Tsang Shu Wo and Another v. Person Unknown in Occupation of Lot No. 2643rp in D.D. 120, Yuen Long, New Territories, Hong Kong and Another
Read the full judgment text of CACV 98/2020 on BabelCite. This Court of Appeal judgment was delivered on 8 May 2023.
1.1. This is the 2 nd plaintiff’s appeal [1] from the Judgment of Anthony Chan J (“ the judge ”) given on 5 March 2020 (“ the Judgment ”) [2] after a 3-day trial in January 2020. The judge dismissed the action with costs to the 2 nd defendant.
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CACV 98/2020, [2023] HKCA 644 On Appeal From [2020] HKCFI 293 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 98 OF 2020 (ON APPEAL FROM HCMP NO 3279 OF 2013) ________________________
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_________________ REASONS _________________ Hon Yuen JA (giving the Judgment of the Court): 1.1.This is the 2nd plaintiff’s appeal[1] from the Judgment of Anthony Chan J (“the judge”) given on 5 March 2020 (“the Judgment”)[2] after a 3-day trial in January 2020. The judge dismissed the action with costs to the 2nd defendant. 1.2.At the conclusion of the appeal, we dismissed the appeal with costs. Our reasons appear below. Background The Tso 2.1.The Tang Siu Yu[3] Tso (“the Tso”) is a tso whose members consist of the male descendants of a common ancestor[4]. It comprises three “sub-tsos”[5], viz. Chik Son tso[6], Man Son tso and Min Son tso. 2.2.The Tso was registered under the New Territories Ordinance, Cap. 97 (“NTO”). Section 15 of NTO in force at the material times stated:
2.3.The principles that registered managers of a tso are trustees of the property held by a tso, and that unanimity is required for trustees’ decisions, will be discussed later in this Judgment. 2.4.On 27 June 1979, the following persons were registered in the Land Registry as managers of the Tso: Tang Kin Kwok (“TKK” or “Kwok” in the judge’s Judgment), Tang Shing and Tang Fuk Loi. Tang Shing died in 2002 and Tang Fuk Loi died in 2005. The Secretary’s approval of the appointment of Tang Tong and Tang Kau was registered on 29 May 2008. 2.5.Thus,
The Plot 3.The Tso is the registered owner of a large piece of land[7] in Ping Shan, Yuen Long (“the Plot”). House 41 4.A house known as House 41, Lam Hau Tsuen (“House 41”) occupies a small portion of the Plot. The 2nd defendant is the occupant of House 41. His family had been residing there since the 1920’s[8]. The Action 5.1.On 5 December 2013, the 1st plaintiff issued proceedings in HCMP3279/2013 against the 2nd defendant for delivery up of vacant possession of House 41 and mesne profits. 5.2.The 1st plaintiff is not a member of the Tso. His claim to possession of the 2nd defendant’s house was based on a purported sub-lease of the Plot to him from Tang Chi Yung (“TCY” or “Yung” in the judge’s Judgment), who claimed that he was himself a lessee of the Tso. The validity of the purported sub-lease vis-a-vis a third party to it (as the 2nd defendant was) will be discussed later in this Judgment. 5.3.Although the 1st plaintiff remained a party in the proceedings below, it was accepted at trial by the plaintiffs’ then counsel[9] that as his purported sub-lease had expired in 2017, his claim was “of little relevance now” and the court was informed that he was no longer seeking any relief in the proceedings[10]. 6.The 2nd plaintiff, also not a member of the Tso, was added as a party in 2019. His claim to possession of the 2nd defendant’s house was also based on a purported sub-lease from TCY, entered into after TCY’s purported sub-lease to the 1st plaintiff had expired. 7.Neither the Tso nor TCY were parties to the proceedings. 8.The main issue before the judge was whether the 2nd plaintiff was entitled to sue the 2nd defendant for possession of the defendant’s house. To understand the arguments, it is necessary to set out the factual background in some detail. 2007 Lease(Tso to TCY and others)4.7.2007 - 3.7.2013 9.1.On 4 July 2007, the Tso leased the Plot to TCY, Tang Wing Shing and Tang Tung Chiu (“the 2007 lessees” or “Yung, Chiu and Shing” in the judge’s Judgment) for a term of 6 years from 4 July 2007 to 3 July 2013 at $1,300 pa (“the 2007 Lease”). The validity of this lease is not disputed. 9.2.The terms were set out in a book (“the book”)[11] signed on behalf of the Tso by the Tso’s “elders”, being TKK (as elder of Chik Son tso, at that time also the sole registered manager), Tang Tong (as elder of Man Son tso) and Tang Kau (as elder of Min Son tso), the latter two at that time not yet registered as managers. 9.3.Clause 7 prohibited the lessees from sub-letting the Plot. 2012 purported Sub-lease (TCY to 1st plaintiff)21.7.2012 - 20.7.2017 10.Notwithstanding Clause 7, on 21 July 2012 (i.e. during the term of the 2007 Lease), TCY sub-let the Plot to the 1st plaintiff for a term of 5 years from 21 July 2012 to 20 July 2017 (i.e. extending beyond the term of the 2007 Lease) at $60,000 pa (“2012 purported Sub-lease”)[12]. Tang Tong (one of the registered managers) signed as a witness but there is no evidence that the other two registered managers had agreed to this sub-lease which was in breach of the 2007 Lease. 2013 purported Lease (Tso to the 2007 lessees)4.7.2013 - 3.7.2019 11.1.On 7 July 2013, there were written in the book (referred to above) the terms of a purported renewed lease to the 2007 lessees for a term of 6 years from 4 July 2013 to 3 July 2019 at $1,450 pa (“the 2013 purported Lease”)[13]. 11.2.The judge found that by this time, there were two registered managers of the Tso, viz. TKK and Tang Tong, Tang Kau having died[14]. However, under the heading “Tang Siu Yu Tso elders”, Tang Tong signed under Man Son tso, and Tang Ching Lin signed under Min Son tso. The space under Chik Son tso was blank. 11.3.It was not disputed that TKK, the other surviving registered manager and the elder of Chik Son tso, had refused to agree to, and did not sign, the 2013 purported Lease, as he considered that the 2012 purported Sub-lease was in breach of the 2007 Lease, and that in any event it should be the Tso, and not the 2007 lessees, who should benefit from payments for occupation of the Plot. 12.We will discuss later in this Judgment the issue whether the 2013 purported Lease was valid when it had not been agreed to unanimously by the Tso’s surviving registered managers. 13.1.Pausing here, it is notable that the judge said this in the Judgment:
13.2.However at the hearing of the appeal, this court noted that the extracts of the book[15] in the appeal bundles did not contain any record of rental payments for the 2013 purported Lease, nor were there any separate documents in the appeal bundles which were the “Payment Records” which the judge referred to. A search of the court file also did not disclose any “Payment Records”. 13.3.When the court drew this to the attention of counsel for the 2nd plaintiff[16], he was not able to point the court to the Payment Records either, so we were not able to see their contents. TKK’s 2016 Declaration 14.1.On 8 February 2016 (i.e. during the term of the 2013 purported Lease and after these proceedings had commenced), TKK, one of the surviving registered managers of the Tso, caused a declaration to be registered in the DLO (“TKK’s 2016 Declaration”). 14.2.In the declaration, he stated that the grant of leases of Tso lands had, for many decades, been jointly undertaken by the managers[17] who represented the three sub-tsos, and even if a registered manager had died, a person chosen as representative would need to be approved at a meeting of the Tso and approved by the DLO before he could lawfully become a manager. After referring to certain arrangements for utilizing funds in bank accounts, he stated that all other Tso affairs were the responsibility of the current managers. January 2017 Meeting 15.1.Following TKK’s 2016 Declaration, a meeting was held on 14 January 2017 for members of the Tso to “express their views” about it. 15.2.It can be seen from the minutes[18] that no signature appears in the place allocated for “elder of Chik Son tso”, viz. TKK. His unchallenged evidence[19] was that he had never been informed of that meeting[20] and no members of his sub-tso had attended[21]. There was no evidence showing the total number of members of all three sub-tsos of the Tso, or when, or how, notice of meeting was given to them all. 15.3.According to the minutes, the chairman mentioned two points for consideration, including at paragraph (3)(A)[22]:
15.4.However, after deletion of paragraphs (4) to (6), the following passage numbered as paragraph 3(C) appears:
16.Notwithstanding the above, it was not disputed that no application had ever been made to the Secretary for Home Affairs, and TKK’s name remained on the register as manager of the Tso at all material times up to and including the time of trial. 2017 purported Sub-lease (TCY to 2nd plaintiff)21.7.2017 - 20.7.2022 17.The 2nd plaintiff claimed that on 1 August 2017 (i.e. during the term of the 2013 purported Lease), TCY sub-let the Plot to him for a term of 5 years from 21 July 2017 to 20 July 2022 (i.e. extending beyond the term of the 2013 purported Lease) at $60,000 pa (“2017 purported Sub-lease”)[24]. “Sub-lease Agreement” dated 4 September 2017 (TCY to 2nd plaintiff)21.7.2017 - 3.7.2019 18.1.However, about a month later, on 4 September 2017, TCY and Tang Tong entered into a purported “sub-lease agreement”[25] with the 2nd plaintiff, which stated the following. 18.2.First, it was recited (among other things) that TCY’s right to sub-let the Plot to the 2nd plaintiff was on the bases that:
18.3.It was agreed that:
19.Notwithstanding (2) and (3) however, as noted above, TKK remained a registered manager at all material times up to and including the time of trial. 2019 purported Lease(Tso to 2007 lessees) 20.7.2019 - 30.9.2022, and purported Sub-lease (TCY to 2nd plaintiff) 21.7.2019 - 20.7.2022 20.1.Finally, a “Confirmation of record of a meeting of the Tso”[27] signed by TCY as “Party A”[28] and Tang Tong as manager stated that on 26 August 2019, TCY confirmed as a member of the Tso that the Tso had held a members’ meeting (the date of which was not stated) resolving that the Plot be leased to the 2007 lessees for a term from 20 July 2019 to 30 September 2022 (“the 2019 purported Lease”), and that he had sub-let it to the 2nd plaintiff from 21 July 2019 to 20 July 2022 (“the 2019 purported Sub-lease”) on terms set out in the “Sub-lease Agreement” dated 4 September 2017. TCY also stated that he and the 2nd plaintiff had signed another tenancy book to confirm this sub-lease. 20.2.There was no written 2019 purported Lease or 2019 purported Sub-lease in the appeal bundles. There was also no evidence of receipt of rent by the Tso. 21.It is notable that:
The judge’s Judgment 22.1.After a 3-day trial, the judge gave his Judgment in which he held:
22.2.Accordingly, the judge dismissed the action. Appeal 23.The Notice of Appeal focused on one point, being the judge’s holding that there was no tenancy by estoppel. Discussion 24.First, as noted earlier, the 2nd plaintiff’s counsel accepts that notwithstanding §16 of the Judgment, there is no evidence before this court of the “Payment Records” which the judge referred to. This is most unsatisfactory. But assuming that the judge was right in finding 3 pages of documents adduced at the trial were “Payment Records” and that they were authentic, that does not assist the 2nd plaintiff in his claim against the 2nd defendant. 25.1.The principle of “tenancy by estoppel”, and the reason why it does not bind third parties, was clearly explained by Lord Hoffmann in Bruton v London & Quadrant Housing Trust[29], where he held:
25.2.The 2nd defendant was a third party. He was not let into possession by and did not purport to derive[30] his rights from any of the parties to the leases or sub-leases. And even if it were to be said that his family had been impliedly permitted by the Tso to continue to stay on the land[31], as will be seen below, the Tso was not bound by any leases with the 2007 lessees after the 2007 Lease expired in July 2013 because TKK, who was throughout a registered manager, never consented to them. 26.There can be no doubt that TKK was a registered manager at all material times up to and including the time of trial. Irrespective of whether TKK had ever offered to resign as manager (whether conditionally on his brother replacing him or not), or whether the Tso had accepted his resignation, or had even “terminated” his appointment at the 2017 meeting (the validity of which was not proven), the fact was (as accepted by the parties) that no application was ever made to the Secretary for his removal as registered manager, and he remained throughout a registered manager. 27.TKK’s opposition to the purported leases after the expiry of the 2007 Lease was significant. It is well-established that property held by a tso is in the nature of trust property, and upon registration of his appointment under s.15 NTO, a registered manager is in the position of a trustee in relation to tso property. As the power of dealing with tso property, including the granting of a lease, is vested in the registered manager, in exercising the power to let, the registered managers as trustees are required to act unanimously[32]. It mattered not whether every manager actually signed the leases, but it was imperative that they all consented to it[33]. Absent TKK’s consent, there could be no valid lease. Even if TCY (or the 2007 lessees) did pay rent to someone in the Tso, that would not create a valid 2013 Lease binding on the Tso by reason of TKK’s opposition as a registered manager. Nor can it be argued that the 2017 meeting had overridden the need for TKK’s consent when TKK’s unchallenged evidence was that he had never received notice of the meeting, and so the validity of the meeting was not proven. Order 28.For the reasons above, the appeal was dismissed with costs to be paid by the 2nd plaintiff to the 2nd defendant, the latter’s costs to be taxed in accordance with Legal Aid Regulations. We also record that, having regard to the fact that the appeal bundles contained many pages with handwritten comments and obliterations, the 2nd plaintiff’s solicitors undertook at the hearing not to charge their client for photocopying the bundles which had been prepared in such an unacceptable manner.
Mr Kwok Kam Kwan, instructed by Raymond Chan, Kenneth Yuen & Co, for the 2nd plaintiff Mr Ernest Koo, instructed by Simon Wong & Co, assigned by the Director of Legal Aid, for the 2nd defendant [1] Proceedings were commenced by the 1st plaintiff in 2013. The 2nd plaintiff was joined as a party in 2019. Although the 1st plaintiff remained a party below, he is not a party to the appeal. [3] Sometimes spelt as “Tang Siu U”. [4] Tang Tong’s affirmation 16.4.2015, §2. [5] Judgment §9, sometimes referred to as “fongs” e.g. C/153. [6] Referred to as “La Son tso” in the translation at C/155. [7] Remaining Portion of Lot No.2643 in Demarcation District 120. [8] 2nd defendant’s 2nd affirmation 9.10.2014, §4. [9] Mr KM Chong with Mr Alvin Chong and Mr Alvin Cheng. [10] Judgment §7. [11] C/131-136. Receipt of rent was acknowledged at C/136-138. [12] C/146-151. [13] C/138-140. [14] Judgment §15. The date of Tang Kau’s death is not shown in the papers, but in the plaintiffs’ pleadings, he is said to have died before the 2013 purported Lease (§11). The actual date of death is not material to the appeal. [15] C/131-137. [16] Mr Kwan Kam Kwan, who did not appear below. [17] Tang Ching Lin (Min Son tso) was referred to as a “manager”, but he had not been registered in the Land Registry. [18] On which 23 names appear. [19] TKK’s Supplemental Witness Statement §3. [20] Judgment §58. [21] Judgment §18. [22] C/159-160. [23] Missing from the translation in the appeal bundle. [24] C/125-129. [25] C/152-154. [26] cf 20 July 2022, see preceding paragraph. [27] C/130. [28] No other party was specified. [29] [2000] 1 AC 406, 415-416. [30] Doe d. Lord Downe v Thompson (1847) 9 QB 1037, 1044; 115 ER 1572, 1574. [31] Which the judge said he was prepared to find if necessary: Judgment §38. [32] Tang Kam Wah and others v Tang Ming Yat and another HCA10141/1998, 26.11.2002, §§68, 69, 72. [33] So Kee Transportation Co Ltd v The Secretary for the Environment, Transport and Works CACV363/2005, 12.10.2006, §6. |
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