LAW SHI YING v. LAW KAM TAI

IN THE COURT OF APPEAL

1994, No. 45
(Civil)

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J U D G M E N T

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Nazareth, J.A.:

1. This is an appeal by the plaintiff against the order of His Honour Judge Downey made on 25th February 1994 dismissing the plaintiff's summons dated 31st August 1993. By that summons the plaintiff sought directions enabling her to enforce a consent order made by Judge Downey on 3rd May 1993.

2. The plaintiff and the defendant are half sisters. A flat was left to them jointly by their mother. The plaintiff applied by summons for partitioning of the flat under the Partition Ordinance. It is not necessary to go into the early stages of that matter. I can proceed directly for the purposes of this appeal to a consent summons that was filed on 1st May 1993 and signed by the solicitors for the plaintiff, Messrs Chung & Kwan, and by the solicitors for the defendant, Messrs C.K. Tse & Co. The consent summons set out in detail the identity of the property. It recorded the consent of the parties to the property being sold with vacant possession at a price to be mutually agreed by the plaintiff and the defendant by private treaty; and that the sale was to be completed on or before 30th June 1993 and in case it was not put through by that time, that the parties might proceed to sell the property by public auction. It also provided for payment by division of an amount of $20,000 incurred as funeral expenses of the deceased mother, also for the payment by the defendant of $15,000 as agreed costs.

3. On 3rd May Judge Downey made the order by consent in terms. The material parts of that order were that:

"1. The said property be sold with vacant possession at a price to be mutually agreed by the plaintiff and the defendant by private treaty.

2. The sale of the said property shall be completed on or before 30th June 1993 and in case for whatever reasons the sale cannot be put through within the stipulated time, the parties may proceed to sell the said property by public auction.

3. The balance of proceeds of sale of the said property after deducting the legal costs therefor and all outgoings (if any) in respect of the said property and all other incidental fees. costs and expenses of the sale and a sum of Hong Kong $20,000.00 shall be divided by the Plaintiff and the Defendant in equal shares."

4. The property was not sold by mutual agreement before 30th June 1993. It appears that the defendant was reluctant to do so. At any rate, on 1st May 1993 Messrs C.K. Tse & Co. filed a notice to act on behalf of the defendant, LAW Kam-tai. Thereafter the consent summons, to which I have referred, was taken out and the consent order made.

5. On 15th September 1993 Mr Law of Messrs Chung & Kwan, for the plaintiff, and Mr Ronald Tse of Messrs C.K. Tse & Co. appeared before Judge Downey. They appeared upon an inter partes summons taken out by Messrs Chung & Kwan, seeking an order for directions that Messrs Associated Surveyors and Auctioneers on the Chinese Club Building be appointed as auctioneers in public auction for the sale of the property pursuant to the consent order; that Messrs Chung & Kwan act for the plaintiff and C.K. Tse for the defendant in the conduct of the sale, that in the event the defendant failed or refused to complete the said sale, the Registrar of the Court be empowered to execute all necessary documents on behalf of the defendant to complete the sale; and finally for costs.

6. The Judge's notes record the following:

"Mr S.W. Law of M/s Chung & Kwan for Plaintiff

Mr Ronald Tse of M/s C.K. Tse & Co for Defendant

Re: for directions

9.40 a.m.

Law:	My summons for directions. Since consent order of 1st May 1993. Present summons does not deal with Vacant Possession.
Court:	Do you consent to application?
Tse:	Defendant was co-operative - but my latest instructions are that defendant will permit purchasers to inspect and that property be sold by private treaty.
Court:	You are consenting to any order?
Tse:	No. My instruction is request an extension of time.
Court:	That should be done by the parties. You are asking the Court to improve the agreement.
Law:	Other side has not complied with the agreement.
Court:	Then you must commence separate proceedings to enforce the agreement. I doubt whether Court has any jurisdiction in this matter."
Order:	Summons dated 31st August 1993 adjourned sine die with liberty to restore. Costs reserved.

The matter came before the judge again on 25th February 1994. His notes record the following:

"Mr Stewart K.M. Wong, counsel instructed by M/s Chung & Kwan for Plaintiff Defendant: Law Kam Tai (ID No. XXXXXXX(X))

Re:	Sale of property.
Wong:	Restored hearing of summons. Heard in September '993. We are asking Court to provide mechanism for achieving parties' objectives.
Court:	How can I make an order in terms of paragraph 2?
Wong:	I don't ask for such order.
Court:	You are asking Court now to make another order binding on defendant, to which she does not consent, without a hearing of the matters in dispute. Do you oppose application?
Law:	I oppose. I would like you to see this document. When my mother was sick I wanted to sell property.
Court:	In the absence of consent the matter should proceed in accordance with the order and direction of Judge Wong made on 2nd February 1993.
Order:	Summons dated 31st August 1993 dismissed."

I interpose here that the order of Judge Wong was made before the consent order and appears to relate to the trial that at time was pending.

7. It is not entirely clear upon what basis the judge dismissed the summons. However, before us today, the issue has boiled down to this: Whether the consent order reflects an agreement to which effect must be given. The respondent says she never agreed to the sale of the flat. Indeed she is rather vague about Mr Tse's role in the matter. She says a friend arranged for him to represent her but that she had never given him any instructions to consent. However, we have on record a consent summons duly signed by the solicitors on each side and the consent order made by the Judge which on their face embody an agreement and order for the sale of the property at a price to be mutually agreed, and if the sale of that property be not completed before 30th June 1993, for whatever reason, the property be sold by public auction. Indeed, provision is made for division of the sale proceeds.

8. It is recognised by Mr Wong, particularly in the light of Golden Bay Investment Ltd v Chou Hung (Civil Appeal No. 160 of 1992, unreported) that additional matters should have been provided for in the consent order, e.g. the conduct of the sale and the execution of the conveyance. But in terms of the existence of an agreement, in my judgment, the omission of such details does not mean that the agreement was not complete. The matters not included are of a minor mechanical nature that could be dealt with by the court and the judicial machinery available in the ordinary way. As far as the consent order is concerned, it is possible even likely that difficulties may be encountered in the absence of the Golden Bay type of detail mentioned. It seems to me, as I have said, that any such difficulties would be far from insuperable. Nonetheless, the inclusion of such provision must at least be prudent and desirable and a judge might well be justified in deferring the making of a consent order until he has sufficient information to make appropriate provision in such a consent order. But this Court is now confronted with a consent order that has already been made; moreover it is a consent order in respect of which the underlying agreement has not been properly challenged.

9. The underlying consent order in a sense may seem not the same as a court adjudicating on the matter; it is the agreement of the parties. If that agreement is to be challenged and upon that basis also the consent order, that must be done by means of a separate action (see e.g. De Lasala v De Lasala [1979] HKLR 214 at pp.223, 234 per Lord Diplock).

10. I feel bound to add in that regard that until this morning when the respondent raised the matter, there was no suggestion that there had been no agreement or that she had not authorised that consent order. The consent order, as I have already said, seems to me to clearly embody an order for the sale of the property in sufficiently precise and detailed terms. Such an order by consent which remains undischarged is as effective as an order of the court made otherwise than by consent (Kinch v Walcott [1929] AC 482 at p.493). It is right therefore that the courts should lend their assistance and process to give effect to it.

11. Upon that basis, it seems to me that the proper order for this Court to make is to allow the appeal and to set aside the order of dismissal made by Judge Downey. By her notice of appeal the plaintiff has also sought directions for sale. It does not seem to me that there is sufficient matter before this Court to enable such an order to be made here, or indeed that this would be appropriate in the particular circumstances. I would remit the matter to the court below to deal with the summons for directions upon the basis I have indicated.

Barnett, J.:

12. For the reasons given by my Lord, I agree that the appeal should be allowed and I also agree with the course which has been proposed. I have no difficulty in discerning that the consent order embodies an unconditional agreement by which the parties agreed to sell the property primarily by private treaty, failing which by public auction. The underlying agreement being undoubtedly enforceable so also is the consent order in which it is embodied. The plaintiff is therefore entitled to the aid of the Court in working out and enforcing that order. It is now therefore for the judge to consider the summons of 31st August last. It is for him to consider whether to give directions in the form sought in that summons. It may well be that when he comes to consider the summons he may think that rather more detailed and elaborate directions should be given than those sought in the summons itself. That, however, is for the judge once he has heard representations from both parties.

Bokhary, J.A.:

13. For my part, I think that the judge was right. We do not know much about the facts of this case. That is not surprising since there has never been a trial.

14. What we do know may be summarised like this. The plaintiff and the defendant are half sisters. More to the point for present purposes, they are also co-owners of a flat in Shek Kip Mei. We do not know who is living at the flat now. Therefore, we do not know what the implications of an order for sale would be on those persons: whether young or old, rich or poor.

15. By an Originating Summons dated July 2, 1992, the plaintiff commenced proceedings in the District Court seeking, under the Partition Ordinance, Cap.352, an order for sale of the flat either by private treaty or public auction.

16. A consent summons dated May 1, 1993, signed by the solicitors for each party was apparently achieved. One of the questions is whether anything apart from a piece of paper was really achieved. Anyway, on May 3, 1993, upon that consent summons, His Honour Judge Downey made a consent order. It provided that the flat would be "sold with vacant possession at a price to be mutually agreed by the plaintiff and the defendant by private treaty". It also provided that the sale "shall be completed on or before 30th June 1993 and in case for whatever reasons the sale cannot be put through within the stipulated time, the parties may proceed to sell the said property by public auction."

17. No sale by private treaty took place. On August 31, 1993, the plaintiff took out a summons for an order: appointing auctioneers; directing one firm of solicitors to act for the plaintiff and another to act for the defendant in the conduct of the sale; and empowering the Registrar of the District Court to execute all documents necessary to complete the sale if the defendant defaults.

18. I have, of course, merely summarised the orders sought. But when one actually looks at the summons, one sees that that full text does not really take it any further than that summary. To his credit, counsel for the plaintiff before us has not suggested that those directions would be adequate on any view.

19. Anyway, on February 25, 1994, Judge Downey, before whom that summons dated August 31, 1993, came, dismissed it.

20. We are now dealing with the plaintiff's appeal. What is clear to my mind is this. The thing apparently embodied in the consent order is not an agreement. As to a sale by private treaty, it is no more than an agreement to agree. That cannot possibly be an agreement.

As to the sale by auction, it will be seen that what was being contemplated as the prelude to an auction was "the sale" not being "put through" within the stipulated time, i.e. not being "completed" on or before June 30, 1993. So, what was contemplated was a sale - but one which was not completed. Completion is of course a term of art. What was contemplated was an agreement for sale which, for some reason, is not completed. On that view, the provision for a sale by auction collapses along with the wholly unenforceable provision for a sale by private treaty. But even ignoring that view, still on any view, all that the consent order would be doing is leaving the parties free - because the order uses the word "may". and not the word "must" - to sell the flat by public auction. There was nothing binding.

21. Now, a consent order cannot be better than what it apparently embodies. The purported agreement is unenforceable, and so is the consent order.

22. The plaintiff must, in my view, be left to seek an order for sale on the merits. She must be left to persuade a judge of first instance, if she can, that such a course would be the appropriate one. And in deciding whether or not that course would be appropriate, the judge would of course go into the merits. Those merits cannot be known unless or until the full implications of a sale is known. And those implications cannot be known unless or until things like the price are gone into.

23. When it comes to a sale of property in co-ownership, the court must consider the interest of all the co-owners, not just one. It may suit one co-owner to sell and sell at a particular time. It may not suit another co-owner to sell or sell at that particular time. Their interests must be weighed and balanced.

24. If there existed a bargain between these parties, then of course the Court would strive to uphold the bargain and give it effect. But where, as here, there is no bargain, it is not for the Court to imagine or to create an agreement. I confess that if it seemed to me a practical and just thing to do, and if it seemed at all possible to do so, I would be keen to adopt such a course as would resolve this litigation here and now. An example of that approach is to be found in the judgment of this Court in Golden Bay Investment Ltd. v. Chou Hung, Civil Appeal No. 160 of 1992, July 6, 1993. There, a case of very much greater complication than this was involved. But we had there the advantage of hearing counsel on both sides of the question, and were able to put an end to the matter there and then by very elaborate directions formulated with the assistance of counsel on both sides. Here, very unfortunately, we have the assistance of counsel on one side only, the defendant being in person.

25. Now, if we cannot deal with this matter today once and for all, and have to send it away, then I am fully convinced that the course which I prefer is not only legally the only possible one but practically a much more acceptable one.

26. If the Court was to hear a proper application for an order for sale on its merits, it would, doing its job as it ought to do it, go into the full implications of an order for sale before either making one or refusing one. And the examination that it would conduct in that regard would be very much like the sort of examination which would take place when one is considering the appropriate directions to make. Moreover, that course would eliminate one danger adverted to in my Lord's judgment. That danger is that there will now be separate proceedings by the defendant to set aside the consent order on the basis which she foreshadowed when she told us in the course of argument that all that she had agreed to do was to pay $15,000 costs, the true agreement between the parties being that there would be no sale after all.

27. Now, I do not wish to say anything to prejudice either side's position in the event of such a fresh action. But this much I will say. Paragraph 5 of the consent order reads as follows:

"The Defendant shall pay to the Plaintiff HK$15,000.00 as agreed costs under this action upon completion of the sale and purchase of the said property."

The defendant told us in the course of the hearing that she has paid those costs. And she said that if she had time to consult her bankbook, she would be able to identify the withdrawal by which she got the money for that payment. If the matter went back on what I consider to be the legally correct basis, namely, for the parties to proceed to trial, then there would be no need for any fresh action for the setting-aside of the consent order.

28. As to the course favoured by my brethren, namely, allowing the appeal so as to remit the matter for directions, I note also that such course is not even sought in the Notice of Appeal. In any event, I consider that course wrong - and impractical, too: delaying matters even more than a fresh start. For my part, I would simply dismiss the appeal, leaving the plaintiff to seek an order for sale on the merits.

Nazareth, J.A.:

By a majority, therefore, the appeal is allowed, the dismissal of the summons dated 31st August 1993 set aside and the matter remitted to the District Court for that summons to be heard. As to costs, having heard submissions, by a majority, we order that the plaintiff is to have her costs of the appeal, and leave undisturbed the order of the judge that there be no order as to the costs before him.