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在民事和行政訴訟中處理無理訴訟人

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一位無理纏繞的訴訟人（“無理訴訟人”）是一位經常採取法律訴訟但沒有足夠法律理據支持這些訴訟的人。他們通常具有以下特徵：

  • 給被告造成不便，使其遭受騷擾，或無理訴訟人可能獲得的收益與訴訟的正本完全不成比例 (Attorney General v Barker [2001] WL 191122 (English Queen’s Bench)) ；
  • 對同一個被告重複相同的訴訟，可能在理據上有微小的變化 (Barker, supra)；
  • 立即上訴或挑戰每個法院的判決 (Barker, supra)；
  • 未能注意到或不遵守法院的命令 (Barker, supra)；
  • 不遵守程序, 例如最後一刻才提交證據、延遲/不遵守期限、不遵守法院命令、不遵守送達法律文件的程序或完全無視送達法律文件的要求、或抱怨其他人不應該根據相關的程序把法律文件送達給他；
  • 出席聆會時，無法以禮節行事，而且可能向對方或法官做出侮辱的行為或說出侮辱的言論 (Ng Yat Chi v Max Share Ltd et al [2005] 1 HKLRD 473 (CFA))；
  • 很多時候，總是沒有律師代表或被拒絕法律援助的申請 (Ng Yat Chi, supra)；
  • 欺詐行為 (Yuen Oi Yee Lisa v Charoen Sirivadhanabhakdi & Ors [2015] HKDC 1336 )；
  • 同一時間，用不同的途徑要求上訴，而結果是法院在不知情的情況下進行多項訴訟，向行政機構投訴，在地區法院或高等法院把已被判了敗訴的案件從新開始訴訟，以及向上訴法院和終審法院尋求上訴（X v MM and Anor [2018] HKDC 215）。

無理訴訟人可能會嘗試申請法律援助，但是即使他滿足經濟審查，也可能不能通過訴訟具有合理理據的檢測。

以下是受害者對付無理訴訟人的一些辦法及工具：

1. 禁制令

禁制令是一個法院的命令，要求當事人避免在特定時期內做出特定行為（禁止性禁令）或要求當事人做出特定行為（強制性禁令）。

在無理訴訟中被禁止的行為的例子：

  • 向無關的第三方披露機密/個人訊息（用這些信息尋求法律建議除外）；
  • 騷擾無辜的一方（例如通過發送信件/電子郵件/電話、短訊）；
  • 作出/發布誹謗性言論，針對無辜的一方；
  • 公開被禁制令保護的信息。

2. 剔除申請

法院可自動或應要求，在訴訟的任何階段，剔除申索陳述書或狀書的任何內容。做這類型申請的理據如下：

(a) 該狀書或註明並無披露合理的訴訟因由或抗辯(視屬何情況而定)；
(b) 該狀書或註明屬於惡意中傷、瑣屑無聊或無理纏擾；
(c) 該狀書或註明可能會對有關訴訟的公平審訊造成損害、妨礙或延遲；
(d) 在其他方面而言該狀書或註明是濫用法庭的法律程序。

如果該申索曾經被法院作出判決，法院不會允許原告往後再提起同一個申索。

3. 限制申請令/限製程序令/《高等法院條例》（第4章）第27條

實務指示11.3建立了兩個命令，讓法院可以制止無理訴訟人繼續提出訴訟：限制申請令（RAO）可以限制無理訴訟人進行當前訴訟，而限制訴訟令（RPO）可以限制無理訴訟人進行已經啟動的多重訴訟。

《高等法院條例》（第4章）第27條提供另外一個很好的方法制止無理訴訟人在將來繼續提出訴訟。根據這一個條例作出的判決，無理訴訟人不得進行任何未來的訴訟程序，除非獲得法院的預先許可。

4. 欠缺狀書/缺席判決

因為無理訴訟人通常不依照程序或時間表做事，根據《高等法院規則》（第4A章）第13和19條，被告人可以申請拿一個缺席判決，是一個快速完結訴訟的好辦法。

5. 除非命令

如果不希望直接申請刪除/簡易判決，無辜的一方可以選擇申請 “除非命令”，並利用無理訴訟人未能遵守法院的指示，繼續採取行動或做出最終判決。

6. 簡易判決

根據《高等法院規則》（第4A章）第14條，無辜的一方可以申請簡易判決。

7. 交付羈押

根據《高等法院規則》（第4A章）第52條，法院有權根據鄙視法院的行為作出羈押的命令 (鄙視法院的行為包括違反禁制令)。如果無理訴訟人始終不遵守法院命令，法院有權判監。

8. 禁止發布命令和匿名命令

匿名命令和禁止發布命令能夠幫助保護無辜者的身份，並減少對無辜者在聲譽上受到的損害。

如果您想了解更多有關如何處理無理訴訟人的法律意見，請隨時與我們的訴訟合夥人趙君宜律師談談。

趙君宜律師
+852 2186 1885
合夥人，爭議解決
高李嚴律師事務所

2020年7月31日

中國 – 商標網上服務系統

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作者：宋靜妍及羅杰

中國國家知識產權局（“國知局“）制定了《關於商標電子申請的規定》（第323號），於2019年8月27日發布，自2019年9月1日起施行。據此，現在大多數於商標有關的業務都可以通過國知局的商標網上服務系統填寫和遞交，例如：商標註冊申請，轉讓，名稱/地址更改，註冊續展和商品/服務刪除，有關更多業務，請參閱以下列表。商標網上服務系統顯然更加方便和高效，尤其是在當今，新冠病毒（COVID-19）爆發和大流行期間，為減少人員接觸，各政府及機構要求或建議進行遠程工作的情况下。

電子填寫商標業務：

•    商標註冊申請；及撤回商標註冊申請
•    更改註冊人/申請人的名稱/地址
•    變更名義/地址/管理規則/成員名單申請；及撤回變更
•    變更代理人/文件接收人；及撤回變更
•    刪減商品/服務項目；及撤回刪減
•    商标转让/移转；及撤回轉讓/移轉
•    商標註銷申請；及撤回商標註銷
•    商標使用許可備案；及撤回備案
•    变更许可人/ 被许可人备案
•    商标使用许可提前终止备案
•    出具优先权证明申请商標註冊證
•    马德里国际商标出具商标注册证明
•    商標更正
•    補發商標註冊證
•    补发變更轉讓續展證明
•    代理人變更（代理人名稱/地址的變更）
•    商標駁回申請

此外，通過商標網上服務系統提交申請，國知局提供給申請人10％的官方費用折扣。我們列出了電子申請使用最為廣泛的商標註冊申請，即電子提交與紙質提交的對比流程如下：

流程電子申請紙質申請
申請表網上填寫申請表原件
提交日期網上提交 – 工作天20:00之前親自送到 – 工作天16:30之前；或郵寄送到 –  但申請日為國知局的確認收件日
通信/通知商標註冊申請受理通知書/改正通知書（如有）/駁回通知書（如有）/公告/註冊 電子通知紙質通知
官方費用人民幣270一個申請人民幣300一個申請

上述比較表明，電子申請不僅更加靈活，而且在時間和費用上都更具成本效益。

因此，除非另有指示，否則我們將使用電子申請，或者在某些情況下不適用電子申請，例如，商品/服务描述不規範等情形下。

如果您對中國商標註冊申請策略和保護有任何問題/疑問，請聯繫vera.sung@oln-law.com或angel.luo@oln-law.com，我們將很樂意為您提供幫助。

Emigration from Hong Kong to Taiwan: The Importance of Pre-Migration Tax Planning (6)

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Among all the destinations, Taiwan is always one of Hong Kong people’s favorite choice for emigration, likely because of its relatively affordable living standard, similar language and culture and democratic lifestyle. According to data from Taiwan’s Ministry of the Interior, immigration from the Hong Kong to Taiwan has increased by 28 percent from January to July in 2019. 

This article will examine from a taxation perspective the considerations which a person should pay due regard to before emigration, so as to better plan for future taxes which might arise at the time of and after the emigration to Taiwan.

Overview of Ways to Obtain Taiwan Citizenship

Taiwan offers a number of pathways to citizenship through permanent residency, covering family, study, business innovation, investment, and employment.

Individuals who wish to immigrate to Taiwan shall first obtain the Alien Resident Certificate (similar to the green card in the United States). This Alien Resident Certificate allows individuals to legally stay in Taiwan based on the fact that they are working in Taiwan under the permission, or being married to a Taiwanese spouse, or being an investor having invested over a certain amount of capital with the approval by the relevant authorities in Taiwan etc.. 

1.    Investment

If you opt for the investment route, you shall first apply for a resident visa for investment and then the Alien Resident Certificate. The criteria for obtaining an investment visa in Taiwan is relatively less demanding comparing with some other popular choices for migration, especially for applicants from Hong Kong and Macau. 

Applicants from Hong Kong and Macau may make an investment of at least NTD6 million (i.e. around USD200,000 or HKD1.5 million) in a private Taiwanese company in order to be eligible for making an application for the investment visa and the Alien Resident Certificate. They may then apply for naturalization as Taiwanese directly after:- (a) 1 year of legal residency, during which the applicant cannot leave Taiwan for more than 30 days; or (b) 2 consecutive years of legal residency and having been physically present in Taiwan for at least 270 days per year.

Non-Hong Kong and Macau applicants may opt for the following alternative route for obtaining an Alien Permanent Resident Certificate (the “APRC”) (i.e. permanent residence permit) thus Taiwanese citizenship, in which case the applicant will not be required to be physically present in Taiwan during his residency:-

a. Making an investment of NTD15 million in a Taiwanese business which creates 5 or more full-time jobs for Taiwan nationals for over 3 years, in which case the applicant is required to have held the Alien Resident Certificate for over 3 years before making the application for the APRC; or

b.  Making an investment of NTD30 million in the government bonds of Taiwan for over 3 years, in which case the applicant is required to have held the Alien Resident Certificate for over 5 years before making the application for the APRC.

Foreign nationals who own the APRC and have legally and continuously resided in Taiwan for 5 years and having been physically present in Taiwan for at least 183 days per year can apply for naturalization as Taiwanese.

2.    Studies

Graduates from universities in Taiwan may apply for permit to work locally thus residency in Taiwan. Permanent residency and naturalization as Taiwanese may then be applied for after the applicant resides in Taiwan for 5 years legally and continuously and having been physically present in Taiwan for at least 183 days per year. 

Alternatively, graduates from universities in Taiwan may first return to their home place of residence to work for 2 years or more, and apply for permit to work locally thus residency in Taiwan. Permanent residency and naturalization as Taiwanese may then be applied for after 1 year in fastest cases. 

3.    Business innovation

You may apply for a Taiwan entrepreneur visa and residency if any of the following requirements is met:-

a. Having received venture capital investment or international fundraising in your business innovation of more than NTD2 million;

b. Having received approval to reside at a recognized innovation park or incubator in Taiwan;

c. Having obtained patent rights or professional skills certificate;

d. Having been awarded in a leading startup or design competition, or has been involved in a foreigner entrepreneurship project in Taiwan;

e. Having been or is currently located in a startup accelerator recognized by the Taiwanese government;

f. The enterprise or the person in charge of the enterprise has been nominated or awarded in a film festival;

g. Having received innovation subsidy of at least NTD3 million from the central government or at least NTD1 million from the local government;

h. Having possessed innovation capability specified or recommended by the Taiwanese government; or

i. Legal representative, manager or director of an established enterprise with innovation capability in Taiwan with an investment of at least NTD1 million.

Permanent residency and naturalization as Taiwanese may then be applied for after 5 years in the fastest cases. 
 
4.    Skilled immigrants

Applicants being professional at certain fields, including accountants, lawyers, medical practitioners, architects etc. may apply for Taiwan residency through its skilled immigration program.

They may then apply for naturalization as Taiwanese after:- (a) 1 year of legal residency, during which the applicant cannot leave Taiwan for more than 30 days; or (b) 2 consecutive years of legal residency and having been physically present in Taiwan for at least 270 days per year.

5.    Family reunion

Like other countries, one may also immigrate to Taiwan on the basis of family reunion, if he has a direct relative or a spouse with Taiwan citizenship. 

Overview of Taxation in Taiwan 

For personal income tax, the progressive tax rates of personal income tax in Taiwan range from 5% to 40%. Similar to Hong Kong, Taiwan levies personal income tax on a territorial basis (i.e. only Taiwan sourced income (for both resident and non-resident) is subject to income tax in Taiwan). That being said, for Taiwan resident whose income is derived from sources outside Taiwan, such income is subject to alternative minimum tax (“AMT”).[1] As for capital gain, Taiwan does not tax capital gains separately. All gains, unless otherwise specifically exempted by the applicable laws, are taxed as ordinary income.

For corporate income tax, a Taiwan resident company is taxed on its worldwide income. The current corporate income tax rate is 20%. Similar to the treatment on individuals, there is also no separate capital gains tax in Taiwan for companies.

Hong Kong currently does not have a comprehensive treaty for double taxation with Taiwan. This essentially means that, for example, in the absence of bilateral tax concessions, a Hong Kong citizen or alien in Taiwan whose income has a Hong Kong source can be taxed twice, once in Hong Kong based on Hong Kong’s territorial source principle of taxation, and another time on AMT paid in the Taiwan. That being said, Taiwan provides unilateral tax credit relief in respect of foreign-sourced income – income tax paid in other countries on income derived outside Taiwan may be credited against one’s total income tax liability in Taiwan. It is also worth noting that double taxation on the income received by people and companies across Taiwan and China is alleviated by the Act Governing Relations between the People of the Taiwan Area and the Mainland Area, but Hong Kong is not a party thereto.

Pre-migration Tax Planning

Pre-migration tax planning is particular important to people (especially Hong Kong resident) who are planning to immigrate to Taiwan for the following reasons:-

1. Taiwan has a higher corporate tax rate and individual income tax rate compared to Hong Kong;

2. There is no capital gain tax in Hong Kong, whilst capital gain is taxed as ordinary income and subject to personal income tax as high as a rate of 40% (compared to the cap of 17% in Hong Kong) or corporate income tax of 20%;

3. There is no tax on dividends in Hong Kong, whilst dividends can be taxable in Taiwan; and

4. There is no estate duties in Hong Kong, whilst the same exists in Taiwan (which will be further discussed below).

We list out hereinbelow some of the pre-emigration preparation which one may need to consider in order to properly plan his/her tax affairs before immigrating to Taiwan.  

Trust 

Unlike Hong Kong, estate tax exists in Taiwan and the same will be levied on the following estate properties:-

1. Property remained by the deceased who was a Taiwan citizen and regularly resided in Taiwan, regardless of the location of the property; and

2. Property left by the deceased who was a Taiwan citizen but resided outside Taiwan regularly, or who was not a Taiwan citizen, if the property is located within Taiwan.

Estate tax rates in Taiwan range from 10% for net taxable estate amount of or under NTD50,000,000, to 20% for net taxable estate amount of or over NTD100,000,001. Accordingly, for individuals (especially high-net worth individuals with properties located in other countries) who are planning to immigrate to Taiwan and acquire Taiwan citizenship, it would be advisable to set up a trust before the migration, such that estate taxes can be saved in respect of the trust assets.

How the trust shall be structured is another important issue. Under Taiwan tax laws, gift tax would be levied for:-

1. Gift made by a donor who is a Taiwan citizen who regularly resides in Taiwan, regardless of the location of the gifted property; 

2. Gift made by a donor who is not a Taiwanese citizen or a Taiwanese citizen residing outside of Taiwan as long as the property is located within Taiwan. In determining whether the property is located in Taiwan, a gifted property to a trust would be deemed as locating in Taiwan (even though it might not be physically present in Taiwan) if the residence of the trustee is Taiwan. The donor i.e. the settlor of such trust in the circumstance would then be subject to gift tax. 

Gift tax rates in Taiwan range from 10% for net taxable gift amount of or under NTD25,000,000, to 20% for net taxable gift amount of or over NTD50,000,001. Accordingly, one would need careful consideration and shall seek professional advice on the trust structure (including timing of settling the trust (i.e. whether the settlement shall be done before acquiring Taiwan citizenship), choice of settlor, choice of trustee, choice of trust assets etc.) so as to minimise any gift tax arising from the settlement of the trust.

Capital Gains and land value increment tax for real estates

If one intends to acquire real estates in Taiwan, he may also need to consider the holding structure of such properties as any transfer of real estates in Taiwan is subject to, inter alia, significant land value increment tax and capital gain tax, and that there are also different tax treatments in relation to the rental income generated from these real estates by corporate/individual, or Taiwan/non-Taiwan residents. 

Land value increment tax is computed based on the increase in the assessed value of the relevant land since the last ownership transfer. Land value increment tax rates vary from 20% to 40%, while capital gain tax rates in respect of transaction of real estates in Taiwan range from 15% to 45%, depending on the holding period and the residence of the parties. 

Conclusion

As could be seen above, however attractive the “Formosa” might be, in terms of taxation, Taiwan is a less friendly jurisdiction to taxpayers compared to Hong Kong. Accordingly, careful pre-migration tax planning is required and tax advice shall be sought before one moves to Taiwan.

OLN provides a range of migration, corporate restructuring and tax advisory services.  If you have any questions on the above, please contact one of the members of our Tax Advisory Team. 

Disclaimer: This article is for reference only. Nothing herein shall be construed as Taiwan or Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

[1] Residents with AMT taxable income exceeding NTD6.7 million is subject to an AMT tax rate calculated by the following formula:- (Income subject to AMT – NTD6.7 million)x20%. Separately, any overseas income exceeding NTD1 million is reportable.

Assistance from Hong Kong Courts Available to Foreign Liquidators

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It is not uncommon that foreign administrators/liquidators see the needs to seek enforcement or exercise their power in Hong Kong. The legal position in this regard is by and large aligned with the rest of the common law world in that Hong Kong Courts would recognize and assist foreign liquidators upon conditions being satisfied. The liquidator will then be able to exercise powers as if it were a local liquidator subject to certain limits. Importantly, this includes power to initiate actions.

Can Foreign Administrators/Liquidators put forward Corporate Rescue Plans in Hong Kong?

Many jurisdictions have formal corporate rescue regimes aiming at helping companies survive financial distress by letting those companies reorganize debts and trade out of difficulties, such as the Chapter 11 procedures in the United States and administration in the United Kingdom. Hong Kong lacks such formal corporate rescue framework. The closest alternative available is a “scheme of arrangement”, which is neither an insolvency nor a bankruptcy process, and can be used by both solvent and insolvent companies. 

Most recently in January this year, the Legislative Council Panel on Financial Affairs tabled a proposal to revive a corporate rescue scheme similar to the US Chapter 11 scheme which was previously examined after SARS. Key features include having the company file documents with the Companies Registry, appoint a provisional supervisor, and that there will be a moratorium on legal actions against the company. Only time will tell what other features the scheme will embody, such as whether the moratorium will enable cross-border actions to protect a Hong Kong company’s overseas assets. In the meantime, the primary restructuring tool in Hong Kong remains the scheme of arrangement.   

How does a Scheme of Arrangement Work?

A company in fiscal difficulty might compile a proposal for its creditors, proposing terms for a compromise of the company’s debts so that creditors may accept a lesser amount in full settlement of the debt. It should be noted that even where a company is undergoing a winding-up procedure, the liquidator has power to initiate a scheme of arrangement.

Once the proposal has been finalized, the application is made to the Court for its approval to convene meeting of each class of affected creditors. In each of the meetings, the scheme must be approved by both a majority of at least 50% in number, and a majority in number presenting at least 75% in value of the voting creditors. Then, upon the Court’s approval, an order sanctioning the scheme will be made. Such order will bind all creditors of the company, even if they did not vote. 

Comparison with the UK CVA

Laws of Hong Kong relating to insolvency are derived from that of the UK. The latter has evolved with progressive development whereas the HK’s insolvency regime is lagging behind. In the UK, in addition to the scheme of arrangement which largely resemble that in Hong Kong, financially-stricken companies might also opt for company voluntary arrangement (“CVA”). 

A CVA allows a company to agree a composition or an arrangement with its creditors in satisfaction of some, or all, of its debts. To be effective, a CVA requires the approval of the requisite majorities of the company’s creditors and shareholders. In the case of creditors, a majority of three-quarters or more (in value) of those responding must vote in favour of the proposals to approve the CVA. As for shareholders, it requires more than half in value of the company’s shareholders present in person or by proxy and voting at a meeting on the resolution to approve the CVA.

Once the CVA is approved by both creditors and shareholders, it binds all the company’s unsecured creditors who were entitled to vote at the meeting (even if they did not vote). However, a CVA cannot bind secured or preferential creditors without their consent. In addition, it must not unfairly prejudice the interests of any creditor.

The below table sets out key differences between schemes of arrangement (whether in Hong Kong or the UK) and the UK CVA:-

 Scheme of arrangementCVA
Court involvementExtensive court involvementCourt involvement only if the CVA is challenged
Shareholders & creditors involvementOnly creditors vote on the scheme of arrangementShareholders’ majority also required
Effect over secured and preferential creditorsSecured and preferential creditors can be bound by a schemeSecured and preferential creditors not bound by CVA without consent
MoratoriumLacks the ability to impose a moratorium on creditor actionsStatutory moratorium only available for small companies (turnover ≤ £10.2m; balance sheet assets ≤ £5.1m; and ≤ 50 employees)
Effect on contractsMight not trigger insolvency-related cross-defaults; outside the scope of statutory insolvency regimeWould trigger insolvency-related cross-defaults in company contracts

What kind of company can invoke a scheme in Hong Kong?

Apart from companies incorporated under the Companies Ordinance in Hong Kong, the Courts of Hong Kong may also approve schemes of arrangement having a “sufficient connection” with Hong Kong, as evidenced by factors such as listing on the Hong Kong Stock Exchange, having creditors/management located in Hong Kong etc. In other words, foreign-incorporated companies, such as those in offshore jurisdictions, can also apply for approval of the scheme (as long as they can establish a sufficient connection with Hong Kong). It is therefore common for a foreign company with debts and liabilities in Hong Kong to seek the Court’s sanction for a scheme of arrangement in Hong Kong.

If you as a receiver or liquidator of a foreign-incorporated company would like to seek approval for a scheme of arrangement in Hong Kong, our firm’s team of experienced lawyers will be able to assist in matters including but not limited to devising a restructuring strategy, advising on each step of the restructure, negotiations with creditors if necessary, as well as preparation of proposed terms of the scheme. We will also be able to offer bespoke advice on the suitability of implementing a scheme and whether other alternatives are available to the company, so as to tailor to the specific needs of each company.  

Is Statutory Moratorium Available in HK? 

There is no statutory moratorium on creditor actions prior to a scheme of arrangement becoming effective, which practically means that any creditor can take legal action against the company. The company, during the process of restructuring, is therefore still susceptible to enforcement action by creditors or winding up petition and might still be exposed to risk of its restructuring efforts being thwarted.

In view of the lack of moratorium in schemes in the insolvency context, often case companies negotiating a scheme might at the same time initiate a provisional liquidation/liquidation to effectively create the necessary moratorium. By virtue of section 186, Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32)(“CWUMPO”), when a winding-up order has been made, or a provisional liquidator has been appointed, no proceeding shall be proceeded with or commenced against the liquidating company (except with leave of Court). This in effect creates a moratorium on creditor actions against a company which has entered liquidation/appointed a provisional liquidator. 

What if a Foreign Statutory Moratorium is sought to be enforced on Hong Kong assets/liabilities?

There are limits to the Hong Kong Court’s ability to provide assistance to foreign office holders. For instance, in Joint Administrators of African Minerals Ltd v Madison Pacific Trust Ltd where a UK administrator sought assistance from the Hong Kong Court in recognising a UK moratorium, the Hong Kong Court refused to provide assistance because the Court’s power to assist foreign liquidation was limited to the type of order available to a liquidator in Hong Kong. At present, Hong Kong does not have any equivalent mechanism to administration, and in particular there is no statutory provision which provides for a moratorium on the enforcement of a secured debt. Providing assistance to the administrator to enforce a moratorium would be an impermissible extension of common law principles.

As to what might happen if a foreign liquidator seeks a court order imposing moratorium over a Hong Kong company as part of a group restructure, the issue was considered in Re CW Advanced Technologies Limited, which involved a Hong Kong company, being part of a Singapore-headquartered corporate group held by a Cayman holding company. The group applied to the Singapore court for a 6-month moratorium (“SG Moratorium”) while it underwent restructuring. The group and the company’s largest creditor, Bank of China, took out an application to appoint provisional liquidators over the Hong Kong company. Harris J held that provisional liquidators be appointed, but did not give them power to pursue debt restructuring (e.g. by using the SG Moratorium). 

For the Hong Kong Court to recognize and assist foreign office holders in liquidation, certain conditions must be met (for details, please see our article “Legal Update: Hong Kong Court Recognizes Application by Shanghai Liquidators”). It was unclear whether the SG Moratorium was a collective insolvency proceeding for common law recognition purposes. Even if it was, there was no Hong Kong authority on whether the court may recognize a foreign insolvency proceeding where the foreign jurisdiction was not the country of incorporation. And even if the SG Moratorium was eligible for recognition, there was no Hong Kong authority on whether the court may assist by appointing provisional liquidators. In the end, the Court left open the issue whether it should recognise foreign moratoriums in the future. 

Whether the Hong Kong Court will recognize foreign moratoriums largely depends on the facts of each case. Factors to be considered include the place of incorporation of that company in liquidation, the processes taking place in Hong Kong, and eligibility of foreign creditors for Hong Kong Court’s assistance. If the company in question does not have tangible existence in its place of incorporation (i.e. it is a mere brass-plate), and that no winding-up proceedings are taking place in Hong Kong where it has no material assets/creditors, it might just be that foreign liquidation is the most appropriate way to wind-up the company. In such circumstance, recognition will likely not be granted to a foreign moratorium. 

What Enforcement Actions may be taken in Hong Kong?

Given that Hong Kong does not have debtor protection insolvency regimes like the US Chapter 11 regime or UK administration, rights of secured creditors in Hong Kong are generally unaffected by liquidation or schemes because neither a liquidation (until winding up order has been made or provisional liquidator appointed) nor a scheme (until implemented) provides for a stay or moratorium on security enforcement. Commencement of insolvency procedures does not affect a secured creditor’s rights as they are entitled to be paid out of the proceeds of their security (unless transaction is subject to claw back by liquidator e.g. in unfair preference, undervalue transactions, extortionate credit transactions, dispositions in compulsory liquidation etc.) 

Generally, once a security is enforceable (e.g. upon default), the lender can enforce its security immediately. Depending on the nature of the security, enforcement could be by way of appointment of a receiver, foreclosure or taking possession. As for enforcement of judgments, the enforcement methods depend on the nature of the judgment. Where a judgment or order is for payment of money (not payment into court however), the judgment may be enforced by a Writ of fieri facias, garnishee proceedings, charging order or appointment of receiver (also in the case of judgment or order is for payment of money into court). Judgments for possession of land are enforced by a Writ of possession.  

a.    Receivership – whereby a receiver would be appointed to take physical possession of and sell a collateral.

b.    Foreclosure – empowering mortgagee to take possession of mortgaged property and become the absolute owner of the foreclosed property, extinguishing the equitable rights of redemption by the debtor i.e. the mortgagor. 

c.    Possession and distraint order – commonly used by landlord to regain possession of premises where the debtor fails to pay rent.

d.    Garnishee order – Court order which would direct a third party such as bank to pay any amount owed to the debtor to the creditor directly.

e.    Writ of Fieri Facias – Writ which allows goods to be seized and sold by public auction. and the proceeds of sale handed to the judgment creditor.

If you have any question regarding the topic discussed above, please contact our partner Anna Chan at anna.chan@oln-law.com for further assistance.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Litigation funding and financial provision payments for children of unmarried parents

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This is the second in a series of articles where we examine recent trends in Family Law issues which have a broad impact on the community. The initial article discussed recent developments in divorce law and procedure in England and Wales regarding “no fault” divorce. This article relates to litigation funding and maintenance payments for children of unmarried parents.  

The Family Law Department of OLN headed by Partner and Head of Department Stephen Peaker has been closely involved for several years in a long-running series of court hearings regarding various cutting edge issues in an evolving area of law: (1) the rights of a child to certain financial provision irrespective of its parents’ marital status, (2) the breadth of discretion of the court to award such payments, and (3) the availability of litigation funding to finance a party’s legal costs in securing such payments.   

Background

The hearings all relate to the same case, a dispute between two unmarried parents. The parties to the dispute were in a four year relationship and had a daughter. They never married, but cohabited for a period of time. A year after their daughter was born, the relationship broke down and the mother moved out with their daughter. The father made regular payments to the mother for rent and her and their daughter’s expenses. The mother subsequently applied for custody and related financial provision and included in the application an order that either the father buy or transfer to her a property outright for their child to live in, or he pay a lump sum to purchase a property to accommodate her and their child which would be held in trust for her child until she reached 18 or completed full time education, and then revert to the father. 

Rights of children of unmarried couples

The application was brought under the Guardianship of Minors Ordinance Cap 13 (“GMO”) as opposed to the Matrimonial Property and Proceedings Ordinance Cap 192 (“MPPO”) as the MPPO currently is limited to children born to married parents.     

The mother argued that either the property should be purchased outright pursuant to s10(2)(a) GMO as there was an “immediate and non-recurring need”, failing which it should be purchased on trust with a reversionary interest pursuant to s10(2)(e) GMO (on the basis that the language “property to which such parent or either of such parents is so entitled” means money to purchase property, i.e. a property which could be purchased in the future). The father’s argument was that accommodation was not an immediate and non-recurring need but an ongoing, everyday need and consequently the mother’s application was based on an incorrect interpretation of the GMO. HHJ Bruno Chan (in IDC v SSA [2013] HKFLR @ 61) agreed with the father and consequently held that the court had no power to make an award, dismissing this limb of the mother’s claim for financial provision.

The mother appealed at the Court of Appeal (“CA”) (IDC v SSA CACV [2014] HKFLR @ 267) arguing that the lower court had erred in not accepting that s10(2) was broad enough to allow the court to grant an order, and that the relevant legislation discriminated between children of cohabitants in favour of a married couple because such an order would have been available under the MPPO. The CA, in reviewing the relevant legislation, determined that the language in the relevant provisions of the GMO was not intended to, and did not in fact, discriminate between the two classes of children. It also found that the lower court erred in its reading of s10(2)(e) GMO and that it could in fact have made such an order as the language was indeed broad enough to encapsulate money to purchase a property. It is now clear that the court has power under the GMO to order a financial provision including a lump sum to purchase a property upon trust, with a reversionary interest to the parent providing the funds.    

However, on the particular facts of the case the CA held that the original decision not to make the order was correct notwithstanding the judge did not consider making such an order at the time of the trial in 2013 as he proceeded on the basis that he had no jurisdiction to do so. This was an important point to note as the CA has not only confirmed the current statutory interpretation but it also affirmed that the lower court has discretion on the facts of the case to order a lump sum in the future.  

The mother then applied to the Court of Final Appeal (“CFA”) (IDC v SSA  [2015] HKFLR @158 ) for leave to appeal on grounds that there were issues of great general or public importance at stake. She argued that the CA erred in not using the principle of the fairness approach when considering the quantum of financial provision in cases involving a child of unmarried parents as opposed to married parents. Ma CJ dismissed the application. He found that there were no issues of great general or public importance at stake and that at best this was a complaint that the CA had incorrectly exercised its discretion. He added that the court had looked at the correct cases and referred to the principles set out in the cases. In this case, the answer was dependent on the underlying facts of the case at the date of the trial in 2013.

In a related and subsequent hearing to this case, HHJ Bruno Chan J (in IDC v SSA (Relocation of a Child) [2015] HKFLR @ 404) in granting the mother’s application to relocate to London, commented on  the issues raised in the  related financial provision litigation between the mother and father, saying the issues were “in my view [issues which] desperately require to be addressed by legislation and serious soul-searching by society”. Highlighting that a dependent cohabitant of a deceased person had the right under statute to make a claim for financial provision from the estate, he found it illogical that current law would offer a dependent legal remedies on the death of a cohabitant but no such remedy whilst the cohabitant was still alive. He added that “it is time that some workable scheme or system should be put in place through legislation to help individual cohabitants and their children for financial provision and adjustment of property right between cohabiting couples on separation…”. 

Litigation Funding

In April 2018, the father applied to vary downwards and/or discharge the earlier 2013 maintenance order. Around the same time the mother applied to vary the same 2013 order, seeking a variation which would provide inter alia a lump sum payment and property transfer order in the name of the child and/or the mother. These applications are currently progressing through the Family Court system. 

However, in a more recent reported judgment (In the matter of Z [2019] HKFC255) between the same parties on an interlocutory matter, the court was asked to determine whether the mother could apply for litigation funding to cover her legal costs in continuing litigation with the father. HHJ C.K. Chan first considered whether disputed legal costs should be dealt with under s10(2) GMO (final orders) or s13(3) GMO (interim orders). He confirmed that where costs are not agreed by the parties they cannot be dealt with under s10(2) which presumes a cost or expense is final and therefore agreed, so must therefore come under s13(3). 

He subsequently confirmed the principle that “…in considering whether such a litigation funding order should be made, the principles as set out in Currey v Currey [2006] EWCA Civ 1338 are applicable, despite the fact that these are not matrimonial proceedings”.        

In brief, the Currey principles are: (1) that the applicant spouse has no assets, or none that can be reasonably deployed; (2) that she can provide no security for borrowing, or none which can reasonably be offered; (3) that she cannot reasonably obtain legal services by offering a charge on the outcome of the litigation; (4) that she cannot secure publicly funded legal help “at a level of expertise apt to the proceedings”. 

On the facts of the dispute, the court decided that the mother did satisfy the Currey test, and would need further funding to have “some equality of arms before the court”. HHJ C.K. Chan then set out his rationale calculating the quantum of the award.  

This is an important confirmation of the current law and is consistent with the other recent judgments in this area involving litigation funding for financial provision cases involving an unmarried party.

OLN is proud to have been able to play a role in the development of an important area of the law regarding financial provision for a child of unmarried parents. In the 2015 case cited above, HHJ Bruno Chan’s concluding words were “…it is time that some workable scheme or system should be put in place through legislation to help individual cohabitants and their children for financial provision and adjustment of property right between cohabiting couples on separation….”. Commenting on his team’s work on these long-running cases, Stephen Peaker remarked “it is very satisfying to see such positive decisions from the courts on these types of issues and I hope that we will see progress in the legislation in due course. My team and I have been working hard to fight for many clients who currently face significant disadvantages as the law currently stands, and we would welcome further positive developments in this area of law”.  

June 2020

Stephen Peaker, Partner and Head of Family Law
Michael Openshaw, Consultant
Family Law Department
Oldham, Li & Nie

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.

As the UK moves closer to allowing no fault divorce where does Hong Kong stand?

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This is the first in a series of articles where we examine recent trends in Family Law issues which have a broad impact on the community. This article discusses developments in divorce procedure and the impact of upcoming changes in the UK for Hong Kong 

One of the most frequent questions we are asked is whether Hong Kong allows “no fault” divorces as is the case in many other countries with sizeable expat communities in Hong Kong such as UK, USA, Australia, China and Canada. Recent developments in England and Wales indicate that the era of no fault based divorces may soon come in to force.

The leading case in this area and which precipitated the upcoming legislative changes in England and Wales is Owens v Owens [2018] AC 899. Mrs Owens filed a petition for divorce in 2015 on the grounds that the marriage had broken down irretrievably. The petition was based on Mr Owen’s unreasonable behaviour, being such that Mrs Owens could not reasonably be expected to live with him (which is the statutory test under English law). At this stage, the couple had been married over 25 years and had adult children, but had not separated. Under English law, an unhappy spouse may only petition for divorce against a non-consenting spouse citing separation as the fact for the irretrievable breakdown of the marriage if the separation is for a period of two years with consent or, absent consent, five years or more. The petition included 27 separate allegations of unreasonable behaviour on the husband’s part. Notwithstanding this, he defended the petition, arguing his behaviour was not so unreasonable that Mrs Owens could not be reasonably expected to live with him. At the trial, the Judge found in favour of the husband. The wife appealed and in 2017 the Court of Appeal upheld the Judge’s decision, finding that the Judge had applied the law correctly, and on the facts reached a defendable conclusion. The wife appealed to the Supreme Court in 2018, which dismissed her appeal but invited the UK Parliament to consider changing the law, recognizing that under current law “it is not a ground for divorce that you find yourself in a wretchedly unhappy marriage…”.

Post Owens v Owens, the following key changes are now very likely to be implemented following the introduction of the Divorce, Dissolution and Separation Bill:

  • There will no longer be any requirement to evidence conduct; a spouse need only state that the marriage has broken down irretrievably 
  • Parties will be able to make a joint application for divorce where the decision is mutual
  • It will no longer be possible for a spouse to contest the basis of the divorce

It will take some time for the courts in Hong Kong to decide whether to review the changes locally, but it is likely that a review will happen. In 1996, the existing statue (the Matrimonial Causes Ordinance) was amended to allow (i) “no fault” divorces based on one (with consent) or two (without consent) years’ separation and (ii) mutually consenting parties to make a joint application, more closely aligning the law with modern society’s values than the position in England and Wales.   

Today, as in England and Wales, the Hong Kong divorce framework requires one of five “facts” to satisfy the court that a marriage has irretrievably broken down. Three facts relate to conduct: adultery, unreasonable behaviour, and desertion for a period of at least one year prior to filing of the petition. The remaining two facts are: one year’s separation (with consent), and two years’ separation (without consent).  

Consequently, if there is no agreement to divorce, a party can bring an unhappy marriage to an end without the consent of the other only after a two year separation. If a party cannot wait for two years, then he or she would typically cite the respondent’s unreasonable behaviour as the “fact” for the irretrievable breakdown of the marriage (as was the case with the unhappy Mrs Owens). This can cause further conflict as the spouse must “particularise” (i.e. list out) the other party’s unreasonable behaviour. Family lawyers in Hong Kong have adopted for the  majority of petitions relying on unreasonable behaviour a “mild particulars” involving standard generic particulars. Typically the petitioner will state that he or she cannot reasonably be expected to live with the respondent, alleging certain reasons setting out their differences in an objective way without focusing on specific details.

It is submitted that there would be a significant advantage in Hong Kong Family Law jurisprudence if (i) an unhappy spouse could simply commence divorce proceedings without proving conduct,  and (ii) the respondent was no longer able to contest the basis for the divorce save where it may cause financial hardship by loss of pension or loss of beneficial rights under a trust for the respondent or where no proper financial arrangements have been made for the children. The parties would then start the divorce process in a kinder, less adversarial and more objective fashion which would likely lead to more settlement minded outcomes. The alternative is to maintain the status quo, and in certain situations it is not possible to just rely on separation from a non-consenting spouse as a two year delay may not always be realistic where an unhappy spouse does not have the luxury of finding a separate home (eg in cases involving low income families, or where there is domestic abuse). 

June 2020
Stephen Peaker, Partner and Head of Family Law
Michael Openshaw, Consultant
Family Law Department
Oldham, Li & Nie

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.