YU WING CHEONG alias YU JOSEPH WING CHEONG, Executor substituted named in the Will of YAU SIN WAH alias YAU KAM LAN (“Deceased”) AND ANOTHER v. YU WING YIN

HCMP 2089/2017

[2019] HKCFI 1304

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2089 OF 2017

______________

______________

______________

______________

DECISION

______________

1.  This was an application by Yu Wing Cheong alias Yu Joseph Wing Cheong (“the 1^st plaintiff”) and Yu Wing Kit (“the 2^nd plaintiff”) (collectively “the plaintiffs”), the executors named in the will of Yau Sin Wah (“the mother”) for summary judgment in respect of their claims for vacant possession and an order for sale of the Property (defined in §5 below) against Yu Wing Yin (“the defendant”) in these proceedings. At the conclusion of the hearing, the Decision was reserved which is now handed down.

BACKGROUND FACTS

2.  The mother died on 30 September 2000 having by her last will dated 14 September 1968 appointed her husband Yu Hing Wan (“the father”) as sole executor and beneficiary and, in the event of his predeceasing the deceased (an event that occurred on 10 August 1970), she appointed the plaintiffs who are two of her three sons to be the executors of her will.

3.  The deceased bequeathed all her real and personal estate to her four children being the plaintiffs, the defendant and Yu Wing Mui (“Anne Yu”) in equal shares.

4.  Probate was granted to the 2^nd plaintiff on 5 September 2002 with power reserved to the 1^st plaintiff to apply for and obtain a like grant.  The grant of probate to the 2^nd plaintiff was registered in the Land Registry on 26 September 2002.

5.  As appears from the schedule of property annexed with the grant, the mother was the registered owner of the 1^st floor of No 24, The Sanitarian Apartments situate at 20 – 30 Green Lane, Hong Kong (“the Property”).  It was assigned to the mother by an Assignment dated 1 April 1998 (“the Assignment”) made between The Sanitarian Co-operative Building Society, Ltd (“the Society”) acting by Ma Shiu Ngok (“the Liquidator”) and the mother.

6.  The Property remains the only unrealised asset of the mother’s estate.  The siblings are all now in their 70s.  As the Property was built some 64 years ago, the outgoings necessary to maintain it have become considerable.  By 2014, the cash and securities (which have been realised) comprised in the mother’s estate had been spent and the 2^nd plaintiff has had to make personal loans over the last several years to the estate to cover the outgoings for the Property.

7.  In about 2016, the plaintiffs and Anne Yu confirmed their wish and agreement that the Property should be sold with vacant possession at market price and the net proceeds distributed to the siblings.  The estimated market price of the Property with vacant possession is in the region of $32 million.  As the Government lease is subject to restrictions on alienation, enquiries made with the Lands Department in 2016/2017 showed a likely landpremium of just over $16.5 million plus administrative costs of approximately $43,000 would be payable for the restrictions to be lifted as at that date.

8.  The defendant still resides at the Property which has been his home for over 60 years and refused to comply with the plaintiffs’ request to vacate the Property. 

9.  In those circumstances, the plaintiffs had little option but to obtain a Beddoe order from Au-Yeung J on 17 August 2017 granting them leave to commence the present proceedings for vacant possession, mesne profits/damages against the defendant and an order for sale to be conducted by the 2^nd plaintiff.

10.  Pursuant to the judge’s directions, these proceedings were commenced by way of an originating summons issued on 28 September 2017 seeking, inter alia, an order for vacant possession, mesne profits and the sale of the Property to be conducted by the 2^nd plaintiff.

11.  On 29 December 2017, Master Lai ordered that the proceedings to proceed as if begun by writ.  Accordingly, the parties filed pleadings which have now closed.  Directions were given at the case management summons heard by master on 17 September 2018 that included the date by which interlocutory proceedings had to be filed.

THE ORDER 14 SUMMONS

12.  The plaintiffs’ summons dated 13 November 2018 seeks final judgment on their claims to vacant possession of the Property and for an order that the Property be sold with vacant possession at market price within three months after obtaining vacant possession, such sale to be conducted by the 2^nd plaintiff.  Should final judgment be obtained, the plaintiffs have confirmed that they will not pursue their claim for mesne profits and interest.

13.  The plaintiffs have adduced evidence to establish the mother’s title to the Property which stems from the Assignment.  The recitals show, inter alia, that (i) the mother was a member of the Society and the underlessee under an underlease of the Property dated 1 November 1994 granted by the Society and held by it under a Government Lease dated 26 April 1974 for a 75-year term commencing 4 January 1956; (ii) the registration of the Society was cancelled on 22 August 1996 effective 1 May 1997; and (iii) the Liquidator was appointed by the Registrar of Co-operative Societies as the liquidator of the Society.

14.  The Liquidator assigned the residue of the term under the Government lease to the mother whereupon the term granted by the underlease merged and was extinguished in the term granted by the Government lease.  Subject to the restrictions on alienation contained in the Government lease and a subsequent modification letter, the mother became the registered owner of the Property upon registration of the Assignment on 30 April 1998.

15.  The mother’s title devolved on the 2^nd plaintiff as executor as shown in the land search records.  The 2^nd plaintiff is shown as the registered owner in his capacity as executor.

16.  That the 2^nd plaintiff as executor has power under section 54 of the Probate and Administration Ordinance, Cap 10 (“the PAO”) to dispose of any property vested in him is apparent.  However, he is not in a position to do so if he cannot be certain of being able to grant vacant possession of the Property to the potential purchaser.

17.  The siblings (other than the defendant[1]) agree that the Property should be sold as soon as possible for the following reasons: (i) it is the only unrealised asset of the estate; (ii) the estate’s lack of available funds to finance the upkeep of the ageing Property; (iii) the estate’s inability to derive rental income from the Property given the alienation restrictions under the Government lease; (iv) the increasing burden of having to look after and maintain the Property when the executor and the beneficiaries of the estate are all in their 70s; and (v) the desirability of winding up the mother’s estate which has been in administration for some 17 years and distributing the net proceeds to the four beneficiaries.

18.  However, the defendant continues to reside at the Property and refuses to vacate it.

WHETHER THE DEFENDANT HAS SHOWN TRIABLE ISSUES

(a)   Equitable interest as a tenant in common

19.  The defendant contended that he has an equitable interest in the property as a tenant in common and, without his consent, the Property cannot be sold.  It is his case as stated in his written submissions opposing summary judgment that under the Civil Servants’ Cooperative Building Society Scheme (“the scheme”), when the premises were granted to the father some 64 years ago it was a grant to the father “for the living and enjoyment of himself and his family” in consideration of his membership of the Society and payment of the construction costs.  At the relevant time, the defendant could only have been a very young infant.

20.  Other than the defendant’s bare assertions, there is not a shred of evidence before the court regarding the scheme, the grant to the father, its terms, how a trust came to be established, its scope and terms that is said to confer on the defendant (an infant at the relevant time) an equitable interest in the Property.

21.  That aside, the defendant has advanced various versions as to how his equitable interest in the Property arose.  Those versions can be discerned from the pleas made in his defence dated 9 February 2018 in the paragraphs identified below:

   (1)   “ Ownership rights flow directly from the original grant of the premises to the siblings’ father and his descendants”  (emphasis added): §5;

   (2)   “ The Defendant’s father never had title to the premises.  Upon his death, the Defendant’s mother…took over the membership of[the Society].  The said premises were not part of the Defendant’sfather’s estate; no estate duty was paid in respect of the premises. The Defendant’s mother never had title to the premises.  The assignment letter from [the Society] solemnised the position of the Defendant’s mother as member of the Society but there was no implication regarding property and title to the premises … the premises is not part of mother’s estate …” §12;

   (3)   “ Even if ownership rights were to be considered to flow from the Defendant’s father to the Defendant’s mother, the ownership rights will then flow to the four siblings jointly.  Furthermore, even if it were construed that the ownership rights flowed from the Defendant’s father to mother, and then to her estate, ownership rights will still flow to the four siblings jointly.  The role of the executors is only as trustees acting for the interests of the beneficial owners …. They have an overarching fiduciary duty towards the benefit of the equitable owners.” §13; and

   (4)   “ Furthermore, the executors do not have title to the property … Even if the executors had title … they would be holding it in trust for the beneficial owners …” §14.

22.  §12 of his witness statement dated 2 October 2018 merely reiterated the assertions made in §12 of his Defence: see §21(ii).

23.  There is a clear inconsistency between his case (as pleaded in §5 of the defence) of there being a grant to “his father and his descendants” which would include subsequent generations, and his case advanced at the hearing, namely, that the grant was one made to “his father and his dependents”which may include other people rather than the grantee’s immediate family.

24.  If anything, the uncertainty of how the alleged “trust” (upon which the defendant relies) arose alone negates the existence of the trust.  

25.  At the hearing, the defendant made reference to a passage in [230.819] Halsbury’s Laws of Hong Kong as well as the decision of the English Court of Appeal in Bull v Bull [1955] 1 QB 234. Those authorities can hardly assist when no prima facie case has been shown of the existence of a trust.

26.  Further, the fact that the defendant is a residuary beneficiary under the will does not mean that he has an equitable interest in the Property.  Absent an assent, what a person interested under the will has is an inchoate right transmissible to his own representatives to have the estate properly administered and applied for his benefit when the administration is complete:see Williams, Mortimer & Sunnucks on Executors, Administrators and Probate,2018 edition at §76-03.

27.  The defendant has failed to show any triable issue arising as to his alleged equitable interest in the Property.

(b)   Whether the statutory power contained in section 54 of the PAO is exercisable

28.  The defendant submitted that the 2^nd plaintiff is not in a position to exercise any power of sale under section 54 because of the restrictions on alienation.  It is not suggested that such restrictions cannot be lifted upon payment of the requisite land premium and administrative costs.

29.  At the hearing, there was some suggestion that those restrictions somehow operated to confer on the defendant who is a member of the grantee’s family an “interest” in the Property or a right to reside there. Such a proposition is clearly untenable.  The restrictions on alienation were imposed by the Government for its own benefit as grantor of the land on which the Property stands and not for the purpose of creating trusts for the benefit of third parties.

30.  It would further appear to be the defendant’s contention that uponpayment of the land premium and the consequent lifting of the restrictions on alienation, the 2^nd plaintiff as executor has no option but to execute an assent of the Property to the siblings.  The defendant further submitted that the executor is in breach of a statutory provision that requires an assent to be made within two years of the mother’s death.

31.  The legal basis of the defendant’s contention is obscure given that the relevant provisions in support were not cited or otherwise provided to the court.

32.  In so far as the defendant seeks to equate his interest as a beneficiary of the mother’s estate to an equitable interest in the Property, that is a non-starter: see §26 above.

(c)   Estoppel

33.  As I understand it, the defendant sought to raise estoppel as a defence to the claim for vacant possession on the basis that during their respective lifetimes, the father and the mother had promised the defendant that he could live at the Property as long as he wished and, in reliance on those promises, he has incurred expenditure in the form of paying certain maintenance expenses in the past in respect of the Property.

34.  No particulars have been given as to when such promises were made or their precise terms.  Further, no evidence has been adduced regarding the expenditure said to have been incurred in reliance on those promises.

35.  In those circumstances, the defendant has failed to show or establish a prima facie case of estoppel.  In my view, such a defence is wishful thinking.

(d)   Re-development proposals

36.  At the hearing, it transpired that the defendant’s stance to a sale of the Property was not an objection in principle to a sale; rather, the issue is the timing of such a sale.

37.  According to the defendant, there is an imminent collective sale for redevelopment of the Sanitarian Apartments pursuant to Cap 545 and 545A.  It was submitted that once the Incorporated Owners (“IO”) go formally into the procedure of collective sale for redevelopment, individual owners will not be allowed to sell the units.  The initial poll was said to show that over 84% of the units were in favour of a collective sale for redevelopmentand the IO discussions have been ongoing for two years.  It was said that the next step is for the units that have not yet paid the alienation premium to apply to the Civil Service Branch for a waiver.

38.  Again, these are bare assertions without any evidential support.  In any event, at this stage, notwithstanding two years of negotiations, nothing concrete has resulted from such redevelopment proposals. There is simply no guarantee of development occurring.  The 2^nd plaintiff as executor is not aware of the commencement of any formal procedure commenced by the IO of collective sale nor is there evidence as to when that is anticipated to take place.  As matters stand, all that can be said at present is that a collective sale may or maynot happen in the future.

39.  In my view, the prospect of a collective sale for redevelopment remains unclear and uncertain.  Given the reasons highlighted in §17 above that strongly militate in favour of a sale in the near future, it would be invidious and unreasonable to refuse an order for sale simply because there is a possibility that a collective sale for redevelopment could happen in the future that might augment the value of the Property.

CONCLUSION AND ORDER

40.  For the reasons set out above, the defendant has failed to show that there are any triable issues or that he has any defence to the plaintiffs’ claims to an order that vacant possession of the Property and for an order that the Property be sold.

41.  Accordingly, it is ordered that:

   (1)   The defendant do forthwith leave, vacate and deliver up vacant possession of the Property to the plaintiffs within 12 weeks from the date of judgment.

   (2)   The Property be sold with vacant possession at market price.

   (3)   The Property be put up for sale by the plaintiffs within three months after obtaining vacant possession of the Property,such sale conducted by the 2^nd plaintiff.

   (4)   There be an order nisi that the plaintiffs’ costs be borne and paid out of the estate of the deceased on a trustee basis, to be taxed if not agreed, and there be no order as to costs in respect of the defendant.