The power of the court to make an order for the sale of land under the Hong Kong Partition Ordinance (Cap. 352)

In law, “partition” means the act of dividing land into smaller parcels. Hong Kong’s Partition Ordinance (PO) provides means for co-owners of property in land to end the co-ownership compulsorily by partition or sale.

The recent judgment in Ford World Development Limited v Yau Kam Hing and Others 2024 HKDC (Judgment) illustrates application of the PO and the legal principles involved.

Facts of case

The plaintiff and defendants were co-owners of a piece of land known as Lot No. 252 in Tai Po, New Territories, Hong Kong (Lot). The Lot was a small piece of land on a steep slope without any structure on it, and appeared abandoned and overgrown with wild vegetation. There was no footpath or vehicular access leading to it.

It was zoned as “Residential (Group B) 12” under the Approved Tai Po Outline Zoning Plan with a maximum plot ratio of 3.3, primarily intended for medium-density residential development.

The plaintiff purchased its share in the Lot in 2022; the other defendants had acquired their shares in the Lot by way of succession in 1968. The 1st and 3rd defendants could not be located while the 2nd and 4th defendants passed away without any personal representative appointed to administer their estates.

The plaintiff wished to end co-ownership of the Lot by way of an order for sale under the PO.

Legal principles

Who is entitled to apply to court under the PO?

There are two types of co-ownership of land – namely joint tenancy (which has the distinctive feature of survivorship), or tenancy in common. Any person (not necessarily a co-owner) interested in land held under co-ownership is entitled to apply to the court for an order of partition or sale of the land under section 3 of the PO.

What are factors will the court consider when determining an application for an order for sale under the PO?

Section 6(1) of the PO provides that the court may make an order for sale if it appears to the court that a partition of the property would not be beneficial to all the persons interested by reason of:-

• nature of the land to which the proceedings relate;
• number of the persons interested or presumptively interested;
• absence or disability of some of the persons interested;
• any other circumstances.

The guiding principles governing the court’s exercise of discretion under section 6(1) of the PO are summarised as follows¹ :-

• A co-owner has a basic right to rid himself of the shackles of co-ownership and, if he has no other recourse, ask for an order for partition or sale;
• When it is impracticable to make an order for partition, the court should make an order for sale unless it is persuaded (the burden being on the opposing co-owner(s)) that such an order will not be beneficial to all the co-owners or that it will result in very great hardship to one owner;
• Whether an order for sale is beneficial to all the co-owners is not determined by dissent of opposing co-owners or assertion by them that it is not beneficial. It has to be determined by the court objectively.

When the court exercises its discretion in favour of making an order of sale in absence of other co-owner(s), the court should adopt certain sufficient steps to safeguard the other co-owner(s)’s interest², namely:-

1. A reserve price set up with reference to professional valuation evidence.
2. A professional solicitor (who owed a duty to the court) appointed to execute conveyancing and other necessary documents to effect sale of the property.
3. Sale proceeds belonging to the estate ordered to be paid into court.”

Court order

The court agreed that this case was appropriate to make an order of sale of the Lot under the PO for the following reasons:-

1. The plaintiff was one of the co-owners of the Lot; entitled to get out of co-ownership and apply for an order for sale under the PO.
2. The size of the Lot was small. If partitioned into five smaller portions, each would range from 7.5 to 11.4 square metres in area.
3. The Lot was in an abandoned status with no vehicular access, and possible footpaths to it were blocked by heavy vegetation.
4. Present land usage of the Lot was for agricultural use. It is not commercially viable to conduct agricultural activities on each partitioned portion.
5. Development potential of the individual partitioned portions was low.
6. The Lot was currently vacant and not occupied by any co-owner. Selling the Lot would not cause any hardship to any of the co-owners.
7. Partition of the Lot was impracticable and ordering the sale of the Lot would be beneficial to the interest of all the co-owners.

The court was also satisfied that the defendants’ interest would be protected by setting a reserve price with reference to a valuation report submitted by the plaintiff, appointing the plaintiff’s solicitors to conduct the sale and paying the defendants’ portions of the sale proceeds into court.

Conclusion

Often as the last resort, an order for sale under the PO is a drastic means to end co-ownership of land because co-owners may be compelled to sell their property against their wishes.

The court is empowered by the PO to conduct a thorough balancing exercise, taking all relevant circumstances into account, when deciding whether to make an order for sale under section 6 of the PO.

This Judgment presented a straightforward case without opposition from the other co-owners. In other more complicated cases – such as where the subject property is occupied by a co-owner – it can often be an uphill challenge to persuade the court to make an order for sale.

¹ Paragraph 12 of the Judgment.

² Paragraph 13 of the Judgment.