Pun Jong Sau and Others v. Poon Wing Kong and Others
Read the full judgment text of HCA 1750/1976 on BabelCite. This High Court CFI judgment was delivered on 15 June 1979.
1. The plaintiffs in these proceedings seek an order that leasehold property which all the parties, save the Attorney General, hold as tenants in common be partitioned or, in the alternative, that there be an order for sale. In fact what the plaintiffs want is an order for sale.
Cited by 18 cases
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HCA001750/1976
Coram: Trainor, J. Date of Judgment: 15 June 1979 ----------------- JUDGMENT ----------------- 1. The plaintiffs in these proceedings seek an order that leasehold property which all the parties, save the Attorney General, hold as tenants in common be partitioned or, in the alternative, that there be an order for sale. In fact what the plaintiffs want is an order for sale. 2. Originally the proceedings were instituted by the first and second plaintiffs against the remaining parties, the Attorney General being added simply to comply with the provisions of the Partition Ordinance. All the defendants entered an appearance but later the proceedings were amended and the original 1st and 7th defendants became the 3rd and 4th plaintiffs. The 6th defendant died and his personal representative became the 5th plaintiff. 3. The premises in question are known as 82 and 84 To Kwa Wan Road, Kowloon, and a building which is four storeys high in front and six storeys high at the rear has been erected on them. The premises are held on a lease from the Hong Kong Government but are occupied by the Hing Wah Battery Factory (Hong Kong) Limited. How that company occupies the premises I do not know, but I was told that for its occupancy it pays a sum of money bi-annually, and it is common case that the occupancy may be determined by six months notice to quit. 4. The issue between the parties is narrow. It is the contention of the plaintiffs that they, being co-owners of the property are "eligible", and that is the word used by Mr. Waite leading counsel for the plaintiffs as descriptive of their right, by virtue of the Partition Ordinance to apply for the relief they seek. In the circumstances of the case, he maintains, they are entitled, subject to the Court's discretion, to an order for sale. 5. Mr. Ching, leading counsel for the defendants, maintains that an order for sale may only be made where the circumstances are such that an order for partition could be made but by reasons of the provisions of the Ordinance the Court considers that a partition would not be beneficial to all the persons interested in the property. In other words, sale is only an alternative to partition when partition is a permissible relief. 6. Only one witness was called. He was called by the plaintiffs and his evidence was substantially accepted by the defendants. He said that, theoretically, it would be possible physically to partition the property but he did not think it would be practicable; parts would have to be held in common and it would result in something totally uneconomical. Partition could not be effected without structural alterations and that would require the building of walls and, possibly, staircases. 7. The proceedings are brought under the Partition Ordinance, to which I shall refer as the Ordinance, and it is common case that under it a co-owner may apply for partition and sale of the property he holds with others or one or other of these reliefs. 8. Opening the case for the plaintiffs Mr. Waite said that the building with which this case is concerned was built in two periods. The first part was completed in 1953 and the second in 1958; comparatively old buildings by Hong Kong standards. He said the occasion is ripe for their demolition and reconstruction and that on reconstruction the floor space of 6,300 square metres could be increased to 15,800 square metres. At the moment (and both counsel were roughly in agreement on this) the value of the premises with vacant possession is approximately $20,000,000. The interest of the five plaintiffs in the property represents almost 80% leaving 20% approximately to the four defendants. It was Mr. Waite con-tention that on a proper construction of the Ordinance the circumstances of the case are such that an order for sale is a proper order to be made. 9. To support his contention Mr. Waite suggested that it would be helpful to refer to the early law pertaining to partition in England and Hong Kong, later legislation in England and the Ordinance; it would be helpful to look at the development of the right of co-owners to partition as it indicates the philosophy behind the development. 10. Originally partition was a matter of common-law and only available to coparceners. By the Act 31 Henry VIII c.1 the right was extended to joint tenants and tenants in common in freehold estates of inheritance. By the Act 32 Henry VIII s.32 the right was further extended to include co-owners whose interest was in a life estate or a term of years, but that Act provided that partition would not be ordered if it were prejudicial to persons who were not parties to the proceedings. 11. That was the position in England until the Partition Act, 1868 was enacted, and in Hong Kong until the Ordinance was enacted in 1969. 12. The Partition Act, 1868, which did not apply to Hong Kong, further liberalised the position in England by providing for the sale of the property and, indeed, in certain circumstances making an order for sale almost obligatory. The extent of the liberalisation may be appreciated from the relevant sections:
The Act then proceeds to enable the Court to permit the parties to bid at the sale on such terms as it thinks fit. The Act also provides that any person who theretofore might have maintained a suit for partition might do so thereafter against one or more of the parties interested in the property without serving the others, but all persons who theretofore would have been necessary parties must be served with notice of the order or decree and thereafter are bound by the order or decree as if they had been parties to the suit. 13. The Act of 1868 was amended by the Partition Act 1876. The only section in that Act that is relevant to these proceedings is section 7. It provided that an action for partition shall include an action for sale and distribution of the proceeds, and in an action for partition it will be sufficient to claim a sale and distribution of the proceeds, it will not be necessary to claim a partition. 14. In England the partition of land held in co-ownership was abolished when the Law of Property Act, 1925 repealed the Partition Acts. The position now is that land held by co-owners is always subject to a trust for sale. 15. There is no doubt that after the two acts of Henry VIII and up to the enactment of the Partition Act in 1868 a co-owner of property who sought partition must have it. That that was so however absurd the result is to be seen from Turner v. Morgan, [1803] 8 Ves. 143 (32 E.R. 307). In that case the plaintiff for partition was tenant in common as to 2/3rds of a house in which the defendant, the other tenant in common, lived. Despite the valiant efforts of Eldon, L.C. p.145 to induce a settlement - "But I will give the Defendant time to come into terms ... Out of mercy to the parties I will let it stand over; but I have no doubt what is to be done, if they will have a decree" - the defendant refused. The Lord Chancellor ordered partition and directed a commission to proceed to investigate as to the division. The defendant took exception to the commission allotting to the plaintiff "the whole stack of chimneys, all the fire places, the only staircase in the house and all the conveniences in the yard" but to no avail. 16. That too was the position in Hong Kong until the enactment of the Ordinance in 1969. 17. Section 3 of the Partition Act, 1868 provided that in a suit for partition where, if the Act had not been passed, "a Decree for Partition might have been made" the Court may, if it thinks that a sale would be more beneficial to the parties, order a sale. Since then orders for sale have always been made where the Court considered it to be more beneficial to the parties. Drinkwater v. Ratcliffe [1875] 20 Eq. Cases 528 was cited in support of that. "It is an absolute power of sale .... provided the Court is satisfied that it would be more beneficial for the parties interested than a division of the property among them". Sir G. Jessel, M.R. at 530. I was informed by Mr. Waite that the research of the learned counsel before me had failed to produce a case in the years between 1868 and 1925 to suggest that the difficulty of physically dividing the property and allotting to the co-owners aliquot parts was relevant when sale alone was sought. Paragraph 1851 Volume 20 of the first Edition of Halsbury was quoted to me. It reads:
and it refers in a footnote to the Partition Act 1876. It continues:
It is quite clear from the passage and the footnotes to it that the words "jurisdiction to order partition" were referring to the jurisdiction of the Court over the land, or the "eligibility" of the applicant. It has no bearing on the question of the physical division of the property. I have dwelt on the legislation in England up to 1876 to the extent I have to stress the development of the law to facilitate the ending of co-ownership there. It was against that historical background that the Ordinance was introduced in Hong Kong in 1969 and by it the law here was brought along an almost parallel course. Indeed, the sources of most of the sections are to be found in the Acts to which I have referred. 18. At the time the Ordinance was enacted Hong Kong had become a city of many multi-storey buildings divided into many forms of occupancy. In particular very many of them were exclusively for domestic use in the form of self-contained flats. Persons acquired the exclusive use of a flat on purchasing an interest in the entire premises which he held as tenant in common with others who had also purchased an interest in the premises to acquire the exclusive use of a flat. I was given to understand that so far back as 1950 this method was what in effect was a way for the developer of the land to sell flats. Having built a premises divided into self-contained flats the developer then, usually, executed a deed of mutual covenants with the first purchaser each on behalf of himself, his executors, administrators and assigns. That deed became, so to speak, the charter of existence between all the tenants in common or, loosely, the flat owners. 19. It was in the conditions then prevailing that the Ordinance was enacted. 20. The purpose of the Ordinance is given in the preamble:
It is a peculiarly expressed statement as at the time the Ordinance was enacted there was no law relating to the sale of property in land under co-ownership of the type under consideration. The position was, as I said earlier, the same as in England prior to 1868. Was there a slip by the draftsman there, and was he of the belief that the Acts of 1868 and 1876 applied, or was it the intention of the Legislature that what existed in England up to 1925 but was lacking in Hong Kong should be provided? In other words was it the intention of the Legislature that there should be provision for the sale of land on the application of a co-owner and did the draftsman in his efforts to be brief omit some words such as: "to provide for the" before the word "sale". 21. As there was no previous provision for the sale of land and the Ordinance went on to make such a provision it would make more sense if the preamble read:
22. The better to appreciate the arguments of counsel it might be appropriate at this stage to set out the sections of the Ordinance that are involved so far as they are relevant. It will, I think, be helpful to indicate their source.
23. It is of interest to note that the margin note to section 2 gives the Act, 32 Henry VIII c.32, s.1 as the source but the section in the Ordinance is wider in that it covers "any property" in land whereas that act of Henry VIII dealt with interests for life and for years; it was 31 Henry VIII c.1 that dealt with estates of inheritance. In fact the section of the Ordinance embraces the relevant sections of the two Acts of Henry. But a novel feature of the section is that the Court is given power to refuse to make an order. I say that because by conferring that power in the face of the position in England up to 1925, that partition or, subject to the Court's discretion, sale is as of right on the application of a person entitled to seek it, it is, in my opinion, impliedly accepting that theretofore in Hong Kong as in England there was no power to refuse partition. Indeed, a brief glance at the common-law position of coparceners and the wording in the Act 31 Henry VIII c.1 there can be no doubt that partition was compellable in Hong Kong. If one considers the position as stated by Coke in his commentaries on Littleton, 167(a), "And therefore if one coparcener maketh a lease for years yet a partition doth lie", and the first of the two Acts of Henry VIII where the right of partition was extended to co-owners in an estate of inheritance "in like manner and form as coparceners by the common law have been and are compelled to do ...." there can be no doubt about partition being compellable. I take the point of Mr. Waite and accept it that had that position continued in Hong Kong there could arise the absurd position of the owner of a single flat, if again I may loosely call him that, in a building of many flats which is subject to a deed of mutual covenant who wishes to sell his interest seeking and obtaining an order for partition of the entire premises. It would be as absurd as the situation in Turner v. Morgan (32 E.R. 307), similarly on an application for sale. In my opinion paragraph (c) of section 2 was introduced by reason of the conditions existing here and to leave the Court a free hand to deal with any unusual circumstances that might exist in a case where partition or sale was sought. 24. Proceeding from there, and remembering that the purpose of the Ordinance was to amend the law that theretofore made partition compellable, what was the intention of the Legislature when it provided in section 2 for "an order under section 4 for a partition" and "an order under section 6 for a sale"? Was it the intention, subject to (c), to provide for a sale in Hong Kong as freely as in England before 1925 or was a limitation imposed in that a sale could only be ordered if a division of the land was physically feasible or practicable. Mr. Waite argues for the former interpretation and Mr. Ching for the latter. 25. I am satisfied that the key to the interpretation of the Ordinance is to be found in the preamble. The Ordinance could not amend the non-existent law as to sale therefore the intention of the Legislature was to amend the law as to partition and to enact new law enabling a Court to end an unwanted co-ownership by an order for sale. As to the amendment of the law that is obvious in, inter alia, section 2(c): partition was no longer compellable, and I have endeavoured to explain that by the prevailing circumstances in Hong Kong. But in construing the Ordinance one must consider the overall intention. The primary intention was to enable an unwilling co-owner to rid himself of the shackles of co-ownership and to have either a physical division of the property into aliquot parts among the co-owners or a division of the proceeds of its sale. It was foreseen that there would be occasions when it would be impossible equitably and sensibly to divide the property into aliquot parts and the Court was empowered to avoid making the order for partition which theretofore it would have been compelled to make; the Court was empowered to avoid a Turner v. Morgan situation. But if a Turner v. Morgan situation would arise was it the intention of the Legislature that the Courts should remain impotent and incapable of terminating the co-ownership and only maintain the status quo ante? Was the position that for which Mr. Ching contended: if the physical division of the premises would result in a section 4(2) situation then all the Court may do is say to the plaintiff, "Sorry, You must grin and bear it". Or on the other hand if the plaintiff sought a sale and the defendant partition must the Court say "a plague on both your houese". As I understand Mr. Ching that is the way he would put it. 26. In my opinion it was not the intention of the Legislature that the Court should be impotent where a reasonable but unwilling co-owner sought to have the co-ownership brought to an end if it could be avoided. To avoid such impotency it provided the Courts with the power to order partition or sale. To enable the Court to meet as many eventualities as possible it also provided a solution novel as to the position in England prior to 1925 or Hong Kong prior to 1969 i.e., order partition of the property: to be held by single owners in severalty; into parcels to be held by two or more owners as tenants in common or as joint tenants; partition the property in all those ways or any combination of them [s.4(1)]. But the Legislature also recognised that there might be times that partition would not be possible without creating a Turner v. Morgan situation and a sale would not be beneficial to all the parties and so it amended the law by relieving the Court from being compelled to order partition or sale. 27. Mr. Ching argued that (a) and (b) of section 2 do not permit sections 4 and 6 to be read independently of each other. He argued that when in section 6(1) it is said ".... where it appears to the Court that a partition of property would not be beneficial to all the persons interested ...." it presupposes the possibility of partition and the Court must decide if, having regard to section 4(2), the division of the property into parts is permissible. If it is then the Court proceeds to consider if partition would be beneficial to the parties. If the Court finds that it is then it may order partition, if not it may order a sale. If, however, the initial finding is that the property could not be divided into parts by reason of section 4(2) then section 2(c) applies and the Court must refuse to make an order; it is impotent. Mr. Ching submitted that section 6(3) by reason of it being introduced "Without prejudice to subsection (1)" emphasised the argument, and invited me to consider that subsection as if the words "instead of an order for partition" were omitted. In further support of his contention Mr. Ching cited "Cromwell Investigation Company Ltd. and Others v. Fook Sun Enterprises Company Limited and the Attorney General(1) and what was there said by Huggins, J.A. and myself. 28. In my opinion it was the intention of the Legislature when enacting the Ordinance to avoid, if possible, leaving the Court impotent when an unwilling co-owner sought to have the co-ownership brought to an end. To avoid such impotency and appreciating that there might be instances where partition would produce bizarre results it relieved the Court of the obligation that theretofore existed of making an order for partition and permitted a sale in lieu of partition. It also appreciated that there might be cases where the best solution was to leave things as they are and so it enabled the Court to decline to make any order. 29. I said earlier that the key to the interpretation of the Ordinance is to be found in the preamble. It did not repeal the law then existing, and when section 2 commences "Subject to this Ordinance" it means that the existing law is to be interpreted in conjunction with the Ordinance, but where there is a difference the law previously existing is amended to the extent set out in the legislation e.g. partition is no longer the only and compellable remedy. It enables the Court to order partition or sale or to decline to make an order. Those are three separate and distinct posers. But when section 3 was enacted and stated that persons interested in property as set out in section 2 might apply either for partition or sale it meant such persons as were eligible to apply under the law; any person who was theretofore eligible to invoke the assistance of the law pertaining to the termination of a co-ownership might apply for partition or sale, and the Court in its discretion might make an order or refuse to make an order in exercise of the powers conferred by section 2. When, therefore, the commencement of section 4 was drafted: "In any proceedings instituted under this Ordinance" and section 6 "In any proceedings under this Ordinance" and section 4(1) proceeds to outline how property may, subject to subsection (2), physically be divided and section 6(1) provides that property may be sold, what the Legislature intended was to make provision for a sale when partition was sought or partition when a sale was sought. In my opinion the words "In any proceedings" means exactly what they say and that is that no matter what the plaintiff seeks the Court may make such order as it in its discretion thinks best, subject to the limitation that it may not order partition when the circumstances envisaged by section 4(2) exist. 30. Mr. Ching, as I said earlier, sought support from section 6(3) for his contention that an order for sale may only be made under section 6(1) in those cases where partition would be ordered under section 4. With great respect for him and his skillful argument I do not agree. Section 6(1) was intended to cover a case where partition is sought. In such a case the Court may order a sale despite the relief sought if partition would not be beneficial to all the persons interested. Section 6(3) enables the Court to order a sale where "any person interested in the property", and I emphasise those words, applies for a sale. The subsection envisages the case where an application is made for partition, where the Court would consider whether or not partition would be beneficial, but an application for sale is made by a person interested in the property - and such a person need not necessarily be a party to the proceedings. The Court may without further ado make an order for sale unless the other parties buy him out. If they do then the case is simply a question of partition and the case is dealt with under section 6(1): the Court will grant the relief sought unless it considers that partition would not be beneficial to all parties. And that is what is meant by "without prejudice to subsection (1)". 31. As to the Cromwell case and the citations from the judgments of Huggins, J.A. and myself, I do not consider they provide Mr. Ching with the support he seeks. I propose firstly to deal with what I said as, obviously, I know what was intended and what it means however clumsy the wording may be. 32. The second ground of appeal in that case was that the respondent (the plaintiff in the court below) was ineligible to seek relief as its interest in the property was an estate in reversion and not in possession. 33. In my judgment I said (P.18)
and I then proceeded to quote subsection (1). 34. Having quoted the subsection I continued:
It is difficult to imagine an opinion more ineptly expressed. In mitigation may I say that I was there considering section 6(1) in the context of the ground of appeal and cursorily dismissing Mr. Swaine's point as I considered the subsection irrelevant in that context. What I meant to convey when I so loosely used the words "sale" and "partition" was that the first function of the Court was to consider whether the applicant for relief was a person who was entitled to apply for relief; in other words I was considering "eligibility". It will be remembered that the ground of appeal under consideration was eligibility: was a reversioner eligible for relief under the Ordinance, but I think the reference I made to the 1868 Act makes the meaning clear. (P.18).
What I was saying there was that if a person was eligible then he must have relief. When one considers the three passages it is, I think, clear that "eligibility" was what was being considered and not section 4(2). But even if the passage cited by Mr. Ching were susceptible to the meaning attributed to it by him there can be no doubt that what was said was obiter and did not affect the ratio of the decision on the second ground of appeal. 35. As to the passage cited from Huggins, J.A.: (P.5)
it must be considered in the context in which it arises. The learned judge had briefly dealt with the history of partition from the common law right of coparceners to the two Acts of Henry VIII and the applicability of that law in Hong Kong until 1969. Having done so the passage cited immediately follows. As up to 1969 partition was the only relief available and was compellable it is clear that what the learned judge meant was that after 1969 there was another relief available, and where a person was eligible to seek partition and did a sale would be ordered where a partition would not be beneficial to all the persons interested. That is how I interpret the passage but, once more, what is expressed there, as what was expressed by me is obiter. 36. When the Ordinance was enacted if introduced into Hong Kong to a very substantial extent the law that existed in England after the Partition Act, 1876 was enacted. That is obvious from a comparison of the wording of the Ordinance and the Acts. It was the intention of the Legislature that what had existed here up to 1969 should be altered along the lines of the English law but regard being had to Hong Kong's special circumstances. When it enacted sections 2, 3, 4 and 6 the intention was this: Where a person is interested in property with others as a joint tenant or a tenant in common and would have been entitled to compel partition prior to 1969, and had no other remedy, he may seek partition or sale, although the Court is not compelled to make any order. If he seeks an order for sale the Court may, by virtue of section 4, make an order for partition in the ways therein set out subject to the limitation of subsection (2). If, on the other hand, he applies for an order for partition and it appears to the Court that partition would not be beneficial to all the persons interested in the property the Court may by virtue of section 6 order a sale (Vide the quotation from Halsbury); and the Court may, as under the partition Act 1868, make the order notwithstanding the dissent or disability of any person interested. It was to enable the Court to grant a particular relief when another was sought that the words "In any proceedings" were used to introduce sections 4 and 6. 37. In this case the plaintiffs, who represent the majority of the owners and the holders of substantially the greater share of the property sought to have the premises sold. Their application was opposed on the grounds I have outlined and also that the property is occupied by strangers to the proceedings. I do not consider that ambiguous occupancy affects the position. 38. It was my opinion that a partition of the premises in question would not be beneficial to all the interested parties. 39. I have already announced my decision:
Representation: Mr. John Waite Q.C., Mr. Oswald Cheung Q.C. & Mr. Patrick Fung (David Y.Y. Fung & Co.) for the plaintiffs. Mr. Charles Ching, Q.C. & Mr. Denis Chang (Stevenson Low & Co.) for the 1st, 2nd, 3rd & 4th defendants. Mr. R. McCallough counsel for the 5th defendant. (1) H.K.L.R. (1976) 1. |
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