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

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2839 OF 2015

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REASONS FOR JUDGMENT

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Introduction

1.  On 26 October 2015, the plaintiff issued the present Originating Summons seeking an order for sale of the property known as 3^rd Floor, Yau Hing Building, No 244 Cheung Sha Wan Road, Kowloon (“Property”) pursuant to section 6 of the Partition Ordinance (Cap 352) (“Ordinance”).

2.  When the Originating Summons first came before me on 3 January 2017, I ordered the matter to be adjourned to 26 January 2017 to enable all necessary documents to be served on the Director of Lands as required by section 3(2) of the Ordinance and rule 4 of the Partition Rules (Cap 352A).

3.  At the conclusion of the adjourned hearing, I gave judgment for the plaintiff in the terms as set out in paragraph 38 below and said I would hand down my reasons later.  These are the reasons for my judgment.

Factual background

4.  The material factual background may be stated as follows.

5.  The Property is one of the 2 units situated on the 3^rd Floor of Yau Hing Building, a 10-storey composite (commercial and residential) building in Sham Shui Po, Kowloon.  Its approximate saleable area is 729 square feet or thereabouts. 

6.  By an assignment dated 3 May 1978, 3 individuals, namely Ng, Ka Yuen Peter (“Peter”), Ng Ka Sau (“Ka Sau”) and Lau Yue Heng (“Lau”), acquired the Property at a total consideration of HK$210,000.  Upon acquisition, Peter, Ka Sau and Lau held the respective shares of 1/4, 1/4 and 2/4 in the Property as tenants in common.

7.  Peter and Ka Sau were brothers. According to the plaintiff (who is Peter’s son), Peter, Ka Sau and Lau were in 1978 jointly operating a textile business venture called Wai Kee Trading Co (“Wai Kee”).  They acquired the Property and used it as Wai Kee’s operating office and factory.  Lau Shiu Yuen, Eric (“Eric”), who was Lau’s son, was also an employee of Wai Kee.

8.  In around 1990, Lau emigrated to Canada and Ka Sau also started to devote less time to Wai Kee’s business. Peter and Eric then became the ones mainly responsible for operating the business.  In around 1995, Eric also left Hong Kong to reunite with Lau in Canada.

9.  In around 2004, when Eric was back in Hong Kong, he told Peter that Lau passed away in Canada in 1997, and that he would soon be returning to Canada.  On that occasion, Eric provided Peter with a contact address, namely 35 Cygnus Drive, Richmond Hill, Ontario L4C881, Canada (“1^st Contact Address”) and a contact telephone number in Canada, 905-883-5807 (“Contact Number”).

10.  Eric also signed 2 Chinese notes dated 12 March 2004 confirming that he was the only son of Lau and was the personal representative of Lau’s estate, and that Peter and Ka Sau were authorized to collect the title deeds of the Property on his behalf upon discharge of the relevant mortgage.  On those Chinese notes, Eric gave a slightly different contact address with a different postal code, namely 35 Cygnus Drive, Richmond Hill, ON L4C8P1, Canada (“2^nd Contact Address”).

11.  Since then, Peter had lost contact with Eric.

12.  On 1 July 2009, Wai Kee ceased business operation and, from then on, the Property has not been in use and has been left vacant.  On 18 July 2009, Ka Sau passed away.  By an assignment dated 5 April 2010, Peter acquired Ka Sau’s 1/4 share in the Property at the total consideration of HK$200,000.  Following that assignment, the only 2 remaining registered owners of the Property were Peter and Lau, each holding a 2/4 share as tenants in common.

13.  In around March 2012, Peter engaged a firm of solicitors to advise him on his intended sale of the Property.  However, attempts to contact Lau’s family members, namely Mrs Ada Lau and Eric, whether at the 1^st Contact Address, the 2^nd Contact Address or the Contact Number, were all in vain.  

14.  On 16 December 2012, Peter passed away.  On 26 September 2013, probate was granted by the Probate Registry to the plaintiff as one of the executors of Peter’s estate under Grant No HCAG 009916/2013. Pursuant to Peter’s last Will annexed to the Grant dated 28 April 2012, his residuary estate shall be divided equally between the plaintiff, his wife Wong Yee Lai and his daughter Ng, Po Yee Francela.

15.  In around March 2014, the plaintiff engaged a firm of solicitors to assist in his intended sale of the Property. Attempts to contact Mrs Ada Lau and Eric at the 1^st Contact Address, the 2^nd Contact Address and the Contact Number were again in vain. Probate searches conducted with the relevant authorities in Hong Kong, British Columbia, Canada and Ontario, Canada did not reveal any application for grant of probate or administration in respect of Lau’s estate.

DCMP 1071/2014 and the present proceedings

16.  On 29 April 2014, the plaintiff issued an Originating Summons in DCMP 1071/2014 against the defendant seeking an order for sale of the Property pursuant to section 6 of the Ordinance.

17.  In the course of the plaintiff’s solicitors seeking the consent of the Official Solicitor to accept service of those proceedings on behalf of the defendant in around September 2015, it was pointed out to the plaintiff’s solicitors that the Originating Summons in DCMP 1071/2014 had already expired.

18.  The plaintiff therefore issued the present Originating Summons on 26 October 2015.  By the Order of Master M Lam dated 19 April 2016, the Official Solicitor was appointed, under RDC O 15 r 6A(5A), to represent Lau’s estate for the limited purpose of accepting service of the present proceedings.  Subsequently, all relevant documents were served on the Official Solicitor.

19.  By a further Order of Master M Lam dated 8 July 2016, the plaintiff was, pursuant to RDC O 15 r 15, given liberty to proceed with the present proceedings in the absence of any person representing Lau’s estate.

20.  Pursuant to the Order of Master SP Yip dated 31 October 2016, substituted service of the Notice of Appointment to hear Originating Summons together with all the supporting affidavits was effected on the defendant.

21.  The defendant was absent both at the first hearing of the present Originating Summons on 3 January 2017 and at the adjourned hearing on 26 January 2017.  There was also no evidence before this court to indicate any opposition from the defendant or Lau’s other family members.

22.  By the nature of the relief sought and the absence of the defendant from the aforesaid hearings, I was satisfied that it was appropriate for this court to dispose of the matter summarily pursuant to RDC O 28 r 4.

Applicable legal principles

23.  Section 2 of the Ordinance provides:-

“Subject to this Ordinance, where any property in land is held by 2 or more persons, whether as joint tenants or as tenants in common, the Court may-

(a)  make an order under section 4 for a partition of the property;

(b)  make an order under section 6 for a sale of the property; or

(c)  refuse to make any order.”

24.  Section 6(1) of the Ordinance provides:-

“(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.”

25.  Whether the court should make an order for sale of a property under section 6 is a matter of discretion.  In the exercise of that discretion, as Trainor J held in Pun Jong-sau & Ors v Poon Wing-kong & Ors [1979] HKLR 662 (at p 668), it is appropriate for the court to bear in mind that the primary intention of the Ordinance was:-

“...... to enable an unwilling co-owner to rid himself of the shackles of co-ownership and to have either a physical division of the property into aliquot parts among the co-owners or a division of the proceeds of its sale.”

26.  In the oft-cited case of Wong Chun Kei Johnny & Ors v Poon Vai Ching & Ors [2007] 1 HKLRD 825, Recorder Joseph Fok SC (as he then was) summarized the principles, after reviewing a number of useful authorities, as to how the court should exercise that discretion (at p 842A-D) 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.

Analysis

27.  Applying the above principles, the first question for this court was whether it was impracticable for an order for partition to be made in respect of the Property.

28.  Mr Donny Chiu, solicitor for the plaintiff, submitted that it was impracticable for a partition of the Property because of its relatively small size (approximate saleable area of 729 square feet or thereabouts) and its only permitted usage as an office.  He relied on the case of Silver Wealth Captial Investment Ltd v Lai Wai Chuen & Anr [2015] 4 HKC 191 in which Chow J (at p 198I-199A) referred to the impracticability of partitioning a single shop with a saleable area of about 521 square feet with a yard of about 44 square feet.

29.  Although the factors relied on by Mr Chiu would have a material bearing on the first question, I think the fundamental point is the fact that the Property is a unit in a multi-storey building held in co-ownership by all the unit owners.  That fact alone would ordinarily make it impracticable for such a unit to be partitioned (see Liu Chung Hang & Ors v Liu Chung Leung Alfred (unreported) HCMP 1255/2007; 19 December 2007 per Recorder Benjamin Yu SC (as he then was) at §9 and Chan William Lai Yee & Ors v Chan Yau Yuen Fun Therese & Anr (unreported) HCMP 1203/2011; 8 March 2012 per DHCJ Peter Ng SC (as he then was) at §12).

30.  As to the second question of whether an order for sale would not be beneficial to the co-owners or would cause great hardship to one co-owner, the defendant, not having appeared in these proceedings, had not adduced any evidence to discharge his burden of proof on that question. 

31.  In any event, as Mr Chiu submitted (which I agreed), on the evidence before this court, it is unlikely that an order for sale would have any of those adverse consequences because the Property has been left vacant and unused since 1 July 2009, and that the only other co-owner, Lau, had already passed away for some 20 years. 

Order for sale

32.  In all the circumstances, I considered that an order for sale would be an appropriate relief to be granted to enable the plaintiff, as Peter’s executor, to rid himself of the shackles of co-ownership and to proceed with realizing the Property in the administration of Peter’s estate.

33.  In the absence of evidence to the contrary, I accepted that the market value of the Property, as set out in a Valuation Report of CS Surveyors dated 22 August 2016, was HK$5,600,000 and that this was the minimum price at which the Property should be sold.

34.  Mr Chiu proposed for the plaintiff himself to have the conduct of the sale, and be appointed to execute all necessary documents to convey the Property and deal with the distribution of the sale proceeds.  Given that the defendant was absent and would unlikely be able to monitor the sale, I considered it to be more appropriate for the plaintiff’s solicitors to be appointed to conduct the sale and deal with all incidental matters, including the handling of the defendant’s share of the net sale proceeds.

35.  As regards costs of these proceedings, Mr Chiu informed this court that the plaintiff had paid HK$20,000 to cover the Official Solicitor’s costs.  He also proposed for such costs paid to the Official Solicitor and the plaintiff’s own costs of these proceedings to be paid out of the sale proceeds of the Property. 

36.  I agreed with such approach, which is in line with Chan Shee Yuen v Chan Shu Fong (unreported) HCA 93/2002; 28 April 2006 per DHCJ To (as he then was) at §70 and Yeung Kwok Kin v Yeung Kwok Keung & Ors (unreported) HCMP 1303/2006; 3 July 2007 per Chu J (as she then was) at §23.  On the present facts, as the defendant had not contested these proceedings or was otherwise at fault, I considered that a fair costs order would be for both co-owners to share the costs of these proceedings to be paid out from the sale proceeds.

37.  At the hearing, Mr Chiu submitted a Statement of Costs for the present proceedings for a total sum of HK$95,713.39.  Having considered the amount of work involved, I took the view that a reduction was called for.  Pursuant to RDC O 62 r 9A, I summarily assessed the plaintiff’s costs of these proceedings at a total sum of HK$86,213.39.

Disposition

38.  For all of the above reasons, I gave final judgment for the plaintiff at the hearing in the following terms:-

(1) ALL THOSE 9 equal undivided 177^th parts or shares of and in ALL THAT piece or parcel of ground registered in the Land Registry as THE REMAINING PORTION OF NEW KOWLOON INLAND LOT NO 1595 And of and in the messuages erections and buildings thereon now known as “YAU HING BUILDING（友興大廈）Nos 244 and 246 Cheung Sha Wan Road” TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT OFFICE known as THIRD FLOOR of No 244 Cheung Sha Wan Road thereon as shown on the Plan annexed to an Assignment in the Land Registry by Memorial No UB1532310 and thereon coloured Pink (“the Premises”) be sold, pursuant to section 6 of the Partition Ordinance (Cap 352), by way of private treaty or public auction at a price of no less than HK$5,600,000;

(2) The plaintiff’s solicitors herein, Messrs Chow, Griffiths & Chan, shall have the conduct of the sale of the Premises and, pursuant to section 8 of the Partition Ordinance (Cap 352) and section 51 (applicable by virtue of section 48) of the Trustee Ordinance (Cap 29), Mr Chiu Siu Keung Donny, senior partner to Messrs Chow, Griffiths & Chan, be appointed to execute the agreement, assignment and all other necessary documents (if any) as vendor to convey the Premises and all interest therein to the purchaser;

(3) The proceeds of sale of the Premises be applied in the following orders of priority:-

(i) first, in discharge of all government rent, rates and other outgoings due and affecting the Premises, if any;

(ii) second, in discharge of all incumbrances, if any;

(iii) third, in satisfaction of legal costs of the sale of the Premises up to HK$12,000 and estate agent commission provided that the commission shall not exceed 1% of the sale price of the Premises;

(iv) fourth, in satisfaction of the sum of HK$20,000 paid by the plaintiff to the Official Solicitor pursuant to the Order of Master M. Lam made herein on 19 April 2016, and the costs of these proceedings referred to in paragraph (5) below;

(v) fifth, 50% of the net sale proceeds of sale shall be paid by the plaintiff’s solicitors herein into court to the credit of the defendant; and

(vi) sixth, 50% of the net sale proceeds of sale shall be paid to the plaintiff;

(4) There be liberty to apply for further directions, if necessary, as to the manner of sale of the Premises and generally; and

(5) Costs of these proceedings summarily assessed at HK$86,213.39 shall be paid out of the proceeds of sale of the Premises as set out in paragraph (3)(iv) above.

39.  I thank Mr Chiu for his assistance.