LKY v. NHP

FCMC11467/2017

[2018]HKFC238

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 11467 OF 2017

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RULING

(Appointment of Single Joint Expert)

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1.  By the order dated 17 May 2018, it is directed that the parties shall agree the value of 49% equity interest of a HK limited company (the “said company”) that was held under the name of the respondent husband (“H”), failing which single joint expert (“SJE”) be agreed and appointed by all parties to prepare a single joint valuation report on the same.  The parties have been unable to reach agreement on the valuation.  Unfortunately, neither could they have been agreed on the appointment of SJE.  The parties were directed to write to the court each giving one suggestion of SJE, together with his C.V., estimated time for the completion of the valuation report and estimated costs, whereby the court would give further directions on the choice of SJE pursuant to Order 38 r.4A(2).  Both parties wrote to the court. 

2.  The petitioner wife (“W”) suggested Mr. Johnathan Lai (“Mr. Lai”) of RSMHK, and H suggested Mr. Canson C.K. Leung (“Mr. Leung”) of CEIBU CPA & Co.  Mr. Lai has indicated that, upon receipt of all documentation required, he needs about 4 to 6 weeks for the report.  Mr. Leung did not give estimated time for the completion of the valuation report.  Mr. Lai’s fee is HK$200,000 to 300,000, and Mr. Leung’s fee is HK$100,000.  I take notice that the instant case is far from a straightforward nature.  The principal activity of the said company was engaged in trading of river sand and stone aggregates. H was and is one of the two directors of the company.  According to the audited accounts, for the financial years ended 31 March 2016 and 31 March 2017, the said company had total net assets of HK$1,219,990 and HK$2,119,578 and profits of HK$1,330,015 and HK$899,588 respectively.  The scope of the SJE’swork is expected to include, inter alia, understanding the business model and operation of the said company and selecting the appropriate valuation method(s) amongst the most commonly used valuation methods, such as net asset approach, discounted cash flow approach and/or market approach and assessing the minority value of 49% equity interest held by H.  On this note, I have reviewed the C.V. of Mr. Lai and Mr. Leung.  I am satisfied that Mr. Lai is an experienced forensic accounting expert, while Mr. Leung, an experienced CPA, is not a forensic expert.  In the premises, I consider that Mr. Lai, rather than Mr. Leung, may be more suitable to be appointed as SJE for the preparation of the valuation report in the instant case.  By reason of matters aforesaid, I am persuaded to appoint Mr. Lai as SJE for the valuation of the said company.  I give the parties 6 weeks to send out the joint instructions and the necessary materials and informations, and further 6 weeks for the completion of the valuation report.

3.  IT IS therefore ORDERED that:

(1)  Mr. Johnathan Lai of RSM be appointed as SJE for the preparation of the valuation report of the said company;

(2)  Mr. Lai’s report be filed with court by W on or before 21 March 2019.  Subject to further directions, such report shall be adduced in evidence without calling the maker;

(3)  The costs of the prepartion of the SJE report be borne by parties in equal share initially and be in the cause of the ancillary relief proceedings eventually;

(4)  The costs of this application be reserved;

(5)  Liberty to apply.