Introduction

It is trite that a consent order, in the context of divorce proceedings, can be set aside on the ground that it was induced by misrepresentation or material non-disclosure. Apart from misrepresentation or material non-disclosure, a party also has to show that he/she has suffered loss or prejudice and the result of the ancillary relief proceedings would not have been the same but for the misrepresentation / material non-disclosure.

Is it possible to rely on a pre-nuptial agreement to set aside a consent order along with claims of misrepresentation/material non-disclosure? Is expert evidence required if the pre-nuptial agreement is entered into in a foreign country? A recent case GM-SA v DDPJ [2022] 3 HKLRD 767 clarifies the Hong Kong position on the above issues.

Background

The husband and wife in this case (collectively, the “Parties”) were French nationals and long-term residents in Hong Kong. They entered into a pre-nuptial agreement (the “PNA”) in France shortly before their marriage in France. According to the husband, the PNA contained an article by which the professional assets of the Parties were to be excluded from the division of assets in the event of a divorce.

After a period of about 20 years, the wife filed a petition for divorce in Hong Kong. Beforehand, the Parties had already reached agreement over arrangements regarding their children and financial matters. A divorce decree nisi was granted and two consent orders were made which reflected the Parties’ agreements. In respect of the financial matters, the Parties agreed to divide joint assets of the family on a 50-50 basis, notwithstanding the PNA.

Within one month of the consent orders, the husband alleged that he learnt that the wife intended to relocate to Europe with their children and had been having an adulterous affair with a third party for a considerable period of time.

As a result, the husband brought an action to set aside the Ancillary Relief Consent Order alleging, among other grounds, that the wife falsely represented and/or failed to make full and frank disclosure in respect of her alleged relationship with the third party and her intention to relocate from Hong Kong in the foreseeable future (the “Wife’s Issues”). But for such misrepresentation and/or material non-disclosure, the husband would not have agreed to the divorce or the Consent Order. Instead the husband would have filed for divorce proceeding against the wife in France and would have relied upon the PNA.

Refusal to grant leave for expert evidence

The husband made an interlocutory application for leave to adduce expert evidence on the jurisdiction of the French Courts over divorced proceedings involving French citizens who were married in France and the validity and enforceability of the PNA between the parties under French law.

The husband’s application was refused by the Judge. The Judge was of the view that the only issue to be resolved at trial was whether the wife had misrepresented and/or failed in her disclosure of the Wife’s Issues. This was only a question of fact which could be decided by the Court without any expert evidence or opinion. Putting the husband’s case to the highest, it was only if the husband can successfully set aside the Ancillary Relief Consent Order that French Law may then be needed to be considered to determine the appropriate ancillary relief.

A misrepresentation and/or non-disclosure has to be material to entitle a party to set aside a consent order. The Judge in his decision, notwithstanding that the husband’s application was only interlocutory, nevertheless determined that the alleged misrepresentation and/or failure to disclose the Wife’s Issues were not material.

The husband brought the present appeal before the Court of Appeal against the Judge’s refusal to grant leave to adduce expert evidence.

Applicable legal principles

The Court of Appeal summarized, among others, the following legal principles for setting aside a consent order:

1.        Before a case for setting aside a consent order can be made good, the court must be satisfied that there was misrepresentation or non-disclosure. The misrepresentation or non-disclosure had to be material to the decision made at that time, resulting in the making of an order which was substantially different from the order it would have made if disclosure had taken place.

 

2.        The burden of establishing materiality shifts depending upon the court’s finding as to the nature of the disclosure. Where a party’s non-disclosure was inadvertent, the onus is on the other party to show that proper disclosure would, on the balance of probabilities, have led to a different order; whereas where a party’s non-disclosure was intentional, it is presumed to be material unless the party can show, on the balance of probabilities, that it is not material.

Errors in the decision below

After summarizing the relevant legal principles, the Court of Appeal went on to point out the errors in the decision of the Judge below:

1.        The Judge took the view that the only issue to be resolved is whether the wife had misrepresented and/or failed in her disclosure of the Wife’s Issues and prematurely held that expert evidence was irrelevant to both issues. The Judge incorrectly overlooked the further issues (i) whether the husband has suffered any loss/prejudice because of the non-disclosure; and (ii) whether the result of the ancillary relief proceedings would have been the same even with the disclosure of the Wife’s Issues.

 

2.        The Judge incorrectly made a determination of whether the Wife’s Issues were material at the interlocutory stage when such determination should have been made at trial.

 

The Court of Appeal held that the expert evidence was relevant to the Wife’s Issues and allowed the appeal. This is because the proposed expert evidence would assist the Court in understanding the true meaning and effect of the PNA, and thus was relevant for the proper determination of whether the Ancillary Relief Consent Order ought to be set aside. Leave was therefore granted to the Parties to adduce the expert evidence.

Conclusion

It can be seen that it is possible to rely on a pre-nuptial agreement in an application to set aside a consent order as the Court may take into account such agreement in determining appropriate financial orders to be made (though such agreement is not binding on the Court and cannot oust the Court’s jurisdiction). It is therefore important to address pre-nuptial agreement(s), if any, in consent order(s). Whether in the above case the consent order in question is successfully set aside by the husband remains to be seen. Nevertheless, this decision clarifies that if a pre-nuptial agreement in question was reached in a foreign jurisdiction, expert evidence on the law of the relevant jurisdiction may be necessary to adduce for the Court to assess its impact on its decision on appropriate financial orders.

Cases involving pre-nuptial agreement(s) or setting aside consent order(s) may be complicated to navigate and resolve. Relevant parties are advised to seek professional and legal advice to understand more comprehensively about their legal rights in such cases.

 

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2022