Beautiglory Investment Ltd v. Tang Moon Sum and Others

Read the full judgment text of HCMP 531/1989 on BabelCite. This High Court CFI judgment was delivered on 10 December 2003.

1. The plaintiff by an Originating Summons dated 9 March 1989 applied for partition or sale of land brought under the relevant provisions of the Partition Ordinance, Cap.352. The suit land is the remaining portion of Section B of Lot No.636 in Demarcation District No.124, Ping Shan, Yuen Long in the New Territories (the "Lot").

Cited by 9 cases · Cites 4 cases

Case No.HCMP 531/1989
Court
High Court CFI
Date10 Dec 2003
Judge
Case Document
100%Judiciary

HCMP000531B/1989

HCMP531/1989

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.531 OF 1989

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IN THE MATTER of Section 4 of the Partition Ordinance, Cap.352

AND

IN THE MATTER of the Remaining Portion of Section B of Lot No.636 in Demarcation District No.124, Ping Shan, Yuen Long, New Territories, Hong Kong.

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BETWEEN
BEAUTIGLORY INVESTMENT LIMITED Plaintiff
AND
TANG MOON SUM, TANG KAU, TANG CHING NIN and all members of TANG YAT TAI TONG including infants and those yet to be born 1st Defendants
TANG PING YAU, TANG WAI CHAI and TANG NAI MAN and all members of TANG WAI SAN TONG including infants and those yet to be born 2nd Defendants
TANG HONG NING, TANG KAY LAI,TANG SZE LIM and TANG WAI YUEN and all members of TANG CHI SING (or spelt as SHIN)TONG including infants and those yet to be born 3rd Defendants

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Coram: Deputy High Court Judge Muttrie in Court

Dates of Hearing: 6-10, 13-17 and 20-21 October 2003

Date of Judgment: 10 December 2003

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J U D G M E N T

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1.The plaintiff by an Originating Summons dated 9 March 1989 applied for partition or sale of land brought under the relevant provisions of the Partition Ordinance, Cap.352. The suit land is the remaining portion of Section B of Lot No.636 in Demarcation District No.124, Ping Shan, Yuen Long in the New Territories (the "Lot").

2.This matter has a long history. The plaintiff is a member of the Sun Hung Kai group of companies, a well-known property developer. It acquired its interest in the Lot by an assignment dated 5 August 1988 from Tang Ngar Yin and Tang Fuk Yin. That interest was expressed as being one equal undivided fourth part or share of and in the land. The plaintiff having applied for partition or sale, the 2nd defendant took the preliminary point that the plaintiff had no locus standi to seek partition, on the basis that its predecessors in title had never acquired title to a 1/4 undivided share. The matter came before Godfrey J, as he then was, who decided on 5 November 1993 that the predecessor had acquired such title, and that the same had been passed on to the plaintiff. However, partition was not ordered at that stage.

3.The parties attempted to reach agreement as to partition. At that stage it was contemplated that the plaintiff should have a physical share of one quarter of the Lot, in the south-east corner. However, the question of access from the public road system to that part of the Lot could not be agreed. The plaintiff issued a summons on 11 April 1996 praying for the making of an order of Godfrey J by reference to an enclosed plan which set out a proposed partition formula. The summons came before Waung J who gave directions for the trial of the disputed formula for partition, but the matter than went to sleep. Then in October 2001 the plaintiff applied for a trial date to be fixed that the Lot be sold by public auction or some other means to be ordered by the Court.

4.As will be seen, since the commencement of the proceedings the Lot has been divided into three portions by the resumption of land for the purposes of road widening and the building of the West Rail Line, so the question of how to partition it, if it is to be partitioned, is now rather more complex. The plaintiff's position now is that the Lot should be sold in its entirety and the proceeds of sale divided. The position of the 1st defendant is that the Lot should be partitioned according to one or other of their expert's proposals, or in the alternative that no order should be made. At the same time the 1st defendant raises a legal argument that the court does not have jurisdiction to order a sale. The 2nd defendant, whose expert has produced a formula for the physical partition of the three portions of the Lot contends that the Lot should not be sold and that no order should be made, but if there is to be a partition is neutral as to how it should be done. The 3rd defendant, which now does not have legal representation, appears by one of its managers and took no active part in the trial, says that there should be a partition but does not express a preference for the method.

5.It is necessary to describe the Lot, as it now is, in some detail. Some of this description comes from a view held by the Court at the beginning of the trial. The Lot is agricultural land. Formerly it was used for fish ponds; these were filled in and paved over, and the remaining portions of the Lot are now part of a large container storage yard or yards.

6.The lot lies to the south and west of Tin Shui Wai Estate. According to the plaintiff's expert it has a registered area of 414,327.8 square feet. As indicated it is now divided into three portions. One portion which I will call the "West Portion" is a piece of ground some 52,797 square feet in area, more or less in the shape of an right-angled triangle with its hypotenuse running north and south, lying to the west of Hung Tin Road and a small secondary road parallel thereto. It is part of a larger container storage yard, and is unmarked. Access could be gained directly from the secondary road though at present the boundary along that road is fenced off.

7.The rest of the Lot lies to the east of Hung Tin Road and south of Ping Ha Road. In the angle formed by the two roads lies the portion which I will call the "North Portion". It is about 271,027 square feet in area and is more or less in the shape of a right-angled triangle with its hypotenuse formed by the line of the land resumption for the West Rail line. The north-eastern tip of the triangle (which is truncated there) is adjacent to an unnamed secondary road running southwards from Ping Ha Road to an industrial area where it joins Kiu Fat Street. On the eastern side of this road, and to the south of Ping Ha Road, lies the Tin Shui Wai West Rail Station. Because the question of access from this road is important I will call it the "Unnamed Road". At the present time, vehicles can turn into it from Ping Ha Road, at which it forms a single track, but it was observed at the view that work was being done which was apparently intended to widen it. At the same time the gazetted West Rail plans appear to show that this road is intended for access from the south to the restricted roads at the West Rail Station, and that it will ultimately be blocked off from Ping Ha Road by a cycle track and footpath. The same gazetted plan appears to show that there is intended to be access from the Unnamed Road into the north-eastern tip of the North Portion.

8.The remaining part of the Lot which I will call the "South Portion" is more or less in the shape of two right-angled triangles side by side and overlapping along the hypotenuse which is formed by the West Rail resumption. The area is about 90,504 square feet. This portion is bounded on the eastern side by Lot 26 SB RP which is in two parts, to the north and the south, with a narrow strip joining them.

9.The whole of the North and South Portions lie within a large container yard. It is possible to see on the ground where at least part of the boundaries of the North Portion lie, but not those of the South Portion. Access to the yard for the container trucks is presently gained by two narrow tarmac roads running east-west. Apparently these are not public roads, but pedestrian walkways. The container operators use them as roads anyway. The trucks enter from Kiu Fat Street by the walkway at the north side of some factory buildings and exit to Kiu Wong Street by the walkway at the south side of those buildings. The northern walkway passes over the joining strip of Lot 26 SB RP and the southern one encroaches on the southern boundary of the southern portion of that lot.

10.There are two corridors under the West Rail viaduct (which is some 14 metres high) marked out for the passage of vehicles though the western one of these is blocked by a fence and some machinery; according to the gazetted plan for the West Rail this corridor is to be permanent but the other is not. There is an open area under the viaduct near the Unnamed Road, not marked physically but which, according to the West Rail gazetted plan is to be a permanent access corridor between north-eastern tip of the North Portion and the northern part of Lot 26 SB RP.

11.At the present time, under the Outline Zoning Plan ("OZP") for the Ping Shan area, the West Portion is zoned for planning purposes for Open Storage ("OS") use. The North Portion is zoned for Undetermined ("U") use, and the South Portion for Industrial ("I") use.

The Law on Partition

12.The powers of the court are provided for in the Partition Ordinance, Cap.352. The relevant sections are sections 2, 4 and 6 which provide :

"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.

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."

Jurisdiction

13.Before going further it is as well to examine the legal issues. The first of these is the question of jurisdiction. It comes about because the defendants are tongs; they are creatures of Chinese customary law. A useful description of the tong appears in the judgment of Cheung J (as he then was) in Tang Yau Yi Tong v Tang Mou Shau Tso & Ors, [1995] 2 HKC 245 at pp.254-255, of which I set out the part necessary for consideration of this case :

"

1. A tong is a Chinese term which covers a variety of associations in Chinese rural society. Of the terms used in the New Territories Ordinance, family and clan clearly indicate land held in the name of a group of individuals with a hereditary link. Tong, on the other hand, can be related to a number of bodies, some of which consist of members with no hereditary link.
2. The tong has two distinct meanings in the context of New Territories land:
a. An owner may decide that, rather than allowing succession to his land to devolve according to custom (to be divided among his sons), all or part of his land should remain intact to be enjoyed communally by his sons and their male descendants in perpetuity. Where such a disposition is made by a land owner in his lifetime, the land is held in the name of his tong
b. Alternatively, following a land owner's death, all or part of his land may be set aside by his sons or later descendants by mutual agreement, in veneration of the ancestor's name."

14.The tong is akin to the tso. Per Mills-Owens J in Tan Kai Chung v. Tang Chik Shang [1970] HKLR 276 at 279 :

"A tso may be shortly described as an ancient Chinese institution of ancestral land holding whereby land derived from a common ancestor is enjoyed by his male descendants for the time being living for their lifetime and so from generation to generation indefinitely. Thus every male descendant of the common ancestor automatically becomes entitled at birth to an interest in the land for his lifetime, on his death his interest merges so as automatically to enlarge the interest of the surviving male descendants; thus his interest at any given moment during his lifetime depends on the number of male descendants then living and on his death it forms no part of his estate."

15.The difference between the tong and the tso appears in the judgment of Bokhary JA (as he then was) in Tang Yau Yi Tong v. Tang Mou Shau Tso & Ors [1996] 2 HKC 471 CA :

"As for a tso, it is worth noting the following passage in 'The Pattern of Life in the New Territories in 1898' by JW Hayes in the Journal of the Hong Kong Branch of the Royal Asiatic Society 2 (1962) 75 at 80:

The Tso is the more closely connected with the clan. Anyone can form a tong but a tso is definitely a clan affair, and of the nature of a serious ancestral trust."

16.For the purposes of this case it is not in dispute that the case law which applies to the tso applies equally to the defendant tongs. The Lot may be regarded as tso land.

17.The argument of Mr Lai for the 1st defendant, if I can summarise it without injustice, I understand to be as follows. For historical reasons which were examined at length Chinese law still applies to land in the New Territories under the New Territories Ordinance, Cap.97. In particular section 13 thereof provides that the court "shall have power to recognise and enforce any custom or customary right affecting such land". Though section 13 of the New Territories Ordinance appears from its wording to be permissive, the courts have held it to be mandatory; see in particular Tang Kai Chung v. Tang Chik Shang [1970] HKLR 276 and Kan Fat Tat v. Kan Yin Tat [1987] HKLR 516. The effect of these legislative provisions and their interpretation in the cases is that tso and tong land are governed by Chinese customary law. Such land is intended to remain inalienable, indivisible and in perpetuity in the ownership of the male heirs of the common ancestor. Article 40 of the Basic Law requires traditional rights of New Territories indigenous inhabitants to be protected, and Article 160 provides that any law discovered to be in contravention of the Basic Law shall be amended or cease to have effect. The result is that the provisions of the Partition Ordinance relating to sale (though apparently not to partition), being in contravention of the Basic Law have ceased to have effect.

18.I do not understand why, if the Partition Ordinance is to be regarded as struck down by the Basic Law in its application to tso and tong land, that should only affect the power to order sale and not the power to order partition. If the land is to be indivisible it surely cannot be partitioned. I do not see the logic of striking down one power, and not the other. In any event, since Article 40 did not create any additional rights over and above those already recognised by statute and the courts so I do not see that it could have the effect contended for.

19.This question came before Chung J in Brisilver Investment Ltd v. Wong Fat Tso & Anor [2000] 2 HKLRD G12. This was an action brought under the Partition Ordinance. The plaintiff was the two-thirds co-owner of the suit property and the 1st defendant its one-third co-owner. The defendants applied for the determination of the following issue :

"Whether the Court has jurisdiction to make an order for sale of the subject properties which are partly owned by a Tso under the Partition Ordinance (Cap.352), having regard to the provisions of the New Territories Ordinance (Cap.97) and Article 40 of the Basic Law."

20.It was argued that section 13(1) of the New Territories Ordinance was a mandatory provision, and that, as a matter of Chinese customary law, tso land was intended to be perpetual, inalienable and indivisible. Hence, a tso member could not ask for tso land to be sold or partitioned, and it could land can only be disposed of by the unanimous consent of all tso members. Therefore, in the absence of unanimous consent, any sale of tso land (even if ordered under the Partition Ordinance) would be contrary to Chinese law and custom. The Court should not make a sale order because to do so would be inconsistent with Chinese law and custom.

21.Chung J after consideration of the authorities, particularly Tang Kai Chung and Kan Fat Tat ruled that the court had jurisdiction to make an order for sale. He accepted that the various authorities were concerned only with applications for the disposal of tso land by tso member(s). The evidence adduced in them was only that Chinese law and custom prohibited a disposal of tso land by tso member(s) in the absence of a unanimous consent of all tso members. There was no evidence in those cases, or before him, that this prohibition extended to the world at large. Accordingly he held that the prohibition did not extend to outsiders unrelated to the tso. He also held that Article 40 of the Basic Law did not affect the position.

22.Mr Lai argues that this case was wrongly decided. The real question was not whether the restriction extended to third parties but whether any person, be he a member of the tso or not, should be allowed to jeopardise the tso by an act of sale; bearing in mind in particular the expert evidence accepted by the court in Tang Kai Chung as to the nature of the tso and its importance in the life and culture of the New Territories. Further tso property protection under Chinese customary law is "in rem" rather than "in personam" because by definition the members are a fluctuating class of persons and to bring in privity of contract, as the judge implicitly did, was to misunderstand the true nature of the issue.

23.With respect, it seems to me that Chung J was right. The tso (or the tong) is a creature of Chinese customary law and it is no doubt right that questions between its members are to be regulated by that law. Once, however, some person other than a member obtains an interest it is difficult to see how a question between that person and the tso or tong must be regulated by Chinese customary law. There is no evidence before me, and so far as I can see there was none in the authorities, to suggest that land owned by a tso was in some way different from other land, or subject to inalienable rights which ran with it. The object of the tso as I understand it was to hold land in trust in perpetuity primarily for the purpose of providing for worship of the common ancestor or founder; and land was held, because in the days when these organisations were developed, land was the primary means of holding capital. However in Kan Fat Tat (at page 527) the court accepted expert evidence that as a matter of Chinese customary law, tso property may consist of moveable assets as well as land or even consist solely of moveable assets. So there can be no special character which attaches to land simply because it is owned by a tso or tong, any more than there would be to money in the a bank account opened by its manager in the tong's name.

24.Further, it is not suggested that the land was sold to the plaintiff's predecessor subject to some right retained by the seller or sellers to veto his sale of it. The defendants seem to be quite happy that the plaintiff should sell its 1/4 share on to someone else. It seems to me that once the interest was sold it was out of the control of the tong members and no question of any need for their unanimous consent to its further disposal would arise.

25.In any event, as Mr Mok for the plaintiffs points out, the whole question of the effect of Chinese customary law in this case has been settled by Godfrey J who decided that a tong could take an interest in property as a co-owner with another tong or another individual. He held that the plaintiff had an interest as tenant in common and therefore the locus standi to apply for partition or sale under the Ordinance. His decision was not appealed. I do not see that there is anything which he left undecided, or which I can now revisit.

26.For these reasons I have no doubt that I have jurisdiction to make the full range of orders provided for in the Partition Ordinance, including the order for sale.

Partition Ordinance Criteria

27.The second issue of law relates to the criteria to be applied in deciding whether to order partition or sale or to make no order.

28.The plaintiff, having originally applied under section 4, now seeks a sale under section 6. The 1st and 3rd defendants seek a partition or in the alternative no order. The 2nd defendant seeks no order, or in the alternative partition.

29.There has been some discussion of the difference, if any, between the criteria to be applied in a decision to sell under section 6(1) where partition is applied for and an application for sale under section 6(3). In particular it is argued for the plaintiff that in the latter case, in the absence of a valid offer to buy out the plaintiff under section 6(3), the court "may without further ado make an order for sale"; per Trainor J in Pun Jong Sau v. Poon Wing Kong & Ors. Mr Mok for the plaintiff also argues that the option of making no order should be ruled out from the beginning. Per Briggs CJ in Fook Sun Enterprises v. Cromwell Investment Co. Ltd & Ors [1973-1976] HKC 335 :

"I think that a court would only make no order, neither an order for partition nor an order of sale, when the interests of all the parties would be better served by their continuing to remain co-owners, or where the facts show that to make such an order would result in very great hardship to one co-owner."

30.Trainor J in Pun Jong Sau examined at length the historical genesis of the law on partition. It is not necessary to repeat his analysis here. Suffice it to say that before the Ordinance came into force in 1969, the English law applied, as it stood before the passing of the Partition Act 1868. A co-owner could compel partition but there was no power to order sale. This could produce the ridiculous situation of the court having, in effect, to divide the indivisible, to the benefit of no one, as, e.g. in Turner v. Morgan (1803) 8 Ves.143. Section 6(1) was taken from section 3 of the Partition Act which gave the court the power to order sale where that "would be more beneficial for the parties interested". Section 4 of the Act, which required the court to make an order for sale if that was applied for by the owner or owners of more than half of the property, "unless the court sees good reason to the contrary", was not repeated in the Ordinance. Section 6(3) of the Ordinance was taken from section 5 of the Act which provided for the court in an application for sale instead of division of property to make that order "if it thinks fit" unless the other parties interested undertook to buy out the applicant or applicants.

31.It is helpful to reproduce Trainor J's view of the overall intention of the legislature in passing the Ordinance, at pages 668-669 :

"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? .....

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."

And at page 670 :

"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 powers. 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' mean 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."

32.With the above I respectfully agree. It seems to me that once there is an application for sale or partition, or both, then the court has the fullest powers to exercise its discretion. If partition would not be beneficial to all the power of sale comes in; but only if the court thinks it fit. Where sale is chosen, incidentally, the mode of sale must be that most beneficial to all parties at the time of sale; Forda Investors Ltd v. U.O.B. Finance (H.K.) Ltd, [1979] HKLR 382. In the situation where neither partition nor sale is beneficial to all the persons interested, that is, where someone will lose whatever is done, the option to make no order remains.

33.Mr Lai engaged in a lengthy consideration of what "benefit" means, following the utilitarian principles of the philosopher Jeremy Bentham. His argument is that benefit is not simply to be regarded in the pecuniary sense, particularly in the context of ancestral tong or tso land. It is said that all the defendants want is preservation of their heritage, tradition and tso land. Partition of an alien share not owned by the tong will "seal a tidy knot on their closed community". Further, if sale were ordered, the tongs would have a problem in dealing with the proceeds because non-land investment is alien to tradition and the managers do not know how to do it, and further there is no evidence of suitable land available for re-purchase. This would create pressure for distribution which would threaten clan harmony. It is also argued that given the special nature of tso or tong land, even if the court finds, as I have, that it has jurisdiction to order sale of the land, discretion should be exercised in favour or partition, thereby keeping the land in the hands of the tongs.

34.The defendants also argue that that the court has a duty to respect property rights, even where the land is not tso or tong land, except in the last resort.

35.The plaintiff says that "benefit" means pecuniary benefit and relies on the dictum of Sir George Jessel M.R. in Drinkwater v. Ratcliffe [1875] 20 LR Eq.528 at 533 :

"It means a pecuniary sense. I cannot go into questions of sentiments, I must look merely to the monetary results."

36.Reliance is also placed on the terms of section 6(2) which permit the court to order sale notwithstanding the dissent of any person interested.

37.Mr Lam however suggests that Drinkwater is of doubtful relevance in Hong Kong, simply because there is no tong (or tso) land in England.

38.What then is the meaning of "not beneficial to all the persons interested"? Prima facie partition should be beneficial to all because it will benefit the unwilling co-owner who wants the co-ownership to come to an end but it will not interfere with the property rights of the other co-owners. Sale will benefit the unwilling co-owner but will interfere with the property rights of the others. So partition should be regarded as the first option.

39."Not beneficial to all the persons interested" may be interpreted as meaning "If there is partition, everybody loses." I think that is putting it too high. It would be too restrictive of the wide powers of the court to do what in its discretion it thinks best. To my mind the proper interpretation is "If there is partition, somebody loses". This puts the threshold low. Sale comes into play but the court must consider whether it thinks fit to order sale. The best option for all must still be sought. In an ideal world that would mean "everybody wins" but this is not an ideal world. I think the best the court can do is aim for a result which by which the detriment to all is avoided or if it cannot be avoided is kept to the minimum.

40.As to what detriment means, it seems to me that the only basis on which the court can decide the question of benefit or detriment is pecuniary or otherwise practical. The two can overlap. In any event, there has to be some objective detriment. I do not say that no regard may be had to the wishes of the parties, but they cannot be the primary concern of the court. If they were, the decision would be simpler; three out of four owners do not want sale, and of those three, two want partition and the other, though preferring the status quo, will accept partition; so the only question left would be how the partition should operate.

41.As I have indicated, I do not see that tong or tso land is some way different from other land. The land is merely an asset held by the traditional groups to produce income for their traditional purposes. Now while the failure of a tong would obviously go further than sentiment and would be an objective detriment, as will be seen below, there seems to be no question that any of the tongs concerned here will fail if it loses its interest in the suit land. The 1st and 2nd defendants own plenty of other land and while there is no evidence on this from the 3rd defendant it seems reasonable to assume that it does also. If it did not, its representative could have told me so. So the general wish of the tongs to retain their traditional land really amounts to no more than sentiment. I do not say that there could never be considerations which, while not being strictly pecuniary or practical, went further than the mere sentiment of the owners and so could be taken into consideration on partition, as to "the nature of the land", such as that the land was the site of a famous battle or other historical event; but there is no suggestion that anything of the sort applies here. The Lot used to be fishponds, and now it is paved over as part of a container yard. It is nothing special. In any event that sort of consideration would rather be a matter of public interest and, while the Ordinance provides for that to be protected by the service of the papers on the Director of Lands, the Attorney General or, now, the Secretary for Justice has not taken any part in these proceedings.

42.In sum, I consider that where, as here, one party seeks a sale and others, wishing to retain their interest, seek partition, the court should first consider whether one or more of them will suffer objective detriment by partition. Now obviously where partition is physically not feasible or practical, for example where what is concerned is a small flat, partition will be detrimental to all. Where partition is physically feasible but not practical, for example where partition will result in a large number of interested persons each getting a portion which is too small to be of practical or economic use, again partition may be said to be detrimental to all. An example is to be found in Golden Bay Investment Ltd v. Cheung Kam Moon [1992] 2 HKC 478 where Deputy Judge Gladys Li QC found that partition of vacant lots, on which the buildings had been the subject of closure and demolition orders would not be beneficial to all the persons interested because of the number of them and "the small area of the properties which makes partition either impracticable or which would render each divided portion so small that no sensible use or enjoyment could be had of it".

43.If there is such objective detriment sale is an option, if the court thinks it fit. The dictum of Briggs CJ in Fook Sun Enterprises seems to suggest that the "no order" option is only to be applied where partition or sale would cause hardship. I do not think that is necessarily so. It allows for "no order" in the situation where the interests of all the parties would be better served by their continuing to remain co-owners. Trainor J envisaged "no order" where partition was ruled out and sale would not be beneficial to all the parties and overall took the view that the court had the widest powers to meet all possible situations. So it seems to me that the same criterion is to be applied; will one or more parties suffer objective detriment (in addition to losing property rights) by reason of sale? If so then "no order" remains an option so long as the unwilling co-owner suffers no objective detriment or as little as possible in addition to being locked into a property right that he does not want to keep. I do not see that there is any question of ruling out the "no order" option at the very beginning.

44.The defendants raise a number of arguments which go to the court's discretion. They argue that the plaintiff's conduct in the past dealings between the parties should be held against it, for it is seeking an equitable remedy and does not come with clean hands. It is said that the plaintiff found out at an early stage that the only legal vehicular access to the Lot lay at the northern end of the Unnamed Road, and did not apprise the other parties of this, but attempted to negotiate a partition which would give it all the means of access, both at that point and over the pedestrian walkways. The defendants also complain of the plaintiff's delay in bringing this matter forward since 1996. Much time was spent on cross-examination of the plaintiff's non-expert witness on this and I was taken to all the correspondence between the parties.

45.Various other arguments on the exercise of discretion were advanced. In particular I was referred to Golden Bay Investment Ltd v. Cheung Kam Moon, above, in which the judge declined to order the sale of two of the properties in which the defendants had bought premises as dwellings before the demolition order, taking into consideration their individual interests as against that of the developers who had bought in after the closure orders. It is argued that here, as in that case the plaintiff, having bought for development, cannot be regarded as an "unwilling co-owner". In fact this case was relied on by Mr Lai for the 1st defendant, who seeks partition rather than that no order be made.

46.There is no doubt that a developer can buy a share in property and obtain partition or sale. The fact that he has bought for development is not of itself, I think, a serious factor which would lead the court to decline to make an order. In any event when Golden Bay went to appeal an order for sale was made, the court taking the view that the owners wanted to be bought out by the developers at an inflated price and in the words of Bokhary JA in 1994 2 HKC 197 at 199 :

"I do not think that the Partition Ordinance was designed to further ambitions of that kind, understandable as they may be."

47.By the same token, incidentally, I do not think that the Partition Ordinance was designed to further the ambitions of developers who want to buy cheap any more than it was designed to further the ambitions of owners who want to sell dear.

48.It seems to me that a party's past conduct should not be a factor in where objective detriment lies. The point is who is going to lose, in objective terms and to bring in questions of unconscionable conduct, delay and the like seems to be going too far into the subjective, unless perhaps it has had some objective consequences. For these reasons I do not propose to examine the evidence to see whether the plaintiff can be regards as guilty of the conduct of which the defendants complain.

The Evidence

49.Turning to the facts of the case the following is not in dispute or is incontrovertible on the documentary evidence. The plaintiff in 1988 paid $9,304,507.00 for its 1/4 share in the Lot. It paid out about $6 million by way of compensation to existing tenants and for filling in the fish ponds and laying the surface. Under leases running since about 1999, it currently receives $1.74 million net per annum in rent for its share of the Lot. What it received before that is not known. By contrast the defendants receive about $180,000.00; this discrepancy is apparently explained by the fact that the plaintiff had to put in money, whereas the defendants did not, and the defendants have never complained about it.

50.Since 1988 the Lot has undergone a series of resumptions the purposes of road widening and the building of the West Rail Line. The total area was reduced from 15.08 acres to 414,372 square feet. The plaintiff has received about $5 million in compensation for the resumptions. Incidentally, had the Lot been partitioned according to the plan attached to the summons dated 11 April 1996, as may be seen from the various plans the plaintiff's portion would have been almost entirely lost to the West Rail resumption.

51.Most of the evidence came from the parties' experts. It was lengthy and wide-ranging, and will not attempt to set it out in detail. Mr Alain Lau Yuk Ming, the plaintiff's expert, says that the Lot should be sold rather than partitioned, but he has not given an estimate of what price might be obtained. He takes the view that it would be difficult to estimate the price properly and the only real way to find out the value of the Lot is to auction it. The view expressed in his first report was that uncertainties and unknown factors, particularly in respect of planning for the area made it impracticable to partition the Lot into parcels of equal value and that further dismantling of it would be detrimental to the existing and future use of the sites divided and more so to their intrinsic value as a whole or individually. His supplementary report went into more detail and took issue with the opinions given by the other two experts.

52.Much of Mr Lau's evidence concerned planning and what the planning authority is likely to do, although he does not profess to be a planning expert. He says that the planning authorities always favour comprehensive development in the New Territories. What is favoured is a small self-contained community with a post office, transport interchange, commercial complex and the like. If the whole site could be acquired the owner could go to the Planning Board and seek to ask for it to be re-zoned to a comprehensive development area. In effect, if the Lot were developed piecemeal it would be harder to get the necessary permission. Also, if the Lot were not sold, the planning authorities might re-zone it for some other low-density use, or even for green belt area; so that no one would be able to make a profit. He also said that if the Lot was sold off as a single site, it should bring a higher price because the market would pay higher to reflect the readiness of the site for development.

53.Mr Lau relied heavily on the OZP and explanatory documentation thereto, in support of his predictions. He sees the whole area as being ripe for development because of the road infrastructure and the West Rail. Further it appears from those documents that the intention of Government in the long term is to move the container storage facilities away from the area. Closer examination of the OZP documents does however tend to show that the optimistic predictions he makes are by no means certain to come about. For instance, although what he and indeed the plaintiff's factual witness envisage is a high-density residential development on the Lot, the Explanatory Statement of the OZP (Exhibit P4, see also Exhibit D2-3) shows that as far as the Planning Board is concerned the centre of population for the Ping Shan area where the Lot is situated is expected to be in Hung Shui Kiu and along the Castle Peak Road corridor, in other words, as may be seen from the Plan, about a kilometre to the south of the Lot. So far as the "U" zones are concerned the Board says this :

"Within the 'U' zone, any developments or redevelopments are required to prepare MLPs (master layout plans) for approval of the Board to ensure that the future planning of the area would not be jeopardised, the environment would not be adversely affected and the infrastructure, GIC (government, institution or community) facilities and open spaces are adequately provided...The type of development should be compatible with the surrounding area and the development intensity should take into account the rural characteristics of the area...."

54.Mr Lau's position is in effect that if one goes to the planning authorities with a big enough area for development, they are likely to go along with what the developer wants. But notwithstanding these rather optimistic predictions the planning documents themselves show that there is no certainty. It is difficult indeed to imagine how another massive set of tower blocks so close the existing development at Tin Shui Wai could be seen as taking into account the rural characteristics of the area.

55.One rather important matter which appeared from Mr Lau's oral evidence is that the Hong Kong Planning Standard and Guidelines recommends noise buffer zones along railway lines, to reduce noise levels in nearby buildings. That for the West Rail is apparently 85 metres and that for the Tuen Mun Light Rail is 25 metres. Mr Lau says that the buffer zone on the Lot would be somewhere between the two, given that trains will go more slowly when approaching and leaving the Tin Shui Wai Station.

56.Mr Daniel Mak Yiu Man, the expert instructed jointly by the 1st and 3rd defendants (when the latter were represented by solicitors) carried out a valuation exercise in respect of the each of the three Portions by the usual means of considering comparable transactions in respect of lots of land with the same zoning for planning purposes and then using the values he obtained to arrive at two proposals for partition by value. He valued the West Portion at $118, the North Portion at $120 and the South Portion at $159 per square foot. He valued the Lot at 11 March 2002 at about $55,850,000.00 in total. The value of the South Portion he put at $14,390,136.00. This is not far off the value of the plaintiff's 1/4 share of $55,850,000.00, i.e. $13,962,500. Partition could be achieved by giving the plaintiff 83,553 square feet in the South Portion and reserving the rest to the defendants to serve as vehicular access into the North Portion. Because the plan at Appendix X of his report shows the plaintiff's proposed area coloured yellow it has been referred to in argument as the Yellow Model. If on further valuation the figures turn out to be inaccurate, adjustment could be made if necessary by giving the plaintiff a small area of the North Portion. Alternatively the plaintiff could be given an area of 105,756 square feet on the eastern side of the North Portion plus 1,350 square feet in the South Portion to serve as vehicular access. Because on the plan at Appendix XI of his report the plaintiff's area was coloured blue it has been called the Blue Model. As to sale the view expressed in his report was that the planning uncertainties would cause a low price.

57.Mr Mak was asked about the noise problem from the West Rail. His view was that the builder would have to find means to mitigate the noise to below 70 dB. Noise barriers could be used; he referred to places where it can be seen that there is no buffer area between the rail alignment and residential buildings, for example near the Pok Oi Hospital and in some areas near the central part of Yuen Long. He said that there is no restriction on how a building may be built next to a railway; there could be windows or even a blank wall on the railway side. That would solve the noise problem to some extent.

58.Mr Rock Tsang Kwok Ming, the expert instructed by the 2nd defendant likewise did not put a value on the Lot but he took the view that each portion could be divided so as to give the plaintiff a quarter of the area. Rights of way could be provided for by the court making a general order that each party give each other the right of way over its property. According to him, sale in the present market conditions is undesirable. It would be difficult to find a buyer who would want three different portions of land all with different zoning. Further the uncertainty arising from the "U" zoning of the North Portion would make it difficult to achieve a reasonable price.

59.The experts compiled their reports on the basis of the access provisions which appeared to be in place, but as I have indicated, in the course of the trial it became apparent that there would probably be provision for access through the north-eastern corner of the North Portion and their views and in particular Mr Mak's rather complicated proposals have to be read in the light of that.

60.Mr Lau wrote in his first report, and Mr Mak agreed with him at any partition must be fair, simple, practicable, capable of being implemented, not detrimental to future development and inexpensive. Mr Tsang did not specifically address these criteria but I do not think he disagreed with them. Certainly to my mind they seem to be the criteria which the court should apply in seeking to minimise detriment to all the co-owners.

61.I found both Mr Lau to be fair, straightforward and believable as an expert witness. Mr Mak was also quite a believable expert except that in dealing with the question of the effect of the plaintiff's owning a share in the Lot on any auction of it, he attempted to give evidence of an instance where another developer had rigged an auction by putting someone in to bid against it and so drive up the price. Of course this may have happened but Mr Mak had no real basis for his allegations and it is not the business of an expert witness to give irrelevant evidence of rumour. I felt that Mr Tsang was less reliable. He appeared somewhat partisan; his report went into matters concerning tongs, which are not part of a surveyor's expertise. In cross-examination he insisted that the Explanatory Statement of the OZP was not "legal"; I suppose he meant "not binding" but this sort of stubborn insistence on the irrelevant does not inspire confidence. Further though Waung J had ordered the surveyors' reports to set out proposals, comments and models of the land should be partitioned together with proposals for any right of way, Mr Tsang did not provide any definite model for partitioning, and the proposed general provision for right of way (which was only made in the course of oral evidence) is obviously totally inadequate and would create more problems than it solved.

62.Ultimately both Mr Lau and Mr Mak agreed that an owner of the North Portion could apply for comprehensive development of it and that it would probably fetch a higher price because of the development potential. Mr Mak further agreed that there was a chance of a successful application for comprehensive development of the North and South Portions together, and that the owner of the whole of the North Portion would have a better chance of a successful application for it to be converted into a comprehensive development area than would an owner of a divided parcel of that portion.

63.Mr Lau comprehensively criticised the basis and method of Mr Mak's proposals for partition based on separate valuations of the three Portions. Mr Mak was cross-examined at length on this and it became apparent that it was very difficult to obtain any degree of certainty by this method. In effect a small variation of the unit rate of any one of the Portions would produce a large variation in the value to be assigned to the plaintiff. In any event the process of valuation by comparables is pretty uncertain and Mr Mak agreed, as I think did all the witnesses, that in any valuation a difference of 10% to 20% between different surveyors would not be unusual. I think this criticism has to be accepted. There is therefore some question of how fair or practical a partition Mr Mak's would be as it stands. Having said that, I do not think it follows that this method could not be used, with due care taken over it, to produce a fair partition.

64.Factual evidence for the plaintiff came from the deputy manager of its project planning department, Ms Yiu Wai Ha, Connie. Ms Yiu relied on an affirmation she had made in October 2001 which dealt with the history of the Lot and the litigation, and the access arrangements. Some of her evidence is already dealt with above under the heading of matters which are not in dispute. Cross-examination revealed the present arrangements for rent in respect of the Lot and various other points.

65.It is clear from Ms Yiu that the plaintiff, being a subsidiary of the Sun Hung Kai Group bought its share in the Lot for purposes of development. It has acquired similar interests in other land in the New Territories as well. Up to 1996 the plaintiff wanted partition; it wanted the south-eastern part of the Lot, with a right of way to it over a strip of land running west from the Unnamed Road along the northern boundary and then south along the eastern boundary of the northern part of lot SB 26 RP; this is what appears in the plan attached to the summons dated 11 April 1996 and which has been referred to in argument as the "teapot handle". But once the West Rail was gazetted in 1996 the position changed and Mr Lau brought it to her attention that it would not be possible to partition the land. She could not decide what to do, for about two years; she hoped that she could find a way to please everyone, the plaintiff's philosophy was not to annoy the tongs, and all along the plaintiff wanted partition. But ultimately the matter was referred to her senior management and ultimately the decision was made to apply for a sale.

66.What the plaintiff now wants to do is to have the Lot put up for auction. It, or an associate company, will bid at the auction. If successful the plaintiff should be able to get planning permission to develop the Lot. Ms Yiu visualises some sort of large building with a podium going over the rail line and tower blocks on top and says that the plaintiff would hope to be able to achieve a plot ratio of 5.

67.Ms Yiu says that land used for open storage may be valued at $100 to $150 per square foot. But more would be paid for development potential. She puts a rough value of $60-$70 million on the Lot. She says that there would be a market for it; she would expect the other major developers and some minor ones to bid against the plaintiff, so the plaintiff would not necessarily succeed. She did not accept that because of the plaintiff's interest, the other developers would keep out, or that there was any kind of informal agreement between developers to do this so as to keep land prices down. The plaintiff was not trying to buy cheap at the expense of the defendants. According to Ms Yiu, the price of agricultural land in the New Territories was not much depressed at present even though urban land and building prices were low. She said that the current prices were only down by about 10%.

68.It was put to Ms Yiu by Mr Lam for the 2nd defendant and she agreed that if the plaintiff had a quarter share of the North Portion, i.e. about 67,000 square feet, it could develop that; it had developed smaller lots though mostly in urban areas, and 67,000 square feet would not be a large in the New Territories. She went on to say that if the Lot were divided into four, the plaintiff would not get planning approval for high density development. It would be all right for building one or two houses, but it would not be possible to get a plot ratio of 5.

69.She then accepted the proposition that physical development after partition would be possible, but no good for the plaintiff, because the plaintiff wanted a high density development; and for that the land would have to be sold.

70.It is, I think, pretty clear from Ms Yiu's evidence that the plaintiff's object is to have the Lot sold, so that it or its associates can bid for it, with a view to putting up a high-density development there. That the plaintiff will succeed in buying is not certain and nor is planning permission but that is what the plaintiff intends.

71.Factual evidence for the defendants came from Mr Tang Moon Sum who is currently one of the managers of the 1st defendant. He adopted his affirmation as evidence-in-chief. From that, it appears that the 1st defendant receives $80,000.00 p.a. in rent for its share of the Lot. The rent is the primary source of funds for expenses such as bi-annual ancestor worship, giving out of roasted pork portions to male heirs of the tso and maintenance of the 1st defendant's ancestral and study hall. Mr Tang says that the managers have no intention of selling or power to sell the tong's land for cash, and no knowledge or ability to invest if the land is converted into cash by a forced sale. Mr Tang blames the 1st defendant for delay in bringing the matter to court, and for the its change from seeking partition to seeking sale. He says that a forced sale is "almost assurance that the plaintiff or other companies of the Sun Hung Kai Group will end up buying the Lot at depressed prices".

72.From cross-examination and a Land Registry document (Exhibit P6) put to the witness it appears that the 1st defendant has extensive land holdings in the New Territories; and indeed, those shown are only the lands which the 1st defendant owns outright; those in which it has a share, including the Lot, do not appear.

73.I asked Mr Tang what would happen if the land were sold and his tong got 25% of the proceeds. He said that the money would simply belong to the tong members and be deposited in the bank; and if anything happened, it would be withdrawn.

74.Factual evidence for the 2nd defendant came from one of its managers, Mr Tang Nai Man. He adopted three affirmations mainly dealing with the history of this matter. In cross-examination, he too was shown a Land Registry document which showed the 2nd defendant to have extensive land holdings; and indeed he estimated that in addition to two blocks in Yuen Long, his tong held 20 million square feet of land in all. I also asked this witness what would be done with the proceeds if the Lot were sold. His answer was that there would have to be a tong meeting to decide on it. In principle, although the money was to be used for worship, it would be possible to divide the proceeds; it would be divided among different families and male heirs according to different percentages.

The Options

75.It is necessary to consider the various options in turn, with reference to how they will operate to the benefit and in particular the detriment of the parties. Overall I am satisfied from the expert evidence, particularly that of Mr Lau, that if the Lot were to be sold as a unit, there would be a market and the other developers would compete. There is no evidence that the fact that the plaintiff already owns a share would lead the other developers to stay out of the bidding. The experts seem to agree that the development potential of the Lot as a whole would drive up the price. The plaintiff's ownership of its share and the fact that it has by now probably recouped much of the cost of that must mean that it is in a position to bid high. So although the market is undoubtedly depressed to some degree, a reasonable price should be obtained.

76.If the plaintiff were to buy out the other parties at auction, it would probably be in a good position to carry out a high-density development of the Lot but at the same time, as indicated, there are a lot of uncertainties involved. If it obtained part of the North Portion by partition, again there would be some chance of high density development. Ultimately what the plaintiff is seeking, by way of an order for sale, is its best chance of profitable development. Loss of chance is pecuniary detriment; but this is all relative. It will still be able to develop and make money even if not as much, if there is partition. It is difficult, in view of the uncertainties pointed out, to say how much better off the plaintiff will be if it gets to develop the whole Lot, after buying out the defendants on sale, than it will be if it gets to develop a portion of it. There will be loss of chance, but how much that loss will be is not clear. Also, as will be seen below, even if no order is made the plaintiff is still getting a good return on its investment in the Lot.

77.I turn first to consider the proposal for partition of all Portions put forward by Mr Tsang. This is the only proposal which would require physical partition of the West Portion. Mr Lau seems largely to disregard it; just how it fits into his idea of a comprehensive development area, with ultimately a small self-contained community is not clear. Mr Mak's models leave it entirely in the ownership of the defendants. There would, I think, be no practical difficulty with Mr Tsang's proposal for the West Portion, so long as it and the surrounding areas are zoned "O" for open storage. Realistically the West Portion would simply go on being used for container storage and only the rent would change. Everyone would be in much the same position as before. But the actual area which the plaintiff would have would be relatively small and if the use were changed the plaintiff would be left with an area which is probably too small for sensible development, as well as being split off from the rest of its portions.

78.So far as the North and South Portions are concerned, the main problem lies with the access arrangements. It is of no assistance to argue that the court should not be concerned with rights of vehicular access to agricultural land, which normally has no such rights. In fact the land is not used for agricultural purposes, and probably never again will be. I think access in the sense of legal right of access must be taken into account. It may be that the defendants are not concerned with it and do not need to be, so long as the land is used for container storage but from the OZP it seems unlikely that this use will continue for a very long period and once the use changes the rights of access will take on more importance. As indicated I do not think much of Mr Tsang's proposal for a general provision for mutual rights of access.

79.As we know, there is no right of vehicular access to the South Portion. If it were partitioned the plaintiff would only have some 22,500 square feet, and I accept that this is a small area for the New Territories with not much development potential. The plaintiff would not have much chance of development of it.

80.We have established that the North Portion will probably have a right of access from the Unnamed Road, in reliance on the gazetted plan for the West Rail. Carving out a lot of about 67,000 square feet for the plaintiffs should be easy and Ms Yiu accepted that the plaintiff could develop such an area. But there would have to be road access. Ms Yiu envisaged a road running along beside the West Rail reservation. This would take up at least some of the noise buffer zone mentioned by Mr Lau but it would have to be taken into account as a common right of way in arriving at the final figure.

81.Overall, there seems to be little detriment to the defendants in this proposal. There would however obviously be detriment to the plaintiff in that it would not have such a good chance of profitable development, mainly because it would have three areas, of which only one could probably be developed at any kind of intensity; the other areas being zoned respectively "O" and "I" might well have to be sold off. There is also a large element of impracticality in this model given the problems which would arise from the necessity to provide rights of access. I think this model may be regarded as not being of benefit to all the persons interested in the sense of being to some degree detrimental to one of them, as well as because it is impractical.

82.The next option is Mr Mak's Yellow Model. This would give the plaintiff the South Portion plus some of the North Portion. In the first place, the South Portion is irregularly shaped. In the second it is zoned "I" - which means it should be worth more, but perhaps have less development potential - and in the third it has no legal access. Again I think that there would be detriment to the plaintiff in adopting this model, because its chance of profitable development would be reduced. There would be little or no detriment to the defendants; they would get the whole of the North Portion with access from the Unnamed Road, so even if and when that Portion ceases to be used for container storage they will have flexibility in what they do with it. I also accept that Mr Mak's method of arriving at partition is uncertain. It would obviously follow that if the plaintiff were given the South Portion, even after a more up-to-date valuation there would have to be adjustments to that part of the North Portion which it would also be given. So this would add an element of impracticability to the Yellow Model. This model is therefore not to the benefit of all parties both because it is detrimental to the plaintiff in that it diminishes the chance of profitable development and because it is impractical.

83.In Mr Mak's Blue Model the element of impracticability is greatly reduced because the western boundary of the blue area on his plan could easily be shifted on an up-to-date valuation according to his method, to produce an equitable division of the North Portion. The plaintiff would get a fairly large area of about 106,000 square feet in the North Portion, with access. It could develop that area. There may be a problem with the noise buffer zone; even if it were set at as little as 30 metres it would render a large proportion of the area unusable for building. On the other hand this problem might be overcome by the use of noise barriers of building techniques, as Mr Mak says. There is nothing in Mr Lau's evidence to rule this out.

84.The Blue Model leaves the defendants without any legal right of access to the remaining western part of the North Portion. They would have to come in under the West Rail viaduct from the South Portion, having illegally used the footways for pedestrian access. So there is with this model still an element of detriment to all the parties, but it is quite obviously the best of the partition options put forward.

85.If the plaintiff were given the same 105,756 square feet (or whatever the calculation provided, if there were a more up-to-date valuation) in the north-western corner of the North Portion that would meet the objection arising from the noise buffer zone because any building could be set back from the viaduct towards the north-western corner. A right of way (subject to adjustment of the various areas to provide for it) could be provided for next to the rail alignment; something like the road on the plan drawn by Ms Yiu at Exhibit P5 to demonstrate how impracticable would be the division of the North Portion into four parts. That possibility was not put forward in the reports. The experts did not consider it. This might provide an option for partition which would reduce even further the detriment to all.

86.I turn to the sale option. This is beneficial to the plaintiff. It will have its chance of profitable development, and it is probably a better chance than it will have on partition. However there will be detriment to the defendants. In the first place they will be forced to take cash. They are not set up to handle cash; they are set up to handle land. According to the 1st defendant's manager, the cash will just sit in the bank. According to the 2nd defendant's manager there may be some form of apportionment but it sounds very complicated and will involve a lot of male heirs and families. In any event, the defendants will be left with the practical problem of what to do with the cash. No doubt there will be experts who will advise them on investment, at a price; and while a large cash sum instead of a rather paltry figure for rent may be seen as a benefit, I accept that particularly for the defendants, it would bring its own practical problems with it. If the defendants, being set up to hold land, used their proceeds of sale to buy other lands, they would have two problems; the first is in finding the land, no doubt in competition with developers, and the second is in paying the agents' commission, stamp duty and legal fees which will reduce their benefit. As I have indicated, there is no evidence to suggest that the tongs will fail if they are bought out, but obviously they will, in addition to losing their property rights, suffer objective detriment.

87.It is not clear from the evidence that the plaintiff would be able to buy out the other parties cheaply. The experts ultimately agreed that the Lot as a whole should fetch a good price. So the concern expressed by the defendants' factual witnesses, that the plaintiff will buy them out cheaply seems to be provided for. However this is true so long as what the experts predict is right. It may not necessarily be so. One thinks of Mr Mak's example of a property in Hung Hom which went for $7 million and was re-sold very shortly thereafter for $12 million. Mr Lau says that the market is wiser than the valuers, and that must be so, because all valuation is prediction; but it can go either way. Further, no one seems very clear as to what might be paid for development potential. It all depends on the attitudes of the developers. We know that the plaintiff is optimistic; but we do not know about the others. If they are pessimistic they will stay out. The plaintiff will be able to buy out the defendants cheaply and that will not be an equitable result.

88.There are other problems with sale. It is suggested that the reserve price at any auction be fixed at $50 million. Unfortunately, there is no valuation from Mr Lau; he said he decided not to make one, until a sale should be ordered. Ms Yiu's figures of $60-$70 million are not based on any specific study though one would expect a developer to know something about land values. We have Mr Mak's valuation at around $53 million, but I have accepted that there may be problems with its accuracy. It is conceptually difficult to order a sale, on the basis that it has to be the least detrimental option for all the parties, when there is of uncertainty as to what the proceeds will be.

89.There is also the fact, well known to all in Hong Kong of the current economic downturn. It may look more optimistic now but it has not ended yet. Ms Yiu says agricultural land is down 10%. Mr Lau agrees that it is down since 1996 "in tune with the market" but he does not know how much. Mr Tsang says that it is down 50% which while no doubt right for residential property may be high for agricultural land. Now no doubt the experts agree that sale of the Lot as a whole will produce a better price than sale of its parts but that price will surely still reflect the economic situation of Hong Kong and it may be better for all, even if sale were the best option, not to sell at this time. A reasonable price will probably be obtained but it is only reasonable for the depressed market.

90.For all these reasons I do not think it fit to order sale.

91.Finally I turn to the option of "no order". This will be of no detriment to the defendants. Granted that with this option the plaintiff would lose its chance to profit from development, that loss of chance would be mitigated by the actual rent coming in for its share. As has been noted the plaintiff paid about $9.3 million for its share, and then spent about $6 million on it. It got back $5 million for land resumption. So if, on the basis of a very rough calculation the capital which it has put in amounts to $10.3 million, it is making something like 17% p.a. on its investment; a very good return nowadays. It has been receiving this return since at least 1999. We do not know how much it has been getting since it bought its share but it is not unreasonable to think that it might have got most of its money back. Nevertheless "no order" would still keep an unwilling co-owner where it does not want to be.

92.As indicated I think partition must be the first choice with sale the second where the conditions in section 6(1) apply, because it involves compulsory loss of ownership. "No order" must be the last choice given that the whole object of the law on partition is to let the unwilling co-owner out. In this case while there is some detriment to the plaintiff in the sense of loss of chance which will ensue from partition, that detriment is not absolute; there will still be development potential; and there will be no detriment to the defendants. Sale is a possible option and will probably produce less detriment in the sense of loss of chance to the plaintiff, but how much worse off the plaintiff will be is uncertain, and the defendants will suffer objective detriment apart from the loss of their property rights so I do not think it fit to order sale. "No Order" will not be detrimental to the defendants but it remains detrimental to the plaintiff to some degree, and it locks in the unwilling co-owner. In all the circumstances it seems to me that partition is still the option least detrimental and therefore more beneficial to the interests of all.

93.The best partition proposal put forward is Mr Mak's Blue Model, with some variation to allow for the fact that legal access from the Unnamed Road will be possible. It is not perfect but it is the best we have. Mr Lau did not come up with anything better. The problem with it remains the uncertainty which arises from working from three different valuations. Even so, this uncertainty only arises because the South Portion is zoned "I" and the difference that makes (assuming one leaves out questions of development potential, which no one has been able to quantify with any certainty) is not great. According to the Blue Model the plaintiff would get 105,756 square feet in the North Portion and 1,350 in the South Portion. Access through the South Portion is not necessary if access is to be obtained from the Unnamed Road. Now if the Lot were simply divided according to area the plaintiff should have 103,582 square feet. The percentage difference is obviously very small. It there is to be a partition, there is not much to argue about.

94.I adopt the experts criteria that partition should be fair, simple, practicable, capable of being implemented, not detrimental to future development and inexpensive. In the interests of fairness to the plaintiff it should have its loss of chance of development minimised by having apportioned to it a discrete part of the North Portion, with development potential and with access from the public road. This will also minimise detriment to the defendants. It seems to me that all the other criteria will be met by giving the plaintiff the area coloured blue on Mr Mak's Appendix XI, i.e. 105,756 square feet. I have considered whether there should be any more up-to-date valuation, or attempt to take into account the small area in the South Portion which the plaintiff will not get, but it seems to me that simplicity, practicality and the need to save the parties further expense rule this out.

95.I will therefore order partition on that basis. The costs of the action (nisi) will be to the defendants, to be taxed if not agreed. These will include the costs reserved by Waung J on 1 July 1996 and 8 January 2002.

(G.P. Muttrie)
Deputy High Court Judge

Representation:

Mr Y.C. Mok, instructed by Messrs Winston Chu & Co., for the Plaintiff

Mr Thomas Lai, instructed by Messrs Chan, Leung & Cheung, for the 1st Defendant

Mr C. Lam, instructed by Messrs Dickie Tsang & Co., for the 2nd Defendant

3rd Defendant acting in person