Connaught Real Estate Ltd v. Dawns Light International Ltd and Others

HCMP 1557/2024

[2026] HKCFI 3315

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1557 OF 2024

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BETWEEN

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JUDGMENT

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A. INTRODUCTION

1.This case concerns the property on Wing Lok Street, Sheung Wan, known as “Shiu Fung Hong Building” (“the Building”). The construction of the Building was completed in 1987. The Building is a 23-level (including Basement) commercial building comprising office space from the Ground Floor (excluding the shop area) to the 21^st Floor and the Upper Roof (“Commercial Accommodation”), and the shop area on the Ground Floor and the Basement (“Shop Portion”). The Building is mainly served by 3 passenger lifts and 2 communal staircases. The access to the Building is via Wing Lok Street.

2.The Building is co-owned by the parties in this case. By a DMC dated 10 August 2009 (“DMC”), there are 5,859 equal undivided shares in the land (“the Land”) on which the Building is now standing thereon. The Plaintiff (“Connaught”, owned by “PF Camp” as defined below) and the 1^st Defendant (“Dawns Light”, owned by “PK Camp” as defined below) as tenants-in-common in equal shares own 5,343 out of the 5,859 equal undivided shares allocated to the Commercial Accommodation. The 2^nd Defendant (“SFHL”, equally owned by PF Camp and PK Camp) owns 470 out of the 5,859 equal undivided shares allocated to the Shop Portion. The 3^rd Defendant (“Horizon Trading”, equally owned by PF Camp and PK Camp), as Manager, holds 46 out of the 5,859 equal undivided shares allocated to the Common Areas and Facilities as defined in the DMC. The 46 out of the 5,859 equal undivided shares were assigned by Connaught and Dawns Light to Horizon Trading by an assignment dated 10 August 2009. It is specified in that assignment that the 46 undivided shares were assigned to Horizon Trading as “Manager”, and Horizon Trading is required to hold the same on trust for the benefit of all the owners for the time being of the Land.

3.This is the substantive hearing of the Amended Originating Summons issued by Connaught. By the Amended Originating Summons, Connaught is seeking an order under the Partition Ordinance (Cap. 352) (“PO”) for the sale of the Building. Alternatively, Connaught seeks an order for the sale of the Commercial Accommodation, whether as a whole or on a “floor-by-floor” basis. Documents relating to these proceedings have been duly served by Connaught on the Director of Lands in accordance with s.3(2) of the PO and the rule 4 of the Partition Rules.

4.Connaught’s application is opposed by Dawns Light and SFHL. Initially, Dawns Light and SFHL said that the Amended Originating Summons should be dismissed in its entirety with costs. However, at the end of the hearing, Dawns Light and SFHL have adjusted their position. Dawns Light and SFHL’s new position is that there should be an order for sale, but only the Commercial Accommodation should be sold, and the sale should be effected on a “floor-by-floor” basis, alternatively the Commercial Accommodation be sold as a whole in one transaction.

5.Horizon Trading adopts a neutral stance in these proceedings. I should also mention that Horizon Trading is the Manager of the Building in name only. Although Horizon Trading is the Manager under the DMC, it has not done any work in the management of the Building and it has not charged any management fee. The management work in fact is done by a company called Yu Hing Tong Limited (“YHTL”). YHTL is a Hong Kong company and is owned as to 89.8% by Fung Yue Company Limited (“Fung Yue”)[1], which is a Hong Kong company owned by PK Camp.

6.In the hearing before me, Ms Teresa Wu, together with Mr Jason Fee, represent Connaught. Mr Adrian But, together with Ms Jamie Pang, represent Dawns Light and SFHL. Ms Emily Ting represents Horizon Trading.

B. BACKGROUND

7.The dispute in these proceedings is a dispute within the Fung Family. For ease of reference, a Family Tree of the Fung Family is annexed hereto as Annex 1.

8.The late Mr Fung Ping Shan started a business under the tradename “Shiu Fung Hong 兆豐行” in 1909. Members in the second generation of the Fung Family as shown in the Family Tree had a harmonious relationship among them. At the second generation, the “Shiu Fung Hong” business was managed jointly and amicably by Sir Kenneth Fung Ping Fan (“PF Fung”) and Dr Fung Ping Kan (“PK Fung”). However, the relationship between PF Camp and PK Camp at the third generation cannot be said as harmonious. The reality is that there is mistrust between the two camps, and the relationship between the two camps is acrimonious.

9.As said in the above, the Building was constructed on the Land in 1987. The Building is co-owned, through various corporate vehicles associated with the descendants of the late Mr Fung Ping Shan. These descendants are divided into two camps, namely:

(1) the descendants of PF Fung (“PF Camp); and

(2) the descendants of PK Fung (“PK Camp”).

10.While PF Fung and PK Fung were alive, the relationship between them was harmonious. However, in the third generation as shown in the Family Tree, the relation between PF Camp and PK Camp has deteriorated markedly over time. There have been increasing hostilities between the two camps, including disputes in relation to matters concerning the management, use, and the future of the Building.

11.For the purpose of these proceedings, it would not be necessary to set out all the disputes between the two camps over the years. Suffice to say that in view of the deteriorated relationship between the two camps, PF Camp has, since 2013, made various attempts to discuss with PK Camp to try to find a way to allow PF Camp to exit from the co-ownership of the Building.

12.In September 2013, PF Camp received an offer from Cushman & Wakefield, a UK real estate investment group, to purchase the whole Building. In November 2013, there were discussions between PF Camp and PK Camp. PK Camp preferred to maintain the continuity of the Shiu Fung Hong business and retain their ownership in the Building through Dawns Light, but PF Camp preferred to realise their investment in the Shiu Fung Hong business and their share of the Building through Connaught. PF Camp proposed that the PK Camp (via Fung Yue) could acquire the interest of the PF Camp (via Grandom Asia Holding Limited (“Grandom”, a BVI company owned by PF Camp, a substantial shareholder of SFHL) and Connaught respectively) in the Building in one transaction based on a price equivalent to the market value of the Building at the time.

13.In or around October 2014, PF Camp proposed that Fung Yue purchased Grandom’s shares in SFHL. From around November 2014 to May 2015, there were further negotiations between PF Camp and PK Camp for Fung Yue’s buy-out of Grandom’s shares in SFHL.

14.No agreement could be reached in the aforesaid discussions.

15.In May 2016, PF Camp commenced HCCW161/2016 to seek an order to wind up SFHL on just and equitable ground. PF Camp failed in those proceedings and did not obtain a winding-up order. As a result of the proceedings in HCCW 161/2016, the relationship between PF Camp and PK Camp has further deteriorated.

16.PF Camp has made various allegations against PK Camp. It would not be necessary for me to rule whether these allegations are true or not true in these proceedings. The purpose of setting out these allegations made by PF Camp against PK Camp is merely to show the hostility between the two camps. For avoidance of doubt, I make no ruling on the veracity of these allegations. PF Camp has made the following allegations:

(1) After HCCW 161/2016, PK Camp has obtained complete control of the SFHL board. PF Camp members have been persistently excluded from nominating directors or having any meaningful voice. SFHL, which owns the Shop Portion, is now in a state with all directors being representatives of the PK Camp.

(2) The management and leasing of the units in the Building is problematic. PK Camp oversees leasing through YHTL. YHTL is not fully licensed in accordance with the requirements under the Property Management Services Ordinance (Cap.626), and hence from 1 August 2023 onwards, YHTL has to engage an external licensed property manager, Stratton Property Management Limited. This arrangement incurs additional expenses, which YHTL deducts before remitting net rental payments to Connaught.

(3) Although Connaught has a substantial interest in the Commercial Accommodation, Connaught has no direct control over leasing matters handled by YHTL. There is a lack of transparency in the leasing matters. YHTL, being controlled by the PK Camp, cannot be expected to act impartially for the benefit of both co-owners of the Commercial Accommodation in those leasing matters.

(4) YHTL continues to hold all tenants’ deposits, including the portion in which Connaught should have an interest. The lack of transparency and proper oversight in the handling of these deposits has created material accounting and financial risks, which have only escalated amid the growing mistrust between the two camps. Connaught’s written enquiries have been unsatisfactorily answered and there has been no formal contact or discussion with the PK Camp on management issues.

(5) Fung Yue (a company in PK Camp) enjoys preferential rental arrangements. Fung Yue’s rental payments are the lowest on a saleable area basis, and significantly lower than those paid by Connaught (who only occupies one unit in the Commercial Accommodation).

17.In or around 2016, Connaught engaged CBRE Limited (“CBRE”, a commercial real estate services and investment firm) and Gareth Williams & Associates (“GWA”, principally engaged in property valuation and estate agency) to provide sale agency services for an en bloc sale of the Building. CBRE prepared a Disposition Proposal for the Building dated 10 May 2016.

18.In or around August 2017, CBRE and GWA successfully secured an offer from Sunlight Real Estate Investment Trust (“Sunlight REIT”) to acquire the Building (“Sunlight REIT’s 1^st Offer”). CBRE then wrote to Dawns Light and SFHL on Sunlight REIT’s 1^st Offer. Dawns Light and SFHL refused to accept the offer.

19.In or around May 2018, Sunlight REIT made a second offer (“Sunlight REIT’s 2^nd Offer”) to acquire the Building. In this offer, Sunlight REIT proposed acquiring all issued shares in Connaught, subject to the conditions that (a) SFHL would sell to Sunlight REIT the Shop Portion; (b) PK Camp would sell to Sunlight REIT all issued shares in Dawns Light; and (c) Horizon Trading would assign to Sunlight REIT (as trustee for the benefit of all owners for the time being of the Building) the Common Areas and Facilities defined in the DMC. Eventually, these conditions could not be fulfilled, and the Sunlight REIT’s 2^nd Offer fell through.

20.In January and February 2020, taking into account the previous negotiations, CBRE attempted to propose a strata-title sale, namely, it would be for Connaught and Dawns Light to “partition” the Commercial Accommodation before Connaught would approach the market for sale of Connaught’s floors. This proposal also could not materialise.

21.In 2021, PF Camp tried to discuss with PK Camp to work out a practical “exit” plan. PF Camp proposed several exit plans, including disposing the Building on an en bloc basis, or disposing the Commercial Accommodation, or selling Connaught’s interest in the Commercial Accommodation to PK Camp. Suffice to say that different members in PK Camp had different views. Eventually, no agreement between the two camps was reached as a result of these discussions.

22.In August 2021, Connaught through Midland IC&I Surveyors received an offer from an intended purchaser of buying the whole Building at HK$550 million. Connaught informed PK Camp the offer and asked for replies from the boards of the Defendants. No reply was given by PK Camp.

23.On 20 August 2024, Connaught commenced these proceedings.

24.By an email dated 13 February 2026, Gareth Williams of GWA informed Daniel Fung of Connaught that Sunlight REIT remains interested in purchasing the Building, but only on the basis that the entire Building is sold en bloc.

C. THE ISSUES

25.The parties’ respective positions have been set out in [3] to [5] above. As said, Horizon Trading has adopted a neutral position in these proceedings. Ms Ting’s submissions are limited to drawing my attention to some parts of the DMC to enable the Court to have a better understanding of the Building and explaining the role of Horizon Trading in the Building. Ms Ting has also made some submissions on costs. Save the aforesaid, Ms Ting has not made any submissions for or against any other party in these proceedings. The agreement and disagreement set out below are agreement and disagreement between Connaught on the one hand, and Dawns Light and SFHL on the other hand.

26.By now, there is an agreement that an order for sale should be made to end the current co-ownership of the Building. The disagreement is what should be sold, and in what manner it should be sold. Given the parties’ latest respective positions, the issues to be resolved by the Court are as follows:

(1) Whether the Building should be sold en bloc, or whether only the Commercial Accommodation should be sold;

(2) If only the Commercial Accommodation should be sold, whether the whole Commercial Accommodation should be sold in one transaction, or whether the Commercial Accommodation should be sold by adopting the mode of “floor-by-floor” sale.

27.Connaught is seeking an order to sell the Building en bloc; alternatively an order to sell the whole Commercial Accommodation in one transaction; in the further alternative, an order to sell the Commercial Accommodation on a “floor-by floor” basis.

28.Dawns Light and SFHL say that the Commercial Accommodation should be sold on a “floor-to-floor” basis; alternatively the whole Commercial Accommodation be sold in one transaction. They oppose Connaught’s application for an order to sell the Building en bloc. Their position is that the Shop Portion should be preserved and SFHL should be allowed to continue to have possession of the Shop Portion.

29.Notwithstanding all the differences between PF Camp and PK Camp, they are ad idem on one point, ie the disputes concerning the Building should be resolved by the third generation of the Fung Family, and the burden should not be passed to the next generation.

30.Before entering into discussion, it is necessary to explain the meaning of “floor-by-floor” sale adopted by the parties. Selling the Commercial Accommodation on a “floor-by-floor” basis means that each unit, or each floor of the Commercial Accommodation, would be sold separately. There is no dispute that the “floor-by-floor” sale would only be viable after having a Sub-DMC to allocate exclusive possession of different parts of the Commercial Accommodation to different owners.

D. THE PRINCIPLES

31.PO provides:

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

Subject to this Ordinance, where any property in land is held by 2 or more persons, whether as joint tenants or as tenants in common, the Court may—

(a) make an order under section 4 for a partition of the property;

(b) make an order under section 6 for a sale of the property; or

(c) refuse to make any order.

3. Institution of proceedings and parties thereto

(1) 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.

……

4. Partition of property in land

(1) In any proceedings instituted under this Ordinance the Court may, subject to subsection (2), make an order for the partition of property in land in any of the following ways—

(a) into parcels held by single owners in severalty;

(b) into parcels held by 2 or more owners as joint tenants;

(c) into parcels held by 2 or more owners as tenants in common,

and may partition the property in all those ways or in any combination of them and give all necessary or proper consequential directions.

(2) Where there is a building on any land, the Court shall not partition the property in that land so that part only of a building stands on any parcel into which the property in the land is partitioned unless that part of the building is self-contained and is not connected to the remainder of the building otherwise than by a party-wall or a mutual staircase, or both.

(3) No order for partition shall prejudice any person other than a party to the proceedings.

……

6. Sale of land

(1) In any proceedings under this Ordinance, where it appears to the Court that a partition of the property would not be beneficial to all the persons interested by reason of —

(a) the nature of the land to which the proceedings relate;

(b) the number of the persons interested or presumptively interested;

(c) the absence or disability of some of the persons interested; or

(d) any other circumstances, the Court may make an order for the sale of the property.

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

(3) (a) Without prejudice to subsection (1), if any person interested in the property applies to the Court to make an order for the sale of the property instead of an order for partition, then, unless the other persons interested undertake to purchase the interest of the party applying for an order for sale, the Court may, if it thinks fit, make an order for the sale of the property.

(b) If an undertaking is given by the other persons interested, the Court may order a valuation of the interest of the person applying for an order for sale in such manner as it thinks fit.

(4) On making an order under subsection (1) or subsection (3), the Court may direct a distribution of the proceeds of the sale and give all other necessary or proper consequential directions.

(5) On a sale under this section the Court may allow any of the persons interested in the property to bid at the sale, on such terms as the Court deems reasonable as to—

(a) non-payment of deposit; or

(b) setting off or accounting for the purchase money or any part thereof instead of paying the same; or

(c) as to any other matters.” (Emphasis added)

32.In the circumstances of this case, the Court cannot make an order to partition the Commercial Accommodation.

(1) It is plain and obvious that neither the Commercial Accommodation nor any individual floor or unit therein is self-contained. Different parts of the Commercial Accommodation are connected with each other by shared facilities, for example, lifts, lift shafts, wires, ducts and pipes. By reason of the prohibition in s.4(2) of the PO, the Court shall not make any partition order.

(2) Ownership of the Commercial Accommodation is a legal concept. It is the ownership of 5,343 out of the 5,859 equal undivided shares together with the exclusive possession of the Commercial Accommodation. Connaught and Dawns Light are owning the 5,343 undivided shares as tenants-in-common in equal shares. It is legally impermissible to make a partition order to put that co-ownership to an end. As said by Recorder B Yu SC in Liu Chung Hang v Liu Chung Leung Alfred[2]:

“9. As the subject matter of the property is a flat which in legal concept and parlance is one undivided equal 12^th part or share in the land together with the sole and exclusive right and privilege to hold use occupy and enjoy the unit, it is obviously impracticable to contemplate partition ……”

(3) Partition puts an end to the unity of possession.[3] An arrangement under which co-owners enjoy exclusive possession of some designated units or floors is not partition.[4] Allocating exclusive possession of different parts of the Commercial Accommodation to different owners by a Sub-DMC is not partition in the legal sense. Even if this is done, the Commercial Accommodation is still jointly owned by Connaught and Dawns Light as they are holding the 5,343 undivided shares as tenants-in-common in equal shares. There is no partition.

33.As said in the above, at the end of the hearing, no party is saying that there should be a partition order in any form, and all the parties (except Horizon Trading, who maintaining a neutral stance) are saying that there should be an order for sale. The dispute is what should be sold and in what manner. The resolution of the dispute depends upon in what way the discretion of this Court should be exercised, after taking into account all the relevant circumstances.

34.Regarding the primary relief sought by Connaught, ie an order for selling the Building en bloc, there is no dispute that being a co-owner of the Land[5], pursuant to s.3(1) of the PO, Connaught has the locus to make an application for that relief. There is also no dispute that the Court has the jurisdiction to grant that relief. The question is whether the Court’s discretion should be exercised in favour of granting that primary relief sought by Connaught.

35.The principles concerning exercising the discretion in granting or refusing an application for an order for sale under the PO have been succinctly summarized by Au-Yeung J in Cheung Wing Kuen Samuel v Ip Chui Sum[6]. In that case, the learned judge said:

“9. Under section 2 of PO, the court may order a partition of the property under section 4, or a sale of the property under section 6, or refuse to make any order.

10. Under section 6 of PO, where it appears to the court that a partition of the property would not be beneficial to all the persons interested, the court may make an order for the sale of the property.

11. The principles for exercise of such power are that:

(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 will 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.

Wong Chun Kei and Poon Vai Ching [2007] 1 HKLRD 825 at §18-19, Recorder Fok SC (as he then was).

12. An order for sale would not be refused unless all the co-owners would be benefitted by its refusal or, in other words, an order for sale would be detrimental to all the co-owners, or unless it will result in very great hardship to one co-owner: Re Lau Hiu Tuen (unrep, HCB 8430/2006, 20 August 2015), G Lam J (as he then was) (§21).”

36.Inconvenience should be distinguished from the issue of very great hardship.[7] Inconvenience and difficulty to one co-owner is not generally enough to outweigh the interests of the other co-owner in obtaining a sale of the property.[8]

E. DISCUSSION

37.While Connaught, Dawns Light and SFHL are now ad idem that an order for sale should be made, they have different views as to what should be sold and in what way the sale should be effected. The options are as follows:

(1) the Building be sold en bloc;

(2) only the Commercial Accommodation be sold, and the sale be on “floor-by-floor” basis;

(3) only the Commercial Accommodation be sold, and the Commercial Accommodation be sold in one transaction

38.For the reasons set out below, I am of the view that Option (1) is the most realistic option which would be beneficial to all the co-owners of the Building.

E1. Different estimated values achieved by different options

39.Connaught on the one hand, and Dawns Light and SFHL on the other hands, have filed their respective expert reports to show the different estimated values achieved by the different options of sale. For the purpose of considering which sale option should be adopted, the Court would look at and consider the expert evidence before the Court in the substantive hearing of the Amended Originating Summons. After deciding which sale option should be adopted, the Court would give the parties an opportunity to file updated valuation evidence for the purpose of fixing the selling price of the subject matter to be sold under the Order made by this Court.

40.The valuation expert evidence filed by the parties is as follows:

(1) Connaught relies on three valuation reports by Dr Tsz Choi Wong (“Dr Wong”) of Albert So Surveyors Ltd dated 1 August 2024 (“Dr Wong’s 1^st Report”), 7 May 2025 (“Dr Wong’s 2^nd Report”), and 31 December 2025 (“Dr Wong’s 3^rd Report”) respectively.

(2) Dawns Light and SFHL rely on a valuation report of Mr Alnwick Chan and Mr Daniel Cheng of Knight Frank Petty Ltd (“Knight Frank”) dated 15 October 2025 (“Knight Frank Report”).

41.In these expert reports, the experts have given their estimation as to (a) the existing use value (EUV) of different parts of the Building; and (b) the redevelopment value (RDV) of the Land. In assessing the RDV, there is a dispute as to whether the RDV would be affected by foundation issues caused by MTR tunnels under the Land. On the foundation issues, the parties have adduced the following expert evidence:

(1) Connaught relies on the Structural and Geotechnical Assessment Report of Ir Dr James Chi Wing Lau (“Dr Lau”) dated 8 January 2026 (“Dr Lau’s Report”);

(2) Dawns Light and SFHL rely on the Structural and Geotechnical Assessment Report of Ir Philip So (“Ir So”) dated August 2025 (“Ir So’s Report”).

42.Some parts of the Building are subject to existing tenancies. For avoidance of doubt, the EUV and RDV set out below are either figures agreed by the parties, or the estimations by the parties’ respective experts, after taking into account the existing tenancies.

43.As to the EUV, the parties have managed to reach some agreements as shown below:

	En bloc sale of the Building in one transaction	Sale of the Commercial Accommodation (“floor-by-floor” sale)	Sale of the Commercial Accommodation in one transaction
EUV of Commercial Accommodation	Agreed value: HK$204,021,326	Knight Frank Report: HK$256,108,228 Dr Wong’s 3rd Report: HK$263,427,172	Agreed Value: HK$207,814,160
EUV of Shop Portion	Agreed Value: HK$45,964,765
Total EUV	Agreed Value: HK$249,986,091

44.As to the EUV of the Commercial Accommodation in the “floor-by-floor” sale, the estimated figure given in the Knight Frank Report is close to the estimated figure stated in Dr Wong’s 3^rd Report. I adopt a broad-brush approach and take the estimated value achieved in the “floor-by-floor” sale as around HK$260 million.

45.As to the RDV, the parties’ respective estimated values are as follows:

RDV (assuming that the Land sold and redeveloped with foundation issues caused by the MTR tunnels under the ground)	Knight Frank Report (Primary Position): HK$155,184,000 Dr Wong’s 3rd Report: N/A
RDV (assuming that the Land sold and redeveloped without foundation issues caused by the MTR tunnels under the ground)	Knight Frank Report (Fallback Position): HK$218,932,000 Dr Wong’s 3rd Report: HK$286,100,000

46.As to whether the redevelopment potential of the Land would be affected by the foundation issues caused by the MTR tunnels under the ground, having considered Ir So’s opinion and Dr Lau’s opinion, I prefer Dr Lau’s opinion. I accept and attach weight to Dr Lau’s expert evidence.

(1) Dr Lau has 50 years of experience in construction, design and research in the field of civil / geotechnical / structural engineering. He has hands-on experience with projects near MTR tunnels / stations in both his capacities as a design engineer and a contractor. On the other hand, in Ir So’s Report, there is no suggestion that Ir So has any actual experience in working in any project near MTR tunnels.

(2) Ir So opined that:

(a) To construct a new building on the Land, the development must comply with the 2019 Wind Code issued by the Building Authority. In order to allow the new building to have the sufficient wind load, the foundation of the building must have the necessary strength to support the superstructure above the ground.

(b) The existing “pile cap” and “bore piles” (including “pile heads”) are tightly embedded and integrated to one another by concrete and reinforcement bars to form an integrated foundation system to support the loading above. In the event that the pile cap is to be removed and replaced for whatever reasons, the functional capacity and performance of the bore piles would diminish.

(c) The MTR tunnels and the MTR Protection Zone impose critical challenges for any reconstruction of the foundation (or inclusion of new foundations). This is particularly so when there is no room for adding additional piles to strength the foundation.

(d) In view of all these difficulties, the existing bored pile foundation and the pile cap have to be inevitably retained and re-used. However, reusing the existing foundation is subject to Building Department’s approval, and much time and costs would be needed in order to get that approval. Further, the existing foundation is a 40-year old foundation and may have some degree of deterioration. A further problem is that the existing foundation was tailor-made for the existing building. That foundation may not be fit for supporting a new building which is materially different from the existing building. Most importantly, because the superstructure would be a new one, it would be time consuming and costly to connect the new columns supporting the new building onto the existing reinforcement structure of the existing pile cap (which was not originally designed for such columns).

(3) Dr Lau opined that:

(a) The existing bored piles can be reused. According to the Code od Practice for Foundations 2017 (amended in February 2021), some tests are required to be carried out on each re-used bored piles. Those tests are not difficult to be carried out. In fact, the same tests are also required for new bored piles.

(b) If additional support is required, this can be achieved by installing additional 600 mm-diameter rock-socked H-piles within the empty spaces near the two ends of the Land. The time and costs required in installing these additional H-piles would not be significant.

(c) Reusing the existing bored piles for a new building can impose constraints on the design of the new building, as the loads from the new building should not exceed the load-bearing capacities of the existing piles. However, this can be satisfactorily addressed or resolved using transfer structures (such as transfer beams, transfer plates, or transfer trusses) to redistribute the loads. Dr Lau has carried out many designs in Hong Kong using transfer structures. Examples include the transfer structures beneath the 4 hotel towers at Pacific Place One and Two.

(d) Ir So’s concern about the connection between the columns and existing pile caps would not exist. In constructing the new building, the pile caps would be removed, and new pile caps would be reconstructed.

(e) With the use of modern structural engineering computing software, the technical team for the purchaser can optimize the loads acting on the existing bored piles by changing the stiffnesses of the structural elements. The objective is to ensure that (i) the existing bored piles are not overloaded by the new building; and (ii) the capacities of existing bored piles are fully utilized. To reduce the deflections due to wind, the technical team can use outriggers to strengthen the structural frames. The outriggers can also help distributing wind loads to outer columns. For the proposed new building in the intended redevelopment, the technical team may adopt two sets of vertical wind bracings placed at the two narrow ends of the building to improve the effectiveness of the building structure against wind loads. The use of wind bracings can be an attractive and innovative element in an otherwise ordinary commercial building design. The technical team can also adopt transfer plates, beams or trusses to redistribute the loads to the existing bored piles. This can be achieved by using computer software to optimize the structural forms and redistribute the wind loads onto the bored pile foundations.

(4) Both Ir So and Dr Lau are of the opinion that the existing foundation can be reused to support a new building on the Land. As said by Dr Lau, even new bored piles are used, the tests required by the Building Department would still need to be carried out. In Dr Lau’s Report, Dr Lau has said from his personal experience, it would not be difficult and would not need to wait for a very long time in order to get approval from the Building Department and from the MTR Corporation. Dr Lau’s experience is supported by a paper presented by the Transport and Housing Bureau on 20 May 2011 to the Subcommittee on Matters Relating to Railways of the Legislative Council Panel on Transport. In that paper, it is stated at [12] that: “in most cases, the existence of the railway tunnels will not impose insurmountable technical constraints on future redevelopment of the buildings”. Further, at [13] of the same paper, a successful redevelopment project in the railway protection zones along Wing Lok Street (the same area in which the Property is located) is also mentioned.

(5) As to the techniques for strengthening the existing foundation, distributing the loading of the new building, and handling the wind load mentioned by Dr Lau, there is no evidence from Dawns Light and SFHL suggesting that the problems in the redevelopment of the Land cannot be handled by these techniques. In my view, the reservation on reusing the existing foundation expressed by Ir So’s Report has been fully and sufficiently addressed in Dr Lau’s Report.

(6) Mr But submits that Connaught has taken the chance of raising all these new points in Dr Lau’s Report, as to which Dawns Light and SFHL do not have leave to file a supplemental expert report in reply, and hence no or no significant weight should be given to Dr Lau’s Report. With respect, I do not think that Mr But’s submission would be a valid or sufficient reason for urging this Court not to attach weight to Dr Lau’s Report. If there is anything in Dr Lau’s Report which is fundamentally wrong or unsound, Dawns Light and SFHL should seek leave to put in rebuttal evidence, and/or seek leave to cross-examine Dr Lau. There is nothing preventing Dawns Light and SFHL from making such applications. Bearing in mind that Dawns Light and SFHL are legally represented in these proceedings at all times, not to seek leave to put in rebuttal evidence or to cross-examine Dr Lau is a decision made by Dawns Light and SFHL with the benefit of having legal advice. In the circumstances, Dawns Light and SFHL must accept the matters as they now stand. In the absence of any evidence rebutting Dr Lau’s opinion that the problems in the redevelopment of the Land can be satisfactorily addressed by the techniques mentioned in Dr Lau’s Report, I do not see any reason not to accept Dr Lau’s opinion.

(7) Mr But also submits that no structural calculations were shown in Dr Lau’s Report, while Ir So has done the calculations in his report. I agree with Ms Wu that Ir So’s calculations are flawed as they are based upon the suboptimal design adopted by Ir So. The design of the new building contemplated by Ir So is suboptimal because, with respect, Ir So has failed to take into account the modern engineering techniques mentioned in Dr Lau’s Report. Further, as submitted by Ms Wu, the Court is not considering the precise design of the new building or details of some engineering calculations. The real issue is whether the MTR tunnels underground would have a material impact on the redevelopment potential. Having considered the modern engineering techniques mentioned in Dr Lau’s Report, I am of the view that the MTR tunnels would not have a significant impact on the redevelopment potential of the Land.

(8) Mr But argues that Dr Lau has not explained the comparability of the examples mentioned in his report to the present case. With respect, I am of the view that Dr Lau has given a clear explanation in his report.[9]

(9) Mr But further submits that strengthening of the existing bored piles would be very costly and risky. With respect, this point is not supported by the evidence. As explained by Dr Lau (who has first-hand information in using the technique), the strengthening work would be done by rotary coring, which produces very little vibration and has no adverse impact on the MTR structures, and the MTR would have no reason to object to the strengthening work.[10]

47.For the reasons above, in my judgment, in assessing the RDV of the Land, the valuation should be done on the basis that the redevelopment potential of the Land would not be adversely affected by the presence of MTR tunnels underground.

48.As to the RDV based upon no adverse impact caused by the presence of MTR tunnels underground, Knight Frank and Dr Wong have given different figures. There is a material difference between the two figures. Although the gross floor area of the new building in the two valuations remains the same, there are notable differences in the two valuations on the design, layout, and achievable specifications of the new building.

	Knight Frank	Dr Wong	Dr Wong’s Remarks
Proposed number of storeys	25	27	Higher floors command premium values due to superior views.
Units on each floor	2	1	A single-unit-per-floor design offers better privacy and exclusivity, while requiring less common area.
Common areas on each floor	40 sqm	35 sqm
Use of 1st and 2nd floors	1/F: E&M 2/F: Office	1/F: Commercial 2/F: E&M	The 1/F enjoys higher visibility to pedestrians and can be flexibly designed for commercial and office uses, including potential joint use with the Ground Floor.

49.There is no reason why in assessing the RDV, Dr Wong’s specifications of the new building cannot be adopted. In other words, Knight Frank’s assessment of the RDV is limited by the unwarranted constraints on the redevelopment potential of the Land imposed by themselves.

50.Further, as submitted by Ms Wu, there are problems in Knight Frank’s valuation:

(1) The comparable buildings relied upon by Knight Frank are inappropriate for those comparable buildings are:

(a) more than 25 years old;

(b) not reflective of modern commercial building standards; and

(c) insufficient or outdated for assessing redevelopment value.

(2) The use of inappropriate comparable buildings has led to underestimation in the valuation exercise.

(3) Knight Frank’s view adjustments are inadequate for (a) failing to capture the premium associated with higher floor; and (b) failing to adopt a single unit per floor configuration.

51.Mr But submits that Dr Wong’s single-unit-per-floor model is undesirable for the following reasons:

(1) By referring to the comparables in Dr Wong’s 3^rd Report, Mr But submits that in the single-unit-per-floor model, the area of each unit would be excessively large and would lack marketability.

(2) Such large units would suffer from quantum discount and drive down the redevelopment value of the Land.

(3) It is an exaggeration to say that each of those large units would enjoy sea view. Only the units at higher floors may have a partial sea view at one side.

52.I am not persuaded by Mr But’s submissions.

(1) In my view, there is insufficient evidence showing that the units in the single-unit-per-floor model lack marketability. Dr Wong has explained in his 3^rd Report that the single-unit-per-floor model would offer better privacy and exclusivity. The fact that there is no unit in other buildings with a similar size does not necessarily mean that the large units in the single-unit-per-floor model would not be attractive in the market. On the contrary, the large units in the single-unit-per-floor model may fill the lacuna in the market and attract purchasers or tenants looking for units of that type.

(2) As said in the above, I am of the view that there is insufficient evidence in support of the claim that the single-unit-per-floor model lacks marketability. I am also of the view that there is insufficient evidence showing that the single-unit-per-floor model would drive down the redevelopment value of the Land. Dr Wong has given the reasons in support of his assessment of the RDV in his 3^rd Report. In my view, there is no valid criticism against Dr Wong’s assessment.

(3) Regarding the adjustment given to the sea view factor, Dr Wong appreciated that units at higher floors would have better sea view and has made adjustments to reflect this factor in his valuation. I am not convinced that there is any exaggeration in Dr Wong’s valuation.

53.In Dr Wong’s 3^rd Report, Dr Wong mentioned 9 properties, ie five properties in Jade Centre at 98 Wellington Street (“JC”)[11], two properties at 1 Des Voeux Road West (“1 DVRW”), one property at Golden Resources Tower at 216-222 Jaffe Road (“GRT”), and one property at 33 Hennessy.

54.Mr But submits that Dr Wong adopted inappropriate comparables as being inconsistent and unprincipled in assessing the RDV. Mr But argues that:

(1) Dr Wong arbitrarily chose not to attach any weight to the five JC properties.

(2) Dr Wong inappropriately only assigned a weighting of 0.5 to each of the two 1 DVRW properties.

(3) The GRT property and the 333 Hennessy property are inappropriate comparables.

55.As to these criticisms, Dr Wong in fact has given explanations in his 3^rd Report. I am of the view that Dr Wong’s explanations are satisfactory.

(1) Dr Wong has explained that the five JC properties are not suitable comparables due to the significant differences in location and use of the building.

(2) Regarding the two 1 DVRW properties, Dr Wong has explained that 0.5 weighting is assigned to each property, in order to achieve an accumulative weighting of 1 for this building, alongside with a weighting of 1 for each of the other buildings.

(3) Regarding the GRT property and the 333 Hennessy property, these buildings are new commercial buildings. Dr Wong opined that a key limitation in Knight Frank’s valuation is their choice of comparable buildings, being over 25 years old and not being able to accurately reflect the value of new commercial buildings. In view of the absence of recent transactions involving new commercial buildings in the Sheung Wan locality, Dr Wong considered it necessary to refer to transactions in the GRT and in 333 Hennessy. These are comparatively new, small-scale commercial buildings in Wan Chai, closely resemble the hypothetical development in all major aspects except location.

56.For the reasons above, subject to the point mentioned in [57] and [58] below, I prefer the RDV (on the basis that the redevelopment potential of the Land would not be adversely affected by the presence of MTR tunnels underground) as set out in Dr Wong’s 3^rd Report.

57.In assessing the RDV, Dr Wong has made an assumption, ie the current tenancy agreement of the 1/F of the Building (“the TA”) can be terminated on 30 June 2027. The 1/F of the Building has been leased to SFHL by the TA in late May 2025, and the term of the TA is until 9 July 2028. There is no break clause in the TA. With respect, the assumption that the TA would be terminated on 30 June 2027 adopted by Dr Wong may not be correct. There is no indication from SFHL that they are willing to agree to an early termination of the TA. In the circumstances, the RDV estimated by Dr Wong should be reduced to reflect the incorrectness of this assumption.

58.If it is necessary to terminate the TA on 30 June 2027 in order to redevelop the Land, it would be necessary to pay compensation to SFHL. The compensation paid to SFHL should be sufficient for SFHL to rent a unit similar to the 1/F of the Building in the Sheung Wan location. The total of the monthly rental, management fee and air-conditioning charge under the TA is around HK$59,000. To err on the safe side, assuming that there is a 50% increase in the market monthly rental for a similar unit in the Sheung Wan area in July 2027 (including management fee and air-conditioning charge), the monthly market rental for a similar unit in Sheung Wan in July 2027 would be around HK$90,000. The compensation paid to SFHL would be around HK$90,000 x 12.34 months[12] = HK$1,110,600.

59.Accordingly, in my judgment, the RDV should be HK$286,100,000[13] – HK$1,110,600[14] = HK$284,989,400.

60.To conclude:

(1) EUV of the Building (en bloc sale of the Building in one transaction) is HK$249,986,091[15];

(2) EUV of the Commercial Accommodation (sale of the Commercial Accommodation in one transaction) is HK$207,814,160[16];

(3) EUV of the Commercial Accommodation (sale of the Commercial Accommodation by “floor-by-floor” sale) is around HK$260 million[17];

(4) RDV of the Land is around HK$285 million[18].

E2. Selling the Commercial Accommodation on “floor-by-floor” basis – an unrealistic and undesirable option

61.Mr But submits that an order for the sale of the Commercial Accommodation should be made, and the sale should be done on “floor-by-floor” basis.

(1) At the end of the hearing, Dawns Light and SFHL’s primary case is that there can be a Sub-DMC defining exclusive possession of different parts of the Commercial Accommodation. After having that Sub-DMC, the floors in the Commercial Accommodation can be allocated to Connaught and Dawns Light in the way as set out in the table in [9.16] of Knight Frank Report (“Knight Frank Table”). Therefore, Connaught and Dawns Light may dispose of the respective floors owned by them in whatever way desired by them. A copy of the Knight Frank Table is annexed to this judgment as Annex 2.

(2) Dawns Light and SFHL’s alternative case is that after having the Sub-DMC, the units and the floors in the Commercial Accommodation can be sold to interested purchasers on “unit-by-unit” and/or “floor-by-floor” basis.

62.Mr But submits that the distribution as shown in the Knight Frank Table is close to a 50/50 split between Connaught and Dawns Light, and is a fair distribution of the floors in the Commercial Accommodation. As to why some particular floors should be given to Dawns Light, Mr But’s answer is that Dawns Light prefers to have those floors.

63.Mr But submits that by adopting the “floor-by-floor” sale, the realization value of the Commercial Accommodation would be the highest. This would be beneficial to both Connaught and Dawns Light. At the same time, SFHL’s possession of the Shop Portion would not be distributed. All the co-owners of the Building would be benefitted by this option.

64.In my judgment, “floor-by-floor” sale is an unrealistic and undesirable option.

(1) In view of the acrimonious relationship between the PF Camp and PK Camp, it is likely that drawing up a Sub-DMC to govern the exclusive possession of different parts of the Commercial Accommodation would not be a smooth and easy exercise. It is true that when the parties cannot agree upon the terms of the Sub-DMC, the Court would consider the drafts provided by the parties and settle a final draft.[19] Disagreements between the parties would not render the mission of having a Sub-DMC being something impossible. However, given the relationship between the two camps, it is almost a certainty that many matters concerning the Sub-DMC would be disputed and would need to be resolved by the Court. Some legal battles may not stop at the Court of First Instance and the disputes may need to be resolved by the Court of Appeal, or even by the Court of Final Appeal. It must be borne in mind that litigation is time consuming and costly. To resolve all the disputes concerning the Sub-DMC through litigation is a painful and lengthy process.

(2) The difficulties in settling the terms of the Sub-DMC include how to deal with the rights and privileges reserved to Connaught and Dawns Light (who are together the “First Owner” in the DMC) in Section III of the DMC.[20] Those rights and privileges include: (a) the right to change the name of the Building at any time[21]; (b) the right to install or affix chimneys, flues, pipes, signs, signboard or advertisement or any other structures or facilities on or within the Common Area or Facilities with prior approval from the Owners’ meeting[22]; (c) the right to designate any part of the Land and the Building as additional Common Area and Facilities with prior approval from the Owners’ meeting[23]; (d) the right to change, amend, vary, add to or alter the Building Plans without the concurrence or approval of any other Owner[24]; and (e) the right to enter into and upon all parts of the Land and the Building with all necessary equipment, plant and materials for the purposes of constructing any other parts of the Building[25]. In settling the terms of the Sub-DMC, it is necessary to consider the rights and privileges reserved to the First Owner would be passed to whom. In the absence of an agreement between Connaught and Dawns Light, these issues may not be easy to answer.

(3) As to the primary relief sought by Dawns Light and SFHL, ie after having a Sub-DMC, distributing the floors in the Commercial Accommodation to Connaught and Dawns Light in the way as shown in the Knight Frank Table, I have no hesitation in rejecting that suggestion. One may ask a simple question – if a purchaser is interested in purchasing a particular floor at a high price which neither Connaught nor Dawns Light is willing to pay, why that floor should not be sold to that purchaser but should be given to Connaught or Dawns Light. Unless there is an agreement between Connaught and Dawns Light that the floors in the Commercial Accommodation should be distributed between them in the way as shown in the Knight Frank Table or in any other way, the question posed in the above is unanswerable. It is an undeniable fact that Connaught opposes the primary relief sought by Dawns Light and SFHL (ie distributing the floors to Connaught and Dawns Light in the way as shown in the Knight Frank Table). In the circumstances, there is no room to adopt that option, and the primary relief sought by Dawns Light and SFHL must be refused.

(4) Regarding selling the units and/or the floors to different purchasers after having the Sub-DMC, given the mistrust and the acrimonious relationship between PF Camp and PK Camp, it can be reasonably contemplated that there would be many problems in the process. It is likely that the parties may not be able to agree on many matters, for example, which estate agent and which law firm should be engaged in relation to the sale of the units and the floors in the Commercial Accommodation, terms of the provisional sale and purchase agreements and the formal sale and purchase agreements, and the selling price of a particular unit or floor. If there is a situation in a particular transaction, for example, the purchaser does not pay the balance of the purchase price on the completion date, Connaught and Dawns Light (they together are the “vendor” in the transaction) also may not be able to agree on how that situation should be handled. One of them may say that the contract should be terminated and the deposits paid should be forfeited. The other may say that the contract should be kept alive and the purchaser should be compelled to complete the transaction by seeking an order of specific performance from the Court. All these differences between Connaught and Dawns Light may finally need to be resolved by the Court, and resolving all these differences in the Court would be a very time consuming and very costly process. The “floor-by-floor” sale can only be completed after all these differences are resolved, including the completion of all appellate proceedings in the Court’s process.

(5) As said in the above, PF Camp and PK Camp are ad idem that the disputes concerning the Building should be resolved by the third generation of the Fung Family, and the burden should not be passed to the next generation. In view of the problems set out in subparagraphs (2) and (4) above, given that fact that the members in the third generation are all in their advanced age, in particular those in PF Camp, if a “floor-by-floor” sale is ordered, it is unlikely that the sale of the Commercial Accommodation on “floor-by-floor” basis would be completed during the lifetime of the members in PF Camp.

65.For the reasons above, I am of the view that “floor-by-floor” sale is an unrealistic and undesirable option.

E3. Selling the Commercial Accommodation alone in one transaction – lack of feasibility

66.As to the option of selling the Commercial Accommodation in one transaction, the problem is that this option lacks feasibility. As set out in [12] to [24] above, for over a decade, there have been potential purchasers expressing interest in acquiring the Building en bloc, but there has not been any one single potential purchaser expressing interest in only acquiring the Commercial Accommodation. In particular, it is pertinent to note that Sunlight REIT repeatedly expressed an interest in acquiring the Building en bloc. In February 2026, Sunlight REIT maintained the interest in acquiring the Building, but at the same time emphasized that the Building should be sold 100%.

67.Mr But submits that Connaught has never tried to sell the Commercial Accommodation and to find a purchaser of the Commercial Accommodation. In the absence of such attempts, it cannot be said that there would be no purchaser interested in only acquiring the Commercial Accommodation.

68.With respect, the flaw in Mr But’s submission is that Dawns Light and SFHL are now advocating that the Commercial Accommodation should be sold primarily on “floor-by-floor” basis, alternatively in one single transaction. When Dawns Light and SFHL are putting forward the proposal of selling the Commercial Accommodation in one single transaction as their fallback position and as a positive case to oppose Connaught’s application for an order to sell the Building en bloc, Dawns Light and SFHL bear the burden of adducing evidence to show that selling the Commercial Accommodation alone is a feasible option in the sense that there are potential purchasers in the market interested in only acquiring the Commercial Accommodation. There is no such evidence.

69.Based upon the evidence before me, I am of the view that selling the Commercial Accommodation alone in one transaction is not a feasible option.

E4. En bloc sale of the Building – any hardship to SFHL?

70.In considering whether an order for en bloc sale of the Building should be made, I have to consider whether making such an order would cause very great hardship to SFHL. If that order is made, SFHL would lose the possession of the Shop Portion. The burden of showing “very great hardship” is on SFHL.

71.Based upon the RDV as found by this Court in [59] above, if the whole Building is sold for redevelopment of the Land, SFHL would receive HK$284,989,400 x 470/5,859 = HK$22,861,413 (say around HK$22.86 million).

72.There is no dispute that SFHL is having a wholesale dried seafood business in the Shop Portion.

73.The evidence on hardship is contained in the two affidavits made by Christine Fung. The relevant parts of these affidavits are as follows:

(1) Affidavit of Christine Fung dated 20 February 2025:

“81. In the event that the Building (together with the Shop) is sold to a purchaser, SFHL would be forced to relocate its business to an alternative premises.

82. At the forefront, there is an issue as to whether the compensation received by SFHL is sufficient to purchase an alternative premises suitable for relocation of SFHL’s business. The transaction costs alone (ie agency fees and stamp duty) would be large which together with other preliminaries and set-up/marketing costs required to transition and rebuild its business back to normal, would become prohibitive.

83. As explained above, SFHL’s business and its established goodwill for over a century is highly dependent upon the Building’s location and its surroundings as being in the middle of a concentrated trading cluster of dried seafood wholesalers and nearby to dried seafood retailers with closely-knitted business ties to SFHL. In other words, it would be gravely prejudicial for SFHL to be forced to relocate outside and away from its trading hub.

84. In addition to having its own retail premises and storage facilities, SFHL’s business also benefited from the following unique features

(1) The name of the Building as ‘Shiu Fung Hong Building’ which strongly bolstered its prestige and trading reputation;

(2) A large retail hall with wide frontage, high ceiling headroom and a decent floor space to allow buyers and their staff to congregate, inspect, weigh and package their goods purchased in bulk;

(3) Unparalleled convenience in allowing trucks and lorries to be able to stop (by convention) right in front of the Shop at Bonham Strand West for loading and unloading purposes with the benefit of a covered staircase and small canopy as shelter for such goods pending their further loadings;

(4) Emergency generators available as secondary source of electricity to protect the goods;

(5) Convenient access and use of 1/F premises which also operated as private reception area for guests and visitors, and additional storage area for packages and special items kept in cooler temperatures and away from dampness; and

(6) Large loading capacity in the Basement for storage of its goods.

85. All of the above distinct advantages as enjoyed by SFHL would be lost upon sale of the Land. More importantly … I have been working in the food business since the 1970s. I also know other suppliers/wholesalers quite well. Whilst the suppliers of dried seafood may usually have some in-store cold storage facilities such as fridges/freezer cabinets, the Building has by far the largest scale and most comprehensive facilities I know of. The built-in facilities in the Building are ‘tailor made’ for its purposes (and approved in building plans specifically annotated as ‘COLD STORAGE’ allowing freezing temperatures below -10 Celsius). Even assuming that there may be other premises of similar size in the locality of the Building, I truly believe that it is practically impossible for SFHL to locate another premises that would allow the same level of convenience, scale and sophistication in facilities for SFHL to carry on its business.

86. Taking cold storage as an example, there are various potential issues caused by operating a cold storage in another building, especially for upper floor units. For instance, there is likely to be water leakage/seepage by reason of the precipitation caused by low temperature.

87. … proper insulation has to be installed and the cold storage needs to have sufficient loading to store SFHL’s products. Heavy installation works of cold storage facilities at an alternative premises of an existing building would require the approval of the landlord, the co-owners and/or the manager under the DMC. These parties are ordinarily prone to act conservatively and are most unlikely to grant any consent, even before any submissions could be made to the Buildings Department (“BD”) for the premises to become altered. Even with some ad-hoc insulation, the cold temperature and precipitations may still risk causing damage to the structural frames and other communal facilities of ordinary buildings, and is prone to cause nuisance to neighbors.

88. It is simply impracticable (if not impossible) for SFHL to rebuild a cold storage suitable for operation of its business in alternative premises. There needs to be sufficient water and electricity voltage supply for the cold storage operations. Major construction works which involve additions and alternations of the premises would require the approval of the BD and potentially other government authorities. Even if a location allowing construction of such cold storage is available, the costs of construction would be extremely high. I expect that such costs will be no less than HK$5 to 6 million.

89. In addition to the issues with cold storage as highlighted above, if the Building is sold and SFHL’s shop has to be relocated, costs have to be incurred for matters such as dismantling and moving and/or installing new storage equipment (such as the racking system), and to relocate the goods for storage at the new location.

90. In the event that a suitable alternative premises cannot be found, it would mean the existing business of SFHL have to become terminated and extinguished for good. This would be devastating. To compel a generational business having its traditions and goodwill established for more than 100 years to come to an end, just because some other unit owners (who do not even achieve 50% majority over the undivided shares) wish to sell their stake and ‘cash out’ would not be fair or right.

……

92. The residual proceeds to be paid from sale of the Land only notionally represent the value of the Shop in cash equivalent. Even assuming sale by “redevelopment basis” of the Land may yield a slightly higher sale price than the existing use value of the Shop … it cannot compensate for SFHL’s substantial costs and expenses for relocation (or even extinguishment).”

(2) 2^nd Affidavit of Christine Fung dated 16 October 2025:

“9. …… I have explained SFHL’s position that it will suffer great prejudice which cannot be adequately compensated by the land value of the Shop in paragraphs 79 to 92 of my first Affidavit. I do not intend to repeat the matters set out in my first Affidavit but will only provide further particulars below in support of SFHL's said position:-

(1) SFHL has probably the largest inventory of abalone (valued at about $50 million) amongst its competitors. Abalone must be kept at a constant cool temperature and the cold storage at the basement of the Building allows the inventory to be stored on site. This enables SFHL to keep the storage and logistical costs at a low level and gives SFHL a competitive advantage over its competitors.

(2) At present, SFHL only keeps a small part of its stock of dried oysters and frozen seafood (such as scallops and oysters) at an off-site godown at the monthly rental of about HK$25,000. If the entire inventory of SFHL has to be moved and stored at an off-site godown, I expect that the monthly rental expenses would exceed HK$100,000, which will significantly increase the costs of SFHL’s business.

(3) In addition to the enhanced costs of storage, SFHL will also have to incur extra logistical costs as the goods will have to be transported from the godown to the Shop. Depending on the location of the godown, the transportation may also have to be equipped with cold storage facilities to ensure that the quality of the goods will be maintained during the course of transportation. The costs of arranging `cold chain logistics' is very expensive nowadays.

(4) Given the present business environment, the additional costs arising from the lack of cold storage on site will cause SFHL to lose its competitive advantage over its competitors and SFHL's business may suffer gravely as a result.”

74.In my view, SFHL has failed to show that an order for sale of the Building en bloc would result in “very great hardship” to SFHL.

(1) As said in the above, SFHL operates a wholesale dried seafood business, not a business of providing cold-storage service. It is true that there is a cold storage in the Shop Portion which is now being used by SFHL to store some goods. However, as revealed by Christine Fung in her 2^nd Affidavit, apart from that cold storage, SFHL also stores some goods at an off-site godown.

(2) If an order for sale of the Building en bloc is made, SFHL would receive sale proceeds of around HK$22.86 million. There is no evidence showing that with the sale proceeds received, SFHL would not be able to purchase or to rent a shop and a godown to continue its business at a nearby place. As a matter of common sense, merely relocating SFHL’s business to a nearby place would not adversely affect the goodwill of the business.

(3) While many difficulties are mentioned by Christine Fung in her 2 affidavits, the fatal deficiency in the evidence adduced by SFHL is that SFHL has never attempted to look for any other place to continue its business if the Building is sold. There is no evidence showing that a shop unit similar to the shop premises now being used by SFHL is not available in the Sheung Wan area. Further, SFHL has not provided any figure showing what amount would be required in order to purchase or to rent a shop and a godown to continue its business. Without telling the Court the exact figure required to relocate SFHL’s business to another place, to say that the sale proceeds received by SFHL would not be sufficient to allow SFHL to continue its business at a nearby place is a bare allegation, as to which this Court cannot attach any weight.

75.Mere inconvenience is not hardship, let alone very great hardship. The burden of showing “very great hardship” is on SFHL. In my judgment, SFHL has failed to adduce sufficient and satisfactory evidence to discharge that burden. As a result, SFHL cannot rely upon very great hardship to resist Connaught’s application for an order for sale of the Building en bloc.

E5. Other matters

76.Given the acrimonious relationship between PF Camp and PK Camp, the common intention of the two camps to resolve the disputes concerning the Building by the third generation of the Fung Family and not to pass the burden to the next generation, and the fact that the members of the third generation are all in advanced age, there is an imminent need to end the co-ownership of the Building by a clean break sooner rather than later.

77.As to the en bloc sale of the Building, Ms Wu has rightly drawn my attention to the fact that not every third-generation member in PK Camp opposes that proposal.

(1) In July 2021, Gary Fung has stated that he is in support of the sale of the whole Building.[26] In April 2025, Gary Fung has again expressed his “full support” for an en bloc sale of the Building. He also expressly said that he does not support partition, which “does not seem to make good economic sense”.[27]

(2) In August 2021, Catherine Fung has clearly stated that she wants the Building sold in its entirety.[28] In April 2025, Catherine Fung said that she “join Gary in full support of [Connaught’s] efforts to sell [the Building] in its entirety and not by partition”.[29]

78.In other words, the majority of the third-generation members in the Fung Family are in support of having an en bloc sale of the Building to end the co-ownership.

79.Dawns Light and SFHL have put forward a ground based upon sentimental value to oppose Connaught’s application for an order for sale of the Building en bloc. In her 1^st Affidavit, Christine Fung said that the Land must be preserved, for the Land is an ancestral property of the Fung Family. If the Land is sold, the legacy in “ancestral property” will become gone for good.[30] Christine Fung said that “we do not ‘sell’ anything for monetary gains and there are other things we value”.[31] In my view, as rightly submitted by Ms Wu, after Dawns Light and SFHL adopting the position that the Commercial Accommodation should be sold on “floor-by-floor” basis or alternatively in one transaction, Dawns Light and SFHL can no longer rely upon the sentimental value ground. Plainly, the latest position adopted by Dawns Light and SFHL contradicts the sentimental value ground advocated by Christine Fung in her 1^st Affidavit.

E6. Conclusion

80.As explained in the above, I am of the view that:

(1) sale of the Commercial Accommodation on “floor-by-floor” basis is an unrealistic and undesirable option;

(2) sale of the Commercial Accommodation alone is not a feasible option; and

(3) sale of the Building en bloc for redevelopment purpose would yield the highest return amongst these options.

81.In the premises, the option of having an en bloc sale of the Building should be adopted.

82.There are further reasons in support of having an en bloc sale of the Building:

(1) For the reasons set out in [76] above, there is an imminent need to end the co-ownership of the Building by a clean break sooner rather than later. To have an en bloc sale of the Building can satisfactorily address this imminent need.

(2) The majority of the third-generation members in the Fung Family is in support of having an en bloc sale of the Building.

83.As explained in the above, I am of the view that SFHL has failed to show “very great hardship” to oppose Connaught’s application for having an en bloc sale of the Building. I am also of the view that Dawns Light and SFHL cannot rely upon sentimental value as a ground to oppose Connaught’s application.

84.For all the reasons above, I am of the view that making an order for sale of the Building en bloc is beneficial to all the co-owners of the Building in the circumstances of this case. I would exercise my discretion to allow Connaught’s application for an order for the sale of the Building en bloc. I would make an order for sale to that effect accordingly. The sale of the Building would be at the price and in the way (for example, sale by a public auction or sale by a private agreement) to be determined by the Court. I would direct the parties to provide proposed directions for the determination of the price and the way to effect the sale to the Court for consideration.

85.Since the RDV is the most desirable selling price, in order to achieve that price, attracting potential purchasers who are going to buy the Land for redevelopment purpose is essential. I am aware that some units and floors of the Building are now subject to tenancies. In order to attract potential purchasers who are going to buy the Land for redevelopment purpose, I would order that the parties herein shall not renew or cause the renewal of the existing tenancies concerning any part of the Building, or create any tenancy or cause the creation of any tenancy concerning any part of the Building. With this order, the purchaser of the Building would be able to obtain vacant possession of the entire Building at an earlier time, and hence would be able to start any redevelopment of the Land without undue delay.

F. DISPOSITION

86.For the reasons set out in the above, I make the following order:

(1) There be a sale of the Building en bloc at the price and in the way to be determined by the Court.

(2) The parties (except Horizon Trading) do lodge the following with the Court within 28 days:

(a) agreed directions for the determination of the price and the way to effect the sale of the Building;

(b) in the absence of an agreement, the parties’ respective proposed directions and the reasons in support of the respective proposals.

(3) Pending the sale of the Building in accordance with (1) above, each of the parties in these proceedings shall not renew or cause the renewal of the existing tenancies concerning any part of the Building, or create any tenancy or cause the creation of any tenancy concerning any part of the Building.

(4) There be liberty to apply.

87.As to costs, I am of the following view:

(1) Since Connaught has succeeded in obtaining the primary relief sought in the Amended Originating Summons, I am of the view that costs should follow the event. Connaught’s costs in these proceedings (including costs reserved, if any) should be paid by Dawns Light and SFHL, with a certificate for two counsel, to be taxed if not agreed.

(2) Ms Ting submits that Horizon Trading holds the Common Areas and Facilities as defined in the DMC on trust for all co-owners of the Building. Although Horizon Trading is necessarily made a party to these proceedings, Horizon Trading remains neutral throughout in these proceedings. Ms Ting submits that in these circumstances, Horizon Trading is entitled to have its costs paid by the co-owners of the Building, ie Connaught, Dawns Light and SFHL jointly and severally. Since those costs would be paid to a trustee, Ms Ting submits that the costs be awarded on trustee basis.

(3) I accept Ms Ting’s submissions. However, in view of the outcome of these proceedings, ie Connaught’s success in obtaining the primary relief as set out in the Amended Originating Summons, and Dawns Light and SFHL’s failure in opposing Connaught’s application, I am of the view that Horizon Trading’s costs in these proceedings (including costs reserved, if any) should be paid by Dawns Light and SFHL on trustee basis, to be taxed if not agreed.

88.I make the following costs order nisi:

(1) Connaught’s costs in these proceedings (including costs reserved, if any) be paid by Dawns Light and SFHL, with a certificate for two counsel, to be taxed if not agreed; and

(2) Horizon Trading’s costs in these proceedings (including costs reserved, if any) be paid by Dawns Light and SFHL on trustee basis, to be taxed if not agreed.

89.Unless there is an application by an inter partes summons for variation of the aforesaid costs order nisi within 14 days after the handing down of this judgment, the costs order nisi shall become absolute without a further order.

90.Lastly, it remains for me to thank all counsel for the helpful assistance rendered to the Court.

Ms Teresa Wu and Mr Jason Fee, instructed by Deacons, for the plaintiff

Mr Adrian But and Ms Jamie Pang, instructed by Wilkinson & Grist, for the 1^st and 2^nd defendants

Ms Emily Ting, instructed by Hugill & Ip, for the 3^rd defendant

Annex 1 - Family Tree of Fung Family

Annex 2 - Knight Frank Table