CHEUNG SHIU CHUN v. LEE WAI SUM AND ANOTHER

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JUDGMENT

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1. These are my reasons for my order made on the 6th August 1984 pursuant to Section 6 of the Partition Ordinance (Cap. 352) for the sale of the above mentioned flat which is held by the Plaintiff and the let Defendant as joint tenants under an Assignment dated the 25th April 1979 for the residue of the leashold term therein mentioned.

2. The plantiff began the proceedings by an Originating Summons taken out on the 9th November 1983. Section 3(1) of the Partition Ordinance provides that proceedings under the Ordinance may be instituted "by way of an action for partition or sale". The 1st Defendant who was originally represented by solicitors until the 22nd May 1984 did not raise any objection to proceedings by originating summons when the Matter gave directions under Order 28 on the 20th February 1984. No objection was made by the Attorney General to the proceedings being brought by originating summons and not by writ and he elected not to be represented at the hearing because the Crown has no outstanding interest in the flat.

3. It seemed to me that the words "action for partition or sale" in section 3(1) of the Ordinance should, in the absence of a definition of "action" requiring a narrow construction, be construed in a wide generic sense as meaning proceedings in due course of law for partition or sale : c.f. Bradlaugh v. Clarke 8 App. Cas. 354 (H.L.) and that Order 5 rule 4 applies to these proceedings. By the time the Master gave his directions under Order 28 it was apparent from the affirmations of the Plaintiff and the first Defendant that issues of fact arose. No order was then made under Order 28 rule 8(1) but at the trial I treated the affirmations of the Plaintiff and the first Defendant as pleadings and both those parties gave evidence and were cross examined.

4. By the Plaintiff's Originating Summons she claimed an order under section 4 of the Ordinance for the partition of the flat and alternatively an order for sale under section 6. She also sought an order against the 1st Defendant, who is her son, for an account in respect of rent and profits in respect of tae flat of which he has at all material times been in exclusive possession. However at the trial the Plaintiff confined her claim to one for an order for sale under section 6 on the footing that the net proceeds of sale should be directed to be divided equally between herself and the 1st Defendant.

5. Accordingly much of the affirmation evidence of the two effective parties became peripheral because it was concerned with  the Plaintiff's claim for an account and with the amount of commission which the Plaintiff alleged had been paid to one Madam Hui in addition to the purchase price for the flat specified in the Assignment.

6. It was common ground between the parties that it would be impracticable to partition the flat which comprised an internal floor area of about 581 square feet. The Plaintiff called a surveyor to give evidence to this effect which was not challenged by the first Defendant who himself affirmed to the same effect in his evidence.

7. By his affirmation made on the 7th January 1984 the 1st Defendant opposed the Plaintiff's claim for an order far partition or sale. He affirmed inter alia that on the 26th March 1979 the Plaintiff and the 1st Defendant had agreed inter alia that -

8. The 1st Defendant further affirmed that since delivery of possesion of the flat under the Assignment dated the 25th April, 1979 he and his family had occupied it as their residence and he had paid all the outgoings pursuant to his agreement with the Plaintiff. He counterclaims declarations that the agreement alleged by him in the above mentioned terms is valid and enforceable and claims specific performance of that agreement. He also counterclaims declarations prohibiting severance, partition or sale of the flat.

9. The Plaintiff's second affirmation made on the 2nd March, 1984 inter alia alleges a materially different agreement between herself add the 1st Defendant. She affirms the agreement to have been in effect :-

10. The Plaintiff further affirmed in his second affirmation that the 1st Defendant paid her six instalments of $1,700.00 each after completion of the purchase. He then told her he had encountered financial difficulties and could only afford to pay her $1,200.00 per month. He thereafter paid her approximately 30 monthly instalments of  $1,200.00 each and paid nothing after May 1983.

11. At the trial the Plaintiff abandoned her contention that either interest or rent was payable the 1st Defendant. When she gave evidence in chief she mentioned that her purpose in making the purchase was for all of them, namely the 1st Defendant and his family and herself to live in the flat. She said that she had spent a couple of nights in the flat and sometimes went there with her friends but that the let Defendant said it was not necessary for her to set up a bed there because there already was one there.

12. When she gave this evidence which included the allegation that the 1st Defendant said originally given her the key of the flat but later changed the lock and excluded her I questioned her counsel as to whether the Plaintiff was seeking to introduce new matters outside the ambit of her original case as set out in her affirmations. After taking instructions counsel indicated that the Plaintiff would not pursue the question of the Plaintiff's alleged right to reside in the flat.

13. On reflection I consider that I went too far in questioning the Plaintiff's right to give evidence regarding her alleged right to live in the flat. I had overlooked that she had asserted the right in para 5(d) of her second affirmation. Moreover the 1st Defendant was not taken by surprise by her allegation that he had excluded her from the premises because he admitted it under cross-examination.

14. The oral evidence disclosed some shifting of ground by the parties but also a substantial area of common ground between them, although there remained a number of peripheral issues of fact which it is not necessary to pursue.

15. Thus the two effective parties both said in effect as follows. The flat was purchased with the intention that the 1st Defendant and his wife and two children should live there and that the Plaintiff should also do so. The price actually paid under the Assignment (as distinct from the alleged commission which the Plaintiff alleged and the 1st Defendant denied was paid to Madam Hui) was $194,750.00 and the whole of that amount was provided by the Plaintiff. The 1st Defendant was to reimburse the Plaintiff one half of the purchase price (on any footing that would be not less than $97,375.00 by monthly instalments of $1,700.00.

16. Their common evidence of the events after the purchase was to the following effect. The 1st Defendant and his family had resided in the flat since the purchase was completed. The 1st Defendant had made six payments of monthly instalments of $1,700.00 between the 30th April and the end of September 1979. He had then obtained the agreement of the Plaintiff that the amount of the monthly instalments should be reduced to $1,200.00 because his children were at school and his expenses were rising. Thereafter he made 30 monthly payments of $1,200 each. Since the 28th May 1983 he had made no payments. I calculate that the 1st Defendant has therefore paid $46,200 towards the sum of $97,375.00 which, on his evidence, he agreed to reimburse the Plaintiff.

17. Assuming, but not deciding, that there was an enforceable agreement between the parties regarding the flat, as distinct from a non contractual purpose or arrangement, then, in my judgment, it is implicit from such of the terms mentioned above which both parties accented in evidence at the trial, that the 1st Defendant's right to remain in occupation of the flat as joint tenant and to preclude the Plaintiff from making a successful application for partition or sale is conditional upon his keeping up his monthly instalment payments. This he has failed to do since May 1983 and there is still a total sum of not less than $51,375.00 outstanding. Moreover the 1st Defendant's evidence was that he is unemployed and he cannot undertake to make any further instalment payments until he finds employment.

18. In addition, the 1st Defendant admitted that he had changed the locks of the flat in February 1983. He said he did this because his boy had lost the basket containing the keys of the flat. When asked why he had changed the locks and not given his mother a set of the new keys, he said this was because she sued him. However the Plaintiff did not begin these proceedings until the 9th November 1983 after he had ceased to keep up payments for the flat in May 1983, and later under further cross examination he admitted that he had excluded the Plaintiff because of something to do with his younger brother.

19. He added under cross-examination that he was now prepared to share the flat with the Plaintiff because he did not want it to be sold and he was out of a job. He said he had not told her before of his change of heart.

20. On his own admissions the 1st Defendant is thus in breach of two of the agreed terms of the arrangement between them. He is not able to maintain his monthly payments. It follows that even if the arrangement amounts to an enforceable contract there can be no question of it being specifically enforced.

21. In my judgment the area of common ground between the parties regarding the purpose of the purchase of the flat in their joint names and the admissions by the 1st Defendant regarding his failure to keep up his monthly payments and the exclusion of the Plaintiff from the flat together with the common evidence of the impracticability of partition are sufficient to indicate that an order for sale should he made in this case.

22. As a joint owner of the flat the Plaintiff was entitled to institute proceedings for partition or sale pursuant to section 2 and 3 of the Ordinance. For the purposes of section 6(1)(a) it is manifeast that a partition would not be beneficial to the two parties interested because it would be impracticable. I accept the unchallenged evidence of the surveyor called on behalf of the Plaintiff who expressed the opinion that partition would be impracticable, uneconomic and prejudicial in financial terms.

23. Accordingly the court has the power to order a sale of the flat under section 6(1) notwithstanding the dissent of the 1st Defendant who has not undertaken to purchase the Plaintiff's interest in the flat pursuant to section 6(3)(a) of the Ordinances

24. In my judgment the Plaintiff has shown good reason for an order for sale. The purpose underlying the purchase of the flat by the joint owners has been shown to have failed. The 1st Defendant has defaulted on his monthly payments since May 1983 and can make no realistic offer to continue them or pay off the arrears. He has offered to permit the Plaintiff to reside in the flat but that will not remedy his financial default and the relations between the parties are very strained.

25. If there is no sale the Plaintiff will continue for an uncertain period to be deprived of the financial payments to which she is entitled in respect of the flat for which she paid a substantial sum in 1979 and she will have the dubious right to reside in the flat with the estranged 1st Defendant and his family who have excluded her from it since February 1983.

26. Whilst the sale of the flat will necessarily cause great hardship to the 1st Defendant and his family, it is not fault of his mother that he has defaulted in making his payments and his action in excluding her from premises was a further breach of the arrangement underlying the purchase in joint names.

27. I accept the evidence of the surveyor called by the Plaintiff, which was not seriously challenged by the 1st Defendant, that the current open market value of the flat is $460,000 with vacant possession. The 1st Defendant will receive half of the net proceeds of the sale which represents the value of his interest in the flat. He is fortunate that his mother has waived any claim in respect of his unpaid monthly payments.

28. In my judgment, the purpose underlying the purchase having failed for reasons not attributable to the Plaintiff, it is right that the court should order a sale under section 6 so that she may realise her interest in the flat and put an end to the situation where the 1st Defendant has been for months in exclusive occupation of the premises in breach of the arrangement between them whilst defaulting on his monthly payments to her.

29. Accordingly I ordered that the flat be sold and gave consequential directions as to conduct of the sale and the application of the proceeds which appear in the order.

30. I add that the order omits to direct pursuant to section 7(2)(a) of the Ordinance that the net proceeds of sale are to be applied first in the discharge of any liability due to the Crown in respect of the flat. However the statutory liability nevertheless exists.

31. A further point is that I was not asked to include in the order a direction that the Attorney General's costs be made part of the costs in the cause to be paid by the 1st Defendant. A letter in the court file dated the 19th May 1984 from the Legal Department to the Registrar indicates that the solicitors than acting for the Plaintiff and the 1st Defendant had agreed that the Attorney General's costs were to be dealt with in this manner. If the matter cannot be dealt with by consent it may be that a further application will be necessary under the liberty to apply granted in the court's order made on the 6th August, 1984.