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Sph v Sa (Formerly Known As Sa

Judgment Cited authorities 21 Cited in Precedent Map Related
Vincent
Judgment Date09 June 2014
Subject MatterFinal Appeal (Civil)
Judgement NumberFACV22/2013
CourtCourt of Final Appeal (Hong Kong)
FACV22/2013 SPH v. SA (formerly known as SA)

FACV No. 22 of 2013

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 22 OF 2013 (CIVIL)

(ON APPEAL FROM CACV NO. 99 OF 2012)

_____________________

Between:

SPH Appellant
- and -
SA (formerly known as SA) Respondent

_____________________

Before : Chief Justice Ma, Mr Justice Ribeiro PJ, Mr Justice Tang PJ, Mr Justice Bokhary NPJ, Lord Collins of Mapesbury NPJ
Date of Hearing: 12 May 2014
Date of Judgment : 9 June 2014

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J U D G M E N T

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Chief Justice Ma, Mr Justice Ribeiro PJ, Mr Justice Tang PJ, Mr Justice Bokhary NPJ, Lord Collins of Mapesbury NPJ

I Introduction

1. This is an appeal from a judgment of the Court of Appeal refusing a stay of matrimonial proceedings in Hong Kong. The appellant husband (H) and the respondent wife (W) are German nationals. W has lived in Hong Kong since 1997 and is a permanent resident. They were married in Hong Kong and during their short marriage they lived there. W commenced divorce proceedings in Hong Kong. H commenced divorce proceedings in Germany and sought a stay of the Hong Kong proceedings. Prior to the marriage they executed an ante-nuptial agreement under German law, and they also executed a post-nuptial, or separation, agreement before the divorce proceeding.

2. Differing from Poon J, the Court of Appeal (Cheung, Fok and Lam JJA) decided that a stay should not be granted. The reasoning of the Court of Appeal will be outlined below. At this stage it is sufficient to mention that the principal reason why it decided to interfere with the judge’s decision, in a case which essentially involved the exercise of a discretion in accordance with well-settled principles of forum non conveniens, was that it considered that Poon J’s exercise of the discretion was plainly wrong because, in finding at the first stage of the enquiry that Germany was clearly and distinctly the more natural and appropriate forum, the judge had failed to give sufficient weight to the facts that W had commenced divorce proceedings in Hong Kong as of right and that the connection of the parties with Hong Kong was overwhelming.

3. The Court of Appeal exercised the discretion afresh, and in the normal course, where it had done so properly, such a case would not have been a suitable one for this court. But what takes it out of the ordinary is that, as mentioned above, the parties entered into an agreement prior to their marriage varying their matrimonial property rights under German law, and when they were about to divorce the parties entered into a separation agreement restricting W’s rights to claim maintenance.

4. Consequently the appeal has a much wider significance, since it involves the potential impact of these agreements in Hong Kong should the proceedings continue here. Such agreements were once considered at common law to be contrary to public policy because, not only were they seen somehow to affect the institution of marriage itself, they ousted the jurisdiction of the court to grant ancillary relief, but they have been the subject of a slow evolution in English law, and also reflected in Hong Kong law, to the point where, although not regarded as definitively binding, they have substantial legal effects. The two crucial decisions were, first, Edgar v Edgar [1980] 1 WLR 1410 (CA), on the effect of post-nuptial agreements or separation agreements (to which we will generally refer as “separation agreements”), which was applied in Hong Kong by the Court of Appeal in L v C [2007] 3 HKLRD 819, and, second, Radmacher v Granatino [2010] UKSC 42, [2011] 1 A.C. 534 in which the UK Supreme Court gave qualified effect to ante- or pre-nuptial agreements (to which we will refer as “ante-nuptial agreements”). This is an opportune occasion to consider whether Radmacher v Granatino represents the law in Hong Kong. If it does not, this would obviously be an extremely important factor in considering whether or not the present proceedings ought to be stayed.

II The marriage and its breakdown

5. As is so often the case in bitter matrimonial disputes, there are almost no uncontested facts, and there are angry disputes in the affidavits on questions (concerning such matters as the size of W’s engagement ring, and the use by the couple of first class air travel) which are peripheral to the issues which arise on the present appeal. There have, of course, been no findings of fact, and the following account must be read in that light.

6. H is German. He is now 50. He is a successful specialist in luxury hotel interior design. His business is based in Cologne, Germany, and has grown internationally over the years. He now has a business presence in several parts of the world including Hong Kong, which he regards as a gateway to enter into the mainland and the Asia Pacific region. In about 2006, he set up Company A, a hotel interior design company, in Hong Kong. Company A’s business is funded by loans from HSBC, and he has paid income tax in Hong Kong.

7. W is also German. She is 46. She has been living in Hong Kong since 1997 and is a permanent resident. Prior to the events giving rise to the present proceedings, she worked in Hong Kong as a general manager for a German-based Hong Kong company.

8. H and W first met in Hong Kong in 2005 when H was on a business trip here. He was then married to his first wife, whom he married in 1997 and from whom he separated in 2006. Later that year H and W began an intimate relationship. In early 2007 H proposed marriage, and they were married at the Peninsula Hotel, Hong Kong, on February 15, 2008. The Hong Kong marriage certificate was used also to obtain registration of the marriage in Germany by April 3, 2008 at the Family Court of Berlin.

9. During their married life, the parties lived together in Hong Kong, although H (often accompanied by W) spent much of the time outside Hong Kong in the pursuit of business and leisure interests, and they frequently visited Germany.

10. H owns, or owned, a castle in Germany (“the castle”) initially through a company, Company C. He had acquired it for €2 million from his former wife as part of their ante-nuptial agreement or their separation agreement – it is not clear from the evidence which is the relevant agreement. H allowed W’s elderly retired parents to live in the guest house in the castle. H claims that as a result of the financial crisis in 2008 he was forced to sell the castle to discharge the loan used to purchase the castle from his former wife. H says that the purchaser was an independent wealth management company, which, on H’s request, granted a lease of the guest house to W’s parents (from which they have moved).W says that H is still the owner.

11. The marriage was a short one, and by 2010 it had broken down. W presented a divorce petition in Hong Kong in October 2010. In the following month H applied for a stay of the Hong Kong proceedings on the basis that the German courts were the forum conveniens. H also commenced divorce proceedings in December 2010 in the Family Court of Berlin. Poon J granted the stay by a decision of November 10, 2011, and an appeal was allowed by the Court of Appeal on February 8, 2013. H now appeals.

III The Agreements

12. H and W entered into two agreements. The first was an ante-nuptial agreement executed on December 17, 2007 (“the Ante-nuptial Agreement”). The second was a separation agreement executed on September 9, 2010 (“the Separation Agreement”).

The Ante-nuptial Agreement

13. H’s evidence of the genesis of the Ante-nuptial Agreement is as follows. W knew that he had entered into an ante-nuptial agreement with his first wife. H told W that as they had already accumulated wealth before meeting each other, their finances should remain independent and separate from each other. W agreed, and suggested that they should sign an ante-nuptial agreement. W knew that H had to carry a lot of business loans after his divorce with his ex-wife, including the €2 million he took out to purchase the castle from his former wife. If there were an ante-nuptial agreement he would be free from any claim against her business and assets, and she would be free from any potential claims from his creditors. So he agreed with her suggestion, even though he was concerned that the process would damage their relationship.

14. H then instructed his lawyers to draft an ante-nuptial agreement. On December 17, 2007, H and W flew back to Germany to execute the Ante-nuptial Agreement before a notary, who explained the contents and legal effect to them beforehand. H says that both parties intended their marriage to be governed by German law, and to have all matrimonial matters dealt with by the German courts.

15. W's evidence is substantially different. She accepts that H told her about the €2 million he had agreed to pay to his ex-wife for the castle, but not that he raised a bank loan to fund it. She denies that it was she who suggested that they should have an Ante-nuptial Agreement. The idea came from H who said that it was for her protection and for the purpose of keeping them safe, just in case if he had to go bankrupt, or had to let his companies go bankrupt. She received no independent legal advice before signing the Agreement before the notary, who was a long standing personal friend of H’s. She says that they did not discuss what law should govern their marriage, or what courts should deal with matrimonial proceedings.

16. The Ante-nuptial Agreement executed on December 17, 2007 stated that the parties (whose residential addresses were stated to be Hong Kong ones) declared: (1) they intended to be married in Hong Kong on February 15, 2008; (2) the notary had pointed...

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