30th Sep 2020

British Expats Divorcing in Hong Kong

British Expats Divorcing in Hong Kong

Our guest blogger, Caroline McNally of Gall Solicitors, Hong Kong, examines the key differences to bear in mind when considering divorcing in England and Wales or Hong Kong. 

Hong Kong, with its colonial connection to the United Kingdom before the 1997 handover, continues to be a popular city for British expatriates to come to explore opportunities. Unfortunately, Hong Kong also has a reputation of being the ‘graveyard of marriages’.

Before filing for divorce, British expats should appreciate the similarities and differences between the law and procedure in Hong Kong and in England and Wales, and the implications on financial matters upon divorce in both jurisdictions.

Eligibility to petition for divorce in Hong Kong

In order to petition for divorce in Hong Kong, you must satisfy the jurisdiction requirements.

Pursuant to section 3 of the Matrimonial Causes Ordinance (Cap. 179), the Hong Kong Courts shall have jurisdiction in the divorce proceedings if either one of the parties was:

  • Domiciled in Hong Kong at the date of the petition or joint application;
  • Habitually resident in Hong Kong throughout the period of 3 years immediately preceding the date of the petition or joint application; or
  • Had a substantial connection with Hong Kong at the date of the petition or joint application.

For most British expatriates, they will rely on the habitual residence ground unless they have been living in Hong Kong for less than 3 years and they will therefore rely on their substantial connection to Hong Kong. Whether or not a couple satisfies the criteria will be a question of fact. An artificially construed connection will not be enough. The Courts will look at the reality of the situation and most expat families who are in Hong Kong for employment reasons will satisfy the test.

‘No fault” divorce in Hong Kong

As in England and Wales, there is only one “ground” for divorce which is the irretrievable breakdown of the marriage which must be established by proving one or more of the five “facts”. As is the case in England and Wales, in Hong Kong there are two non-fault based facts that the parties can rely on – although the criteria in Hong Kong differ, notably:

  • The parties’ separation for one year with consent; or
  • The parties’ separation for two years without consent.

The other fault based facts are:

  • Adultery
  • Unreasonable behaviour
  • Desertion

The adultery fact is rarely used in Hong Kong because a third party involved in an adultery petition will normally be joined to the proceedings as the “second respondent” or “co-respondent.

Financial relief on divorce

Couples might find themselves eligible to file for divorce in both England and Wales and in Hong Kong. It is therefore helpful for the parties to understand the legal landscape in both jurisdictions which is often called ‘dangerously similar’ because whilst Hong Kong legislation is based on the Matrimonial Causes Act, there are a few significant differences both in law and procedure.

Division of matrimonial assets

There is no mathematical formula for the division of matrimonial assets in either jurisdiction.

In deciding whether to exercise its powers of redistribution of assets or financial support, the Court will take into account all the circumstances of the case, including the following matters which are set out in section 7 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) (“MPPO”). These factors mirror the factors which are set out in section 25 of the Matrimonial Causes Act 1973:

  • The income, earning capacity, property and other financial resources that each spouse has or is likely to have in the foreseeable future;
  • The financial needs, obligations and responsibilities that each spouse has or is likely to have in the foreseeable future;
  • The standard of living enjoyed by the parties during the marriage;
  • The age of each spouse and the duration of the marriage;
  • Any physical or mental disability of either of the parties;
  • The parties’ respective contributions to the welfare of the family; and
  • The value of any benefit (such as a pension) that one party may lose upon divorce.

The approach taken by the House of Lords in White v White [2001] 1 AC 596 was approved in Hong Kong in 2010 in the case of LKW v DD [2010] HKFLR 016.

The principles of LKW v DD are as follows:

  • The Court’s primary objective is to arrive at a distribution of assets which is fair as between the parties;
  • There is no place for discrimination between a husband and a wife and their respective roles when considering the concept of fairness;
  • With a view to eliminating insidious discrimination and promoting fairness, judges should check their tentative view on distribution against a ‘yardstick of equal division’ which should only be departed from for good, articulated reasons; and
  • The Court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage.

In applying the above principles, the Court will take the following steps:

(I)        Identification of the assets 

(II)       Assessing the parties’ financial needs

(III)      Deciding to apply the sharing principle

(IV)      Considering whether there are good reasons for departing from equal division 

(V)       Deciding the outcome

Pension sharing

A pension or Mandatory Provident Fund (MPF) is often a substantial matrimonial asset. This is the area on which the powers of the Courts in the two jurisdictions diverge. Unlike in England and Wales, the Hong Kong Court does not have the ability to make any orders with regards to the sharing of pensions.

Instead, the loss of future pension benefits will be considered when the Court undertakes its statutory exercise under section 7 MPPO and wherever possible, a party should be compensated accordingly. Pension/MPF will be included in the matrimonial assets but must be retained by the spouse who owns it. The Court will therefore offset the value of the pension or retirement benefits with the other matrimonial assets to provide a fair outcome.

Restriction against real property

Where the matrimonial assets include real property in Hong Kong, it might be advantageous for a party to petition for divorce in Hong Kong because it is possible to place a restriction on a matrimonial property in Hong Kong by registering a Notice of an Application for Ancillary Relief (Form A) with the Lands Registry when there are proceedings in the Hong Kong Family Court.  The owner will not be able to dispose the property free of encumbrance as the Land Registers are public documents which are available to potential buyers and estate agents.

It has not been possible to place a restriction against a Hong Kong property when divorce proceedings are issued in another jurisdiction.

Financial provision for children

Unlike in the England and Wales, in Hong Kong there is no Child Maintenance Service and the Courts will decide the financial provision for children taking into account the following:

  • The financial needs of the child;
  • The income, earning capacity (if any), property and other financial resources of the child;
  • Any physical or mental disability of the child;
  • The standard of living enjoyed by the family before the breakdown of the marriage; and
  • The manner in which he was being and in which the parties to the marriage expected him to be educated.

Procedure

The procedure is set out in Practice Direction 15.11 and is broadly similar to the procedure in England and Wales with a few important differences.

On the application for financial relief the Court will fix a first Court hearing called a First Appointment hearing in 10 weeks. The parties are required to complete the Form E Financial Statement 28 days before the hearing. A First Appointment Bundle must be filed 14 days before the hearing containing the following:

  • A list of the directions sought;
  • A questionnaire and request for documents;
  • A chronology; and
  • A statement of issues.

It is very common in Hong Kong to have several First Appointment hearings which can delay the Financial Dispute Resolution hearing, and significantly increase costs.

Conclusion

Many factors should be taken into account when deciding where to file for divorce. When a party is eligible to file for divorce in Hong Kong and in England and Wales, they must give serious consideration as to the best location for the proceedings having regard to the nature and location of the assets as well as other practical considerations.

Caroline McNally is an Executive Partner and Head of the Family & Divorce practice at dispute resolution law firm Gall, in Hong Kong. With over 20 years in family law practice, Caroline has considerable experience in complex financial disputes with substantial assets, as well as difficult children matters including relocation cases. Her international experience has equipped her to handle the most complex of cases and advise on matters with cross-jurisdictional elements. Contact Caroline at E: carolinemcnally@gallhk.com or T: +852 3405 7629. Visit Gall’s website at www.gallhk.com.