Re Lee Yik Kwong

HCB 4043/2006

[2019] HKCFI 2485

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 4043 OF 2006

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BETWEEN

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Before: Mr Recorder Eugene Fung SC in Chambers

Date of Hearing:  25 September 2019

Date of Decision:  15 October 2019

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D E C I S I O N

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A.  INTRODUCTION

1.The 1^st applicants are the joint and several trustees of the estate of Mr Lee Yik Kwong (“the Bankrupt”). The 2^nd applicant is a recovery and liquidation funding company which was ordered to be added as a party herein on 2 August 2016.

2.This is the substantive hearing of the applicants’ summons (“the Sale Summons”) to determine the beneficial ownership of the property known as Flat C, 5^th Floor, Block 10, Beverly Villas, 16 La Salle Road, Kowloon (“Flat 5C”), and whether the Court should order a sale of the Property if the Bankrupt is found to have a beneficial interest in the Property. 

3.In addition to the Sale Summons, there are also the following two summonses before the Court:

(1)  the applicants’ summons to amend the Sale Summons to include the car parking space numbered 216 on Ground Floor, Beverly Villas, 16 La Salle Road, Kowloon (“the Car Parking Space”) as the subject matter of the Sale Summons (“the Amendment Summons”);

(2)  the respondent’s summons to strike out the Sale Summons and the Amendment Summons (“the Strike Out Summons”).

4.At the start of the hearing, the parties agreed that I should hear and determine the Strike Out Summons.  After hearing arguments from both parties, I dismissed the Strike Out Summons with costs to be paid by the respondent to the applicants to be taxed if not agreed.  I indicated that I would set out my reasons for dismissing the Strike Out Summons in this Decision. 

5.Upon hearing my decision on the Strike Out Summons, Mr Simon Wong, on behalf of the respondent, indicated that the respondent would not oppose the Amendment Summons.  I then made an order in terms of the Amendment Summons.

6.I now set out my reasons on why I dismissed the Strike Out Summons, and my decision on the Sale Summons.

B.  THE RELEVANT FACTUAL BACKGROUND

7.On 18 May 2007, the Bankrupt was adjudged bankrupt by the Court.  On 3 August 2007, Mr Kenneth Chen Yung Ngai and Mr Stephen Briscoe were appointed the joint and several trustees of the Bankrupt’s estate.  On 13 June 2008, Mr Wong Tech Meng was appointed as one of the joint and several trustees of the Bankrupt’s estate in place of Mr Chen.

8.Subsequently, the Bankrupt was automatically discharged on 18 May 2011 on the expiration of four years from the date of the bankruptcy order.

9.During the course of the applicants’ investigations into the Bankrupt’s affairs, it was discovered that the Bankrupt and his father, Mr Lee Cheu (“Mr Lee Sr”), are registered as joint tenants of Flat 5C and the Car Parking Space (collectively as “the Property”).

10.The Bankrupt is the only child of Mr Lee Sr and Madam Fan Lai Har (“Madam Fan”), who, according to the respondent, were married in Mainland China in 1946.

11.The respondent is the wife of the Bankrupt, and the daughter- in-law of Mr Lee Sr and Madam Fan.

12.On 20 April 2011, the applicants issued the Sale Summons against Mr Lee Sr.

13.On 2 June 2011, Mr Lee Sr filed a Writ in HCA 926/2011 against the Bankrupt seeking, inter alia, a declaration that the Bankrupt held all his estate, right, title, benefit and interest of and in the Property on trust for Mr Lee Sr and that Mr Lee Sr is the sole beneficial owner of the Property (“the HCA Proceedings”).  Mr Lee Sr subsequently agreed to stay the HCA Proceedings until the determination of the Sale Summons.

14.The Director of Lands was served with the Sale Summons and the relevant papers pursuant to section 3(2) of the Partition Ordinance (Cap 352).  On 7 June 2011, the Director of Lands indicated that the Government would not have objection to the proposed sale of Flat 5C.

15.In January 2012, the Sale Summons was set down for a substantive hearing on 3 May 2012.  However, in the light of the then ongoing settlement discussions, the parties in April 2012 agreed to seek to vacate and adjourn the hearing to a date to be fixed.

16.According to the respondent, in about February 2015, Mr Lee Sr was diagnosed by a psychiatrist to have vascular dementia, and since then was unable to proceed with these proceedings on his own.

17.On 16 February 2016, the 1^st applicants applied for leave to enter into a deed of assignment to assign the interest in one half of the proceeds from the sale of the Property to the 2^nd applicant, which was granted on 15 June 2016 by Mr Justice Ng.

18.In late 2016, the Sale Summons was set down for a substantive hearing on 11 January 2017.

19.On 28 November 2016, the applicants took out the Amendment Summons.  Thereafter, the respondent instructed lawyers who sought to appoint the respondent as the next friend or guardian ad litem of Mr Lee Sr.

20.On 11 January 2017, Mr Justice Ng ordered that the Sale Summons and the Amendment Summons be adjourned sine die with liberty to restore, and the respondent was given leave to take out an application to appoint herself as the next friend or guardian ad litem of Mr Lee Sr.

21.On 22 January 2017, Mr Justice Ng made an order by way of consent that an expert was to be appointed to examine the mental capacity of Mr Lee Sr.

22.On 10 April 2017, Professor Helen Fung Kum Chiu agreed to be appointed as the single joint expert to examine the mental capacity of Mr Lee Sr and requested the parties to arrange an interview with Mr Lee Sr.

23.From April 2017 to mid-September 2017, Mr Lee Sr was said to be in and out of Intensive Care Unit, and accordingly, the interview with Professor Chiu for the purpose of examining the mental capacity of Mr Lee Sr was never arranged.

24.In September 2017, Mr Lee Sr passed away.

25.On 18 July 2018, the respondent was appointed to represent Mr Lee Sr’s estate in these proceedings.

26.On 22 May 2019, the applicants took out a summons to restore the Sale Summons and the Amendment Summons for hearing.

27.On 14 June 2019, Mr Justice Ng ordered by way of consent, amongst other things, that the Sale Summons and the Amendment Summons be restored to a date to be fixed.

28.On 27 June 2019, the respondent took out the Strike Out Summons, which was ordered by Mr Justice G Lam by way of consent to be heard together with the Sale Summons and the Amendment Summons before this Court.

C.  THE STRIKE OUT SUMMONS

29.In the Strike Out Summons, the respondent sought to strike out the Sale Summons and the Amendment Summons on the ground of “abuse of process and/or inordinate and inexcusable delay in prosecuting [the two summonses] causing prejudice to the respondent”.

C1.  The relevant legal principles

30.The legal principles on dismissal for want of prosecution were restated by Ma CJ in Wing Fai Construction Co Ltd v Yip Kwong Robert (2011) 14 HKCFAR 935 at §75.  The principles that are relevant to this case can be summarised as follows:

(1)  “ … striking out is a remedy of the last resort … and only where it would be plain and obvious to do so.”  [§75(1)]

(2)  “ Abuse of the process of the court is the foundation for the exercise of the jurisdiction to strike out for delay.”  [§75(2)]

(3)  “ Abuse can take many forms.  The Birkett v James second limb will continue, where it is proved, to be a form of abuse so that inordinate and inexcusable delay causing real prejudice would be an abuse.  Thus, where a delay which is inordinate and inexcusable causes a substantial risk that a fair trial is not possible, this is perhaps the most compelling form of prejudice to a defendant …” [§75(3)]

(4)  “ It is still important when looking at the aspect of delay that it should be both inordinate and inexcusable, and that abuse is shown.  It has never been the law that mere delay will be sufficient to justify an order to strike out …”  [§75(5)]

(5)  “ … in the majority of applications to strike out for delay, the aspect of prejudice to the defendant will often be extremely relevant … prejudice to the defendant (whether it exists or not) can still be very much a factor.  It is a factor that may well be relevant to the overall justice of the case …”  [§75(7)]

(6)  “ As to the conduct of the parties, this will of course remain a relevant consideration of the court. … it is wrong to say that the conduct of the parties is not a relevant consideration.  Quite the contrary, it will be relevant both to the critical question of abuse as well as to the overall justice of the case.  Thus, post-CJR, where all parties to the proceedings have the obligation to prosecute the proceedings and assist the Court in furthering the underlying objectives, it would be highly relevant to consider any failure on the part of the parties here.  As far as the defendant is concerned, I would say once again that there is no place anymore for defendants to adopt the attitude of ‘letting sleeping dogs lie’. No longer will it be possible (if it ever was) for a defendant to sit idly by and do nothing, in the hope that sufficient delay would be accumulated so that some sort of prejudice can then be asserted. If it is sought to be argued that time has dimmed the memories of witnesses, the court will usually want to know what steps have been taken by the defendant to take instructions, or proof or locate witnesses …  The court will certainly want to know what the true nature of the defence is, in order to assess the extent of the prejudice suffered by a defendant.”  [§75(8)]

C2.  Discussion

C2a.  Inordinate and inexcusable delay

31.The respondent relied on the following three periods to support her case that there had been inordinate and inexcusable delay on the part of the applicants:

(1)  The first period: from the date of appointment of the applicants (3 August 2007) to the date when the Sale Summons was issued (20 April 2011).

(2)  The second period: from the date of the consent summons to vacate the substantive hearing for the Sale Summons (26 April 2012) to the applicants’ application to obtain leave to enter into a deed of assignment with the 2^nd applicant (15 June 2016).

(3)  The third period: from the order of Mr Justice Ng to appoint the respondent to represent Mr Lee Sr (18 July 2018) to the applicants’ application to restore the hearing for the Sale Summons and the Amendment Summons (22 May 2019).

32.The first period:

(1)  I was not persuaded that this was a relevant period for the purpose of considering whether the Sale Summons and the Amendment Summons should be struck out for want of prosecution.  In a claim to dismiss or strike out proceedings for want of prosecution, the complainant would be complaining about the inordinate or inexcusable delay on the part of the applicant in prosecuting his proceedings. However, the first period in this case was concerned with the time before the two summonses in question were issued.  It appeared to me that the respondent was essentially complaining about the delay on the part of the 1^st applicants in taking out the two summonses, as opposed to the delay in prosecuting them.  I did not think that the respondent could properly rely on this period to support a dismissal for want of prosecution.

(2)  In any event, as explained by the applicants in their affidavit evidence, the delay in this period was caused by the lack of cooperation from the Bankrupt and the lack of funding to pursue legal proceedings.  I had no reason to doubt the veracity of these reasons.

33.The second period:

(1)  From the evidence adduced by the applicants, the 1^st applicants during this period were engaged in findings ways to resolve the matter with Mr Lee Sr, and subsequently on account of the breakdown of the negotiations, in making arrangements for obtaining funding for continuing the proceedings. 

(2)  On behalf of the applicants, Mr Toby Brown accepted that the matter had moved slowly.

(3)  In my view, the delay during this period was inordinate.  However, in the light of the explanations given by the applicants, I did not consider the delay to be inexcusable. 

34.The third period:

(1)  According to the applicants, during this period, they attempted to engage without prejudice negotiations with the respondent to resolve the matter and also sought advice from counsel to address issues arising from Mr Lee Sr’s death.

(2)  This period was relatively short.  Having taken on board the applicants’ reasons for their inactivity, I did not consider the delay in this period to be either inordinate or inexcusable.

C2b.  Prejudice

35.On behalf of the respondent, Mr Simon Wong submitted that there were two forms of prejudice to Mr Lee Sr, namely (1) the Property could not be disposed of freely, and (2) the impossibility for Mr Lee Sr to testify in Court which made a fair trial impossible.

36.As to (1), there was no evidence before the Court that Mr Lee Sr at any time wished to dispose of the Property.  Indeed, Mr Lee Sr in paragraph 29 of his affirmation filed on 7 June 2011 in opposing the Sale Summons stated: “In about 2002, I have decided to stay in the Property for the rest of my life.  I considered that I would not sell or rent it. I love this flat.  It is my home.”  There was no evidence that Mr Lee Sr had a change of intention in respect of the Property between 2002 and the time when he passed away.

37.As to (2), Mr Wong emphasised that there was a real need for Mr Lee Sr to give oral evidence in Court regarding his intention in 1979 when the Property was purchased.  However, it was clear from the order dated 8 June 2011 given by Barma J (as he then was) that the makers of the affirmation filed in the Sale Summons would only need to attend the substantive hearing for the purpose of being cross-examined.  In other words, all the relevant evidence that Mr Lee Sr was supposed to give should have already been set out in his affirmation filed in June 2011. Moreover, if he or his lawyers considered appropriate and necessary, Mr Lee Sr could have applied for leave to file a further affirmation to respond to any matters raised by Mr Briscoe of the 1^st applicants in his second affidavit dated 28 September 2011.  But no such leave was applied.

38.Accordingly, even assuming there was some inordinate and inexcusable delay on the part of the 1^st applicants to prosecute the Sale Summons and the Amendment Summons (contrary to my views set out above), I was not satisfied that there was any real prejudice caused to Mr Lee Sr as a result of such delay.

39.My view on the absence of prejudice to Mr Lee Sr was to some extent fortified by the inactivity on the part of Mr Lee Sr or the respondent to move the proceedings forward in the second period and the third period. As Ma CJ said in Wing Fai Construction (above) at §75(8), “post-CJR, where all parties to the proceedings have the obligation to prosecute the proceedings and assist the Court in furthering the underlying objectives, it would be highly relevant to consider any failure on the part of the parties here.”  If Mr Lee Sr had really wanted to dispose of the Property, there was no reason why he could not take action at the beginning of the second period to restore the hearing.

C3.  Conclusion on Strike Out Summons

40.For the above reasons, I dismissed the Strike Out Summons with costs to be paid by the respondent to the applicants to be taxed if not agreed.

D.  THE SALE SUMMONS (AS AMENDED)

41.The applicants contend that there are two substantive issues in the Sale Summons (as amended).  The first is to determine who has beneficial interests in the Property.  The second is decide whether it is appropriate for the Property to be sold in the circumstances of this case in the event that the Court finds that the Bankrupt has a beneficial interest in the Property. 

D1.  Whether the Bankrupt has any beneficial interest in the Property

42.It is undisputed that Mr Lee Sr and the Bankrupt became joint tenants of the Property on 21 April 1981.

43.At the hearing, Mr Wong submitted that the respondent would rely on the doctrine of common intention constructive trust to contend that the Bankrupt holds his beneficial interest in the Property on trust for Mr Lee Sr’s estate.

D1a.  The relevant legal principles

44.Where a property is vested only in one person’s name (A), the other party (B), in order to establish a beneficial interest, may be able to establish a constructive trust by showing that it would be inequitable or unconscionable for A to claim the entirety of the beneficial ownership. This requires two matters to be proved:

(1)  that there was a common intention that both should have a beneficial interest; and

(2)  that B has acted to his/her detriment on the basis of that common intention. 

See Grant v Edwards [1986] Ch 638 at 654D–E (Sir Nicolas Browne-Wilkinson VC); Luo Xing Juan Angela v Estate of Hui Shui See Willy (2009) 12 HKCFAR 1 at §38 (Ribeiro PJ).  This type of constructive trust is generally known as a “common intention constructive trust”.

45.The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership.  In sole ownership cases it is upon the non-owner to show that he has any interest at all.  In joint ownership cases, it is upon the joint owner who claims to have other than a joint beneficial interest.  See Stack v Dowden [2007] 2 AC 432 at §§56 and 68 (Baroness Hale); Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985 at §5.5 (Cheung JA).

46.The party alleging the common intention constructive trust must first prove that there was, at any time prior to acquisition or exceptionally at some later date, an agreement, arrangement or understanding reached between the parties that the property is to be shared beneficially: see Lloyds Bank Plc v Rosset [1991] 1 AC 107 at 132E–F (Lord Bridge); Mo Ying (above) at §5.8 (Cheung JA).

47.The question of whether there was a common intention that each party should have a beneficial interest in the property has been described as the primary or threshold question: see Oxley v Hiscock [2005] Fam 211 at §§47 and 68 (Chadwick LJ); Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343 at §24 (Johnson Lam J (as he then was)).

48.The common intention, or the agreement, arrangement or understanding, between the parties may be based on express discussions between them or inferred from their conduct: see Lloyds Bank Plc v Rosset at 132E – 133B (Lord Bridge) and Oxley v Hiscock at §§36 and 40 (Chadwick LJ); Mo Ying (above) at §5.8 (Cheung JA).

D1b.  Discussion

49.At the hearing, Mr Wong submitted that Mr Lee Sr and the Bankrupt had a common understanding that the Bankrupt would hold the Property on trust for Mr Lee Sr shortly after Mr Lee Sr paid the initial deposit for the purchase of the Property. When asked by this Court to identify the relevant evidence to support such a common understanding, Mr Wong referred the Court to paragraphs 12 to 14 of Mr Lee Sr’s affirmation, which read:

“ 12. After that day, I felt that handling a property transaction was pretty tiring to me. I was already 56 years old at that time and my health started to deteriorate. At the same time, I was also busy with my business in cloths and tailoring. I started to get worried and did not want to handle and be involved in liaising with management company and renovation contractors for this Property or the estate agents and lawyers if I decided to rent or sell the Property in future.

13.  I had a discussion with my wife. We came up with an idea to add the name of our son to the Property, so that he could manage the Property for me, that is to liaise with parties, contractors, agencies to deal with formalities and signing of documents. By adding his name, he could also collect rent from the tenant from me, if the Property was to be rented in future. In that case, I would not need to trouble myself in travelling to places to personally handle the troublesome matters.

14.  The Bankrupt, who was then 29 years old, agreed to take up this role. Therefore I immediately informed Messrs Shea & Co that the Bankrupt would be added as an additional purchaser of the Property.”

50.In the two-page affirmation filed herein, the Bankrupt simply stated that he had read Mr Lee Sr’s affirmation, that the contents therein were true and accurate to the best of his knowledge, information and belief, and that he would adopt the contents therein as his evidence.

51.However, even if Mr Lee Sr’s evidence quoted above is accepted in its entirety, it does not support the case that Mr Lee Sr and the Bankrupt had a common intention that the Bankrupt would hold his beneficial interest in the Property on trust for Mr Lee Sr.  All Mr Lee Sr stated in the above-quoted passages in his affirmation was to explain why he decided to include the Bankrupt’s name as an additional purchaser of the Property.   There is no affidavit evidence from Mr Lee Sr to deal with any agreement, arrangement or understanding reached between him and the Bankrupt that the Property was to be beneficially owned solely by Mr Lee Sr, and not to be shared beneficially.  Further, there was nothing in the Bankrupt’s cross-examination which can be used to support such an agreement, arrangement or understanding.

52.In these circumstances, the respondent has failed to establish that the Bankrupt holds the Property on a common intention constructive trust for Mr Lee Sr’s estate.

53.As the respondent has failed to show that the beneficial ownership is different from the legal ownership vis-à-vis the Property, equity follows the law.  It follows that before the Bankrupt’s bankruptcy, the Bankrupt and Mr Lee Sr were joint tenants of the Property in law and in equity.

54.For the sake of completeness, I should point out that certain events in 2002 (1) fortify my conclusion that the Bankrupt and Mr Lee Sr were joint tenants of the Property and (2) seriously undermine the respondent’s case that the Bankrupt has been holding his beneficial interest in the Property on trust for Mr Lee Sr:

(1)  By an agreement for sale and purchase dated 20 February 2002 and signed by both the Bankrupt and Mr Lee Sr, the Bankrupt agreed to sell his interest in the Property to Mr Lee Sr for HK$2,500,000 with the completion date of 22 April 2002.  The Bankrupt acknowledged receipt of HK$250,000 as deposit for the sale from Mr Lee Sr by signing on the execution page of the agreement.

(2)  By a supplemental agreement dated 3 May 2002 and signed by both the Bankrupt and Mr Lee Sr, the date of completion was postponed to 3 July 2002.

(3)  By a cancellation agreement dated 15 July 2002 and signed by both the Bankrupt and Mr Lee Sr, it was agreed that the agreement for sale and purchase would be cancelled and that the deposit of HK$250,000 would be returned to Mr Lee Sr by the Bankrupt.

(4)  All three agreements were prepared by Messrs Deacons and registered in the Land Registry against the Property. 

(5)  On the face of the three agreements, it is clear that they show that both Mr Lee Sr and the Bankrupt in 2002 considered the Bankrupt to have some beneficial interest in the Property.

(6)  According to his affirmation evidence, Mr Lee Sr (a) considered that it was no longer necessary for the Bankrupt to manage the Property for him and therefore wanted to have the Bankrupt’s title transferred back to him, (b) had never paid anything to the Bankrupt for the transfer, (c) was unable to understand the significance of the sale and purchase agreement, (d) felt it was unnecessary for him to give money to the Bankrupt when being asked to pay the balance of the purchase price and therefore instructed his solicitors to cancel the sale and purchase, and (e) never received HK$250,000 from the Bankrupt pursuant to the cancellation agreement.

(7)  When asked about these 2002 transactions in cross-examination, the Bankrupt said that they happened a long time ago and that he did not have a clear recollection about them.

(8)  I agree with Mr Brown that the version of events put forward in Mr Lee Sr’s affirmation is inherently implausible.  It is directly inconsistent with the contemporaneous documents and the inconsistencies could not be explained by Mr Lee Sr in his affirmation evidence, or by the Bankrupt.  I therefore consider that both Mr Lee Sr and the Bankrupt in 2002 had acknowledged that the Bankrupt held some beneficial interest in the Property.

55.As mentioned earlier, the Property was registered in the name of Mr Lee Sr and the Bankrupt as joint tenants:

(1)  On making of a bankruptcy order, any property of the bankrupt held under a joint tenancy would be severed automatically and the severance would create a tenancy in common between the trustee in bankruptcy on the one hand and the other co-owner on the other hand: see Re Dennis [1993] Ch 72 at 74 (Sir Donald Nicholls VC); Re Liu Yi Fang (a bankrupt) [2015] 3 HKLRD 668 at §7 (Anthony Chan J); Re Lo Yau Shing (a bankrupt) [2018] 3 HKLRD 540 at §12 (Peter Ng J).

(2)  Further, the bankrupt’s interest in the property became vested initially in the Official Receiver or provisional trustees, and subsequently in the trustees of bankruptcy upon their appointment: see sections 58(1), 58(1A) and 58(2) of the Bankruptcy Ordinance (Cap 6).

56.For the reasons given above, it is appropriate for me to make a declaration that the interest in the Property is vested in and held in equal shares between Mr Lee Sr’s estate, and the 1^st applicants, as tenants in common. 

D2.  Whether the Property should be sold

57.Section 2 of the Partition Ordinance (Cap 352) 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.”

58.Section 6 of the Partition Ordinance relevantly 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.

(2)  The Court may exercise its powers under subsection (1), notwithstanding the dissent or disability of any person interested.”

59.The Property consists an apartment in a building and a car parking space.  Given the nature of the Property, it seems to me to be almost impossible to equitably and sensibly divide the Property into aliquot parts amongst the two co-owners.  In these circumstances, I believe it would be impracticable to make an order for partition of the Property. Indeed, this appears to be common ground between the parties.

60.In Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825, Recorder Joseph Fok SC (as he then was) at §§18 and 19 restated the following propositions in the context of the Partition Ordinance:

(1)  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.

(2)  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 (a) such an order will not be beneficial to all the co-owners, or (b) it will result in very great hardship to one co-owner.

(3)  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.

Both Mr Brown and Mr Wong accept that these propositions are applicable in this case.

61.The respondent contends that hardship would be caused to the other co-owner of the Property (namely Madam Fan) if an order for sale is made.  The following evidence is relied up by the respondent to support her position:

(1)  Mr Lee Sr did not leave behind a will and Mr Lee Sr’s wife, Madam Fan, would be a 50% beneficial co-owner of the Property.

(2)  Madam Fan, the Bankrupt and the respondent are currently residing at Flat 5C.  Madam Fan’s grandchildren would sometimes stay at Flat 5C.

(3)  Madam Fan is now 89 years old.  Her health is not good and it is not convenient for her to move about.

(4)  Madam Fan has been living at Flat 5C for over 30 years.

62.The applicants have adduced evidence to show that as at 1 August 2019, the value of the Property was in the region of HK$20 million to HK$22 million.

63.There is no evidence on how much is currently owing by the Bankrupt to his creditors.  The only evidence before the Court is as follows:

(1)  In the Petition dated 15 May 2006 filed by a creditor, it was stated that the Bankrupt was indebted to the creditor in the aggregate sum of US$616,656.64 and HK$2,930.00 as at 8 May 2006.

(2)  In the Statement of Affairs dated 31 July 2007 filed by the Bankrupt, the estimated total indebtedness was HK$862,130.09 due to four unsecured creditors.

64.The Court does not have any medical evidence regarding the physical condition of Madam Fan.  Further, the respondent has not adduced any evidence on the financial position of Madam Fan, including details of her assets other than the 50% interest in the Property, and whether she is financially capable to rent or purchase another property.

65.Accordingly, and applying the propositions restated by Recorder Joseph Fok SC in Wong Chun Kei (above), I am not satisfied that the respondent has established a case of very great hardship on the part of Madam Fan in the event that an order for sale of the Property is made. I consider that an order for sale should be made.

66.There is a divergence in judicial opinion on whether the approach applied by the majority in the English Court of Appeal in Re Citro (a bankrupt) [1991] Ch 142 should be adopted in Hong Kong:

(1)  In Re Citro, it was held, amongst other things, that for the purpose of making an order for sale in favour of a trustee in bankruptcy under section 30 of the Law of Property Act 1925, (a) where a spouse, having a beneficial in a matrimonial home had become bankrupt, the interests of the creditors would usually prevail over the interests of the other spouse and a sale of property ordered within a short period, and (b) only in exceptional circumstances, more than the ordinary consequences of debt and improvidence, could the interests of the other spouse prevail so as to enable an order for sale to be postponed for a substantial period. 

(2)  The Re Citro approach has been followed by Anthony Chan J in Re Ng Tze Ching (unreported, HCB 5883/2006, 29 August 2014) and in Re Liu Yi Fang (a bankrupt) [2015] 3 HKLRD 668.

(3)  However, Peter Ng J declined to follow the Re Citro approach in Re Cheung Chan Hong (a bankrupt) [2015] 2 HKLRD 1. 

67.Given the view I expressed above that the respondent has not established a case of very great hardship, it is unnecessary (1) for the applicants to rely on the Re Citro approach to contend that the creditors’ voice should prevail over that of Madam Fan, or (2) for the respondent to rely on the Re Citro approach to demonstrate any exceptional circumstances why Madam Fan’s voice of not selling should prevail over that of the creditors.  In these circumstances, it is unnecessary for me to express any view on whether the Re Citro approach should be followed in Hong Kong. 

68.For the above reasons, I would make an order for sale of the Property. 

69.The Court has not received any submissions from the parties on how much time the current occupants of Flat 5C should be given to deliver vacant possession to the applicants.  I therefore direct the parties to jointly propose agreed directions within 7 days for the filing of written submissions to address the timing for the delivery of vacant possession, failing agreement the parties should immediately seek further directions from the Court.  I also give general liberty to apply.

70.I also make an order nisi that the applicants’ costs of the Sale Summons be paid out of the estate of the Bankrupt.

Mr Toby Brown, instructed by Gall, for the 1^st and 2^nd applicants

Mr Simon Wong, instructed by Fongs, for the respondent

Both the Director of Lands and the Official Receiver, unrepresented, absent from the hearing