SIU PIK FONG v. TSE CHU KAI

DCMP 153/2018

[2019] HKDC 388

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 153 OF 2018

--------------------------------

--------------------------------

--------------------------------

------------------------------

JUDGMENT

------------------------------

Application

1.  This is an application by way of originating summons for an Order for sale of a property under section 6 of the Partition Ordinance (Cap 352) (the “Ordinance”).

History

2.  The plaintiff (“Ms Siu”) and the defendant (“Mr Tse”) were married in 1991.  A child was born to the family in 1992.  The matrimonial home was Flat J, 8^th Floor, Block 1, Fullview Garden, No 18 Siu Sai Wan Road, Hong Kong (the “Property”).  In 2001, the marriage was dissolved by a Decree Absolute.  Pursuant to a consent summons dated 18 May 2001, it was ordered (amongst other things) that upon Mr Tse undertaking not to sell the Property until the child reached 18:-

(a)  Mr Tse shall pay Ms Siu nominal maintenance payment at HK$1 per annum;

(b)  Mr Tse shall pay HK$50,000 to Ms Siu within 14 days from the date of the Decree Absolute;

(c)  Ms Siu shall within 14 days from the date of the Decree Absolute transfer and assign to Mr Tse all her estate, right, title and benefit, legal and beneficial of and in the Property absolutely;

(d)  In the event that Ms Siu refuses, neglects or fails to transfer the Property within 7 days after being called upon to do so, the Registrar of the High Court be directed pursuant to section 26 of the Matrimonial Proceedings and Property Ordinance, Cap 192 to prepare and execute a proper assignment giving effect to the transfer of the Property.

(the “Order”)

3.  There is no dispute that subsequent to the Order, Mr Tse did pay Ms Siu HK$50,000 and Ms Siu executed in escrow an assignment to the effect of transferring and assigning to Mr Tse all her estate, right, title and benefit, legal and beneficial of and in the Property absolutely.

4.  Due to his financial circumstances, Mr Tse was unable to obtain a loan to discharge the then existing mortgage to complete the transfer of the Property.  The transfer was never carried out, and could not be carried out until after the discharge of the mortgage.

5.  In March 2013, Mr Tse eventually paid off the last instalment of the mortgage loan and attempted to effect the transfer of the Property pursuant to the Order.  By then, 12 years would nearly have passed since the Order was made.  As the Property is under the Home Ownership scheme, an application for the approval of the Housing Authority requires the signatures of both Ms Siu and Mr Tse for the transfer to be effective.

6.  Mr Tse said that despite numerous attempt to call Ms Siu, he had not been able to contact her.  Mr Tse said that once his solicitors managed to get through but Ms Siu immediately cut off the line once the solicitors informed her of the purpose of their call.  Since then Ms Siu did not pick up any calls from the solicitors.  Mr Tse failed to procure Ms Siu to sign the Housing Authority application form before the expiry of the limitation period.

7.  It is of note that prior to 2013, there was never any indication from Ms Siu that she would be unwilling to abide by and carry out the terms of the Order.

8.  Ms Siu’s case is that she is now no longer under an obligation to sign the application to effect the transfer, since Mr Tse is debarred from enforcing the Order, which had expired by virtue of section 4(4) of the Limitation Ordinance (Cap 347).

9.  Further, as a joint tenant of the Property, Ms Siu now seeks an order for the sale of the Property and to have 50% of the sale proceeds after all disbursements and costs have been paid.

Section 4(4) of the Limitation Ordinance (Cap 347)

10.  Ms Siu relies on a simple line of argument.  Namely, the Order has expired and she is no longer bound by it.  She is no longer bound by the settlement terms embodied in the Order.

11.  Section 4(4) of the Limitation Ordinance (Cap 347) (the “LO”) provides:

“An action shall not be brought upon any judgment after the expiration of 12 years from the date on which the judgment became enforceable, and no arrears of interest in respect of any judgment debt shall be recovered after the expiration of 6 years from the date on which the interest became due.”

12.  Mr Lo, counsel for Ms Siu contended that since more than 12 years have passed from the date of the Order, Mr Tse can no longer enforce the Order nor compel Ms Siu to carry out the terms of the Order.  Thus, Ms Siu remains a joint tenant of the Property and she is entitled to apply for a partition of the Property.

13.  Mr Law, counsel for Mr Tse, submitted that Mr Tse is still entitled to execute the Order.  He relied on the case of Lowsley v Forbes [1999] 1 AC 329 where it was held that: “Action in section 24(1) means a fresh action and does not include proceedings by way of execution.”  Mr Law contended that therefore Mr Tse is still entitled to bring enforcement proceedings against Ms Siu to compel her to transfer her interests in the Property pursuant to the Order.

14.  However, such submissions would go against the Court of Appeal decision of Re Li Man Hoo [2013] 6 HKC 116, to which neither party referred the Court.  In Re Li Man Hoo, Barma JA dealt with the limitation point arising out of section 4(4) of the LO (from §9-32) and held that in Hong Kong, as we are untrammelled by the peculiar legislative history of the corresponding English provisions, for the purposes of section 4(4) of the LO, “action” has the very wide meaning attributed to it by section 2 of the LO – “any proceeding in a court of law”.

15.  In light of Re Li Man Hoo, Mr Law reluctantly conceded that enforcement proceedings to carry out the terms of the Order would fall under “any proceeding in a court of law” and thus Mr Tse is debarred under section 4(4) of the LO from having the terms of the Order carried out by enforcement actions. 

Factual Dispute

16.  In the midst of legal arguments, parties applied for the Originating Summons to be turned into a Writ action and asked for directions to file pleadings.  This was surprising as it was Mr Lo’s submission originally that any factual disputes there might be would be irrelevant to the determination of the Originating Summons.  The only factual dispute was whether there was an agreement to the effect that Mr Tse would no longer require Ms Siu to transfer her interest in the Property pursuant to the Order, as Ms Siu allegedly agreed to waive all outstanding indebtedness due from Mr Tse to her.

17.  As parties agreed that that was the only factual dispute, the court was of the view that with such a narrow factual dispute, it could be dealt with by the court taking live evidence from both Ms Siu and Mr Tse and have them cross-examined only on that issue.  This is particularly so because bearing in mind the value of the Property, it would not be sensible to expend huge amount of costs and time and turn the originating summons into a full action when the factual dispute is but a narrow one.

18.  Parties then filed respective affirmations (limited to the issue of the alleged agreement) and the Court heard live evidence from both Ms Siu and Mr Tse on 20 February 2019 on whether there was an agreement for Ms Siu to waive Mr Tse’s alleged indebtedness in return for Mr Tse’s agreement not to enforce the transfer of Ms Siu’s interest in the Property.

19.  Ms Siu’s evidence was that after the divorce, she tried to have access to the daughter and was told by Mr Tse that she could only see the daughter if she would lend him certain sums of money.  Ms Siu said she acceded to Mr Tse’s request and understood that the money she lent Mr Tse would be used to pay for the salary of Mr Tse’s domestic helper.  Ms Siu’s evidence was that she had lent Mr Tse HK$5,000 each month for about a year.  Upon the court’s enquiry, Ms Siu confirmed that the total amount lent to Mr Tse was HK$60,000.  This was never mentioned in her previous affirmations.  In her previous affirmation, she said that she could not remember how much was lent to Mr Tse.  Ms Siu could provide no documentary evidence in support of such loans.

20.  Compared to Ms Siu, Mr Tse gave consistent evidence to the fact that he had ceased all communications with Ms Siu after the Order and thus would have no opportunity to talk to Ms Siu, let alone ask her for loans. He denied the existence of the alleged loan or agreement to waive Ms Siu’s obligation to transfer.

21.  The court is of the view that the version of events suggested by Ms Siu is inherently improbable.  It is not disputed that the parties were on bad terms after the divorce.  It is difficult to imagine why Mr Tse would agree to forgo half share interest in the Property, in return for the waiver of a HK$60,000 loan, especially when he was living there with his daughter.

22.  When the court put this to Ms Siu and asked for an explanation, all Ms Siu could say was the alleged agreement was made “due to a commitment from Mr Tse to her”.  No detail of what was the basis of such commitment or why there was any commitment from Mr Tse after their divorce could be given by Ms Siu.

23.  I reject that there was any agreement by Mr Tse to waive his rights to insist on the transfer of Ms Siu’s half share interest in the Property pursuant to the Order.

24.  On that basis, the parties returned to the legal arguments.

25.  As it was conceded that the time limit to enforce the Order had passed, Mr Law tried to resist the application by relying on various equitable remedies.

Proprietary Estoppel

26.  Mr Law relied on promissory estoppel and submitted that Ms Siu is estopped from making a proprietary claim in the Property.

27.  The three elements of promissory estoppel are: i) the parties were in a relationship involving enforceable or exercisable rights, duties or powers; ii) the promisor by words or conducts, conveyed or was reasonably understood to convey a clear and unequivocal promise or assurance to the promise that the promisor would not enforce or exercise some of those rights, duties or powers, iii) the promise reasonably relied upon that promise and was induced to alter his position on the faith of it, so that it would be inequitable or unconscionable for the promisor to act inconsistently with the promise.  (§4-086 - §4-097, Chitty on Contract, 32^nd Ed.)

28.  Mr Tse and Ms Siu were in a relationship with exercisable rights.  Ms Siu clearly made a promise as enshrined in the Order and had acted accordingly; Mr Tse had relied upon that promise and acted to his detriment by having repaid the mortgage in full by himself.  I consider that the three elements of promissory estoppel as having been fulfilled, and now it would be inequitable or unconscionable for Ms Siu to act inconsistently with the Order – namely, to assert 50% interest in the Property and asking for it to be sold.

29.  I am thus of the view that Ms Siu is estopped from asking for the Property to be partitioned and sold now.

30.  Even if I were wrong on the issue of estoppel, I am in any event not satisfied that Ms Siu has demonstrated that according to the principles governing the exercise of discretion under s.6 of the Partition Ordinance, an Order ought to be made in favour of her Application. 

Partition Ordinance (Cap 352)

31.  Section 6 of the Partition Ordinance (Cap 352) provides as follows:-

“(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.

(2) The Court may exercise its powers under subsection (1), notwithstanding the dissent or disability of any person interested.”

32.  In Wong Chun Kei Johnny & Others v Poon Vai Ching & Others [2007] 1 HKLRD 825, Recorder Joseph Fok SC (as he then was) at paragraphs 18-19 summarised the principles, after reviewing a number of helpful authorities, as to how the court should exercise that discretion under the Partition Ordinance as follows:-

“(a) 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;

(b) 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

(c) 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.”

33.  A pre-requisite for invoking sections 2 and 6 of the Partition Ordinance is that the applicant must demonstrate that he or she has a beneficial interest in the property in question.  As an illustration, see Ng J’s decision in Re Tsang Yin Hong HCB 4387/2007 (unreported, 27 June 2016), paragraph 22:-

“ … [T]his court concludes that Madam Yiu and Mr Tsang did not intend a joint beneficial tenancy of the Property. In other words, this court is satisfied that Madam Yiu has discharged the burden of showing Mr Tsang had and has no beneficial interest in the Property. That is sufficient to dismiss the Trustees [of the property of Mr Tsang]' application.”

34.  As stated in Snell's Equity (33^rd ed, 2015) at para 24-049:-

“Where an express trust has not been declared, then the starting point is that equity follows the law, and the beneficial ownership of the property is held in the same way as the registered legal estate in the property. If the property is registered in the name of one party only, then they will be presumed to be the sole beneficial owner. If it is registered jointly in the names of both parties, then it is presumed that they hold for themselves as beneficial joint tenants. This will be the case even where one party has made no financial contribution at all to purchasing the property.” (emphasis added)

35.  As such, Mr Tse bears the burden of proving that Ms Siu, albeit registered as a joint tenant of the Property, is nevertheless not a beneficial owner of the same.  In the present case Mr Tse has given evidence on affirmation, which was not disputed by Ms Siu, that relying on Ms Siu’s promise to transfer her original interest in the Property to him, he had repaid the entire mortgage by himself.  Although there seems to be some dispute on whether Ms Siu contributed to the original down payment of the Property, taking her case to the highest, this would only amount to a contribution of HK$35,000 plus repayment of part of a HK$30,000 loan.  There is no dispute that the rest of the mortgage repayments were paid by Mr Tse solely.  Under these circumstances and looking at the history between Mr Tse and Ms Siu, it is thus difficult to see on what basis could Ms Siu assert a 50% claim on the proceeds upon sale of the Property.  I am satisfied that Mr Tse has discharged the burden of showing that Ms Siu, despite a registered joint tenant of the Property, is nevertheless not a beneficial owner of the same.

36.  Further, it is clear that ordering the sale of the Property will result in very great hardship to Mr Tse.  Mr Tse had relied upon Ms Siu’s promise and repaid the entire mortgage on his own.  Ms Siu had not indicated prior to this application, that not only would she renege on transferring her interest under the property, she would further ask for the property to be sold and then ask for 50% of the sale proceeds.  Mr Tse has no other Property that he and his daughter (who is also the daughter of Ms Siu) could move to if the Property was partitioned and sold.

37.  I have little doubt in concluding that under the present circumstances, making an order for sale of the Property would create very great hardship on Mr Tse.

38.  As such, I will exercise my discretion against making an order under section 2 or section 6 of the Partition Ordinance.

Enforcement of the Plaintiff’s Obligations under the Order

39.  Mr Law seems to suggest in his skeleton that the court should order Ms Siu to transfer her interest in the Property to Mr Tse pursuant to the doctrine of part performance, or by reason of Mr Tse being an equitable assignee.

40.  This application being the Ms Siu’s application by originating summons, it is inappropriate to deal with relief sought by Mr Tse, nor was there an application on the part of Mr Tse for such relief before the court.  The court declines to consider such arguments.  It will be for Mr Tse to take out an appropriate application if so advised.

Disposition

41.  I dismiss the originating summons dated 16 January 2018.

42.  I make a costs order nisi that costs are to be paid by the plaintiff to the defendant, on a party to party basis, including all costs reserved.  Unless the parties make an application to vary the above costs order nisi within 14 days from the date of this order, the costs order nisi will be made absolute after the expiry of the said 14 days.