devise or bequest to the former spouse shall lapse, except in so far as a contrary intention appears from the will. Accordingly, submitted by counsel, once the decree has been made absolute the Wife will be dis-entitled from any gift to which she may be entitled under the Husband’s will.

17. The third named prejudice is that once the decree has been made absolute and the Husband passed away without leaving a will, the Wife, no longer being the Husband’s spouse, will be a stranger to his estate. Probably Miss Remedios is referring to the Intestates’ Estates Ordinance, Cap 73 (“IEO”) which makes no provisions for ex-wife: see section 4 of IEO.

Discussion

18. The Husband’s present application is made under Section 17(2)(a)(i) & 17(2)(b) of the MCO, which stipulate:

“(2)(a) Where a decree nisi of divorce has been granted and no application for it to be made absolute is made, then, at any time after the expiration of 3 months from the earliest date on which such an application could have been made, an application for a decree absolute may be made by:-

(i)     in the case where the decree nisi was granted on a petition for divorce, the person against whom it was granted; or

(ii)   …

(b) Where an application is made under this subsection, the court may in relation to it exercise any of the power mentioned in subsection (1)(a) to (d).”

19. Subsection (1)(a) to (d) of the same Ordinance provides that subject to certain other sections (which are not relevant to the present case), the court may (a) make the order absolute; (b) rescind the decree; (c) require further inquiry; or (d) otherwise deal with the case as it thinks fit.

20. In Smith v Smith (supra), the respondent husband was appealing against the registrar’s decision made under section 9(2) of the Matrimonial Causes Act 1973 (“1973 Act”) and certain relevant rules refusing to make absolute the decree nisi obtained by the petitioner wife. In fact section 9(2) of the 1973 Act is the English counter-part of our section 17(2) of MCA and two provisions are almost identical. The following paragraph by Brandon LJ in England v England (1980) 10 Fam Law 86 was cited by Hollings J with approval in Smith:

“It was contended for the wife on this appeal that there were no circumstances in which the court had power to delay the making absolute of a decree nisi. I do not accept that contention. It is, in my view, clear beyond doubt the court has the power to do that in the exercise of its inherent jurisdiction where there are special circumstances which make it just that it should be done.”

21. Accordingly, I accept the Court retains a discretion on whether to make any decree nisi absolute, and the guiding principle is whether it is just in the circumstances to do so.

22. Material prejudice likely to be suffered by a maintenance-applying spouse is a good ground for delaying the making absolute of a decree nisi. In Wickler v Wickler [1998] 2 FLR 326 (or W v W, [1998] 2 FCR 304; [1998] 3 All ER 111), the wife obtained a decree nisi against the husband in 1996 and then immediately began her ancillary application. Both parties were Dutch, the wife living in England and the Husband in Holland and Israel. The court formed the view that the Husband was not revealing frankly the extent and value of his assets. He was also considered to have adopted a devious manner in dealing with disclosure. There was also evidence that the husband was concealing his real address, and his sudden drop in income was considered apparent rather than real. Only some of his assets were located in UK and the majority of them were not. In 1997 the husband was anxious to marry another woman. He was granted leave to apply for a decree absolute subject to his certain undertakings relating to the wife’s financial situation. The wife appealed, contending her interest would be materially prejudiced if the decree absolute was granted. The wife said the husband would no longer have any incentive to participate in any way in the ancillary proceedings after he had got the decree absolute. In fact between the appeal and delivery of judgment the husband flew to New York to go through a religious ceremony of marriage which was not legally recognized anywhere. The ancillary matter was set down some 9 months after the hearing.

23. Bracewell J, after going through all relevant facts and reviewing the conduct of the parties in the ancillary application in that particular case, allowed the appeal. The court concluded that there was a real risk that if the husband were granted a decree absolute, leaving him free to contract a lawful marriage, he would end his involvement in the ancillary relief proceedings, preventing the wife from establishing her real entitlement and from receiving her proper share. The prejudice to the husband in delaying his legal marriage for 9 months until disposal of the wife’s ancillary proceedings was considered minor when compared with the prejudice to the wife if the husband refused to participate further in the ancillary proceedings.

24. Accordingly, by Wickler v Wickler (supra), when the Court is exercising discretion whether to make absolute a decree nisi, the Court has to ask the following questions:

i) is there a real risk of prejudice to the opposing spouse (in the present case the Wife) if the applicant spouse (in the present case the Husband) is allowed to apply for a decree absolute;

ii) what is the prejudice done to the applicant spouse (i.e. the Husband) if the decree is not made absolute; and

iii) whether the prejudice to the Wife, if there is, outweighs the prejudice to the Husband.

25. Miss Jacqueline Leong, S.C. for the Husband submitted that unless there are good reasons, decree nisi should be made absolute within reasonable time. I have no hesitation to accept her proposition. It is because even when the Court finds there being no prejudice done to both parties to a divorce and one may be tempted to leave things as they are “just in case”, it will be a faulty exercise of the court’s discretion if it does not make the decree absolute: see Re G (Decree Absolute: prejudice) [2003] 1 FLR 870, [2003] Fam Law 306.  It is because in that event the wife is entitled to apply for decree absolute and if she had done so, the court would undoubtedly have granted it.

26. In Re G (Decree Absolute: prejudice), the court found that the wife has failed to make out a case that she would or might be prejudiced by the granting of the decree absolute. On the other hand the court also failed to detect that the husband would suffer any real prejudice if the decree absolute were held up. The learned Bennet J has this to say in paragraph 30 of Re G (Decree Absolute: prejudice),

“If the wife can establish no grounds why the decree absolute should not be granted then in the normal course of things it ought to be granted. I do not consider that the mere fact that there are ancillary relief proceedings yet to be heard and adjudicated upon is a sufficient reason to hold up the grant of the decree absolute.”

As such, only when the last question in paragraph 24 is answered in the positive that the Court will delay making the decree absolute. When there is no prejudice done to both parties, the decree should be made absolute, unless there is real and cogent reason for a refusal.

27. Concerning the first prejudice said to be suffered by the Wife, Miss Leong S.C. has drawn the Court’s attention to Section 16(1) of the IO, which, I consider, provides almost a complete reply. Section 16(1) of the IO states that:

“(1) Where after the date on which a decree of divorce or nullity of marriage has been made absolute or a decree of judicial separation has been granted, a party to the marriage die and –

(a) an application for a financial provision order under section 4 of the Matrimonial Proceedings and Property Ordinances (Cap 193) or an order under section 6 of that Ordinance has not been made by the other party to that marriage; or

(b) such an application has been made but the proceedings thereon have not been determined at the time of the death of the deceased,

then, if an application for an order under section 4 of the this Ordinance is made by that other party, the court shall, notwithstanding anything in section 3 or 5 of this Ordinance, have power, if it thinks it just to do so, to treat that party for the purposes of that application as if the decree of divorce or nullity of marriage had not been made absolute or the decree of judicial separation had not been granted, as the case may be.” 

28. By virtue of these provisions the Wife’s rights as “wife” under the IO have not been lost as alleged. She has already lodged her ancillary relief claims formally. Even if the decree is made absolute before disposal of her ancillary application, the Wife can still apply under the IO and the Court, if it considers just to do so, to treat the application as if the decree has not been made absolute. For the time being, there appears to be no reasons to exclude the Wife’s application under section 16 if circumstances require her to make the application. Accordingly the Wife is not disadvantaged under the IO as alleged.

29. As for the second alleged prejudice, I have to say that it cannot assist the Wife at all. Firstly there is no evidence from the Wife suggesting that the Husband has made a will intending to benefit her. Secondly, a will is ambulatory in nature and speaks only from the date of death. Before the Husband’s death he can always revoke or change his will. So even if the Husband had made a will in favour of the Wife, given the relationship between the parties, I believe the Husband would have already revoked or changed the same. She would be getting nothing anyway and cannot be said to have been prejudiced. On the other hand, if the Husband really intends to benefit her upon his death, I believe he would have already taken steps to spell out clearly his intention in his will so that the Wife could get the benefit in any event, in which case, the Wife suffers no prejudice. 

30. In light of section 16 of the IO, I do not believe the alleged third prejudice a real prejudice to the Wife at all.

31. I have gone through the affirmations deposed to by the Wife to see if she has suffered other prejudice. There has been no allegation or suggestion that the Husband has not been frank in his assets disclosure, or has adopted an evading attitude in the ancillary proceedings, or will be going abroad for the purpose of frustrating the Wife’s ancillary proceedings if the decree was made absolute. In the affirmation, the reason for opposing the present application appears to be that the decree absolute should await the outcome of the ancillary relief; and she is as keen as the Husband to finalize the ancillary proceedings: see paragraphs 10 and 12 of the said affirmation.

32.  The Wife also complained in her affirmation that the Husband in fact is siphoning away funds of the family to his various mistresses which would defeat her claim for ancillary relief. In my judgment, it cannot assist the Wife at all. In the bank transfer slips exhibited by the Wife in her Affirmation, the alleged mistress is one Madam Eliza Sin. However, this Madam Sin is no stranger to her. By the 1998 Deed exhibited by the Husband in his 2^nd Affirmation filed over 10 years ago on 11^th March 1999, the Husband undertook therein not to legally marry Madam Sin in the event the parties divorced. Apparently Madam Sin has been identified then. Further, in the Petition, the Wife accused the Husband of having association with different women and had at least fathered 3 children with 2 women other than her. If the Wife really concerned about her position having been materially affected, she should have taken active steps to protect her interest since the petition. She has since then been represented by experienced family lawyers. Yet she has done nothing, at least since 2003, in relation to the ancillary application or to preserve the family assets, thus protecting her from the alleged dissipatition of assets. Neither has she advanced any explanation on why she sat on the matter doing nothing for the past few years. A logical inference is that either the alleged siphoning away of assets causes no real harm to her, or the family assets or at least her fair share are well within her control so that she has no urgency to press ahead in the ancillary proceedings.

33. It is also the Wife’s case that the Husband has agreed not to apply for the decree absolute. However, a closer examination of the relevant correspondence revealed that Husband’s solicitors only agreed not to apply for the decree absolute “for the time being” when the parties executed the 2001 Deed. It is the Wife’s evidence that by mid-2003 she knew that the Husband was not going ahead with the trust. Since such of the Husband’s conduct are not and cannot be impediments to the Wife taking steps to pursue her ancillary claims, I do not consider this alleged agreement can assist the Wife at all unless she can give the court a satisfactory explanation on her inactivity 

34. The undue delay on the part of the Wife in pursuing her ancillary claim is unexplained. Her inaction since mid-2003 is totally inconsistent with her allegation that she also wants to finalize her ancillary claim as soon as possible. I agree with Miss Leong S.C. that the Wife’s failure to take any steps in the ancillary proceedings makes a mockery of her assertions of anxiety to finalize such matter as soon as possible.

35. The Husband has alleged in his affirmation that it is the Wife who has been well supported by the listed company financially. She is a director of the company, paid a director’s fee, lives in company quarters and her credit cards are also settled by the company. In his further affirmation, the Husband has exhibited his own estimate that the Wife has received roughly $164 million since 1986. On the other hand, the Husband has used up substantial part of his cash reserve in maintaining shareholding of the family. So it is the Wife, according to the Husband, who has no incentive to pursue her ancillary relief.

36. In purported rebuttal of the Husband’s allegation, the Wife said she ceased to receive director’s fee (at the rate of about $132,660 per month) since October 2008. Her credit cards (amounting to up to $70,000 per month) ceased to be settled by the company at around the same time. She confirmed she was living in company’s accommodation. I understand Miss Remedios protested that the Wife has no chance to file further affirmation to rebut the payment which she was alleged to have received. However, in light of her confirmation of receipt of director’s fee and benefit up to 2008, I think in effect the Husband’s allegation in this respect, though with qualifications, has been confirmed.

37. In my judgment, a respondent in a divorce is entitled to have the divorce disposed of within reasonable time and delay by itself is a prejudice. That is perhaps one of the reasons why section 17 of MCO entitles the spouse affected by the decree nisi an opportunity to apply to have the decree made absolute. Furthermore, as pointed out by Miss Leong, S.C., the Wife made no response to the Husband’s summons dated 1^st December 2009 for exchange of updated Form E until the morning of 26^th January 2010 when the summons was heard. It takes about 2 months for her to respond to such simple and straightforward application. Her words are simply inconsistent with her deed. As such, apart from there being unexplained and undue delay in prosecuting the ancillary application, I consider such delay deliberate.

Conclusion and Orders

38. By reasons of the above, I consider that the Wife suffers no real prejudice at all if the decree is made absolute. On the other hand, it will be unfair to the Husband if the decree is held up. Accordingly, the Husband’s application will be granted. The decree nisi pronounced on 23^rd June 1999 is hereby made absolute.

39. As I have concluded that the Wife’s opposition is without merit, I fail to see why the usual rule of costs to follow the event should not apply. I therefore make an order nisi that the Wife do pay the Husband’s costs of this summons, including all costs reserved, such order be made absolute if no application is made to vary the same in 14 days.