PLC v. MKK

FCMC 4209/2023

[2026] HKFC 132

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 4209 OF 2023

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J U D G M E N T
( Ancillary Relief )

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This Application

1.  This is the Petitioner wife’s (“W”) application for ancillary relief against the Respondent husband (“H”).

2.  The trial took place over three days from 8 - 10 July 2025.  Both parties are legally represented. 

Parties background

3.  The parties met when studying night school in 1984, they got married on XX March 1994. 

4.  At the time of trial, W was aged 68 and retired. H was aged 62, a businessman and the sole proprietor of a business he set up in 1989 (“HLTC”).  HLTC’s business is in agency and distribution of pharmaceuticals health products and medical supplies.  H acknowledges that HLTC is the family key source of income.

5.  W joined HLTC shortly before the parties’ marriage in 1993.  Since mid-February 1994, W took over multiple roles in HLTC including inter alia, administration, taking orders, shipping and delivery, account management and book-keeping.  She was HLTC’s authorised signatories for its bank accounts and managed the business’s financials.

6.  Further, W looked after their home and was the main carer of the children.

7.  There are two children of family born in 1994 and 1997, both are adults, and not featured in this ancillary relief trial.  

8.  Relationship deteriorated over 2021, H says this was in early 2021, and W says it was late 2021.  The parties separated in May 2022 when W found out that H has an extra-marital affair; she moved out of the matrimonial home in Yuen Long (“FMH”) into the jointly owned DP property (defined below). 

9.  It is W’s case that both parties were personally involved in the daily management and oversight of HLTC; although H said he had made much more contribution to the company than W, and that she was at best a “mere employee” of the company.

10.  There are two other companies which are relevant to these proceedings.  One being JIL and the other CLIL, the parties are both directors and shareholders of both of these property holding companies.  JIL holds a residential property in Tsuen Wan (the “DP Property”), and CLIL holds a workshop in Tsuen Wan (the “Workshop”)

11.  It is also not in dispute that W started receiving salary of $29,000 per month after an argument with H in December 2021, from in around March 2022; it is W’s case that there is an extra $15,000 of allowance when she realized that H was taking out $44,000.  Her “employment” at HLTC was terminated on 31 May 2024, and she stopped receiving this salary shortly after.  

12.  W’s Petition was filed on 20 April 2023 based on H’s unreasonable behaviour.  Decree Nisi was granted on 7 July 2023.

Parties Evidence

13.  The parties’ evidence before the Court are as follows:

Date	Petitioner W	Respondent
20.6.2023	Form E
9.10.2023		Form E
7.11.2023	1st Answer to Questionnaire	Answer to Questionnaire
5.9.2024	Affidavit (R.121 Summons)
11.9.2024	2nd Answer to Questionnaire
8.10.2024		4th Affirmation (oppose W’s R.121 summons and in support of own R.121 summons)
27.11.2024	2nd Affidavit (Oppose H’s R.121 Summons)
27.12.2024		5th Affirmation (reply to W’s 2nd Affidavit)
8.5.2025		6th Affirmation (Narrative)
9.5.2025	3rd Affidavit (Narrative)

14.  In February 2024, SJE was appointed for the valuation of two companies, namely HLTC and VH Limited.  This report is dated 20 June 2024, based on HLTC’s value as at the end of 2023.  The value of HLTC was assessed to be $3 Million, such was agreed between the parties for the purpose of this trial.  VH Limited was valued at nil, agreed, and not featured in this discussion.

The Applicable Law & Legal Principles

Legal Principles with regard to determination of Ancillary Relief claims

15.  Section 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO”), Cap 192 sets out the matters that the court must have regard to when making orders for ancillary relief:

“(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-

(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.

16.  The Court of Final Appeal in its landmark judgment of LKW v DD [2010] 13 HKCFAR 537 has laid down a 5-step approach in assessing the division of the parties’ matrimonial assets:

1.  The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing (§§71 to 73);

2.  The assessment of the parties’ financial needs.  If the total resources are not enough to meet the parties’ needs, the s.7 exercise should stop at this step and there is no room to apply any sharing principle (§§74 to 79);

3.  If surplus assets would remain after the parties’ needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division as part of that principle.  This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division (§§80 to 82);

4.  In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of s.7 and the implicit objective of a fair distribution of the assets.  Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations (§§ 83 to 130); and

5.  The weight to be given to each of the factors is a matter of discretion for the court (§131).

17.  The above approach is to be considered against 4 guiding principles, namely:

(i)  objective of fairness,

(ii)  rejection of sex or role discrimination,

(iii)  yardstick of equal division, and

(iv)  rejection of minute retrospective investigation.

18.  The principles are trite and will be applied to the issues in this case hereinbelow.  

Legal principles with regard to Wanton Dissipation

19.  Both parties have cited a number of cases which dealt with the issue of wanton dissipation.  I find the most important guidance from the Court of Appeal decision in LCC v LTLA [2024] HKCA 406.  In my decision of KKSR v CLH [2024] HKFC 141, I quoted from the Court of Appeal decision, which I will repeat herein below (159-161):

159.  I turn to the recent Court of Appeal decision in LCC v LTLA CACV 281/2022 [2024] HKCA 406 on 30 April 2024 in which Madam Justice B Chu devoted a section of her judgment to go through the jurisprudence on Add - back principles starting from §27.  The guidance has aways been to exercise caution when invoking this principle.  In quoting from the case of MAP v MAP (Financial Remedies : Add-back) [2015] EWHC 627 (Fam), she said at paragraph 41:

“41.Moor J pointed out again that the argument in the area of “add-back” is essentially an issue of conduct, namely “conduct that it would be in the opinion of the court be inequitable to disregard”, and for such conduct to bite it has to be “gross and obvious”, and that for the court to add back assets that have been spent, the court has to be satisfied that there has been “wanton dissipation of assets”.”

160.  I also find the following excerpts of the Judgment to be helpful, namely §§47 - 48 and 61:

47.  In a recent case in July 2023, Tsvetkov and Khayrova [2023] EWFC130, Peel J reiterated the 4 situations identified by Mostyn J in OG v AG where conduct is relevant and he then set out a two stage approach for a party asserting conduct in paragraphs 43 and 44 of his judgment (“Two Stage Approach”).  Peel J also set out in paragraph 46 the procedure which should normally be followed when there are, or may be, conduct issues.  In particular, conduct being a specific [section 7] factor must always be pleaded as such and that usually, if relied upon, the conduct allegations should be clearly set out in the relevant box in a party’s Form E.

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.

….

61. 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.

161.  In the line of cases quoted by Madam Justice Chu, dissipation  took the form of overspending or frittering of family assets, gambling, gifting away, and in one case, spending on drugs alcohol and prostitute. Not all the cases ended in funds being added back to the matrimonial pot. 

20.  It will be on these principles that I will examine H’s case of wanton dissipation.  

The matrimonial pot represented by parties for the trial

21.  The issues will be better understood with a view of the matrimonial assets, the following are numbers extracted from the agreed joint schedule of assets and liabilities:

		Petitioner W	Respondent H
	ASSETS
A	Landed Properties
	FMH	4,470,000 (1/2 = 2,235,000)
	DP Property (held by JIL)	7,180,000 (1/2 = 3,590,000)
	Workshop (held by CLIL)	3,923,000 (1/2 = 1,961,500)
	Shatin Carpark	727,000
	½ Share of KF Court held with H’s sister		2,497,300
	PRC Property		814,000
	SUB-TOTAL	8,513,500	11,097,800
B	Bank account
	HSB	418,607
	BOC	23,466
	HSBC	27,342
	BOC	728 (1/2 = 364)
	HSBC		1,044,838
	Citibank		2,368
	SUBTOTAL	469,779	1,047,570
C	Companies
	JIL (holds DP Property)	12,039 (1/2 = 6019)
	CLIL (holds Workshop)	5,061 (1/2 = 2,530)
	HLTC		3,000,000 H is sole proprietor
	VHL		0
	SUBTOTAL	8,549	3,008,549
D	Stocks / Investments
	HSB	31,052
	Various		265,573
	SUBTOTAL	31,052	265,573
E	Insurance
	Prudential	409,973
	AXA	290,099
	AIA	177,407
	HS	231,924
	SUBTOTAL	1,109,403
F	Valuables
	Diamond ring, earrings, gold ornaments etc	80,000
	Yacht and Rolex watch		335,000
	SUBTOTAL	80,000	335,000
G	MPF
	BCOM		414,417
	TOTAL ASSETS	10,212,440	16,168,909
	LIABILITIES
	Held on trust for son	-194,750
	Credit Card	-14,200
	Credit Cards miscellaneous		-35,403
	TOTAL LIABILITIES	-208,950	-35,403
	ASSETS NET LIABILITIES (%)	10,003,490 (38.27%)	16,133,659 (61.73%)
	TOTAL AGREED POT	26,137,149

Issues

22.  The parties filed an Agreed / Disputed List of Issues; other than the those specifically required to be addressed under our statutory provisions and the well-trodden principles of LKW v DD; the following additional issues to be addressed are agreed between the parties:

a.  What is the standard of living enjoyed by the parties during marriage

b.  What is W’s pattern and level of withdrawals from H’s sole proprietorship, HLTC during the marriage

c.  Issues of “Addback” to W’s side of the balance sheet:

i.  $10,852,581from HLTC from 13 April 2017 to 5 July 2022

ii.  W’s total credit card expenditure of $4,176,593 from May 2021 to July 2022.

iii.  $432,000 from J Investment Limited (JIL).

iv.  Withdrawal of $140,000 from BOC joint account since 13 August 2022.

v.  Payment by HLTC of $22,440 and $182,531 for W’ salary tax.

vi.  Insurance claims payment from AIA of $119,994.

d.  H’s liabilities

i.  Debt owed to sister of $2,000,000 under alleged loan agreement 18 October 2023

ii.  Debt owed to sister of $2,000,000 under alleged loan agreement 14 February 2025 (net $1,817,500)

iii.  $5,882,371 owed to ESPL

iv.  Debt of $3,000,000 owed to DBS Bank under a loan arrangement on 24 June 2024 (net $2,524,768)

v.  Debt of $3,000,000 owed to Livi Bank under a loan arrangement on 21 March 2025 (net $2,896,006)

e.  Whether H’s withdrawal of money from HLTC of $36,500 monthly payable to his sister, totally $730,000 + $182,500 = $912,500, be added back to H’s assets

f.  Whether H’s payment of $1,800,000 to FW as repayment of an alleged loan be added back to H’s assets

g.  H’s further withdrawals belatedly disclosed on 9 June 2025 be added back to H’s assets

h.  Whether HLTC repayment of bank loan (after the SJE report) should be taken into account in increasing its value in the SJE report

i.  Does W owe HLTC $671,444

j.  Whether a sum of $8,533,335 being HLTC’s Proprietor’s Current Account and a sum of $392,667 (of motor car expenses attributed to W) be deemed as sums owed by H to HLTC.

k.  What is W’s role and contribution to family during marriage

l.  What is H’s earning ability and income in the future

23.  The determination of the matrimonial pot will be based on the resolution of the various issues listed above.

W’s Case

24.  W says that during the marriage of 28 years, the way that finances during the marriage was operated were as follows:

a.  H did not give her any money for family use.

b.  She withdrew money from HLTC for expenses for home, children and her personal expenses.

c.  She used the supplemental AE credit card to pay for family and her personal expenses.

d.  She exercised caution to ensure that there is money in the company before effecting withdrawals.

e.  Sometime when liquidity is low at the company, she would put her own money in to ease the fund flow issue, and then seek reimbursement from HLTC when funds therein are adequate.

25.  W says that throughout the marriage, she would withdraw funds from HLTC as well as the two property holding companies, JIL and CLIC to cover family related expense.  And she never accepted a salary from the company until March 2022 when a salary arrangement was agreed between the parties.

26.  W also operated the supplemental AE credit card without the need to seek H’s authorization or approval; there was never any objection until the divorce.

W’s Open Proposal

27.  W asks for a clean break from H.

28.  W’s assessment of the matrimonial pot came to $22,449,801.

29.  W put forward two options, briefly described as follows.

30.  PROPOSAL 1:

a.  Within 3 months from the date of the Order, H to repay and discharge all encumbrances relating to the DP Property, and then to transfer (i) H’s 50% of his shareholding in JIL and (ii) his interests in the receivables known as “amount due to directors” from JIL to W.  All legal costs, expenses, stamp duty and disbursement to be shared equally

b.  Within 3 months from the date of the Order, H to repay and discharge all encumbrances relating to the Workshop, and then to transfer (i) H’s 50% of his shareholding in CLIL and (ii) his interests in the receivables known as “amount due to directors” from CLIL to W.  All legal costs, expenses, stamp duty and disbursement to be shared equally.

c.  Within 28 days of H complying with a and b above , W shall transfer her interest in the FMH to H. All legal costs, expenses, stamp duty and disbursement to be shared equally.

d.  With 28 days of H complying with a and b above, W shall transfer the 5 insurance policies held with AIA to H.

e.  Other than the above transfer, parties to keep their assets in their own names or those held with others, or those to which they have beneficial interests. Parties’ mutual claims to be dismissed.

31.  PROPOSAL 2

a.  Within 3 months from the date of the Order H to repay and discharge all encumbrances relating to the DP Property, and then to transfer (i) H’s 50% of his shareholding in JIL and (ii) his interests in the receivables known as “amount due to directors” from JIL to W.  All legal costs, expenses, stamp duty and disbursement to be shared equally

b.  Within 28 days from H compliance with a above, (i) W to transfer  her shareholding of the 50% in CLIL to H and (ii) her interests in the receivables known as “amount due to directors” from CLIL to H.  All legal costs, expenses, stamp duty and disbursement to be shared equally.

c.  Within 28 days of H complying with a above, W shall transfer her interest in the FMH to H.  All legal costs, expenses, stamp duty and disbursement to be shared equally

d.  With 28 days of H complying with a above, W shall transfer the 5 insurance policies held with AIA to H.

e.  With 28 days of H complying with a above, H shall pay W a lump sum of $4,000,000

f.  Other than the above transfer, parties to keep their assets in their own names or those held with others, or those to which they have beneficial interests.  Parties’ mutual claims to be dismissed.

32.  The difference between the two proposals is that W foregoes the Workshop and ask for $4,000,000 in cash instead.

H’s case

33.  H alleges that there had been substantial “unauthorized withdrawals” from various sources, and must be added back to the W’s side of the balance sheet.  H’s claim of these “unauthorized withdrawals” were at least since 2017 up to 2022, and should have required his prior approvals or at least discussion with H.  It is cited in H’s narrative affirmation that he runs a case of wanton dissipation.

34.  When asked during the oral opening submission, Counsel for H says he doesn’t have “a precise amount” and says it has always been the modus operandi of the family.  On this H’s Counsel relies on H’s evidence saying there is there had been “tacit common understanding” and it is a matter of “common sense”.

35.  In H’s written opening submission says that the parties are “generally agreeable” that:

“(1) H is the breadwinner of the family in running various companies for the family, in particular [HLTC]: and

(2) W took out the primary responsibility of the raising and caring of the children of the family and assisted in [HLTC]’s business operations.”

There was not much else with regard to H’s position under this point.

36.  H’s case proposes a substantial departure from equal sharing of the matrimonial assets, yet H’s opening submission has little to say except for the above description of the roles of the parties during the marriage.

H’s Open Proposal

37.  The following is H’s proposal:

a.  W to transfer to H the FMH

b.  W to transfer to H her interests in JIL which holds the DP Property

c.  W to transfer to H her interest in CICL which holds the workshop

d.  W to have a life interest in the DP Property or until she remarries whichever is the earlier

e.  H shall give to the W $1,200,000 by 24 monthly instalments of $50,000 each within 28 days of decree absolute

f.  With 14 days of the Order to be made, W to transfer the 5 insurance policies held with AIA to H free of encumbrances

g.  Other than the above transfer, parties to keep their assets in their own names or those held with others, or those to which they have beneficial interests; parties mutual claims to be dismissed

38.  This Proposal leaves wife with a carpark worth $727,000 (already in her own name), life interest in the DP Property until she remarries, and $1,200,000 over two years.  W’s Counsel also said that as W has to discharge the encumbrances, namely the loan she took out against the insurance policy of $800,000, she said W’s net position would then be $1,2000,000 - $800,000 = $400,000.

The 6% proposal

39.  On enquiry at beginning of trial, H was asked how much income would $1,200,000 generate per month for W if paid in lump sum.  H’s Counsel says it would fetch the W $100,000 per month, which seems to me eminently implausible; then later says, $66,000 per year, this number H’s Counsel said he arrived at by using 18 years as a life expectancy calculation for W ($1,200,000 /18), which translates to $66,666 per year, and $5,555 per month.

40.  Court also enquired as to the percentage of the matrimonial pot that H is proposing to give to W.  At the discussion after lunch, H’s Counsel submitted that W would have $1.2 million from H, and she has own assets of around $2.24 million. H’s calculation of the matrimonial pot, having added all the unauthorized withdrawals that he claims W to have made, is $42 million.  Therefore, the percentage of the pot W would end up with under H’s proposal is $3.44/$42 = 8.2%.

41.  However, W’s Counsel reminded the court that there needs to be deduction of the above-mentioned encumbrances of W’s loan against the insurance therefore removing $880,000 from her side of the balance sheet.  $3.44 million – $800,000 = $2.56 million, based on H’s case of the matrimonial pot, this equates 6%.

42.  H is therefore offering an astounding and unprecedented 6% of the matrimonial pot to W, this is even without saying that his lump sum is proposed to be paid over 2 years, leaving her with the rest of her rather illiquid assets of a carpark and the insurance policies.

Discussion

The Matrimonial Pot

H’s case of adding back items into W’s Assets

43.  There are 6 items under this heading totalling $15,926,139.

A	Payment out of HLTC from April 2017	$10,852,581
B	W’s Credit Card expenditure of from May 2021 to July 2022	$4,176,593
C	W’s receipt of from JIL as director’s fees	$432,000
D	W’s withdrawal of from BOC Joint account since 13 August 2022	$140,000
E	HLTC’s payment of salary taxes on behalf of W	$204,971
F	Insurance Claims payments	$119,994

44.  All of which H claims were not authorized or to which he has not given consent.  He says that as he is the sole proprietor of HLTC, and that each and every cent belong to HLTC and could only be spent with his express approval, without which such payment out is said to be unauthorized and should be added back to the matrimonial pot or treated as personal debt owed by W to him.

45.  That said, in his Counsel’s submission, it was admitted that H agreed with a tabulated list of expenses that W prepared showing the type of expenses paid by HLTC, which was put together by her legal team from the HLTC’s General ledger provided by H, this appeared in the W’s narrative affidavit.  At a glance, these expenses includes:

a.  Petty cash to H

b.  Payment of utilities, FMH management fees

c.  Payment of H’s yacht membership / mooring fees / yacht related expenses etc

d.  Payment of various credit card bills on behalf of H

e.  Payment of insurance premia

f.  Expense on family pet 

46.  It is also of note that H clearly accepts that HLTC pays for the family expenses.

47.  W says that:

a.  H’s allegations date back to a time at least 4 - 4.5 year prior to the relationship break down.  But H says it did not go back beyond April 2017 only because it was the earliest account records H could retrieve.

b.  H’s allegation of lack of authorization or consent does not in and of itself constitute a valid basis for addback.

c.  The family court does not have jurisdiction to order a repayment of these amounts, which H has alternatively characterized as loan from him, from one spouse to another.

d.  There is no element of wanton or reckless dissipation.

A. $10,852,581 Payment from HLTC from April 2017 for HLTC and family expenses (Issue 22b and c-i)

48.  The H’s allegation in this regard came in January 2024; saying that he had not given express consent to at least 127 transactions totalling the sum of $10,852,581 and dating back to April 2017.

49.  W says of this amount, $9,903,725 were paid by cheques to her account.  And the rest of $948,856 in cash payment.  H has access to W’s bank statements, and he had not taken issue as to where the monies went after entering her bank account, and any balance remains there.

50.  W also says that $8,722,877 were spent on HLTC’s expenses and for family expenditure.  She separates this amount to five categories of spending.

(1)	Repayment of sums advanced by W to HLTC when HLTC was in low cash liquidity	$2,950,000
(2)	Payment of son’s school fees in the UK which was settled by W	$1,248,729
(3)	Back payment of W’s past salary /allowance/bonus substantiated by W receipt of $1,027,000 from Dec 2021 to March 2022 paid into W’s bank account	$1,931,667
(4)	Reimbursement of credit card bills settled by W	$2,323,051
(5)	Cheques prepared by HLTC accountant	$269,430
		$8,722,877

51.  As for the balance of $2,129,704 covering the period from April 2017 to July 2022, these were labelled by H as unauthorized withdrawal by W, petty cash claim to which he disagrees, or withdrawals by W of particulars unknown.

52.  W argues that the withdrawals she made was also for HLTC including, cash rebates, purchase of gift coupons, and commission payment for business referrals. 

53.  H maintains that these withdrawals lack documentary evidence in support, and that it constitutes financial misconduct if not outright wanton dissipation of those assets from HLTC.  He says that W’s withdrawals had plunged HLTC into “financial carnage”.

54.  H also argue that:

a.  W should have knowledge that HLTC operation depends on sufficient liquidity.

b.  W should also know that the funds in the company’s account are from 2019 and 2020 credit facilities that was backed by HKMC SME Financing Guarantee which imposes restriction on spending on facilitation of business operation and working capital.

c.  W’s complaint of not paid maintenance during marriage is undermined if she says she was allowed to withdraw funds from HTLC freely.

d.  That the SJE has included the withdrawals as being unauthorised and included them as calculation in the company valuation.

e.  While acknowledging that some expense items are covered by HTLC referencing W’s affidavit, it does not mean they are “authorized”.

Analysis

55.  I will start first with the timing issue.  This legal principle of wanton dissipation arises in the context of ancillary relief in divorce proceedings, and therefore should pertain to conduct which arises after the start of the proceedings; and taking to the highest, subject to consideration of relevant evidence before the court, may extend to periods prior to the petition, including periods of relationship deterioration and the time of parties’ separation.

56.  In the present case, referring to spendings back to 2017 is an erroneous approach, such spendings dating back that far could at best only be looked at for the purpose of discerning the relevant pattern of spending prior to the parties’ deteriorating relationship and/or separation.

57.  To assist with my analysis of these sums, I make reference to the Answers that W produced via her solicitors’ letter dated 17 April 2024.  Here W produced her answers to 90 transactions from 2020 to July 2022 (shortly after which she was removed as a signatory to HLTC bank account).  I also note that her solicitors have specifically said that list of transactions requesting explanation starting from 2017 was oppressive, and therefore only provided answers to those from 2020 instead.  I agree with W’s position.

58.  Turning to the various categories under this heading.

59.  With regard the advancement made by W in 50(1) above of $2,950,000, W in her narrative affidavit says she had on occasion deployed her own money to put into the bank account of HLTC when there were liquidity issues at HLTC.  She cited 5 such occasions:

(a)  21 September 2018 $100,000

(b)  21 October 2018 of $600,000

(c)  25 July 2019 of $600,000

(d)  13 September 2019 $800,000

(e)  21 October 2020 of $850,000

60.  On all of the above transactions, W produced evidence of money transferred from her own account, (including on one occasion, borrowed money against various insurance policies, and on another occasion sold “gold” in her bank account to accumulate funds to transfer to HLTC); records of her cheque stubs or bank transfers, and records of HLTC account in receipt of funds.  On closer inspection of the HLTC excerpt bank statements in these exhibits, I also notice that in all the transactions, amount she transferred to HTLC would be to reduce an overdrawn account ((a) and (b)), or appeared to be a top-up of funds in HTLC’s account in anticipation of upcoming withdrawal ((c), (d) and (e)).  The same records also show money was withdrawn from HLTC’s bank account to reimburse W.  H says these are wanton dissipation.

61.  My observation is that these transactions which H seeks to “add back” to the matrimonial pot is unfounded either from a timing point of view or the nature of the transaction.  W did not deplete HTLC’s account putting the company in a difficult situation, she was assisting the cash flow of the company.

62.  Under cross examination, H was shown a cheque of $600,000 signed by H on 12 August 2019 in W’s favour.  When asked why he signed this, his answer was vague and evasive.  He recognised his signature, but failed to recall whether this was a repayment or reimbursement to W.  Then he argued that the cheque should not have been signed by him.  This is but one of his many occasions of memory lapses in the witness box.  I also agree with W’s Counsel that his signature on such a substantial amount to W should not have escaped his attention or memory, and I am convinced that H is fully aware of this reimbursement arrangement to W.  Further, the cheque stub produced by W for this transaction shows this $600,000 cheque was recorded as reimbursement (“退款”) in the cheque stub. 

63.  I accept these explanations with regard the “repayment of loan advanced to HTLC”.  The practice of utilising her own funds to assist with cash flow of the company is supported by contemporaneous evidence.  On most of these occasions, she has also depleted her account quite considerably; and she has established a practice that she would receive “reimbursement” from HLTC for these sums advanced by her.  This is not wanton dissipation.

64.  As for 50(2) regarding payment for the parties’ only son who was studying in the UK, the amount spent on him came to a total of $1,248,729 from 14 transactions.  W’s case is that she has incurred this amount of money for the son from September 2016 to July 2020.  She sought reimbursement from HLTC for these sums of money she incurred.

65.  H accepts that HLTC would pay for son’s expenses but queried why W sought immediate refund on 3 occasions, but for the rest of the amounts, was only reimbursed a long time after the transactions.  The record shows that the rest of the 11 transactions were reimbursed to her in April 2020 and then in December 2021; some of which were three years after the event, and H says that the withdrawals had “plunged” HLTC account significantly into debt.

66.  H also argues that as son has completed his degree by July 2020 and expenditure beyond cannot be considered as support for his education; she should have discussed with H.

67.  H’s Counsel even seemed to argue that W had already sought immediate reimbursements of those sums but put forward no evidence of such conjecture.

68.  H has pointed in particular to the withdrawals in December 2021 and how it had affected HLTC’s bank account.  On looking at the bank statement of HLTC for December 2021, while the W’s claim for reimbursement under this category paid on 13 December 2021 had placed the HLTC’s bank account into a negative position, the bank balance had quickly recovered from this position in less than two weeks by 24 December 2021 with a number of deposits from the Hospital Authority.

69.  I do not accept that the H’s argument on wanton dissipation of these sums is made out, nor does the mere delays in recovering such sums substantiate H’s case.  H’s allegation on the timing of these reimbursements to the W does not come up to the high bar required to prove wanton dissipation.  I therefore find that the W’s reimbursement of such sums from HLTC does not constitute wanton dissipation of the matrimonial pot. 

70.  With regard to 50(3), about W’s past salary payment.  In February 2022, W had issued cheques in her own favour, according to her narrative affidavit, for the amount of $1,931,667 as salary backpay from January 2014 – January 2022.  W also says that this was triggered by an incident earlier that month when in the heat of an argument, H pushed her onto the floor with her ending up in the hospital.  H showed a complete lack of care for her situation, and she felt that there was no future in their relationship.

71.  It should not be disputed that there was a discussion to take salary by the parties after an argument in December 2021, and that the sum of $29,000 was agreed.  H then realised it was not enough, and obtained an additional $15,000 for himself, but he then said that he did not agree for W to receive the additional $15,000, be it as allowance or bonus.

72.  W has put into evidence the Employer’s return signed by H of W’s salary tax for the year 2021 to 2022 of $1,027,000.  H contends that as W only received salary from HLTC after their argument in December 2021, at most W would have received only 3 to 4 months of salary.  That said, H gave evidence that he had relied on the company’s accountant to have reviewed the Employer’s return before presenting to him for signature.  Under cross examination, he further admitted that he had not reviewed the details of the return and has no knowledge of when W received her salary payment.  But he did sign it.

73.  W’s Counsel argues that if H had objected to W’s back payment, he would not have signed the Employer’s return for the above amount which clearly incorporated elements of back payment.

74.  When challenged under cross examination how her substantial withdrawal in around February 2022 had affected HLTC’s bank account.  W’s answer to this was that she was aware that HLTC has overdraft facilities. 

75.  W also says that even if challenged, these sums went towards her maintenance as H did not pay any maintenance. 

76.  For the record, during cross examination of W, the amount that was put to her by H’s Counsel was that she has withdrawn $1,590,000 under this heading.  This was agreed to by W’s Counsel, after reviewing the numbers. 

77.  The amount of $1,027,000 for the tax year of April 2021 to March 2022 and W’s withdrawal of $1,590,000 calculated up to January 2022, are two amounts that must have some overlapping component looking at the dates.  As in the usual manner he had been giving evidence, H cannot be allowed to say that he did not know what he was signing and argue a position contrary to the document he signed.  Therefore, there could not be any complaint for the sum of $1,027,000.  The difference of these two amounts is a further $563,000.

78.  Under cross examination, W said that during the argument in December 2021, H said that the source of her income is the company, and the company belongs to him, so everything she has belongs to him.  W explained that she has always considered the company to be hers as it belongs to the family; but because of this argument, clearly H was merely treating her as an “employee”, and she therefore asked to take back her previous salaries. She then said twice, “He did not say no”. 

79.  I recognize that it was not explained to me why she chose to withdraw money from the year 2014, which was a line of questions pursued by H’s Counsel.  But if the above was her intention, the amount she withdrew was modest, and given that she had not been paid any salary in the past.  I also acknowledge that there were “heat of arguments” responses; but hearing her oral evidence, I accept her sentiments and the rationale behind her action.  When she withdrew her backpay in February 2022, she felt she was entitled, and there was no objection from H. 

80.  I do not find that there is a wanton element to this withdrawal.

81.  50(4) concerns the credit card expenses which W has paid and sought reimbursement from HLTC.  She compiled a list of such payments in her narrative affidavit; for the “impugned period” (May 2021 to June 2022) alleged by H, he says there is a total of $2,103,292.  Reference is made to the credit card expenses discussion in section B below.

82.  Regarding 50(5), these were cheques paid to W and prepared by HLTC’s clerk.  The explanation was in W’s narrative affidavit. Extracting only for the period from June 2022 to July 2022, this totalled $232,950 (instead of $269,430). 

83.  W explained that there were 8 cheques in total, and as it was prepared by the HLTC clerk it was typed out and should have relevant supporting documents for the payment.  She also adds if she issued cheques to herself, it would be handwritten.  W says it is unreasonable to label this as unauthorized withdrawals as H has also used funds from the company labelled as “Cash for Mr M”, “Mr M cash”, and “Mr M pretty cash” etc ranging from $5,000 to $96,000.

84.  H’s complaint to this in his closing submission is that it was a huge amount over a very short period of time, and that W has not called the clerk to testify her claim that that these are reimbursement for miscellaneous expenses.

85.  In the absence of any further evidence or details about these sums, this allegation falls far short of the bar required to establish wanton dissipation.

B. W’s Credit Card expenditure of 4,176,793 from May 2021 to July 2022 (Issue 22c-ii)

86.  H complains that this is exorbitant spending. The total amount according to a table from H’s Answer to W’s questionnaire is:

From 20/4/2021 to 31/12 2021		$1,045,574
From 1/1/2022 to 30/6/2022		$2,246,685
The following expenses in 12 months instalments payments
20/1/2022 to 20/12/2022	PH Beauty	$59,760
20/6/2020 to 20/5/2023	PH Beauty	$64,700
20/6/2020 to 20/5/2023	Dr R Medical	$928,000
20/6/2020 to 20/5/2023	Dr R Medical	$160,000
		$4,504,719

87.  The total under this heading was amended to $4,176,793 by a letter from H’s legal representatives on 2 May 2025 on review of the numbers.

88.  W says that this is in line with the marital standard of living. The main focus of H’s complaint were spendings on “beauty related expenses” and “jewellery related expenses”.  W’s opening submission extracts the following comparisons: the section of prior to 2021 expense amounts come from AE statements produced by H pursuant to W questionnaire:

	Beauty	Jewellery
	Beauty related	Jewellery related
Before relationship deterioration to parties’ separation
Nov 2018 – June 2022 Total spending (44 months)	$4,332,473
Monthly	$98,465
Feb 2019 – June 2022 Total spending		$3,010,179
Monthly		$73,419
Relationship deterioration in 2021 until parties’ separation
May 2021 – May 2023 Total spending (25 months)	$2,069,652
Monthly	$82,786
November 2021 – June 2022 Total		$588,751
Monthly		$73,593

89.  Relying on the above evidence, W says that the amount of spending on the respective items is consistent before and after the relationship breakdown.

90.  She further says that it was the H who urged her to lose weight, which prompted her to purchase the beauty packages; and she adds that the beauty packages were prepaid in instalments, had long expiry dates, and were also enjoyed by their daughter, who was getting married in March 2023.

91.  W also says that the remaining items include payments to merchants such as Fortress and to high-end retail like Chanel, but H has failed to prove that these are not marital standard spendings.

92.  W also seeks to compare H’s own spending from 2023 - 2024 looking at those settled by HLTC which came to a monthly sum of $155,000, and from the credit cards alone was averaged at $64,655.

93.  H’s complaint is that she doesn’t have to spend so much, and that these are not authorized by the H, and it is merely W’s bare allegation that she had free use of the AE credit card.  He also argued that if W did buy all those luxury items she claimed, then it should be revealed in W’s Form E, while the latter only show items which are diamond rings and earrings of “No commercial value”.  Further, in H’s closing submission, it is said that H accept there is no basis to suggest that W has deliberately concealed any assets; but these products appeared to be no longer in her possession as reflected by her Form E.

94.  W says the bills for the main and her supplemental AE credit card had in the past been settled by HLTC or by herself and then reimbursed by HLTC.

Analysis

95.  W argues in her closing submission that during cross examination, H conceded that he possessed and could locate AE card statements back to August 2018, yet these were not produced; and all he did was to have his legal team  prepared a list of expenditures from 2018 onwards (presented in his “2023 Questionnaire”).  W’s Counsel reminds me that H then said the statements were not provided as he was not asked to do so, then change his testimony to say that those statements need to be applied for.

96.  It is therefore clear, in the circumstances, the Court does not have a full picture of whether it was indeed W’s spending pattern for beauty packages, jewellery items and luxury goods prior to the relationship break down.  That said, the summary that W’s Counsel provided above in para 88, at the very least, supports her case that there was similar spending pattern before 2021.

97.  H Counsel had attempted to put all these spendings to W’s “cocktail of negative emotions”, which coincide with unhappy events around December 2021 and May 2022.  While it was argued that this was different from previous spending habits, no evidence was put forward on H’s behalf except to blame W’s emotions and her “selfish” conduct.

98.  Doing my own calculation here: I turn to abovementioned list of transactions that H collates in his 2023 questionnaire, I extract the spendings with 4 merchants from that list below, and calculate the “Per transaction” and “Per month” amount:

Period	Merchant	Amount	Per transactions	Per month
23/9/2018 - 12/1/2021	Watsons  (14 transactions)	$346,835	$24,773	$11,959 (29 months)
9/11/2018 -  22/6/2022	PH Beauty Centre (3 transactions)	$3,317,951	$1,105,983	$75,407 (44 months)
27/2/2019 -  1/6/2022	Chow Sang Sang (15 transactions)	$2,739,649	$182,643	$91,326 (30 months)
14/9/2019  -  10/12/2021	M Beauty Limited (15 transactions)	$924,522	$61,634	$33,018 (28 months)

99.  What the above transactions show is that before the breakdown of relationship, W did spend a fair amount on beauty services and luxury items from a jeweller, including an average of $1.1 million on beauty services and $180,000 from Chow Sang Sang per transaction.

100.  Even if I were to find that some spending looks high without context, W has put forward her case that she has a similar level of spending before the relationship broke down over the course of 2021.

101.  Against the background of spending on beauty treatments and jewellery; there were indeed a fair amount of spending on luxury goods from late 2021 to around June 2022.  W has said that some of the items were purchased for their daughter.  

4/12/2021	Bottega Veneta	$53,600
4/12/2021	Prada	$29,150
5/12/2021 to 15/5/2022	Chanel (13 transactions)	$751,800
8/12/2021 to 2/5/2022	Gucci (2 transactions)	$14,300
8/12/2021 to13/1/2022	Fendi (4 transactions)	$119,400
13/1/2022	Burberry	$39,000
13/1/2022 to 18/4/2022	Celine (2 transactions)	$21,901
16/1/2022 to 28/1/2022	Christian Dior (6 transactions)	$97,950
1/4/2022 to 15/5/2022	Hermes (6 transactions)	$178,320
		$1,305,421

102.  Having in mind W’s Counsel’s submission that the earlier credit card statements were not produced, it is hard to conclude if these types of luxury goods purchases were extraordinary spendings.  The balancing factor I have to consider is this lack of evidence from H on W’s previous spending, and the lack of luxury goods reporting in W’s Form E.

103.  It is acknowledged that H did in his first questionnaire asked about the purchases of luxury brands, to which the response was that all the valuables have been reported.  Taking H’s case to the highest, W has under-reported on her valuables; but in his closing, H says that “parties have no dispute as to the value of …. valuable personal items”.

104.  I also make reference to Moor J’s judgments in the cases of MAP v MFP (Financial Remedies: Add-back) [2015] EWHC 627 (Fam) and ARQ v YAQ [2022] 4 WLR 112, [2022] EWFC 128, with the former involving the husband’s use of money on drugs and prostitution, and the latter involving the wife who indulged in extravagant spendings.  Moor J did not find that there was wanton dissipation on either of the cases, and further stated in both judgments that one has to take one’s spouse as one finds him or her.  I find this to be of relevance to this analysis.

105.  I am therefore not prepared to find any element of wanton dissipation under this category of spending.

C. W’s receipt of $432,000 from JIL (Director’s fees) (Issue 22c-iii)

106.  W says these are rental income from the property held by JIL and were paid as Director’s fees to W, this amount was received from July 2019 to February 2022.  W says these appear in JIL’s Income Statement and was co-signed by both parties, and H cannot now be allowed to deny this and call this wanton dissipation by W.

107.  H says this was without JIL’s board or shareholders’ resolution , and that he has no knowledge nor given prior consent, and says that family expenses were already paid by HLTC so there was no need for W to pay for such expenses from funds in JIL.

108.  However, under cross examination.  H brought up a nouveau argument that such payment was part of a mutually agreed tax arrangement and that W should have returned the payment. 

Analysis

109.  W has produced in evidence Income Statements of JIL for 2019, 2020, 2021 and 2022 signed by both parties, the payment of Director’s remuneration appeared in the Statements.

110.  In H’s narrative affidavit, he said the following:

“Out of trust and confidence I have had in the Petitioner, I signed on [JIL]’s accounts without reviewing their contents and therefore did not become aware of her alleged remuneration, until these proceedings.”

111.  H’s Counsel said that if this was only meant to be an “accounting arrangement” (for tax), then the $432,000 was not intended to be paid to her.  This is a preposterous argument coming from a professional.

112.  Such Director’s remuneration had been in place since 2019, before the relationship breakdown, I agree with W’s case that H should not be allowed to now say he did not know what he was signing, and then renege on such payments to W.  

113.  Therefore, I find that payment of Director’s remuneration to W from JIL is not wanton dissipation.

D. W’s withdrawal of $140,000 from BOC Joint account since 13 August 2022 (Issue 22c-iv)

114.  W says this was spent on private investigator to investigate H’s extra-marital affair.

115.  H argues W had knowledge of his alleged extra-marital affairs by April 2022 and then moved out in May 2022, there was no reason for any further investigation.

Analysis

116.  I do not see this as wanton dissipation. Parties separated in May 2022 and W’s Petition was dated April 2023.  The timing of this payment appeared to be synchronized with W finding more information about H’s affair after she left the former matrimonial home, which then led to her decision to commence these proceedings.

117.  Furthermore, this amount was withdrawn from the parties joint personal account and does not fall into H’s allegation of W’s spending affecting HLTC’s operation.

118.  In any event, I do not see that this item satisfies the high bar of wanton dissipation.

E. HLTC’s payment of salary taxes on behalf of W of $204,971 (Issue22c-v)

119.  H has acknowledged that the payments were made to “Government of HKSAR” for payment of salary tax, and two cheques were signed in December 2022 ($182,531) and January 2023 ($22,440) by him; although he then said he thought he was paying for HLTC’s profit tax.

120.  But then H went on to say that this is another example of W “wanton dissipation” of HLTC’s funds.  This is because W only started receiving salary in December 2021 and should at best be paying tax for 4 months of income, and he did not agree to any backdating of salary beyond December 2021.  He therefore said that W must have reported a “ballooned figure” to IRD of her salaries tax, and has caused HLTC to “financially bleed more by paying taxes for her unnecessarily”.

121.  H’s Counsel seeks to place the blame on W that she should have noticed that the salaries tax is not proportionate to the income she received. Counsel even went on to suggest that as H is the sole proprietor, “he is required to sign various documents on a daily basis. It is not impossible that he has omitted to pay proper attention to it before signing on the Form IR56B” (my emphasis).

122.  W says that such payments are “necessary and unavoidable” and therefore not wanton.  In the past, HLTC had paid for H’s salaries tax as a director of the company, she should also be entitled to the same treatment.

Analysis

123.  H’s argument makes no sense. W could not be just paying for 4 months of income as the salary tax would also include provisional tax for the following year.  There is no evidence before me of H’s empty allegation of “ballooned figure”; as W was an employee, there should not have been any difficulty in checking the IRD assessment and H should also have access to W’s filing and could have investigated the basis.  H has once again admitted to not looking at what he has signed.

124.  In any event, I agree that payment to the HK Government for salary tax of W as director could not be wanton dissipation; and if the amount is not correctly reported for whatever reason, H could not complain as he had signed off and not asked questions.

F. Insurance Claims payments of $119,994 (Issue 22c-vi)

125.  This is an amount that was the insurance claim payment of the treatment of H’s cardiac procedures which took place in August 2024, from an insurance owned by W, of which H is the life insured and W the beneficiary.

126.  H says he is the “sole insured”, and had asked W to return the amount, which was refused.  She did admit to the fact that she did not pay for H’s hospital expense.

127.  W argues that as she is the policy owner and named beneficiary under the insurance policies and is entitled to receive the claim payments, which  was paid into W’s personal bank account.  W argues that her bank statements were disclosed to H, and H had not taken issue with regard to W’s withdrawals from her personal account, nor claimed that such funds were spend unreasonably or dissipated.

128.  Further W also argues that she used to receive a monthly sum of $44,000 from HLTC but have stopped since July 2024, so retaining this sum was an interim measure to support herself.  H’s contention to this was that W did not apply for MPS.

Analysis

129.  As a beneficiary, W is entitled to receive the sum.

130.  While she may not be entitled to retain that sum, it is not accepted that this is wanton dissipation.  Retaining funds from an insurance claim for personal use on the part of W shortly after recent cessation of income cannot be interpreted as wanton.

Conclusion on Analysis re Addback claims

131.  Unauthorized withdrawal and wanton dissipation and are two different concepts.  H’s case seems to have conflate these two. 

132.  W’s argument is that even when payments were taken from HLTC’s account, it was paid into W’s personal account; and H, having access to W’s statements thereafter had not objected to or raise any issues with them. 

133.  H’s contention on this is that case law did not say that payment into W’s account does not constitute wanton dissipation.

134.  The obvious approach is to look at the purpose and / or nature of the transaction, the analyses have been conducted above.  

The “unauthorized” argument

135.  Under this heading of “unauthorized withdrawals”, I am of the view that there would need to be established a practice of seeking authorisation or consent, and that W has fallen short.  This did not appear in H’s case, and no mention was made in his narrative affidavit; the only reference is that it is a matter of common sense, and not to affect the operations of HLTC.  Nowhere has it been mentioned how authorization or consent had been obtained or discussed in the past, nor to say the least, any supporting evidence that these authorization or consent were conducted at all.  

136.  In H’s closing submission, it was admitted that H did not propose a “precise figure” at which they agreed that there need to be consultation.  H’s Counsel then relied on H saying that buying a musical instrument of $30,000 is expensive, and used that as a yard stick beyond which consultation with each other should “sensibly” be taking place.  H’s Counsel then carried on submitting that it is “eminently plausible” that there was some form of consensus despite that it is not in writing, and that this is substantiated by H’s insistence on this in the witness box.  Then Counsel seeks to invite the Court that $30,000 is the figure understood by H and W to be the threshold at which purchases beyond this requires consultation.

137.  I found this suggestion to be seriously objectionable.  There was no ground for this conjecture, no evidence in support, and only H’s unconvincing effort to suddenly insist that there was such an understanding; and belatedly suggested a number which was never in evidence before the trial.  Further, building this argument on common sense and sensibilities is vague and has no foundation.

138.  In my view, this argument of “unauthorized withdrawal” must fail.

Transaction not wanton - pre relationship breakdown spending pattern

139.  Wanton dissipation involves intentionally or recklessly spending money in the matrimonial pot resulting in reduction in its value.  I acknowledge that the need for “intention” is subject to further jurisprudence, although it has been acknowledged as an important consideration.

140.  In the present case, withdrawals of money from HLTC, and spendings are not wanton if W can prove, on a balance of probabilities, that these practices accord with pre-relationship breakdown.

141.  H’s case is that HLTC is responsible for payment of family expenses, and he never refuted W’s case that she extracted payment for family and children expenses from HLTC; nor has it been contended that W received a regular  maintenance amount and therefore she was not entitled to take money from HLTC for the family; nor has the H argued that he had placed a limit on how the supplemental credit card is utilized (which he could have done by placing a cap on W’s spending limit on the card if he had found it objectionable).

142.  Looking again at the alleged transactions:  

a.  I cannot concur that spending on their son, payment of salary tax for W as HLTC’s Director, retention of insurance claim money, payment from JIL of Director’s remuneration, the engagement of a private investigator, are wanton dissipation.

b.  Reimbursement of sums advanced by W to HLTC were proved by W’s production of contemporaneous evidence of how she had advanced money to HLTC, and on most occasions as analysed above, were to reduce HLTC (sometimes impending) negative positions.

c.  I have also concluded that the spending on the AE supplemental card accords largely with pre-marital spending; and H’s case that this was exorbitant lacks proof.  

143.  These does not in any way accords with the alleged wanton dissipation which took place in the various authorities that were quoted by both sides of Counsels.  

Affect company finances?

144.  H seems to also argue that W’s withdrawal had plunged HLTC into “financial carnage”, and therefore calls this wanton dissipation.  This argument does not hold water.

145.  In perusing HLTC’s major bank account with NCB, it is noticed that it is frequent that the NCB bank account went in and out of negative positions, the account would then recover from income deposited into the business.  H had explained in his narrative affidavit the HLTC’s business operation and how it worked with the credit facilities and trust receipt facilities from financial institutions.

146.  I am of the view that HLTC falling into negative positions is merely the result of how the business operates in its trade transactions, and the pattern can be seen from the bank statements that have been put into evidence.  I am also conscious that the business is well supported by credit and overdraft facilities on-going.  

147.  To the extent that H says that W’s withdrawal has affected the company finances, I was not brought to look at the state of financial carnage which H says W has caused to HLTC.  On the contrary W‘s Counsel has drawn my attention to look at W’s removal of sums for salary backpay in early 2022.  It was submitted by Counsel that after that lot of withdrawals for salary backpay, the NCB account had returned to a positive position within the month; and by end of March 2022, HLTC had a balance of with $1.37 million.

148.  From the evidence, I have gathered the impression that H’s case is put together by labelling everything that W had used, transacted, touched on or dealt with as “unauthorized withdrawal”; and even attempted to take the case back to 2017 when there was no evidence of relationship breakdown.  It is regretful that H has run such an oppressive case, but lacks supporting evidence. 

H signed documents without review

149.  Furthermore, the evidence that unfurls over the course of the trial shows H’s lack of understanding and monitoring over the accounts of his business and how he had often signed things without checking; from above, it would at least include the JIL Income Statements, cheque payment for reimbursement to W of $600,000, cheque payment of two lots of salary tax to the government and HLTC’s Employer’s Return for W’s salary tax.  H is not entitled to run a case contrary to what he signed on these documents. 

H’s alleged Liabilities

150.  H seeks to deduct the following items from his side of the balance sheet.  Some of which, W says, was disclosed only very close to trial date.

		Value as at date of trial
(1)	Unpaid invoices to ESPL	$5,882,371
(2)	DBS Loan	$2,524,768
(3)	Livi Bank	$2,896,006
(4)	2nd loan from sister	$1,817,500
(5)	Outstanding sum owed to HLTC	$8,533,336
	TOTAL	21,653,981

(1)  H’s alleged invoice / debt of $5,882,371 owed to ESPL (Issue 22d-iii)

151.  H alleges that there is an unpaid invoice for medical good received.  It was admitted that this only came to light subsequent to H’s narrative affidavit of May 2025 despite the date of invoice in March 2025.  H also says that the funds reserved for payment of these goods was instead deployed by him towards an alleged repayment to a Mr FW pursuant to a loan agreement (see analysis below), therefore this invoice remained unpaid.

152.  W’s Counsel argues that for this amount, there should be equivalent value of stocks (if not sold), or account receivable (if sold).  Therefore, there could not be a decrease in the value of HLTC; and further W argues that if sold, there should be a profit element which would increase the value overall.  Under H’s cross examination, he admitted that the stock from this invoice had been sold to the Hospital Authority, and HLTC had made a profit on this transaction.

Analysis

153.  It is not clear from the evidence that I was referred to, when H placed this order, the only document that came late in evidence was an invoice dated 29 March 2025 with this amount.  H’s Counsel’s submission says that there was a 90-day payment term.

154.  It is H’s case that it was “subsequential” to W’s unauthorized withdrawals, he says the sum is owed as HLTC did not have sufficient funds to settle the accounts.  The question needs to be asked if there is insufficient fund, why did H place an order of this size and amount?

155.  W was removed as a signatory from HLTC in around July 2022, so the alleged unauthorized withdrawals would have ceased long before then.  In the absence of evidence by H, I fail to see how the said withdrawals could have a causal link with HLTC’s inability to pay this invoice almost three years after. 

156.  As for funds that should have been used to pay for this invoice which H has opted to repay Mr FW in priority instead, this will be dealt with below.

157.  Based on H’s answer under cross examination, this could not be a liability item as it has been set off with sale of the same goods with a profit.  

158.  This is a business liability of HLTC, and a debt owed to a third party by HLTC.  This position represents the ebb and flow of the business’s income and expenditures.  I fail to see how this item could be deducted from H’s assets as his personal liability.

(2)  H’s debt of 3,000,000 to DBS Bank (Issue 22d-iv)

159.  H says this was a loan taken out by HLTC on 24 June 2024, borrowed for the purpose of sustaining HLTC’s operations upon W’s unauthorized withdrawals.  This was only revealed in his narrative affirmation dated less than two months before trial.

160.  H says that after monthly repayments since October 2024, the net sum outstanding is $2,524,768.

161.  W says that this issue was raised only shortly before trial.  Further, HLTC‘s operation has always involved taking out banking facilities and bank loans and revolving credit.

Analysis

162.  This loan was taken out almost two years after W was removed as a signatory to the bank account.  H’s argument seems to suggest that after two years, he was still complaining it was all W’s fault that he needed to take out loans while his company has continued to operate over this time.

163.  H’s Counsel submission is this:

“Although W does not use the word “sham” in the Joint List of Issues in Dispute, by alleging that H has not explained or provided proof for the destination, purpose, and or whereabout of the funds, W appears to suggest that neither DBS nor H intended the loan to create the legal rights or obligations it should create”.

I found this to be a misconceived argument.  As H has produced this as his liability, it is not unfair for W to wonder where and when the amount was deposited and how it was deployed. All that H produced with regard to the loan is the facility letter, and it is incumbent on him to produce documents relating to this loan if he is seeking to rely on it to adjust the matrimonial pot.  I see no reasonable basis for H’s Counsel to imply that W is running a sham argument on a bank loan.

164.  W’s Counsel has also cited some relevant information to show that HLTC had always operated on banking facilities, the following is taken from the closing submission:

a.  19 December 2019, NCB banking facility of $5M

b.  16 December 2020: DBS instalment loan of around $3.15 M (60 instalments)

c.  15 December 2022:DBS instalment loan of $2M (120 instalments)

d.  9 December 2023: SC Bank instalment loan of $4M (48 months)

e.  24 June 2024 DBS instalment loan of $3M (60 instalments)

165.  Further observation on this, the repayment of these loans have overlapping repayment terms; so as an on-going basis, HLTC has the continuing ability to borrow money.  The healthy condition of the company must have been  assessed by the financial institution for loans to be advanced.

166.  In any event, this loan is taken out by HLTC, and is a debt of HLTC.  It is trade financing on which HLTC operates.  This is not H’s liability.

(3)  H’s debt of 3,000,000 to Livi Bank (Issue 22d-v)

167.  This is a loan taken out by HLTC on 21 March 2025.  H says this loan is borrowed for the purpose of sustaining HLTC’s operation upon W’s unauthorized withdrawals.  After repayment made on this loan since May 2025, the net amount outstanding is $2,896,006.

168.  Again, this loan was only revealed in H’s narrative affidavit in May 2025 with the facility letter in support.  

169.  W’s analysis on this alleged borrowing, was that the amount had only been moved around within HLTC’s various bank accounts.

a.  The amount was received by the HLTC’s account with LIVI.

b.  $2 million was transferred from the LIVI bank to HLTC’s account with NCB, of which $1,397,500 was placed on time deposit with NCB and the rest remained in NCB current account.

c.  The rest of the loan remained in HLTC account with LIVI.

170.  W repeats the argument that HLTC‘s operation has always involved taking out banking facility and bank loans and revolving credit.  This is HLTC’s modus operandi and does not indicate that HLTC is in a liability situation.

Analysis

171.  Other than the fact that this loan was taken out almost 3 years after the alleged unauthorised withdrawals by the W, I repeat the same analysis above as for the DBS loan.

(4)  H’s alleged debts to sister MSY of $2,000,000 in 2023 and a further $2,000,000 in 2025 (Issue 22d-(i) and (ii))

172.  H says that there is a loan agreement, “properly entered into between two adults of age and sound mind”.  Both were paid into H’s personal HSBC account.

173.  The first loan of $2,000,000 was under a “loan agreement” dated 18 October 2023.  H also said that he has repaid his sister $36,500 monthly since November 2023 hence a total repayment of $730,000 as at time of trial, and the net liability was therefore $1,270,000.  H says that this loan is “verified by the SJE”.  I take the view that the SJE is not doing an audit on HLTC, the SJE worked with the documents provided to them by H, instead of verifying the amount.  This loan has been taken into account in the valuation of the company, which value was agreed between the parties; I shall deal with this loan later although the analysis below applies.

174.  The second loan was also for $2,000,000, this was under an alleged loan agreement dated 14 February 2025.  H also claims that he has repaid his sister $36,500 since February 2025 hence a total repayment of $182,500 had been made, the net liability was $1,817,500 at time of trial.

175.  W says on H’s own evidence, this sum was received by H and transferred to HLTC.  Therefore, albeit H has this alleged liability, HLTC value should also have increased with the injection of funds, which should have resulted in a breakeven position of the H’s assets.

176.  According to the SJE report, a loan from the H’s sister of $1,933,333 was recorded and deducted from the assets in computation, this amount represents the net amount at time of valuation after the alleged repayment of loan made by H.  It should not be disputed that this is sister’s (purported) first loan.

177.  W says that H’s case on the two loans is “flimsy, lacks credibility and is therefore seriously disputed”.  As the alleged two loans were not supported by credible documents, W sought the repayments made of $912,500 ($730,000 + $182,500) be added back to H’s assets.

Analysis

178.  Again, H had not disclosed these loans in a timely manner.  Especially one such loan was made back in 2023, and it is clear law that H has an ongoing duty of financial disclosure.  The only documents produced with these two loans are two homemade documents, typed out in Chinese (except for the sister’s name and ID card number which is in handwriting for the first loan document).

179.  Both of the loan documents were signed by H, but the second loan document does not have the sister’s signature, it was blank where she was supposed to sign.  There were no witnesses to these signatures.  Under cross examination, H said he hadn’t had time to present the second loan agreement to his sister for signature, and then changed this evidence to say that he had forgotten to ask his sister to sign.

180.  W has also submitted, referencing transfers of these alleged loans into H’s HSBC account, that it came in under the designation of “SAVINGS / TIME DEPOSIT” of both amounts in the bank statements. It is indeed true that this does not look like they came in from an external transfer or a deposit of a cheque from a third party. 

181.  W has asked for disclosure on the source of funds of these loans by letter of 26 May 2025, but H has failed to provide any evidence in this regard.  Under cross examination, his only response to this was that no request had been made.

182.  As for the purpose of these loans, H’s case was that this was for payments due by HLTC (he said for upcoming Letters of Credit and for payment of salaries in his oral evidence), but from the HSBC bank statements, the second “loan” was sitting in his HSBC personal account for two weeks before $900,000 was transferred to HLTC account.  When challenged, he said that the money is cash reserve and for “security”.  It was put to him that he had created labilities to decrease the matrimonial pool.

183.  More particularly, H has not sought to bring in his sister into these proceedings as his witness to prove the existence of these documents and the loans, and her signature to the first “loan document”.  W’s Counsel quoted the case of Liao Zhiqiang & Others v Cheung Sin Ling , Vikki & Others [2022] HLCFI 892 at §75 therein, and invited the court to draw the necessary inference on H’s failure to call his own sister to corroborate on these loans, which had undermined the credibility of the H’s case. 

184.  On the balance, I do not accept the veracity of both of these loans.  In particular, I consider that if H’s sister is prepared to lend H a total of $4M, then there should not be any difficulty to produce proof with regard to the source of these funds as transfers from her. 

185.  As the first loan has been taken into consideration in the SJE report, I shall deal with the necessary adjustment below.  I also agree that the repayment by the H to the sister pursuant to these alleged loans should be taken into account in consideration of the pot.

(5)  HLTC Proprietor’s Current Account $8,533,335 (Issue 22j)

186.  This represents the amount of drawing made by H from HLTC.

187.  H says this amount consists of is $7,491,948 of unauthorized withdrawals by W from HLTC, which means the H’s allegation of such withdrawals were booked in this current account.  Such was recorded in the SJE report, which was based on the ledger produced by H and his accountant, and the latter’s labelling to the transactions.

188.  W does challenge the accuracy of such reporting, and disputes that there were any unauthorized withdrawals by W.  However, she accepts that as this amount was taken into account in determining the valuation of HLTC;  therefore, the amount of $8,533,335 is to be deducted from H’s assets, irrespective of the reporting validity.

Analysis

189.  A sole proprietorship is not a separate legal entity, and such drawing should be a reduction in equity of the business owner, instead of a debt owed; as a person cannot owe an enforceable debt to himself .

190.  I remain of the view that this is not a real debt that H needs to pay back to HLTC.  But I have to agree with W that as the amount has been added to the valuation as “non-operating asset” of HLTC, the liability has to be considered to balance the sums.

191.  There are a few other issues to be deal with regard to the pot:  

W owes HLTC $671,444 (Issue 22i)

192.  H says that these are debts recorded as “other receivables” in the SJE report and W should be accountable for it.  The numbers from the SJE report came from the unaudited financial statement produced by H to the SJE.  

193.  W says there are no details provided by H, and she did not have the opportunity to verify this entry in HLTC’s unaudited books.  

194.  His narrative basically stated that:

“I have not caused such an entry to be made. By reason of the matters aforesaid,,this could only be made at the instigation of the Petitioner, who has at all material times participated in creation and keeping of the company's accounts. Given the Petitioner's close involvement, I verily believe it should be the Petitioner who should answer for such receivables”.

195.  I find this basis of H’s rationale to put the blame on W, and the complete lack of supporting evidence extremely baffling.  This is yet another instance where H’s excuse to label this as W’s accountability.

196.  I am unable to accept, in the absence of any evidence, that this should affect the matrimonial pot in any way.

H’s withdrawals belatedly disclosed on 9 June 2025 and HLTC’s repayment of bank loan after the SJE report (Issue 22g and 22h)

197.  These appeared in the List of Issues but were not pursued by W at trial.

H alleged loan of $1,800,000 from Mr FW (Issue 22f)

198.  H says this was a loan is based on an “agreement” dated 15 February 2025. H said that he has repaid the sum of $1,933,486 to FW, “inclusive of half of HLTC’s profits derived from sales of [medical products] to the Hospital Authority”. 

199.  W says that the evidence to support this is also flimsy, lacks credibility and therefore seriously disputed.  In the closing, W says the repayment was calculated to dissipate funds from the matrimonial pot.

Analysis

200.  The only document produced by H is a document dated 15 February 2025, under his own letterhead and labelled as a receipt, recording a loan of $1,800,000, and extra repayment representing a percentage of profit from the transaction for which this loan is made.  It was signed only by H.

201.  H has pointed to payment of two amounts into HLTC bank account with NCB of totalling $1,800,000 which are labelled as “ATM Cheque Deposit”.  But there is no further evidence that this came from Mr FW, not in the form of cheque copy or deposit record. 

202.  Under cross examination regarding this transfer, H said he did not make copies of the cheque due to urgency, and said he had taken a copy on his phone which he has failed to produce.  On further questioning, he resorted to his usual answer that no one has asked for it. 

203.  With regard to this “receipt”, W submitted that:

a.  This receipt was only signed by H.

b.  While it was dated 15 February 2024, the deposits into the bank were on 24 February, which is after the “receipt” by 9 days. W therefore argues that this was not a contemporaneous acknowledgment of a bona fide transaction.

204.  W’s Counsel has put together the following “irreconcilable accounts for the intended use of the $1,800,000”, the following is taken from W’s closing submission:

a.  During cross examination, H initially claimed the funds were required to repay a HK$5 million low interest bank loan allegedly subsidized by the government which called for immediate repayment.

b.  H then shifted to state that the funds were to cover overdue payments to a shipping company – while conceding that the alleged loan amount was inadequate to meet those obligations.

c.  In the pretrial discovery, H claimed the funds were used to pay a $1,800,000 invoice dated 29 March 2025 (and producing in  support the abovementioned invoice from ESPL)  It was pointed out to him that the invoice post-dated the loan by more than one month, and the amount was not $1,800,000. H then claimed that it was a wrong invoice, and that there should have been an earlier one with $1,800,000.

205.  In recalling the H’s oral evidence on this, his answer was contradictory and confusing and accompanied by his repeated declaration of memory loss.

206.  To start with, I am not of the view that a receipt signed only by H and not by the lender Mr FW constitutes a credible “loan agreement”.  Again, H could have asked his friend to act as witness to corroborate his version of events, but he did not.  

207.  The “receipt” for this loan is said to be repayable in four months, so should be due 15 June 2025.  The alleged repayment to Mr FW was made on 12 June.  He said the money for the repayment was meant to be reserved for payment of ESPL invoice, which contract was dated 29 March with 90 days for repayment, and should be due also at the end of June.  I find it suspicious that H has proffered no explanation as to why that he has opted to leave the outstanding payment with a business partner ESPL, and chose to settle this personal loan from Mr. FW.

208.  In summary, I agree with W that this is not a credible loan, and was created by H to depreciate the assets in the matrimonial pot.  As a result, the amount of $1,933,486 should be added back to H’s side of the balance sheet.

Adjustment to be made pursuant to the above analysis

209.  Based on the analysis above, I need to make adjustments to the H’s side of the balance sheet as follows:

a.  The repayment of the purported loan made to Mr FW $1,933,486.

b.  Adjust HLTC’s valuation which has taken into account H’s sister first loan, this will be reflected as an adjustment to HLTC’s value.

c.  $66,667 which was the alleged repayment made to the sister’s purported first loan calculated at the time of the valuation report as at December 2023. (Issue 22e)

d.  $182,500 which was the alleged repayment made to sister’s purported second loan. (Issue 22e)

e.  Liability to HLTC based on the Proprietor’s current account of $8,533,335.

210.  I take the view that the alleged repayment of the loans to H’s sister and the preferred payment to FW are in fact dissipations which could have been the subject matter of proper interlocutory application had these been disclosed earlier.  

211.  Regarding point b above, the following is taken from §193 of the SJE report where the equity value of HLTC was calculated at Tabel 32:

	As at valuation date
Enterprise value	9,068,305
Less: DLOM at 18.2%	(1,650,432)
Enterprise value	7,417,873
Add: Non-operating assets	13,700,328
Less: Total debts	18,074,289
Equity value	3,043,912

212.  As the “Total debts” (Table 31 of the SJE report) include “Loan from MSY of $1,933,333”, the removal of this item will result in an adjustment to the valuation of HLTC.  The total debts to be deducted after removing the item of the loan will therefore be $18,074,298 – $1,933,333 = $16,140,956.  The equity value will become:

Enterprise value	7,417,873
Add: Non-operating assets	13,700,328
Less: Total debts	16,140,956
Equity value	4,977,245

213.  I will therefore adopt the figure of $4.97M as the adjusted value of HLTC.

214.  For the record, the SJE has taken this loan amount from H or his accountant, and has not in the report said that he had verified this amount or its paper trail; nor would this be his role as he was not auditing, but merely conducting the valuation based on the materials given to him.

The Matrimonial Pot

215.  Taking the numbers from paragraph 21 above, and factoring in the adjustments above mentioned:

W		H
Agreed assets net liabilities	$10,003,490	Agreed assets net liabilities	$16,133,659
		Add: adjusted value of HLTC after removal of sister’s first loan, $4.97M – $3M	$1,970,000
		Add: repayment already made to sister for the purported first loan at time of SJE report $2,000,000 – $1,933,333	$66,667
		Add: repayment to sister for the purported second loan	$182,500
		Add: repayment amount under the purported loan from Mr FW	$1,933,486
		Less : liability towards the HLTC’s Proprietor’s Current Account	$8,533,335
	$10,003,490		11,752,977

216.  I therefore find that the amount of the matrimonial pot is $21,756,467 (being $10,003,490 + $11,752,977). 

W’s Income and Earning Capacity

217.  W was aged 68 at time of trial, she had throughout her married life of 28 years been working at HLTC, and financially dependent on H.  HLTC stopped paying her income / allowance after her “termination” in May 2024. Therefore, she had not received any regular income since except for the rental of the carpark she owns, of HK$2,200.

218.  I am not of the view she has any working capacity, nor expect her to be looking for a job when this divorce is finalized.

219.  Looking at her side of the balance sheet, the bulk of her assets are in co-owned properties with H under corporate structures; and other than limited funds in the bank, the rest of her assets are insurance policies which are relatively illiquid.  

H’s Income & Earning Capacity (Issue 22l)

220.  H was aged 62 at the time of trial, he is 6 years younger than W.  H’s source of income is largely from HLTC.  

221.  The income he declared in his Form E dated 6 October 2023 was $116,000 and RMB2,000 rental income from his property in China.  However, these numbers changed in the Schedule of Income and Expenses prepared for trial, the numbers of which are set out below.  In that schedule, he claims to be receiving only $44,000 of income.

222.  As the sole proprietor, he has continual access to draw money from HLTC.

223.  It is also important to recognize here, that from the evidence before the court, HLTC is responsible for settling a large part of his expenses.  This was acknowledged in his affidavit, and there is no indication that this position has changed.  Hence HLTC is his “piggy bank” and his resources.  

224.  There is also no evidence before me that H is not or will not be able to continue running his business at HLTC.

225.  H’s Counsel argues that:

a.  H is in bleak financial health, referring to his personal bank statements; and 

b.  H has limited financial resource, that of the NCB trust receipt facility was terminated, H had to resort to borrowing from his sister, and from other banks at a lesser amount.

Assessing Parties’ Needs

W’s Needs

226.  The following is the W’s declaration of her own expenses, taken from the Schedule of Income and Expenses submitted for the hearing.  

GENERAL	HK$	Court estimate($)
Management Fees	2,087	2,087
Utilities	3,500	3,000
Food	5,000	4,000
Household expenses	3,000	2,000
Insurance premia	400	400
Domestic Helper (Part time)	2,000	5,000
SUB-TOTAL : General	15,987	16,487

PERSONAL	HK$	Court estimate ($)
Meals out of Home	6,000	3,500
Transport	600	500
Clothing / Shoes	1,000	1,000
Personal grooming	8,150	2,000
Entertainment / presents	1,000	500
Holiday	4,200	4,000
Medical / dental	9,800	3,000
Tax	-	-
Insurance	5,500	5,500
Other : Dedication to church	1,500	-
SUB-TOTAL: Personal	37,750	20,000
	53,737	36,487

227.  W’s numbers are challenged by H’s Counsel to be excessive.  Special reference is made to her meals out of home spending of $6,000 on top of money spent on food of $5,000; and H also complained of the expenditure for personal grooming, where his Counsel attempted to argue that as H is no longer pressuring her to undergo beauty treatment and the daughter’s wedding had already taken place, there is no “real or meaningful need” to spend such sums for personal grooming as there is “no real need to be presentable for business purposes”, and he compared this to H’s need of only $200 per month for his haircut.  H also says there is no evidence in support of her medical and dental expenses; and that she should cease her contribution to her church.

228.  I agree that some of her expenses are on the high side (food and meals, personal grooming, medical / dental), but not for the above-mentioned H’s argument regarding the lack of need to look presentable.  I also accept that she will be requiring a full-time help.  That said, W is not asking for spousal maintenance from H.  My estimation is in the right-hand column above, I find that that she should be able to manage her expenses from the Order to be made herein, with appropriate adjustments to her discretionary spending, and some economising.

229.  On a broad-brush basis, I assess her monthly expenses to be in round figure of $36,500.

230.  It is W’s case and in her open proposal that she is to be given the ownership of the DP Property in which she now resides.  This makes sense to me, after exiting this marriage of 28 years where she had contributed to the business which feeds and support the family, and as a home carer and a mother to the children; a roof over her head which she owns is a basic and important need to cater for.  Hence, I find the H’s proposal of a mere life interest in a property to be extremely disappointing.

231.  As I have found that she does not possess any earning capacity and should not be expected to find work, her needs should be looked at in terms of how her livelihood is to be supported.  To that end, W has proposed that she keeps the Workshop for income or in the alternative be given a lump sum.  I find that the latter arrangement gives her more flexibility, and H can keep the Workshop to continue to obtain necessary facilities to run the business.

232.  Taking into account $36,500 per month and a life expectancy of 87 years for woman based on §§49 and 50 of the SJE report.  She would need, on a straight-line basis the following amount.  Admittedly there should be a lesser sum if payment is made up front, but as there is no Duxbury evidence, I am unable to come up with a proper number as an upfront lump sum:

$36,500 x 12 x (87 – wife current age 69 = 18) = $7,884,000

233.  I take the view that a lump sum will enable her to invest for return; and based on the above calculation, the better plan for her is probably to re-organize her capital so she can switch to a smaller size accommodation and retain more liquidity.

234.  W’s open proposal produces the following result:

	HK$
DP Property	7,180,000
Carpark	727,000
Bank accounts	469,779
From JIL	12,039
Share & Stocks	31,052
Insurance	931,997
Valuables	80,000
	9,431,867
Less : agreed liabilities	-208,950
	9,222,917
W asks for $4M OR the Workshop	4,000,000
W’s Open Proposal Amount	13,222,917

235.  The above calculation showing W’s open proposal takes into account:

a.  The transfer of FMH to H

b.  The transfer of CLIL and the underlying Workshop to H

c.  The transfer of all AIA insurance policies to H

236.  In her closing submission, it was said that W is “amenable to receiving a lump sum payment of approximately $4,000,000 (instead of the workshop) with a view to acquiring a comparable property or exploring other investment opportunities to generate future income”.  Her case is therefore, that $13.22M is sufficient for W’s livelihood on a clean break basis, based on her assessment then of the matrimonial pot of $22,449,801, this amount came to around 59% thereof.

H’s Needs

237.  When H declared his $116,000 income in his Form E, he said his expenses was $115,497.  When he changed his income to $44,000 in the Schedule of Income and Expenses prior to trial, his expenses became $41,309.  On both occasions, the expenses had conveniently come to just short of the respective amounts of income.

238.  The following are the two sets of number from H’s Form E and from the Schedule of Income and Expenses :

GENERAL	Form E ($)	Schedule of Income and Expenses ($)
Management Fees	3,777	3,777
Utilities	2,750	2,750
Food	5,000	4,000
Household expenses	4,000	1,000
Insurance premium	9,570	-
Domestic Helper	4,630	4,850
Others: Car related	29,440	6,000
Others: Yacht related	17,600	6,500
Others: FCC membership	-	1,000
SUB-TOTAL : General	76,767	29,877

PERSONAL
Meals out of Home	8,000	1,500
Transport	4,000	1,000
Clothing / Shoes	2,000	1,000
Personal grooming	500	200
Entertainment / presents	5,000	2,000
Holiday	5,000	-
Medical / dental	1,000	1,000
Insurance	-	1,657
Tax	11,680	4,075
Others: Pet related	2,000	-
SUB-TOTAL:	39,180	12,432
TOTAL	115,947	42,309

239.  On H’s own case, his expenses have been and should continue to be covered by HLTC.  It is clear therefore that he has under-reported his expenses in the right-hand column above.

240.  On this point, I find the W’s Counsel opening submission to be of assistance.  W’s legal team collated from the HLTC ledger the credit card bills settled by HLTC on H’s behalf between August 2023 and July 2024, with the descriptor that reads “Settlement of HSBC / Citibank / American Express Credit card”, the total amount spent was $775,860, the average per month was $64,655.  This does not include items of cash withdrawals and payment of other expenses directly for H from HLTC.  Not only is this an indication of the extent of H’s spending which he tried to argue out of, it is clear this shows HLTC is effectively H’s financial resources.

241.  W assessed H’s expenses by adding $64,655 to the expenses of the yacht, the car and insurance premia in H’s Form E: $64,655 + $17,600 (yacht) + $29,440 (motor) + $9,570 (insurance policy) = $121,265, and then proposed to adopt $100,000 as H’s expenses “to err on the side of caution”.  It is her submission that this can be covered by the salary payment he receives, and HLTC continuing to cover the rest of expenditure as before. 

242.  Looking at H’s expense above, I do not accept that H spends only $42,309.  I hold the same view here that H (as for the W) is expected to economize after these proceedings.  On a broad-brush basis, taking into account that his credit card payments could have overlapped with the items reported in the table above, and not descending into the “minute retrospective investigation” of the numbers, I exercise my discretion to adopt the figure of $70,000 for the H’s expenses.  The question, therefore, is HLTC’s ability to generate at least $840,000 per year.

243.  H will be retaining the HLTC business, this is the “goose which laid the golden egg”.  While H’s Counsel maintains that the business is not doing well. I find W’s argument to the contrary to be more convincing.  W says HLTC is “a commercially valuable and income-generating asset capable of producing HK$3,121,000 per annum. This significant earning potential means H could recoup the differential in asset division in under a year”.  The $3,121,000 a year is calculated by W as follows:

	Yearly Income ($)
H’s salary of 44,000 per month from HLTC	528,000
HLTC’s profits (HLTC taxable income for 2021/2022)	1,393,000
HLTC expenses paid for H	1,200,000
	3,121,000

244.  W went on to say that if HLTC operates 3 more years, HLTC would generate $9,363,000; and based on H’s declared expenses in the Schedule of Income and Expenses, it would be enough to support him on the basis of 18 years of life expectancy.

245.  I must admit I find this a bit perplexing.

246.  Instead, I turn to the SJE Report, and also a letter from H’s solicitors to the W’s dated 30 June 2025, which produced HLTC’s Management Account for year end March 2023 and March 2024, and extract the numbers below:

	Year end March 2024	Year end March 2023	Year end March 2022	Year end March 2021
Sales	40,224,991	34,662,668	40,688,685	31,270,006
Gross Profit	9,804,657	8,800,366	9,110,394	6,708,175
GP%	24.37%	25.39%	22.39%	21.45%
Net Profit	287,021	637,600	732,337	759,164
Total Expense:   Salary	9,517,635   5,326,906	8,412,790   4,089,110	8,378.057   4,356,432	6,450,652   3,039,228
Accumulated profit brought forward	3,827,094	3,540,072	Not available	Not available

247.  The above numbers show HLTC business and profit had increased in the year before the hearing.  It is observed that the net profit has decreased in the year end March 2024 as the single most dominant item in the expenses, which is for salary, has increased by 30%.  Quoting from W’s Counsels submission: “This increased salary outlay reflects operational expansion—not financial strain—offering yet further evidence that Hang Lung’s business is thriving.”  I agree.

248.  The salary item should include that payable to H, the rest of his expenses are payable by HLTC; there is more than enough accumulated profit in HLTC to cover any shortfall.  I therefore find that HLTC is in a position to support H’s expenses and his livelihood going forward.

249.  As for the H’s accommodation needs, this is provided for as he will be retaining the full interest of the FMH.  He should also be able to retain the Workshop which he has utilized as facilities for HLTC.  He has a ½ share of the Shatin Property and a property in China; and assuming that his sister is residing in the Shatin Property, the Property in China can fetch him an additional modest amount of rental income of $2,200 (RMB2,000).

Other factors taken into account

Parties living standard (Issue 22a)

250.  W’s case rest on, in part, explaining her spending pattern in her expenses that there was a certain freedom to spend money without questions from H.  Based on the evidence before me, from the credit card spending, and her purchase of beauty packages and jewellery items all speak to a more than comfortable and above average living standard. 

251.  It is H’s case that the W’s claim of high standard living “verges on being incredible”.  H says that their yacht and speedboat were only purchased second hand in 2019/2020 and they had only one yacht club membership.

252.  I find the W’s evidence more credible.  The pieces of evidence she produced were contemporaneous receipts and record of purchases, which go to support her version of the living standard of the family.  H has, on the other hand, failed to produce any documentary evidence in support of his claim that their living standard was merely average.

Calling of Witnesses

253.  Both parties have quoted to me that adverse inference should be drawn on the other party for failing to call certain witnesses.  The following authorities were quoted to me.

254.  From the Petitioner and as cited above, the principle was cited that where a party fails to call material witnesses, an adverse inference may be drawn against that party, and quoting Liao Zhiqiang (廖志强) & Others v Cheung Sin Ling, Vickki (張倩玲) & Others [2022] HKCFI 892 [W#13] at §75:-

“75. As regards the drawing of adverse inferences from the absence of a witness, the following principles stated in Phipson on Evidence, 20th ed., §45-35 are relevant:

“The court may be entitled to draw adverse inferences from the absence of a witness who was available to and might have been called by a party. However, the court does not usually do so, not least because there may be all sorts of reasons why a particular witness is not called and one usually cannot be confident to infer what the witness would actually have said. Further, in general it is for a party to choose which witness he wishes to call and there is no property in a witness, and in the case of a witness in the jurisdiction the opposing party can seek to compel a witness’s attendance by means of a witness summons.

It is in a comparatively small number of cases that it would be appropriate to draw an adverse inference, but where it is sought to do so, the party inviting the court to exercise such a discretion must:

(1) Set out clearly (a) the point on which the inference is sought and identifying the inference sought; (b) the reason why it is said that the missing witness would have material evidence to give on that issue; (c) why it is said that the party seeking to have the inference drawn has himself adduced relevant evidence on that issue; and (d) why the party seeking the inference could not himself be expected to call or witness summons the witness.

(2) Explain why such inference is justified on the basis of other evidence that is before the court.

It is then open to the other party to resist such an inference by giving a good reason why the witness is absent or silent. If he is able to do so, then no inference should be drawn. If there is some credible explanation given, even if not wholly satisfactory, the potentially detrimental effect of his absence or silence may be reduced or nullified.”

255.  W’s Counsel says that H has failed to call Mr FW and H’s sister to give evidence with regard to the liabilities of $5.8 Million ($4 Million loan from sister, and $1.8M loan from Mr FW).  When asked why these witnesses were not called, his responses were: “You didn’t ask”; and “I did not think you will not trust me”.

256.  W’s Counsel reminded me that question was asked of H why he did not ask the accountant Ms L to corroborate his account.  He did acknowledge that he should have asked his accounting staff to give evidence, when pressed further, his response was “No one asked me to do so”.  

257.  As for H’s case, his Counsel quoted the following two cases.  From Black Marble Securities Ltd v Lee Yan Chi [2023] HKCFI 1084 at §30:

“Where a party against whom a prima facie case is established fails, without explanation, to call a witness who might reasonably be expected to give direct evidence on the matters in question, the court may draw adverse inferences against him.”

And also, from the case of Telings International Hong Kong Limited v John Ho (unrep., CACV 10/2010, 22 October 2010) Where J Le Pichon quoted from her own judgment in Tullet & Tokyo International Securities v APC Securities Co Ltd [2001] 2 HKC 713 at 723:

“The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so; and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavorable to the party. ….”

258.  On these authorities, H’s Counsel says that W has failed to call the head accountant Ms L to give evidence on the various withdrawals which W says are authorised and proper.  He went on to point out that W has known Ms L for a long time and contacted her on a regular basis and would have been able to contact her to give evidence on her behalf.  To this, W’s response was that she was not aware whether Ms L was still working there, and that she only contacted her while in the office.  Furthermore, W also emphatically said: “The burden of proof is on you to prove that I took this amount, not on me to prove that I did not take this money.”

259.  I agree with W’s case as to H’s failure to call his sister and his friend Mr FW.  These last-minute liabilities on which the H seeks to reduce his assets by at least $5.8 Million (which is considerable in the light of the size of matrimonial pot) were, as analyzed above, insufficiently supported by evidence.  This lack of corroboration by witnesses has weakened H’s case further to the already flimsy foundation of these transactions. 

260.  As for Ms L, I also agree with W’s case that she could have been called by H, to explain the ledgers, or to produce the accounting records, and to deal with all the questions where H had inadvertently and repeatedly said he is not aware and he trusted the accountant to present him with the papers, which he would then just signed.  As Ms L is H’s former employee, it makes more sense that he could have called her as his witness, even if she had left his employ.  W is also correct that the onus is on H to prove his allegations of unauthorized withdrawals.  

Application of the Sharing Principle and departure from equality

261.  For the record, H’s Counsel has taken a rather inventive way of approaching this step, Counsel :

a.  Assessed the matrimonial pot to be approximately $24.24M; then

b.  Arbitrarily reassess W’s needs and adopted H’s expense from the Schedule of Income and Expenses; then applied 21 years of life expectancy for both parties and arrived at a total figure of $22M.

And then calls this a “Borderline sharing case”.

262.  I am unable to follow this approach.

263.  This is a marriage of 28 years.  It was admitted by H that she had care of the home and raised the children, and had assisted in HLTC’s business operations.  Following LKD v DD (supra), there is to be no gender or role discrimination.  Clearly, the W had contributed as much to the marriage as H had. (Issue 22k)

264.  I note that there are surplus assets in the pot.  While the starting point should be a 50-50 sharing of the pot; I have decided that I will deviate from this formula, this is premised on W’s age and the disparity in the parties’ respective earning capacity.

Deciding the Outcome : Fairness as the Objective

265.  Given the lack of liquidity of W’s position, I am of the view that W needs to be allocated a lump sum going forward.  I have decided to make an Order for a lump sum of $3,500,000 which shall be paid in two instalments.  In so deciding, I have considered H ability to pay these sums, and have taken into account the liquidity in his bank accounts, his ability to draw from HLTC bank account balances, and his ability to borrow.

266.  Based on the analysis and rationale above, the division of capital should be as follows between H and W.

		Petitioner W	Respondent H
	ASSETS
A	Landed Properties
	FMH		4,470,000
	DP Property (held by JIL)	7,180,000
	Workshop (held by CLIL)		3,923,000
	Shatin Carpark	727,000
	½ Share of KF Court held with H’s sister		2,497,300
	PRC Property		814,000
	SUB-TOTAL	7,907,000	11,704,300
B	Bank account
	SUBTOTAL	469,779	1,047,570
C	Companies
	JIL (holds DP Property)	12,039
	CLIL (holds Workshop)		5,061
	HLTC		3,000,000
	SUBTOTAL	12,039	3,005,061
D	Stocks / Investments
	SUBTOTAL	31,052	265,573
E	Insurance
	Prudential	409,974
	AXA	290,099
	HS	231,924
	AIA		177,407
	SUBTOTAL	931,997	177,407
F	Valuables
	Diamond ring, earrings, gold ornaments etc	80,000
	Yacht and Rolex watch		335,000
	SUBTOTAL	80,000	335,000
G	MPF
	BCOM		414,417
	TOTAL ASSETS	9,431,867	16,949,328
	LIABILITIES
	SUBTOTAL	-208,950	-35,403
	ASSETS NET LIABILITIES	9,222,917	16,913,925
	Adjustment to the Pot per paragraph 215 above
	Add: HLTC  adjustment after removal of 1st loan		1,970,000
	Add: repayment made to sister for the purported 1st loan		66,667
	Add: repayment made to sister for the purported 2nd loan		182,500
	Add: repayment to Mr FW		1,933,486
	Less: Amount due to HLTC		8,533,335
		9,222,917	12,533,243
		21,756,160
	W equalising Lump Sum	3,500,000
		12,722,917 58.48%	9,033,243 41.52%

267.  In the above scenario, both parties will have a roof over their head which they own.  H keeps the business, and W will have a lump sum with which she can re-organise her capital for her ongoing needs.  In the long run, should H decide to liquidate the business, it could be done by converting HLTC into his retirement capital, he also has other real properties to his name, and time in between to save and invest what he owns.

268.  Therefore, to juggle the ownership of the assets between the parties, and in line with W’s asks in her open proposal, H shall transfer to W the full ownership of DP Property, free of encumbrances.  DP Property is part of the collateral for banking facilities from NCB to HLTC, but it has been proposed that it could be replaced by using the FMH.

269.  W will transfer her interest in the equity in the FMH and the CLIL / Workshop to H. 

270.  The parties also appear to be in agreement that the insurance policies with AIA be transferred from W to H.

271.  For the avoidance of doubt, both parties shall keep the remainder of assets in their name or own jointly with others.

Costs

272.  I see no reason why Costs should not follow the event.

273.  I have considered the irreconcilable position of W’s purchases of luxury brands and the lack of reporting as her valuables in the Form E.  On the other hand, H had failed in his on-going duty of financial disclosure, the liabilities he seeks to rely on came only with his narrative affidavit less than two months before the trial; but they were incurred well before, these include the DBS loan in June 2024, his sister second loan in February 2025, ESPL’s invoice from March 2025, and LIVI Bank loan in March 2025. This has left W’s side scrambling to seek discovery of these issues at the last minute.

274.  All matters considered, I have decided to make a Costs Order for H to pay W’s costs, including all costs reserved, to be taxed if not agreed with certificates for Counsels.  This is to be a Costs Order Nisi, to be made absolute 14 days hereof.  

Orders

275.  For the reasons aforesaid, I make the following Orders:

a.  H shall pay $3,500,000 to W in two instalments:

(i)  $2,000,000 within 2 months after the granting of the Decree Absolute;

(ii)  $1,500,000 within 6 months thereafter.

b.  Within 3 months from the granting of the Decree Absolute, H shall transfer free of encumbrance, JIL which holds the DP Property, to W, including the balance in JIL’s accounts.  

c.  On compliance with b above, and within 2 months thereafter, W shall transfer her interest in the FMH and CLIL which holds the Workship to H, together with the balance in CLIL’s accounts.

d.  Costs of transfer of the FMH be shared between H and W.

e.  Costs of transfer of JIL and CLIL to be borne by H.

f.  On compliance with paragraphs a to e above, both parties’ ancillary relief claims against each other shall be dismissed.

g.  Costs of these proceedings, and all costs reserved, be to the W, with certificates for Counsels.  This to be a Costs Order nisi to be made absolute 14 days hereof.

h.  Liberty to apply on the implementation of these orders.