TAC v. VDC nee VDM

FCMC 16497 / 2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 16497 OF 2010

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J U D G M E N T
(Stay of Proceedings)
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Introduction

1. This is an application by the Petitioner husband as follows:

1. all further proceedings in the Hong Kong proceedings be stayed on the ground that the courts in the State of Maryland, USA are the more convenient and appropriate forum for the custodial issues relating to child of the family, namely CGC, a girl, in May 2006(“C”), and the ancillary relief issues to be heard, tried and determined;

2. a declaration that in the circumstances of the case, the Hong Kong court (i) declines to exercise personal jurisdiction over the parties’ property; (ii) has no exclusive or continuing jurisdiction under the laws of Hong Kong over issues involving custody, ancillary relief or alimony including the Interim Maintenance Order dated 26 March 2013 as a result of the parties’ relocation of B, Maryland in March/April 2013; (iii) the Interim Maintenance Order dated 26 March 2013 is not a final support order for alimony or ancillary relief and is subject to a final determination; and (iv) the courts in Maryland, USA are the appropriate forum for hearing any matters relating to C and the parties’ alimony/division of marital property or ancillary relief in these proceedings and/or to grant any relief or remedy sought by either party;

3. the parties be at liberty to commence proceedings and/or make applications in the respect of custodial issues and/or ancillary relief in Maryland, USA.

Issue

2. The primary issue to be determined by the court however is whether or not the proceedings in Hong Kong should be stayed on the premise that all substantive issues are then dealt with by the court in Maryland, USA notwithstanding the fact that up until now the matter has been dealt with by the courts in Hong Kong. The husband has undertaken to issue proceedings for divorce in Maryland in the event that the proceedings in Hong Kong are stayed.

Background to the marriage 

3. In my relocation/child arrangement judgment of the 20 June 2012 I set out in some detail the background to the marriage and the litigation up until that point. Reference can be made to that if necessary. Suffice it to say that this has been a heavily litigated matter between two American nationals, who at one stage were both living in Hong Kong. They have one child a little girl called C who is now 8 years of age. On the 29 March 2013 the mother relocated back to B, USA, which is where the parties were from originally, with C. The husband followed one month later and since then the whole family has resided in B.    

Stay of Proceedings

The law

4. There is no dispute over the law and both Counsel have referred me to the same principles – which can perhaps most easily be summarized in the matrimonial case of Louvet v Louvet [1990] 1 HKLR 670 as follows: 

“1. The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action ie in which the action may be tried more suitably for the interests of all the parties and the ends of justice?

2. In order to answer this questions, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (“appropriate” in this context means the forum had the most real and substantial connection with the action) and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong. Failure by the applicant to establish these two matters at this stage is fatal.

3. If the applicant is able to establish both of these two matters, then the plaintiff in the Hong Kong proceedings has to show that he will be deprived of a legitimate personal or juridical advantage if the action is tried in a forum other than Hong Kong.

4. If the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer. Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the court’s satisfaction that substantial justice will be done in the available appropriate forum.

5. This is then a three stage process. I am in essence being asked to stay the Hong Kong proceedings on the basis that Hong Kong is not now the most appropriate jurisdiction to deal with this matter and that the State Maryland, USA is clearly and distinctly the more appropriate forum.

Discussion

Stage I – Appropriate Forum

6. The burden is on the husband to show that Hong Kong is not now the natural or appropriate forum to determine the divorce and all other related issues and that Maryland is “clearly or distinctly more appropriate than Hong Kong”. In that context it should be noted that a mirror order of the Hong Kong relocation/custody order dated the 20 June 2012 was obtained in Maryland on the 17 April 2013. The Maryland court is currently seized of all matters pertaining to C and the shared care originally ordered has since been varied to a week on week off arrangement. 

7. Given that the parties both relied on legal opinion which differed, I ordered on the 18 September that a single joint expert be instructed to:

1.  … provide the Court with an opinion on the jurisdiction of the Maryland courts to hear issues regarding C and ancillary relief (finances) which should include details of the basis on which the Maryland court will determine financial application – both as to capital, spousal, alimony and of child support.  Further, the possibility of obtaining a mirror order in the event that an order on ancillary relief (finances) is made in Hong Kong including reference to the issue of enforcement.

8. Since then the court has received a report from a Mr RBJ of the law firm X&Y L.L.C dated the 4 March 2014 and a subsequent letter clarifying certain points dated the 6 October 2014. I have found both documents to be very helpful.

9. In essence Mr J is of the view that if the proceedings were stayed in Hong Kong, that Maryland would have the jurisdiction to deal with all matters including:

“… those of custody and support, relating to the parties’ minor child as well as to determine the financial issues, including alimony, Child support, Marital Property and Counsel fees”.

10. This is reiterated in part by Ms Irving for the husband who sets out the following 17 factors in her written submission which all point to Maryland now being the appropriate forum for this action. They are as follows:

a. The parties and C all reside in B.

b. C attends school in B.

c. The courts of Maryland are seized of all matters concerning C.

d. The parties are domiciled in B.

e. The parties met in B and were living there when they were married; the Wife’s family is in B and the Husband’s in the US.  Both parties regularly returned to B together with C to visit their family during their time in Hong Kong.

f. The parties lived in B before moving temporarily to Hong Kong in February 2008.

g. All domestic and school expenses to which maintenance would refer are incurred in Maryland.

h. The only landed property owned jointly by the parties is a condo in Ocean City, Maryland.  There is another property in the Husband’s name in Ohio.  There is no landed property in Hong Kong and never has been.

i. The Husband is now employed by A Management in B, paid out of Chicago.

j. The Wife is working full time in B.

k. The Husband’s retirement fund is based in the US.

l. For the duration of their time in Hong Kong, the parties pad US tax and both the Husband and Wife maintained US bank accounts.

m. The partiers are both liable for US taxes.

n. The parties’ bank accounts are located in US save for one account that the Husband maintains in Hong Kong primarily used for paying legal costs of both parties.

o. The parties voted in Hong Kong for the US elections.

p. There are no surviving connections with Hong Kong.

11. I accept all of these points as being valid.

12. Thus prima facie I accept that the husband has been able to show  

  …that Hong Kong is not now the natural or appropriate forum to determine the substantive issues and that Maryland is “clearly or distinctly more appropriate than Hong Kong”.

Stage II: Juridical Advantage

13. The burden then shifts and it is then for the wife to show that she will be deprived of a legitimate personal or juridical advantage if the action is tried in Maryland as opposed to Hong Kong.

14. The wife states and this is not challenged by the husband, that she has brought her divorce action as of right. I accept that to be the case. Clearly the parties had the jurisdiction to issue proceedings for divorce at the time. Since then however the situation has changed.

15. The wife’s case in summary is that she does not trust the husband and she challenges much of what the single joint expert says. She fears that she will be potentially disadvantaged if the finances are dealt with in Maryland. In particular she is concerned that she will not be able to claim maintenance or alimony for herself and that she will also be prevented from making a claim against the former matrimonial home.

16. With respect I do not accept that these arguments would deprive the wife of a legitimate juridical advantage. I note that the former matrimonial home has been sold in any event and whether the wife has a valid claim against it in either jurisdiction is really a moot point in the circumstances. In so far as maintenance is concerned the fact that the wife may have a better case on maintenance for herself in Hong Kong than in Maryland, does not of itself seem to me to be a valid reason to refuse the stay.   

17. Maryland is clearly a competent jurisdiction with laws similar in content to our own. On the face of it, it seems clear that the wife will be able to seek similar although perhaps not exactly the same financial relief in Maryland as in Hong Kong. I accept that the parties will be able to file for divorce in Maryland notwithstanding the fact that a decree nisi has been granted in Hong Kong given that both parties have been resident there for over a year. The husband has undertaken to file for a divorce and I will hold him to that undertaking. I accept that the Maryland court could modify i.e. vary the Hong Kong courts order on interim maintenance and issue a final order on alimony and child support. I also accept that they could make final orders with respect to the division of marital property and that the courts have an absolute discretion in terms of the percentages that can be awarded.   

18. All in all I do not accept that the wife would be deprived of a legitimate personal or juridical advantage if the action was dealt with in Maryland as opposed to Hong Kong. With respect the wife chose to return to the United States with C. I have no doubt that fairness will be done in that jurisdiction as here.

19. I should add that from a practical perspective even if the matter were to remain in Hong Kong that it is extremely unlikely in my view that matters would be concluded quickly. The parties are not ready for trial. Their Form E’s although originally updated in February and March 2014 may need to be further updated.  Further questionnaires may also be necessary.

20. In the circumstances I accept that the balancing exercise contemplated in Stage III is not necessary given that the husband has been largely successful at Stage I and the mother has not been able to shift the burden in her favour at Stage II.

Conclusion

21. Consequently I will make an order as follows:

a) Subject to the father’s undertaking to issue proceedings for divorce in Maryland forthwith I will order that the proceedings under FCMC 16497 of 2010 in Hong Kong be stayed.

b) Further the parties shall be at liberty to commence proceedings and/or make applications in respect of ancillary or financial relief in Maryland, USA.

c) There shall be liberty to apply in Hong Kong on an urgent basis. I have in mind that if for whatever reason the Maryland Court does not accept jurisdiction or that there are any problems in that respect that the parties shall have the ability to return to this court on an expedited basis.

d) For the avoidance of doubt it is also directed that pending any modification or variation of the Hong Kong court order dated the 26 March 2013 (maintenance pending suit/interim maintenance and litigation funding) that that order shall remain in place.

22. This application centred on a discreet point. I accept that both parties had an arguable case. I shall therefore make an order nisi to be made absolute in 14 days time that there shall be no order as to costs.