Z v. Z

HCMC 6/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 6 OF 2011

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J U D G M E N T

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1.There are two issues in this application, which are:

(i) Whether this Court has jurisdiction to entertain these divorce proceedings; alternatively,

(ii) Whether these divorce proceedings should be stayed on forum non conveniens.

BACKGROUND

2.The Wife was born in Japan to Japanese parents and is now 45.  She was brought up and educated entirely in Japan, and holds a Japanese passport.  She has never lived outside of Japan.

3.The Husband, now 46, was born in Germany in 1966 where his father was stationed with the US Army.  In 1968, his family returned to the United States, where the Husband was brought up and educated.  He is a US citizen and holds a US passport.

4.The Husband majored in East Asian Studies at Harvard University where he acquired a very good knowledge of the Japanese language.  After graduating, he went to work in Tokyo as a securities analyst.  The parties met in 1991, and married in January 1993 in Tokyo.  The Wife was at that time working in a Japanese securities firm.

5.There are two children of the family, a son, who will be 19 in December this year, and a daughter, who has just turned 17 in August. The Wife stopped working shortly before the son was born.  She resumed working between 1999 and 2001, but since 2001, she has been a full time housewife.

6.Under Japanese law, the children remain minors until they reach the age of 20.  The son has just left Japan to begin his studies at the Edinburgh University, having completed his secondary education at the American School in Tokyo, while the daughter at present continues her studies there. 

7.The parties resided in rented accommodation in Tokyo after their marriage.  It appears that the Husband started his own company before their daughter was born, but later closed it down to work with G.  According to the Wife, their marriage first ran into difficulties in about 1995.  She said that the first time the parties separated was in 1995, and that the Husband left Japan in 1998 and relocated to New York while she and the children remained living in Japan^[1]. The Husband said it was in fact in November 1996 that he relocated to New York^[2], and that it was in 1997 that he started to work there^[3]. He said he was living with his brother T at that time and he was contacting the Wife frequently and would visit Japan about twice a month for his business as well as for meeting his family.

8.In November 1998, the Husband formed his own hedge fund company called P (“P”) which was incorporated in British Virgin Islands.

9.The Husband then returned to Japan to live with the Wife and the children in about 2000, although he constantly travelled out of Japan to other places for his business^[4]. In 2001 a substantial property was bought in the centre of Tokyo as the parties’ matrimonial home (“Japan Property”).  The Japan Property is a house of 8,500 square feet with 6 bedrooms and the purchase price in 2001 was about HK$116,000,000^[5]. There is also an attached apartment unit of 2,590 square feet with three bedrooms, which has a separate entrance and own car park.  According to the Husband, the apartment had previously been rented out for about HK$1,000,000 per annum^[6].

10.The Wife said the Husband’s business rapidly increased and shifted from Japan to other Asian countries, and that as a result in 2007, he decided to close P’s office in Tokyo and set up an office in Hong Kong.  Further according to the Wife, the Husband relocated to Hong Kong in April 2008 and has since then been living in Hong Kong^[7], while the Wife and the children have continued to live in Japan. According to the Wife, this was when their second separation occurred.

11.The Husband did not deny that he took steps to terminate his residential visa in Japan towards the end of 2007 after he received advice on tax issues. He said, however, he did not cease living with his family in Japan.  He said that as the amount of his work in New York was increasing in 2007 again, the amount of time he stayed in New York rapidly increased.  He said for this reason, he started living a life of spending his weekdays in New York and returning to Japan on weekends, and also during the long vacation such as summer and spring recesses to go travelling with the Wife and the children^[8].

12.The Husband said the marriage in fact lasted for more than 18 years during which he was in Tokyo on a regular basis.  According to him, the Wife requested for a divorce in late November 2010, and thereafter the parties eventually separated in February 2011. 

13.The Husband said after separation he relocated to Shanghai, to reside in a property which he had contracted to purchase in 2006 for about HK$53,400,000 (“Shanghai Property”).  The title registration certificate of the Shanghai Property indicated that it was registered in the Husband’s sole name on 5 August 2008. This is a large property, the total Gross Floor Area for the car park and the apartment is 728.93 sq m^[9].

14.The Husband  further said that  he was employed in Shanghai as an investment analyst by a company called G R (“G R”)  in February 2011, and he produced a copy of his employment contract dated 4 February 2011[10]. The base salary was an annual gross amount of RMB 180,000, plus a bonus. It appears that after deduction of income tax, his monthly income was about RMB 10,000 only[11].

Divorce Proceedings in Japan (“Japan Proceedings”)

15.On 14 February 2011, the Husband filed a Request for Mediation in Tokyo, which according to him was a mandatory and integral part of divorce proceedings in Japan (“Mediation Request”)

16.The 1st Mediation Hearing was on 18 April 2011, which the Wife attended with her lawyers, but the Husband himself did not attend as he was at that time recovering from his cancer surgery.  Only his lawyers attended.  The hearing was then adjourned.

17.Two further Mediation Hearings took place on 18 April and 13 June 2011, which were attended by the Husband.  According to the Husband, it became clear to him at the hearing on 13 June 2011 that a settlement was impossible, and he then filed a divorce application on the same day (“Japan Petition”).  I understand that since then, there have been about 5 more hearings, and the next one will be on 15 October 2012^[12].

18.This Court was told that during the hearing on 25 June 2012, the Japanese Court confirmed that the parties’ date of separation was 6 February 2011. During this same hearing, the Japanese Court also ordered the Husband/the parties to file financial disclosure by 30 September 2012^[13].

Divorce Proceedings in Hong Kong (“Hong Kong Proceedings”)

19.About one month after the 1st Mediation Hearing in Japan, on 18 May 2011, the Wife issued the divorce petition herein (“Hong Kong Petition”).  In the Hong Kong Petition, the Wife prayed for a divorce, ancillary relief and costs only, and there was no prayer for custody of the children, although neither was 18 at the time. Two days later, the Wife further issued her Form A/ notice of application for ancillary relief.

20.In the Hong Kong Petition, the Wife has set out that the Husband had a substantial connection with Hong Kong at the date thereof, having lived here since April 2008 and that he continues to live and work here^[14].  At one stage, there appeared to be an issue as to which party had commenced divorce proceedings first and whether the Husband’s Mediation Request was part of divorce proceedings in Japan. The Wife herself had referred to the Japan Proceedings as divorce proceedings in the Hong Kong Petition^[15]. Mr Scott thus relied on this to say that the Wife had in fact acknowledged that the Husband was first in time to commence divorce proceedings.  Anyway, by the time of the hearing, this was no longer a real issue.

21.The Wife initially encountered some difficulties in serving the Husband with the Hong Kong Petition.  Eventually, the Husband lodged an acknowledgment of service on 8 August 2011, indicating that he received the Hong Kong Petition at his Japanese lawyer’s office on 26 July 2011.  On 8 August 2011, the Husband issued a summons for the Hong Kong Proceedings to be dismissed on lack of jurisdiction, or alternatively be stayed based on forum non conveniens.

SUBSTANTIAL CONNECTION

The Law

22.It has been set out in section 3 of our Matrimonial Causes Ordinance (“MCO”) that the Hong Kong court shall have jurisdiction in proceedings for divorce if :-

(a)   either of the parties to the marriage was domiciled in Hong Kong at the date of the petition; or

(b)   either of the parties to the marriage was habitually resident in Hong Kong throughout the period of 3 years immediately preceding the date of the petition; or

(c)    either of the parties to the marriage had a substantial connection with Hong Kong at the date of the petition.^[16]

23.The expression “substantial connection with Hong Kong” was first discussed in Hong Kong in the case of Savournin and Lau Yat Fung^[17] by Briggs J (as he then was).  It was held in that case that the expression “a substantial connection with Hong Kong” had a wider meaning than domicile, or in the case of a wife petitioner at that time, 3 years ordinary residence in Hong Kong, and while it might be almost impossible to give an all embracing definition of what amounted to a “substantial connection with Hong Kong”, it was not difficult to determine when the circumstances did not show a substantial connection^[18].

24.Shortly after the case of Savournin and Lau Yat Fung came another case Griggs v Griggs ^[19], in which Briggs J reaffirmed that it would be difficult to give a definition to the phrase “substantial connection” and that every case had to be considered on its own facts. In that case, the couple were both British and the family moved to Hong Kong where the husband later took up employment.  The parties remained ordinarily resident in Hong Kong for two years before the wife petitioned for divorce.  The court found that, on a balance of probabilities, there was evidence to show that the husband intended to remain in Hong Kong for a very considerable time and that he had set up the matrimonial home, which was a rented flat and the children went to school here.  It was held that the husband had a substantial connection with Hong Kong.

25.Then there were two cases of Hartmann J (as he then was), S v S ^[20]and B v A^[21], where the question of whether the petitioner had a “substantial connection with Hong Kong” was considered.

26.In S v S, following Briggs J in Savournin v Lau Yat Fung, Hartmann J held that the phrase “substantial connection” was to be given its ordinary meaning, and that it was sufficient that a petitioner demonstrated “a” substantial connection with Hong Kong, and it did not have to be the only substantial connection or the most substantial connection he had with any jurisdiction^[22].

27.Hartmann J further said in S v S that “substantial” was a plain enough English adjective, and was not a word that would lend itself to precise definition or from which precise deductions could be drawn^[23].  He went on to say that “an artificially constructed connection will not be a substantial one….. ………..  It was not the intention of the Legislature (in passing s. 3 (c) into law) to create a convenient off-shore divorce jurisdiction.”^[24] 

28.In the 2^nd case of B v A, Hartmann re-iterated what he had earlier said in S v S that the factual issue of whether or not a party had a substantial connection with Hong Kong at the time or the institution of proceedings could conveniently be determined by asking two questions: namely (i) did the party have a connection with Hong Kong”  (ii) was that connection of sufficient substance; that is of sufficient significance or worth, to justify the courts of Hong Kong assuming jurisdiction in respect of matters going to, and consequential upon, the dissolution of that party’s marriage^[25]?.

29.With these general principles in mind, I now turn to the present case.

The Alleged Facts

30.In summary, as set out in paragraph 12 of the skeleton submissions of Mr Burns SC, Leading Counsel for the Wife, the Wife’s case is that the Husband had/has a substantial connection with Hong Kong on the date of the Hong Kong Petition based on the following:

(i)    The Husband effectively manages the business of the P Group,  a substantial Hong Kong based investment and asset  management group of companies with billions of Hong Kong dollars under management, of which the Husband is the founder, controlling shareholder, President and Chief Investment Officer;

(ii)   The P Group and the similarly controlled M Group have at all material times maintained substantial shareholdings and investments primarily in Hong Kong listed companies, the market value of which( as at 15 May 2012) was approximately HK$5.9 billion;

(iii)   The P Group operates in Hong Kong through O P Limited (“O P”), a Hong Kong company, formerly named P F A, which is controlled by P , and thus by the Husband;

(iv)   O P is licensed by the SFC , as are its Responsible Officers, representatives and dealers who include  T (the Husband’s brother and a director of O P) and J, and W who are both also employed by P as senior analysts;

(v)   P (and thus the Husband) carries on business through O P from office premises at the E Building, Hong Kong (“E B Address”), which the Husband has from time to time referred to as “his” office; [on any basis, even if it could be said that, technically, for tax and other purposes, neither P nor the Husband carry on business in Hong Kong, they both at least have a very substantial connection with Hog Kong by virtue of their dealing with and connection with O P in Hong Kong and by virtue of the business activities carried on in Hong Kong for P (and ultimately for the Husband)];

(vi)   O P, its employees and business premises in Hong Kong, which provides a broad range of investment related services to the P Group, have often been referred to as “the Hong Kong” unit and office respectively of the P Group.  P regularly uses and has used the offices of O P as its address and point of cont for substantial contractual obligations and public disclosures;

(vii)  O P is central to the business affairs of P and the Husband is in effect the “engine room” for the business activities of P and the P Group;

(viii)  The P Group derives its very substantial income from charging and receiving a range of fees, in respect of the investment advisory services provided, based on the assets under management and the performance of the funds within the P and M Groups.  This income or at least a very sizeable part of it is made available to the Husband by way of dividends and distributions through his controlling interest in the P Group;

(ix)   The Husband has taken out a long term contract for residence by him at the L H which he has described as his “home”.

31.For matters listed in (i) to (viii) above, the Wife relied mainly on a report prepared by her expert, Mr Borelli, a chartered accountant.  Mr Borelli prepared his report based on substantially publicly available information (“Borelli Report”)[26].

32.In response, the Husband had also instructed his own expert Mr Sage to prepare a report (“Sage Report”).

33.The Husband accepts that he is the founder and owner of P.  A year after P was set up, in November 1999, a company called P F A Limited was incorporated in Hong Kong.  At the time of incorporation, the Husband was one of the four first directors.  This company later changed its name to O P in August 2002, and at that time, the Husband was still a director.  He later resigned as a director from O P in November 2007.

34.O P appears to be owned 100% by a company called G which was formed in Delaware USA. The beneficial owner/s of G is so far unknown.  It is stated in the Sage Report that according to the Annual Returns filed by O P with the Hong Kong Companies Registry[27] neither the Husband nor any of the companies falling within the definition of the P Group was an officer or shareholder of O P[28].  The Husband himself had said that there was no legal (my emphasis) connection between P and O P[29].

35.The “P Group” was defined in the Borelli Report to be a group of Companies and Funds including O P[30], and O P was also described in the Borelli Report to be the “engine room” of P. This was denied by the Husband.  With the exception of O P, all the other Companies and Funds included in the definition of the P Group in the Borelli Report were all incorporated outside Hong Kong.  There appears to be no dispute that the Husband is both the founder and controlling shareholder of all these other Companies and Funds in the P Group[31].

36.It is, however, the Husband’s case that the P Group does not carry on business in Hong Kong, and that it merely acquires Hong Kong-listed securities for the Funds through instructions given to O P, which, according to the Sage Report, is an independent contractor.  As evidence of this, a Sub-Advisory Agreement dated 1 January 2005 (“SA Agreement”) between P and O P was produced in the Sage Report[32]. This SA Agreement sets out all the services O P are to provide for P and it is further stated therein that O P is allowed to provide services to other clients[33].

37.On 28 August 2005, O P was granted a licence by the SFC of Hong Kong to advise on securities, futures contracts and asset management[34]. The business address in the SFC’s Public Register for Licensed Persons and Registered Institutions on 21 March 2012 was the E B Address, and among the registered “Responsible Officers” were T, the Husband’s younger brother who joined P as a Senior Trader in 2006, and J who joined P as an Analyst in 2006[35]. T was appointed as a director of O P in September 2006. The Husband appeared to be also a licensed Representative of O P from 21 January 2008 to 15 June 2008[36]. As of March this year, two of O P’s Responsible Officers were also employees of P.

38.P was registered as an investment adviser in the US and in its application form (“Form ADV”) dated 20 March 2006, P’s “Principal Office and Place of Business” was given to be “C/O O P” with its then address in Hong Kong[37]. The Form ADV was signed by one J, the Chief Financial Officer/Chief Compliance Officer of P since 2004 and whom the Husband has described in his 4^th affidavit as his personal lawyer[38].

39.It is the Husband’s case that P only provides services under an Investment Management Agreement to the Funds in the P Group.  A copy of an Investment Management Agreement was also produced in the Sage Report in which the remuneration was stated therein[39]. It is further the Husband’s case that these fees do not arise from services performed in Hong Kong nor do they arise from a contractual obligation undertaken in Hong Kong.  It seems that all the Investment Management Agreements were signed outside Hong Kong[40].

40.It is the Wife’s case that apart from the P Group the Husband similarly controlled another group, the M Group, through his brother T.  In the Borelli Report, it is stated that “The primary connection between the P Group and the M Group is that P also manages and advises funds controlled by the M Group.  The M Group appears to be controlled by the Husband’s brother T. Announcements made to the HKSE indicate that the Husband also controlled M Group through his brother (the Trsutee)”[41].

41.The M Group was defined in the Borelli Report to include a number of companies and trusts, which appeared to be all incorporated outside Hong Kong. According to diagrams produced in the Borelli Report[42], the Husband owned 100% of a company called M GP LLC (NV, USA), which was the “founder” of a discretionary trust called M Trust.  T is the trustee of 43.2% of the M Trust as of 7 April 2010, and another trust R Trust.  According to Mr Borelli’s diagrams, the M Partners Trust held 100% interest of P A F (BVI) and its subsidiary P Master Fund Limited (BVI).

42.These last two were part of the Funds listed in the Sage Report[43]for which the Husband says P provides investment management services.  Mr Sage has said in the Sage Report that these Funds were incorrectly stated in the Borelli Report as being a part of the M Group[44].

43.It is the Wife’s case that the the M  Trust, controlled by the Husband, and the Husband’s  Family Members own M Partners LLP, now known as S S LLP, which in turn owns  M P L, now known as U I S[45]. Mr Sage, on the other hand, said that the conclusion that Mr Borelli reached in relation to the Husband’s connection with the M Group was both “unfounded and incorrect”[46].

44.In support of the matters alleged in paragraph 30(i) to (viii) above, the Borelli Report has included a number of publicly available Hong Kong Stock Exchange (“HKSE”) documents in relation to transactions involving P or the M P I and various listed companies in Hong Kong.  These documents dated from about 2006 onwards. 

45.Some of these documents were in relation to the same transaction.  One particular major transaction was the purchase by M P I of 74.99% of the issued capital of the Hong Kong Building and Loan Agency Limited (“HKBLA”), a listed company in Hong Kong.  There was a HKSE announcement in relation to an agreement dated 11 May 2007 concerning this transaction[47]. In this public announcement, M P I Limited was defined as a company incorporated in BVI with limited liability and a wholly-owned subsidiary of M P LLP, which is in turn wholly and beneficially owned by family members of the Husband and a trust and the sole initial beneficiary thereof is wholly and beneficially owned by the Husband[48].

46.After the above purchase, the Husband joined the Board of HKBLA together with his brother T, J, and J as executive directors, and the Husband became chairman of the Board.  There was another HKSE announcement to this effect[49].

47.In extracts of the 2008 Annual Report of the HKBLA, the Chairman’s Statement and Corporate Governance Report both of which was signed by the Husband on 26 March 2009, it was again stated that the shares of M P I Limited were indirectly wholly-owned by M P Trust, a discretionary trust[50]. Further, it was stated that the Husband was deemed interested in the shares of the HKBLA through his control of more than one-third of the voting power of M GP LLC , the founder of the M P Trust[51]. Although during Mr Scott’s reply submissions, he disclosed that the Husband, T, J and J had in fact all resigned from the HKBLA Board on 23 October 2009 when M sold the shares in HKBLA, the above documents of HKBLA clearly indicated the Husband’s connection with the M Group at that time. 

48.A more recent transaction concerned S O C Limited (“S O”) , another company listed on the HKSE.  Extracts from the 2012 Annual Report of S O showed that on 31 December 2010, the Husband and P held about 28.93% of the issued share capital of S O, the Husband holding in the capacity of “interest of controlled corporation”, and P as “investment manager”[52].

49.Then on 28 January 2011, there was a HKSE announcement concerning a possible proposed voluntary conditional partial cash offer to acquire shares in S O revealing the shareholding of P in S O[53]. According to the note relating to P, it was stated that P’s shares were held under a group of entities, including O P, and this group of entities was described as an Asian-focused hedge fund group run by the Husband[54].

50.Another recent transaction concerned a company F, also listed on the HKSE.  Again, the extracts of the Annual Report for 2010-2011 and dated 31 March 2011 revealed P holding about 10.61% of the shareholding in the capacity as investment manager and it was described that the shares were held through 3 companies, including O P, and all of which was stated to be wholly owned by P.

51.The documents in relation to S O and F would support the Wife’s case that O P was part of the P Group run by the Husband.

52.The Husband had said that those publicly available documents produced in the Borelli Report were outdated and inaccurate, but apart from HKBLA, he did not give details.  Even though some of these public documents may be outdated, such as those on HKBLA, the was no sufficient evidence to show the information contained therein in relating to P/P Group, M Group, O P or the Husband was inaccurate at the date of the relevant public document.  There was further no evidence that the Husband had taken steps to rectify inaccuracies, if any, in these public documents.  

53.In a number of these public documents, P’s address was given to be “c/o” O P’ at the E B Address. Mr Scott had tried to point out that “c/o” meant that the E B Address was only that of O P, and not of P or the P Group.  The Husband said that he had put down his address to be “c/o” O P’s E B Address for convenience, as he used to be a director of O P and his brother was working there. Anyway, in an email the Husband sent to the Wife who asked for his new office address, he put down his HK Office being O P at the E B Address[55]. The Husband was at one time in 2010 also contemplating joining the China Club in Hong Kong and in his application form, he had again put down O P and the E B Address, although in the end he did not go through with his application.

54.It is not disputed that the E B Address was an office rented by O P, but as the Wife says O P is part of P Group, thus Mr Burns has submitted that the E B Address is also the office for P.  One of the public documents relied on by the Wife was a SFC Press Release dated 13 March 2012 concerning a criticism of P in relation to certain breaches of the dealing disclosure requirements in the Takovers Code.  It was stated therein that P had implemented a number of enhanced measures to ensure future compliance, and such measures included “the provision of training to the staff members in its Hong Kong office….and if the need arises, employment of additional staff…..”[56].

55.The Husband no doubt has/had a number of professional advisers to advise him and P on legal and tax matters. P and the P Group, and also the M Group seem to have all been carefully structured so that there is no tax exposure in Hong Kong.  P is not taxable in Hong Kong.  The office at the E B Address was rented by O P, and it may well be that P is not the legal employer of any staff in Hong Kong.  Under the SA Agreement O P would undertake those services for P as set out therein, including performing “any other assignments as P may reasonably request, subject to O P’s agreement thereto”[57]. The services provided to P are thus very wide and further O P is being paid by P.  There is no evidence that O P has performed services for any company other than P.  I am therefore of the view that O P has been the vehicle through which P has conducted its various business activities in Hong Kong.  As P is controlled by the Husband, so should O P.

56.It may well be that the Husband did not hold any beneficial interest in Hong Kong listed securities in his own name and he did not carry on business in Hong Kong for tax purposes.  He has never paid any salaries tax in Hong Kong.  It seems that the Husband has only ever been a director of two Hong Kong companies, namely O P and HKBLA.  He resigned from O P in 2007 and from HKBLA in 2009. Thus, he had resigned from these companies long before the Hong Kong Petition was issued.

57.In the Husband’s 1^st and 2^nd affidavit filed in support of his present application, he did not refer to P or the P Group at all.  All he disclosed at that time was his contract of employment with G R dated 4 February 2011[58]. On the other hand, in the Husband’s Mediation Request filed on 14 February 2011 in the Japan Proceedings, he stated that he was managing an investment firm with bases in 4 places- Japan, the United States, Shanghai, Hong Kong[59]. There was no mention in the Mediation Request of any G R contract which he said he entered into 10 days earlier.

58.The Wife had produced a copy of the Husband’s travelling schedule to support what she alleged, that he treated Hong Kong as a base over the past few years.  This covered the period approximately from November 2009 to March 2011[60]. According to the Husband, the schedule was based on his planned trip, and not actual flights, and also for the periods where there were no records, he was actually with the Wife and the children. Anyway, the Husband himself then set out a table of his travel days from 30 November 2010 to 20 May 2011[61]. During this period of a total of 172 days, according to him, he had spent 39 days in Japan, 14 days in the US, 27 days in China, 52 days in Hong Kong, and the rest in other parts of the world.  This meant that the Husband was in Hong Kong about 30% of those 6 months, and almost twice as much the time he spent in China.

59.The Husband himself had said in the Japan Proceedings that his core business shifted from Japan to China around autumn of 2006 when he started thinking about relocating to Hong Kong[62]. Out of the 4 bases referred to by the Husband, there seems to be no evidence that the US or Shanghai has been a base for P.Thus, Mr Burns has submitted that out of the 4 bases, this would leave only Hong Kong as the real base for P’s operations.  On the evidence presently before me, this seems indeed to be the case.

60.According to the Borelli Report, the valuation of the P Group’s and the M Group’s Listed Investments as at 14 May 2012 was about HK$5.79 billion[63]. Further, according to the Borelli Report, the P Group derives its income from charging and receiving a range of fees in respect of the Funds within the P Group and the M Group and that this income is substantial and is made available to the Husband by way of dividends and distributions through his controlling interest in the P Group[64].

61.I accept that the Husband has been receiving, and is still receiving substantial income from P and/or P Group and/or M Group, rather than from his employment with G R.

62.The P Group and the M Group have been maintaining substantial shareholdings and investments mainly in Hong Kong listed companies.  Based on the schedule of publicly available information[65], I am of the view that since about 2006 onwards, the Husband has had extensive business interests in Hong Kong, whether through P/P’s Group, M Group or O P or otherwise and has continued to do so until at least May 2012.

63.Is this, however, a connection of sufficient substance with Hong Kong so as to give the Hong Kong courts the power to adjudicate on matters going to the dissolution of this marriage?

64.Mr Scott has submitted that when considering whether a person has a “substantial connection” under the MCO, one has not only to look at the connection from merely a “corporate ”or “business” sense, but also  from a “personal” sense or “human” level.

65.It is the Husband’s case that there is a complete absence of matrimonial-related connecting factors with Hong Kong. There is a total absence of connecting factors based on personal status with Hong Kong in that:

(i)      None of the Wife’s nor the Husband’s parents are of Hong Kong origin or otherwise have ties with Hong Kong;

(ii)    Whilst both the Wife and the Husband speak fluent Japanese neither speaks Cantonese or Mandarin;

(iii)   The Wife is a Japanese citizen holding a Japanese passport, while the Husband is a US citizen holding a US passport;

(iv)   The children hold dual US and Japanese passports;

(v)    No person in this family has or has ever had or held a Hong Kong Identity Card  nor any form of residential connection with Hong Kong;

(vi)   No member of the family has ever been liable to or has paid any form of Hong Kong tax.

66.The Husband admitted that in 2006 there were discussions with the Wife about the possibility of moving to Hong Kong, and steps were taken to look for accommodation and schools for the children in Hong Kong, but the Wife later decided not to move and to remain with the children in Japan.  The Husband said once it was decided that the Wife and children would stay in Japan, rather than relocating to Hong Kong, he had retained Japan as his home base until he did relocate to Shanghai in February 2011.  However, in the Japan Proceedings, he seemed to have agreed that he did relocate to Hong Kong in 2007[66], although he then went on to say that he made enormous amount of efforts in order to return to Japan every weekend and to spend the long vacation with the family.  Anyway, according to him, in 2007, he had spent 49 weekends out of 52 with the family and spent 45 days in total for vacations in spring, summer, the end of the year and the new year with his family[67].

67.The Wife’s case is that since the Husband relocated to Hong Kong he has rented an “apartment” as his permanent residence in Hong Kong at the L H[68], and that the Husband also has a Hong Kong mobile telephone number, which he supplied to the children’s school in Japan as being one of his contact numbers.

68.What the Husband said about the L H was that it was a reasonable hotel, and that he had also stayed in many luxurious and expensive hotels in Hong Kong. The L Hwould only be chosen by an executive like him who would spend a few nights a month here[69]. He has said that he is a man of significant financial means and would not choose to take up residence in a 4-star hotel.  I note that in February 2009, the long staying package for the harbor view suite at the hotel was HK$38,000 net a month only, including 10% service charge, and benefits included complimentary daily breakfast, internet access, local calls, daily newspaper, use of gym and other discounts.

69.As for his Hong Kong mobile number, the Husband has said his Blackberry has dual phone numbers, one Shanghai and one Hong Kong.  As the voicemail and directory for the Shanghai number is in Mandarin, he has said sometimes he uses the Hong Kong number which is in English for callers who do not understand Mandarin, and that he receives calls on both numbers.  He has also said the Hong Kong number was provided to the children’s school by the Wife without his consent, and his contact mobile telephone number for the school has now been corrected to his Shanghai number.

70.The Husband says he has remained a member of the Tokyo American Club, and he is and has been continuously since 2004 a Trustee of the American School in Tokyo where the daughter is still attending. He has also been a member of the Roppongi Hills Club in Tokyo since 2008.  By comparison, he has not joined any club in Hong Kong, although, as mentioned earlier, he had contemplated joining the China Club but did not go through with it.  He joined initially as a member of the Hong Kong chapter of the Young Presidents’ Organisation (“YPO”), but switched his membership to the Shanghai chapter in March 2011 after relocating to Shanghai[70]. The Husband claims that he has been an active member of the Shanghai YPO since, having now attended 12 events in Shanghai as well as other events in Singapore, Beijing, Mongolia and Hong Kong (one event only) since February 2011[71].

71.Mr Burns has submitted on behalf of the Wife that the entire circumstances of a case have to be looked at, and that the Hong Kong court will have jurisdiction if it is shown that one of the parties to the marriage had a substantial connection with Hong Kong at the material time, and this will be so where the other party had no connection or no substantial connection and even in circumstances where the matrimonial life was not conducted in Hong Kong and where Hong Kong has no connection with the marriage itself.

72.Mr Scott has, however, submitted that this being a matrimonial case, the connection must relate to the marriage itself, and that the conduct of matrimonial life within the jurisdiction is of particular weight.  He has referred to the following passages in S v S:

“18. As the jurisdiction looks to the determination of matrimonial proceedings, a material factor will be whether both parties to the marriage have lived in Hong Kong and, if so, how long they have lived here as man and wife. But those factors will not necessarily be determinative. In each case the factors to be considered will be different and the weight to be given to them, in the factual context of each case, will no doubt be different too.

19. In summary, whether-for the purposes of the Ordinance-a connection is substantial or not can only be determined on the basis of a broad objective assessment, taking all relevant factors into account.”[72]

73.It seems to me there is some support to Mr Scott’s submission in view of the distinct nature of matrimonial proceedings. The distinct nature of matrimonial proceedings was  referred to by Cheung JA when considering an appeal on the issue of forum non conveniens in the case of  RI v SSH[73], although the issue  in that case was which  forum  had the most real and substantial connection with the proceedings and not a case under s. 3(c) of MCO.  Cheung JA had held that in order to see whether the matrimonial proceedings had a real and substantial connection to Hong Kong, one must ascertain whether at the time of its commencement, the parties had substantially conducted their matrimonial life in Hong Kong[74] to reflect the distinct nature of the matrimonial proceedings.

74.Mr Scott has further referred the Court to a Family Court case G v G[75]where Judge Bruno Chan had held that the husband had a substantial connection with Hong Kong even though the parties were not living in Hong Kong at the time of the proceedings.  The Italian husband in that case had moved from Hong Kong to Macau and only visited Hong Kong where he had business interests and the German wife had returned to Germany.  The husband had claimed that he had severed his ties with Hong Kong and that the matrimonial home was no longer in Hong Kong.  In that case, the parties lived in Hong Kong for about 3 years before moving to Macau.  The husband was a businessman carrying on a trading business in Hong Kong and Macau.  Both had obtained an employment visa in Hong Kong, and after moving to Macau, the husband had retained his Hong Kong Identity Card and had continued to renew his Hong Kong employment visa, and only relied on a tourist visa to stay in Macau.  After moving to Macau, the parties continued to use their accounts in Hong Kong and did not open any bank account in Macau either in personal name or in the name of the Macau Company, apart from an auto-pay utility account by the wife. The parties had purchased a property in Hong Kong after they moved to Macau and further, the husband’s Hong Kong Company had tax liabilities in Hong Kong.

75.In the present case, it is said by Mr Scott that the Husband leads a “nomadic lifestyle” or he is an itinerant businessman shuttling between various countries, and while he does visit Hong Kong, he stays in various hotels with no permanent presence or residence.

76.The Wife’s case, on the other hand, is that the Husband has taken out a long term contract for residence at the L H which has been his home in Hong Kong. She had produced copies of emails between the Husband with the General Manager of the L H in February 2009[76]. According to the Wife, the Husband has an “apartment” in the hotel, but it seems where the Husband has been staying is only a “suite” at the hotel. It further appears from the emails that the Husband was staying in a room of same size at the Four Seasons in February 2009 and was considering switching to the L H.  He did switch on about 6 June 2009[77]. It further appears that the Husband was offered a “long stay package” at the L H subject to a minimum stay of 3 months.

77.The Wife said the Husband had been treating the “apartment” at the L H as his home, where he had displayed family photographs.  The Wife said she had asked the Husband for an address of his home in Hong Kong in April 2009 and he replied to say “HK Home, as of 6 June would be the L H “don’t know room # yet)”[78]. The Wife had also said when the Husband arranged for the children to come to Hong Kong in March 2011 after the earthquake, about one month after he claimed he relocated to Shanghai, he arranged for the children to stay in another suite in the L H, and this shows that the Husband was still staying there at that time, rather than in Shanghai.

78.It may well be that the Husband has been keeping a suite at the L H until March 2011, or even until now, for his stay whenever he was/is in Hong Kong.  In my view, however, a hotel room or suite, with apparently only one bedroom for the Husband only, whether luxurious or not, is more transient, and is very different from say, a rented flat which is subject to a fixed term tenancy agreement or a self-owned flat, both of which would be more indicative of an intention or commitment to stay for a fairly extended period of time, rather than short stays.

79.The Wife’s case is that the Husband has severed his ties with Japan in 2007.  Although the Husband gave up his residential rights in Japan at that time, he returned regularly to Japan to be with his family at the Japan Property.  The Japanese Court has held that the parties’ separation occurred only in February 2011 which has been the Husband’s case throughout.  On the evidence before me, I find that the place where the Husband had maintained a home up until February 2011 was still in Japan and thereafter, he has set up his home in Shanghai.  As mentioned earlier, the Japan Property is a substantial property.  The Husband has produced photographs of the Shanghai Property showing it to be a fully furnished home.  The Shanghai Property is again substantial, of about 7,000 sq ft with 5 bedrooms and 6 bathrooms. It is a penthouse apartment which covers the entire top floor of the building and there is also a roof garden of approximately 1,940 sq ft as well as 2 parking spaces. The Husband has produced gas bills for May 2011 and a schedule of his monthly expenses for his driver, full-time housekeeper and household expenses.  The Husband further said he has joined the Shui On Club in Shanghai in April 2011.

80.By comparison to the Japan Property and the Shanghai Property, the Husband’s suite at the L H, with one bedroom, did not seem to be a real home in the style he was accustomed to.  Anyway, there was no evidence that he had any personal furniture in this hotel suite.  There were no internet or indeed any utilities accounts registered in his personal name at the hotel.  It seems that he could easily pack up and move out of this suite any time.

81.In the Mediation Request, the address the Husband gave as his “domicile” was the address of the Shanghai Property.  This was three months before Hong Kong Proceedings were instituted against him.  The Husband said the Wife was aware that he relocated to Shanghai as the Wife had sent his personal belongings from the Japan Property to the Shanghai Property in June 2011.  The Wife had said the items she tried to send to the Husband were returned, but the Husband said they were rejected by the Chinese customs because the indicated contents on the shipping label contained copyrighted materials.  Whatever, this shows that the Husband still had personal belongings in the Japan Property before June 2011, which would seem to support his case that his home was the Japan Property before his move to Shanghai Property.

82.Mr Scott has pointed out that under s. 3 of the Registration of Persons Ordinance (Cap 177), every person in Hong Kong aged 11 or over is required to obtain a Hong Kong Identity Card, save for, inter alia, bona fide travelers in transit through Hong Kong or persons who have been permitted to stay for not more than 180 days[79]. It seems that the Husband falls within the exempted categories of persons, and as mentioned earlier, for the period of about 6 months preceding the date of the Hong Kong Petition, the Husband was only here about 30% of the time.

83.Under the MCO, to claim jurisdiction based on residence, what would be relevant is “habitual residence”.  There is clearly no sufficient evidence that the Husband has been habitually resident in Hong Kong since April 2008. Indeed, as Mr Scott has pointed out,  had there been sufficient evidence, then the Wife could have relied on the Husband’s habitual residence in Hong Kong for three years under s. 3 (b) of MCO.

84.From the available evidence, other than the Japan Property and the Shanghai Property, the only other place the Husband has/had a landed property is/was in Hawaii.

85.The Wife has said that the parties each own 7% shareholding and their children each own 5% in a BVI company, which is a 100% owner of a Hong Kong company Asia Jet Partners Limited (“Asia Jet Hong Kong”).  The Wife’s case is that the Husband owns two private jets which are leased to Asia Jet Hong Kong, and the jets are parked in Hong Kong. The Husband denies that he personally owns two jets.  According to him, the jets are owned by US based companies and that the jets are parked where they land after each trip.

86.The only other substantial asset mentioned by the Wife was a 101.27 carat diamond which the Husband purchased in early 2008 from Christie’s in its Spring 2008 jewellery sale in Hong Kong for about HK$48.48 m and the diamond was later named after the Wife. The Wife claimed that the Husband kept the diamond in a safe deposit box in Hong Kong. The Husband said he kept it in Shanghai after he moved there in February 2011.

87.Save as set out above, at present, there is a general lack of information on what other assets the Husband held or holds in Hong Kong, if any.

88.The Husband has produced a PRC “Alien Employment License” allowing him to work in Shanghai, which was issued to him on 3 May 2011[80]. It seems that he would have applied for this licence earlier than the issue date, and in any event before the Hong Kong Proceedings were issued.  The Husband has  also produced a  page from his old passport with a PRC “Residence Permit for Foreigner” issued at Shanghai on 20 June 2011[81] , and later a new one issued on 18 November 2011[82] when he obtained a new passport. 

89.Mr Scott has submitted if any businessman with extended business interests in Hong Kong is regarded to have a substantial connection here this would be like opening a floodgate, say for example, there are many businessmen in Hong Kong from the Mainland and their spouses may decide to issue divorce proceedings here.  “Substantial Connection” is of course now also a jurisdictional ground under our new Part IIA application under Matrimonial Proceedings and Property Ordinance Cap 192 where an applicant may apply for leave for an order for financial relief after a divorce outside Hong Kong. 

90.In deciding whether there is “substantial connection”, this Court would have to have regard to all relevant factors.  I agree with Mr Scott that in considering jurisdiction for matrimonial proceedings under s. 3(c) of MCO, material factors should include some connection with the marriage or connection with the parties on a “personal” level or “personal” sense and not only from a “corporate” or “business” sense.  Having considered all the circumstances of this case, I am not satisfied that the Wife has demonstrated, on a balance of probabilities, that the Husband had a substantial connection with Hong Kong as at 20 May 2011 so as to give the Hong Kong courts the power to adjudicate on matters in relation to the dissolution of this marriage.  It is accordingly my finding that the Hong Kong courts do not have jurisdiction for these divorce proceedings.

91.This should dispose of these proceedings, but in case I am wrong on the jurisdictional point, I will go on to consider the alternative part of the Husband’s application, namely whether the Hong Kong Proceedings should be stayed on the ground of forum non conveniens.

FORUM NON CONVENIENS

The Law

92.The relevant principles for staying parallel matrimonial proceedings are now well established, having been laid down in Louvet v Louvet[83], which follows the three-stage approach laid down in Spiliada Maritime Corporation v Consulex Ltd[84] .

93.Such legal principles have also been set out quite clearly by Cheung JA in the case of DGC v SLC[85] as follows:

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

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

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

(iv) If the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer. Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the court’s satisfaction that substantial justice will be done in the available appropriate forum”[86].”

Stage 1 – The More Appropriate Forum

94.In the case of RI v SSH[87], the Court of Appeal upheld Hartmann JA’s decision to refuse a stay of proceedings by the French husband in that case.  Cheung JA had said in that case[88]:

“4…… Matrimonial proceedings are concerned with human beings and the regulation of their lives after the dissolution of their union as husband and wife in terms of custodial and financial provisions. Hence in order to see whether the proceeding has a real and substantial connection to Hong Kong, one must, first of all, substantially conducted their matrimonial life in Hong Kong. Hong Kong being an international commercial city, the identification of this sissue is most acure for expatriate families who live in Hong Kong. The relevant considerations are, for example, whether the parties’ matrimonial home is here; what is their past pattern of life; do they regard Hong Kong as their home for the time being even if their life style may indicate that they may not take root in one place for too long a time……”that Hartmann JA was correct to hold that for the short period ( a year in Hong Kong for the husband and nine months for the wife), the parties had established a real and substantial connection to Hong Kong because during this period Hong Kong was the place where they led their matrimonial life, and they had never conducted their matrimonial life in France at all”.[89]

95.Cheung JA held that in the above case that parties had established a real and substantial connection to Hong Kong because during the short period they were in Hong Kong, Hong Kong was the place where they led their matrimonial life and by contrast although the parties had held a civil marriage in France, their child was born there and the parties held properties in France, they had never conducted their matrimonial life in France at all and that Hong Kong was the appropriate forum.

96.There is no dispute that the Husband and the Wife had never conducted their matrimonial life in Hong Kong, Japan was where they conducted their matrimonial life.  Both the children were born there and have always lived there.  The Husband has issued the Japan Proceedings.  There were no jurisdictional issues there. Both parties speak fluent Japanese.

97.Further, according to the Husband, the contested issues in the Japan Proceedings include whether the Wife formed an adulterous relationship with another man in Japan, custody, care and control, access , and maintenance of the children; and division of assets between the parties.

98.Mr Burns has suggested that the Husband’s claim for custody can only be viewed as a “cynical tactic” which the Husband has adopted in an attempt to improve his position as regards his application for a stay of the Hong Kong Proceedings on forum grounds. The children are now 18 and 17 respectively but as I have mentioned earlier, they are both “minors” under the law in Japan.

99.The Husband had apparently initially conceded that custody should remain with the Wife, but has now made a claim for custody in the Japan Proceedings. The Husband says he has made this claim upon finding out that the Wife had an adulterous relationship with another man.  It is now the Husband’s case that the Wife left the children unattended in Japan for 7-10 days a month to visit her boyfriend in the USA.  Anyway, the matter of the Wife’s infidelity and suitability to have custody of the children are currently ongoing contested issues in the Japan Proceedings.

100.Yuen JA has said in RI v SSH that it is unrealistic to suggest that there should be two separate proceedings, in that case, one set in Hong Kong to deal with the children, and the other set in France to deal with divorce and distribution of the matrimonial assets.

101.In the present case, the daughter is in fact still a minor under Hong Kong law.  The Husband is entitled to seek a custody order in relation to the daughter in the Hong Kong Proceedings, even though the Wife has not done so, and unless there is agreement between the parties, if the Hong Kong Proceedings were to continue, this is also likely to be an issue in the Hong Kong Proceedings, at least until August 2013 when the daughter reaches 18.  If this is going to be an issue, it is clear to me such an issue should be determined in Japan where the Wife and the daughter are. 

102.The Husband has further said that there is a complete lack of particulars in the Wife’s Hong Kong Petition.  The Hong Kong Petition was drafted to be based on “mild” unreasonable behaviour of the Husband.  My understanding that this is the usual practice done with a view to reduce acrimony and hostility between the parties.  Having raised the issue of the Wife’s adulterous relationship in the Japan Proceedings, it is, however, likely that the Husband may also raise this in the Hong Kong Proceedings, if these proceedings were to continue.  Given that the parties’ matrimonial life centred in Japan, as submitted by Mr Scott, and I agree, the more appropriate forum for the determination of such factual issues relating to the breakdown of the marriage including the availability of witnesses etc. should be Japan.

103.In view of the above and following what was said in RI v SSH[90], I find Hong Kong is not the natural or appropriate forum for the trial of divorce proceedings between the parties.  Moreover, Japan is clearly and distinctly the more natural and appropriate forum, namely the forum where the parties led their entire matrimonial life and Japan is the forum which has the most real and substantial connection with the divorce proceedings between the parties.

Stage 2- Juridical Advantage

104.Upon the Husband establishing Stage 1, the burden then shifts to the Wife to show that she will be deprived of a legitimate personal or juridical advantage if the divorce proceedings take place in Japan.

105.Parties in divorce proceedings in Hong Kong are obliged to make full financial disclosure by way of filing a financial statement (“Form E”).  There are also discovery procedures available in our Rules of the High Court.  The Wife says while there are effective means available to the Hong Kong Court to enforce this obligation, there is no such obligation in divorce proceedings in Japan and the Japanese Court has no effective means and/or mechanism to compel a party to make a full frank and clear disclosure of their financial circumstances.

106.Both parties have produced expert opinion in this respect. Mr Scott has challenged the Wife’s expert Mr Kawamura’s credentials as a matrimonial law expert, saying that his online CV dated about 22 December 2011 did not include matrimonial law as an area of his expertise[91]. Mr Kawamura later confirmed that he has been qualified 8 years and has conducted 4 matrimonial cases, with 1 case that touching on jurisdictional matters.  On the other hand, the Husband’s expert Ms Ikeda has been practicing family law for almost 28 years, since 1984[92]. She has conducted more than 19 matrimonial cases in the last 3 years with at least 6 involving international jurisdictional issues[93], and is a fellow of the International Academy of Matrimonial Lawyers. The Wife has not challenged Ms Ikeda’s experience.

107.On the issues of financial disclosure, it is Ms Ikeda’s view that there is a regular and frequently used practice of exchanging financial information in Japanese divorce proceedings, and it is not correct  to say that there is no legal obligation for a party in divorce litigation to disclose his/her assets or financial status[94]. Further, according to Ms Ikeda, the burden of proof in Japanese proceedings is not placed on either party – instead, it is for the Court to take on an essentially inquisitorial role and actively examine the evidence.  She is of the view that the inquisitorial approach means that a fair and equal distribution would generally be achieved in the Japanese Courts[95] .

108.Ms Akeda has referred to Article 2 of the Code of Civil Procedure in Japan (“Code”) under which the Courts shall endeavour to ensure that civil suits are carried out fairly and expeditiously, and parties shall conduct civil suits in good faith[96].

109.Further, a party is entitled to make an inquiry to the opponent under Article 163 of the Code unless the inquiry falls under one of the exceptions, which include an inquiry which is not specific or individual[97]. In particular, Section 5 of the Code sets out the provisions in relation to examination of documentary evidence[98]. Under Article 219, a party may request the court to order the holder of a document to submit such a document, and Article 220 sets out the obligation of the holder of a document to submit the document. Article 221 sets out the provisions for filing a petition for an order to submit a document, and Article 222 sets out the procedure for identifying document.  Article 223 further empowers the Court to make an order to submit a document if the petition for such an order is well-grounded.

110.Mr Burns has drawn this Court’s attention to the fact that Articles 207 (2), 208 & 224 of the Code are inapplicable to “personal status litigation” by virtues of Article 19 of the Personal Status Litigation Act[99]. He has further submitted that the inapplicability of Article 224, which deals with a party’s non-compliance with order to submit document etc, leaves the Japan court with only a power to impose a non-penal fine for Third Party’s non-compliance with order to submit document under Article 225, but the fine is not more than 200,000 yen[100].

111.Mr Burns has referred this Court to the case of Shenzhen Futaihong Precision Industry Co Ltd and another v BYD Company Limited and others[101]. In that case, it was common ground that there were major differences between the discovery procedure in Hong Kong and the civil evidence gathering procedure in the Mainland.  Further, there was no procedure under the PRC legal system similar to that of the administration of interrogatories as available in Hong Kong. It was submitted for the plaintiffs in that case that the compulsory and more comprehensive discovery in Hong Kong, coupled with the interrogatories procedure constituted a juridical advantage for the plaintiffs and such advantage would be lost if the case were to be stayed in Hong Kong, in favour of the Shenzhen Court.

112.The then Deputy High Court Judge Au in the Shenzhen case has referred to the following observations of Lord Goff in the Spiliada case[102]:

“8) Treatment of ‘a legitimate personal or juridical advantage’

Clearly, the mere fact that the plaintiff has such an advantage in proceedings in England cannot be decisive. As Lord Sumnersaid of the parties in the Société du Gaz case, 1926 SC (HL) 13, 22:

‘I do not see how one can guide oneself profitably by endeavouring to conciliate and promote the interests of both these antagonists, except in that ironical sense, in which one says that it is in the interests of both that the case should be tried in the best way and in the best tribunal, and that the best man should win.’

Indeed, as Oliver L.J. [1985] 2 Lloyd's Rep. 116, 135, pointed out in his judgment in the present case, an advantage to the plaintiff will ordinarily give rise to a comparable disadvantage to the defendant; and simply to give the plaintiff his advantage at the expense of the defendant is not consistent with the objective approach inherent in Lord Kinnear's statement of principle in Sim v. Robinow, 19 R, 665, 668.

The key to the solution of this problem lies, in my judgment, in the underlying fundamental principle. We have to consider where the case may be tried ‘suitably for the interests of all the parties and for the ends of justice.’ Let me consider the application of that principle in relation to advantages which the plaintiff may derive from invoking the English jurisdiction. Typical examples are: damages awarded on a higher scale; a more complete procedure of discovery; a power to award interest; a more generous limitation period. Now, as a general rule, I do not think that the court should be deterred from granting a stay of proceedings, or from exercising its discretion against granting leave under R.S.C. Ord. 11, simply because the plaintiff will be deprived of such an advantage, provided that the court is satisfied that substantial justice will be done in the available appropriate forum. Take, for example, discovery. We know that there is a spectrum of systems of discovery applicable in various jurisdictions, ranging from the limited discovery available in civil law countries on the continent of Europe to the very generous pre-trial oral discovery procedure applicable in the United States of America. Our procedure lies somewhere in the middle of this spectrum. No doubt each of these systems has its virtues and vices; but, generally speaking, I cannot see that, objectively, injustice can be said to have been done if a party is, in effect, compelled to accept one of these well-recognised systems applicable in the appropriate forum overseas. In this, I recognise that we appear to be differing from the approach presently prevailing in the United States: see, e.g., the recent opinion of Judge Keenan in Re Union Carbide Corp. (1986) 634 F.Supp. 842 in the District Court for the Southern District of New York, where a stay of proceedings in New York, commenced on behalf of Indian plaintiffs against Union Carbide arising out of the tragic disaster in Bhopal, was stayed subject to, inter alia, the condition that Union Carbide was subject to discovery under the model of the United States Federal Rules of Civil Procedure after appropriate demand by the plaintiff. But in the Trendtex case [1982] AC 679, this House thought it right that a stay of proceedings in this country should be granted where the appropriate forum was SwiTerland, even though the plaintiffs were thereby deprived of the advantage of the more extensive English procedure of discovery of documents in a case of fraud. Then take the scale on which damages are awarded. Suppose that two parties have been involved in a road accident in a foreign country, where both were resident, and where damages are awarded on a scale substantially lower than those awarded in this country. I do not think that an English court would, in ordinary circumstances, hesitate to stay proceedings brought by one of them against the other in this country merely because he would be deprived of a higher award of damages here.

But the underlying principle requires that regard must be had to the interests of all the parties and the ends of justice; and these considerations may lead to a different conclusion in other cases.”

113.Judge Au was of the view that in the above passage Lord Goff was not laying down a generally applicable principle or proposition that, in every forum non conveniens case, the deprivation of a more extensively discovery procedure, or a higher level of recovery of damages in the local jurisdiction would not constitute a “legitimate personal or juridical advantage” and would never lead to the conclusion that the plaintiff would not be able to obtain substantial justice in the other forum.  Each case must be decided on its own circumstances.  In the Shenzhen case, Judge Au came to the conclusion that under Stage 2, the plaintiffs would potentially be deprived of juridical advantages, if the case in Hong Kong was to be stayed in favour of the Shenzhen Court, and such advantages included a more comprehensive and extensive compulsory discovery procedure and the right to administer interrogatories available to the plaintiffs in Hong Kong.

114.Mr Burns has referred to the “woeful inadequacy” of the disclosure made by the Husband so far in the Hong Kong Proceedings and the disclosure so far given by the Husband in the Japan Proceedings has been “patently deficient”.  I have to say that on reading the Husband’s affidavits, the impression one would get is that they were carefully drafted so as not to disclose any more information than necessary.  However, the Hong Kong Proceedings are still at a preliminary stage and there is no order and indeed no requirement at this stage for the Husband to file any Form E, or to make any full financial disclosure.  In the Japan Proceedings, the Husband was ordered on 25 June 2012 to make financial disclosure before the end of September 2012.  The deadline was not yet reached at the time of the hearing.

115.As Lord Goff has pointed out in Spiliada in the above quoted passage, there is a spectrum of systems of discovery applicable in various jurisdictions, ranging from the limited discovery available in civil law countries on the continent of Europe to the very generous pretrial oral discovery procedure applicable in the United States, and the English procedure lies somewhere in the middle of this spectrum.

116.As mentioned earlier, there is a procedure for a party to make an inquiry to the opponent under the Code under Article 163.  The Japanese Court also has power to make an order to produce documents even though it seems that the documents must be specifically identified.  Section 5 of the Code sets out quite detailed procedures for examination of documentary evidence.

117.In Hong Kong, the information and documents required initially to be disclosed by a party in matrimonial proceedings under the Practice Direction 15.11 are only those set out in the Form E.  Any further financial disclosure or filing of questionnaires will need to be subject to further direction and the approval of the court. 

118.The Wife’s expert Mr Kamamura has referred to excerpts in various books and commentaries written by various judges to support the Wife’s case that the current litigation procedures in Japan are insufficient to deal with people who do not voluntarily provide cooperation in the discovery process.

119.Ms Akeda on the other hand has said in her experience in practicing family law in Japan since 1984, the disclosure of documents and assets in Japan is not at all as problematic as the Wife’s expert has alleged.

120.Having considered what the experts have said about the provisions in the Code, I have no reason to doubt what Ms Akeda has said in view of her long experience in dealing with matrimonial litigation.  In the circumstances, I am not satisfied that the Wife will be deprived of a legitimate personal or juridical advantage if the divorce proceedings take place in Japan, rather than Hong Kong.

Stage 3 - The Balancing Exercise

121.The Wife is a Japanese national who has lived her whole life in Japan, and Mr Scott has submitted that her expectations as to the legal incidents of the dissolution of her marriage will be engendered by her life experience under the Japanese legal system.

122.The evidence indicated that she had expressed a preference for continuing to live in Japan as compared to relocating to Hong Kong.

123.Mr Scott has referred this Court to a passage of what Lord Denning MR said in MacShannon v Rockware Glass[103]. In the MacShannon’s case, the plaintiffs were Scotsmen who lived in Scotland all their lives.  They were injured in accidents in Scottish factories.  Instead of suing in Scotland, they tried to avail themselves of juridical advantages in England by suing in England.  Lord Denning said by way of dicta the following:

“ Now each of those reasons come to this: that he will do better under the English legal system. Is that a sufficient justification for his bringing his action in England? I think not. He has lived under Scots law all his life. He should take its Legal system – like his wife – for better or for worse. He cannot take it or leave it as it suits him best.”

124.I have already formed the view that there is no sufficient evidence that the Wife will be deprived of any personal or juridical advantage.  Even if there is, I find that the advantages of proceeding in Japan outweigh any juridical disadvantages that the Wife may suffer.

125.There has not been any stay of the Japan Proceedings, and there have been a number of hearings there already, with financial disclosure having already been ordered.  Allowing the Hong Kong Proceedings to continue will mean two parallel sets of divorce proceedings and multiplicity of applications.

126.Having considered all the circumstances, I am of the view that the Hong Kong Proceedings should be stayed, even if there were no jurisdictional arguments.

ORDER

127.My order is thus as follows:

(i)   The Petition issued herein on 20 May 2011 be dismissed for lack of jurisdiction;

(ii)  Alternatively, the divorce proceedings herein be stayed on forum non conveniens.

128.Costs normally follow the event.  I make an order nisi that the Petitioner shall pay the Respondent’s costs of and incidental to his application, to be taxed if not agreed, with certificate for two counsel.  The order shall be made final after 21 days, unless there is an application in writing to vary the same.

Mr Ashley Burns, SC leading Mr Robin Egerton, instructed by Withers, for the Petitioner

Mr John Scott, SC leading Ms Mairead Rattigan and Mr Alexander Tang, instructed by Oldham, Li & Nie, for the Respondent