CWG v. MH AND OTHERS

CACV 80/2013
CACV 83/2013
HCMP 264/2014
(Heard together)

IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO. 80 OF 2013
CIVIL APPEAL NO. 83 OF 2013
(ON APPEAL FROM HCMP NO. 643 OF 2012)

AND

IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
MISCELLANEOUS PROCEEDINGS NO 264 OF 2014
(ON AN INTENDED APPEAL FROM HCMP NO. 643 OF 2012)

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J U D G M E N T

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Hon Yuen JA:

1. There are four matters before this court viz. two applications for Hadkinson orders, an application for security for costs, and an application for leave to appeal a ruling of the Court of First Instance granting a stay of execution on conditions.  As the background is fairly complex, it is necessary to set out some relevant facts first. 

Background

2. In HCMP643/2012, the Applicant is the former wife of the 1^st Respondent.  The 2^nd Respondent is the 1^st Respondent’s mother and the other respondents are individuals or companies with connections to the 1^st Respondent.  For convenience, I shall refer to the Applicant in HCMP643/2012 as “the Wife”, the 1st Respondent as “the Husband” and the 2^nd Respondent as “the Mother”.

3. The Husband and Wife were married in Thailand in 1989.  A daughter was born in 1993 and a son in 1997.  The children are in full time education and have been living with the Wife in Hong Kong. 

Divorce proceedings in Hong Kong and Thailand

4. The Wife first commenced divorce proceedings in Hong Kong in FCMC14600/2009 on the ground of unreasonable behaviour (“the 1^st proceedings”). 

5. The Husband then secured a divorce order in default from the court of Thailand on 4 October 2010.  The marriage was dissolved by the grant of a Certificate of Finality issued on 23 November 2010 (“the Thai divorce decree”). However in December 2010 the Wife petitioned the Thai court for a re-trial.

6. Shortly afterwards the Wife issued another petition in Hong Kong in FCMC17014/2010 for divorce on the ground of 1 year’s separation (“the 2^nd proceedings”).  The 1^st and 2^nd proceedings were transferred to the High Court as HCMC3/2011. 

7. Subsequently however the Wife decided to accept the Thai divorce decree.  Her acceptance was formalised by the withdrawal of her re-trial petition in Thailand on 2 May 2011.  

MPS

8. Going back in time a little, the Wife had applied for Maintenance Pending Suit in the 1^st proceedings.  On 13 August 2010 a Maintenance Pending Suit order was made in the 1^st proceedings by Deputy District Judge CK Chan (“the MPS Order”).  In addition to undertakings given by the Husband to pay the children’s education expenses (i.e. school/university fees, tuition fees etc), he was ordered to pay $323,000 a month as maintenance, with effect from 1 September 2010.

9.1. An order for maintenance pending suit ends with the date of the determination of the suit (in this case, the petition for divorce - whether under the 1^st proceedings or the 2^nd proceedings).  This will feature later in this judgment. 

9.2. The Husband paid $323,000 (on top of the education expenses) until November 2011, when he started paying only $40,000 a month as maintenance (on top of the education expenses). 

Wife’s application for financial relief under Part IIA MPPO

10.1. In December 2011 the Wife sought leave to apply for financial relief under Part IIA (“the Part IIA Application’) of the Matrimonial Proceedings and Property Ordinance Cap. 192 (“MPPO”). 

10.2. Part IIA enables a party to a marriage dissolved outside Hong Kong to apply to the Hong Kong court for financial relief, but a party making such an application must first obtain leave of the court under s.29AB MPPO by way of an ex parte Originating Summons in Form 27.  This is the procedure prescribed in rule 103A of the Matrimonial Causes Rules Cap. 179 (“MCR”). 

10.3. Under the scheme set out in Part IIA, it is only after leave is granted that a party can apply for financial relief (including periodical payments) by way of an inter partes Originating Summons in Form 28.  This is the procedure prescribed in rules 103B and 103C of the MCR.  Section 29AD, which provides for periodical payments, states:

“(1) If leave is granted under section 29AC for the making of an order for financial relief and it appears to the court that the applicant or any child of the family is in immediate need of financial assistance, the court may make an order requiring the other party to the marriage to make to the applicant or the child any periodical payments the court thinks reasonable.

(2) The periodical payments may be for a term that the court thinks reasonable, but the term must not begin earlier than the date of the grant of leave and must end on the date of the determination of the application for an order for financial relief.

(3) An order under this section may be made subject to any conditions the court thinks fit”.

It would be noted that under s.29AD(2), the court may order periodical payments to start from the date that leave was granted.

10.4. On 21 December 2011, the Wife filed an ex parte Originating Summons for leave in Form 27.

14 March 2012

10.5. This was heard by Jeremy Poon J on 14 March 2012.  Counsel then acting for the Wife asked for leave to apply for financial relief under Part IIA.  Counsel also asked for directions, consequential upon leave being granted, that all orders in HCMC3/2011 be “transferred” to the Part IIA Application.  She sought to draw an analogy with transfers of proceedings when a petition for divorce on one ground (eg unreasonable behaviour) is superceded by a later petition on another ground (eg separation by consent). 

10.6. The judge gave leave to the Wife to apply for financial relief under Part IIA. 

10.7. As for the Wife’s application for a direction for “transfer” of orders, the judge referred to the statutory requirement for the filing of an Originating Summons (Form 28) under rule 103B.  Counsel for the Wife then undertook to file a Form 28 within the next 48 hours.

10.8. It was under those circumstances that the judge, after granting a stay of HCMC3/2011, ordered:

“3. Notwithstanding the general stay of the proceedings in HCMC3/2011:

(a) the following order shall continue to have effect until further order:

(i)   The order for maintenance pending suit dated 13th August 2010 (‘MPS Order’) ...”

This has been referred to subsequently as “the Interim Order”. 

10.9. Pausing here, a question has been raised as to whether the judge had jurisdiction on 14 March 2012 to make the Interim Order.

(1)   HCMC3/2011 had been terminated by the Wife’s recognition of the validity of the Thai divorce (which was the ground for her Part IIA Application).  HCMC3/2011 was the suit which underpinned the MPS Order, which is only ancillary relief.  Consequently, as Poon J recognized in his Reasons for Decision handed down on 10 May 2012, “because of the Thai decree, the Hong Kong court ceases to have jurisdiction to grant any ancillary relief” (para. 52). 

(2)   Whilst the Wife had obtained leave to apply for financial relief under Part IIA (which proceedings were to become HCMP643/2012), no application had yet been made by the Wife for periodical payments under s.29AD, and any application she made would have to be inter partes. 

10.10. However, in respect of (2) above, on 19 March 2012 the Wife duly filed an inter partes Originating Summons in Form 28 seeking financial relief, including periodical payments under s.29AD, pursuant to the undertakings given to the court at the ex parte hearing.  The Order made by Poon J on 14 March 2012 was also served on the Husband on that day.

20 March 2012

10.11. The next day (20 March 2012), both the Husband and the Wife appeared through counsel before Poon J on the hearing of a summons issued by the Husband on 1 November 2011 for:

(1)   recognition of the Thai divorce decree;

(2)   dismissal of the petition in the 2^nd proceedings;

(3)   (a)   “the Order of His Honour Judge CK Chan, Judge of the District Court, dated 13^th August 2010 [the MPS Order] be set aside; and

(b)   appropriate directions and order consequential upon the setting aside of the aforesaid order if deemed fit” (Emphasis added).   

It would be noted that para. 3(b) was necessary, once HCMC3/2011 ceased (whether by stay or dismissal) and the MPS Order lapsed, to enable some arrangement to be made for periodical payments for maintenance whilst the parties’ financial affairs were sorted out upon the dissolution of their marriage.

10.12. What transpired at the proceeding on 20 March 2012 is important to the question of Poon J’s jurisdiction to make (or more accurately, to give effect to) the Interim Order.  The following appears from the transcript. 

10.13. First, counsel for the Wife informed the judge that the Form 28 had been filed.  The court was therefore seized of an application for periodical payments under s.29AD.  Importantly the judge then made it clear that “today’s proceedings will be taken as if they were taken out in the Part II[A] proceedings”. 

10.14. Counsel for the Wife then informed the court that leading counsel for the Husband had agreed not to pursue para. 3 of his summons (see para. 10.11 above), as follows:

“Paragraph 3[(a)], it asks for the order of Deputy Judge Chan [the MPS Order] be set aside, but at the moment there is the order of my Lord directing that there will be continuation of the existing MPS proceedings as [if] it is being taken out under Part IIA. So my learned friend is not pursuing 3[(a)]”.

10.15. Leading counsel for the Husband informed the court that the Husband was considering whether to apply to set aside the grant of leave to make an application for financial relief under Part IIA, and for that reason, he agreed to the stay of the HCMC3/2011 proceedings.  He said:

“ ... should we not seek leave to set aside [the grant of leave], then these proceedings [HCMC3/2011] would no longer be stayed, they would essentially die; the court’s jurisdiction would go with it”.

10.16. However it is important to note that, in relation to para. 3 of his summons, he went on to say:

“... as far as [paras.] 3 and 4 are concerned, we are applying to set aside [the MPS Order], obviously, and your Lordship has dealt with that. You’ve returned it into the next set of proceedings [the Part IIA proceedings].

So I don’t myself think that any order needs to be made on [para.] 3 at all, because your Lordship has already dealt with it ...”. (Emphasis added).

Since s.29AD(2) gives the court power to order periodical payments from the date when leave was granted to make an application for financial relief under Part IIA (i.e. 14 March 2012), the Husband’s position was a sensible one.    

10.17. In the event, the Husband did not at any stage thereafter make an application to set aside the leave granted to make an application for financial relief under Part IIA.      

10.18. Thus, even if the judge did not have jurisdiction on 14 March 2012 to make the Interim Order, the question of periodical payments was dealt with on 20 March 2012.  On that day the Form 28 had been issued, the judge made it clear that he was dealing with the proceedings as if they had been taken out under the Part IIA Application, and (subject to the Husband’s reservation of his right to apply to set aside the grant of leave) the parties dealt with the issue of periodical payments by treating the judge’s order of 14 March 2012 as having been made under the new proceedings i.e. the Part IIA Application (see para. 10.16 above). 

10.19. If the Husband wished to, he could have argued at the inter partes hearing on 20 March 2012 (or he could have reserved his right to argue) that the sum ordered under the MPS Order should not be continued, eg if he considered that the words “immediate needs” in s.29AD should lead to a reduction in the sum. He did not do so, and accepted that the judge had dealt with the question of periodical payments under the new (Part IIA) proceedings.  Accordingly in my view, even if the judge did not have jurisdiction on 14 March 2012 to make the Interim Order, he certainly did have jurisdiction on 20 March 2012 to make it with effect from 14 March 2012, and accordingly para. 3 of the Husband’s summons was rendered otiose.

10.20. As a result of what occurred on 20 March 2012, the date originally fixed for the hearing of the inter partes Originating Summons (the Form 28) on 2 May 2012 passed without a hearing. 

11. The Wife’s Part IIA Application eventually came before Deputy High Court Judge B Chu in October 2012.  The hearing took 47 days and judgment was given on 26 March 2013 (“the Main Judgment”).

Application for variation of the MPS Order

12.1. Previously on 8 March 2012, the Husband had applied by summons in HCMC3/2011 for a downward variation of the MPS Order (“the Variation Application”).  It would be noted that this summons was filed before the Interim Order was made by Poon J. 

12.2. It is clear – both from the language of the summons and from the time of its filing – that the Husband was applying for variation of the MPS Order only.

12.3. The Husband did not apply for variation of the Interim Order at any stage.

Application for leave to appeal out of time against MPS Order

13. Then on 14 May 2012, the Husband applied to appeal the MPS Order which had been made nearly 21 months previously.  On 30 October 2012 his application was by consent adjourned sine die with liberty to restore. 

Arrears of MPS

14.1. On the basis that the Husband had paid only $40,000 (on top of the education expenses) instead of $323,000 a month from November 2011 to March 2012 (when Poon J made the Interim Order), the Wife asserted that the Husband was in arrears of $283,000 ($323,000 - $40,000) a month for the 5 months from November 2011 to March 2012 (both months inclusive).  This sum came up to $1,415,000. As discussed earlier, even if Poon J had no jurisdiction to make the Interim Order on 14 March 2012, he did have jurisdiction on 20 March 2012 to make it with effect from 14 March 2012, so there was no period of time which was not covered by any order for payment of maintenance/periodical payment.    

14.2. This sum of $1,415,000 was later paid by the Husband in the following circumstances.  After the Main Judgment was given, the Husband applied for a stay of execution.  The Wife then applied for a Hadkinson order that unless the Husband complied with various orders, he should not be heard on his stay application.  On 10 July 2013 Deputy Judge Chu made it one of the conditions for hearing the Husband on his stay application that he should first pay the 5 months arrears of MPS of $1,415,000.  The Husband duly made this payment. Accordingly, there are no arrears due now under the MPS Order. 

14.3. There was no appeal from this Hadkinson order.

The Interim Order

15.1. As discussed earlier (paras.10.11 - 10.18), whatever may have been the position with jurisdiction on 14 March 2012, on 20 March 2012 the judge did have jurisdiction to make an order for periodical payments and it was accepted by the parties that he had dealt with periodical payments under the new (Part IIA) proceedings, subject only to the Husband’s reservation of his right to apply to set aside the leave granted to the Wife to make an application under Part IIA.

15.2. In the event, the Husband did not apply to set aside the leave, or the Interim Order, and he did not appeal either order.

Arrears of Interim Order payments

16. Meanwhile the Husband continued to pay only $40,000 a month (on top of the education expenses).  On the basis that the Husband had paid $40,000 instead of $323,000 a month from April 2012 (after the Interim Order was made) to March 2013 (when the Main Judgment was given), the Wife asserted that the Husband was in arrears of $283,000 a month for the 12 months from April 2012 to March 2013 (both months inclusive).  This sum came up to $3,396,000.

Hearing before Deputy Judge Chu

17. Coming back to the 47-day hearing of the Wife’s Part IIA Application, Deputy Judge B. Chu also heard

(1) the Wife’s application filed in April 2012 to set aside dispositions made by the Husband of shares in some Hong Kong companies to some BVI companies (“the Setting Aside Application”), and

(2) the Husband’s Variation Application. 

18.1. There was a list of 20 issues, a major one being whether the Husband had beneficial interests in a number of companies which he said belonged beneficially to the Mother. 

18.2. In this respect he was supported by the Mother who had been joined as a party. 

18.3. I pause here to note that in connection with this issue, on 10 August 2012 Poon J had ordered the Mother to make disclosure of information and documents (“the Discovery Order”). 

18.4. There was no appeal from the Discovery Order. 

18.5. An affirmation was filed by the Mother on 9 October 2012.  I will return to this order later. 

The Main Judgment

19. On 26 March 2013 Deputy Judge Chu handed down a  215-page judgment, making orders which are summarized below:

(1) the Husband undertook to pay university/school fees for the children and related fees of $15,000 a month;

(2) from 1 April 2013, the Husband shall pay the Wife periodical payments of $50,000 for each child (superceding the MPS Order and Interim Order);

(3) the Husband’s dispositions of certain shares to AC Oversea (BVI) were set aside;

(4) the Husband’s Variation Summons was dismissed;

(5) the Husband shall pay off all MPS Order and Interim Order arrears within 3 months (ie by 26 June 2013) failing which the Wife could restore a judgment summons which she had issued;

(6) the Husband shall pay the Wife a lump sum of $120m within 3 months (ie by 26 June 2013);

(7) upon the Husband’s payment of the lump sum, the Wife shall deliver up vacant possession of a flat in The Grand Panorama (where she and the children had been staying);

(8) upon the Husband’s payment of the lump sum, the Wife shall transfer certain shares registered in her name to him;

(9) upon the Husband’s payment of the lump sum, the Wife’s claim for financial relief would be dismissed;

(10) liberty to apply.

The Main Appeals

20. On 23 April 2013, the Husband and the Mother lodged appeals from the Main Judgment.  They are respectively CACV80/2013 and CACV83/2013 (“the Main Appeals”). 

Husband’s application to judge for stay

21.1. As mentioned above, the deadline for the Husband’s compliance with the orders made by Deputy Judge Chu was 26 June 2013.  On 18 June 2013 he applied for a stay of execution pending appeal.

21.2. On 6 December 2013, the judge gave a stay conditional upon the Husband paying

(1) $25m (slightly more than 20%) of the lump sum of $120m, and

(2) arrears of Interim Order payments of $3,396,000 (referred to in para.16 above) 

both within 14 days (ie by 20 December 2013).

This has been referred to as “the Stay Ruling”.

21.3. The Husband failed to comply with the conditions by 20 December 2013, so there is no extant stay. 

Husband’s application for leave to appeal against Stay Ruling

22. On 30 January 2014 the Husband applied for leave to appeal against the Stay Ruling.  This application is HCMP264/2014, one of the four matters before this court.

Wife’s Applications for Hadkinson orders

23. On 6 February 2014 the Wife applied for Hadkinson orders (Hadkinson v Hadkinson [1952] P 285). 

24.1. In respect of the Husband’s appeal (CACV80/2013), the Wife asked for an order that he not be heard until he has complied with the order to pay the arrears of Interim Order payments of $3,396,000 (i.e. the same sum as the condition of stay, which he has not paid).

24.2. On 28 February 2014 (the Friday before the hearing on Tuesday), the Wife applied to amend the summons to include an order that the Husband not be heard until he has also paid outstanding costs of $414,563.98. 

24.3.These costs had apparently been taxed “at the end of last year” according to the Wife’s leading counsel.  However no satisfactory explanation was given to why the summons was not amended to include this sum until the weekend before the hearing.

24.4. By reason of this delay for which no satisfactory explanation was given, in the exercise of our discretion we refused leave to amend the summons to include the sum of $414,563.98 as a condition for a Hadkinson order.

25. In respect of the Mother’s appeal (CACV83/2013), the Wife asked for an order that she not be heard until she has complied with the Discovery Order (see para. 18.3 above). 

Wife’s application for security for costs of the Husband’s Appeal

26. On 11 February 2014 the Wife also applied for security for costs against the Husband in the sum of $5,357,000.

Matters before this court

27. On 4 March 2014 we heard the Wife’s applications for Hadkinson orders and security for costs and the Husband’s application for leave to appeal the Stay Ruling.  In the event we reserved our judgment after hearing all the applications, except for the Hadkinson application against the Mother which was adjourned for the reasons appearing below (see paras. 34-35).

Hadkinson orders

28. The principles governing Hadkinson orders are well-known.  In Hadkinson v Hadkinson, a judge made an order giving custody of a child to the mother on condition that the child should not be removed from the jurisdiction without the court’s sanction (“the 1^st order”).  However the mother took the child to Australia without obtaining the court’s sanction.  The father then obtained an order for the return of the child (“the 2^nd order”). The mother sought to appeal the 2^nd order.  The court held that she would not be heard on her appeal against the 2^nd order until she had purged her contempt of the 1^st order. 

29. The principle behind Hadkinson orders, stated very briefly, is that a person in contempt of court would not be heard by the court whose order he had disobeyed.  However there are exceptions to the rule.  Lord Romer LJ said that one exception is that a person can apply to purge his contempt.  Another exception is that “he can appeal with a view to setting aside the order upon which his alleged contempt is founded” (p.289). 

30. In any event, the court retains a discretion to decide whether to hear the person in contempt.  In exercising that discretion, the court would take into account matters such as the gravity of the effect of his contempt and whether there were other means available for securing compliance with the order.  It has been said that if the contemnor’s “disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed” (Hadkinson p.298).  The court would consider the proportionality principle in deciding whether or not to bar the contemnor, and what conditions to impose.

Wife’s Hadkinson application against the Mother

31.1.The Wife’s application for a Hadkinson order against the Mother was based on the latter’s failure to comply fully with the Discovery Order made on 10 August 2012 by Poon J. 

31.2. The Mother had been ordered to file an affirmation within 21 days (ie by 31 August 2012) providing answers to questions set out in a schedule and stating whether she has or had at any time in her possession any documents set out therein. 

31.3. There was no appeal from the Discovery Order.  An affirmation was made on 9 October 2012 which the Wife said did not fully comply with the order. 

31.4. The Mother did not give evidence at the hearing of the Part IIA Application before Deputy Judge Chu.

32.1. Later when the Husband applied for stay of execution of the Main Judgment, the Mother applied to be heard “to support” the Husband’s application. 

32.2. On 2 August 2013 Deputy Judge Chu made a Hadkinson order to the effect that the Mother would not be heard on her application until she fully complied with the Discovery Order.

33.1. The Mother applied for leave to appeal that decision.  On 9 January 2014 this court (Kwan and Macrae JJA) refused leave on paper, holding (paras. 16-17):

“16. ... Her failure to comply with the Discovery Order had caused the court to be handicapped in the discharge of its inquisitorial function in the application for financial relief. ...

17. The judge is plainly right to find on the facts that the 2nd respondent is clearly in contempt of court in failing to comply with the Discovery Order. We do not think there is any basis to impugn the exercise of her discretion that a Hadkinson order should be made in the circumstances of this case”.

33.2. The Mother’s failure to comply fully with the Discovery Order has therefore been confirmed by another division of this court. 

34. Faced with another Hadkinson application, this time in relation to her main appeal, on 28 February 2014 (the Friday before the hearing on Tuesday) the Mother caused to be filed in court:

(1) an affirmation of Lo Lai Ching (also known as Anita Lo), the Mother’s personal assistant;

(2) an affirmation of the Mother’s Hong Kong solicitor enclosing the affidavit of Mr Charles Morgan Seeger III, the Mother’s American attorney; and

(3) an affirmation of the Mother herself confirming the veracity of these two persons’ affirmations. 

Various documents were exhibited in compliance or purported compliance with the Discovery Order. 

35.1. Obviously, if the documents now provided comply with the Discovery Order, then the Mother would have purged her contempt and the basis for the Hadkinson application would fall away. 

35.2. Leading counsel for the Wife claims that the Discovery Order has still not been fully complied with.  However we considered that it is inappropriate for an appellate court to determine this issue which should be decided at first instance. 

35.3. Accordingly we directed that:

(1) the Wife and the Mother should exchange lists of issues on the newly disclosed information and documents by 7 March 2014 (presumably the Wife would start by asserting what documents or information are still missing);

(2) the Wife and the Mother should seek to agree on a list of issues by 10 March 2014;

(3) the matter be remitted to Deputy Judge Chu for a hearing of half a day on the issue whether there has been full compliance with the Discovery Order, an early date to be fixed;

(4) the Wife’s summons filed on 6 February 2014 (the Hadkinson application against the Mother) be adjourned pending Deputy Judge Chu’s determination on whether there has been compliance with the Discovery Order.

Wife’s Hadkinson application against the Husband

36. As far as the application against the Husband is concerned, the Wife’s application is that he should first comply with the Interim Order and pay arrears of $3,396,000 (see para. 16 above).

37.1. Leading counsel for the Husband argued first that as there has already been an order that the Husband pay arrears of MPS of $1,415,000 (which has been complied with), the Husband’s “failure to comply with the MPS Order has already been the subject of the Court’s consideration and penalties exacted therefor”. 

37.2. With respect, I do not agree.  In my view, that ignores the distinction between the MPS Order and the Interim Order.  Deputy Judge Chu was well aware of this distinction as she had held in the Main Judgment that “Poon J’s order had the effect of a fresh interim order made pursuant to s.29 AD of MPPO (‘Interim Order’)” (para. 634).  So she must have been aware of the distinction between the two orders when she made the Hadkinson order requiring payment of $1,415,000 for the arrears of MPS.

38.1. Leading counsel for the Husband then argued that the Interim Order was invalid because on the papers before Poon J on 14 March 2012, no application had been made for periodical payments, and in any event the application would have to be made by an inter partes Originating Summons. 

38.2. I have dealt extensively with this issue in paras. 10.11 - 10.19 above.  To recap, whatever may have been the situation with jurisdiction on 14 March 2012, the judge did have jurisdiction on 20 March 2012 to give effect to the Interim Order for periodical payment, because the inter partes Originating Summons (Form 28) had been filed, and it was accepted by the parties at the hearing on the 20^th in the Part IIA proceedings that it was not necessary to deal with periodical payments in those proceedings, subject only to the Husband’s reservation of his right to make an application to set aside the leave granted, which in the event he did not do.  Therefore I do not think it is correct to say that the Interim Order was invalid for want of jurisdiction.  The judge had jurisdiction on 20 March 2012 to make the order with effect from 14 March 2012 and the Husband sensibly accepted that to be the case.  The “invalidity” argument now advanced appears, with respect, to be an  after-thought of a purely technical nature.

39.1. Finally leading counsel for the Husband argued that the exception to the Hadkinson rule applied, because Deputy Judge Chu’s dismissal of his summons to vary the MPS Order was one of the matters subject to appeal. 

39.2. However as noted previously (paras. 12.1-12.3), it is clear – both from the language of the summons and from the time of its filing – that the Husband was applying for variation of the MPS Order only.  The Husband did not apply for variation of the Interim Order under s.29AD.  Therefore the “appeal exception” to the Hadkinson rule does not apply.

40. Having taken all the circumstances into account, including the fact that the Husband was in fact able to pay the sum of $323,000 a month from August 2010 to November 2011, the fact that the “invalidity” argument appears to be a purely technical after-thought, the fact that the arrears ($3,396,000) is a relatively small sum considering the wealth enjoyed by this family and the resources at the Husband’s disposal, and the proportionality of a Hadkinson order, I would make the following order on the Wife’s application made by summons on 6 February 2014:

(1) the 1^st Respondent (the Husband) should not be heard on the appeal in CACV80/2013 until he pays the sum of $3,396,000 being the arrears of periodical payments ordered by Poon J in the Part IIA Application, the said sum being the arrears from April 2012 to March 2013;

(2) until payment of the sum referred to in (1) is made, all proceedings in CACV80/2013 be stayed;

(3) in the event that the 1^st Respondent (the Husband) fails to make full payment of the said sum within 14 days of the date appearing on this Judgment, CACV80/2013 shall stand dismissed without notice or further order, with costs to be paid by the 1^st Respondent (the Husband) to the Applicant (the Wife) to be taxed if not agreed;

(4) there shall be a costs nisi as follows:

(1) the 1^st Respondent (the Husband) shall pay the costs of the Applicant (the Wife) of the application, to be taxed if not agreed, with certificate for two counsel, save that

(2) the Applicant (the Wife) shall pay the costs of the 1^st Respondent (the Husband) of the Wife’s summons to amend, to be taxed if not agreed, not certified for two counsel. 

Security for costs 

41. The Wife has asked for security for costs of $5,357,000 from the Husband for his appeal, which is due to be heard in 10 weeks time (19-26 May 2014). The Husband has made an affirmation opposing the Wife’s application for security for costs, arguing (1) that the Wife is not as poor as she makes herself out to be; (2) that he is in a poor financial condition and an order for security would have the effect of terminating his appeal which has a strong chance of success; and (3) that the application has been made too late.

42.1. The Wife’s delay in applying for security for costs is a matter for some concern. It is well-established that an application for security for costs should be made without delay – as soon as an appeal is lodged and set down and the notice of appeal is served. 

42.2. In this case the notice of appeal was filed on 23 April 2013.  The application for security for costs was not made until 11 February 2014 – 10 months after the Husband’s notice of appeal was filed, 8 months after detailed directions were given by the court for the preparation of the appeal, and 10 days before skeleton submissions were to be filed in court.  Considerable preparations for the appeal (to be heard in 10 weeks time) have been made, and substantial costs must have been incurred by the appellant. 

42.3. No explanation has been given for the delay in applying for security for costs, other than that the Wife is operating on a stringent budget.  I would have thought the more stringent the Wife’s budget, the more concerned she would have been to secure her costs at the earliest opportunity. 

42.4. It has also been said on the Wife’s behalf that her legal advisers have been busy with other litigation, including litigation in the PRC.  However I would have thought that an application for security for costs, being a stand-alone application, is one which could easily have been made without much reliance (if at all) on the lay client’s participation.  It was not necessary to ascertain her financial condition as it was not relevant to the application for security for costs.

43.1. It is well-established that an application for security for costs should be made promptly after the notice of appeal is served (see Hong Kong Civil Procedure para. 59/10/34).  In my view, the court would be setting a bad precedent if it were to accede to an application for security for costs made so late. 

43.2. Accordingly in the exercise of the court’s discretion, I would dismiss the application, with an order nisi that the costs of the application should be paid by the Wife to the Husband, to be taxed if not agreed.  I do not consider that two counsel were necessary to respond to the application.       

43.3. As a matter of completeness, I should mention that had it not been for the delay, I would have made an order for security as I am not satisfied at this stage that the Husband’s chances of overturning the Main Judgment are so strong that the Wife should be denied security for costs.

Application for leave to appeal from Stay Ruling

44. Finally I will deal with the Husband’s application for leave to appeal from Deputy Judge Chu’s Stay Ruling.

45. The order of a conditional stay was made in the exercise of the judge’s discretion.  For the Husband to get leave to appeal, he would have to show a reasonable prospect of success in persuading an appellate court to overturn that exercise of discretion. 

46. It is well-established that an appellate court would not interfere with the exercise of discretion unless it is demonstrated that the judge had erred in principle or that the decision was “plainly wrong”. 

47.1. I am not persuaded that the judge had erred in principle or that the decision was “plainly wrong”. 

47.2. The conditions imposed by the judge were not draconian given the Husband’s proven access to financial resources.  The conditions were payment of $25m being part of the lump sum and $3,396,000 arrears under the Interim Order. 

47.3. The $25m amounted to about 20% of the lump sum ordered.  It was based on the Husband’s own Revised Open Offer made on 8 November 2012 (see para. 24 of Deputy Judge Chu’s Reasons for refusing leave to appeal from the Stay Ruling, 16.1.2014). The Husband said that this offer was made with his mother’s assistance.  Be that as it may, it shows his ability to obtain such assistance if necessary.  I have discussed the arrears in an earlier part of this judgment (para. 40) and will not repeat it here.

47.4. Accordingly I take the view that there are no reasonable prospects of success in the Husband’s proposed appeal against the Stay Ruling since an appellate court is unlikely to interfere with the judge’s order made in the exercise of her discretion, and I would refuse leave to appeal. 

47.5. I would dismiss the Husband’s summons for leave to appeal the Stay Ruling, with an order nisi that the costs of the application are to be paid by the Husband to the Wife, to be taxed if not agreed, not certified for two counsel. 

Hon Barma JA:

48. I agree.

Hon McWalters J:

49. I agree.

Hon Yuen JA:

50. Accordingly there will be orders as set out in paras. 24.4, 40, 43.2 and 47.5.