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Matrimonial Causes2011

HHML v. RYD

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84468-EN-2012-10-17

HHML v. RYD

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HCMC 7/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO 7 OF 2011

(TRANSFERRED FROM FCMC 10543 OF 2011)

________________________

BETWEEN

 HHMLPetitioner

and

 RYDRespondent

________________________

Before : Hon Poon J in Chambers
Date of Hearing : 9 October 2012
Date of Decision : 9 October 2012
Reasons for Judgment : 17 October 2012

____________________________________

REASONS FOR JUDGMENT

____________________________________

1. Before the court were :

(1) the Wife’s application for sole custody, care and control of the Boys (A, aged 15; B, aged 11 and C, aged 10) with defined access to the Husband;

(2) the Husband’s application for permanent removal of the Boys from Hong Kong to Spain; and

(3) the Wife’s application for ancillary relief.

On 9 October 2012, I allowed the Wife’s applications and dismissed the Husband’s.  These are the reasons for my judgment.

A. BACKGROUND

2. The background circumstances have been set out in my decision dated 11 May 2012 allowing the Wife’s application for maintenance pending suit (“MPS”) and the decision of Deputy Judge Lok dated 5 June 2012 refusing the Husband’s application for stay of the proceedings in favour of Spain.  (The Spanish court has already stayed the divorce proceedings commenced by the Husband there in September 2012.)  For present purposes, they are recapitulated as follows.

3. Both the Husband and the Wife are Spaniards, now aged 45 and 47 respectively.  They were married in Madrid, Spain on 1 December 1995 after signing a separate assets agreement (“the Agreement”).  A was born in January 1997 and B, May 2001.  Shortly thereafter, the family moved to Hong Kong.  C was then born in Hong Kong in July 2002.  All the members of the family have acquired the status as Hong Kong permanent residents.

4. The Husband had been working in the field of information and technology.  In about June 2002, his employer (“the Employer”) sent him to Hong Kong as an expatriate.  He had been working in that capacity continuously until he left Hong Kong in January 2012.  At all material times, he had had a rather lucrative employment package.  Indeed, the Husband described it as a very generous package.  For 2011, his annual income was €450,000 on the Wife’s case or €229,281 plus a discretional bonus of €150,000 on his case.  He also had a housing allowance of HK$300,000 per month, which enabled the family to live in a detached house in Stanley as the matrimonial home.  With his income, the family had at all material times enjoyed a very comfortable life style.

5. In January 2012, the Employer repatriated the Husband back to Spain.  In September 2012, he left the Employer.  His actual current employment status is unknown.  But according to the Wife, he will soon attend some job interviews in Miami, the USA.

6. The Wife obtained her degree in economics and MBA in Spain.  In 1993, she completed post‑graduate courses in marketing and customer satisfaction run by two prestigious universities in the USA.  When she met the Husband in 1991, she was employed as a marketing executive in the largest telecommunication company in Spain with a decent income.  In 1999, two years after she gave birth to A, she reduced her working hours in order to take care of the family.  After coming to Hong Kong, she had become a full time housewife and primary carer of the Boys.  She had also become wholly dependent on the Husband financially.

7. Since early this year, she has resumed working as an estate agent with a local agency, earning a basic salary of HK$15,000 with an estimated monthly commission of about HK$10,000.  She has to do so because after his return to Spain, the Husband has persistently failed to pay her a penny for interim maintenance, including the MPS that I ordered on 11 May 2012.

8. At the commencement of these proceedings, A was attending a boarding school in England (“the School”), doing his Sixth Form there.  However, in about July or August 2012, the Husband unilaterally, and without the Wife’s consent, withdrew A from the School and placed him in a local school in Spain.  B and C are attending an international school in Hong Kong (“the International School”).

9. In June 2012, the Husband’s former solicitors ceased to act for him.  Thereafter, he has taken no further steps in these proceedings.  He has not filed any further evidence to support his relocation application or to oppose the Wife’s two applications.  He was even absent at the substantive hearing on 9 October 2012.

B. CUSTODY, CARE AND CONTROL AND REMOVAL

10. The Wife’s application for sole custody, care and control of the Boys and the Husband’s removal application can be conveniently dealt with together.  Although the Husband had not formally applied for custody, care and control in his removal application, he did indicate in the list of issues filed in March 2012 that he sought sole custody, care and control of the Boys.

B1. Should the Husband be heard?

11. Ms Rattigan, counsel for the Wife, took the preliminary objection to the Husband being heard on his application because, having failed to comply with the MPS order, he is in contempt.  She relied on the well known case of the English Court of Appeal in Hadkinson v Hadkinson [1952] 2 All ER 567.

12. Refusing to hear a party is a very serious matter, which can only be justified by strong and cogent reasons.  So although the Husband is absent, I cannot accept Ms Rattigan’s submission lightly.  I still need to be satisfied that it is a proper case to exercise my discretion to refuse to entertain the Husband’s application in limine.  If I disagree with her, then I will consider it on the materials before the court, although I will have to do the best that I can without the benefit of his further input in these proceedings.

13. This brings me to a closer reading of Hadkinson v Hadkinson.  Romer LJ stated the general rule at p.569C-F :

“It is the plain and unqualified obligation of every person against, or in respect or, whom an order is made by a court of competent jurisdiction to obey it unless and until that order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by an order believes it to be irregular or even void. …

Such being the nature of this obligation, two consequences will, in general, follow from its breach.  The first that anyone who disobeys an order of the court (and I am not now considering disobedience of orders relating merely to matters of procedure) is in contempt and may be punished by committal or attachment or otherwise.  The second is that no application to the court by such a person will be entertained until he has purged himself of his contempt.”

14. His Lordship then described the exceptions to the general rule at p.570A-B :

“ One of such exceptions is that a person can apply for the purpose of purging his contempt, and another is that he can appeal with a view to setting aside the order on which his alleged contempt is founded. … The only other exception which could in any way be regarded as material is the qualified exception which, in some cases, entitles a person who is in contempt to defend himself when some application is made against him.”

I pause to note that none of these exceptions arises here.

15. In exercising the discretion to refuse to hear a party in contempt, the court is guided by what Denning LJ (as he then was) said in Hadkinson v Hadkinson.  There after reviewing the authorities, his Lordship gave this reminder at pp.574H-575C :

“Those cases seem to me to point the way to the modern rule. It is a strong thing for a court to refuse to hear a party to a cause and it is only to be justified by grave considerations of public policy. It is a step which a court will only take when the contempt itself impedes the course of justice and there is no other effective means of securing his compliance. In this regard I would like to refer to what SIR GEORGE JESSEL, MR, said (46 LJ Ch 383) in a similar connection in Re Clements & Costa Rica Republic v Erlanger (14) :

‘I have myself had on many occasions to consider this jurisdiction, and I have always thought that necessary though it be, it is necessary only in the sense in which extreme measures are sometimes necessary to preserve men’s rights, that is, if no other pertinent remedy can be found. Probably that will be discovered after consideration to be the true measure of the exercise of the jurisdiction.’

Applying this principle, I am of opinion that the fact that a party to a cause has disobeyed an order of the court is not of itself a bar to his being heard, but if his disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed.”

16. Here, by the MPS order, I ordered the Husband to pay the school fees for B and C for the first 6 months of 2012, monthly MPS of HK$80,000 and monthly provision for legal costs of HK$50,000 and removal expenses of HK$10,800.  By failing to pay the MPS as ordered, the Husband is no doubt in contempt of court.  So far he has not offered any explanation either.

17. In my view, his non-compliance with the MPS order is a deliberate tactical move, calculated to achieve two illegitimate purposes.  First, he wants to harm the Wife financially when these proceedings are pending, which also incidentally put B and C at peril.  Her present income and savings are hardly sufficient to support herself and the two boys.  (A is now living in Spain, presumably supported by the Husband.)  The Wife has to live on the generosity of her friends, one of whom has kindly provided rent-free accommodation until her financial situation improves.  Second, he wants to force her to return to Spain to fight the divorce there, in total disregard of Deputy Judge Lok’s previous order of refusing his application to stay.  His conduct is reprehensible indeed.  He is now in Spain, well beyond this court’s jurisdiction and it is most unlikely that he would ever return to Hong Kong again.  Any enforcement of the MPS order is extremely difficult if not impossible.

18. In these circumstances, justice demands that the Husband should not be heard until he purges his contempt.  I refuse to entertain his removal application, which is dismissed.

B2. The Wife should be given sole custody care and control

19. What remains is the Wife’s application for sole custody, care and control.

20. Her application is brought under section 19 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”).  In determining her application, the court bears in mind the best interest of the Boys as the first and paramount consideration : section 3(1) of the Guardianship of Minors Ordinance, Cap 13, applied by virtue of section 48C of the Matrimonial Causes Ordinance, Cap 179.

21. There is a wealth of case law on how custody care and control in the context of a divorce should be approached.  For present purposes, I only need to refer to the recent decision of the Court of Appeal in PD v KWW [2010] 4 HKLRD 191, where Hartmann JA admirably explained the underlying concepts of custody and care and control in these terms :

“28. As our law has developed and now presently stands, when a marriage breaks down and the court must ensure the best interests of any child of the union, it will invariably do so by bringing into play the dual concepts of ‘custody’ - whether it be sole or joint custody - and ‘care and control’. Neither concept, however, is defined in our statute books.

29. Regrettably, empirical evidence suggests that there is a large measure of misunderstanding as to the nature and extent of the two concepts, certainly among lay persons.

30. At a practical level, a convenient way of understanding the two concepts is to compare the nature of the decision-making that is required to put them into practice.

31. The decisions to be made by a custodial parent are those of real consequence in safeguarding and promoting the child’s health, development and general welfare. They include decisions as to whether or not the child should undergo a medical operation, what religion the child should adhere to, what school the child should attend, what extracurricular activities the child should pursue, be it learning a musical instrument or being coached in a sport. A parent vested with custody has the responsibility of acting as the child’s legal representative.

32. By contrast, the decisions to be made by a parent who (at any time) has care and control of the child are of a more mundane, day-to-day nature, decisions of only passing consequence in themselves but cumulatively of importance in moulding the character of the child. They include a host of decisions that arise out of the fact that the parent has physical control of the child and the responsibility of attending to the child’s immediate care. They include decisions as to what the child will wear that day, what the child may watch on television, when the child will settle down to homework and when the child will go to bed. They also include the authority to impose appropriate discipline.

33. We have spoken of the misunderstanding that exists as to the nature and extent of the two concepts. This is most often manifested in the misperception that, if sole custody is given to one parent, that parent thereby ‘wins’ the right to determine all matters big and small in the upbringing of that child while the parent who is not given custody ‘loses’ the right to have any say in the child’s upbringing. …

…

36. It is to be emphasised in the strongest terms that if one parent only is given custody, that parent is not thereby given an absolute and independent authority to act without further reference to the non-custodial parent. Any such potential misunderstanding was quashed in Dipper v Dipper [1980] 3 WLR 626 in which Ormrod LJ said :

‘It used to be considered that the parent having custody had the right to control their children’s education, and in the past their religion. This is a misunderstanding. Neither parent has any pre-emptive right over the other. If there is no agreement as to the education of the children, or their religious upbringing or any other matter in their lives, that disagreement has to be decided by the court.’

37. In the same case, Cumming-Bruce LJ, another experienced family judge, said :

‘ … it (is) a fallacy which continues to raise its ugly head that, on making a custody order, the custodial parent has a right to take all the decisions about the education of the children in spite of the disagreements of the other parent. That is quite wrong. The parent is always entitled, whatever his custodial status, to know and be consulted about the future education of the children and any other major matters. If he disagrees with the course proposed by the custodial parent he has the right to come to the court in order that the difference may be determined by the court.’

38. A non-custodial parent, therefore, has the right to be consulted in respect of all matters of consequence that relate to the child’s upbringing. While the right to be consulted does not include a power of veto, it is nevertheless a substantial right. It is not merely a right to be informed, it is a right to be able to confer on the matter in issue, to give advice and to have that advice considered.

39. While, therefore, a parent who is given sole custody is given the authority, in the event of disagreement with the non-custodial parent, to make the final decision, it should only be made after due consultation and, if the final decision that is made is considered by the non-custodial parent to be inimical to the child’s best interest, the court may be called upon to determine the matter.

40. Invariably, therefore, the giving of sole custody to one parent does no more than recognise that, in the circumstances of the breakdown of the marriage, the best interests of the child are secured by giving to that parent the authority, if necessary, to make a final decision concerning matters of consequence in the upbringing of the child but only after the other parent’s views have been given full and rational consideration. In summary, an order of sole custody does not more than add a qualification to the otherwise joint endeavour of both parents in raising their child, that qualification being that the final decision will rest with one parent.

41. For this reason it is often said that there is a thin line between sole custody and joint custody.

42. …

43.   Before leaving a consideration of the dual concepts of custody and care and control, it needs to be emphasised that, when a court awards care and control to one parent but rights of access to the other, as in the present case, the court is effectively awarding a form of shared care and control.  This is because, when a parent exercises rights of access, especially staying access, that parent assumes care and control of the child for the time that the child is in that parent’s physical custody.  Rights of access, it is to be remembered, are given - in the interests of the child - to ensure continued bonding between parent and child.”

22. Later, his Lordship laid down the proper approach to joint custody thus :

“52. Today, although there has been no change in our law similar to many other common law jurisdictions, orders of joint custody are in no way exceptional. This is because it is accepted that, in principle, such orders are in the interests of children.

53. In all but the most exceptional circumstances, the effect of divorce on the children of the marriage, especially children of tender years, is deeply felt. In all but the most exceptional circumstances, such children desire that they should continue to be protected and guided by both parents. …

54. In the result, in the best interests of the child, the fact that, as a result of the breakdown of the marriage, relations between the parents are strained is not of itself a reason to refuse to make a joint order of custody. Nor is the fact that the parent to be given care and control does not agree. Such orders look to the future. They will govern a limited area of exchange between the parents, albeit one of the greatest importance.

55. Accordingly, the issue for the judge is whether, with the court proceedings concluded, it is reasonably anticipated that the parents will be able to agree on the questions of importance that will determine the upbringing of their child, both recognising that, as difficult as it may be for them, this process of cooperation is in the best interests of the child.

56. In determining this issue, the judge is entitled to proceed on the presumption that competent, loving parents possessed of sufficient objectivity to be able to make rational decision in the interests of the child will be able to cooperate with each concerning matters of importance in the upbringing of the child.

57.   At all times, of course, the welfare of the child remains the first and paramount consideration.  As this Court has recognised (see, for example, Y v P [2009] HKFLR 308), there may be occasions when the ability of the parents to reach any rational accord in respect of important matters concerning the upbringing of their child is so deeply undermined that to compel attempts at cooperation will not protect the interests of the child but only leave the child more vulnerable.”

23. When applying these general principles to the present case, the evidence overwhelmingly shows that the Wife should be given sole custody care and control of the Boys.

24. Joint custody is definitely inappropriate.  For one thing, in the foreseeable future, the couple will live in Hong Kong and Spain separately.  It is rather impracticable to give them joint custody.  More importantly, there is a total breakdown in communication between them.  Realistically, until mutual trust and confidence between them is restored, they cannot cooperate meaningfully on the upbringing of and welfare arrangements for the Boys.

25. The Boys and their father have a good relationship.  In particular, they enjoy his company very much when he takes them to holidays, including skiing holidays in Europe.  A had previously indicated that he wished to stay with the father.  B and C said they could stay with either of the parents.

26. However, in my view, the Husband is manifestly unfit to be granted custody care and control of the Boys.  I do not think he can properly discharge the parental responsibilities entrusted to him.  I say so for two principal reasons.

27. First, he is liable to and indeed has placed his own interests in opposing the Wife’s claims in these proceedings over and above the best interests of the Boys.  The deliberate non-compliance of the MPS order is a vivid example.  As rightly submitted by Ms Rattigan, the Husband’s non-payment of any maintenance or school fees for B and C is shocking.  Another recent incident is his unilateral withdrawal of A from the School to a local school in Spain.  It is wholly contrary to the parents’ joint wish, as the undisputed evidence shows, that A should continue his education within the English system.  It is no doubt another tactical move by the Husband to create yet a further obstacle hindering the Wife in pursuing her claims.  I do not think a responsible father would so conduct himself.

28. Second, he has not even bothered to present any future care plans or arrangements for the Boys for my consideration.  I simply do not know what he has in mind or what he intends to do.  The absence of such information is worrying because, according to the Wife’s undisputed evidence, he may well have to work in the USA in the near future.  How is he going to discharge his parental duties with his busy schedule away from home?  He has provided no glue whatsoever.

29. There is an additional reason why the Husband should not be given sole custody care and control of B and C.  If that were to happen, effectively, they would have to be relocated to Spain.  I do not consider uprooting them from Hong Kong, a stable and familiar environment in which they have been living since infancy and where they have established emotional and social ties, is desirable.

30. As already noted, the Wife has traditionally been the primary carer of the Boys before the breakdown of the marriage.  She is a caring and loving mother.  The Boys have a good relationship with her. Driven by circumstances, she is now working full time.  But she is assisted by a domestic helper in running chores and child care.  She can definitely continue to take care of the Boys to the best of her ability.

31. Turning to the educational needs of the Boys, which is an important factor, the Wife’s evidence, which I accept, is that the English system is more preferable to the Spanish one.  Quality of the education service that the two systems can offer is one thing.  Another reason is that the Boys would have to spend some time to brush up their Spanish if they were to attend schools there.  For A, it had all along been the parents’ joint wish, at least before the Husband unilaterally withdrew him from the School, that he should read his university degree in England.  (Thanks to the understanding of the School, a place has been reserved for A despite the withdrawal.  So he can return and resume his studies there.)  In my view, it would definitely serve the Boys much better if A is to continue his education in England and B and C in Hong Kong. 

32. When all the circumstances are viewed in the round, I am firmly of the view that the Wife should be given sole custody care and control of the Boys.

33. For completeness, I need to deal with two additional points shortly.

34. First, the Wife is fully aware of A’s current wish to stay in Spain.  She said she would discuss with A about his future education plan.  As I understand her, she would respect his wish and would not do anything against it.  That must be right.  After all, A is now 15.  His view should be respected.

35. Second, I had called for two social welfare reports in January and March 2012.  According to the social welfare officer, determining who should be given custody care and control is a difficult decision and she would leave the matter to the court.  I think her view has since been overtaken by subsequent events, in particular, the Husband’s conduct.  On the evidence before me, I have no difficulty in deciding the question of custody care and control in the way as I did.

36. The Wife accepts, and rightly so in my view, that the Husband should be given holiday access and daily access by phone or Skype to the Boys.

37. I next turn to the Wife’s application for ancillary relief.

C. ANCILLARY RELIEF

38. The application is governed by section 7 of the MPPO.  The approach to a section 7 exercise is now settled since the Court of Final Appeal’s judgment in LKW v DD (2010) 13 HKFCAR 537, per Ribeiro PJ at paras71-132.  In short, the exercise involves five steps :

(1)  The first step in the s 7 exercise is to ascertain the financial resources of each of the parties calculated as at the date of the hearing.  In particular, under s 7(1)(a), the court must have regard to “the income, earning capacity, property and other financial resource” which each of the parties “has or is likely to have in the foreseeable future”.  The object is to compute the net financial resources, taking account of all material liabilities.

(2)  The second step is for the court to assess the parties’ financial needs.  Usually, the available assets are insufficient to cater for both parties’ needs after termination of the marriage so that the s 7 exercise did not progress beyond this point.  Where the assets are meager, a “clean break” may not be possible and an order for periodic payments might be necessary.  The matters referred to in s 7(1)(c)-7(1)(e), namely, standard of living, age and disability, would often be relevant.  The parties’ needs should be “generously interpreted” and set at a level that equated, in so far as resources allowed, to the standard of living enjoyed during the marriage, and assessed with flexibility in the light of all the relevant circumstances.

(3)  If surplus assets remain after the parties’ needs have been catered for, the third step generally involves the court deciding that the sharing principle applied, leaving the “needs” question previously considered to be dealt with under that principle, and taking the view that the total assets should be divided equally between the parties unless there is good reason, capable of articulation, for departing from an equal division.

(4)  The fourth step involves considering whether good reasons exists for departing from the principle of equal division.  Any of the matters listed in s 7(1)(a)-7(1)(g) may provide an appropriate reason as might the “conduct of the parties” and “all the circumstances of the case” under s 7(1), the latter making relevant any matter which bore on the fairness of the financial outcome in a matrimonial context.  However, a finding that one or more of those factors are engaged does not necessarily mean that a departure must occur.  The sharing principle must not be mechanically applied.

(5)  The fifth step is deciding the outcome.  The court is not bound to depart from equality of division even if one or more of the factors considered are engaged on the facts.  The weight to be given to them and such decision is a matter of discretion for the court and fact specific.  But where there is a departure, the court should explain its basis since the articulation of reasons would provide a usual check on the fairness of the outcome.

39. I first identify the financial resources of the Husband and the Wife.

40. The only piece of financial information that the Husband has disclosed is a schedule of property exhibited to his affidavit filed in September 2011 (“the Schedule”), which covers various landed properties in Spain and one in Macau.  The total value is stated to be HK$31,020,000.  The Wife does not accept it to be all what the Husband owns but is prepared to adopt it for present purposes.  As said, the Husband’s current employment status is unknown.  But there is nothing in the evidence to suggest that his earning capacity would be impeded one way or the other.

41. As already noted, the Wife is now working as an estate agent, earning a basic salary of HK$15,000 with an average commission of about HK$10,000 per month.  She only has savings of less than HK$25,000.

42. On the available evidence before me, the family assets that are available for distribution is the list of property as per the Schedule, valued at HK$31,020,000.

43. I then come to the financial needs of the parties.  There is no evidence to suggest that the Husband with his earning capacity cannot meet his own reasonable financial needs.  On the other hand, the Wife has listed her financial needs in the latest Form E filed on 8 October 2012 to be HK$102,900.  With her income, she still needs about HK$80,000 every month to meet her and the Boys’ reasonable financial needs.

44. On distribution, the Wife seeks an equal division of the sum of HK$31,020,000.  I agree.

45. This has been a long marriage where the assets have been generated within the marriage.  Fairness dictates that they should be shared on an equal basis.  The Agreement does not alter the position.  For the circumstances have materially changed since then.

46. The Agreement was made at a time when both the Husband and the Wife were earning.  In fact, the Wife had a good job and good career prospect.  (The Husband alleged that at the time when the Agreement was made, the Wife was expecting to receive a big inheritance from her uncle.  That is denied by her.  In any event her undisputed evidence is that she never received the inheritance any way.)  Four years after marriage, the Wife gave up her job and career to become a full time housewife.  Her contribution to the family allowed the Husband to pursue his career and to invest his income into the family assets.  It would be most unfair if the Agreement were to apply, depriving the Wife of her share in the family assets, in total disregard to the material change of circumstances and her valuable contribution to the family over the years.

47. I further agree with Ms Rattigan that even with the equal division of the family assets, the Wife still needs a monthly sum of HK$80,000.  Periodical payments are in order.

48. Finally, I agree with Ms Rattigan’s submission that given the Husband’s failure to comply with the MPS order, he has evinced an intention of resorting to unscrupulous means in order to defeat the Wife’s claim for ancillary relief.  I should exercise my discretion under section 4(1)(b) of the MPPO that the Wife be given a security for all maintenance, school fees and costs against the Husband’s 50% share in the family assets.

D. DISPOSITIONS

49. For the above reasons, I made the following order on the Wife’s applications :

(1) Custody, care and control of the Boys be granted to the Wife with reasonable access to the Husband as follows :

(a) daily Skype and/or telephone access;

(b) staying access for up to half of all school holidays in Hong Kong unless otherwise agreed between the parties in writing;

(c) In the event that the Husband travels to Hong Kong or the UK further access as agreed in writing upon him giving 14 days’ notice of his travel plans to the Wife.

(2) The Husband do forthwith return to the jurisdiction of Hong Kong A or with the Wife’s written consent do forthwith return A to the School.

(3) The Husband do pay or cause to be paid to the Wife a lump sum of HK$15.5 million being 50% of the net assets disclosed by the Husband in the Schedule within 14 days of the pronouncement of Decree Absolute of Divorce herein.

(4) The Husband do pay or cause to be paid a lump sum of 50% of any payment to him by the Employer within 14 days of Decree Absolute of Divorce.

(5) The Husband do pay to the Wife periodical payments at the rate of HK$20,000 per month from the first day of the month following the pronouncement of Decree Absolute of Divorce herein.

(6) The Husband do pay to the Wife periodical payments for the Boys at the rate of HK$20,000 per month per child payable on the first day of each month commencing on the first day of the month on pronouncement of Decree Absolute of Divorce herein.

(7) The Husband do pay to the Wife the sum of HK$33,000 per month in respect of the school fees at the School and the sum of HK$19,492 per month for the school fees at the International School in respect of B and C the first payment commencing on first day of the month after the pronouncement of Decree Absolute of Divorce.

(8) The periodical payments, school fees and costs payable to the Wife as set out at above do stand secured against the HK$15.5 million to be retained by the Husband being the 50% balance of the assets disclosed by him in the Schedule.

50. Finally, I awarded her costs to be summarily assessed.

 (J Poon)
Judge of the Court of First Instance
High Court

Ms Mairead Rattigan, instructed by Oldham, Li & Nie, for the petitioner

RYD, the respondent, absent

82025-EN-2012-06-05

HHML v. RYD

HTML content

HCMC 7/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 7 OF 2011

_____________

BETWEEN

 HHMLPetitioner

and

 RYDRespondent

_____________

Before: Deputy High Court Judge Lok in Chambers (Not open to public)
Date of Hearing: 27 April 2012
Date of Decision: 27 April 2012
Date of Reasons for Decision: 5 June 2012

____________________________

REASONS FOR DECISION

____________________________

 

1. This is an application by the husband to stay the petition for divorce issued by the wife on 2 August 2011 on the ground that the Spanish court is the more appropriate forum for the hearing of the matrimonial dispute (“the Forum Application”). In the hearing on 27 April 2012, I refused the Forum Application and I now give my reasons.

Background

2. The parties are Spanish and married in Spain in 1995 after signing a marriage settlement in Madrid (“the Marriage Settlement”). The husband and the wife are aged 45 and 46 respectively.

3. There are 3 children: the eldest son aged 15 studying in England, the second son aged 10 and the youngest son aged 9 both studying in an international school in Hong Kong.

4. The wife has received much education having obtained an economics degree and a MBA degree and attended post-graduate courses in Marketing at Harvard University.  Prior to coming to Hong Kong, she had a respectable job with a decent income.  In 1999, she had to reduce her working hours in order to take care of the family.

5. The husband has been working in the information and technology industry.  The parties moved to Hong Kong in June 2002 when the husband was transferred here with his job.  Although his employment contract was initially for 2 years, this had been continually extended with the last extension up to June 2012.  The family are all permanent residents of Hong Kong.

6. The wife petitioned for divorce on the ground of unreasonable behaviour in the District Court in Hong Kong on 2 August 2011, and the proceedings were served on the husband on 22 August 2011.  The husband commenced divorce proceedings in Spain on 1 September 2011, and these proceedings were served on the wife in December 2011.

7. The husband took out the Forum Application in Hong Kong on 7 September 2011.

8. On 9 September 2011, the husband was confirmed to move back to work in Spain in January 2012.

9. On 20 September 2011, Deputy District Judge G Own of the District Court made an order to transfer the matrimonial proceedings to the High Court.

10. In the first hearing of the Forum Application on 21 November 2011, the court adjourned the application for argument with directions given for the filing of affidavit and expert evidence.

11. On 7 December 2011, the wife renewed her application for, inter alia, maintenance pending suit (“MPS”) and school fees.  On 15 December 2011, the court gave further directions in respect of the wife’s MPS application and the Forum Application.

12. After the service of the Spanish proceedings on the wife, she took out an application in such proceedings to challenge the jurisdiction of the Spanish court.  The application has yet to be determined.

13. Some time in December 2011, the wife indicated her intention to remain Hong Kong together with the children.  On 27 January 2012, the husband filed an application in the Hong Kong proceedings seeking for sole custody, care and control of the 3 children and for permanent removal of the children from Hong Kong (“the Husband’s Custody Application”).  In support of such application, the husband had secured schooling in Spain for the second and the third sons at a school which was attended by the eldest son before the parties came to Hong Kong.

14. On 2 March 2012, the wife applied for custody, care and control of the children (“the Wife’s Custody Application”).  Both the Husband’s Custody Application and the Wife’s Custody Application have now been fixed for substantive hearing on 9 October 2012 before Poon J with 5 days reserved.  There have been 2 social welfare reports prepared in respect of the welfare of the children and the social welfare officer is expected to give evidence in the hearing.

15. On 8 March 2012, the wife’s application for MPS was heard before Poon J, and the learned judge handed down the decision on MPS on 11 May 2012.

16. On the other hand, it seems that the proceedings in Spain have not progressed at all.  As the wife has lodged an application to challenge the jurisdiction of the Spanish court over the present divorce, there is an interim stay of the proceedings pending the final determination of the wife’s application.

Legal principles

17. Both parties agree with the following established legal principles for forum non conveniens applications laid down in the case of Louvet v Louvet & Anr. [1990] 1 HKLR 670 (adopting the well-known principles set out in Spiliada Maritime Corp v Consulex Ltd [1987] AC 460):

(i)  The court has to answer a single question, namely: Is there 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?

(ii)  For the purposes of the analysis, it is convenient to view the problem at three separate stages:

(1)  Is it shown that Hong Kong is not only not the natural or appropriate forum for the trial, but that there is another available forum which is clearly and distinctly more appropriate than Hong Kong.  The evidential burden is here upon the applicant.  The emphasis is upon “appropriate” rather than “convenient” because this is not simply a matter of practical convenience. The purpose is to identify the forum “with which the action has the most real and substantial connection”.  Several relevant factors for deciding upon the natural and appropriate forum for the action have been identified by the courts:

(a)  the law governing the transaction;

(b)the place where the parties reside or carry on business;

(c)  the cost of the trial;

(d)the convenience of witnesses;

(e)  the place where the transaction giving rise to the litigation occurred;

(f)  the relative ease of execution; and

(g)  the avoidance of a multiplicity of actions.

Failure by the applicant at this stage is normally fatal.

(2)  If the answer to (1) is yes, will a trial at this other forum deprive the plaintiff of any “legitimate personal or juridical advantages”?  The evidential burden here lies upon the plaintiff.

(3)  If the answer to (2) is yes, a court has to balance the advantages of (1) against the disadvantages of (2).  Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that notwithstanding such loss “substantial justice will be done in the available appropriate forum”. The court must try to be objective.  Proof of this, which can fairly be called the ultimate burden of persuasion, rests upon the applicant for the stay.  By these means he establishes that on balance the other forum is more suitable “for the interests of all the parties and the ends of justice”.  This may be another way of saying that the plaintiff’s choice of forum has been shown to be so inappropriate as to deserve the pejorative description of “forum shopping” and to be restrained accordingly.

18. Hunter JA then applied these principles in the context of the matrimonial case in Louvet v Louvet, supra when he said:

“The final question, this being a matrimonial case, can perhaps be reformulated in the language of de Dampierre with the necessary adaptations in this way. In the language of Lord Templeman at p 101: is it just that the wife should be allowed to exploit her Hong Kong advantage and would it be unjust to confine her to her remedies in France? Or in the language of Lord Goff at p 110; ‘objectively speaking’, would justice be done if this petitioner was compelled to pursue her remedies in France? Those, it is common ground, are the applicable principles.” (at p 675)

19.  In the Stage I inquiry, the burden lies on the applicant to show not only that Hong Kong is not the appropriate forum, but that there is another forum and that forum is “clearly and distinctly” more appropriate than Hong Kong.  As pointed out by Cheung J, as he then was, in Yu Lap Man v Good First Investment [1998] 1 HKC 726 at p 734E, the right to commence proceedings should not be lightly disturbed as jurisdiction is properly founded in Hong Kong.  In that particular case, the defendant failed to discharge the burden in the Stage I inquiry, as it only managed to show that the courts in the Mainland were equally appropriate to deal with the case.

Stage I inquiry

20. I therefore start with the Stage I inquiry.  Mr Egerton, counsel for the husband, submits that the Spanish court is clearly the natural forum for the adjudication of the matrimonial dispute.

21. Firstly, the husband and the wife are both Spanish, and the couple were only in Hong Kong by virtue of the husband’s expatriate employment in Hong Kong.  Further, the couple had already planned to leave Hong Kong before the commencement of the divorce proceedings, and the wife only changed her mind in December 2011 when she indicated her intention to remain in Hong Kong.  According to Mr Egerton, this was a tactical move on the part of the wife with a view to “blackmail” the husband.

22. Secondly, both the husband and wife have no asset in Hong Kong.  The majority of the assets of the parties are in Spain, including some real properties and a few companies, and one real property in Morocco and another one in Macau.  The wife has raised issues as to further mortgages obtained by the husband over a property in Madrid in 2002, 2007 and 2010 and has made complaint as to the financial issues in Spain with the husband’s mother and the use of a power of attorney.  The wife also doubts whether the husband has made full disclosure of his assets.  Mr Egerton submits that the natural forum to determine these issues is Spain as the relevant documents and witnesses are in Spain and not in Hong Kong.

23. Thirdly, as the assets of the parties are mainly in Spain, quite a number of documents need to be translated from Spanish to English if the dispute is adjudicated in Hong Kong, and this would increase the costs of the litigation.

24. Despite Mr Egerton’s able submission, I do not accept that the husband has discharged the burden of showing that the Spanish court is clearly and distinctly the more appropriate forum to hear the divorce proceedings.  The parties are permanent residents of Hong Kong.  They have been here for over 10 years and have spent the majority of their marriage in Hong Kong and not in Spain.

25. More importantly, Hong Kong is the “home” for the children.  In fact, Hong Kong is the only home that the younger children have known, even the eldest son moved here when he was just 5 and he only went to boarding school in England in 2010.  Although it is fair to say that the family might have planned to leave Hong Kong in view of the intended relocation of the husband, it is quite proper for the wife to change her plan for the children and herself in light of the divorce between the parties.  I am given to understand that the wife now has a job in Hong Kong earning a modest income. Since the lease of their former home in Stanley has been terminated by the husband’s employer, the wife is now living in her friend’s house together with the two younger children.

26. The parties dispute as to whether moving back to Spain or remaining in Hong Kong is best in the interest of the 2 younger boys. As they have been living and studying in Hong Kong for quite some time, it would be more convenient to carry out the investigation relating to the welfare needs of the children in Hong Kong.  In fact, there have already been 2 social welfare reports prepared for the purpose of the coming hearing in October. 

27. To a certain extent, the husband also agrees that it would be more convenient to deal with the matters relating to the children in Hong Kong.  The Husband’s Custody Application was taken out in the Hong Kong court after the Forum Application.  If the Spanish court is the more appropriate forum, the application would have been made there.  In fact, there have already been a number of hearings in Hong Kong including a full MPS hearing.  Since the Hong Kong court has already started to deal with some of the substantive issues in the matrimonial proceedings, it would certainly be desirable for the Hong Kong court to continue with such proceedings.

28. Further, if the Forum Application is granted, it would virtually mean that there would be two separate proceedings: one in Hong Kong to deal with the children, and the other one in Spain to deal with the divorce and the distribution of the matrimonial assets.  This is certainly undesirable, as observed by Yuen JA in RI v SSH [2010] 4 HKC 588 at §42:

“… … … it is unrealistic to suggest that there should be two separate proceedings – one in Hong Kong to deal with the children, and the other in France to deal with divorce and distribution of the matrimonial assets. Provision for the children is inextricably tied up with the distribution of the matrimonial assets. It would also be a waste of the parties’ resources for litigation to be conducted on two fronts.”

29. There may also be other complications if the matrimonial proceedings are heard in the Spanish court.  Poon J has already given his decision on the MPS application.  One of the principles that is followed by the court in making a MPS award is that any unfairness in the interim award can be corrected by the final order made at the trial.  If a stay is granted, this cannot be done.

30. There is also uncertainty as to whether the Spanish court will decline jurisdiction based on the ground that the wife had filed her petition in Hong Kong first.  So far as I understand it, there is a rule in the European Community (EC) Regulations regarding international lis pendens in family matters: if parties to a matrimonial dispute have filed divorce proceedings in two separate EC countries, the court in which the proceedings were filed second in time would decline jurisdiction to deal with the matter.  The parties’ Spanish law experts disagree as to whether this rule is applicable to non-EC countries, but there are indeed precedents in which the courts in EC countries did grant a stay of proceedings in favour of the Hong Kong courts by reason of such rule.

31. As most of the assets of the parties are in Spain, there would be some inconvenience in hearing the matrimonial proceedings in Hong Kong.  Documents may have to be translated and witnesses may have to fly to Hong Kong to testify.  However, the Hong Kong courts have a lot of experience of dealing with foreign assets in matrimonial proceedings, and so this is not a strong factor in favour of the stay.  In any event, at least 2 real properties involved in the dispute are located outside Spain, and so even the Spanish court will have to deal with foreign assets in determining the issue of distribution of matrimonial assets.  Further, it has been repeatedly emphasised by the courts that in modern days, it would not be too inconvenient for overseas witnesses to come to Hong Kong to testify.  The parties may also make use of video link facilities to enable overseas witnesses to testify without coming to Hong Kong.  As the matrimonial assets mainly consist of real properties, there is also no indication that the financial issues between the parties are complicated to an extent that it is impracticable to deal with them in the Hong Kong court.

32. Based on these considerations, I do not accept that the husband has managed to establish that the Spanish court is clearly and distinctly the more appropriate forum to hear the matrimonial dispute between the parties.  As mentioned above, failure by the husband in this stage of the inquiry is normally fatal.

Observations about the Stages II and III inquiries

33. This would have been sufficient to dismiss the Forum Application.  However, as the parties have devoted considerable time in their submissions to deal with the personal or juridical disadvantages that may be suffered by the wife if the dispute is litigated in the Spanish court, I feel obliged to express my view on the Stage II inquiry as well.

34. The existence of the Marriage Settlement is certainly a factor to be taken into account in determining whether the wife will suffer personal or juridical disadvantages by having the matrimonial dispute be heard in the Spanish court.  In H v H [2007] HKFLR 125, the husband had commenced proceedings in Germany and sought to stay the subsequent proceedings brought by the wife in Hong Kong.  In the German proceedings, the wife would be at a considerable disadvantage as that court would strictly apply a marriage contract that severely limited the wife’s claim.  In the Hong Kong proceedings, it would only be one factor that the court would look at.  It was held by HH Judge Bruno Chan that this was a legitimate advantage of proceeding in Hong Kong which could prevent a stay even if a prima facie case for one was established under Stage I.

35. There is a dispute between the parties’ Spanish law experts as to the weight of the Marriage Settlement that would be attached by the Spanish court in determining the financial issues.  According to the husband’s expert, the Spanish court will take into account factors similar to those stated in s 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192 in determining the financial issues between the parties.  So far as the Marriage Settlement is concerned, like Hong Kong, this is only one of the factors that the Spanish court will take into account when exercising its discretion.

36. On the other hand, the wife’s expert claims that, under Spanish law:

(i)  by reason of the Marriage Settlement, there will be no transfer of assets and it is not possible for the wife to obtain the properties under the husband’s name;

(ii)  in view of the earning capacity of the wife, it may not be possible for her to receive maintenance from the husband, and in any event the maintenance would be limited to a short period of time between 2 to 4 years; and

(iii)  partly because the wife had enjoyed domestic help throughout the marriage, it may not be possible for the wife to obtain any compensation for her contribution in respect of household duties in the family.

37. In summary, the wife’s expert is of the opinion that the Spanish court will enforce the Marriage Settlement, and it is extremely unlikely that the wife will receive anything beyond that.  According to the wife’s calculation, after a long marriage, she will be left with approximately HK$6.39 million out of over HK$35 million in assets and no maintenance for herself if the matrimonial dispute is heard in the Spanish court, which is grossly unfair to her.  In particular, she had given up career for the family.

38. On the other hand, the Hong Kong court will follow the well-known principles laid down in LKW v DD (2010) 13 HKCFAR 537 in determining the issues of distribution of matrimonial assets and maintenance.  Whilst the Hong Kong court will take into account the Marriage Settlement, it will not be binding and the court will certainly look at matters such as overall fairness and the wife’s needs in determining the financial issues between the parties.

39. Although there is a dispute between the experts as to the approach that will be adopted by the Spanish court in determining the issue of distribution of matrimonial assets, it is fair for me to say that, since Spanish law has expressly recognised pre-nuptial agreement or marriage contract, the Spanish court, as compared with the Hong Kong court, will give more weight to such kind of agreement in determining the distribution of matrimonial assets between the parties.  If the dispute is heard in the Spanish court, the amount of assets that can be obtained by the wife may not be that small as alleged by her, but the difference in the approaches of the courts in dealing with the issue of pre-nuptial agreement or marriage contract and the risk of the Spanish court in strictly enforcing the Marriage Settlement are, in my judgment, sufficient for the wife to establish that she will be deprived of “the legitimate personal or juridical advantages” if the matrimonial dispute is heard in the Spanish court.

40. I therefore also rule the Stage II inquiry in favour of the wife.  As I find against the husband in both Stages I and II inquiries, the Forum Application should not succeed and it is quite unnecessary for the court to go to the Stage III inquiry.

Submission to the jurisdiction of the Hong Kong court

41. Ms Rattigan, counsel for the wife, further submits that as the husband has submitted to the jurisdiction of the Hong Kong court by making the Husband’s Custody Application, he is estopped from asserting that the Hong Kong court is not the appropriate forum to hear the matrimonial dispute.

42. This may be an attractive submission, in particular the husband could have made the custody application under the Guardianship of Minors Ordinance, Cap 13 without invoking the jurisdiction of the court in the divorce proceedings.  However, the matter may not be that simple.

43. Firstly, the Husband’s Custody Application was taken out on 27 January 2012 which was well after the Forum Application dated 7 September 2012.  In Hwoo Huang Linda v Fu Bing san & Ors, unreported, HCA 2888/2001 (decision on 10 April 2002), Reyes J said the following in §26(5) of his judgment:

“A party may be able to preserve an option to challenge forum, despite having engaged in conduct which might be regarded as submission to the jurisdiction, if before or at the time of such conduct he makes it clear that his action is without prejudice to the bringing of a challenge to forum.”

44. After the husband took out the Forum Application on 7 September 2011, he has all along indicated his intention to proceed with such application.  In such circumstances, even with the making of the Husband’s Custody Application, the husband has not given up his right to proceed with the Forum Application.  Hence, it is arguable that the husband has preserved the option to challenge forum according to the dicta of Reyes J in the Hwoo Huang Linda case.

45. Secondly, with a view to remove the previous confusion in the law as to what conduct amounts to submission to the jurisdiction of the court, O 12 r 8 of the Rules of the High Court, Cap 4, has been amended during the CJR exercise to provide a single mechanism for dealing with all forms of challenges to the jurisdiction of the court, including setting aside the writ for lack of jurisdiction and staying the proceedings on the ground of forum non conveniens (see: MGM Grand Paradise Ltd v Wong Sing Wa, unreported, HCA 2140/2011, decision of Lok DHCJ on 21 May 2012).

46. There is no corresponding rule in the Matrimonial Causes Rules, Cap 179, but s 10 of the Matrimonial Causes Ordinance, Cap. 179 provides that, if there is no special provision contained in the said Ordinance, the practice and procedure for the time being in force in the High Court in England with reference to matrimonial proceedings shall apply.  What then are the practice and procedure in the High Court of England relating to forum application and submission to the jurisdiction of the court? As both counsel have not addressed me on these particular issues, I am not prepared to make a ruling as to whether the husband has submitted to the jurisdiction of the Hong Kong court by the making of the Husband’s Custody Application.  For our present purpose, I just refuse the Forum Application on the ground that the husband has failed to establish that the Spanish court is clearly and distinctly the more appropriate forum to hear the matrimonial dispute between the parties.

47. These are the reasons for dismissing the Forum Application in the hearing on 27 April 2012.  I now also make an order nisi that the costs of the application be to the wife, which shall be made absolute 14 days after the date of the handing down of this Reasons for Decision.

 (David Lok)
 Deputy High Court Judge

Ms Mairead Rattigan, instructed by Oldam Li & Nie, for the petitioner

Mr Robin Egerton , instructed by Withers, for the respondent