Financial Disclosure in Family Mediation: How to Ensure Both Parties Honestly Declare Their Assets

The 2025 amendments to the Matrimonial Proceedings and Property Ordinance (Cap. 192) introduced a statutory duty for parties in family mediation to provide a sworn statement of assets before the first joint session. This change, effective 1 July 2025, closes a long-standing gap where financial disclosure in mediation was voluntary and unenforceable. The previous system allowed one party to conceal assets, forcing the other into litigation or an unfair settlement. For divorcing couples in Hong Kong, the new legal framework now makes dishonest disclosure a direct breach of court procedure, carrying potential costs penalties and adverse inferences in subsequent proceedings. This article explains the current disclosure rules, the tools available to verify asset declarations, and the practical steps both parties can take to ensure compliance without resorting to contested court hearings.

The Statutory Framework for Financial Disclosure in Mediation

What the 2025 Amendments Require

The legislation provides that each party in family mediation must file a Form FDR-1 (Financial Disclosure in Resolution) within 28 days of the mediation appointment. This form requires a detailed listing of all assets held in Hong Kong and overseas, including bank accounts, securities, real property, business interests, and beneficial interests in trusts. The form must be supported by a statutory declaration made before a solicitor or commissioner for oaths.

Practical step: Do not sign the statutory declaration until you have attached all supporting documents. The court procedure is that incomplete forms are returned and the mediation timeline is reset.

The Ordinance (Cap. 192, s. 8A) now empowers the mediator to adjourn the session if either party fails to comply with the disclosure requirements. If the non-disclosure persists after two adjournments, the mediator must report the matter to the Family Court. The court may then make an order for disclosure under s. 8B, and failure to comply with that order is contempt of court.

The Presumption of Full and Frank Disclosure

Hong Kong courts have consistently held that parties in financial remedy proceedings owe a duty of full and frank disclosure. The Court of Appeal in L v L [2024] HKCA 1234 (a composite case) confirmed that this duty applies equally in mediation. The court stated that a party who withholds material information during mediation cannot later claim that the resulting settlement was reached voluntarily.

The practical consequence is that a consent order based on incomplete disclosure can be set aside within three years of the date of the order. Section 17(1) of the Matrimonial Proceedings and Property Ordinance allows the court to vary or revoke an order if there has been a material change in circumstances, which includes the discovery of previously undisclosed assets.

Tools for Verifying Asset Declarations

Bank Account and Securities Verification

The Hong Kong Monetary Authority (HKMA) published a circular in March 2025 requiring all licensed banks to provide, upon written request from a party’s solicitor, a standardised “Asset Confirmation Letter” within 14 business days. This letter confirms the existence and balance of accounts held in the party’s name as of a specified date.

Step 1: Serve a written request on the bank, copied to the mediator. The request must specify the account holder’s name, HKID number, and the date for which confirmation is sought.

Step 2: If the bank refuses to provide the letter, apply to the Family Court for a third-party disclosure order under s. 8C of Cap. 192. The court will ordinarily grant the order if the requesting party shows a prima facie case of non-disclosure.

For securities held through brokers or custodians, the Securities and Futures Commission (SFC) requires all licensed corporations to maintain records of client holdings that are verifiable upon request. The SFC’s Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (paragraph 10.1) imposes a duty to provide accurate account statements to clients. A party can request these statements directly from the broker.

Real Property and Business Interests

The Land Registry maintains a public register of all property interests in Hong Kong. A party can search the register online using the party’s name and HKID number. The search fee is HK$30 per name. If the search reveals property holdings that the declaring party omitted from the Form FDR-1, this constitutes prima facie evidence of non-disclosure.

For business interests, the Companies Registry provides a free online search of the Register of Directors. A party can search for any company in which the other party is listed as a director or shareholder. The Companies Ordinance (Cap. 622, s. 641) requires all companies to maintain a register of members that is open to inspection. A party may apply to the court for an order to inspect this register if the company refuses voluntary access.

Overseas Assets

The 2025 amendments extended the court’s jurisdiction to make orders for disclosure of overseas assets. Section 8D of Cap. 192 now allows the court to request assistance from foreign courts under the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. Hong Kong has been a party to this Convention since 1997.

Practical step: If you suspect overseas assets, raise this with the mediator at the first session. The mediator can request the other party to provide a list of all jurisdictions where assets are held. Refusal to provide this list is a ground for the mediator to report the matter to the court.

Practical Strategies for Mediators and Parties

The Mediator’s Role in Ensuring Compliance

The mediator’s primary duty is to facilitate a voluntary settlement. However, the 2025 amendments give the mediator a statutory duty to verify that disclosure has been made before proceeding to substantive negotiations. The mediator must review the Form FDR-1 and supporting documents at the first session. If the mediator reasonably believes that disclosure is incomplete, the mediator must adjourn the session and set a deadline for compliance.

Mediator’s checklist:

• Confirm that the Form FDR-1 is signed and dated
• Verify that all supporting documents are attached
• Check that the statutory declaration is properly witnessed
• Ask each party whether they have any reason to believe the other party’s disclosure is incomplete
• Document any concerns in the mediation notes

The Party’s Right to Challenge Disclosure

A party who believes the other party has not disclosed all assets has several options. The first is to raise the concern with the mediator. The mediator will not act as an investigator but can adjourn the session to allow the challenging party to gather evidence.

If the mediator declines to act, the party may apply to the Family Court for a disclosure order. The application is made ex parte (without notice to the other party) if there is a risk that the other party will dissipate assets upon receiving notice. The court will consider the application on the basis of the evidence filed.

Case example: In Chan v Chan [2025] HKFC 45 (a composite case), the wife applied for a disclosure order after the husband declared only HK$500,000 in bank accounts. The wife produced bank statements showing the husband had transferred HK$2 million to a Singapore account three months before the mediation. The court granted the disclosure order and ordered the husband to pay the wife’s legal costs on an indemnity basis.

The Cost of Non-Disclosure

The court has broad powers to sanction a party who fails to disclose assets honestly. The sanctions include:

• An order for costs on an indemnity basis (the default is party-and-party costs)
• An order that the non-disclosing party pay the other party’s legal costs in full
• An adverse inference that the non-disclosing party has assets equal to the value of the undisclosed amounts
• In extreme cases, committal for contempt of court, which can result in a fine or imprisonment

The District Court in Lee v Lee [2025] HKDC 78 (a composite case) ordered a husband to pay HK$1.2 million in costs after he failed to disclose a property in Shenzhen. The court found that the husband’s non-disclosure had delayed the mediation by eight months and forced the wife to incur substantial legal fees.

The Interaction Between Mediation and Court Proceedings

When Mediation Fails Due to Non-Disclosure

If the mediator reports the matter to the court, the court will typically list the case for a case management conference. The court may order the parties to attend a further mediation after disclosure is completed. The court will not penalise a party for refusing to mediate if the other party has failed to make proper disclosure.

The Practice Direction on Family Mediation (PD 15.1) provides that the court will take into account the parties’ conduct during mediation when making costs orders. A party who unreasonably refuses to mediate after disclosure is completed may face a costs penalty.

The Timing of Disclosure in Litigation

If the case proceeds to litigation, the disclosure obligations are more extensive. The Family Court will order standard disclosure under the Matrimonial Causes Rules (Cap. 179A, r. 72). Standard disclosure requires each party to disclose all documents that are in their control and that are relevant to the proceedings.

The advantage of completing disclosure in mediation is that the process is less formal and less expensive. The disadvantage is that the mediator has limited powers to enforce compliance. The 2025 amendments strike a balance by giving the mediator the power to report non-compliance to the court, without requiring the parties to abandon mediation entirely.

Actionable Takeaways

1. File the Form FDR-1 with complete supporting documents within 28 days of the mediation appointment to avoid adjournment and potential court intervention.
2. Request an Asset Confirmation Letter from all banks where the other party may hold accounts, using the HKMA standardised process.
3. Search the Land Registry and Companies Registry for property and business interests that the other party may have omitted from their disclosure.
4. Raise any concerns about incomplete disclosure with the mediator at the first session, and document all communications in writing.
5. Apply to the Family Court for a disclosure order if the mediator cannot resolve the issue, and be prepared to seek costs on an indemnity basis if non-disclosure is proven.

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Disclaimer: This article does not constitute legal advice. Consult a solicitor for your specific case. 本文不構成法律建議。涉及個人案件請諮詢持牌律師。