Raingate Ltd v. Bee Cheng Hiang (Hong Kong) Ltd

CACV 121/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 121 OF 2016

(ON APPEAL FROM DCCJ 3540 of 2015)

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J U D G M E N T

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Hon G Lam J (giving the Judgment of the Court):

1.This is an appeal by the plaintiff from the decision of Deputy District Judge Sanjay Sakhrani dated 1 February 2016 refusing to enter summary judgment against the 2^nd defendant and giving unconditional leave to defend.

2.Leave to appeal was granted by us after an oral hearing on 20 May 2016.  By consent of the parties, after we have read the written summons lodged by counsel for both parties, the hearing of the appeal fixed on 26 August 2016 was vacated and it was directed that the appeal be disposed of on the basis of written submissions alone. 

3.The plaintiff’s claim is, so far as relevant, one for damages for trespass.  By way of background, the plaintiff has, since 30 April 2012, been the owner of, inter alia, the outer walls of the building standing at Nos 9-15, Yee Wo Street, Causeway Bay, Hong Kong, to which we shall refer simply as “the building”. 

4.The 1^st defendant is the registered owner of the premises being Shop No 1 on the ground floor of the building.  The 2^nd defendant was the tenant of the shop under a tenancy agreement entered into, between the 2 defendants, on 12 October 2012, for a term of 3 years commencing on 26 October 2012. 

5.By a writ of summons issued in the District Court on 31 July 2015, the plaintiff made a claim against both defendants for trespass arising out of the installation of air‑conditioning equipment attached to the outer wall of the building facing Yee Wo Street.  We shall refer to that wall as “the outer wall”.  The plaintiff’s summons for summary judgment issued on 23 October 2015 was originally for both injunctive and related relief and damages and mesne profits to be assessed.  By the time of the hearing before the Judge below, the 2^nd defendant’s tenancy had expired and the air-conditioning equipment had been removed, as a result of which only the application for summary judgment for damages and mesne profits to be assessed needed to be dealt with.  The Judge entered judgment against the 1^st defendant but, as stated above, gave the 2^nd defendant unconditional leave to defend. 

6.It is not in dispute that the 2^nd defendant had placed air‑conditioning equipment on the affixation attached to the outer wall, starting, on the 2^nd defendant’s own case, from around the commencement of the term of tenancy, ie October 2012.  Clause 16 of the tenancy agreement provided that the 2^nd defendant as the tenant was to install and maintain its own air‑conditioning equipment only at such locations as approved by the 1^st defendant as landlord.  The 1^st defendant admitted that it had in fact no right to use, or permit others to use, the outer wall. 

7.It is the 2^nd defendant’s case, both on its pleading and affirmation, that it had placed the air-conditioning equipment on the outer wall with the expressed permission and direction of the 1^st defendant. 

8.By two solicitor’s letters to the 1^st and 2^nd defendants dated 14 and 23 July 2015 respectively, the plaintiff demanded that the air‑conditioning equipment be removed and dismantled within 7 days. 

9.It is not in dispute that placing anything on or in land in the possession of another, such as fixing air-conditioning equipment to his wall, constitutes trespass to land: Clerk & Lindsell on Torts (21^st ed), §19‑01 and 19-02.  There was, on the undisputed facts, prime facie a tort of trespass committed by the 2^nd defendant unless it can be shown that its use of the plaintiff’s outer wall was justified or that there was some other defence available in law.  The defences raised by the 2^nd defendant are (i) acquiescence and estoppel, and (ii) implied licence.  The facts relied upon for both defences overlap and may be summarised as follows:

(1) The metal support affixed to the outer wall had already been installed and in existence and used by the previous occupant of the same shop, namely Wang Po Dispensary Co Ltd for its own air-conditioning equipment well before the commencement of the 2^nd defendant’s tenancy in October 2012.

(2) The metal support was very conspicuous. 

(3) The 2^nd defendant had, upon the commencement of its tenancy, started to use the existing metal support and placed its own air-conditioning equipment thereon which was also very conspicuous.

(4) The plaintiff knew or ought to have known of the use of the metal support and the outer wall by Wang Po Dispensary Company Limited and by the 2^nd defendant.

(5) Despite such knowledge, the plaintiff had raised no objection to the previous tenant’s use of the metal support.

(6) Likewise, the plaintiff had raised no objection against the 2^nd defendant’s use of the outer wall since about October 2012.

(7) The plaintiff only made a complaint or demand for the first time in the letters referred to above in July 2015. 

10.We shall deal with the argument based on implied licence first which, although pleaded, was not given prominence by the 2^nd defendant below.  On the alleged facts, even assuming them to be true, we do not think that a licence by the plaintiff as contended for can be implied.  As Lam J (as Lam VP then was) stated in Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (unreported, HCA 15824/1999, 11 October 2007) at §127:

“Passive acquiescence is not enough to establish implied licence. There must be some overt acts on the part of the licensor referable to a licence having been granted to give rise to an implication by conduct, see R (Beresford) v Sunderland City Council [2004] 1 AC 889, in particular Paras 76 to 83.”

11.While the actual decision of the House of Lords in R (Beresford) v Sunderland City Council was held to be wrong and departed from by the UK Supreme Court in R (Barkas) v North Yorkshire County Council [2015] AC 195, we think that the passages relied upon in Kam Lan Koon remain good law.  This is clear from the following passages in Lord Neuberger’s judgment in R (Barkas) v North Yorkshire County Council:

“28. Furthermore, the fact that the landowner knows that a trespasser is on the land and does nothing about it does not alter the legal status of the trespasser. As Fry J explained, acquiescence in the trespass, which in this area of law simply means passive toleration as is explained in Gale (or, in the language of land covenants, suffering), does not stop it being trespass. This point was well made by Dillon LJ in Mills v Silver [1991] Ch 271, 279-280, where he pointed out that “there cannot be [a] principle of law” that “no prescriptive right can be acquired if the user ... has been tolerated without objection by the servient owner” as it would be “fundamentally inconsistent with the whole notion of acquisition of rights by prescription.” Accordingly, as he added at p 281, “mere acquiescence in or tolerance of the user ... cannot prevent the user being user as of right[1] for purposes of prescription.”

29. Thus, if a trespass has continued for a number of years, then the fact that it has been acquiesced in (or passively tolerated or suffered) by the landowner will not prevent the landowner claiming that it has been and is unlawful, and seeking damages in respect of it (subject to the constraints of the Limitation Act 1980). For the same reason, if such a trespass has continued for 20 years and was otherwise as of right, it will be capable of giving rise to a prescriptive right. On the other hand, if the landowner has in some way actually communicated agreement to what would otherwise be a trespass, whether or not gratuitously, then he cannot claim it has been or is unlawful – at least until he lawfully withdraws his agreement to it. For the same reason, even if such an agreed arrangement had continued for 20 years, there can be no question of it giving rise to a prescriptive right because it would clearly have been precario, and therefore “by right”.”

See also §35 of the same judgment, where Lord Neuberger referred with approval to, inter alia, the speech of Lord Bingham in R (Beresford) v Sunderland City Council at §6 in which his Lordship said:

“Authority, however, establishes that a licence to use land cannot be implied from the mere inaction of a landowner with knowledge of the use to which his land is being put. ...”

The same point can be seen from the joint judgment of Lord Neuberger and Lord Hodge in the later case of R (Newhaven Port and Properties Ltd) v East Sussex County Council [2015] AC 1547 at §55:

“... in agreement with Richards LJ [2014] QB 186, 263, para 72 in the Court of Appeal, we would accept that mere silence or inaction on the part of the entity cannot amount to permitting. In the same way as silence and inactivity on the part of a private landowner cannot, without more, amount to consent ..., so would the absence of any express or implied prohibition in the Byelaws, without more, not amount to an implied licence.”

12.Mr Billy Ma, for the 2^nd defendant, relied on several cases in support of his argument for implied licence but it seems to us in the ultimate analysis that none of them assists him.  First, in Lowery v Walker [1911] AC 10, the defendant put a savage and dangerous horse on his field which he knew the public were in the habit of crossing without leave.  The House of Lords held that the plaintiff, who was attacked and injured by the horse when crossing the field, could recover damages from the defendant.  Mr Ma relied on the decision for the proposition that acquiescence in repeated trespass could give rise to an implied licence. It is clear however that the decision was a peculiar one.  Their Lordships did not deal with the law of trespass; they did not even analyse the case in terms of an implied licence.  As explained by Lord Denning in Videan v British Transport Commission [1963] 2 QB 650 at 663-664, the case was an example of the court by a fiction finding a person, who had come on to land without permission in fact, to be there by leave and licence of the occupier, in order to circumvent the common law rule that an occupier owed no duty of care to a trespasser; see also British Railways Board v Herrington [1972] AC 877, 933E per Lord Diplock, to the same effect.

13.Secondly, Mr Ma referred to Canadian Pacific Railway Co v The King [1931] AC 414.  There, the railway company had erected poles carrying telegraph wires on Crown land during the years 1888-90, some without leave.  While the erection of those poles was originally a trespass, the Privy Council held that, by 1926, when the suit was brought by the Crown, the railway company was no longer a trespasser, given the long period of acquiescence by the Crown and the fact that the Crown had at least since 1916 been claiming to be paid rent (see pp 422, 424).  On those facts, that case is readily distinguishable from the present, where there was simply about 2 years and 8 months of inaction (a period much shorter than the period of limitation for an action in tort prescribed in the Limitation Ordinance (Cap. 347)) on the part of the plaintiff in respect of the trespass, and no request for any rent was made.

14.The third case is Westlands Estates Ltd v Swilynn (HK) Ltd (unrep, HCA 8748/1984, 14 February 1985), in which the plaintiff landowners sued the defendant for, inter alia, trespass because the defendant’s air-conditioning installations protruded into the air space over the plaintiffs’ land.  Upon an application by the plaintiffs for summary judgment, Deputy Judge Barnett held that it was arguable that the defendant’s installations appeared sufficiently high above the plaintiffs’ land, which was used as a road, so as not to interfere with any right of passage.  The learned judge also opined that “it may well be that because of the 1^st plaintiff’s failure to take action immediately the installations appeared, the defendant is acting under the authority of a bare or gratuitous licence”.  This opinion was obiter and was apparently expressed without the benefit of any consideration of the authorities on the question of implied licence.  Furthermore, that case was decided at a time when certain authorities in England (such as Wallis’s Cayton Bay Holiday Camp Ltd v ShellMex and BP Ltd [1975] QB 94) might suggest that where the intruder’s acts did not interfere with the owner’s plans for the use of the land, a licence of the owner could be readily imputed even  without any specific factual basis for such implication;[2] see Buckinghamshire County Council v Moran [1990] Ch 623, 636-640 – an approach which, it has been held, does not represent the correct position in law: see the discussion in Hong Kong Kam Lan Koon Ltd v Realray investment Ltd, supra, at §§65-75.

15.It is in our view plain that the facts relied upon by the 2^nd defendant amount no more than to inaction and silence on the part of the plaintiff.  No positive act, overt or otherwise, was identified.  In essence it is said that the plaintiff did nothing to stop, object to or complain against the trespass, of which it had knowledge, until July 2015.  Such inaction seems to us to be entirely equivocal, and cannot conceivably be said to communicate the plaintiff’s permission to the 2^nd defendant to occupy the outer wall.  On the 2^nd defendant’s own evidence, it did not use the outer wall pursuant to any perceived implicit permission from the plaintiff; it did so in reliance on the express permission of the 1^st defendant.  On well established principles, the 2^nd defendant’s plea of implied licence must fail on the facts alleged and relied upon and therefore raises no triable issue.

16.The other defence raised, which overlaps with the implied licence point, is acquiescence and estoppel, a plea which the learned judge below accepted as sufficient to give rise to triable issues.  His Honour considered that the nature and extent of the plaintiff’s knowledge, which was disputed as a fact, was a relevant issue.  If that was a pivotal issue we would agree with the judge that it could not be determined conclusively in an application for summary judgment based on affidavit evidence alone.  But in our view the case does not turn on it.  Even assuming the plaintiff had knowledge of the trespass from the outset, all that was said was that it did nothing until July 2015.  As was made clear in R (Barkas) v North Yorkshire County Council (quoted above), the fact that a trespass has been acquiesced in or passively tolerated, in the sense that the landowner has not yet taken any act to stop or prevent it, does not make it any less of a trespass.

17.While the 2^nd defendant’s defence only pleaded implied licence and acquiescence (but not estoppel), we are prepared, as was the judge, to deal with it as raising the defence of acquiescence giving rise to an estoppel.  We accept, at least as arguable, that if an estoppel can be established by the 2^nd defendant, then it can give rise to a valid defence to the plaintiff’s claim for trespass.  But before an estoppel can arise in the present context, it is necessary for the 2^nd defendant to show detrimental reliance: Jones v Stones [1999] 1 WLR 1739, 1745A-B.  The judge below said that whether the plaintiff can succeed on detrimental reliance “depends on how the estoppel/acquiescence issue as a whole plays out”.  On this we respectfully part company with the judge. 

18.It was said that the previous tenant of the shop also placed air-conditioning equipment on the metal support affixed to the outer wall.  This was not a representation, and there was no evidence, that the plaintiff was prepared to allow the 2^nd defendant to continue to do so free of charge.  The 2^nd defendant’s allegation and evidence was that it was given the right by its own landlord, ie the 1^st defendant, to use the outer wall in the way it did.  Its case was that, by clause 16 of the tenancy agreement, it was bound to install its air-conditioning equipment on the outer wall as permitted and directed by the 1^st defendant.  The judge found that the 1^st defendant had no right to do so, and entered judgment against the 1^st defendant, against which there is no extant appeal by either defendant.  There was no plea or evidence whatsoever that the 2^nd defendant relied on the plaintiff’s acquiescence or representation to its detriment.  In any event, it is in our view difficult to see what detriment the 2^nd defendant could be said to have suffered.  There is no suggestion that it could have dispensed with the air-conditioning equipment or placed it elsewhere, or that the installation of the equipment was a lengthy procedure during which it incurred substantial, avoidable expenses as a result of the plaintiff’s acquiescence to that process.  This is to be contrasted with the case of Winland Finance Ltd v Profit Fine Ltd (unrep, HCA 1045/2005, 10 January 2006), referred to by the judge below, where expensive and time-consuming works were carried out on the basis that the defendant could operate the premises as a home for the elderly.  In the circumstances of the present case, based on the facts alleged, the bare assertion of an estoppel by acquiescence does not give rise to any triable issue.

19.Mr Ma also referred to Hollywood Shopping Centre Owners Committee Ltd v The Incorporated Owners of Wing Wah Building Mongkok Kowloon (unrep, HCA 1582/2007, 23 April 2008) and Lucky Hing Shing Estate Co Ltd v The Incorporated Owners of Genius Court (unrep, HCA 2048/2015, 7 April 2016) in which the defences of waiver, acquiescence, estoppel, and laches were discussed.  Both of them are, however, cases in which mandatory injunction was sought – an equitable remedy subject to the court’s discretion.  In that context and having regard to the facts of those cases, the courts did not consider it appropriate to deal with the matter on a summary basis.  In our view neither case assists the 2^nd defendant here.

20.For these reasons we shall allow the appeal, set aside leave to defend, and enter interlocutory judgment against the 2^nd defendant for damages and mesne profits to be assessed.

21.We make an order nisi that (i) costs of the action as between the plaintiff and the 2^nd defendant be to the plaintiff to be taxed if not agreed with certificate for counsel; and (ii) costs of the appeal be to the plaintiff to be taxed if not agreed.

Written Submissions by Ms Anna MW Chow, instructed by Vivien Chan & Co, for the plaintiff (appellant)

Written Submissions by Mr Billy N P Ma, instructed by William Sin & So, for the 2^nd defendant (respondent)

[1] As explained in para 14 of the same judgment, the phrase “as of right” is used counter-intuitively here to mean it is not by right and not with the permission of the true owner.

[2] The implied licence doctrine was reversed by statute in the UK: see para 8(4) of Schedule 1 to the Limitation Act 1980.