TO also known as TT v. KO

CACV 541/2020

[2021] HKCA 1545

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 541 OF 2020

(ON APPEAL FROM FCMC NO 12767 OF 2018)

________________________

________________________

________________________

J U D G M E N T

________________________

Hon Kwan VP (giving the Judgment of the Court):

1.  On 17 July 2020, Her Honour Judge Melloy handed down her judgment (“the Judgment”) that the petition for divorce filed by the wife on 8 October 2018 be dismissed on the ground that the Hong Kong courts lack jurisdiction to entertain the same under section 3(b) of the Matrimonial Causes Ordinance, Cap 179 (“MCO”)^[1] in that neither the wife nor the husband was habitually resident in Hong Kong throughout the period of three years immediately preceding the date of the petition (ie from 8 October 2015 to 7 October 2018)^[2]. She ordered that the decree nisi dated 20 February 2019 be rescinded and that the husband’s undertakings to the wife and to the court given in the order dated 18 April 2019 be discharged. The appeal of the wife was brought with leave granted by the judge on 25 September 2020 and the rescission of the decree nisi was stayed pending the outcome of this appeal.

2.  Eleven grounds of appeal were advanced in the notice of appeal.  They may be divided into two broad issues.  Grounds 1 to 6 raised the contention that the husband should not have been allowed to challenge jurisdiction given that a decree nisi had already been pronounced and the court was functus officio; that setting aside the decree nisi can only take place by a fresh action or an appeal (in which case the burden is on the husband to show that the judge’s finding was plainly wrong); that res judicata (both cause of action estoppel and issue estoppel) had arisen; and that the husband has submitted to jurisdiction and is debarred from challenging it.  Grounds 7 to 11 sought to challenge the judge’s findings of fact that the parties were not habitually resident in Hong Kong throughout the relevant period of 8 October 2015 to 7 October 2018.  It is fair to say that the bulk of Mr Richard Todd’s submissions on behalf of the wife^[3] focused on the first of the two broad issues, namely, that there was no jurisdiction to entertain the husband’s challenge to jurisdiction, alternatively that the court should not have exercised that jurisdiction in the circumstances.

Background

3.  The relevant background matters may first be stated as follows.

4.  The husband and wife are Japanese.  The husband is a renowned businessman of great wealth.  In 1998, he was a widower with two adult children.  He married the wife in 1999 in Tokyo.  He was then aged 56 and she was 25.  They lived in a large family house in Tokyo for the first ten years of their marriage.  Their only child, a daughter (“R”), was born to them in Tokyo in November 2009.

5.  In 2008, the husband decided to set up a new casino business in the Philippines.  To facilitate this project, he set up a corporate structure in Hong Kong in 2010 including a private holding company (“OHL”) and an intermediary holding company (“TRA”), with the intention eventually to seek public listing on a stock exchange in Hong Kong.  OHL and TRA were holding entities and did not carry out any business operations here.  TRA held 99.9% of the shares of a company established by the husband in the Philippines for the casino business.  In 2011, he incorporated a company in Hong Kong to manage his art collections, some of which are housed in a museum he established in Japan in 2013.

6.  Since the commencement of the new casino project, the husband travelled extensively between the Philippines, Macau, Hong Kong, Japan and the United States.  In around December 2010, he moved to Hong Kong.  The wife and R followed in April 2011.  The husband rented a luxurious apartment for the family on the south side of Hong Kong Island.  The lease was renewed every two years until it was terminated by the husband in November 2018.  He did not purchase real property in Hong Kong.

7.  The wife was issued a Hong Kong Identity Card in September 2011.  In 2014, R was enrolled in a school in Stanley.  The wife’s younger sister (“Y”) stayed in Hong Kong and assisted in taking care of R.  In September 2018, when R was almost nine years old, she was sent to an exclusive boarding school in Switzerland.

8.  From the time of the construction of the casino project in early 2011 to the time when the casino resort became operational in December 2016, the husband spent on average 20 days per month in Manila, with the rest of the days either in Japan or Hong Kong.  Initially he rented a large house as his residence in an exclusive district in Makati City, Manila.  Later he purchased a large house as his residence in the same exclusive district in Manila.  He maintained the family house in Tokyo. After the completion of the casino project in Manila, the husband gradually shifted his focus back to Japan.

9.  According to the immigration records, the days of the husband’s stay in Hong Kong during the period from 7 October 2015 to 8 October 2018 were as follows:

Period	Days in Hong Kong per year	Average Days in Hong Kong per month
7 October 2015 to 6 October 2016	35 days/366 days	3 days
7 October 2016 to 6 October 2017	51 days/365 days	4.25 days
7 October 2017 to 8 October 2018	148 days/367 days	12 days

10.  The husband explained that whenever he travelled to Hong Kong, the main purpose was to visit R.  As for the longer period of his stays in Hong Kong during 7 October 2017 to 8 October 2018, this was because his passport was detained due to an investigation by the Independent Commission Against Corruption in respect of a complaint made by TRA in July 2018.  The husband was removed as a director of TRA in May 2017 as a result of a “business coup” and the wife replaced him as a director.  He was free to travel when he was subsequently cleared by the authorities.

11.  Throughout the period of three years immediately preceding the date of the petition, the wife had spent much less time in Hong Kong than in Japan.  Her international travels increased as R became older.

12.  According to the immigration records, the days of her stay in Hong Kong during the period from 7 October 2015 to 8 October 2018 were as follows:

Period	Days in Hong Kong per year	Average Days in Hong Kong per month
8 October 2015 to 7 October 2016	112/366 days (about 30%)	9.25
8 October 2016 to 7 October 2017	92/365 days (about 25%)	8
8 October 2017 to 7 October 2018	43/365 days (about 12%)	4

13.  According to the entries and departures in and out of Japan for this period, the days of her stay in Japan during this period were as follows:

Period	Days in Japan per year	Average Days in Japan per month
8 October 2015 to 7 October 2016	137/366 days (about 37%)	11
8 October 2016 to 7 October 2017	169/365 days (about 46%)	14
8 October 2017 to 7 October 2018	149/365 days (about 41%)	12

14.  The marriage probably broke down in 2016/2017, with each side accusing the other of extra marital relationship.  As mentioned, there was a “business coup” against the husband in May/June 2017.  The wife, a business man with whom she was alleged to have a relationship, and the two adult children of the husband were involved in the coup.  In 2017, the husband brought proceedings in Hong Kong to challenge his removal from the companies.  TRA brought proceedings against the husband in Hong Kong claiming breach of duties as a director and made a complaint against him to the ICAC.  There was other litigation in Hong Kong and other jurisdictions.

15.  On 8 October 2018, the wife presented a petition for divorce on the ground of unreasonable behaviour.  In the petition, it was stated that both parties “have been habitual residents in Hong Kong throughout the period of 3 years immediately preceding the date of this Petition”.  The husband was served with the petition at the Hong Kong International Airport on 31 October 2018.  Under rule 15(2) of the Matrimonial Causes Rules, Cap 179A (“MCR”), the husband had eight days after service of the petition to give notice of intention to defend (ie Form 4). Rule 15(3) further provides that such notice may be given at any time before directions for trial are given, notwithstanding that the time limited for giving the notice has expired.

16.  On 18 October 2018, the wife applied for and was granted Hong Kong permanent residency by the Immigration Department on the basis that she had been ordinarily resident in Hong Kong from September 2011 to October 2018 and had not been absent for any period of more than six months during that time.  As part of her application, she made a declaration of having taken Hong Kong as her “only place of permanent residence”.  When the husband terminated the lease of the apartment, the wife moved to a new apartment that she rented.  The husband had also expressed interest of applying for Hong Kong permanent residency during October 2018 to January 2019, for tax reasons.  He did not however proceed with the application.

17.  On 9 November 2018, the wife filed an application to the registrar for directions for the trial of the divorce petition by entry of the cause in the Special Procedure List on the basis that the time limit for giving the notice of intention to defend had expired and this could be treated as an “undefended cause”.  The application was made under rule 33(2A) of the MCR, with a supporting affirmation of the wife in Form 21(7) as required by rule 33(2A)(i).  Mr John Scott, SC for the husband^[4], submitted that this was premature and the wife had “jumped the gun”.  We will come back to this as this involves the construction of relevant provisions in the MCR and the proper procedure that should be followed by the registrar under the MCR, even though this is a minor point and does not affect the outcome of this appeal.

18.  On 20 November 2018, the registrar wrote to the wife’s solicitors stating that her application for directions for trial was being processed and drew their attention to two matters that remained outstanding, being proof of service of the petition and the usual undertaking to return the child to the jurisdiction when called upon to do so.

19.  On 23 November 2018, the husband’s former solicitors belatedly filed on his behalf a Form 4 being an acknowledgment of service, stating that he intended to defend the case.  There was no indication of any intended challenge to jurisdiction.  Under rule 18(1) of the MCR, the husband was required to file an answer to the petition within 21 days after expiration of the time limited for giving notice of intention to defend.  In this instance, this would be 29 November 2018.  The husband did not file an answer within the prescribed time in rule 18(1) or at any subsequent time before directions for the trial of the cause had been given, as permitted in rule 18(2).

20.  The 1^st First Appointment Hearing was held before Judge Melloy on 17 December 2018.  The husband did not attend.  He was represented by counsel^[5] who did not indicate there would be any challenge to jurisdiction. Counsel made proposals regarding the exchange of Form E and the adjournment of the First Appointment Hearing.  The judge ordered the First Appointment Hearing and the Children’s Appointment Hearing be adjourned to 18 April 2019 and directed both parties to attend personally.  She also gave directions on the filing and exchange of Form E.  At the conclusion of the hearing, the judge inquired of the husband’s counsel if there was a “potential defended suit” and expressed the hope that “common sense will intervene”.  Counsel informed the judge he was hoping so too.

21.  The wife made an affirmation on 17 December 2018 affirming the averment in the petition that both parties have been habitual residents in Hong Kong throughout the three-year period immediately preceding the petition and that she was legally advised that the court can assume jurisdiction. The husband made no response to the wife’s affirmation.

22.  The husband deposed in his first affirmation filed on 25 November 2019 that he was then 77 years old, he does not speak English, Cantonese or Mandarin and only speaks Japanese.  The solicitors who represented him during October 2018 to April 2019 were the company secretary of OHL and he did not meet with them at all.  He had “poor communication” with his solicitors and required an interpreter who he said was “incompetent”.  As he was not in Hong Kong most of the time, most of the communication was done through telephone or email to the husband’s assistant because of the language problem.  He did not attend the hearing on 17 December 2018 as he had understood from his solicitors through his Japanese legal counsel that the solicitors “would prepare an application to challenge jurisdiction and/or forum”.  It had always been his understanding that the adjourned hearing on 18 April 2019 was for his intended application to challenge jurisdiction and/or forum^[6].

23.  On 16 January 2019, the registrar gave directions for trial of the petition as an undefended cause.  Pursuant to rule 33(2A), he issued a certificate that the wife had sufficiently proved the contents of the petition and was entitled to a decree nisi of divorce.  He also issued a notice of date of pronouncement of decree informing the parties that the cause had been entered in the Special Procedure List, and that 20 February 2019 had been fixed for the pronouncement of the decree by a judge unless cause was shown to the contrary.  The notice stated that it was unnecessary for either party to attend court on the appointed date.  Notwithstanding this notice, no action was taken by the husband to challenge jurisdiction.

24.  On 20 February 2019, the petition came before Judge Melloy in the Special Procedure List as an undefended cause.  The judge granted a decree nisi.

25.  On 5 April 2019, the husband commenced divorce proceedings in the Tokyo Family Court by first filing a petition for mediation, as mediation is a mandatory and integral part of divorce proceedings in Japan.

26.  On 18 April 2019, the wife and the husband personally attended the 2^nd First Appointment Hearing, as directed by the judge.  The husband’s solicitors applied to cease to act for him as a new firm of solicitors had filed a notice to act albeit limited to the First Appointment. Leave to withdraw was granted to the first solicitors.  The second firm of solicitors were only engaged the day before and another counsel was retained with limited instructions to seek an adjournment of the First Appointment Hearing and postponement of the exchange of Form E. In support of the application, the new counsel informed the court there would be challenge to forum and that mediation proceedings had taken place in Japan.  The judge refused an adjournment, noting that there was no summons to challenge forum and no evidence was adduced regarding any proceedings in Japan.  Upon the judge’s refusal to adjourn the hearing, the second solicitors and new counsel withdrew and the husband acted in person.

27.  The judge then inquired of the husband if he was willing to give undertakings to the court not to dispose of his assets to third parties without the wife’s consent or a court order and not to disclose anything in relation to the proceedings to any third parties, failing which an interim order would be made.  The husband agreed to give the undertakings.  He claimed in his affirmation in November 2019 that in giving the undertakings, he did not understand their significance and implications.  He also complained that the Japanese interpreter had performed his job poorly.

28.  The judge told the husband that if he wished to challenge jurisdiction or forum, an application would need to be issued, otherwise the proceedings would just continue.  He informed the court that it was difficult for him to fly out to Hong Kong and consult lawyers but would try his best to lodge an application as soon as possible.  The judge made an order upon the husband’s undertakings as aforesaid adjourning the First Appointment Hearing and the Children’s Appointment Hearing to 14 August 2019 and extending time to the husband to file his Form E with a penal notice endorsed to the order.  Other directions were given in relation to the disputes concerning R and ancillary relief.

29.  The husband engaged new solicitors in May 2019 and received “initial advice” regarding an application to challenge jurisdiction and/or forum in around June/July 2019.  The third solicitors’ firm did not meet with the husband until 5 August 2019 when they took more detailed instructions.  They instructed a new counsel for the 3^rd First Appointment Hearing on 14 August 2019.  No application to challenge jurisdiction or forum was issued by the time of that hearing.  Counsel sought the indulgence of the court to allow the husband to issue a summons for that purpose within 14 days and proposed a stay of proceedings pending the determination of that application.  The judge indicated she would not entertain any application in relation to that unless a summons was filed.  She adjourned the First Appointment Hearing to 27 November 2019 and gave further extension to the husband to file his Form E.

30.  On 2 September 2019, there was a mediation hearing of the divorce proceedings in the Tokyo Family Court during which the wife requested that the Japanese proceedings be dismissed on the ground that there were divorce proceedings in Hong Kong.  The Tokyo Family Court ruled that mediation had failed without dismissing the petition for divorce mediation and issued a certificate of failure of mediation on 3 September 2019. This enabled the husband to file a divorce suit on 15 October 2019.

31.  The husband engaged his current solicitors after the 3^rd First Appointment Hearing.  He claimed that it was not until after the fourth solicitors’ firm was engaged that he was able to communicate properly with his solicitors and receive proper advice on his application to challenge jurisdiction and/or forum.  A summons for this purpose was filed on 25 November 2019 with a substantial affirmation of the husband in support.

32.  At the 4^th First Appointment Hearing on 27 November 2019, the husband appeared by Mr Scott.  After hearing the parties, the judge ordered that the application to challenge jurisdiction be set down for hearing on 20 April 2020 and the application to challenge forum on the basis of forum non conveniens be adjourned until after the determination of the challenge to jurisdiction.  Due to the general adjournment of court proceedings in early 2020, the judge made an order nisi on 14 April 2020 that the application to challenge jurisdiction be dealt with on the basis of two rounds of written submissions instead of an oral hearing.  As no objection was received from any party, the order nisi was made absolute on 20 April 2020.

If there was jurisdiction to entertain the husband’s challenge to jurisdiction

33.  Much was made by Mr Todd of the dilatoriness of the husband in issuing a summons to challenge jurisdiction before and after the pronouncement of the decree nisi in February 2019.  He pointed out the husband had passed up five opportunities^[7] before the decree nisi to make the application.  There was further delay of nine months after the decree nisi and no action was taken despite two First Appointment Hearings in this period and the judge’s reminder to the husband that an application would need to be issued if he wished to challenge jurisdiction or forum, otherwise the proceedings would just continue.  As he had failed to observe the duty of promptitude to pursue his complaint and there was no or no proper reason for his lateness, his challenge to jurisdiction should not have been entertained.

34.  In RKL v WL [2016] 1 HKFLR 162, Chu JA (giving the judgment of the court) said at §25 that reading Order 12 rule 8 of the Rules of the High Court with rule 15(1) of the MCR, a respondent who wishes to dispute the jurisdiction of the Hong Kong court over matrimonial proceedings must, first, file a Form 4 containing a statement to the effect that he intends to defend the proceedings, and second, make an application to contest jurisdiction within the time limited for filing an answer to the petition.  In §45, Chu JA quoted from the judgment of Mason NPJ in Re Resource 1 (2000) 3 HKCFAR 187 at 213G to I that there are powerful reasons for thinking that jurisdictional objections should be resolved, as far as possible, at an early stage of an action.

35.  Day v Day [1980] Fam 29 was cited as an example of the need to observe the duty of promptitude.  The husband there gave notice of intention to defend the petition but did not file an answer.  Since the suit was apparently undefended, the registrar entered the cause in the Special Procedure List and issued a certificate under the rules that the wife had proved the contents of the petition.  On the day fixed for pronouncement of the decree nisi, the husband appeared by counsel and showed cause why the decree should not be pronounced because he wanted a reconciliation. The judge gave leave to the husband to file an answer out of time and took the case out of the Special Procedure List.  The English Court of Appeal allowed the wife’s appeal and held that as the requirements of the Matrimonial Causes Act 1973 were complied with when the registrar issued his certificate that the wife had proved the contents of the petition, the wife was entitled to a decree nisi and the pronouncement of the decree by the judge was nothing more than a formality.  Accordingly, the judge should not have entertained the husband’s application to file an answer out of time or granted any relief other than a short postponement of the pronouncement of the decree nisi to give time for an application to be made to set aside the registrar’s certificate.  It was held on the facts that before the directions for trial were given, the husband was properly advised and had ample time to file an answer but did not do so, hoping that the threat of divorce would go away.  Justice of the case did not require there should be a re-hearing or that he should be permitted to defend the suit for divorce.

36.  Mr Todd emphasised that the husband is of great wealth and would have easy recourse to legal services.  Also, none of the solicitors and counsel previously engaged had filed an affidavit to support the husband’s account of why he had failed to issue a timely application to challenge jurisdiction or forum, in particular that he was not “properly advised on the merits of an application to challenge jurisdiction and/or forum if [he] wished to proceed” as alleged by the husband.  And it is a trite proposition of law that bad legal advice does not render a court order void or capable of review.

37.  Mr Todd further submitted that for the husband to challenge jurisdiction after the decree nisi was granted, he should either bring a fresh action raising a claim such as deceit, or to appeal the decision to grant a decree nisi.  In the event that an appeal was brought, the burden is on the husband to show that the judge had been plainly wrong in her finding of fact (ie the wife’s case as pleaded in the petition and supported by her signed statement of truth and her subsequent affirmation, which were not challenged by the husband) or that the judge had exercised her discretion in such a way which no reasonable judge could have done.

38.  In his oral submissions, Mr Todd elaborated on why there should be a reversal or shifting of the burden to the husband to show that the judge was in error in seeking to challenge jurisdiction.  This is because there is tension between a party having obtained a binding order and a challenge by the other party to have it set aside out of time.  The burden should be shifted to the husband otherwise there would be huge uncertainty in a question of status.

39.  We are here concerned with a challenge to the divorce jurisdiction of the Hong Kong courts.  The general proposition, as stated in Champion Concord Ltd v Lau Koon Foo (No 2) (2011) 14 HKCFAR 837 at §54, is that where a court has no jurisdiction to deal with a particular matter, the parties cannot confer jurisdiction on it by consent, nor generally can the operation of estoppel confer jurisdiction where none exists.  Mr Scott submitted that this applies equally to a situation where a party failed to raise a timely challenge to jurisdiction.  In support of this, he cited the decision of the Court of Appeal in W v C (Divorce: Jurisdiction) [2013] 2 HKLRD 602^[8].

40.  In W v C, a decree nisi was granted (§16) and the Family Court proceeded to adjudicate on the issue of custody (§2).  When the husband appealed the order for custody, the Court of Appeal raised, on its own motion (§3), the issue of jurisdiction, as it was questionable on the evidence whether the husband was domiciled in Hong Kong at the date of the petition for divorce as asserted by the wife, even though he did not dispute the assertion or the jurisdiction of the court (§7).  It was held on the evidence that he was not domiciled in Hong Kong at the date of the petition, accordingly the Hong Kong courts had no jurisdiction and this invalidated the order for custody and the proceedings.  The decree nisi, made without jurisdiction, was void as a nullity.  In giving the judgment of the court, Yuen JA said as follows:

“23. No other ground under s.3 MCO has been advanced for the Hong Kong court to have jurisdiction in the divorce proceedings. It does not matter that the Wife asserted it in her petition and it had not been denied by the Husband. Parties cannot confer jurisdiction on a court by consent. As was held in R v R (Divorce: Jurisdiction: Domicile) [2006] 1 FLR 389 at para.6, ‘domicile isdecided by applying the law to the facts … a question of jurisdictionbased on the application of law cannot be compromised’.

24. As Judge Wong’s order under appeal was made within those proceedings, a finding that the Hong Kong court has no jurisdiction has the effect of invalidating the order (and indeed the proceedings). That is the only issue with which this Court was concerned and we do not consider it appropriate to comment on the Husband’s proposed plan of action regarding any applications he may wish to make under other areas of the law.

25. It would also be necessary to declare that the decree nisi, made without jurisdiction, is void as being a nullity (Dennis v Dennis [2000] 3 WLR 1443).”

41.  The two cases referred to in the above extract are instructive.

42.  In R v R (Divorce: Jurisdiction: Domicile), the husband filed for divorce asserting that although neither party was habitually resident in England, both were domiciled in England.  The wife’s solicitors filed an acknowledgment of service giving the UK as her domicile (§3).  A district judge issued a Special Procedure certificate and fixed a date for the pronouncement of a decree nisi (§7).  Prior to the pronouncement, the wife’s new solicitors filed an amended acknowledgment of service deleting the UK as the wife’s domicile and stating her domicile as France.  Another district judge stayed the Special Procedure certificate and transferred the case to the High Court for determination of the issue as to the wife’s domicile.  The court rejected the contention that the cause had been compromised by the original acknowledgment of service (§4), as a domicile could not be acquired or retained by the mere declaration of one of the parties.  The content of a petition did not confer jurisdiction, nor did the failure to assert a sustainable jurisdictional basis deprive the court of jurisdiction, if it existed on grounds other than those pleaded.  It was not possible for the suit to be compromised (§6).

43.  In Dennis v Dennis, the husband obtained a decree absolute without following the statutory pre-requisites (at 171C to F) and remarried in the belief he had been validly divorced.  The irregularities were later discovered, the wife’s solicitors contacted the court and the county court of its own motion convened a hearing to clarify the situation.  The matter was then transferred to the High Court for a hearing (at 167G to H) and the decree absolute was declared void as the county court had no jurisdiction to issue the decree absolute since it had not complied with mandatory statutory requirements (at 169D, 174A).  The county court’s act in ordering a hearing to clarify the situation did not amount to new proceedings separate from the wife’s divorce suit (at 177D to 178A).  It is apparent that there was no need for a fresh action or an appeal to be brought, contrary to the contention of Mr Todd.  That was also the case in W v C, applying Dennis v Dennis.

44.  Yet another example is Armstrong v Armstrong [2003] EWHC 777 (Fam), in which a decree nisi was granted and the husband, who did not file an acknowledgment of service, applied to rescind the decree nisi on jurisdictional grounds and permission to file an answer to the petition and an order staying the petition.  The parties agreed that the decree nisi should be rescinded but were in dispute as to the rest of the applications by the husband (§1).  The wife accepted that the husband was habitually resident in South Africa but contended that he had a second residence in England which founded jurisdiction.  Butler-Sloss P ruled on the issue of jurisdiction whether the husband was habitually resident in England without requiring a fresh action or an appeal to be brought, and without shifting the burden of proof, contrary to what Mr Todd had submitted before us.  On finding for the husband that he did not have a second habitual residence in England, the certificate of entitlement to a decree nisi was set aside and the decree nisi was rescinded.

45.  As rightly pointed out by Mr Scott, no case has been cited in support of the proposition that a decree nisi may only be rescinded by way of fresh action or appeal or that there should be a reversal of the burden of proof.  Once the attention of the court is drawn to questions concerning a jurisdictional issue, it will investigate the matter and come to a view whether there is jurisdiction without requiring fresh action or appeal or the shifting of burden.  If it then concludes there is no jurisdiction, the decree nisi will be rescinded as a result.  We agree with Mr Scott that due to the fundamental importance of the jurisdiction issue, subject to concerns of abusive re-litigation, the court will investigate and if necessary rescind any decree nisi made without jurisdiction.

46.  As for the dilatoriness of the husband in issuing a summons to challenge jurisdiction, it is regrettable that he had not done so much earlier, as a jurisdictional objection should be pursued at an early stage and resolved as soon as practicable.  It does not appear to us there is abusive re-litigation in this instance.  There might well be considerable communication problems between the husband and the legal advisers he engaged until he was represented by the current team, and the problems could well be exacerbated by the fact that he was not in Hong Kong most of the time and only flew in for sporadic consultations and occasional court attendances.  He should have exercised greater diligence nonetheless.  No issue of jurisdiction arose in Day v Day cited by Mr Todd.  We do not think the duty of promptitude should be a governing consideration where jurisdiction is in issue.  This is a proper case to reopen the issue of jurisdiction. 

If the jurisdiction challenge was precluded by res judicata

47.  Mr Todd submitted there was issue estoppel.  When the judge decided to pronounce a decree nisi, she necessarily determined that the court had jurisdiction to do so and must have been satisfied on the evidence as to the requirement of habitual residence pleaded in the petition. The wife’s factual plea of the parties’ habitual residence, supported by her affirmation, was not challenged by the husband at the time.  He was therefore estopped in respect of the underlying facts.  The facts alleged by the wife which formed the basis for the jurisdiction to the decree nisi cannot now be impugned, without more.

48.  Mr Todd made the point that the decision on decree nisi was a de jure finding of jurisdiction, hence it was incorrect for the judge to say in §21 of the Judgment that “the court did determine prima facie that it had jurisdiction … before the issue was properly and fully argued before it”. Section 15(1) of the MCO provides that “In any proceedings for divorce it shall be the duty of the court to inquire, in so far as it reasonably can, into any facts alleged by any party to the proceedings.”  Jurisdiction was such a fact and in granting the decree nisi on 20 February 2019 the court had decided this in the wife’s favour.  The decree nisi was an order in rem against the world affecting status.  A reasoned decision is not necessary for issue estoppel to arise.  The second decision made on 17 July 2020 in the Judgment that the court did not have jurisdiction had thus offended the principles of res judicata.  The judge should not have entertained an attack on the merits.

49.  Reliance was placed on the statements of Buxton LJ in Lennon v Birmingham City Council [2001] IRLR 826 at §30:

“The doctrine [of res judicata] turns not on the reason why the court’s decision to dismiss the claim was consented to by the party making the claim, nor on the reason why a court made the order, but on the simple fact that the order was in fact made. It is for that reason that, in the case of issue estoppel, the court will not re-enter the merits or justice of allowing the proceedings to continue …”

50.  Mr Scott made a number of replies.  Firstly, he submitted that a decree nisi is non-final and by its very nature cannot create any res judicata or issue estoppel.  A decree nisi cannot be considered to be a final judgment for the purpose of founding an issue estoppel unless and until the decree becomes absolute, citing Kemp v Pearce [1972] VR 805 at 811 lines 20 to 45.  Secondly, the concepts of res judicata or issue estoppel should not apply in any event given the nature of the issue being determined is one of statutory jurisdiction, citing J & F Stone Lighting and Radio Ltd v Levitt [1947] AC 209 at 216 (“it is idle to suggest that either estoppel or res judicata can give the court a jurisdiction under the Rent Restriction Acts, which the statute says it is not to have”, per Lord Thankerton); Champion Concord Ltd v Lau Koon Foo (No 2) at §54; W v C at §23; R v R (Divorce: Jurisdiction: Domicile) at §6.  Thirdly, even if the decree nisi were to attract res judicata, jurisdiction is such a fundamental issue that it should be re-opened in the exercise of the inquisitorial jurisdiction under section 15(1) of the MCO.  The principles are as stated by Denning LJ in Thompson v Thompson [1957] P 19 at 28 and 29:

“There is no doubt, to my mind, that if the doctrine of res judicata applies in its full force to the Divorce Division of the High Court, the wife is so estopped. … The question in this case is, however, whether those ordinary principles do apply to the Divorce Division. The answer is, I think, that they do apply, but subject to the important qualification that it is the statutory duty of the divorce court to inquire into the truth of a petition—and of any countercharge — which is properly before it, and no doctrine of estoppel by res judicata can abrogate that duty of the court. The situation has been neatly summarized by saying that in the divorce court ‘estoppels bind the parties but do not bind the court’: but this is perhaps a little too abbreviated. The full proposition is that, once an issue of a matrimonial offence has been litigated between the parties and decided by a competent court, neither party can claim as of right to reopen the issue and litigate it all over again if the other party objects … but the divorce court has the right, and indeed the duty in a proper case, to reopen the issue, or to allow either party to reopen it, despite the objection of the other party … Whether the divorce court should reopen the issue depends on the circumstances. If the court is satisfied that there has already been a full and proper inquiry in the previous litigation, it will often hold that it is not necessary to hold another inquiry all over again: but if the court is not so satisfied, it has a right and a duty to inquire into it afresh. If the court does decide to reopen the matter, then there is no longer any estoppel on either party. Each can go into the matter afresh.” (Emphasis supplied)

51.  The above passage in Thompson v Thompson had been applied and adopted in Laws v Laws [1963] 1 WLR 1133 at 1136 to 1137; Kan Lai Kwan v Poon Lok To Otto (2014) 17 HKCFAR 414 at §§115 to 122.

52.  We agree with Mr Scott.  The court has a right and duty to inquire into the issue of jurisdiction in this instance in exercising its statutory jurisdiction and to act upon evidence which is material to its determination.

Whether the husband had submitted to jurisdiction

53.  It was contended on behalf of the wife that the husband had submitted to jurisdiction at the 1^st First Appointment Hearing on 17 December 2018 when his counsel asked for time to file Form E and had apparently proceeded on the basis that the court had power to deal with matters relating to the custody, care and control of R.  Further, his counsel also indicated that the husband might not even be defending the suit.  The way that his counsel conducted the proceedings at that hearing was consistent only with submitting to, accepting and engaging jurisdiction.

54.  It was further contended that the acts on the part of the husband at the 2^nd First Appointment Hearing on 18 April 2019 were also inconsistent with challenging jurisdiction and consistent only with proceeding on the basis of submitting to, and actively engaging jurisdiction. These acts included the husband’s counsel not proceeding with the proposed challenge to jurisdiction indicated in his skeleton argument when this was objected to during the hearing, and the husband consented to give undertakings to the court which were embodied in the order made.

55.  Before the summons of the husband was issued in November 2019, the judge had made orders at the First Appointment Hearings regarding the First Appointment, Children’s Appointment, Form E, decree nisi, undertakings, Form J, social welfare report, and Children’s Dispute Resolution Hearing.  Mr Todd cited RKL v WL in which the Court of Appeal dismissed the husband’s appeal from the holding that he had submitted to jurisdiction in that he had filed a Form 4 stating an intention not to defend the proceedings and asking to be heard on ancillary reliefs and subsequently filed another Form 4 stating an intention to defend followed by applications to challenge jurisdiction and forum.  The court rejected the submission that a party may take one or more steps in the proceedings, which objectively viewed amount to acceptance of jurisdiction, and thereafter change his mind and mount a jurisdictional challenge without having to obtain leave of the court or to give reasons (at §40).  Thus, Chu JA said in §43: “except where the defendant makes an application to the court as prescribed in [Order 12] r 8(1) and (2), the acknowledgment of service by a defendant shall, unless the acknowledgment is withdrawn by leave of the court, be treated as a submission by the defendant to the jurisdiction of the court in the proceedings.”

56.  We agree with Mr Scott that as submission to jurisdiction is a form of estoppel, it should have no relevance in this situation for the same reasons that res judicata should not apply when the jurisdiction is a statutory one.  As for RKL v WL, this is not a case dealing with the applicability of the submission to jurisdiction principle to the issue of statutory jurisdiction.  The applicability of the submission principle was only dealt with as regards the issue of forum.  At first instance, the wife accepted that the court’s jurisdiction could not be founded on the first Form 4 if neither party had a substantial connection with Hong Kong and it was not in dispute that even if the husband’s applications were defective, the court had power to consider the question of jurisdiction of its own motion.  Hence, the judge only resolved the arguments in respect of submission to jurisdiction on the issue of forum (RKL v WL, FCMC 14906/2014, 17 September 2015, §§15 to 17, 28 to 45).  As a result, the appeal on the issue of submission to jurisdiction was only in relation to forum.

57.  We also have some doubts whether the husband’s conduct could be regarded as submission to jurisdiction. Unlike RKL v WL, the husband had stated in his Form 4 it was his intention to defend the proceedings.  His failure to issue a summons to challenge jurisdiction timeously cannot be regarded as submitting to jurisdiction.  It could not be said that he had actively participated in the proceedings before he issued the summons in November 2019.

If the finding that the parties were not habitually resident in Hong Kong throughout the relevant period can be impugned

58.  The wife sought to challenge the judge’s findings that the parties were not habitually resident in Hong Kong throughout the material period of 8 October 2015 to 7 October 2018.

59.  The judge referred to the relevant legal principles in §§10 to 12 of the Judgment.  There is no serious dispute about the principles. Habitual or ordinary residence refers to “a man’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 for the time being, whether of short or of long duration. … All that is necessary is that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled.” (R v Barnet London Borough Council, ex p Nilish Shah [1983] 2 AC 309 at 343G to H, 344D, per Lord Scarman; adopted in ZC v CN (Divorce: jurisdiction) [2014] 5 HKLRD 43 at §8.1)

60.  The Court of Final Appeal emphasised in Vallejos v Commissioner of Registration (2013) 16 HKCFAR 45 that the question of residence has to be interpreted in a purposive and contextual manner.  The proper approach is to “examine the factual position of the person claiming to be ordinarily resident to see whether there are any special features affecting the nature and quality of his or her residence.  If such features exist, one asks whether they result in that person’s residence being qualitatively so far-removed from what would traditionally be recognised as ‘ordinary residence’ as to justify concluding that he or she is not ‘ordinarily resident’.” (at §81)

61.  Physical presence is a weighty feature in considering whether there is a sufficient degree of continuity in the purpose of living for it to be described as settled.  In Ikimi v Ikimi [2002] Fam 72, a 44% physical residency rate was held to be “just sufficient” foundation for jurisdiction (§§12, 36, 37).  In Armstrong v Armstrong, a 20% residency rate, coupled with the pattern of the husband’s visits, was held to be clearly insufficient (§30).

62.  Mr Todd emphasised that habitual residence is not to be calculated solely by reference to time spent, a point that was made in Armstrong at §30 and was taken note of by the judge in §13 of the Judgment when she examined the parties’ immigration records as “the first port of call” and went on to consider other relevant factors at §§15 to 19. Mr Todd then sought to rely on JEK v LCYP [2015] HKFLR 425 to support his contention that one should look at the degree of stability and integration by R and her parents as a family and socially to see whether the residence in Hong Kong had acquired the necessary degree of stability to become habitual.  But JEK v LCYP was not a case dealing with the habitual residence of the parties to the marriage, the court there was concerned with the habitual residence of the child, the issue being whether the court had jurisdiction over the child under the Hague Convention on child abduction (§§7.1, 7.7).  This was dealt with correctly by the judge in §16 of the Judgment, in which the judge also observed that the immigration records tend to support the husband’s case that in reality much of the day to day care of R must have been taken up by someone other than the wife, namely her sister Y and a domestic helper.

63.  We are not satisfied in this instance that any palpable errors are identified or that the judge’s findings of fact are plainly wrong.  What Mr Todd had done was merely to list a number of factors^[9] which he contended should militate in the wife’s favour to bolster the proposition that it is possible to have two or more habitual residences at the same time^[10], such as the wife’s permanent resident status in Hong Kong, the husband’s intended application for permanent residency at one time, and the registered domicile on the Japanese family registration deeds, all of which have been considered and evaluated by the judge^[11].  Mr Todd was in effect arguing that insufficient weight had been given to them by the judge. This is not a valid basis to interfere with the judge’s findings of fact.

64.  We reject his contention that in seeking to impugn the findings of fact, the burden is not on the wife to show that the judge had made palpable errors or that the judge was plainly wrong.  That burden has clearly not been discharged in this instance.

Conclusion

65.  For the above reasons, none of the grounds of appeal are of merit.  We therefore dismiss the wife’s appeal against the Judgment.

66.  There is no dispute that costs of this appeal should follow the event.  We order the wife to pay the husband’s costs of this appeal, with a certificate for two counsel.

67.  The judge has adjourned the issue of costs generally including the costs arising out of the Judgment and the order dated 17 July 2020, pending the outcome of this appeal.  This should now be dealt with by the judge.  In the event any party should wish to appeal against the costs order to be made by the judge, we will deal with this on paper.

Postscript

68.  The wife’s solicitors filed an application to the registrar on 9 November 2018 (eight days after service of the petition on the husband within which he may give notice of intention to defend under rule 15(2) of the MCR) for directions for the trial of the petition by entry of the cause in the Special Procedure List.  It was contended by Mr Todd that this is permissible by virtue of rule 33(1)(c) of the MCR, given that the husband did not file an acknowledgment of service until 23 November 2018.

69.  Rule 33(1) stipulates that “On written request of the petitioner or of any party who is defending a cause begun by petition, the registrar shall give directions for the trial of the cause if he is satisfied” of one of the matters as listed in paragraphs (a) to (f).  For present purposes, paragraphs (c) and (d) may be relevant and they read as follows:

“(c) if no notice of intention to defend has been given by any party entitled to give it, that the time limited for giving such notice has expired;

(d) if notice of intention to defend has been given by any party, that the time allowed him for filing an answer has expired;”.

70.  Rule 33(2) makes provision for the obligation of the registrar to give directions for trial where the cause is pending, and expressly states that this is “Subject to paragraph (2A)”. Rule 32(2A)(ii) provides that “Where a cause is an undefended cause”, the registrar shall give directions for trial by entering the cause in the Special Procedure List.  The meaning of “undefended cause” is defined in rule 2, and the relevant meaning applicable to the present situation is paragraph (b)(i) which reads: “a cause in which no answer has been filed or any answer filed has been struck out”.

71.  The divorce suit did not become an undefended cause until 29 November 2018, when the husband did not file an answer within 21 days after expiration of the time limited for giving notice of intention to defend, as provided in rule 18(1) of the MCR.  Mr Scott is right in saying that the wife’s application for directions for trial filed on 9 November 2018 was premature.  Before the suit became an undefended cause, it was wrong for the registrar to entertain the wife’s application for directions for trial on 20 November 2018 by asking her to deal with outstanding matters pursuant to rule 33(2A)(i) with the view of entering the cause in the Special Procedure List.