WW v. LPQ formerly known as LLN and LSM AND OTHERS

FCMC 8485 / 2019

[2025] HKFC 81

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 8485 OF 2019

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BETWEEN

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J U D G M E N T
(ANCILLARY RELIEF)

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A. Introduction and background

1.  This judgment follows a Trial of the ancillary relief claims of the Petitioner (Husband or H) and 1^st Respondent (Wife or W)[1], and of the Wife’s Summons dated 27 August 2020 under s. 17 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) (“MPPO”) (“s. 17 Summons”) by which she seeks various orders including for the reversal of transfers of shares and trademarks by or at the behest of H to the 2^nd and 3^rd Respondents.

2.  H was born in Hong Kong in September 1962 and is now 62 years of age. He graduated from a Hong Kong university in 1985 with a Bachelor of Arts degree with in English and Literature and then pursued further studies in the UK. He is a director of several Hong Kong companies, including LS Limited (incorporated in 1996) (“LSL”), and GS Limited (incorporated in 2007) (“GSL”). LSL and GSL are involved in the trade and supply of health products including health supplements and milk products, to retail chemists in Hong Kong. GSL is a subsidiary of LSL, which is an 85.71% shareholder, with H (10%) and R2 (4.29%) holding the other shares. Since it was set up in 2017, R3 has also been involved in the same business.

3.  H works closely with R2, his business partner since the late 1990s. H and R2 have known each other since secondary school and R2 was best man at H and W’s wedding.

4.  W was born in Hong Kong in September 1961 and is now 63. She migrated to Japan with her family in 1966. She then lived for about 10 years in Mainland China from 1967 before returning to Hong Kong in 1977. In 1979 she returned to Japan for her studies, graduating from a Japanese university with a Degree in History. In or about 1989/1990 she moved back to Hong Kong to assist in her father’s business in Hong Kong and China. The business had grown from its origins as a Chinese herbal medicine trading company to becoming involved in other import/export lines.

5.  W and H met in the late 1980s/early 1990s. H was then working with a company involved in plastics, chemicals and pharmaceuticals, areas in which H says W’s father was keen to become involved. Over time, W and H’s relationship grew from one which was purely business into something more personal and in September 1993 they were married. They have two adult children, both sons, born in 1994 and 1996, who have completed their education and are now fully independent. H described their standard of living as “average middle class”, with accommodation of 1,000 sq ft flat and use of a company car, but with no holidays taken after the children left for their UK studies in 2012.[2] W described it somewhat differently:

“82. My family life quality has always been rather premier. The Petitioner in the past bough me famous brand handbags, jewelleries and clothing, more than HK$100,000 per month. Membership were jointly used with the Petitioner. The Petitioner got membership of the Excelsior Hotel, Intercontinental hotel and Zhuhai Golf Membership (value over a million dollars). … In addition, I and the Petitioner would travel at least 5-6 times a year, with places that must visit include Europe like UK, South East Asian countries like Japan and Thailand.

..

84. Throughout my marriage of over 30 years, I travelled by car. After marriage, the Petitioner and I once owned a Porsche.”[3]

6.  W and H have spent most of their careers in the health care products industry. In 1995, along with a business partner (not R2), H established a factory in Hainan province to produce pharmaceutical products. In or about 1998, W became involved in the Hainan factory, acquiring the shares of H’s business partner in the company through which it was run.

7.  In 2003, the Mainland factory relocated to Zhongshan, Guangdong Province, with the holding company being renamed “LS (Z) BP Limited”, and with H and W holding equal shares. They purchased apartments in Zhongshan which they still own: “Zhongshan 1505” (W’s apartment) and “Zhongshan 1605” (H’s apartment).

8.  At this time the marriage was not a happy one. In late 2003, H and W filed a Joint Application (FCJA 1223/2003) seeking dissolution of their marriage based on separation since 1998. A Decree Nisi was pronounced in March 2004 and the usual Order was made adjourning questions of custody and ancillary relief to 8 June 2004. Neither party was present at that hearing, and the Court ordered that questions of custody/maintenance be adjourned sine die with liberty to restore. Nothing happened until July 2009, when a Consent Summons was filed for the rescission of the 2004 Decree Nisi, on the basis that the parties had reconciled. Accordingly, on 10 July 2009 the Joint Application was dismissed and the Decree Nisi rescinded.

9.  H says that, despite the reconciliation, the period during which the parties were living apart, which he describes as between the late 1990s to the mid- to late- 2000s, remains relevant to the award the Court should make under the MPPO.

10.  R2, who was joined in the proceedings following W’s s. 17 Summons, has been involved in the business of LSL from the start. In the late 1990s he secured the rights to the distribution in China of a pharmaceutical product which had been developed by an Austrian company. R2 and H decided that this represented a good business opportunity and they established a company, “EPL” as the appropriate vehicle through which to trade. In April 2004, the name of the company was changed to LS Limited.

11.  In February 2005, LSL issued 10,000 shares, which were evenly distributed: H was allocated 3,334 shares, and W and R2, 3,333 shares each. It is part of W’s case that the understanding and intention of H, W and R2 was that this equal holding was to be maintained for as long as the business of LSL continued to operate. This is disputed by H and R2, who say that the business of LSL was always theirs, equally and that W was never involved in it.

12.  Discussions were held at this time for R2 to become involved in the Mainland business. In February 2005 H, W and R2 entered into a Shareholders Cooperation Agreement (“SC Agreement”) which provided for R2 to acquire a 5% shareholding in LS (Z) BP Limited for the sum of HK$1,000,000. The SC Agreement further specified that R2 would assist in the business as “director and vice general manager” and for him to work in the Mainland no less than 3 days per week.

13.  The SC Agreement specified for, in effect, a six-month ‘probationary’ period. That is, upon payment of the HK$1,000,000, R2 would receive a cheque from H/W for the same amount post-dated by six months, on the further condition that “if [R2] fails to achieve the spirit of cooperation and performance specified in the three-party cooperation agreement within the first 6-month cooperation period, [W] can declare the cooperation agreement to be invalid, and [R2] can transfer the post-dated cheque to his account and get the money back; if the cooperation is successful, [R2] should return the post-dated cheque to [W] and [H], and [W] and [H] should arrange to transfer the shares to [R2].” This enabled W to have the final say as to whether the cooperation arrangement was satisfactory. If she decided that it was not, then R2 would be refunded his HK$1 million and the 5% shareholding in LS (Z) BP Limited would not be transferred to him. If it was satisfactory, then H/W would retain the HK$1 million and R2 would be allocated 5% of the company’s shares.

14.  Mr. Andrew Hart, for H, R2 and R3, described the document as a “convertible loan agreement”. Whatever may be the correct description, there are disputes of fact as to what took place after the SC Agreement was signed. R2 says that he paid over the HK$1 million in accordance with its terms, but never received the post-dated cheque in return. W says she never received the HK$1 million and, if it was paid, it must have been paid to H. H denies this, and says that, sometime later, and on the assurance from R2 that he had indeed paid the money, he repaid HK$1 million to R2 out of his own pocket as he felt it was “the right thing to do”. Whether or not the money was paid by R2, and to whom, R2 was never allotted 5% of the shares in LS (Z) BP Limited in accordance with the SC Agreement and, to the extent that R2 was involved in the Mainland business, this was short-lived. In the witness box H confirm that, to the best of his recollection, R2 was involved for less than 6 months.

15.  In the following years the Mainland business continued to grow and was in need of additional liquidity to fund its expansion. Applications were made for loans, including with the China Construction Bank, supported by personal guarantees.

16.  W says that at this time, she and H were concerned with potential problems arising from this indebtedness and its possible impact on the Hong Kong business of LSL and the assets held through OT Limited, and that they jointly decided that the Mainland factory would be transferred into W’s name, with, at the same time, W transferring her shares in LSL to H. Essentially, from this time onwards, the arrangement was that W would have management of the Mainland business, and H (with R2), management of the Hong Kong business.

17.  In December 2007 W transferred her shares in LSL to H. It is nonetheless W’s case that this was on the basis that H would hold the shares on trust for her, so that the equal beneficial shareholder was not to be changed. I note at this point that H has conceded that the whatever the true extent of his shareholding in LSL, this constitutes a matrimonial asset to be shared with W.

18.  In 2012, the Mainland factory became embroiled in legal proceedings. W says she had to borrow more than RMB 2 million from her father and elder sister to fund legal representation, and was forced to pledge Zhongshan 1505 to her sister as part security for the loan. She exhibited to her (narrative) 36^th Affirmation a “Mortgage Loan Contract” dated 6 September 2012, for a loan of RMB 800,000 with a term of 10 years (to 5 September 2022) and with an interest rate accruing at 2.2% per month.

19.  Ultimately, in 2017 the Mainland factory was sold by auction. W says that this came about due to a change in the Guangdong government. There is no doubt that this was a forced sale. The sale price recouped was insufficient to cover the debts of LS (Z) BP Limited.

20.  W produced a 2018 pronouncement of the First People’s Court of Zhongshan City (“Zhongshan Court”), listing claims of a total of 27 companies/entities, and the assessment by the Zhongshan Court amounting to RMB 40,621,756. It was determined by the Court W would be personally responsible for RMB 22,143,665. The judgment states (in relevant part) as follows:

“Concerning the responsibility of [W], Article 63 of the Companies Laws of the PRC stipulates: ‘In case a shareholder of a one-person limited liability company cannot prove that the company’s property is independent of the shareholders’ own property, it shall be liable for the company’s debts.’

[Mainland company] is a company set up by [W]. As [W] cannot prove that the company’s property is independent of her personal property, she shall be jointly liable for the debts in this case.”

21.  H said that the Zhongshan judgment had been affirmed by the Supreme Peoples Court of Beijing (H’s 6^th Affirmation, §24).

22.  Mr. Hart questioned W on the additional liability arising from guarantees for bank loans, pointing out the lack of documents to support any indebtedness of this nature. W responded that the total of these guarantees were in the vicinity of RMB 40 million to 50 million and documents could be supplied if needed.

23.  W said that none of the Zhongshan Court’s judgment has been satisfied, and that she is still indebted to these 27 Mainland creditors in the sum stated.

24.  In May 2007, another company, NSKC Limited, was incorporated in Hong Kong, with LSL being allocated three shares, H and R2 one share each, with R2 appointed as the sole director. In September 2017, following W and H’s separation, five shares in NZKC Limited were transferred to W, and she became the sole shareholder. The company then changed its name to “LTLSB Limited”. Through this company, W operates a small food supplement business. The turnover is relatively modest and has not yet returned a profit. She has registered another company, YWTLSB Limited, which is not yet in operation.

25.  Over approximately a decade and a half between the mid 2000s and the late 2010s, a number of trademarks for the health care products imported and distributed by LSL were registered. W exhibited a number of documents suggesting that many trademarks were registered in the Mainland, some similar to the Hong Kong registered trademarks. W says that she was the designer of the trademarks, both those registered in the Mainland and those registered in Hong Kong. This is disputed, and R2 gave evidence[4] of the history of the Hong Kong registered trademarks, how they were designed by him or by employees of LSL under his supervision.

26.  In October 2017, H and R2 set up KH Limited (R3) and in November 2017, all the Hong Kong registered trademarks held by LSL were transferred to R3. W says she had no notice of the transfer, and the effect of it is to diminish the value of LSL considerably, thereby significantly reducing the value of a matrimonial asset, i.e. the shares held by H in LSL.

27.  In November 2019, H transferred 1,667 of his shares in LSL to R2. Again, W says that she was not informed of the share transfer, and that it was made by H with the intention of defeating her claim to the shares in LSL.

28.  On 27 August 2020 W applied by her s. 17 Summons to set aside both of these transactions.

29.  The assets of the parties include a number of landed properties, including the Former Matrimonial Home (“FMH”) at Taikoo Shing, in which W still resides. This is an apartment, purchased in September 2007 for HK$5,780,000. The current value is agreed at HK$19,070,000. The property is held through OT Limited of which H is the sole shareholder and director. The books of OT Limited show a director’s loan from H of HK$8,927,242.57, and H’s position is that if the property is to be sold, his loan must first be repaid before the net proceeds are shared with W. W disagrees, and says that to the extent this alleged debt represents H’s capital contribution to the acquisition of the FMH, this is no different to other cases where one or other party may, due perhaps to their superior financial position at the time, contribute a greater proportion of the acquisition costs of a landed property, and that it would be wrong to deduct such contribution as a debt to be repaid before the sharing principle is applied, particularly so in the case of a FMH.

30.  Other landed properties are held by H or W or through LSL. H owns a Unit in an industrial building in Kwai Chung. LSL owns four other Units in the same building. H also has an apartment in Bangkok, as well as the Zhongshan 1605 apartment. W has the Zhongshan 1505 apartment, and an apartment in London.

31.  Aside from bank savings, which have diminished over the time these proceedings have been on foot, and subject to allegations raised by W that H has deliberately dissipated matrimonial assets, including cash assets, the other main assets comprise insurance investment accounts. W has a car, a Jaguar F-Pace, which was purchased in May 2020 for $343,250 plus tax of HK$215,750.

B. The Issues

32.  The role of the Court on contested hearings of this nature is to achieve a fair distribution of the assets having regard to all relevant circumstances.

33.  The Court will strive, if at all possible, to achieve a clean break. In this case the need for a clean break is particularly acute. It is essential that H and W have closure so that they can move on with their lives. They are in their early sixties, an age at which many people are contemplating retirement in the coming five to ten years. Neither are in the best of health, and in particular W is suffering from a number of ailments, in respect of which she has recently sought medical treatment. During the January/February 2024 tranche of the Trial, she attended hospital several times for assessment and treatment.

34.  It is also clear that by now both H and W had expected to be significantly better off financially than they presently are. They blame the other for the fact that they are not. They have both adopted positions from which they are most reluctant to move. One illustration of this is that neither H nor W were prepared to make any Opening Proposals. H’s written Opening went so far as to suggest that, after hearing the evidence, the Court should dismiss W’s claim entirely.[5] W’s Opening Submissions explained the lack of an Opening Proposal on the basis that W had, at the last minute, discovered material non-disclosure by H representing “almost 59.3% of the pot”.[6]

35.  The issues in the case are those which present themselves in most final ancillary relief Trials:

(1) What is the extent of the matrimonial pool?

(2) What are H’s and W’s other financial resources, including their current earnings and earning capacity?

(3) What are their needs, assessed appropriately including by reference to the marital standard of living?

(4) Are there assets surplus to needs? If so, should they be shared equally or are there cogent reasons for the Court to depart from equal sharing?

(5) What is the appropriate Order the Court should make in respect of costs?

C. The Proceedings

36.  In early 2017, H and W separated for the last time. H commenced proceedings on 27 April 2018 (under FCMC 4996/2018) by filing a Petition (“the First Petition”) alleging unreasonable behaviour on the part of W. On 17 July 2019 the Husband filed a fresh Petition (with the current Action number) (“the Second Petition”) based on 2-years separation. The Decree Nisi was pronounced on 12 March 2020 and this was made Absolute on 7 April 2020.

37.  Both Petitions referred to the previous divorce proceedings in FCJA 1223/2003. The Joint Application in those proceedings, in turn, referred to H and W having entered into a Deed of Separation in October 1998 by which it was agreed that H would pay to W the sum of HK$120,000 per year for her maintenance and HK$60,000 per year for each of the children. The Deed of Separation was not attached to the Joint Application and H said he has not been able to locate a copy of it, despite his best efforts. He suggested that W should have it in her possession. No application for specific discovery of the Deed was made by H. W’s evidence is that the Deed was in English and she did not validly consent to its terms, whatever they may have been.

38.  In his Opening Submissions, H contended that the Deed of Separation should form the basis of the ancillary relief award between H and W. This was modified somewhat in his Closing to a submission that the earlier divorce proceedings, coupled with the existence of the Deed, supported a finding that this was not a long marriage, and that “the assets of the parties were separated as from 28 February 1998, latest 17 November 2003, which is relevant to the identification of assets…”.[7]

39.  This matter has involved considerable personal animosity between H and W. This is apparent from the many written affirmations, and, to a degree, from the behaviour of H and W at the Trial itself.

40.  In the period leading-up to the filing of the First Petition there were a number of instances of alleged mis-behaviour by W towards H, which resulted in H seeking injunctive relief against W. This was resolved by Order dated 23 May 2019, with H’s ‘non-molestation’ Summons being adjourned sine die upon a mutual undertaking not to “molest, harass or threaten” each other.

41.  Both H and W have raised allegations of financial misconduct which they say should form part of the Court’s consideration.

42.  H points to W’s unsuccessful foreign exchange trading (HKD/JPY) in 2000 resulting in a loss of approximately US$1.5M, representing a significant proportion of the family’s then cash savings. Separately, he says that W is to blame for the loss of the Mainland business.

43.  W refer to an incident in or about 2000 when H was prosecuted for a fraud offence, requiring her to spend most of her then savings to secure his release, even borrowing money from her father. She accuses H of never having paid her back for this financial support.

44.  W also claims that, since their separation, H has made multiple bank transfers to hide money from her and place savings beyond the reach of her claim.

45.  Section 7 of the MPPO requires the Court to have regard to the “conduct of the parties” in the exercise of its discretionary powers to award ancillary relief, but the Court should not allow a disputed ancillary relief trial to descend into a “post mortem” of the marriage. Conduct, in the sense of negative conduct, is only to be considered material if it is so “obvious and gross” and it would “in the opinion of the court be inequitable to disregard it.”[8]

46.  Mostyn J in OG v AG (Financial Remedies: Conduct)[9] identified four situations where conduct might be relevant: (i) where there is gross and obvious personal misconduct by one party against the other, which can extend to economic misconduct (ii) the addback jurisprudence, where one party has wantonly and recklessly dissipated assets (iii) identifiable litigation misconduct and (iv) permissible inferences drawn from a party’s failure to give full and frank disclosure, resulting in a conclusion that there are undisclosed assets.

MPS

47.  I have referred above to the fact that for a period of time during their marriage W and H were living quite separate lives, at least financial speaking. Following the collapse of the Mainland business, and although they each retained assets in their own names, W says she relied for her regular upkeep on financial support from H.

48.  On 30 January 2019, W applied by Summons for maintenance pending suit. In her supporting affirmation she said that in the period before separation and for about a year afterwards H paid support of HK$70,000 per month together with settlement of a supplementary credit card of HK$50,000 per month, but that this support had gradually decreased during 2018 and by the end of 2018, had ceased altogether.

49.  H claimed that the HK$70,000 per month payments constituted loans to W to help to pay her insurance premia while she was in financial difficulty.[10]

50.  On 23 July 2019 (“the July 2019 Order”) the Court handed down judgment on W’s MPS Summons directing H to pay to W the sum of HK$60,000 per month for her expenses and upkeep, to commence on 1 August 2019 and to continue until further order, and HK$50,000 per month for litigation funding, to be paid directly to her solicitors with effect from the same date. The Court additionally ordered that H pay to W a lump sum of $660,000 to cover both MPS and litigation funding for the period 1 February 2019 to 1 July 2019.[11]

51.  H appealed the July 2019 Order and on 14 January 2020 the Court of Appeal modified it by limiting the litigation funding of $50,000 per month up to the FDR, and reducing the arrears of litigation funding to $155,000.[12] The Court of Appeal declined to disturb the order for MPS for W’s own expenses.

52.  On 28 October 2020, H applied by Summons to vary the MPS order (“Variation Summons”) by reducing the payments to W for her upkeep by half (from HK$60,000 to HK$30,000 per month) and to reduce the litigation funding to zero. He did not actively seek a hearing of his Summons, and continued to breach the July 2019 Order.

53.  On 3 December 2020 W applied by Judgment Summons to enforce payment of arrears of HK$110,000. A further Judgment Summons was issued on 19 August 2021, seeking to enforce arrears of HK$1,028,285.15.

54.  On 31 August 2021, the Judgment Summonses came before the Court, and H was ordered by to pay HK$100,000 before 31 October 2021 and thereafter HK$50,000 per month for the arrears of MPS. The Judgment Summonses were adjourned sine die pending the determination of H’s Variation Summons, with liberty to restore being granted.

55.  By this time, the FDR had been held (on 29 July 2021) and the litigation funding of $50,000 per month had ceased pursuant to the Court of Appeal’s Order. More than a year later, on 7 November 2022, W re-applied for litigation funding to cover her costs of the ancillary relief Trial. This further MPS Summons was heard together with H’s Variation Summons by HH Judge I Wong on 14 December 2022, and on 10 January 2023 Wong J dismissed H’s Variation Summons and granted W’s Summons for further litigation funding in the amount of HK$500,000.[13] This was in anticipation of and was intended to cover W’s legal expenses for a four-day Trial set for 25 April 2023 (with 26, 27 April and 2 May 2023 reserved) and, additionally, to cover the costs of a further mediation session that H and W had agreed they would attend.

56.  The Trial could not proceed in April/May 2023 and was refixed for hearing in October 2023, again for 4 days. The Trial could not be concluded within those 4 days, and was adjourned part-heard to 22 January 2024, with four additional days set aside for its completion. The additional sitting days were again insufficient for the reasons set out in my Judgment dated 9 February 2024[14] by which W was granted further, and final, litigation funding for the completion of the Trial adjourned to 19 June 2024. The Trial ended on 24 June 2024, with the parties filing written Closing Submissions and Replies.

W’s Judgment Summonses

57.  W has filed a number of Judgment Summonses seeking to enforce the payments of maintenance under the July 2019 Order. I have referred to two of them, dated 3 December 2020 and 19 August 2021. Her further Judgment Summonses are:

(1) Judgment Summons filed 20 June 2023, seeking enforcement of HK$748,133 plus interest, surcharge and costs to be assessed.

(2) Judgment Summons filed 8 April 2024, seeking enforcement of HK$1,249,644.

(3) Judgment Summons filed 2 September 2024, seeking enforcement of HK$560,503.

58.  The exact quantum of arrears of maintenance (assuming non-compliance with the July 2019 Order) is not clear. However, assuming non-compliance with the July 2019 Order in respect of the HK$60,000 per month payments since August 2021, the arrears are very substantial.

59.  In Schedule B to his final written Reply Submissions, H said this:

“114. P has paid the MPS and legal costs according to the best of his ability and this has already been covered. Such payments should be factored into the amounts ordered to be paid (if any) to R1. R1 has continued to harass P as to payment of these monies by attempting to issue and serve Judgment Summonses even during the trial and subsequently. The amounts which are owed (if any) by P are not entirely clear given the Order dated 31^st August 2021.”

60.  With respect, I do not fully understand this submission. I cannot see how the payments made by H can be “factored into” the ancillary relief award unless the amount paid, and the amounts if any which remain due, are actually determined by the Court or admitted by H. I accept that the documents show the amounts paid (and the balance outstanding) in respect of the arrears under the July 2019 Order, but there is no indication that any further payments complying with the maintenance provision of the July 2019 Order i.e. the $60,000 per month have been made since August 2021.

61.  H seems to have studiously avoided making any admission of non-compliance. For example, his updated Form E did not include any reference to having not complied with the July 2019 thereby resulting in a debt to W (see para 2.13 “liabilities”) nor even to this ongoing monthly obligation as a regular monthly expense including in his list of expenses (see para 4.2 under “interim maintenance”).

62.  A party in whose favour an Order for interim maintenance/MPS has been made is entitled under the Rules to enforce such payment by appropriate means without waiting for final judgment of ancillary relief proceedings. This is not harassment.

63.  Further, it has been clear at all times what H was required to do under the July 2019 Order and the 31 August 2021 Order. This latter Order required payment of arrears of unpaid maintenance – both legal costs and maintenance components – on an instalment basis, and adjourned W’s Judgment Summonses pending the outcome of H’s Variation Summons. It made no alteration to H’s continuing obligations under the July 2019 Order. H duly made payments pursuant to the 31 August 2021 Order – as is seen from his bank statements[15] – albeit with some of the arrears apparently still outstanding.

64.  Further, H’s Variation Summons was dismissed by HH Judge I Wong’s judgment of 10 January 2023 and in the course of his Judgment His Honour was clear as to H’s continuing obligations under the July 2019 Order and the 31 August 2021 Order.

65.  In his 16^th Affirmation in support of his Variation Summons, H had said this:

“41. I am very surprised to hear in the Court on 10^th November 2022 that my MPS Order remains valid even after the FDR. My former lawyer as well as the barrister she instructed for the appeal both told me the MPS and litigation funding stopped at FDR.

42. If I am under a MPS Order and after my variation application was heard, I will still be in a position owing the 1^st Respondent MPS. My previous lawyer had offered a solution to this: to sell the matrimonial home and both myself and the 1^st Respondent divide the proceeds. Then both myself and the 1^st Respondent could handle all the MPS and litigation issues. I am strongly asking the court to consider this point. The situation now is different we have at least 9 more months to go before the trial and property prices are dropping. A Court Order to sell the matrimonial home will benefit both of us. By the time the whole trial is over, the price might have gone down 30%.”

66.  In my view, it is most unlikely that H’s former solicitor and barrister gave any such advice as claimed by H in paragraph 41 of his affirmation. The Court of Appeal Order was very clear: it allowed H’s appeal in part only, modifying the July 2019 Order only with respect to the litigation funding which was ordered to continue until the FDR and then cease. No such time limit was imposed with respect to the payments for W’s upkeep in the sum of HK$60,000 per month.

67.  In any event, it is clear from these two paragraphs in his affirmation that H accepted that he had become aware, at the 10 November 2022 hearing, that he was under a continuing obligation under the July 2019 Order to pay maintenance to W, in the sum of $60,000 per month, and, to the extent that he had failed to make such payments from August 2021 onwards, he was required immediately to resume such payments, and make arrangements to clear the backlog. Rather than resume payments, he decided to pursue his Variation Summons, but that was dismissed by I Wong J’s judgment of 10 January 2023.

68.  H has apparently taken no further steps to resume payments and to attend to the arrears. According to the Judgment Summons dated 20 June 2023, the unpaid arrears pursuant to the 31 August 2021 Order are HK$179,708. The same Judgment Summons also alleged non-payment of $60,000 per month since 1 August 2021. Assuming a period of 46 months from August 2021 to the date on which this Judgment is being handed down, and further assuming that H has not paid at all since August 2021, H owes HK$60,000 x 46 months = HK$2,760,000 plus the arrears of HK$179,708, total HK$2,939,708. This excludes any interest and surcharge which might be payable on the outstanding amount.

69.  W’s Judgment Summonses have been adjourned pending the handing down of this Judgment. In this Judgment, I include a direction that all outstanding Judgment Summonses be re-listed for hearing before a Master at the earliest convenient date. It will then be for H to determine whether or not he will contest the enforcement of the alleged arrears of maintenance under the July 2019 Order, including in light of the findings set out in this Judgment and the awards made by it. He is, of course, entitled to all of his rights under the Judgment Summons process or any other enforcement mechanism W may wish to pursue.

S. 17 Summons

70.  An interim preservation order is in place preventing any further dealing in the shares in LSL and the trademarks. On 2 September 2020, the return date of the s. 17 Summons, the Court made interim orders restraining the R2 and R3 (who were then the “Intended 1^st Intervener” and “Intended 2^nd Intervener”) from disposing of the trademarks that W claimed had been wrongly transferred to R3. The same Order records the undertaking of H not to transfer or dispose of his shares in LSL, and his shares (if any) in R3, and his shares in OT Limited and another company, KC Limited. Leave was granted for H and the two Intended Interveners to file affirmations in response to the s. 17 Summons and for W to file an affirmation in reply. The s. 17 Summons was adjourned to 3 February 2021, for mention.

71.  At that adjourned hearing the Court made the order joining R2 and R3 in the proceedings. The Order was made upon the following undertakings recorded in the Recitals to it (appropriate modification has been made for abbreviation and anonymity):

“AND UPON the R1 undertaking to the court that she would pay damages to P, FTCR [i.e. R2] and KH Limited [i.e. R3] (if any) as a result of the following undertaking

AND without admission and prejudice as to the merits in R1’s application of the Summons and such undertakings shall not be treated as an admission of liabilities, P gives the following undertakings:

(i) Upon P undertaking until further order of the court not to transfer or dispose of his shares in LS Limited;

(ii) Upon P undertaking until further order of the court not to transfer or dispose of the Trademarks as defined in Paragraph 10 of the 5^th Affirmation of R1;

(iii) Upon P undertaking until further order of the court not to transfer or dispose of his shares he may have (if any) in KC Limited;

(iv) Upon P undertaking until further order of the court not to transfer or dispose of his shares in OT Limited;

(v) Upon P undertaking until further order of the court not to transfer or dispose of his shares (if any) in KH Limited;

(vi) Upon P undertaking until further order of the court not to transfer or dispose of the Trademarks as specified in Schedule 2 of R1’s Summons.

AND without admission and prejudice as to the merits in R1’s application of the Summons and such undertakings shall not be treated as an admission of liabilities, FTCR and KH Limited gives the following undertakings:-

(i) Upon FTCR undertaking until further order of the court not to transfer or dispose of his shares in KH Limited;

(ii) Upon FTCR and KH Limited undertaking until further order of the court not to transfer or dispose of the Trademarks as defined in Paragraph 10 of the 5^th Affirmation of R1;

(iii) Upon FTCR undertaking until further order of the court not to transfer or dispose of his shares he may have (if any) in KC Limited;

(iv) Upon FTCR undertaking until further order of the court not to transfer or dispose of his shares in KH Limited;

(v) Upon FTCR and KH Limited undertaking until further order of the court not to transfer or dispose of the Trademarks as defined in Schedule 2 of R1’s Summons.”

72.  There are no formal pleadings on the s. 17 Summons. The lack of such pleadings seems to be due in part to the fact that at times W has not been legally represented. The Order requiring pleadings was made on 31 August 2021, directing W to file her Statement of Claim by 28 September 2021, then H, R2 and R3 to file their Defences by 26 October 2021 and liberty to W to file a Reply on or before 16 November 2021.

73.  At this time W was acting in person. Her solicitors had ceased to act on 2 June 2021. She did not instruct new solicitors until September 2022.

74.  On 30 September 2021 W filed her Statement of Claim pursuant to the 31 August 2021 Order. On 14 December 2021 the Statement of Claim was struck out by Order of HH I Wong J, and W was ordered to file and serve a fresh Statement of Claim by 28 December 2021, with consequential amended directions for the filing of Defences by H, R2 and R3 and for the filing (if any) by W of a Reply.

75.  The same Order fixed dates for a 5-day Trial of the parties’ ancillary relief claims and W’s s. 17 Summons to commence 6 December 2022, with an additional direction that the parties should “take any and all interlocutory applications on or before 4 May 2022.”

76.  W filed a new Statement of Claim on 28 December 2021. Unusually, this had several “exhibits”. On 31 December 2021 H, R2 and R3 applied by Summons to strike out the new Statement of Claim, and for an order that the s. 17 Summons be stayed or dismissed. On 10 January 2022, a Defence was filed by H, R2, and R3 without prejudice to the strike out application. On 6 February 2022 W filed her Reply. On 14 July 2022, an Order was made striking out the Statement of Claim filed 28 December 2021 and W’s Reply dated 6 February 2022, with costs to H, R2 and R3 to be summarily assessed.

77.  On 7 November 2022, having obtained new representation, W filed a Summons seeking an order that certain affirmations stand as pleadings for the purposes of the s. 17 Summons, and on 10 November 2022 an Order was made to that effect, namely:

“1. The 5^th Affirmation of R1 filed 27 August 2020, Affirmation of R2 filed 7 October 2020, 6^th Affirmation of P filed 7 October 2020, 6^th and 7^th Affirmations of R1 filed 29 December 2020 do stand as pleadings in respect of R1’s s. 17 Summons filed on 27 August 2020.”

78.  W’s case on the s. 17 Summons is as follows:[16]

(1) Her claim primarily is that H’s transfer of the 1,667 in LSL to R2 (“Alleged Wrongful Transfer”) should be set aside. Additionally, she challenges the transfer of the trademarks from LSL to R3 as being wrongful, and a dissipation of matrimonial assets.

(2) W’s claim is founded on the basis that it was always the intention of the parties (W, H and R2) that the beneficial interest in the shares in and assets of (including the trademarks) LSL would be held in equal shares, irrespective of the transfer from W to H of 3,333 shares in December 2007. The transfer was for H to hold these shares on trust for her.

(3) As the s. 17 Summons was filed within 3 years of the Alleged Wrongful Transfer), therefore the presumption under s. 17(3) applies.

(4) The timing of the Alleged Wrongful Transfer was, in any event, “highly suspicious”, in as much as (a) W was removed as a director of LS Limited within 2 months of the final separation; (b) shortly thereafter R3 was set up; (c) within 5 months of the Petition being filed, H and R2 caused the transfer of the trademarks; (d) the Alleged Wrongful Transfer took place after the first round of Form Es were filed and (e) it was made without notice to W, who only discovered it upon conducting a company search of LSL in July 2020.

(5) In the premises, the transfers of the shares, and of the trademarks, were each made with the intention of defeating W’s claim, and should be set aside.

79.  H/R2’s defence to W’s claim is as follows:[17]

(1) There was no trust or any agreement that LSL would be owned by the three of them in equal shares; it was always the position that R2 owned 50% of LSL and if W had any interest in the company, which is disputed, it would be “taken out of” H’s 50% interest.

(2) The transfer to return the shareholding to 50/50 between H and R2 was in exchange for a valuable consideration of HK$411,479, calculated on a figure then provided by the auditors of LSL as to the then net asset value of the company.

(3) The trademarks were never assets of H or W (directly or indirectly), and could not therefore be matrimonial assets; they were, and always have been assets of R2, their creator, who allowed LSL to use them under an arrangement agreed between R2 and H.

80.  W’s response/reply to this Defence is that:

(1) W joined LSL in 2005, whereupon each of W, H and R2 held equal shares, legally and beneficially. As such, even if (which is not admitted) the original intention was for H and R2 to be 50/50 owners of LSL, this intention must have changed in 2005.

(2) H’s claim that he and R2 were at all material times the equal 50/50 owners of LSL cannot be correct, as it is inconsistent with the transfer by W in December 2007 to H of 3,333 shares in the company; if R2 was in fact entitled to 50% of the shares, W would have been asked to and would have transferred half of the 3,333 to H and half to R2.

(3) Additionally, H’s claim is inconsistent with H maintaining his 66% shareholding in LSL following the December 2007 transfer, for 10 years, until the Alleged Wrongful Transfer which W seeks by her s. 17 Summons to set aside, and which was only made after the final separation and the filing of the Petition.

(4) There is no documentary evidence of the alleged consideration of HK$411,749, which, in any event, represents a gross underpayment given the true value of the 1,667 shares.

(5) R2 was at all material times aware of the breakdown in H/W’s relationship and did not enter into the transaction to receive the transfer of shares in good faith.

81.  W opened the Trial on the basis that, in addition to her own evidence, she would be rely on the evidence of a witness, “Ms. S”, a member of staff of the accounting firm engaged by LSL to audit its books, who would say that the transfer of 1,667 shares in LSL and 50% of R3 was in fact a “trust arrangement orchestrated by H”, in effect that it was a sham designed to distance a significant proportion of LSL’s business from W’s claim to ancillary relief.[18]

82.  One of the directions given on 19^th October 2023 was to grant leave to the Wife to file an affirmation of Ms. S, and to call her to give evidence at the adjourned Trial. This was not done, and even after W re-obtained representation, no attempt was made for Ms. S to give evidence on her behalf. In the circumstances, I place no weight on Ms. S’s statement as exhibited to W’s narrative affirmation.

D. The Assets

D.1 Landed Properties

83.  The following landed properties are held by the parties, directly or through companies in which they have or claim to have an interest. The respective positions of H and W are set out in the following chart for ease of reference.

Property	Held by	Valuation HK$	H’s position	W’s position
FMH at Taikoo Shing	OT Limited	$19,070,000 (Agreed)	H claims he loaned HK$8,927,242.57 to OT Limited and this must be deducted from the value of the FMH for the purposes of asset distribution	There is no evidence of the loan. A FMH has a central place in any marriage, and it would be unfair for any deduction to be made to deny W of her equal share
Kwai Chung Unit 10D	H	Disputed. SJE valuer appointed	Agreed as part of matrimonial pool	Agreed as part of matrimonial pool
Zhongshan 1605	H	Disputed. SJE valuer appointed	Agreed as part of matrimonial pool	Agreed as part of matrimonial pool
Zhongshan 1505	W	Disputed. SJE valuer appointed	Should be part of matrimonial pool	Pledged to W’s sister and registered C/1027/1028
London property	W	$5,000,000 (agreed)	Should be part of matrimonial pool	Acquired in 2005. Held on trust for 2 sons. Form F has been served.
Bangkok	H	THB1,600,000 = HK$400,000 (agreed)	Agreed as part of matrimonial pool	Agreed as part of matrimonial pool
Kwai Chung 15E2	LS Limited	Disputed. SJE valuer appointed	Agreed as part of matrimonial pool. Percentage shareholding the subject of the s. 17 Summons	Agreed as part of matrimonial pool. Percentage shareholding the subject of the s. 17 Summons
Kwai Chung 16B2	LS Limited	Disputed. SJE valuer appointed	Agreed as part of matrimonial pool. Percentage shareholding the subject of the s. 17 Summons	Agreed as part of matrimonial pool. Percentage shareholding the subject of the s. 17 Summons
Kwai Chung 16C	LS Limited	Disputed. SJE valuer appointed	Agreed as part of matrimonial pool. Percentage shareholding the subject of the s. 17 Summons	Agreed as part of matrimonial pool. Percentage shareholding the subject of the s. 17 Summons
Kwai Chung 16F	LS Limited	Disputed. SJE valuer appointed	Agreed as part of matrimonial pool. Percentage shareholding the subject of the s. 17 Summons	Agreed as part of matrimonial pool. Percentage shareholding the subject of the s. 17 Summons

84.  A number of pre-Trial interlocutory Orders and Directions were made for the parties either to agree the value of assets, or failing such agreement to take steps for these assets to be appraised by independent experts.

85.  Despite this, when the Trial commenced on 16 October 2023, the Court was informed that the values of several of the landed properties were still not agreed but had not been appraised by an independent expert or experts. The landed properties, the value of which were not agreed, comprised the two Zhongshan apartments, and the five Kwai Chung industrial units (“7 Landed Properties”).

86.  As the Trial could not be concluded within the four days in October 2023, the Court gave further directions for the 7 Landed Properties to be valued during the adjourned period. Mr. Chan Chi Wah of PSA (HK) Surveyors was appointed as SJE to value the 7 Landed Properties. He provided two separate reports, one dealing with the Zhongshan apartments and the other the 5 Kwai Chung units. He gave evidence on 2 February 2024.

D.2 Shareholdings in Companies

87.  As noted, the Hong Kong business of LSL and GSL is in the sale of health and milk products to chemists. LSL primarily deals with the large chain pharmacies, and GSL the smaller pharmacies.

88.  Mr. J McDonagh was appointed by Order dated 3 November 2023 as SJE to value LSL. He provided a Report and gave evidence on 31 January 2024 and 1 February 2024.

89.  In her Closing Submissions, W made a number of comments on Mr. McDonagh’s report, and at paragraph 60 of those Submissions, stated as follows:

“60. According to the valuation report prepared by Mr. McDonagh, LS is 85% owner of [GSL], which mainly supplies to pharmacy shops. Therefore, the sale of [GSL] would be another matter in question that the Court should have to sort out. However, no independent assessment had been done in relation to the business of [GSL]. Equally, no valuation had been carried out in relation to the two Shenzhen companies under the name of LS.”

90.  In my view there was no need for such valuations to have been conducted. As I have already noted, and as will be explained further below when I address Mr. McDonagh’s evidence, all revenue from the sale of products in the business conducted by H and R2, whether sold directly by LSL, or by companies under its control, is remitted to LSL. This is apparent from the company accounts provided to Mr. McDonagh by H for the purpose of his Report.

91.  OT Limited is the owner of the FMH in Taikoo Shing. In W’s Opening it was said that given the history of the company and its acquisition of several properties over time, coupled with the description in the audited financial statements that it is involved in the business of “letting of property”, OT Limited is likely to be the holder of other properties. This is denied by H.

92.  W is the sole shareholder of LTLSB Limited, to which I have referred. Neither W nor H suggest that this company holds significant assets, and neither sought a formal valuation of it as a going concern.

D.3. Insurance Policies

93.  Both H and W hold insurance policies. They are essentially investment policies, the surrender value of which fluctuates from time to time. W has three such policies with HSBC, against which she has obtained loans to support her upkeep. The surrender value of her policies has, as a result, reduced significantly. According to her last Form E dated March 2023, the remaining surrender value of her policies was approximately HK$668,000. Updated documents were provided by her in support of her application for litigation funding which she made in February 2024, and these showed that the loan balances had increased and the surrender values had correspondingly decreased. Given the lapse of time over the past year and months since that application, and the lack of support from H, I accept that the surrender values of her policies are minimal, if they exist at all.

94.  H’s insurance policies are in a healthier position. In the Court’s Judgment dated 9 February 2024, it was noted that the surrender value of his policies was approximately HK$5 million.[19] It is accepted that the effect of that Judgment is likely to have resulted in the value of these being diminished (because H may have needed to borrow against the surrender value of one or more of the policies in order to meet his obligation to pay MPS/Litigation funding under the Judgment) and for the purposes of this Judgment I assume that the surrender value is now HK$5 million less HK$500,000 i.e. HK$4.5 million.

D.4. Jewellery and cash, other personal items

95.  W listed valuable personal items in her last Form E which she estimated to be worth in total HK$5,410,000: HK$3,410,000 worth of jewellery and HK$2 million in cash. She claimed that in 2017 H had taken away all these items from a joint name safe deposit box in the Sheung Wan HSBC, and moved them to his own safe deposit box in a North Point HSBC. Her statement in the Form E said this:

“When I discovered what he had done, the Petitioner invited my sister to attend the North Point HSBC and added my name to his safe deposit box. He then gave me a key of the safe deposit box. However, in February 2017, the Petitioner stole the key of the safe deposit box from my home. I did report the incident to the Police and have been chasing the Petitioner for all my valuable items but in vain. On 14 February 2022, the Petitioner unilaterally took away all my valuable items and cash from the safe deposit box and cancelled the safe deposit box. I reported to the Police and the case is handling by the North Point Police Station.”

96.  H denies this. He says that W has the only key to the safe deposit box and has provided no proof that the items exist.

97.  As noted, W owns a Jaguar F-Pace which she purchased in May 2020.

E. The Law

E.1 Ancillary relief

98.  Under the MPPO the Court has jurisdiction to make a variety of financial orders including a direction that one party to proceedings pay such lump sum or sums or periodical payments to the other party for that parties benefit or the benefit of a child of a marriage (ss 4 and 5) and orders for the transfer or sale of real or personal property (ss 6 and 6A).

99.  On applications for such “ancillary relief” the Court is required by s. 7(1) to have regard to the conduct of the parties and “all the circumstances of the case” including

“(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.”

100.  The judgment of the Court of Final Appeal in LKD v DD laid down the procedural steps the Court must follow in exercising its powers to grant ancillary relief, and the underlying principles to be applied when doing so, namely:

Step 1: The identification of the assets, income and other financial resources of the parties

Step 2: The assessment of the parties’ financial needs (and those of the children, if any) and how these may be met by the assets, income and other financial resources as assessed

Step 3: In the event that there are assets surplus to those needs, the application of the sharing principle

Step 4: The consideration of whether there are good reasons to depart from an equal division of the assets

Step 5: Deciding upon the outcome.

101.  In applying these steps, the Court’s ultimate goal is to achieving an outcome which is just, having regard to four principles:

First, the objective of fairness

Secondly, the rejection of discrimination, including the rejection of gender or role discrimination

Thirdly, the yardstick of equality

Fourthly, the rejection of minute retrospective investigations which will serve only to “deplete the parties’ (and the courts’) resources and to increase antagonism and discourage settlement.”[20]

E.2 Obligation of full and frank disclosure – inferences from non-disclosure

102.  The obligation on parties to matrimonial litigation is to make full and frank disclosure of their relevant circumstances, including but not limited to their financial resources. The duty is a continuing one: it is not confined to the provision of information by the Form Es and Answers to Questionnaires. A party who fails in this duty without good reason runs the risk of the court drawing adverse inferences and “robustly attributing assets to him or her, or making adverse costs orders.”[21]

103.  Inferences may be drawn where a party leaves gaps in the information, and these inferences will normally be less favourable to the party guilty of non-disclosure. However, inferences “should only be drawn if there is some proper basis to do so”.[22]

E.3 Conduct – add-backs

104.  I have referred above to the allegations each party has made in respect of the other’s conduct, including conduct alleged to have resulted in significant financial loss.

105.  In LCC v LTLA[23] the Court of Appeal re-examined the law on allegations of conduct amounting to wanton and irresponsible expenditure. That case involved a claim by the wife that very significant sums lost by the husband through gambling should be added back in the matrimonial pot. At first instance, she succeeded. The husband appealed. On appeal the Court of Appeal found there was insufficient evidence to support the factual findings at first-instance, and that, absent this, it was not appropriate to add-back or re-attribute any amount to the assets in the husband’s name.

106.  The Court of Appeal conducted a review of the law on addbacks. At §27 the Court began its analysis by referring to its earlier decisions in ARAV v VP[24] and MKKWH v RKSH (Ancillary Relief: Addbacks and Claw Backs)[25], both of which confirmed that for a court to have regard to conduct, this must be “obvious and gross” and of such a nature that it would be inequitable to disregard it. In LCC v LTLA the Court of Appeal stressed that, even where a court is satisfied that the conduct is of this nature, it would not automatically follow that there will be a re-attribution by add-back or claw-back:

“34. Pausing here, it is clear from the above authorities whether a spouse’s conduct in relation to financial matters after the separation is a conduct issue under section 7 of our MPPO, and for the courts to have regard to such conduct, the conduct has to be obvious and gross and that it would be inequitable to disregard. It is not the case that a finding of misconduct must inevitably lead to a re-attribution of assets to the guilty spouse, and not every item of non-marital expense can be added back even though it could be said that such expense was a depletion of the matrimonial pot and as such it reduces the share of the spouse who has not benefitted from such expenditure, and any re-attribution must be conducted very cautiously by clear evidence of dissipation in which there is a wanton element. The ultimate goal is to achieve fairness.”

107.  The Court then examined a number of other UK decisions on the topic, including BJ v MJ (Financial Order: Overseas Trust)[26] where Mostyn J remarked that “Although intellectually pure, the problem with this technique is that it does not re-create any actual money. In my judgment it is in truth a process of penalisation, and it should be applied very cautiously indeed and only where the dissipation is demonstrably wanton.” At §45 of LCC v LTLA, the CA referred to Mostyn J’s decision in OG v AG (Financial Remedies: Conduct),[27] to which I have already referred. And at §47, the Court of Appeal noted Peel J’s decision in Tsvetkov and Khayrova,[28] which proposed a two-stage approach to be taken in cases of alleged misconduct impacting on claims for ancillary relief.

108.  The Court of Appeal accepted this ‘two-stage’ approach as being appropriate where misconduct falling into one of the four situations identified in OG v AG is claimed:

“48. We find the Two Stage Approach helpful in cases where conduct is an issue in ancillary relief claims and we set out the Two Stage Approach (slightly modified) as follows -

Stage (1)

A party asserting conduct must prove:

(i) the facts relied upon; and if established,

(ii) those facts meet the conduct threshold, which has consistently been set at a high or exceptional level; and

(iii) that there is an identifiable (even if not always easily measurable) negative financial impact upon the parties which has been generated by the alleged wrongdoing. A causative link between act/omission and financial loss is required. Sometimes the loss can be precisely quantified, sometimes it may require a broader evaluation, but it is doubtful that the quantification of loss can or should range beyond the financial consequences caused by the pleaded grounds.

Stage (2)

If Stage (1) is established, the court will go on to consider how the misconduct, and its financial consequences, should impact upon the outcome of the financial remedies proceedings, undertaking the MPPO section 7 exercise which requires balancing all the relevant factors.”

109.  At §61 of the Judgment, drawing the threads together, the Court of Appeal summed up the legal position:

“To summarise, following GS v L , the line of “add-back” cases in England has consistently set the threshold for the conduct for the court to have regard to for the section 7 exercise at a high or exceptional level, namely so gross and obvious that it is inequitable for the court to disregard it. In cases where one spouse alleges the other spouse of misconduct of over-spending, there must be clear evidence of dissipation in which there is a wanton element. In considering whether there has been wanton dissipation, the court has taken into account matters including (i) the extent, timing and nature of the alleged wanton dissipation; (ii) the general assessment of the overspending party; (iii) the motivation for the overspending such as whether the overspending was with the intention to reduce the other spouse’s financial claims, and/or whether it was bona fide ; and (iv) the negative financial impact upon the parties. Upon the misconduct being established, the court will then consider how the misconduct and its financial consequences should impact upon the outcome of the financial award having regard to all the relevant section 7 factors. “Add-back” is ordered in very limited circumstances even though it is recognized as an option, and the courts in England appear to be moving away from this option, with at least one judge pointing out that this technique does not re-create any actual money and is a process of penalisation. What is clear is that, there has been a constant reminder that the add-back has to be conducted very cautiously. No matter which route one pursues, the ultimate goal is to achieve fairness.”

E.4 Section 17, MPPO

110.  Section 17 of the MPPO empowers the Court to set aside a disposition or transfer of property made with the intention of defeating a claim for financial provision and to “give such consequential directions as it thinks fit for giving effect to the order” including directions requiring the making of any payment or the disposal of any property: s. 17(1)(b). Section 17(1)(b) applies to a disposition made by the other party not being a disposition made for valuable consideration to a person who, at the time of the disposition, acted in good faith and without notice of any such intention on the part of the other party: s. 17(2).

111.  In the event that the application is filed to set aside a disposition made less than 3 years before the date of the application and the Court is satisfied that the disposition or other dealing would have the consequence of defeating the applicant’s claim for financial provision, then it is presumed, unless then contrary is shown, that the other party disposed of the property with the intention of defeating the claim: s. 17(3). Section 17(4) provides, in part, that

“The relevant provisions of this Ordinance ( 本條例的有關條文 ) means any of the provisions of sections 3 , 4 , 5 , 6 , 6A , 8 , 11 (except subsection (6)) and 15; (Amended 69 of 1997 s. 33 ) and any reference to defeating an applicant’s claim for financial provision is a reference to preventing financial provision from being granted to the applicant, or to the applicant for the benefit of a child of the family, or reducing the amount of any financial provision which might be so granted, or frustrating or impeding the enforcement of any order which might be or has been made at the instance of the applicant under the relevant provisions of this Ordinance.”

112.  It is not a requirement that the intention is the sole or dominant intention of the disponor. It is enough that it played a substantial part of the intentions as a whole. [29] The standard of proof to be applied is the balance of probabilities. The test is whether the Court is satisfied on the evidence of the presence of the claimed intention. The Court is entitled to consider the disponor’s conduct, and any lack of candour to the Court. As a consequence, the circumstances surrounding the making of the dispositions is of relevance.[30] I am mindful that I am required to consider the evidence as a whole, and that I am required to be convinced that the intention is not merely dishonourable, but directed at the defeating or diminution of the other party’s claim for relevant relief under the MPPO.[31]

F. The Evidence

F.1 The Parties

113.  Each of the parties – H, W and R2 – affirmed multiple affirmations and gave evidence at the Trial.

114.  The Wife gave evidence over three days in October 2023; the Husband over two days in June 2024 and R2 also in June 2024. Each were tested by probing cross-examination.

115.  I am satisfied that, subject to the comments I will include below, that for the most part, W and H strove to give truthful testimony. At times, understandably, their responses to questions became combative and went beyond a response to the questions put, and into re-statements of their claims.

116.  Both W and H accuse the other of giving untruthful evidence. I had the advantage of seeing both of them give evidence over a number of days. Again, subject to otherwise as remarked below, neither of them raised any concern with this Court from their demeanour and responses to questions that they were engaged in an attempt to give false testimony. Having said this, it is clear that each of them are motivated – ‘driven’ would not be too strong a word – by the concern that they each maintain their current asset position and that this is not further diminished by a claim by the other party to it. This is hardly surprising after so many years and the effort they have invested in these proceedings.

117.  The 2^nd Respondent, who had affirmed four affirmations, gave evidence during the third tranche of the Trial in June 2024. I am satisfied that he also strove to give truthful evidence. This does not mean that I necessarily accept all of his contentions. I am conscious that his case is closely aligned with the Husband’s, his friend and business colleague for many decades, and that his position certainly cannot be described as disinterested. R2’s focus is on maintaining what he considers to be rightfully his: the trademarks and his half interest in LSL.

F.2 The experts

118.  Both Single Joint Experts, Mr. J McDonagh (the valuer of the HK business) and Mr. Chan Chi Wah (the valuer of the 7 Landed Properties) gave evidence. They each gave measured and considered responses to the matters put to them. I will address the specific elements of their evidence below.

G. LKW v DD Steps

G1 Step 1 – the identification of the assets and other financial resources

119.  There are a number of landed properties, including (a) the former matrimonial home in Taikoo Shing, held in the name of OT Limited, (b) five industrial units in Kwai Chung, four held by LSL and one by H (c) two apartments in Zhongshan, China, one held by H and one by W and (d) an apartment in London in W’s name. W has made allegations that H holds other properties which he has failed to disclose.

G1.1 Assets in dispute

(1) Zhongshan 1505 and 1605

120.  These properties are both duplex residential units, completed in 2005.

121.  Mr. Chan’s report dated 8 January 2024 concluded, based on sales of comparable properties and making the appropriate adjustments including for location, building age, view and orientation, that the two properties were to be valued at:

Zhongshan 1505: RMB 507,000

Zhongshan 1605: RMB 509,000

122.  Mr. Chan was called and gave evidence on 2 February 2024. Mr. Chan is a Fellow of the Hong Kong Institute of Surveyors with 28 years’ post-qualification experience in the profession of a surveyor. He is a Corporate Member of the Royal Institute of Chartered Surveyors, a Member of the China Institute of Real Estate Appraisers and Agents, a Registered Professional Surveyor (General Practice) and a Registered Business Valuer of the Hong Kong Business Valuation Forum. His experience includes preparation of various expert reports on residential and industrial sites in both Hong Kong and the Mainland.

123.  W questioned Mr. Chan’s ability to provide an accurate valuation of the two properties without having gained access to them. She emphasised her criticism of his failure to view the properties in her Closing Submissions.[32]

124.  Mr. Chan’s evidence was that his valuations assumed that the properties were in good condition, and he said that it was still perfectly possible to conduct an assessment of the value of the properties based on comparable sales data.

125.  W put to Mr. Chan that she had extensively renovated her flat and that his valuation did not take this into account. Mr. Chan responded by saying that not all buyers would like renovations made by existing owners, and he declined to adjust his valuation. I have not ignored the fact that W, by her questions, was suggesting that her apartment was worth more than Mr. Chan’s appraisal, a position she may not have appreciated was not necessarily advantageous to her.

126.  Mr. Chan is a valuer with nearly three decades of appraising residential properties including in the Mainland and I find that his approach to his task and to the giving of evidence was entirely professional. He considered comparable sales, made appropriate adjustments, and took into account all relevant elements, to the extent that he was able to do so. I find that the current market values of the Zhongshan properties are as appraised by Mr. Chan.

(2) Kwai Chung industrial units

127.  The five units held by H and LSL are located within an industrial building in Kwai Chung, New Territories, which was built in the early 1980s. W has registered her Form A Notice of Intention to Proceed with an Application for Ancillary Relief dated 5 October 2018 against the four units held by LSL and another Form A dated 27 December 2019 against the unit held by H.

128.  The units on the 16^th Floor are used by LSL for workshop and storage, and Unit D on the 10^th floor is currently undergoing renovation. Mr. Chan conducted an internal inspection of four of the units on 19 December 2023. He was not able to inspect Unit E2 on the 15^th Floor, and assumed, for the purposes of his appraisal, that it was being used for its intended purposes.

129.  Mr. Chan appraised the units based on market value, researched sales of comparable properties sold between November 2022 and August 2023, made various adjustments for location, building age, view etc, and concluded their values as at 25 December 2023, as follows:

Unit	HK$
Unit B2, 16/F	4,600,000
Unit C, 16/F	5,400,000
Unit F, 16/F	5,600,000
Unit E2, 15/F	4,600,000
Unit D, 10/F	5,500,000

130.  Mr. Chan was questioned by W as to the drop in value of the units over the period pre- and post- the Covid outbreak. He agreed that, based on the Price Indices published by the Rating and Valuation Department, there had been a drop of between 10% – 20% in the values of such units leading up to the date of his Report. He said that units in older buildings had dropped more than those in newer and better-quality buildings. W put to Mr. Chan that his valuations were on the low side. He disagreed.

131.  Again, I note the care with which Mr. Chan has conducted his appraisal of the value of the five industrial units, including his research of the sale of five comparables, all of which were in the same building, and all of which had been transacted within 13 months prior to his Report, and his consideration of adjustment factors including the time of sales, aspect/view, and size.[33] I find the Units are worth the values as assessed by Mr. Chan.

(3) The London property

132.  W purchased the London property in 2005. In her narrative (36^th) affirmation for the Trial she simply stated that “I hold the interest of this UK London Property on trust for my two sons.”

133.  W was directed to serve a Form F on her two sons and this was done. There was no response from the two sons, and they have not participated at all in these proceedings.

134.  In the witness box W confirmed that there was no formal Declaration of Trust in respect of the London Property in favour of either of her sons. W’s Closing Submissions, simply repeated her bare assertion that the property is held on trust and therefore “it should not be counted as part of the matrimonial pool.”[34]

135.  W supplied no document(s) to substantiate her assertion that she currently holds the London Property on trust for her sons. I reject her assertion and find that W holds both the legal and beneficial interest in the London Property. I find that, consistent with what I have said about both parties’ (i.e. H and W) enthusiasm to retain as much of the properties in their sole name from a claim by the other, that she has maintained, without any real basis other than her expressed desire, that the beneficial interest in the property is not hers.

(4) Zhongshan 1705

136.  In his first Form E, filed April 2019, H disclosed another property in Zhongshan which he had purchased in 2012 for the price of RMB 1M (= HK$1,170,000). In his second Form E filed January 2023, he disclosed that he had sold it for RMB 798,000.

137.  W conducted a search and found two different Sale and Purchase contracts for the Zhongshan 1705 property both dated 15 August 2020, both between H and the same buyer, but with two different selling prices, one for RMB 798,000 and another being RMB 1,320,000.

138.  H was cross-examined on this inconsistency. He said this:

“Let me explain. In China, at least in this county, Zhongshan, if you buy and sell something, you make a price which is lower than what the government has in mind, they will not bother with your transactions, but will still ask you to pay at the price they set. This is like a supplementary contract made by the agent for the sake of stamp duty.”

139.  H added that at the time of the sale – 2020 – the Mainland authority required the contract to record a higher, fixed price, and that the stamp duty would be payable on the price that they fixed. One of the reasons for this, was that the concern was that if the true sale price was recorded, and it revealed a drop in the value of the property, this could have a negative impact on the property market generally.

140.  In Closing, W suggested that this explanation was not to be believed. She said that H had disclosed no evidence of this practice and further no evidence that the sale price had actually been received by H.

141.  I accept H’s evidence that, having regard to the concerns of the Mainland officials arising from the market uncertainties and the decline in property prices during the relevant period (2019, 2020), it was a required practice to disclose in the contract a higher transaction price, with a lower (actual) price being assessed for stamp duty purposes. Having regard to this, and to the evidence given by both parties, I am not satisfied that H sold the property at an undervalue as suggested by W. I am satisfied that he did receive the sale proceeds.

142.  H accepted in Closing that the sale proceeds should form part of the matrimonial pool.

(5) Alleged undisclosed properties owned by H

143.  In the Agreed List of Assets and Liabilities, W referred to Annual Returns of LSL and GSL which gave a residential address for H, namely a property in Huizhou. She suggested that this was a property owned by H. H’s response was that this was a rental property.

144.  W referred to another property, “Unit 11066”, and referred to H’s account with the China Construction Bank showing that H had paid property management fees, and utilities. Again, H denied he was the owner.

145.  The fact that H has included an address of a property in the Annual Returns of one or more of his companies, does not, without more, lead to an inference that this is a property owned by him. Nor does such an inference arise from payment of management fees or utilities, which are commonly the responsibility of both owners and renters. No other evidence was adduced by W to show that the properties were ever owned by H, including, most obviously, title searches. Nor was it put to H during cross-examination that he was lying about these being rental properties.

146.  I do not accept that H owns either directly or through a company (including OT Limited) other landed properties which he has failed to disclose to W and to the Court.

(6) LS Limited/GS Limited

147.  Mr. Jerome McDonagh is Director of Matson Driscoll & Damico (“MDD”), a firm of forensic accountants. He is a fellow of the Association of Chartered Certified Accountants (UK), a Certified Valuation Analyst with the National Association of Certified Valuators and Analysts (USA), a Certified Fraud Examiner with the Association of Certified Fraud Examiners (USA), and a member of the Academy of Experts (UK). He has experience as an expert witness in court proceedings in Hong Kong, the UK and USA.

148.  In his report dated 8 January 2024, Mr. McDonagh assessed the value of LSL, adopting the asset approach, market approach and income approach, as follows:[35]

Description	HK$
Asset approach	19,927,836
Market approach	13,304,017
Income approach
LS 2022-2023 Declining Growth Rate	16,661,349
Statista Growth Rate	12,777,631

149.  Noting that the market and income approaches had yielded values below the asset approach, Mr. McDonagh suggested this might be for the following reasons:

“a) As noted in 2.11 above, [LS]’s turnover has decreased from approximately HKD 50 million per year to less than HKD 20 million in 2023, due to the Hong Kong protests and the COVID-19 pandemic which has had an effect [on] the long-term profitability of its business; and

b) [LS] has a strong asset base owning 4 properties in [Kwai Chung]. These 4 properties have had a significant impact on its value under the asset approach, increasing the value of [LS] by over HKD 15 million compared with the net asset value recorded in its balance sheet as at the Valuation Date.”[36]

150.  He concluded:

“7.6 As noted in 3.10 above, the asset approach can be the Fair Market Value of an entity, when it derives a value above the market and income approaches. As this is the highest value of [LS] based on my analysis, I consider this to [be] the Fair Market Value of [LS] and have estimated [LS]’s Fair Market Value to be HKD 19,927,836.”

151.  H accepted Mr. McDonagh’s valuation of LSL and as such would not have required him to be called to testify at the Trial.

152.  When Mr. McDonagh was appointed, as with Mr. Chan, the Court directed that they both make themselves available to give evidence upon the January 2024 resumption of the Trial.

153.  When the Trial resumed on 22 January 2024, the Court dealt with W’s solicitors’ application that they had ceased to act, and this was granted on 23 January 2024, and from then until May 2024, when she engaged new solicitors, she acted in person.

154.  Taking into account the difficulties W faced in conducting the proceedings after her solicitors ceased to act, it was in my view important to ensure fairness that Mr. McDonagh come to Court to give live evidence so as to explain his methodology and the conclusions in his Report, and that W have an opportunity of putting her questions to him. The Report, and the attachments are for the most part in English, a language in which W is not fluent.

155.  An official transcript of Mr. McDonagh’s evidence was ordered and made available to the parties. Mr. McDonagh’s evidence proceeded as follows:

(1) Mr. McDonagh went through his entire Report and explained the different methodologies he had adopted.

(2) He confirmed the information he had relied upon, including the financial statements provided by LSL and related companies GSL and R3.

(3) He referred to the comparable companies for the purposes of assessing the market approach, including the research tools he used.

(4) He explained the formulae, including his use of enterprise value and EBITDA.[37]

(5) He confirmed and explained the conclusions he had reached.

156.  Mr. McDonagh confirmed that his assessment of the value of LSL using the income approach relied necessarily on the accuracy of information he was provided, including the financial statements of LSL and the associated companies.

157.  With the assistance of the Court, W questioned Mr. McDonagh on his Report and his conclusions. A significant proportion of her questions focused on her claim that the accounts provided by H to him were not accurate, and that therefore, Mr. McDonagh’s conclusion as to the value of LSL could not be accurate, either. Mr. McDonagh conceded that if this was in fact the case, i.e. that the financial statements could not be relied upon, then this would materially impact on his valuation.

158.  W contended that money – income properly belonging to LSL – had been wrongly diverted to R3, including income from its major customer, Watsons. Again, Mr. McDonagh conceded that, if this was true and if earnings meant to be received by LSL had been diverted or misappropriated and not returned to LSL, this would have an impact on his conclusion, albeit that he was not able to give an accurate figure by how much the conclusion would differ. He explained that it was not a matter of simply adding back a sum allegedly diverted into the earnings of the company, as although its profits may be higher, so too may its costs.

159.  The principal difficulty of W’s position is that Mr. McDonagh was not appointed by the Court to conduct a forensic audit or fraud investigation as part of his duty to evaluate the worth of LSL. Mr. McDonagh emphasised this in his written Report[38] and during his oral evidence.

160.  W’s Closing Submissions contended that:

(1) KH Limited was, wrongly, not valued by Mr. McDonagh, and that this was particularly concerning given the trade volume it had with Watsons which amounted to several hundred thousand HKD per month (para 96).

(2) The fallacy in Mr. McDonagh’s approach was to approach the assessment of LSL’s value without regard to its true market value of LSL, especially given W’s claim that the profit margin at all material times was much greater than that reported in the audited financial statements (para 97).

(3) In this regard, Mr. McDonagh was provided with, but ignored information which proved the siphoning off (by H and R2) of profits generated by LSL but moved to third parties, in order to minimize the profits of LSL shown in its financial accounts (para 98).

(4) Mr. McDonagh failed in his duty properly to investigate into the matter, instead relying on inaccurate audited reports (para 101).

161.  No application was made by W’s solicitors to recall Mr. McDonagh for further questioning during the four days in June 2024 allocated for the completion of the evidence. If it was felt that the contention that Mr. McDonagh had gone about his task in too limited a way had merit, one option open to W, having now re-secured representation, including by counsel with considerable experience in matrimonial cases,[39] was to ask that the Court direct the return of Mr. McDonagh to the witness box for further questioning.

162.  W’s central complaint is that, as a result of the setting up of KH Limited, profits were diverted to KH Limited and away from LSL, thereby impacted on its profitability, and resulting in inaccurate accounts.

163.  The flaw in this argument is this: Mr. McDonagh based his assessment on the assurance by H that all income received by KH Limited had been returned to LSL (Transcript 31 January 2024, am) (names abbreviated for reasons of anonymity):

Court: You say [in your Report], “In the emails I note W has reiterated her claims of fraud within LS. As I noted in my previous email of 4 January the court has appointed me to conduct a valuation of LS and I have not been provided with any instructions in my appointment to conduct a fraud investigation, or any fraud investigation. In relation to W’s question about the trademarks formerly held by LS, I understand that they are held by KH Limited. It is my understanding KH Limited was set up by H and R2 to collect revenues from Watsons and all of the revenues transferred back to LS. It is my understanding that the revenues generated from LS would have used the aforementioned trademarks as I have my analysis – has taken into account the profitability of” – do you mean, “As I have in my analysis”

A. Sorry, yes, Your Honour

Court: Yes, “Have taken into account the profitability of LS.” Now, part of these proceedings involves an application by W for certain relief. There are two aspects to that. The first is that it is her case that H wrongfully transferred shares to R2 in November 2019. The second aspect is that on a different date LS at the agreement …between W and R2 transferred trademarks to R3, KH Limited. Now, those matters are not matters that I am seeking your opinion about because that’s a matter for the court to determine whether or not, in fact, those claims have merit. But … I think what you report says and what this email says is that you’ve taken it into account on the basis that, in fact, all profits from those trademarks generated, including the revenue .. arising from sales of products to Watsons, be that wholesale or whatever other basis, you understand that all of that, all of those profits generated came into LS, is that right?

A. Yes, that’s my understanding. In one of the answers by H or R2 which were provided by Hart Giles, I believe they said that they set up… KH Limited to collect revenue from Watsons because of issues with W, and that they will transfer back the revenues from KH to LS.

164.  Again, during the later evidence given by both H and R2, it was confirmed that all income received by R3 including from Watsons, would be transferred back to LSL, and that this would continue to be the case so long as the business continued to trade. This evidence is consistent with the accounts and financial returns of LSL and the associated companies, with Mr. McDonagh’s Report and his evidence in the witness box.

165.  W’s allegation that Mr. McDonagh’s reliance on the financial statements of LSL has resulted in an inaccurate undervaluation of LSL is not accepted.

166.  I can find no flaw in the analysis conducted by Mr. McDonagh. I accept his conclusion as to the value of LSL, based on the Asset Approach, at HK$19,927,836.

(7) W’s s. 17 Summons – LSL Shares and the Trademarks

167.  In her evidence, particularly her 5^th Affirmation dated 24 August 2020, W stressed the importance of the timeline, including the fact that in February 2005 LSL had a total issued share capital of 10,000 of which H held 3,334, and R2 and W 3,333 shares each, and that at this time all three persons were directors of the company. From this, and the fact that she remained a director of the company with this equal shareholding, until April 2007, she says that she was very much involved in the Hong Kong side of the pharmaceutical business. She also lays emphasis on the fact that she was reappointed director from November 2012 to April 2017 and that

“[A]t all material times from 2000 to April 2017, I worked actively in promoting the business of [LSL] in Mainland China and in Hong Kong. We have registered the trademarks in Mainland China under the Petitioner’s and my names and then we also caused those same trademarks to be registered under [LSL]’s name as our trustee in Hong Kong. In addition, we have also developed some more trademarks in Hong Kong. However, all the registered trademarks were registered in [LSL]’s name on trust for the Petitioner and myself and we are the beneficiaries of those trademarks.”[40]

She points to the fact that removal of her as director, the setting up of R3 and the transfer of trademarks to it, and the transfer/sale by H of a significant amount of his shares to R2 all took place in the years since H and W finally separated in January 2017.

168.  H/R2’s case is set out in their affirmations dated 7 October 2020.[41] Both say that W was never involved in the Hong Kong business of LSL, and, until it collapsed, she devoted all her energies to the Mainland business. Their respective affirmations detail how the business grew, including how, in 2005, they secured contracts with Watsons, and later with Mannings, which provided sufficient income for LSL to acquire the first of the Kwai Chung units as a permanent office. H says that the restructuring of shares in 2005 was pursuant to an agreement that W would sell LSL’s products in the Mainland, and “if she failed to sell the products in China, she would return the shares to us.” (H’s 6^th affirmation, para 28). The subsequent return of the shares by W to H in 2007 was “pursuant to that agreement” (para 31).

169.  In respect of the trademarks, H said that all of the trademarks formerly held by LSL were designed by R2, and that W had no involvement in their creation (6th Affirmation, para 35), that the trademarks and the intellectual property in the business were all handled by R2, and was subject to an agreement between H and R2 that for as long as they were in business together, LSL would be able to use the trademarks for free (paras 53, 54). He says that the 1,667 shares transferred by H to R2 were sold in November 2019 for valuable consideration: HK$411,749, a figure decided upon after advice from LSL’s auditors as to the company’s then value. H says that without this ‘equalization’ of the shareholding, the business of LSL would have broken down (para 60).

170.  For his part, R2 described how for many years he had been interested in graphic design and had the ability and knowhow to create designs including by using software, and that it was “always understood between us [i.e. H and R2] that the Intellectual Property did not belong to [the business] but I retained ownership.” (R2’s 1^st affirmation, para 5). He affirmed that, after W’s resignation as director and return of shares in December 2007, she ceased all connection with LSL (para 19), and that her assertion that there was an oral agreement that she would continue, irrespective of the registered shareholding, to hold a 1/3^rd interest in LSL, was “absurd” (para 20). In his further affirmation filed pursuant to the Court’s Order of 19^th October 2023, he described in considerable detail the development of the designs subsequently registered as trademarks.

171.  Having considered the written and oral evidence of the parties, I make the following findings.

• Trademarks

172.  I accept that the 2^nd Respondent was the prime mover in the creation of the Trademarks formerly held by LSL and later transferred to the 3^rd Respondent. The Order dated 19 October 2023 granted leave to R2 and W to file further affirmations to describe the genesis of these Trademarks, relevant to the claims by W on the one hand that they were a product of her efforts, and R2, that this was not correct and that he was the inventor of them. R2 chose to file detailed evidence as to their creation. W did not. I have not ignored the difficulties W encountered during this period, including that she did not have the advantage of solicitors acting for her during this time. Although her former solicitors were still on the record, it is clear from the exhibits to the affirmation in support of their application that they had ceased to act for W that they had withdrawn all further services to W unless their outstanding accounts were settled and they were placed in funds to cover further work.

173.  Nevertheless, although I accept that R2 was the primary designer of and developer of the Trademarks, as affirmed by him, other designers were hired by LSL to assist in the process.[42] In Closing, H submitted[43] that “[t]he designers hired merely helped with administrative tasks and their title did not reflect their duties”. This submission is not accepted. It is inconsistent with R2’s 4^th Affirmation, which made it clear that the designers hired were not engaged simply to provide administrative tasks:

“13. As I know the importance of graphic design for the company, I asked for the Petitioner’s consent for hiring a designer to help my work. The designer could help me to finish the artwork in a professional way…

14. We were lucky to have as the third designer a Miss [T]. She was eager to learn and worked very hard. She had been working in the company for more than 7 years (from … 2008 to … 2015) and left the company for overseas study. Miss [T] contributed a lot to help me to complete the product and trademark designs, and also the print advertisement….”

174.  The Trademarks were developed and registered for the purposes of enhancing the marketability and identity of the pharmaceutical products of LSL so as to cement LSL’s position as a provider of such products to the retail chemists with whom it had fostered close business relations.

175.  I reject H and R2’s case that there was an “understanding” that, irrespective of the development of the Trademarks, they were R2’s to do with as he wished, and that LSL’s use of them over the years, before they were transferred to R3, was a gesture of goodwill on R2’s part. I find that this is a recent invention on the part of H and R2, in an effort to protect the Trademarks from any claim by W to them. If in fact this understanding and agreement had existed, there would have been nothing to have stopped R2 from being the registered owner of the Trademarks from the moment they were created, and for a simple licensing agreement to have been drawn up to confirm R2’s agreement for them to be used by LSL in its business.

176.  Nonetheless, I accept that H and R2 took the step to transfer the Trademarks to R3 not because of any desire on the part of H to defeat W’s claim to them, but out of a concern for the business disruption which might be caused, and/or perpetuated, by W’s behaviour, as outlined by both of them in their respective affirmations. The steps they took included the establishment of R3.

177.  The important point to bear in mind is H’s shares in LSL have been valued on the basis that for as long as it continues to trade, it will be entitled to all of the income derived from the use of the Trademarks by its present registered owner, R3.

178.  I therefore dismiss paragraphs 5 and 6 of W’s s. 17 Summons.

• Shares

179.  In my judgment the transfer of shares in LSL by H to R2 was made with the intention of defeating W’s claim to them. If, as H and R2 assert, the short-lived ‘joint venture’ whereby W acquired 1/3^rd of the shares in LSL in return for her promoting and selling the products of LSL in the Mainland, ceased in April 2007, whereupon H and R2 reverted to equal owners of LSL, why then did H retain the majority shareholding in the company through to 2019? I do not accept that this was due to an oversight on H’s part. Further, if, as they assert, LSL always belonged to them equally, it would make no sense for R2 to have paid anything but a nominal sum for the 1,667 shares when they were transferred to him in November 2019. I accept W’s explanation that the reason her 3,333 shares were transferred to H in April 2007 was out of a concern that she divest her registered interest in LSL given the potential personal liability which might arise out of the operations of the Mainland business.

180.  Further, it agree that it is significant that W was re-appointment as a director of LSL in the later years, before her resignation/removal in 2017, three months after the final separation.

181.  The 1,667 shares were transferred to R2 at a time when R2 was aware of the breakdown in H and W’s relationship, and when he very likely was aware of these proceedings. R2 affirmed, and confirmed when he gave oral evidence, that the setting up of R3 and the transfer to it of the Trademarks and of the business with Watsons was primarily due to W’s alleged misbehaviour and the potential disruption to the business with Watsons. He cannot have been unaware of the marital disharmony between H and W, and, to be fair to him, he did not claim during his oral testimony to have been so.

182.  I further find that the shares in LSL were transferred from H to R2 at a considerable undervalue. Mr. McDonagh’s estimate of the present value of LSL, which I have accepted as correct, is HK$19,927,836, on a net asset basis. The vast majority of LSL’s assets comprise the Kwai Chung units. At Mr. McDonagh’s valuation, one share in LSL is now worth HK$1,992.78, and 1,667 shares, HK$3,321,964. According to Mr. Chan’s, the value of the units has declined in recent years, indicating that the value of one share in LSL in 2017 was higher than it is now. The difference between the value of the shares at the time they were transferred from H to R2 and the price agreed, is stark. Both H and R2 must have appreciated that the basis on which the transaction price was agreed was wholly unreflective of the true value of the asset base of LSL. Financial statements routinely list landed properties as non-current assets and their net book value is calculated on the basis of acquisition cost less depreciation. Mr. McDonagh’s valuation was, of course, not conducted on this basis, but having had the benefit of Mr. Chan’s appraisal of the current value of the Kwai Chung Units owned by LSL.

183.  It has not been necessary for me to make any finding on W’s assertion that after her transfer of the shares to H in April 2007, H continued to hold them on trust for her. Both W and H accepted that whatever H’s correct shareholding, it constitutes a matrimonial asset and should form part of the pool of assets.

184.  W therefore succeeds in part in her s. 17 Summons. The question remains as to whether I should grant an Order as sought in paragraphs 2 and 3 of her Summons, for the reversal of the transaction, and for R2 to transfer 1,667 shares to H. I am mindful that, having regard to the finding that these shares are worth considerably more than R2 paid for them, such a transfer may attract ad valorem stamp duty. If, as H and R2 have testified, they consider that their shareholding in LSL should be equal, then it makes sense for the present arrangement to remain in place, subject to any claim by H against R2 that R2 should pay to him an amount equivalent to the difference between $411,749 and their true present value, i.e. 1,667 x HK$1,992.84 = HK$3,322,064.28. I will grant all parties liberty to apply to address me on this, if they so choose.

(8) Add backs for alleged misconduct/dissipation

185.  I have referred above to the contentions of the parties on this issue.

H’s allegations against W

186.  I do not consider that there is sufficient evidential basis to hold W responsible for the failure of the Mainland business. I accept that both H and R2 eschewed any involvement in the business after 2007. The difficulty is that it is not possible for the Court to draw any firm conclusions as to why the business failed. Although H made a number of allegations against W, including suggesting that W had committed a crime or crimes in the Mainland which might have contributed to its loss, he did not call any witnesses or produce any other Court documents to substantiate his allegations. It is not possible, in these circumstances, for the Court to draw any conclusions as to the reasons for the failure of the Mainland business or that it was solely or primarily due to misconduct on W’s part.

187.  Then there is the allegation that the Court should take into account that W lost as much as HK$10 million in ill-considered margin trading, in or about 2000. It is clear from the evidence, and the bank statements provided, that W was involved in this. She laid the blame on another person – a Mr. Chan – and on H.

188.  The Court drew H and W’s attention to the Court of Appeal’s judgment in LCC v LTLA. In his closing submissions, Mr. Hart referred to this, and to other authorities. It is unclear whether H is advancing a case that the monetary losses due to W’s margin trading should result in the Court “adding back” an amount to W’s side of the ledger.

189.  Assuming that this is H’s submission, I am not convinced that this is a case in which the Court should add back any amount or to adjust the award to reflect this loss. In my view, however unfortunate, W’s conduct in investing in Japanese Yen, a currency she obviously believed in and considered would strengthen against the Hong Kong dollar, cannot be regarded as “wanton and reckless dissipation of matrimonial assets”. No doubt W regrets having invested such a significant proportion of cash assets in this forex trading. In my view, this cannot be described as “obvious and gross” misconduct of such a nature that it would be inequitable for the Court to disregard. It is relevant that this alleged misconduct took place as long ago as 2000, admittedly during a period of marital disharmony, but which was followed by the parties’ reconciliation.

W’s allegations against H

190.  W’s contention on alleged dissipation of assets by H was presented in her submissions in support of an adjournment of the Trial, on 16^th October 2023. She claimed to have obtained bank statements from her younger son and his girlfriend, showing a dissipation of HK$17.4 million in 2017-2018, to H’s sister, and to a joint account of H and his younger son.

191.  The Court refused to allow the bank statements produced in support of this allegation to be admitted into evidence. Leaving aside the extreme lateness of the production of the documents, and the element of unfairness to H, the Court was not satisfied that the documents had been obtained by proper means.

192.  Ultimately, upon resumption of the Trial in June 2024, W attempted to produce a bundle of additional bank statements, for the purposes of cross-examination of H. Some of the documents were admitted. H conceded the potential relevance of the bank statements, pragmatically recognizing the importance of the Trial finally coming to its conclusion. The bank statements allowed in were compiled into an additional Trial Bundle “F”.

193.  H’s Answers dated 30 September 2020 to W’s Questionnaire dated 19 June 2020 asked for explanations of substantial transactions in H’s personal HSBC accounts during 2018 and 2019. The bank statements show significant stock/securities trading, including after the sale of a property in Taikoo Shing (not the FMH).

194.  In his Answers, H said that he had transferred the following sums to his two sons to enable them to purchase property in Birmingham:

5 July 2018	£224,744
11 July 2018	£100,000
11 July 2018	£50,000
12 July 2018	£15,000
1 Aug 2018	£3,000
2 Aug 2018	£5,000
16 Aug 2018	£74,288
Total:	£470,032

195.  During cross-examination, H was taken to a transaction in 2017, namely another transfer out of his account of £70,000, and said that it was possibly to his son(s) for the same purpose, i.e. property investment. Adding this transfer, the total amount transferred by H to his son(s) for their investment in property during the period of approximately 14 months from June 2017 to August 2018 was £540,000 or around HK$5,400,000.

196.  In his Form E dated 10 April 2019, under para 5.1 which requires identification of a significant change in assets during the period 36 months, H referred to the sale of the Taikoo Shing flat, but did not mention that he had transferred £540,000 to his sons. It is clear from his Answers, his bank statements and his other evidence that he decided to transfer cash assets to the children so that they could invest in property. There is no evidence that H did so with W’s knowledge or approval.

197.  Next, there is the question of the later movement of money from H’s bank accounts in 2019 and 2020. In the Judgment dated 10 January 2023, I Wong J was critical of H’s explanation for the substantial decrease in his bank balances between early 2019 and September 2020:

“24. The husband, in essence, said there was a change in his financial situation. In his supporting affirmation dated 27 October 2020, he said due to the failing business of his company, LS, his director’s fee has been reduced from monthly sum of $100,000 to $20,000 as from October 2020. On the top of this $20,000, he has been in receipt of housing allowance of $30,000 and rental from his property in Tung Chung Industrial Building, totalling $62,700 per month. He also said his bank balances were only about $106,000: see para 8(a) and (b). in his affirmation in reply dated 22 November 2022, he referred to the rapid depletion of his cash at the time: see para 6.

25. In response, the wife said in her affirmation dated 24 February 2021 that before the husband’s petition for divorce, the liquid assets at his disposal exceeded $10,000,000. The husband’s deposit in his HSBC-513-888 account were $8,806,000 and $7,435,000 as at 30 January 2019 and 30 August 2019 respectively but the amount dropped to $2,008,000 on 29 April 2020 and further down to $170,000 on 30 September 2020.

26. There was also another HSBC-045-888 account that had $4,948,000 and $3,090,000 on 15 January 2018 and 16 September 2018 respectively. The husband did not update the latest situation of this account in his supporting affirmation. The wife claimed the husband had transferred the monies away from his bank accounts to some undisclosed accounts: see paras 11 – 13.

27. In reply, in respect of the HSBC-513-888 account, the husband said the following at para 17 of his affirmation dated 8 March 2021,

“I have already produced all relevant bank statements for scrutiny by (the wife) and her legal advisors. Although (the wife) makes a number of general complaints and criticisms based on the bank balances …, she has not raised any specific queries regarding any of the transfers. If I am given sufficient notice to do so by the Court, I am happy to offer my time to explain and crystalize the litigation.”

28. In respect of the HSBC-045-888 account, the husband said it was a joint account between him and his younger son. He said “funds from different accounts were being moved around by (him) and (his) financial situation required”: para 18. The husband did not dispute that the account balance was reduced to zero. But he said it did not mean “all accounts were deposited with millions all the time”. He said “I had in the year 1998 millions of dollars in my other accounts, but they are not relevant to this case.”: see para 20.”

198.  His Honour then referred to the well-known remarks of Hon Lam J (as he then was) at §§97-98 of L v L[44] dealing with the nature of the obligation of full and frank disclosure including that it is continuing duty and that a “good litmus test for distinguishing a bona fide fulfillment of the duty to give disclosure from an attempt to obfuscate is to ask whether the answer or the material can on its own meaningfully assist in informing others as to the means of the party.”[45] Wong J then said this:

“30. … In my view, it is wholly inadequate for the husband to say by just one stroke of sentence that it was “due to the failing business of his companies” and that he has already produced all relevant bank statements for scrutiny by the wife…. Not only that the husband is the one in the best position to explain, he has a duty to do so. To provide the wife with all the bank statements and wait and see whether she was able to ask the right questions on particular transfers is a deplorable “catch me if you can” tactic. It is incumbent on the husband to explain, with sufficient particularities, where the $5,100,000 in his bank account have gone.

31. For these reasons, I agree with Mr. Wong that the husband has failed to explain the rapid deterioration in his bank balance. This point alone is sufficient for the disposal of the Variation Application.”

199.  H’s reluctance to provide a sufficient explanation of the diminishment in the bank balances is consistent with his responses to some of the Questions put by W’s Questionnaire. In her Questionnaire, W’s asked H to explain the depletion of the HSBC-045-888 account, to which H responded in this way:[46]

“Q13. As far as settlement is concerned with the Hong Kong dollar savings account number [045-888] held by the petitioner at the above-mentioned HSBC Bank, on February 15, 2018 there was a deposit of HK$30,526.86 and a total investment of HK$4,917,498.65. Please explain the reason why on February 16, 2019, there is only a deposit of HK$531.95 left in the account. Please provide all relevant documents proving the account entry and exit of the funds.

A13. See the monthly statement provided.”

200.  An answer which responds to a clear request for an explanation of the reasons for the depletion by “see the monthly statement provided” is entirely inadequate and, borders on deliberate obfuscation, suggesting W and the Court should to engage in guesswork.

201.  Compliance with the duty of full and frank disclosure is not met by a party stating that they have supplied documents, and are “happy to answer questions about them”. Again, for emphasis, this is what Lam J (as Lam PJ then was) in L v L:

“198. It is high time that litigants in matrimonial proceedings and those advising them should appreciate that affirmation of means and answer to questionnaire are not a game of hide and seek. Too much legal costs and judicial time had been spent on such wasteful exercise. As stressed by Mr. Mostyn, the onus falls squarely and fairly on a party to give full and frank disclosure of his or her own means. To adopt a wait and see approach with a hope that the opponent might fail to ask the right question is a tactic to be deplored. That by itself is a breach of the positive duty to give disclosure….”

202.  H’s “sitting back” stance is entirely consistent with the fact that, having filed his Variation Summons, he took no active steps to ensure that it was heard and determined in a timely manner, until W reapplied for litigation funding.

203.  During the determination of W’s final application for litigation funding made on 25 January 2024, I drew Mr. Hart’s attention to the above passage in Wong J’s Judgment, and granted him leave to H to file affirmations updating his financial position so as to explain why, if at all, he felt that the statements made by Wong J in the Judgment were incorrect/unfair.

204.  In his 21^st Affirmation dated 30 January 2024, W gave the following responses to the paragraphs cited above from Wong J’s judgment[47]:

24. Yes, my director’s fee went down from HKD 100,000 to HKD 20,000. Since January 2023 when China opened up again, we were expected a great increase in business, but it did not happen to our line of business. Our bank account is constantly under O/D and we are not optimistic about the economic situation in 024. The drop in business from 2019, 2020 and so on happened so fast and if we did not cut cost bravely, the company would have collapsed. Had the government not helped in the worst days in the last couple of years, we would have gone belly up. I am still getting paid the same amount after the reduction and my rent from flat 10D went down a bit.

25. When I looked at my bank statements, I am also surprised how my savings went down. I looked at the entries and moneys went away. R1 scrutinised all the entries and raised her questions. I further answered her questions and she just kept on speculating and accusing.

26. R1 was probably talking about the joint account of my younger son and me. She looked at only depending on her needs either the deposit or the withdrawal but not both ways. The joint account was closed down and there were no updates. She raised it again and her summons was heard on the first day of the October trial and was dismissed.

27. No further comment.

28. I replied to the concrete ones for example accusing my mother of getting my assets. I explained to her that was money for raising our kids and the stock exchange my mother gave me money previously to purchase for her. No matter what I explained, she just said no and kept on coming back. She wont stop.

29. I am not familiar with case law or law cases and don’t understand fully. When I did my Affirmation, I believe I explained myself fully my situation. All I was saying was that apart from the explanation I gave on the Affirmation, I am happy to answer any further questions.”

(Emphasis added)

205.  I refer to my 9 February 2024 Judgment, and in particular §§51 to 57. I stand by that analysis. As matters then stood, pending H given evidence in June 2024, he had still not adequately explained the depletion in his bank accounts over the years 2018 to 2020 (with the notable exception of the amounts sent to his sons to enable their investment in a UK property or properties, which he had acknowledged in his Answers to W’s Questionnaire).

206.  In cross-examination, Mr. Enzo Chow (for W) asked H a number of questions on the reduction in his bank savings. The purpose of some of the transactions H was able to recall, others not:

(1) He testified that some of the substantial deposits and corresponding withdrawals were of moneys belonging to a friend. The Court cautioned H that this was an activity H needed to consider carefully, and document, given the obvious issues arising from it.

(2) He explained the transfers to a joint account opened with his sister, by saying that he wanted his sister to have a Premier account. H made some stock transactions on this account before it was closed in 2018.

(3) Some moneys were transferred into an account with his younger son, including for the younger son’s expenses. H also used this account for stock trading.

207.  An allegation of dissipation, including those suggesting that one party has either wantonly misused or deliberately hidden cash assets must be precisely alleged, and pursued with due regard to procedural and evidential exactitude. There must be at the very least a proper evidential basis for a conclusion that one party has deliberately diverted assets so as to diminish the matrimonial pool and frustrate the Court’s ultimate aim of achieving fairness.[48]

208.  The following is a close paraphrasing of Mostyn J’s guidance in NG v SG, as endorsed by the Hong Kong authorities. The Court is duty bound to consider by the process of drawing inferences whether funds have been hidden. Such inferences must be properly drawn and reasonable. It would not be right to draw such inferences where the Court is satisfied he has not got. If the Court is so satisfied, then it must attempt a realistic and reasonable quantification, even in the broadest terms. The Court is required to examine the evidence carefully, including documentation, and observations and submissions made by the party claiming the dissipation. The Court will take into account the scale of business activities and lifestyle. The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure than that which would be ordered if the truth was told.

209.  I am satisfied on the evidence that following separation, H took steps to transfer to his sons a very significant sum of HK$5,400,000 from his then savings for them to invest in UK Property. This was apparently without any consultation with or prior notice to W.

210.  W asserted in her evidence that there was also a transfer of HK$4,000,000 to his current wife and this was repeated during her Closing.[49] This was responded to in H’s Reply, as “an outrageous fiction”.[50] I am not satisfied that there is sufficient evidence to support such a transfer.

211.  However, having considered all the evidence, including H’s oral testimony in June 2024, I remain unsatisfied that he has complied with his obligation of full and frank disclosure and in particular his duty to provide a full, unvarnished and complete explanation for the movements of money from his HSBC accounts in the years following final separation in early 2017. He has, indeed, played a game of “catch me if you can”.

212.  The motivation for this conduct is stark. Time and again, H has felt the need to ventilate, in his narrative affirmations, and at times in Court, his grievances against W. He has maintained positions which are, in my judgment, less than realistic, including the suggestion, repeated in the final Reply submissions, that this is was a short marriage which ended in 1998 and that from then on or at the latest 2003, they lived separate lives, financially speaking. I am satisfied that he had every incentive to protect as much of his own assets following the final separation as he possibly could, and took steps to divert them away. His transfer of the shares in LSL to R2 is entirely consistent with this.

213.  W asked me to conclude that H had wrongly dissipated/transferred to third parties, cash assets in the tens of millions. There is insufficient evidence to support such an inference. I am, however, satisfied that H has not only transferred a significant proportion of the matrimonial assets to his two sons, albeit for a purpose which is perhaps laudable, i.e. the acquisition of landed property, but that has also transferred to a third party or parties unknown, or hidden in a place which he has failed to disclose to W and the Court, a significant sum of money/liquid assets. He has been given multiple opportunities to explain the significant drop in his cash position over the period from 2018 to 2020, and his explanation is far from complete or satisfactory. His explanation in his 21^st Affirmation “I am also surprised how my savings went down. I looked at the entries and moneys went away.” is less than adequate. I am satisfied that he has diverted significant sums in addition to the money transferred to his two sons.

214.  I am required to quantify the amount diverted, even in the broadest of terms. I find, in addition to the amount transferred to the two sons, H has diverted at least $2,000,000 away from his accounts so as to diminish the pool of assets available for distribution.

215.  However, I am not satisfied that it is appropriate to add-back any of the amount transferred by H to his two sons. No doubt, the amounts have been invested long ago.

216.  Not without considerable hesitation, nor am I satisfied that the assessed dissipated funds of $2,000,000 should be added back. I am mindful of the assets in this case, which are modest, and that the process of “adding back” does not create real money.

217.  Nonetheless, H’s conduct will be taken into account when I come to the question of the appropriate asset division.

(9) Debts owed to H

218.  In both of his Forms E, H stated that he was owed money:

(1) The director’s loan to OT Limited. This has fluctuated from time to time: in his first Form E it was HK$8,927,242.59 and in his second, $7,869,627.

(2) A loan to W helping her to pay her insurance premia while she was in financial difficulty, of approximately HK$3,360,000 (HK$70,000 x 48 months).

219.  In respect of the former, W submitted[51] that (i) there was no documentary proof of the loan or the claim that H was the sole provider of the purchase money for the FMH and (ii) in any event, the matrimonial home has a central place in a marriage, and in principle, each party should have an equal share of the value of the matrimonial home regardless of how long or short the marriage is.[52]

220.  I agree. Although the quantum of the director’s loan has fluctuated from time to time, it is clear that a significant part of it constitutes H’s contribution to the purchase price of the FMH. In Hong Kong, it is not uncommon for landed properties, including residential apartments, to be held by private companies. Those companies may be involved in trading, or simply exist as holding companies. It does not ipso facto mean that the nature of the asset is to be treated any differently than it otherwise would if it was directly held in the name of one or other (or both) parties to a marriage.

221.  H confirmed, in his Answers to W’s Questionnaire dated 19 June 2020 on his first Form E, that the director’s loan was from monies due to H accumulated over a period of more than 10 years and was for the purpose of acquiring the FMH, and that this acquisition was confirmed in OT Limited’s financial statements for the year ended 31 March 2018.[53]

222.  If the FMH was instead registered in H’s name, it would be wrong in principle for him to be able to claim reimbursement of the initial deposit or unequalled contribution to its acquisition, before the sharing principle is applied, just as it would be incorrect for the Court to regard the FMH as a non-matrimonial asset to be excluded from the matrimonial pool if it has been acquired unilaterally: LKW v DD (2010) 13 HKCFAR 537, at §98 (Ribeiro PJ). In this case the moneys used to acquire the FMH had been accumulated during the marriage, albeit some of the amount during the period when the parties were not on the best of terms.

223.  For these reasons, I find against H’s claim that he is entitled to have his director’s loan reimbursed out of the proceeds of sale of the FMH in the event that it is so ordered or in the event it is ordered to be transferred to W. The agreed value of the FMH will constitute part of the matrimonial pool without any deduction.

224.  For the alleged debt of HK$3,360,000 due by W to H, I find that this is an artificial characterization by H of maintenance paid to W in the lead-up to their final separation in early 2017. The HK$70,000 per month was only part of the financial support provided by H: he additionally allowed W to use a supplementary credit card with a limit of HK$50,000 per month. I noted that the payments continued after separation through to January 2018 and thereafter at a reduced rate until the end of 2018, before they ceased altogether, prompting W’s MPS Summons.[54]

(10) Missing cash and jewellery

225.  I have referred above to W’s claim that around HK$2,000,000 together with jewellery to the value of HK$4 – 5 million has gone missing, and she blames H for this. H denies this.

226.  W accuses H of theft. This is a serious allegation requiring proof to a high standard for the Court to make such a finding. I am not satisfied on the evidence that there is any such proof.

(11) Conclusions on disputed assets

227.  My conclusions on the disputed assets are as follows:

(1) Zhongshan 1505 and Zhongshan 1605 are valued as assessed by Mr. Chan.

(2) The 5 Kwai Chung industrial units are valued as assessed by Mr. Chan.

(3) The London property is held legally and beneficially by W, and is not subject to any kind of trust for her two sons.

(4) Zhongshan 1705 was sold by H at the price asserted by him, and proceeds received by H.

(5) H does not own any additional landed properties other than those he has disclosed.

(6) LSL/GS Limited are valued as assessed by Mr. McDonagh.

(7) W’s s. 17 Summons. W has satisfied me that H transferred 1,667 shares in LSL to R with the intention of defeating her claim to them. This judgment will proceed on the basis that H still holds the beneficial interest in 2/3^rd of the shares in LSL. I am not satisfied that the transfer of the Trademarks was made with the intention of defeating W’s claim to them. They will remain registered in the name of R3.

(8) H has diverted matrimonial cash assets of $5,400,000 to his two sons, together with $2,000,000 in other cash assets, total $7,400,000. However, this will not be “added back” into his side of the ledger of matrimonial assets, but taken into consideration when the final division of assets is determined.

(9) H does not have any substantial debts owing to him.

(10) I am not satisfied that H has been guilty of stealing or hiding cash/jewellery belonging to W.

(12) Conclusion on overall asset position

228.  The asset position is as follows

Wife

Asset	Foreign currency (if applicable)	HKD equivalent
Bank		829,097[55]
HSBC Policies		0
London property	£500,000	5,000,000
Zhongshan 1505	RMB507,000	583,050
Jaguar F-Pace car		180,000
Total		HK$7,380,041

Husband

Asset	Foreign currency (if applicable)	HKD equivalent
Bank		285,169[56]
HSBC Policies		4,500,000
FMH held by OT Limited		19,070,000
LSL Shareholding		13,286,264 (6,667 shares at $1,992.84 per share)
Zhongshan 1605	RMB509,000	585,350
Zhongshan 1705 proceeds	RMB798,000	917,700
Kwai Chung Unit D, 10/F		5,500,000
Thai property	THB1,600,000	400,000
Zhuhai Golf club membership		880,000
Total		HK$39,924,483

G.1.2 Debts

Wife

229.  In closing, W asserted her current liabilities as follows:

Item	Liability/lender	Amount (HK$)
1.	CY	172,500
2.	LSW	2,472,500
3.	HHZ	600,000
4.	LKY	196,000
5.	LSS	2,200,000
6.	Mainland debt (multiple creditors)	25,465,215 (= RMB 22,143,665)
7.	Policy loan (HSBC)	4,677,417
8.	HSBC Credit Card	73,836
9.	HSB Credit Card	10,105
10.	BOC Credit Card	18,946
11.	AE Credit Card	4,782
12	YWT Credit Card	16,439
	Total	HK$35,907,743

(i) Items 1 – 5.

230.  These are all loans from friends or family members.

231.  With her Affirmation dated 29 January 2019 in support of her MPS Summons, W produced the following documents:[57]

Item	Date of loan document	Amount of loan	Due date for repayment
1.	5 September 2018	HK$160,000 and RMB150,000	30 June 2019
2.	13 December 2018	HK$150,000	30 June 2019
3.	15 January 2019	HK$300,000	30 June 2019
4.	31 December 2018	HK$196,600	30 June 2019

232.  H submitted[58] that Items 1 to 5 were disputed, item 1, 3, 4, 5 on the basis that W had produced no documentation or basis for claiming such debts. I disagree. In respect of Item 1 to 4, she produced the loan documents as I have set out in the preceding paragraph. For Item 5, she provided proof later. Further, she supplied her HSBC Premier bank statements, and when asked by H’s first Questionnaire as to some of the deposits, stated that the entries were her borrowings, totalling at that time (between April 2018 and March 2019 HK$1,180,606).[59] She supplied the “Mortgage loan agreement” by which she says she was forced to pledge Zhongshan 1505. Furthermore, the timing of the loans is significant in that it coincides with H’s reduction in and eventually full withdrawal of his financial support to W.

233.  I accept, however, that there is a gap in the documentary evidence verifying that W has borrowed the full amounts she asserts in the Closing Submissions. No table was produced, for example, indicating the more recent deposits into W’s bank account since her Answers to H’s Questionnaire.

234.  At the same time, I have already accepted that H has not complied with the July 2019 Order and that there may well be a very considerable sum due by way of arrears. In such circumstances, and with minimal income (see below), it is unsurprising that W would resort to asking for money from her friends and family members to support her upkeep. It is H’s fault that he has not complied with the July 2019 Order, and the Court cannot rule out the possibility that this has been so as to put financial pressure on W to give up her case or accede to a settlement favourable to him.

235.  Doing the best I can, I accept that W presently owes between HK$3,500,000 and HK$5,000,000 by way of these loans.

236.  The question then is whether these are loans W will be required to repay, including from an award of ancillary relief.

237.  In WLK v TMC (2010) 13 HKCFAR 816, the CFA confirmed the need for the Court to examine the circumstances of borrowings, including those from family members, to determine whether or not the alleged indebtedness was genuine and should be reflected in the calculation of the net assets of a party for the purpose of ancillary relief proceedings. Factors which might indicate a loan is “soft” include that the obligation is owed to a family member who remains on good terms with the borrower and is unlikely to want the debtor to suffer hardship or that the obligation arose informally and the terms of the obligation do not have the “feel” of a normal commercial arrangement.

238.  H has maintained his case that W will not be required to repay these loans. W was cross-examined on the evidence in support, and she referred to the exhibited loan agreements and to her Answers to H’s Questionnaire, and said that she could provide further proof if necessary.

239.  By all accounts, W has not been in a position to repay a significant portion of the loans. Whether or not she will be in a better position and feel obliged to do so after this Judgment is handed down is unclear. If, for example, she recovers a lump sum by pursuing her Judgment Summonses it may be that she will feel obliged to return a significant proportion of the money borrowed.

240.  At the same time, it is a matter for W to provide sufficient evidence of indebtedness. I accept that she has made some efforts to do so, but not to the extent which is normally required in cases of this nature.

241.  Doing the best I can on the basis of the material, I accept that she will feel obliged to repay a significant proportion of the amounts loaned to her, some of which it would seem have gone towards her legal fees, as well as her personal upkeep. I find that she is likely to have kept the lenders (or some of them) informed of the progress of the litigation, and, particularly in respect of the more substantial loans, the lenders will be asking for at least some of their money to be returned. On the basis of the evidence as it stands, I consider that HK$2,500,000 is the extent of her indebtedness under this sub-heading.

(ii) Credit Cards

242.  I accept that W’s balances on her credit cards (as with H) are likely to have fluctuated since she gave evidence in late 2023. For the purposes of this Judgment, I will accept the balances as set out above, taken from W’s updated Form E dated 4 April 2023.

(iii) Mainland judgment debt

243.  I have referred above to the circumstances in which this substantial debt occurred after the collapse of the Mainland business and the subsequent litigation in Zhongshan.

244.  H’s position was that, assuming the debt exists, enforcement of it could be avoided by W not travelling to the Mainland. When this was put to her by Mr. Hart, W disagreed, stating that she had already received demands, although not at her current address of the FMH. She accepted that she had not travelled to the Mainland in recent years.

245.  In my view, the fact that W may have so far been able to evade enforcement of the Mainland debt does not enable the Court to treat it as not existing. No submission was made by H that W is not indebted in the sum stated in the Zhongshan Court judgment.

246.  Furthermore, H has run a case that the Mainland factory was, after 2007, W’s business with which he had little if any involvement. Nevertheless, the liabilities to the 27 companies/creditors arose during his marriage to W, and the legal problems and the ultimate judgment of the People’s Court of Zhongshan was pronounced well after they had reconciled as a couple. H’s criticism of W’s conduct in leading to the indebtedness falls squarely into the category of the kind of allegations the CFA in LKW v DD counselled should not form part of contested ancillary relief proceedings. In these circumstances it would be wrong to pretend that the judgment debt, which may well have accrued substantial interest since it was pronounced, is to be considered irrelevant.

247.  As for additional liability under bank guarantees, whether RMB 40 million or RMB 50 million or otherwise, this is less clear. W has not produced sufficient evidence of such debt(s) to enable the Court to draw firm conclusions.

(iv) The HSBC Policy loan

248.  This has already been considered in respect of the remaining worth of W’s HSBC policies. To include it here would amount to double-counting.

249.  I find that W’s current level of indebtedness is

Personal loans from friends/family	HK$2,500,000
Mainland judgment debt	HK$25,465,215
Credit card debt	HK$124,108
Total	HK$28,089,323

Husband

250.  In his 2^nd Form E dated 26^th January 2023, H listed his debts as follows:

Liability/lender	Amount (HK$)
HSBC Gold Mastercard	102,455
HSBC Visa Signature	759
BOC Visa Platinum	500
Loan due to LSL	1,558,409
Total	1,662,123

251.  I am prepared to accept the credit card balances, although of course these will have fluctuated since H’s most recent Form E.

252.  In his 20^th Affirmation dated 26 January 2024 filed in relation to W’s final application for litigation funding, H added that he still owed approximately HK$55,000 by way of the balance of a dowry to his new wife’s family, and would likely have to bear 50% of the funeral and burial costs of his late father, who died in December 2023.

253.  The loan by LSL to H has been taken into account by Mr. McDonagh in arriving at the value of LSL. It would be double counting for it to be included in H’s debts. Further, there is no suggest by H that this is an amount which will be required to be repaid at a definite date, as the financial statements of the company make clear.

254.  I cannot ignore the fact that H may additionally be indebted for a substantial amount to W for his failure to pay maintenance. This may be as much as approximately $2.9 million, in addition to interest and any surcharge thereon which may be imposed on the hearing of the Judgment Summonses.

255.  Nevertheless, H has not made any clear statements about how much he is owing – perhaps because such statements may be seized upon by W on the hearing of the Judgment Summonses as an Examination Summons (if W decides to proceed in such a way).

256.  I will allow $350,000 for other debts. In the circumstances, I find H present debts for the purposes of arriving at a figure of the Matrimonial Pool of Assets to be $453,714.

G.1.3 Conclusion on net asset pool

257.  W’s debts significantly exceed her assets. Assuming for the moment that she will not be made to pay the Mainland judgment debt in the forseeable future, her net position for the time being is: HK$7,380,041 less HK$2,624,108 = HK$4,755,933. However, on the evidence, I find that her debts, including those on the Mainland, significantly exceed her assets.

258.  H’s assets net of liabilities are, I find: HK$39,924,483 less HK$453,714 = HK$39,473,769.

259.  The matrimonial pool of assets is therefore HK$39,473,769, being the assets held by H.

260.  I accept that both parties will have to meet from their income, savings, and this award, outstanding legal fees, if any. This will be subject to any application either party will want to make with respect to costs of the proceedings.

G.1.4 Earnings/earning capacity

The Wife

261.  In her latest Form E Financial Statement, W said her income is Nil. In her narrative (36^th) Affirmation she said that “Apart from HK$50,000 per month provided by the Petitioner and several thousand to 10 thousand dollars a month from online sales, I have no other income.”

262.  Despite W repeated statements that she has continue to play a significant part in LSL’s business in Hong Kong, including in recent years, I find that this is not correct. I find that, increasingly from when she first began to participate in the Mainland business in 1998, and certainly from when H and W moved the business to Zhongshan, she devoted most of her time to the Mainland business.

263.  The legal proceedings in the Mainland lasted five years from 2012 to 2017, and has resulted in a Judgment which likely precludes W from doing any future business in the Mainland, whether in the pharmaceutical/health products line or otherwise.

264.  Her company LTLSB Limited is now trading, but the turnover is modest. In her February 2023 Form E she said it was trading at a loss. She has not been required to file a tax return for several years. Mr. Hart did not press for further information concerning LTLSB Limited during his cross-examination.

265.  Further, W is now 63, and will be 64 in September. She has ongoing health problems.

266.  I find that, although she has considerable skills and experience, and that she will continue to pursue her present business, which might eventually turn a profit, she has a modest earning capacity, which I would place no higher than being able to make HK$200,000 to HK$250,000 per year at some point in the future.

The Husband

267.  H is in a better position, and his business he shares with R2 is long-established. LSL’s accounts show substantial reduction in net profit for the period 1 April 2019 to 31 March 2021, with a loss being recorded for the financial year ended 31 March 2022. Nevertheless, and with some reductions in expenses including director’s remuneration, net profits for the year ended 31 March 2023 rebounded to HK$1,071,131.

268.  In his December 2022 Form E, H stated his income from LSL to be HK$20,000 per month, plus housing allowance of HK$30,000 and rental income of HK$12,700 from his Kwai Chung property.

269.  In his affirmation dated 27 October 2020 in support of the Variation Summons, H explained that his director’s fee had been reduced from HK$100,000 per month to $20,000 in October 2020. In his judgment on the Variation Summons, I Wong J noted that the director’s fee, and other payments to H, may well be subject to manipulation by H.

270.  His Honour further noted that H’s credit card was paid by LSL directly.[60]

271.  As noted, H has several credit cards, the principal personal card being HSBC Gold Master Card. He also has an HSBC Business Credit Card ending “5351”. This is also in his name, but is not included in his Form E.

272.  Statements for 2022 of this credit card were obtained by W and produced with her 37^th Affirmation.[61] I note at this juncture the following:

(1) This credit card, and his use of it, was not disclosed by H in either Form E, nor were statements attached.

(2) It is apparent that this is H’s principal credit card. The other cards show relatively modest transactions. Indeed, the only significant transaction on the HSBC Gold Master Card was for a Prince of Wales Hospital fee in November 2022 for HK$100,000.

273.  These statements included a spending summary for the calendar year Jan to Dec 2021:[62]

Category	Number of transactions	Total spending (HKD)
Airlines	9	5,305
Hotels	7	10,246
Travel	213	106,303
Restaurants	152	68,534
Entertainment and recreation	19	3,431
Department stores	6	6,627
Specialty retail	305	216,324
Clothing and Footwear	0	0
Household/home furnishing	0	0
Jewelry and accessories	0	0
Telecommunications	30	3,675
Services	66	85,913
Cash advance	0	0
Balance transfer	0	0
Miscellaneous	31	9,117
Refund/adjustment	15	5,319
Total		HK$510,160

Or HK$42,513 per month.

274.  The credit card statements for the following year, 2022, indicate multiple overseas trips taken by H. It is unclear how many of these were business related, but they include: a US trip between March and May 2022, and an Australian trip between September and October 2022. The business card is regularly paid off in full. The monthly new transactions in some cases far exceed HK$50,000, in July 2022 they were HK$93,975 and in October 2022, HK$95,925. The total spending using this business credit card shown by the statements from January 2022 to November 2022 was HK$717,000, a monthly average of approximately HK$65,000.

275.  These are some time ago, but they underline a point, that is, that H’s assertion that his income from LSL is a mere $20,000 per month, and that due to the COVID pandemic or other factors, the business of LSL is failing, is not credible.

276.  LSL has a number of long-standing clients, including Watsons. H did not suggest that the business was in any problems, and aside from the modest loss booked for the FY 2021/2022, it has continued year-on-year to turn a profit. Between 2022 and 2023 LSL’s revenues grew by 12.65%. Mr. McDonagh estimated for the purposes of his analysis of the income-based approach that either (i) the revenues would gradually converge to the long-term growth rate of 2.7% from 2027 onwards or (ii) grow at the rate of 4.86% per month, before continuing at the rate of 2.7% from 2027 onwards.[63] The business is, broadly speaking, on track to return to pre-COVID levels of turnover and income.

277.  I find that H’s present earning capacity is at least HK$80,000 per month, in addition to benefits including payment of his credit cards in the sum of HK$50,000 per month, housing allowance of HK$30,000 per month and rental income of HK$12,500 per month. In my judgment, his income is likely to increase further in the coming years.

278.  I have not ignored H’s compliant that he also has medical issues, but these are not such as are likely to force his retirement in the foreseeable future. I do accept that he is of an age when he might well be considering retirement within the next 5 – 10 years.

G.2 Step 2 – Ascertaining the needs of the parties

Wife

279.  In her narrative 36^th affirmation, W described her needs:

“76. The present and future forseeable medical needs are rather substantial, because of the serious injury in 2017 and my age is getting older, a lot of gynaecological problems surfaced. Such as the serious deformity of gum in 2019 which need HK$300,000 to fix it, but I did not have enough money at that time to handle it.

77. Now my main expenses are legal fees, renovation fees (because the place I am living in, i.e. the 2^nd former matrimonial home has not been renovated for over 12 years, and with the severe water leakage affecting daily life, plus my elder son and his wife just came back in September from UK and the expenses to replenish some furniture.”

280.  W claims that her monthly expenses are as follows:[64]

General	Amount (HK$)
Rent	0
Mortgage instalments	0
Utilities	5,000
Management fees	[left blank]
Food	20,000
Household expenses	2,000
Car expenses	25,000
Insurance premia	47,354
Domestic helper(s)	5,500
Others: Renovation fees	33,333
Total	HK$138,187

Personal	Amount (HK$)
Meals out of home	30,000
Transport	3,000
Clothing/Shoes	10,000
Personal grooming (including haircut and cosmetics/sun protection crème (sic))	10,000
Entertainment/present	10,000
Holiday	20,000
Medical/Dental	20,000
Tax	[left blank]
Insurance premia	10,000
Interim maintenance	[left blank]
Contribution to parents	5,000
Dependent family members	[left blank]
Others (purchase medicines from pharmacy)	10,000
Total	$128,000

281.  W additionally included expenses relating to the children, of $34,000. However, as I have already noted, the children of the family are independent adults.

282.  In paragraph 4.1 of her 2^nd Form E, said she had spent more than HK$660,000 on renovation of the FMH due to water damage, and had been supplied with a quote of HK$400,000 for further work.

283.  Several of W’s listed expenses are high. No doubt, during the better years of the marriage, including after reconciliation and when the Mainland business was expanding, W likely became used to this level of spending both on general and personal expenses, and indeed the present claimed expenses may seem modest compared with her past level of expenditure.

284.  In his judgment on W’s MPS Summons, HH CK Chan J, albeit on a broad-brush basis, considered W’s expenses to be “very high” and his award of interim MPS comprised the following:

General	Amount (HK$)
Food for family	7,500
General household expenses	2,000
Car park rental	Not allowed
Mobile and internet charges	3,070
Domestic helper salary	5,500
Renovation fees for the matrimonial home	Not allowed

Personal	Amount (HK$)
Meal out of home	7,500
Transport	Increased to 5,000
Clothing/Shoes	5,000
Personal grooming (including haircut and cosmetics/sun protection crème (sic))	5,000
Entertainment/present	5,000
Holidays	5,000
Medical expenses including herbal doctor	5,000
Supplements (including herbal medicine)	5,000
Insurance premiums for herself	Not allowed
Contribution to parents	Not allowed

Total: HK$60,750

285.  To her narrative affirmation W exhibited at LPQ-143 her updated bank statements, list of expenditures, renovation expenses, utilities bills, parking fees and miscellaneous expenses.

286.  I have considered this exhibit, together with her other credit card and bank statements:

(1) I accept that the amount of $660,000 has been spent on renovation. This is clear from the HSBC bank statements including entries paid to an engineering company, HK$200,000 19 September 2022 and HK$300,000 on 7 October 2022. There is also a quotation from the company dated 19 September 2022 for HK$660,000 and receipts matching the payments. There is an “Incident Report” from the Management company of the building in late 2021/early 2022, confirming that inspections had been conducted of suspected water leakage and some remedial work performed in April 2022. The report attaches photographs of the suspected damage. A later report also from the Management Company dated 19 September 2022 confirms more extensive damage apparently caused by water seeping from the flat(s) above the FMH, again attaching photographs of damage, including cracks in the ceiling

(2) Utilities bills were provided by W:

(a) Electricity bills for August 2022 for $1,759, September 2022 for $4,151 and October 2022 for $1,353

(b) Water bills for May 2022 for $743, September 2022 for 648.40, March 2023 for $318.70

(c) Mobile/internet of $99 per month

(3) Parking chit of Wilson Parking at $3,180 per month

(4) Other:

(a) Sales memo dated 8 July 2022 for new iPhone for $10,999.

(b) Receipts for other electrical goods, including an air conditioner, air purifier, stove top, and for furniture (IKEA and others) and other substantial home improvement products.

287.  The Court was not informed by either W or H whether action was contemplated for the damage to the FMH against one of the owners of the flat(s) above.

288.  I have considered the other documentation supplied by W including her credit card statements from 2022.[65] The difficulty in the Court conducting a sufficiently precise forensic examination of these statements, is compounded by the fact that very few if any questions were put by Mr. Hart, for H, on the transactions which are revealed by them. Nor did W’s counsel seek to break down or provide a chart distinguishing between different categories of expenditure. One example: the HSBC Visa Signature Card Account statement for 25 November 2022 shows a transaction dated 14 November 2022 for “Ronson Kwok Asia Pacific HK” of HK$29,250. Ronson Kwok is the operator of the SOGO department store. As far as I have been able to ascertain, there is no document which reveals the nature of this purchase – it could be for clothing, home appliances or something else.

289.  Some items are able to be ascertained with more precision. At this time, W was maintaining health insurance through AXA, paying HK$2,299.59 per month (e.g. HSBC Premier Card Statement 14 December 2022) or HK$27,595 per annum. I accept that this is an important expense for her to meet.

290.  Having examined these statements carefully, it seems to me that W has heeded the suggestion made by His Honour Judge CK Chan in the MPS judgment, that she work to a budget. Her monthly spending at this time (October 2022 – December 2022) is far from excessive. There is the occasional meal at a high-class restaurant – the Marriott and the Grand Hyatt Tiffin Room – but other meals out are generally in coffee shops or other similar places.

291.  Similarly, she seems to have decided at least at this time, to commute by taxi, rather than take her Jaguar and incur parking fees and petrol. There are only a few items which relate to parking (other than the monthly rental at $3,180) and one item which relates to petrol (for HK$1,022). Having said this, her taxi use over these three months was approximately HK$2,400, or about HK$800 per month. I note that she recharged her Octopus card a number of times, for a total of between $5,000 - $5,500. I will assume that W takes public transport when appropriate, at the discounted rate to which she and H are entitled, given their ages.

292.  I consider the following to be a reasonable level of expenditure for W at the present time:

General	Amount (HK$)
Rent	0
Mortgage instalments	0
Utilities	5,000
Internet and mobile phone	750
Management fees (on the basis that OT Limited pays for these)	0
Food	7,000
Household expenses	3,000
Car expenses including car park rental	5,000
Domestic helper(s)	5,500
Others:	0
Total	HK$26,250

Personal	Amount (HK$)
Meals out of home	5,000
Transport	3,000
Clothing/Shoes	5,000
Personal grooming	5,000
Entertainment/present	5,000
Holiday	5,000
Medical/Dental including all treatments/medicines not covered by insurance	20,000
Tax	0
Insurance premia	27,595
Contribution to parents	0
Dependent family members	0
Total	$75,595

Total: HK$101,845 per month

293.  As for the claim for future expenses to continue renovation of the apartment, this will have to be met out of W’s award. It may well be, having looked at the evidence, that this is not a choice – if the damage has not been repaired, then further remedial work may have to be undertaken.

Husband

294.  H set out the following expenses in his Form E:

General	Amount (HK$)
Rent	-
Mortgage instalments	-
Utilities	-
Management fees	2,147
Food	-
Household expenses	-
Car expenses	-
Insurance premia	-
Domestic helper(s)	-
Others:	-
Total	HK$2,147

Personal	Amount (HK$)
Meals out of home	10,000
Transport	3,000
Clothing/Shoes	2,000
Personal grooming	-
Entertainment/presents/CNY Lai See	[Left blank]
Holiday	-
Medical/Dental	1,500
Tax	17,596
Insurance premia	33,000
Interim maintenance	-
Contribution to Mother	3,000
Dependent family members	-
Others (specify): Food and Groceries	31,000
Total	$73,096

295.  The last item is more properly included in the “General” expenses category, and I will assess on the basis that it is, i.e. that H estimates his General expenses to be HK$33,147 and Personal expenses at $40,096.

296.  I accept H’s list of expenses are reasonable.

G.3 Step 3 – Deciding to apply the sharing principle

297.  In my assessment, there are no assets surplus to needs. However, for the avoidance of doubt, if there were, I would apply the sharing principle. I will address the various contentions justifying a departure from equal sharing advanced by the parties, as part of the next Step.

G.4 Step 4 – Are there good reasons to depart from equal division of assets?

298.  H has maintained his position that this is a short marriage, of only 5 years 26^th September 1993 to 30^th October 1998[66]. I disagree. Although there was a period of matrimonial disharmony resulting in the parties seeking a dissolution by Joint Application, they reconciled and the proceedings were withdrawn. They continued to live as man and wife, raising their two sons through to their university years, until their separation in 2017. I consider this to be a lengthy marriage of 24 years.

299.  Secondly, H says that the Deed of Separation should have an influence on the ultimate result. I reject this submission. Even if the terms were known (which they are not), I cannot see how the terms of separation set out in a Deed, signed in 1998, can possibly be relevant to the appropriate division of matrimonial assets accumulated since that time.

300.  In her Closing Submissions, W referred to a handwritten document which she says was in H’s handwriting, and dated January 2017, whereby he made a number of promises in the event he formed any intimate relationships with other females.[67] W referred to this as a “Guarantee”. A translation of the document was provided by W’s legal team. This was exhibited to her 37^th Affirmation in support of her application for further litigation funding and to resist H’s Variation Summons.

301.  It contains a number of statements, but the main promise is that if H is intimate with any other woman, he would promise that all assets would be transferred to W immediately, and that all cash, stocks and fixed assets would belong to their two sons.

302.  No questions were put to H about this document, the circumstances in which it was written, whether, for instance, H may have been forced to write it under some duress or emotional conflict with W (given that it was purportedly written at about the time W and H separated for the last time.

303.  I will place no weight on the document whatever.

304.  I have found that H has diverted cash matrimonial assets. I have declined to add back the amounts so diverted. I bear in mind that adding back a sum or sums into the matrimonial pot does not inevitably follow from a finding of inappropriate diversion or dissipation: ARAV v VP [2011] 3 HKLRD 759, at §§58 – 61.

305.  In my view, having regard to this misconduct, and further taking into account the considerable difference in earning capacity, there should be a departure from a 50:50 sharing of the net assets in the Wife’s favour. In my view, the appropriate division should be 55:45 in favour of the Wife.

G.5 Deciding the result

306.  W is awarded 55% of the net assets, H 45%. She will receive HK$21,701,572 of the assets. H is awarded HK$17,763,196. There will be an order that the FMH current held by OT Limited be transferred to her. The costs of the transfer will be paid by H. Further, there will be an order that H do pay to W a lump sum of $2,631,572. This will be by way of two lump sums, $1,315,786 within 3 months from the date of this Judgment, i.e. to be paid on or before 6^th July 2025 and a further lump sum of $1,315,786 within 6 months, namely by 6^th November 2025. There will be a further Order that with effect from 1 June 2025, H’s obligation to pay maintenance in the sum of $60,000 per month to W shall cease.

H. Costs and final Order

307.  Order 62 rule 3(2) of the Rules of the District Court (Cap. 336H) applies. In matrimonial cases, the exercise of the Court’s discretion is somewhat broader than in other civil proceedings. The starting point remains that costs “follow the event”: HK v BD [2011] HKFLR 66 at §78, per Hartmann JA, citing Gojkovic v Gojkovic [1992] 1 ALL ER 267. The Court is to exercise its discretion in a principled way with a view to reality and justice. Costs following the “event” is but a starting point, and in measuring who has been the successful party and the extent of the success, the Court must examine the reality and justice of the case: YBL v LWS (No. 2) [2017] 2 HKLRD 783 at §§9-10. The Court is required to take into account the various factors including the underlying objectives in Order 1A rule 1, the conduct of the parties, whether a party has succeeded on part of his case, even if that party has not been wholly successful, and any admissible offers to settle.

308.  In this case, the number of issues raised by the parties has been very substantial. Some of them have been raised properly. Others, in my judgment, have not. Neither party has been wholly successful on all of the arguments they have put forward or claims made.

309.  In the circumstances, there will be an order nisi that there be no order as to costs, including all costs reserved. This order will not disturb previous orders made against one part or the other on interlocutory applications.

310.  The Order will be made absolute 28 days from now. If either party seeks to vary the Order, including in respect of the Husband, for him to seek an order for reimbursement of the litigation funding he has provided to the Wife pursuant to the Court’s various orders in that respect, then they must write to the Court within 28 days proposing directions for the filing of written submissions and written replies. The question of costs will be dealt with on paper. The Court will consider all relevant matters, including the interim MPS orders for legal costs provision.

311.  The Order upon this Judgment is therefore:

(1) The former matrimonial home at Taikoo, currently occupied by the 1^st Respondent, is to be transferred to her within 2 months of this Judgment.

(2) The Petitioner is to take all necessary steps to effect the said transfer.

(3) The Petitioner do pay the costs of the transfer.

(4) The Petitioner do pay to the 1^st Respondent two lump sums, namely:

i. On or before 6 August 2025, the sum of $1,315,786

ii. On or before 6 November 2025, the sum of $1,315,786

(5) Both the Petitioner and the 1^st Respondent do retain all other assets in their own names.

(6) That from 1 May 2025, paragraph 1 of the Order of HH CK Chan J dated 23^rd July 2019 be discharged.

(7) All outstanding Judgment Summonses issued by the 1^st Respondent be re-listed before Master E Yeung at the earliest convenient date for directions.

(8) Upon compliance with orders (1), (2), (3), (4), and further upon the Court’s final determination of the Judgment Summonses and the question of outstanding maintenance including arrears of maintenance under the July 2019 Order, H and W’s claims for ancillary relief do stand dismissed.

(9) Further, upon compliance with orders (1), (2), (3), (4), and further upon the Court’s final determination of the Judgment Summonses and the question of outstanding maintenance including arrears of maintenance under the July 2019 Order, there be an order that the Form A Notices registered against the four Kwai Chung units held in the name of LSL and the single Kwai Chung unit held in the name of the Petitioner, be discharged.

(10) There be liberty to apply in respect of the implementation of these Orders, including in respect of the question of any necessary or desirable orders in respect of the shareholding in LSL.