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Falling Out of Love in Hong Kong – a quick guide to divorce and financial provision in the territory

Clare Williams, Professional Support Lawyer, and Lydia Pilati, Associate Solicitor, both at JMW explain the similarities and distinctions between the law of divorce and financial provision between Hong Kong and England and Wales

 

Clare Williams, Professional Support Lawyer, and Lydia Pilati, Associate Solicitor of JMW.


Political turmoil in Hong Kong has been in the news throughout this year and last, with critics calling the passing of China's new security law "the end of Hong Kong" (1). It feels as if life in the territory is undergoing fundamental – for many, unwelcome – changes, leading many expats to ask serious questions about what the future may hold for them. Hong Kong's many British residents may find themselves wrestling with the decision whether or not to return to the UK. For some, whose failed marriage has upheld Hong Kong's unfortunate reputation as the 'graveyard of marriages', this decision may induce an additional dilemma of whether they should initiate proceedings in Hong Kong, given their resident status, or seek to issue in England and Wales, either immediately or after returning.

As its legal system was developed under British rule, Hong Kong is a common law jurisdiction, with the law on divorce and financial provision largely modelled on its English equivalent. Whilst there are many recognizable features, not least the acceptance of the post-White jurisprudence on financial provision, there is some divergence between the two jurisdictions. The most notable difference, however, is the lifestyle that many expatriate and local families choose to lead, their spending habits and the structure of their asset portfolio. It is not uncommon for local families, for example, to have their wealth tied up in the family business or a trust structure. In addition, the cost of living is comparatively high and, therefore, separating families who intend to continue to live and potentially raise their children in Hong Kong, will need to consider whether the matrimonial pot can afford to maintain two households.


Jurisdiction

Pursuant to section 3 of the Matrimonial Causes Ordinance (Cap 179), the courts in Hong Kong will have jurisdiction in divorce proceedings if either party to the marriage can satisfy one of the following requirements, as at the date of the petition:

1. They are domiciled in Hong Kong;

2. They have been habitually resident in Hong Kong for a minimum of three years; or

3. They have a substantial connection to Hong Kong.

This differs from the position in England and Wales whereby the court's jurisdiction is generally based on the familiar grounds set out in Article 3 of Council Regulation (EC) No 2201/2003, ("Brussels II Revised"), namely:

1. Both spouses are habitually resident here;

2. The parties were last habitually resident as a couple here, and one of them still lives here;

3. The respondent divorce petition is habitually resident here;

4. The applicant is habitually resident, having resided here for a period of 12 months ending in the date the application is made;

5. The applicant is domiciled here, having resided here for a period of six months ending in the date the application is made; or

6. Both parties are domiciled here.

Applicants unable to avail themselves of jurisdiction under Brussels II revised here or in another contracting state may of course rely on a single party's domicile in England and Wales (2), noting that the courts in England and Wales may nevertheless lack jurisdiction to deal with a needs-based claim due to the operation of the EU Maintenance Regulation.

In Hong Kong "substantial connection" is case dependent and it is not uncommon, when filing for the pronouncement of decree nisi, for the Hong Kong court to request a short affidavit from the petitioner setting out their substantial connection to Hong Kong. The affidavit should consider and set out how long the parties have been resident in Hong Kong, whether the parties work in Hong Kong and have a fixed employment contract, whether they have a tenancy agreement (most Hong Kong tenancy agreements run for two years with a one year break clause), whether they have bank accounts in Hong Kong, or any other assets, and whether their children attend school in Hong Kong. Commonly, Hong Kong practitioners will ask their clients to provide this information at the initial meeting so that the affidavit can be drawn up shortly thereafter with a view to automatically filing it with the court alongside Form 21 (the application for decree nisi) without the court having to request it, thus preventing any unnecessary delay.


Grounds for Divorce


Hong Kong's substantive divorce law (3) mirrors the current law in England and Wales, in that there is only one ground upon which parties may petition for divorce, i.e. that the marriage has irretrievably broken down. However, the facts upon which parties may rely upon do differ, the main difference being the availability of the two separation facts within shorter timescales. 

1. The respondent's behaviour;

2. Adultery;

3. Separation for a continuous period of one year preceding the petition, with consent;

4. Separation for a continuous period of two years preceding the date of the petition, without consent; and

5. Desertion, the respondent having deserted the petitioner for a continuous period of one year preceding the date of the petition.

Happily, collaborative practice is encouraged in Hong Kong, and the majority of practitioners will advise their clients to petition for divorce citing the respondent's behaviour using mild particulars, to set proceedings off on the right foot and to prevent legal fees escalating unnecessarily. In addition, save for exceptionally rare cases if "obvious or gross" (4), the conduct of a party will not be relevant when the court considers the division of the matrimonial pot or the custody of the children and therefore it seems futile to engage in long protracted proceedings. Indeed the Hong Kong court has encouraged family practitioners "… to embrace a more proactive mindset to resolve family disputes through effective and proportionate means…" (5)

Generally, reliance in the petition on the fact of adultery is actively discouraged because when using this fact, the petitioner will need to prove their spouse committed adultery and the third party will need to be made party to the proceedings, unless excused by the court on special grounds.


Financial Provision

Similar to the legislation in England and Wales, under section 4 of the Matrimonial Proceedings and Property Ordinance (Cap 192) ("MPPO"), the Hong Kong courts can make the following orders for financial provision:

1. Periodical payments;

2. Secured periodical payments;

3. Lump sum;

4. Transfer or settlement of a property;

5. Sale of a property; and

6. Variation of settlement.

One stark difference between the financial provision orders the Hong Kong and English courts can make is with regard to pensions. In Hong Kong, a compulsory pension fund, the Mandatory Provident Fund (MPF), requires an employee and employer to contribute on a monthly basis to the scheme in proportion to the employee's salary. The disparity of pension provision can be very much a live issue in many expatriate families in which one party is employed or has formerly been employed in the territory, and the other has left their employment in their home country to join their spouse in Hong Kong, has been unable to find similar or suitable employment in Hong Kong and has not acquired an MPF or funds to pay into a private pension.

However, unlike the English courts, the Hong Kong courts do not have the jurisdiction to make pension sharing orders. Instead, pensions are taken into account as part of the matrimonial pot and are offset against the value of the other assets.


How the court decides

The factors to be taken into account when making one or more orders for financial provision in Hong Kong are set out in the MPPO, section 7. The court must "have regard to the conduct of the parties and all the circumstances of the case", including the following matters, which reflect to an extent those set out in section 25 of our Matrimonial Causes Act 1973:

1. the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

2. the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

3. the standard of living enjoyed by the family before the breakdown of the marriage;

4. the age of each party to the marriage and the duration of the marriage;

5. any physical or mental disability of either of the parties to the marriage;

6. the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family; and

7. the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

Similarities can also be found in Hong Kong case law. The leading case in Hong Kong is LKW v DD [2010] HKCFA 70, which deals with financial provision and the division of matrimonial assets adopting the same principles found in the English cases of White v White [2000] UKHL 54, [2001] 1 AC 1996 and Miller v Miller: McFarlane v McFarlane [2006] UKHL 24. In the Court of Appeal, Cheung JA, whose judgment was upheld by the Court of Final Appeal, passed comment that English decisions are "not binding on Hong Kong courts but highly persuasive authorities… the Hong Kong legislation on matrimonial property is still based on the almost identical United Kingdom legislation".

As per the modern English case law, the case of LKW v DD sets out the fundamental basis and principles the Hong Kong court follows in exercising its power to make financial provisions for a spouse. The case of LKD v DD developed the principles of fairness, non-discrimination between the role of a husband and a wife, and the 'yardstick of equality'.


Same-sex unions and LGBTQ+ rights

This is one area in which Hong Kong differs markedly from England and Wales. Neither same-sex marriages nor civil partnerships enjoy legal recognition and there is therefore no right to apply for financial provision upon divorce or dissolution in the territory.  A series of court cases have pushed forward the course of reform a little. For example, a male to female trans-person won the right to marry her male partner, leading to a change in the law (6). It is also now possible for a same-sex spouse or civil partner of an individual with an employment visa to enter the territory on a dependant's visa, provided of course that the marriage or civil partnership was contracted outside Hong Kong (7). However, there appear to be no immediate plans to introduce same-sex marriages or civil partnerships.
 
Thought must be given when choosing where to file for divorce. Not only must one consider if the client is eligible and meet the jurisdictional criteria of the court in which they are filing, but also how the court will deal with proceedings and assets once engaged. As in England and Wales, Hong Kong does not favour one party over the other, and the two systems are extremely similar in that regard. As mentioned, the cost of living in Hong Kong is particularly high, and parties may need to consider how far the matrimonial pot can stretch. Factors such as these will undoubtedly influence a family's decision on whether a move back to the UK is best for them, and, in light of such, whether to issue proceedings here. 

Lydia Pilati is an Associate in the Family Department at JMW Solicitors LLP in Manchester. Before moving to JMW earlier this year, she worked in Hong Kong as a registered foreign solicitor and later qualified as a solicitor of the Hong Kong High Court. Throughout her time in Hong Kong Lydia specialised in family law, advising expatriate and local families on an array of matters arising from the breakdown of a marriage.

Clare Williams
is a Professional Support Lawyer at JMW.

Footnotes
1. See also 'This is the end of Hong Kong': China pushes controversial security laws (The Guardian)  
2. Domestic and Matrimonial Proceedings Act 1973, s 5(2)
3. Part III of the Matrimonial Causes Ordinance, cap 179
4. Cheung JA in SJH v RJH [2012] 4 HKLRD 308, at para 9
5LLC v LMWA [2019] 2 HKLRD 529
6W v The Registrar of Marriages [2013] HKCFA 39
7QT v Director of Immigration [2018] HKCFA 28

8.10.20