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Cromwell Investment Co Ltd And Others v Fook Sun Enterprises Co Ltd And Another

Judgment Cited authorities 9 Cited in Precedent Map Related
Vincent
Judgment Date05 December 1975
Year1975
Judgement NumberCACV15/1975
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV000015/1975 CROMWELL INVESTMENT CO LTD AND OTHERS v. FOOK SUN ENTERPRISES CO LTD AND ANOTHER

CACV000015/1975

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CIVIL APPEAL NO. 15 OF 1975

(On appeal from Original Jurisdiction Miscellaneous proceedings No.118 of 1974)

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BETWEEN
CROMWELL INVESTMENT COMPANY LIMITED 1st Appellant
(1st Defendant)
NGAN TUNG CHUN, NGAN TUNG WAI and YIEN CHI REN 2nd Appellants
(2nd Defendants)
CHU SHIU LING 3rd Appellant
(4th Defendant)
AU SHE SING 4th Appellant
(5th Defendant)
and
FOOK SUN ENTERPRISES COMPANY LIMITED 1st Respondent
(Plaintiff)
THE ATTORNEY GENERAL 2nd Respondent
(3rd Defendant)

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Coram: Huggins, McMullin & Trainor, JJ.

Date of Judgment: 5th December 1975.

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JUDGMENT

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Huggins, J.:

There are in this appeal two points calling for decision. They can be stated quite shortly but cannot be so shortly disposed of.

2. The Plaintiff in the action sues for an order under s.6 of the Partition Ordinance for the sale of a tenement held by it in common with the first and second Defendants. That tenement is situate at and known as Nos. 136 and 138 Queens Road Central, Hong Kong and the Plaintiff owns more than 60% of the undivided shares. The first facts which introduce difficulty into an otherwise straight-forward case are that the first and second Defendants (the other tenants in common) have mortgaged their undivided shares and that the dates for redemption are still a long way in the future. The originating summons was taken out on 18th March 1974. On 17th November 1973 the first Defendant had mortgaged its undivided share to Yien Chi-Ren (the last named of the three second Defendants). The principal is not repayable until 16th November 1983. On 10th December 1973 the three second Defendants mortgaged their undivided shares to the fourth Defendant. The principal sum there is not repayable until 9th December 1985. On 21st December 1973 the three second Defendants gave a second mortgage of their undivided shares to the fifth Defendant. Under that mortgage the principal is not repayable until 20th December 1976.

3. Another fact which introduces difficulty is that at all material times the tenement in suit has been let to "The Lin Heung Tea House", although we have not been referred to any Lease or Agreement and we do not know what are the terms of the tenancy. It is common ground that the premises are protected under Part I of the Landlord and Tenant (Consolidation) Ordinance.

4. It must further be mentioned that the adjoining house, No. 140 Queen's Road Central, although not subject matter of the suit is owned by the Plaintiff and has, it would seem, been let to "The Lin Heung Tea House" also, for the tea house runs its business in part of all three houses. The only parts of Nos.136 and 138 which are not used for the tea house business are two shops on the ground floors, these having been sub-let. The aim of the Plaintiff is itself to purchase Nos. 136 and 138 if an order for sale is made and then to redevelop all three houses as a unit.

5. It is, I think, more logical to deal first with the second of the two points which have been argued, as Trainor, J. has done in the judgment which he has just read. Mr. Swaine, for the first and second Defendants (the first and second Appellants before us), contends that the Plaintiff has no interest which entitles it to sue under the Partition Ordinance at all. He does not, of course, deny that it is tenant in common with his clients but submits that anyone claiming under the Ordinance must have an estate in possession and that by reason of the tenancy granted to "The Lin Heung Tea House" the Plaintiff's estate is in reversion and not in possession. He emphasises that the tenant in possession does not merely have a contractual tenancy (and I gather it to be a periodic tenancy which has not been duly terminated) but also a right to retain possession under Part I of the Landlord and Tenant (Consolidation) Ordinance.

6. The Partition Ordinance does not state in terms that only a tenant in common in possession may sue under its provisions, but authorities have been cited to show that that was the position under the old law, the principle being, it was said, that a reversioner had no need of partition and should not be allowed to disturb the existing state of things when there was an interest in possession: Cantwell v. Hassard (1858) 7 Ir. Ch. R. 370. Two matters require consideration: (1) whether the Plaintiff has in truth no interest "in possession" which would have entitled it to partition under the old law, and (2) whether the Ordinance must be construed as having abrogated the old law.

7. The Common Law right to partition was confined to coparceners. The Plaintiff and first and second Defendants in the present case having become tenants in common by act of parties were not coparceners. The right to partition was extended to joint tenants and tenants in common in estates of inheritance in their own rights or in the rights of their wives by the Act of 31 Henry VIII Cap. 1 and further extended by 32 Henry VIII Cap. 32 to joint tenants and tenants in common for terms of life or years. Both acts remained in force in Hong Kong, either by virtue of the Supreme Court Ordinance or of the Application of English Law Ordinance, until 4th July 1969, on which date the Partition Ordinance came into force.

8. It is submitted, and I readily accept, that no order for sale under s.6 can be made unless a plaintiff would be entitled to partition under s.4. The right to sell has been added, here as elsewhere, only as an aid to partition where that is more beneficial.

9. Mr. Swaine then relies on the statement in Walker's Partition Acts (2nd Ed.) p.7:

"But no one can successfully institute an action for partition whose estate is not an estate in possession. A reversioner cannot maintain such a suit: 'this rule is not merely technical, but is founded on good sense in not allowing the reversioner to disturb the existing state of things; there might be a tenant for life of the whole, and several tenants in common in reversion in which case the inconvenience would be obviously very great; at all events the rule is unquestionably settled' (per Lord Hatherley, L.C., Evans v. Bagshaw L.R. 5 Ch. 340)."

In the case there cited a bill for partition was filed by a married woman and her husband and their mortgagee. The wife was tenant in common in fee in one sixth. The husband was a bankrupt before the execution of the mortgage and all his interest was then vested in the assignees in bankruptcy. After action brought the mortgagee bought the life estate from the husband's assignees and the bill was amended accordingly. It was held that an action did not lie on the original bill because the married woman was in effect the owner of a reversion only: nor could the plaintiffs by subsequently acquiring a title by purchase of the bankrupt's estate obtain a right to a decree in that suit, even if the bill was amended. On the other side Mr. Litton argues that although a reversion expectant upon the termination of a life interest may not be an estate in possession a reversion expectant upon the termination of a term of years is. He rightly says that the only cases cited against him were cases where there was a tenant for life and he relies upon passages in Megarry and Wade's Law of Real Property (3rd Ed.). It must, of course, be borne in mind that the passages are dealing primarily with the law of England after 1925. First there is the passage at p.144:

"'In possession' means that the estate must be immediate, and not in remainder or reversion. Remainders and reversions are now equitable interests, taking effect behind a trust of the legal estate. But, in order to prevent temporary interests such as leases from disturbing the legal ownership, 'possession' is defined so as to include not only physical possession of the land but also the receipt of rents and profits or the right to receive them, if any. Thus a fee simple is still 'in possession even though the owner has granted a lease, for he is entitled to the rent reserved by the lease, and even if the land has also been mortgaged, for he is entitled to the rents and profits, if any, in excess of any interest payable to the mortgagee".

Then at p.185 the learned authors observe:

"A reversion is such part of a grantor's interest as is not disposed of by his grant; a remainder is such part as is disposed of, provided that it is postponed to some estate in possession created at the same time. Thus if a tenant in fee simple grants a life interest, the fee simple which he retains is a reversion. His estate in fee simple in possession has become a fee simple in reversion. If, on the other hand, he creates a lesser estate and by the same instrument disposes of some or all of the residue of his estate to one or more other persons, the interests of those other persons are not reversions but remainders."

and at p.186 they continue:

"From its very nature it follows that a reversion is a vested interest; for it is the remnant of an estate which has never passed away from the grantor, and he or (if he is dead) his representatives stand ready to receive the land as soon as the particular estate determines. According to feudal principles, moreover, a freehold reversioner on a term of years has an estate which is vested not only in interest but also in possession, for the grant of a lease does not deprive a grantor of seisin, and he therefore has what is properly called a freehold in possession subject to the term. From this point of view a reversion on a lease is not a reversion or,...

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