KWAN YEE WAI AND ANOTHER v. THE PERSONAL REPRESENTATIVES OF POON KING (DECEASED)

DCMP 1534/2019

[2020] HKDC 556

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1534 OF 2019

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BETWEEN

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JUDGMENT

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APPLICATION

1.  This is the plaintiff’s application by originating summons dated 8 May 2019 (the “Originating Summons”) for ALL THAT piece or parcel of ground registered in the Land Registry as Kowloon Inland Lot No. 8086 And of and in the building thereon now known as Peony House West Block being No. 12 Foo Kwai Street, Kowloon, Hong Kong (the “Building”) TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT FLAT NO. 230 on the 2^nd Floor of the building as shown on the Plan annexed to an Assignment registered in the Land Registry by Memorial No. UB345947 and thereon coloured PINK (the “Property”) to be sold pursuant to section 6 of the Partition Ordinance (Cap 356) (the “Ordinance”).

BACKGROUND

2.  Madam Poon King (the “defendant”) and Madam Kwan Ngan Chu (“Madam Kwan”) are sisters-in-law.  Madam Chow Yau (“Chow Yau”) was a friend of the defendant and Madam Kwan.  They all worked as Chinese maids (馬姐) and were widows without children.  They intended to live together after retirement so that they could take care of each other.

3.  On 13 July 1961, Madam Chow, the defendant and Madam Kwan acquired the Property at a consideration of HK$12,095.  Madam Chow, the defendant and Madam Kwan held ½ , ¼ and ¼ shares in the Property respectively as tenants-in-common.

4.  On 30 March 1967, Madam Chow transferred her shares in the Property to the defendant and Madam Kwan at a consideration of HK$6,000.  Upon the transfer, the defendant and Madam Kwan owned the Property in equal shares as tenants-in-common and had been living in the Property together.

5.  The defendant passed away on 24 December 1975.  Thereafter, Madam Kwan invited her nephew Mr Kwan Chi Kin and his wife Madam Chan Lai Yung (“Mr and Mrs Kwan”) to live in the Property with her.  No descendants or relatives of the defendant had ever resided in the Property.

6.  The 1^st and 2^nd plaintiffs are the children of Mr and Mrs Kwan.  They had been raised and resided in the Property since they were born on 7 October 1983 and 18 May 1985 respectively. 

7.  Madam Kwan passed away on 17 December 1983 and under her will Mr Kwan Chi Kin became the sole beneficiary to her estate (the ½ share in the Property).

8.  On 28 February 2003, Mr Kwan Chi Kin transferred his ½ share in the Property to Madam Chan Lai Yung.  On 12 May 2015, Madam Chan Lai Yung assigned her ½ share in the Property to the 1^st and 2^nd plaintiffs as joint tenants by way of a deed of gift.

9.  The registered owners of the Property at present are thus the 1^st and 2^nd plaintiffs and the defendant.  The 1^st and 2^nd plaintiffs hold 50% of the Property as joint tenants whilst the defendant holds the remaining 50% of the share of the Property.

10.  The 1^st plaintiff had moved out whilst the 2^nd plaintiff continues to live in the Property.

Attempts to Contact the Defendant

11.  The plaintiffs had never met the defendant as they were born after she had passed away, nor do they have any contact of the defendant’s relatives or her descendants.  The plaintiffs’ solicitors conducted a probate search and no application for grant of probate was revealed in respect of the defendant’s estate.

12.  On a certified copy of an entry in the register of the death of the defendant, the name of a Mr Fok Wing appeared as the defendant’s brother-in-law.  A letter was sent to Mr Fok Wing to the address (an address in Kwai Chung Estate) appearing on the certified copy of the death of the defendant,.  There was no reply from Mr Fok Wing.  It was subsequently discovered that Kwai Chung Estate was demolished and had been redeveloped in the 1990s.  It would thus be futile to continue to locate Mr Fok Wing at the Kwai Chung Estate address.

13.  The plaintiff’s solicitors placed an advertisement on Oriental Daily News on 28 January 2019 with a view to contacting Mr Fok Wing or other family members of the defendant.  Again, there was no reply.

Procedural History

14.  The 1^st and 2^nd plaintiffs and the Official Solicitor applied by consent summons for an order that the Official Solicitor be appointed to represent the estate of the defendant for the limited purpose of accepting service of the Originating Summons.  The order was granted on 17 June 2019 by Master Jacqueline Lee.

15.  Pursuant to Order 15 Rule 15 of the Rules of the District Court, the plaintiffs applied by ex parte summons to seek leave for the plaintiffs to proceed with the present proceedings in the absence of a person representing the estate of the defendant.  The order was granted on 3 December 2019 by Master Peony Wong.

16.  The plaintiffs posted an advertisement in Apple Daily on 10 February 2020 of the notice of hearing of the Originating Summons.  No one had contacted the plaintiff or their solicitors.

17.  All documents had been served on the Director of Lands as required by section 3(2) of the Ordinance and Rule 4 of the Partition Rules (Cap 352A).

Appropriate for Partition or Sale?

18.  HH Judge Li had set out in the case of Law Chun Wai v Chu Suk Har[1] the legal principles on how the court should exercise a power of sale under section 6 of the Ordinance:-

“26. Generally, in determining whether a sale is more beneficial than a partition, the court considers only the pecuniary results, disregarding matters of sentiment, and has regard to the interest of all parties interested as a whole; but it can and will order a sale where, in its discretion, it thinks fit, unless the parties opposing a sale undertake to purchase the shares of those desiring sale.” (Halsbury’s Laws of Hong Kong, 2^nd edition, Volume 35, para 230.826) [emphasis added].

27. In Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825, the Court held that:-

“(1) when it was impracticable to make an order for partition, the court should make an order for sale unless it was persuaded, the burden being on the opposing co-owner, that such an order would not be beneficial to all the co-owners or that it would result in very great hardship to one co-owner; and

(2) 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.” [emphasis added]

28. In considering whether it is impracticable to make an order for partition, the Court would consider the size and design of the property: See Chan Shee Yuen v Chan Shu Fong, unrep, HCA 93/2002 (Deputy High Court Judge To (as he then was); 28 April 2006), Poon Yuet Chun v Tse So Kwun, unrep, HCMP 5662/2001 (Yuen J (as she then was); 29 April 2002).

29. While the Courts would pay regard to the difficulty of a co-owner in seeking alternative accommodation: (Chow Doi Kwai v Chan Cho Yuk [2000] 2 HKLRD 235), a co-owner’s sentimental attachment to the property is irrelevant: (Chan Ching Kit v Lam Sik Shi & Anor,unrep, HCMP 2239/2000 (Kwan J (as she then was); 24 June 2002), Drinkwater v Ratcliffe(1875) LR 20 Eq 528).

30. In Ip Sau Shu v Sham Lai Hing, unrep, HCMP 3452/1999, (Deputy High Court Judge Poon (as he then was); 31 March 2003), a two bedroom flat of about 600 square feet in size was determined to be owned by the plaintiff and the defendant as tenants in common in equal shares.  The partition of the property was not suggested to be physically possible.  The Court held that even if partition was possible, because the parties had been in a personal relationship which had ended, it would be meaningless to do so.  The plaintiff had no savings and no assets other than the property.  Since the plaintiff had no way of realizing the value of his half share in the flat unless there was a sale, the Court ordered the sale of the property.”

Grounds of Application

19.  The plaintiffs say that the building was built in 1961 and has become shabby and obsolete.  There was persistent water leakage affecting the steel structure and steel reinforcement, where salty water had weakened and damaged the concrete structure and caused spalling.  Several building orders had been registered against the Building by the Building Authority of Hong Kong.  Some of the building orders have referred to the common areas and exterior of the Building as dangerous.

20.  The plaintiffs are of the view that due to the high cost of renovating the Property, it is in the best interests of all owners to sell the Property. They would like to rid themselves of the shackles of co-ownership with the defendant.

The Present Property

21.  The Property is a 265 square foot residential flat in a multi-storey building with only one entrance to the flat.  From the layout plan, it can be seen that it is impossible to add another entrance to the Property.  There is only one bathroom, one living room, one kitchen and one bedroom.  Given the size and the impossibility of adding another entrance, it is impracticable to partition the Property.

22.  The open market value of the Property as at 25 April 2019 is HK$2,790,000. There is no known incumbrance to the property.  The costs of the sale of the Property and the estate agent commission have been caped at 1% of the sale price of the Property.  Thus, if the Property is sold, the personal representatives of the defendant will get back approximately HK$1,290,000. 

23.  The defendant had passed away for more than 40 years and no grant of probate had been taken out for her estate.  No evidence had been filed for the defendant and the court is thus in no position to infer that a sale of the Property will create any hardship.

Conclusion

24.  I agree that in the present circumstances, it is fair and just to make an order for sale of the Property under section 6(1) of the Ordinance. 

25.  I will make an order as follows:-

(1) The Property be sold pursuant to section 6(1) of the Partition Ordinance (Cap 352) in the open market at a price of no less than HK$2,790,000;

(2) Messrs Chan & Chan, shall have the conduct of the sale of the property and, pursuant to section 8 of the Partition Ordinance and section 51 (applicable by virtue of section 48) of the Trustee Ordinance (Cap 29.) Miss Chan Hoi Yan Andrey, partner at Messrs Chan & Chan, be appointed to execute the agreement, assignment and all other necessary documents as vendor to convey the Property and all interests therein to the purchaser.

(3) The proceeds of sale of the Property shall be applied in the following manner and order of priority:-

(a) in discharge of all government rent, taxes, rates and other outgoings due and affecting the Property;

(b) in payment for the discharge of all encumbrances having priority to the Legal Charge (if any), including the costs and disbursements for handling such encumbrances;

(c) in payment of all reasonable costs and expenses of the sale (including conveyancing costs up to HK$30,000 and estate agent commission up to 1% of the sale price);

(d) in satisfaction of the sum of HK$16,462.34 paid by the plaintiffs to the Official Solicitors, and the costs of this application referred to in sub-paragraph (5) below;

(e) the remaining net balance be split into two equal halves:-

(1) as for the first half: payment into court to the credit of the defendant.

(2) as for the second half: payment to the plaintiffs.

(4) There be liberty to apply, including (but without limitation to) for directions on the terms and manner of the sale of the Property.

(5) Costs of these proceedings summarily assessed at HK$150,000 shall be paid out of the proceeds of sale of the Property as set out in paragraph (3)(d) above.