Forda Investors Ltd v. U.O.B. Finance (HK) Ltd
Read the full judgment text of CACV 57/1978 on BabelCite. This Court of Appeal judgment was delivered on 12 July 1979.
1. The plaintiff Appellant appeals against an order made under s.6 of the Partition Ordinance for the sale of a multi-storeyed building in Des Voeux Road Central. The Plaintiff and Tian Teck Investment Holding Co. Ltd. ("Tian Teck"), the predecessors in title of the 1st Defendant, became tenants in common in equal shares of that building. On 12th April 1976 the Plaintiff and Tian Teck executed a document in the following form:
Cited by 2 cases
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CACV000057/1978 Tenants in common in equal shares of a building - agreement allocating use of some of the floors between the tenants - agreement binding - not agreement to partition - application for sale in lieu of partition - order for sale not limited to floors unallocated - evidence that sale floor by floor more profitable financially - duty of court to order sale in manner most beneficial to both parties at time of sale.
----------------- Coram: Huggins and Pickering, JJ.A. and McMullin, J. Date of Judgment: 12 July 1979 ----------------- JUDGMENT ----------------- Huggins, J.A.: 1. The plaintiff Appellant appeals against an order made under s.6 of the Partition Ordinance for the sale of a multi-storeyed building in Des Voeux Road Central. The Plaintiff and Tian Teck Investment Holding Co. Ltd. ("Tian Teck"), the predecessors in title of the 1st Defendant, became tenants in common in equal shares of that building. On 12th April 1976 the Plaintiff and Tian Teck executed a document in the following form:
The equalization money therein mentioned was paid. The parties continued to share as before the rents of the eighteen floors allotted by the agreement. On 30th June 1977 Tian Teck assigned its interest to the 1st Defendant and on the same day the Plaintiff, Tian Teck and the 1st Defendant all signed the following endorsement on the document of 12th April 1976:
On 28th November 1977 the Plaintiff took out an originating summons claiming, in the alternative, the sale of those parts of the building which were not allotted by the agreement ("the remaining floors") or the sale of the whole building. In either event the sale was to be subject to the existing tenancies, one of which was the tenancy of the 1st Defendant of the lower ground, ground and mezzanine floors. It was common ground that partition would not be beneficial to the parties (even if it were possible in the light of s.4(2)) and that an order for sale ought to be made under s. 6. Cons, J. ordered that the entire building be sold and that it be sold as one holding. Upon the appeal the Plaintiff contends that the sale should be confined to the remaining floors or, if the judge was right to order sale of the entire building, that the sale should not be as one holding: it should be a sale floor by floor except that the lower ground, ground and mezzanine floors should be sold as one unit and the twenty-first floor and roof as another unit. 2. Cons, J. rejected the first of the alternative claims on the ground that the agreement of 12th April 1976 was not a binding contract. He did not accept that the parties had no intention of entering into a contractual relationship, but thought that the agreement was "simply not sufficiently specific: it leaves too many matters unresolved". In his note of his oral judgment he does not specify the matters which he had in mind, but suggests that they are apparent upon a study of the draft Deed of Mutual Covenant which was drawn up pursuant to the agreement. I respectfully agree with the learned judge that all the parties clearly intended to bind themselves by the agreements of 12th April 1976 and 30th June 1977 and thought that they had done so. Payment of the equalization money alone establishes that in respect of the former. What exactly each thought it had achieved is not so clear, but that is another matter. What they had in mind was apparently a horizontal division of the entire building, for the floors not allotted were "to be retained temporarily". What is suggested is that it is uncertain whether, as the confirmatory endorsement suggests, the agreement was limited to use of the floors without any change in the title or it was in contemplation of the eventual partition of the whole building. Although there was considerable emphasis in the argument upon the question whether the agreement was specifically enforceable, what has troubled me is the rather different question whether there was a legally binding agreement at all, and that involves ascertaining whether the meaning of the agreement is clear. 3. It was originally contended on behalf of the Plaintiff that this was an agreement not merely for horizontal division but for horizontal partition. On the assumption that it was such an agreement it was then argued that as a matter of normal conveyancing practice it would be followed by a formal deed of partition, the terms of which necessarily remained to be negotiated and which would be settled by the court in default of agreement between the parties. However, as Mr. Chang submitted, this was not a contract to partition, for it did not purport to provide for an end to the tenancy in common in the entire site of the building. 4. On the basis that it was not an agreement to partition, Mr. Harman's argument may, I think, be summarized as follows:
5. As to the first of these points I understood Mr. Harman to contend that there was no need to imply a term that an undivided share in the land would be allocated to each of the allotted floors, an allocation for which a deed of conveyance would be required. I understood Mr. Litton at one stage to be saying that the agreement was not a contract because it did not specify what share in the site was intended to be allocated to each floor. That argument would necessarily involve a concession that the agreement did contemplate some alteration in the ownership of the site. I am not persuaded that any such alteration was contemplated. Indeed, Mr. Litton himself objected that to imply such a term would be to go beyond the scope of the agreement and would involve the court in deciding questions which could properly be decided only by the parties themselves. He said that the aim of the original agreement was "to achieve a degree of severance of the title" (and that much Mr. Harman conceded) but he went on to contend that it was to be achieved "by means of a deed of mutual covenant". What Mr. Litton meant by severance of title appears to have been that the equal undivided shares would immediately be split up. With respect I do not agree that any such aim has been proved or that, if it has, that aim could be achieved by means of a deed of mutual covenant. All that can be inferred is that the aim of the parties must have been to enable them to enter into contracts in relation to individual floors without the necessity of calling on the other co-owner as a party to the transaction. That is confirmed by a letter dated 13th April 1976 from the Plaintiff to Messrs. Peter Mo & Co., solicitors, a copy of which letter was sent to Tian Teck. Three paragraphs in it read as follows:
The "decision" in the second of the paragraphs cited was the decision to allot the eighteen floors. Either party could effect sales or lettings of the floors allotted to it without there having been any alteration in the other's original half undivided share in the land. That was possible even though it was common ground that under the normal conveyancing practice in Hong Kong flats were invariably sold with an undivided share in the site and that, whatever may be the position in the United Kingdom, no one would be likely to buy a flat here unless he were given a share in the site. On the other hand, if severance of the title were necessary, it could not be achieved in a simple deed of mutual covenant: it would require a deed of partition and mutual covenant. 6. Nevertheless there remains the question whether the learned judge was right when he said:
What Mr. Litton has alleged to be missing is any agreement as to the terms of the deed of mutual covenant which he says must have been in the contemplation of the parties because it was known that one of the parties wanted to sell and, without such a deed, neither party would be likely to find a purchaser for his flats. Mr. Harman, on the other hand, submits, first, that strictly no deed of mutual covenant was necessary and, alternatively, that, if such a deed must have been intended, the settling of its terms was a mere matter of machinery. He relies upon the clear intention of the parties to enter into a legal relationship and submits that the trend of the modern authorities shows that the court should be slow to hold the agreement void for vagueness. He says the court will uphold the agreement where a term can be implied upon the principles laid down in The Moorcock (1889) 14 P.D. 64 or where certainty can be obtained by using machinery provided by the agreement itself: moreover, where the necessary machinery is not provided but a formula has been stated, the machinery will be supplied by the court: Brown v Gould 1972 Ch. 53. This argument recognizes that a deed of mutual covenant is not necessary for the conveyance of the rights agreed to be transferred in the same way that a deed of conveyance of a freehold would be necessary for the conveyance of the interest agreed to be transferred. Nevertheless it is suggested that the real intention of the parties could never be achieved without a deed of mutual covenant, so that the deed of mutual covenant becomes as necessary as a deed of conveyance would be upon the transfer of a freehold and may be regarded, no less than such a deed of conveyance, as part of the machinery of conveyancing. Mr. Harman asserts that the Chancery Division of the High Court in England would so regard it and that accordingly specific performance would be granted in the form of an order to execute a deed of mutual covenant in terms to be agreed between the parties or, in default of agreement, to be settled by the court. He has not cited any authority for this, but I think it must be right. It is true that a deed of mutual covenant may, to use the words of the trial judge, include matters "of financial import" but they are matters which could be decided objectively by a person with the necessary expertise. No less difficult matters of financial import sometimes have to be decided by conveyancing counsel of the court. 7. It should be mentioned that, although the agreement between the parties refers to "the floors to be retained temporarily", which suggests that a further agreement relating to the remaining floors was in contemplation, there can be no suggestion that the parties were purporting to bind themselves to enter into such a further agreement. The fact that the rents from the allotted floors continued to be divided between the parties is consistent with an intention that the agreement was intended as a first step towards partition, but that does not make it an agreement to agree. 8. In the result I think there was a binding agreement and that it was capable of specific performance. However, it does not necessarily follow that the agreement should be specifically enforced. 9. The next question, therefore, is whether the existence of this contract affects the form of the order for sale which ought to be made. We have already seen that it does not preclude the court altogether from making an order for sale, since it does not bring about a partition. Mr. Harman contends that the court should nevertheless give effect to the contract by limiting the order to the sale of the remaining floors and Cons, J. said that if the agreement were enforceable he would have so limited the order for sale. It is, of course, true that the order which has been made for the sale of the entire building has the effect of overreaching the agreement between the parties and prejudices the Respondent to the extent that it has paid equalization money under the agreement, but this prejudice can be negatived by an appropriate order under s. 4(4) for distribution of the proceeds of sale. It would clearly not be in the interests of the parties to direct sale of the building subject to the parties' rights under the contract to exclusive use of the allotted floors: their rights, then unsupported by a share in the site, would be greatly diminished in value, whilst the price obtainable for the building would also be disproportionately reduced. Accordingly I think the learned judge was right to order sale of all the floors. I would, however, direct that the Appellant should receive a share in the proceeds reduced by the amount of the equalization money paid. 10. That leaves the question whether the judge erred in ordering sale of the building as a single unit. In my view the existence of the agreement can have no bearing on that question. What is submitted on behalf of the Appellant is that the judge appeared to accept the reports of all the surveyors to the effect that a sale floor by floor would be more profitable financially. There were three matters which he thought operated against ordering such a sale. First, he thought that an effective floor by floor sale might take as long as eighteen months. He attached no weight to this consideration because the Plaintiff gave an undertaking to purchase immediately at the recommended reserve price any floor which was not sold at the proposed auction. An argument was addressed to us concerning the sufficiency of that undertaking, but the answer to that is that the judge himself was satisfied with the undertaking. 11. The second matter I have already alluded to, namely that before there could be a sale floor by floor some arrangement would have to be made for the subsequent management and administration of the building. It is true, as the judge said, that the present parties are unlikely to agree upon the terms of an appropriate deed of mutual convenant. In such circumstances the usual practice would be for each party to submit a draft and for the court to settle a final draft. I see no difficulty about that. The fact that the document would not be, in the judge's words, "purely legal in its character" does not appear to me to be material: as I have said, the courts frequently have to decide, upon evidence adduced by the parties, issues which involve considerations of commercial judgment. The question whether this building should be sold as a single unit or floor by floor is itself one such issue. 12. The third matter which the judge thought weighed against a sale floor by floor was that the sale of the building as a whole ought to satisfy both parties, since it was open to the Plaintiff to buy the whole building and subsequently to resell it floor by floor. No doubt the Plaintiff would be at liberty to do that but, with respect, I think this simple solution to the problem ignores the fact that the court's duty is to sell in the manner most beneficial to both parties at the time of the sale. 13. As I understand it, the judge was satisfied by the evidence of the surveyors that a higher price would be obtained by a sale floor by floor and I have come to the conclusion that the considerations which led to his ordering otherwise do not have the weight which he attributed to them. I would therefore allow the appeal to the extent of ordering a sale floor by floor, subject to this, that I understand it to be common ground that the lower ground, ground and mezzanine floors should be sold as a unit and the twenty-first floor and roof should be sold as another unit. Subject to anything that the parties have to say I think there should be directions under s.6(4) that (i) a deed of mutual covenant be settled by the court in default of agreement and (ii) that the proceeds of sale be distributed equally between the parties after deduction of all proper expenses, allowance being given for the equalization money paid pursuant to the agreement of 12th April 1976. 12th July 1979.
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----------------- Coram: Huggins and Pickering, JJ.A. and McMullin, J. Date of Judgment: 12 July 1979 ----------------- JUDGMENT ----------------- Pickering, J.A.: 14. In the Court below the Appellant Company, as Plaintiff, claimed against the Respondent Company, as 1st Defendant, an Order that the lower ground floor, ground floor, mezzanine floor, 1st floor, 21st floor and the roof of Advance Building situated at 34-38 Des Voeux Road Central, Hong Kong be sold by public auction subject to existing lettings and tenancies. In the alternative the Appellant sought an order that the whole building together with the land on which it is situated be sold by public auction subject to such lettings and tenancies. In the Court below the Attorney General was joined as 2nd Defendant by reason of section 3(3) of the Partition Ordinance (Cap. 352). However, the Attorney's interest in the proceedings was confined to a small amount of Crown rent due and he took no active part nor has he been named as a respondent in this appeal which is by the Plaintiff in the Court below against the order made by the learned judge for the sale of the land and building as one unit. It is the case of the Appellant that the learned judge was in error in ordering the sale of the whole building and that his order should have been confined to the floors mentioned above: in the alternative the Appellant says that if the judge was right to order the sale of the whole building his order should have been for a sale floor by floor and not as one indivisible unit. 15. The building in question resulted from a redevelopment scheme undertaken by the Appellant and a company called Tian Teck Investment Holdings Co. Ltd. which latter company, during the course of the redevelopment, sold its interest to the Respondent Company. The building is subject to a mortgage but nothing turned upon that since the mortgagee bank concurred in the Appellant's original application to the Court. 16. On 12th April 1976 the Appellant and Tian Teck entered into what was referred to in the Court below as the "Chinese Agreement" providing for the apportioning between them of all the floors of the building other than the roof and those floors which I have mentioned separately above. This Agreement was ratified on 30th June 1977 when it was signed on behalf of the Appellant Company, Tian Teck and the Respondent Company. It will be convenient to set out the translation of that Agreement which is as follows:-
17. The learned judge said that if the Chinese Agreement was a valid enforceable agreement then the court should give effect to it in which case he would be concerned with only five floors. He found however that the Chinese Agreement was insufficiently specific and left too many matters unresolved that being apparent, he said, when one studied the draft Deed of Mutual Covenant which was subsequently prepared by solicitors to give effect to the agreement. He held the Chinese Agreement to be "one of those illusory contracts" referred to by Lord Wright in Scammell v. Ouston(1) and found it to be no more than an agreement to make an agreement and as such unenforceable. He held further that the court could not make that second agreement for the parties with the result that he was required to deal not merely with the give above numbered floors and the roof but with the whole building. Holding further that a partition of the building would not be beneficial to the parties, the learned judge applied himself to making an order for sale, the question being whether the building should be sold floor by floor as the Appellant wished or as a whole as the Respondent preferred; in either event the sale would be subject to existing lettings and tenancies. 18. The evidence of various surveyors was that a floor by floor sale would be more profitable financially than the sale of the building as a whole although there was some evidence that a piecemeal sale might take as long as eighteen months to effect: on the other hand the Appellant had proposed to eliminate any such delay by undertaking to take up immediately any floor left unsold at the auction and to do so at a price calculated to produce a gross return for the building which would be comfortably in excess of any of the various valuations in evidence. 19. In connection with this proposed method of sale the judge said that it would entail some arrangement having to be made for the subsequent management and administration of the building which would normally be done by means of a deed of mutual covenant prepared in advance by the seller; it being clear that the parties were unlikely to agree upon the terms of such a deed the final responsibility for its terms would fall upon the court. The judge considered that that would present no difficulty if the document were purely legal in character but was of the view that such a deed required not only legal judgment but a considerable amount of business judgment which the court was not in a position to supply. He accordingly made an order for sale of the whole building as one unit commenting that both parties would have liberty to bid at the auction and that if the Appellant wished it could purchase the building as a whole and subsequently resell floor by floor so obtaining the additional profit. 20. Mr. Harman, leading counsel for the Appellant, argues that there was no question of the court being asked to make a second agreement for the parties since the Chinese Agreement was not merely an agreement to make an agreement but was itself enforceable and the court could and should give effect to that agreement implying all such terms as were necessary to clothe it with business efficacy. It was well within the competence of the court, counsel urged, either in a deed of mutual covenant or in the conveyances which would eventually flow from the partition intended by the parties to be effected by the Chinese Agreement, to supply the business judgment necessary to regulate relations between the parties and this could, if necessary, be achieved with the assistance of evidence from experts in the property field. 21. It was originally Mr. Harman's proposition that if the Chinese Agreement were specifically enforceable the court could not order a sale of those portions of the building which had been sub-divided between the parties by that Agreement but would be confined to dealing with the five floors and roof still held jointly by the parties. However, following the very able address of Mr. Chang, who appeared with Mr. Litton for the Respondent Company, Mr. Harman conceded that the Chinese Agreement by itself, and in the absence of any conveyances of the floors with which it dealt, was not effective to sever the undivided shares in those floors so that common ownership continued and the jurisdiction of the court in regard to those floors was not ousted. Nonetheless, the argument went, if the court was of the opinion that the Chinese Agreement was a valid and enforceable contract in respect of the eighteen floors it should not interfere with what the parties had thought to be most beneficial to themselves in regard to those floors but should confine the order for sale to the five floors and roof constituting the residue of the building. 22. Much of the argument before us centred around the question whether the Chinese Agreement was specifically enforceable. Mr. Harman would have it that, it being entirely possible to contract in stages, the Agreement was so enforceable and any Deed of Partition and Mutual Covenant or Deed of Exchange found to be necessary to implement the Agreement could be settled by the Court. Mr. Litton however contended that the Chinese Agreement did not represent the whole of the agreement between the parties but was intended to be followed by a Deed of Mutual Covenant which was also to be a Deed of Partition and which would have allotted the undivided shares so that the Chinese Agreement constituted only a very small portion of the package being merely an apportionment of rights of use. It seems to me with respect that the argument as to specifically performable or not was not wholly to the point. There was no prayer for specific performance and the true issue for the Court was how the building should be dealt with in the best interests of both parties. A sale of the residue of five floors and the roof, leaving the eighteen floors to be dealt with by the parties on the basis of the Chinese Agreement supplemented by some form of partition of those floors was one possible solution and one calculated to involve, as by a sidewind, something in the nature of specific performance of the Chinese Agreement but was it, having regard to the differences which had arisen between the parties, the best solution? Mr. Harman's contention that the Court should not interfere with what the parties had thought to be most beneficial to themselves in regard to the eighteen floors might have been more aptly phrased as what the parties had at one time thought to be most beneficial to themselves; for the Court was not directly concerned with specific performance, which is in any event a discretionary remedy, but with adjusting the rights of the parties in regard to the whole building to the greatest mutual advantage in a situation in which events had largely overtaken the Chinese Agreement. 23. Close scrutiny of the Chinese Agreement throws much doubt upon the intention of the parties thereto and I confess to considerable difficulty in the endeavour to ascertain the true nature of that intention. The Agreement, as it was first drawn up on 12th April 1976, is anything but specific as to what it was intended should happen to the nine floors enumerated under each of the headings "Forda Investors Ltd." and "Tian Teck Investment Holdings Co. Ltd." Having recited the drawing of lots and the result of that draw the document contains nothing express as to the proposed subsequent relationship of the parties to the floors which each had drawn. For anything expressed to the contrary the agreement could be one simply to paint and decorate the respective nine floors drawn by each party. It is only by inference, derived from the recital of the payment of equalization money and from the reference to the remaining floors as "to be retained temporarily" (whatever that may mean as to by whom and pending what eventuality), that an intention in some way to dispose of the eighteen floors between the parties can be gleaned. The extent of that disposal however is left nebulous as indeed is the whole idea of an intent to dispose. It is only when one turns to the confirmation of the Chinese Agreement contained at the foot thereof, signed by the original parties and the Respondent and dated 30th June 1977 - more than one year later - that uncertainty, though far from dispelled, is lessened; for the three parties there "agree and confirm to the above-mentioned apportionment of the floors to the respective parties for their exclusive use and enjoyment." Here, for the first time, is an express avowal that what was intended between the original two parties to the Agreement was some sort of apportionment between them of the eighteen floors: but what measure of apportionment, and did the phrase "for their exclusive use and enjoyment" imply any more than it says? Specifically, did it contemplate a division of the undivided shares in the eighteen floors leaving the remaining five floors and the roof in joint ownership? 24. It is to be remembered that all the parties were laymen. I find it difficult to believe that had the officious bystander asked "What is to happen to your undivided shares in the eighteen floors?" that the answer would necessarily have been "Of course we are severing them." A more likely answer would have been "We must leave the details to the lawyers" but such an answer would have been given in ignorance of just what provisions the lawyers would eventually draft. Equally likely would have been a reply to the effect that the severance of undivided shares could await the fate of the remaining five floors and the roof. As it seems to me nothing in the Chinese Agreement nor in the contemplation of the parties at the time of its execution or confirmation went so far as to effect or necessarily to consider a severance of the undivided shares in the eighteen floors. 25. It is unnecessary for me to cite the cases upon the point to which we were referred but accepting that the parties believed they were making a contract and that the courts will strive to give business efficacy to any document intended by the parties to create legal relations, on the basis of the old maxim "ut res magis valeat quam pereat", each case must nonetheless be decided upon the construction of the particular document. In the present case the Chinese Agreement does not contemplate anything more than use and enjoyment of particular floors whilst leaving other floors unaffected and to imply a term that there was necessarily to be a severance of the undivided shares in the effected floors would involve a considerable leap. At one stage I thought that even Mr. Litton, for the Respondent, was prepared to essay such a leap - though for my part I should have been timid to follow him. Further consideration of his argument however persuades me that Mr. Litton was not conceding an implied term in the Chinese Agreement but was saying that independently of that agreement there was an intention on the part of the parties that at some stage - and not necessarily before some division of the roof and the remaining five floors had been effected between the parties - there would be a Deed of Mutual Covenant which would also be a Deed of Partition and which would allot the undivided shares; so that the Chinese Agreement, being merely an apportionment of rights of use, constituted a very small part of the deal to be made between the parties. Insofar as Mr. Litton was conceding an intention by the parties to execute later a Deed of Mutual Covenant which would also be a Deed of Partition, he was relying upon the subsequent conduct of the Appellant in writing to solicitors requesting that the terms of the Chinese Agreement be put into legal form and to the subsequent preparation by the solicitors of a draft Deed of Mutual Covenant which incorporated partition but was never executed. For reasons to which I am coming I doubt if it was open to Mr. Litton so to amplify the intention of the parties as expressed in the Chinese Agreement. There was some argument from Mr. Chang to the effect that the Chinese Agreement was never acted upon except to the extent that the Appellant paid the Respondent some $16,520 "equalization money" under it. Thereafter, it was said, the Agreement was abandoned by both parties who set up a management company to manage the building and collect rents and who continued to share the rents of the eighteen floors equally. Such conduct, it was urged, negatived an intention to sever the undivided shares in the eighteen floors. However I do not think it competent to this Court to look at the subsequent conduct of the parties in order to throw light on the meaning of their contract. (See Whitworth Estates v. James Miller(2), Wickman v. Schuler(3), Port Sudan v. Chettiar(4).) And this must equally apply to Mr. Litton's amplification of the intention of the parties on the basis of subsequent conduct. 26. Mr. Harman would have it that the Chinese Agreement was sufficient unto itself and that all that was further needed was the machinery for carrying it out. I think that is true so far as the Agreement went and that the only machinery necessary (though never supplied) to carry out the Agreement was the provision of a system whereby each party received the rents of and was responsible for the outgoings in respect of its nine floors but I am far from satisfied that further machinery in the form of a Deed of Partition or conveyances was necessary or contemplated in order to carry out the limited intention of the parties revealed by the Chinese Agreement. I would add that I would not agree with the learned judge that the Chinese Agreement was nothing more than an agreement to make an agreement. It constituted an effective agreement but limited to the exclusive use and enjoyment by each of the parties of the nine floors it had drawn by lot. 27. If that view be wrong however, it remains the case that by the time the matter reached the Court below the parties were at loggerheads and the judge was right to say that a physical partition of the premises would not, in those circumstances be in the best interests of the parties. The only practicable solution was sale but for the judge to have ordered a sale of only the five remaining floors and the roof, which was and remains in this Court, the primary request of the Appellant, would have been to have perpetuated the situation in regard to the remaining eighteen floors and to have left those floors in the undivided ownership of the parties. Mr. Harman has conceded that whatever the interpretation of the Chinese Agreement that undivided ownership persists so that the Court has jurisdiction in respect of the whole building. In those circumstances the clean-cut answer is an order for sale of the whole building. 28. What method of adjustment of the rights of the parties is to their greatest mutual advantage? I cannot see that it lies in holding the parties to the Chinese Agreement and implementing that Agreement by means of a Deed of Partition and Mutual Covenant the terms of which are likely to be severely contested between the parties and may well eventually have to be imposed upon them by the Court. 29. In my view the judge was right to approach the matter from the standpoint of an order for sale of the whole building and the question is was he right to order the sale thereof as an undivided whole or should the order have been for a sale floor by floor? The former method was, on the evidence of the experts, likely to be the less advantageous financially though having the merit of leading to a speedier conclusion of the matter. The learned judge considered that the sale of the building as a whole should satisfy both parties in that each would be at liberty to bid at the auction and observed that if the Appellant Company so wished it could purchase the building as a whole and subsequently resell floor by floor so obtaining for itself the additional profit represented by a "retail" sale. There is in my view merit in Mr. Harman's objection that this approach may well favour the party with the deeper purse and that is true whichever party that may be. It is apparent that the maximum financial advantage to both sides is to be derived from a sale of the building floor by floor and I would allow the appeal and substitute such an order for that made by the learned judge. Since however the lower ground, ground and mezzanine floors are in the occupation of the same tenant, a bank, and since the eventual owner of the top floor, the twenty-first, must inevitably be the most affected by what happens or does not happen on the roof of the premises, it is desirable that the order should depart somewhat from the concept of a strict floor by floor sale. Accordingly the order should be for the sale of the lower ground, ground and mezzanine floors as one unit, for that of the twenty-first floor and roof as another single unit and for the remainder of the building floor by floor. Additionally the equalization money paid by Tien Teck to the Appellant must be handed over by the Appellant to the Respondent. Representation: J.L. Harman, Q.C., O.V. Cheung, Q.C. and R. Wei (P.H. Sin & Co.) for Appellant. Litton, Q.C., D. Chang and W. Stone (Deacons) for Respondent. (1) 1941 A.C. 251 at 268. (2) (1970) A.C. 583. (3) (1974) A.C. 235. (4) (1977) 2 Lloyds Rep. 5. |
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