GM-SA also known as DG, M S v. DDPJ

CACV 495/2019 and
CACV 496/2019
(Heard together)

[2020] HKCA 488

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 495 OF 2019 AND 496 OF 2019

(ON APPEAL FROM FCMC 9657/2016)

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J U D G M E N T

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

Introduction and Background

1.  These are appeals by the Respondent husband (“the husband”) against the rulings of Her Honour Judge Sharon D. Melloy dated respectively 27 September 2018 ([2018] HKFC 164) (the “Jurisdiction Ruling”) and 3 June 2019 ([2019] HKFC 142) (the “Substantive Ruling”) in respect of the Petitioner wife (“the wife”)’s summons dated 8 February 2018 (the “Summons”).  In the Summons the wife seeks, inter alia, directions in relation to the chattels held at the former matrimonial home as well as the former matrimonial home itself.

2.  The background of the matter has been set out in [3]-[8] of the Jurisdiction Ruling and [2]-[4] of the Substantive Ruling.  In short, the husband and wife previously reached agreement in relation to both the arrangements for the children (who were 11 and 9 in 2017, see [5] of the Ruling on Leave to Appeal of 24 April 2017) and ancillary relief, as a result of which consent orders were made on 20 September 2016 in FCMC 9657/2016 (the “Family Proceedings”), one in relation to the children and one in relation to ancillary relief (“AR Order”).

3.  In particular, the parties agreed that the wife would obtain full ownership over the former matrimonial home (the “Bisney Property”) after paying off the mortgage over the property with her own funds; the husband, on the other hand, would obtain full ownership over three overseas properties, known as the “Bali Property”, the “Paris Property”, and the “Sumba Land”.

4.  Subsequently, the husband found out that the wife had formed a serious relationship with a third party and wished to relocate to Switzerland with the children in order to join that third party there.  The husband therefore (after unsuccessfully seeking leave to appeal from this Court) issued a High Court writ in HCA 2431/2017 on 20 October 2017 seeking, inter alia, to set aside the AR Order on the basis of “material non-disclosure and/or misrepresentation” (the “High Court Action”).  He had not sought any interim relief regarding the AR Order in the context of the High Court Action or the Family Proceedings.  In the meantime, the wife has complied with her undertakings contained in the AR Order, including paying off the mortgage over the Bisney Property with her own funds and taking the necessary steps to effect the transfer to the husband of the full ownership over the Paris, Bali and Sumba properties.  The husband, on the other hand, has not taken steps to transfer the Bisney Property to the wife.

5.  On 31 October 2016, the wife took out a summons (the “1^st Summons”) in the Family Proceedings seeking, essentially, to enforce the AR Order, by seeking an order for the transfer of the Bisney Property and the transfer of a number of shares.  On 3 November 2017, upon the consent of the parties, an order (the “Adjournment Order”) was made that, upon certain undertakings by each party, the application be adjourned sine die to be determined if need be after the determination of the High Court Action or until further order.

6.  On 15 November 2017, decree absolute was pronounced in the Family Proceedings.  According to paragraphs 1 and 2 of the AR Order, the parties’ claims against each other in ancillary relief were dismissed upon such pronouncement.

7.  On 8 February 2018, the wife took out another summons (the “2^nd Summons”) in the Family Proceedings seeking, inter alia:

(1)  Variation of the wife’s undertaking in Recital D of the Adjournment Order in respect of the chattels in the Bisney Property (other than her and the children’s personal belongings) and directions for, inter alia, a full inventory and valuation of such chattels;

(2)  Leave to sell the Bisney Property; and/or

(3)  Alternative to an order for sale of the Bisney Property, an order that:

(a)  Leave be granted to the wife to rent out the Bisney Property;

(b)  The wife to provide an account of all rental income generated from such renting out;

(c)  The husband to account for all income generated from renting out the Paris, Bali and Sumba properties;

(d)  Neither the Bisney Property, the Bali Property, the Paris Property or the Sumba Land may be sold, transferred, mortgaged or otherwise disposed of pending the final resolution of the High Court Action or until further order.

8.  As a result of the husband’s challenge to the Family Court’s jurisdiction to hear the 2^nd Summons, a preliminary hearing was held on 21 September 2018 to resolve the jurisdiction issue.  This led to the Judge’s Jurisdiction Ruling on 27 September 2018.

9.  By a summons dated 19 November 2018, the husband sought leave to appeal against the Jurisdiction Ruling from this Court.  By a judgment dated 28 December 2018, this Court adjourned the application for leave sine die with liberty to restore after the final determination of the 2^nd Summons by the Family Court.

10.  The substantive hearing of the 2^nd Summons took place in the Family Court on 25 March 2019. The Judge delivered the Substantive Ruling on 3 June 2019 and ordered (the “Substantive Order”) that, inter alia:

(1)  The chattels in the Bisney Property be removed from the Bisney Property and placed in safe professional storage pending final determination of the High Court Action or until further order, unless the parties could agree that a particular chattel be taken by one or the other of them within 21 days of the order;

(2)  The husband to provide a full account of all rental income from renting out the Bali Property, the Paris Property and the Sumba Land;

(3)  Leave be granted to the wife to rent out the Bisney Property;

(4)  The wife to provide an account for all rental income from renting out the Bisney Property;

(5)  Neither the Bisney Property, the Bali Property, the Paris Property or the Sumba Land may be sold, transferred, mortgaged, or otherwise disposed of pending final resolution of the High Court Action or until further order;

(6)  The husband to pay the costs of the application.

11.  After unsuccessfully seeking leave to appeal from the Judge, by a summons dated 17 September 2019, the husband sought leave from this Court to appeal against the following parts of the Substantive Order:

(1)  That the Bali Property may not be sold, transferred, mortgaged or otherwise disposed of pending final resolution of the High Court Action or until further order; and

(2)  The husband to pay the costs of the wife’s application by the 2^nd Summons.

12.  At the hearing of the husband’s summons on 18 October 2019, this Court granted leave to the husband to challenge the part of the Substantive Order in respect of the Bali Property on both the jurisdiction point and the discretion point, as well as leave to challenge the part of the Order as to costs.

Grounds of Appeal

13.  On 25 October 2019, the husband lodged two Notices of Appeal (“NOA”) in CACV 495/2019 and CACV 496/2019.

14.  The grounds of appeal as against the order in respect of the Bali Property focused on the following issues:

(1)  Whether the Judge had jurisdiction to make any order in respect of the properties covered by the AR Order after the issue of the writ in the High Court Action seeking to set aside the AR Order (the “Jurisdiction Issue”).

(2)  Whether there was an erroneous exercise of discretion in respect of the Bali Property (the “Discretion Issue”).

15.  The ground of appeal against the costs order focused on the issue of whether the husband prevailed in respect of the majority of the contentious issues before the Judge (the “Costs Issue”).

16.  In light of the course adopted by the husband in issuing CACV 496/2019 and some submissions now advanced on behalf of the husband, it is necessary to reiterate that at the hearing on 18 October 2019, the only leave granted was in respect of the challenge regarding the Bali Property and the costs order.  This Court had not granted leave to him to appeal against the other parts of the order of 3 June 2019.  At the hearing, this Court had specifically queried the scope of the challenge with Mr Pilbrow and counsel had confirmed that leave to appeal was only sought regarding the Bali Property and the costs order[1].

17.  The Court had also intimated that it would be sufficient for leave to be granted in CAMP 229/2019 without further leave being necessary for CAMP 171/2018[2].

18.  Notwithstanding that, when the Notice of Appeal came to be issued, those acting for the husband issued two notices of appeal and in the Notice of Appeal for CACV 496/2019 he sought these relief:

(1)  Leave to appeal against the Ruling of 27 September 2018;

(2)  Stay of the AR Order pending the determination of the leave application and the appeal;

(3)  Costs.

19.  Thus, those acting for the husband was aware that this Court had not granted any general leave to challenge the Jurisdiction Ruling.

20.  At the same time, the grounds of appeal set out in the Notice of Appeal for CACV 495/2019 covered the jurisdiction point as well as other points taken by the husband against the order regarding the Bali Property and costs.  Thus, it was quite clear that those acting for the husband had taken on board the approach suggested by this Court at the hearing on 18 October 2019.

21.  In light of the limited extent to which leave to appeal was granted on 18 October 2019, we cannot see the basis for the husband to issue CACV 496/2019.  It is well established that an appeal brought without leave is incompetent and such appeal should be struck out: Fok Hing (HK) Trading Ltd v Gunawan-Indra CACV 74/2014, 4 July 2014; Kwok Cheuk Kin v Leung Chun Ying [2018] 4 HKC 440; Leung So Hung Siem v Carson Wen [2019] 1 HKLRD 1123.  

22.  It is not an answer to seek leave to appeal in the Notice of Appeal.  This is not the correct procedure.  Application for leave to appeal should be made by a separate application by summons taken out by way of CAMP: see Order 59 Rule 2A(1).

23.  In the present instance, application had indeed been made for leave to appeal against the Jurisdiction Ruling in CAMP 171/2018.  That application was restored before this Court on 18 October 2019 and after hearing counsel we did not grant any leave for a general challenge to the Jurisdiction Ruling.

24.  By reason of Section 14AA of the High Court Ordinance, the refusal of leave for such general challenge in the context of CAMP 171/2018 is final.

25.  In the circumstances, CACV 496/2019 is brought without leave and is incompetent.  We therefore strike out and dismiss the same.

26.  The challenge to the Jurisdiction Ruling in the context of the order regarding the Bali Property will be considered in the context of

A.  The Jurisdiction Issue

27.  Mr Pilbrow (together with Ms Madeleine Booth), on behalf of the husband, submitted that, pursuant to paragraphs 1 and 2 of the AR Order, the parties’ claims against each other in ancillary relief were dismissed.  Upon such dismissal, the Family Court no longer had any jurisdiction to vary the AR Order and only had jurisdiction to make orders for its enforcement and implementation.

28.  Mr Todd, in his submissions, argued that the Substantive Order in respect of the Bali Property was made by the Judge in the exercise of her undoubted jurisdiction in terms of the enforcement/implementation of the AR Order.

29.  In the judgment of this Court (Lam V-P and Kwan JA, as she then was) on 28 December 2018 in CAMP 171/2018 [2018] HKCA 1009, it was held that the Judge was plainly right in holding that the Family Court retained the jurisdiction to consider matters relating to the implementation and/or enforcement of the undertakings given to court in the context of the AR Order.

30.  Mr Pilbrow, however, contended that, after the husband took out the writ in the High Court Action to set aside the AR Order, the Family Court would have no jurisdiction to entertain any application in respect of the AR Order, whether it is an application to vary, enforce or implement the order, pending the conclusion of the High Court proceedings.

31.  Mr Pilbrow’s submissions started with the following propositions, which are well-established and not in dispute:

(1)  In Hong Kong, the only ways for a party to set aside a consent order made in the Family Court are (a) by way of appeal to the Court of Appeal or (b) by bringing a fresh action to set aside the order.  This has been well established since the Privy Council decision in De Lasala v De Lasala [1980] AC 546: Wong Oi Han v Sin Wai Chung [2012] 3 HKC 533, at [14]-[15] per Poon J (as he then was); Lui Sik-kuen v Lee Suk-ling (unreported, CACV 23/1992, 19 June 1992).

(2)  In cases where issues of fact will need to be resolved, a fresh action, as opposed to appeal, is more appropriate: WTOL v WYPP (unreported, CACV 241/2011, 18 July 2012), at [35] per Tang VP (as he then was).

32.  Indeed, it was on the basis of the aforesaid principles that this Court dismissed the husband’s previous application for leave to appeal against the consent orders.  See the Reasons for Decision dated 14 September 2017 in HCMP 1052/2017, at [7(1)], per Cheung JA.

33.  Relying on the aforesaid principles as the starting point, Mr Pilbrow argued that (1) any “fresh proceedings” to set aside the consent order can only be brought in a superior court, namely, the High Court, but not the District Court or the Family Court and that, therefore, (2) once such a fresh action has been taken out in the High Court, the Family Court’s jurisdiction in respect of the consent order would be terminated, including the jurisdiction to make orders for the enforcement or implementation of the consent order.  Put another way, Mr Pilbrow’s submissions is that once the writ had been issued in the High Court Action, the Family Court no longer had any jurisdiction to vary, enforce or implement the AR Order; instead, all matters in respect of the AR Order should be dealt with only by the High Court judge seized with the setting aside application, until such time as the High Court proceedings are completed.

34.  With respect, we do not accept Mr Pilbrow’s submissions.

A.1  The Court in which a Fresh Action to Set Aside must be Brought

35.  For the reasons set out below, we are not persuaded that the “fresh action” to set aside the consent order can only be brought in the High Court, as opposed to the District Court. In the Reasons for Decision dated 14 September 2017 in HCMP 1052/2017, Cheung JA stated: “As the law now stands, there is no jurisdiction to apply to set aside the consent orders before the Judge who made them.” But his Lordship did not express any view on whether it was possible to bring a fresh action to set aside the consent orders in the District Court.  Nor did the court in that case considered the possibility of the fresh action being listed back to the same judge presiding over the family proceedings.

36.  Whilst it is indeed well settled in Hong Kong that a “fresh action” has to be brought to set aside a consent order, there is no discussion in most of the cases on the level of court at which such an action should be brought.

37.  In Lui Sik Kuen (supra), Fuad VP (as he then was) suggested that the fresh action should be brought “by writ in the High Court” (see pp.10 to 12) by way of a passing comment.  But there was no consideration as to whether the fresh action could be brought in the District Court.  The real issue in that case was whether an application to set aside a consent order may be brought by way of summons in the existing set of proceedings.  The Court of Appeal (consisting of Fuad VP, Penlington and Nazareth JJA, as they then were) answered the question in the negative, following De Lasala (supra).  None of the three judges expressed any definite view as to the level of court in which a fresh action to set aside should be brought.

38.  Mr Todd relied on the decision in WTM v LNCA [2012] HKFLR 159 to argue that a “fresh action” to set aside a consent order may be issued in the District Court, provided that it can be brought within the civil jurisdiction of the District Court.  In WTM v LNCA (supra), Judge KW Wong, in considering the wife’s application for leave to appeal against the consent order to the Court of Appeal, examined the relevant authorities including, Lui Sik Kuen (supra).  At [52] of the judgment, Judge KW Wong set out the following guidelines which, in our opinion, correctly summarized the relevant principles set out in previous authorities:

(1)  As the law currently stands in Hong Kong, it is not possible to set aside a consent order which finally disposes of a financial claim on the grounds of fraud, misrepresentation or material non-disclosure by way of re-hearing before the same judge.

(2)  The only ways of launching the challenge are either by lodging an appeal to the Court of Appeal or starting a fresh action.

(3)  If the evidence is so over-whelming one way or the other, the matter can be proceeded with by way of an appeal relying on affirmation evidence.  If the appeal is successful, the question of ancillary relief can be restored in the same matrimonial suit for further determination.

(4)  If there is serious dispute of facts, a fresh action should be issued to set aside the order in a court of competent jurisdiction so that the particulars of fraud and misrepresentation can be exactly pleaded, defined and identified, the issues fought out, evidence tested and the facts established by the court.

(5)  If the consent order was set aside the aggrieved party can restore an ancillary application in the matrimonial proceedings.

39.  On the issue of whether a fresh action could be brought in the District Court, the judge had the following to say (at [54]):

“ … A Judge in the Family Court is a District Judge designated to hear matrimonial and family cases. They still retain the full powers and authorities to dispose of matters falling within the District Court Ordinance and other empowering statutes. I consider that any action issued in the District Court by writ in its Civil Jurisdiction for setting aside can be competently disposed of by any District Judge. …”

40.  We respectfully agree with Judge KW Wong.  The jurisdiction of a District Judge to hear an application to set aside a consent order for fraud or mistake stems from Section 37(1)(g) of the District Court Ordinance (Cap.336) (“DCO”), see Salekipour v Parmar [2018] 2 WLR 1090 at [74] and the exercise of that jurisdiction is subject only to the monetary limits set out in Section 37(2)(g).

41.  Practice Direction SL 10.3 is a Guidance on Setting Aside a Consent Order on Ancillary Relief.  It was issued by the Chairman of the Family Proceedings Court Users’ Committee on 18 January 2019 after due consultation with the legal profession.  It deals with the practice and procedure for setting aside a consent order on ancillary relief where no error of the court is alleged.  Paragraph 4 of PDSL 10.3 provided that an application for setting aside a consent order on ancillary relief shall be made “by way of fresh action in the Court of First Instance or, where the District Court has the jurisdiction under Part IV of the DCO, in the District Court”.  Paragraph 6 further sets out the procedure for transfer of proceedings commenced in the Court of First Instance to the District Court.

42.  The Guidance is perfectly in line with our analysis above.

43.  Mr Pilbrow however argued that PDSL 10.3 was ultra vires and wrong in stating that an application might be launched in the District Court or be transferred from the High Court to the District Court.  Counsel’s submissions hinged on the proposition that in Hong Kong, like what happened in England, it is necessary to enact primary legislation to enable a jurisdictional change at the Family Court level to empower the Family Court to have jurisdiction to set aside its own order.

44.  With respect, counsel failed to understand the jurisdictional basis for a District Judge to hear a fresh action for setting aside a consent order.  As explained above, under the existing statutory framework, a District Judge does have jurisdiction to entertain such action under Section 37(1)(g) of the DCO so long as the subject matter in the case is within the monetary limits set by Section 37(2)(g).  In Hong Kong, our Family Court is part of the District Court and a Family Judge is ex officio a District Judge: see YBL v LWC [2017] 1 HKLRD 823 at [70].  A Family Judge can therefore exercise the power of a District Judge without any need for statutory changes.

45.  The legislative changes in England focused on enabling a setting aside application to be taken out by way of re-hearing or by way of summons in existing proceedings without the need to bring a “fresh action”: see, e.g. Rayden & Jackson on Divorce and Family Matters (18^th Ed, 2005), [18.44]-[18.45]; Rayden & Jackson on Relationship Breakdown, Finances and Children (Issue 6, 2017), [28.366]-[28.368].

46.  Previously, even before such legislative changes, the English authorities did not suggest that the “fresh action” could only be taken out at a “higher” level of court; rather, the emphasis was that the action should be brought before “a judge at first instance”: see e.g. Robinson v Robinson (Disclosure) [1983] 4 FLR 102, at p.114B per Ormrod LJ; B-T v B-T [1990] 2 FLR 1, at p.12.  The contrast was between an appellate process and a fresh action before a first instance judge.

47.  Such contrast was made because of the ineptitude of an appellate process to resolve factual issues requiring the hearing of evidence.  So long as there is an original process with a first instance judge making the necessary findings after hearing evidence, it matters not whether it is heard by a judge in the District Court or a judge in the High Court.

48.  Mr Pilbrow cited no authority to support his stance that a District Judge cannot set aside an order of a Family Judge in a fresh action commenced in the District Court.  As it is an original process, there is no need in principle for commencing the fresh action in a court at a higher level in the judicial hierarchy as in the case of an appellate process.  The setting aside is not based on errors on the part of a judge of co-ordinate jurisdiction.  It is based on the fraud or misrepresentation or concealment by the defaulting party.  Bearing in mind the true basis for a claim for setting aside a consent order, an action can be brought in a first instance court to set aside an order made in a court of higher level on the basis of fraud or misrepresentation: see Jonesco v Beard [1930] AC 298, at 300-301, per Lord Buckmaster; Flower v Lloyd (1877) 6 Ch D 297 and (1879) 10 Ch D 327; Kuwait Airways Corporation v Iraqi Airways Co (No 2) [2001] 1 WLR 429 at [22]-[27] and [2003] EWHC 31 (Comm).  

49.  For these reasons, we do not accept that a fresh action to set aside a consent order made by the Family Court must be brought in the High Court under the current law of Hong Kong.  The only constraint is the monetary limits in Section 37(2)(g) of the DCO.

50.  Paragraph 6 of PDSL 10.3 suggests that an action for setting aside consent order commenced in the High Court can be transferred to the District Court pursuant to Sections 43 or 44 of the DCO.  On such transfer, it can be heard by a Family Judge or the original Family Judge whose order is the subject of the setting aside action. Section 43 is for cases which fall within the jurisdictional limits of the District Court.

51.  Under Section 44 of the DCO, it is possible for an action commenced in the High Court to be transferred to the District Court even if the claim is outside the jurisdictional monetary limits of the latter.  The only qualification is that the consent of the parties is required.  Upon such transfer, such monetary limits would not bar the District Court from hearing the action, see Section 44(3) of the DCO.

52.  Such guidance was given with a view to procure, insofar as it is appropriate to do so, all matters (the setting aside action as well as the ancillary relief application, if the consent order is set aside) being heard by the same judge.  Such a course has the obvious advantage of putting everything in the right perspective and avoiding multiplicity of proceedings.

53.  This is in line with modern litigation case management approach: c.f. Edgerton v Edgerton [2012] 1 WLR 2655 at [51], [52], [60] and [61]. At [52], Lord Neuberger MR (as he then was) said,

“ … while there will, of course, be cases where the family court judge will direct that a preliminary issue as to ownership of assets, involving a third party, be heard in another Division as a preliminary issue, the better course is normally for the family court to determine the issue … Continuity of judicial involvement is desirable both for efficiency and for consistency of decision-making. There will be cases where it may be appropriate to hive off some issues and send them to another Division of the High Court, but it should only be when relatively technical issues, outside the familiar family law territory, are likely to be raised and to play an important part.”

54.  That was said in the context of preliminary issue.  We respectfully take the view that the same approach should be adopted in case managing the hearing of a fresh action for setting aside a consent order and matters arising from the underlying ancillary relief application.  See also the observations of Lord Wilson in Gohil v Gohil [2015] 3 WLR 1085 at [18].

55.  Given that consent of the parties is essential for a transfer under Section 44(3) of the DCO, there will be cases where the setting aside action remains in the High Court.  In such cases, consideration should be given to have the family proceedings transferred to the High Court as a matter of good case management.

56.  As a general comment (which is not applicable in the present case since the High Court Action has already been commenced), we note that under Section 41 of the DCO, when a claim outside the jurisdictional limit is brought in the District Court (like a claim for setting aside a consent order concerning subject matters outside the monetary limits under Section 37(2)(g) of the DCO), the District Court can transfer the same to the High Court.

57.  If it is a counterclaim which is outside the jurisdictional limits, the District Court can report to the Court of First Instance under Section 41(3)(c) of the DCO if it were of the view that the whole proceedings should be heard and determined by the District Court.  In that event, the Court of First Instance may order the whole proceedings be heard and determined in the District Court under Section 41(4)(b) of the DCO.  In that event, the District Court shall have jurisdiction to hear and determine the whole proceedings by virtue of Section 41(6).

58.  In a sense, a fresh action to set aside a consent order is similar to a counterclaim against a claim for the enforcement or implementation of the consent order.  In the absence of arguments from the parties, we are not going to decide if the procedure in Section 41 of the DCO can be utilized for such situations.  However, it is a direction which can be explored (for legislative amendments or otherwise) because this procedure would provide the avenue for a joint effort by the District Court and the Court of First Instance in deciding the appropriate forum for a global resolution of the disputes. 

59.  We are aware that there is an application by the wife for transfer pending in the High Court Action and an application for transfer by the husband pending in the Family Court.  The exercise of discretion in these applications should be informed by the approach discussed in this judgment.

A.2  The Effect of the Commencement of a High Court Action to Set Aside a Consent Order

60.  Even in cases where, as in the present case, an action has already been brought in the High Court, there is no principle of law which mandates that the commencement of the High Court action would automatically stay the enforcement of the consent order, or extinguish the jurisdiction of the Family Court to enforce or implement the order, as suggested by Mr Pilbrow.

61.  Mr Pilbrow argued that, once a High Court action has been taken out to set aside the consent order, the Family Court is deprived of any jurisdiction in respect of the consent order, even in matters involving the enforcement and implementation of the order, and that all relevant matters must be dealt with only by the High Court until the completion of the High Court proceedings.  He argued that this must be the case because, otherwise, conflict between the Courts could potentially arise as well as significant risk of delay and additional costs where the Family Court operates on the basis that it continues to have jurisdiction over a case when substantive overlapping subject matter is pending determination in the High Court.

62.  We are unable to accept that there is a rule of law that proceedings in the Family Court should automatically be stayed or that the Family Court’s jurisdiction over the enforcement or implementation of the consent order will automatically be extinguished even without any application by the party challenging the consent order.

63.  With respect, the case cited by Mr Pilbrow, Livesey v Jenkins [1985] 1 AC 424, does not support such proposition.  At p.434E, Lord Brandon only referred to the fact that the wife in that case decided not to proceed with the intended sale of the former matrimonial home in view of the setting aside proceedings brought by the husband without laying down any principle of law.

64.  In our judgment, notwithstanding the commencement of the High Court Action, the Family Court is still seised of the family proceedings.  Until and unless the family proceedings are transferred to the High Court, the Court of First Instance (where the fresh action is litigated) does not have jurisdiction to deal with the family proceedings.  As Mr Todd rightly pointed out, the Family Court (as part of the District Court) has power to stay proceedings before it, where it thinks fit to do so, either of its own motion or on the application of any person under Section 48(5) of the DCO, and terms and conditions can be imposed as a matter of discretion under Section 48(1)(a) of the DCO.  The power to stay enforcement proceedings is an inherent part of the jurisdiction in respect of enforcement and implementation matters.

65.  In other words, until a transfer of the family proceedings is ordered, questions relating to the enforcement and implementation (and thus, stay) of the consent order should be addressed in the Family Court.

66.  Though as a matter of discretion the Family Court should take account of ongoing proceedings in the High Court to set aside a consent order when there is an application for the enforcement or implementation of the consent order, it does not follow that the Family Court must stay the family proceedings.  There are other relevant considerations which the Court must have regard to before deciding if the enforcement or implementation of the consent order should be stayed and if so, on what terms.

67.  An application can be made to the Family Court under Rule 32 of the Matrimonial Causes Rules Cap 179A (“MCR”) for the transfer of the family proceedings to the High Court. There is however no statutory provision for the making of an application to the High Court for the transfer of proceedings from the Family Court to the High Court.

68.  This is consistent with the legislative intent that family proceedings should primarily be litigated in the Family Court as provided under Rule 10A(1) of the Matrimonial Causes Ordinance Cap 179.

69.  Thus, a party challenging a consent order should make an application to the Family Court to seek a stay of the enforcement or implementation of the consent order.  He may also ask for a transfer of the proceedings to the High Court at the same time. If he did not do so, the other party may still seek to enforce the order in the Family Court.

70.  This was precisely what happened in the present case.  After the commencement of the High Court Action, the husband had not taken out any summons for interim stay of the consent order before the wife sought to enforce the same by the 2^nd Summons.  We firmly rejected Mr Pilbrow’s suggestion that the husband had already sought an interim stay[3] when he did not take out any summons for such purpose before the Judge (or in the Court of First Instance, though that court would not have jurisdiction to entertain a stay until the family proceedings are transferred to it).  Though the 1^st Summons was adjourned by consent pending the determination of the High Court Action or until further order[4], there had not been any order for the stay of the proceedings in the Family Court generally.  This was the context in which the Judge came to consider the Jurisdiction Issue and the Discretion Issue. 

71.  In such circumstances, we have no doubt that the Judge did have jurisdiction to consider the 2^nd Summons.  Whether she was correct in making the order as she did on 3 June 2019 in the exercise of discretion in light of the High Court Action shall be examined below.  But that is not a question of jurisdiction.

A.3  Conclusion on the Jurisdiction Issue

72.  Our conclusion on the Jurisdiction Issue is, therefore:

(1)  Given the parties’ claims against each other had been dismissed upon the pronouncement of the Decree Absolute on 15 November 2017, the Family Court no longer had any jurisdiction to vary the AR Order and only retained jurisdiction to make orders for its enforcement or implementation.

(2)  Notwithstanding the on-going High Court Action whereby the husband seeks to set aside the AR Order, the Family Court continues to have jurisdiction over the enforcement and implementation of the terms of the order.

(3)  There is no automatic stay of any enforcement proceedings in the Family Court upon the commencement of the High Court Action.  It is for the husband to seek a stay of the AR Order if he wishes to do so.

(4)  The Family Court has jurisdiction to stay the order, on the terms and conditions as it sees fit, under Section 48 of the DCO.  For the reasons explained below, the part of the Substantive Order restraining the sale etc of the Bali Property was in the nature of a conditional stay of the AR Order.  As such, it was within the Judge’s power of enforcement and implementation to make such an order.

73.  It follows from the above that the challenge on the basis of the Jurisdiction Issue must fail.

B.  Discretion Issue

B.1  The proper forum for considering the stay or enforcement

74.  Mr Pilbrow submitted that with the commencement of the High Court Action, all issues related to the AR Order should be litigated in the High Court.

75.  Whilst we agree that the courts should exercise their case management power with a view to avoid multiplicity of proceedings, we do not agree with the submissions of Mr Pilbrow.

76.  First, as we have explained, the High Court does not have jurisdiction over the family proceedings and it has no power to order the transfer of such proceedings to the High Court.  Hence, the question of transfer or stay of the family proceedings must first be addressed in the Family Court.

77.  Second, in most cases, unless the consent order is made at a very early stage of the family proceedings, the Family Judge would be more familiar with the case than a judge of the Court of First Instance when the stay application falls to be considered. 

78.  Third, a Family Judge is usually more attuned than a judge in the Court of First Instance hearing an ordinary civil action to issues and implications arising from the relevant matters and circumstances which would arise from a general stay of a consent order or conditions set for the grant of such stay.  For example, if the implementation and enforcement of a consent order is essential for the maintenance and upkeep of a party or some children of the family, the court must ensure that sufficient provisions are made in that regard before granting a stay.  As held by Lord Neuberger in Edgerton v Edgerton, supra, a Family Judge is usually more familiar with considerations of this kind as part of the family law territory.

79.  Fourth, since the application for stay has to be made in conjunction with an application for transfer made at the Family Court, it would be more expeditious for the stay application to be processed in that court than to reserve it to the Court of First Instance after the proceedings are transferred.

80.  Fifth, in assessing the extent to which the impugned consent order should be stayed and the terms and conditions for such stay, there is no need (and it is often quite impossible) for the court to come to a definite view on the prospect of success of the application to set aside.  So long as the application to set aside has a reasonable prospect of success[5], there have to be some form of interim measures to safeguard the positions of both parties.  Thus, it is not essential that the forum for deciding the stay application should be the same as the forum which would eventually try the fresh action.

81.  On the facts and circumstances of the present case, where the husband did not take out any effective application for stay and had yet to take out an application for the transfer of the Family Proceedings[6], we are of the view that the Judge was plainly correct in entertaining the 2^nd Summons instead of referring the same to the Court of First Instance.

B.2  Nature of the Order Restraining the Sale of the Bali Property

82.  Before moving on to discuss the Discretion Issue, it is necessary to determine whether the part of the Substantive Order restraining the sale, transfer, mortgage or otherwise disposal of the Bali Property is in the nature of a freezing order.  Mr Pilbrow argued that insofar as it restrains any dealing with the Bali Property, the order amounted to a freezing order, which could only be granted if a risk of dissipation could be established.

83.  Mr Todd, on the other hand, argued that paragraph 7 of the Substantive Order (the “Restraint on Disposal”), which imposed restriction on the sale, transfer, mortgage or otherwise disposal of all the four properties, i.e. the Bisney Property, the Paris Property, the Bali Property and the Sumba Land, was in the nature of an order for the conditional stay of the AR Order.

84.  We agree with Mr Todd that the Restraint on Disposal is in the nature of an order for conditional stay.  The Restraint on Disposal was ordered as an alternative to the order for the sale of the Bisney Property sought by the wife in the 2^nd Summons, which is an application for the enforcement/implementation of the AR Order.  For the reasons set out above, the AR Order was not automatically stayed notwithstanding the issue of the High Court Action.  Without a stay, the husband remained obliged to transfer to the wife all his legal and beneficial interest in the Bisney Property pursuant to his undertaking in Recital Q of the AR Order.

85.  Instead of ordering the husband to comply with his undertaking in the AR Order, the Judge made the Restraint on Disposal Order which was clearly intended to preserve the status quo on an equal footing between both parties pending the final resolution of the High Court Action.  In our judgment, this is an exercise of the Judge’s discretion to order a conditional stay of the AR Order on the Court’s own motion under Section 48 of the DCO.

86.  It is not uncommon for a stay of enforcement proceedings to be granted on terms and conditions.  Such terms and conditions are imposed to safeguard the interests of the party who is restrained in the meantime from enforcing an order which had been made in his or her favour.  In so doing, the Court embarks on a “balancing exercise” to consider the prejudice that would be caused to the successful party in the event a stay is granted and if necessary, to impose conditions so as to minimize the prejudice caused to him or her: c.f. Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, at [9(9)], per Ma J (as he then was).

87.  Thus, the Court’s jurisdiction to impose terms and conditions on a stay of a consent order is not the same as its jurisdiction to grant a Mareva-type injunction.  The exercise of the former jurisdiction is not dictated by the principles governing the latter.  There is no need for the wife to establish any risk of dissipation before the Judge can properly impose the Restraint on Disposal as a measure to preserve the status quo to safeguard the interests of the wife due to her inability to enforce the AR Order in the meantime.  The husband cannot pre-empt the wife from resorting to the Bali Property to compensate her against the delay in the full implementation of the AR Order (e.g. the market value of the Bisney Property may drop substantially during the period of stay).  In other words, the Restraint on Disposal is the price that the husband has to pay by preventing the wife from having full benefit of the AR Order pending the determination of his claims in the High Court Action. 

B.3  Exercise of Discretion

88.  In addition to the absence of a risk of dissipation, the husband further challenged the Restraint on Disposal on the basis that it was unreasonable, unnecessary and excessive in the circumstances of the case.  In particular, Mr Pilbrow argued that the value of the Bisney Property, the Paris Property and the Sumba Property was more than sufficient to cover any claims the wife may have in ancillary relief.  He did not, however, explain why the wife was over-secured by reference to the value of the matrimonial assets.

89.  The value of the assets in the “matrimonial pot”, as agreed by the parties in the asset schedule (“Asset Schedule”) annexed to the AR Order, is around US$40 million / HK$320 million.  As the Judge observed, under the AR Order, the wife would receive approximately 47% of the pot (approximately US$18 million) and the husband the remaining 53% (US$20 million) ([3] of the Substantive Ruling).

90.  The value of the four properties subject to the Restraint Order, according to the Asset Schedule, are as follows:

Property	Amount (USD)
Paris Property	3,000,000
Bali Property	1,500,000
Sumba Land	467,273
Bisney Property
Bisney 1F	5,149,994
Bisney 2F	5,793,743
Total Value of          Bisney 1F + 2F	10,943,737
Less Mortgage on 2F	(1,681,423)
Net Value of    Bisney 1F + 2F	9,262,314
Total Net Value of       Paris + Bali + Sumba + Bisney	14,229,587
Total Net Value of       Paris + Sumba + Bisney	12,729,587

91.  Even including the Bali Property, therefore, it would seem that the value of the properties subject to the Restraint on Disposal does not exceed the wife’s share of US$18 million.

92.  Even taking into account that the wife had about US$6.8 million odd of the matrimonial assets under her name, and hence was not entitled to the full sum of US$18 million, Mr Pilbrow did not explain how much out of the US$18 million the wife should be entitled to preserve.  As submitted by Mr Todd, the wife had paid off the mortgage of the Bisney Property at US$1.68 odd million.

93.  Further, there is no reason why the wife should be confined to having recourse to the Paris and Sumba Properties to make good for the fall in market value of the Bisney Property in the meantime (which is arguably a loss occasioned by the conditional stay preventing a sale).  In the absence of proper evidence and explanation, we are not prepared to interfere with the Judge’s exercise of discretion.

94.  In addition, in exercising her discretion, the learned Judge expressly stressed that the purpose of the Restraint on Disposal was that “as far as possible all of the main assets held by the parties should be secured pending either final agreement between them or ultimately adjudication by the court” (at [39] of the Substantive Ruling).

95.  Even if the husband were to succeed in the High Court Action, the parties would be back to litigation on their claims in ancillary relief.  Hence, the Judge was entitled to consider the preservation of the matrimonial pot in the event that it became necessary to re-distribute the assets.  As the Judge observed at [7] in her Ruling refusing leave to appeal on 4 September 2019, the Restraint on Disposal is not absolute.  There could still be a sale of the properties if both parties are fully informed and the sale is on arm’s length and the net proceeds preserved.

96.  Unless the Judge has come to a conclusion that is plainly wrong and outside the ambit within which reasonable disagreement is possible, the Court of Appeal would refrain from interfering with the judge’s exercise of discretion: Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at p.220B-F; SPH v SA [2014] 3 HKLRD 497 at [65]; CCMJ v SSM [2016] 1 HKFLR 22 at [16].

97.  In light of the foregoing, we are not persuaded that the Judge’s exercise of discretion in making the Restraint on Disposal was so clearly unreasonable, unnecessary and excessive that an intervention by this Court is warranted.  It follows that the husband’s appeal on the basis of the Discretion Issue must also fail.

98.  The above analysis is sufficient to deal with the appeal based on the Discretion Issue.  It is not necessary for us to decide what is the correct approach if the Restraint on Disposal is in the nature of a non-proprietary injunction to secure a claim as opposed to a condition for stay.  Nevertheless, we would like to briefly comment on this issue in deference to counsel’s submissions.

99.  Had we not held that the Restraint on Disposal, properly understood, was an order for a conditional stay of the AR Order, rather than a non-proprietary injunction order, we would have been inclined to agree with Mr Pilbrow that the wife must show a solid risk of dissipation for the reasons discussed by Mostyn J in ND v KP (Freezing Order: Ex Parte Application) [2011] 2 FLR 662, [5]-[6] and L v K (Freezing Orders: Principles and Safeguards) [2014] 2 WLR 914, at [14], [19], [25], [69][7].

C.  Costs Issue

100.  Mr Todd submitted, rightly in our judgment, that the threshold for interfering with an order as to costs is high.  This Court will not interfere with the exercise of a judge’s discretion in the award of costs unless it can be shown that the discretion has clearly been exercised incorrectly, or that the judge has erred in law or in relation to a certain legal principle: KWKM nee WKM v KSW (unreported, CACV 432/2006, 15 June 2007), at [11]; TCTE v SM [2012] HKCA 628, at [7].

101.  We are not persuaded by Mr Pilbrow that the Judge’s decision on costs, as explained in [41] of the Substantive Ruling, is plainly wrong so as to justify an intervention from this Court.  Indeed, given the Judge’s finding that the wife had always been willing to rent the Bisney Property out as an alternative to an order for sale (as reflected in the terms of the 2^nd Summons), we cannot find any fault with the Judge’s conclusion that the wife has been largely, although not completely successful in her application.  We see no reason to interfere with the Judge’s decision on costs.

Conclusion

102.  For the reasons stated above, we would dismiss both appeals with costs to the wife.  Such costs shall include the costs of the two CAMPs and are to be taxed with certificate for 2 counsel (insofar as it is applicable) if not agreed.