Yeung Yiu Fai v. Tam Yun King
Read the full judgment text of DCMP 1280/2015 on BabelCite. This District Court judgment was delivered on 1 March 2016.
1. The plaintiff (“Mr Yeung”) and the defendant (“Madam Tam”) were husband and wife. They jointly own a property known as 4 th Floor, 11A Sheung Heung Road, Kowloon, Hong Kong (“the Property”) as joint tenants. The saleable area of the Property is about 560 square feet. The Property is in a building with an age of not less than 58 years.
Cited by 4 cases · Cites 3 cases
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DCMP 1280/2015 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO 1280 OF 2015 --------------------------
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-------------------------- JUDGMENT -------------------------- INTRODUCTION 1.The plaintiff (“Mr Yeung”) and the defendant (“Madam Tam”) were husband and wife. They jointly own a property known as 4th Floor, 11A Sheung Heung Road, Kowloon, Hong Kong (“the Property”) as joint tenants. The saleable area of the Property is about 560 square feet. The Property is in a building with an age of not less than 58 years. 2.In these proceedings, Mr Yeung seeks an order for sale of the Property and an order requiring Madam Tam to account for occupation rents and profits for occupying and using the Property. 3.Both Mr Yeung and Madam Tam have adduced evidence through affirmations. They have also attended the trial to give evidence and have been cross-examined by the other side. 4.Mr Yeung has produced evidence to show that the annual ratable value of the Property is less than HK$240,000. Accordingly, I am satisfied that by virtue of s 9 of the Partition Ordinance (Cap 352) (“PO”), this court has jurisdiction to hear and determine Mr Yeung’s application. BACKGROUND 5.I would first set out the background facts. On matters in respect of which Mr Yeung and Madam Tam disagree with each other, I would set out the respective versions of the parties. 6.Mr Yeung and Madam Tam married to each other on 8 February 1984. They have 3 children:-
7.After the marriage, Mr Yeung was working as a butcher and Madam Tam was working as a sewer. 8.The couple purchased the Property on or about 24 August 1987. 9.Madam Tam said when purchasing the Property in 1987, she and Mr Yeung had made a promise to each other. The version of the promise set out in Madam Tam’s affirmations is different from the version mentioned by Madam Tam in her oral evidence. Madam Tam said the version in her oral evidence was the correct version. 10.According to Madam Tam, the promise made in 1987 is that if in future any of them has an affair and is unfaithful to the marriage vow, his or her interest in the Property should be passed to the children (“the alleged promise”). Mr Yeung denied the existence of the alleged promise. 11.The purchase price of the Property was HK$290,000. The couple managed to pay a down-payment of HK$190,000 and borrowed a loan secured by a mortgage of the Property to pay the remaining HK$100,000. 12.As to the down-payment of HK$190,000, the couple paid off the same by withdrawing HK$110,000 from their savings (as both Mr Yeung and Madam Tam were working, Mr Yeung’s contributions to these savings would not be insignificant), borrowing HK$50,000 from Madam Tam’s mother (which was jointly repaid by the couple later) and borrowing HK$30,000 from Mr Yeung’s mother. 13.As to the mortgage repayments made from 1987 to 1990, Mr Yeung said those repayments were made by him, for he paid money to Madam Tam each month for all the household expenses, which would include the mortgage repayment. Madam Tam said that Mr Yeung’s monthly payments to her would not be sufficient to cover the mortgage repayments, and the mortgage repayments were all from her salaries. 14.Mr Yeung won HK$130,000 in a horse racing in 1990. He used the money to pay off the outstanding balance of the mortgage loan, which was around HK$80,000 at that time. Mr Yeung also used the money to repay the HK$30,000 owed to his mother. The mortgage was discharged on or about 3 September 1990. 15.The relationship between the couple turned sour gradually. In 1999, Madam Tam moved all Mr Yeung’s personal belongings to his parents’ home and required Mr Yeung to leave. Mr Yeung alleged that the breakup of the relationship was caused by Madam Tam indulging herself in gambling. Madam Tam on the other hand said that the relationship could not continue because Mr Yeung was having another woman. 16.The parties entered into a Deed of Separation on 15 January 1999 (“the DS”). That deed was drafted by Madam Tam’s solicitors. The DS provides, inter alia:-
17.The DS does not touch upon the Property. As to why the DS does not cover the Property, Mr Yeung and Madam Tam have given different explanations:-
18.After Mr Yeung moving out from the Property in 1999, Madam Tam and the 3 children continued to live in the Property. 19.The marriage was dissolved by a decree absolute on 19 May 2000. 20.Mr Yeung said after the divorce, he regularly paid maintenance to Madam Tam and the 3 children with occasional extra payments as gifts. Mr Yeung said amongst the HK$12,000, HK$3,000 was for the maintenance of Madam Tam, and HK$3,000 was for each of the children until he or she reached the age of 18. Mr Yeung said notwithstanding that the maintenance to each child should only be payable up to that child reaching the age of 18, he continued to pay no less than HK$12,000 per month to Madam Tam until February 2010. After February 2014, he paid no less than HK$11,000 per month to Madam Tam until late 2014. He stopped to pay maintenance in late 2014 because he could not continue to work as a result of his illness. Mr Yeung said he would pay cash gifts directly to the children when they met, and he also paid HK$50,000 as a gift to the Son in 2014 when the Son got married in that year. 21.Madam Tam said Mr Yeung did not pay the maintenance regularly, and sometimes Mr Yeung just paid less than the amount stipulated in the DS. Madam Tam agreed that Mr Yeung had paid HK$50,000 to the Son when the Son got married in 2014, but she however paid about HK$170,000 to fund the Son’s marriage. 22.In October 2014, Mr Yeung was diagnosed with cancer of right parotid gland. On 1 December 2014, Mr Yeung received a surgery. 23.Mr Yeung said as a result of his illness, there were medical expenses and he could not continue to work. He was in need of money. He had repeatedly contacted Madam Tam to discuss with her the disposal of the Property. Mr Yeung wanted to liquidate his interest in the Property to get money. The discussion between the parties did not lead to any agreement. 24.Thereafter, Mr Yeung’s solicitors wrote to Madam Tam on 2 February 2015 and 25 March 2015 respectively, and in each letter the solicitors proposed sale of the Property in the market and dividing the proceeds between Mr Yeung and Madam Tam equally, alternatively sale of Mr Yeung’s 50% interest in the Property to Madam Yeung. Madam Tam did not agree to any of these proposals. 25.Madam Tam said over the years, all the building maintenance fees, building insurance, and all the government fees relating to the Property were paid by her. In particular, she paid HK$220,000 to renovate the Property in 2006 as there was water seepage at that time. Mr Yeung did not dispute that during Madam Tam and the children’s occupation of the Property, all the maintenance, insurance and government fees were paid by Madam Tam, but Mr Yeung said the renovation fee in 2006 was only about HK$100,000. 26.At present, there are 6 people (“Madam Tam’s family”) living in the Property, ie Madam Tam, the Son, his wife (“the Daughter-in-law”), his son (“the Grandson”), the 1st Daughter and the 2nd Daughter. The Daughter-in-law is now pregnant and will give birth to the 2nd child in August 2016. According to Madam Tam, the financial situation of her family is as follows:
27.The market value of the Property at present is around HK$3 million. 28.Mr Yeung said with 50% of the sale proceeds, and the fact that Madam Tam and 2 children were working and having incomes, Madam Tam and the children would be able to rent or buy a new unit to live therein after the sale of the Property. 29.Madam Tam on the other hand said losing the Property would cause tremendous hardship to her and the children:-
30.Madam Tam also said in the last 15 years, she had borrowed around HK$480,000 from her sisters to pay the fees relating to the Property and the tuition fees of the 3 children. Further, she borrowed HK$150,000 from a bank in early 2015 to support the family, since Mr Yeung stopped to pay the maintenance fees in late 2014. Madam Tam said allowing Mr Yeung to stop to pay the maintenance fees was already a big support to Mr Yeung in view of his illness. THE ISSUES 31.The issues to be resolved are as follows:-
BENEFICIAL INTEREST 32.On the question of the beneficial ownership of the Property,
33.As to the respective contributions to the purchase price of the Property:-
34.It is clear that the majority of the purchase price was contributed by Mr Yeung. This provides a solid basis in support of Mr Yeung’s case on the respective beneficial interests of the parties in the Property. 35.On the other hand, Madam Tam’s case lacks any sound basis. 36.I find that each of the party has 50% beneficial interest in the Property. ORDER FOR SALE The law 37.Section 6(1) of the PO provides:-
38.In Pun Jong Sau & Others v Poon Wing Kong & Others[1977-1979] HKC 210 at p. 218E-F, Trainor J reviewed the history of the law pertaining to partition in England and the development of the law in Hong Kong. The learned judge came to the view that the primary intention of the PO 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. 39.In Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825 Recorder Fok SC (as he then was) after reviewing the authorities in this area set out the following guiding principles for the exercise of discretion by the court under the PO:-
40.In Re Lau Hiu Tuen (HCB 8430/2006, 20 August 2006), G. Lam J further explained the principles laid down in Wong Chun Kei at [21]-[22]:-
41.The court will make an order for sale on the application of a co-owner unless it is satisfied that all the co-owners would be better served by the refusal of the order or that making an order would result in very great hardship to one co-owner: see Wong Chun Kei Johnny v Poon Vai Ching [2007] 1 HKLRD 825 at [16]-[19]; Fook Sun Enterprises Co Ltd v Cromwell Investment Co Ltd & Ors [1973-1976] HKC 335 at 337 H-I. 42.The court may grant an order for sale notwithstanding the dissent of any person interested. See s 6(2) of the PO. Impracticable for partition and order for sale would benefit Mr Yeung 43.Mr Yeung is a co-owner of the Property having 50% beneficial interest therein. He wants to rid himself of the shackles of co-ownership. 44.The Property is a residential unit in a multi-storey building having a saleable area of about 560 square feet. I am satisfied that it is impracticable to make an order for partition in these circumstances. 45.Mr Yeung is now suffering from cancer and cannot work. He wants to sell the Property to get some money to pay his medical expenses and to support his living. The sale of the Property would be beneficial to Mr Yeung. It cannot be said that all the co-owners would be better served by the refusal of the order for sale. 46.Accordingly, in accordance with the principles set out above, I should make an order for sale unless Madam Tam can persuade me that the sale of the Property would result in very great hardship to her. Whether Madam Tam has shown very great hardship? 47.I am not going to resolve all the differences between Mr Yeung and Madam Tam, for it would not be necessary for me to do so for the purpose of these proceedings. I would however make a determination on the existence of the alleged promise, for it may have some relevance on the issue of hardship. If the alleged promise was made in 1987, Madam Tam may argue that she arranged her financial matters at all times since the separation by relying upon the promise, and it would be unfair to her and would cause her hardship if Mr Yeung tries to go back on his words. 48.On the existence of the alleged promise, I accept Mr Yeung’s evidence and do not accept Madam Tam’s evidence:-
49.Madam Tam said to purchase a unit with similar saleable area in the same district would need about HK$12,5000,000. In saying this, Madam Tam was referring to the asking price of a unit with a magnificent view in a new development. I do not think this can be used as a reference of the market price of a unit similar to the Property, which is a unit in a building with an age of not less than 58 years. 50.Having said that, I can readily accept that if there is an order for sale, 50% of the net proceeds would not be sufficient to purchase a similar unit in the same district. However, Madam Tam may use the sale proceeds to rent a similar unit. 51.The market value of the Property is around HK$3 million. 50% of the net sale proceeds would not be a small sum, and would definitely be over HK$1 million. 52.According to Madam Tam, to rent a similar unit would need about HK$15,000 per month. So even without any contribution from anyone in Madam Tam’s family, by solely using the 50% of the net sale proceeds, Madam Tam would be able to rent a similar unit for more than 5 years in future. 53.Madam Tam said that she would need to repay some loans. There is no evidence showing that the sale of the Property would trigger early repayment of or a higher interest rate on any of these loans. 54.Madam Tam, the Son, and the 1st Daughter are working and having incomes. Although Madam Tam’s family will have a new member in the August 2016, it is expected that the 2nd Daughter would finish her degree course in late 2016 and would start her career thereafter. With all these incomes and with the 50% of the net sale proceeds, I do not think the sale of the Property would result in very great hardship to Madam Tam’s family. 55.I can well understand that Madam Tam and the children want to stay in the Property, and requiring them to leave and to find a new place to live in would cause inconvenience and difficulties to them. However, as I am not satisfied that Madam Tam has made out a case of very great hardship, in accordance with the established principles, I have to make an order for sale. OCCUPATION RENTS AND PROFITS No profit 56.As to Mr Yeung’s claim for an account of occupation rents and profits, I can say at the outset that I am not with Mr Yeung on the claim for an account of profits. 57.Mr Yeung’s own evidence is that after his moving out from the Property, Madam Tam and the 3 children have been living in the Property at all times. In other words, Madam Tam has never let the Property to anyone else and has never used the Property to make any profit. Accordingly, Mr Yeung’s claim for an account of profits must fail. No occupation rent 58.The remaining question is whether Madam Tam is liable to account to Mr Yeung for any occupation rent. 59.In relation to this, the learned authors of Snell’s Equity (33rd Ed) said:-
60.In Re Barcham, sub nom French v Barcham [2009] 1 WLR 1124, Blackburne J explained the principle in the context of bankruptcy at [35]:-
61.I would decline to make an order for account of occupation rent:-
Maintenance and repairing expenses 62.For the sake of completeness, I also set out my view on whether Mr Yeung has to account to Madam Tam for the maintenance and repairing expenses concerning the Property paid by Madam Tam over the years. I would answer the question in the negative. 63.The general rule is set out in Snell’s Equity (33rd Ed), para.20-087(c):-
64.There is no evidence showing that the maintenance or repairing works done by Madam Tam has increased the value of the Property. Accordingly, in accordance with the general rule, I do not think Mr Yeung has to share the costs of these works. 65.Further, as Madam Tam has been living in the Property and is not required to pay any occupation rent, in my view it would be just and fair for those maintenance and repairing expenses to be borne by Madam Tam. CONCLUSION 66.For the reasons above, I would make an order for sale of the Property but refuse to order an account of any occupation rent or profit. 67.While the Property has to be sold, it would be in the mutual interest of the parties if the expenses of the sale can be minimized and the best selling price in the market can be achieved. I therefore would direct the parties to agree on the manner of the sale for the purpose of achieving these objectives within 28 days. In the absence of an agreement between the parties, the Property would be sold by public auction. 68.After deducting the expenses of the sale, the net proceeds should be divided equally between Mr Yeung and Madam Tam. 69.I would also give the parties liberty to apply. If the parties encounter any difficulties in performing my order, they may apply for directions in due course. 70.As to costs, I am of the view that costs should follow the event. While Mr Yeung succeeds in getting the order for sale, he fails in obtaining the order for account of occupation rents and profits. Having said that, most of the time in these proceedings is spent on the order for sale. Taking all these into account, I would make a costs order nisi that Mr Yeung would have 2/3 of the costs of these proceedings. This order nisi would become absolute unless either party makes an application to vary the same within 14 days. 71.With the aforesaid in mind, I make the following order:-
72.I further direct that this judgment be interpreted to Madam Tam by a court interpreter at the time of handing down of the same. 73.I thank parties for the valuable assistance rendered to this court.
Miss Ip Wah, of Tsui & Co, assigned by the Director of Legal Aid, for the plaintiff The defendant appeared in person |
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