CWG v. MH AND OTHERS

CACV 80/2013
CACV 81/2013
CACV 82/2013
CACV 83/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 80 OF 2013

CIVIL APPEAL NO. 81 OF 2013

CIVIL APPEAL NO. 82 OF 2013

CIVIL APPEAL NO. 83 OF 2013

(ON APPEAL FROM HCMP NO. 643 OF 2012)

------------------------

BETWEEN

	CWG	Applicant
	and
	MH	1st Respondent
	WH	2nd Respondent (Appellant in CACV83/2013)
	MVFL	3rd Respondent
	WM	4th Respondent
	EH	5th Respondent
	LSL	6th Respondent
	BM	7th Respondent

------------------------

Before: Hon Yuen, Barma and McWalters JJA in Court

Date of Hearing and Judgment: 19 May 2014

Date of Reasons for Judgment and Judgment on costs: 30 June 2014

_________________________________

REASONS FOR JUDGMENT
&
JUDGMENT ON COSTS

__________________________________

 

Hon Yuen JA:

1.  On 19 May 2014, we acceded to an application that the appellant in CACV83/2013 (who was also a respondent in CACV80/2013, CACV81/2013 and CACV82/2013) should not be heard on those appeals by reason of her failure to comply fully with an order of the court.  We indicated that written reasons would be given in due course. My reasons appear below.  

Background

2.  In HCMP643/2012, the applicant (“the Wife”) applied for relief under Part IIA Matrimonial Proceedings and Property Ordinance Cap. 192 against the respondent (“the Husband”).  The Wife alleged that the Husband owned, or had interests in assets owned by, various companies.  The Husband denied this and alleged that the companies were owned solely by his mother (“the Mother”). The Mother was subsequently joined as a party.                          

The Discovery Order

3.1   On 10 August 2012 Jeremy Poon J made an order requiring the Mother to disclose various documents regarding companies which she claimed to own (“the Discovery Order”). These were companies which the Wife alleged were owned or controlled by the Husband. 

3.2   The Mother did not appeal the Discovery Order.  However she failed to comply with it. 

The hearing of the Part IIA application

4.  At the hearing of the application under Part IIA in October 2012, the Mother did not attend to testify in person or via video link.  She was not permitted to adduce affidavit evidence.

5.  In a judgment handed down on 26 March 2013 (“the Main Judgment”), B. Chu Dep J remarked on the absence of evidence regarding the companies and their assets.

6.  The learned judge ordered (amongst other things) that the Husband should pay a lump sum of $120m to the Wife.

The 2.8.2013 Hadkinson order

7.1   Subsequently the Husband sought a stay of the judgment.  The Mother sought to “support” the Husband’s application.  On 2 August 2013 the judge made an order to the effect that the Mother would not be heard on her application until she fully complied with the Discovery Order (“the 2.8.2013 Hadkinson order”).         

7.2   The Mother applied for leave to appeal that decision but her application was refused on paper by this court (Kwan and Macrae JJA) on 9 January 2014.

The appeals against the Main Judgment

8.  Both the Husband and the Mother lodged appeals against the Main Judgment (CACV80/2013 and CACV83/2013 respectively).  The Wife lodged a cross-appeal (CACV81/2013). Moon Valley Foundation Ltd, the recipient of certain shares from the Mother, also lodged an appeal (CACV82/2013).    

The Wife’s application for a further Hadkinson order

9.1   On 6 February 2014 in a summons filed in the Mother’s appeal, the Wife applied for a Hadkinson order to the effect that the Mother should not be heard on the appeal until she fully complied with the Discovery Order.

9.2   Shortly before the hearing before this court of the Wife’s application on 4 March 2014, the Mother caused to be filed three affirmations purporting to comply with the Discovery Order.  The Wife argued that nevertheless the Mother had still failed to comply fully with the Order. 

9.3   In a judgment handed down on 13 March 2014, we directed that the issue of compliance be remitted to the judge.  Some further affirmations were filed before the hearing before the judge.

The judge’s decision on the issue of compliance

10.  On 15 May 2014 the judge heard the parties on this issue and decided that the Mother had still failed to comply fully with the Discovery Order.  Reasons for the decision were handed down the following day.                                                                 

Restoration of the Wife’s Hadkinson application

11.  The Wife’s Hadkinson application was duly restored for hearing on the first day of these appeals on 19 May 2014.  After hearing argument on behalf of the Wife and the Mother, we acceded to the Wife’s application.

Principles

12.  The questions a court should ask itself in Hadkinson applications have been conveniently set out in Mubarak v Mubarik (No.1) [2004] 2 FLR 932, 946, para. 59.  Applied to the situation in our case, they are:

(1) Is the Mother in contempt?    

(2) Is there an impediment to the course of justice?

(3) Is there any other effective means of securing compliance with the court’s orders?

(4) Should the court exercise its discretion to impose conditions having regard to the question?

(5) Is the contempt wilful (is it contumacious and continuing)?

(6) If so, what conditions would be proportionate?

The standard of proof is the civil standard: Mubarak v Mubarik (No.2) [2007] 1 WLR 271, 286, para. 72.

Discussion

13.1   In relation to questions (1) and (5), it is clear from the judge’s decision that the Mother was in contempt in failing to comply fully with the Discovery Order even after her late attempts to provide some materials.  For instance, Item 6 of the Order related to five Security Agreements entered into by ACOHL.  None was provided, and the Mother had made no attempt to obtain them from the other parties to the agreements in the 21 months since the date of the Order.  Item 8 related to documents regarding 31 cars.  Again, none was provided, and again there had been no attempt to obtain them from other parties such as dealers, purchasers and insurers.  There were also unexplained gaps in the audited accounts provided under Item 12.

13.2   Mr CY Li SC, leading counsel for the Mother, did not seek to challenge the judge’s decision on non-compliance.  As I understand it, his submission was that the court should take into account the Mother’s age which affected her ability to search for the required materials.  With respect, I find it difficult to accept this submission in the circumstances of this case.  The Mother’s non-compliance cannot be other than contumacious and continuing when one considers the resources at her disposal and the length of time that has elapsed since the date of the Order.   She has been served by a large team of lawyers, as well as persons (such as Mr Seeger and Miss Anita Lo) who have assisted her in the administration of her affairs for many years and who could be reasonably expected to know which persons or entities to contact to enable compliance, if they had been so instructed.

14.  The Mother’s age is however relevant to question (3).  In view of her advanced years, other means of securing compliance with the Order (eg by means of committal) would not be appropriate, and indeed Mr Li did not suggest any other effective means of securing compliance.

15.1   In relation to question (2), Mr Li accepts fairly in his skeleton submission (para. 8) that the non-disclosure has a substantial connection with the findings from which the parties have appealed.

15.2   The Mother’s non-compliance has certainly made the performance of the judge’s functions more difficult.  For instance, by reason of the absence of the documents in Item 8, the judge was hampered in performing a valuation of the cars (see para. 454 of the Main Judgment).  Similarly, by reason of the absence of documents in Item 9, the judge was unable to value the 9 watches which had not been sold through Christies (see para. 479 of the Main Judgment).

15.3   As Mostyn J put it in NG v SG [2012] 1 FLR 1211,

“Without full disclosure the court cannot render a true certain and just verdict. ... It is thrown back on inference and guess-work within an exercise which inevitably costs a fortune and which may well result in an unjust result to one or other party”.

It is clear from the Main Judgment that the Mother’s non-compliance has been an impediment to the course of justice in the Part IIA application.    

16.1   Of course, the crucial issue is whether in the exercise of its discretion, the court should bar the Mother from participating in the appeals by reason of her non-compliance, but first, it is necessary to say a word about the ambit of the Hadkinson application. 

16.2   A summons was taken out only in CACV83/2013 (ie the Mother’s appeal) and not in the other appeals where she is a respondent.  By way of explanation (or perhaps excuse), Ms Eu SC, leading counsel for the Wife, has referred us to some cases where the reports show that a Hadkinson point had been taken without a summons having been issued. 

16.3   For my part, I would have thought that bearing in mind the principles of the Civil Justice Reform, an application of such significance as a Hadkinson application should not be made without the other party being duly forewarned by way of summons, with enough time for affidavit evidence to be adduced for and against the making of the order.  That has not been done in relation to the appeals in which the Mother is a respondent. 

16.4   However in the present case there is no suggestion that the Mother’s legal team has been misled or taken by surprise by the application being extended to the appeals in which she is a respondent.  What has been pressed on us by Mr Li by way of submission, which I accept, is the principle that a Hadkinson application “needs even more serious consideration where the party in respect of which it is submitted should not be heard is the respondent to the application”: M v M [2011] 1 FLR 1773, 1779, para. 26; or, in our case, a respondent to the appeals.

17.  However, even after having given more serious consideration to the issue as a result of that feature, it is clear that in the exercise of the court’s discretion, the non-compliance in the present case was such that the Mother should be debarred from participating in the appeals.

18.1   First I accept the reality of the additional feature in the present case that the Husband’s legal team remained available, as it were, to fight the Mother’s corner: cf X Ltd v Morgan-Grampian Ltd [1991] 1 AC 1, 51.  However that is only one factor to be taken into account.  A party cannot get away with non-compliance of the court’s orders simply by taking advantage of the fact that there is another party with allied interests.

18.2   Importantly, there was no appeal from the Discovery Order and it has not been argued that the order was an unreasonable one.  In those circumstances it cannot be said that there is any infringement of the maxim “audi alteram partem”: X Ltd v Morgan-Grampian Ltd, p.50or related constitutional rights.      

18.3   Although the Order was made in August 2012, no attempt was made at compliance, even after a Hadkinson order was made by the judge in August 2013 and was confirmed by another division of this court four months ago. 

18.4   It took yet another Hadkinson application in respect of these appeals before the Mother took any action, and even then the judge found what was provided was too little, too late. 

18.5   In these circumstances, to permit the Mother to participate in the appeals would be tantamount to condoning a deliberate flouting of the court’s orders.  

19.  For the reasons set out above, I acceded to the Hadkinson application.  It follows that CACV83/2013 is dismissed.  The Mother is to pay the Wife the costs of the summons and to pay the respondents to CACV83/2013 the costs of that appeal.  I agree with the judgment of Barma JA regarding costs.

Hon Barma JA:

20.  I agree with the Reasons for Judgment of Yuen JA in respect of the making of a Hadkinson order against the Mother, so as to bar her from being heard both in respect of her own appeal (CACV 83/2013) and those in which she was a respondent (CACV 80, 81 and 82/2013).

Costs

21.1   So far as costs are concerned, Ms Eu SC for the Wife sought an order that the costs of the Hadkinson application, and of the Mother’s appeal (CACV 83/2013), which must be dismissed in consequence of the Mother not being permitted to be heard on it, should be paid by the Mother to the Wife, on the indemnity basis.  For the Mother, Mr C Y Li SC accepted that the Wife should have her costs of both the Hadkinson application and the Mother’s appeal, but submitted that these should be taxed on the party and party basis rather than the indemnity basis.

21.2   At the hearing, we indicated that we would make costs orders in favour of the Wife in respect of both matters, but would reserve our decision in relation to the basis of taxation.

22.1   Ms Eu submitted that having regard to the Mother’s contumacious failure to comply with the Discovery Order, it was entirely appropriate for these costs to be taxed on the indemnity basis. 

22.2   Mr Li, however, submitted that this was inappropriate, given that the Mother was not a party to the marriage, but was a third party, and having regard to the fact that efforts had been made by the Mother to comply with the Discovery Order.

23.1   Although the Mother was not a party to the marriage, she was very much a party to the proceedings.  Her involvement in the proceedings arose as a result of the claim that she was the true beneficial owner of most of what might otherwise be thought to be assets owned by the Husband.

23.2   As Yuen JA has pointed out, the Mother was subject to the Discovery Order, against which she never appealed (paragraph 18.2 above), and the documents that she was ordered to provide were needed for the purposes of the proceedings, their absence making the task of the court below more difficult (paragraphs 15.1 to 15.3 above).

23.3   Further, such attempts as were made to comply with the Discovery Order came very late in the day – despite the fact that an earlier Hadkinson order had been made (and confirmed by another division of this court when dismissing an application for leave to appeal against it) in relation to her participation in an application by the Husband for a stay of the orders made on the Part IIA application, no attempt at compliance was made until after the present Hadkinson application was brought, and even then, the attempt fell short of what was required (see paragraphs 18.3 and 18.4 above).

23.4   The Mother’s appeal having been brought, and continued, against this background, and taking the matters referred to above into consideration, I am satisfied that the Wife’s costs, both of the Hadkinson application and of the Mother’s appeal, should be taxed on the indemnity basis.

24.  The Husband’s legal representatives were present during the hearing of the Hadkinson application, but did not take part in it, and did not seek any orders for costs arising from it or from the Mother’s appeal, and I would therefore make no order as to costs in respect of him.

25.1   So far as the 4^th, 5^th and 6^th Respondents are concerned, they were absent during, and took no part in, the Hadkinson application.  Further, that application did not, in my view, concern them, and accordingly, I would make an order nisi that there should be no order as to costs as between them and the Mother in respect of that application.

25.2   However, so far as the costs of the Mother’s appeal (CACV 83/2013) are concerned, they were parties to the appeal, having been served with the Notice of Appeal, and by the appeal, the Mother sought (among other things) to have the costs order made in their favour, jointly and severally against her and the Husband, set aside. They therefore were concerned in the Mother’s appeal and affected by it.  That appeal having been dismissed, I would make an order nisi that their costs of the appeal should be paid by the Mother, to be taxed on the party and party basis if not agreed.

Hon McWalters JA:

26.  I agree with the Reasons for Judgment of Yuen JA and the Judgment on Costs of Barma JA.

(MARIA YUEN) Justice of Appeal

(AARIF BARMA) Justice of Appeal

(IAN MCWALTERS) Justice of Appeal

Mr C Y Li SC and Mr Adrian But, instructed by B C Chow & Co, for the 2^nd Respondent (Appellant in CACV 83/2013) and instructed by Simon C W Yung & Co., for the 3^rd Respondent

Ms Audrey Eu SC and Mr Chan Hei Ching, instructed by C T Chan & Co, for the Applicant

Mr David Pilbrow SC, Mr Jonathan Ah-weng and Mr Samuel Yip, instructed by Tso Au Yim & Yeung, for the 1^st Respondent

Mr Alexander Wong and Mr Leung Yiu Kwong, instructed by Lo, Wong & Tsui, for the 4^th Respondent

Mr Robin D’Souza, instructed by Tam, Pun & Yipp, for the 5^th & 6^th Respondents

CACV 80/2013
CACV 83/2013
HCMP 264/2014
(Heard together)

IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO. 80 OF 2013
CIVIL APPEAL NO. 83 OF 2013
(ON APPEAL FROM HCMP NO. 643 OF 2012)

AND

IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
MISCELLANEOUS PROCEEDINGS NO 264 OF 2014
(ON AN INTENDED APPEAL FROM HCMP NO. 643 OF 2012)

------------------------

BETWEEN
	CWG	Applicant
and
	MH	1st Respondent
	WH	2nd Respondent
	MVFL	3rd Respondent
	WM	4th Respondent
	EH	5th Respondent
	LSL	6th Respondent
	BM	7th Respondent
------------------------
	(HEARD TOGETHER)

Before: Hon Yuen, Barma JJA and McWalters J in Court

Date of Hearing: 4 March 2014

Date of Judgment: 13 March 2014

______________

J U D G M E N T

______________

Hon Yuen JA:

1. There are four matters before this court viz. two applications for Hadkinson orders, an application for security for costs, and an application for leave to appeal a ruling of the Court of First Instance granting a stay of execution on conditions.  As the background is fairly complex, it is necessary to set out some relevant facts first. 

Background

2. In HCMP643/2012, the Applicant is the former wife of the 1^st Respondent.  The 2^nd Respondent is the 1^st Respondent’s mother and the other respondents are individuals or companies with connections to the 1^st Respondent.  For convenience, I shall refer to the Applicant in HCMP643/2012 as “the Wife”, the 1st Respondent as “the Husband” and the 2^nd Respondent as “the Mother”.

3. The Husband and Wife were married in Thailand in 1989.  A daughter was born in 1993 and a son in 1997.  The children are in full time education and have been living with the Wife in Hong Kong. 

Divorce proceedings in Hong Kong and Thailand

4. The Wife first commenced divorce proceedings in Hong Kong in FCMC14600/2009 on the ground of unreasonable behaviour (“the 1^st proceedings”). 

5. The Husband then secured a divorce order in default from the court of Thailand on 4 October 2010.  The marriage was dissolved by the grant of a Certificate of Finality issued on 23 November 2010 (“the Thai divorce decree”). However in December 2010 the Wife petitioned the Thai court for a re-trial.

6. Shortly afterwards the Wife issued another petition in Hong Kong in FCMC17014/2010 for divorce on the ground of 1 year’s separation (“the 2^nd proceedings”).  The 1^st and 2^nd proceedings were transferred to the High Court as HCMC3/2011. 

7. Subsequently however the Wife decided to accept the Thai divorce decree.  Her acceptance was formalised by the withdrawal of her re-trial petition in Thailand on 2 May 2011.  

MPS

8. Going back in time a little, the Wife had applied for Maintenance Pending Suit in the 1^st proceedings.  On 13 August 2010 a Maintenance Pending Suit order was made in the 1^st proceedings by Deputy District Judge CK Chan (“the MPS Order”).  In addition to undertakings given by the Husband to pay the children’s education expenses (i.e. school/university fees, tuition fees etc), he was ordered to pay $323,000 a month as maintenance, with effect from 1 September 2010.

9.1. An order for maintenance pending suit ends with the date of the determination of the suit (in this case, the petition for divorce - whether under the 1^st proceedings or the 2^nd proceedings).  This will feature later in this judgment. 

9.2. The Husband paid $323,000 (on top of the education expenses) until November 2011, when he started paying only $40,000 a month as maintenance (on top of the education expenses). 

Wife’s application for financial relief under Part IIA MPPO

10.1. In December 2011 the Wife sought leave to apply for financial relief under Part IIA (“the Part IIA Application’) of the Matrimonial Proceedings and Property Ordinance Cap. 192 (“MPPO”). 

10.2. Part IIA enables a party to a marriage dissolved outside Hong Kong to apply to the Hong Kong court for financial relief, but a party making such an application must first obtain leave of the court under s.29AB MPPO by way of an ex parte Originating Summons in Form 27.  This is the procedure prescribed in rule 103A of the Matrimonial Causes Rules Cap. 179 (“MCR”). 

10.3. Under the scheme set out in Part IIA, it is only after leave is granted that a party can apply for financial relief (including periodical payments) by way of an inter partes Originating Summons in Form 28.  This is the procedure prescribed in rules 103B and 103C of the MCR.  Section 29AD, which provides for periodical payments, states:

“(1) If leave is granted under section 29AC for the making of an order for financial relief and it appears to the court that the applicant or any child of the family is in immediate need of financial assistance, the court may make an order requiring the other party to the marriage to make to the applicant or the child any periodical payments the court thinks reasonable.

(2) The periodical payments may be for a term that the court thinks reasonable, but the term must not begin earlier than the date of the grant of leave and must end on the date of the determination of the application for an order for financial relief.

(3) An order under this section may be made subject to any conditions the court thinks fit”.

It would be noted that under s.29AD(2), the court may order periodical payments to start from the date that leave was granted.

10.4. On 21 December 2011, the Wife filed an ex parte Originating Summons for leave in Form 27.

14 March 2012

10.5. This was heard by Jeremy Poon J on 14 March 2012.  Counsel then acting for the Wife asked for leave to apply for financial relief under Part IIA.  Counsel also asked for directions, consequential upon leave being granted, that all orders in HCMC3/2011 be “transferred” to the Part IIA Application.  She sought to draw an analogy with transfers of proceedings when a petition for divorce on one ground (eg unreasonable behaviour) is superceded by a later petition on another ground (eg separation by consent). 

10.6. The judge gave leave to the Wife to apply for financial relief under Part IIA. 

10.7. As for the Wife’s application for a direction for “transfer” of orders, the judge referred to the statutory requirement for the filing of an Originating Summons (Form 28) under rule 103B.  Counsel for the Wife then undertook to file a Form 28 within the next 48 hours.

10.8. It was under those circumstances that the judge, after granting a stay of HCMC3/2011, ordered:

“3. Notwithstanding the general stay of the proceedings in HCMC3/2011:

(a) the following order shall continue to have effect until further order:

(i)   The order for maintenance pending suit dated 13th August 2010 (‘MPS Order’) ...”

This has been referred to subsequently as “the Interim Order”. 

10.9. Pausing here, a question has been raised as to whether the judge had jurisdiction on 14 March 2012 to make the Interim Order.

(1)   HCMC3/2011 had been terminated by the Wife’s recognition of the validity of the Thai divorce (which was the ground for her Part IIA Application).  HCMC3/2011 was the suit which underpinned the MPS Order, which is only ancillary relief.  Consequently, as Poon J recognized in his Reasons for Decision handed down on 10 May 2012, “because of the Thai decree, the Hong Kong court ceases to have jurisdiction to grant any ancillary relief” (para. 52). 

(2)   Whilst the Wife had obtained leave to apply for financial relief under Part IIA (which proceedings were to become HCMP643/2012), no application had yet been made by the Wife for periodical payments under s.29AD, and any application she made would have to be inter partes. 

10.10. However, in respect of (2) above, on 19 March 2012 the Wife duly filed an inter partes Originating Summons in Form 28 seeking financial relief, including periodical payments under s.29AD, pursuant to the undertakings given to the court at the ex parte hearing.  The Order made by Poon J on 14 March 2012 was also served on the Husband on that day.

20 March 2012

10.11. The next day (20 March 2012), both the Husband and the Wife appeared through counsel before Poon J on the hearing of a summons issued by the Husband on 1 November 2011 for:

(1)   recognition of the Thai divorce decree;

(2)   dismissal of the petition in the 2^nd proceedings;

(3)   (a)   “the Order of His Honour Judge CK Chan, Judge of the District Court, dated 13^th August 2010 [the MPS Order] be set aside; and

(b)   appropriate directions and order consequential upon the setting aside of the aforesaid order if deemed fit” (Emphasis added).   

It would be noted that para. 3(b) was necessary, once HCMC3/2011 ceased (whether by stay or dismissal) and the MPS Order lapsed, to enable some arrangement to be made for periodical payments for maintenance whilst the parties’ financial affairs were sorted out upon the dissolution of their marriage.

10.12. What transpired at the proceeding on 20 March 2012 is important to the question of Poon J’s jurisdiction to make (or more accurately, to give effect to) the Interim Order.  The following appears from the transcript. 

10.13. First, counsel for the Wife informed the judge that the Form 28 had been filed.  The court was therefore seized of an application for periodical payments under s.29AD.  Importantly the judge then made it clear that “today’s proceedings will be taken as if they were taken out in the Part II[A] proceedings”. 

10.14. Counsel for the Wife then informed the court that leading counsel for the Husband had agreed not to pursue para. 3 of his summons (see para. 10.11 above), as follows:

“Paragraph 3[(a)], it asks for the order of Deputy Judge Chan [the MPS Order] be set aside, but at the moment there is the order of my Lord directing that there will be continuation of the existing MPS proceedings as [if] it is being taken out under Part IIA. So my learned friend is not pursuing 3[(a)]”.

10.15. Leading counsel for the Husband informed the court that the Husband was considering whether to apply to set aside the grant of leave to make an application for financial relief under Part IIA, and for that reason, he agreed to the stay of the HCMC3/2011 proceedings.  He said:

“ ... should we not seek leave to set aside [the grant of leave], then these proceedings [HCMC3/2011] would no longer be stayed, they would essentially die; the court’s jurisdiction would go with it”.

10.16. However it is important to note that, in relation to para. 3 of his summons, he went on to say:

“... as far as [paras.] 3 and 4 are concerned, we are applying to set aside [the MPS Order], obviously, and your Lordship has dealt with that. You’ve returned it into the next set of proceedings [the Part IIA proceedings].

So I don’t myself think that any order needs to be made on [para.] 3 at all, because your Lordship has already dealt with it ...”. (Emphasis added).

Since s.29AD(2) gives the court power to order periodical payments from the date when leave was granted to make an application for financial relief under Part IIA (i.e. 14 March 2012), the Husband’s position was a sensible one.    

10.17. In the event, the Husband did not at any stage thereafter make an application to set aside the leave granted to make an application for financial relief under Part IIA.      

10.18. Thus, even if the judge did not have jurisdiction on 14 March 2012 to make the Interim Order, the question of periodical payments was dealt with on 20 March 2012.  On that day the Form 28 had been issued, the judge made it clear that he was dealing with the proceedings as if they had been taken out under the Part IIA Application, and (subject to the Husband’s reservation of his right to apply to set aside the grant of leave) the parties dealt with the issue of periodical payments by treating the judge’s order of 14 March 2012 as having been made under the new proceedings i.e. the Part IIA Application (see para. 10.16 above). 

10.19. If the Husband wished to, he could have argued at the inter partes hearing on 20 March 2012 (or he could have reserved his right to argue) that the sum ordered under the MPS Order should not be continued, eg if he considered that the words “immediate needs” in s.29AD should lead to a reduction in the sum. He did not do so, and accepted that the judge had dealt with the question of periodical payments under the new (Part IIA) proceedings.  Accordingly in my view, even if the judge did not have jurisdiction on 14 March 2012 to make the Interim Order, he certainly did have jurisdiction on 20 March 2012 to make it with effect from 14 March 2012, and accordingly para. 3 of the Husband’s summons was rendered otiose.

10.20. As a result of what occurred on 20 March 2012, the date originally fixed for the hearing of the inter partes Originating Summons (the Form 28) on 2 May 2012 passed without a hearing. 

11. The Wife’s Part IIA Application eventually came before Deputy High Court Judge B Chu in October 2012.  The hearing took 47 days and judgment was given on 26 March 2013 (“the Main Judgment”).

Application for variation of the MPS Order

12.1. Previously on 8 March 2012, the Husband had applied by summons in HCMC3/2011 for a downward variation of the MPS Order (“the Variation Application”).  It would be noted that this summons was filed before the Interim Order was made by Poon J. 

12.2. It is clear – both from the language of the summons and from the time of its filing – that the Husband was applying for variation of the MPS Order only.

12.3. The Husband did not apply for variation of the Interim Order at any stage.

Application for leave to appeal out of time against MPS Order

13. Then on 14 May 2012, the Husband applied to appeal the MPS Order which had been made nearly 21 months previously.  On 30 October 2012 his application was by consent adjourned sine die with liberty to restore. 

Arrears of MPS

14.1. On the basis that the Husband had paid only $40,000 (on top of the education expenses) instead of $323,000 a month from November 2011 to March 2012 (when Poon J made the Interim Order), the Wife asserted that the Husband was in arrears of $283,000 ($323,000 - $40,000) a month for the 5 months from November 2011 to March 2012 (both months inclusive).  This sum came up to $1,415,000. As discussed earlier, even if Poon J had no jurisdiction to make the Interim Order on 14 March 2012, he did have jurisdiction on 20 March 2012 to make it with effect from 14 March 2012, so there was no period of time which was not covered by any order for payment of maintenance/periodical payment.    

14.2. This sum of $1,415,000 was later paid by the Husband in the following circumstances.  After the Main Judgment was given, the Husband applied for a stay of execution.  The Wife then applied for a Hadkinson order that unless the Husband complied with various orders, he should not be heard on his stay application.  On 10 July 2013 Deputy Judge Chu made it one of the conditions for hearing the Husband on his stay application that he should first pay the 5 months arrears of MPS of $1,415,000.  The Husband duly made this payment. Accordingly, there are no arrears due now under the MPS Order. 

14.3. There was no appeal from this Hadkinson order.

The Interim Order

15.1. As discussed earlier (paras.10.11 - 10.18), whatever may have been the position with jurisdiction on 14 March 2012, on 20 March 2012 the judge did have jurisdiction to make an order for periodical payments and it was accepted by the parties that he had dealt with periodical payments under the new (Part IIA) proceedings, subject only to the Husband’s reservation of his right to apply to set aside the leave granted to the Wife to make an application under Part IIA.

15.2. In the event, the Husband did not apply to set aside the leave, or the Interim Order, and he did not appeal either order.

Arrears of Interim Order payments

16. Meanwhile the Husband continued to pay only $40,000 a month (on top of the education expenses).  On the basis that the Husband had paid $40,000 instead of $323,000 a month from April 2012 (after the Interim Order was made) to March 2013 (when the Main Judgment was given), the Wife asserted that the Husband was in arrears of $283,000 a month for the 12 months from April 2012 to March 2013 (both months inclusive).  This sum came up to $3,396,000.

Hearing before Deputy Judge Chu

17. Coming back to the 47-day hearing of the Wife’s Part IIA Application, Deputy Judge B. Chu also heard

(1) the Wife’s application filed in April 2012 to set aside dispositions made by the Husband of shares in some Hong Kong companies to some BVI companies (“the Setting Aside Application”), and

(2) the Husband’s Variation Application. 

18.1. There was a list of 20 issues, a major one being whether the Husband had beneficial interests in a number of companies which he said belonged beneficially to the Mother. 

18.2. In this respect he was supported by the Mother who had been joined as a party. 

18.3. I pause here to note that in connection with this issue, on 10 August 2012 Poon J had ordered the Mother to make disclosure of information and documents (“the Discovery Order”). 

18.4. There was no appeal from the Discovery Order. 

18.5. An affirmation was filed by the Mother on 9 October 2012.  I will return to this order later. 

The Main Judgment

19. On 26 March 2013 Deputy Judge Chu handed down a  215-page judgment, making orders which are summarized below:

(1) the Husband undertook to pay university/school fees for the children and related fees of $15,000 a month;

(2) from 1 April 2013, the Husband shall pay the Wife periodical payments of $50,000 for each child (superceding the MPS Order and Interim Order);

(3) the Husband’s dispositions of certain shares to AC Oversea (BVI) were set aside;

(4) the Husband’s Variation Summons was dismissed;

(5) the Husband shall pay off all MPS Order and Interim Order arrears within 3 months (ie by 26 June 2013) failing which the Wife could restore a judgment summons which she had issued;

(6) the Husband shall pay the Wife a lump sum of $120m within 3 months (ie by 26 June 2013);

(7) upon the Husband’s payment of the lump sum, the Wife shall deliver up vacant possession of a flat in The Grand Panorama (where she and the children had been staying);

(8) upon the Husband’s payment of the lump sum, the Wife shall transfer certain shares registered in her name to him;

(9) upon the Husband’s payment of the lump sum, the Wife’s claim for financial relief would be dismissed;

(10) liberty to apply.

The Main Appeals

20. On 23 April 2013, the Husband and the Mother lodged appeals from the Main Judgment.  They are respectively CACV80/2013 and CACV83/2013 (“the Main Appeals”). 

Husband’s application to judge for stay

21.1. As mentioned above, the deadline for the Husband’s compliance with the orders made by Deputy Judge Chu was 26 June 2013.  On 18 June 2013 he applied for a stay of execution pending appeal.

21.2. On 6 December 2013, the judge gave a stay conditional upon the Husband paying

(1) $25m (slightly more than 20%) of the lump sum of $120m, and

(2) arrears of Interim Order payments of $3,396,000 (referred to in para.16 above) 

both within 14 days (ie by 20 December 2013).

This has been referred to as “the Stay Ruling”.

21.3. The Husband failed to comply with the conditions by 20 December 2013, so there is no extant stay. 

Husband’s application for leave to appeal against Stay Ruling

22. On 30 January 2014 the Husband applied for leave to appeal against the Stay Ruling.  This application is HCMP264/2014, one of the four matters before this court.

Wife’s Applications for Hadkinson orders

23. On 6 February 2014 the Wife applied for Hadkinson orders (Hadkinson v Hadkinson [1952] P 285). 

24.1. In respect of the Husband’s appeal (CACV80/2013), the Wife asked for an order that he not be heard until he has complied with the order to pay the arrears of Interim Order payments of $3,396,000 (i.e. the same sum as the condition of stay, which he has not paid).

24.2. On 28 February 2014 (the Friday before the hearing on Tuesday), the Wife applied to amend the summons to include an order that the Husband not be heard until he has also paid outstanding costs of $414,563.98. 

24.3.These costs had apparently been taxed “at the end of last year” according to the Wife’s leading counsel.  However no satisfactory explanation was given to why the summons was not amended to include this sum until the weekend before the hearing.

24.4. By reason of this delay for which no satisfactory explanation was given, in the exercise of our discretion we refused leave to amend the summons to include the sum of $414,563.98 as a condition for a Hadkinson order.

25. In respect of the Mother’s appeal (CACV83/2013), the Wife asked for an order that she not be heard until she has complied with the Discovery Order (see para. 18.3 above). 

Wife’s application for security for costs of the Husband’s Appeal

26. On 11 February 2014 the Wife also applied for security for costs against the Husband in the sum of $5,357,000.

Matters before this court

27. On 4 March 2014 we heard the Wife’s applications for Hadkinson orders and security for costs and the Husband’s application for leave to appeal the Stay Ruling.  In the event we reserved our judgment after hearing all the applications, except for the Hadkinson application against the Mother which was adjourned for the reasons appearing below (see paras. 34-35).

Hadkinson orders

28. The principles governing Hadkinson orders are well-known.  In Hadkinson v Hadkinson, a judge made an order giving custody of a child to the mother on condition that the child should not be removed from the jurisdiction without the court’s sanction (“the 1^st order”).  However the mother took the child to Australia without obtaining the court’s sanction.  The father then obtained an order for the return of the child (“the 2^nd order”). The mother sought to appeal the 2^nd order.  The court held that she would not be heard on her appeal against the 2^nd order until she had purged her contempt of the 1^st order. 

29. The principle behind Hadkinson orders, stated very briefly, is that a person in contempt of court would not be heard by the court whose order he had disobeyed.  However there are exceptions to the rule.  Lord Romer LJ said that one exception is that a person can apply to purge his contempt.  Another exception is that “he can appeal with a view to setting aside the order upon which his alleged contempt is founded” (p.289). 

30. In any event, the court retains a discretion to decide whether to hear the person in contempt.  In exercising that discretion, the court would take into account matters such as the gravity of the effect of his contempt and whether there were other means available for securing compliance with the order.  It has been said that if the contemnor’s “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” (Hadkinson p.298).  The court would consider the proportionality principle in deciding whether or not to bar the contemnor, and what conditions to impose.

Wife’s Hadkinson application against the Mother

31.1.The Wife’s application for a Hadkinson order against the Mother was based on the latter’s failure to comply fully with the Discovery Order made on 10 August 2012 by Poon J. 

31.2. The Mother had been ordered to file an affirmation within 21 days (ie by 31 August 2012) providing answers to questions set out in a schedule and stating whether she has or had at any time in her possession any documents set out therein. 

31.3. There was no appeal from the Discovery Order.  An affirmation was made on 9 October 2012 which the Wife said did not fully comply with the order. 

31.4. The Mother did not give evidence at the hearing of the Part IIA Application before Deputy Judge Chu.

32.1. Later when the Husband applied for stay of execution of the Main Judgment, the Mother applied to be heard “to support” the Husband’s application. 

32.2. On 2 August 2013 Deputy Judge Chu made a Hadkinson order to the effect that the Mother would not be heard on her application until she fully complied with the Discovery Order.

33.1. The Mother applied for leave to appeal that decision.  On 9 January 2014 this court (Kwan and Macrae JJA) refused leave on paper, holding (paras. 16-17):

“16. ... Her failure to comply with the Discovery Order had caused the court to be handicapped in the discharge of its inquisitorial function in the application for financial relief. ...

17. The judge is plainly right to find on the facts that the 2nd respondent is clearly in contempt of court in failing to comply with the Discovery Order. We do not think there is any basis to impugn the exercise of her discretion that a Hadkinson order should be made in the circumstances of this case”.

33.2. The Mother’s failure to comply fully with the Discovery Order has therefore been confirmed by another division of this court. 

34. Faced with another Hadkinson application, this time in relation to her main appeal, on 28 February 2014 (the Friday before the hearing on Tuesday) the Mother caused to be filed in court:

(1) an affirmation of Lo Lai Ching (also known as Anita Lo), the Mother’s personal assistant;

(2) an affirmation of the Mother’s Hong Kong solicitor enclosing the affidavit of Mr Charles Morgan Seeger III, the Mother’s American attorney; and

(3) an affirmation of the Mother herself confirming the veracity of these two persons’ affirmations. 

Various documents were exhibited in compliance or purported compliance with the Discovery Order. 

35.1. Obviously, if the documents now provided comply with the Discovery Order, then the Mother would have purged her contempt and the basis for the Hadkinson application would fall away. 

35.2. Leading counsel for the Wife claims that the Discovery Order has still not been fully complied with.  However we considered that it is inappropriate for an appellate court to determine this issue which should be decided at first instance. 

35.3. Accordingly we directed that:

(1) the Wife and the Mother should exchange lists of issues on the newly disclosed information and documents by 7 March 2014 (presumably the Wife would start by asserting what documents or information are still missing);

(2) the Wife and the Mother should seek to agree on a list of issues by 10 March 2014;

(3) the matter be remitted to Deputy Judge Chu for a hearing of half a day on the issue whether there has been full compliance with the Discovery Order, an early date to be fixed;

(4) the Wife’s summons filed on 6 February 2014 (the Hadkinson application against the Mother) be adjourned pending Deputy Judge Chu’s determination on whether there has been compliance with the Discovery Order.

Wife’s Hadkinson application against the Husband

36. As far as the application against the Husband is concerned, the Wife’s application is that he should first comply with the Interim Order and pay arrears of $3,396,000 (see para. 16 above).

37.1. Leading counsel for the Husband argued first that as there has already been an order that the Husband pay arrears of MPS of $1,415,000 (which has been complied with), the Husband’s “failure to comply with the MPS Order has already been the subject of the Court’s consideration and penalties exacted therefor”. 

37.2. With respect, I do not agree.  In my view, that ignores the distinction between the MPS Order and the Interim Order.  Deputy Judge Chu was well aware of this distinction as she had held in the Main Judgment that “Poon J’s order had the effect of a fresh interim order made pursuant to s.29 AD of MPPO (‘Interim Order’)” (para. 634).  So she must have been aware of the distinction between the two orders when she made the Hadkinson order requiring payment of $1,415,000 for the arrears of MPS.

38.1. Leading counsel for the Husband then argued that the Interim Order was invalid because on the papers before Poon J on 14 March 2012, no application had been made for periodical payments, and in any event the application would have to be made by an inter partes Originating Summons. 

38.2. I have dealt extensively with this issue in paras. 10.11 - 10.19 above.  To recap, whatever may have been the situation with jurisdiction on 14 March 2012, the judge did have jurisdiction on 20 March 2012 to give effect to the Interim Order for periodical payment, because the inter partes Originating Summons (Form 28) had been filed, and it was accepted by the parties at the hearing on the 20^th in the Part IIA proceedings that it was not necessary to deal with periodical payments in those proceedings, subject only to the Husband’s reservation of his right to make an application to set aside the leave granted, which in the event he did not do.  Therefore I do not think it is correct to say that the Interim Order was invalid for want of jurisdiction.  The judge had jurisdiction on 20 March 2012 to make the order with effect from 14 March 2012 and the Husband sensibly accepted that to be the case.  The “invalidity” argument now advanced appears, with respect, to be an  after-thought of a purely technical nature.

39.1. Finally leading counsel for the Husband argued that the exception to the Hadkinson rule applied, because Deputy Judge Chu’s dismissal of his summons to vary the MPS Order was one of the matters subject to appeal. 

39.2. However as noted previously (paras. 12.1-12.3), it is clear – both from the language of the summons and from the time of its filing – that the Husband was applying for variation of the MPS Order only.  The Husband did not apply for variation of the Interim Order under s.29AD.  Therefore the “appeal exception” to the Hadkinson rule does not apply.

40. Having taken all the circumstances into account, including the fact that the Husband was in fact able to pay the sum of $323,000 a month from August 2010 to November 2011, the fact that the “invalidity” argument appears to be a purely technical after-thought, the fact that the arrears ($3,396,000) is a relatively small sum considering the wealth enjoyed by this family and the resources at the Husband’s disposal, and the proportionality of a Hadkinson order, I would make the following order on the Wife’s application made by summons on 6 February 2014:

(1) the 1^st Respondent (the Husband) should not be heard on the appeal in CACV80/2013 until he pays the sum of $3,396,000 being the arrears of periodical payments ordered by Poon J in the Part IIA Application, the said sum being the arrears from April 2012 to March 2013;

(2) until payment of the sum referred to in (1) is made, all proceedings in CACV80/2013 be stayed;

(3) in the event that the 1^st Respondent (the Husband) fails to make full payment of the said sum within 14 days of the date appearing on this Judgment, CACV80/2013 shall stand dismissed without notice or further order, with costs to be paid by the 1^st Respondent (the Husband) to the Applicant (the Wife) to be taxed if not agreed;

(4) there shall be a costs nisi as follows:

(1) the 1^st Respondent (the Husband) shall pay the costs of the Applicant (the Wife) of the application, to be taxed if not agreed, with certificate for two counsel, save that

(2) the Applicant (the Wife) shall pay the costs of the 1^st Respondent (the Husband) of the Wife’s summons to amend, to be taxed if not agreed, not certified for two counsel. 

Security for costs 

41. The Wife has asked for security for costs of $5,357,000 from the Husband for his appeal, which is due to be heard in 10 weeks time (19-26 May 2014). The Husband has made an affirmation opposing the Wife’s application for security for costs, arguing (1) that the Wife is not as poor as she makes herself out to be; (2) that he is in a poor financial condition and an order for security would have the effect of terminating his appeal which has a strong chance of success; and (3) that the application has been made too late.

42.1. The Wife’s delay in applying for security for costs is a matter for some concern. It is well-established that an application for security for costs should be made without delay – as soon as an appeal is lodged and set down and the notice of appeal is served. 

42.2. In this case the notice of appeal was filed on 23 April 2013.  The application for security for costs was not made until 11 February 2014 – 10 months after the Husband’s notice of appeal was filed, 8 months after detailed directions were given by the court for the preparation of the appeal, and 10 days before skeleton submissions were to be filed in court.  Considerable preparations for the appeal (to be heard in 10 weeks time) have been made, and substantial costs must have been incurred by the appellant. 

42.3. No explanation has been given for the delay in applying for security for costs, other than that the Wife is operating on a stringent budget.  I would have thought the more stringent the Wife’s budget, the more concerned she would have been to secure her costs at the earliest opportunity. 

42.4. It has also been said on the Wife’s behalf that her legal advisers have been busy with other litigation, including litigation in the PRC.  However I would have thought that an application for security for costs, being a stand-alone application, is one which could easily have been made without much reliance (if at all) on the lay client’s participation.  It was not necessary to ascertain her financial condition as it was not relevant to the application for security for costs.

43.1. It is well-established that an application for security for costs should be made promptly after the notice of appeal is served (see Hong Kong Civil Procedure para. 59/10/34).  In my view, the court would be setting a bad precedent if it were to accede to an application for security for costs made so late. 

43.2. Accordingly in the exercise of the court’s discretion, I would dismiss the application, with an order nisi that the costs of the application should be paid by the Wife to the Husband, to be taxed if not agreed.  I do not consider that two counsel were necessary to respond to the application.       

43.3. As a matter of completeness, I should mention that had it not been for the delay, I would have made an order for security as I am not satisfied at this stage that the Husband’s chances of overturning the Main Judgment are so strong that the Wife should be denied security for costs.

Application for leave to appeal from Stay Ruling

44. Finally I will deal with the Husband’s application for leave to appeal from Deputy Judge Chu’s Stay Ruling.

45. The order of a conditional stay was made in the exercise of the judge’s discretion.  For the Husband to get leave to appeal, he would have to show a reasonable prospect of success in persuading an appellate court to overturn that exercise of discretion. 

46. It is well-established that an appellate court would not interfere with the exercise of discretion unless it is demonstrated that the judge had erred in principle or that the decision was “plainly wrong”. 

47.1. I am not persuaded that the judge had erred in principle or that the decision was “plainly wrong”. 

47.2. The conditions imposed by the judge were not draconian given the Husband’s proven access to financial resources.  The conditions were payment of $25m being part of the lump sum and $3,396,000 arrears under the Interim Order. 

47.3. The $25m amounted to about 20% of the lump sum ordered.  It was based on the Husband’s own Revised Open Offer made on 8 November 2012 (see para. 24 of Deputy Judge Chu’s Reasons for refusing leave to appeal from the Stay Ruling, 16.1.2014). The Husband said that this offer was made with his mother’s assistance.  Be that as it may, it shows his ability to obtain such assistance if necessary.  I have discussed the arrears in an earlier part of this judgment (para. 40) and will not repeat it here.

47.4. Accordingly I take the view that there are no reasonable prospects of success in the Husband’s proposed appeal against the Stay Ruling since an appellate court is unlikely to interfere with the judge’s order made in the exercise of her discretion, and I would refuse leave to appeal. 

47.5. I would dismiss the Husband’s summons for leave to appeal the Stay Ruling, with an order nisi that the costs of the application are to be paid by the Husband to the Wife, to be taxed if not agreed, not certified for two counsel. 

Hon Barma JA:

48. I agree.

Hon McWalters J:

49. I agree.

Hon Yuen JA:

50. Accordingly there will be orders as set out in paras. 24.4, 40, 43.2 and 47.5.   

(MARIA YUEN) Justice of Appeal

(AARIF BARMA) Justice of Appeal

(IAN MCWALTERS) Judge of the Court of First Instance

Ms Audrey Eu SC and Mr Chan Hei Ching, instructed by C T Chan & Co, for the Applicant

Mr David Pilbrow SC and Mr Jonathan Ah-weng, instructed by Tso Au Yim & Yeung, for the 1^st Respondent  

Mr C Y Li SC and Mr Adrian But, instructed by B.C. Chow & Co,  for the 2^nd Respondent