FWM v. NXC

FCMC 10248/2023

[2024] HKFC 137

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 10248 OF 2023

________________________

________________________

________________________

J U D G M E N T
(Jurisdiction and Forum Non Conveniens)

________________________

Introduction

1.  This is the substantive hearing of the summons filed by the Respondent (“Husband”)  on 12 December 2023 seeking the following orders:

i.  The Amended Petition issued by the Petitioner (“Wife”)  be dismissed for want of jurisdiction; and

ii.  Alternatively, these present proceedings be stayed on the ground of forum non conveniens.

2.  In the Wife’s affirmation, she relies on both the substantial connections of the Husband and herself with Hong Kong to establish jurisdiction.  However, in the Amended Petition, she only pleaded her substantial connections with Hong Kong, but not the Husband’s or both.  At the hearing, Mr Chan for the Husband sensibly agreed not to take academic issue on the pleading.

Background

3.  Both the Husband and the Wife were born and raised in Mainland China.

4.  The parties met in 1999 and cohabited in Shenzhen.  In 2007, they were married in Hong Kong.  The original intention of marrying in Hong Kong was due to the parties’ initial intention to relocate to Hong Kong.

5.  The parties gave birth to their only son in 2004 (the “Son”), now 20 years old.  The Son was born and raised in Shenzhen.  He attended his kindergarten, primary school, and secondary school all in Shenzhen.

6.  In June 2023, the Son commenced his university study at the University of Hong Kong.

7.  Apart from the Son, the Husband also has two sons with his first and second ex-wives respectively.  The Elder Son currently resides in Hong Kong and the Second Son currently resides in Shenzhen.

8.  In 2011, the Husband became qualified for admission to reside in Hong Kong through the Capital Investment Entrant Scheme. The Wife and the Son obtained their permanent residencies in Hong Kong as the Husband’s dependents.

9.  Before separation in 2023, the parties cohabited in different apartments located in Shenzhen.

Husband’s case

10.  It is the Husband’s evidence that during the entirety of their marital life, the parties travel to Hong Kong seldomly, around 4 to 5 times per year at most, where the parties usually entered and left Hong Kong on the same day.

11.  Despite both parties agreeing that, at the time of the parties’ application for permanent residency in Hong Kong, they had once contemplated the possibility of relocating to Hong Kong during initial stage of their marriage, such plan had never been crystalised.  The Husband has explained why the parties never actually relocated to Hong Kong:

a.  The Husband originally applied for permanent residency in Hong Kong to facilitate his visits to the Elder son and Second Son, or to even potentially live with them, who resided in Hong Kong at the time;

b.  The Wife’s and the Son’s application for permanent residency was prompted to receive an additional permanent residency outside of Mainland China;

c.  At the time of when the parties first contemplated to relocate to Hong Kong, the Husband had sufficient financial resources to afford the high cost of living in Hong Kong.  However, the Husband suffered major economic setback in his investment portfolio in 2009, making it financially challenging to relocate to Hong Kong after 2011; and

d.  The Second Son now resides in Shenzhen, defeating one of his original purposes of applying for permanent residency in Hong Kong.

12.  The Son did not receive any education in Hong Kong prior to June 2023, ie about 3 months prior to the date of the petition.

13.  The Husband has been earning his living mainly by his real estate investment in Shenzhen and Xi’an.  He currently owns the following landed properties:

a.  Shenfang dizi Flat no. 600000ZZZ, Parcel number G06207-97 residential land, of Xiashuijing Village (下水徑村), Buji Town (布吉鎮), Shenzhen;

b.  No. YYY Lancuige (攬翠閣), Hongxing Haian (紅星海岸), Xiaomeisha, Yantian District, Shenzhen; and

c.  Shop XXX on 4^th Floor, On Fung Building, Nos. 110-118 Caine Road, Hong Kong (“Hong Kong Property”).

14.  The Husband said that the value of his landed properties in Mainland China is much higher than the Hong Kong Property, with the monthly rental income for Buji Town flat amounts to as much as RMB 70,000 per month.

15.  He has once owned a company in Hong Kong, called World Resource Development (“Hong Kong Company”), but such company has never conducted any business operations and was closed in 2018.

16.  He also maintains bank accounts in both Mainland China and Hong Kong.  His primary usage is focused on his bank accounts in Mainland China, as he resides in Shenzhen.  His bank account in Hong Kong was primarily designated for emergency situations only.

Wife’s case

17.  The grounds that the Wife relies to establish jurisdiction are as follows:

a.  The parties were lawfully married in Hong Kong;

b.  The parties and the Son are all permanent residents of Hong Kong whilst the Wife and the Son subsequently gave up their citizenships of Mainland China;

c.  The Wife has relocated to Hong Kong with intent to implement the plan agreed between the parties despite the family as a whole cannot be relocated here;

d.  The Husband has strong family ties with Hong Kong as the Elder Son who is also a permanent resident of Hong Kong and resides here;

e.  The Husband owns the Hong Kong Property and set up the Hong Kong Company carrying on business of trading and landed property investment before its closure in 2018;

f.  The Son is studying Year 1 in the University of Hong Kong and expected to complete the bachelor degree in 3 years’ time; and

g.  The Wife and the Son currently reside in a rented apartment in Queen’s Road West, Hong Kong.

18.  The Wife also said that has purchased an insurance product for about US$50,000 at Prudential Hong Kong.

19.  The Husband stated his residential address of “Flat XX, 36/F, Belcher’s Tower, Pokfulam, Hong Kong” (“Pokfulam Address”)  as his correspondence address in his premier account with HSBC at its Sheung Shui branch.

20.  He further declared his another residential address in Discovery Bay, Lantau Island (“Discovery Bay Property”)  in a notarized declaration made by him on 2 August 2023.  The Elder Son owns the Discovery Bay Property.

Relevant Legal Principles

21.  It is trite that the burden rests on the Wife in these proceedings in establishing jurisdiction under s.3 of the Matrimonial Causes Ordinance (Cap. 179), which provides that,

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

…

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

22.  In ZC v CN (Divorce: jurisdiction)  [2014] HKFLR 469, the Court of Appeal set out the relevant principles on the issue of substantial connection as follows:

“[9.1] In line with the modern approach of statutory interpretation, one should not simply look at the natural and ordinary meaning of the words ‘substantial connection’ but also the context and purpose of this term.

…

[9.4] Whether a person has a substantial connection with Hong Kong is clearly a question of fact. No definition for this term will be succinct or comprehensive enough. What one may do is to look at the surrounding factors to see whether that person is substantially connected with Hong Kong at the time of the petition. As a starting point, one begins to see if that person has connection here and then decide whether that connection is a substantial one, see S v S [2006] 3 HKLRD 751 paragraph 15. In terms of connection, there must be physical presence in Hong Kong, this must be the ground rock of invoking the divorce jurisdiction. But because of the requirement of ‘substantial’, the presence cannot be of a transitory nature otherwise this will encourage ‘fly in’ and ‘fly out’ divorces, a theme that the Court has consistently emphasised…

[9.5] In the majority of cases, where a married couple is in Hong Kong, the Court will have no difficulties in ascertaining whether they have a substantial connection here. Thus in RI v SSH [2010] 4 HKC 588, this Court held that:

‘4. …… Hence in order to see whether the proceeding has a real and substantial connection to Hong Kong one must, first of all, ascertain whether at the time of its commencement the parties have substantially conducted their matrimonial life in Hong Kong. Hong Kong being an international commercial city, the identification of this issue is most acute for expatriate families who live in Hong Kong. The relevant considerations are, for example, whether the parties’ matrimonial home is here, what is their past pattern of life; do they regard Hong Kong as their home for the time being even if their life style may indicate that they may not take root in one place for too long a time. Related to the issue are matters such as the place of work of the spouses: do they choose to work here; even if one of them has to ‘commute’ overseas to work, is Hong Kong still treated as their home base. Likewise for the children of the family: are they studying here or spending their vacations here even if they are studying abroad.’

…

[9.8] The fact that a party has resident status which allows him or her to live here legally is only a factor to be taken into account.  He or she may not be living here on a long term basis and only comes here occasionally.  No doubt one has to look at other factors such as the party’s past pattern of life, the frequency of his visit to Hong Kong, the length and purpose of the stay, whether the party is engaged in business or work here, whether the rest of the family is here and whether a home has been established here and whether the children are at school here.  It is also important to bear in mind that since the legislation only requires the party to establish a substantial connection in Hong Kong, he or she at the same time may have a substantial connection elsewhere, see S v S.  In my view, if a party is shown to have substantial connection elsewhere by reason of his home or work, this may be used to contrast with the connecting factors he has in Hong Kong to see whether the Hong Kong connection is a substantial one.”

…

(emphasis added)

23.  When it comes to arguments on forum, the burden is first shifted to the Husband to demonstrate that Longhua Court, not the Hong Kong Courts, is the natural and appropriate forum to deal with the parties’ divorce proceedings.  When the Husband successfully discharges his burden, then the burden is shifted back to the Wife to demonstrate deprivation of a legitimate personal or juridical advantage for the matter to be adjudicated in the Longhua Court.

24.  The House of Lords decision in Spiliada Maritime Corporation v Cansulex Ltd (The Spiliada)  [1987] AC 460 regarding the issue of forum has been adopted by the Court of Final Appeal in SPH v SA (Forum and Marital Agreements)  [2014] HKFLR 286 and the Spiliada test in the context of matrimonial proceedings is stated to be (at §51):

“1. The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action i.e. in which the action may be tried more suitably for the interests of all the parties and the ends of justice?

2. In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (‘appropriate’ in this context means the forum has the most real and substantial connection with the action)  and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong. Failure by the applicant to establish these two matters at this stage is fatal.

3. If the applicant is able to establish both of these two matters, then the plaintiff in the Hong Kong proceedings has to show that he will be deprived of a legitimate personal or juridical advantage if the action is tried in a forum other than Hong Kong.

4. If the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer.  Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the court's satisfaction that substantial justice will be done in the available appropriate forum.”

Discussion

Jurisdiction

25.  It is accepted by the parties’ Counsel that the principles laid down by the Court of Appeal in ZC v CN is not applied inflexibly.  The approach is a holistic review of all the circumstances.  In any event, whether a person has a substantial connection with Hong Kong is a question of fact.

26.  Mr Chan for the Husband rightly submitted that focus on matters of substantial connection are assessed “as at the date of the petition”.  In the present case, the date is 6 September 2023.  The Wife stated in para. 3 of the Amended Petition her current residential address in Queen’s Road West, Hong Kong and produced in her affirmation the copy tenancy agreement of this address dated 16 August 2023 and signed by the Son as tenant.  I am satisfied that she was residing in Hong Kong as at the date of the petition.

27.  In any event, Mr Chow for the Wife rightly relied on a recent Court of Appeal case JQ v CLH[1], in which the lack of residence in Hong Kong is not a fatal factor for the court in holding that the Hong Kong Court has jurisdiction.

28.  Regarding the parties’ past pattern of life, I accept that they have mainly resided in Shenzhen for 17 years of their marriage only until recently in 2023. 

29.  However, I note that the Husband had established the Hong Kong Company in September 2005 and only closed it down in April 2018[2]. That is to say, he had used the Hong Kong Company to do business for over 12 years, which is not a short period of time.  He did mention in his affirmation that he followed an invitation from the North Korea government to conduct business and due to sanction imposed by the United Nations on North Korea, the Hong Kong Company never actually commenced operations.  In my view, the Husband can simply produce the audited reports or other relevant financial documents of the Hong Kong Company in his affirmation for the purpose of showing what business this company was doing.  There is no reason why he fails to do so.  His bare assertion of no business in Hong Kong is very suspicious.

30.  The Husband also purchased the Hong Kong Property at the consideration of about HK$6.6 million free from mortgage in 2010.  He said that it was purchased solely for the purpose to facilitate his application for permanent residencies in Hong Kong and that it was left vacant since purchase.  Although the Hong Kong Property is an office but not a residential unit, I fail to see why it cannot be rented out for 14 years, which again is not a short period of time.  His bare assertion is really suspicious.

31.  The Husband said that the Pokfulam Address is rented by and the Discovery Bay Property is owned by the Elder Son.  In my view, if the Husband has to use these 2 Hong Kong addresses but not his own residential address in PRC, it shows that to certain extent, he is required to prove his connection with Hong Kong when he was doing some business or making some applications in Hong Kong. 

32.  It is not in dispute that the Husband has and had travelled to visit the Elder Son and Second Son in Hong Kong.  Mr Chan for the Husband argued that the purpose of his travel was not to establish a permanent home in Hong Kong with them and that such visits to Hong Kong remains to be transitory in nature.  With respect, I disagree with this submission.  The court has to look at the whole picture and has to take into account of other important facts, such as the Husband also owns a premier account with HSBC, the Hong Kong Property and the Hong Kong Company at the material time.  It is reasonable for this court to infer that apart from visiting the Elder Son and Second Son, the Husband has to manage his bank account, property and company in Hong Kong from time to time albeit the duration of stay here may be short.

33.  Mr Chan for the Husband also argued that the Son viewed his time in Hong Kong as a study abroad experience rather than establishing it as his home base.  I disagree.  Both of the Wife and the Son have given up their citizenships of PRC and they are now living together in the same household in Hong Kong.  Even though the parties’ original intention to relocate to Hong Kong when applying for their permanent residencies never came into fruition, I have to accept that at least presently the Wife, if not both of her and the Son, has decided to relocate to Hong Kong.

34.  Given the modern age of globalization, it is not uncommon for the businessman, like the Husband to hold some properties, companies and bank accounts in Hong Kong as well as in Mainland China.  Further, I am sure that he will come to Hong Kong from time to time to visit the Elder Son and the Son in the future.  On one hand, I agree that both parties have substantial connections with Mainland China and especially, the Husband may genuinely treat Mainland China as his home.  Nonetheless, this court is still entitled to hold that they also have substantial connections with Hong Kong even though their connections with Mainland China are more substantial than with Hong Kong.  It is not mutually exclusive for the parties to have substantial connections with Mainland China and Hong Kong at the same time.  As said in ZC v CN, “this may be used to contrast with the connecting factors he has in Hong Kong to see whether the Hong Kong connection is a substantial one.”

35.  Having carefully considered the whole circumstances, I am satisfied that the Wife has successfully demonstrated that either of the parties, if not both, had a substantial connection with Hong Kong at the date of the petition.

Forum non conveniens

36.  The Husband has commenced a divorce proceedings in Longhua Court and argued that Longhua Court is distinctively the more appropriate forum than Hong Kong for the following reasons:

(1)  Both parties ordinarily reside in Shenzhen;

(2)  The parties conducted their marital life exclusively in Shenzhen;

(3)  The Son was born and raised in Shenzhen;

(4)  Most of the matrimonial assets, mainly the Husband’s landed properties, are located in Mainland China; and

(5)  Neither parties have any substantial connection with Hong Kong.

37.  First, I have some doubt as to whether the Wife can be said to be ordinarily resident in Shenzhen. The search record of residential status produced by the Husband in his affirmation[3] is not conclusive evidence as to the Wife’s residency in Shenzhen.  As mention above, she and the Son are currently residing in Hong Kong together.

38.  Besides, although it is true that the Son was born and raised in Shenzhen, he now studies here for at least 3 more years.

39.  At this stage, there is no valuation report for the Hong Kong Property and the Mainland China properties owned by the Husband.  I do not think that the fact that most of the matrimonial assets are located in Mainland China is very significant.  In any event, the aggregate value of the Husband’s assets in Hong Kong is not small. 

40.  As said above, I find that the parties have any substantial connection with Hong Kong.

41.  In any event, even if the Husband’s submissions are correct, which I disagree, the Husband still fails to establish that Hong Kong is not the natural or appropriate forum and that Longhua Court is clearly or distinctly more appropriate than Hong Kong. It is well known that the travelling between Hong Kong and Mainland China is very convenient nowadays.

42.  In my view, since the Son currently studies and resides in Hong Kong, any order for financial provision made in favour of the Son should be better determined by the Hong Kong Court than Longhua Court.  It is always possible for him to attend court for giving evidence relating to his expenses in Hong Kong. 

43.  Furthermore, Mr Chan for the Husband argued that any judgment on the enforcement of financial orders made in Mainland China can now be easily registered in Hong Kong under the new statute Matrimonial and Family Cases (Reciprocal Recognition and Enforcement)  Ordinance, Cap. 639. In my view, the fact that the Husband has the Hong Kong Property and other assets in Hong Kong will make the Wife easier to enforce the relevant order against the Husband in Hong Kong if the relevant order is made by the Hong Kong court.  Hence, I consider that the Wife is likely to be deprive of her legitimate personal or juridical advantage if I order to stay the Hong Kong divorce proceedings.

44.  In the circumstances, I refuse to grant the order to stay on the ground of forum non conveniens.

Conclusion

45.  The Husband’s summons filed on 12 December 2023 be dismissed.

46.  Cost should follow the event.  I make a costs order nisi that the Husband do pay the Wife costs of this application with certificate for counsel, which shall become absolute unless any of the parties apply to vary by summons within 14 days.

47.  Such costs be summarily assessed by the court on paper with the following directions:

i.  The Wife do lodge and serve her statement of costs within 21 days;

ii.  The Husband do lodge and serve his statement of opposition within 7 days thereafter.

48.  I thank counsel for their assistance.