LAI TAI MIU, ROVANA v. EVEREST TIMOTHY WODEHOUSE

HCMP 2224/2019

[2024] HKCFI 1432

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2224 OF 2019

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DECISION

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Introduction

1.  The plaintiff and the defendant are ex-partners and former cohabitees. They are tenants-in-common of the Property. In December 2019, the plaintiff commenced these proceedings seeking an order to sell the Property pursuant to the Partition Ordinance, Cap 352.

2.  Deputy High Court Judge William Wong S.C. by two separate orders dated 22 January 2021 (the “1^st Order”) and 3 September 2021 (the “2^nd Order”) respectively (collectively, the “Orders”) made an order for sale of the Property and provided the manner in which the Property ought to have been sold. The terms of the Orders which are of relevance to the present application are:

(1)  The Property be sold by public auction in open market within the next 2 months (from 3 September 2021), failing which, the Property be sold by private treaty with Mr Joe Cheng (“Joe Cheng”) of Midland Realty International Limited appointed as the exclusive estate agent for the purpose of the sale by private treaty;

(2)  By consent, the reserve price for the sale of the Property be set at HK$58,000,000.

3.  Despite of the Orders providing a mechanism on how the Property ought to be sold, the Property had not been sold as there had been no bid put in at the auction and no offer at or above the reserve price had been made for the sale by private treaty.

4.  After more than 2.5 years since the 2^nd Order, the Property still has not been sold and the plaintiff took out the present application to seek new directions for the sale of the Property.

5.  Mr Justin Ismail, counsel for the defendant, classifies this application to be a variation of the 2^nd Order, which should not be acceded to as the court does not have jurisdiction to alter the terms of the Orders so as to obtain a quick sale.

6.  Mr Peter K.M. Chung, counsel for the plaintiff, on the other hand submitted that under the express “liberty to apply” provision, or on the basis that there has been a change of circumstances, new directions for the sale of the Property should be given.

7.  After clarification at the hearing, Mr Ismail confirmed that he was not submitting that the court has no jurisdiction to vary the Orders, but rather, in the circumstances, there is no basis for the court to do so.

The defendant’s stance

8.  Heavy reliance was placed by Mr Ismail on the case of Kong Colin Chung Ping, the executor of the estate of Kong Wing Hong v. Kong Chun Ip[1]. In Kong Colin Chung Ping, the mechanism for the sale of the property in question was: a reserve price was set, if the property was not sold at that price, the reserve price would be reduced over time and the periodic price reduction would be repeated and continued until the Property was sold. Deputy High Court Judge Winne Tsui considered the objective intention of the parties when the reserve price was set and the mechanism that followed when the property is not sold. It was thus held that there was no intention between the parties that the Property be sold at market price as the price reduction mechanism would not take into account what the market price was. As the regime was workable and no working out was necessary.

9.  It is submitted by Mr Ismail that as parties had agreed on a minimum reserve price of HK$58 million and no deadline for the sale had been set, the intention of the parties was clearly that the Property should not be sold if the minimum reserve price is not met. The mechanism is still working well as Joe Cheng is still marketing the Property at HK$58 million throughout.

10.  I reject this submission. I am of the view that it cannot have been the intention of the parties (least not the plaintiff’s) that unless the Property is sold at or above HK$58 million, it should not be sold.

11.  The context behind the sale of the Property ought to be borne in mind: the parties had separated. The plaintiff had to go to court to obtain an order for sale under the Partition Ordinance after her relationship with the defendant ended. It is clear that the plaintiff wished to have this final matter between them to be dealt with and have closure. The defendant’s contention that the Orders should not be varied would lead to the absurd result that unless the Property can be sold at HK$58 million or above, the Property will not be sold and the plaintiff and the defendant might forever share a connection through the Property despite their relationship having come to an end. This could not have been the common intention of the parties.

12.  Kong Colin Chung Ping is clearly distinguishable on the facts as the property in question would most probably be sold as the price would eventually get to zero.

13.  In any event, there is also no conviction in the defendant’s stance that once the reserve price is set, it cannot be varied. In a letter from Haldanes, solicitors for the defendant, dated 6 October 2021, the defendant asked the plaintiff to agree to increase the reserve price in view of transactions having been completed at a higher amount around that time, failing which an application would be taken out to vary it.

The plaintiff’s stance

14.  Mr Chung submitted that due to the following, it is clear that the mechanism as provided in the Orders did not work and will not work:

(1)  Since the 2^nd Order was made, the property market has changed such that the reserve price of HK$58 million is no longer realistic. To insist on the old reserve price would mean that the Property would not be sold in the near future.

(2)  The fact that no time limit was provided for in the 1^st Order or the 2^nd Order means that the Property may not be sold if the reserve price is not met, for an indefinite period of time.

(3)  Joe Cheng as the sole joint agent had all along been acting as if he were the defendant’s agent rather than as a joint agent for both the plaintiff and the defendant.

15.  I agree with Mr Chung that there are ample bases for the plaintiff to complain about Joe Cheng:

(1)  Despite the plaintiff having made repeated requests, no agency agreement has been made available for the plaintiff’s information.

(2)  The full contact details of Joe Cheng had been withheld except for his mobile number.

(3)  Joe Cheng would provide extensive reports only to the defendant on his marketing efforts (as set out in the letter from Haldanes dated 7 March 2024), which was then passed on by the defendant to the plaintiff. The plaintiff thus could only receive such information that the defendant decided to release to her.

(4)  Repeated requests from the plaintiff for photos and advertising information of the Property were ignored by Joe Cheng for no legitimate reason. Haldanes also saw fit to impose conditions before releasing information (which she was entitled to in the first place) to the plaintiff: such as a confirmation from the plaintiff that she had not been contacting Centaline to advertise the Property for less than HK$50 million and an undertaking that she would not do so. The defendant claimed that this was because the plaintiff wanted to have the photos to market the Property separately, which was not allowed under the Orders. However, even if that were true, the defendant has no right to unilaterally take away the plaintiff’s right to information, when she remains a beneficial owner of the Property. If there are valid grounds for the defendant to complain about what the plaintiff does with the information, the defendant should seek recourse separately.

(5)  Complaints on Joe Cheng’s uncooperative attitude had repeatedly been expressed by the plaintiff’s solicitors to Haldanes and yet no improvement had been made.

16.  I am also of the view that the present mechanism as provided for in the 2^nd Order is unworkable for the following reasons:

(1)  With Joe Cheng siding with the defendant, it is understandable that the plaintiff cannot trust him to put in real efforts in the sale of the Property.

(2)  With the history between the plaintiff and the defendant, it would be unlikely that either of them would trust any agent that has been proposed by the other side.

(3)  The fact that there is no time limit set for the sale of the Property in the Orders is only acceptable if the Property could be and was sold within a reasonable time. If one takes an extreme example: if the price of the Property never reaches HK$58 million again and no offer is made, the defendant’s stance that the mechanism can never be altered would lead to the absurd result that the Property will never be sold. The case of Kong Colin Chung Ping is thus distinguishable. In Kong Colin Chung Ping, parties had devised a mechanism that the property would eventually be sold as the price kept being reduced as time went by and no offer was made, until the price is HK$0.

17.  I thus come to the conclusion that further directions need to be provided for the Property to be sold.

Mechanism For Sale

18.  Parties have made supplemental submissions on paper for the mechanism of sale. At the hearing, after discussions, parties have sensibly agreed to the following mechanism:

(1)  The Property be sold by private treaty at the reserve price of HK$53,000,000.

(2)  If the Property is not sold on or before 31 July 2024 at 11:59 p.m., the price of the Property will be adjusted downwards by 3% to HK$51,410,000.

(3)  This 3% downward adjustment mechanism will continue with a new adjusted price on the 1^st day of each calendar month until the Property is sold, or until this mechanism is varied, either as between the parties or by the court, whichever is earlier.

(4)  The contact person designated by the plaintiff is Ms Chong Shuk Yu of Messrs. H.L. Wong & Co; the contact person for the defendant is Mr Rattigan of Messrs. Haldanes. If either party receives an offer and is ready to enter into a preliminary sale and purchase agreement, he or she should confirm with the other side before executing such preliminary sale and purchase agreement. The other side should confirm if they have received any or better offer within one hour thereof.

Costs

19.  The plaintiff is substantially successful on the application to vary the Orders. There will be a costs order nisi that the costs of the application and the hearing on 19 April 2024 be to the plaintiff, with certificate for counsel, except that there will be no order as to costs on the submissions and hearing on the price adjustment mechanism, as neither party is wholly successful. Such costs to be summarily assessed if not agreed. The plaintiff do lodge and serve her statement of costs within 7 days hereof. The defendant do lodge and serve his list of objections, if any, within 7 days thereafter. Summary assessment of the costs will be carried out on paper.

Order

20.  The mechanism as provided by the orders dated 22 January 2021 and 3 September 2021 by Deputy High Court Judge William Wong S.C. be varied as follows:

(1)  The Property be sold by private treaty at the reserve price of HK$53,000,000.

(2)  If the Property is not sold on or before 31 July 2024 at 11:59 p.m., the price of the Property will be adjusted downwards by 3% to HK$51,410,000.

(3)  This price adjustment mechanism will continue with a new price on the 1^st day of each calendar month until the Property is sold, or until this mechanism is varied, either as between the parties or by the court, whichever is earlier.

(4)  The contact person designated by the plaintiff is Ms Chong Shuk Yu of Messrs. H.L. Wong & Co; the contact person for the defendant is Mr Rattigan of Messrs. Haldanes. If either party receives an offer and is ready to enter into a preliminary sale and purchase agreement, he or she should confirm with the other side before executing such preliminary sale and purchase agreement. The other party should confirm if they have received any or better offer within one hour thereof.

(5)  Liberty to apply.

21.  Costs of the application and the hearing on 19 April 2024 be to the plaintiff, with certificate for counsel, except that there is no order as to costs on the submissions and hearing on the price adjustment mechanism.

22.  I thank counsel for their assistance.