Kwun Sau Kam v. Li Yan Lam and Another

DCMP 2866/2025

[2026] HKDC 708

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2866 OF 2025

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JUDGMENT

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I.  INTRODUCTION

1.This is an application by Originating Summons issued on 26^th May 2025 and filed on 27^th May 2025 (“Originating Summons”), the Plaintiff (“P”) applies for sales of the property situated at the Rear Portion on 2^nd Floor of No 62 Ho Pui Street, Tsuen Wan, New Territories, Hong Kong (“the Property”) owned by the 1^st Defendant (“D1”) and the 2^nd Defendant (“D2”) as Joint Tenants with consequential orders relating to the sales and the disposition of the proceeds of sale.

2.P seeks to be paid out of the sales proceeds the total outstanding balance due from the D1 and payable under the Charging Order Absolute dated 5^th October 2022 in the sum of HK$819,043.85 together with the sum of the Allocatur dated 12^th September 2023 at HK$31,230.00.

3.D1 and D2 are joint tenants of the Property.

4.D1 and D2 were married, but are by, a Decree Absolute issued on and dated 23^rd July 2024, divorced.

5.D2 had filed an Acknowledgement of Service of Originating Summons; D1 had not.

6.For the purpose of the present proceedings, H Y Leung & Co LLP for P had lodged a Skeleton Submissions and Hearing Bundle.

7.The 1^st Affirmation of Kwun Sau Kam dated 26^th May 2025 with exhibits numbers KSK-1 to KSK-9 and the 2^nd Affirmation of Kwun Sau Kam dated 7^th August 2025 with exhibits numbers KSK-10 to KSK-11 were filed in support of the application.

8.D2 also filed her Affirmation dated 23^rd July 2025 and her 2^nd Affirmation dated 7^th August 2025 requesting inter-alia for the partition of the Property so that she can continue to remain in Room B of the Property. The Property is divided into Room A and Room B.

9.By a Notice of Appointment dated 6^th August 2025, the date to hear the Originating Summons was fixed on 8^th September 2025.

10.By the Order of DDJ Lawrence KF Ng dated 9^th September 2025, an updated Valuation Report and a further substantive hearing of two hours for argument were ordered. An updated Valuation Report of AA Property Services Limited dated 6^th October 2025 was filed and served, in which it was opined that the market value of the Property subject to vacant possession and free of all encumbrances to be HK$2,270,000.00.

11.Both D1 and D2 were present for this hearing.

II.  BACKGROUND

12.D1’s marriage with P resulted in their divorce and an earlier Matrimonial Proceedings FCMC 3290 of 2002 for ancillary relief. Judgment of the ancillary action is produced as Exhibit KSK-9 and an Allocatur for costs against D1, as Exhibit KSK-3, on Party and Party basis resulted in the sum of HK$31,230 payable by D1 to P.

13.There is another sum of HK$819,043.85 being the outstanding balance of the money due from D1 to P and payable under the Charging Order Absolute dated 8^th June 2021 pursuant to the Order made by DDJ Lee.

14.P seeks in the proceedings the following reliefs:

(1)  The 1^st Defendant to pay the Plaintiff the sum of HK$819,043.85 with interest thereon together with HK$31,230 being the party and party costs and disbursements taxed by the Chief Judicial Clerk on 3^rd July 2023 pursuant to the Charging Order Absolute made by the Deputy District Judge Lee of the District Court of the Hong Kong Special Administrative Region in Chambers on 5^th October 2022 under FCMC 3290 of 2002 which was registered in the Land Registry by Memorial No 22101302100147 (the “Charging Order Absolute”);

(2)  A declaration that the beneficial and equitable interest of the Property is held by the 1^st and 2^nd Defendants as tenants in common in equal share;

(3)  The 1^st and 2^nd Defendants shall vacate and deliver up vacant possession of the Property to the Plaintiff;

(4)  An order for sale of Rear Portion on 2/F, No 62 Ho Pui Street, Tsuen Wan, New Territories (“the Property”) (the full particulars of the Property are set out in the Schedule hereto) pursuant to Sections 3 & 6 of the Partition Ordinance, Cap 352;

(5)  The conduct of the such sale of the Property be committed to the Plaintiff’s solicitors;

(6)  The parties to this action are at liberty to bid at such sale and to become the purchaser of the Property;

(7)  Upon such sale, the Defendants shall do all acts and things necessary to vest the title of the Property in the purchaser and cause all necessary documents required to convey title of the Property to the purchaser to be properly signed and executed, failing which, the Registrar of the District Court or such other person to be appointed by the Registrar be authorised for the purpose of signing and executing all necessary documents and instruments and deeds including, but not limited to, an agreement for sale and purchase and assignment to vest the Property in and/or to convey title of the Property to the purchaser(s);

(8)  The proceeds of sale of the Property be paid to and held by the Plaintiff’s solicitors as stakeholders and be applied in the following manner or order or sequence: -

(i)  for discharging all liabilities due to the Government in respect of the Property;

(ii)  for payment to prior encumbrancer ranking immediately before the Charging Order Absolute (if any);

(iii)  for paying all lawful remuneration, legal costs, charges and expenses properly incurred in the sale or other dealing of the Property;

(iv)  after deducting the items (i) to (ii) above, 50% of the remaining proceeds be distributed to the 2^nd Defendant; the other 50% of the remaining proceeds be applied for discharging the 1^st Defendant’s liability to the Plaintiff under the Charging Order Absolute; and

(v)  after deducting items (i), (ii) and (iii), any remaining proceeds, if any, be distributed to the 1^st Defendant.

(9)  Further and/or other relief and/or directions as this honourable Court deems just;

(10)  ⁠Costs of and occasioned by these proceedings be to the Plaintiff to be taxed if not agreed;

(11)  The Plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations; and

(12)  There be liberty to apply.

III.  LEGAL PRINCIPLES

15.Section 2(b) of the Partition Ordinance, Cap 352 (“PO”) empowers the Court to make an order under section 6 for a sale of the property where the property in land is held by 2 or more persons as joint tenants or as tenants in common.

16.Section 3(1) of the PO provides 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.

17.Section 6(1) of the PO provides 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, then, the Court may make an order for the sale of the property.

18.In Law Chun Wai v Chu Suk Har [2016] 1 HKLRD 224, HHJ Andrew Li (as he then was) granted an order for sale as the plaintiff, the licensed money lender, was an “interested person” and in the circumstance of a small flat of 367 square feet in size held by the 1^st and 2^nd defendants as tenants in common, it was impracticable to make an order for partition. The 1^st defendant had executed a legal charge over his half share as security to the plaintiff and the legal charge was registered at the Land Registry.

19.In Wong Chun Kei Johnny v Poon Vai Ching [2007] 1 HKLRD 825, Mr Recorder Joseph Fok SC (as he then was) adopted at §§18-19 the following propositions as fairly and accurately stating the law:-

(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 such an order would not be beneficial to all the co-owners, or that it will result in very great hardship to one co-owner; and

(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.

20.In Silver Wealth Capital Investment Ltd v Lai Wai Cheun [2015] 4 HKC 191, Chow J (as he then was) considered the basic right of a co-owner to rid himself of the shackles of co-ownership and Wong Chun Kei Johnny v Poon Vai Ching was followed.

21.In Re Inland Lot No 476 [2010] HKCU 574 (unreported, HCMP 1273/2009, 12^th March 2010), Bharwaney J summarized that: -

“10. Underpinning these principles is the acceptance that the right of ownership must include the right of disposition. That right takes on more importance particularly when co-owners are uncooperative and unable to fully utilize opportunities for the letting out of commercial premises at favourable rates…”.

IV.  FACT AND DISCUSSION

22.To start with, D1 has failed to file any response to the Originating Summons. However, D1 was present and he incoherently ranted his objection to the aforesaid matrimonial proceedings that resulted in the sums he was ordered to pay P. D1 had to be reminded this is the hearing to deal with P’s application for sales of the Property with ancillary directions as to the distribution of the proceeds of the sale. D1 objects to the sale of the Property, but he is not residing at the Property.

23.D2 was also present. Her request is to partition the Property so that she can continue to occupy Room B of the Property. She also objects to the sale of the Property.

24.As shown in the Land Register under Owner Particulars at Exhibit KSK-4, D1 and D2 held and hold the Property as joint tenants and they acquired the Property at a consideration of HK$1,722,000.00.

25.In the circumstances of this case, I would first consider it may not be appropriate in this case to order partition of the Property as between D1 and D2, as the size of the Property is too small. As both of them had contributed to the down payment and the service of the loan, to unshackle so that each will have 50%, the only way may be by an Order for sale. There also subsist the Charging Order Absolute against the whole Property. This issue can be resolved also by an order for sale of the Property, with 50% of the proceeds after costs and expenses going to D1 for the discharge of the Charging Order Absolute and 50% going to D2 to allow her a substantial sum for her arrangement of future accommodation.

26.I will not make an order in terms of the Originating Summons, but instead direct that: -

(1)  An order for sale of the Property pursuant to sections 2, 3 and 6 of the PO (Cap 352) firstly by way of private treaty within 90 calendar days from the date of this order, or, failing sales by private treaty, by way of public auction;

(2)  An order that the conduct of the sale of the Property, if by public auction, shall be as directed and arranged by the P’s solicitors herein and that P, D1 and D2 shall have leave to bid at the public auction;

(3)  An order that D1 and D2 shall cause all documents and instruments as necessary for the implementation of  the sale of the Property and the conveyancing of their titles to the purchaser(s) to be properly signed or executed by D1 and D2 within 14 days from the sale by public auction, failing which, the Registrar of the District Court or such other person to be appointed by the Registrar be authorised for the purpose of signing and executing all necessary documents and instruments and deeds including, but not limited to, an agreement for sale and purchase and assignment to vest the Property in and/or to convey title of the Property to the purchaser(s);

(4)  An order that D1 and D2 shall deliver up the Property vacant possession after the signing of the Agreement for Sale and Purchase;

(5)  An order that the proceeds of sale of the Property shall be applied in the following order of priority: -

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

(b)  second, in payment of the reasonable costs, charges and expenses necessarily incurred in the sale of the Property (inclusive of conveyancing fees, estate agent's commission and auctioneer's fee), if any;

(c)  third, for payment of any amount owed to any bank, inclusive of all interests and charges and to discharge of all encumbrances;

(d)  fourth, the net proceeds of sale after (a), (b) and (c) to be split into two equal halves, being “D1’s half share” and “D2’s half share”;

(e)  D2’s half share shall be paid to D2 forthwith upon D2’s vacate of the Property;

(f)  D1’s half share shall be first be paid to P for the discharge of the Charging Order Absolute in an amount being the total of HK$819,043.85 and HK$31,230.00, with the remaining balance to be paid to D1 upon his vacate of the Property;

(6)  Liberty to apply for further directions, if necessary, as to the manner of sale of the Property and/or the disposition of the proceeds of sale;

(7)  As this is P’s application for an order for sales, with this matter largely dealt with on paper, and D1 and D2 appeared in person, I make an order nisi that there be no order as to costs of the application and the hearings and the order nisi shall become absolute in the absence of any application to vary the same within 14 days of handing down; and

(8)  The Plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.

Mrs Cecilia Grace Wong, of H Y Leung & Co LLP, assigned by the Director of Legal Aid, for the Plaintiff

The 1^st and 2^nd Defendants appeared in person