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𝐒𝐡𝐞𝐧𝐳𝐡𝐞𝐧–𝐇𝐨𝐧𝐠 𝐊𝐨𝐧𝐠 𝐂𝐫𝐨𝐬𝐬-𝐁𝐨𝐫𝐝𝐞𝐫 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐦𝐢𝐧𝐚𝐫: 𝐂𝐫𝐨𝐬𝐬-𝐁𝐨𝐫𝐝𝐞𝐫 𝐃𝐢𝐬𝐩𝐮𝐭𝐞 𝐑𝐞𝐬𝐨𝐥𝐮𝐭𝐢𝐨𝐧, 𝐖𝐞𝐚𝐥𝐭𝐡 𝐒𝐮𝐜𝐜𝐞𝐬𝐬𝐢𝐨𝐧 𝐚𝐧𝐝 𝐅𝐚𝐦𝐢𝐥𝐲 𝐌𝐚𝐭𝐭𝐞𝐫𝐬

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Oct 26 2023

The Hong Kong Court of First Instance (Court) recently decided due process issues arising from the fairness of remote hearings in not one, but two, judgments. In Sky Power Construction Engineering Ltd v Iraero Airlines JSC [2023] HKCFI 1558 (Sky Power), the respondent argued that the tribunal’s decision to order a fully virtual hearing prejudiced its ability to properly assess the testifying witness’s demeanour. The Court rejected the respondent’s arguments. In Song LiHua v Lee Chee Hon [2023] HKCFI 2540 (Song), the Court held that an arbitrator’s “obvious” failure to concentrate during the remote hearing violated due process.

Despite the opposite outcomes (where one award was enforced and the other was not), there are common takeaways from both judgments. These are especially important given remote hearings are here to stay. For example, the Hong Kong International Arbitration Centre (HKIAC) reported in October 2023 that most of its hearings this year (to date) have involved some virtual element.

Key Takeaways

First, the Court clarified that fully virtual hearings may be procedurally acceptable if a tribunal has appropriately considered the reasons for it. In Sky Power, the Court found the arbitrator had duly considered the “difficulties and delay caused by the global pandemic, the need for a speedy resolution of the Arbitration without further postponements in the face of the changing situation and the evolving health regulations and travel restrictions, when she decided on the timing and format of the hearing”. Neither party had voiced any concerns during the remote hearing as regards any interference or difficulties encountered.

However, it should not be considered a blanket endorsement by the Hong Kong courts for virtual hearings in every case, especially if a party objects. Ultimately, the Court’s decision will turn on specific facts of the case. The shift here was not from a fully in-person to a fully virtual hearing, which might have presented more complex challenges and considerations.

Second, the International Council for Commercial Arbitration’s (ICCA)Task Force 2022 Report on the legal, conceptual and practical implications of remote hearings in international arbitration provides a broader context to the Hong Kong courts’ decisions. Following a survey of 82 New York Convention jurisdictions, the report’s authors conclude that the risk of an award being set aside due only to a remote hearing is minimal. However, any such decision will be fact-specific, dependent on various factors, including the law of the seat of arbitration, the rules chosen by the parties, and the tribunal’s handling of the issue.

The authors observe that based on existing case law, for a challenge to an award to be successful, there needs to be a factor that makes the remote hearing egregiously unfair. These factors could prevent a party from presenting its case or result in unequal treatment. The authors remarked that the courts have generally given little weight to logistical challenges that might arise in remote hearings, such as technological glitches, time zone differences or arguments based on the need to “eyeball” a witness.

Third, Song provides an example of an “egregiously unfair” situation. In a video-recorded excerpt from a remote hearing lasting about two and a half hours, it was observed (among other things) that, during the presentation of legal and evidentiary submissions:

The arbitrator had “scarcely been stationary for more than 1 minute”, apart from when he was sitting in his car. He moved between rooms, “at times talking to and/or gesturing to others in the room”.
He disconnected from the hearing at various times, with no or little explanation for his absence.
It appears that the arbitrator did not use any headphones or earpiece and was instead relying on the speaker of his mobile telephone or other handheld advice. When asked at two points whether he was online or could hear the proceedings, he did not respond verbally or by gesture.

The Court found that these (and other) factors gave rise to a breach of natural justice and the parties’ right to be heard. In these circumstances, an objective observer would have reasonable doubts. First, as to whether the arbitrator had already made up his mind on the dispute before hearing the parties. And second, whether his decision in the case could be supported by the evidence (given he had no properly focused on it). The Court concluded that there was “no apparent justice and fairness, when a member of the decision-making tribunal was not hearing and focused on hearing the parties in the course of the trial”.

The Court refused to enforce the award even though the Respondent’s lawyers had not raised any objections to the arbitrator’s conduct during the hearing (and even affirmed that they had no objection).

Finally, parties should take practical steps to protect their interests if there is a remote hearing:

Raise contemporaneous procedural objections if you have concerns about the conduct of proceedings, as it may assist if it is necessary to challenge an award later. While parties may not want to raise objections for seemingly minor issues, in some circumstances, an objection will be warranted, even if it leads to a delay in resolving the proceedings. It will be necessary to safeguard the award from potential enforcement challenges.
Consider how a remote hearing can be conducted as effectively as possible for your client (for example, mitigating the distortions that can arise from remote examination of a witness).

Pamela Mak and Elizabeth Chan

If you would like to discuss any of the matters raised in this article, please contact:

Pamela Mak

Partner | Email

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Sep 18 2023

This article was initially published by The Global Legal Post.

1 . What is the structure and organisation of local courts dealing with commercial claims? What are the main procedural rules governing commercial litigation?

The Basic Law of Hong Kong (HKBL) is the constitutional document upon which the Special Administrative Region is founded. Section 4 of the HKBL expressly provides that Hong Kong will have an independent judiciary, which will exercise judicial powers free from any interference.^[1] The Hong Kong legal system is thus separate from the legal system of the People’s Republic of China (PRC).

The court system in Hong Kong is bilingual and proceedings can be conducted in either or both Chinese and English.^[2] Pursuant to Article 81 of the HKBL, the courts in Hong Kong comprise of:

The Court of Final Appeal. This is the final appellate court of Hong Kong and has the power of final adjudication.^[3] The Chief Justice of the Court of Final Appeal is the head of the judiciary.
The High Court, comprised of the Court of Appeal and the Court of First Instance (CFI). The Court of Appeal hears appeals on civil and criminal matters from the CFI and the District Courts, as well as from the Lands Tribunal. The CFI has unlimited jurisdiction in both criminal and civil matters. It also hears appeals from the Magistrates’ Courts, the Labour Tribunal, the Small Claims Tribunal and the Obscene Articles Tribunal.
The District Court, which has limited jurisdiction in both criminal and civil matters. The Family Court of Hong Kong is also part of the District Court.
Magistrates Courts, which exercise criminal jurisdiction over a wide range of indictable and summary offences.
Other special courts, which include the Competition Tribunal, the Lands Tribunal, the Coroner’s Court, the Labour Tribunal, the Small Claims Tribunal, and the Obscene Articles Tribunal.

Major commercial disputes are usually brought before the CFI as it has unlimited civil jurisdiction. The District Court has jurisdiction over smaller commercial disputes (of values over HKD 75,000 and up to HKD 3 million). Claims below HKD 75,000 are dealt with by the Small Claims Tribunal.

In addition, the CFI reserves jurisdiction in certain types of disputes, in particular the:

Construction and Arbitration List for disputes concerning civil or mechanical engineering; building or other construction work; claims by or against engineers, architects, surveyors and other professionals engaged in the construction industry; and applications relating to arbitration.^[4]
Intellectual Property List for applications, appeals or claims made in respect of matters such as trademarks, patents, copyrights and other registered designs.^[5]
Constitutional Law and Administrative Law List for applications such as judicial review and other issues relating to the HKBL.^[6]
Commercial List for actions involving commercial matters.^[7]

Procedures in civil proceedings in Hong Kong are set out in the Rules of the High Court (Cap 4A) (RHC) and the Rules of the District Court (Cap 336H) (which is very similar to the RHC). Practice Directions are also published to provide further practical guidance to civil and criminal procedures in the Hong Kong Courts.
^{[1] Article 85, HKBL.}

^{[2] Article 9, HKBL.}

^{[3] Article 82, HKBL}

^{[4] Practice Direction 6.1.}

^{[5] Practice Direction 22.1.}

^{[6] Practice Direction 26.1 and SL3.}

^{[7] Practice Direction SL1.1.}

2 . What pre-action considerations apply?

There are no specific rules on pre-action conduct but it is customary (though not necessary) for actions to be preceded by letter(s) before action. This is because the court has wide discretion in dealing with the matter of costs (see Question 7 below) and the court may take into account parties’ pre-action conduct in determining costs issues.^[8] As such, parties should ensure that they act reasonably before, as well as during, the proceedings.

It may also be relevant to consider the matter of limitation periods in Hong Kong, which are set out in the Limitation Ordinance (Cap. 347).

^{[8] Order 62, rule 5(1)(e) and (2)(d), RHC.}

3 . What are the main alternative dispute resolution (ADR) methods used to settle large commercial disputes?

The most common ADR methods in Hong Kong are mediation and arbitration.

Mediation

Mediation involves the appointment of a neutral third party to help facilitate settlement discussions. Since Hong Kong’s implementation of the Civil Justice Reform (CJR) in 2009, solicitors are required to file mediation certificates confirming that they have advised their client on the mediation process and indicating whether their clients are willing to participate in mediation. There is also a Practice Direction providing a practical framework for incorporating mediation into the court process.

Arbitration

Arbitration is an ADR method which is particularly popular with parties involved in high-value and complex international commercial disputes. Arbitration is favourable to the parties in these disputes due to its relative procedural flexibility (compared to court proceedings) and its confidential nature. Arbitral awards are generally final and binding (see Question 11 below) and can be enforced through the Hong Kong courts (as well as in foreign courts).

4 . How long, on average, do court proceedings take to reach trial?

Relatively straightforward civil matters commenced by writ of summons could be ready for trial two to three years from the commencement of proceedings. However, more complex matters where the timeline is delayed by multiple interlocutory applications could take many years before they are ready to be set down for trial. In addition, the date of the actual trial would depend on the number of days required (to be directed by the court, having consulted with the parties) and the court’s diary.

In certain circumstances, a plaintiff may obtain judgment without a full trial. These circumstances are discussed further in Question 8 below.

5 . What disclosure obligations apply? Are parties required to disclose unhelpful documents as well as those on which they rely?

There are two main types of discovery: automatic discovery and specific discovery.

Automatic discovery

Pursuant to Order 24, rule 1, RHC, parties are required to provide discovery of documents “which are or have been in their possession, custody or power relating to matters in question in the action”. These include documents that are not favourable to the parties’ own cases and may include any paper documents and any electronic data contained in any tapes, discs or other electronic means. Order 24 rule 2(1), RHC requires discovery to take place within 14 days after the close of pleadings (where matters are commenced by writ).

‘Relevance’ in this context has typically been given a wide meaning, and would cover, for example, documents that would assist a party in proving or disproving a matter. However, in the interest of wider case management, the court has express powers under Order 24, rule 15A, RHC to limit the discovery of documents.

Where a party is concerned that some of the documents are privileged, the claim for privilege must be set out in the list of documents^[9] and the relevant documents must still be identified. It can then refuse to allow the other party to inspect the documents.

Specific discovery

Where, after the completion of automatic discovery, a party is of the view that the other party has failed to disclose documents in accordance with the above procedure, it can apply to the court for an order compelling the other party to disclose those documents.^[10]

^{[9] Order 24, rule 5(2), RHC.}

^{[10] Order 24, rule 3, RHC.}

6 . Can witnesses be required to attend trial and face cross-examination?

As a general rule, Order 38, rule 1, RHC provides that “any fact required to be proved at the trial of any action begun by writ by the evidence of witnesses shall be proved by the examination of the witnesses orally and in open court”.

Where parties have prepared and filed witness statements, they must ensure that their witnesses are available to attend trial. Where a party is unsure whether its witness will attend the trial, it can consider issuing a writ of subpoena to compel the witness to attend.^[11]

^{[11] Order 38, rule 14, RHC.}

7 . What discretion do the courts have in making costs orders?

Generally, costs will follow the event and the unsuccessful party will be ordered to pay the successful party’s costs. However, the court has discretion to make any costs orders it considers appropriate,^[12] having regard to matters such as the parties’ respective conduct in the proceedings, whether settlement offers have been made, or the level of success (i.e., whether the successful party had only been partially successful). In rare situations, the court also has the discretion to order costs against a legal representative.^[13]

Unless the parties can reach an agreement on the amount of costs to be paid, the amount claimed by the receiving party will have to be assessed (or taxed) by the court, whereby a taxing master will consider the case and the papers and assess the costs claimed by the receiving party.^[14]

The receiving party is generally also entitled to interest on any costs from the date of the costs order. However, if the taxing master considers that there has been undue delay in commencing taxation proceedings or in proceeding with the taxation, they may exercise their discretion to disallow interest or reduce the rate of interest or period during which it is payable.^[15]

^{[12] Order 62, rule 3, RHC.}

^{[13] Order 62, rules 8 to 8E, RHC.}

^{[14] Order 62, rule 12, RHC.}

^{[15] Order 62, rule 22(5)(c), RHC.}

8 . What are the main types of interim remedies available?

The procedural rules provide for a number of different applications for interim remedies. What is appropriate in each case will be different as each case will develop according to the manner in which the case is defended.

Default judgment

A plaintiff can apply for default judgment where the defendant:

fails to give notice of intention to defend;^[16] or
fails to serve a defence within the prescribed time limit.^[17]

A defendant may also apply to the court to have an action dismissed if the plaintiff fails to serve a statement of claim within the prescribed time limit.^[18]

Summary judgment

Where the defendant serves a defence but the plaintiff considers that the defendant has put forward no arguable defence against its claim, the plaintiff can apply to the court for summary judgment.^[19] This application is made by way of summons supported by affidavit setting out the plaintiff’s belief that “there is no defence to that claim or part, […] or no defence except as to the amount of any damages claimed”.^[20] To avoid summary judgment being entered against it, the defendant would need to show, primarily, that there is an issue in dispute that ought to be tried.^[21] However, summary judgment is not available for certain causes of action.^[22]

Security for costs

Plaintiffs based overseas may be subject to an application by the defendant for security for costs. A defendant (or a plaintiff who is a defendant in a counterclaim) can apply for an order for security for costs to be paid by the plaintiff on a number of grounds:

the plaintiff is ordinarily resident out of the jurisdiction;^[23]
the plaintiff is a nominal plaintiff suing for the benefit of another party, and there is reason to believe that it will be unable to pay the defendant’s costs;^[24]
the plaintiff’s address is not stated in the writ or other originating process or is incorrectly stated (unless this was an innocent error and not made with an intention to deceive);^[25]
the plaintiff changed its address during the course of the proceedings with a view to evading the consequences of the litigation;^[26] or
where there is reason to believe that a plaintiff company will be unable to pay the defendant’s costs (e.g., where it is in liquidation).^[27]

If one of the above grounds are satisfied, then the court may exercise its discretion to grant security of costs. In exercising this discretion, the court will have regard to all the circumstances of the case, including the merits of the claims.^[28]

Other interim measures, such as injunctions, are available to preserve assets and assist with the enforcement of judgments. These are discussed at Question 16 below.

^{[16] Order 13, rules 1 to 6, RHC.}

^{[17] Order 19, rules 2 to 6, RHC.}

^{[18] Order 19, rule 1, RHC.}

^{[19] Order 14, rule 1, RHC.}

^{[20] Order 14, rule 2(1), RHC.}

^{[21] Order 14, rule 3(1), RHC.}

^{[22] Order 14, rule 1(2), RHC.}

^{[23] Order 23, rule 1(1)(a), RHC.}

^{[24] Order 23, rule 1(1)(b), RHC.}

^{[25] Order 23, rules 1(1)(c) and (2), RHC.}

^{[26] Order 23, rule 1(1)(d), RHC.}

^{[27] Section 905, Companies Ordinance (Cap. 622).}

^{[28] Order 23, rule 1, RHC; See also §23/3/3 of Hong Kong Civil Procedure 2023.}

9 . What approach do the local courts adopt with respect to arbitration? What arbitration law applies and is it based on the UNCITRAL Model Law?

Arbitration in Hong Kong is governed by the Arbitration Ordinance (Cap 609) (AO), which came into force in June 2011. The AO is largely based on the UNCITRAL Model Law, with each article of the UNCITRAL Model Law forming a section in the AO, supplemented by details of any modifications which have been included to fit the local context.

Parties cannot unilaterally force the other to arbitrate and therefore there must be a valid arbitration agreement. In most cases, the arbitration agreement is incorporated as part of the contract from which the dispute arose. However, if there is no arbitration agreement in the contract, there can still be a separate arbitration agreement between the parties providing for the dispute to be referred to arbitration.

If one party commences legal proceedings in the court, notwithstanding that such party had previously agreed to arbitration, the other party may apply to court for the proceedings to be stayed in favour of arbitration. The party requesting the stay must show prima facie that there is a binding arbitration agreement.^[29] Then, the court will only refuse to stay the proceedings in limited situations, for example:^[30]

where the party requesting the stay has already submitted its first statement on the substance of the dispute, for example by filing a defence; or
if the court considers that the arbitration agreement is null and void, inoperative or incapable of being performed.

Section 12 of the AO provides that the court cannot intervene in arbitration proceedings, except where court intervention is specifically provided for in the AO.

^[29]^{Tommy CP Sze v. Li & Fung (Trading) Ltd}^{[2003] 1 HKC 418; see also}^{L v. M N & Anor}^{[2021] HKCFI 2829.}

^{[30] Section 20(1), AO.}

10 . Can arbitrators grant interim relief?

The arbitral tribunal is empowered by section 35 of the AO to grant interim measures pending the determination of the matter, which include injunctions as well as other interim measures and procedural orders such as provision of security and disclosure of documents.

Section 45 of the AO also specifically allows parties to go to court to seek interim relief in relation to any arbitral proceedings which have been or are to be commenced in or outside Hong Kong. This is particularly valuable for urgent situations because, notwithstanding sections 22A and 22B of the AO which provides for emergency relief, it would be much quicker to make an urgent application to the court.

11 . On what grounds can an arbitration award be appealed?

An arbitrator’s award is final and binding.^[31] There is no automatic right to appeal unless the parties have expressly opted for certain provisions. Where the award cannot be appealed, the only other available recourse is an application to the court for the award to be set aside on the grounds set out in section 81 of the AO.

Courts in Hong Kong are generally careful to not be seen to be interfering with arbitration proceedings. The grounds set out above are applied narrowly and the threshold that must be met before an arbitration award can be set aside is high.^[32]

^{[31] Section 73, AO.}

^[32]^{LY v. HW}^{[2022] HKCFI 2267.}

12 . What international conventions and agreements on enforcement of judgments or arbitral awards is your jurisdiction a party to?

Hong Kong is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Hong Kong is otherwise not a party to any international conventions and agreements dealing with the enforcement of foreign judgments. For a foreign judgment to be enforceable in Hong Kong, it must either be registrable under the limited statutory regime that exists, or recognised under the common law by way of bringing separate proceedings on the judgment.

13 . What types of judgments in commercial matters are enforceable and what types are excluded?

Domestic judgment

Generally speaking, all types of domestic judgments can be enforced. Even where a judgment is in the process of being appealed, it is still enforceable unless the defendant applies for a stay of execution.

Foreign judgment

The process of the enforcement of foreign judgments will be discussed below in Question 14 and, generally speaking, only final money judgments can be enforced. Where a judgment is to be registered under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597) (MJREO), only final money judgments in relation to a commercial contract can be enforced.

Other foreign judgments, such as interlocutory judgments and judgments for non-monetary relief (e.g., specific performance) cannot be enforced in Hong Kong.

14 . What is the process for registration of foreign judgments and arbitral awards?

In Hong Kong, foreign judgments can either be:

registered under the limited statutory regime; or
recognised under the common law by way of separate proceedings.

The statutory regime applies in the first instance and where a foreign judgment falls within the scope of the statutory regime it must be registered under it. The common law can only be used when statutory registration is not possible.

Statutory registration

Foreign judgments

Pursuant to the Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap. 319) (FJREO), an application can be made to the CFI to register a foreign judgment. This judgment must satisfy the following requirements:

the judgment must be from a superior court of a designated country (set out in the schedules to the Foreign Judgments (Reciprocal Enforcement) Order (Cap 319A)), and must not be included in the list of excluded proceedings;^[33]
the judgment must be final and conclusive as between the parties;^[34]
the judgment is for a sum of money (but not in respect of taxes or similar charges), a fine or a penalty;^[35]
the recognition application must be made within six years of the date of the original judgment, or where there have been proceedings by way of appeal against the judgment, after the date of the last judgment;^[36]
the judgment must not have been wholly satisfied^[37] — if at the date of registration, the judgment has been partially satisfied, it can be registered only in respect of the balance that is still payable;^[38] and
the judgment must not be enforceable by execution in the country of the original court.^[39]

The application is made ex parte to the CFI but the court may direct the matter to be determined inter partes. If the judgment is registered, notice of registration should be served on the judgment debtor and the foreign judgment can be enforced in the same way as a Hong Kong judgment.

Mainland Chinese judgment

To enforce a judgment granted by a court in any part of China other than Hong Kong, Macau and Taiwan (Mainland Judgment) in Hong Kong, it must be registrable under the MJREO and must satisfy the same requirements under the FJREO with the following modifications:

the judgment must be from the Supreme People’s Court, any Higher or Intermediate People’s Court or certain recognised Primary People’s Courts;
the judgment is in relation to a commercial contract and was given after 1 August 2008; and
the parties to the commercial contract had a written agreement made after 1 August 2008 specifying that the courts in the mainland China have exclusive jurisdiction over the dispute.

The procedure for an application under the MJREO is similar to an application made under the FJREO and is also made ex parte to the CFI.

Common Law recognition

Other judgments that cannot be registered will have to be recognised at common law. The foreign judgment or award will form the basis of a cause of action and the judgment will be treated as a debt between the parties.

For a judgment to be enforceable at common law, the following requirements must be met:^[40]

the foreign judgment must be for a debt or a definite sum of money;
the foreign proceedings were not opposed to natural justice;
the foreign judgment was not obtained by fraud;
the foreign judgment was rendered by a court of competent jurisdiction;
the foreign judgment was final and conclusive;
the enforcement and recognition of the foreign judgment was not contrary to public policy; and
the foreign proceedings were not brought in contravention of an agreement between the parties for the settlement of the dispute and the judgment debtor had otherwise submitted to the jurisdiction of that foreign court.

The practice under the common law is that the judgment creditor will issue proceedings by way of a writ of summons, endorsed with a short statement of claim referring to the foreign judgment. Then, if the judgment debtor acknowledges service of the proceedings, the judgment creditor will make an application for summary judgment. The court will then determine whether the judgment debtor has any bona fide defence (see Question 8 above on summary judgment in general).

Arbitral awards

Section 84, AO states that, with the court’s leave, an arbitration award, whether made in or outside Hong Kong, may be enforced in the same manner as a judgment of the High Court provided there is no pending request to the court to challenge the award.^[41]

Leave is obtained by way of ex parte application with an affidavit in support but the court may direct that the application be dealt with inter partes. Leave is not granted as of right but is a matter of judicial discretion. Once leave has been obtained from the court (and where no application has been made for the leave to be set aside), a judgment can then be entered in the terms of the arbitral award.^[42]

^{[33] Section 2(2), FJREO.}

^{[34] Section 3(2)(a), FJREO.}

^{[35] Section 3(2)(b), FJREO.}

^{[36] Section 4(1), FJREO.}

^{[37] Section 4(1)(a), FJREO.}

^{[38] Section 4(4), FJREO.}

^{[39] Section 4(1)(b), FJREO.}

^{[40] §E3/0/5, Hong Kong Civil Procedure 2023.}

^{[41] Section 26(2), AO.}

^{[42] Section 84(2), AO.}

15 . Once the judgment or award is registered, what are the available methods of execution?

Once registered or recognised (whichever is appropriate), the foreign judgment will be enforceable in the same way as any Hong Kong judgment. All methods available for the enforcement of Hong Kong judgments would be at the party’s disposal.

The judgment creditor may enforce the judgment by way of one or more of the following:

examination order: where the judgment debtor will be cross-examined on oath to disclose information on its assets;
charging order: whereby the court imposes a charge on any property or securities owned by the judgment debtor;
garnishee order: where the debt owed by the judgment debtor is attached to a debt owed to the judgment debtor by a third party (the garnishee);
writs of execution: where the bailiff would be directed to execute the judgment by seizing goods, chattels and other property of the judgment debtor; and/or
winding-up or bankruptcy proceedings: where the debtor company would be wound up (or the debtor will be bankrupt) and a liquidator (or trustee) will be appointed to examine the asset position of the debtor.

Where the judgment to be enforced is a money judgment, garnishee proceedings are usually the most efficient, especially if the judgment creditor knows that there is sufficient balance in the debtor’s bank account.

16 . What interim measures are available pending enforcement?

There are a number of interim measures that have been developed to assist with the enforcement of judgments.

Disclosure orders

As with many other jurisdictions, disclosure orders such as Norwich Pharmacal Orders^[43] and Bankers Trust Orders^[44] are available to assist plaintiffs with tracing their assets and proceeds to parties that have stolen or misappropriated or received misappropriated funds and assets. This allows plaintiffs to obtain pre-action evidence against a wrongdoer, which will allow them to pursue the wrongdoers and ultimately enforce judgments against the wrongdoers.

Where the third party is a bank, the court has an additional power, under section 21 of the Evidence Ordinance (Cap 8), to direct a bank to provide copies of its bankers’ records to a plaintiff to assist them with tracing their assets.

Mareva injunction

A Mareva injunction is a type of interlocutory injunction that restrains a defendant from removing, transferring, disposing of, dissipating or otherwise dealing assets pending judgment or further order.^[45] In granting an application for a Mareva injunction, the court must be satisfied that:

the plaintiff has a good arguable case;
the defendant has assets within the jurisdiction;
there is a real risk of dissipation of the defendants’ assets in such a way that a judgment in favour of the plaintiff would go unsatisfied;
the plaintiff cannot be adequately compensated by an order for damages but where the plaintiff can compensate the defendant or other affected parties for any loss and damages caused by the relief; and
the balance of convenience lies in favour of the granting of the relief.

Proprietary injunction

A proprietary injunction is granted where the plaintiff has a proprietary claim over the defendant’s assets and it is necessary to preserve the assets so that they can be returned to the plaintiff if it is successful in the action. A plaintiff is required to show that there is a serious question to be tried.^[46] Unlike the case for a Mareva injunction, the court is not required to be satisfied that there is a risk of dissipation of assets.^[47]

Interim measures in aid of foreign proceedings

Pursuant to section 21M, HCO, the court has jurisdiction to grant interim relief, including Mareva injunctions or proprietary injunctions in Hong Kong, in aid of foreign proceedings.^[48]The court will need to be satisfied that:

the facts of the case warrant the grant of the interim relief if the proceedings were brought in Hong Kong;
the judgment to be obtained may be enforced in Hong Kong;^[49] and
the fact that the court otherwise has no jurisdiction does not make it unjust to grant the relief sought.^[50]

Where an ancillary injunction has been obtained under section 21M, HCO, the defendant’s assets will be preserved. When a foreign judgment has been obtained, an application can be made for the enforcement of the same in Hong Kong (see Question 14 above) against the defendant’s assets.

Prohibition order

This is an order prohibiting a judgment debtor from leaving Hong Kong. The CFI’s jurisdiction to make prohibition orders are provided under section 21B(1) of the HCO,^[51] which also sets out the judgments in relation to which a prohibition order can be obtained. As with injunctions, prohibition orders are discretionary reliefs. Prohibition orders are initially granted with a one-month period (but may be extended to up to 3 months).

In deciding to grant a prohibition order, the court must consider the following:^[52]

whether there is a real likelihood that the judgment debtor will leave Hong Kong;
whether there is a real risk that they will not return for a substantial period of time; and
whether as a result of their absence enforcement of the judgment would be obstructed or delayed.

Stop order

Pending enforcement of judgment, judgment creditors may apply for a “stop notice”^[53] in relation to securities held by the judgment creditor. This has the effect of preventing any transfer of the securities being registered until 14 days after notice of the proposed transfer has been sent to the judgment creditor.^[54]

^{[43] Originated from}^{Norwich Pharmacal Co. v. Customs and Excise Commissioners}^{[1974] AC 133.}

^{[44] Originated from}^{Bankers Trust Co v. Shapira}^{[1980] 1WLR1274 CA.}

^{[45] Section 21L(3), High Court Ordinance (HCO).}

^[46]^{American Cyanamid v. Ethicon Ltd.}^{[1975] AC 396.}

^[47]^{Zimmer Sweden AB v. KPN Hong Kong Ltd}^{(Unreported, HCA 2264/2013, 2 May 2014).}

^[48]^{Compania Sud Americana De Vapores S.A. v. Hin-Pro International Logistics Ltd}^{[2015] HKEC 398.}

^{[49] Section 21M(1)(b), HCO.}

^{[50] Section 21M(4), HCO.}

^{[51] There is a similar provision at section 52E of the District Court Ordinance.}

^[52]^{Yue Wah Chuk Richard & Anor v. Mckeon Bredan Hugh}^{(unreported) DCCJ 7088/2003, 24 August 2004, as cited in}^{Questnet LTD v. Kurt Georg Rocco Rinck and Anor}^{(unreported) HCA 1475/2006, 22 February 2008 and}^{CWYJ v. LTYE}^{[2020] HKCA 913.}

^{[53] Order 50, RHC.}

^{[54] Order 50 rule 12, RHC.}

Ian De Witt and Natalie Lam

If you would like to discuss any of the matters raised in this article, please contact:

Ian De Witt

Partner | Email

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Jun 26 2023

After the COVID-19 pandemic subsides and the borders between countries reopen, there has been a noticeable increase in prosecutions related to immigration offences in Hong Kong, such as overstaying and making false statements.

In Hong Kong, the Immigration Department is the primary law enforcement agency responsible for handling such cases. If you are suspected of committing immigration offences, you will usually be required to attend an interview with the Investigation Unit of the Immigration Department located at the Skyline Tower in Kowloon Bay. In the event that you are charged, you will be required to attend a court hearing, most likely at the Shatin Magistrates’ Court.

1. Overstaying contrary to Section 41 of the Immigration Ordinance (Cap.115):

The offence: A person who overstays in Hong Kong beyond the permitted period of stay as specified in his/her travel document may be charged under this offence.

There has been an increasing number of cases where individuals visiting Hong Kong continue to stay in Hong Kong beyond the time allowed without applying for a renewal or extension of their visas, especially during the COVID-19 pandemic where most people were restricted from travelling to other countries.

Possible sentence: The principles for determining the sentences for overstaying cases were laid down in HKSAR v Manalad Tiongson Patricia. In summary the penalty normally depends on the length of time a person has overstayed, imprisonment can be avoided if there are good mitigating factors.

Taking up employment whilst overstaying without any work visa is considered as a very serious aggravating factor and normally results in imprisonment.

2. Making a False Representation to an Immigration Officer contrary to Section 42(1) of the Immigration Ordinance

The offence: A person who had provided false information or had made false statements to immigration officers, either during the visa application process or at immigration checkpoints, may be charged under this offence.

The Immigration Department nowadays places heavy scrutiny on the information submitted with visa applications. Even apparently minor discrepancies in particulars of date and place of birth may trigger an investigation.

Possible sentence: Conviction of this offence usually results in a custodial sentence. Those who make a false representation to an immigration officer should expect the same punishment as that for using a false travel document, namely, 12 months’ imprisonment after a guilty plea.

3. Employment of Illegal Workers contrary to Section 17I of the Immigration Ordinance Immigration Ordinance

The offence: Employers may be charged under this offence for hiring individuals who do not possess valid documents (for example, a work visa) that permit them to work in Hong Kong. Where the employer in question is a company, under Section 101E of the Criminal Procedure Ordinance, the director of the employer or other officer concerned in the employer’s management will also be liable if the offence is committed with their consent or connivance.

Employers will still be in breach of the law and liable notwithstanding that the employee has had a valid work visa to work in Hong Kong when he/her was employed, but that work visa has expired and has not been renewed in a timely manner due to Covid-19 or other reasons.

Statutory defence: An employer who is charged with this offence may establish a defence by demonstrating, on a balance of probabilities, that he/she took all practicable steps to determine whether the employee was lawfully employable and that it was reasonable to conclude that the employee was lawfully employable.

Possible sentence: A custodial sentence usually follows a conviction of this offence. The Court will take into account whether the offence involves a single employee, whether the employment is on a causal basis, and if there are any other aggravating factors (such as exploitation, multiple employment or repeat offending). 3 months’ imprisonment is appropriate for a first offender if no aggravating factor is present.

How can we help?

Our Dispute Resolution Team is experienced in assisting clients in the Immigration Department’s investigation process concerning a wide range of immigration offences. We are proud to be praised by clients as smoothing the otherwise unpleasant process and helping them achieve the best possible outcome.

Pamela Mak, Russell Bennett and Adam Hoi

If you are seeking legal representation, please contact:

Pamela Mak
Partner | E-mail

Russell Bennett
Partner | Email

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Jun 12 2023

On 16 May 2023, The Honourable Mr Justice Wilson Chan handed down a written decision dismissing Grand Network Technology Limited’s (“GNT”) appeal against the dismissal of its application or security for costs against a foreign plaintiff XY, LLC in XY, LLC v Jesse Zhu (also known as Jia-Bei Zhu and Jessie Jia-Bei Zhu) and Grand Network Technology Limited [2023] HKCFI 1317. This is a rare case in which a foreign plaintiff with no assets or presence within the Hong Kong jurisdiction has successfully defeated a defendant’s application for security for costs.

The context of GNT’s application for security for costs – and its appeal – is a long-standing dispute that has been the subject of extensive litigation in the Courts of British Columbia, Canada and Hong Kong.

At issue before the Court was whether, for the purpose of defeating an application for security for costs, XY, LLC has a “high probability of success” in this action against GNT. This threshold has been described by the Court as “very high indeed” and is to be established without the need for the Court to conduct a “mini-trial” or make a “preliminary run” at deciding the ultimate result of an action.

The Court agreed with submissions made on behalf of XY, LLC that it has a high probability of success in this action against GNT, having regard to and agreeing with earlier findings made by (1) the High Court in November 2015 in relation to GNT’s unsuccessful application to discharge the exceptional remedy of a Chabra injunction successfully obtained by XY and (2) a decision of the Court of Appeal in December 2016 dismissing GNT’s appeal against that earlier decision of the High Court. The Court noted that although the threshold in question before the Court of Appeal was different, the “the findings… are enough to lead to the conclusion that the plaintiff has a high probability of success against GNT in this action” (§31).

The Court also considered that XY, LLC’s position is strengthened by the fact that there are substantial costs orders granted in favour of XY, LLC against GNT and that these costs orders are available for a set-off in case costs is awarded against XY, LLC in this action.

GNT has applied for leave to appeal to the Court of Appeal. A further update is to follow.

Mark Side, Partner, and associates Sharina Mahtani and Ling Meng of TDW’s Dispute Resolution team and Ernest Ng of Parkside Chambers represented XY, LLC at both first instance before a Master and the appeal before Chan J.

Mark Side, Sharina Mahtani and Ling Meng

For more information on commercial litigation, asset tracing and recovery, please contact:

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May 15 2023

On 14 April 2023, the Hong Kong Court of Appeal delivered its decision in Tam Sze Leung & Ors v Commissioner of Police [2023] HKCA 537, overturning the Court of First Instance’s decision which had held that the Letter of No Consent (“LNC”) regime – a longstanding practice operated by the Hong Kong Police which had the effect of creating an immediate if informal freeze on suspicious bank accounts – was, inter alia, unlawful.

Hong Kong is a major money laundering centre and is frequently utilised by fraudsters as a channel to receive payments made by the victims before the monies are dissipated or onward transferred. Thousands of bank accounts in Hong Kong have been used to collect and launder billions of dollars representing proceeds of crime in the past years. The availability to the Police of the power to issue LNCs was an essential part of every fraud and asset recovery lawyer’s arsenal of weapons in assisting the victims of fraud in Hong Kong. The loss of that power created great uncertainty for the Police and practitioners alike.

The decision of the Court of Appeal is therefore a significant relief to victims of fraud, as the LNC regime – which had previously been pivotal in temporarily “freezing” fraudsters’ bank accounts allowing the victims time to take action to preserve and recover their stolen assets – is restored and will continue to operate.

What is the LNC regime?

The LNC regime is derived from sections 25 and 25A of the Organized and Serious Crimes Ordinance (Cap.455) (the “OSCO”), and operates subject to the relevant procedures set out in the Hong Kong Police’s Force Procedures Manual (the “Manual”).

Sections 25 and 25A of the OSCO make it an offence for a bank to deal with property that is known or is reasonably believed to represent the proceeds of crime. A bank that has knowledge that or suspects that property held in an account maintained by the bank represents the proceeds of crime is obliged to make disclosure of that information to an authorised officer or face criminal liability. Further, a bank that allows monies to be dissipated from an account with notice of a fraud can be held civilly liable to restore such funds.

In practice, a bank (or other financial institution) with knowledge of a fraud would discharge this obligation by filing a suspicious transaction report (“STR”) with the Joint Financial Intelligence Unit (“JFIU”), a government division jointly staffed by the Hong Kong Police and the Customs & Excise Department. Upon receipt of the STR, the Head of JFIU – a superintendent of the Hong Kong Police – may exercise the power to either give or withhold consent for the bank to deal with the account. In the event that the Head of JFIU does not consent for the bank to deal with the account, he will issue a letter, commonly referred to as the Letter of No Consent, to the bank indicating that he does not consent to any dealings with the account.

An LNC can be issued very quickly and normally lasts no more than 6 months. During that period, the Hong Kong Police are expected to progress their investigations and undertake regular monthly reviews of the continuation of the LNC. The Police are also expected to obtain a restraint or confiscation order against the accounts concerned to replace the LNC and thereby continue restricting the operation of the accounts.

What is the Tam Sze Leung case about?

In Tam Sze Leung, the applicants were family members and maintained several bank accounts with banks in Hong Kong. They were suspected by the Securities and Futures Commission of having committed stock market manipulation through illegal “pump and dump” activities and arranging for other persons to provide false stock trading tips or insider information to the public, thereby earning a profit at the expense of investors who had been misled by their false information. In assisting the SFC’s investigation, the Hong Kong Police issued LNCs against the applicants’ bank accounts to preserve such profits as had been generated, identifying the proceeds of crime pending further investigation.

When the applicants’ judicial review of the decision of the Commissioner of Police (to issue and maintain the LNC) was heard at The Court of First Instance before the Honourable Mr Justice Coleman, the Judge held that three out of six grounds advanced by the applicants were made out and declared that the LNC regime was (1) ultra vires of OSCO; (2) not prescribed by law; and (3) involved a disproportionate restriction of the constitutional right to property under the Basic Law. The Court also explained its understanding of how the LNC impacted the bank – by causing it not to deal with the account, thereby effectively causing the bank to de facto ‘freeze’ the account.

The Court of First Instance’s decision created uncertainty about the validity of Letters of No Consent. Victims of fraud, among others, were concerned that all Letters of No Consent could be withdrawn by the Hong Kong Police without warning at any time, or could be challenged by the account holders through judicial review proceedings on the grounds upheld by Coleman J at first instance.

What is the Court of Appeal’s decision?

The Commissioner of Police appealed against the Court of First Instance’s decision.

The Court of Appeal found itself in “respectful disagreement” with the Court of First Instance Judge in relation to the grounds he upheld. In short, all of the grounds put forward by the applicants to challenge the LNC regime were rejected by the Court of Appeal. It upheld the operation of the LNC regime as lawful, constitutional and proportionate.

Importantly, the Court of Appeal acknowledged that the LNC regime is not a “secret, informal and unregulated asset freezing power”. On the contrary, the object of the LNC regime was to deter criminal activity by restricting access to the proceeds of crime and that this in itself was a legitimate societal aim.

In reaching its decision, the Court of Appeal considered itself bound by its previous decision in Interush Ltd v Commissioner of Police [2019] HKCA 70, and endorsed its ruling that the LNC regime “is part and parcel of the measures used to combat organised crime in money laundering”.

The Court of Appeal also clarified that an account is de facto “frozen” by an LNC not because there is any enforceable order made by the Police that operates to restrain a bank from operating the account, but because a bank with notice of the fraud had itself chosen to not comply with its customer’s instructions due to its own concern about potential exposure to criminal liability under the OSCO and civil liability to restore dissipated funds if it dealt with property representing the proceeds of crime. In other words, the Hong Kong Police have no power – by virtue of the LNC regime or otherwise – to compel the banks to take or refrain from taking any steps in relation to its customers’ accounts. Instead, the police are empowered by OSCO by issuing an LNC to notify the bank that they do not consent to funds in a subject account from being dissipated, or alternatively for the JFIU to give consent to the bank dealing with the account, and thereby giving the bank immunity from criminal liability.

The Court of Appeal also expressed the view that the Hong Kong Police’s power under the LNC regime is not unfettered. The Court of Appeal noted that the Hong Kong Police’s internal guidance over the exercise of the LNC regime provides “sufficient constraints to guard against arbitrary or capricious refusal, and sufficient signposts to give guidance for a citizen, with legal advice, to anticipate the scope of the discretion and the manner of its exercise.”

Key takeaways

The upholding of the LNC regime will be welcomed by victims of fraud, who continue to benefit from the restoration of the LNC regime. Time is of the essence for victims of fraud to recover their stolen assets. The LNC regime, which has the practical effect of causing the bank to immediately freeze the relevant bank account, will continue to be a vital instrument for practitioners and fraud victims alike to preserve stolen assets pending the victim’s application for a civil injunction in the Hong Kong Courts.

In addition, the LNC regime provides a cost efficient resource for fraud victims. It is common for victims to rely on the LNC when they do not have the financial resources to apply for an injunction order to restrain the movement of the recipients’ bank accounts pending civil recovery of the stolen monies, or where the amounts involved are not sufficient to justify incurring the costs of applying for injunction.

Having said that, this matter concerns the core constitutional right to property and therefore is of great public importance, it is still possible that the applicants will challenge the Court of Appeal’s decision and appeal to the Court of Final Appeal. We will closely monitor this space.

How we can help

Our fraud and assets tracing team regularly represents clients in complex, high-value, and multi-jurisdictional fraud cases, including through applications to the Hong Kong Court for urgent disclosure and injunction orders. We maintain close relationships with a network of leading practitioners in many other jurisdictions to support our domestic and international asset tracing and recovery practice.

Any victim of fraud seeking relief, or a bank account holder adversely affected or with concerns that they might be adversely affected by a Letter of No Consent, should contact our partners Jeff Lane and Pamela Mak.

Jeff Lane, Sharina Mahtani, Adam Hoi and Ling Meng

If you would like to discuss any of the matters raised in this article, please contact:

Jeff Lane
Partner | [email protected]

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Feb 14 2023

We have clients who come to us seeking advice on the process and substance of a pre-nup. Often they haven’t discussed this in any real detail save perhaps they have some pre-marital wealth they wish to ring-fence or a desire to keep extended family wealth excluded from the asset pool. They have concerns about how to approach the details of the document with their partner or how to move through the process.

Pre-nups still have an air of suspicion or distaste about them. A fear perhaps that a divorce becomes inevitable once it is signed. Concerns that a partner may reject you because you suggest one or they consider it unromantic.

It doesn’t have to be that way. We propose that a pre-nup, if handled correctly, with honesty and transparency, is an act of love; a demonstration of thoughtful consideration for the future. A time to plan for the marriage itself and not just the wedding day.

Consider the following tips :-

Prepare a list of your current income, assets and liabilities.
Consider your career plan and that of your spouse, how will your careers be supported, will there be any detriment to a spouse because of child care responsibilities? How will your expenses be managed?
Consider your priorities for the future: what do you hope for your financial future and how can you implement it?
Consider how you will approach any changes in circumstances during the marriage such as a relocation abroad, or passage of time, or medical event.
In the unfortunate event the marriage does come to an end, consider what a reasonable outcome might look like for you both and how it may cater for any big expenses such as accommodation expenses or children’s expenses.
Consider specialist legal advice in the country that you live in but be prepared to seek advice in other relevant jurisdictions.
Consider specialist processes such as mediation or Collaborative Practice to discuss and settle the terms of a pre-nup in a holistic environment.

With the right approach a pre-nup is a financial planning tool that allows open dialogue and understanding and certainty in the event of divorce. You and your intended spouse wish to spend the rest of your lives together. We encourage you to have these (sometimes) difficult conversations now. Relationships and marriages are based on having honest, open conversations with each other – however taboo the topic may feel. So, start early. This, to us, is a real act of love.

For specific advice on your situation, please contact:

Joanne Brown
Partner | [email protected]

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Feb 13 2023

2022 was a big year for divorce law in England & Wales. With the introduction of the Divorce, Dissolution and Separation Act 2020 coming into force on 6 April 2022, anyone seeking to petition for divorce or dissolution of marriage no longer has to apportion blame on their spouse.

Before the new law came into effect, there is only one ground for divorce, namely the marriage has broken down irretrievably; parties seeking divorce or dissolution must then rely on one of five facts for the irretrievable breakdown: separation for specific periods (2 years with consent or 5 years without consent), adultery, desertion or conduct of the other party (i.e. unreasonable behaviour).

The terminology “unreasonable behaviour” is somewhat misleading as the law does not require that the behaviour of a spouse should have been unreasonable but that the expectation of continued life together with that spouse should be unreasonable. Specifically, the Petitioner will plead that the Respondent has acted in such a way that he or she cannot be reasonably expected to live with the Respondent. Often, this can be a hard pill to swallow for the Respondent – and understandably so.

In practice, nevertheless, we see many “unreasonable behaviour” petitions, which is conduct-based. Although it is well established principle that the Court’s role is not to investigate the reasons behind the breakdown of a marriage, a conduct petition can lead to resistance towards settlement.

“No-Fault Divorce” removes the blame element and hopefully, also, the resistance. This allows focus on financial and children’s arrangements, rather than time, effort and emotions wasted on addressing the particulars of “unreasonable behaviour”.

The need for change: Owens v Owens [2018] 2 FLR 1067

The case of Owens v Owens in England highlighted the need for change. Mrs Owens petitioned for divorce in May 2015 citing unreasonable behaviour. Mr Owens disagreed and defended the petition as he did not consider his behaviour to be unreasonable. The petition was dismissed after a Judge considered that there was no behaviour pleaded in the Petition that Mrs Owens could not have been reasonably expected to live with and there was no irretrievable breakdown of marriage. Specifically, the Judge identified that the particulars pleaded (i.e. the allegations of unreasonable behaviour” were “flimsy”, “anodyne” and “scraping the barrel”. The Judge concluded that the husband’s behaviour, as pleaded, amounted to “minor altercations of a kind to be expected in a marriage”. This meant without the consent of Mr Owens, Mrs Owens had to wait until 2020 (5 years post separation without consent) to be granted the divorce.

Mrs Owens, dissatisfied with the first instance decision, appealed. ]

On appeal to the Supreme Court in 2018, the Supreme Court judges also agreed with the Court of First Instance. However, they admitted they felt uneasy by the decision, noting however it is not their role to change the law.

This case was the catalyst for the campaign for “No-Fault Divorce”. It took another 4 years for the law to take effect.

The need for change in Hong Kong

In Hong Kong, we still rely on fault behaviour or separation similar to England or Wales before the 2020 Act. It is common for parties to rely on anodyne or mild particulars to promote settlement which it often does.. The recent case of K (江) v W (黄) [2022] HKFC 200 is a rare example of a contested petition and sets out the Hong Kong Court’s approach in cases of “unreasonable behaviour”. Notably, there was significant discussion about the common practice of lawyers to rely on mild behaviour petitions to promote settlement between parties, but which had caused Mrs Owens to rely on incomplete evidence of the Respondent’s behaviour.

Facts

In K v W, the parties separated in July 2021 when the Husband moved out of the former matrimonial home. He petitioned for divorce in August 2021 alleging the following behaviours against the Wife:-

the Wife kicked him in the street due to difference in their views;
the Wife often threw tantrum without a reason towards him. She would leave their home 2 or 4 times a week after throwing tantrum; and
the Wife often unreasonably demanded him to make extra payment for expenses or expenses which were beyond his means and without regard to debts already owed, including spending frivolously without his knowledge (spending unnecessarily on purchasing cats, re-installing air conditioners, taking out big-ticket loans for renovations) . She failed to discuss with him before she made important decisions.

The Wife sought to resist the divorce and raised the following defences:-

she does not agree with the particulars of behaviour alleged by the Husband;
it was the Husband who chose to evade from their family problems by not returning to home or losing contact;
the Husband unilaterally divorced her in order to avoid his family responsibility; and
the Husband physically assaulted her during the marriage.

Ruling

The Court adopted the 3-stage enquiry approach in Owens v Owens [2018] 2 FLR 1067 when deciding this case of “unreasonable behaviour”, namely:-

by reference to the allegations of behaviour in the petition to determine what the respondent did or did not do;
to access the effect that the behaviour had upon this particular petitioner in light of the latter’s personality and disposition and of all circumstances in which it occurred; and
to make an evaluation whether, as a result of the respondent’s behaviour and in the light of its effect on the petitioner, an expectation that the petitioner should continue to live with the respondent would be unreasonable.

The Judgement clearly sets out the Court’s findings.

Stage 1: did the Wife behave as alleged?

This is a factual exercise. The Court analysed the Wife’s behaviour as alleged by the Husband by examining the facts presented by the Husband. On evidence, the Court foundamongst other things that:

the Wife did often throw tantrum over trivial matters throughout the marriage, after which she would not say a word to the Husband, but leave home until the next morning. She would continue to throw tantrums by throwing items such as shoes and books. The Husband did try to soothe her time and time again;
the Wife did often make unreasonable financial requests or decision, which caused the Husband to bear the heavy financial burden for the family; and
the Husband allowed the Wife to manage his finances, but the Wife did not disclose to the Husband her actual income, nor was her income ever paid into the joint account. It was only the Husband who paid money into the joint account.

Stage 2: effect of the Wife’s behaviour on the Husband

The Court found that the cumulative effect of the Wife’s behaviour had led to Husband to a breaking point taking into account his personality which the Court has observed to be “easy-breezy” and “rather care-free”. The Court considered him to be a person who wished to enjoy life, rather than being restrained, especially when it came to finances.

Stage 3: evaluate if it is unreasonable to expect the husband to continue to live with the wife

Upon evaluation and due to the cumulative effect of all the matters, the Judge came to the conclusion that it is unreasonable to expect this Husband to continue to live with this Wife. Their marriage had broken down irretrievably.

The Judge then made directions for the Parties to proceed with their ancillary relief proceedings.

Conclusion

Family practitioners often advise that if one party to a marriage wishes to divorce, they will become divorced. It is an inevitability and simply a matter of time.

It may take time for a spouse to come to terms that the marriage has broken down and accept a mild behaviour petition. It may take time for a spouse to appreciate that defending a petition can become a costly and ultimately futile exercise, especially if they agree that the marriage has broken down or a separation period of over a year has occurred. Parties may themselves use separation periods to cool off before petitions are filed.

In K v W, the Petition was filed in August 2021. Trial took place on 28 August 2022 and this judgment was handed down in October 2022. Over 1 year had passed since the issuance of the Petition and the decision made that the marriage has broken down. The associated time delay and costs incurred will vary from case to case, but one thing is clear: it is often driven primarily by emotions or a misunderstanding of the law, both of which can be prevented with statutory change.

Behaviour petitions in Hong Kong often rely on the mild and anodyne particulars. The purpose of this is to proceed before the relevant separation period has elapsed and to reduce potential conflict and offence to the respondent spouse in hope to avoid (i) the petition being defended and (ii) a lengthy trial on the Main Suit of the divorce.

In K v W, the Husband did not rely on these standard facts. If he had, there is very real possibility that the Court may not have accepted the behaviours as pleaded as was see in Owens v Owens. Further delays may arise if the Petition had to be amended.

With over 10,000 new petitions each year, the Hong Kong Family Court is inundated with a heavy case-load. The Court also addresses ongoing cases, as well as adjudicating on matters relating to children and/or finances after a divorce is finalised. The statutory change in the UK has been effective for less than a year and so it remains to be seen how effective it has been in reducing conflicts, costs and resources. However, it is commonly accepted that a “No-Fault” divorce regime will undoubtedly help to end the blame game, help parties reduce conflict, especially from the start, and allow parties to focus on more pertinent matters at hand and free invaluable court resources.

Joanne Brown and Joanne Lam

For specific advice on your situation, please contact:

Joanne Brown
Partner | [email protected]

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Jan 13 2023

Tanner De Witt is delighted once again to be recognised by Chambers & Partners in their inaugural 2023 Greater China Region Guide for each of its main practice areas. Please see full results and editorial commentary below.

Corporate/M&A: Independent Hong Kong Firms (Band 2)
Full ranking here.

Tanner De Witt remains part of a global referral network with elite law firms, frequently handling cross-border mandates. Its services cover the full range of corporate and commercial matters, including investments, joint ventures and M&A transactions. The team is strong in dealing with regulatory compliance work related to corporate transactions. Tanner De Witt is additionally able to assist clients on venture capital transactions, as well as restructurings and reorganisations. The firm counts ZV France and Newborn Town among its major clients.

Strengths One client comments: “I always have very efficient and responsive communication with Tanner De Witt.”

Another client compliments the team’s “very commercial and practical advice without complicating the issues.”

Work highlights

Tanner De Witt assisted Qima in its acquisition of an inspection services provider.

Eddie Look wins praise for his handling of cross-border M&A, joint venture establishments and private equity transactions. He is regularly mandated by clients from the manufacturing, financial services and life science industries.

One client says “Eddie not only has vast experience of corporate transactions in Hong Kong, but also has a deep understanding of our business.”

While another adds, “He is easy to communicate with and very willing to help.”

Edmond Leung focuses his practice on multi-jurisdictional private equity and M&A, and frequently acts on behalf of international companies and investors. He has extensive experience advising on acquisitions, divestments and corporate reorganisations. Clients comment that he is “technically sound but pragmatic as well in his advice to deliver effective legal solutions” while maintaining “good client relations and [being] very good to work with.”

Tim Drew co-leads the corporate department of Tanner De Witt. He has over two decades’ experience in the Hong Kong corporate market, handling all manner of cross-border corporate and transactional mandates, including M&A, disposals and shareholders’ agreements.

“Tim takes a highly commercial approach combined with a positive ‘can do’ attitude. Tim gets deals done and is a pleasure to work with. He is accessible and I can always get hold of him” says a client.

“Tim has a good awareness of the potential commercial pitfalls we may face and always has a good solution for us.”

Dispute Resolution: Litigation (International Firms) (Band 4)
Full ranking here.

What the team is known for

Tanner De Witt is a respected, independent Hong Kong firm, acknowledged for its broad commercial disputes offering. Its areas of expertise include professional negligence claims, shareholder disputes, debt and asset recovery, fraud, and contentious trusts and probate. The team often acts for clients in the financial services sector, international investors and high net worth individuals and families. Its key clients include Kroll, KPMG and FraudNet.

Strengths A client comments that “The team are all very capable and articulate and offer immediate responses, even when on holiday. They are also aware of latest events and case law that will have an impact on the matters at hand.”

A different client praises the team for being: “always ready with documents and advice and the team all worked well together.”

A third happy client states: “Tanner De Witt always offers exemplary levels of service and is one of our go-to Hong Kong firms. They are always commercial and responsive.”

Work highlights

Tanner De Witt acted for a Chinese cement producer in a longstanding shareholders’ dispute case.

Jeff Lane is well versed in fraud claims and various tracing and recovery actions. He is also experienced with cyber-fraud claims. A client states: ““He’s very experienced and efficient, with a good network.”

Mark Side is head of the firm’s dispute resolution team. He is known for handling employment disputes, as well as contentious regulatory matters and white-collar crime investigations. Chambers Asia notes that Mark is “strategically very strong, mindful of our concerns and [he] always explains the contributing factors to his advice”.

P amela Mak is co-head of Tanner De Witt’s China practice group in Hong Kong and often acts on contentious probate cases, as well as shareholder disputes and asset tracing and recovery. One source praises her client skills, observing that “she’s very skilled at handling even the most demanding client.” Other clients comment that she “is excellent at handling sensitive matters.” and that “She’s very good at managing complex matters and gives practical and commercial advice.”

Richard Wilmot is a consultant in Tanner De Witt’s Hong Kong office. He frequently acts for lenders, bondholders and investors on recovery and enforcement actions.

One client says “working with Richard is a very good and interactive experience.” Another saying, “I have worked with Richard for many years. He and his team have never failed to solve any issues referred to him”

Employment: Hong Kong-based (International Firms) (Band 2)

What the team is known for

The strong contentious employment team at Tanner De Witt possesses notable expertise representing employees in high-profile litigation cases. It is active on matters involving individuals employed in Hong Kong, including supporting foreign domestic workers on a pro bono basis, but it also advises employers on work policies, contracts and post-employment restrictions. Tanner De Witt is highly active on cases related to race and sex discrimination, and white-collar crime investigations.

Strengths One client appreciates its “ability to translate a complex matter into bite-sized issues for discussions and considerations.”

One impressed interviewee finds the team’s analyses “clear and concise.” Another client observes: “The employment team works closely with their civil litigation team and provides fast response on contentious matters.” While another adds, “They offer exceptional service and attention, with humour when needed!”

Russell Bennett is well placed to represent clients in disputes arising out of discrimination and harassment claims and contested terminations, with a focus on advising clients from the financial services sector. One happy client reports: “Russell is one of the few employee-friendly lawyers in town. His advice is practical and covers all corners.” Another source states: “Russell is a very experienced lawyer specialising in employment law.” And clients comment that “Russell is a great adviser. He’s realistic, reliable and totally practical.”

Family/Matrimonial (International Firms) (Band 3)

What the team is known for

Tanner De Witt is an independent Hong Kong practice offering advice on a range of family and matrimonial matters. The firm is experienced in handling divorce proceedings and child-related cases. It assists on cross-border abduction matters, with particular expertise in cases involving the Hague Convention. The team also provides support in nuptial agreements and trust arrangements.

Strengths “The team has a hands-on, friendly and practical approach. They have the skills to break down stubborn parties and barriers and seek resolution with ease.”

Clients appreciate the team for “care(ing) about their clients and try to protect them. Their preparation is very on point, and they are knowledge of the law and procedures.”

Joanne Brown draws widespread support from sources and is especially skilled in divorce, custody and nuptial matters. Her expertise in cross-jurisdictional matters is regularly sought by clients. Clients find her to be “extremely fair and very practical” adding that “she has a very good strategic mind.” Another source also comments that “Joanne is solution-oriented, so she doesn’t shy away from telling the truth. She is respected among solicitors.”

Restructuring/Insolvency (International Firms) (Band 2)

What the team is known for

Tanner De Witt fields a well-established independent Hong Kong restructuring and insolvency team that holds a strong reputation, particularly in relation to high-stakes contentious insolvency cases. The team regularly handles complex domestic and cross-jurisdictional litigations. Its clients include distressed companies and liquidators.

Strengths “Tanners De Witt is a big team and able to deploy team members in larger situations.” Sources also comment that the team are “excellent problem solvers.”

Work highlights

Tanner De Witt assisted a private bank and asset management firm, as petitioning creditor, with obtaining a bankruptcy order against an individual who held directorships in several companies listed in Hong Kong.

Ian De Witt‘s deep expertise spans both the advisory and contentious aspects of restructuring and insolvency-related work. He is a counsel of choice among liquidators and creditors. Clients see him as an “excellent problem solver” and that “He is commercial, approachable and a fountain of knowledge in Hong Kong law and procedure.”

Robin Darton is a highly regarded authority on international insolvency and liquidation matters. He offers impressive expertise handling contentious and non-contentious cases for liquidators and debtors.

Sources speak highly of Robin as “he knows very well how things work in the Hong Kong market, and what you need, be it legal advice or strategy.”

A client comments: “Robin has buckets of experience, and is technically strong.”

TMT (International Firms) (Band 4)

What the team is known for

Tanner De Witt’s TMT practice offers considerable experience in multi-jurisdictional technology transactions and offers technology businesses broad legal support through all stages of their growth and development. Key clients include DaRen Biotech, Bowtie Life Insurance and Brinc.

Strengths Sources praised the team for their timely, high-quality work: “Things move fast in our world, and the team at Tanner De Witt move fast with us, though urgency does not change work quality. Their documents are well laid out, and in language non-lawyers can understand. Their advice is clear and actionable. They are very reliable.” While a client states: “I was impressed with the turnaround time, the thoughtfulness of the documents, the responsiveness to my comments and the partner-level attention.”

Work Highlights

Tanner De Witt advised Nomura on the extension and modification of a transaction with Hitachi Vantara to provide the bank with global data capacity on a utility compute basis.

Pádraig Walsh

He received high praises from sources, stating: “Padraig was a joy to work with. He is responsive, smart, friendly and very accommodating of special requests – an excellent lawyer.” While clients admire his expertise, commenting that “He is a very highly skilled IT law expert with whom it is a pleasure to work.” Also that “He has in-depth knowledge of conducting venture capital investments and deep experience in various commercial and business issues. Mr. Walsh always considers our business needs and provides us with practical advice.” Speaking highly of Pádraig as he “has fulfilled and surpassed (their) expectations for legal expertise.”

For an archive of Tanner De Witt’s Chambers rankings, please click here.

Tanner De Witt, 17th Floor, Tower One, Lippo Centre, 89 Queensway, Admiralty, Hong Kong

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