J v. V

HCMC 3/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO 3 OF 2012

(TRANSFERRED FROM FCMC 14350 OF 2009
consolidated with FCMC 4402 OF 2010)

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

Before : Hon Poon J in Court

Date of Hearing : 16 November 2012

Date of Judgment : 27 November 2012

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

J U D G M E N T

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

1.This is H’s application for the decree nisi pronounced against him on 25 August 2010 be made absolute under section 17(2) of the Matrimonial Causes Ordinance (“the Ordinance”)[1].

2.The background may be summarized as follows.

Background

3.H is an ethnic Cambodian and a French national. He is now 71.  W is a Korean and now aged 57.  H and W were married on 8 June 1987.  They have two adult children.  Most, if not all, of the family assets are in Cambodia.

4.On 16 November 2009, W commenced divorce proceedings in the Family Court in Hong Kong[2].  On 16 April 2010, H issued a petition for divorce[3] in the same Court.  By order dated 23 June 2010, the two petitions were consolidated with W’s standing as the petition and H’s standing as the cross-petition in the consolidated cause.  On 16 July 2010, leave was given to H by consent to withdraw the cross-petition.  On 25 August 2010, a decree nisi was pronounced in favour of W.

5.The parties then entered into mediation with a view to resolving financial provisions.  The mediation was successful, which resulted in a mediation agreement dated 22 December 2010 (“the Mediation Agreement”) whereby the parties reached an overall settlement over their finances on a “clean break” basis.  The parties agreed to make cross-transfers of various properties and shares in different companies.

6.The parties next obtained a consent order dated 13 January 2011 (“the Consent Order”) from the Family Court.  The Consent Order contained various undertakings by the parties to effect the settlement contained in the Mediation Agreement within 12 months from the date of the Mediation Agreement.  Upon compliance of the undertakings, the parties’ respective claims for ancillary relief do stand dismissed.

7.On 1 February 2011, H took out an ex parte application under rule 65 of the Matrimonial Causes Rules (“MCR”)[4] for the decree nisi to be made absolute.  The procedure was wrong as such an application can only be made by a petitioner.  However, the Family Registry erroneously granted a decree absolute in H’s favour on 9 February 2011.  W then swiftly applied to set aside the decree absolute, which was allowed by Judge Melloy on 19 April 2011.

8.Complaints about the non-compliance of the undertakings in the Consent Order soon arose.  In December 2011, W took out a summons seeking directions for the implementation of a timetable in relation to the undertakings in dispute.  The matter came before Judge Melloy on 31 January 2012.  After hearing the parties, she adjourned the matter for 12 weeks to assess the progress and for report to be made to the court.

9.On 3 February 2012, H filed a criminal complaint against W in Cambodia for breach of trust arising from her failure to hand over the signed transfer documents in relation to one of the properties to him, as she was supposed to do under her undertakings in the Consent Order.  The criminal complaint was based erroneously on the allegation that W was his ex-wife.  After the children’s intervention, H withdrew the complaint on 16 March 2012.  The Deputy Prosecutor responsible for the complaint took the view that it was non-performance of contract and not a criminal offence.  The case was then “filed without proceeding” on 23 March 2012.  H had since taken no further step in the criminal complaint.

10.On 30 April 2012, W issued a summons seeking an order restraining H from pursuing proceedings in Cambodia against her or any of her assets and other interim orders of protection to preserve the assets subject to the agreed division so that a division could in fact be carried out.  On 3 May 2012, Judge Melloy granted an interim anti-suit injunction and other interim preservation orders against H pending the determination of the summons.  But later on 24 May, she discharged the interim anti‑suit‑injunction and ordered the case to be transferred to the High Court for a full hearing to be fixed on an expedited basis.

11.By summons dated 3 July 2012, H applied for a decree absolute, which was opposed by W.

12.Both W’s and H’s summonses came before me on 20 July 2012.  After hearing the parties, I dismissed the wife’s application for an anti-suit injunction in its amended form[5].  But I allowed her application for the preservations orders, which, in short, prohibited H from disposing of the assets concerned without court’s leave or W’s consent (“the Preservation Orders”). I adjourned H’s application with consequential directions.  Subsequently, H’s application was fully argued before me on 16 November 2012.

The law

13.For the purpose of the discussion below, I will refer to the spouse in whose favour the decree nisi is granted “the Petitioner” and the spouse against whom the decree nisi is granted (“the Respondent”).

14.Section 17(2)(a) of the Ordinance provides :

“(2) (a) Where a decree nisi of divorce has been granted and no application for it to be made absolute is made, then, at any time after the expiration of 3 months from the earliest date on which such an application could have been made, an application for a decree absolute may be made by-

(i) in a case where the decree nisi was granted on a petition for divorce, [the Respondent]; or

... ”

Subsection (2)(b) then empowers the court to, among other things, make the decree absolute.

15.It is common ground that the court retains a discretion under its inherent jurisdiction as to whether to make a decree nisi absolute : Smith v Smith[6]; Miller-Smith v Miller-Smith (No 2)[7].  I would add that the discretion is unfettered and that as a guiding principle, the court will exercise the discretion in a way that is just in the circumstances to do so.  However, the parties differ as to how the discretion should be exercised.

16.Mr Pilbrow, SC, for H, argues that the jurisdiction to delay or stay an application to make a decree absolute is exercised only if the opposing party is able to establish special or exceptional circumstances.  He cites Miller-Smith v Miller-Smith (No 2)[8]in support.  There, the decree nisi was made in favour of the petitioning husband.  The wife’s opposition to his application to make the decree absolute was dismissed when she failed to establish special or exceptional circumstances.

17.Mr Scott, SC, for W, relies on Wickler v Wickler[9].  There, the wife had obtained a decree nisi and began ancillary relief proceedings.  Both parties were Dutch.  The wife lived in England, the husband in Holland and Israel.  The husband’s involvements in the proceedings were marked by a lack of openness and a devious approach to disclosure.  He concealed his real address.  His sudden drop in income was apparent than real.  Some of his considerable assets were held within the jurisdiction but the majority was not. The husband was anxious to marry another woman.  He obtained leave to apply for a decree absolute on undertakings which were related to the wife’s financial situation.  The wife appealed, contending that her interests would be materially prejudiced if the decree absolute were granted as the husband would no longer have any incentive to participate in any way in the ancillary relief proceedings.  Bracewell J allowed the appeal, holding that if the husband were granted a decree absolute, leaving him free to contract a lawful remarriage, he would lose interest in the ancillary relief proceedings thus preventing the wife from establishing her real entitlement and from receiving her proper share.  The prejudice to the husband in dealing his legal remarriage for 9 months until the ancillary relief hearing was very minor when compared with the prejudice to the wife if the husband refused to participate further in the ancillary relief proceedings.

18.Mr Scott contends that a distinction has to be drawn between an application for decree absolute brought by the Petitioner, as is the case in Miller-Smith v Miller-Smith, and an application brought by the Respondent, as is the case in Wickler v Wickler.  In the former case, the Petitioner is seeking to make the decree nisi granted in his/her favour be made absolute.  The Respondent as the opposing party needs to establish special and exceptional circumstances.  In the latter case, no burden is imposed on the Petitioner as the opposing party to show any special or exceptional circumstances.  What the court does is to balance the prejudice that the Petitioner may suffer if a decree absolute is granted against the prejudice that the Respondent may suffer if a decree absolute is not granted[10].

19.While the discretion is based on the court’s inherent jurisdiction, the right to a decree absolute is governed by statute. The statutory regime governing the grant of a decree absolute naturally bears on how the discretion should be exercised.  The statutory regime can be outlined as follows.

20.Under section 15(5) of the Ordinance, every decree of divorce shall in the first instance be a decree nisi and shall not be made absolute before the expiration of 3 months from its grant, unless the Chief Judge[11] by general order, or the court in any particular case, fixes a shorter period.  The Chief Justice issued the Matrimonial Causes (Decree Absolute) General Order 1973, reducing the period of 3 months to 6 weeks for a decree nisi pronounced on or after 3 July 1973. The court will very rarely reduce the 6 weeks’ period further[12].  I will refer to the 6 weeks’ period or any shorter period as fixed by the court as “the Appropriate Period” below.

21.Upon the expiry of the Appropriate Period, the Petitioner may apply, under rule 65 of the MCR, to make the decree nisi absolute.  The application is made by lodging with the registrar a notice in Form 5[13].  The registrar shall then search the court minutes and if he is satisfied that all the statutory requirements are met, he shall make the decree absolute[14].

22.Significantly, if Form 5 is lodged more than 12 months after the decree nisi, the registrar may require the applicant to file an affidavit accounting for the delay and may make such order on the application as he thinks fit or refer the application to a judge[15].  Plainly, the Petitioner is expected to apply for a decree absolute within 12 months after the decree nisi, failing which the consequences prescribed by the rule may follow.

23.Ordinarily, the Petitioner will apply for a decree absolute.  However, if for some reasons, the Petitioner does not do so, section 17(2)(a)(i) of the Ordinance enables the Respondent to make the application at any time after the expiration of 3 months from the earliest date on which such an application could have been made.

24.In my view, the legislative policy of the statutory regime outlined above is clear.  A marriage which has been irretrievably broken down should be brought to an end formally within a reasonable time after the expiration of the Appropriate Period so that, with finality achieved, the parties can leave the failed relationship behind, move on with their life and to remarry if they so wish[16]. 

25.Given the legislative policy, a spouse opposing the application to make the decree nisi absolute has to satisfy the court that it is just in the circumstances of the particular case to exercise the discretion to refuse the application.  It matters not whether the opposing spouse is the Petitioner or the Respondent.  The opposing spouse has to make good the opposition by establishing some special or exceptional circumstances to satisfy the court that it is just to do so[17].

26.What constitute special or exceptional circumstances must of course depend on the particular facts of the case before the court.  Typically, the opposing spouse relies on the financial prejudice that he/she may suffer if the decree is made absolute before the determination of the ancillary relief[18]. 

27.It should, however, be firmly borne in mind that it is the financial prejudice before the determination of the ancillary relief that constitutes a special or exceptional circumstance to persuade the court to refuse to grant a decree absolute.  In the absence of any real prejudice, the mere fact that there are ancillary relief proceedings yet to be determined is not a sufficient reason to delay the grant of a decree absolute : Re G (decree absolute : prejudice)[19].  Otherwise, the opposing spouse can use the making of a decree absolute as a factor in bargaining for ancillary relief, which is not permissible[20].

28.Further, even when prejudices are established by the opposing spouse, it is not necessarily conclusive.  For, as the facts in Wickler v Wicker demonstrated, the applying spouse may suffer prejudice if the decree is not made absolute.  In such scenario, the guiding principle that the discretion must be exercised in the way that is just in the circumstances to do so requires the court to weigh the respective prejudices suffered by the parties to see where the balance lies.  The ultimate task is to ensure that the discretion is exercised as justly as the circumstances of the case require.

29.To recap, the following principles govern the exercise of the discretion whether to grant a decree absolute :

(1) As a guiding principle, the court must exercise the discretion in the way that is just in the circumstances to do so.

(2) The opposing spouse must establish special or exceptional circumstances to satisfy the court that it is just to refuse the grant of a decree absolute.  What constitute special or exceptional circumstances depends on the facts of the case.

(3) When the opposing spouse raises financial prejudice before determination of the ancillary relief as a special or exceptional circumstance, he/she must prove that the prejudice as alleged is real, failing which the mere fact that the ancillary relief is yet to be determined is not sufficient.

(4) When the opposing spouse would suffer prejudice if a decree absolute is granted and the applying spouse would suffer prejudice if the decree is not granted, the court will balance the respective prejudices to see where the balance lies, always bearing in mind that the ultimate task is to exercise the discretion as justly as the circumstances of the case require.

30.With these principles in mind, I next turn to the facts of the present case.

Prejudices suffered by W

31.W relies on two forms of prejudice if the decree absolute were to be made.

32.She first contends that H has persistently failed to effect transfers that he is required to effect under the undertakings in the Consent Order.  The non-compliance is very substantial.  His conduct in the litigation showed a total disregard of the binding nature of his obligations under the Consent Order and the integrity and proper conduct of the proceedings in Hong Kong.  Relying on Wickler v Wickler, Mr Scott submits that if a decree absolute were to be made, H would definitely withdraw from the proceedings, leaving the W without her proper share under the settlement.  The fact that H lacks connection with the jurisdiction and that most of the family assets are situated in Cambodia would render enforcement most difficult if not impossible.  W will suffered a real prejudice financially.

33.With respect, I disagree.  Mr Scott’s submission has ignored two very important features, which are not present in the authorities that he relied on.  First, the undertakings in the Consent Order are cross‑undertakings.  W is required to effect certain transfers to H as well and H is complaining that there has been substantial non-compliance on her part.  I think H has every incentive to carry on with the on-going negotiations with W as to how to effect the undertakings and, if necessary, to participate in any proceedings, to ensure that he will receive his proper share under the Consent Order.  Second, the Preservation Order will remain in force, preventing H from disposing of his assets to be transferred to W without court’s leave or her consent.  W’s interest in those properties is adequately protected until the parties’ disputes over the implementation of the Consent Order are resolved.

34.Mr Scott submits that the decree should not be made absolute unless H has substantially performed his undertakings.  He puts it rather bluntly that making the decree absolute is a leverage which W can deploy to procure substantial performance by H.  However, as seen above, in the absence of any real prejudice, this kind of litigation tactics is simply impermissible.

35.W next contends that if a decree absolute were to be made, she would lose the immunity as H’s wife in Cambodia.  H could lodge wholly unmeritorious criminal complaint against her in Cambodia again with dire consequences.  She could face detention in Cambodia pending finality of the criminal trial once she entered into the court room.  If found guilty, she could be removed from the board of directors of a banking and financial institution or restrained from holding shares in that institution.  She might not be able to become a director in any new commercial enterprise.  That would seriously affect her commercial interest.

36.On the evidence before me, the chance of H lodging another criminal complaint against W is very remote.  When H lodged the criminal complaint in February 2012, he was motivated by what he perceived to be disrespectful treatments and remarks by W’s lawyers in the proceedings in Hong Kong.  He had definitely overreacted.  But after the children’s intervention, common sense prevailed.  He withdrew the complaint and did not pursue it any further.  In the event, the Deputy Prosecutor had concluded that his complaints about W’s failure to perform her obligations in question gave rise to no criminal conduct.  It is highly unlikely that he would file another criminal complaint based on similar allegations again.  W’s alleged prejudice arising from the loss of criminal immunity is more apparent than real.

37.For these reasons, I am not satisfied that W has shown any real prejudice if the decree absolute is granted.

Abuse of process

38.For completeness, I need to deal with a further point raised in Mr Scott’s submissions.  He argues that the court should take into account H’s litigation history in procuring a decree absolute by the wrong procedure in February 2011 and treat his present application as an attempt to get a decree absolute by the back door. Effectively, Mr Scott contends that H’s present application is an abuse of process.

39.I fully accept that abuse of process, if proved, can be a valid ground for not granting a decree absolute.  However, the undisputed evidence is that H’s lawyers adopted the wrong procedure when taking out the application for a decree absolute in February 2011.  The fault was entirely theirs.  H cannot be blamed for the procedural irregularity.  The present application, brought under the correct procedure, cannot possibly amount to any abuse of process at all.

Dispositions and directions

40.For the reasons I have given, I find that W has failed to establish any special or exceptional circumstances to satisfy the court that H’s application should be refused.  I allow H’s application.  I will return to the wording of the order in a moment.

41.The parties have agreed that costs should follow the event.  I therefore order W to pay H the costs of this application, with all costs reserved, to be taxed if not agreed with a certificate for two counsel.

42.What remains is the drawing up of the order. After the substantive hearing, W’s solicitors wrote to the court on 19 November 2011.  They refer to Rayden, supra, para 11.17 and submit that if the court is minded to grant a decree absolute and grant leave to H’s favour for the decree nisi to be made absolute, the date on which the order is to be made and to take effect shall be notified to the parties 28 days in advance to allow W time to seek further counsel opinion on the option of appeal against such decision to allow her sufficient time to proceed with appeal if she does intend to do so.

43.I have yet to hear from H on W submissions.  I will therefore direct H to lodge with court his submissions together with a draft order for approval within 7 days from the date of this judgment.  If so advised, W should lodge with court her submissions in reply to H’s submissions and on the draft order within 7 days thereafter.  The order will then be drawn up.

Mr John Scott SC leading Mr Andrew Lynn, instructed by Withers,  for the petitioner

Mr David Pilbrow SC, instructed by Yip, Tse & Tang, for the respondent

Please refer to CACV279/2012 for the relevant appeal(s) to the Court of Appeal.