Co-ownership – partition – loan agreement between moneylender and borrower being tenant in common of property – borrower’s half share of property secured for loan – money lender “person interested” under s. 3(1) following default by borrower – whether sale more beneficial than partition
D1–2 were the tenants in common in equal shares of a flat of 367 saleable square feet. P, a licensed money lender, loaned HK$450,000 to D1, in consideration of which D1 executed a legal charge over his half share of the property as security and registered it at the Land Registry. D1 defaulted on the loan and after giving Ds notice of his intention to enforce the legal charge under a clause in the loan agreement (the “Clause”), P applied for an order for sale of the flat under the Partition Ordinance (Cap.352) (the “PO”). Ds neither entered any appearance in the proceedings nor appeared at any of the hearings.
Held, granting the order for sale sought, that:
- P was an “interested person” under s. 3(1) of the PO. Since the day D1 defaulted in payment of the loan, P acquired an interest in possession pursuant to the Clause and was eligible to seek an order for sale or partition under the PO.
- D2, as the co-owner, bore the burden of demonstrating that an order for sale would not be beneficial to all co-owners or would result in very great hardship to him. By relinquishing his right to defend and, after service on him had been proved, D2 could not now say injustice had been done to him. It was therefore fair and just to order the sale of the flat under s. 6(1) of the PO given that Ds were absent and the nature of the flat made it impracticable to partition.