R,V v. A, A also known as A A

CACV 296/2021

[2022] HKCA 89

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 296 OF 2021

(ON APPEAL FROM FCMC NO 7978 OF 2017)

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REASONS FOR JUDGMENT

AND DECISION ON COSTS

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Hon Yuen JA (giving the Reasons for Judgment and Decision on Costs of the Court):

Introduction

1.  This is an appeal from the Judgment of HH Judge Melloy (“the judge”)  given on 1 February 2021 (“the Judgment”)  in respect of:

(1)  a summons filed on 12 September 2018 by the Respondent (“the father”)  for joint custody and shared care and control of the two children of the family on a 2:2:5:5[1] basis;

(2)  a summons filed on 13 September 2018 by the Petitioner (“the mother”)  to vary an amended order dated 31 May 2018 ordering joint custody (“the JC order”)  to one under which she would have sole custody and sole care and control of the children, with defined access to the father;

(3)  a summons filed on 30 October 2019 by the mother for leave to permanently remove the children to Bangalore, India (“the relocation application”).

2.  In the Judgment, the judge ordered that:

(1)  leave be given to the mother to relocate the children to Bangalore with effect from the uplifting of the current travel ban between Hong Kong and India caused by the COVID-19 pandemic (“the relocation order”);

(2)  the JC order remain in place;

(3)  the mother have care and control of the children with defined access to the father;

(4)  the parties share the children’s holidays (as specified in the order);

(5)  there be no order as to costs;

(6)  there be liberty to apply on an urgent basis with respect to the implementation of the order with particular reference to the schooling in India;

and it was further directed that:

(7)  the mother obtain a mirror order from the appropriate court in Bangalore with respect to the terms of the order, such order to be obtained prior to the children’s relocation;

(8)  the parties set up a specified app to be used for communication about matters pertaining to the children;

(9)  each parent be responsible for the children when in their respective care, including responsibility for extra curricular activities, extra tuition and social events as set out in para. 74 of the Judgment; and

(10)  each parent “obtain some psychological support for themselves”.

3.1.  On 1 March 2021, the father filed a summons for leave to appeal the relocation order and a stay of that order pending appeal.  Written submissions dated 28 February 2021 and 16 March 2021 were filed by the parties.

3.2.  On 1 June 2021, the judge handed down a ruling giving leave to appeal and stayed the relocation order pending appeal (“the ruling”).  The judge suspended the directions for the mirror order as she held that “the issue of the mirror order is now largely moot pending the appeal”.

3.3.  On 7 June 2021, the father filed a notice of appeal, and on 19 July 2021, the mother filed a respondent’s notice seeking to affirm the judge’s order.

4.1.  At the conclusion of the hearing of the appeal on 4 January 2022, for the reasons appearing below, this court allowed the appeal and made the following orders:

(1)  the orders made by the judge at paras. 2(1), (3)  and (4)  above be set side;

(2)  in lieu of paras. 2(3)  and (4), there be an interim order for care and control with defined access as set out in para.75 of the Judgment;

(3)  for the avoidance of doubt, the judge’s order for joint custody at para. 2(2)  above do stand;

(4)  the mother’s summons filed on 30 October 2019 for leave to permanently remove the children to Bangalore, India be dismissed;

(5)  those parts of the father’s summons filed on 12 September 2018 and the mother’s summons filed on 13 September 2018 relating to care and control of and access to the children be remitted to the Family Court for decision.

4.2.  We heard the parties’ submissions on costs, and our decision on costs is set out below.  

Background

5.1.  The parents are both in their 40's and are Indian nationals.  They both have MBAs.  In 1999, after their marriage in New Delhi, they went to live in Singapore where the father was relocated by his employer, an investment bank.

5.2.  In 2002, they came to Hong Kong where the father continued his career as an investment banker.  The family are permanent residents of Hong Kong.  They have lived here for 19-20 years now, and have enjoyed a lifestyle including domestic help, overseas holidays, and recreation club membership.  They also have a number of real property-linked investments in various countries.

5.3.  In June 2014, the father opted for redundancy[2]. Since then he has been managing a portfolio in which he and others have investments.  Obviously, he no longer receives a regular income such as he used to receive from being a salaried employee.  Instead, gains would be realized from time to time from capital investments.  The mother was employed by an executive search company until April 2019, from which time she has been staying at home[3]. 

5.4.  At the hearing before the judge, the father said the family assets amounted to about $43 million[4].  The mother however alleged that the father has been liquidating assets of the family without properly accounting for them, with liquidated figures ranging between $11 million and $20 million[5]. These allegations are disputed by the father as having been based on (among other things)  spurious figures[6]. Ms Allison, counsel for the mother, informed this court that no steps have been taken towards a financial dispute resolution (“FDR”)  pending this court’s judgment on appeal as it was thought that the parties’ financial needs depended on the place of their residence.  We will discuss this approach in para.27 of these Reasons for Judgment. 

5.5.  As for the children, both were born in Hong Kong and have always lived here.  IK (“the elder daughter”)  will be 16 years old next month.  IS (“the younger daughter”)  is 9 years old.  They have been attending a well-established international school here.  The elder daughter is said to be a very able student.  She will be taking the IGCSE examinations in a few months time, with a view to entering university in 2 years time in the UK or the US, where the mother considered the children “could have a long-term future”[7].

5.6.  The parents separated in December 2014.  After a period when both lived at the matrimonial home, they have since moved to two separate apartments.  The mother petitioned for divorce in June 2017.  Suffice it to say that unfortunately the proceedings have been acrimonious.

Relocation

6.  The primary issue before the judge in August 2020 was the relocation application.

7.1.  The mother is not from Bangalore and has never lived there, but her younger brother and his family moved there from the US a few years ago, and their mother stays with him sometimes[8]. Essentially, the mother believes that living in Bangalore, “her standard of living can be assured at a much lower cost”[9] and the “matrimonial pot is likely to go further”[10].  The judge found that the mother’s application was mainly finance-driven, holding that “to a very large extent ... her application is founded on financial considerations”[11]. 

7.2.  As for the father, he is also not from Bangalore[12], but has stated that if relocation is ordered, he would move there in order to be with the children.  However, he does not believe relocation would be in the best interests of the children, who have spent their entire lives in Hong Kong and were well settled here.  He was particularly concerned with the effect of such a move at this stage on the elder daughter’s education[13].  The father did not accept the mother’s position that the family cannot afford to remain in Hong Kong.  He has been paying her more than $100,000 a month as interim financial support for herself and the children, on top of which he pays (among other things)  school fees and club fees directly[14].  He agreed that with two households, the parties needed to tighten their belts, but alleged that if necessary he could, in place of his existing work managing a portfolio, return to employment from which he could command a high salary in Hong Kong[15].

7.3.  As for the children, they have previously visited Bangalore on holiday.  Their views on relocation were set out in an updated social investigation report provided on 27 July 2020 (“the updated SIR”).  Between the options of staying in Hong Kong or relocating to Bangalore, “[the elder daughter] stressed that she preferred to live in Hong Kong with both parents.  Meanwhile, [the younger daughter] had clearly expressed that she hoped to live in Hong Kong continuously and just wanted to visit or travel to Bangalore”.  The investigating officer commented:

“Both the children were born and grown up in Hong Kong where their ties were here. They were well settled and it was understandable that both the children were happy to live here and did not prefer to have change at this stage.

Taking into consideration the above circumstances, the Investigating Officer is of the view that [the mother’s] permanent relocation application is support-worthy in principle. However, it is considered not the best timing for relocation at this stage in view of the children’s readiness and acceptance, situation of pandemic in India, and uncertainties the children would face on their schooling. More important, it will be of the best interest for the children if the parents could reach an agreement on the best timing and plan for the relocation to be accepted by the children”. (Emphasis added).

The judge’s Judgment

8.  The following main points are clear from the Judgment:

-  the “one and only authentic legal principle” is that the “best interests of the children are paramount”, with the discipline set out in Payne v Payne [2001] 1 FLR 1053 providing guidance only[16];

-  the judge was “largely unconcerned with who was the primary care taking parent historically”[17];

-  the judge largely accepted “the mother’s stated concerns about finances and future employment”[18] and “that it would be sensible longer term for both parties to be in a jurisdiction where the ‘matrimonial pot’ is likely to go further”[19];  the case was approached “on the premise that longer term both parents will need to return to the work force and that neither will have the luxury of being full time non-working parents”[20]; 

-  as for the children’s views, the judge held[21]:

“... I am sure that all things being equal both girls would prefer to stay in Hong Kong. I also accept that they may not fully understand the reasons for the proposed relocation or the financial concerns of the mother. It seems to me that their views have to be considered in this light also. It is trite but worth repeating at this juncture that children and young people do not ‘get to choose’ and that their views although important are not determinative”.

Discussion

Timing

9.1.  The timing of the relocation application was as follows:

30.10.2019  Mother’s summons for relocation

17-21.8.2020   Hearing

7-22.9.2020  Written submissions

20.12.2020  Last day for relocation according to the mother’s proposals[22]  

1.2.2021    Judgment

1.3.2021   Father’s summons for leave to appeal and stay of order

1.6.2021   Judge’s Ruling granting leave to appeal and stay of order

4.1.2022   Hearing of this appeal 

9.2.  As seen from the above, the mother had proposed relocation “no later than 20 December 2020", with relocation “by the beginning of the Spring term [beginning of January 2021][23] at the very latest”[24]. That was because the first choice of school in Bangalore was The International School of Bangalore (“TISB”).  The evidence was that this school required students to attend its IGCSE course before proceeding to its 2-year IB course[25].

10.  Now that the elder daughter will be taking her IGCSE examinations in 4 months’ time, attending TISB for its IGCSE course and thereafter its IB course, would, on the evidence before this court, no longer be possible.  There was no application for leave to adduce any further evidence in this regard.  

11.1.  That leaves the second choice school, the Indus International School (“Indus”).  It is clear from the mother’s own evidence that TISB “has a definite edge over Indus in its reputation and placements”[26] and that “Indus is on the outskirts of Bangalore and is 8-9 km further away than TISB from both [apartment complexes identified], which is where I plan to live.  This means that the children will have to spend more time on commute if they attend Indus”[27].

11.2.  One of the grounds on which the father had opposed relocation to Bangalore was air pollution and traffic concerns.  He exhibited materials reporting on the notorious traffic situation there. 

11.3.  As noted by the judge, “the mother accepts that there are difficulties with the traffic but says that she has tried to counter this by living closer to TISB.  This issue may need to be revisited in the event that the girls go to Indus”[28].  However, the mother has not sought to adduce fresh evidence on alternative proposals for accommodation if the children were to attend Indus.  

11.4.  In other words, the TISB option having fallen away and there being no proposal from the mother for alternative accommodation in an area that would allow the children to attend Indus without having to suffer traffic delays and attendant air pollution, the time that has elapsed since the hearing does not favour relocation as far as the children’s schooling is concerned.

The applicability of the Payne discipline   

12.  Coming back to the Judgment, the judge was with respect correct in stating that the “one and only authentic legal principle” is that the “best interests of the girls remain the court’s paramount concern”.  She said she would “largely rely on the guidance provided by Payne in coming to a decision on the issue of relocation”[29].  

13.  In Ground (1)  of the notice of appeal, counsel for the father, Mr Todd[30] submitted that the judge misdirected herself as a matter of law when she applied the Payne “test”, because (he submitted)  that “works from a basis that the mother is the undisputed primary carer of the children” and that was not the case here.  Mr Todd referred to the list of cases discussed by Thorpe LJ in Payne[31] where the relocation applicants had custody of the children and were their primary carers, and to Thorpe LJ’s judgment in MK v CK [2011] EWCA Civ 793[32] at para.57 where he said “where each [parent] is providing a more or less equal proportion [of care] and one seeks to relocate externally then I am clear that the approach which I suggested in paragraph 40 in Payne v Payne should not be utilised”.  It had been submitted in MK v CK that where there was a “shared care” situation, the relevant approach should be that set out in Re Y (Leave to Remove from Jurisdiction) [2004] 2 FLR 330. 

14.1.  We rejected Mr Todd’s submission that the Payne discipline[33] can only apply to a situation where the relocation applicant was the primary carer.  It is clear from paras. 40 - 41 of Payne that the purpose of the Payne discipline was to ensure that the regard which the court pays to the reasonable proposals of the primary carer was not elevated into a legal presumption, and to guard against the risk of too perfunctory an investigation resulting from too ready an assumption that those proposals are necessarily compatible with the children’s welfare; so essentially, the discipline was for the purpose of “an overriding review of the child’s welfare as the paramount consideration”[34], which applies whatever the arrangements for the care of the children are.    

14.2.  Thus, it was held by Black LJ (as she then was)  in MK v CK at paras. 144-145:

“Payne therefore identifies a number of factors which will or may be relevant in a relocation case, explains their importance to the welfare of the child, and suggests helpful disciplines to ensure that the proper matters are considered in reaching a decision but it does not dictate the outcome of a case. I do not see Hedley J’s decision in Re Y as representative of a different line of authority from Payne, applicable where the child’s care is shared between the parents as opposed to undertaken by one primary carer; I see it as a decision within the framework of which Payne is part. It exemplifies how the weight attached to the relevant factors alters depending upon the facts of the case.

Accordingly, I would not expect to find cases bogged down with arguments as to whether the time spent with each of the parents or other aspects of the care arrangements are such as to make the case ‘a Payne case’ or “a Y case’, nor would I expect preliminary skirmishes over the label to be applied to the child’s arrangements with a view to a parent having a shared residence order in his or her armoury for deployment in the event of a relocation application”. (Emphasis added).

14.3.  Black LJ’s approach was adopted by this court[35] in BA v BL (Child Relocation) [2019] 4 HKLRD 23 at paras. 4.14 - 4.15, where Cheung JA held that whether the relocation application is made by a primary carer or a non-primary carer, the paramount consideration is the best interests of the child, and that the relevant factors in Payne “provide a structured framework in which the appraisal is to be made holistically”.  This case was expressly referred to by the judge at para. 19 of the Judgment.

14.4.  There was therefore no error in law and no merit in Ground (1).

The setting of the bar

15.  Ground (3)  was advanced on the premise that the judge treated the mother as the primary carer and thus set the bar to be cleared by her at a lower level.

16.1.  At para. 24 of the Judgment, the judge had said:

“In addition, reference may also be made to the case of F v H (Children: relocation) [2008] 2 FLR 1667 where it was held that

(1)  The bar as to practicalities to be jumped by a relocation applicant was set at a wide variety of heights depending on the facts and circumstances of the case. In this commonplace category of cross-border family creation, in which the primary carer was returning to a completely familiar environment, the bar was set considerably lower than in the case of an applicant who in pursuit of some dream or ambition was proposing to take the children to an unknown and untried environment. The bar was set particularly low if the primary carer was returning ... to a completely familiar home after a brief absence”[36]. (Emphasis added).

16.2.  At para. 25, the judge then held:

“In this case, although there is a debate over whether or not the mother is truly ‘returning home’, there is nevertheless no doubt that Bangalore is a very familiar, if not a ‘completely familiar environment’ for the family. I accept therefore that prima facie the bar should be set at a lower level than might otherwise be the case”.

17.  Whilst F v H was an application by a primary carer (as shown in the passage italicized above), there is nothing in the Judgment to show that the judge was influenced by that particular feature when considering the familiarity or otherwise of Bangalore to the family when “setting the bar”.  As noted earlier, the judge had expressly stated that she was “largely unconcerned with who was the primary care taking parent historically”[37].  Ground (3)  therefore also failed.  

Wishes of the children and priority given to financial considerations

18.  In Ground (4), it was submitted that the judge failed to give any or sufficient weight to the wishes and feelings of the children, especially when the elder daughter was 15 years old.  In Ground (5), it was submitted that the judge took the most important factor to be the parties’ personal economies when the judge had recognized that many of the financial issues would have to be determined in the future in the ancillary relief enquiry. 

19.1.  These grounds may be considered together, as the judge was aware that the children wished to stay in Hong Kong, and did not find that unreasonable, but held that their views had to be considered in the light of “the reasons for the proposed relocation or the financial concerns of the mother”[38].  Put another way, the judge permitted the mother’s financial concerns to outweigh or take priority over the children’s reasonable wishes.

19.2.  Normally, the weight to be given to one factor as opposed to another is a matter for the judge, and an appellate tribunal would be slow to interfere.  However, that is on the assumption that there was sufficient evidence adduced before the court to enable the judge to balance the various factors before deciding that one factor should be given more weight than another. 

19.3.  In the present case, with respect to the judge, the evidence needed for a comparison of the parties’ financial positions in Hong Kong and Bangalore was incomplete at the time of the relocation application.  

20.  Before discussing the evidence of the effect of relocation on the family’s financial positions, it should be noted that there was no urgent financial need for relocation.  Even on the father’s own case, there was still $43 million in family assets[39], and he has been paying maintenance pending suit or interim maintenance of more than $100,000 a month and school fees and club fees directly[40].  The mother still had substantial cash in her bank accounts[41].  So it was not a case where the mother had to urgently relocate to avoid going into debt.  

21.  At the time of the relocation application, there was incomplete evidence before the judge, even in terms of “ballpark” figures, to enable her to compare the family’s financial positions in Hong Kong and Bangalore respectively. 

22.1.  First, there was incomplete evidence on the important issue of tax.  The father said in his affirmation dated 22 April 2020 that

“the most crucial difference between the family’s financial position in Hong Kong versus Bangalore is that the family capital asset will shrink due to tax, while any return from investment will fall significantly due to the reduction of investment opportunities and the higher tax rate after the move”[42].

The father referred to 3 main types of taxes which would affect the family assets[43], noting that whilst no tax was chargeable in Hong Kong on returns on capital investments,

“[in India] a 20% investment gains tax applies on the realisation of investment gains. Capital control restrictions in India may possibly halve the family’s investment opportunities and, in any event, be subject to income tax of around 36%”[44].

Various materials on tax in India were exhibited.

22.2.  In respect of this evidence, the judge said[45]:

“The mother, in turn, does not necessarily accept the father’s concerns, but rightly points out in any event, that given that neither party is an expert on Indian tax and if this remains an issue, that the court will clearly need to have the benefit of expert evidence at either a Financial Dispute Resolution hearing, or at trial. For the avoidance of doubt this will need to be a Single joint expert in the first instance”. (Emphasis added).

22.3.  Pausing here, clearly tax was an issue which, once raised by the father, should have been addressed by the mother, particularly as her application was founded on financial considerations.  If the mother needed more time[46] to address it, it would have been within the judge’s discretion to adjourn the hearing for relevant materials or expert evidence to be produced, but with respect to the judge, this was a real and substantial issue which would have to be determined first, before she could proceed to make a relocation order upon prioritizing financial considerations.

23.  Second, the judge said she approached the case “on the premise that longer term both parents will need to return to the work force and that neither will have the luxury of being full time non-working parents”[47]. However, having said that, the judge did not proceed to examine the impact on the family assets of the parents’ “return to the work force” in Bangalore, as compared with Hong Kong. 

24.1.  As far as the father is concerned, he has been managing a portfolio of investments in Hong Kong.  He has referred to capital control restrictions in India which may affect the financial viability of such work.  As noted above, the judge did not determine that issue. 

24.2.  Even if it is assumed that the father were to return to salaried employment, it was not seriously disputed that Hong Kong provided a greater market for his professional skills. Although the mother asserted that a number of global banks also have operations in Bangalore, she accepted in her affirmation that the father’s career in structural financial products (a subset of investment banking)  is one where there are good opportunities in Hong Kong[48]. 

24.3.  As far as the mother herself is concerned, she has not adduced evidence of actual work opportunities for herself in Bangalore. 

25.1.  Then even if it is assumed that there would be salaried employment opportunities in Bangalore for both parents, there is the question of the quantum of such salaries.  The judge accepted that salaries would be lower there than in Hong Kong.  In fact, the internet printout exhibited as “VR10-12"[49] to the mother’s 10^th affirmation showed that on average, salaries in Bangalore are 77% lower than in Hong Kong.  According to the Social Investigation Officer’s report dated 17 November 2017, the father said he had income of around HK$3 - 5 million yearly managing the portfolio in Hong Kong[50].  The mother did not produce for comparison any figures for salaried employment in the father’s line of work in Bangalore. 

25.2.  As for herself, she expected to make HK$20,000 - 40,000 a month there (presumably working full time), whereas she used to receive a salary of about HK$100,000 when she was working full-time (and about HK$57,000 working part-time)  here[51]. 

26.  The judge failed to take into account that until figures for the father’s expected salary and the evidence on tax are available, the court simply could not ascertain the net cash the family could save by living in Bangalore as compared with living in Hong Kong, of course bearing in mind future expenses in USD or GBP that would be incurred for university and living expenses in the US or the UK for the elder daughter (and in time, the younger daughter).  

27.  It is clear from the mother’s evidence that the reason for her relocation application is the father’s financial disclosures, which she criticized as being “slow, deficient and less than full and frank”[52]. If that is so, inadequate or late disclosures can be visited with sanctions by the court, and the parties would be best served by an efficient time table to be strictly complied with in the approach to the FDR, instead of making a relocation application driven by financial concerns based on evidence which the judge acknowledged was incomplete.  We found Ground (5)  was substantiated.

28.  As for Ground (4), the judge accepted the children’s wishes to remain in Hong Kong as stated to the Investigating Officer, but permitted the mother’s financial considerations to outweigh them. 

29.1.  Ms Allison submitted that the Investigating Officer had not expressly asked the elder daughter what her views were if both parents were in Bangalore[53], but it is clear from paras. 22 and 24 of the report that each of the children had told the Officer that “her parents had shared with her on the relocation plan”.  The father’s relocation plan was to relocate to Bangalore if the order was made[54]. 

29.2.  In any event, it is not only parents who feature in children’s wishes and feelings.  In discussing the children’s “psychological preparedness”, the Investigating Officer included “what companions they would have there”.  The elder daughter is nearly 16 years old and entering a phase of life when support from her peer group at school, in addition to (or even sometimes in place of)  parents, may be crucial to how well she faces the academic and emotional stress of university entrance examinations.  

30.  If the financial factor is taken out of the balance or its weight is reduced due to incomplete evidence, it would appear from the Judgment that the children’s wishes might well have been respected[55]. In light of our decision on Ground (5), we found that Ground (4)  has also been made out.

Shared care and control?

31.  As for Ground (2), it was submitted that the judge gave insufficient or no adequate reasons for departing from the recommendations of the experts that there should be not only joint custody but also shared care and control.

32.  As noted earlier, the primary issue before the judge was the relocation application.  In para.79, the judge ordered that “following the relocation, the [mother] shall have sole care and control of the children with defined access to the father as set out in paragraph 75”.  No order was made for a non-relocation scenario. Accordingly, as the parties agree that the arrangements set out in para.75 should continue in the interim, we made an order for an interim order for care and control with defined access as set out in para.75 of the Judgment and ordered that those parts of the father’s summons filed on 12 September 2018 and the mother’s summons filed on 13 September 2018 relating to care and control of and access to the children be remitted to the Family Court for decision.

Decision on Costs

33.1.  Finally, Mr Todd asked for an order that the father is to have the costs of the appeal, with no enforcement until after the determination of ancillary relief.  As for the costs of the relocation application before the judge, she made no order as to costs as the proceedings concerned children.  The father was content for that to remain.

33.2.  Ms Allison asked for no order as to costs even of the appeal, on the ground that the proceedings concerned children.  However, we note that in her own written submissions, she sought the costs of the appeal in the event that the appeal was dismissed. 

34.  In our view, in light of the fact that the mother’s application, based on financial considerations, was premature when the parties’ financial positions had not yet been ascertained, and as she had pressed ahead with it despite the tax and salary issues raised by the father, we order the mother (Petitioner/Respondent)  to pay the father’s (Respondent/Appellant’s)  costs of the appeal, this order not to executed until after the determination of ancillary relief.