Hong Kong China Handling of Cross Border

Hong Kong & China: Handling of Cross Border Divorce IP & HEATHFIELD SOLICITORS 20 th June 2014 Ms. Jennifer Ip Email: jip@ihlaw. com. hk Website: www. ihlaw. com. hk 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors 1

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors China & Hong Kong o The People’s Republic of China has grown to become the world's 2 nd largest economy, and is currently one of the world's fastest-growing major economies. o Since the handover in 1997, the strength of China’s expanding infrastructure has forged ever closer ties between Hong Kong and the rest of China. o Hong Kong has become the natural gateway for Chinese nationals to invest their wealth; people increasingly move to China for business and to live. 2

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors China & Hong Kong o The socioeconomic dynamic creates vast opportunities for Hong Kong and China to work together. o In the family context, this creates issues as Chinese Family Law is in some instances vastly different to that of Hong Kong and the rest of the world. 3

Family Law and the Cross Border element 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors o In 2013 alone, around 20, 000 divorce proceedings were issued in the Hong Kong Courts. o Of 20, 000 divorce decrees granted, a third involved a party from China. o Common scenarios: Scenario A Wife and Child living in China while Husband works and lives mainly in Hong Kong; 4

Family Law and the Cross Border element 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Scenario B ØWife and Husband both born in China and of Chinese descent. H emigrated to Canada and started a trading business importing products from China for sale in Canada. ØH and W met in Canada and subsequently married. ØThe marriage was registered in Hong Kong but celebrated in Beijing. ØTheir son was born in HK. ØH and W’s marriage broke down. ØH and W spent considerable time in Beijing and Hong Kong. W has permanent residency status in Hong Kong and works in Hong Kong. ØIn a case like this, Forum Non Conveniens – should it be Hong Kong or China? 5

Family Law and the Cross Border element Ø Ø Ø 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors i. W issued divorce proceedings in Hong Kong based on substantial connection ii. H issued divorce proceedings in Beijing iii. H issued application to dismiss W’s petition and stay HK proceedings on basis that Hai Dian People’s Court in Beijing was appropriate forum iv. W issued application to restrain H from proceeding in Beijing. 1. Court will only grant stay of proceedings as a matter of discretion. Burden then falls to the party seeking stay to show HK is not appropriate forum and that the other forum is clearly and distinctly more appropriate than HK; 2. Court will not grant stay if the party continuing in HK can show he will suffer judicial disadvantage in other jurisdiction. 6

Family Law and the Cross Border element Ø Ø Ø 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Interestingly in China, H (who is the petitioner) who wants to issue divorce proceeding in China must issue proceedings in the right district of the respondent’s residence or 户口, in this case, the H first issued in Chao Yang Court and his proceeding was dismissed. H then appealed to Beijing 1 st Intermediate Court. Also dismissed. H then lodge further appeal to Beijing Supreme Court, but was also dismissed. In essence, Court in HK has to decide whether H & W has a real or substantial connection to HK. In this case the judge ruled that in this increasingly international and mobile age, Wife spent significant periods of time in Beijing and Mainland, but also lived and worked in HK. She has substantial connection to HK. 7

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Cross Border Marriages o To divorce in Hong Kong, 3 heads must be fulfilled under section 3 of the Matrimonial Causes Ordinance: - 1. Either party is domiciled in Hong Kong at date of divorce application 2. Either party was habitually resident in Hong Kong throughout the period of 3 years immediately preceding the date of the divorce application 3. Either party has a substantial connection with Hong Kong at the date of the divorce application. 8

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Cross Border Marriages o Main considerations for conducting proceedings in Hong Kong Ø Extensive financial discovery Ø Obligation on both parties to disclose all documents to make full and frank financial disclosure Ø Hong Kong Courts make orders after considering total world -wide assets Ø Injunctions or restraining orders preventing dissipating assets worldwide Ø Interim maintenance for spouses and children 9

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Basis of Divorce o Basis: irretrievable breakdown of the marriage by reason of one or more of the following: Ø Ø Ø Adultery Unreasonable Behavior 1 year separation with Consent 2 years separation 1 years desertion 10

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Asset Tracing o There are number of experts whose evidence or professional opinion will be relied upon in the financial aspect of the matrimonial case; with forensic accountants and investigators in conducting investigation and discovery work as to: 1) hidden personal assets; 2) evidence of infidelity; and 3) status enquiries. 11

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Financial Disclosure o Form E Financial Statement 1) Most important in the financial aspect of a Hong Kong divorce matter. 2) Failure to give full and frank disclosure may lead to any order the court makes being set aside and an adverse order for costs being made against the guilty party. If a party is found to have been deliberately untruthful, he or she may be referred to in criminal perjury action. 12

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Financial Disclosure 3) Must disclose the following evidence in the Form E: Ø Bank and credit card statements Ø Inland Revenue Returns (2 years) including employer’s details Ø Shareholding and directorships in companies Ø Property holding in HK or elsewhere Ø Stock and share investment holding Ø Monthly spending Ø Liabilities 13

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Asset Tracing o Filing of Questionnaires Ø After the basic level of financial disclosure given by the parties under the Form E, solicitors and forensic accountants will study the other party’s Form E and its attachments and formulate further questions contained in a legal pleading to further the discovery process. o Landed property valuations o Company valuations 14

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Ancillary Relief o Consideration shall be given to the section 7 of the Matrimonial Proceedings and Property Ordinance which states that the courts should give consideration to the following: Ø Ø Ø Ø Income or earning capacity of the parties; Financial needs of the parties Standard of living enjoyed by the family prior to breakdown; Age of parties to marriage and duration of marriage; Physical or mental disabilities of the parties; Contributions of each party to welfare of the family; and The value of any benefit either party may lose chance of acquiring by reason of breakdown of the marriage. 15

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Ancillary Relief o Hong Kong landmark case LKW v DD has confirmed the important principle of “the yardstick of equality” in the division of assets. Ø o The starting point of “the yardstick of equality” does not equal the final figure that the Court will award but the longer the marriage the more likely it is that there will be a 50/50 split of assets. Valuation of the total matrimonial pool of assets Ø When parties cannot agree on the value of the landed properties or company/business concerned. 16

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Ancillary Relief o Duxbury calculations Ø Maintaining the standard of living for the financially dependent spouse is also a main area of concern, especially when a clean break cannot be reached and spousal maintenance comes into play. Ø Duxbury calculations are an accounting exercise or an appraisal of a lump sum level an individual will need to spend for the rest of his/her life at a certain level of expenditure every year. 17

Child Custody, Care and Control 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Custody o. Which means the bundle of rights that parents have over their children including the right to make all important decisions affecting the child in relation to health, development and general welfare. o. Otherwise, it can be deemed to be the responsibility of acting as the child’s legal representative. o. The usual order is sole custody unless the parents have a workable relationship. In Hong Kong, there is an increasing movement towards parents having joint parental responsibility meaning joint custody of the child. 18

Child Custody, Care and Control 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Care & Control o. Being physical control of the child’s day to day care and supervision. o. The usual order is sole care and control, although increasing movement towards shared care and control where children spend an equal or similar amount of time with each parent. Access o. The party without care and control shall have access which shall be defined or where not defined, reasonable. It is usual that there shall be staying access to enable the child to have a meaningful relationship with both parents. 19

Relocation & Cross Border Access 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors o As between Hong Kong and China, there are problems of parental child abduction and cross border access for the children. o In relation to Family proceedings there are no reciprocal enforcement agreements between Hong Kong and China o Therefore, non-recognition of Hong Kong Family court orders in China. 20

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Child Custody in China o Historically, the accepted social norm was that children would be raised by the paternal side of the family o With the improvement of the social and family status of women in China, women are entitled to issue for divorce and to ask for custody of their own children. o In cases involving two or more children of the family, it is usual that each parent will have custody of one or more children. o Fathers will normally have custody of boys so as to continue the family name. 21

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Child Custody in China o The introduction of the one-child policy or officially the family planning policy, has led to many vigorous battles over the single child of the family upon divorce. o In China, there is no definition of “custody” but regard should be given to Article 36 of the Marriage Law of the PRC: Ø Relationship as between parent and child will not be set aside after divorce Ø Post divorce, parents still have right and responsibility towards upbringing and education of the child Ø Custody should favour child’s physical and mental development Ø Babies should be brought up by mothers post divorce. 22

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Child Custody in China o The age of children is a consideration, usually: Ø Mother will have custody of children under 2 years old Ø Between 2 to 10 years old, the courts will consider the living situation of the child during the marriage Ø Over 10 years old, the court will consider the child’s wishes. 23

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Child Custody in China o Other factors will include: Ø Ability of parent to have other children in the future Ø Time spent with each parent prior to breakdown of marriage Ø Respective health of the parties Ø Extended families Ø Gender of the child, usually girls to mother and boys to father Ø Principle of equality, if there are two children, each parent will get custody of one child. 24

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Child Access in China o Access is a right of ‘non-custodial’ parent to contact the child post divorce, it is not viewed as the child’s right. o The ‘custodial’ parent shall be obliged to facilitate access. o Exercise of right of access must be in the best interest of the child. o Child’s views should be taken into account if the child is able to how access takes place: Access should not be forced on the child 25

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Child Access in China o Age of the Child is relevant: ØUnder 2 years old, access takes place at the home of the child; ØBetween 2 to 10 years old, access takes can take place at the home of the child or outside; views of the child not a consideration; ØOver 10 years old, the child’s views should be considered and access should be by the child’s consent. o Custodial parent’s refusal to cooperate or facilitate access may result in detention or fine, though penalties not defined and Courts will not forced child to return to his/her residence and cannot force access on the child. 26

Cross-border Issues – Hague Convention o 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors The Hague Convention on the Civil Aspects of International Child Abduction does not apply in China, and where the child is in China: Ø Guardianship or custody orders from the Hong Kong Courts do not have force of law in China and may not be enforced Ø Can only seek the cooperation of Chinese authorities to help find the child and encourage the parental child abductor to return the child to habitual residence 27

Cross-border Issues – Hague Convention Ø 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Difficulty in locating a child in a country with a population of over 1. 35 billion and covering an area of 9. 7 million km 2, which has not centralized system for population information or movement. o Where the child is in HK: Ø Order of Wardship can be obtained in from the High Court of Hong Kong Ø Following which, the return of the child achieved by the voluntary return of the child by the parental child abductor or by initiating legal proceedings. o For this reason, Hong Kong courts are reluctant to allow parties to remove a child to China for holidays. 28

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Child Custody – Relocation o The Hong Kong Court’s jurisdiction to restrict removal of children from being removed outside of Hong Kong per Rule 94(2) of the Matrimonial Causes Rules: n “A petitioner or respondent, or in case of a joint application, either of the joint applicants concerned may apply at any time for an order prohibiting the removal of any child of the family under 18 out of Hong Kong or out of the custody, care or control of any person named in the application without the leave of the court except on such terms as may be specified in the order. Unless otherwise directed, an application under this paragraph may be made ex parte. ” n Entry to Immigration Department’s Stoplist. 29

Child Custody – Permanent Removal part 1 o Application for permanent removal of Child from jurisdiction per Rule 94(1) of the Matrimonial Causes Rules n o 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors “An application for leave to remove a child permanently out of Hong Kong shall be made to a judge unless the application is unopposed, in which case it may be made to the registrar. ” Considerations - K v W [2006] 2 FLR 292 Ø what is in the welfare of the child Ø Consideration of the reasonable proposals Ø Need to be satisfied of motivation for the move Ø Effect of refusal of the application on the applicant 30

Child Custody – Permanent Removal part 2 Ø Ø 葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors The effect of approval and thus denial of the child’s access to the other parent The opportunity for continual contact between the child and the other parent Need for imposition of conditions Need for international social investigation reports. 31

葉永青，稀蓮達律師行 Ip & Heathfield, Solicitors Contact Information Ms. Jennifer Ip c/o 13 th Floor, Fung House 19 -20 Connaught Road Central Hong Kong Email: jip@ihlaw. com. hk Website: www. ihlaw. com. hk 32