Hong Kong Case Law: Decisions & Judgments

Topic

Goodwill valuation

Legal area

Court

19 Feb 2016

CHAN LUEN YAN AND OTHERS v. CHAN TIN CHAI AND OTHERS

Citation

CHAN LUEN YAN AND OTHERS v. CHAN TIN CHAI AND OTHERS
Court

Court of Appeal
Case number

CACV161/2013

The Court of Appeal dismissed the petitioners' appeal because the independently appointed valuer's revised NAV and per‑share valuation were reasonable and within instructions, there was no demonstrable patent error in the valuer's methodology, the judge correctly applied the agreed contractual terms and audited accounts (including using contractual rent and the 2.5% agreed interest), the impairment and write‑down of the investment were justified by CLC Ltd's audited deficits, there was no evidential basis to quantify any goodwill, and no basis existed to order repayment of shareholder loans i…
3 Jan 2013

MENFOND ELECTRONIC ART & COMPUTER DESIGN CO LTD v. WONG WANG TAT VICTOR AND ANOTHER

Citation

MENFOND ELECTRONIC ART & COMPUTER DESIGN CO LTD v. WONG WANG TAT VICTOR AND ANOTHER
Court

Court of First Instance
Case number

HCA293/2011

The court held that the allegations in the statement of claim did not amount to an allegation of fraud that would invoke Order 14 r.1(2)(b) to bar summary judgment; on the facts Victor held the domain and website for the plaintiff (plaintiff paid for and used them in the course of business) so there was no credible defence to beneficial ownership; the plaintiff established the trinity for passing-off (distinctive goodwill, misrepresentation by defendants, likelihood of damage); accordingly summary judgment was entered for the plaintiff and injunctive/proprietary relief and costs were ordered…
20 Jun 2012

AU-YEUNG PING KI t/a CLEAR OPTICAL v. THE DIRECTOR OF LANDS

Citation

AU-YEUNG PING KI t/a CLEAR OPTICAL v. THE DIRECTOR OF LANDS
Court

Lands Tribunal
Case number

LDLR2/2010

Claimant entitled to compensation for partial loss of goodwill and reasonable renovation and removal expenses resulting from relocation caused by resumption; pre-resumption loss of profit and loss of fixtures were rejected as insufficiently causally connected or too remote; Tribunal adopted a cautious valuation methodology (combined profit periods, discarded an outlier year, applied 3 and 1.5 years' purchase respectively, deducted interest on capital at 2%) and awarded total compensation of HKD 1,107,000, with ancillary matters adjourned.
18 Sept 2007

SO KEE TRANSPORTATION CO LTD v. THE SECRETARY FOR THE ENVIRONMENT, TRANSPORT AND WORKS

Citation

SO KEE TRANSPORTATION CO LTD v. THE SECRETARY FOR THE ENVIRONMENT, TRANSPORT AND WORKS
Court

Lands Tribunal
Case number

LDRW36/2003

Head Lease must be treated as binding for its fixed term and not as a periodic tenancy so s.12(c) of the Lands Resumption Ordinance applied; therefore goodwill must be assessed taking into account that the tenancy would have expired 31 December 2003 (approximately ten months' remaining tenure). The Tribunal preferred the Applicant's evidence on capacity/layout and adopted a simple average adjusted profit method to calculate goodwill, awarded loss of goodwill pro rata (HKD 1,021,884), accepted forced sale loss (HKD 5,262,165) and severance payments (HKD 2,258,883), and ordered total compensati…
13 Jun 2005

CHAN CHUNG WAI AND OTHERS v. CHEUNG WAI PUI AND OTHERS

Citation

CHAN CHUNG WAI AND OTHERS v. CHEUNG WAI PUI AND OTHERS
Court

Court of First Instance
Case number

HCA8721/1996

Master held the court had jurisdiction to grant interim payment in a derivative action and exercised discretion to order payment into the 8th defendant's account with plaintiffs as signatory; accepted plaintiffs' expert methodology and 27.02% gross profit ratio because defendants failed to produce cost and transactional records and thus failed to discharge burden to account; rejected double‑counting objection on the facts and accepted inclusion of goodwill; ordered interim payment of HK$10,170,083 and directed further disclosure and inquiry as per the consent judgment.
13 Jun 2002

WO KEE TRADING CO LTD v. THE SECRETARY FOR TRANSPORT

Citation

WO KEE TRADING CO LTD v. THE SECRETARY FOR TRANSPORT
Court

Lands Tribunal
Case number

LDMR28/2000

The Tribunal found the Applicant failed to prove that the resumption caused the alleged losses except for a narrow head relating to fixtures where credible expert evidence supported a small loss; most claimed losses arose from market fluctuations and management decisions and/or were avoidable by reasonable mitigation, the Applicant's valuation and apportionment evidence was unreliable or unsupported, therefore only $60,273 was awarded for loss of fixtures and reinstatement and all other claims were dismissed with professional fees, interest and costs reserved.
6 Nov 2001

WONG HOI NUNG v. THE SECRETARY FOR TRANSPORT

Citation

WONG HOI NUNG v. THE SECRETARY FOR TRANSPORT
Court

Court of Appeal
Case number

CACV521/2001

Goodwill claim rejected because no demonstrable profit trend and wage/rental proxy methods were unsatisfactory; forced sale losses must be awarded in full because resumption of the resumed lot caused closure of the entire business; construction/site improvement costs are non‑recoverable because works were unauthorized under the lease and loss was not caused by resumption; cross‑appeal on profit rent dismissed and tribunal unit rent calculation upheld.
24 Jul 2001

Hon Mei Hing t/a Wing Tat Iron And Steel Engineering v. The Secretary For Transport

Citation

Hon Mei Hing t/a Wing Tat Iron And Steel Engineering v. The Secretary For Transport
Court

Lands Tribunal
Case number

LDMR19/2000

Tribunal held applicant had a tenancy only in respect of the half-house and a licence over the open area; compensation limited to loss attributable to the portion of Lot 199 that was resumed (excluding government strips G1 and G2); profit rent calculated by estimating market rent for Lot, deducting actual rent/licence, capitalising at 13% over 7 years; goodwill assessed on total extinction basis with adjusted annual profit, 7 years purchase discounted at 20%; unauthorised structures and improvements in breach of lease are not compensable; forced sale values for plant/fixtures and stock used a…
22 Oct 1997

TSUI TAN FAI and Another v. DIRECTOR OF LANDS

Citation

TSUI TAN FAI and Another v. DIRECTOR OF LANDS
Court

Court of Appeal
Case number

CACV124/1996

The Court held that although the Tribunal failed to apply Shun Fung's analytical principles explicitly, the appellant produced no evidence to show the 9% discount rate was plainly wrong; given available empirical data (eg Chan) and lack of contrary evidence on risk premium, 9% was not demonstrably erroneous. On the fixtures claim, the Tribunal permissibly limited the award to substantiated payments; absence of receipts for the balance justified refusal. Appeals dismissed with costs.
23 Dec 1996

Hung Yee-shun v. Director of Lands

Citation

Hung Yee-shun v. Director of Lands
Court

Lands Tribunal
Case number

LDLR19/1995

Under s.10(2)(d) the applicant was entitled to compensation to restore his business position; having found the applicant unable to relocate, the Tribunal applied total extinguishment. Accepting bank-statement based reconstructed profits (as adjusted by the respondent's accountant) produced an average annual profit around HKD 1,250,000, deducting profit rent HKD 50,000 gives a base profit HKD 1,200,000. Applying a multiplier of 5 and capitalising at a 9% rate over five years (factor 3.9) produced goodwill of HKD 4,680,000, which was awarded. The discount rate must reflect business/property ret…