CHAN WILLIAM LAI YEE AND OTHERS v. CHAN YAU YUEN FUN THERESE AND ANOTHER

HCMP 1203/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1203 OF 2011

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BETWEEN

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REASONS FOR DECISION

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1.  This is the plaintiffs’ application by Originating Summons dated 27 June 2011 for an order that two properties be sold pursuant to section 6 of the Partition Ordinance, Cap 352.

2.  At the conclusion of the hearing on 2 February 2012, I made an Order in terms of the Originating Summons as orally amended, with reasons to be given later.  I now give the reasons for my decision.

3.  The properties in question are :

(a)    Flat A on 1^st Floor of Block 1 and Car Park No 16 on LG2 Level, Scenic Garden, No 9 Kotewall Road, Hong Kong (“the 1^st Property”); and

(b)    Flat B on 1^st Floor of Block 1 and Car Park No 2 on LG2 Level, Scenic Garden, No 9 Kotewall Road, Hong Kong (“the 2^nd Property”).

(collectively “the Properties”)

4.  By Hong Kong standards, these are luxury properties. According to the valuation reports before this Court, the market value of the 1^st Property, as at 20 May 2011, was in the region of HK$21.3 million while that of the 2^nd Property was HK$18.5 million.  These are reflected in the “reserve” price for the Properties set out in the terms of sale under the Originating Summons.

5.  According to the deeds of assignment, the Properties were assigned to the plaintiffs and the defendants as tenants‑in‑common in equal shares on 19 July 1989 by Eskensen Investment Limited as Vendor and Mr Chan Lai Sing (“Mr Chan Senior”) as Confirmor.

6.  The plaintiffs and the defendants are all related. Mr Chan Senior, who passed away on 31 December 2009, was the father of Mr Chan Siu Cheong Stephen, deceased (“Mr Stephen Chan”) and the plaintiffs.  Mr Stephen Chan was the eldest son but passed away early in 1984. The 1^st defendant is his widow.  They had 3 children : Serena Chan, the 2^nd defendant, and Georgia Chan.

7.  Since its acquisition, Mr Chan Senior had resided at the 1^st Property until he passed away.  The 2^nd and the 4^th plaintiffs had also been residing in the 1^st Property, although I was informed by their Counsel that they had already moved out of it prior to the hearing.  At all material times, the 2^nd Property was occupied by the 1^st defendant and her family rent free.  Currently, the 1^st defendant, Serena, Georgia and a family friend are residing in the 2^nd Property.  

8.  The position therefore seems to be that some co‑owners have for a long time been and are still enjoying their shares of ownership of the Properties but not the others, whether in terms of occupation or rental income.

9.  I now turn to the law.

10.  Section 2 of the Ordinance provides that :

“Subject to this Ordinance, where any property in land is held by 2 or more persons, whether as joint tenants or as tenants in common, the Court may‑‑

(a) make an order under section 4 for a partition of the property;

(b) make an order under section 6 for a sale of the property;

(c) refuse to make any order.”

11.  Section 6 of the Partition Ordinance confers on the Court the power to order a sale of the Properties in these terms :

“(1) In any proceedings under this Ordinance, where it appears to the Court that a partition of the property would not be beneficial to all the persons interested by reason of :

(a) the nature of the land to which the proceedings relate;

(b) the number of the persons interested or presumptively interested;

(c) the absence or disability of some of the persons interested; or

(d) any other circumstances;

the Court may make an order for the sale of the property.”

12.  As the subject matter of the Properties are equal undivided shares of the land together with the sole and exclusive right and privilege to hold use occupy and enjoy the two units in the building, it is not practical to partition the Properties among the parties and none of them have contemplated or proposed a partition.  I have no doubt that an order for partition would not be beneficial to all the persons interested.  I am therefore satisfied that I have the power to order a sale of the Properties.   

13.  Section 6 confers a discretion on the Court whether to order a sale.  The Ordinance does not, however, set out the considerations which guide the Court in deciding whether to order a sale.  I have to turn to the case law.

14.  The primary purpose of the legislation is to enable unwilling co‑owners to terminate an unwanted co‑ownership : Pun Jong Sau v Poon Wing Kong [1980] HKLR 662, 668.

15.  The authorities in this area were usefully reviewed by Recorder Fok SC (as he then was) in Wong Chun Kei Johnny and others v Poon Vai Ching and others [2007] 1 HKLRD 825. The principles governing the exercise of discretion may be set out as follows :

“(1) 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 if he has no other remedy.

(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) 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.

(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.”

See Wong Chun Kei Johnny and others v Poon Vai Ching and others op cit at pp 841‑2; Liu Chung Hang and Others v Liu Chung Leung Alfred HCMP 1255 of 2007, 19 December 2007, unrep (Recorder Yu SC); Re Inland Lot No 476 HCMP 1273 of 2009, 12 March 2010, unrep (Bharwaney J).

16.  According to the plaintiffs, after Mr Chan Senior had passed away, there was an agreement between the plaintiffs and the 1^st defendant at a family gathering that the Properties were to be sold as soon as possible when the renovation of the building and the facilities was due to complete in March 2011. This was disputed by the 1^st defendant.  In view of the stance taken by her at the hearing to which I shall refer later in this judgment, it is not necessary for this Court to making a finding on this.

17.  Essentially, the plaintiffs’ case is that they are all of advanced age ‑ the 1^st plaintiff is 77 years old while the 4^th plaintiff, the youngest of the four, is 59 years old.  It would appear that they are all anxious to realize the Properties for cash in order to support their living during their present or anticipated retirement.  While efforts have been made by the plaintiffs to reach a mutually acceptable arrangement with the 1^st defendant and to put the Properties on the market for sale since late 2000, they have not succeeded in doing so.  The parties then instructed their own solicitors to negotiate with one other.  Proposals for the sale of the Properties have been exchanged between the parties’ solicitors since March 2011, but to no avail.

18.  On 27 June 2011, the plaintiffs issued the Originating Summons in this Action.

19.  The 2^nd defendant has all along taken a neutral stance to the sale of the Properties.  He was joined as a defendant in order to be bound by any Order made by this Court.

20.  The 1^st defendant’s original stance was that while she had no objection to the sale of the 1^st Property, she resisted the sale of the 2^nd Property on the ground of hardship.  Since her husband Mr Stephen Chan passed away in 1984, she has been a full‑time housewife taking care of her three children.  She has been living in the 2^nd Property for over 22 years and has attached great sentimental value to it. She is now 76 years old and is dependent on her children for financial support.

21.  The day before the hearing, Counsel for the 1^st defendant, in his written submissions, indicated that his client no longer objected to the sale.  This was confirmed by him at the hearing.  However, the 1^st defendant proposed that the terms of the Originating Summons be amended so that the conduct of the sale would be given jointly to the solicitors for the plaintiffs and her solicitors.  Underlying this proposal was obviously a deep mistrust between the parties, the cause of which was not entirely apparent from the evidence, but it was also not for this Court to speculate or explore.  Suffice it to say that after this Court had pointed out the practical difficulties and potential delay to the sale that this course might entail, Counsel for the 1^st defendant subsequently, on instructions, withdrew the proposal.  Instead, it was suggested that the sale proceeds of the Properties be paid to the solicitors for the plaintiffs and solicitors for the 1^st defendant jointly as trustees for discharging various outgoings and expenses and then for distribution to the parties.  The suggestion was accepted by all.

22.  In the circumstances of this case, I have no doubt that the parties are unwilling to continue their co‑ownership of the Properties, and that it will be beneficial to all of them by ordering a sale so as to rid them of the shackles of co‑ownership.  All but the 2^nd defendant are of advanced age and some of them have long been enjoying their shares of the Properties more than the others.  An order for sale would allow the parties to cash in on the Properties while the market is still relatively buoyant, and provide some financial comfort during their present or pending retirement or to fund their acquisition of alternative accommodation.  Lastly, I am satisfied that no great or undue hardship will be caused to the 1^st defendant by a sale.

23.  For these reasons, I am satisfied this is an appropriate case to make an order for sale under section 6 of the Partition Ordinance, and I so order.