Final Appeal No 20-2009 (civil)

IpsofactoJ.com: International Cases [2010] Part 8 Case 4 [CFA]


COURT OF FINAL APPEAL, HKSAR

Coram

M.L.

- vs -

Y.J.

JUSTICE KEMAL BOKHARY PJ

JUSTICE PATRICK CHAN PJ

JUSTICE R.A.V. RIBEIRO PJ

JUSTICE HENRY LITTON NPJ

SIR ANTHONY MASON NPJ

13 DECEMBER 2010


Judgment

Justice Bokhary PJ

  1. I am proud as well as happy to agree with Mr Justice Chan PJ’s judgment in its entirety. Like him, I would restore the decision reached by Mr Justice Lam in the High Court, which decision has the support of Mrs Justice Le Pichon JA who presided and dissented in the Court of Appeal. I of course respect the views taken by those who see it differently from us. But the public policy consideration engaged is the fundamental one that our judiciary adjudicates unless there is good reason otherwise. And I am firmly of the opinion that in order to preserve the effectiveness of our legal system and to do justice according to law, there is one course and one course only to take. It is to withhold recognition of the Shenzhen decree and proceed with this case in Hong Kong. No matter how soon time proves that to be true, it will be too late for the wife (unless subsequent events provide – as Chief Justice Li for the Court put it in Government of HKSAR v. Scott (2006) 9 HKCFAR 221 at p.222J – “wholly exceptional reasons” such as would persuade the Court to “re-open” this appeal).

    Justice Chan PJ

  2. This is an appeal by the wife (“the Wife”) in a matrimonial dispute. Two issues are raised for determination.

    • First, whether the Divorce Order dissolving her marriage with the husband (“the Husband”) granted by the Shenzhen Intermediate People’s Court on 14 November 2007 which took effect on 14 December 2007 (“the Shenzhen Divorce”) should be recognized in Hong Kong.

    • Second, if it is recognized, whether, notwithstanding such recognition, the Hong Kong Courts can still proceed with the Wife’s ancillary relief claim against the Husband which she had commenced in Hong Kong before the Shenzhen Divorce.

    Background of the parties

  3. Both the Husband and the Wife were born in the Mainland and are Chinese nationals. The Wife is a university graduate and worked initially as an English teacher. After changing to a textile factory and working there for a while, she started her own textile business. The Husband first worked as a public security officer in Shenzhen and later joined a state owned telecommunication company. They met in 1989 and got married in Shenzhen in 1992. The elder son was born in the same year.

  4. The Husband then became a director and general manager of another state owned enterprise, China Motion Telecom Development Company. As the company expanded to Hong Kong, he came to work here in 1993. The operation in Hong Kong was carried out by a company called CM Telecom International Ltd (“CMTIL”) which was listed on the Hong Kong Stock Exchange in 1997 and the Husband became its Vice Chairman.

  5. The Wife came to Hong Kong with the elder son in 1995 to join the Husband. After she came to Hong Kong, she still maintained her textile business. In 1999, the second son was born in Hong Kong. The children went to school here. In due course, they all acquired the right of abode as permanent residents.

  6. The parties kept two matrimonial homes: one in Shenzhen and the other in Hong Kong. The Husband stayed more in Shenzhen since his responsibilities required him to spend more time in the Mainland. The Wife and their sons lived in Hong Kong but commuted between Shenzhen and Hong Kong during the weekends. The Wife ceased her textile business in 2000 to be a full-time housewife looking after the children.

  7. In April 2004, the Husband left the telecommunication business and started to engage in real estate business both in Hong Kong and in Shenzhen. It is not disputed that when he left CMTIL, he was given substantial assets and his real estate business later turned out to be very successful.

  8. The family enjoyed quite a high standard of living and had accumulated substantial wealth both in Shenzhen and in Hong Kong.

  9. The marriage went wrong in 2002 when the Wife said she discovered that the Husband had an affair with another woman. In May 2004, the Wife suggested a divorce and the Husband agreed, but this was not implemented due to the objection of the elder son. However, on 23 March 2006, the Husband wrote to the Wife asking for a divorce. This apparently was agreeable to her.

    History of the proceedings

  10. On 18 May 2006, the Wife filed a petition for divorce in Hong Kong relying on misconduct on the part of the Husband and sought custody of the children and ancillary relief (“the Hong Kong proceedings”).  

  11. Two days later, the Husband issued a writ in the High Court against the Wife (“HCA 1088”) claiming declarations that she was holding the shares of five companies on trust for him. The Indorsement of Claim also sought injunctions to restrain the Wife from misappropriating, converting and/or misusing the assets and properties of these five companies and the sale proceeds of two properties (a unit on 9/F Union Park Centre and a flat in the Legend) and an account for the sale proceeds in respect of four other properties held in the name of the companies.

  12. On 15 June 2006, the Husband filed a Form 4 indicating his intention to defend the petition and advanced claims for custody and ancillary relief. Both parties applied for interim custody of the children.

  13. In HCA 1088, the parties reached an agreement for the net proceeds of the sale of two of the properties forming part of the subject matter of that action to be deposited in court by the Wife. Consent orders relating to the payments into court were made on 29 June 2006 and 14 July 2006. Pursuant to those orders, the Wife paid the net proceeds of sale into court amounting to $28.5 million.

  14. On 2 August 2006, the parties filed their respective financial statements (Form E). In the Form E filed by the Husband, it is stated that the payment into court in HCA 1088 was made “pending the determination of the ancillary relief application in the divorce proceedings”. He disclosed on oath two properties in the Mainland and various assets, properties and companies in Hong Kong with total net assets amounting to more than HK$72 million.

  15. On 3 August 2006, the Wife filed an application for ancillary relief, and also filed a notice of her intention to proceed with the application in the petition for a transfer of property order in respect of the Husband’s beneficial interest in two Hong Kong properties (“the Central Park property” and “the Waterloo Road property”) which were not the subject matter of HCA 1088 but which were disclosed in his Form E. The notice was registered in the Land Registry against those properties.

  16. The petition was amended by consent on 9 August 2006 to water down the Wife’s allegations of misconduct. On 11 August 2006, the Wife issued an application for maintenance pending suit for herself and the children. The Husband subsequently filed another Form 4 on 10 August 2006 indicating that he would not defend the amended petition.

  17. On 1 September 2006, a consent order for interim maintenance pending suit was made so that the Husband would pay the Wife and the children interim maintenance of HK$450,000 per month upon the parties entering into the consent summons in HCA 1088. This consent summons was filed on 7 September 2006 seeking an order for payment out of a sum that matched the interim maintenance ordered until further order. In a letter dated 6 September 2006 from the Wife’s solicitors to the court accompanying the consent summons, the Husband’s solicitors by countersigning on the letter confirmed that “both the Plaintiff and the Defendant agree that the 2 payments into court are part of the family assets”.

  18. On 15 September 2006, interim custody of the younger son was granted to the Wife. No interim custody order was made regarding the elder son. The restriction on the elder son from leaving Hong Kong was discharged by order of Hartmann J on 29 December 2006.

  19. On 23 October 2006, the Husband instituted the Shenzhen divorce proceedings (“the Shenzhen proceedings”). He also sought custody of the children and financial relief regarding the parties’ joint assets consisting only of eight Mainland properties and two Hong Kong properties amounting approximately to RMB 14.66 million. None of the assets, properties and companies disclosed in his Form E in the Hong Kong proceedings appeared in this Shenzhen document, apart from two Mainland properties and two Hong Kong properties. 

  20. The Wife was not informed of the Shenzhen proceedings until 13 November 2006, when the parties were supposed to attend a Financial Dispute Resolution (FDR) meeting. On that same day, a decree nisi of divorce was granted by consent in the Hong Kong proceedings.

  21. On 23 November 2006, an order was made by consent to transfer the Hong Kong proceedings from the District Court to the High Court. When the Husband indicated in December 2006 that he would not withdraw the Shenzhen proceedings, the Wife applied in the Hong Kong court on 18 January 2007 for an anti-suit injunction and for interim relief pending the substantive hearing. Lam J refused interim relief at the hearing and adjourned the substantive hearing to 7 May 2007.

  22. On 5 March 2007, on advice, the Wife withdrew the anti-suit injunction application in Hong Kong and applied for a stay of proceedings in the Shenzhen court. This stay application was unsuccessful, and her subsequent appeal to the Higher People’s Court of Guangdong Province was also unsuccessful.

  23. The Wife applied for leave by summons dated 30 April 2007 in HCA 1088 to pay out HK$7 million from the monies in court for the completion of the purchase of the flat in the Legend.

  24. On 4 May 2007, the Husband issued a summons for vacating the Wife’s notice for ancillary relief registered against the Waterloo Road property so that he could proceed with the sale of the property to reduce the mortgage on the Central Park property. His summons made no mention of the Shenzhen proceedings or that the Shenzhen court was asked to deal with the division of these two Hong Kong properties. In his supporting affirmation, he said he was not attempting to dissipate the matrimonial assets, that his ultimate objective was to preserve and maximize the value of the matrimonial assets and that this application was only for the interest of both parties.

  25. On 23 May 2007, the Wife was granted custody of both children, with reasonable access to the Husband by Mr. Recorder Yuen SC. The Wife’s and the Husband’s summonses were heard together before the Recorder who noted that the Legend would be part of the family assets and available for adjustment and distribution at the ancillary relief hearing. On 4 June 2007, leave was granted for the net proceeds of the Waterloo Road property to be applied by the Husband to partially pay for the loan secured by a mortgage on the Central Park property and for HK$7 million to be withdrawn from the funds in court in HCA 1088 towards the purchase of the Legend.

  26. The divorce case was heard in Shenzhen on 25 June, 6 August and 25 September 2007. The Wife took part in the proceedings and was legally represented. During the proceedings, as she did not have the requisite evidence, the Wife withdrew her request for an investigation into whether there had been concealment and transfer of properties by the Husband, indicating that she would reserve her rights.

  27. On 29 June 2007, Lam J ordered that the trial for ancillary relief be set down for fifteen days commencing 5 March 2008. Directions were also given for the filing of evidence.

  28. On 14 November 2007, the Shenzhen court dissolved the marriage and distributed the properties put forward by the Husband in the Shenzhen proceedings (including the two Hong Kong properties), and the Husband was ordered to pay to the Wife RMB 8.8 million within 30 days of the entry into force of the order. It also rejected the Husband’s claim for custody of the two children.

  29. On 3 December 2007, the Husband took out a summons in the Hong Kong proceedings seeking an order

    1. to stay the Wife’s ancillary proceedings permanently;

    2. to strike out her claim for ancillary relief;

    3. to vacate the hearing dates for an impending FDR meeting and for the trial;

    4. for a rescission, withdrawal and/or annulment of the decree nisi; and

    5. for a declaration that no decree nisi should be made absolute.

  30. Notwithstanding his stay and strike out application, the Husband participated in the FDR meeting that took place before HH Judge Chu from 10 to 14 and 20 December 2007. On its failure, Judge Chu ordered that the case be transferred back to the High Court.

  31. On 25 February 2008, the Wife filed a summons for the decree nisi to be made absolute.

  32. At the commencement of the trial on 5 March 2008, Lam J heard the Husband’s application as a preliminary issue and dismissed it. The first day of the hearing for ancillary relief took place on 10 March 2008. The Husband was legally represented in the morning but in the afternoon he withdrew his instructions to his legal representatives. He did not attend the rest of the trial.

    Orders made by Lam J

  33. On 14 March 2008, Lam J ordered that HCA 1088 be dealt with and heard at the same time as the ancillary relief. On 23 May, Lam J ordered that the decree nisi be made absolute and handed down judgment on ancillary relief. He held that the family assets not distributed by the Shenzhen court amounted to approximately HK$840 million, of which HK$66 million worth of assets were in Hong Kong and the rest being assets in the People’s Republic of China (“PRC”). He ordered that certain assets be transferred to the Wife, payment out of monies paid into court in HCA 1088 to her and struck out HCA 1088. At an adjourned hearing on 6 November 2008, at which the Husband did not attend, the judge ordered that the Husband pay the Wife a lump sum of approximately HK$378 million.

    Lam J’s reasons for refusing to recognize the Shenzhen Divorce

  34. Lam J first noted that recognition of the Shenzhen Divorce would mean that the marriage was effectively dissolved and that the Hong Kong court would not be able to grant any decree absolute.

  35. On whether recognition should be refused on the ground that it would “manifestly be contrary to public policy” under s.61(2)(b) of the Matrimonial Causes Ordinance, Cap 179 (“the MCO”), the judge applied the test in Hebei Import & Export Corporation v Polytek Engineering Co. Ltd (1999) 2 HKCFAR 111 (a case on the recognition of a foreign arbitral award), namely, whether recognition was “fundamentally offensive to that jurisdiction’s notions of justice” or “contrary to the fundamental conceptions of morality and justice”. He accepted that the hurdle for opposing recognition must be high.

  36. The judge accepted that the Husband had a legitimate reason in going to Shenzhen for a divorce, as he had concerns over whether a Hong Kong divorce would be recognized in Shenzhen. But having considered all the circumstances, he found that both parties had all along been litigating on the basis that two different sets of proceedings would deal with the different parts of the family assets and that to accede to the Husband’s application would in effect frustrate the parties’ common intention. He also found that the Husband had applied forensic tactics in the present case and this was against the fundamental notions of justice.

  37. The judge also considered the severe consequences to the Wife if recognition were given, namely, the order for maintenance pending suit being discharged, the Hong Kong court’s inability to grant ancillary relief, and the Wife having to face an entirely new battle and all the costs incurred so far would have been wasted. He took the view that even if the Husband was willing to make an undertaking to give consent to the Wife to re-open the Shenzhen proceedings to seek further distribution of the family assets, it did not mean it was not unconscionable for the Husband to manipulate the procedures to derail the Hong Kong ancillary relief proceedings at such a late stage.

    Orders made by the Court of Appeal

  38. On the Husband’s appeal, the Court of Appeal by majority (Cheung JA and Sakhrani J, with Le Pichon JA dissenting) reversed the decision of Lam J and upon certain undertakings given by the Husband, stayed the Wife’s ancillary relief proceedings, rescinded the decree nisi and declared that the marriage was validly dissolved by the Shenzhen Divorce and that Lam J’s ancillary relief orders shall not take effect. The court discharged the order for maintenance pending suit but ordered the Husband to pay $450,000 as maintenance for the children.

    The majority’s decision

  39. Cheung JA (and Sakhrani J agreeing with him) took the view that there was no “manipulation” on the part of the Husband because he had a legitimate reason to apply for a Shenzhen divorce. They held that there was also no common intention between the parties that they would litigate different assets in different jurisdictions and that the Husband had from an early stage the intention to pursue relief in Shenzhen.

  40. The majority was critical of the Wife in the way she attempted to stay the Shenzhen proceedings and having failed to do so, took part in those proceedings. She was also criticized for asking the Shenzhen court to adjudicate on the Husband’s hidden assets in Shenzhen but later withdrawing her claim and reserving her position.

  41. It was said that knowing that the Shenzhen judgment would put an end to her ancillary relief application in Hong Kong, she had failed to apply for a decree absolute in Hong Kong and to lodge an appeal against the Shenzhen judgment, and had she done so, she could have prevented it from being recognized in Hong Kong.

  42. The majority noted that she could still litigate in Shenzhen in respect of the substantial hidden assets not covered by the Shenzhen judgment and that the Husband had given an undertaking to provide maintenance for the two children of the marriage, and also to give any necessary consent to the Wife to re-open the Shenzhen proceedings to seek further distribution of the family assets that had yet to be dealt with.

  43. For these reasons, the majority was of the view that the Wife had failed to convince them that recognition would result in dire consequences such that public policy would require non-recognition of the Shenzhen Divorce.

    Le Pichon JA’s dissenting judgment

  44. The judge took the view that the exercise of the discretion for non-recognition required consideration of all the circumstances of the case and the consequences of recognizing the foreign decree from the perspective of the Wife and children and performing a balancing exercise in weighing the disadvantages of non-recognition to the Husband against the disadvantages to the Wife of recognizing the foreign decree.

  45. In relation to the Wife’s failure to appeal against the civil judgment of 14 November 2007, Le Pichon JA did not regard the errors on the part of the Wife’s legal advisors sufficient to preclude a court from considering the consequences of non-recognition and taking into account all the circumstances of the case, although they could go to the weight to be attached to the consequential effects.

  46. She noted the Wife’s inability to obtain ancillary relief in Hong Kong, and to secure effective enforcement of any Shenzhen award in relation to assets in Hong Kong because of the lack of means of any arrangement between the two places. Although the Husband had given the Undertaking, the reality was that his share of the liquid matrimonial assets in Hong Kong had already been exhausted and the Wife’s maintenance could not achieve its objective of countering her dire consequences. She found that the Husband was being merely opportunistic in seeking to oust the Hong Kong court’s jurisdiction to grant ancillary relief. She was of the view that such conduct was contrary to public policy, and that Lam J was correct in refusing to recognize the Shenzhen Divorce.

    Second issue

    – whether Hong Kong Courts still have jurisdiction to deal with ancillary relief after recognition of Shenzhen Divorce

  47. Of the two issues raised in this appeal, I think it would be more appropriate to dispose of the second issue first. This is because the main plank of the arguments on the first issue (i.e. whether the Shenzhen Divorce should be recognized or not) is based on the premise that if the Shenzhen Divorce is recognized, the Hong Kong Courts have no jurisdiction to entertain the Wife’s application for ancillary relief. Further, if the second issue is decided in favour of the Wife, it would not affect her position whether the Shenzhen Divorce is recognized or not.

  48. Mr Benjamin Yu SC, leading Ms Anita Yip for the Wife, contends that construing Part IX of the MCO in a holistic and purposive manner, it was not the intention of the legislation to oust the jurisdiction of the Hong Kong Courts to deal with matters of ancillary relief after recognition. There is, it is submitted, no inconsistency between recognition of an overseas divorce and the granting of a decree absolute to enable the Hong Kong Courts to deal with ancillary relief; and since the Hague Convention on the Recognition of Divorces and Legal Separations (“the Hague Convention”) does not require the recognition of overseas ancillary relief orders, it is consistent with the Hague Convention to construe s.61 as not affecting the Hong Kong Courts’ power to make ancillary relief orders even after a recognition of an overseas divorce. It would be, counsel argues, a derogation of the right of access to the court guaranteed by art. 35 of the Basic Law if the right to ancillary relief under the matrimonial laws is denied.

  49. In my view, such arguments clearly cannot be sustained. If an overseas divorce is recognized, this would only mean that the parties are not only as a matter of fact but also in the eyes of Hong Kong law no longer a married couple. There is then no marriage between them for the Hong Kong Courts to dissolve and no decree absolute for divorce can be made.

  50. Counsel argues that there is nothing to stop the Hong Kong Courts from granting a decree absolute for divorce and that the judge was wrong to rely on Seaford v Seifert [1968] P. 53 which is distinguishable from the present case. In that case, the husband died after a decree nisi for divorce was granted and before it was made absolute, but the Registrar upon the application of the wife made the decree absolute dating it back to the time before the husband’s death. The English Court of Appeal (applying Stanhope v Stanhope (1886) 11 P.D. 103) set aside the decree absolute holding that the Registrar had no jurisdiction to make the decree absolute or to backdate it and that the wife was still married to the husband when he passed away and thus entitled to his estate as his widow.

  51. In my view, while the facts and the main issue argued in that case (the rule of relation back) were obviously different, the reasoning behind the court’s setting aside of the decree absolute applies equally to the present case: that is, if at the time of the application for a decree absolute, the subject matter of the marriage had disappeared, there was nothing to dissolve by the decree.  

  52. It is true that Part IX of the MCO does not make any express provision ousting the court’s jurisdiction to deal with ancillary relief after recognition of an overseas divorce. But this is the necessary effect of s.25 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”). By virtue of s.25(1)(a), when a petition for divorce has been presented, proceedings for ancillary relief under ss. 3, 4, 5, 6 or 6A may be begun, but under s.25(1)(b), no ancillary relief orders made under these provisions shall take effect unless a decree absolute has been made. Since the court cannot grant a decree absolute, it would be pointless to engage in any resolution on the question of ancillary relief.

  53. There are authorities (dealing with English statutory provisions similar to those in the MPPO) to support the proposition that recognition of an overseas decree of divorce will have the effect of barring the court’s jurisdiction to make ancillary relief orders. In Torok v Torok [1973] 1 WLR 1066, Ormrod J stated at 1068 (paragraph G & H):

    .... And so if this marriage is dissolved by the Hungarian court, there will be no court which has jurisdiction to deal with the house .... and there will be no court which has any effective jurisdiction to order maintenance for the wife ....

    In Joyce v Joyce [1979] Fam. 93, Lane J said at p.97:

    The jurisdiction of this court to grant the relief sought by the petitioner depends upon whether or not this court will recognize a decree of divorce pronounced and made absolute in a court of competent jurisdiction in .... Canada. If recognition is given to the Canadian decree, this court cannot adjudicate because there would then be no subsisting marriage to be dissolved.

    See also Quazi v Quazi [1980] AC 744 at 785, per Ormrod LJ to similar effect.

  54. The Law Commission in the UK in its Working Paper No. 77 was concerned with the possibility that a party affected by the recognition of a foreign divorce may be left with no financial relief noting that: “there is a gap in the law where a marriage is terminated by foreign proceedings in which no financial order is made, since our courts have no power to grant financial relief in such a case.” Upon its recommendation, an amendment was made in 1984 to the English Matrimonial Causes Act 1973 giving specific power to the courts to make ancillary relief orders in such situations. This approach is however not adopted in our MPPO.

  55. It is also true that the Hague Convention does not require recognition of financial orders (see the second part of art. 1). But I do not think that this can further Mr Yu’s argument. The principal object of recognition under the Hague Convention is the dissolution of marriages (by divorces and legal separations). It is simply not concerned with what the court granting recognition can or cannot do upon recognition.

  56. I also do not think there is any question of contravention of art.35 of the Basic Law. The right of access to the court cannot be exercised without a subsisting subject matter for enlisting the assistance of the court. If the court declares that the marriage between two parties no longer subsists as a result of an overseas divorce, there can be no marriage to be dissolved and in the absence of any express provision in the statute extending the court’s jurisdiction to such situation, as in the UK 1984 Act, the court has no power to entertain applications for ancillary relief.

    First issue

    – whether the Shenzhen Divorce should berecognized

  57. I now turn to the first issue. The relevant statutory provision is Part IX of the MCO. It was enacted in 1972 to implement the Hague Convention (which was concluded on 1 June 1970) to which the United Kingdom was a Contracting State. The Ordinance including this part was adopted as part of the laws of the Hong Kong SAR after 1997. As a matter of fact, on 3 June 1997, the PRC had given notification to the effect that the Hague Convention applies to the Hong Kong SAR.

    Section 55 or section 59 of the MCO

  58. Section 55(1) of the MCO provides that sections 56 to 58 shall have effect, subject to section 61, as respects the recognition in Hong Kong of the validity of overseas divorces (and legal separations). “Overseas divorces” is defined in s.55(2) to mean divorces which

    1. have been obtained by means of judicial or other proceedings in any country outside Hong Kong; and

    2. are effective under the law of that country.

  59. Doubts were expressed by Lam J (paras 38 to 42) as to whether s.55 is applicable since the Shenzhen Divorce was obtained in Shenzhen which cannot be regarded as a country outside Hong Kong, both Shenzhen and Hong Kong being different parts of the same country. Counsel before the judge did not address in detail on the applicability of s.55 to PRC divorces. The judge, having expressed his doubts, assumed that it was applicable, but added that even if it was not, PRC divorces could still be recognized under the common law principle of recognition which was preserved under s.59. No issue was taken before the judge and this was not discussed by the Court of Appeal. 

  60. Before this Court, Mr Yu suggests that the common law as preserved by s.59 and not s.55 applies to PRC divorces. However, he argues that it does not make any difference to his case whether PRC divorces are recognized under s.55 or the common law. Mr Michael Thomas SC, leading Mr Paul Shieh SC and Mr Jeremy Chan for the Husband, submits that the question whether the power of recognition is based on s.55 or the common law has to be resolved because it is his case that the scope of public policy as a ground for refusing recognition under s.61(2)(b) is not the same as that under the common law, a point which will be dealt with in the later part of this judgment.        

  61. Clearly, Shenzhen (and indeed any other part of the Mainland) cannot be regarded as another “country” in relation to Hong Kong. But in my view, if we adopt a purposive construction (as we should) of the relevant provisions of Part IX, it is clear that PRC divorces fall within the ambit of s.55 and are not governed by the common law as preserved by s.59. This is because what is contemplated by the Hague Convention and hence Part IX are divorces granted not only by the courts of another country but also of another place outside Hong Kong exercising a different jurisdiction in judicial proceedings and/or operating under a different judicial system than that in Hong Kong.

  62. This construction is supported by the following provisions of the Hague Convention and Part IX:

    1. art.1 which refers to divorces which “follow judicial or other proceedings”; art.15 which makes reference to a Contracting State having “two or more legal systems applicable”; and art.23 which provides for the situation of a Contracting State having “more than one legal system” in matters of divorce.

    2. s.55(2)(a) itself which refers to “judicial or other proceedings” in any country outside Hong Kong.

    3. s.56(3) which emphasizes the different systems of law rather than different political entities: territories within a country but with different systems of law are treated as separate “countries”.

    4. s.62(1) (which has no direct application to Hong Kong after 1997) which defines “country” to include the different colonies and dependent territories of the United Kingdom. This indicates that different parts of the United Kingdom are to be treated separately for the purpose of Part IX, since each of them is exercising a different jurisdiction, although none of them is a different country.    

    This construction is also consistent with paragraph 19 in Schedule 8 to the Interpretation and General Clauses Ordinance, Cap. 1, which provides that any reference to a foreign country (or to similar terms or expressions) shall be construed, among other things, as a reference to any place other than the HKSAR, depending on the contents of the relevant law.

    Ground for refusing recognition – s.61

  63. It is not in dispute that the Shenzhen Divorce falls within the ambit of s.56 since the Husband was at the date of commencement of the Shenzhen proceedings a national of the PRC and also habitually resident in Shenzhen. That being the case, the Shenzhen Divorce shall be recognized unless it falls within the exceptions in s.61. We are not concerned with the exceptions in s.61(1) (which deals with the situation where there was no subsisting marriage) or s.61(2)(a) (which refers to two situations where there was no sufficient steps taken to notify the other party or no opportunity to take part in the overseas proceedings). Section 61(2)(b) confers upon the court a power to refuse to recognize an overseas divorce “if, and only if – its recognition would manifestly be contrary to public policy”. This is the ground relied on by the Wife.

  64. The main disputes in this appeal thus involve an examination of what is the scope of public policy under the statute and how this is to be applied to the facts of the present case.

    Scope of public policy under the statute

  65. Prior to the adoption of the Hague Convention, at common law, the courts retained a discretion in refusing to recognize a foreign divorce on the ground of public policy “when it offends against our ideas of justice” (Gray (otherwise Formosa) v Formosa [1963] P. 259 at 269, Lord Denning MR) and a foreign divorce would be recognized “provided that no substantial injustice according to our notions has been committed” (Salvesen or von Lorang v Administrator of Austrian Property [1927] AC 641 at 659, Viscount Haldane) or “it must not offend against English ideas of substantial justice” (Salvesen or von Lorang, at 663, Viscount Dunedin). 

  66. Following the enactment of Part IX after the adoption of the Hague Convention into domestic legislation, the court’s power to refuse recognition is contained in s.61 described in the heading to the section as “exceptions from recognition”. The scope of public policy as a ground for refusal to recognize an overseas divorce has to be considered in the light of the context of Part IX which includes the purpose of the Hague Convention and the background to its implementation.

  67. In this connection, I would make the following observations.

    • First, the object of the Hague Convention is to “facilitate the recognition of divorces and legal separations” and to avoid “limping marriages” where a divorce is recognized as valid in one jurisdiction but not in another. This would have adverse effects on the status not only of the person involved but any spouse and children to a new marriage.

    • Secondly, while it is desirable that international comity should be achieved as much as possible, it is not intended that there should be completely no supervision at all by the recognizing state and several grounds are provided in the Hague Convention to enable the recognizing state to do so (see e.g. arts 6 to 10).

    • Thirdly, it can be noted that under s.56(1) of the MCO, recognition of an overseas divorce is mandatory if the criteria are met. Further, under s.61(2), by the use of the words “if, and only if”, it is clear that the power to refuse recognition can only be exercised on the limited grounds as set out in that section.

    • Fourthly, there is a need (as the UK Law Commission noted when recommending legislation in the UK to implement the Hague Convention) to incorporate the equivalent of article 10 (refusal on public policy ground) in the implementing statute, “lest cases should arise in which our courts would be forced to recognise a foreign decree in circumstances in which it would seem unconscionable to do so” (Law Com No 34, para.11). See also paragraph 35 of the Explanatory Report by Messrs Bellet and Goldman accompanying the draft to the Hague Convention.

  68. Various authorities have been cited during argument. I do not propose to deal with each of them as the Court of Appeal did. Suffice it to say that care must be exercised in making use of these decisions to extract principles of general application:

    • first, these cases are inevitably case specific;

    • secondly, many of them were not decided on the ground of public policy although this further ground was briefly discussed as also relevant; and

    • thirdly, some of these cases were decided before the English 1984 Act was enacted to provide the English courts with power to deal with ancillary relief even after recognition of a foreign divorce and it was said that the courts were then more ready to refuse on the ground of public policy.  

  69. Construing s.61(2)(b) purposively and in context, the following points can be made:

    1. Bearing in mind the objectives of the Hague Convention, the desirability of international comity and the wording of Part IX, there is an obligation on the part of the court to recognize an overseas divorce unless to do so is manifestly contrary to public policy and the court’s power should be exercised only sparingly and in truly exceptional cases. While at common law, it was sometimes believed that the court had a wide discretion in this matter (e.g. Wood J in Chaudhary v Chaudhary [1985] Fam. 19, 29; Smellie J in Wheeler v Wheeler [1997] CILR 362, 377), it would seem that in the context of this provision, the hurdle now is much higher than it was.

    2. The court would only refuse recognition of an overseas divorce if to do so would cause substantial injustice. In practice, I see no real difference between this test and what was propounded in Hebei Import & Export Corporation v Polytek Engineering Co. Ltd (1999) HKCFAR 111: whether recognition is “so fundamentally offensive to that jurisdiction’s notions of justice that, despite its being a party to the Convention, it cannot be reasonably be expected to overlook the objection” (per Bokhary PJ at 123H-I) or “contrary to the fundamental conceptions of morality and justice of the forum” (per Sir Anthony Mason NPJ at 139F). In this connection, the word “manifestly” in s.61(2)(b) would, in my view, mean no more than “plainly” or “obviously”.

    3. In considering the exercise of such power, the court is not confined to examining what happened at the place where the divorce was granted. The divorce was prima facie validly granted by a competent court in the overseas jurisdiction and any procedural injustice regarding lack of sufficient notice or opportunity to be heard are separately covered by s.61(2)(a). Obviously all relevant circumstances should be considered and this must include the conduct of the parties and the consequences of recognition or refusal to them. Thus recognition would be refused where one party is taking unfair tactical advantage over the other with the result that the other party is deprived of his or her legitimate financial relief upon divorce.

    4. That the court will consider the conduct of the parties and the consequences of recognition or non-recognition on them can be illustrated by cases such as Joyce v Joyce [1979] Fam 93 (husband obtained foreign divorce to minimize wife’s entitlement to financial relief); Newmarch v Newmarch [1978] Fam 79 ; Wheeler v Wheeler [1997] CILR 362 (parallel proceedings and recognition would have adverse financial effect on wife); Chaudhary v Chaudhary [1985] Fam 19 (recognition would deprive wife of right to obtain financial relief) and Golubovich v Golubovich [2010] EWCA Civ 810 (wife not deprived of financial relief) .

  70. Relevant to the exercise of this power, it is to be noted that although Lord Scarman in Quazi v Quazi [1980] AC 744, 826 (which was not decided on the public policy ground) considered this as an exercise of discretion (which an appellate court would not likely interfere unless it was clearly wrong), Thorpe LJ (with whom the other members of the court agreed) in Golubovich v Golubovich (a case decided on the public policy ground) expressed the view that this involves a proportionate judgment by giving proper weight to all relevant factors and circumstances (paras 68 and 69). Subject to my observations in the preceding paragraphs, I would prefer such an approach.

    Whether the Shenzhen Divorce should be recognized

    The Husband’s conduct

  71. The majority of the Court of Appeal accepted, as the judge did, that the Husband had a legitimate reason to commence divorce proceedings in Shenzhen since according to him, he had, acting on legal advice, entertained at least a doubt whether a divorce granted in Hong Kong would be recognized in Shenzhen. That may be the case. But it would be going too far to hold (as Cheung JA held in para. 140) that “there being a legitimate reason for the husband to seek the divorce in Shenzhen, this must override any suggestion of ‘manipulation’ on the part of the husband.” In my view, it is still necessary to examine what the Husband did before and after he had been so advised. From the evidence before the court and taking an overall view of the whole matter, with respect to the majority of the Court of Appeal, I would come to the conclusion that manipulation was exactly what the Husband wanted to achieve and had achieved in the present case. I shall seek to explain the reasons for this conclusion as follows.

  72. Divorce was what the Husband suggested to the Wife in a letter on 23 March 2006 and to this the Wife agreed. If he had entertained any doubt about the recognition of a Hong Kong divorce in Shenzhen, he could easily have taken steps to institute proceedings in the Mainland (as he later did) or asked the Wife to start proceedings in Shenzhen. This may or may not be held against him, depending when he was so advised. But it is an entirely different story since, after he had been advised that there might be a problem in recognizing a Hong Kong divorce in Shenzhen (which must have been well before he decided to commence the Shenzhen proceedings), he continued to take part in the Hong Kong proceedings and what is more, had deliberately led the Wife to believe that he would do so.  

  73. From the very beginning, what he did in Hong Kong gave the clearest impression that he would litigate the ancillary relief issue in Hong Kong. First, two days after the Wife had commenced divorce proceedings in Hong Kong on 18 May 2006, he immediately started HCA 1088 and obtained injunctions which effectively froze all the Hong Kong land properties and five companies which the Wife could lay her hands on. Sale proceeds of two of the properties were by consent paid into court and were agreed to be regarded as family assets pending the determination of the ancillary relief applications in the divorce proceedings. It was also agreed that out of the proceeds paid into court, $450,000 per month would be paid out as maintenance for the Wife and the children until further order. Secondly, this impression was reinforced by the Husband filing Form E which he affirmed for the purpose of the ancillary relief claim. In his form E, he purported to disclose all his properties not only in Hong Kong but also those in the Mainland. This shows, at least on the face of it, an intention on the part of the Husband to deal with all his assets in the Hong Kong proceedings (although it was clear from other evidence filed by him at a later stage that his disclosure in this Form E was plainly not complete). Thirdly, on 4 May 2007, well after he had commenced the Shenzhen proceedings, he applied to the Hong Kong court to allow him to get payment out of the sale proceeds of one Hong Kong property to reduce his indebtedness in respect of another Hong Kong property, assuring the court on oath that this was not an attempt to dissipate the matrimonial assets and that this was done to preserve and maximize the value of the matrimonial assets to the interest of both parties. But preserving these assets for what purpose? In my view, it must be for the purpose of the pending determination by the Hong Kong court on the question of ancillary relief.

  74. So while it might not be entirely appropriate to say there was a “common intention” to litigate in Hong Kong, what the Husband did as discussed above must have led everyone including the Wife to believe that the ancillary relief issue would be litigated in Hong Kong. Notwithstanding his alleged doubt that the Hong Kong divorce might not be recognized in Shenzhen, he took active part in the Hong Kong proceedings. Presumably the advice given to him would also include advice that there might be difficulty in enforcement since there was no reciprocal arrangement on enforcement of court orders between the two places.

  75. That unfortunately is not the end of the story. It is significant to note that in his Form E filed on 2 August 2006, he stated on oath that he had or had had 9 Hong Kong properties, 6 companies either registered in Hong Kong or in the BVI, shares in CMTIL and 2 properties in Shenzhen. The total assets were in the region of $72 million. Yet when he started divorce proceedings in Shenzhen two months later on 23 October 2006, all that he disclosed as available assets for division upon divorce were 8 properties in Shenzhen (6 of which were not disclosed in his Form E) and two Hong Kong properties (which he had disclosed in his From E and which did not form part of the subject matter of HCA 1088). No mention was made of any companies anywhere or any shares he was holding. The total assets were said to amount to RMB 14 million, which was only about one-fifth of what he stated in his Form E.

  76. What was his intention in leaving such huge discrepancies in these formal court documents? I find no acceptable basis for believing that he had in mind that the parties would only contest the Mainland properties in Shenzhen and the Hong Kong properties in Hong Kong. This is because in his Shenzhen document, he also mentioned two Hong Kong properties and in his Form E, he mentioned two Shenzhen properties. The only possible conclusion one can draw is that he was either trying to deceive the Shenzhen court and keep them in the dark about his other properties or was contemplating to do something at a later stage. Which it was can be known only to himself. But any claim by him that he would continue with the Hong Kong ancillary relief proceedings is, to say the least, extremely suspect and this is also inconsistent with what he put forward as the reason why he sought a Shenzhen divorce, namely, his alleged doubt that a Hong Kong divorce (and what followed) might not be recognized in Shenzhen. Besides, his From E was clearly untrue insofar as he failed to disclose his Mainland properties.

  77. Having commenced Shenzhen divorce proceedings, he did not inform the Wife of those proceedings until 3 weeks later on 13 November 2006 when they attended the Hong Kong court for an FDR. There is no apparent legitimate reason why he should have concealed that from her.

  78. What the Husband did after he had obtained the Shenzhen Divorce is also telling against him on what he had really intended to do all along. The Shenzhen Divorce was granted on 14 November 2007. The deadline for the Husband to appeal was 28 November but the Wife had up to 14 December 2007 to lodge her appeal. But almost immediately after the period for him to appeal expired, but before the period for the Wife to appeal had run out, on 3 December 2007, he applied to the Hong Kong court to stay the Wife’s ancillary relief proceedings and to strike out her application for ancillary relief. In other words, as soon as he obtained the Shenzhen Divorce, he took immediate steps to put an end to the Wife’s ancillary relief proceedings. If he had a doubt that a Hong Kong divorce might not be recognized in the Mainland, now that he had obtained a Shenzhen divorce, that would have put an end to such doubt. There was no need to put an end to the Hong Kong ancillary relief proceedings, unless of course that was his real objective in seeking a Shenzhen divorce. 

  79. It is also important to note that while in Hong Kong, he was facing question after question and having to make disclosure after disclosure about his assets, what he had disclosed before the Shenzhen court remained more or less the same as those disclosed by him in his initial court document filed in that court. No criticism is levelled at the procedure in the Shenzhen process (and I shall deal with the suggestion that the Wife could apply to re-open the case in Shenzhen at a later stage). What Lam J ultimately found at the trial as the Husband’s true assets (amounting to HK$840 million) might not truly reflect the real position because the Husband deliberately refrained from attending court or instructing lawyers to represent him. But the huge difference does suggest that there were genuine reasons for the Husband to avoid if he could the detailed and meticulous scrutiny of the Hong Kong court. Faced with such evidence, one simply cannot escape the conclusion that he was indeed manipulating the procedures by taking advantage of the differences in the two systems to his own benefit whenever it suited his own purpose.   

    The Wife’s conduct

  80. What about the Wife? The Wife was criticized for taking part in the Shenzhen proceedings. Very shortly after she was informed of the Shenzhen proceedings, she applied for an anti-suit injunction in Hong Kong to stop the Husband from continuing with the Shenzhen proceedings. Upon advice, this was withdrawn, only to be followed by an application by her to the Shenzhen court to stay those proceedings. When this failed, she appealed but was unsuccessful. She then had to participate in those proceedings because the Husband was also claiming for the custody of the children. It is true that at one stage, Lam J did indicate to her that she could always go back to the court when it was necessary to do so. But one can rhetorically ask: when and for what purpose?    

  81. The Wife was also blamed for not applying for an expedited decree absolute. And had she done so, she could effectively have avoided the predicament in which she now finds herself. It is accepted that with the benefit of hindsight, she should have done that. But it has to be pointed out that as a result of the Husband’s conduct, she had, until the Husband applied to stay her proceedings in Hong Kong, all along been labouring under the impression that he would continue to take part in her ancillary relief application. And even if she did apply for a decree absolute at that stage, the matter would most likely have been referred to the judge to be considered together with the Husband’s application to stay and to strike out.  

  82. It was also said that she should have appealed against the Shenzhen order made on 14 November 2007 and that would have delayed the Husband’s reliance on the Shenzhen Divorce and meanwhile she could have obtained a decree absolute in Hong Kong. First, she could not be blamed for agreeing to a divorce in Shenzhen – the marriage had broken down irretrievably and both wanted a divorce. Secondly, when the Husband applied to stay her ancillary relief proceedings, the time for her to appeal against the Shenzhen order had not expired. Thirdly, from what counsel for the Husband disclosed at the appeal hearing before this Court as to how the division of the family assets was done before the Shenzhen court made the order, and the fact that she had reserved her right to re-open her case on the Husband’s hidden assets, there was hardly any ground for appeal against that Shenzhen order. In any event, as Le Pichon JA said, any error of judgment on the part of her lawyers, no doubt a factor which the court should take into account in the exercise of its power, is insufficient to preclude the court from holding in her favour if all the circumstances demand it.

    Consequences of recognition or non-recognition

  83. It is not argued, at least not strongly, that there would be any prejudice to the Husband’s legitimate interests if the Shenzhen Divorce was not recognized in Hong Kong. There is no question of any “limping marriage” in the present case (the evil the Hague Convention wanted to avoid) – if he had not applied for a stay of the Wife’s proceedings, the court would no doubt in due course make the decree absolute.

  84. On the other hand, it is submitted by Mr Yu that the Wife would be deprived of a substantial part of her ancillary relief entitlement if the Shenzhen Divorce is recognized with the result that her ancillary relief application would be frustrated. In resisting this submission, it is argued by Mr Thomas that she would not suffer any detriment since she could always apply to the Shenzhen court to re-open her case on ancillary relief.

  85. Before the Shenzhen court, the Wife alleged that there were hidden assets belonging to the Husband which he had not disclosed. But since at that stage she could not adduce the relevant evidence, she had to withdraw that claim and indicated that she would reserve her right to re-open her case. It is not disputed that under the PRC Divorce Law, she could do so. The Husband also gave an undertaking to the Hong Kong court that he would agree to the Shenzhen Intermediate People’s Court dealing with the matrimonial assets set out in the undertaking and to abide by any orders of that court.

  86. To this argument, a number of points can be made:

    1. although the PRC Divorce Law allows for a litigant to re-open his or her case on discovering that there are matters concealed from the court, it is not clear how this could be done; whether this could be done if this issue was taken but later withdrawn; whether she could do so if there was no appeal against the original order; and what evidence would be acceptable for that purpose; 

    2. the properties set out in the Husband’s undertaking which he has agreed to let the Shenzhen court deal with are all Hong Kong properties and that list is not even complete in the light of what he had disclosed in his Form E’s and other affirmations. There is nothing to suggest that he would facilitate a re-opening of the Wife’s case on the Mainland properties, hidden or otherwise;

    3. the value of this undertaking is rather suspect and the Husband’s veracity and sincerity are very much in doubt. This is because the Husband had so far not honoured his promise made in the same undertaking to the effect that he would pay $450,000 each month for the maintenance of the children. His application to the court to vary this undertaking failed because he had not purged his contempt of failing to comply with the terms of the undertaking. The present position is that the money in court has run out and the Husband has not paid maintenance for the children;

    4. it is not clear whether the evidence obtained by the Wife could be used at any re-opening of her case in Shenzhen. At the hearing before Lam J in the absence of the Husband, a lot of matters were raised which required cogent explanation by the Husband and in the absence of any explanation, the court is entitled to draw an adverse inference against the Husband. It is not clear whether this is also the approach in the Shenzhen court. To take one clear example, it was alleged that the Husband had received substantial assets including shares which were transferred to some fictitious persons with names (楊輝 and 何東) which bore some similarities with those of the Husband and his partner and that enquiries at the Mainland authorities resulted in an answer that the registration documents had somehow mysteriously gone missing and that the identity card numbers of these persons did not match with the official records. These matters do legitimately raise grave concern over whether the Wife could effectively re-open her case in the Shenzhen court even if she wanted to do so. In these circumstances, I do not think I can attach any substantial weight to the possibility of her being able to do so; and

    5. it must also be noted that there is no arrangement between Shenzhen and Hong Kong for mutual enforcement of judgments. How she can enforce any orders in her favour remains in doubt.

  87. I should also mention that HCA 1088 still stands dismissed by Lam J. In the orders made by the majority of the Court of Appeal this was not referred to. Thus, as a result of the recognition of the Shenzhen Divorce, her position is extremely vulnerable: the Hong Kong properties are frozen by HCA 1088 which she cannot revive, she being the defendant and it is doubtful whether the Husband would still accept that the action concerns family assets; she cannot enforce the Shenzhen order in Hong Kong; and the children are not paid maintenance.

  88. That being the case, I am not able to agree that the Wife had not suffered and will not suffer any substantial detriment by being deprived of the opportunity to litigate in Hong Kong her application for ancillary relief and to obtain a fair share of her entitlement under the Hong Kong matrimonial regime. This is a direct consequence not of the divorce, but of the recognition of such a divorce as a result of the Husband manipulating the proceedings.   

    Conclusion

  89. I am conscious of the obligation under Part IX to recognize an overseas divorce unless to do so is manifestly contrary to public policy. I am also aware of the high hurdle facing the Wife in resisting recognition. However, having regard to all the circumstances of this case, I am more than satisfied that recognition of the Shenzhen Divorce would cause substantial injustice to the Wife and that the power of the court under s.61(2)(b) should be exercised by refusing recognition. I would uphold the decision of the judge (which has the support of Le Pichon JA) in refusing recognition. I would allow appeal and restore the orders made by Lam J. 

    Justice Ribeiro PJ

  90. I agree with the judgment of Mr Justice Litton NPJ.

    Justice Litton NPJ

    Introduction

  91. This case concerns the matrimonial affairs of two nationals of the People’s Republic of China (“PRC”). The husband was born in Shenzhen in 1963. The wife was born in Hunan Province in 1964. For some years the husband worked as a public security officer in Shenzhen and in state-owned enterprises until he branched out in business on his own. The wife owned and operated a textile business in Shenzhen at one time.

  92. They were married in Shenzhen in April 1992. They have two sons: The elder born in Shenzhen and the younger in Hong Kong. In the mid-1990s the family came from Shenzhen to Hong Kong and have since then maintained two matrimonial homes: One in Hong Kong and the other in Shenzhen. Since about 2003 the husband has resided mainly in Shenzhen, where he has close relatives and much involvement in business.  The wife and the two children have lived mainly in Hong Kong. The children attended school here. The wife and children went across to Shenzhen most weekends, until the breakdown of the marriage around the beginning of 2006.

  93. What led to the issues calling for resolution by this Court is this: In May 2006 the wife instituted divorce proceedings in Hong Kong; five months later the husband issued proceedings in Shenzhen; the Shenzhen Court granted a decree on 14 November 2007 dissolving the marriage; this became effective under PRC law on 14 December 2007. By this time the Hong Kong decree nisi of divorce had been granted, but not made absolute. It is the impact of this Shenzhen decree on the Hong Kong proceedings which lies at the heart of this case.

    The Hong Kong proceedings

  94. On 18 May 2006 the wife lodged her petition in Hong Kong, in which she sought dissolution of the marriage, custody of the children, and ancillary relief. 

  95. Two days later the husband issued a writ (HCA 1088 of 2006) in which he claimed inter alia that shares held by the wife in her own name in four private companies were held in trust for his sole benefit. He sought injunctions to restrain the wife from dealing with the properties under her control. Two of those companies, as it happened, had entered into contracts to sell the properties they owned, so the parties agreed that the proceeds of those sales, amounting to $28.5 million, should be lodged in court and that interim maintenance for the wife and the two children, at $450,000 per month, should be paid out of the money in court.

  96. Another of the four companies in HCA 1088/2006 had entered into a contract to purchase a luxury flat in a development called “The Legend”. More will be said about this property later on.

  97. On 15 June 2006 the husband lodged his Form 4 indicating his intention to defend the suit and advanced claims for custody of the children and ancillary relief.

  98. There were numerous applications to court made by both sides concerning a variety of matters, supported by lengthy affidavits, many focusing on custody and access to the children and maintenance for the wife and the children. The matter was transferred from the District Court to the High Court. Every step was bitterly fought. There were orders made for interim maintenance pending suit, interim custody of the younger son and for payment out of various sums from the $28.5 million lodged in court in HCA 1088/2006. Inevitably, considerable costs were incurred.

  99. On 23 October 2006 the husband commenced proceedings in the Shenzhen Intermediate People’s Court, seeking orders for the dissolution of the marriage, division of property and custody of the children. He did this, he said, on the advice of his lawyers, on the basis that as both parties were PRC nationals, a Hong Kong decree might not be recognized in the Mainland: The trial judge (Lam J) said that, in this regard, the husband could not “be criticized for applying for a PRC divorce” (§57). 

  100. From that time onwards, there were parallel proceedings in the two jurisdictions.

  101. On 18 January 2007, the wife applied for a permanent injunction (an “anti-suit injunction”) to restrain the husband from proceeding further with his suit in Shenzhen on the ground that the continuation of that suit would be “oppressive and vexatious” and would “cause irreparable damage” to her (§34 of her supporting affirmation). This was followed by an application for a temporary injunction (referred to by counsel as a Hemain injunction, so named after the case of Hemain v. Hemain [1988] 2 FLR 388), which was heard by Lam J on 24 January 2007: There the husband was categorized by the wife’s counsel as a “vexatious litigant” in starting the Shenzhen proceedings. Lam J adjourned the matter to a later date.

  102. On 5 March 2007 the wife withdrew her application for an anti-suit injunction; a few weeks later she applied in Shenzhen to stay the husband’s proceedings there. This was dismissed. An appeal in May 2007 against the Shenzhen Intermediate People’s Court’s order of dismissal also failed.

  103. In the meanwhile, back in Hong Kong, there were further interlocutory matters being dealt with by the courts. Two require mention:

    1. A flat in Waterloo Road in the husband’s name. The wife’s application for ancillary relief had been registered against the title.  The husband applied to vacate the registration, to enable him to proceed with the sale of the flat, upon his undertaking to apply the proceeds of sale to reduce the mortgage loan on another property in Kowloon, the “Central Park” property, which would then enhance the pool of assets available for eventual distribution, when the respective parties’ applications for ancillary relief came to be considered. Recorder Rimsky Yuen SC acceded to the husband’s application in June 2007.

    2. The Legend (referred to in §96 above). This was a luxury flat at Jardine’s Lookout for which the wife had paid a deposit when the husband issued his writ in HCA 1088/2006. By May 2007 the time for completion of the sale was near. The wife sought leave to withdraw $7 million from the fund in court, intending to raise the balance of the purchase price on mortgage, paying the interest on that mortgage from the $450,000 monthly maintenance to be drawn from the same fund. This was likewise allowed by Recorder Rimsky Yuen SC in June 2007.

  104. After much argument and the lodging of affidavits (by this time the wife had lodged 17 affirmations) the court (on 29 June 2007) gave directions for the substantive hearing on ancillary relief, with 15 days reserved, to commence in March 2008. In the meanwhile the parties were directed to attend mediation sessions in December 2007: These sessions failed.

    The Shenzhen proceedings

  105. The hearing of the Shenzhen proceedings commenced on 25 June 2007, and continued on 6 August and 25 September 2007. The wife took part, represented by a lawyer throughout. On 14 November 2007 the Shenzhen Court handed down its judgment granting a decree of divorce which, under PRC law, took effect on 14 December 2007. The wife had 30 days from 14 November to lodge an appeal. She never did. The Shenzhen Court ordered, at the same time, certain divisions of property pursuant to the agreement between the parties : Apart from two Hong Kong properties (not the subject matter of HCA 1088/2006), they were all properties in Shenzhen. Equalization money amounting to about RMB 8.8 million was ordered to be paid by the husband to the wife.  The husband’s application for the custody of the two children was dismissed. 

  106. Given the facts as summarized above, it may seem strange that any question should have arisen regarding the recognition by the Hong Kong courts of the Shenzhen divorce.  Here were two nationals of the PRC with the closest possible connection with Shenzhen, one of them since birth; married in Shenzhen; with a home in Shenzhen; with a son born in Shenzhen; divorced after judicial proceedings in Shenzhen, in which they both took part.

  107. Before examining the circumstances which led the courts below to come to different results, (Lam J refused recognition, reversed by the Court of Appeal, Le Pichon JA dissenting) it would be convenient first of all to examine the statutory scheme under which the courts below reached their conclusions.

    The Statutory Scheme: “Overseas Divorces”

  108. The consideration of this question comes under Part IX of the Matrimonial Causes Ordinance, Cap. 179 (“Cap. 179”), the heading of which reads “Recognition of Overseas Divorces and Legal Separations”.

  109. At first blush, it may seem odd that the question of recognition of a Shenzhen decree of divorce in Hong Kong should be considered by the courts under the heading of “overseas divorces”, when Shenzhen and Hong Kong belong to the same country. A consideration of the history of Part IX is therefore necessary.

  110. Part IX was added to Cap. 179 in 1972, at the time when Hong Kong was a colony under the British Crown. It follows closely the United Kingdom statute, the Recognition of Divorces and Legal Separations Act 1971, which gave effect to the Hague Convention of the same name. In the preamble to the Convention, the various states, signatories to the Convention, declared their desire “to facilitate the recognition of divorces and legal separations obtained in their respective territories”.

  111. Section 55 of Cap. 179 states:

    55.

    Recognition in Hong Kong of overseas divorces and legal separations

    (1)

    Sections 56 to 58 shall have effect, subject to section 61, as respects the recognition in Hong Kong of the validity of overseas divorces and legal separations.

    (2)

    For the purposes of subsection (1) “overseas divorces and legal separations” means divorces and legal separations which –

    (a)

    have been obtained by means of judicial or other proceedings in any country outside Hong Kong; and

    (b)

    are effective under the law of that country.

  112. At the time when this statute came into effect (1972), the expression in s.55(2)(a) “any country outside Hong Kong” would of course have included the PRC. It is to be noted that those words do not stand alone: They are linked to the words “judicial or other proceedings” in the same sentence. Part IX focuses on legal proceedings which take place in jurisdictions outside Hong Kong and is capable of accommodating the situation where, within the same country, there are different legal systems and jurisdictions. This point is emphasized in s.56(3) which states:

    (3)

    In relation to a country comprising territories in which different systems of law are in force in matters of divorce or legal separation, the provisions of subsections (1) and (2) (except those relating to nationality) shall have effect as if each territory were a separate country.

  113. As this Court said in HKSAR v. Kevin Egan [FACC No. 3 and 5 of 2009, 16 November 2010, unreported] at §6, in modern principles of construction, a statute is not treated as embedded and fossilized in its own time but is generally to be construed as “always speaking”. Hence, when the Hong Kong Special Administrative Region came to be established on 1 July 1997 and the Basic Law came into effect, regard must be had to the provisions of the Basic Law and in particular to Article 18, when a Hong Kong statute such as Cap. 179 falls to be construed. Article 18 says:

    The laws in force in the Hong Kong Special Administrative Region shall be this Law, the laws previously in force in Hong Kong as provided for in Article 8 of this Law, and the laws enacted by the legislature of the Region.

    National laws shall not be applied in the Hong Kong Special Administrative Region except for those listed in Annex III ....

    [The exceptions in Annex III are of no relevance in this case.]

  114.  The separation of Hong Kong’s legal system from that of the Mainland, as entrenched in Article 2[1] of the Basic Law, is fundamental to the concept of “one country, two systems”, as referred to in the Preamble to the Basic Law.

  115. Seen in this light the words in s.55(2)(a) “judicial or other proceedings in any country outside Hong Kong” must be wide enough to include judicial proceedings in a jurisdiction outside Hong Kong, at least in so far as the jurisdiction of the Mainland courts is concerned.

  116. It is for this reason that leading counsel for both parties at the hearing before us were agreed that the question of recognition of the Shenzhen divorce falls to be considered within Part IX of Cap. 192.

    Recognition

  117. Mutual recognition of divorce decrees is a matter of comity between friendly jurisdictions.  Section. 56 of Cap. 179, under the heading “Grounds for recognition”, states:

    56.

    (1)

    The validity of an overseas divorce or legal separation shall be recognized if, at the date of the institution of the proceedings in the country in which it was obtained –

    (a)

    either spouse was habitually resident in that country; or

    (b)

    either spouse was a national of that country.

    (2)

    In relation to a country the law of which uses the concept of domicile as a ground of jurisdiction in matters of divorce or legal separation, subsection (1)(a) shall have effect as if the reference to habitual residence included a reference to domicile within the meaning of that law.

    (3)

    In relation to a country comprising territories in which different systems of law are in force in matters of divorce or legal separation, the provisions of subsections (1) and (2) (except those relating to nationality) shall have effect as if each territory were a separate country.

  118. Section 56(1) is mandatory. The provisions of subs. (1)(a) plainly apply to the husband, and those of subs (1)(b) apply to both parties in this case.

  119. There has never been any suggestion of procedural defects in the Shenzhen divorce proceedings which might have invalidated the Shenzhen decree. Given the mandatory terms of s. 56(1) it may seem surprising that recognition in the Hong Kong courts of the Shenzhen decree should be disputed.

    Exception from Recognition

  120. Exceptions from recognition are set out in s.61[2] of Cap. 179. This has become the principal focus of this appeal.

  121. Section 61, as can be seen, provides broadly for two scenarios whereby recognition might be refused: one mandatory – subs. (1) – and one discretionary – subs (2).  As is apparent from the terms of subs (2), even where, adequate steps have not been taken in giving notice, or where a party has not had a proper opportunity to take part in the overseas proceedings, the court might nevertheless, in its discretion, give recognition to the overseas decree.  This emphasizes the principle of comity which underpins the scheme of Part IX of Cap. 179, and shows the narrowness of the exception under s. 61(2)(b): To refuse recognition where “recognition would manifestly be contrary to public policy”. This, as is plain from the scheme of the statute, is a residual discretion, to be sparingly exercised (El Fadl v El Fadl [2000] 1 FLR 175 at 189).

  122. What considerations govern the exercise of this discretion?  The question is more easily asked than answered. The mischief that the Hague Convention of 1970, on which Pt IX of Cap. 179 was based, was designed to cure was that of “limping marriages”, that is marriages that were recognised in some jurisdictions as having been validly dissolved, but in other jurisdictions as still subsisting (Quazi v. Quazi [1980] AC 744 at 804 at G-H). The remedy provided by the Hague Convention and complying legislation was to facilitate the recognition of foreign matrimonial decrees, as appears from art.1 of the Convention, “Desiring to facilitate the recognition of divorces and legal separations obtained in their respective territories ....”

  123. While the grounds on which recognition may be refused under s.61(2)(a) are strictly limited and the “manifestly contrary to public policy” discretion is to be sparingly exercised, enhanced recognition of foreign decrees generates potential injustice when the foreign decree makes inadequate, or even no, financial provision for a dependent spouse and children. The potential for injustice is the greater in jurisdictions, like Hong Kong, where there is no jurisdiction to award financial relief ancillary to a foreign decree. (More will be said on this point later on.)  The lack of such a jurisdiction in England was remedied by Pt.III of the Matrimonial and Family Proceedings Act 1984. The introduction of this provision substantially lessened the need for an English court to have resort to the public policy discretion. As Balcombe J noted in Chaudhary v. Chaudhary 1985 Fan 19 at 48F:

    because of the recent change in the law, it would not now be possible for the husband to obtain such a collateral advantage, even without recourse to the doctrine of public policy.

  124. Leaving aside cases of want of procedural fairness, the public policy discretion has only been applied in cases where the decree offends against our ideas of “substantial justice”. This was the expression used by Lord Lindley MR in Pemberton v. Hughes [1899] 1 Ch 781 at 790, in a passage cited and applied by Lord Denning MR in Formosa v. Formosa [1969] P 259 at 268.

  125. It is not possible to define “public policy” or what is meant by “substantial justice”.  Although the discretion is to be exercised sparingly, there is no limit to the combination of circumstances which fall to be considered under it. This was recognised by Wood J at first instance in Quazi v. Quazi [1980] AC at 783H. It is, however, possible to identify some guidance from the Convention itself, the Law Commission report which led to the enactment of the Recognition of Divorces and the Legal Separations Act 1971 (UK), also from the decided cases, as his Lordship then predicted.

  126. As Lord Scarman pointed out in Quazi at 822E,

    [t]he true metewand for determining the meaning of the code of recognition introduced by the 1971 Act (UK) is, therefore, not the common law but the Hague Convention ....

    His Lordship went on to reject (at 823D) a restrictive interpretation of the text of the Convention, saying:

    there is no room for the sort of restriction for which Mr Jackson contends, whether it be based upon the pre-existing common law or upon an ejusdem generis interpretation [of the text of a provision in the statute].

  127. In Golubovich v. Golubovich [2010] EWCA 810, in a judgment in which the Master of the Rolls and Etherton LJ agreed, Thorpe LJ referred (at paras 46-51) to the Law Commission report on the Hague Convention (Law Com. No.34), on articles 7-10 of the Convention. They dealt with the refusal of recognition, in particular art.10 (the “manifestly” contrary to public policy ground) and art.8 (the lack of notice and lack of opportunity to participate provisions which are treated as two specific aspects of the public policy ground).  The Commission’s report said (para.11) of these articles:

    We consider that legislative effect should be given to these articles in order specifically to preserve the power, which our courts have exercised in the past, of refusal to recognise decrees obtained in a manner that contravenes principles of natural justice. While we believe that legislation in the terms of article 8 alone would cover most of the circumstances in which recognition has in the past been refused on the grounds of public policy, we have, after some hesitation, come to the conclusion that the basis of article 10 should also be expressly incorporated in the statute, lest cases should arise in which our courts would be forced to recognise a foreign decree in circumstances in which it would seem unconscionable to do so.

  128. Thorpe LJ pointed out (Golubovich at para.48) that this recommendation was enacted in s.8(2) of the 1971 Act (UK), though not in these terms.

  129. The first point to be made about the cases is that there are few of them in which the public policy discretion has been exercised. Indeed, according to the 2006 (14th) edition of Dicey, Morris and Collins on the Conflict of Laws, Vol. 2 at p.909, Kendall v. Kendall [1977] Fam. 208, to be discussed in more detail later, was by 2006 only one of two English cases in which a foreign divorce had been refused recognition solely on the ground of public policy. And Kendall, as will be seen, involved bad faith on the part of the husband. The other case B v. B (Divorce: Northern Cyprus [2000] 2 FLR 707 was subsequently not followed in Emin v. Yeldag [2002] 1 FLR 956.

  130. The second point to be made is that a decree will not be refused recognition on the basis of the public policy exception simply because better financial provision will be made for the wife in our courts than will be made for her in the courts of the jurisdiction the recognition of whose decree is in question. Something substantially more than a mere comparison of financial provisions available in the two jurisdictions is clearly required in order to trigger the discretion.

  131. Whether the discretion can be exercised in cases where the wife is left without any or scant financial support in the jurisdiction whose decree is sought to be recognised is a more difficult question. The possibility that the wife may become a burden on the state is one factor which may need to be taken into consideration, as well as the conduct of the parties in relation to the proceedings which led to the making of the foreign decree. Joyce v. Joyce [1979] 2 All ER 156 illustrates the problem. In that case recognition of a Canadian decree would have left the wife without effective remedies in Canada for maintenance and in relation to the matrimonial home. Further, she had not been given an “effective opportunity” to participate in the Canadian proceedings.  Recognition was refused on that ground and on the public policy ground because recognition would “jar” on the court’s conscience.

  132. Chaudhary is a good example of circumstances which attract the public policy exception.  There Oliver LJ said (at 45B):

    .... it must plainly be contrary to the policy of the law in a case where both parties to the marriage are domiciled in this country to permit one of them, whilst continuing his English domicile, to avoid the incidents of his domiciliary law and to deprive the other party to the marriage of her rights under that law by the simple process of taking advantage of his financial ability to travel to a country whose laws appear temporarily to be more favourable to him.

    Balcombe J expressed (at 48E) the same view. It was a case which was decided on another ground, so that the remarks on public policy were obiter.  But the passages quoted show that bad faith in pursuing a jurisdictional advantage with the sole object of depriving the other party of his or her ordinary domiciliary entitlements attracts the public policy ground.

  133. Chaudhary is an instance of exercising the public policy discretion in a way that takes account of the strong claims of the court of the domicile to dissolve a marriage. In Igra v. Igra [1951] P 404 at 412, Pearce J stated the principle in these terms:

    It has long been accepted that the court of the domicile is the proper tribunal to dissolve a marriage. Its decisions should, as far as reasonably possible, be acknowledged by other countries in the interests of comity.

    To the same effect were the remarks of Lord Morris of Borth-y-Gest in Indyda v. Indyda [1969] 1 AC 33, at 74A where his Lordship spoke of:

    the acceptance of domicile as the basis for assuming jurisdiction in England that if a husband and wife are domiciled in another country and if there is a decree of divorce in that country it will here be recognized.

    This principle, the principle of comity, which it is the object of the Convention to support, is one reason why the public policy discretion is sparingly exercised.

  134. Kendall is a striking example of refusal of recognition of an overseas decree on public policy grounds. It concerned a decree of a court in Bolivia. There the wife was tricked by her husband into signing papers written in Spanish; one of them turned out to have been her own purported petition for divorce: The “petition” was then lodged in court in Bolivia by the husband, or by his lawyers, after the wife had left Bolivia and returned to England with her children. The Bolivian court was deceived in a number of important respects. First of all, that the wife herself was petitioning in absentia for divorce, (another piece of paper she was tricked into signing was some form of authorization which, under Bolivian law, enabled her to proceed in absentia); that there were no children of the marriage (in fact, there were three); that the wife worked (this was of relevance as regards financial provisions for her). At p. 214-G the judge said: “I am sure that, if the Bolivian court was apprised of the circumstances that I find existing, it would without hesitation take steps effectually to invalidate the decree”.

  135. Like Chaudhary, Kendall is poles apart from the present case. Its significance is that it exhibits the kind of very serious misconduct engaged in by a spouse which materially contributes to the making of a decree which the courts refuse to recognise on the ground that it is manifestly contrary to public policy.

  136. In considering the argument in the present case that the Shenzhen decree is “manifestly” contrary to the public policy of Hong Kong, the first point to be made is that Shenzhen was the court of the domicile. Plainly, at least until the mid-1990s, when the parties set up a house in Hong Kong, they were domiciled in the PRC. The evidence does not establish that the wife, who was resident in Hong Kong, established a domicile of choice in Hong Kong. Moreover, in view of the parties’ long connections with the PRC, the situation of their assets in the PRC, being matters referred to earlier in these reasons, the courts of the PRC were the natural forum for proceedings for the dissolution of the marriage. And, as will appear, the wife was not deprived of an effective opportunity to participate in the Shenzhen proceedings. She did in fact participate in them through her legal representative and reserved the right to re-open questions of financial provision before the Shenzhen court.

    Impact of the Shenzhen decree

  137. Once a marriage is dissolved by a divorce recognised by the Hong Kong courts, the personal status of the parties is changed in the eyes of the law: Salvesen v. Administrator of Austrian Property [1927] AC 641. And that status is changed from the time when the foreign decree is pronounced. Our courts cannot, as the appellant argues, give themselves jurisdiction to make ancillary orders by way of financial relief after the foreign decree is pronounced by refusing to recognise it until such ancillary orders are made. So to do would be to ignore the true effect of the foreign decree and to make ancillary orders after dissolution of the marriage.

  138. The impact of this change in personal status, in relation to the proceedings here for ancillary relief, is this: No orders can be made by the Hong Kong courts under sections 4, 6 and 6A of the Matrimonial Proceedings and Property Ordinance, Cap. 192, dealing with financial provisions (section 4), transfer of property (section 6) and sale of property (section 6A). These will have to be dealt with in the overseas jurisdiction. This is plainly the effect of s.25(1)(a) of Cap. 192[3], since no decree nisi of divorce can ever be made in Hong Kong once the parties are no longer married to each other.

  139. The effect is the same even if orders for ancillary relief were made after the decree nisi.  So long as the decree has not become absolute no such orders can take effect: s.25(1)(b) of Cap. 192. And such orders can never take effect once an overseas divorce decree, recognised by the Hong Kong courts, has been pronounced: From that time onwards the parties are no longer married. No order absolute can ever follow.

  140. Where formalities such as giving notice and the like have been complied with overseas, the only escape from the legal consequence set out above is s.61(2)(b) of Cap. 179: That recognition of the overseas divorce “would manifestly be contrary to public policy”.

  141. The impact of the overseas decree on the Hong Kong matrimonial processes under s. 25(1) of cap. 192 is a consequence of law. Unless recognition of the PRC decree can properly be refused, the wife’s claims for ancillary relief will have to be pursued in Shenzhen.

    “Hidden PRC Assets”

  142. According to the wife’s case there are undistributed assets worth approximately $840 million, the bulk of which is held in the names of nominees (referred to in the courts below as the “hidden assets”). The entirety of the “hidden assets”, except for one BV1 registered company, consist of shareholdings in companies registered in the PRC. The nominees – if they be such – are all close relatives of the husband, residing in the Mainland. It was accepted in the courts below that the wife is not barred from “re-opening the Shenzhen proceedings to deal with family assets not yet dealt with by the Shenzhen Court” (see §62, Le Pichon JA). It is of some significance that, at the hearing on 25 June 2007 in Shenzhen, the wife reserved her right to pursue the “hidden assets” there. Plainly, the natural forum for the resolution of this matter is the Shenzhen court.

    Hong Kong Assets

  143. There are, within our jurisdiction, very valuable assets which fall for consideration in the ancillary relief proceedings, including 54 million-odd shares in China Motion Telecom International Ltd, a publicly-listed company, and shares in a number of private companies, and a BV1-registered company. The husband has given an undertaking consenting to the Shenzhen Court dealing with those assets and has also undertaken to carry out such orders for transfer of such properties as may be made by the Shenzhen Court.

    Need For Reform?

  144. In the courts below the learned judges thought that, given the fact that the Hong Kong courts are deprived of jurisdiction to deal with ancillary relief once an overseas divorce decree becomes effective, there is an urgent need for legislative reform here: The Hong Kong court has no discretion in the matter, unlike the position in the United Kingdom where such discretion, as mentioned earlier, has been given to the courts under the provisions of Part III of the Matrimonial and Family Proceedings Act 1984. A brief look at the 1984 Act is instructive for the purposes of this appeal

  145. Under s. 13(1) no application can be made without leave of the court.

  146. In considering whether leave should be granted the court must (under s.16(2) of the Act) consider inter alia the following matters:

    1. the connection which those parties have with the country in which the marriage was dissolved;

    2. the connection which those parties have with any other country outside England and Wales;

    3. any financial benefit which the applicant has received by virtue of any agreement or the operation of the law of a country outside England and Wales;

    4. in a case where an order has been made outside England and Wales requiring the other party to make any payment or transfer any property, the financial relief given and the extent to while the order has been complied with;

    5. any right which the applicant has to apply for financial relief under the law of any country outside England and Wales and if the applicant has omitted to exercise that right the reason for that omission.

  147. If one substitutes “Shenzhen” for “country outside England and Wales”, one sees the following:

    • Subsection (b):

      the parties have the closest possible connection with Shenzhen;

    • Subsection (d): 

      the wife has derived considerable benefit from the agreement for the distribution of property in Shenzhen and from the order;

    • Subsection (f):  

      the wife has reserved her right to pursue the hidden assets in Shenzhen.  Nothing suggests she cannot do so.

  148. It is therefore doubtful whether, in the circumstances of this case, even if the United Kingdom reforms under the 1984 Act had been effective in Hong Kong, the wife would necessarily have obtained relief here. Nevertheless, it is desirable that the equivalent of those reforms should be introduced to enable the Hong Kong court to provide ancillary relief after dissolution of a marriage pursuant to a foreign decree in appropriate cases.

    Proceedings in the Courts below

  149. What happened here after the Shenzhen Court had granted the decree in November 2007 was this: The husband applied on 3 December 2007 for a permanent stay of the matrimonial proceedings and this came before Lam J for hearing in March 2008. He refused recognition of the Shenzhen decree by his judgment of 20 March 2008.  The husband appealed and by a majority (Cheung JA and Sakhrani J, Le Pichon JA dissenting) the Court of Appeal allowed the appeal, declared that the marriage was dissolved by the order of the Shenzhen Court with effect from 14 December 2007, and that no orders by way of ancillary relief should take effect.

  150. Lam J said (§80 of his judgment) that his refusal of recognition was solely due to his finding of “the unconscionable use of the PRC divorce by the husband”: In other words, that it was “unconscionable” that the husband should have made his application of 3 December 2007: Exercising his undoubted right of access to the court. This was referred to by the Judge as a “tactical stay” (§68).

  151. Elsewhere the judge referred to the arrangement summarized in para. 95 above and said:

    18.

    .... It is thus the common intention of the parties that there would at least be a determination on the distribution of the Hong Kong assets identified in HCA No. 1088 of 2006 in Hong Kong proceedings.

  152. This was expanded later on into a “common intention” that two different sets of proceedings (one in Hong Kong and another in Shenzhen) “would deal with different parts of the family fortune” (§69). There is no suggestion that there was an express agreement to this effect. Presumably this “common intention” arose by necessary inference. There is no support in the material before us for such inference. True it is that the parties were, as from 23 October 2006 (see §99 above), conducting parallel proceedings, and that the two Hong Kong properties dealt with by the Shenzhen court were not the subject of HCA No. 1088/2006 (see §105 above). It is difficult to see how, from this fact, the “common intention” as found by the Judge to exist, could arise.  Public policy considerations under s. 61(2)(b) of Cap. 179 do not hang upon such slender threads.

  153. At §58 the Judge said this was clearly not a case where the husband “chose a jurisdiction with no substantial connection with him to obtain a collateral advantage” by seeking a divorce in Shenzhen: And yet he found that the husband was “manipulating proceedings to his .... forensic advantage” (§13), engaged in “tactical manoeuvre” (§74) and had acted unconscionably “to derail the Hong Kong ancillary relief hearing” (§75). These expressions do not sit well with the Judge’s earlier statement.

  154. At §18 the Judge, referring to the husband’s High Court Action 1088 of 2006 in which he sought injunctions against the wife, said this:

    The Husband had sought assistance from the Hong Kong legal system to procure a restriction on the Wife’s disposal of the Hong Kong assets. He also took active part in the Hong Kong divorce proceedings. In his Form E, he also claimed ancillary relief against the wife. Having submitted to the jurisdiction of the Hong Kong courts, the Husband cannot be heard to dispute this court’s in personam jurisdiction over him.

    This appears to be some form of equitable estoppel which, if valid, lies well outside the realm of public policy considerations under s.61(2)(b)of Cap. 179. The Judge himself appears to have had doubts in this regard, for he said later on:

    65.

    Bearing in mind international comity .... it has to be accepted that it is not against our fundamental notion of justice for a party to pursue concurrent parallel divorce proceedings in a different jurisdiction where a petition has already been presented against him or her in Hong Kong. Since a race is bound to take place, it is equally impossible to say it is against our public policy to recognize an overseas divorce just because a race is won in the overseas jurisdiction.

    66.

    It does not matter that the procedures in the overseas jurisdiction are such that it would be relative quicker for a divorce to be obtained there. Nor does it matter that the award that a spouse can obtain in the overseas divorce by way of ancillary relief is substantially less than what he or she can obtain in Hong Kong. Thus, Pearce J said as follows in Igra v. Igra [1951] P 404 at p.412,

    Different countries have different personal laws, different standards of justice and different practice. The interests of comity are not served if one country is too eager to criticize the standards of another country or too reluctant or recognize decrees that are valid by the law of domicile.

  155. It is difficult to see how these views can be reconciled with the conclusion that the husband had “manipulated” the court’s procedures such that recognition of the Shenzhen divorce would be manifestly contrary to public policy.

  156. In my respectful view, the Judge had erred in the exercise of his discretion under s.61(2)(b) of Cap. 179.

    The Court of Appeal

  157. As to the general approach to the question of recognition, the majority (Cheung JA and Sakhrani J) cited at §138 Kendall v. Kendall as an example of fraud being perpetrated by the overseas claimant upon the foreign court, emphasizing the narrowness of the scope of the discretion under s. 61(2)(b) of Cap. 179. As to the facts, Cheung JA succinctly summarized the situation thus:

    139.

    However the present litigation is plainly not a case where, first, the husband had no legitimate reason to litigate in Shenzhen and, second, the wife would be deprived of substantial legal rights if the Shenzhen judgment is recognized.

    I respectfully agree with Cheung JA in both respects.

    Viewing the Matter Broadly

  158. At the hearing of the wife’s application for a Hemain injunction before Lam J on 24 January 2007 her counsel said that unless the husband was restrained, the PRC proceedings would go very quickly; the husband would get his Shenzhen decree, come back to Hong Kong and say: “Hey, man, res judicata!”: Transcript p. 14N.

  159. It is therefore clear that the wife’s legal advisers were perfectly aware by that time of the legal consequence of the dissolution of the marriage in Shenzhen and its impact on the ancillary relief proceedings in Hong Kong, if they had not been aware before. The wife’s counsel categorized the parallel proceedings as a race and a “sprint to the finishing line”: Transcript p. 15G. This was said in January 2007.

  160. It must have been perfectly apparent to the wife’s legal advisers that, at the conclusion of the second hearing in the Shenzhen Court on 6 August 2007, when agreement had been reached on the disposal of nine out of the ten properties then under consideration, that the granting of a divorce decree by the Shenzhen Court was imminent. From the outset, the wife had agreed to a divorce: In Hong Kong, the decree nisi had been made the previous year: On 13 November 2006.

  161. And yet the wife took no steps to apply for a decree absolute in Hong Kong: which she could have done at any time after the expiration of six weeks from 13 November 2006.  As regards, s.18 of Cap. 192 (restricting the court’s power to make absolute a decree nisi unless satisfactory arrangements for the welfare of the children have been made), there had been in place since July 2006 the arrangement whereby the wife was authorized to draw $450,000 a month out of court, for the maintenance of herself and the children. The wife had custody of the children. There has been no explanation as to why she failed to apply for an accelerated decree absolute. It was not until 25 February 2008 that the wife applied for a decree absolute, to be back-dated to 14 December 2007.  By then, of course, it was too late.

  162. There is, in the evidence, no basis whatsoever for saying that the appellant was denied an adequate opportunity to participate in the Shenzhen proceedings. As mentioned earlier, she applied for an anti-suit injunction and a temporary injunction but subsequently withdrew the proceedings. Her application for a stay of proceedings in Shenzhen was dismissed, as was her appeal from that dismissal. She was represented by a lawyer in the Shenzhen proceedings leading to the pronouncement of the decree for dissolution of the marriage.  She had a right to appeal from the decree but did not exercise that right.

    Conclusion

  163. I would uphold the judgment of the majority of the Court of Appeal and dismiss this appeal. Submissions as to costs, if any, should be lodged with the Court within 21 days of the date of this judgment and any submissions in reply within 14 days thereafter.

    Sir Anthony Mason NPJ

  164. I agree with the judgment of Mr Justice Litton NPJ.

    Justice Bokhary PJ

  165. By a majority of three to two, the Wife’s appeal is dismissed. Costs will be dealt with in the manner proposed by Mr Justice Litton NPJ.


[1]

Article 2:

The National People’s Congress authorizes the Hong Kong Special Administrative Region to exercise a high degree of autonomy and enjoy execution, legislation and independent judicial (power, including that of final adjudication, in accordance with the provisions of this Law.

[2]

61.

Exceptions from recognition

(1)

The validity of a divorce or legal separation obtained outside Hong Kong shall not be recognized in Hong Kong if it was granted or obtained at a time when, according to the law of Hong Kong (including its rules of private international law and the provisions of this Part), there was no subsisting marriage between the parties.

(2)

Subject to subsection (1), recognition by virtue of this Part or of any rule preserved by section 59 of the validity of a divorce or legal separation obtained outside Hong Kong may be refused if, and only if –

(a)

it was obtained by one spouse –

(i)

without such steps having been taken for giving notice of the proceedings to the other spouse as, have regard to the nature of the proceedings and all the circumstances, should reasonably have been taken; or

(ii)

without the other spouse having been given (for any reason other than lack of notice) such opportunity to take part in the proceedings as, having regard to the matters aforesaid, he should reasonably have been given; or

(b)

its recognition would manifestly be contrary to public policy.

(3)

Nothing in this Part shall be construed as requiring the recognition of any findings of fault made in any proceedings for divorce or separation or of any maintenance, custody or other ancillary order made in any such proceedings.

[3]

25.

Commencement of proceedings for financial provision orders, etc.

(1)

Where a petition or joint application for divorce or a petition for nullity of marriage or judicial separation has been presented or made, then, subject to subsection (2), proceedings under section 3, 4, 5, 6 or 6A may be begun, subject to and in accordance with rules of court, at any time after the presentation of the petition or the making of the application; but –

(a)

no order under section 4, 6 or 6A shall be made unless a decree nisi of divorce or of nullity of marriage or a decree of judicial separation, as the case may be, has been granted;

(b)

without prejudice to the power to give a direction under section 26, no such order made on or after granting a decree nisi of divorce or of nullity of marriage, and no settlement made in pursuance of such an order, shall take effect unless the decree has been made absolute.


Representations

Mr Benjamin Yu SC and Ms Anita Yip (instructed by Messrs Ho, Tse, Wai & Partners) for the appellant

Mr Michael Thomas SC, Mr Paul Shieh SC and Mr Jeremy S K Chan (instructed by Messrs Facey & Co. in association with Withers) for the respondent


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