D, W v. H, HT

FCMC 2662 /2021

[2025] HKFC 202

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 2662 OF 2021

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RULING
(Appeal Against Master’s Decision)
(Single Joint Expert Report)

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The Appeal

1.  In these proceedings, the petitioner is the wife and the respondent is the husband. For the ease of reference, I shall refer to the petitioner as “the wife” and the respondent as “the husband”.

2.  This is an appeal by the wife against an order made by a Master (“the Master”) on 8 October 2025. By this order, the Master directed that -

(1)  a corporate asset in the name of WC, is to be valued as at 30 June 2025 by a Single Joint Expert (“SJE”) for the purpose of the trial on ancillary relief; and

(2)  the SJE Report is to be obtained within 56 days (ie by 3 December 2025).

3.  On 4 November 2025, HH Judge Thelma Kwan extended the submission of SJE Report to 23 December 2025.

4.  The trial is estimated to last for 15 days and has been fixed to take place commencing from 20 January 2026 before Judge Thelma Kwan.  

Brief Factual Background

5.  The parties married in January 2009. They have a daughter. She is over 18 years old. It is not in dispute that the parties separated in August 2020. On 26 March 2021, the wife petitioned for divorce on the ground of the husband’s unreasonable behaviour.

6.  The husband has 2 adult children from his former marriage whom I refer to as “KY” and “KN”.

7.  Whilst the wife has no objection for the value of WC to be assessed as at 30 June 2025, she insists that there should be 2 dates on which the asset is to be valued. Apart from 30 June 2025, she says the company should also be valued as at 31 December 2019. Dissatisfied with the Master’s Order, she launched an appeal on 16 October 2025.

8.  The wife was removed as a director of WC in 2020. The audited financial reports of WC for 2017, 2018, 2019 had already been disclosed when the Master made his decision on 8 October 2025. It is to be noted that these audited reports are consolidated financial statements of WC and its subsidiaries.  The wife claimed there was a significant loss for the year 2020. She also said huge amounts were written off due to various disposals of subsidiaries of WC. These are the reasons why she insisted on having the company to be valued as at 31 December 2019.

9.  Ms Ha, on behalf of the husband, opposes the appeal.

Legal Principles

10.  It is trite that an appeal from a master’s decision to a judge in chambers is a de novo hearing, and the judge will deal with the matter in question as if it came before him or her for the first time. A judge hearing an appeal from a master, however, is entitled, if he thinks fit, to adopt the master’s reasoning in his own judgment without setting out the reasoning himself; by so doing the judge does not fail to exercise the discretion confederated on him: see Hong Kong Civil Procedure  (2026) at [58/1/2].

The Wife’s Grounds

11.  When considering the wife’s appeal, it is important to bear in mind that the SJE Report being directed by the court to be obtained is for the purpose of ascertaining the value of WC for the purpose of the section 7 MPPO exercise. This is Step 1 (Identification of the Assets) of the section 7 exercise (“section 7 exercise”) as expounded by Mr Justice Ribeiro PJ in LKW v DD (2010) 13 HKCFAR 537.

12.  It is submitted by Mr Leung that significant assets were deliberately dissipated by the husband.  Mr Leung refers to the following transactions:

1.	2 September 2018	WC disposed of 50% interest in D investment Limited, a subsidiary of WC, at the consideration of $5,000, whereby an amount of $94.7 million was written off.
2.	2019	WC recorded a net profit of $18,496,000.
3.	2019	WC disposed of FH Investment Limited, which resulted in a gain on disposal of $206,358,000 but the asset revaluation reserve realized was $215,493,000,000, reflecting a decrease in equity of around $9,135,000.
4.	11 February 2020	H transferred 22.22% of his shares in WC to KY and KN.
5.	18 November 2020	WC disposed of 51% of another subsidiary in the name of WU Capital Limited (“WU”) to a related company (ie owned by one of the shareholders of WC), resulting in total written-offs of $388,855,000, namely, (i)  Goodwill written-off of $7,055,000; (ii)  Trade receivables due by subsidiary of WU of $234,000,000; (iii)  Amount due by subsidiaries of WC of $147,800,000.
6.	2020	WC recorded a net profit of $110,285,000.

13.  Mr Leung has two grounds.

The First Ground

14.  Mr Leung raises a new point in his oral submission that was not in the Petitioner’s Note nor was it raised before the Master, hence putting Ms Ha in surprise. Essentially, whilst Mr Leung agrees that there is already an audited financial statement as at 31 December 2019, a valuation on the value of the company as at the same date is still required because the two serves different purposes. Mr Leung submits that there are 3 methodologies that the SJE may adopt in the valuation exercise, viz, Income Approach, Net Value Approach and Market Approach. In considering which methodology to adopt, the SJE should be allowed to consider these dispositions and whether they were legitimate, done in the course of business, or for some other bona-fide reason. The SJE should also want to make an assessment on the impact on the value of WC if these dispositions were “added back” to the assets of WC – because they were, as alleged by the wife done for nefarious reasons.

15.  Mr Leung has not elaborated, whether in his oral submissions or in the Petitioner’s Note, on the relevance of these methodologies in relation to this point. Be that as it may, as I mentioned above, the SJE Report is obtained for the purpose of the Step 1 exercise. As I see it, whether the SJE would consider the matters that the wife wishes him to do, is, as of now, an open question. In my view, this is more a wishful thinking on the part of the wife.

The Second Ground

16.  The second ground relates to the transfer of H’s 22% shares to KY and KN on 11 February 2020 (item no. 4 at [12] above). Mr Leung argues that if this transaction is set aside by the court at trial and the shares are reverted back to H, he will once again become the majority shareholder of WC (55.56%) as opposed to being 31.82% as of now or at the very least a “major shareholder” of WC. This will surely have a significant impact on the values of his shares, as compared to if he was simply a minority shareholder. He refers it as the “control premium”.

17.  Again, whether the SJE would consider the “control premium” that the wife wishes him to do is a matter of professional judgment; hence, it is an open question.

18.  Mr Leung refers me to N v N [2001] 2 FLR 69 in support of his contention. However, N v N is not a case in which the judge was asked to obtain a SJE Report on an asset to be valued on two different dates.

19.  Most importantly, and this relates to both grounds raised by Mr Leung – the fundamental flaw is that Mr Leung never justifies why WC needs to be valued as at 31 December 2019.  I do not know what “magic” in it by picking 31 December 2019 as the date. It is not the date on which the parties separated. This date was about 8 months before the parties’ separation and in the middle of the dispositions complained of by Mr Leung. Mr Leung submits that this would provide the court a snapshot of how much WC was worth on 31 December 2019. Be that as it may, the question then is, does the trial judge need to have this snapshot? For the reason that this date does not falls on any significant event, I fail to see how the value of WC as at 31 December 2019 (whatever methodology to be adopted) would be useful to the trial judge in her section 7 exercise.

20.  I am conscious of the wife’s claim that there were dissipations of assets and she needs to investigate why there have been substantial decline in the value of WC. The husband has already produced WC’s audited financial statement for the year ended 31 December 2019. This is exactly the date on which the wife seeks to have the asset valued by the SJE. In my view, there is nothing from the wife to challenge the veracity and authenticity of this audited financial statement, or for that matter, other audited financial statements produced by the husband. Ironically, it is in reliance on these audited financial statements that the wife alleged there were dissipation of assets. Indeed, Mr Leung, on behalf of the wife, fairly accepts that the wife is not challenging the veracity or authenticity of these statements. Furthermore, these audited financial statements are consolidated statements. My understanding as a layman is that a written-off (a decrease in value) by the holding company in favour its subsidiary would result in an increase in value on the same consolidated audited financial statement.

21.  I have had the benefit of reading the learned Master’s Reasons for Decision. I must say I am in agreement with him that there is a wealth of authorities that confirm that the valuation date for matrimonial asset is as close to trial as possible. The cases cited to me are: KWC v LYY, FCMC 14968/2006, 31 July 2009, WSW v YKK , CACV 388/2007, 30 June 2008, Kan Lai Kwan v Poon Lok To Otto (2014) 17 HKCFAR 414. Indeed, I would add that in Rossi v Rossi [200]] 1 FLR 790, it was said by the English Deputy High Court Judge Mr Nicholas Mostyn QC (as he then was) that all assets must be valued at the date of trial: at [24.1].

22.  As I have referred to above, the audited financial statement of WC for 2017, 2018, 2019 had already been disclosed when the Master made his decision on 8 October 2025. I am given to understand that pursuant to W’s specific discovery application which was heard on 4 November 2025, the husband already provided the audited financial statements of WC for the years 2021, 2022 and 2023. Regardless of if the audited financial statement for the year of 2024 is available or not, there will be a valuation report prepared by the SJE on the company as at 30 June 2025.  At trial, the court would be able to see the changes in WC’s financial situation over the course of these years. From these, the court would be able to tell if there were decreases in the value of WC and if these were due to the dissipations or various written offs of its assets. If the husband fails to explain to the satisfaction of the court or if he is found to have failed to give a full and frank disclosure of these financial matters, the court may draw an adverse inference against the husband regarding his financial situation and may respond by a notional add-back or departure from equal division: see the Court of Appeal judgment in ARAV v VP [2011] 3 HKLRD 759.

23.  Thus, I agree with the Master that a valuation of WC as at the date of 31 December 2019 does not assist the wife.

24.  I would also add that HH Judge Thelma Kwan fixed the dates for ancillary relief trial and made her order on obtaining the SJE Report as early as on 12 December 2024 and 15 May 2025 respectively. There is no explanation from the wife why this matter came so late to be determined. At the end of the day, it is a matter of case management and in doing so, the court has to conduct a balancing exercise.  Even if there were some marginal benefits in obtaining a valuation as at 31 December 2019 (which this court is yet to be persuaded), on any view, given that the trial will certainly be affected, such application should be refused.

Post Hearing Development – Consent Summons dated 5 December 2025

25.  A week after the hearing of 28 November 2025, on Friday, 5 December 2025, the court was notified by the husband’s solicitors that a proposal had been put forward to the wife to resolve the dispute. Surprisingly, the proposal was that, in addition to the date of valuation as at 30 June 2025, two additional dates, namely 31 December 2008 and 31 December 2020 (and not 31 December 2019 as contended by the wife in this appeal) were to be adopted, too. Hence, there would be 3 valuations.  

26.  The court responded on 8 December 2025 with the following directions –

Parties do inform the court in writing forthwith (in any event by 5:00 pm, 8 December 2025) if the trial will be affected if (the husband)’s proposal is accepted by (the wife)?”

27.  Unbeknown to the court, a consent summons embodying the husband’s proposal was already filed to the court in the afternoon of the same day.

28.  On 9 December 2025, the court made the following directions:

“The consent summons dated 5 December 2025 will not be approved if the trial dates (which are milestone dates) will be affected.

In the meantime, the order dated 8 October 2025, specifically paragraph 3 thereof (ie when the SJE Report is to be available), do stand.”

29.  No reply was ever received by the time directed on 8 December 2025. It was not until 12 December 2025 that there was a joint letter by the parties informing the court that, according to the SJE, it is unlikely the SJE Report on the value of WC as at 30 June 2025 would be available by 23 December 2025. As I see it, this is beside the point. Parties have not given any explanation or justification on why these 2 entirely new dates are chosen and how these 2 dates could help the trial judge in her deliberation on the section 7 exercise. Parties are reminded that the court is not a rubber stamp. In the absence of any explanation or justification and when it is certain that the trial will be affected, the court would not approve the consent summons and would have it dismissed and I so order, with no order as to costs. The husband’s solicitors are to draw up, file and serve this Order.

30.  It has to be emphasized that the trial date is a milestone date. Any party (and his/her legal representatives) who is found to have led to the postponement of the trial may face adverse costs consequences.

Conclusion

31.  For the above reasons, the wife’s appeal ought to be dismissed; and I so order.

32.  As regards costs, I see no reason why costs should not follow the event. I order that, by way of an order nisi, the wife is to pay the husband’s costs of this appeal (with counsel certificate), to be summarily assessed. I make the following directions:

1.  The husband’s solicitors are to lodge and serve a Statement of Costs on or before 5 January 2026. The Statement of Costs shall be in the form prescribed under PD 14.3 (Appendix A).

2.  The wife’s solicitors may lodge and serve a List of Oppositions/Objections on or before 19 January 2026.

3.  No further submissions shall be allowed unless with the leave of the court.

4.  The summary assessment is to be dealt with by way of paper disposal.