CHAN KAI MAN v. WONG KA WAI CAROL

DCMP 4019/2020

[2022] HKDC 341

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 4019 OF 2020

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JUDGMENT

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1.  By an Originating Summons dated 7 December 2020 (“the OS”), the plaintiff (“P”) seeks an order under s.6 of the Partition Ordinance (“PO”) that the property known as No.6, 23/F, Block A, Tong Ming Court, 15 Tong Ming Street, Tseung Kwan O (“the Property”) be sold and after deducting all the necessary expenses and costs of these proceedings, the remaining balance of the sale proceeds be paid to P and the defendant (“D”) in equal shares.

2.  By a summons dated 8 April 2022 (“D’s Summons”), D applies for an order that the proceedings herein be converted to writ proceedings and for consequential directions.

3.  This is the substantive hearing of the OS and D’s Summons. In this hearing, P is represented by Ms Karen WL Wong of counsel, and D is represented by Ms Abigail Liu of counsel. At the beginning of the hearing, I directed that the OS and D’s Summons be heard at the same time.

Background

4.  I would first set out the background facts which are not in dispute or indisputable.

5.  P and D are ex-husband and ex-wife. They married in 1997 and divorced in 2013. During the parties’ marriage, they jointly purchased the Property in 1999 as joint tenants. They lived together in the Property until their separation in 2009 when P moved out therefrom.

6.  On 10 October 2012, D filed a petition (“the Petition”) in FCMC 14989/2012 (“the matrimonial proceedings”) to seek an order to dissolve the marriage between P and her on the ground that they had separated for more than 2 years. In the Petition, D also sought an order in terms of the draft consent order signed by both P and D and annexed to the Petition (“the Draft Consent Order”). The terms of the Draft Consent Order are as follows:-

“1. 經呈請人和答辯人確認同意以在同意下作出的命令的記錄的內容及命令和解本案附屬濟助問題以下（稱為「在同意下作出的命令的記錄」）；

2. 又經呈請人和答辯人確認及向法院承諾以下述安排處理及處置位於Flat 6 on 23rd Floor of Block A, Tong Ming Court, 15 Tong Ming Street, Tseung Kwan O, Sai Kung, New Territories, Hong Kong之物業（在本文中簡稱為「唐明苑A 座2306室物業」）：—

(i) 在簽署在同意下作出的命令的記錄當日，呈請人及答辯人乃為唐明苑A座2306室物業之聯權共有業主（Joint Tenants）；

(ii) 呈請人及答辯人同意在絕對離婚令頒布後，呈請人及答辯人繼續以聯權共有形式共同擁有唐明苑A座2306室物業；

(iii) 如日後呈請人及答辯人出售「唐明苑A座2306室物業」，在扣除有關因出售該物業而所涉及的費用及開支後（“以下稱為樓價餘數”），呈請人及答辯人將各自分得樓價餘數的一半。

雙方同意法庭頒出以命令：—

1.解除上述婚姻；及

2.法庭不就訟費頒佈任何命令。”

7.  In the matrimonial proceedings, D filed an affirmation made by her on 22 November 2012 to support the Petition. At [4] of the said affirmation, D urged the court to grant an order in terms of the Draft Consent Order.

8.  On 26 February 2013, the Family Court made a decree nisi dissolving the marriage and a consent order (“the Consent Order”) in terms of the draft submitted by D.

9.  In the matrimonial proceedings, D was legally represented at all times. P was acting in person until 12 March 2020. In other words, in respect of all the matters in the matrimonial proceedings set out in the above, P was acting in person in those matters. All the documents in the matrimonial proceedings mentioned in the above were prepared by the solicitors representing D in the that case.

10.  After the divorce, the Property was and is occupied by D.

11.  In about 2014, P came to know that D had remarried and had given birth to a child. D’s case is that she and her family are currently living in the Property.

12.  Throughout the years, there have been various discussions between the parties regarding a sale of the Property. Unfortunately, the matter cannot be resolved through those discussions.

13.  It is an agreed fact that the rateable value of the Property did not exceed HK$320,000 at the time of the commencement of these proceedings. Accordingly, this court has the jurisdiction to determine the application made by P in this case.[1]

The Principles

14.  The principles concerning whether an order for sale should be made under s 6 of the PO have been succinctly summarized by Au-Yeung J in Cheung Wing Kuen Samuel v Ip Chui Sum[2] recently. In that case, the learned judge said:-

“9. Under section 2 of PO, the court may order a partition of the property under section 4, or a sale of the property under section 6, or refuse to make any order.

10. Under section 6 of PO, where it appears to the court that a partition of the property would not be beneficial to all the persons interested, the court may make an order for the sale of the property.

11. The principles for exercise of such power are that:

(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.

Wong Chun Kei and Poon Vai Ching [2007] 1 HKLRD 825 at §18-19, Recorder Fok SC (as he then was).

12. An order for sale would not be refused unless all the co-owners would be benefitted by its refusal or, in other words, an order for sale would be detrimental to all the co-owners, or unless it will result in very great hardship to one co-owner: Re Lau Hiu Tuen (unrep, HCB 8430/2006, 20 August 2015), G Lam J (as he then was) (§21).”

15.  In this case, the Property is a unit in a multi-storey building. Given the nature of the Property, it would not be practicable to make an order for partition.[3] Accordingly, if P’s application is allowed, an order for sale should be made.

D’s Grounds of Objection

16.  D opposes the OS. Ms Liu for D submits the following:-

(1)  The OS should be dismissed as it is an abuse of the process of the court.

(2)  There are some material factual disputes which should be resolved in writ proceedings.

(3)  An order for sale should not be granted because of hardship caused to D.

17.  I would examine these grounds of opposition in turn in the paragraphs below.

The OS being an abuse of process by P?

18.  Ms Liu submits that:-

(1)  The issue of the sale of the Property and the distribution of the sale proceeds have already been covered in the Consent Order, and P should be estopped from bringing the present proceedings to re-litigate the same issue under a different cause of action.

(2)  Further or alternative, this case is in substance an enforcement of the Consent Order and the appropriate arena should be the Family Court under the existing matrimonial proceedings between the parties. By commencing the OS, P is asking the court to deal with matters which essentially are enforcement by nature thus falling within the Family’s Court’s jurisdiction but was disingenuously taken up by P as separate proceedings in the present action. P’s conduct is clearly an abuse of court process.

(3)  P’s application is in blatant contradiction to the Consent Order which did not make the sale of the Property compulsory. The Consent Order clearly qualified the sale of the Property with the word “if” (“如日後呈請人及答辯人出售「唐明苑A座2306室物業”, if the Petitioner and the Respondent sell the Property in the future), the spirit of the order is hence clear that the sale of the Property should not be mandatory. Allowing P’s claim in the OS essentially permits and empowers P to get round with the parties’ deliberate arrangement of not providing for a specific date compelling the sale of the Property. Compelling such sale under s.6 of the PO goes glaringly against the spirit of the Consent Order. If P is aggrieved with the terms of the Consent Order, P should take out appropriate applications to vary the Consent Order or to seek further directions in the Family Court for the implementation and enforcement of the sale.

19.  With respect, there is no merit in these points.

20.  In my view, the true meaning of the Consent Order is as follows:

(1)  After the divorce, the Property would continue be held by P and D as joint tenants. However, they would be joint tenants in name only.

(2)  When the Property is sold, P and D should each have 50% of the sale proceedings after deducting all the relevant expenses therefrom. This is a clear stipulation stating that both P and D would be regarded as beneficial owners of the Property, and each of them is having 50% beneficial interest therein.

21.  There is nothing in the Consent Order saying that the Property can only be sold if there is a unanimous agreement between P and D to sell the same. Also, there is nothing in the Consent Order to prevent P from making an application for an order for sale pursuant to the PO. I do not agree that by making the application in this case, P is trying to re-litigate any matter which has been determined in the matrimonial proceedings.

22.  Secondly, I also do not agree that P should only make the application for an order for sale in the Family Court and not in the District Court. To state the obvious, the Family Court in fact is part of the District Court. There is also no reason why P cannot make an application for an order for sale in a separate set of proceedings but must make the application in the matrimonial proceedings. In any event, the primary aim in exercising the powers of the court is to secure the just resolution of the dispute between P and D in accordance with their substantive rights.[4] Whether P’s application should be allowed should depend upon the substantive merits of that application.

23.  Thirdly, I do not agree that P’s application is in any way contradicted by the Consent Order. As said in the above, there is nothing in the Consent Order preventing one party from seeking an order for sale in the event that the parties differ on whether the Property should be sold.

24.  There is no basis to say that P’s application herein is an abuse of the process of the court.

Material factual disputes

25.  D has put forward the following factual allegations to oppose P’s application for an order for sale:-

(1)  D is the 100% beneficial owner of the Property. All the payments and all the mortgage repayments concerning the Property were paid by D.

(2)  Before filing the Petition in the matrimonial proceedings, P has made the following promise to D (“P’s Promise”):-

(a)  There would be no change in the status quo of the ownership of the Property after the divorce, which means P and D would continue to be joint tenants but the sole beneficial ownership in the Property would rest in D; and

(b)  Despite P being a joint owner in name, D shall continue to live in the Property after the divorce and the sale of the Property shall be entirely decided by D, including the date, the price and all the details of the sale.

26.  Ms Liu submits that D’s case on these matters is believable and should be investigated in writ proceedings. At the very least, the court should only reach a conclusion on these matters after hearing oral evidence. Ms Liu submits that if these matters are resolved in D’s favour, these can be grounds in support of D’s opposition to P’s application for an order for sale.

27.  With respect, for the reasons set out below, I am of the view that there would be no need for the court to hear oral evidence to determine these factual allegations raised by D.

28.  In my judgment, D is estopped from alleging that she is the sole beneficial owner of the Property in these proceedings. The issue of the beneficial ownership of the Property has been determined by the Consent Order in the matrimonial proceedings, and there is an issue estoppel operating against D.

(1) I have set out the true meaning of the Consent Order in [20] above. The Consent Order is based upon the Draft Consent Order signed by P and D. That draft is in fact an agreement between P and D. The matters set out in that draft, including the beneficial ownership of the Property, in fact are admissions made by P and D, and are matters agreed by them.

(2) A consent order or a consent judgment can be the basis of an issue estoppel. As said by Henry Carr J in Baxendale-Walker v APL Management Ltd[5],

“40. In the circumstances of the present case it is also necessary to consider the effect of an admission in relation to res judicata. An admission has the same effect as if the issue were decided by the court. The effect of an admission is to make it unnecessary for the court to decide the issue. This principle was expressed by Diplock LJ (as he then was) in Thoday v Thoday (supra) at p.198:

“If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon evidence or upon admission by a party to the litigation, neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition assert that the condition was fulfilled if the court has in the first litigation determined that it was not, nor deny that it was fulfilled if the court in the first litigation determined that it was.”

41. This principle is the basis upon which a party who has consented to judgment is estopped from relitigating the claim; see In re South American and Mexican Company ex parte Bank Of England [1895] 1Ch 37 at 45, where Vaughan-Williams J (as he then was) said:

“It has always been the law that a judgment by consent or by default raises an estoppel just in the same way as a judgment after the court has exercised a judicial discretion in the matter. The basis of the estoppel is that, when parties have once litigated a matter, it is in the interests of the estate that litigation should come to an end; and if they agree upon a result, or upon a verdict, or upon a judgment, or upon a verdict and judgment, as the case may be, an estoppel is raised as to all the matters in respect of which an estoppel would have been raised by judgment if the case had been fought out to the bitter end.”” (Emphasis added)

(3) In Khan v Golechha International Ltd, Brightman LJ said:[6]

“The only sensible approach of the law, in my view, is to treat an issue as laid at rest, not only if it is embodied in the terms of the judgment, or implicit in the judgment because it is embodied in the spoken decision, but also if it is embodied in an admission made in the face of the court or implicit in a consent order.”

(4) In the Draft Consent Order, D has already agreed and admitted that after the divorce, P and D should be regarded as each having 50% beneficial interest in the Property. Based upon the Draft Consent Order, the court has made the Consent Order. Beneficial interest of the Property has been determined in the Consent Order, and D is estopped from re-litigating the same in this case.

(5) Ms Liu has referred me to the Court of Appeal’s decision in Ng Yee Wah v Lam Chun Wah[7] and submits that a consent order may not give rise to an issue estoppel. In that case, the Court of Appeal was of the view that the consent order in question could not be the basis of any issue estoppel, for the consent order did not reflect all the pleaded issues and the admissions made by the first defendant in the pleadings in a related action.[8]

(6) Each case depends upon its own facts. In this case, as to the beneficial interest in the Property, I am of the view that D has clearly agreed to and admitted the position as set out in subparagraph (4) in the above, and on the basis of that agreement and that admission, the Consent Order is made. In these circumstances, the Consent Order would give rise to an issue estoppel operating against D, and D should not be allowed to re-litigate the issue of beneficial interest in the Property in this case.

29.  As to the existence of P’s Promise, I am of the view that D’s case is unbelievable. The allegation that D should be regarded as the sole beneficial owner of the Property after the divorce is directly contradicted by the terms of the Consent Order. If D is to be regarded as the sole beneficial owner of the Property after the divorce, P should completely drop out of the picture. The Property should be vested in D’s sole name, and P should have no participation in the sale of the Property. Further and importantly, P should not get any sale proceeds after the sale of the Property. P’s Promise as alleged by D is flatly contradicted by the terms of the Consent Order and is incapable of being believed. For this reason, the allegation can be dismissed summarily.

30.  For the reasons set out in the above, I would dismiss D’s Summons.

Very great hardship

31.  I am satisfied that P is a co-owner of the Property having 50% beneficial interest therein. P has a basis right to rid himself of the shackles of co-ownership. I have already said that it would be impracticable to make an order for partition given that the Property is a unit in a multi-storey building. Accordingly, an order for sale would be made, unless such an order will result in very great hardship to D. Mere inconvenience is not hardship, let alone very great hardship. The burden of showing very great hardship is on D.

32.  The Property was purchased by P and D from the Hong Kong Housing Authority (“HKHA”) under the Home Ownership Scheme (“HOS”). It can only be sold in the open market after a premium is paid to HKHA. Otherwise, the Property can only be sold in the HOS Secondary Market. The saleable area of Property is about 429 sq ft. Ms Wong for P submits that the Property should be sold at a price of not less than HK$5.8 million in the open market and at a price not less than HK$4.2 million in the HOS Secondary Market. I am of the view that these figures are supported by the evidence adduced by P. The valuation put forward by P is not challenged by D.

33.  The Property is now subject to a mortgage, and the outstanding amount of the debt secured by the mortgage is HK$88,423.27.

34.  Ms Liu submits that an order for sale should not be made, for such an order would cause very great hardship to D. Matters in support of the hardship as mentioned by D in her affirmation in opposition are as follows:-

(1)  The Property is now the home of D, her husband and their son. D and her husband have no other properties in Hong Kong and have no other place to move to if the Property is sold.

(2)  D’s family cannot move to Tai Po to live in the property owned by D’s mother (“the Tai Po Property”) for the following reasons:-

(a)  D’s mother and D’s younger brother (“the brother”) are now living in the Tai Po Property. D is not very close to the brother as the brother has been prone to violence for years. The brother is very emotional and irritable, and has assault-related criminal records. While these proceedings are ongoing, at one time when D went back to the Tai Po Property to visit her mother, the brother warned D that she should not think of moving back to the Tai Po Property.

(b)  D’s son is now 7 years old and is studying primary 2 at a school in Happy Valley. Class commences at 7:30 am. It would be a very long way to travel from Tai Po to Happy Valley. Living in the Tai Po Property would not be a realistic option.

(3)  D and her husband do not have sufficient financial means to purchase another property or to rent an alternative accommodation. D’s husband is the sole bread winner of the family who works as a construction site worker, earning unstable income. He was able to make an average monthly income of about HK$20,000. However, due to the pandemic, his income has become particularly insecure these days. D is a full-time housewife looking after her son.

(4)  D’s mother did not give money to D on a regular basis.

35.  In my view, there is no satisfactory evidence showing that there would be very great hardship to D if an order for sale is made.

36.  As submitted by Ms Wong, what has been said by D in her affirmation cannot be taken at its face value:-

(1)  D has not produced any documentary evidence to substantiate her claim that she and her husband do not have sufficient financial means to purchase another property or to rent an alternative accommodation. There is no documentary evidence showing the incomes of and the assets owned by D’s family at present.

(2)  In the call-over hearing on 4 August 2021, D was acting in person. In that hearing, D sought an adjournment from the court. D said that she only saw the contents of the court documents two days before the hearing. D said“咁本人唔係話經常喺嗰個住所度出現嘅，因為我有陣時都會返番去我媽媽屋企嘅”.

(3)  P has adduced evidence to show that the OS was served by insertion through the letter box at the Property on 17 December 2020. Personal service of the court documents at the Property was attempted three times on 8 March 2021 (Monday) at about 7:55 pm, 12 July 2021 (Monday) at about 7:45 pm, and 29 July 2021 (Thursday) at about 11:35 am, but no one answered the door bell on each occasion. A copy of the OS and a notice was posted at the entrance of the Property on 12 July 2021.

(4)  Taking the aforesaid into account, it is doubtful whether D and her family is residing at the Property at all times. It is also doubtful whether D and her family has no other residence apart from the Property.

37.  Even assuming that the matters said by D in her affirmation are all true, those matters still cannot constitute very great hardship.

(1)  After the sale of the Property, D would obtain about HK$2 million. With the HK$2 million, D’s family can certainly rent an alternative accommodation in the vicinity and to live therein for years.

(2)  D’s husband is still having income from his job. Allegedly, the husband’s income has been adversely affected by the pandemic. However, the public health situation is improving. Since the pandemic is subsiding, it is likely that the husband would have more income in the near future.

(3)  There is indisputable evidence showing that D was a teller in a bank during the marriage between her and P, and was still a teller after the divorce. D then became an insurance agent until at least October 2018. D said that she would need to look after her son now. However, there is no reason why D cannot find a part-time job and to work during the time when her son is at school.

38.  During the hearing, Ms Liu submits that if all the payments and mortgage repayments concerning the Property have been solely paid by D, granting P’s application for an order for sale would be a hardship to D. With respect, I do not accept this submission. No matter who has paid the payments and mortgage repayments concerning the Property, P and D have agreed in the matrimonial proceedings that each of them should have 50% beneficial interest in the Property after the divorce. The parties are bound by this agreement. The consequences of the agreement cannot constitute hardship frustrating P’s application for an order for sale.

39.  In my judgment, D has failed to show “very great hardship”. Accordingly, P’s application for an order for sale must be allowed.

Settlement Agreement in the matrimonial proceedings

40.  In P’s 2^nd affirmation, P mentioned that before signing the Draft Consent Order, he and D has reached a settlement agreement (“the Settlement Agreement”), by which they agreed:-

(1)  D and P should continue to hold the Property as joint tenants;

(2)  D could continue to live in the Property provided that she would solely repay the mortgage instalments and all the outgoings of the Property; and

(3)  If D remarries, the Property must be sold and the sale proceeds should be shared by P and D equally.

41.  P said that although the terms of the Draft Consent Order had not fully reflected the terms of the Settlement Agreement, since he was acting in person at that time, he did not know that he had a right to demand to have an amended version of the draft. As a layman, he simply thought that he had to make sure that his 50% interest in the Property would be secured.

42.  There is no doubt that P must be bound by his own evidence. However, the Settlement Agreement mentioned by P would not prevent P from making the application in these proceedings. After all, P only commenced these proceedings after the remarriage of D.

D’s counterclaim

43.  In her affirmation, D raises a counterclaim (“D’s Counterclaim”) for the following relief:-

(1)  a declaration that P is holding the Property on trust for D absolutely; and

(2)  an order requiring P to transfer the Property to D.

44.  I have held that D is estopped from re-litigating the beneficial interest of the Property in these proceedings. Accordingly, D’s Counterclaim must be dismissed.

Deposition

45.  I dismiss D’s Summons and D’s Counterclaim. I give judgment to P. I appreciate that D would need some time to find an alternative accommodation. I am prepared to allow D to deliver vacant possession of the Property to P within 8 weeks. I make the following order (“the Order for Sale”):-

(1)  The Property be sold pursuant to s.6 of the PO;

(2)  D do deliver up vacant possession of the Property and all the title deeds of the Property in D’s possession (if any) to P within 56 days;

(3)  D shall do all things as may be necessary to procure the sale of the Property with vacant possession;

(4)  If D does not comply with the aforementioned paragraph (3), the partner of P’s solicitors handling these proceedings be authorized to sign and execute any documents required for the sale of the Property;

(5)  The conduct of the sale be given to P’s solicitors;

(6)  The Property shall be sold with vacant possession at first attempt by private treaty sale at a price of not less than HK$5.8 million in the open market and not less than HK$4.2 million in the HOS Secondary Market.

(7)  If the Property cannot be sold within 12 months in the manner as stated in the preceding paragraph, the Property be sold by public auction with a reserve price of HK$5.8 million in the open market and HK$4.2 million in the HOS Secondary Market;

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

(a)  Payment of reasonable costs and expenses of the sale (including conveyancing costs, estate agent commission not exceeding 1% of the sale price, and premiums and all necessary expenses to the HKHA (if applicable));

(b)  Payment for the discharge of any liabilities due to the Government (including taxes, rates, other outgoings and stamp duties);

(c)  Payment in discharge of all mortgages, charges and encumbrances affecting the Property;

(d)  Payment of P’s costs in these proceedings;

(e)  Payment of all costs and expenses incurred by P in taking enforcement action for recovery of possession of the Property, if necessary;

(f)  The remaining net balance to be paid to P and D in equal shares.

(9)  Liberty to apply.

46.  Ms Liu submits that P should repay to D half of the mortgage repayments paid by D after P has moved out from the Property in 2009. I observe that although the mortgage repayments were repaid by D during this period, the Property was solely occupied by D at the same time. P has not demanded any occupation rent from P. I further observe that the Settlement Agreement mentioned by P may be a defence to this claim.

47.  I note that D has not raised any claim concerning the mortgage repayments in her counterclaim. The claim is only raised by Ms Liu for the first time at the very end of her submissions. That being the case, P has not been given any opportunity to adduce evidence to meet that claim. In any event, I do not think that the claim would affect P’s entitlement to have an order for sale in any way. For all these reasons, I decline to make a ruling on this claim in these proceedings. If D intends to claim any contributions to the mortgage repayments, she would need to commence a new set of legal proceedings to do so.

48.  Ms Liu has also sought a stay of the Order for Sale for a period of time, so that the parties may try to discuss that one party may buy out the other party’s interest in the Property. On the other hand, Ms Wong submits that P is willing to discuss with D to see whether that option is feasible, but there should not be a stay of the Order for Sale. After all, the Order for Sale would not prevent the parties from having any discussion. I agree with Ms Wong. If the parties can reach a binding agreement after having some discussion, they can seek leave from the court to implement that agreement notwithstanding the Order for Sale.

49.  I note that D has not yet served D’s Summons and her affirmation in opposition on the Director of Lands (“the Director”) in accordance with s.3(2) of the PO and rule 4 of the Partition Rules. D is required to serve these documents on the Director within 7 days. I also direct P to serve a copy of this judgment on the Director within the same period. If the Director wishes to make any application after seeing the documents served on him, he may do so within 14 days from the date of service. Unless the court directs otherwise, the order made in this judgment shall not be sealed until after the expiration of a 28-day period counting from the date of this judgment. For avoidance of doubt, this direction would not affect the computation of time set out in the Order for Sale. All the time set out in that order shall start to run from the date of this judgment.

50.  Costs should follow the event. I order that costs of these proceedings (including all costs reserved, costs of D’s Summons and costs of D’s Counterclaim), be paid by D to P forthwith, with a certificate for counsel. Those costs are summarily assessed at HK$270,000.

51.  I thank counsel for the assistance rendered to the court.