CHAN CHUN HEI DAVID v. MA TUNG LILY

HCA 16978/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 16978 OF 1999

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D E C I S I O N

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1. This is the hearing of a summons issued by the defendant as the executrix of Madam Tao Shu Yau, deceased ("the deceased") on 27 December 2002.

2. The summons arose out of a judgment I handed down in this action on 6 March 2002. In the judgment, I dismissed the claim of the plaintiff for a declaration that the Notice of Severance executed by the deceased to sever the joint tenancy of herself and the plaintiff regarding a property known as Flat A, 9th Floor and Car Parking Space No. 1 on 1st Floor of Way Man Court, Nos. 50 and 52 Village Road, Happy Valley, Hong Kong ("the Property") was invalid. I also dismissed the plaintiff's claim against the deceased's estate for reimbursement of expenses of HK$1,173,627.02 that he had paid for and on behalf of the deceased from February 1989 to December 1991. I dismissed the defendant's counterclaim for an account and enquiries of mesne profits of the Property. As for the counterclaim for an order for sale of the Property under section 6 of the Partition Ordinance, Cap. 352, I have adjourned this to chambers. Hence this summons was issued by the defendant to pursue this counterclaim.

3. The plaintiff was adjudicated bankrupt on 15 October 2001 in HCB No. 2610 of 2001. The Official Receiver has been served with this summons as the trustee of the property of the plaintiff. Leave was given under section 12 of the Bankruptcy Ordinance, Cap. 6 on 16 August 2002 to proceed with the present application and for taxation of the defendant's costs pursuant to an order made in the defendant's favour in my judgment.

4. The Director of Lands has also been served with this summons pursuant to rule 4 of the Partition Rules. The Director has indicated as early as June 2001 that he would not object to the proposed sale of the Property provided there is full and final settlement of the outstanding government rent and premium with accrued interest.

5. As a result of my judgment, the Property was, prior to the bankruptcy of the plaintiff, held by the plaintiff and the defendant as tenants in common in equal shares. The Property is now vested in the defendant and the Official Receiver and Trustee as tenants in common in equal shares.

6. The principal reliefs sought by the defendant in the summons are an order for sale of the Property under section 6(3) of Cap. 352 and an order for appointment of receivers of the Property.

7. I have heard submissions from the defendant, the Official Receiver as well as the plaintiff.

8. Regarding an order for sale of the Property, the Official Receiver and Trustee has no objection in principle to a joint sale of the Property by the defendant and the Official Receiver and Trustee. I have jurisdiction to make such an order under section 6(3)(a) of Cap. 352. The Official Receiver and Trustee is not in a position to undertake to purchase the interest of the defendant in the Property pursuant to this provision.

9. I am mindful of the fact that the plaintiff intends to lodge an appeal against my judgment and for this, he has applied for legal aid in March and May this year. His applications were refused. He has appealed against the refusal of legal aid. His appeal was heard on 22 October 2003 before Registrar Chan and was adjourned part heard.

10. I understand from the Official Receiver that the grounds of refusal of legal aid are delay and lack of merits.

11. As a bankrupt, the plaintiff has no right to launch an appeal against my judgment in his own name. The Official Receiver informs this court that he is unwilling to lend his name to any appeal intended to be brought by the plaintiff against the judgment. No information has been supplied to the Official Receiver on the merits of the proposed appeal. Further, the plaintiff has not provided a full and effective indemnity to the Official Receiver against liability as to costs in the proposed appeal.

12. It seems to me in these circumstances, there is no sufficient reason why an order for sale should not be made.

13. The Official Receiver has addressed me on consequential directions that should be given in the event that an order for sale is made. Firstly, it is submitted that the proceeds of sale should be applied to the discharge of government rent, taxes, rates, premium and other outgoings due and affecting the Property in priority to all other payments. This is not controversial. Secondly, the defendant's taxed costs in these proceedings do not have any priority and can only rank pari passu with the general creditors of the plaintiff. Counsel for the defendant does not dispute that this is right. Hence, the half share of the net proceeds to which the Official Receiver and Trustee is entitled, should be paid to the Official Receiver and Trustee in full for the benefit of the plaintiff's estate, subject to the discharge of an incumbrance that I will mention. Thirdly, there is registered against the Property a charge created by the defendant in favour of the Commissioner of Estate Duty regarding the defendant's half share of the Property. Thus, the half share of the net proceeds to which the defendant is entitled should be applied in discharge of this charge before the same is to be paid to the defendant for distribution among the beneficiaries of the deceased's estate pursuant to the will of the deceased. Fourthly, there is also registered against the Property a charging order absolute dated 25 April 2001 in respect of the plaintiff's liability to one Tao Hsu Mei Tony in respect of taxed costs against the plaintiff in a probate action, so the half share of the net proceeds to which the plaintiff's estate is entitled should be applied in discharge of this charging order before the same is to be paid to the plaintiff's estate. Lastly, directions would need to be given on the delivery up of vacant possession by the plaintiff who is occupying the Property. The Official Receiver and Trustee has written to the plaintiff as long ago as 25 May 2002 requiring him to surrender the title deeds of the Property to the Official Receiver and Trustee on or before 30 May 2002, and to find alternative accommodation and deliver up vacant possession as soon as possible. The plaintiff has not complied with this to date.

14. In his written submissions dated 4 and 14 March 2003, the plaintiff says that he is not opposed to an order for sale and delivery up of vacant possession of the Property, provided that the defendant is to pay him HK$119,190.00, otherwise he is not able to pay for the expenses of his relocation from Hong Kong to Vancouver and to travel to Vancouver to find alternative accommodation there. He is willing to deliver up possession of the Property only if he is paid. He has been receiving public assistance from the Social Welfare Department of HK$1,805.00 a month. He says that returning to Canada is his only option as the Social Welfare Department will not find accommodation for him in Hong Kong.

15. The amount of HK$119,190.00 is made up of expenses which the plaintiff had paid on behalf of the deceased, being her funeral and cremation expenses, the costs of her shrine at the crematorium, a donation to a church and the severance pay to the maid of the deceased. These expenses formed part of the plaintiff's claim for reimbursement of HK$1.1 million odd in this action, which I have considered in paragraphs 91 to 97 of my judgment and rejected.

16. In his oral submissions today, the plaintiff again claims that the defendant should be responsible for the amount relating to the funeral expenses of the deceased.

17. I do not think the plaintiff has advanced any valid reason for refusing to deliver up vacant possession. The plaintiff has been notified to deliver up vacant possession of the Property since May 2002, so he should have more than sufficient time to make alternative arrangements if he is minded to do so. I will order delivery up of vacant possession in four weeks from today. As for delivery up of title deeds, I understand the plaintiff has supplied to the Official Receiver and Trustee statutory declarations made by him and by his solicitor, Mr Emerson, as to the loss of the title deeds of the Property.

18. The other relief sought in the summons is for appointment of receivers to the Property. Here, I am inclined to agree with the Official Receiver and Trustee that it is unnecessary to appoint receivers; as all that needs to be done is to sell the Property, directions could be given on the conduct of the joint sale by the defendant and the Official Receiver and Trustee by an appropriate agent. There is no reason why additional expenses in appointing receivers should be incurred. I therefore refuse the application for appointment of receivers to the Property.

19. I make the following orders:

(1)	the Property is to be sold at a price of not less than the market value of the Property as assessed by a qualified surveyor as agreed between the defendant and the Official Receiver and Trustee;
(2)	the defendant is to have conduct of the sale of the Property by appointing one or more estate agents as the defendant may deem fit, and that the mode of sale may be by private treaty, auction or tender as the defendant may deem fit;
(3)	the plaintiff is to deliver up vacant possession of the Property to the defendant or the Official Receiver and Trustee within twenty-eight days hereof;
(4)	the plaintiff is to provide further statutory declarations as to the loss of the title deeds and documents relating to the Property as may be requested by the defendant or the Official Receiver and Trustee within fourteen days of such request;
(5)	upon sale of the Property, the defendant and the Official Receiver are to do all acts and things necessary for the vesting of the Property in the purchaser or purchasers, failing which the Registrar of the High Court or such other person as the court deems fit be appointed, authorised and empowered to do so;
(6)	the money arising from the sale of the Property is to be applied in the following order of priority and manner:
	(i) in discharge of all government rent, premium, taxes, rates and other outgoings due and affecting the Property;
	(ii) next, in payment of all lawful costs and expenses properly incurred in the sale of the Property;
	(iii) next, in payment of the net proceeds of sale to the defendant and the Official Receiver and Trustee to be divided equally; as to the half payable to the defendant, the incumbrance in favour of the Commissioner of Estate Duty is to be discharged before the balance of the net proceeds is to be distributed among the beneficiaries pursuant to the will of the deceased; as to the half payable to the Official Receiver and Trustee, the charging order in favour of Tao Hsu Mei Tony is to be discharged before the balance of the net proceeds is to be paid to the Official Receiver and Trustee for the benefit of the bankrupt's estate;
(7)	there be liberty to apply generally;
(8)	the plaintiff is to pay the defendant's costs of this summons, such costs to be treated as part of the costs incurred in the sale and be paid out of the proceeds of sale of the Property;
(9)	there be no order as to costs of the defendant's application by summons dated 1 April 2003.