Ml v. Yj
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CACV 89/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 89 OF 2008 (ON APPEAL FROM HCMC NO. 13 OF 2006) ---------------------- BETWEEN
---------------------- Before: Hon Le Pichon, Cheung JJA and Sakhrani J in Court Dates of Hearing: 5 & 6 May 2009
Date of Handing Down Judgment: 17 June 2009 -------------------------- J U D G M E N T ------------------------ Hon Le Pichon JA: 1.This is an appeal from an order of Lam J dated 7 March 2008 dismissing the respondent husband’s summons to strike out the petitioner wife’s claim for ancillary relief. Jurisdiction to entertain the wife’s claim depends on the recognition or otherwise of a divorce granted by the Shenzhen Intermediate People’s Court (“the Shenzhen court”). At the conclusion of the hearing judgment was reserved which we now give. Background 2.It is necessary to set out in some detail the history of the divorce proceedings. As will become apparent, the conduct of the parties was a material factor in the judge’s exercise of his discretion in refusing to recognise the divorce granted by the Shenzhen court. 3.The parties were born on the Mainland and were married in Shenzhen in April 1992. The husband had businesses in both Hong Kong and the Mainland. They moved to Hong Kong in the early-mid 90s acquiring a right of abode here. They have two sons and maintained matrimonial homes in both jurisdictions. The elder son was born on the Mainland in 1992 and the younger son in Hong Kong in 1999. While the husband spent his time between Hong Kong and the Mainland for business reasons, the wife and children lived mostly in Hong Kong where the children attended school, returning to the Shenzhen matrimonial home at weekends. The parties maintained a high (if not somewhat lavish and extravagant) standard of living and had substantial assets in both jurisdictions. §§ 23-25 of Lam J’s judgment of 23 May 2008 (“the May judgment”) on ancillary relief offer some insight on the subject. The matrimonial assets as found by the judge, were in the aggregate, in excess of HK$870 million. 4.The marriage broke down irretrievably in 2006. The wife filed a petition for divorce in Hong Kong on 18 May 2006. 5.Two days later, the husband issued a writ in the High Court of Hong Kong (HCA 1088 of 2006) claiming that the wife held certain assets situated in Hong Kong, being shares in various Hong Kong companies (including Bestraight Development Ltd, Park Regent Development Ltd and Joint Profit Ltd) and in BVI companies in trust for him. The wife had named Joint Profit as the purchaser in a contract in 2005 to purchase a property called “the Legend” for about HK$30 million with completion due sometime in 2006/2007. (This transaction is further described in §§ 19 - 20 below.) The writ also sought injunctions to restrain the wife from “misappropriating, converting and/or misusing” the sale proceeds of, inter alia, a property situated in Nathan Road, (hereafter, is referred to as “the Union Park property”) and the Legend. Bestraight and Park Regent were the registered owners of various properties in Hong Kong, some of which were in the process of being sold. The BVI companies also held Hong Kong properties. 6.Meanwhile, the husband filed his Form 4 on 15 June 2006 indicating an intention to defend and advancing claims for custody and ancillary relief. Both parties also applied for interim custody of the children in June 2006. 7.On 3 August 2006, the wife filed a notice of her intention to proceed with the application in the petition for a transfer of property order in respect of the husband’s beneficial interest in two Hong Kong properties which, for convenience, will be referred to as (“the Central Park property” and “the Waterloo Road property” respectively). The notice was registered in the Land Registry against those properties which were not properties affected by HCA 1088. 8.The petition was amended on 9 August 2006 essentially to put forward a ‘watered-down’ version of unreasonable behaviour and, on the following day, the husband filed a further Form 4, stating an intention not to defend the petition. The Hong Kong ancillary relief proceedings 9.On 11 August 2006, the wife applied for maintenance pending suit for herself and her children. This was followed by the husband’s notice of application for ancillary relief, making all financial claims. 10.On 1 September 2006, after an oral hearing before Deputy District Judge Melloy, an order was made for maintenance pending suit on the parties’ consent summons of even date filed in these proceedings (then FCMC 5788/2006) that the husband pay the wife interim maintenance of $450,000 per month upon the parties entering into the consent summons in HCA 1088 which was annexed to the interim order. While the amount of interim maintenance might appear extravagant, it could be said to reflect the parties’ lifestyle. The HCA 1088 consent summons was filed on 7 September 2006 seeking an order for payment out of a sum (i.e. $450,000 per month) that matched the interim maintenance ordered until further order. The circumstances that gave rise to that arrangement are relevant and it would be convenient to describe them here. 11.As noted earlier, HCA 1088 had been instituted by the husband,claiming that certain assets in the name of the wife were held by her in trust for him. The wife’s case is that they formed part of the parties’ matrimonial property. The issue, therefore, was whether the properties belonged exclusively to the husband or whether they formed part of the pool of matrimonial assets available for division upon divorce. The parties reached an agreement for the net proceeds of sale of two properties forming part of the subject matter of HCA 1088 to be deposited into court by the wife, thus enabling the two sale transactions to proceed to completion. Consent orders relating to the payments into court were made on 29 June 2006 and 14 July 2006. The net proceeds of sale paid into court by the wife pursuant to those orders amounted to $28.5 million. But this was part of a broader arrangement encompassing maintenance pending suit as is reflected by the consent summons mentioned in § 10 above. 12.In this regard, significantly, the payment into court was not made, as one would expect, “pending the determination of HCA 1088” but as stated by the husband in his Form E of 2 August 2006 (at 5.5.8)
Further, in the letter of 6 September 2006 from the wife’s solicitors to the court accompanying the consent summons in HCA 1088, the husband’s solicitors countersigned the letter and confirmed that
An order (in terms) was made in HCA 1088 on 18 September 2006. 13.The significance of the ‘agreement’ did not escape the judge’s notice. He addressed it in § 18 of his judgment:
14.Other than the issuance and service of the writ, the husband has taken no further steps in HCA 1088. No statement of claim was ever filed and those proceedings remained dormant until, as will appear below, they were struck out by the judge in May 2008. If the present appeal were allowed, one of the consequences would be the re-instatement of HCA 1088. In § 71 of his judgment, the judge referred to the husband’s intention to pursue HCA 1088 “based on his proprietary interests” in the assets identified in that action. 15.Unbeknown to the wife, the husband issued a writ in the Shenzhen court on 23 October 2006 claiming divorce, custody of the children and for division of the matrimonial assets said to be of the value of approximately RMB 14.68 million (“the Shenzhen proceedings”). When he did so the parties had already exchanged Form Es and financial questionnaires and answers had also been filed in the Hong Kong proceedings. The ostensible reason given by the husband for initiating the Shenzhen proceedings was that there was some doubt as to whether a decree of divorce pronounced in Hong Kong would be recognised and given effect in the PRC. That, however, does not explain the other relief sought. Be that as it may, the wife first became aware of the Shenzhen proceedings on 13 November 2006, the day the decree nisi (which was unopposed) was pronounced in Hong Kong. 16.When the husband refused to withdraw the Shenzhen proceedings, on 18 January 2007, the wife applied for an anti-suit injunction and for interim relief pending the substantive hearing. The judge refused interim relief at the hearing on 24 January 2007 and adjourned the substantive hearing to 7 May 2007. In March 2007, on advice, the wife withdrew the anti-suit injunction and, instead, applied for a stay in the PRC court. Her stay application made in the Shenzhen court in March 2007 was unsuccessful and her subsequent appeal to the Higher People’s Court of Guangdong in May 2007 met with the same fate. 17.Shortly thereafter, the custody applications (which were bitterly fought) came before Mr Recorder Yuen SC and, on 23 May 2007, the wife was granted custody of both children, with reasonable access to the husband. 18.In May 2007, prior to the trial in Shenzhen, a number of other events occurred. First, the husband was anxious to proceed with the sale of the Waterloo Road property which was one of the ‘common properties’ he had requested the Shenzhen court to deal with but a sale required that the registration of the notice for ancillary relief made by the wife against the property be vacated. He issued a summons on 4 May 2007 in HCMC 13 for that purpose. Second, as notice to complete the purchase of the Legend was expected at any time, the wife applied for leave by summons dated 30 April 2007 in HCA 1088 to pay out $7 million from the monies in court in HCA 1088 for that purpose. 19.According to the wife, she had been asked by the husband in the year 2000 to look for a suitable home for the family and in 2005 she located the Legend. Meanwhile, ‘home’ was in the form of a service apartment at the Four Seasons Hotel. On 28 June 2005, the wife signed a provisional agreement for the purchase of the property at approximately HK$30 million in the name of Joint Profit and paid a deposit of just over $6 million. While the husband disputed this, it is a nevertheless a fact that at the time the deposit was paid for the purchase of the Legend, the wife and children were living in a service apartment. 20.Failure to complete the purchase of the Legend would result in a forfeiture of the deposit of over $6 million which,on any view, would not be a desirable outcome. The wife thus made her application on the basis that the balance of the purchase price required other than the $7 million would be financed by a bank loan to be secured by a mortgage on the Legend, that the wife would move into the property with the children thus saving on rental for the service apartment and the mortgage repayments would be paid out of the interim maintenance of $450,000 a month. Beneficial ownership of the Legend would be left for determination in HCA 1088 and the ancillary relief proceedings. I pause here to observe that even with the payment out of $7 million, there was still a shortfall of $17 million plus costs to be financed by a bank loan. 21.The two summonses were adjourned to be heard together. They came before Mr Recorder Yuen SC on 25 May 2007. Significantly, the husband’s evidence in support of his application made no mention of the Shenzhen proceedings or that the Shenzhen court was being asked to deal with the division of the two Hong Kong properties in the Shenzhen proceedings. Judgment was reserved and by orders made on 4 June 2007 leave was granted for the net proceeds of the Waterloo Road property to be applied by the husband to partially repay the loan secured by a mortgage on the Central Park property and for $7 million to be withdrawn from the funds in court in HCA 1088 towards the purchase of the Legend subject to appropriate safeguards relating to any future dealings with the Legend. 22.In § 17 of his judgment of 4 June 2007 in the wife’s application, the recorder noted that
The recorder had no reason but to think that ancillary relief would be dealt with by the Hong Kong courts. That train of thought was logical inasmuch as no mention had been made of the Shenzhen proceedings. The orders made on 4 June 2007 thusfurther reinforced the inextricable link between HCA 1088 on the one hand and FCMC 5788 which became HCMC 13 (the ancillary relief proceedings) on the other. This link was first established when the parties reached the ‘agreement’ referred to in § 10 above, such that one set of proceedings could not sensibly and reasonably be resolved without at the same time also resolving the other. 23.At about the time the trial began in Shenzhen, on 29 June 2007, Lam J ordered that the trial for ancillary relief be set down for fifteen days commencing 5 March 2008. By that date, a great deal of evidence relating to the parties assets and finances had been filed. Extensive further and better particulars had been requested by the husband on 30 May 2007 and by the wife on 12 June 2007. On 29 June 2007, the wife obtained an order from Lam J requiring the husband to answer the wife’s questionnaire of 12 June 2007 by 31 July 2007. The husband failed to do so and on 27 September 2007, Hartmann J ordered both parties to file their narrative affirmation relating to ancillary relief on or before 18 October 2007 and to respond to each other’s questionnaires and further and better particulars on or before 18 October 2007. The parties did not provide the particulars sought until 9 November 2007, by which time the trial in Shenzhen was over and, in fact, the civil judgment was about to be handed down. Importantly, the husband’s answers were critical to the issue of hidden assets raised by the wife. The Shenzhen proceedings 24.As earlier noted, the husband had commenced the Shenzhen proceedings in late October 2006 and the wife’s attempts to stay those proceedings had failed. Because the custody of the children was at stake in that the husband continued to pursue custody in the Shenzhen court notwithstanding the fact that the Hong Kong court had by that stage already disposed of the custody issue, the wife had little choice but to participate in those proceedings. She was plainly a ‘reluctant’ party. 25.The trial took place on 25 June, 6 August and 25 September 2007. The husband sought sole custody of the children and sought division of what was said to be the common properties of the parties, comprising eight properties in the PRC and two properties in Hong Kong, having an aggregate value of RMB 14.68 million. The two Hong Kong properties were the Central Park and Waterloo Road properties, neither of which was property affected by HCA 1088. 26.On the first day of the trial in Shenzhen, the parties indicated that they desired a divorce without attributing blame. The husband then proceeded with his claim for custody notwithstanding the Hong Kong court’s decision a month earlier. The parties also put forward their respective cases as to how the court should deal with what the husband had presented to the Shenzhen court as common properties. The wife’s contention was that the husband should not be allocated any of the properties or a smaller share because there were other assets (the hidden assets) some of which had been transferred into the names of the husband’s mother and younger brother. 27.By the adjourned hearing in August, the parties had reached agreement on the disposal of nine out of the ten properties said to be ‘common properties’, namely, seven of the eight PRC properties (including one that had been sold) and the two Hong Kong properties which included the proceeds of sale of the Waterloo Road property that, meanwhile, had been sold. 28.The Shenzhen court ruled that one of the seven PRC properties was not common property but property belonging to the wife only. But as under the parties’ agreement, that property was to go to the wife in any event, the ruling made no practical difference. Thus, the Shenzhen court could be said to have given effect to the parties’ agreement in relation to the nine properties (including the proceeds of sale of the two properties that had been sold). 29.As regards the Shenzhen matrimonial home as to which the parties had not been able to reach agreement, the Shenzhen court found that the property had a net value of RMB 22.62 million and that it should go to the husband on the basis that the wife be paid half the net value of the property, namely RMB 11.31 million. While there was mention that the Shenzhen matrimonial home was being used as collateral to guarantee a liability of RMB 9 million, it would appear that in reckoning the net value of the property stated above the Shenzhen court had made no allowance for it. 30.The net result was that the wife was given four of the properties including the Central Park property in Hong Kong, and the husband the remaining four properties, save that the parties were to pay each other, by way of adjustment, various sums particularised in the judgment of the Shenzhen court. In this regard, after netting off, the husband was ordered to pay the wife the sum of RMB 8.8 million within 30 days of the entry into force of the order. As there is no challenge to the civil judgment, it matters not that, arithmetically, quite how that result was achieved is opaque. Be that as it may, the value of the assets subject to the order of the Shenzhen court is of the order of HK$32 million and not RMB 14.68 million. 31.On the issue of the ‘hidden assets’, at the August hearing, the wife withdrew her request for an investigation into whether there had been concealment and transfer of common properties due to a lack of evidence but reserved her rights. In this regard, it is pertinent to note that despite Lam J’s order that the answers be provided by 31 July 2007, the husband’s responses remained outstanding at the date of the August hearing. In fact they were not forthcoming until the eve of the civil judgment. 32.The civil judgment dealt with a number of other matters including the lawsuit brought by Shenzhen Shangkai Investment Co Ltd (a company ostensibly owned by the husband’s mother and brother) against the husband concerning an alleged loan which was before the civil tribunal to which the wife was a third party. The Shenzhen court ruled that that dispute should be dealt with by that court. 33.The husband’s claim for sole custody was dismissed and the wife was granted custody of the two children. The court rejected all other claims of the parties. 34.The civil judgment which was dated 6 November 2007 was handed down on 14 November 2007. Under PRC law, the wife had 30 days within which to appeal. 35.What is significant from the Shenzhen proceedings is that neither party made any reference to the assets that are subject to HCA 1088. The Shenzhen court was not apprised of the existence of those assets and the omission was plainly deliberate. Thus while the wife did make reference to ‘hidden assets’, it is plain that that was a reference to the husband’s interest in various PRC companies and could not have encompassed the assets identified in HCA 1088. Unlike the ‘hidden assets’, the wife was not hampered by a lack of evidence in respect of the HCA 1088 assets. The judge found a common intention that the distribution of those HCA 1088 assets would be determined by the Hong Kong courts in HCA 1088 but within the context of the Hong Kong ancillary relief proceedings. There was ample evidence to support that finding – the matters referred to in § 12 above and the otherwise inexplicable omission to apprise the Shenzhen court of the HCA 1088 assets. The husband’s striking out application 36.On 3 December 2007, the husband took out a summons seeking an order to stay the ancillary proceedings permanently; to strike out the wife’s claim for ancillary relief; to vacate the hearing dates for an impending FDR (fixed for 10-14 December 2007) and for the trial; rescission, withdrawal and/or annulment of the decree nisi; and for a declaration that no decree nisi should be made absolute. Notwithstanding the summons, the husband in fact participated in the FDR hearing that took place before HH Judge Chu from 10 to 14 and 20 December 2007 on which date, on the failure of the FDR, Judge Chu ordered that the case be transferred back to the High Court. 37.At the commencement of the trial on 5 March, the judge heard the application to strike out as a preliminary issue. On 7 March 2008, the judge dismissed the husband’s application, finding a common intention that there would be an ancillary relief hearing in Hong Kong to resolve the distribution of the assets that had not been the subject of the Shenzhen proceedings and that it would be unconscionable to allow the husband to derail the Hong Kong ancillary relief proceedings. The ancillary relief hearing 38.The first day of the hearing for ancillary relief took place on 10 March 2008. The husband was legally represented that morning but in the afternoon he withdrew his instructions to his legal representatives and appeared in person. He then absented himself for the rest of the trial. 39.On 23 May 2008, the judge held that the family assets that had not been distributed by the Shenzhen court amounted to approximately $840 million, the bulk of which were assets in the PRC. Nevertheless, they included assets in Hong Kong worth $66 million. The judge ordered that certain assets be transferred to the wife, payment out of monies paid into court in HCA 1088 to the wife and struck out HCA 1088. He adjourned the application of a lump sum payment pending supplemental submissions to a date to be fixed. 40.The husband did not attend the adjourned hearing. On 6 November 2008, the judge ordered that the husband pay the wife a lump sum of approximately $378 million. This appeal 41.The issue in this appeal is whether the judge was right to refuse to recognise the Shenzhen divorce on public policy grounds. The answer to that question would also decide the question of the Hong Kong court’s jurisdiction to grant ancillary relief to the wife. 42.It is common ground that under section 25(1)(b) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“MPPO”), the statutory powers of the Hong Kong court to make an order for financial provision or property transfer in favour of the wife are conditional on the grant of a decree absolute by the Hong Kong court. 43.A decree absolute will not be granted in the absence of an order of the court made under section 18(1) of the MPPO if there are children of the marriage. Also, it will not be granted if at the time of application the marriage has ceased to exist, whether by death of one of the parties to the marriage or by reason of a valid decree of divorce made overseas and recognized in Hong Kong. 44.The relevant legislation relating to the recognition of overseas divorces is to be found in Part IX of the Matrimonial Causes Ordinance, Cap. 179 (“MCO”). That legislation was enacted in 1971 and was the Hong Kong counterpart to English legislation enacted as a result of the UK being a signatory to the Hague Convention on the Recognition of Divorces and Legal Separation 1970. 45.The relevant provision, for the purposes of this appeal, is section 61:
Section 61(2)(b) and (3) reflect in substance, Art. 10 and Art. 1 (second paragraph) respectively of the Convention. But the legislation is broader than the Convention in that reciprocity which underlies the obligations between “Contracting States” under the Convention is not a pre-condition for the recognition of overseas divorces. 46.It is accepted that paragraph (a) of section 61(2) has no application in the present case since the wife not only had notice of the Shenzhen proceedings but also took part in them. Public policy 47.The following passage from the judgment of Wood J in Chaudhary v Chaudhary [1985] Fam 19 at 29B-E serves as a useful starting point:
48.As Wood J observed, the wording of the English counterpart to section 61(2)(b) of the MCO, followed closely that of Art. 10 of the Convention save for the insertion of the word “manifestly” in the legislation. He opined that he did not consider that it added anything to the subsection in that he did not believe that any judge would invoke the doctrine of public policy unless he felt that it was clearly right and just so to do. 49.What is immediately obvious is that the exercise of the residual discretion is fact-sensitive and all the circumstances of the particular case need to be considered. That emerges from two of the leading cases on the subject, namely the House of Lords’ decision in Quazi v Quazi [1980] AC 744 and the judgment of the Court of Appeal in Chaudhary. 50.Both Quazi and Chaudhary concerned marriages between parties who were Muslims and in each case the talaq had been pronounced under the laws of Pakistan. While it was held that the talaq was a divorce obtained by judicial or other proceedings for the purposes of the Recognition of Divorces and Legal Separations Act 1971, the English court recognised the talaq divorce in Quazi but not in Chaudhary. The different results came about and were justified because of factual differences between the two cases. These differences are forcefully brought out in the judgment of Oliver LJ in Chaudhary (at 44C-45A):
51.That the facts of the particular case are critical to the exercise of the discretion is also made plain from this passage from the judgment of Cumming-Bruce LJ (at 39F-G):
52.Lord Scarman’s speech in Quazi is instructive in relation to the trial judge’s discretion (at 826E-F):
53.Wood J (who was the trial judge in Quazi as well as Chaudhary, commented (at 783H) that:
The facts in Quazi and Chaudhary could be said to be at either end of the spectrum, thus justifying different conclusions on the question of recognition of foreign divorces. 54.Mention should also be made to Joyce v Joyce and O’Hare [1979] 2 All ER 156 which was decided shortly after Quazi. That case concerned an English couple whose marriage in England had lasted almost 20 years. The husband deserted his wife and family and later left for Canada where he petitioned for a divorce. Due to errors on the part of the wife’s legal representatives, she was denied a fair opportunity of being heard in the Canadian divorce proceedings. In refusing recognition because the wife had been denied a fair opportunity of being heard, Lane J stated (at 171h-i) that:
55.It has been suggested that Joyce is a decision within the English equivalent to our section 61(2)(a)(ii) and should not be regarded as an authority on the public policy exception in section 61(2)(b). However, in reaching the conclusion that the wife had been denied a reasonable opportunity to take part in the Canadian proceedings, the court had regard to the consequences of recognising the Canadian decree from the perspective of the wife and children: that they would be left without remedy with regard to their home and would be left without practical means of enforcing maintenance orders, be they English or Canadian. Further, the court also undertook a balancing exercise, weighing the disadvantages of non-recognition to the husband against the disadvantages to the wife of recognising the foreign decree. Those were the circumstances that prompted Lane J to remark that to recognise the Canadian decree “would indeed jar on [her] conscience”. In context, it would appear that the court considered those same circumstances as sufficient to justify non-recognition on public policy grounds which was the alternative ratio in that case. The judge’s approach and findings of fact 56.At § 52 of his judgment, the judge stated the applicable principles, adopting the propositions (deduced from English cases on the topic) set out by Deputy High Court Judge Stephen Wildblood QC in H v H [2007] 1 FLR 1318 at 1368, as follows:
The judge recorded that counsel for both parties accepted that those were relevant considerations that the court must take into account. 57.The judge accepted that it is not against our fundamental notion of justice for a party to pursue concurrent parallel divorce proceedings in a different jurisdiction after a petition has been presented against him or her in Hong Kong. He acknowledged that that might well lead to a race to be the first to reach the finishing line but the fact that a divorce may be obtained more quickly in an overseas jurisdiction or that a spouse may obtain substantially less by way of ancillary relief in the overseas jurisdiction is no reason not to recognize a foreign divorce. He accepted that the husband could not be criticised for applying for a PRC divorce. 58.But the judge considered (at § 67) that
59.He went on to elaborate on the meaning of ‘distortion’:
60.He concluded that recognition of the Shenzhen divorce would not only frustrate that ‘common intention’, there would also be severe consequences for the wife in that the order for maintenance pending suit would have to be discharged on which he elaborated in § 70 of his judgment: the consent order in HCA 1088 for the payment out each month to match the maintenance pending suit would have to be discharged; the wife would cease to be able to resort to the money in court for her continuous maintenance and the court’s flexible powers under the MPPO would no longer be available in the resolution of HCA 1088. He considered that that would be
In that regard, the wife alone had by then incurred costs totalling HK$5.5 million. In fact, on 22 February 2008, by consent, $5.5 million was released from the funds in court in HCA 1088 to enable the wife to finance the divorce proceedings. 61.The judge also made reference to the fact that in granting the PRC divorce, the Shenzhen court was not made aware of the husband’s intention to use that divorce as a ground for frustrating the ancillary relief proceedings in Hong Kong and noted that the present case was not one where the husband had meanwhile contracted another marriage which plainly would have been a relevant factor. He considered (at § 74) that the only practical effect of non-recognition would be
62.Whilst the wife may not be barred from reopening the Shenzhen proceedings to deal with family assets not yet dealt with by the Shenzhen court, the judge did not consider that it followed that it would not be unconscionable for the husband to derail the Hong Kong ancillary relief hearing at such a late stage. Moreover, while the hidden assets were assets within the PRC, he stressed that “the undistributed Hong Kong assets are also substantial”. 63.The judge, having considered all the facts of the case and for the reasons outlined above, concluded that the Shenzhen divorce should not be recognized. Absent any error of law, it would be wrong to interfere with what, after all, is an exercise of his discretion. 64.Mr Thomas SC who appeared for the husband submitted that the judge was wrong in finding a ‘common intention’. He submitted that on the three occasions that that expression was used in the judgment, they were used to mean different things. Mr Thomas stressed that this was a case where concurrent parallel divorce proceedings in two jurisdictions were justified and everything done by the husband had been above board, there being no subterfuge or fraud involved in the obtaining of the PRC divorce. It was said that a court is not entitled to withhold recognition because of the consequential effects that it would have in Hong Kong to the detriment of one party and public policy cannot justify non-recognition even if one of its effects would be to deprive the wife of obtaining ancillary relief in Hong Kong. Mr Thomas referred to public policy as an “unruly horse”, an indulgence in “palm tree” justice, such that the exercise of judicial restraint was an imperative. 65.If the proposition sought to be made is that in exercising its discretion, the court may not have regard to the consequential effects of according recognition to a foreign divorce as part of the overall facts of the particular case, I am unable to agree with it. See Chaudhary, Quazi, Joyce and H v H considered above. 66.It was also suggested that the fact that the wife would be unable to obtain ancillary relief in Hong Kong were the PRC divorce to be recognized was a consequence that she could have avoided. In other words, she only had herself to blame and so it was wrong for the judge to have taken that matter into consideration. First, it was said that the wife’s legal advisers were well aware that the Hong Kong court would have no jurisdiction to grant ancillary relief upon the pronouncement or recognition of an overseas divorce, as is apparent from the transcript of the wife’s application for interim relief pending her summons for an anti-suit injunction heard by the judge on 24 January 2007. Second, when the civil judgment was handed down on 14 November 2007, it was clear that absent an appeal by the wife within 30 days, it would become effective. When the husband took out the present summons to strike out the wife’s application for ancillary relief on 3 December 2007, there were still 11 days left for the wife to lodge an appeal or to apply for an expedited decree absolute under the principle in Torok v Torok [1973] 3 All ER 101 so as to preserve the Hong Kong courts’ jurisdiction to grant ancillary relief. For those reasons, it was said that the judge had erred in principle, entitling this court to intervene. 67.I would observe that even if an urgent application had been made during the 30 day period (whether before or after the filing of the husband’s strikeout summons), a Torok order was by no means a foregone conclusion. While the civil judgment states on its face that the effective date is 14 December 2007, there is no satisfactory evidence as to when a civil judgment becomes effective as a matter of PRC law. Is the civil judgment effective from the date it bore or alternatively from the date it was handed down until reversed or set aside on appeal, if any? If an appeal is lodged does it mean that the effective date then becomes suspended? I note in passing that the husband’s summons of 3 December 2007 and first supporting affirmation were predicated on the divorce already having taken effect. 68.Be that as it may, even assuming (against the wife) that a Torok order could have been obtained had an application been made and the failure to make such an application and/or the failure to appeal the civil judgment was attributable to some fault on the part of the wife and/or her legal advisers (such as a judgment call that, with hindsight, could be said to have been unwise), would that have the automatic effect of precluding the judge from having regard to the consequences to the wife in the event of the PRC divorce being recognised? 69.In my view, errors on the part of a party’s legal advisers do not mean that the judge is precluded from having regard to the consequences of recognising the overseas divorce. That is clear from Joyce and also derives support from Wheeler v Wheeler [1997] CILR 362, 380 and Newmarch v Newmarch [1978] 1 All ER 1,12. Such errors do not operate to preclude the judge from taking into account all relevant circumstances although they may possibly go to the weight to be attached to the consequential effects. 70.Moreover, in the present case, the ‘net consequences’ to the wife is not as simple as her inability to obtain ancillary relief in Hong Kong. 71.Several matters emerge from the history of the divorce I have endeavoured to set out in some detail above. As is clear from §§ 5, 10-14, 18-23, the parties consciously and deliberately caused the interlocking of HCA 1088 with the ancillary relief proceedings. I see no basis for impugning the finding of common intention in § 18 of the judgment for the reasons explained in § 35 above. In passing, I would mention that in the May judgment, the judge considered (at § 3) that the parties had clearly envisaged that HCA 1088 would only serve “as an adjunct to the ancillary relief application”. 72.Notwithstanding Mr Thomas’ criticism of this ‘finding’, on analysis, the arrangement reached by the parties comes to this: it is now undeniable that the proceeds paid into court by the wife were matrimonial assets. As there is no rational basis for distinguishing those assets from the other ‘trust assets’ identified in HCA 1088, the judge was entitled to reach the conclusion thathe did – namely, that at the very least the assets identified in HCA 1088 should be determined as part of the ancillary proceedings. (While the phrase “Hong Kong assets” was used, it is clear that it was a reference to assets subject to HCA 1088.) 73.The matter is further complicated by the agreement that $7 million from the proceeds be released towards the purchase of the Legend subsequent to the commencement of HCA 1088 and the subsequent funding of the purchase. In those circumstances, the husband’s claim cannot be resolved fairly and justly except within the context of the ancillary relief proceedings. Yet, it is apparently the husband’s intention to have HCA 1088 decided (subject to whether or not the judge was correct in striking it out) independently, by reference solely to his proprietary rights, free from ancillary relief considerations and the consequent flexible powers of the court under the MPPO. 74.At the hearing, Mr Thomas was at pains to emphasise that, based on the opinion of the wife’s expert, it remains open to her to apply to the Shenzhen court in respect of matrimonial assets other than those already dealt with in the civil judgment. It was said that the Shenzhen court is, in any event, the most suitable forum since what the wife alleges to be ‘hidden assets’ are shares in PRC companies. But it is clear that that was a matter the judge had taken into consideration. 75.The Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters Between Hong Kong and The PRC (“the Reciprocal Arrangement”) recently entered into between the PRC and Hong Kong has no application to matrimonial proceedings and ancillary relief. In that regard, it would appear that the Shenzhen court has no means of ensuring enforcement of its award insofar as it relates to assets situated in Hong Kong. In those circumstances, even if the wife were successful in obtaining an order from the Shenzhen court in relation to the HCA 1088 assets (which the judge found to have a value of the order of $66 million), in the absence of any effective means of enforcement, such an order would be next to useless. At the end of the day, the wife’s ability to apply to the Shenzhen court (which would involve yet further costs) is one of many competing factors to be taken into consideration. Another would be her ability to secure effective enforcement. The weight be attached to the various factors was plainly a matter for the judge. 76.Pausing here, mention should be made of undertakings which the husband offered the judge and also this court. Put shortly, the husband (1) consents to the Shenzhen court dealing with and distributing the assets subject to HCA 1088 and the ‘hidden assets’ on the basis that they are matrimonial assets; and (2) “pending further order” from the court, the husband undertakes to pay $450,000 per month for the maintenance and benefit of the two children of the family, such payment to be satisfied by payment to the wife under the current arrangements out of the proceeds paid into court by the wife in HCA 1088. 77.The undertakings give rise to the following observations. First, they show that the husband’s stance relating to the treatment of the assets subject to HCA 1088 is inconsistent: while the husband is apparently agreeable to the Shenzhen court dealing with and distributing the assets subject to HCA 1088 as matrimonial assets, his stance is otherwise were those assets to be adjudicated by the Hong Kong courts. See § 71 of the judgment where the judge records the husband’s position. It has not been suggested in this appeal that the judge made an error there. There would not appear to be any rational explanation for that inconsistency. Second, the seemingly generous undertaking to continue the maintenance payment of $450,000 (although expressed as payments for the benefit of the children rather than to support the wife) merits closer analysis. It was intended to operate pending the substantive decision of the judge regarding the maintenance of the children under section 5 of the MPPO. (see Tr. 150Q-151). Under the renewed offer to this court, it is not entirely clear what “pending further order” means. 78.Even on the hypothesis that it were an offer to continue the current arrangements pending a determination by the Shenzhen court, what is the reality? The $28.5 million paid into court under HCA 1088 represented matrimonial assets rather than the husband’s assets alone. On a 50-50 basis, the wife’s share would be $14.25 million. At the time of the ancillary relief hearing in March 2008, the amount left in court was approximately $8.67 million. 15 months have since elapsed which would have depleted that amount by a further $6.75 million. Irrespective of the treatment of the $7 million released to enable completion of the Legend, there is little doubt but that the husband’s share has long been exhausted and that, for at least a period of time, the wife’s maintenance has effectively been funded out of her share of the liquid matrimonial assets in Hong Kong. Even those funds are likely to be totally depleted by the end of the summer. So even if the wife were to apply to the Shenzhen court for relief, by the nature of things, it will be some time before the matter can be resolved and, meanwhile, there would no longer be any available funds left in court. In any event, as I have said, such funds as remain in court represent monies that belong to the wife. 79.At the end of the hearing, there was some dispute between the parties as to whether or not the husband has actually complied with the civil judgment which required him to make the payment of RMB 8.8 million and to transfer, inter alia, the Central Park property to the wife within 30 days of the civil judgment. While it is not the function of this court to make any findings in that regard, quite apart from the fact that this court is not in a position so to do, it is to be noted that the judge did make some observations on that issue in the May judgment. In explaining at (§ 133) why he considered it necessary to have the periodic payments secured, he referred, inter alia, to the husband’s “attempts to frustrate the Wife from getting the fruit of the PRC judgment”. Then at § 135, he commented that
This much is clear: at a minimum, as at the date of the March hearing (if not also at the date of the judgment) which was some four months after the date of the civil judgment, the husband had failed to perform at least some of his obligations under the order of the Shenzhen court. 80.It seems tolerably clear that the undertakings have been proffered for no purpose other than to seek to counter the otherwise dire consequences for the wife arising from recognition of the Shenzhen divorce. They were only made at the eleventh hour, at the reply stage of the proceedings below. For the reasons stated, I do not consider that they achieve their objective. Moreover, there is the question of wasted costs involving sums of a significant magnitude. The judge was obviously of the view that to require the wife to reinvent the wheel by commencing proceedings all over again in Shenzhen when the trial on ancillary relief was about to commence immediately after the hearing of the husband’s striking out summons was inimical to the administration of justice and its underlying objectives which underpin the current civil justice reform. The trial itself took 9 days (and this notwithstanding the husband’s absence after the first day) which is a good indication of the amount of material involved and its complexity. 81.There is the further question of the ‘effectiveness’ of these undertakings in the event of non-compliance. While it could conceivably lead to contempt proceedings (which would necessitate yet another court hearing and further legal costs), that presupposes that the husband will be within the jurisdiction. Such evidence as there is before this court points to the husband no longer living in Hong Kong and, although he has a right of abode here, he lives and works in the PRC where his business interests now are. While the judge did not elaborate in his written judgment as to why he considered the undertakings to be “beside the point”, it is clear from the transcript that he concluded (and in my view rightly so) that the net result of the maintenance undertaking was that the husband was not going to be paying anything out of his pocket. 82.Given all the circumstances of this case, not only has the husband undeniably used the Hong Kong legal system “to procure a restriction on the wife’s disposal of the Hong Kong assets”, he has done so in way that is beyond being merely opportunistic. He has embraced the Hong Kong legal system only when it suited his purposes and rejected it when the outcome was not to his liking. The judge refused to countenance conduct on the part of the husband he considered should not be condoned by the court, conduct that could be said to verge on abuse when, as the judge found, the only practical effect of non-recognition for the husband was the frustration of his tactical manoeuvre to oust the jurisdiction of the Hong Kong courts to grant ancillary relief. 83.There is no doubt that the Shenzhen court is a court of competent jurisdiction. To refuse recognition of the divorce granted in the civil judgment is no small matter. After weighing all the relevant circumstances, the judge concluded that to recognise the divorce would manifestly be contrary to public policy. I can discern no error of principle in his approach. 84.I would therefore dismiss this appeal. Postscript 85.This appeal concerns the power of the court to grant ancillary relief. Neither this appeal nor the preliminary point on jurisdiction taken below would have arisen but for section 25(1)(b) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 which provides that no order for ancillary relief shall take effect unless the decree has been made absolute. 86.Serious injustice could arise from this jurisdictional limitation. For example, where the marriage is terminated by foreign proceedings in which no financial order is made, the Hong Kong courts would have no power to grant financial relief even where there are matrimonial assets within the jurisdiction. This deficiency in the law was addressed by way of legislative reform in the United Kingdom, by the introduction of Part III of the Matrimonial and Family Proceedings Act 1984 conferring jurisdiction on the English courts to grant ancillary relief based on an overseas divorce provided that leave is obtained. 87.In his reasons for judgment, the judge highlighted the need for legislative reform in this regard in Hong Kong. See §§ 63-64 and 80-81 of his judgment. I fully endorse his plea for urgent legislative attention. Hon Cheung JA: Recognition of overseas divorce 88.Section 56 of the Matrimonial Causes Ordinance (‘MCO’) (Cap. 179) empowers the Hong Kong Court to recognize an ‘overseas divorce’. 89.The husband who is the respondent in the matrimonial proceedings commenced by the petitioner wife in Hong Kong (‘the Hong Kong proceedings’), obtained from the Shenzhen Intermediate People’s Court, Guangdong in the Mainland on 6 November 2007 a judgment on divorce, custody of children and distribution of matrimonial property (‘the Shenzhen judgment’). 90.The husband applied before Lam J to give recognition to the Shenzhen judgment and stay the Hong Kong proceedings. The application was refused. The husband now appeals against the judgment. Background 91.The parties were originally residents in the Mainland. They met in Shenzhen in 1989 and eventually were married there on 28 April 1992. Two sons were born of the marriage in December 1992 and October 1999 respectively. The elder son was born in the Mainland while the younger son was born in Hong Kong. In 1993 the husband came to live in Hong Kong. He was joined by the wife together with the elder son later in 1995. 92.When the parties met in 1989, the wife was already a successful businesswoman engaged in the textile trade. The husband was a high ranking officer of a state enterprise which operated a telecommunication business. Since 2004 he has been engaged in real property development. The parties are a rich couple. 93.After they came to Hong Kong, they set up matrimonial homes both in Hong Kong and Shenzhen. By 2000 the wife spent most of her time in Hong Kong raising the children. Since 2003, the husband spent more time in the Mainland than in Hong Kong. The wife and the children would return to the Shenzhen matrimonial home every weekend. 94.By 2002, the parties encountered marital problems. In early 2006 the marriage had irretrievably broken down. On 18 May 2006 the wife commenced the Hong Kong proceedings. She sought divorce based on unreasonable behaviour of the husband. The husband initially indicated that he would defend the divorce and make claims for ancillary relief and custody of the children but after the divorce petition was amended by consent to plead a less serious case of unreasonable behaviour of the husband, he on 10 August 2006 indicated that he would not defend the divorce. 95.On 2 August 2006 the parties filed their financial statements (Form E) in the divorce proceedings. The wife on 3 August 2006 issued a Notice of an Application for Ancillary Relief (Form A). 96.On 11 August 2006 the wife issued an application for maintenance pending suit for herself and children. The husband on 15 August 2006 filed his Form A. 97.Earlier, on 20 May 2006 the husband issued a writ in the High Court, namely, High Court Action No. 1088/2006 against the wife. The husband sought, among other things, an injunction to restrain the wife from disposing of assets in five companies, and a declaration that the wife held her shares in four of the companies on trust for him. By agreement of the parties the wife paid $17,873,188.43 and $10,635,235.66 being the proceeds of sale of some of the assets disposed of by her into Court in July 2006. In September 2006, by the consent of the parties, a monthly sum of $450,000 was agreed to be paid out from the money in Court for the maintenance of the wife and children. By then the wife was granted interim custody of the younger son. 98.On 23 October 2006 the husband issued the Shenzhen proceedings. 99.On 13 November 2006 a decree nisi of the divorce was pronounced by the Hong Kong District Court. 100.The wife, however, only became aware of the Shenzhen proceedings on 13 November 2006 on the first appointment of the ancillary relief application in Hong Kong. 101.On 23 November 2006, an order was made by consent to transfer the divorce proceedings from the District Court to the High Court. Despite the wife’s request to the husband to withdraw the Shenzhen proceedings, the husband on 22 December 2006 indicated his refusal to do so. 102.The wife on 18 January 2007 sought an interim anti-suit injunction from the Hong Kong Court to stop the husband’s Shenzhen proceedings. The application, however, was refused by Lam J on 24 January 2007. The wife then withdrew her application on 5 March 2007. 103.The wife then applied in March 2007 in the Shenzhen Court to stay the Shenzhen proceedings. She was unsuccessful both in the first instance and on appeal by orders respectively dated 26 March 2007 and 18 May 2007. 104.The Shenzhen proceedings then commenced on 25 June 2007 with two further hearings on 6 August and 25 September 2007. On 6 November 2007 the Shenzhen Court gave the Shenzhen judgment which was handed down to the parties on 14 November 2007. 105.On 3 December 2007, the husband issued the application to stay the Hong Kong proceedings. 106.In December 2007, the parties attended Family Dispute Resolution (‘FDR’) hearing before H H Judge Chu in the District Court. It was unsuccessful. Lam J then ordered the hearing of the ancillary relief application to take place on 5 March 2008 for a 16-day hearing. 107.On the commencement of the hearing on 5 March 2008, Lam J dealt with the husband’s application to stay the Hong Kong proceedings. He refused the application on 7 March 2008 and commenced hearing the substantive ancillary relief application on 10 March 2008. In the afternoon of the first day of the substantive hearing, the husband discharged his lawyers and filed a notice to act in person. He, however, did not appear in Court to contest the hearing. Lam J continued the hearing in his absence and gave judgment on the ancillary relief on 23 May 2008. He ordered the husband to pay a lump sum of HK$378,291,111.11. He found that the parties’ wealth to be worth HK$840,290,664.60. This comprises of three main items :
Part IX of the MCO 108.Part IX of MCO deals with the recognition of overseas divorce. Section 56 confers jurisdiction on the Hong Kong Courts to give recognition to ‘overseas divorce’. Section 56(1) provides the conditions of recognition, namely, at the date of the institution of the overseas proceedings :―
109.Recognition may be refused under section 61(2) if,
110.The recognition of an overseas divorce does not include the recognition of any findings of fault made in any proceedings for divorce or separation or of any maintenance, custody or other ancillary order made in any such proceedings : section 61(3). 111.Part IX of MCO is based on the Recognition of Divorces and Legal Separation Act 1971 (‘RDLSA 1971’) of England. The RDLSA 1971 was enacted to give effect to the Hague Convention on the Recognition of Divorces and Legal Separation 1970 (‘the Hague Convention’). 112.The rationale behind recognizing overseas divorce under the Hague Convention is to avoid ‘limping marriage’ that is ‘marriages that were recognised in some jurisdictions as having been validly dissolved, but in other jurisdictions as still subsisting’ : see Family Law Financial Relief after Foreign Divorce, Law Commission Working Paper No. 77. Effect of recognition 113.One thing that must be pointed out immediately is that upon the Hong Kong Court recognizing an overseas divorce, it will no longer have any jurisdiction to deal with the ancillary relief application by a spouse even if the Hong Kong Court has already granted a decree nisi ofdivorce. This is because the recognition of an overseas divorce means that the marriage has been dissolved. Once this happens, there is no marriage for the Hong Kong Court to dissolve : see Torok v. Torok [1973] 1 WLR 1066 and Quazi v. Quazi [1980] AC 744. In practical terms it means that even if there is a decree nisi granted by the Hong Kong Court it will not be in a position to grant a decree absolute upon the recognition of the overseas divorce. Without a decree absolute there could not be an ‘effective’ order for ancillary relief. This is because section 25(1)(b) of the Matrimonial Proceedings and Property Ordinance (‘MPPO’) (Cap. 192) provides that the ancillary relief order made on or after a decree nisi shall not take effect unless the decree has been made absolute. 114.Originally under the RDLSA 1971 the recognition of an overseas divorce in England would also have the effect of depriving the English Courts from dealing with ancillary relief. The English position has since been changed. Under the provisions of Part III of the Matrimonial and Family Proceedings Act 1984, which came into force on 16 September 1985, the English Courts have jurisdiction to entertain an application for an order for financial relief if certain requirements are satisfied. Torok 115.As long ago as 1973, Ormrod J (as he then was) in Torok commented that the oust of jurisdiction is an unforeseen situation when the RDLSA 1971 was drafted. Referring to the inability of the English Courts to deal with a family who had family property in England as a result of exclusion of jurisdiction he said that ‘this is a situation which plainly should be avoided at all costs.’ 116.In that case the couple who were originally Hungarian residents went to live in England. The husband then moved to Canada leaving the family in England. A divorce was later obtained by the husband in Hungary. Although the Hungarian Courts had jurisdiction to award maintenance for wives, they rarely exercised that power. In that case because the wife had lodged an appeal against the Hungarian judgment, Ormrod J retained his jurisdiction to hear the ancillary relief application by the wife. He also pronounced a decree absolute at the same time. 117.Despite the change of the English position, Part IX of MCO which became the Hong Kong law since 1972 continues to oust the jurisdiction of the Hong Kong Court on this issue. No mutual recognition 118.Another feature in this case is that while the Hong Kong Court is required by MCO to recognize a Shenzhen divorce if the conditions are satisfied, there is no mutual recognition of a Hong Kong divorce in Shenzhen. Further, ancillary relief orders made by Shenzhen Courts are not enforceable in Hong Kong and vice versa because there is no agreement on mutual enforcement of matrimonial judgments in these two jurisdictions. This is accepted by the parties. Conditions fulfilled 119.There is no dispute that the conditions imposed by section 56(1) and 61(2)(a) for recognition of the Shenzhen judgment have been fulfilled, namely, either of the parties are Chinese nationals in the Mainland and the wife had the opportunity to take part in the Shenzhen proceedings. The only issue in this appeal is whether recognition should be refused by reason of public policy consideration under section 62(1)(b). Basis of decision 120.The Judge recognized that the effect of recognition would preclude the wife from pursuing ancillary relief in Hong Kong. He held that the parties had all along been litigating on the basis that two different sets of proceedings (one in Hong Kong and another one in Shenzhen) would deal with different parts of the family assets. He held that it was the common intention that there will be ancillary relief hearing in Hong Kong to resolve the distribution of the assets that have not been litigated in Shenzhen. The Judge held that it was unconsciousable on the part of the husband to manipulate the procedure to his advantage so as to frustrate the common intention of the parties. 121.From the judgment the common intention was to be discerned from the following :
122.The Judge held that the consequence of recognizing the Shenzhen judgment
123.On that basis the Judge held that the Shenzhen judgment should not be recognized by reason of public policy. The challenge 124.The challenge against the judgment by Mr. Thomas S.C. (who appeared together with Mr. Shieh, S.C. and Mr. Jeremy Chan as counsel for the husband) was that the Judge erred in holding that public policy excludes the recognition of the Shenzhen judgment by reason of the common intention and the consequence to the wife if recognition is given. Public policy 125.In considering how the discretion should be exercised in the context of public policy, the following is a summary of the relevant factors :
Consequence of giving recognition 126.This list is, of course, not exhaustive. In my view, one further factor is the consequence of recognizing an overseas divorce. This being a relevant factor is recognized by the authorities. 127.As pointed out earlier, Ormrod J in Torok clearly expressed his concern about the undesired consequence of ousting the jurisdiction of the Court when giving recognition to a foreign divorce 128.In Joyce v. Joyce and O’Hare [1979] 2 All ER 156, the couple originally lived in England. They had a matrimonial home in joint names. The husband left the family and lived with another woman. The wife had obtained in England an order from the magistrate’s court (on the grounds of the husband’s desertion and cruelty) awarding her custody of the children and directing the husband to pay maintenance to her. The husband went to Canada and obtained a divorce in Quebec. 129.Lane J refused to give recognition to the Canadian divorce. At page 171 she held that,
130.She went on to hold that
131.In Quazi the parties who were Muslims had lived in various countries including Pakistan. The husband obtained a ‘Khula’ Muslim divorce. They then became separated and the husband came to live in England. The wife against the husband’s wish came also to England. The husband then returned to Pakistan to obtain a ‘Talaq’ divorce which was recognized by Wood J. He held at page 782 that
132.Ormrod LJ sitting in the Court of Appeal on appeal from Wood J referred to Joyce and stated at page 799 that the case
133.While the House of Lords reversed the Court of Appeal decision and restored Wood J’s decision in giving recognition to the ‘Talaq’ divorce, it expressly called for amendments to the RDLSA 1971 to allow ancillary relief applications to be made. Although Lord Scarman expressed his agreement with Wood J’s exercise of discretion, it should be noted that the discretion was exercised on the facts of that case. 134.While the wife in Quazi had no connection with England and whose purpose of going there was to seek a claim on a property there, the position was different in Chaudhary,where the husband who had been living in England, went to Pakistan where he had originally lived and obtained a Talaq divorce. Wood J refused to give recognition to that Talaq divorce. His decision was affirmed on appeal. 135.Cumming-Bruce LJ of the Court of Appeal held at page 40
136.This is another instance of the Court taking into account the consequence on the other spouse if an overseas divorce is recognized. 137.More recently in Wheeler v. Wheeler [1997] CILR 362, the Grand Court of Cayman Islands refused to recognize a US divorce by reason of public policy. Smellie J reviewed cases including Joyce and Quazi and considered factors such as the US Court would have afforded the wife very little by way of financial provision. 138.Hence although the power to refuse recognition should be exercised sparingly and the usual situations of refusal are those related to fraud or dishonesty perpetrated by the overseas claimant upon the foreign court, or bias in the foreign court or other gross impropriety (see, for example, Kendall v. Kendall [1977] Fam. 208, Armitage v. Nanchen (1983) 4 FLR 293, Eroglu v. Eroglu [1994] 2 FCR 525), I disagree with the submission advanced by Mr. Thomas S.C. that consequence of serious prejudice to a party should be ignored. In so doing, I expressly accept the restriction that the Court has to observe in considering matters of public policy. As Bokhary PJ observed in Heibei Import & Export Corp v. Polytek Engineering Co. Ltd (1999) 2 HKC FAR 11, in the context of a jurisdiction refusing to enforce a convention arbitral on public policy grounds,
The facts of this case 139.However the present litigation is plainly not a case where, first, the husband had no legitimate reason to litigate in Shenzhen and second, the wife would be deprived of substantial legal rights if the Shenzhen judgment is recognized. 140.The husband chose Shenzhen because of the doubt whether a Hong Kong divorce would be recognised there. The Judge accepted that the husband cannot be criticised for applying for the Shenzhen divorce because of such a doubt. The Judge further accepted that this is not a case where the husband chose a jurisdiction with no substantial connection to him in order to obtain a collateral advantage. The Judge referred to such factors as the marriage being contracted in Shenzhen; there are matrimonial homes and family assets in both jurisdictions; and the respective spouse spending most of his or her time in each of the two jurisdictions. In my view, there being a legitimate reason for the husband to seek the divorce in Shenzhen, this must override any suggestion of ‘manipulation’ on the part of the husband. 141.In terms of the rights of the wife, the starting point is that in an ideal situation, ancillary relief application should be dealt with in one jurisdiction so that the Court which is seized of the matter can have a complete picture of the parties’ financial positions and needs. In this context, counsel for the husband had misunderstood that I was advocating a ‘truncated’ approach. 142.In this case when the husband applied in Hong Kong for the recognition of the Shenzhen judgment, the Shenzhen Court had only dealt with part of the assets of the parties and its judgment is not capable of enforcement in Hong Kong. However, even if all the assets are dealt with in one jurisdiction, say Hong Kong instead of Shenzhen, the practical consequence (due to the lack of mutual assistance between these two jurisdictions) is that the judgment will not be enforced in Shenzhen where the wife claimed that the husband has substantial hidden assets. 143.Shenzhen Courts have jurisdiction to award equal distribution of the family assets to the parties. This was what it did in the Shenzhen judgment. The wife had participated in the Shenzhen proceedings. She explained that she had to do so because of the custody issue but the proceedings also dealt with the other assets of the parties which included assets in Shenzhen and Hong Kong. She did not lodge an appeal against the Shenzhen judgment. If she did, she would have prevented it from being recognized in Hong Kong. 144.Furthermore it is clear from the evidence that the wife could still litigate in Shenzhen in respect of the substantial hidden assets not covered by the Shenzhen judgment. She had in fact initially asked the Shenzhen Court in the Shenzhen proceedings to adjudicate on this topic but later decided not to pursue it but reserved her position to raise this matter again when she managed to obtain further evidence. Common intention 145.Much emphasis was laid on the issue of common intention of the parties. There clearly was no express agreement between the parties about where they should litigate their disputes. I find it difficult to find support for the Judge’s view on common intention. Although the husband had taken part in the Hong Kong proceedings and there was a consent order to allow the money paid into court by the wife in High Court Action No. 1088/2006 to be used for her maintenance and that of the children, the husband had within five months of the commencement of the Hong Kong proceedings instituted the Shenzhen proceedings. This is a very early indication that the husband wished to pursue relief from Shenzhen. The initial agreement regarding the use of the proceeds of sale as maintenance pending suit cannot be an indication, in the overall scheme of things, that the parties had agreed to use Hong Kong to resolve their disputes. Further, although the husband had in Form A ticked the boxes such as orders for maintenance pending suit, periodical payment and other items, and had complied with the requirement of making financial disclosure, he in fact did not make ancillary relief claims of his own in the Hong Kong matrimonial proceedings. 146.Any suggestion that there was a common intention to adjudicate different assets in different jurisdiction is refuted by the wife’s respective applications carried out in Hong Kong to stop the Shenzhen proceedings and in Shenzhen to stay the Shenzhen proceedings. Thereafter one also cannot find support for the common intention because the wife had also initially asked the Shenzhen Court to adjudicate the hidden assets in Shenzhen. She did not ask the Shenzhen Courts not to do so because of a common intention that they would or should be dealt with by the Hong Kong Court. Instead she merely informed the Shenzhen Court that she would reserve her position on that issue. 147.More importantly, there could never be any common intention as relied upon by Mr. Mok S.C. (who appeared with Ms Anita Yip, as counsel for the wife) that despite the Shenzhen divorce, the parties would continue to adjudicate their unresolved claims in Hong Kong. This is contrary to the wife’s knowledge through her lawyers that the Shenzhen judgment would put an end to her ancillary relief application in Hong Kong when she applied for the anti-suit injunction. She had also not applied for a decree absolute in Hong Kong which would confer the Hong Kong Court with the jurisdiction to give a final adjudication on the ancillary relief application. Her concern was that a decree absolute would put to an end to the consent order on maintenance pending suit. This is true as far as her own maintenance is concerned. However, if there was a decree absolute, the Hong Kong Court would still be able to address the substantive ancillary relief proper and in any event the recognition of the Shenzhen judgment would have no effect on the children’s maintenance by reason of section 61(3). Discretion wrongly exercised 148.The stark consequence of recognition is to put an end to the Hong Kong proceedings. There will be no doubt wastage of the costs and expenses incurred in the Hong Kong proceedings and the Hong Kong Court will not be able to exercise its matrimonial jurisdiction in High Court Action No. 1088/2006. But this is an inevitable consequence of recognition. I accept that this would also mean that the judgment on ancillary relief would have to be stayed as well. However, this begs the question whether recognition was correctly refused in the first place. 149.To address the unresolved problems, the wife could still litigate in the Shenzhen Court to resolve the issue on the remaining assets of the parties. She could make use of the evidence she had obtained on these assets and to invite the Shenzhen Court to consider the view of the Judge expressed in his judgment on these assets. The husband had, as the Judge stated, given an undertaking to give any necessary consent to enable the wife to re-open the Shenzhen proceedings to seek further distribution of the family assets that have not yet been distributed in the Shenzhen judgment. Counsel for the husband informed this Court that the undertaking is still being offered to this Court. As the Court has not been addressed on its contents, I will simply set out in full the undertaking :
150.In any event, irrespective of the undertaking, my view remains that the wife simply failed to put forward a case that the consequence of giving recognition to the Shenzhen judgment is so dire that public policy requires the Hong Kong Court not to recognize it. 151.In my view the Judge had erred when he refused to give recognition to the Shenzhen judgment on public policy ground. The discretion was wrongly exercised. In my view recognition should be given. Overseas jurisdiction 152.I will address two other matters raised in this appeal. The Judge harboured doubt whether a Shenzhen divorce is an overseas divorce. I initially shared the same view but I am satisfied that it is. There is nothing in the Interpretation and General Causes Ordinance (Cap. 1) which may cast doubt on this interpretation. It would be most odd that while the Hong Kong Court has jurisdiction to recognize divorce from other overseas countries but not that of divorces from the Mainland. The lack of mutual recognization is not a bar because Part IX does not contain a list of overseas countries which Hong Kong is required to give recognition to their divorces if the conditions are met. In other words Part IX goes beyond the ambit of the Hague Convention which is based on mutual recognition. Mr. Mok S.C. accepted that a Shenzhen divorce is an overseas divorce. Continuous jurisdiction 153.Mr. Mok S.C. argued that notwithstanding the recognition of the Shenzhen judgment, Hong Kong still has jurisdiction to deal with ancillary relief matter. I have already expressed my view on the effect of recognition and I would not repeat it. I would join the Judge’s call for an immediate legislative change to confer jurisdiction on the Hong Kong Court in appropriate cases to deal with ancillary relief after giving recognition to an overseas divorce. Conclusion 154.I would allow the appeal, set aside the judgment on recognition and recognize the Shenzhen judgment. As a matter of logic, the recognition of the Shenzhen judgment means that the Hong Kong decree nisi has to be rescinded as well. This was recognized by the Judge although he did not decide on rescission. Orders 155.Upon the husband’s undertaking as set out above, I would make the following orders :
Costs 156.I would make an order nisi that there will be no order as to costs of the appeal and below. Hon Sakhrani J: 157.I have had the benefit of reading the judgments of Le Pichon JA and Cheung JA. 158.For the reasons given by Cheung JA, I would also allow the appeal and make the orders proposed by him. There is nothing that I can usefully add. Hon Le Pichon JA: 159.Accordingly, by a majority, the appeal is allowed and there is to be an order in terms of §§ 155-156 above.
Mr Johnny Mok SC & Ms Anita Yip, instructed by Messrs Lo & Lo, for the Petitioner/Respondent Mr Michael Thomas SC, Mr Paul Shieh SC & Mr Jeremy Chan, instructed by Messrs Hampton Winter & Glynn, for the Respondent/Appellant Application for leave to appeal by the Petitioner to Court of Final Appeal granted by Court of Appeal. Please refer to CACV89/2008 dated 18 December 2009 |
Further hearings and rulings under CACV 89/2008