VAMPIO LTD v. LAI YUK LEONG AND OTHERS

DCCJ 4644/2018

[2026] HKDC 836

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4644 OF 2018

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BETWEEN

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JUDGMENT

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A. INTRODUCTION AND BACKGROUND

1.  The Plaintiff and the 1^st to 7^th Defendants (collectively “D1” to “D7”) are the co-owners of Lots No 415, 418, 419, 420, 424, 425, 426, 427, 431, 432, 433, 434, 435, 437, 438, 443, 444, 458, 459, and 465 in Demarcation District No 257 (“DD 257”) (collectively the “Properties”). The Properties are in Tsam Chuk Wan, Sai Kung, New Territories.

2.  As shall be explained further below, one of the main disputes among the Parties is whether succession of the Properties was done on a per stirpes (the branch of each son receiving an equal share) or per capita basis (all living male descendants, regardless of which generation, receiving an equal share).

3.  D1 to D7 are all part of the Lai Family. Parties have provided to the Court a family chart[1] (Annex 1 to this judgment) reflecting the relationship between D1 to D7, as well as other relevant male ancestors and descendants of the Lai Family. In gist and insofar as it is relevant to the current proceedings:-

(a) Lai Tak Yam is the 1^st Generation of the Lai Family.

(b) Lai Ki Fuk, as the sole successor of Lai Tak Yam is the 2^nd Generation of the Lai Family. He passed away on 16 August 1949.

(c) Lai Ki Fuk had three sons, namely Lai Koon Shing, Lai Shui Kiu and Lai Shui Yeung. They are the 3^rd Generation of the Lai Family.

(d) Lai Koon Shing had four male descendants. D1, D2 and D3, and Lai Yuk Leong are sons of Lai Koon Shing.

(e) Lai Shui Kiu had three male descendants. D4, D5 and D6 are the sons of Lai Shui Kiu.

(f) Lai Shui Yeung had four male descendants. D7, Lai Yuk Kin (already deceased), Lai Yuk Kwan (already deceased) and Lai Yuk Kwai are the sons of Lai Shui Yeung.

(g) All D1 to D7 belong to the 4^th Generation of the Lai Family.

Devolution of the Properties’ Interests

4.  The parties of the proceedings became co-owners of the Properties through various events spanning over decades. As will be further explained below, the Properties were originally owned by two persons named Cheung Loi Fat and Cheung Tam Fat.

5.  On 16 August 1949, Lai Ki Fuk passed away. On 24 September 1960, Lai Shui Yeung passed away.

6.  After the death of Lai Ki Fuk on 16 August 1949, the Lai Family did not apply for succession of Lai Ki Fuk’s estate. Instead, on 9 March 1961, after the death of Lai Shui Yeung, six members of the Lai Family at that time, namely (i) Lai Koon Shing, (ii) Lai Shui Kiu, (iii) Lai Yuk Kin, (iv) Lai Yuk Kwan, (v) Lai Yuk Tim, and (vi) Lai Yuk Kwai (collectively, “the 6 Lais”) applied for the succession of Lai Ki Fuk’s estate.[2]

7.  On 28 July 1961, three succession memorials were registered with the Land Registry:-

(a) Memorial No 72787[3] was registered in respect of properties with Cheung Loi Fat as the title holder, namely including Lots No 440, 415, 419, 424, 426, 431, 432, 434, 437, 458, 462, 465 and one-half and undivided share of Lot 418 in DD 257 in favour of the 6 Lais. For Lai Yuk Tim and Lai Yuk Kwai, they were only 14 and 4 years old only at the time when Memorial No 72787 was registered, and Lai Yuk Kin held their interest as trustee.

(b) Memorial 72788[4] was registered in respect of properties with Cheung Tam Fat as the title holder, namely Lots No 529, 535, 539 in DD 256 and Lots No 443, 444, 420, 425, 427, 433, 438, 459, 463, 435 and one-half and undivided share of Lot 418 in DD 257 (ie the remainder of the Properties not covered by Memorial 72787).

(c) Both Memorials 72787 and 72788 did not specify the number of shares held by each of the 6 Lais in the Properties.

(d) Memorial 72789[5] was registered in respect of several lots with Lai Ki Fuk as the deceased owner, with the 6 Lais succeeding such properties (again without their respective shares specified).

(i) It should be noted that the properties concerned in Memorial 72789 are unrelated to the Properties.

(ii) However, as shown on the Land Search records, the Lots under Memorial 72789 were also originally owned by Cheung Tam Fat. How title devolved from Cheung Tam Fat to Lai Ki Fuk is not apparent.

(iii) Different from the situations of Memorials 72787 and 72788, the application from[6] in relation to Memorial 72789 is available and admitted as evidence. It shows clearly that the succession application under Memorial 72789 was made on a per stirpes basis.

(e) The three Memorials were approved and registered successively on the same day (with the stated time to be 9:50, 9:55 and 10:00, ie 5 minutes apart from one and other) by the same Assistant Land Officer.

(f) In summary:-

(i) Memorials 72787 and 72788 were approvals for succession in relation to the Properties. Cheung Loi Fat and Cheung Tam Fat were stated to be the deceased owner of the Properties, which were succeeded by the 6 Lais.

(ii) Memorial No 72789 was the approval for succession in relation to other properties. Lai Ki Fuk was stated to be the deceased owner of those properties (although the properties were originally owned by Cheng Tam Fat and it was not clear on what basis Li Ki Fuk succeeded the title form Cheung Tam Fat), which were succeeded by the 6 Lais. Further, the succession application was expressly made on a per stirpes basis.

8.  On 25 August 1961, Memorial 72960[7] was registered in respect of Lai Tak Yam’s properties in favour of the 6 Lais (again without stating their respective share specified). The properties concerned in Memorial No 72960 were unrelated to the Properties. On 11 October 2001, Rectification Memorial No 469471[8] was filed in respect of Memorial No 72960. The effect of the rectification was to clarify that the Lai Koon Shing and Lai Shui Kiu succeeded 1/3 share respectively, and the remaining 1/3 share was succeeded by D7, Lai Yuk Kin, Lai Yuk Kwan and Lai Yuk Kwai in equal shares (ie each of them having a 1/12 share). This effectively made the succession under Memorial No 72960 on a per stirpes basis, with Lai Koon Shing, Lai Shui Kiu and Lai Shui Yeung’s branches (all of the 3^rd Generation of the Lai Family) succeeding Lai Tak Yam’s (1^st Generation of the Lai Family) properties in equal shares. The 2^nd Generation, Lia Ki Fuk, was apparently “skipped” as he had already passed away prior to 1961.

9.  On 26 April 1988, Lai Yuk Kin (4^th Generation) passed away and the estate and his son Lai Mev Kang (a member of the 5^th Generation) succeeded Lai Yuk Kin’s share of the Properties.

10.  On 27 September 1999[9], the Sai Kung District Office issued a letter approving the succession of Lai Yuk Kin’s properties by his son Lai Mev Kang.

(a) The succession was approved under Section 17 of the New Territories Ordinance (Cap 97) and Section 12 of the New Territories Land (Exemption) Ordinance (Cap 452).

(b) In the letter, it was stated that Lai Yuk Kin had a registered interest in inter alia the Properties under Memorials 72787 and 72788 with a 1/6 share, which was approved to be succeeded by Lai Mev Kang.

(c) In the letter, it was also stated that Lai Yuk Kin had a registered interest in inter alia the other properties under Memorial 72789 with a 1/4 share out of 1/3 (ie 1/12), which was approved to be succeed by Lai Mev Kang.

(d) This shows that on 27 September 1999, the Sai Kung District Office has taken the view that Lai Yuk Kin (one of the 6 Lais) was entitled to a 1/6 share in the Properties (under Memorials 72787 and 72788), and only a 1/12 share in the other properties (under Memorial 72789).

(e) Effectively, the District Land Office’s view was that the Properties (under Memorials 72787 and 72788) were succeeded on a per capita basis, and the other properties (under Memorial 72789) were succeeded on a per stirpes basis.

11.  S 17 of the New Territories Ordinance (Cap 97) (now repealed) provided as follows:

“the Land Officer, on ascertaining the name of the person who is so entitled to such land in succession to the deceased person (hereinafter called the successor), and on being satisfied that any estate duty which may be due has been paid, shall register the name of the successor, and upon such registration being effected the said land shall vest in the successor for all the estate and interest of the deceased person therein, or for such estate and interest as shall be entered on the register by the Land Officer against the entry of the name of the successor…”

12.  The operation of s 17 of the New Territories Ordinance (Cap 97) was explained by Keith J (as he then was) in Wing Tung Yick v AG [1997] 4 HKC 432 as follows:-

“11. In my judgment, there are there reasons why the form of registration contemplated by s 17 of the NTO is not registration under the LRO:

(i) The land Officer’s obligation under s.17 is to register ‘the name of the successor’. The system of registration under the LRO relates to registration of documents. Names as opposed to documents are not registrable under the system of registration created by the LRO.

(ii) The effect of the registration by the Land Officer of ‘the name of the successor’ is that the deceased’s interest in the land vests in the successor. Registration of instruments affecting land under the LRO does not have that effect. Registration under the LRO does not pass title. Since registration under s.17 has the effect of passing title, registration under the LRO is not the form of registration contemplated by s.17.

(iii) Where the registration contemplated by the NTO is registration under the LOR, the NTO makes that clear. Thus, s.15 of the NTO requires the re-entry by the Crown upon land held by a clan, family or t’ong to be effected by ‘the registration of a memorial thereof’. I have already referred to the fact that registration by memorial can only refer to registration under the LRO.

If the form of registration contemplated by section 17 of the NTO is not registration under the LRO, what form does the registration take? How does the Land Officer register the name of the successor? The answer is provided by looking at what the Land Officer actually does. When a right to succession is asserted, the Land Officer opens a file and assigns a number to it. In due course, he records, in a record kept for that purpose, the file number, the applicant’s name and address, the date when the application was first made and particulars of the deceased. Once he has determined, in accordance with Chinese law and custom, that the applicant is indeed the deceased’s successor-in-title, he notifies the applicant of that fact. In these circumstances, the registration of the name of the applicant as the successor is constituted by the record which records the details of the application and the written notice approving his succession. It may be that Land Officers have assumed in the past that registration is not complete until the written approvals have been registered under the LRO. That would enable any member of the public to ascertain in whom land vests by simply inspecting the Land Register. But for the reasons I have given, I do not believe that that is what section 17 of the NTO, properly construed, actually requires.”

13.  In Wu Koon Tai v Wu Yau Loi [1997] AC 179, the son was not registered as successor to the father’s lands under s.17. Instead, after the son’s demise, the grandson was registered as successor to the grandfather directly. The Privy Council held that, despite the son being entitled to be registered as a successor, he did not do so during his lifetime and the title in the land was never vested in the son. Consequently, the sale of the land by the son was held to be invalid. At 187G-188B, it was said:-

“… It is plain that, after the Peking Convention, the whole system of land tenure in the New Territories was fundamentally altered. Leases from the Crown were substituted for old titles under the pre-existing law. A system for deducing title to such leases was imposed, dependent upon the registration of deeds. To allow the old customary land law to cut across and to trump the new system would be to defeat its whole purpose.

This view is supported by the provisions of sections 15, 16 and 17 of the Ordinance of 1910 which expressly modified the general system of registered conveyancing to take account of special Chinese institutions. Section 15 deals with the case where lands belong, under Chinese law, to a clan or family; it provides for a manager of such lands to be registered, he having full power of disposition of all the family lands. Section 16 also deals with family lands. Section 17 is directed to dealing with the problem of succession on death. It recognises that under Chinese law, which is to continue to regulate rights of succession, it is improbable that the full procedure of taking a grant of probate or letters of administration will be followed. It provides for the registration of the successor to the land and the vesting of the land in the registered successor.

In their Lordships’ view, the devolution of title to land in the New Territories, whether by inter vivos transaction or on death, is regulated by the registration system and the general law of Hong Kong. It follows that in the present case title to the land was never vested in the son since, although entitled to be registered as successor to the father, the son was never in fact so registered. It follows that the son cannot have transferred title to the purchaser by the 1934 document. The title to the land was vested by virtue of section 17 directly in the grandson when, in 1951, he was registered as successor to the father. The title to the land is now vested in the defendant.”

14.  On 6 August 2005, by way of a deed of gift[10], Lai Shui Kiu assigned his share in the Properties to D4, D5, and D6 in equal shares.

(a) Recital (3) of the deed stated that Lai Shui Kiu “considers” that he shall be the successor of 1/3 shares by virtue of the reasons set out in Recital 2.4 that Lai Shui Kiu and Lai Koon Shing (3rd Generation) were members of an older generation and shall each be entitled to more share than the younger generation.

(b) It thus appears that Lai Shui Kiu considered himself to have a 1/3 share in the Properties on a per stirpes succession.

15.  On 9 May 2008, Lai Mev Kang assigned his share of the Properties to Far Power Development Limited (“Far Power”). Far Power subsequently assigned its share of the Properties to P on 16 March 2009.

16.  On 29 May 2009, by way of a deed,[11] Lai Koon Shing assigned his share in inter alia the Properties to his 3 sons (D1, D2 and D3) in equal shares.

(a) It was stated on the deed that Lai Koon Shing was owner of 1/6 share of the Properties.

(b) It is noteworthy that originally the share of 1/3 was typed on the deed, which was crossed out and 1/6 written in manuscript, with the 4 parties to the deed countersigning to confirm such alternation.

17.  On 5 November 2011, Lai Kev Meng vested Lai Yuk Kwai’s share of the Properties, which was previously held on trust by Lai Yuk Kin, to himself,[12] and vested D7’s share of the Properties, which was previously held on trust by Lai Yuk Kin, to D7.[13]

18.  On 13 January 2013, Lai Yuk Kwan assigned his share of the Properties to P. [14]

19.  As a result of these transfers, it is common ground that P and D1-D7 have become co-owners of the Properties:-

(a) P is the successor-in-title of Lai Yuk Kin, Lai Yuk Kwan and Lai Yuk Kwai’s shares.

(b) D1-D3 are the successors-in-title of Lai Koon Shing’s shares.

(c) D4-D6 are the successors-in-title of Lai Shui Kiu’s shares.

(d) D7, who is one of the 6 Lais, got his title from Memorials No 72787 and 72788.

B. THE AGREED LIST OF ISSUES

20.  In the present trial, parties have filed an Agreed Statement of Issues in Dispute which consists of seven issues. However, on the first day of the trial, the Court was informed that D1 to D3’s Counterclaim against D7 would be withdrawn. Therefore, the remaining issues for this Court to make findings on are as follows:-

(a) Whether the Plaintiff and the Defendants hold their respective shares in the Properties according to Ratio (1) or Ratio (2), as set out in the table below. (“Issue 1”)

	Name of registered owner	Ratio (1) Number of shares held (per capita basis)	Ratio (2) Number of shares held (per stirpes basis)
1.	P	3/6 shares	1/4 share
2.	D1	1/18 share	1/9 share
3.	D2	1/18 share	1/9 share
4.	D3	1/18 share	1/9 share
5.	D4	1/18 share	1/9 share
6.	D5	1/18 share	1/9 share
7.	D6	1/18 share	1/9 share
8.	D7	1/6 share	1/12 share

(b) Whether it is practical to partition each of the Properties according to Ratio (1) or Ratio (2). (“Issue 2”)

(c) What is the respective prevailing market value of the Properties. (“Issue 3”)

(d) Whether an order for sale of the Properties ought to be granted, and if so, whether a consequential order for the sale proceeds to be distributed to the Plaintiff and the Defendants according to Ratio (1) or Ratio (2) above ought to be granted. (“Issue 4”)

(e) Alternatively, whether an order for partition of the Properties ought to be granted. (“Issue 5”)

(f) Whether an order for sale for the Lots 419, 420, 437 and 438 in DD 257 should be granted in the manner that D1 to D3 to purchase all other co-owner’s shares at prevailing and reasonable market price. (“Issue 6”)

C. THE PARTIES’ CASE

C1. The Plaintiff’s Case

21.  P (represented by Mr Jonathan Tai) argues that Ratio (1) represents the correct proportion of share of the Parties. P’s case is premised on the analysis that the succession of the Properties under Memorial 72787 and Memorial 72788 from Cheung Loi Fat and Cheung Tam Fat did not involve the Properties first having formed part of the estate of Lai Ki Fuk. As shall be explained in more detail below, the evidence suggests that the division of Lai Ki Fuk’s estate would be done on a per stirpes basis, meaning his three sons, Lai Koon Shing, Lai Shui Kiu and Lai Shui Yeung and their lineage would each be entitled to 1/3 of the Properties.

22.  P’s Chinese Customary Law expert, Professor Michael Palmer, supports the equal devolution among the 6 Lais, leading to Ratio (1). On the other hand, D6’s expert Professor Cheung Sui-wai supports the per stirpes devolution, leading to Ratio (2).

23.  P also seeks an order for sale in order to free itself of the “shackle” of co-ownership with D1 to D7. P and D6 have adduced the joint valuation report which states that physical partition is infeasible.

C2. The Defendants’ Case

24.  D1, D3, D4 and D5 were absent at trial. Pursuant to O 35, r 1 of the Rules of District Court (Cap 336H), the trial proceeded in their absence.

25.  D1-D3 previously filed a joint Defence and Counterclaim, which stated that their interest in the Properties “are at least 1/6…such1/6 may be adjusted upwards at trial”. D1-D3 further counterclaims for an order for sale of Lots 419 and 420, and Lots 437 and 438, with the condition that they should be entitled to purchase all other co-owners’ shares in relation to those Lots. The apparent logic for such a request is that those Lots would be of greater utility to D1-D3 as they are adjacent to the other lands privately owned by them.

26.  D2 appeared in person at trial. Understandably, he is more inclined to adopt the view that the Parties’ respective share in the Properties should be in accordance with Ratio (2). He further opposes an order for sale on the ground that P has other means to free itself from the co-ownership and an order for sale would cause him great hardship.

27.  D6 (represented by Mr Nicholas Oh) argues that the Parties’ respective share in the Properties should be in accordance with Ratio (2). D6 further opposes an order for sale on the ground that P has failed to show that it did not have any other remedy to rid itself of the shackles of co-ownership, and that great hardship would be caused to D6 if such an order is to be made.

28.  D7 (represented by Mr Roy Chui) agrees with P that the Parties’ respective share in the Properties should be in accordance with Ratio (1). D7 further argues that there are other remedy available for P to rid itself of the co-ownership, and that no order for sale should be made due to the great hardship that he would suffer if such an order is made.

D. FACTUAL WITNESSES

29.  At trial, Wong Kam Kin (“Wong”) testified for the P. D2 and D6 testified.

30.  D1 and D3 previously filed witness statements, which were expunged from the trial bundles consequent upon their failure to testify in court.

31.  D7, previously made a witness statement but did not testify in court. Instead, D7 applied to adduce his witness statement as hearsay evidence pursuant to s 47A of the Evidence Ordinance (Cap 8). P indicated that he would not object to the admission of D7’s witness statements as hearsay evidence. On the other hand, D6 objects to its admission. For the following reasons I shall expunge D7’s witness statement from the Trial Bundles:-

(a) The basic rule under O 38, r 1 of the Rules of District Court has always been that evidence to be given be witnesses at trial should be by way of viva voce evidence in open court.

(b) In Cheung Wei Man Vivien v Centaline Property Agency Limited [2004] 1 HKC 692 at 696H, DHCJ Lam (as Lam PJ then was) said:-

“12. Under Section 47 (1) [of the Evidence Ordinance], the court may exclude hearsay evidence if it is satisfied, having regard to the circumstances of the case, that the exclusion of the evidence is not prejudicial to the interests of justice. As I mentioned in the course of argument, although Section 49 of the Evidence Ordinance primarily deals with weight to be given to hearsay evidence, it does have an indirect bearing on the assessment as to whether the exclusion of a piece of hearsay evidence would be prejudicial to the interests of justice. If the court finds it possible to conclude that irrespective of what shall happen at the trial, no weight could be attach to a piece of evidence after taking into account of the matters set out under Section 49, its exclusion would not be prejudicial to the interests of justice.”

(c) In Hong Chun Tak v Yip Kan Kee Contracting Co Ltd [2021] HKDC 352 at paragraph 39, HH Judge K C Chan said:-

“…as a matter of first hurdle, it can be demonstrated that there are exceptional circumstances properly justifying a statement or witness statement to be admitted as hearsay evidence without calling the maker to attend trial to give oral evidence, the weight of the hearsay evidence does not fall to be considered; and therefore the reliance on s 49 of the EO is misplaced. The weight to be attached to that statement or witness statement should not, of itself, be regarded as a factor justifying the adoption of such an exceptional course. Indeed, the more important the factual matter to be proved and the more controversial the factual matter is, the more the reason in the interests of justice that the proving witness should attend trial to be examined orally in open court. Therefore, I find it unnecessary to embark on the exercise of analyzing the application of the various considerations set out in s 49(2) of the EO, as Ms Kwok invited the court to.” (emphasis original)

(d) The reasons submitted by D7’s counsel (Mr Chui) was that D7 was old and has just undergone surgical procedure as a result of his diagnosis of skin cancer, which requires rest at home. I do not consider these to be an acceptable reason for D7’s failure to testify in the trial. Despite suffering from late-stage pancreatic cancer, D2 appeared and represented himself at trial, only taking a half-day medical leave on Day 6, which was granted by the Court.

(e) At trial, the Court has reminded D7’s legal representatives that D7’s witness statements may be expunged if he fails to testify in Court. D7 must be taken as being aware of such a risk, and has made a decision to not to testify.

(f) D7 filed his witness statement in September 2020 and supplement witness statement in September 2023. It was only shortly before trial on 27 October 2025 that hearsay notices were filed by D7 seeking to adduce D7’s witness statements as hearsay evidence. This last-minute decision of D7 to not to testify would certainly have taken D6 by surprise.

(g) D6 will be seriously prejudiced if D7’s witness statement is allowed to be admitted, as D6 will be deprived of an opportunity to cross-examine D7.

(h) Overall, I consider that it would be prejudicial to the interest justice to allow D7’s witness statement to be admitted as hearsay evidence, and it would not be prejudicial to the interest of justice to disallow D7’s witness statement to be admitted.

32.  Wong is the manager of P. His evidence can be summarized as follows:-

(a) P is a Hong Kong company engaged in property investment. In 2009, P decided to acquire landed properties near Tsam Chuk Wan, including co-ownership in the Properties, for investment.

(b) When P acquired its co-ownership in the Properties, it did not know, and none of the Defendants or vendors had informed P that the Properties were family properties reserved for family use or village houses.

(c) House 16A Tsam Chuk Wan stands on Lots 434 and 435, which is enclosed as a garden. D7 is occupying House 16A and the garden without P’s consent and without paying rent. D7 should have no difficulty in securing an alternative accommodation in Sai Kung at the rent of about HK$7,000 to HK$13,000.

(d) Apart from Lots 434 and 435, the rest of the Properties are agricultural lands which are patchy and scattered.

(e) P had made extensive but unsuccessful efforts to acquire the rest of the shares of the Defendants from 2016 onwards, but to no avail.

(f) In his oral testimony, Wong accepted that P was only willing to sell the 20 Lots of land comprising the Properties together, but not individually. As Wong explained, P was advised by its solicitors that D2 wishes to buy all the shares of Lot 419 and 420, but the Plaintiff was unwilling to do so. The reason for that was because in the New Territories, the lands owned by the developers usually consist of multiple land lots. Thus, if land lots are singled out and sold, some of the land lots would have no market and therefore developers would not single out the lands with better quality to sell them.

33.  D2’s evidence can be summarised below:-

(a) Without giving any reason, it was stated that “the 1^st to 3^rd Defendants herein, are at least 1/6 owners of the Properties.”

(b) It is customary and traditional practice that New Territories lands, including the Properties, should so far as possible be used and preserved by indigenous villagers. He had already planned to retire in village houses to build on the Properties and pass them to his children, and that almost all areas of the Properties are classified as “Village Zone” where village houses can be built.

(c) P should have known from the Land Registry records before its purchase of the co-ownership of the Properties that they were indigenous villagers from the same family, yet P decided to make the purchase on that basis.

(d) D1-D3 had applied under the Small House Policy to build small houses, an order for sale would sabotage those applications and their retirement plans.

(e) D7 owns a small house at 79 Tsam Chuk Wan Village, and 1/36 share in another house at 15 Tsam Chuk Wan Village where D7 resides. D7 has not resided at House 16A, which were used mainly for storage of wood and rice.

34.  D6’s evidence can be summarized as follows.

(a) According to what D6’s father (Lai Shui Kiu) told him:-

(i) During the Second World War from around 1939 to 1945, Lai Ki Fuk was a neighbour of Cheung Loi Fat and Cheung Tam Fat, who were then owners of the Properties. As both Cheung Loi Fat and Cheung Tam Fat were impoverished despite being owners of the Properties, they relied on Lai Ki Fuk for food. Out of gratitude, Cheung Loi Fat and Cheung Tam Fat “intended to and did appoint [Lai Ki Fuk] or his children as successor(s) to the Properties in equal shares.”

(ii) After Lai Ki Fuk passed away on 16 August 1949, his three sons (Lai Koon Shing, Lai Shui Kiu and Lai Shui Yeung) succeed Lai Ki Fuk’s properties in equal shares, including the Properties.

(b) As such, the correct shares of the Parties in the Properties are those under Ratio (2).

35.  D7’s witness statement and supplement statement have been expunged from the Trial Bundles, as D7 failed to testify at trial. For completeness sake, D7’s witness statements could be summarized as follows:-

(a) D7 was born in Tsam Chuk Wan in 1947 (he was thus around 14 years old at time of the 1961 succession memorials).

(b) He was given to known that the original registered owners of the Properties were Cheung Loi Fat and Cheung Tam Fat, and that during the Japanese occupation Cheung Tam Fat died after being cared of by Lai Shui Yeung (D7’s father), who then inherited the Properties and the title deeds to the same, and undertook the burial arrangements as well as erecting the tomb stone for Cheung Tam Fat. Since the passing of Cheng Tam Fat, Cheung Loi Fat had never appeared at Tsam Chuk Wan, and Cheung Loi Fat’s whereabouts is not known.

(c) In about 1961 (after Lai Shui Yeung’s passing), Lai Koon Shing demanded the title deeds to the Properties from D7’s mother, and then Lai Koon Shing, Lai Yuk Kin and Lai Yuk Kwan, together with 3 village elders, attended the rural office to deal with succession. D7 did not attend as he was only 14 years old.

(d) Before the death of D7’s mother, D7’s mother had told him many times that since Lai Shui Yeung was the eldest branch (fong) of Lai Ki Fuk, their branch (fong) should hold a larger share of Lai Ki Fuk’s estate.

(e) According to D7’s knowledge and belief, only the eldest branch (fong) (Lai Shui Yeung and his 4 sons, including D7) had the power to determine the succession rights to the Properties. The properties were inherited in 1961 among all of the living male dependents of Lai Ki Fuk (ie the 6 Lais) in equal shares.

(f) D7 (73 years old), his wife (72 years old) and daughter currently lives at House 16A at Tsam Chuk Wan, which was built by his father (Lai Shui Yeung). No one has ever objected to their occupation of House 16A over the years. If an order for sale is made, D7 and his family would be put in extreme hardship as they would be forced to vacate House 16A without having the financial means to purchase another residence.

E. EXPERT WITNESSES

36.  The Parties have adduced expert reports on land surveying and valuation from 3 experts.

(a) Hui Wai Chun Raymond for P.

(b) Denys Lok Ping Kwan for D6.

(c) Tsang Ka Kau for D7.

37.  The experts have filed ther solo report, and their joint report in 2021. Closer to trial, an updated joint valuation report was filed by the experts for P and D6. Initially, D1-D3 had filed their own land valuation expert report, which has since then be withdrawn upon D1-D3’s indication at the PTR that they would not rely on their expert at trial.

38.  In the joint valuation report of the 3 experts dated 17 September 2021, they agreed on most of the matters, but had minor differences as to their respective assessments of the market values of the Properties. Pursuant to the Order dated 7 July 2025, P and D6 filed an updated joint valuation report (D7 opted not to participate), in which the experts agreed on all aspects, including the Properties’ market value as of the valuation date on 30 September 2025:-

(a) For the 9 lots that are not feasible for small house development (ie Lots 415, ,424, 427, 431, 435, f437, 438, 443, 444 in D.D. 257), the market value is in total HK$765,000.

(b) For the 11 lots that are feasible for small house development (ie Lots 418, 419, 420, 425, 426, 432, 433, 434, 458, 459, 465 in D.D. 257), the market value is in the total sum of HK$3,603,000.

(c) The total market of the Properties is thus HK$4,368,000.

39.  P and D6 have adduced expert reports on Chinese customs and Chinese customary law from Prof Michael Palmer and Prof Cheung Sui Wai respectively. They have filed their solo reports and a joint statement setting out their agreements and disagreements.

40.  Prof Palmer has researched and published extensively in the field of Chinese law, encompassing both traditional and modern perspectives. Ho co-convened and co-taught, alongside the late Professor Anthony Dicks, the University of London LLM course ‘Foundations of Chinese Law’ — focused on Traditional Chinese Law and Custom — for over twenty years (from 1988 to 2009). From 1971 to 1976, he resided in the northern New Territories of Hong Kong to conduct research into the local system of landholding, where Chinese customary law continues to govern. Between 1990 and 1993, he was seconded from the University of London to serve as a full-time advisor on Chinese law in the Attorney General’s Chambers in Hong Kong.

41.  Prof Cheung is a graduate of The Chinese University of Hong Kong and the University of Oxford. He obtained a Bachelor of Arts from the Department of History at The Chinese University of Hong Kong in 1987, followed by an M St and D Phil from the Institute for Chinese Studies at the University of Oxford in 1994 and 2002, respectively. His main academic research interests are, among other things, land administration and social life in late Imperial and early colonial Hong Kong. He had carried out extensive fieldwork in villages in the New Territories and villages in New Kowloon during the last thirty years.

42.  The expertise of both Prof Palmer and Prof Cheung was not challenged, and they both testified at trial and were cross-examined.

43.  According to Prof Palmer:-

(a) Under Chinese statutory and customary law, subject to some exceptions, which are not pertinent in the instant case, property was attributable to a family group rather than an individual. In the traditional Chinese legal system and customary law the family, which for this purpose may be defined as a common male descent group, was an expression of a line of patrilineal descent which included both deceased ancestors and unborn future generations as well as living persons. It was the duty of the living members of the family to pass on to their male descendants both the property they had received from their ancestors and such property as they were able to accumulate by their own efforts.

(b) The male members of the family (jia) were the co-owners of the property, although the female members were entitled to support out of the assets of the property so long as they remained within the family. The arrangement was characterized by a traditional phrase, tongji gongcai (同居共財), the literal meaning of which is ‘living together with assets in common’. But membership might well continue even if some members do not co-resident, provided that the common budget arrangements were maintained.

(c) The provisions of the Qing Penal Code relating to succession of property are found principally under two separate Articles.

(d) Under Article 87, division of the family or its property, or the establishment of separate residences by sons of grandsons during the lifetime of their parents or grandparents without the consent of the latter was prohibited. This provision also forbid division within the mourning period of there years after the death of a parent or grandparent unless otherwise authorized by a will or deathbed instructions of the decedent. The purpose of these provisions was to support the principles of parental authority and filial piety.

(e) Under Article 88 – “If any of the junior members of a family living under the same roof appropriate without leave of the seniors any part of the family property, he shall be liable to punishment at the rate of twenty blows for every ten tales value so appropriated, and one degree more for every additional ten, not exceeding one hundred blows in all. If the elders living under the same roof, in dividing family property, divide it unfairly, they shall be liable to a similar punishment”. The first sub-statue to Article 88 stipulated that nay division should be equal: “As regards children in general, hereditary official rank descends only to the eldest son and his descendants born in lawful wedlock, but all family property movable or immovable must be divided equally between all male children whether born of the principal wife or of a concubine or domestic slave.”

(f) In customary law, it was sometimes the case that there would be a variation of the principle of equality by allowing the oldest son an extra share because of his ritual succession responsibilities as an eldest son. The basis for this was to be found in McAleavy, Henry (12958) ‘Varieties of hu’o’ng-hoa: a problem of Vietnamese law’, Bulletin of the School of Oriental and African Studies, University of London, Vol XXI, Part 3, 1958, 608-619 at 613-614. The article was produced by D6 at trial, which shows that it pointed out that primogeniture has long fallen into total desuetude and, in any event, applies to the duty to ancestral worship and not to the succession of property.

(g) For Cheung Loi Fat and Cheung Tim Fat to appoint Lai Ki Fuk or his children as successor(s) to the Properties in equal shares, the Cheungs would have had to adopt the Lai beneficiaries as “guofang erzi” (過房兒子) or adopted sons crossing from one family branch to another. In traditional Chinese customary law, cross surname adoption was forbidden, and not recognised by the state. In Chinese customary law, many localities were prepared to recognise such adoptions, but would require special ceremonies in order to indicate local community acceptance. However, there is no evidence of any such adoptions or ceremonies having taken place.

(h) Given that the transfers under Memorials 72787 and 72788 were characterized as “succession”, in the absence of evidence to the contrary the fundamental succession principle of equal shares could be applied by analogy, so that the 6 Lais would each hold 1/6 share in the Properties.

(i) As there was no evidence of any adoption or similar ceremony having taken place, the transfer of the Properties from the Cheungs to the 6 Lais (as persons of a different surname) did not constitute “succession” in Chinese law and custom.

(j) The transfers under Memorials 72787 and 72788 could not be interpreted as family property devolving from one generation to the next. The Cheungs were the registered owners of the Properties up to 28 July 1961, and the Properties were on that day transferred by the two Memorials to each of the 6 Lais. In the absence of other evidence, the per stripers possibility has no basis, and each of the 6 Lais had received an equal 1/6 share to the Properties.

44.  According to Prof Cheung:-

(a) Tsam Chuk Wan village is a small Hakka village in Sai Kung which had been established before the lease of the New Territories to the British in 1898. It is one of the villages in the New Territories recgonised by the government where small houses could be built. Tsam Chuk Wan village is one of the six villages which formed an inter-village alliance at Pak Tam Chung district. In 1995, the sic villages of Pak Tam Chung jointly repaired the taai-wong shrine. A stone tablet was erected beside the earth god, which inscribed the names of the 47 donors. Lai Koon Shing (father of D1-D3) had donated $1,000 for that. As he was the only one from the Lai family on the donation list, Lai Koon Shing should be the person who represented the Lai lineage to participate in communal activities in the Pak Tam Chung district.

(b) In relation to the 1961 successions under Memorials 72787 and 72788, the 6 Lais as “successors” of the Properties must have submitted some documents to the Assistant Land Officer to cause their becoming the successors of the Properties originally owned by the Cheungs.

(c) It was certain that the succession was:-

(i) Firstly approved by the Assistant Land officer according to Memorials 72787 and 72788 based on the provisions of the Land Registration Ordinance (Cap 128) and the New Territories Ordinance (Cap 97).

(ii) Secondly, the Properties were co-owned by all living male members of the three junior fongs.

(iii) Thirdly, these male members, the 6 Lais, consented unanimously to the property arrangement. The rights of D7 and Lai Yuk Kwai (being 14 years old and 4 years old in 1961 respectively) were represented by their eldest brother Lai Yuk Kin as their trustee.

(d) Regarding the question of how the 6 Lais’ shares should be distributed, the Great Qing Code at p.217 specified that when dividing family property, it must be split equally among the property owner’s biological sons. This rule applied to all sons, regardless of whether they were born to the principal wife, concubine(s), or servant girl(s). A son born to a woman who was raped by the property owner was entitled to half a share. “「嫡、庶子男，除有官廕襲，先儘嫡長子孫; 其分析家财、田產，不問妻、妾、婢生，止以子数均分; 姦生之子，依子量與半分。」”

(e) Upon Dr Cheung’s site visit, Lai Ki Fuk’s grave was discovered, which shows that in 1955, the three sons Lai Koon Shing, Lai Shui Kiu and Lai Shui Yeung (3^rd Generation) repaired the grave of their father, who died in 1949.

(f) According to the inscriptions on the gravestone of Lai Tak Yam and his two wives, Lai Shui Yeung, Lai Koon Shing and Lai Shui Kiu (3^rd Generation) became the three fongs after Lai Tak Yam (1^st Generation) and Lai Ki Fuk (2^nd Generation).

(g) According to Dr Cheung’s opinion, on 28 July 1961, the 6 Lais registered the Properties under the three fongs, with all living members of the lineage listed as “successors”. Therefore, if the Properties had to be divided, it would be the most reasonable to divide them equally by these three fongs, with each fong having a 1/3 share of the Properties.

(h) This distribution aligns with the principle of dividing lineage property per stirpes (rather than per captia) according to the customary law of the New Territories.

(i) Dr Cheung also cited Kan Fat Tat also known as Kan Fat v Kan Tin Tat also known as Kan Tat HCMP 865/1982, 25 November 1986, where DHCJ Robert Tang QC said:-

“172. Per stirpes division in China, as I understand it, provides for equal divisions amongst the sons of the relevant direct ascendant. Given a desire to achieve equality amongst the sons, I believe that to be the only fair method of distribution. A division per capita such that each male descendant living at the time of distribution, regardless of generation should have an equal share, would not be fair to the younger sons, who are likely to have less descendants on death of the relevant ascendant which is the earliest time at which one could insist on division. It seems that as a matter of Chinese law, one could insist on division on death of one's father (who was also head of the family) after a decent period for observance of the rites (I disregard postponement during the life time of the widow). One would expect the son who happened to have the largest number of descendants then to demand division. So effectively, if division is per capita, it would mean equal division to each living descendant on the death of the head. That seems to me to be arbitrary. Why should the law prefer some remote descendants over others because of the accident of their being born prior to the death of the relevant ascendant. So in my opinion per stirpes division of family property is both reasonable and right. Indeed, any system of division per capita in the sense we have used the word would seem to be unsatisfactory because the number of shares may vary depending on the time of distribution.

174. It is accepted that so far as family property was concerned, as a matter of Chinese customary law, it should be divided per stirpes.”

F. ANALYSIS

F1. ISSUE 1 – Ratio (1) or Ratio (2)?

45.  I have considered all of the submissions made by the Parties. For reasons to be elaborated below, I find that the succession under Memorials 72787 and 72788 to have been made on a per capita basis (ie Ratio (1) being the correct ratio).

46.  The only factual witnesses who testified were D2 and D6. However, neither of them had any personal knowledge as to the circumstances under which Memorials 72787, 72788 and 72789 came about. The only person who would have direct knowledge on this was Lai Koon Shing (father of D1-D3), being the person who signed on three Memorials on his own behalf as well as on behalf of Lai Shui Kiu. Apparently, due to his old age, Lai Koon Shing was not called as a witness, nor had he made any witness statement. As such, I do not consider it unreasonable for D1-D3 and the other Parties for not having insisted for Lai Koon Shing to testify. After all, Lai Koon Shing is old in age and had already gifted his share in the Properties (which according to the deed of gift dated 29 May 2009, was 1/6) to D1-D3.

47.  As D2 and D6 (and for that matter, D7) did not have personal knowledge of the critical circumstances leading to Memorials 72787, 72788 and 72789, which occurred a long ago in 1961, I do not consider their account could be accorded any significant weight. What is of more weight are the contemporaneous documentary evidence and the objective actions of the parties over the years.

48.  Lai Koon Shing and Lai Shui Kiu emigrated to the United Kingdom at some point in time before 1961. Of the 3^rd Generation, it was Lai Shui Yeung who remained in Hong Kong until he passed away in 1960. Indeed, as Mr Oh for D6 submitted in paragraph 31 of his closing submissions, the most likely inference is that Lai Shui Kiu was still living in the UK in 1961.

49.  From the passing of Lai Ki Fuk in 1949, nothing was done until 1961 in relation to the succession of the family properties. It was likely to be the case that Lai Shui Yeung’s passing in 1960 prompted the family to handle the succession matters. It is not disputed that Lai Koon Shing returned to Hong Kong in 1961 for that, and Lai Shui Kiu did not return. This is supported by the fact that Lai Koon Shing signed on the three Memorials on his own behalf as well as on Lai Shui Kiu’s behalf.

50.  As such, it would appear that Lai Koon Shing had travelled back to handle the succession of properties. It is inherently likely that he would have discussed with Lai Shui Kiu as to the way they wished to divide up the properties before coming back to Hong Kong. At the very least, Lai Koon Shing would have obtained the authority of Lai Shui Kiu to make decision on his behalf. This is consistent with the fact that Lai Koon Shing had signed on the 3 Memorials on behalf of Lai Shui Kiu. It is inherently unlikely that Lai Koon Shing would have signed on behalf of Lail Shui Kiu without the latter’s authorisation.

51.  This is also consistent with what Dr Cheung noted, namely that the 6 Lais must have consented unanimously to the property arrangement in 1961, and that the rights of D7 and Lai Yuk Kwai (being 14 years old and 4 years old in 1961 respectively) were represented by their eldest brother Lai Yuk Kin as their trustee. As noted expressly in the Memorials, Lai Yuk Kin had signed on behalf of himself and his three brothers:-

(a) Lai Yuk Kin had signed the 3 Memorials on behalf of D7 and Lai Yuk Kwai (minors at that time) as “manager”.

(b) The 3 Memorials was also signed by Lai Yuk Kin on behalf of Lai Yuk Kwan.

52.  As such, the documents reveal that Lai Koon Shing and Lai Yuk Tim were the two representatives representing the 3 fongs in the singing of the 3 Memorials.

(a) Lai Koon Sing signed on his own behalf.

(b) Lai Koon Shing signed on behalf of Lai Shui Kiu.

(c) As Lai Shui Yeung had passed away in 1960, his interest would have devolved to his four sons, with Lai Yuk Kin representing himself and the other 3 brothers.

53.  The objective evidence did reveal a clear picture as to what Lia Koon Shing understood to be the agreement among the 6 Lais in relation to the Properties.

(a) As noted above, in the deed of gift dated 29 May 2009, Lai Koon Shing gifted his 1/6 share in the Properties to his 3 sons (D1-D3).

(b) The proportion share was specifically amended from “one equal undivided 3^rd part or share” to “one equal undivided 6^th part or share” in manuscript, and countersigned by Lai Koon Shing to confirm the alternation.

(c) It is therefore clear that in so far as Lai Koon Shing is concerned, his understanding was that the Properties were succeeded per capita in 1961, which makes it inherently likely that an agreement was reached among the 6 Lais to distribute the Properties that way.

(d) This is also exemplified by a prior incident in 2005:-

(i) Lai Shui Kiu’s lawyers (Messrs Wong Hui & Co) applied by letter dated 17 September 2005 to the District Office to rectify Memorials 72787 and 72788 by specify that the succession was on a per stirpes basis. The request was made on the basis that the succession of properties of the Lai Tak Yam (1^st Generation) family should have been on a per stirpes basis.

(ii) In the District Office’s reply letter dated 9 November 2005, the District Officer requested for documentary proof in relation to the share distribution, and the family relationship with Cheung Tam Fat and Cheung Loi Fat (original owners of the Properties).

(iii) There is no evidence that Lai Shui Kiu had provided such information to the District Office.

(iv) According to D6’s witness statement, the District Office required both Lai Shui Kiu and Lai Koon Shing to attend in person to attest to the proposed shareholding. However, Lai Koon Shing refused to attend.

(v) This, viewed together with the deed of gift dated 29 May 2009, shows quite clearly what Lai Koon Shing’s understanding was, namely that the Properties were succeeded on a per capita basis in 1961.

54.  A distribution per stirpes would have been more beneficial to Lai Koon Shing, as he would get a 1/3 share of the Properties instead of a 1/6 share under a per capita distribution. The deed of gift dated 29 May 2009 can thus be considered a declaration made by Lai Koon Shing against his own interest, to which I shall give significant weight.

55.  Further, what D6 said in relation to how Cheung Loi Fat and Cheung Tam Fat “intended to and did appoint [Lai Ki Fuk] or his children as successor(s) to the Properties in equal shares” was not mentioned in the letter of Messers Wong Hui & Co dated 17 September 2005. There is no sensible reason as to why such a basis was not put forward by Lai Shui Kiu (father of D4-D6) to the District Office had that been the truth. Instead, the basis as presented to the District Office was succession of family properties of Lai Tak Yam (1^st Generation).

56.  On balance, I do not consider D6’s testimony to be reliable or credible.

57.  That the 1961 succession of the Properties were done on a per capita basis was also reflected in the approval letter of the District Office dated 27 September 1999, which noted that “approval is hereby given under and in accordance with the provisions of Section 17 of the New Territories Ordinance (Cap 97) and Section 12 of the New Territories Land (Exemption) Ordinance”. The succession approved of was a 1/6 share of Lai Yuk Kin in the Properties, which is consistent with a per capita distribution in 1961, and inconsistent with a per stirpes distribution. Although is now unclear on what basis or information the District Office made the decision, it is inherently likely that the District Officer must have had such information before him when he decided to approve of the succession on the basis of a 1/6 share in the Properties owned by Lai Yuk Kin.

58.  Further, the fact that Memorials 72787, 72788 and 72790 were treated by the Assistant Land Officer in the same way on the face of the Memorials does not necessarily support the contention that the succession of the Properties was done on a per stirpes basis.

59.  Memorial 72790 was in relation to the succession of family properties owed by Lai Ki Fuk (albeit the properties originated from Cheung Tam Fat), and the application dated 9 March 1961 stated that the succession was to be on a per stirpes basis.

60.  However, per stirpes succession is not by default applicable to non-family properties. Memorials 72787 and 72788 were in relation to transfers from the Cheungs to the 6 Lais, and there is no reliable evidence as to how that could have been treated as a succession of family properties.

61.  It is not surprising for Lai Koon Shing and Lai Yuk Kin (representing themselves and the interests of the others of the 6 Lais, as explained above) to have agreed on a per captia distribution in relation to lands owned by the Cheungs, and on a per stirpes distribution in relation to lands which can be shown to be owned by Lai Ki Fuk.

62.  For completeness’ sake, I note that it is legally possible for succession memorials to be registered in a way that “skipped generation”. In Wu Koon Tai (supra), the approval and registration under s.17 of the New Territories Ordinance (Cap 97) was done in a manner whereby the grandson succeeded the properties of the grandfather directly, and the father was held to have acquired no title to the properties. In our case, it is legally possible for the properties of Lai Ki Fuk (2^nd Generation) (or for that matter Lai Tak Yam, of the 1^st Generation) to be succeeded by the 3^rd and 4^th Generations directly. However, in my view, there is a lack of reliable evidence showing that the Properties (originally owned by the Cheungs) had somehow become properties owned by Lai Tak Yam or Lai Ki Fuk.

63.  As to reason why the Assistant Land Officer who approved Memorials 72787 and 72788 had considered the 6 Lais to be entitled to succeed the Properties, Mr Oh for D6 raised three possibilities in his written closing submissions:-

(a) The 6 Lais succeeded the Properties directly from the Cheungs.

(b) An extra share of the Properties was given to Lai Shui Yeung’s fong.

(c) The 6 Lais agreed amongst themselves to split the properties left by the Cheungs on an equal/per capita basis.

64.  Logically, the first and third possibilities are not mutually exclusive. It could have been the case that on the force of some documents signed by the Cheungs, the Assistant Land Officer considered the 6 Lais to be entitled to succeed the Properties, and the 6 Lais had reached agreement to distribute the Properties on a per capita basis. In my view, for reasons explained above, I consider it more likely to be the case that an agreement was reached amongst the 6 Lais for the succession under Memorials 72787 and 72788 to be done on a per capita basis. The succession under Memorial 72789 in relation to properties which could be shown to be owned by Lai Ki Fuk (although originally owned by the Cheungs) was, understandably, done on a per stirpes basis as per the general custom that family properties should be distributed per stirpes.

65.  Having considered all the submissions and evidence, I find that the succession of the Properties under Memorials 72787 and 72788 were done on a per capita basis, resulting in Ratio (1) being the correct share distribution.

F2. ISSUE 2 – whether physical partition impracticable?

66.  The Properties comprised 20 lots of lands. The Properties do not form a single piece of land, but are scattered around the Tsam Chuk Wan Village. Most of the Properties are small in size and are irregular in shape.

67.  According to the Joint Valuation Report compiled by the 3 surveying experts of P, D6 and D7 (page 8), the physical partition of the Properties was considered infeasible. D6’s expert in fact opined that carving the lots into smaller sections would be detrimental to their value an marketability, if not rending them totally useless.

68.  I agree with these opinions and so find.

F3. ISSUE 3 – what is the respective prevailing market value of the Properties?

69.  As noted in paragraph 37 above, according to the Updated Joint Valuation Report, the agreed valuation of the Properties as of 30 September 2025 was:-

(a) For the 9 lots that are not feasible for small house development (ie Lots 415, ,424, 427, 431, 435, f437, 438, 443, 444 in DD 257), the market value is in total HK$765,000.

(b) For the 11 lots that are feasible for small house development (ie Lots 418, 419, 420, 425, 426, 432, 433, 434, 458, 459, 465 in DD 257), the market value is in the total sum of HK$3,603,000.

(c) The total market of the Properties is thus HK$4,368,000.

70.  I shall adopt that as the prevailing market value of the Properties. The reserve price of any auction to be carried out under an order for sale should adopt this valuation, subject to any application to vary the same as necessitated by actual market conditions.

F4. ISSUE 4 – whether an order for sale should be granted?

The Law

71.  S 2 of the Partition Ordinance, Cap 352 (“PO”) provides that where any property in land is held by two or more persons, whether as joint tenants or tenants in common, the court may either make an order for partition, order for sale, or refuse to make any order.

72.  S 6 of the PO provides that in any proceedings under the Ordinance, the court may make an order for the sale of the property where it appears to the court that a partition of the property would not be beneficial to all the persons interested by reason of:-

(a) the nature of the land to which the proceedings relate;

(b) the number of the persons interested or presumptively interested;

(c) the absence or disability of some of the persons interested; or

(d) any other circumstances.

73.  In Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825, Recorder Fok SC (as he then was) at [18]-[19] set out the three propositions which “fairly and accurate state the law as regards to the court’s jurisdiction when faced with an application or sale under the [PO]”:-

(a) A co-owner has a basic right to rid himself of the shackles of co-ownership and if he has no other remedy, ask for an order for partition or sale.

(b) When it is impracticable to make an order for partition, the court should make an order for sale unless it is persuaded (the burden being on the opposing co-owner(s)) that such an order will not be beneficial to all the co-owners.

(c) Whether an order for sale is beneficial to all the co-owners is not determined by the dissent of the opposing co-owners or the assertion It has to be determined by the court objectively.

74.  When the court is dealing with an application under the PO, regard must be paid to the purpose of that Ordinance (see para 21 of Re Ng Tze Ching, HCB 5883/2006, unreported, 29 August 2014).

75.  In Pun Jong Sau & Ors v Poon Wing Kong & Ors [1977-1979] HKC 210 (cited in Wong Chun Kei), Trainor J reviewed the history of the law pertaining to partition in England and the development of the law in Hong Kong. He came to the view that the primary intention of the Partition Ordinance was to enable an unwilling co-owner to rid himself of the shackles of co-ownership and to have either a physical division of the property into aliquot parts among the co-owners or a division of the proceeds of its sale (see page 218E-F):-

“28. In my opinion it was the intention of the Legislature when enacting the Ordinance to avoid, if possible, leaving the Court impotent when an unwilling co-owner sought to have the co-ownership brought to an end. To avoid such impotency and appreciating that there might be instances where partition would produce bizarre results it relieved the Court of the obligation that theretofore existed of making an order for partition and permitted a sale in lieu of partition. It also appreciated that there might be cases where the best solution was to leave things as they are and so it enabled the Court to decline to make any order.

…

36. When the Ordinance was enacted if introduced into Hong Kong to a very substantial extent the law that existed in England after the Partition Act, 1876 was enacted. That is obvious from a comparison of the wording of the Ordinance and the Acts. It was the intention of the Legislature that what had existed here up to 1969 should be altered along the lines of the English law but regard being had to Hong Kong's special circumstances. When it enacted sections 2, 3, 4 and 6 the intention was this: Where a person is interested in property with others as a joint tenant or a tenant in common and would have been entitled to compel partition prior to 1969, and had no other remedy, he may seek partition or sale, although the Court is not compelled to make any order. If he seeks an order for sale the Court may, by virtue of section 4, make an order for partition in the ways therein set out subject to the limitation of subsection (2). If, on the other hand, he applies for an order for partition and it appears to the Court that partition would not be beneficial to all the persons interested in the property the Court may by virtue of section 6 order a sale (Vide the quotation from Halsbury); and the Court may, as under the partition Act 1868, make the order notwithstanding the dissent or disability of any person interested. It was to enable the Court to grant a particular relief when another was sought that the words "In any proceedings" were used to introduce sections 4 and 6.” (emphasis added)

76.  In Golden Bay Investment Ltd v Chou Hung [1994] 2 HKC 197, Bokhary JA (as he then was) held at paragraph [6] that the PO was not designed to allow some of the co-owners to be bought out at an inflated price by other co-owners keen to acquire the whole of the larger piece of land for development, and that each lot should be sold separately. As his Lordship explained in paragraph 7:-

“The Partition Ordinance does not empower the court to amalgamate separate properties to form a single property. But where the court considers that each of a number of properties should be sold, so that it has become a matter of consequential directions only thereafter, then, if it appears to be in the legitimate interests of all the co-owners and workable in practice, the court may make directions for the sale of all the properties as if they constituted a single property. Such directions would be "proper" within the meaning of s. 6(4) of the Ordinance.”

77.  In Beautiglory Investment Ltd v Tang Moon Sum and Others (HCMP 531/1989, unreported, 10 December 2003), DHCJ Muttrie at paragraphs 46-47 that:-

“46. There is no doubt that a developer can buy a share in property and obtain partition or sale. The fact that he has bought for development is not of itself, I think, a serious factor which would lead the court to decline to make an order. In any event when Golden Bay went to appeal an order for sale was made, the court taking the view that the owners wanted to be bought out by the developers at an inflated price and in the words of Bokhary JA in 1994 2 HKC 197 at 199:

“I do not think that the Partition Ordinance was designed to further ambitions of that kind, understandable as they may be.”

47. By the same token, incidentally, I do not think that the Partition Ordinance was designed to further the ambitions of developers who want to buy cheap any more than it was designed to further the ambitions of owners who want to sell dear.”

78.  In terms of the meaning of “had no other remedy”, Recorder Joseph Fok SC (as he then was) in Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825 at [87] considered the legislative intent of stated in Pun Jong Sau above and explained:-

“87. In my judgment, the plaintiffs are not in a situation in which they are forced to remain unwilling co-owners of the Property. They have the ability to unshackle themselves from the incidents of co-ownership. The only real reason they choose not to exercise this option is because of the financial advantages that have been offered to them by the Developer.”

79.  In Golden Bay Investment Ltd v Chou Hung, Bokhary JA also concluded the PO does not empower the Court to amalgamate separate properties to form a single property. It is only when the Court considers that each of a number of properties should be sold, then it becomes a matter of consequential directions as to whether all the properties would be sold as if they constituted a single property.

80.  In Silver Wealth Capital Investment Limited v Lai Wai Cheun and Another [2015] 4 HKC 191, the property concerned is a single shop with a relatively small floor area which renders it impracticable for partition into smaller shops. The Plaintiff also argued that it would be difficult for it to sell its undivided interests in the property which only amounts to 40% of the interest to any third party to realist its investment. Chow J (as he then was) said:-

“30. It may be thought, at first sight, that in view of the fact that the co-ownership in the present case relates to a single shop with a relatively small floor area (ie a saleable area of about 521 square feet together with a yard of about 44 square feet) which makes it impracticable for it to be physically partitioned into two smaller shops, it would be difficult for the plaintiff to sell its undivided interests in the Property to any third party to realize its investment.

31. Nevertheless, this is precisely what happened when Mr Lai Wai Hai sold his undivided interests in the Property to the plaintiff. When I raised with Mr Raymond Lau whether there was any connection between Mr Lai Wai Hai and the plaintiff, Mr Raymond Lau informed me that there is no such evidence and I ought to proceed on the basis that Mr Lai Wai Hai and the plaintiff were independent parties.

32. On the evidence before me, it would appear therefore that there is a market for the sale and purchase of undivided interests in a small single shop in an old district in Hong Kong. It is not suggested that the plaintiff has taken any steps to look for, but failed to find, any buyer for its undivided interests in the Property. I am not satisfied that the plaintiff has no other remedy to rid itself of the shackles of co-ownership. On this ground as well, I would decline to make an order for the sale of the Property.”

81.  In Full Gold Development Ltd v Wong Tsing [2023] HKDC 423, the Court further analysed the concept of “no other remedy”. While co-owners enjoy a “basic right” to rid himself of the shackles of co-ownership, that “basic right” does not mean the co-owners can get rid of the co-ownership as of right (see [74]).

82.  The Court in Full Gold considered the following factors which militate against the grant of an order to sale:-

(a) The Plaintiffs purchased the shares of the land not long ago, which shows that there is a possibility of selling the shares in the private market (at [75]); and

(b) The Plaintiffs are not in a situation in which they are forced to remain unwilling co-owners of the land lots. In fact, the Plaintiffs had made a well-informed decision by entering into the co-ownership with the Defendant who owned ⅓ of the land lot situated in the Government, Institution or Community (G/IC) zone. Further, without an order for sale, the Plaintiffs would have no suffering or any prejudice, other than their outright development plan (at [76]-[77]).

83.  As to the consideration on parties’ prior efforts to purchase or to sell their respective shares of land, in 新基業發展有限公司 對 文彥均 [2025] HKDC 217, after the Plaintiff has sought valuation twice and invited the Defendant to sell its shares, but that the Defendant was uncooperative and proposed unreasonable offer of selling price, the Court considered that the Plaintiff had no other remedy apart from an order for sale.

No Other Remedy?

84.  In the present case, Wong for P accepted in his oral testimony (Day 2 of the Trial, before lunch break) that P was only willing to sell its share in the Properties (comprising 20 lots of land) altogether, but not individually. In particular, Wong’s evidence was that:-

(a) They were advised by their solicitors that D2 wishes to buy all the shares of Lot 419 and 420, but the Plaintiff is unwilling to do so.

(b) Compared to selling the land lots to the Lais, the Plaintiff is more preferred to land swapping.

(c) The reason why the Plaintiff is refusing to sell the lots individually is that in the New Territories, the lands owned by the developers usually consist of multiple land lots. Thus, if land lots are singled out and sold, some of the land lots would have no market and therefore developers would not single out the lands with better quality to sell them.

85.  However, it is clear that P has no right to pick and choose how they would like to sell the individual lots. As held by Bokhary JA in Golden Bay Investment Ltd v Chou Hung [1994] 2 HKC 197, the PO does not provide for the amalgamation of lots. It is only after a decision has been made for an order of sale that the Court then considers whether it would be more beneficial to all co-owners to sell the lots as one property. The insistence by P that all 20 lots should be sold altogether would certainly have meant that the selling of the individual lots to other co-owners was not explored.

86.  Further, as Chow J (as he then was) observed in Silver Wealth Capital Investment Limited v Lai Wai Cheun and Another [2015] 4 HKC 191 at paragraphs [31]-[32], the fact that P had purchased the 3/6 share in the Properties would suggest that there is an available market for the sale and purchase of such undivided interests. Although as DHCJ Muttrie said in Beautiglory Investment Ltd v Tang Moon Sum and Others (HCMP 531/1989, unreported, 10 December 2003) at paragraphs 46 “[t]here is no doubt that a developer can buy a share in property and obtain partition or sale. The fact that [a developer] has bought for development is not of itself, I think, a serious factor which would lead the court to decline to make an order”, the fact remains that it is for P to demonstrate that it had no other ways to unshackle itself from the co-ownership before an order for partition or sale should be made.

87.  I note also that there is a lack of evidence, as in 新基業發展有限公司 對 文彥均 [2025] HKDC 217, that P had attempted to put on sale or purchase the individual lots at a market price valued by a valuation expert.

88.  As to Wong’s evidence that P had in fact placed the Properties for sale with estate agents but to no avail, my view is that such a claim is not believable.

(a) Firstly, In Wong’s witness statement, P it was not mention that P had attempted to sell the Properties at the open market. In Wong’s supplemental witness statement, Wong merely claimed at paragraph 11 that he had “made enquiries with my estate agents working in the Sai Kung District. I asked them of the possibility of selling the Plaintiff’s share in the subject Properties to third parties at market value…They informed me that…no one would buy the Plaintiff’s shares at fair market price, as the subject Properties cannot be developed and are practically useless for any potential purchasers int eh present state of shareholdings with 8 co-owners.”

(b) There is a complete lack of documentary evidence showing P had ever placed the individual lots comprising the Properties on sale at the open market. This is certainly surprising had P done that.

89.  Having considered the matter in the round, I conclude that P had failed to show that there is no other remedy available. As such, I shall reject P’s claim under the PO. I note that, as suggested by Chow J (as he then was) in Silver Wealth Capital Investment Limited v Lai Wai Cheun and Another [2015] 4 HKC 191at paragraph [34]:-

“I should add that this judgment does not preclude the plaintiff from re-applying for an order for sale should there be any material change of circumstances. For example, if, for any reason, the 1^st defendant personally (not his son or successor or assignee) decides not to, or is unable to, continue to carry on the business of Wing Cheong Shing at the Property, or the 1^st defendant refuses to pay a proper occupation rent for his use of the Property to the exclusion of the plaintiff, it may be that a fresh application would be justifiable. There could be other situations arising which may justify a fresh application by the plaintiff for an order for the sale of the Property. Obviously, any such future application will have to be considered in light of the evidence and arguments before the court.”

F5. ISSUE 5 – whether an order for partition should be granted?

90.  As explained under Issue 2 above, it is impracticable for the Properties to be physically partitioned. As such, an order for partition should not be made.

F6. ISSUE 6 – whether an order for sale for Lots 419, 420, 437 and 438 in DD 257 should be subject to D1-D3’s first right of refusal?

91.  In case of an order for sale is to be made, D1-D3 seeks an order that sale for Lots 419, 420, 437 and 438 in DD 257 should be subject to D1-D3’s right to purchase other co-owner’s shares at prevailing and reasonable market price.

92.  This does not arise as I have rejected P’s claim under PO.

G. CONCLUSIONS

93.  For these reasons, I shall make a declaration that the Parties’ respective shares in the Properties are those as set out under Ratio (1). I shall also refuse to make any order under the PO. It appears that one of the main stumbling blocks to the Parties’ discussion as to how to deal with the Properties is their difference as to whether Ratio (1) or Ratio (2) is correct. It is hoped that the Parties will sensibly approach the question of how it is best to deal with the Properties given the Court’s findings in this trial.

94.  As I found for P and D7 (and against D6) on the issue of share, and found for all Ds (and against P) on the claim under the PO, I shall make a cost order nisi that:-

(a) P should bear the costs of D1-D5 and D7 incurred in these proceedings, to be taxed if not agreed.

(b) There should be no order as to costs as between P and D6.

95.  The costs order nisi shall become absolute in the absence of an application to vary the same within 14 days.

96.  I thank Mr Tai, Mr Lai, Mr Oh and Mr Chui for their assistance rendered to the Court.

Annex 1