FAITH LUCK CORPORATION LTD AND ANOTHER v. TIN YAU NUNG

HCMP 603/2018

[2020] HKCFI 314

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 603 OF 2018

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JUDGMENT

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1.  The plaintiffs (“Ps”) are the owners of one equal undivided moiety or half part or share of Lot No. 1984 in Demarcation District No. 51, North, New Territories (“the Land”) since 10 January 2018. The defendant (“D”) is the owner of the remaining half undivided part or share of the Land. Ps now apply under s.6 of the Partition Ordinance (“PO”) for an order that the Land be sold and for half of the sale proceeds to be distributed to Ps and the remaining half to be distributed to D.

2.  Having read the evidence on service adduced by Ps, I am satisfied that the documents in these proceedings have been properly served on D and on the Director of Lands.

3.  The principles concerning whether an order for sale should be made under s.6 of the PO have been succinctly set out by Recorder Joseph Fok SC (as he then was) in Wong Chun Kei Johnny & Others v Poon Vai Ching & Others [2007] 1 HKLRD 825, which are as follows:

(1)  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;

(2)  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 or that it will result in very great hardship to one co-owner; and

(3)  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 by them that it is not beneficial.  It has to be determined by the court objectively.

4.  Ps purchased the half undivided share of the Land together with some other lots surrounding the Land on 11 July 2017 through an estate agent.  The Land was, inter alia, duly assigned to Ps on 10 January 2018.

5.  At the time of purchase, Ps were informed by the estate agent that the Land was occupied by an occupier, who initially refused to leave the Land.  The estate agent charged an extra amount of HK$1 million to procure the Occupier to deliver vacant possession of, inter alia, the Land. On or about 28 December 2017, Ps through the estate agent paid HK$500,000 to the occupier, among which a sum of HK$200,000 was the consideration for delivering the vacant possession of the Land to Ps, and the remaining sum of HK$300,000 was for abandoning her claim for adverse possession of the Land against D.  In late February 2018, the occupier delivered vacant possession of the Land to Ps.

6.  The Land lies in the heart of a cluster of other lots of land belonging to Ps (total area: 103,650 square feet).  The area of the Land is 0.05 acres or 2,178 square feet.  It is an open piece of land, paved and unused, but surrounded by other lots which are being used as part of a fee-paying parking area.  In other words, the Land is landlocked.

7.  Ps intend to free themselves from the shackles of co-ownership.  In my view, it is impracticable to make an order for partition dividing the Land between Ps and D.  Different parts of the Land may have different values.  It would be difficult if not impossible to divide the Land fairly between Ps and D.  Further, as the Land itself is landlocked, access to the Land is already not an easy question as many right of way issues would be involved.  If the Land is further divided into 2 pieces, that would certainly generate more access problems.  Since partition is impracticable, I should make an order for sale.  There is no evidence before me showing that an order for sale would not be beneficial to all the co-owners of the Land, or that an order for sale would cause very great hardship to any co-owner. 

8.  Based upon the valuation evidence produced by Ps, I am satisfied that a reserve price of HK$3,700,000 should be set for the sale of the Land.  Ps’ half undivided share of the Land is now subject to a mortgage and rent assignment.  Ps have offered an undertaking to procure the discharge of the said mortgage and rent assignment to facilitate the sale of the Land.  I accept this undertaking, and the order for sale is made upon this undertaking.

9.  Counsel for Ps submit that the HK$500,000 paid to the occupier on 28 December 2017 should be deducted from the proceeds of sale, for that sum is used to protect the co-owners’ interest in the Land. Since D has never come out to challenge the occupier’s claim for adverse possession, Ps have been put to expense of settling such claim for the purpose of preserving the title of the paper owners.  I agree.

10.  I make an order in terms of the draft prepared by counsel.  Costs of these proceedings be to Ps and be summarily assessed at HK$240,000.                 

11.  I thank counsel for the assistance provided to the court.