FUNG PING FAI v. WONG FUNG CHU

DCMP 919/2019

[2022] HKDC 1203

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 919 OF 2019

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JUDGMENT

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1.  This is the plaintiff’s application for an order for sale of the property known as Unit K on 19/F of Block 1, Vigor Industrial Building, Nos 49-53 Ta Chuen Ping Street, Kwai Chung, New Territories, Hong Kong (the “Property”) under the Partition Ordinance (Cap 352).

Background

2.  In 1982, the plaintiff, Fung Hei and Fung Wai Kong established the Hung Fat Hardware Machinery Fty (“Hung Fat”).

3.  To provide a place of operation for Hung Fat, the three of them purchased the Property as co-owners on 30 November 1988, with each of them holding an equal undivided 1/3 share.

4.  In 2007, the plaintiff ceased to engage in Hung Fat, but he continued to hold onto his 1/3 share in the Property.

5.  Since in or around July 2009, the plaintiff has not received his share of the rent derived from the Property, although he was given to understand that the Property was leased to Hung Fat. In or around 2014, it came to the plaintiff’s notice that Hung Fat no longer rented the Property, and the Property was occupied by one Mr Yip who was the occupier of the neighbouring Unit L (“Mr Yip”).

6.  On 20 May 2016, the defendant acquired 2/3 interest in the Property from Fung Hei and Fung Wai Kong, when United Asia Finance Ltd exercised its power of sale as a chargee on their 2/3 share in the Property.

7.  By a letter dated 26 October 2017 from Messrs Li & Partners, the plaintiff’s then legal representative, to the defendant, the plaintiff requested the defendant to disclose all information regarding the use of the Property. However, the defendant did not reply.

8.  From 31 October 2018 to 16 November 2018, the plaintiff’s son attended the Property and discovered that the Property was occupied by staff of a tenant working therein. It was represented to the plaintiff that they worked for a company named ‘雅賢公司’. The plaintiff then required the defendant to disclose all information regarding the tenancy.

9.  By letters from Messrs K B Chau & Co, the then legal representative of the defendant, to Messrs Li & Partners dated 11 December 2018 and 14 March 2019, the defendant provided some information relating to the leases of the Property to the plaintiff. However, the information provided lacked particulars and did not appear to be sufficient for the plaintiff to ascertain his entitlement to the rent derived from the Property.

Applicable Legal Principles

10.  For an order for sale under s 6 of the Partition Ordinance, Au-Yeung J summarized the relevant principles in Cheung Wing Kuen Samuel v Ip Chui Sum [2021] HKCFI 2535:-

“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).”

Sale of the Property

11.  As the subject matter of the Property consists of equal undivided shares of the land together with the sole and exclusive right and privilege to hold use occupy and enjoy the unit in the building, it is not practical to partition the Property between the parties: Liu Chung Hang & Ors v Liu Chung Leung Alfred (HCMP 1255/2007, 19 December 2007) at [9]; Chan William Lai Yee & Ors v Chan Yau Yuen Fun Therese & Anr (HCMP 1203/2011, 8 March 2012)at [12]; and Ng Ming Joe Joseph, Executor of the Estate of late Ng Kar Yuen Peter (Deceased) v The Personal Representatives of Late Lau Yue Heng (Deceased) (DCMP 2839/2015, 7 February 2017) at [29].

12.  The defendant confirmed that she agreed to the sale of the Property. She also agreed to the minimum price and reserve price as proposed by the plaintiff when the Property was sold by way of private treaty and by auction respectively.

13.  I am satisfied that the plaintiff is a co-owner of the Property having 1/3 beneficial interest therein, and he is in a position to rid himself of the shackles of co-ownership. As it is impracticable to make an order for partition, an order for sale would be made in light of the stance now taken by the defendant.

14.  I therefore make an order for sale in the following terms:-

(1)  The Property be sold pursuant to s 6 of the Partition Ordinance;

(2)  The defendant do deliver up vacant possession of the Property and all the title deeds of the Property in the defendant’s possession (if any) to the plaintiff before 31 January 2023;

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

(4)  If the defendant does not comply with the aforementioned paragraph (3), Mr Tang Tim Sik of Messrs Ng & Co be authorized to sign and execute any documents required for the sale of the Property;

(5)  The conduct of the sale be given to Mr Tang Tim Sik of Messrs Ng & Co;

(6)  The Property shall be sold with vacant possession at first attempt by private treaty sale at a price of not less than HK$5,250,000 in the open market;

(7)  If the Property cannot be sold within 3 months in the manner as stated in the preceding paragraph, the Property be sold by public auction at the reserve price of HK$4,000,000 in the open 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 (with solicitors’ costs excluding disbursement not exceeding HK$25,000), estate agent commission not exceeding 1% of the sale price, and all necessary expenses;

(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 in discharge of all fees which remain outstanding and unpaid immediately before the completion of the sale;

(e)  1/3 of the remaining net balance to be paid to the plaintiff, and the remaining 2/3 be paid to the defendant (after payment of the plaintiff’s costs in these proceedings, and payment of the plaintiff’s costs of any enforcement action in recovering the possession of the Property if necessary).

(9)  Liberty to apply.

Recovery of Expenses

15.  It is the defendant’s case that subsequent to the purchase of her interest in the Property, she had tried to contact the plaintiff but to no avail. She had paid for various expenses for the Property, and she had spent over HK$300,000 in renovating the same. The defendant asked the plaintiff to reimburse her for his share of the expenses.

16.  There is no record that the defendant had applied to have her intended counterclaim to be resolved in these proceedings. No order has been made to this effect and no directions have been given to allow the plaintiff to adduce the relevant evidence in meeting her intended counterclaim. I was informed that the plaintiff would take issue with defendant’s purported expenses including the cost and necessity of the renovation. In light of the amount of factual dispute involved, these matters cannot be resolved on affidavit. The defendant should therefore deal with her intended counterclaim by way of separate proceedings.

Rental of the Property

17.  It is the defendant’s case that the Property had been leased out by one of the former owners to Mr Yip at HK$6,000 for a total of 8 years although the relevant period was not specified.

18.  The defendant accepted that the Property was later leased out by her, with its rents received and retained by her.

19.  I am satisfied that the plaintiff, as a co-owner, is entitled to ask for an account and enquiries in rents, profits and other income derived from the Property since 6 May 2016.

20.  As to costs, I make a costs order nisi that the costs of the plaintiff be borne by the defendant, with certificate for counsel, to be taxed if not agreed. The costs order nisi shall become absolute in 14 days from the date of this judgment if no application to vary the order is taken out.