LAM SIK SHI v. LAM SIK YING

cacv 79/2010

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 79 of 2010

(on appeal from HCMP NO. 1273 of 2009)

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D E C I S I O N

1.  This is an application by the defendant for a stay of execution pending appeal of an order of 12 March 2010 of Bharwaney J that the property located on the ground floor of 4 Sharp Street East (“the property”) be sold pursuant to section 6 of the Partition Ordinance, Cap. 352.

Background

2.  The property comprising a 1/6 share in the land is a retail shop situated in the heart of Causeway Bay near Times Square and occupies an area of approximately 600 sq. ft., with a yard of about 60 sq. ft., and a cockloft of approximately 320 sq. ft.  It is the ground floor of a six-storey Chinese tenement-type building sharing a common staircase with the adjoining building at 2 Sharp Street East.  The five upper floors are residential units.  The shop space itself is rectangular in shapewith a frontage on Sharp Street East of between 11 to 13 ft.  There is a staircase situated at the rear left hand side after entering the shop that leads up to the cockloft.  Beyond the staircase at the rear of the shop is a kitchen leading to a water closet which together take up the left half of the rear portion of the property.  The right half of the rear portion situated to the right of and adjacent to the kitchen and water closet is an open yard.

3.  The plaintiff and the defendants are half-brothers.  The property was purchased by their father in 1969 and registered in their names as tenants in common as to a half share each.  At that time, the defendant was already living in Canada, having left Hong Kong for Canada in about 1964.

4.  The father died in 1983 and the parties have been locked in various disputes and family litigation concerning the father’s estate for some 18 years.  That they do not see eye to eye is an understatement.  Indeed, the defendant has recently issued a bankruptcy petition against the plaintiff, based on unsatisfied statutory demands.

5.  In July 2009, the plaintiff applied for an order for sale of the property under the Ordinance.  A great deal of evidence has been filed including expert valuations relating to property’s rental and sale values.

6.  At the time of the application, the property was let at $122,000 per month.  The lease expired at the end of February 2010.

7.  On 12 March 2010, the judge made an order for the sale of the property by private tender with consequential directions.  The defendant applied for a stay of execution pending appeal which the judge refused on 29 April 2010 on the ground that he was not satisfied that there is an arguable appeal.

8.  That is the only question for determination in this renewed stay application since it is common ground that the appeal (which is scheduled for hearing in early September) would be rendered nugatory if a stay were not granted.

Is there an arguable appeal?

9.  In approaching this question, while the court must form a preliminary view at this stage, it is undesirable for the court to enter too deeply into the merits and strengths of the appeal.

10.  There is considerable overlap in the many grounds of appeal advanced.  They broadly fall under the headings below.

Impracticability of a partition

11.  Ms Chan who appeared for the defendant submitted that the judge’s conclusion in § 8 of the judgment that it was impracticable to make an order for partition is unsustainable because it had no evidential basis and, further, that it was incumbent on the plaintiff who had made the application to adduce evidence to show that.

12.  The plaintiff’s application was for an order for sale.  His case was that partition was impracticable given the nature of the land.  That is apparent from the plaintiff’s first and second affirmations.

13.  The defendant did not challenge the plaintiff on the impracticability issue and did not contend below that partition was the appropriate relief.  Rather, the application was resisted on the basis that the defendant had a sentimental attachment to the property and that it had not been established that it was more beneficial to the parties to sell the property rather than to continue to own it.

14.  If the impracticability of a partition had been in issue, having regard to the physical attributes of the property, expert evidence (which would have included the nature of the building works (structural or otherwise) that would be necessary to effect a partition, the period of time such works would take, the expenditure required and the value of the two units after partition) would have been filed.  But no directions were ever sought or given below for the filing of such expert evidence and the matter proceeded on the basis that it was unnecessary.

15.  In those circumstances, I do not consider it arguable that absent expert evidence there was no basis on which the judge could have reached the conclusion that a partition was impracticable.  Whether expert evidence is necessary must depend on the facts of the particular case.  The materials before the judge included the physical layout and size of the property as described in the various valuations, annexed to which were floor plans and photographs of the exterior of the property and of the building.  It is also clear from the land search records that the property consists of a 1/6 share in the lot.  Bearing in mind how the parties chose to proceed below, I do not consider it arguable that it was not open to the judge to reach the conclusion that partition was impracticable.

Section 6(1) of the Ordinance

16.  Following his finding that partition was impracticable, the judge went on to conclude that a partition “would not be beneficial to all the owners”.  The defendant contends that section 6(1) requires that an order for partition must first be considered as a threshold matter and that this judge failed to do inasmuch as it could not be done in the absence of expert evidence.  Implicit in that argument is that no order for sale may be made absent expert evidence that partition is not practicable.

17.  Section 6(1) of the Ordinance reads:

(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.

18.  Section 6(1) only requires that the court be satisfied that partition would not be beneficial to the owners having regard to one or more of factors (a) to (d).  While factor (a) relates to “the nature of the land”, the other factors (which may well outweigh factor (a) in any particular case) concern other matters. I do not consider Ms Chan’s reading of the provision – as mandating expert evidence regarding partition – to be arguable.

The plaintiff’s financial position

19.  The plaintiff had put forward two reasons for his application: first that he needed the proceeds to settle his debts said to be no more than $5 million including $1.2 million due to his ex-wife and, second, the breakdown in relationship between the co-making it impossible to agree or cooperate on any matter concerning the property.  In his supporting affirmation, he mentioned various properties he had ‘lost’ as a result of his divorce in 1997.

20.  Subsequent to the judgment, the defendant claimed to have uncovered evidence which showed that in March 2010, years after the divorce, the plaintiff remained the registered owner of some of those properties.  It was said that his earlier statements to the court were calculated to mislead the court as to his financial circumstances and the judge had exercised his discretion in ignorance of the true position.

21.  Even assuming in the defendant’s favour that the plaintiff has not been truthful about his financial position and however much that conduct is to be deplored, I fail to see how that could undermine the exercise of the judge’s discretion when the plaintiff’s needs or financial position is not a relevant consideration.  Once the power of sale is triggered, it is the defendant who has to persuade the court not to exercise that power because of hardship to him.  The Ordinance does not require the court to consider hardship to the plaintiff or relative hardship.

22.  Ms Chan stressed the fact that the plaintiff’s financial needs was one of the reasons given by the plaintiff for making his application and it was a matter that the judge had taken into account (see § 13 of the judgment).  That may be so but unless it is a consideration the Ordinance requires to be taken into account when deciding whether or not to order a sale (which it is does not), it has no relevance.  The point is not arguable.

23.  I only need add that the further ground that it was incumbent on the plaintiff to fully reveal and substantiate his assets and liabilities is equally unarguable for the same reasons.

Appeal against the exercise of discretion

24.  The judge is said to have erred in the exercise of his discretion.  A number of matters are relied on which I have considered but, taken individually or collectively, in the scheme of things, they are but peripheral considerations.  I do not consider it arguable that they would be sufficient to warrant the setting aside of the discretion.

Conclusion

25.  For all these reasons, I do not consider that the defendant has shown that there is an arguable appeal.  While the court has to engage in a balancing exercise and it is accepted that the appeal would be rendered nugatory if a stay were not granted, the absence of an arguable appeal tilts the balance against a stay, bearing in mind that the starting point is that the successful party is not be deprived of the fruits of success.  Accordingly, the application for a stay pending appeal is refused with an order nisi of costs in favour of the plaintiff.