HOLLY PROPERTY CO LTD v. THE PERSONAL REPRESENTATIVES OF THE ESTATE OF LEUNG CHIU LAU, DECEASED

DCMP369/2019

[2020] HKDC 894

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 369 OF 2019

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REASONS FOR DECISION

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1.  This is the plaintiff’s application for an order for sale.

Background

2.  The plaintiff and the defendant (i.e. personal representative of the Deceased) are equal legal and beneficial tenants in common of a property known as 1st Floor, Wah Yee Mansion, No. 53 Staunton Street, Hong Kong (the “Property”). 

3.  The Deceased passed away on 30 August 1971, nearly 50 years ago. 

4.  The plaintiff acquired its interest from a Ms Chiu Lai Kun (趙麗群) on 15 December 2017 for investment purposes, and thereafter became a co-owner of the Property, the other co-owner being the Deceased’s estate.

5.  The Property is now filled with garbage.

6.  Hoping to make productive use of the Property, the plaintiff had taken steps to acquire the half interest of the Property held by the Deceased’s estate. However,it has not received any responses from anyone representing the Deceased’s estate.

7.  The plaintiff applied by an Amended Originating Summonsfor an order for sale of the Property under section 6 of the Partition Ordinance (Cap 352) (“PO”).

8.  There are 3 issues that this court is required to determine.

Issue 1: Whether the application can proceed in the defendant’s absence

9.  The Deceased passed away on 30 August 1971, nearly 50 years ago.

10.  Despite the plaintiff’s efforts, P has been unable to contact the Deceased’s possible issues and/or personal/lawful representatives to represent the Deceased’s estate in these proceedings, and even the Official Solicitor is unable to do the same.

11.  After some efforts in negotiating with the Official Solicitor and taking out applications to the Court, Registrar Lui gave the following order:

“Leave be granted to the Plaintiff to proceed with the proceedings in the absence of a person representing the estate of Leung Chiu Lau (梁肖榴), Deceased, for the purposes of these proceedings pursuant to Rule 15 of Order 15 of the Rules of District Court, Cap.336H, and any such order, any judgment or order subsequently given or made in these proceedings, shall bind the estate of the Deceased to the same extent as it would have been bound had a personal representative of the Deceased been a party to the proceedings.”

12.  No appeal is lodged against Registrar Lui’s Order, which is therefore still valid and enforceable. Hence, the plaintiff can proceed with the present application in the absence of the defendant.

13.  In any event, the plaintiff has properly served the relevant documents on the defendant by leaving at the Property, which is deemed the “last known or usual address” (see Hong Kong Civil Procedure 2020, §10/1/12).

Issue 2: Whether the plaintiff is entitled to an order for sale of the Property against the defendant

14.  According to sections 2, 3, 5 and 6 of the PO, a tenant in common has the locus standi to apply for an order for sale:

“Section 2: Power to order partition or sale of property in land

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.”

“Section 3 Institution of proceedings and parties thereto

Where any property in land is held in the manner referred to in section 2, any person interested in such property may institute proceedings in the Court under this Ordinance by way of an action for partition or sale ...”

“Section 5 Court may apportion rights and obligations and create easements

(1) The Court may, at any time after it has made an order under section 4 for the partition of the property, on the application of any person interested or of its own motion, make an order under this section, which order may —

(a) apportion or adjust between the several parcels into which the property is partitioned any rights, obligations or liabilities in force in respect of the property;

(b) create, as between the several parcels into which the property is partitioned, or any of them, any easement, together with rights and obligations attaching thereto,

and any order under this section shall have effect as if all necessary dispositions or agreements had been duly made for that purpose by all persons concerned …”

“Section 6: Sale of land

(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.”

15.  As to the considerations relevant to the Court’s exercise of discretion under the PO:

a. In Wong Chun Kei v Poon Vai Chung[2007] 1 HKLRD 825, Recorder Fok SC (as Fok PJ then was) succinctly summarised the principles at §§18-19 as follows:

“18. These passages from the cases cited above were relied upon by Mr. Fung SC to support the following propositions, namely:

(a) A co-owner has a basic right to rid himself of the shackles of co-ownership and 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.

(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.

19. Subject to adding the qualifications, “if he has no other remedy,” before the words “ask for an order for partition or sale” in proposition (1), and “or that it will result in very great hardship to one co-owner” to the end of proposition (2), I am satisfied that these propositions fairly and accurately state the law as regards the court’s jurisdiction when faced with an application for partition or sale under the Ordinance and I shall proceed in this judgment to apply those propositions in resolving the plaintiffs’ application.” (emphasis added)

b. The above principles were applied by DHCJ Kent Yee in Tsang Wai Fan v Hui Siu Kwong HCMP 1505/2014 (unreported, 26.1.2016) (at §22) and by DHCJ Keith Yeung SC (as he then was) in Chan Sing Fu v Chan Hoi Shing and Others HCMP 1713/2017 (unreported, 17.9.2018) (at §§10-11).

16.  The court finds that the plaintiff, being an equal legal and beneficial tenant in common, is indisputably a “person interested” within the meaning of the PO. Thus, a co-owner such as the plaintiff has a basic right to “rid [itself] of the shackles of co-ownership and ask for an order for partition or sale”.

17.  Further, the discretionary factors are also in favour of the grant of an order for sale:

(a) There is no evidence suggesting that it is possible or desirable to physically partition the Property into two halves.

(b) To the contrary, Mr Poon Kai Kit Joe, an Authorised Person (registered under the Buildings Ordinance (Cap 123) (the “AP”)), has confirmed in writing that it is infeasible to make an order for partition. In the present case, the common area of the building is the main staircase which is also the only means of escape in case of fire. In these circumstances, it is impossible to carry out a sub-division that can provide a “Barrier Free Access” for persons with a disability so as to comply with the mandatory statutory requirements under the Building (Planning) Regulations (Cap 123F), Regulation 72.

(c) Rather, since the Property is a residential unit in a multi-storey building with a saleable area of less than 330 sq ft and of considerable age (constructed in 1971), it would be impracticable or not beneficial to the owners to make an order for its partition.

(d) Even if a partition was possible, doing so would devalue the Property, and prejudice the defendant’s financial interests.

(e) There is also the difficulty (if not impossibility) of getting in touch with any personal and/or lawful representatives of the Deceased’s estate and to discuss with him/her regarding the management and utilisation of the Property. Hence, the plaintiff cannot enjoy its property rights in the Property prior to a sale of the same.

(f) There is no evidence from the defendant suggesting that an order for sale would cause great hardship. Instead, once the Property is sold (with a reserve price which is fair) to the potential purchaser with the highest “offer”, the Deceased’s estate would be entitled to half of the net sale proceeds.

(g) Finally, there is also no sign that the defendant would or at least intend to defend the plaintiff’s application. By contrast, the Official Solicitor, previously representing the Deceased’s interest herein, had not indicated any objections to the plaintiff’s application.

Issue 3: Measures to safeguard the defendant’s interests

18.  The court would refer to Ng Ming Joe Joseph v Late Lau Yue Heng DCMP 2839/2015 (unreported, 7 February 2017), where the following steps were placed to safeguard interests of the defendant:

a. First, a reserve price was set up with reference to professional valuation evidence.

b. Second, a professional solicitor (who owed a duty to the Court) was appointed to execute the conveyancing and other necessary documents to effect a sale of the property.

c. Third, the sale proceeds belonged to the estate were ordered to be paid into Court.

19.  In this case, the court is satisfied that the draft order submitted by the plaintiff is along the same lines: based on the valuation submitted by the plaintiff, together with the plaintiff’s proposal to set up a reserve price at that value, it is likely that the sale proceeds of the Property will be at least HK$5,710,000.00, and the defendant’s entitlement would be paid into Court under the handling of a professional solicitor.

Conclusion

20.  The court will therefore give an order in terms of the draft order submitted by the plaintiff.