CHEUNG PO CHEONG PAUL AND ANOTHER v. WU SIU FAN AND OTHERS

DCCJ 5311/2016

[2020] HKDC 21

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5311 OF 2016

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REASONS FOR DECISION

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1.  This is an application for summary judgment by the plaintiffs against the 1^st defendant. At the conclusion of the hearing I grant summary judgment with costs of the action and make an order for an inquiry and then payment by the 1^st defendant of the sum found due. Written reasons therefor are to be provided and here are the reasons.

Background and the plaintiffs’ claim

2.  By an assignment dated 10 June 2016 registered with memorial number 16070701670016 following a sale by auction by the mortgagee Credit One Finance Limited (“Credit One”), the plaintiffs as joint tenants were assigned 1/6 share in the property known as No 153 Aberdeen Main Road and No 2 Wu Pak Street, Hong Kong (“the Property”), thereby making the plaintiffs tenants-in-common with the 2^nd defendant who owns 1/2 share and the 1^st and 3^rd defendants who together as joint tenants own the remaining 1/3 share of the Property.

3.  The other co-owners of the Property, namely the defendants, are family members.  The 1^st defendant is the mother of the 2^nd defendant her natural son, and of the 3^rd defendant her adopted daughter.

4.  Mr Ho, counsel for the plaintiffs, informs the court that there were difficulties serving the writ herein to the 2^nd and 3^rd defendants who remain unserved; and they therefore are not yet parties to this action.

5.  Erected on the Property is a 6-storey building known as Hoi Bor Building (“the Building”).  Its ground floor consists of 2 shop units, A and B, each divided into 2 shops.  There is a cockloft in shop A that stretches over the upper part of Shop B.  The 1^st and 2^nd floors are office units.  On the 3^rd to 5^th floors are domestic units, one on each floor.

6.  It is not seriously disputed by the 1^st defendant that all units in the Building have been rented out to generate income.

7.  The plaintiffs now claim that they have been either actually or constructively ousted from the Property since they obtained title thereto on 10 June 2016, in that despite repeated demands by their solicitors’ letters, the 1^st defendant refused to:

(a)  disclose all current tenancy/license agreements whereby units in the Building were let or licensed;

(b)  account and pay to the plaintiffs 1/6 of all the rental or other income derived from the Property;

(c)  consult the plaintiffs and seek their consent in relation to the signing of new or renewal of existing tenancies; and

(d)  provide keys to any units of the Building (and thus denying the plaintiffs physical access to the Property).

8.  The plaintiffs also claim, furthermore, that the 1^st defendant informed tenants or licensees of the Building not to pay any rent or fees to the plaintiffs or to provide them with copies of the tenancy or license agreements.

9.  The plaintiffs therefore now claim for an inquiry and an order for payment of 1/6 of the rental or other income derived from the Property or occupation rent thereof for the period from 10 June 2016 to date, with interest and costs.

Legal principles

10.  The legal principles applicable to the application for summary judgment are trite and need not be repeated here.

The only defence raised by the 1^st defendant

11.  In her Defence (“the Defence”), the 1^st defendant admits that the plaintiffs are registered co-owners of the Property[1], and only pleads bare non-admission, and therefore really raises no substantive defence, regarding matters complained of by the plaintiffs which they say constituted ouster.

12.  The only substantive defence raised by the 1^st defendant is that:

“The 1^st Defendant avers that under paragraph 2 above, the 1^st Plaintiff and the 2^nd Plaintiff have no legal right and/or right in equity and/or are not entitled to ask the 1^st Defendant to do the things described in paragraphs 7 and 10 of the Statement of Claim”[2].

13.  Paragraph 2 of the Defence is a long paragraph.  In a nutshell, it sets out (a) the background leading to Credit One’s mortgagee sale of the 1/6 share in the Property (b) allegations of one Chen Jianqiang (“Chen”), the mortgagor, borrower and previous owner of the 1/6 share, leading to the plea that Chen has commenced HCA 3223 of 2016 to seek a declaration that the sale to, and the assignment of, the 1/6 share in the Property by Credit One to the plaintiffs is void and has no legal effect.

14.  It is convenient at this juncture to mention that Chen was the boy friend of the 1^st defendant.

15.  The background leading to Credit One’s mortgagee sale is as follows:

(a)  Immediately prior to the borrowing by Chen from Credit One, the 1^st and 3^rd defendants together with Chen were registered joint tenants holding 1/2 share in the Property, the remaining half being held by the 2^nd defendant.

(b)  On 16 June 2014, Chen severed the joint tenancy and by a legal charge executed in favour of Credit One charged his 1/6 share in the Property to secure a loan, obtained that day, made by Credit One to him in the sum of HK$3,000,000 to be repaid in 12 instalments and at an interest of 32% per annum.

(c)  Upon Chen’s default in making any repayment by instalment, Credit One on 22 June 2015 obtained a judgment against Chen for the principal sum of HK$3,000,000 and interest at 32% per annum from 16 July 2014 to 15 June 2015.

16.  Chen’s allegations, now pleaded in the Defence, in gist consist of:

(a)  The allegation that the auction sale to the plaintiffs held on 26 April 2016 was void[3], in that Chen himself had attended the auction and made the highest bid of HK$8,350,000 which was accepted by the auctioneer at the fall of the hammer. Chen also made the bare assertion that the auction sale to the plaintiffs never took place.

(b)  The bare assertion that the auction was a clog to Chen’s equity of redemption and the auction is therefore void[4].

(c)  Various complaints that Credit One had failed to discharge its duty in the sale of the 1/6 share in the Property in that, among others, Credit One had sold the 1/6 share at a gross undervalue[5].

17.  Importantly and as have been mentioned, it is the 1^st defendant’s own case, as pleaded in paragraph 2(q) and (r) of the Defence, that these exact matters and allegations are now being litigated in HCA 3223 of 2016 commenced by Chen against Credit One as the 1^st defendant and the plaintiffs herein as the 2^nd defendant there.

18.  In the hearing, I am informed by Mr Ho that HCA 3223 of 2016 is still on-going while recently Chen has filed a notice to act in person in place of his solicitors.

19.  Chen filed an affirmation on behalf of the 1^st defendant on 20 November 2019 in opposition deposing to matters relating to the above allegations.

Discussion

20.  Chen’s above allegations seem to me problematic even without much examination.  Firstly, by Chen’s own evidence, even though his highest bid was accepted by the fall of the hammer, he had not then signed the Memorandum of Agreement[6] in the form annexed to, and as required by clause (1) of, the Special Conditions of Sale of the auction[7]; nor had he deposed to making any payment of deposit or the auctioneer’s fee immediately, which were also required by the same clause.  This tallies with the plaintiffs’ evidence that they received a call from the auctioneer that day informing them that the 1/6 share was re-listed for auction as the highest bidder had not paid the deposit immediately as required; whereupon they returned to the venue and won this 2^nd auction.  Secondly, as pointed out by Mr Ho, section 52 of the Conveyancing and Property Ordinance Cap 219 provides, among other things, that the title of the purchaser shall not be affected if the power of sale under a mortgage was improperly or irregularly exercised; while section 59 of the same ordinance provides that a purchase, made bona fide and without fraud, shall not be opened or set aside merely on the ground of undervalue.

21.  In view of the fact that these allegations are now litigated in HCA 3223 of 2016, I do not find it appropriate or necessary to discuss further the merits (or lack thereof) of Chen’s allegations, even though both counsel have made a number of submissions thereon.

22.  Most pertinent is that by seeking leave to defend, the 1^st defendant is now asking this court to allow her to litigate parallelly in this action a claim raised by a third party (namely, Chen) involving the same factual disputes and legal issues over the same subject matter as are now being litigated by that third party in another High Court Action (namely, HCA 3223 of 2016).  It is plainly wrong and improper for this court to allow that to happen.

23.  There are proper civil procedures to cater for this situation.

24.  If Chen, alleging that he himself is the true co-owner owning the 1/6 share, has made a competing claim for the same rental income/occupational rent or if the 1^st defendant is expecting to be so claimed against, she could interplead under O 17 of the District Court Rules to protect her position, whereby the fight would then be between Chen and the plaintiffs, and the court could and would manage that fight and all parties’ rights appropriately under the machinery provided by O 17.

25.  Alternatively, the 1^st defendant could consider, if so advised, applying for a stay of this action pending the outcome of HCA 3223 of 2016.

26.  I note particularly that Chen has never made such competing claim, nor it seems that the 1^st defendant is expecting it.  Rather, Chen now acts as a witness for the 1^st defendant.  I also note particularly that despite having full knowledge of Chen’s allegations and the fact that he had commenced HCA 3223 of 2016, the 1^st defendant in all this time has not made any application to stay this action.

27.  I also accept Mr Ho’s submission that in this action we are concerned with the parties’ respective rights and liabilities inter se and it is not open for the 1^st defendant to seek to be absolved of her liabilities by pointing to the better title of a 3^rd party (even if that is the case), as succinctly put by Lewison J in Wells v Pilling Parish Council[8]:

“At common law, questions about title are determined according to the principle of relativity of title, which is the bedrock of English land law. If A and B are in dispute about ownership of a piece of land, the only question for the court is which of the two of them has the better title to the land. It is not a defence, for example, to an action for possession by A against B that, in fact, C is the true owner of the land.”

28.  So far as between the parties themselves, the plaintiffs are and remain as registered co-owners owning 1/6 share in the Property unless and until the relevant conveyance is being set aside, if at all.

29.  I also consider that in the event that the sale and therefore conveyance to the plaintiffs is set aside in HCA 3223 of 2016, Chen would have the opportunity in that action to recover from the plaintiffs any occupation rent derived from the Property that the plaintiffs may have received by then; or if by then they have not so received it, they would no longer have the right to.

30.  In the premises, I hold that there is no issue or question in dispute which ought to be tried in this action and that there is no other reason why there should be a trial of the plaintiffs’ claim.  I therefore refuse to give leave to defend and grant summary judgment to the plaintiffs with costs of this action.

Relief

31.  It is settled law, and not disputed by the 1^st defendant, that where a co-owner ousted another, he is liable to pay the ousted co-owner occupation rent, though the principles governing its quantification are not settled (see 曹美如 訴 龔梅芳 HCMP 2026/2000, unreported, 28 February 2003, Leung Siu Man & Others v Leung Yiu Tai [2019] HKCFI 1971 and W v D (2012) 115 SASR 61).

32.  The plaintiffs’ evidence is that the 1^st defendant was the person who entered into and signed the tenancy agreement regarding one of the shops in the ground floor of the Property[9], which is the only one they can get hold of, as the 1^st defendant herself refused to and has informed tenants not to provide copies of tenancy agreements to the plaintiffs[10]. It is also the plaintiffs’ evidence that the 1^st defendant was the person who pocketed the rent from the Property[11]. These are not disputed by the 1^st defendant.

33.  Moreover, the 1^st defendant also produced a Deed of Undertaking in Chinese dated 21 March 2009[12] in which Chen and the 3^rd defendant undertook that the 1^st defendant would be the only person entitled to receive rent from, among others, the Property.

34.  I therefore think it just to order an inquiry and order payment by the 1^st defendant of the sum found due.