WONG KWOK KI STEPHEN as the joint and several trustee of the property of WONG KIN KEUNG AND ANOTHER v. WONG KIN KEUNG AND ANOTHER

HCA 594/2017

[2018] HKCFI 178

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 594 OF 2017

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D E C I S I O N

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INTRODUCTION

1.  This is the plaintiffs’ application by summons dated 21 September 2017 to strike out those parts of the defendants’ defence and counterclaim as underlined in the copy annexed to the summons, on the ground, inter alia, that those parts are irrelevant to the plaintiffs’ action. 

PLAINTIFFS’ CLAIM

2.  The plaintiffs, represented by Mr Adrian Wong, are the joint and several trustees of the property of the 1^st defendant, who was adjudged bankrupt on 5 November 2003 and whose bankruptcy was discharged on 5 November 2007.  The plaintiffs commenced the present action in relation to two properties, namely, (1) Flat E, 16/F, Block 24, No.16 East Laguna Street, Laguna City, Kowloon (the “16E Property”) and (2) Flat D, 24/F, Block 23, No.15 Laguna Street, Laguna City, Kowloon (the “24D Property”), both of which (the “Properties”) have been registered in the name of the 1^st and 2^nd defendants.  The Properties were initially held by the 1^st and 2^nd defendants as joint tenants, but upon the bankruptcy order against the 1^st defendant in 2003, they became statutorily converted into tenants-in-common of the Properties, with the 1^st defendant’s ownership vested in the trustees.

3.  In respect of the 16E Property, the plaintiffs apply for an order of sale under the Partition Ordinance (Cap 352).  In respect of the 24D Property, the plaintiffs also apply for an order of sale, and in addition, for an account of all rents and/or profits that have been received by the defendants since 1 June 2002.

DEFENDANTS’ CASE

4.  Those parts of the defence and counterclaim sought to be struck out are substantial.  It is not necessary for me to state them in full in this Decision.  Suffice to say that they are complaints of the conduct of the plaintiffs and their predecessors in the administration of the property of the 1^st defendant.  Further, in those parts of the defence and counterclaim, they alleged that all the debts of the 1^st defendant have been paid off and thus there is no need for the plaintiffs to make any claim over the Properties.

ANALYSIS

5.  The fact is that the plaintiffs are still the trustees.  The 1^st defendant’s ownership of the Properties have been vested in them, while the remaining remains with the 2^nd defendant.  As a co-owner, the plaintiffs make the present application.  The legal principles are trite.  In Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825, Recorder Fok SC (now Fok PJ) set out the principles as follows:-

“16. As to the circumstances in which the court will exercise its power under section 2(c) of the Partition Ordinance to refuse to make an order for partition or sale, the test is that set out in the judgment of Briggs CJ, sitting at first instance, in Fook Sun Enterprises Co Ltd v Cromwell Investment Co Ltd & Ors [1973-1976] HKC 335 at 337H-I:

          “I think that a court would only make no order, neither an order for partition nor an order of sale, when the interests of all the parties would be better served by their continuing to remain co-owners, or where the facts show that to make such an order would result in very great hardship to one co-owner.”

17. Although the decision in Fook Sun Enterprises Co Ltd v Cromwell Investment Co Ltd & Ors [1973-1976] HKC 335 was overturned by the Full Court, see Cromwell Investment Co Ltd & Others v Fook Sun Enterprises Co Ltd & A-G [1976] HKLR 1, none of the judges suggested that this approach to section 2(c) was wrong. It has since been endorsed by David Yam J in Chow Doi Kwai v Chan Cho Yuk [2000] HKLRD 235 at 237D-G and by Deputy Judge Poon in Ip Sau Shu v Sham Lai Hing [2003] 4 HKC 528 at 540 §36. It was also endorsed, in substance, by Deputy Judge Muttrie in Beautiglory Investment Ltd. v Tang Moon Sum & Ors, HCMP531/1989, 10 December 2003, unrep. at §43.

18. These passages from the cases cited above were relied upon by Mr Fung SC to support the following propositions, namely :

(a) A co-owner has a basic right to rid himself of the shackles of co-ownership and 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 by them that it is not beneficial. It has to be determined by the court objectively.

19.  Subject to adding the qualifications, "if he has no other remedy," before the words "ask for an order for partition or sale" in proposition [(a)], and "or that it will result in very great hardship to one co-owner" to the end of proposition [(b)], I am satisfied that these propositions fairly and accurately state the law as regards the court's jurisdiction when faced with an application for partition or sale under the Ordinance and I shall proceed in this judgment to apply those propositions in resolving the plaintiffs' application.”

6.  Thus, the starting point is that the plaintiffs have the basic right to rid themselves of the shackles of the co-ownership with the 2^nd defendant.  Mr Edward Chan SC (with Mr Danny Fung), contended that I have to look at the real interest behind the present action started by the plaintiffs, namely, to pay off the debts of the 1^st defendant (including the fees to themselves), and thus when I read the phrase “if he has no other remedy”, I should bear in mind that there are other means whereby the plaintiffs could resort to for the payments.  I disagree.  Read in context, particularly bearing in mind the basic right to rid himself of the shackles of the co-ownership, “no other remedy” means no other remedy to rid himself of the shackles of the co-ownership.

7.  The question which the court will then ask is whether the order for sale would not be beneficial or would cause very great hardship to the 2^nd defendant.  The test is an objective one.  Mr Chan submitted that to determine this question, the Court would have to consider all the relevant circumstances, including the comparative benefits to the plaintiffs.  Thus, he submitted, if the debts actually have been paid off or very little, or can be paid off by some other means, the prejudice or the hardship caused to the co-owner would be larger.  I disagree.  To approach the question, the Court is not required to consider the matter in a comparative approach.  What the Court has to consider is objectively, whether to the co-owner, it would not be beneficial or would cause great hardship.  Recorder Fok SC did not summarise the test as whether compared with the benefit to be obtained by the applicant, the benefit to the co-owner would be great or not.

8.  It remains for me to add that the present action is not the appropriate forum for the defendants to vent out their grievance.  If the 1^st defendant or even the 2^nd defendant has any complaints to make concerning the administration of the property of the 1^st defendant, they still have redress.  In particular, there is nothing to prevent them from applying to the Court by appropriate procedure to give appropriate directions or orders pursuant to its supervisory jurisdiction over the plaintiffs as trustees under sections 83 and 97 of the Bankruptcy Ordinance (Cap 6).  In this regard, Mr Chan contended that the Court of First Instance, including this court, has the jurisdiction to deal with this matter because section 2 of the Bankruptcy Ordinance defines “court” as “Court of First Instance sitting in its bankruptcy jurisdiction”.  While I agree that the Court of First Instance has jurisdiction in general, the question still is whether those complaints raised by the defendants are relevant.  If they were relevant, they would be considered whether or not certain procedure is complied with under the Bankruptcy Ordinance.  However, since I have ruled that they are irrelevant, I do not need to labour on this point further.

CONCLUSION

9.  In the circumstances, I order that the paragraphs and those words of the Defence and Counterclaim as underlined in the copy of the Defence and Counterclaim annexed to the plaintiffs’ summons dated 21 September 2017 be struck out.  I shall hear submissions on costs.