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Ml v Yj

Judgment Cited authorities 11 Cited in Precedent Map Related
Vincent
Judgment Date17 June 2009
Year2009
Citation[2010] 1 HKLRD 1
Judgement NumberCACV89/2008
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV89/2008 ML v. YJ

CACV 89/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 89 OF 2008

(ON APPEAL FROM HCMC NO. 13 OF 2006)

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BETWEEN

ML Petitioner
and
YJ Respondent

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Before: Hon Le Pichon, Cheung JJA and Sakhrani J in Court

Dates of Hearing: 5 & 6 May 2009

Dates of Written Submissions:

11 & 18 May 2009 (Respondent)
14 May 2009 (Petitioner)

Date of Handing Down Judgment: 17 June 2009

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J U D G M E N T

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Hon Le Pichon JA:

1. This is an appeal from an order of Lam J dated 7 March 2008 dismissing the respondent husband’s summons to strike out the petitioner wife’s claim for ancillary relief. Jurisdiction to entertain the wife’s claim depends on the recognition or otherwise of a divorce granted by the Shenzhen Intermediate People’s Court (“the Shenzhen court”). At the conclusion of the hearing judgment was reserved which we now give.

Background

2. It is necessary to set out in some detail the history of the divorce proceedings. As will become apparent, the conduct of the parties was a material factor in the judge’s exercise of his discretion in refusing to recognise the divorce granted by the Shenzhen court.

3. The parties were born on the Mainland and were married in Shenzhen in April 1992. The husband had businesses in both Hong Kong and the Mainland. They moved to Hong Kong in the early-mid 90s acquiring a right of abode here. They have two sons and maintained matrimonial homes in both jurisdictions. The elder son was born on the Mainland in 1992 and the younger son in Hong Kong in 1999. While the husband spent his time between Hong Kong and the Mainland for business reasons, the wife and children lived mostly in Hong Kong where the children attended school, returning to the Shenzhen matrimonial home at weekends. The parties maintained a high (if not somewhat lavish and extravagant) standard of living and had substantial assets in both jurisdictions. §§ 23-25 of Lam J’s judgment of 23 May 2008 (“the May judgment”) on ancillary relief offer some insight on the subject. The matrimonial assets as found by the judge, were in the aggregate, in excess of HK$870 million.

4. The marriage broke down irretrievably in 2006. The wife filed a petition for divorce in Hong Kong on 18 May 2006.

5. Two days later, the husband issued a writ in the High Court of Hong Kong (HCA 1088 of 2006) claiming that the wife held certain assets situated in Hong Kong, being shares in various Hong Kong companies (including Bestraight Development Ltd, Park Regent Development Ltd and Joint Profit Ltd) and in BVI companies in trust for him. The wife had named Joint Profit as the purchaser in a contract in 2005 to purchase a property called “the Legend” for about HK$30 million with completion due sometime in 2006/2007. (This transaction is further described in §§ 19 - 20 below.) The writ also sought injunctions to restrain the wife from “misappropriating, converting and/or misusing” the sale proceeds of, inter alia, a property situated in Nathan Road, (hereafter, is referred to as “the Union Park property”) and the Legend. Bestraight and Park Regent were the registered owners of various properties in Hong Kong, some of which were in the process of being sold. The BVI companies also held Hong Kong properties.

6. Meanwhile, the husband filed his Form 4 on 15 June 2006 indicating an intention to defend and advancing claims for custody and ancillary relief. Both parties also applied for interim custody of the children in June 2006.

7. On 3 August 2006, the wife filed a notice of her intention to proceed with the application in the petition for a transfer of property order in respect of the husband’s beneficial interest in two Hong Kong properties which, for convenience, will be referred to as (“the Central Park property” and “the Waterloo Road property” respectively). The notice was registered in the Land Registry against those properties which were not properties affected by HCA 1088.

8. The petition was amended on 9 August 2006 essentially to put forward a ‘watered-down’ version of unreasonable behaviour and, on the following day, the husband filed a further Form 4, stating an intention not to defend the petition.

The Hong Kong ancillary relief proceedings

9. On 11 August 2006, the wife applied for maintenance pending suit for herself and her children. This was followed by the husband’s notice of application for ancillary relief, making all financial claims.

10. On 1 September 2006, after an oral hearing before Deputy District Judge Melloy, an order was made for maintenance pending suit on the parties’ consent summons of even date filed in these proceedings (then FCMC 5788/2006) that the husband pay the wife interim maintenance of $450,000 per month upon the parties entering into the consent summons in HCA 1088 which was annexed to the interim order. While the amount of interim maintenance might appear extravagant, it could be said to reflect the parties’ lifestyle. The HCA 1088 consent summons was filed on 7 September 2006 seeking an order for payment out of a sum (i.e. $450,000 per month) that matched the interim maintenance ordered until further order. The circumstances that gave rise to that arrangement are relevant and it would be convenient to describe them here.

11. As noted earlier, HCA 1088 had been instituted by the husband,claiming that certain assets in the name of the wife were held by her in trust for him. The wife’s case is that they formed part of the parties’ matrimonial property. The issue, therefore, was whether the properties belonged exclusively to the husband or whether they formed part of the pool of matrimonial assets available for division upon divorce. The parties reached an agreement for the net proceeds of sale of two properties forming part of the subject matter of HCA 1088 to be deposited into court by the wife, thus enabling the two sale transactions to proceed to completion. Consent orders relating to the payments into court were made on 29 June 2006 and 14 July 2006. The net proceeds of sale paid into court by the wife pursuant to those orders amounted to $28.5 million. But this was part of a broader arrangement encompassing maintenance pending suit as is reflected by the consent summons mentioned in § 10 above.

12. In this regard, significantly, the payment into court was not made, as one would expect, “pending the determination of HCA 1088” but as stated by the husband in his Form E of 2 August 2006 (at 5.5.8)

“pending the determination of the ancillary relief application in the divorce proceedings.”

Further, in the letter of 6 September 2006 from the wife’s solicitors to the court accompanying the consent summons in HCA 1088, the husband’s solicitors countersigned the letter and confirmed that

“both the Plaintiff and the Defendant agree that the 2 payments into court are part of the family assets.”

An order (in terms) was made in HCA 1088 on 18 September 2006.

13. The significance of the ‘agreement’ did not escape the judge’s notice. He addressed it in § 18 of his judgment:

“18. The divorce proceedings referred therein are obviously the divorce proceedings in Hong Kong. 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. A1088 of 2006 in the Hong Kong proceedings. 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….”

14. Other than the issuance and service of the writ, the husband has taken no further steps in HCA 1088. No statement of claim was ever filed and those proceedings remained dormant until, as will appear below, they were struck out by the judge in May 2008. If the present appeal were allowed, one of the consequences would be the re-instatement of HCA 1088. In § 71 of his judgment, the judge referred to the husband’s intention to pursue HCA 1088 “based on his proprietary interests” in the assets identified in that action.

15. Unbeknown to the wife, the husband issued a writ in the Shenzhen court on 23 October 2006 claiming divorce, custody of the children and for division of the matrimonial assets said to be of the value of approximately RMB 14.68 million (“the Shenzhen proceedings”). When he did so the parties had already exchanged Form Es and financial questionnaires and answers had also been filed in the Hong Kong proceedings. The ostensible reason given by the husband for initiating the Shenzhen proceedings was that there was some doubt as to whether a decree of divorce pronounced in Hong Kong would be recognised and given effect in the PRC. That, however, does not explain the other relief sought. Be that as it may, the wife first became aware of the Shenzhen proceedings on 13 November 2006, the day the decree nisi (which was unopposed) was pronounced in Hong Kong.

16. When the husband refused to withdraw the Shenzhen proceedings, on 18 January 2007, the wife applied for an anti-suit injunction and for interim relief pending the substantive hearing. The judge refused interim relief at the hearing on 24 January 2007 and adjourned the substantive hearing to 7 May 2007. In March 2007, on advice, the wife withdrew the anti-suit injunction and, instead, applied for a stay in the PRC court. Her stay application made in the Shenzhen court in March 2007 was unsuccessful and her subsequent appeal to the Higher People’s Court of Guangdong in May 2007 met with the same fate.

17. Shortly thereafter, the custody applications (which were bitterly fought) came before Mr Recorder Yuen SC and, on 23 May 2007, the wife was granted custody of both children, with reasonable...

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