SUZANNE RUTH HENDERSON v. SCOTT HENDERSON

HCMP 1780/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1780 OF 2013

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J U D G M E N T

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Introduction

1. The plaintiff is the former wife of the defendant.

2. By paragraph 1 of the ex parte order made by L Chan J on 22 July 2013 the plaintiff was granted a worldwide Mareva injunction restricting the defendant from disposing of his assets up to the value of CAD$803,610.50 and as set out in the ex parte order of L Chan J (“the ex parte order “).

3. The defendant was also ordered by paragraph 2 of the ex parte order to disclose to the plaintiff all his assets of an individual value of HK$20,000 or more whether in or outside Hong Kong, whether in his own name or not, and whether solely or jointly owned, giving the particulars as set out in paragraph 2 of the ex parte order and to confirm the information provided in an affidavit.

4. The ex parte order was to remain in force up to and including the return date of 9 August 2013.

5. The plaintiff applied by a summons dated 23 July 2013 for an order that the ex parte order be continued until further order of the Court (“the plaintiff’s summons”).

6. By a summons dated 8 August 2013 which was returnable also on 9 August 2013, the defendant applied for an order, inter alia, that the ex parte order be set aside or discharged forthwith (“the defendant’s summons”).

7. On 5 August 2013 the ex parte order was amended by order of L Chan J as regards paragraph 1 of the Exceptions to the Order.

8. At the return date on 9 August 2013 the matter came before Suffiad J who ordered that the plaintiff’s summons and the defendant’s summons be adjourned for argument and that in the interim the ex parte order of L Chan J be continued until determination of the plaintiff’s summons and the defendant’s summons or until further order. Directions were also given for the filing and serving of evidence by the parties.

9. At the return date the defendant also applied to vary the ex parte order but Suffiad J made no order on this application pending a proper application to be made by the defendant.

10. By a summons dated 16 August 2013 and returnable on 4 October 2013 the defendant applied, inter alia, to vary the ex parte order to permit him to spend the amounts set out in the summons on ordinary and proper living expenses and on legal advice and representation.

11. The defendant’s application for variation came before Deputy Judge Hartmann on 4 October 2013. The ex parte order as amended on 5 August 2013 was varied by Deputy Judge Hartmann who permitted the defendant to use the balance of his monthly salary paid into his bank account in Hong Kong after having made monthly payments representing child and spousal support to be paid by the defendant.

12. The plaintiff’s summons and the defendant’s summons came before me on 22 October 2013.

Background

13. The plaintiff is a pilot with Air Canada. The defendant is a pilot with Cathay Pacific Airways. According to the plaintiff, she has been on sick leave with reduced wages for most of the time in the past two to three years. She is on sick leave with a 40% pay reduction. She lives in Canada on disability allowance.

14. The plaintiff and the defendant were married in 1986 in Canada. They have 2 daughters now aged 20 years and 17 years, respectively. Since 1999, the plaintiff had full care and control of their daughters.

15. In June 2000 the defendant filed a petition for divorce in the Superior Court of Justice Family Court Branch, Brampton, Ontario, Canada (“the Ontario Court”).

16. By an order made on 25 October 2002 by Kruzick J of the Ontario Court, it was ordered that the matrimonial home in Orangeville, Ontario be vested solely in the name of the plaintiff. It was also ordered that the defendant do pay the plaintiff child support in the amounts set out therein. The defendant was also ordered to answer his undertakings and to comply with previous orders of the Court on or before 13 January 2003.

17. The defendant failed to do so. It appears that the defendant disappeared from the jurisdiction of the Ontario Court and failed to attend court hearings.

18. By an order made on 9 June 2003 by Kruzick J it was ordered that the defendant’s pleadings be struck out. It was further ordered that there be a warrant of arrest and a warrant of committal against the defendant for his contempt of court orders.

19. On 21 April 2006 Fragomeni J of the Ontario Court issued another order against the defendant whereby he ordered, inter alia, that the defendant should not be permitted to proceed with or continue any motion in the divorce proceedings until such time as he has purged all of his contempts, complied with all of the disclosure orders and fulfilled all of his undertakings to the Ontario Court.

20. At the trial of the divorce proceedings in the Ontario Court held in the absence of the defendant as he did not appear, Madam Justice van Rensburg on 15 January 2009 made an order (“the Ontario AR Order”) granting permanent custody of the daughters to the plaintiff with access to the defendant in accordance with the earlier order of 21 April 2006. She also made an order that the defendant do pay to the plaintiff spousal support and child support for the daughters in the amounts as set out therein. The Court also declared that the defendant owed the plaintiff child support arrears, inclusive of interest in the amount of CAD$360,699 as at 31 December 2008. The defendant was also ordered to pay costs in the amount set out therein. It was further ordered that the earlier order of Kruzick J of 9 June 2003 as it related to the issuance of the warrant of arrest and warrant of committal against the defendant should continue.

21. The defendant failed to comply with the Ontario A.R. Order. According to the plaintiff, the defendant only made some occasional payments in small sums whenever he liked.

22. The plaintiff has been unable to enforce the Ontario AR Order in Ontario as the defendant has no assets there. According to the plaintiff, the defendant’s Canadian passport, Canadian pilot license and Canadian driving license have all been confiscated. This has not been denied.

23. The Family Responsibility Office in Ontario (“the FRO”) is the enforcement agency in Ontario to enforce spousal and child support orders made in Ontario. It appears that when the FRO is aware that a person who has to pay support no longer resides in Ontario but resides in a reciprocating jurisdiction, the FRO is the agency which would send the order to the appropriate authority to be registered in the reciprocating jurisdiction.

24. In or around May 2011 the plaintiff found out that the defendant had relocated to California. She was served with documents advising her to attend court in California as the defendant was fighting the registration of the Ontario AR Order sent by the FRO to the authorities in California. The plaintiff instructed lawyers in California to seek enforcement in California.

25. The Ontario AR Order was eventually registered in California. The defendant’s objection to the registration was overruled by the Superior Court of the State of California, for the County of Riverside (“the California Court”) on 15 December 2011.

26. The defendant was cross-examined as a judgment debtor in the California Court by the plaintiff’s lawyers in California on 27 August 2012.

27. According to the plaintiff, despite the fact that the Ontario AR Order was successfully registered in California, she was unable to enforce the Ontarion AR Order because the defendant fled California before a contempt hearing had been set.

28. Also, in or about August 2012 the plaintiff found out that the defendant had moved to Arizona. She also discovered that the defendant had purchased a house at 2162 Sentry Ridge CT in Tuscon, Arizona 65718 (“the Arizona property”) for the purchase price of US$1.5million in March 2012.

29. The defendant had remarried in December 2011. He moved to live at the Arizona property with his present wife.

30. The plaintiff instructed lawyers in Arizona to take out enforcement proceedings against the defendant in the Superior Court of the State of Arizona, County of Pima (“the Arizona Court”). Her lawyers filed a request on 30 October 2012 to register the Ontario AR Order for enforcement in Arizona.

31. On 20 May 2013 by an order of the Arizona Court the registration of the Ontario AR Order was confirmed but all enforcement action was stayed until there had been an evidentiary hearing regarding the allegations in the defendant’s objections, namely, “fraud, modification, or partial payment”.

32. An evidentiary hearing was fixed for 24 July 2013.

33. However, the plaintiff discovered that prior to the 20 May 2013 order of the Arizona Court, the defendant had transferred half-share of the Arizona property to his present wife on or about 6 March 2013 whilst the enforcement proceedings taken out by the plaintiff against the defendant in the Arizona Court were pending.

34. By an application made in May 2013 on behalf of the defendant by his lawyers in Ontario, the defendant filed a motion to vary the Ontario AR Order in the Ontario Court. This was opposed by the plaintiff.

35. On 7 May 2013 Madam Justice Snowie made an order striking out the defendant’s motion to vary the Ontario AR Order. She further ordered that the defendant could not bring any motion or take any fresh step until he complied with the Ontario AR Order. Costs fixed at CAD$10,000 were also awarded against him.

36. The defendant was not himself present at the hearing of his motion to vary before the Ontario Court but he was represented by his lawyers.

The ex parte order

37. On 22 July 2013 on the plaintiff’s ex parte application, L Chan J made the ex parte order. The restriction on the defendant was from disposing of his assets up to the value of CAD$803,610.50. The sum of CAD$803,610.50 was the total sum of ancillary relief ordered to be paid to the plaintiff and the daughters in arrears together with outstanding costs as at 13 June 2013.

The applications

38. The plaintiff seeks a continuation of paragraph 1 of the ex parte order until further order. The defendant seeks a discharge of the ex parte order.

The main issues

39. The defendant’s main contentions are that :

(1) the plaintiff does not have a good arguable case on the merits;

(2)  there is a lack of assets to satisfy the plaintiff’s claim;

(3)  there is no risk of dissipation of assets ;

(4)there has been a failure of the duty to make full and frank disclosure of all material facts when obtaining the ex parte order.

Is there a good arguable case?

40. By section 21M of the High Court Ordinance, Cap 4, the Court has jurisdiction to grant interim relief, including Mareva injunctions, in relation to proceedings which:

(a) have been or are to be commenced in a place outside Hong Kong; and

(b) are capable of giving rise to a judgment which may be enforced in Hong Kong under any Ordinance or at common law.

41. Section 7(1) of the Maintenance Orders (Reciprocal Enforcement ) Ordinance, Cap 188 (“the Ordinance”) provides that section 7 applies to a maintenance order made by a court in a reciprocating country. There is no dispute that the Ontario AR Order is such an order.

42. Section 7(2) of the Ordinance provides that

“Where a certified copy of an order to which this section applies is received by the Chief Executive from the responsible authority in a reciprocating country, and it appears to the Chief Executive that the payer under the order is residing in Hong Kong, he shall send the copy of the order to the Registrar of the District Court.”

43. Section 7(3) provides that where the Registrar of the District Court receives from the Chief Executive a certified copy of such an order, he shall, subject to subsection (4), register the order in the court.

44. However, section 7 (4) provides that

“Before registering an order under this section the Registrar shall take such seps as he thinks fit for the purpose of ascertaining whether the payer under the order is residing in Hong Kong, and if after taking those steps he is satisfied that the payer is not so residing he shall return the certified copy of the order to the Chief Executive with a statement giving such information as he possesses as to the where abouts of the payer.”

45. A registered order may be enforced in Hong Kong as if it had been made by the District Court and as if that court had jurisdiction to make it, and proceedings for enforcement of such an order may be taken (section 9(1) of the Ordinance).

46. It is clear that at the ex parte stage the plaintiff was invoking the Court’s jurisdiction by relying only on the Ordinance.

47. At the hearing before me, apart from relying on the Ordinance, the plaintiff also relies, in the alternative, on the enforcement of the Ontario AR Order in Hong Kong under the common law.  The originating summons was re-amended pursuant to the order of Suffiad J on 9 August 2013 to include the alternative basis on which the plaintiff seeks enforcement of the Ontario AR Order against the defendant in Hong Kong under the common law.

48. The defendant contends that there is no good arguable case for enforcement of the Ontario AR Order either under the Ordinance or under the common law.

49. As regards enforcement under the Ordinance, the defendant’s case is that there is no good arguable case  that the defendant is residing in Hong Kong and that because of this the Ontario AR Order will not be registered in the District Court under the Ordinance and will not be enforced in Hong Kong.

50. The question to consider is whether there is a good arguable case that the defendant is residing in Hong Kong.

51. As to what constitutes a good arguable case, paragraph 29/1/66 of Hong Kong  Civil Procedure 2014 states

“In order to show a ‘good arguable case’, the courts have held that ‘the plaintiff need not go so far as to persuade the judge that he is likely to win’. The plaintiff must show that his case ‘ is one that is “more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success”’ (Ninemia Maritime Corporation v. Trave Schiffahrtsgesellschaft mbH & Co.KG[1984] 1 All E.R. 398, applied in Akai Holdings Ltd v. Ho Wing On (unrep., HCCL 37/40 of 2005; [2009] H.K.E.C. 191)).”

52. The defendant maintains that he does not reside in Hong Kong. His case is that he resides in Arizona in the USA. He says that he has never resided in Hong Kong either on a permanent or temporary basis and that since 1 July 2003 he has been residing in the USA.

53. I have considered the evidence filed on behalf of the parties on the question of whether the defendant is residing in Hong Kong. I have also considered the submissions of counsel.

54. A useful summary of what constitutes residence is to be found in the judgment of Lloyd LJ in Lyle Dicker Grace v The Commissioners for Her Majesty’s Revenue and Customs[2009] EWCA Civ 1082 where at paragraph 6  of his judgment Lloyd LJ set out the summary of Lewison J as follows:

“ (i) The word ‘reside’ is a familiar English word which means “to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live in or at a particular place”: Levene v Commissioners of Inland Revenue (1928)13 TC 486,505. This is the definition taken from the Oxford English Dictionary in 1928, and is still the definition in the current on-line edition;

(ii) Physical presence in a particular place does not necessarily amount to residence in that place where, for example, a person’s physical presence there is no more than a stop gap measure: Goodwin v Curtis (1998) TC 478,510;

(iii) In considering whether a person’s presence in a particular place amounts to residence there, one must consider the amount of time that he spends in that place, the nature of his presence there and his connection with that place: Commissioners of Inland Revenue v Zorab (1926) 11 TC 289,291;

(iv) Residence in a place connotes some degree of permanence, some degree of continuity or some expectation of continuity: Fox v Stirk [1970] 2 QB 463, 477; Goodwin v Curtis(1998) TC 478,510;

(v) However, short but regular periods of physical presence may amount to residence, especially if they stem from performance of a continuous obligation (such as business obligations) and the sequence of visits excludes the elements of chance and of occasion: Lysaght v Commissioners of Inland Revenue (1928) 13 TC 511, 529;

(vi) Although a person can have only one domicile at a time, he may simultaneously reside in more than one place, or in more than one country:  Levene v Commissioners of Inland Revenue (1928) 13 TC 486, 505;

(vii) “Ordinarily resident” refers to a person’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life, whether of short or long duration: R v Barnet LBC ex p Shah [1983] 2 AC 309, 343;

(viii) Just as a person may be resident in two countries at the same time, he may be ordinarily resident in two countries at the same time: Re Norris (1888) 4 TLR 452; R v Barnet LBC ex p Shah [1983] 2 AC 309, 342;

(ix) It is wrong to conduct a search for the place where a person has his permanent base or centre adopted for general purposes; or, in other words to look for his “real Home”: R v Barnet LBC ex p Shah [1983] 2 AC 309, 345 and 348;

(x) There are only two respects in which a person’s state of mind is relevant in determining ordinary residence. First, the residence must be voluntarily adopted; and second, there must be a degree of settled purpose: R v Barnet LBC ex p Shah [1983] 2 AC 309, 344;

(xi) Although residence must be voluntarily adopted,  a residence dictated by the exigencies of business will count as voluntary residence:  Lysaght v Commissioners of Inland Revenue (1928) 13 TC 511, 535;

(xii) The purpose, while settled, may be for a limited period; and the relevant purposes may include education, business or profession as well as a love of a place: R v Barnet LBC ex p Shah [1983] 2 AC 309, 344;

(xiii) Where a persona has had his sole residence in the United Kingdom he is unlikely to be held to have ceased to reside in the United Kingdom (or to have “left” the United Kingdom) unless there has been a definite break in his pattern of life: Re Combe (1932)17 TC 405,411.”

55. It is clear that a person may be resident in two countries at the same time. Also, short but regular periods of physical presence may amount to residence especially if they stem from performance of business obligations.

56. Ultimately whether the defendant is or is not a resident in Hong Kong is a question of fact.

57. The defendant relies on the fact that in 2009 the FRO attemped registration of the Ontario AR Order in Hong Kong.

58. According to an email dated 25 September 2013 from Mr Calvin Chan, of the Chief Secretary of Administration’s Office to the defendant, the FRO sent his office in March 2009 a request for registration of 10 maintenance orders including the Ontario AR Order. The orders were registered on 23 April 2009 (“the 2009 registration”) by the Registrar of the District Court pursuant to section 7(3) of the Ordinance. However, having considered the information furnished to the District Court by the court bailiff and the defendant and his solicitors, the Registrar cancelled the registered orders on 13 August 2009 pursuant to section 11(2) of the Ordinance.

59. The 2009 registration and the subsequent cancellation of the same was not brought to the attention of L Chan J when he was asked to make the ex parte order and this is one of the reasons why the defendant seeks a discharge of the ex parte order. I shall return to the non-disclosure of these matters later in my judgment when dealing with the issue of whether there has been a failure of the duty to make full and frank disclosure. I would observe that the plaintiff’s case is that she was unaware of the 2009 registration and its subsequent cancellation.

60. The defendant relies on the cancellation of the 2009 registration as supporting his case that he was never resident in Hong Kong. The defendant has not disclosed what information he and his solicitors provided to the Registrar of the District Court which led to the subsequent cancellation of the 2009 registration. However, it seems to me that it is highly unlikely that the Registrar of the District Court would have had all the evidence that has been placed before me.

61. The defendant has been with Cathay Pacific Airways as a pilot since 1994. He is employed by USA Basing Ltd, a subsidiary of the Cathay Pacific Group and he is paid in US dollars. USA Basing Ltd is based in San Francisco. The defendant is paid his salary through a bank account in Hong Kong which the defendant has maintained.

62. The defendant also relies on the confirmation of the matters set out in a letter from USA Basing Ltd dated 12 August 2013. The said letter confirms that the defendant is based in and operates from San Francisco, his residential address according to company records is in Arizona, he does not have a Hong Kong address, when he enters Hong Kong he is a member of the crew of the aircraft which he operates, and that he is allocated company accommodation in crew hotels in Hong Kong whenever he operates aircraft to Hong Kong from San Francisco.

63. The defendant has been paying salaries tax in Hong Kong to the Inland Revenue Department (“the IRD”). For the year 2010, it appears that the address given by the defendant to the IRD was his California address at La Quinta, California. For the year 2011/12, the address given by the defendant to the IRD was the Arizona property. Prior to 2010, it appears that the address given by the defendant to the IRD was care of Cathay Pacific Airways at 8 Scenic Road, Lantau (“the Scenic Road address”) which are the offices of Cathay Pacific Airways.

64. According to his salaries tax computation for the year 2010/11, the defendant was able to obtain an exemption of part of his income on the basis that he claimed to have lived and rendered service in the USA for 276 days out of 365 days.

65. I would, however, observe that in his US Nonresident Alien Income Tax returns for the years 2009, 2010 and 2011 the defendant filed US Tax returns as a non-resident of the USA. In those returns he gave as his home address the Scenic Road address in Hong Kong.  The defendant claimed in those returns that he was a non-resident of the USA and was present in the USA only for 90 days in each of those years, thereby contradicting his claims to the IRD in Hong Kong that he lived and rendered service in the USA for 276 days out of 365 days for the year 2010/2011. In his US Nonresident Alien Income Tax return for 2009 the defendant claimed to be a resident in Hong Kong. 

66. The defendant has also used as his address in Hong Kong a flat at 43B, Block 1, 80 Robinson Road, (“the Robinson Road address”). This is the defendant’s address in the tax return inquiry of his employer dated 1 May 2006. Another address used by the defendant  in the US Wage and Tax Statements W-2 for the years 2007 to 2010 (exhibit SRH-56 to the 3^rd affidavit of the plaintiff) is a flat at 57A Tower II Carribean Coast, Tung Chung(“the Carribean Coast address”). I would observe that the Carribean Coast address was used by him for a number of years. Even though he may have stayed at a crew hotel, it seems to me that there is evidence to show that he has used different addresses as his home address in Hong Kong.

67. The defendant denies that the Robinson Road address and the Carribean Coast address were ever his residential addresses .The defendant says that the Robinson Road address and the Carribean Coast address were mistakes made by his employer which have since been rectified. There is, however, no evidence from his employer to show that it had made such mistakes.

68. The defendant has a British passport. He also has a Hong Kong Identity Card. Although the defendant does not have a permanent identity card with a right of abode in Hong Kong, the fact that he applied for and is still in possession of a Hong Kong Identity Card is a factor to bear in mind although this by itself would not be sufficient to show that he is a resident in Hong Kong. He does not, however, explain why he applied for a Hong Kong Identity Card in the first place.

69. The defendant as a commercial pilot for Cathay Pacific Airways stays in Hong Kong for about two to three months a year. The record of crew days in Hong Kong which were in evidence shows that for the years 2008 to 2013 the defendant spent about a total of two to three months a year in Hong Kong. Each time he spent about two to three days.

70. The defendant also relies on the fact that recently when he travelled to Hong Kong for the hearing on 9 August 2013, he entered as a visitor as shown by the stamp in his passport. On all other occasions he entered Hong Kong as a crew member without having to show any passport or travel documents. I accept that when he entered Hong Kong recently for the hearing on 9 August 2013, the stamp on his passport shows that he entered as a visitor. However, I do not place much reliance on the stamp in his passport. At the time he entered Hong Kong for the hearing on 9 August 2013, the ex parte order had already been served and his self serving declaration to the Immigration officer that he was a visitor to Hong Kong does not assist him in my view. He was obviously coming to Hong Kong to oppose the continuation of the ex parte order and to resist the contention that he was a resident in Hong Kong. 

71. I would also observe that as set out in the letter dated 25 June 2013 from the plaintiff’s attorneys in Arizona, Centuori & Associates, PLLC to the plaintiff’s solicitors in Hong Kong (exhibit SRH-32 to the 1^st affidavit of the plaintiff), the defendant alleged in open court on 6 March 2013 in the Arizona Court that he was a resident of both California and Hong Kong in his attempt to resist the registration of the Ontario AR Order in Arizona. This has not been denied by the defendant.  It is significant that the defendant himself claimed to be a resident of Hong Kong as recently as March 2013 thereby contradicting his evidence that he was never a resident of Hong Kong.

72. I am satisfied that there is a good arguable case that the defendant is residing in Hong Kong within the meaning of section 7 of the Ordinance.

73. It is, therefore, not necessary for the plaintiff to rely on her alternative basis for enforcement of the Ontario AR Order under the common law.

74. However, since the matter has been argued before me, I shall consider the question of whether there is a good arguable case on the plaintiff’s alternative basis for enforcement of the Ontario AR Order under the common law.

75. In order to enforce the judgment of a foreign court it must be established that the foreign judgment is final and conclusive. The test of finality is the treatment of the judgment by the foreign tribunal as a res judicata (para 14-023 Dicey, Morris and Collins on The Conflict of Laws 15^th Edn).

76. In dealing with the question of whether the foreign judgment is final and conclusive, Lord Herschell said in  Nouvion v Freeman (1889) 15 App Cas 1 at page 9

“… it must be shewn that in the Court by which it was pronounced it conclusively, finally, and for ever established the existence of the debt of which it is sought to be made conclusive evidence in this country, so as to make it res judicata between the parties. If it is not conclusive in the same Court which pronounced it, so that notwithstanding such a judgment the existence of the debt may between the same parties be afterwards contested in that Court, and upon proper proceedings being taken and such contest being adjudicated upon, it may be declared that there existed no obligation to pay the debt at all, then I do not think that a judgment which is of that character can be regarded as finally and conclusively evidencing the debt, and so entitling the person who has obtained the judgment to claim a decree from our Courts for the payment of that debt.”

77. I have also considered Beatty v Beatty [1924] 1 KB 807, Chiyu Banking Corporation Ltd v Chan Tin Kwun [1996] 2 HKLR 395 and Korea Data Systems Co. Ltd v Chiang Jay Tien and another [2001] 3 HKC 239.

78. The plaintiff relies on the expert evidence of Mr Michael Marra to the effect that the Ontario AR Order is a final order within the meaning of Ontario law. On the evidence filed on behalf of the defendant this is disputed.

79. Mr Leung, for the defendant, relied on the transcript of the proceedings before Madam Justice van Rensburg on 15 January 2009 when she made the Ontario AR Order. It is clear from a perusal of the transcript that the Court was concerned with the figures put forward by Mr Fanjoy, the plaintiff’s lawyer, as being the income of the defendant without providing proper evidence as to the figures.

80. At page 8 of the transcript Mr Fanjoy said

“I would suggest maybe then if we could use the $402,000 figure and provide within the order Mr Henderson can demonstrate that his income, in fact, is lower by complying with court orders, then he can come back and reduce that amount. That’s the only fair way I can say we proceed in this regard.”

81. And at page 29 of the transcript, the Court asked Mr Fanjoy

“to write in for me some wording with respect to Mr Henderson having the ability to come forward at some later date to prove to the court that his income is not $402,000 a year, and therefore, argue that his child support and spousal support obligation should be varied?”

82. The Court emphasized that there should be a separate paragraph in the order

“which makes it clear that this order is without prejudice to him coming, seeking to vary on the basis of both the child support and the spousal support on the basis of if his income is other than the $402,000 figure”.

83. In view of the Court’s concern, paragraph 11 of the Ontario AR Order provided that

“This Order, as it relates to child and spousal support, is subject to possible variation upon the [defendant] purging all existing contempts, providing all answers to his undertakings, providing complete income disclosure and reopening his pleadings. This does not prejudice the [plaintiff’s] right to seek security for costs should the [defendant] seek such variation.”

84. As set out above, on 7 May 2013 Madam Justice Snowie made an order to strike out the defendant’s motion for variation of the Ontario AR Order. She ordered that the defendant cannot bring any motion or take any fresh step until he complies with the Ontario AR Order.

85. Mr Michael Marra says that the defendant is prevented from bringing a motion to re-open his pleadings and vary the Ontario AR Order unless he has first complied with the Ontario AR Order.

86. It seems to me to be clear that provided the defendant complies with the Ontario AR Order he is by the terms of paragraph 11 of the Ontario AR Order permitted to seek a variation of the Ontario AR Order in respect of child and spousal support.

87. I am not satisfied that a good arguable case has been shown that the Ontario AR Order is a judgment which is final and conclusive so as to make it res judicata between the parties on the question of child and spousal support. It follows that I am not satisfied that a good arguable case has been shown for enforcement of the Ontario AR Order under the common law.

Lack of assets

88. The defendant maintains that he does not have sufficient assets to satisfy the plaintiff’s claims. For that reason, it was submitted that a Mareva injunction should not be granted.

89. I am satisfied that the defendant has assets within the jurisdiction and also outside the jurisdiction. He has a half-share in the Arizona property which was purchased for US$1.5m in 2012. He has bank accounts in Hong Kong. He also has his monthly salary paid to him into his bank account in Hong Kong. He has a Provident Fund with Cathay Pacific Airways with a current value of over HK$6.5m.

90. This is not a sufficient ground for refusing relief to the plaintiff in my view.

Risk of dissipation of assets

91. The defendant denies that he has been evading enforcement of the Ontario AR Order or that he has absconded from the jurisdiction of the Ontario Court. He also denies that he has been hiding or been siphoning off assets.

92. The defendant maintains that he intends to continue working for Cathay Pacific Airways until the age of 65 when, upon retirement, he will be able to access his Provident Fund.

93. I am satisfied on the evidence before me that there is a real risk of dissipation of assets. There is evidence to show that he has absconded from the jurisdiction of the Ontario Court. The warrant of arrest and the warrant of committal for contempt of court in the Ontario Court are still in force. The defendant has not as yet complied with the Ontario AR Order nor has he purged his contempt.

94. It is significant, in my view, that during the enforcement proceedings in Arizona the defendant transferred half share of the Arizona property to his present wife in March 2013. By so doing he has divested himself of half share of the Arizona property which will not be available to satisfy any judgment.  Although the defendant denies that he intends to cease his employment with Cathay Pacific Airways, there is nothing to prevent him from so doing and cashing in on his entitlement to his Provident Fund.

95. I am satisfied that there is a real risk of dissipation of assets to justify the grant of a Mareva injunction against the defendant.

The duty of full and frank disclosure

96. The defendant contends that when applying for the ex parte order the plaintiff failed in her duty to make full and frank disclosure of :

(a)     the 2009 registration and its subsequent cancellation; and

(b)    the fact that shortly before the application for the ex parte order the parties had been in negotiations for a settlement of their dispute.

97. It was submitted on behalf of the defendant that the Court should discharge the ex parte order and should not re-grant a Mareva injunction to the plaintiff.

98. A Mareva injunction is a draconian order and is one which is regarded as exceptional and unusual. It is well established that when applying for such an order ex parte there is a stringent duty on the part of the applicant and its legal advisers to make the fullest and frankest disclosure of all material facts including those against the application. There was also a duty to make proper enquiries before making such an application ex parte. The material facts are those which it is material for the judge to know in dealing with application. Materiality is to be decided by the Court and not by the assessment of the applicant or his legal advisers.

99. There is no doubt that the 2009 registration and its subsequent cancellation were material facts which should have been disclosed to the court when applying for the ex parte order. However, the plaintiff and her Ontario lawyer, Mr Fanjoy, deny on oath that at the time they knew about the 2009 registration and its subsequent cancellation.

100. On the evidence before me, I am not satisfied that the plaintiff or Mr Fanjoy knew of the 2009 registration and its subsequent cancellation at the time of the application for the ex parte order. However, it seems to me that if proper enquiries had been made at the time, the plaintiff’s legal advisers would have found out about the 2009 registration and its subsequent cancellation.

101. The defendant also complains that the plaintiff failed to disclose to the Court that shortly before she took out the application for the ex parte order the parties had been in negotiation for a settlement of their dispute. According to the defendant, in the Arizona proceedings the parties’ respective lawyers were negotiating for a settlement and they were very close to reaching agreement. This has not been denied by the plaintiff.

102. I have considered Unilever plc v The Proctor and Gamble Co.[2000] 1 WLR 2436, Pearson Education Ltd v Prentice Hall India Private Ltd [2005] EWHC 646 and Dubai Bank Ltd v Galadari and others [1990] 1 Lloyd’s Rep.120.

103. In my view, when applying for the ex parte order the plaintiff should have disclosed that she had been in “without prejudice” negotiations with the defendant shortly before the application. This was a material fact for the Court to know in reaching its decision and there was, in my view, a failure of the stringent duty to make full and frank disclosure of all material facts.

104. In his written skeleton submissions for the hearing before me on 22 October 2013, Mr Ng, for the plaintiff, submitted at paragraph 16 that the plaintiff procured the responsible authority in Ontario to seek registration of the Ontario AR Order in Hong Kong under the Ordinance. However, in the course of Mr Ng’s oral submissions he was unable to refer to any evidence showing that the plaintiff had procured the FRO to seek registration of the Ontario AR Order in Hong Kong.

105. Mr Ng then sought an adjournment from me in the late afternoon to take instructions on the matter, which I granted. After having taken instructions from the plaintiff over the telephone, Mr Ng informed the Court that the plaintiff had not procured or approached the FRO to register the Ontario AR Order in Hong Kong as he had submitted in his written skeleton submissions. Mr Ng informed the Court that he had been mistaken as to this when preparing his written skeleton submissions. An undertaking was then given by counsel, on behalf of the plaintiff, that the plaintiff would within 7 days procure the FRO to register the Ontario AR Order in Hong Kong.

106. The hearing was adjourned part-heard to 1 November 2013. Further evidence was filed and served before the resumed hearing on 1 November 2013 at which time the plaintiff was represented by Mr Bruce SC and Mr Ng.

107. At paragraph 83 of her 1^st affidavit placed before the judge at the ex parte application the plaintiff said

“Also, I have instituted (sic) my Ontario lawyer to initiate the registration of the Ontario AR Order in Hong Kong pursuant to section 7 of [the Ordinance]”

108. The evidence shows that on or about 19 July 2013 the plaintiff did instruct her Ontario lawyer to start looking into the matter to seek the FRO’s assistance in registering the order in Hong Kong. However, there was no formal application made to the FRO at that time.

109. The plaintiff says that on 30 July 2013 she personally made follow up telephone calls to the FRO to inquire about the registration procedures in Hong Kong. She also says that in September 2013 workers from the FRO told her orally that if she were now seeking registration of the Ontario AR Order in Hong Kong, the FRO would stop representing her for the reason that the Arizona proceedings were ongoing and the FRO would not attend to the Hong Kong registration.  For that reason, she withheld making a formal application to the FRO. However, she says that she did not inform her solicitors in Hong Kong about this as she did not want them to directly communicate with the FRO. She was worried that her Arizona enforcement proceedings would have to stop once there was a request to the FRO to register the Ontario AR Order in Hong Kong.

110. Clearly, on the evidence before me, there is nothing to prevent the FRO from seeking registration of the Ontario AR Order in different jurisdictions at the same time. I accept that the plaintiff was mistaken as to whether the FRO could seek registration of the Ontario AR Order in different jurisdictions at the same time. Nevertheless, in my view, her legal advisers should have made proper enquiries with the plaintiff before submitting that she had procured the FRO to seek registration in Hong Kong. I accept that counsel’s mistake in his written skeleton submissions was made because the plaintiff had decided not to inform her legal advisers of her concern and of her decision not to make a formal application to the FRO for registration in Hong Kong. 

111. To comply with the undertaking given to me on 22 October 2013, the plaintiff on 23 October 2013 instructed her Ontario lawyer to formally apply to the FRO to seek registration of the Ontario AR Order in Hong Kong. The formal application was made on 27 October 2013. On 29 October 2013 the FRO acknowledged receipt of the application to the FRO for registration of the Ontario AR Order in Hong Kong. Although there has been some delay in making the formal application to the FRO, this has now been done.

112. Although I have found that there has been material non-disclosure when applying ex parte, the Court has a discretion whether or not to set the ex parte order aside. It seems to me that in the exercise of my discretion the ex parte order should be continued rather than discharged.  In my view, the non-disclosure of the negotiations between the parties would probably not have made much difference to the Court when deciding to grant the ex parte order. The plaintiff’s failure to make a formal application to the FRO for registration in Hong Kong has now been rectified. Although a misleading impression was given to me in counsel’s written skeleton submissions that the plaintiff had procured the FRO to register the Ontario AR Order in Hong Kong, this was corrected in the hearings before me. It does not appear that this misleading impression was given to the judge dealing with the ex parte application. 

Conclusion

113. I am satisfied that as a matter of justice paragraph 1 of the ex parte order as amended on 5 August 2013 should be continued.

114. I order that paragraph 1 of the ex parte order as amended on 5 August 2013 and as varied by Deputy Judge Hartmann on 4 October 2013 be continued until further order. I dismiss the defendant’s summons.

115. I also make an order nisi that the costs of the plaintiff’s summons and the defendant’s summons be costs to the plaintiff such costs to be taxed, if not agreed, with a certificate for two counsel.