FAQ on Property Adjustment

The relevant laws and court's power

Part II of the Matrimonial Proceedings and Property Ordinance (Cap. 192)  makes provisions for ancillary and other relief in matrimonial causes and proceedings. Under section 4 the Court may order :

• periodical payment and 
• lump sum payment. 

 Under section 6 the Court may make orders for :

• transfer or settlement of property and 
• variation of settlement. 

 The Court also has the power to order sale of property under section 6A. 

The "fairness principle" in LKW v DD, Court of Final Appeal judgment

Family Law in Hong Kong follows closely that in the UK. Hong Kong’s Court of Final Appeal in LKW v DD adopted the ‘equal sharing’ principle in the English landmark case of White v White. A ‘yardstick of equal division of property’ is to be applied after meeting the parties’ financial needs when the court exercises its discretion with surplus assets pursuant to section 7 of the Matrimonial Proceedings and Property Ordinance (Cap. 192) , unless considerations in that section call for a departure.

In short, pre-nuptial agreements are NOT binding on the Hong Kong courts when considering division of assets in divorce.

Section 7 of the Matrimonial Proceedings and Property Ordinance ("MPPO") is the determining rule in law when deciding how assets in matrimony are to be re-distributed. Pre-nuptial Agreements are therefore recognized by Hong Kong courts only to a peripheral extent. It carries limited weight when the courts are exercising their discretion under section 7 MPPO. 

Don't do this.

The laws require you to have full disclosure of your assets and income. This is done under oath. Failing to disclose commit the crime of perjury and can be imprisoned.

When you divorce, you and your spouse need to agree how to separate your finances. Maintenance is a periodic payment made by an ex-spouse to the other. This is only one of the items in a financial agreement.

A complete financial agreement includes deciding how you’re going to divide:

• maintenance by payment a periodic sum usually monthly
• retirement funds
• property
• savings
• investments
• child maintenance

You might get things like:

• a share of your your partner’s assets particularly on the matrimonial home or other valuable real properties
• monthly maintenance
• regular maintenance payments to help with children or living expenses

You can usually avoid long court process if you agree how to split your money and property.

You may sign a financial settlement with you ex-spouse on every items to be agreed without going to court. We advise you to make this by way of a court order.

If you and your ex-spouse agree on how to divide money and property, you may apply for a consent order to make it legally binding and can be enforced in court.

 Court encourages parties to agree and settle.

If you and your ex-spouse cannot agree how to divide your finances, you can ask a court to make a financial order (also known as the ‘contested’ or "contentious" route or an ‘ancillary relief order’).

This means the court will decide how assets will be split. Getting the court to decide usually takes longer and is more expensive than if you and your ex-spouse agree.

There are three stages after you have applied for a financial order:

• the first appointment - a short hearing with the judge to discuss your application
• financial dispute resolution (FDR) appointment - to help you agree without needing a final hearing (you might need more than one appointment)
• final hearing - if you’re not able to agree, this is when a judge will decide how you must separate your finances.

You and your ex-spouse need to fill in a financial statement for a financial order (Form E) to show a breakdown of your property and debts. This includes giving an estimate of your future living costs.

You’ll also need to collect documents about your finances, for example:

• rental or mortgage agreements
• retirement fund documents
• loan agreements
• proof of your salary income, for example tax return or recent payroll statements
• details of personal belongings, for example a car or house contents

 Completing a financial statement for a financial order (Form E) can be tedious and demanding if you have diverse assets and multiple or unstable income sources. You may need a lawyer's help to avoid omissions and mistakes.

Don't be mislead by TV drama or movies about divorce fights and the divorce news of the super rich.

Taking a divorce case to trial will be more costly in the long run since you and your spouse must hire your divorce lawyers and go through a lengthy dispute process. The longer it takes to resolve in court, the more you pay legal fees. This can cost you over a million dollars.

This could be especially difficult if you have minor children or are in a bind due to no longer having the financial support of your spouse. Even you believe the fight is worthy, the judge has the final say. So if you don’t agree with their ruling, you’ll have to file an appeal. This will cost you more.

When a business is determined to be marital property, its assets will be distributed accordingly. Nevertheless, when business is a going concern, liquidation is the worst and should not be considered as an option.

There are 3 common methods of dividing a business in a Divorce

Here are some examples.

1. Buyout. In this case, the spouse that can afford to do so would purchase the business shares of the other and become the sole owner. This is a good option for a situation where one spouse isn’t very interested in continuing to be a part of the company after the divorce.
2. Co-ownership. Ex-couples can also decide to continue running their business as a unit. This is great for situations that end mutually and without spite. Separations can be amicable, and couples often continue successfully running their companies together even after deciding to go their separate ways.
3. Sell the business. A third option is to sell. Depending on the market, selling a company could be a smart financial move. A couple might not want to continue running a business together when they’re no longer in a relationship. If both agree, they can sell, split the funds, and go their separate ways.

The division of assets can be a complicated and stressful process, but it doesn’t have to be.