Kwan Ngai Kuen Maggie Executor of the Estate of Kwan Yuk Ling (Deceased) v. Wong Ching Man

LDPD 1327/2022

[2024] HKLdT 46

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO LDPD 1327 OF 2022

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BETWEEN

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JUDGMENT

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1.Introduction

1.1In these proceedings, the Applicant (“A”) as landlord claims against the Respondent (“R”) as tenant for (1) possession of a property known as Room M12 (“Room M12”) of the Upper Basement of Block 5, No 1 Wang Fung Terrace, Hong Kong and (2) arrears of rent up to 31 July 2021 in the sum of HK$31,000 (“Unpaid Rent”) and mesne profits from 1 August 2021.

1.2At the trial, A was represented by Mr Martin Lau and R by Mr Adrian But (with Mr Matthew Choi), all of counsel.

1.3The issues in dispute were curtailed at the commencement of the trial. Mr But was prepared to proceed on the bases that (1) there had been monthly periodic tenancies between A (or her predecessors) on the one hand and R on the other until termination on 31 July 2021 and (2) R is liable for the Unpaid Rent and also mesne profits at the claimed rate of HK$4,500 per month. However, consequential to the sole ground of opposition pursued by R, there is a dispute between the parties on the period of mesne profits for which R is liable.

1.4The sole ground of opposition pursued by R is this. At §36(h) of the Amended Notice of Opposition, it is pleaded that A has no right to evict R from Room M12 and/or seek possession thereof because R had “acknowledged and recognized (ie attorned to) Kwan Wong Chow as true legal and beneficial owner of Room M12” by either (1) as evidenced by a written declaration dated 19 January 2023 (“Alleged Declaration”), Mr Kwan Wong Chow (“KWC”) through his wife permitted R to stay within Room M12 at her will or (2) by a written tenancy entered between KWC (signed by his wife on his behalf) as landlord and R as tenant, Room M12 was let by KWC to R by a 2-year lease (“Alleged Tenancy Agreement”) at a monthly rent of HK$3,000 commencing from 1 February 2023, which agreement is automatically renewable upon expiry.

1.5Depending on my finding on R’s attornment defence, the period of mesne profits for which R is liable is either (1) should I find against the attornment defence, between 1 August 2021 until R delivers possession of Room M12 or (2) should I find in favour of the attornment defence, between 1 August 2021 and either the date of the Alleged Declaration or the commencement of the Alleged Tenancy Agreement.

1.6It is plain that there is a dispute between the parties on the ownership of Room M12. As KWC is not a party to these proceedings and in view of the fact that the issue of beneficial interest in Room M12 is not within the jurisdiction of the Lands Tribunal, I had raised with the parties whether the present case should be transferred elsewhere and/or whether additional parties ought to be joined. I record that both parties were content for the present case to be decided on the basis that any incidental findings on R’s attornment defence are not binding on third parties. For example, even were I to reject the attornment defence, Mr Lau accepted that KWC (should he wish to do so) may apply to join these proceedings at the writ of possession stage.

1.7I therefore proceed on the approach urged upon me by Mr Lau, namely in examining the attornment defence, the tribunal only needs to determine whether R has adduced sufficient evidence to make good her case that she falls within an exception to the doctrine of tenancy estoppel, in that she had attorned to the true owner. I am not required to determine, as between KWC and A (or as between KWC and the whole world), who has (the better) title. I do not understand Mr But to have quarreled with that approach: R’s Submissions dated 18 September 2023 §9-10.

1.8In terms of witnesses, A herself gave evidence and she also called her sister, Ms Kwan Ngai Kun Hedy (“Hedy”). R herself gave evidence and she also called his son, Mr Kwan Po Wan (“R’s Son”).

2.Factual background

2.1Unless otherwise noted, the matters set out in this section are either undisputed or indisputable.

2.2Wang Fung Terrace consists of a series of developments erected on an elevated “plateau” in Tai Hang. All developments in Wang Fung Terrace (Nos 1 to 16) were connected with Tai Hang Road. The said connecting road (comprising a steep and narrow road with 180 degrees hairpin turn) is known as “Wang Fung Road”.

2.3The subject development, Grandview Mansions of No. 1 Wang Fung Terrace, was built at the “northern tip” of Wang Fung Terrace (“Development”). The Development is reachable as the first building when one approaches the said hairpin at Wang Fung Road.

2.4The Development is situate on various subsections of IL 3289 Section K and consists of 8 blocks of flats. The Development was acquired and built by Sang Hop (North Borneo) Company Limited (“Developer” or “Sang Hop”). The occupation permit of the Development was issued on 11 June 1955.

2.5The Developer subdivided IL 3289 Section K into 8 lots (Subsections 1 to 7 and the Remaining Portion) by assignments to various purchasers.

2.6Subject to the parties’ arguments on its proper interpretation, by way of a first assignment dated 25 October 1966, the Developer assigned to the late Madam Wong Wai Ching (“Madam Wong”) 1 equal undivided shares over IL 3289 Section K Subsection 3 (“SS3”) together with "the use and occupation and enjoyment of ALL THAT the UPPER BASEMENT of the said building" ("Upper Basement").

2.7After several devolutions of title, the title held by Madam Wong was transferred to her daughter in law, the late Madam Kwan Yuk Ling ("Madam Kwan"). Madam Kwan passed away in November 2014, leaving a last Will appointing the Applicant as (one of her) executors.

2.8A’s case is that the Upper Basement includes a “triangular area” (“Triangular Area”) and in particular Room M12.

2.9R has been and is residing in Room M12. She has resided there since about 1965 when she married one Mr Kwan Wah. As stated above, Mr But accepted that there were monthly periodic tenancies between A (or her predecessors) on the one hand and R on the other for over 50 years until termination on 31 July 2021.

2.10The parties’ relationship turned sour in 2021 and it is plain from counsel’s submission that what perpetrated the deterioration is not germane to the resolution of the disputed issues. Suffice it to point out, since about July 2021, R ceased to pay rent to A. Also as stated above, Mr But accepts that R is liable for the Unpaid Rent and mesne profits at the monthly rate of HK$4,500 from 1 August 2021.

2.11In November 2022, R obtained legal advice. R and/or R’s Son (through investigations by their lawyers) found out that the true owner of Room M12 was purportedly KWC, and the Alleged Declaration and Alleged Tenancy Agreement thereafter came into existence. Prior to R’s approach, KWC had never claimed any ownership to Room M12.

3.The attornment defence: Summary of the parties’ positions

3.1The parties’ respective case as pursued in closing may be summarized as follows.

3.2On R’s part, it was contended:

(1) Room M12 is located outside the lot boundaries of SS3;

(2) The lot boundaries of SS3 had been delineated and demarcated by a Reassignment dated 24 May 1955 (“1955 SS3 Reassignment”), when SS3 was carved out from the other subsections. Since then, SS3 became an independent parcel of land which was separate and distinct from its adjacent lots;

(3) Within 2 weeks after the 1955 SS3 Reassignment, the right to “exclusive use and occupation” of the “Upper Basement” was first created and crystallized under the First Assignment and Deed of Mutual Covenant between the Developer and the first purchasers of SS3 on 3 June 1955 (one Irene Goh) and 30 November 1962 (one Szeto Mei Kam) respectively;

(4) The Developer had assigned the entire Remaining Portion of IL 3289 Section K (including Room M12) (“RP”) by an assignment dated 30 November 1962 to one Kwan Nan Gay (“KNG”) (“1962 RP Assignment”). The parcel clause and assignment plans to the 1962 RP Assignment clearly included the Triangular Area (including Room M12) as demarcated in “Green”;

(5) The “Upper Basement” referred to in the assignment by the Developer to Madam Wong dated 25 October 1966 ("1966 Assignment") can only refer to the floor area of the upper basement level within the boundaries and precincts of SS3. Room M12 is not included in such area;

(6) Even if the “Upper Basement” under the 1966 Assignment was intended to include the entirety of the Triangular Area to be assigned, by reason that the Developer had already sold it under the 1962 RP Assignment, no title/ownership in Room M12 could be conveyed in favour of Madam Wong. At most, any grant of exclusive use/occupation of areas outside the boundaries SS3 (ie including Room M12) can only constitute a grant of personal licence without any proprietary right of ownership assigned in favour of Madam Wong;

(7) KWC is at least one of the co-owners of RP;

(8) R is not precluded from challenging A’s title by reason of the doctrine of tenancy by estoppel because after A terminated the periodic tenancies with R, KWC has granted to R a licence and subsequently a lease. R has attorned to the true owner of Room M12 and has acquired a superior title to occupy Room M12 as a lessee of the rightful owner. Without rightful title, A cannot evict R who became the title paramount herself.

3.3Conversely, Mr Lau contended that the attornment defence should not be accepted for any of the following 3 reasons:

(1) R is not legally entitled to attorn because (a) as a matter of law, attornment is not available in the absence of there being an adverse claim by the title paramount (whoever it may be) and (b) on the facts of this case (and even proceeding on the R’s evidence), there is no suggestion that any adverse claim has ever been asserted by KWC. Instead, the attornment was done at R’s own initiation and volition (“Issue 1”);

(2) Even were R legally entitled to attorn, she is unable to adduce sufficient and satisfactory evidence to show that she had in fact attorned to KWC, the alleged title paramount (“Issue 2”);

(3) In any event, R has failed to adduce sufficient and satisfactory evidence to show that KWC (whom she allegedly attorned to) was the title paramount of Room M12 (“Issue 3”).

3.4It is not disputed by Mr But that R’s attornment defence fails were she unable to persuade me on any of the above 3 issues.

3.5As I understand the parties’ arguments, credibility of the witnesses only has a bearing on Issue 2. Issue 1 predominantly involves legal arguments and the resolution of Issue 3 largely revolves around an exercise on the proper construction of the relevant conveyancing documents. In so far as the Issue 3 interpretation exercise involves consideration of the relevant background facts, the factual matrix, as I understand counsel, is not in serious dispute.

4.Issue 1: Whether attornment available as a matter of law in the absence of an adverse claim by the title paramount

4.1Both parties referred to Industrial Properties v AEI [1977] 1 QB 580. Lord Denning said at 596D-597B as follows:

“If a landlord lets a tenant into possession under a lease, then, so long as the tenant remains in possession undisturbed by any adverse claim - then the tenant cannot dispute the landlord's title [ie the doctrine of tenancy by estoppel]...

But if the tenant is disturbed by being evicted by title paramount or the equivalent of it, then he can dispute the landlord's title. Suppose the tenant is actually turned out by the third person - or if the tenant, without going out, acknowledges the title of the third person by attorning to him - or the tenant contests the landlord's claim on an indemnity from the third person - or there is anything else done which is equivalent to an eviction by title paramount - then the tenant is no longer estopped from denying the landlord's title (see Wilson v Anderton per Littledale J). The tenant, being thus disturbed in his possession, can say to the landlord: ‘You were not truly the owner at the time when you demanded and received the rent from me. I am liable to pay mesne profits to this other man. So you must repay me the rent which I overpaid you. Nor am I liable to you on the covenants during the time you were not the owner’ (see Newsome v Graham; Mountnoy v Collier; Waston v Lane). The tenant can also claim damages for the eviction if there is, as here, an express covenant for quiet enjoyment covering interruption by title paramount.

Short of eviction by title paramount, or its equivalent, however, the tenant is estopped from denying the title of the landlord. It is no good his saying: “The property does not belong to you but to a third person” unless that third person actually comes forward and successfully makes an adverse claim - by process in the courts or by the tenant’s attornment; or acknowledgment of it as by the tenant defending on an indemnity. If the third person, for some reason or other, makes no adverse claim or is debarred from making it, the tenant remains estopped from denying the landlord's title. This is manifestly correct; for, without an adverse claim, it would mean that the tenant would be enabled to keep the property without paying any rent to anybody or performing any covenants. That cannot be right. That was the reasoning adopted by the Court of Queen’s Bench in Biddle v. Bond (1865) 6 B. & S. 225., a case of a bailor and baliee but the court treated it as the same as landlord v tenant.” (emphasis added)

4.2The position advocated by Mr Lau is as follows:

(1) As a matter of law, KWC needed to make an adverse claim before tenancy by estoppel is destroyed. This is clear from Lord Denning’s dicta “[if] the third person; for some reason or other, makes no adverse claim or is debarred from making it, the tenant remains estopped from denying the landlord's title”;

(2) The law requires an adverse claim because (a) until actual disturbance by the title paramount, there is no destruction of tenancy by estoppel: the Court of Appeal Judgment in Typhoon 8 Research Ltd v Seapower Resources International Ltd & Anor [2002] 2 HKLRD 660 at §10; (b) if a person was let in voluntarily by the tenant, he would be in no better position than the tenant himself: Re Emery & Barnett 140 ER 1149; and (c) there is a public policy to guard against risks of collusion: Delaney v Fox 2 CB (NS) 768;

(3) There is no evidence in the present case showing that KWC had asserted any adverse claim before R reached out to him. There was no threat of eviction by KWC and this is not a case where an adverse claim was made by the title paramount followed by the tenant’s attornment. Mr Lau therefore reasoned that the attornment defence falls in limine.

4.3I think the position advocated by Mr Lau finds support in the first instance judgment in Typhoon 8 Research ([2001] 3 HKLRD 773) (“Typhoon 8 Research (DC)”) in which Industrial Properties was considered. HHJ Cheung (as he then was) said as follows:

“[16] On the other hand, where after the mortgage, a tenancy is created without statutory or express power, or more particularly where the mortgagee’s prior consent (if required) has not been obtained, the tenancy is good by estoppel as between the mortgagor and tenant, but is void as between the mortgagee and the tenant. This is because, as explained above, the mortgagor has, by the mortgage, conveyed away the title to possession. The lease, though not binding on the mortgagee, will continue as between the mortgagor and the tenant until the mortgagee interferes: See for instance the local case of The Banque de L’indo Chine v Mitchell (1928) 23 HKLR 44. Mere inaction on the part of the mortgagee after learning of the existence of the tenancy is insufficient to terminate the tenancy. Nor is mere inaction with knowledge of the tenancy on the part of the mortgagee sufficient, for that matter, to constitute any acceptance of the tenant by the mortgagee: Parker v Braithwaite [1952] 2 All ER 837. Whilst the tenancy remains undisturbed, the parties to the transaction are estopped from denying that they stand in the relationship of landlord and tenant. That will remain the position unless and until the tenant is disturbed by being evicted by someone with a title superior to that of his landlord (usually described as being evicted by title paramount) or its equivalent in which case he can dispute the landlord’s title.

[17] Instances of ‘the equivalent of eviction by title paramount’ are where the tenant is forced to acknowledge the title of a third party and attorn to him or where the tenant contests the title of his landlord on being given an indemnity by a third party: Hill & Redman’s Law of Landlord and Tenant, Vol.1, Division A paras. 86 and 106 citing as authority, among others, the English Court of Appeal case of Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, where Lord Denning MR explained the position thus [citing the passage set out at §4.1 above].

[18] As pointed out by Hill & Redman’s Law of Landlord and Tenant Vol.1, Division A para.108, it is not wholly clear what precisely is equivalent to eviction by title paramount such as to enable the tenant to deny the title of the landlord who has granted him a lease. The list of instances of such equivalent to eviction by title paramount given by Lord Denning in the passage quoted above was obviously not intended to be exhaustive. For the purpose of the present case, the question is whether the action by a mortgagee of taking possession of the mortgaged premises and demanding payment of rent by the tenant amounts to an equivalent to eviction by title paramount. Mr Wong, Counsel for the defendants, argued ‘no’, because if the tenant agrees to pay rent to the mortgagee, his quiet possession of the premises will not be disturbed, and therefore there is no eviction or an equivalent to eviction.

[19] In my judgment, this gives too narrow a meaning to an equivalent to eviction by title paramount. From the instances of such equivalent referred to above, it is quite clear that a tenancy by estoppel is fatally disturbed when the relationship of landlord and tenant is fundamentally disturbed. From the angle of a landlord, the receipt of rent is a, if not the most important instance of his status as the landlord, and once the mortgagee asserts his right to receive the rent against both the mortgagor and tenant, it fatally disturbs the landlord and tenant relationship and thus the tenancy by estoppel. From the angle of the tenant, payment of rent is his most important obligation under the tenancy. He recognises the title of his landlord by making payment of rent to him. Once he is forced to recognise someone else as having the right to receive payment of rent from him, he is in fact being forced to acknowledge that someone else as having a better title than his landlord to the reversion and receipt of rent. That strikes at the very foundation of the relationship of landlord and tenant. So in my judgment, when a mortgagee takes possession and demands payment of rent by the tenant, this amounts to an equivalent to eviction by title paramount by the mortgagee, the tenancy by estoppel is fatally disturbed and the tenant is free to challenge and deny his landlord’s title. In other words, the tenancy by estoppel is destroyed.” (emphasis added)

4.4Mr But has no quarrel with the proposition that the position advocated by Mr Lau is correct in what he describes as a “typical scenario” of non-payment of rent. In such typical scenario, Mr But accepts that the tenant cannot dispute the landlord’s title by just referring to the mere existence of a title paramount who remains idle and does not exercise any right as owner over the subject land. I think the foregoing is clearly illustrated in Typhoon 8 Research (DC) §16 and Industrial Properties (§4.1 above).

4.5Mr But, however, contends that there is no basis for A’s argument that a valid attornment must be preceded by some form of antecedent adverse claim by the true owner made at his own initiative, such that a tenant who, as here, took the initiative to approach the true owner is still bound by tenancy by estoppel as against the purported landlord.

4.6In my view, I think Mr But is right. I do not believe, as a matter of law, R is unconditionally bound by tenancy by estoppel if, upon her own investigation into the ownership of Room M12, she discovered that KWC is the true owner. What is material is the conduct of KWC after being apprised of the result of R’s investigation. KWC could either remain idle or take action which may or may not be seen as an equivalent to eviction by title paramount. In the former scenario, R would still be bound by tenancy by estoppel. In the latter scenario, it is at least arguable, by parity of reason, that the Alleged Tenancy Agreement has the effect of fatally disturbing the landlord and tenant relationship between A and R: Typhoon 8 Research (DC) §19.

4.7Moreover, as pointed out by Mr But, the Hong Kong Court has recognized that the defence of attornment in a claim on tenancy by estoppel is based on the concept of relativity of title. Industrial Properties was considered in Tai Fat Development (Holding) Co Ltd v The Incorporated Owners of Gold King Industrial Building [2007] 4 HKLRD 440. In addition to citing at §37 Lord Denning’s dicta set out at §4.1 above, Tang VP (as he then was) at §40 also considered Lawton LJ’s observation at pages 612-613:

“The origins of this law lie in the middle ages, probably in decisions as to methods of proof and manner of pleading. The earliest relevant reported case is James v Landon 1 Cro Eliz 36. The most junior apprentice in the law who was present in court when this case was being tried must surely have known what the result was going to be. The defendant had granted a 21-year lease to the plaintiff. After it had expired a dispute arose between the plaintiff and the defendant as to which of them owned the freehold. The plaintiff said he did as the heir at law of an earlier freeholder. The defendant tried to defend this claim by saying that as the plaintiff had taken a lease from him he was forever barred from disputing his claim to the freehold. This unmeritorious defence was rejected.”

4.8Tang VP went on to state as follows:

“[41] The essence of the estoppel is that it will not avail the tenant to say the property does not belong to [the landlord] but to a third party.

[42] But, we do not believe the tenant is estopped from asserting that he himself has the better title. The observation of Lawton LJ quoted above supports this view. Suppose the landlord was the mortgagor and the tenancy was not binding on the mortgagee, and the tenant has acquired the mortgage, we do not believe the tenant would be estopped from asserting that he was entitled to remain in possession because of his better title as mortgagee. It is at least arguable that he is not.

[43] We are of the view that the judgment for possession must be set aside. It is highly arguable that the defendant is entitled to assert its better title to possession.” (emphasis added)

4.9I do not believe Mr Lau in his Reply Closing Submissions offered any or any sufficient answer to Tai Fat Development.

4.10For the above reasons, I answer Issue 1 in favour of R, namely as a matter of law, an adverse claim by the title paramount at his own initiative is not required before an attornment defence is available. In the context of the present case, R may succeed in her attornment defence if she can demonstrate she can derive and has derived a better title from KWC.

5.Issue 2: Whether R has adduced sufficient and satisfactory evidence to show that she had in fact “attorned” to KWC

5.1As pointed out at §3.5 above, credibility of the witnesses has a bearing on Issue 2. I shall adopt the approach set out at Hui Cheung Fai & Anor v Daiwa Development Ltd & Ors, HCA 1734 of 2009, 8 April 2014 §§79-83. In essence, importance is attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of the events. It is further important to assess the consistency of the evidence of a witness with undisputed or indisputable evidence, and its internal consistency, namely by comparing the oral testimony and his witness statement(s).

5.2The evidence on what transpired after R obtained legal advice on the ownership of Room M12 is set out in almost identical terms at R’s statement §§60-63 and at R’s Son’s statement §§47-50.

5.3R’s statement reads as follows:

“[60] 在知道 [KWC] 是真正的業主後，本人便聯絡 [KWC] 和他太太Betty 和兒子Otto，告知他們有關情況，並在確認 / 承認 [KWC] 作為真正業權人的基礎下，並懇求他們給本人繼續居住 [Room M12] 直至終老。

[61] 其後獲得 [KWC] 和他太太告知我可以繼續左(sic) [Room M12] 居住並且住過世。2013 (sic)年1月19日關太代 [KWC] 簽發一張紙條給我，容許我住 [Room M12] 直至遷離或過世(關山的表達為: “住到佢唔住”)，好讓本人可以繼續在 [Room M12 ] 安居樂業，直至終老。

[62] 經考慮進一步法律意見後，本人兒子和關太([KWC 的代表])商討，以租約形式和繳交月租方式 (月租港幣$3000)、(sic)每約為期兩年自動續期向 [KWC] 租住[Room M12] 會更正式和恰當。經考慮後在2023年2月1日，關太代表 [KWC] 簽署了簡單的文件，確認將 [Room M12] 租給本人住，我亦向 [KWC] 從2023年2月起繳付了按金和租金，並取得有關的收據。

[63] 在2023年3月本人也繳交了該月份租住 [Room M12] 的租金給 [KWC]，並取得租金收據。”

5.4R’s Son’s statement reads as follows:

“[47] 在知道 [KWC] 是真正的業主後，母親和我便聯絡 [KWC] 和他太太Betty 和兒子Otto，告知他們有關情況，並在確認 / 承認 [KWC] 作為真正業權人的基礎下，並懇求他們給母親繼續居住 [Room M12] 直至終老。

[48] 其後獲得 [KWC] 和他太太告知母親可以繼續左(sic) [Room M12] 居住並且住過世。2013 (sic)年1月19日關太代 [KWC] 簽發一張紙條給我，容許我住 [Room M12] 直至遷離或過世 (關山的表達為: “住到佢唔住”)，好讓本人可以繼續在[Room M12]安居樂業，直至終老。

[49] 經考慮進一步法律意見後，本人和關太([KWC 的代表]) 商討，以租約形式和繳交月租方式 (月租港幣$3000)、(sic)每約為期兩年自動續期向 [KWC] 租住 [Room M12] 會更正式和恰當。經考慮後在2023年2月1日，關太代表 [KWC] 簽署了簡單的文件，確認將 [Room M12] 租給母親住，母親亦向 [KWC] 從2023年2月起繳付了按金和租金，並取得有關的收據。

[50] 在2023年3月母親也繳交了該月份租住 [Room M12]租金給 [KWC]，並取得租金收據。本人亦安排了母親有關和 [KWC] 租約文件到稅局打釐印，以便呈堂。”

5.5In closing, Mr Lau submitted that there is no satisfactory evidence to show that KWC had agreed to the Alleged Declaration and Alleged Tenancy Agreement. He pointed out that both documents were not signed by KWC but signed by KWC’s wife (“Betty”) allegedly on behalf of KWC.

5.6For the following reasons, I agree with Mr Lau.

5.7I accept Mr Lau’s submission that R and R’s Son are not reliable witnesses. As pointed out by Mr Lau, R came across as a frail and old lady and her memory as to the events was also not particularly vivid. Given her advanced age, R may not have been deliberately dishonest. Having said that, a witness’ recollection of past events (especially one without contemporaneous records) even if honest, may nonetheless be fallible: Hydrotech Waterproofing Solutions Ltd v Shun Yuen Construction Company Ltd [2022] HKCFI 1170 at §§3-7.

5.8Further, as is plain from their witness statements set out at §§5.3 and 5.4 above, the Alleged Tenancy Agreement was said to be negotiated only between R’s Son and Betty. Yet, both R and R’s Son at the trial gave oral evidence that the Alleged Tenancy Agreement was negotiated between R, R’s Son, Betty and KWC. On any view, this is the sort of internal inconsistency identified in Hui Cheung Fai and such inconsistency is concerned with a highly material matter, namely whether KWC had agreed to the Alleged Tenancy Agreement.

5.9It is also plain that there is a wholesale reproduction of the contents of R’s statement in R’s Son’s statement. As pointed out by Mr Lau, they even shared the same typographical mistakes (as underlined at §§5.3 and 5.4 above). I bear in mind the caution set out at Au Yeung Pui Chun v Cheng Wing Sang [2021] HKCFI 463 at §§30-38 that, in such circumstances, the tribunal should be slow to accept with any confidence that R’s statement and R’s Son’s statement contain independent recollection of the facts and events. As pointed out by G Lam J (as he then was) at §35, in such circumstances, the weight that should be placed on such strikingly similar statements ought to be greatly diminished.

5.10In assessing the inherent likelihood and apparent logic of the events, the useful starting point is to first consider the undisputed or indisputable facts. In the present case, the first undisputed fact is that, on R’s own evidence, until R (purportedly) approached KWC after she obtained legal advice in November 2022, KWC did not regard himself as the owner of Room M12. A further indisputable fact is that, on R’s own evidence given at the trial (by R’s Son), it was Betty, not KWC, who was concerned about R being evicted from Room M12, so much so that Betty voluntarily and without prompting provided additional documents to R’s Son after the commencement of the trial for R to rely on at the trial. A yet further indisputable fact is that the Alleged Declaration and Alleged Tenancy Agreement were on extremely favourable terms to R. The Alleged Declaration was a license for R to remain in Room M12 for free at R’s will and the Alleged Tenancy Agreement is effectively a perpetual lease at a very favourable monthly rental with (on its face) no provision for rent increase, and the Alleged Tenancy Agreement was entered into only because R obtained legal advice to do so. An additional indisputable fact is that at the time when R purportedly approached KWC, KWC must have known that there was a competing claim by A to the ownership of Room M12.

5.11In agreeing to the alleged arrangements in respect of Room M12 with R, KWC must have realized that he was asserting a claim to a property which he for many years did not regard to be his own, but Room M12 was regarded by someone else to be theirs for a long time. At its most serious, the foregoing may give rise to a risk of litigation. At its mildest, it would at least cause some embarrassment between himself and A, both owners of properties at the Development (as acknowledged at R’s Main Closing Submissions §128).

5.12As set out in the section following, R’s case that KWC is the true owner of Room M12 is far from straightforward and entails detailed examination of a number of conveyancing documents. R’s Main Closing Submissions dedicate almost 90 paragraphs to address the issue, and R’s Reply Closing Submissions on the topic contain almost 30 paragraphs. And even then it is acknowledged by Mr But that KWC may only be one of the tenants in common (as opposed to the sole owner) of that part of RP which includes Room M12.

5.13There is no or no detailed evidence as to what information was conveyed to KWC by R to satisfy KWC that he was the true owner of Room M12. It is apparent from the evidence of R and R’s Son that no lawyer was present when they approached KWC.

5.14In such circumstances, it is perhaps unsurprising that R and R’s Son departed from their witness statement to the effect that the Alleged Tenancy Agreement was not negotiated only between R’s Son and Betty, but between R, R’s Son, KWC and Betty. That was plainly an attempt to demonstrate that KWC was satisfied that he was the true owner of Room M12. I do not accept that evidence. First, as noted above, there is an internal inconsistency on a highly material matter. Secondly, if KWC had actively participated in the negotiation of the Alleged Tenancy Agreement, there was no good explanation for KWC not signing the Alleged Tenancy Agreement himself (even taking into account his old age), in particular when it was a homemade document consisting of only a few sentences. Thirdly, I share Mr Lau’s concern on the manner in which R and R’s Son departed from their witness statements. At the trial, R’s Son was sequestered out of court during R’s oral evidence. R’s evidence did not complete on Day 2 and R was given the usual warning not to discuss her evidence with anyone during the adjournment. I find it highly unusual that both of them would have made the same mistake in their witness statements and then proceeded to make the same clarification during oral testimony.

5.15What appears to have happened is that R had developed a good relationship with residents at the Development. She (and previously her late husband) have been the caretaker at the Development since the 1970s. In evidence are letters signed by various owners at the Development (including Betty for KWC) supporting R continuing to stay at Room M12 while rendering management services.

5.16But Betty’s willingness to assist R does not necessarily indicate KWC’s agreement to the alleged arrangements. KWC’s position is different from those of the other owners and Betty. Colloquially, KWC was “sticking his neck out” for A and his doing so would expose him to at least a risk of litigation. There is simply no evidence that any assessment was carried out or considered by KWC.

5.17Mr But naturally relies heavily on the documentary evidence (ie the written Alleged Declaration and Alleged Tenancy Agreement). As submitted by Mr Lau, Betty’s signing on behalf of KWC is neither here nor there since, as a matter of law, an agent cannot cloak herself with any authority when none has been conferred by the principal: Re Apastron Capital Limited [2022] HKCFI 1567 §77.

5.18There can be no dispute that the burden on establishing a conferral of authority rests on the party asserting its existence. It is plain from Amended Notice of Opposition §36(h) that the burden in the present case rests on R (§1.4 above). In answer, Mr But relies on both actual and apparent authority. Their nature is summarized at Bowstead & Reynolds on Agency, 23^rd Ed §3-001 to 3-003:

(1) The authority of an agent may be (a) actual where it results from a manifestation of assent that the agent should represent or act for the principal expressly or impliedly made by the principal to the agent; or (b) apparent where it results from such a manifestation made by the principal to the third parties;

(2) Actual authority is the authority which the principal has given the agent wholly or in part by means of words or writing or is regarded by the law as having given the agent because of the interpretation put by law on the relationship and dealings of the two parties;

(3) In terms of apparent authority, where a principal represents, or is regarded by the law as manifesting, that another has authority, the principal may be bound as against a third party by the acts of that other person within the authority which that person appears to have, though the principal had not in fact given that person such authority or had limited the authority by instructions not made known to the third party.

5.19In my view, I do not regard the Alleged Declaration and Alleged Tenancy Agreement as being probative on the existence of either actual authority or apparent authority.

5.20As regards actual authority, I do not accept Mr But’s submission that the Alleged Declaration and Alleged Tenancy Agreement, in so far as they contain the words “for and on behalf of [KWC]”, amount to express declarations of actual authority conferred by KWC to Betty. The cases referred to at R’s Reply Closing Submissions §68(e), for example, Toymax (HK) Ltd v Redsmith International [1994] 1 HKC 714 §38 do not support his proposition. As stated at Bowstead §3-003, an actual authority is a legal relationship between principal and agent created by consensual agreement to which they alone are parties. As pointed out by Mr Lau, no authorization letter or power of attorney signed by KWC in favour of Betty has been produced. I have already stated above that I do not regard R and R's Son to be reliable witnesses. Betty and KWC also did not come forward to give evidence that any authorization conferring actual authority was given.

5.21As regards apparent authority, equally, the Alleged Declaration and Alleged Tenancy Agreement on their own were not representations made by KWC to R that Betty had authority such that KWC might be bound as against R by the acts of Betty within the authority which Betty appeared to have.

5.22Mr But asserted at R’s Main Closing Submissions §115 that Betty had apparent authority to bind KWC to the Alleged Declaration and Alleged Tenancy Agreement because it was reasonable for R to rely on Betty’s apparent authority as his wife. The authority cited by Mr But for the proposition is Thanakharn Kasikorn Thai Chamkat v Akai Holdings Ltd (2010) 13 HKCFAR 479 §52:

“In a commercial context, absent dishonesty or irrationality, a person should be entitled to rely on what he is told: this may occasionally produce harsh results, but it enables people engaged in business to know where they stand. As to principle, apparent authority is essentially a species of estoppel by representation (see per Diplock LJ in Freeman & Lockyer [1964] 2 QB 480, 503, cited above, and per Brennan J in the High Court of Australia in Northside Developments Pty Ltd v. Registrar-General (1989-1990) 170 CLR 146, 173-4).” (emphasis added)

5.23I do not believe Mr But can derive any assistance from Thanakharn. First, the present case is not one in a commercial context. Secondly, and more importantly, in the context of apparent authority, a person, absent dishonesty or irrationality, should be entitled to rely on what he is told by the principal. The reference to Freeman at Thanakharn §43 makes this clear:

“[43] In an often cited passage in Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, 506, Diplock LJ identified four conditions which have to be satisfied before a third party, whom he described as a “contractor”, can enforce a contract against a company entered into by a purported agent with no actual authority. Those conditions are:

(1) that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the contractor;

(2) that such representation was made by a person or persons who had ‘actual’ authority to manage the business of the company either generally or in respect of those matters to which the contract relates;

(3) that he (the contractor) was induced by such representation to enter into the contract, that is, that he in fact relied upon it; and

(4) that under its memorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought to be enforced or to delegate authority to enter into a contract of that kind to the agent.” (emphasis added)

5.24It is plain that the Alleged Declaration and Alleged Tenancy Agreement on their own cannot amount to representations made by KWC to R. They were signed by Betty and at most amounted to representations made by Betty. I repeat that I do not find R and R’s Son to be reliable witnesses. There is no other documentary evidence showing any representation made by KWC to R.

5.25Further, in so far as Mr But suggests that Betty had apparent authority on the basis that she was KWC’s wife, no authority is cited for the proposition. I note, however, that at Bowstead §3-045 to 3-046, the propositions there stated are that in general one spouse has no usual authority to bind the other in contract, and that in the context of presumed authority (which Mr But does not rely on), it is confined to necessaries. It seems clear that the Alleged Declaration and Alleged Tenancy Agreement are not necessaries.

5.26I should point out that it is not part of R’s case that any lack of authority was cured by ratification on KWC’s part. In any event, as pointed out by Mr Lau, there was no documentary evidence on the performance of the Alleged Tenancy Agreement (or the acceptance of the same by KWC). R sought to adduce (after A closed her case) into evidence certain rent receipts. I did not accede to R’s application. No explanation was provided for the lateness of the application, in particular when R’s witness statement already mentioned their alleged existence.

5.27For the above reasons, I determine Issue 2 against R, namely I agree with Mr Lau that R has failed to adduce sufficient and satisfactory evidence to show that she had in fact attorned to KWC.

5.28I have not lost sight of the fact that A and Hedy did not put forward any evidence on Issue 2. This is hardly surprising, as they were not involved in the dealings between R and KWC. The burden is squarely on R to provide sufficient and satisfactory evidence to substantiate her attornment defence.

5.29Given my findings above, it is unnecessary to resort to Mr Lau’s invitation to me to draw adverse inference by reason of R’s failure to call KWC and/or Betty as her witnesses or to deal with Mr But’s arguments on why, in the circumstances of the present case, no adverse inference should be drawn.

5.30As I have determined Issue 2 against R, her attornment defence fails. In case I am wrong on the above factual findings, I proceed to briefly deal with counsel’s arguments on Issue 3. It is, however, necessary to first set out the relevant conveyancing documents.

6.Issue 3: Whether R has adduced sufficient and satisfactory evidence to show that KWC (whom she allegedly attorned to) was the “title paramount” of Room M12

6.1The resolution of Issue 3 involves the construction of the relevant conveyancing document. The focal point, as submitted by Mr Lau, is not whether A is the true owner of Room 12 but whether R can demonstrate that KWC is the true owner. This is because, unless R can demonstrate that she has attorned to KWC as the true owner, she is bound by estoppel by tenancy and cannot dispute A's title.

6.2There is no dispute between counsel that the proper interpretative approach involves a unitary exercise: Eminent Investments (Asia Pacific) Limited v DIO Corporation (2020) 23 HKCFAR 487:

“[42] The highest courts in Hong Kong and in England and Wales have returned often in recent years to the principles of the interpretation of contracts. Reported cases deal of course with the difficult cases and it is easy to overlook the fact that the overwhelming majority of contracts are interpreted and performed without difficulty in accordance with their terms.

[43] It is a truism that the starting point is the ordinary and natural meaning of the words of the contract, and of course in the vast majority of cases that is the ending point also. But, as Ma CJ pointed out in Fully Profit (Asia) Ltd v Secretary for Justice, in the more difficult cases it is not particularly helpful to refer to the “ordinary and natural meaning” of words because in such cases there can be much debate over exactly what is the ordinary or natural meaning of words; and in those cases the surer guide to interpretation is context.

[44] In Wood v Capita Insurance Services Ltd, Lord Hodge JSC reviewed the many cases on interpretation and emphasised that interpretation was a unitary exercise. That is why, where there are conflicting interpretations, account should be taken of the natural and ordinary meaning of the provision in question, the purpose of the contract and of the provision, other relevant provisions, the facts and circumstances known or assumed by the parties at the time that the contract was executed, the quality of the drafting of the instrument, and commercial common sense.

[45] The following points emerge from the judgment of Lord Hodge JSC:

(a) it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each;

(b) the court must be alive to the possibility that one side may have agreed to something which with hindsight did not serve its interest, or that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms;

(c) some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals, whereas the correct interpretation of contracts which are marked by informality, brevity or the absence of skilled professional assistance may be achieved by a greater emphasis on the factual matrix;

(d) but negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement; and

(e) commercial common sense and surrounding circumstances should not be used to undervalue the importance of the language of the provision which is to be construed, and the mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly for one of the parties, is not a reason for departing from the natural language.

[46] In our view, there is no substance to Eminent’s criticism of the Court of Appeal. The Court of Appeal plainly rejected the notion that there was a conflict between a “textual” and a “contextual” approach, specifically relying on Lord Hodge’s judgment in Wood v Capita Insurance Services Ltd. It is true that on one reading of paragraph 7.4, the Court of Appeal may be taken to have suggested that, in the case of professionally drafted documents, the context was relevant only to dealing with inconsistencies or gaps. There is no such limitation, but a fair reading of the judgment as a whole shows that the Court of Appeal was not excluding context in the whole process of interpretation.” (emphasis added)

6.3In the specific context of conveyancing documents, both counsel referred to Harvest Rise Development Ltd v Ling Yau Yung [2002] 2 HKLRD 378 §27:

“[27] Taking into account the factors I have just set out, I have been guided by the following principles of construction relevant to the present case :

(1) The object of the exercise in construing conveyances, just as in the case of any other contract, is to ascertain what the parties intended. In Secretary for Justice v. Wing Lung Wai Community [1999] 3 HKC 580 at 588B, Chan CJHC said, "If there is a dispute with regard to what is actually conveyed, that is a matter of construction of the whole conveyance, including the parcel clause and the plan, in the light of other relevant surrounding circumstances. The object is to ascertain what the parties intended to be passed under the document and what is passed". This approach is entirely consistent with that adopted in relation to all contracts: regard must be had to the actual wording of the relevant clause, to the rest of the contract and the surrounding circumstances or "factual matrix".

(2) In giving effect to the parties' intention, the court may modify or even supply words in a contract: Chitty on Contracts, (28th Edn), Vol. 1 at paras.2-070 and 2-074. In the present case, in order to give effect to what I have found to be the parties' intention, it is necessary to modify the plans annexed to the four assignments by supplying or adding to the Pink, Blue and Yellow coloured areas, the Subject Portion.

(3) I have not forgotten that the assignments expressly provide that the Property assigned was as "more particularly delineated and described" in the annexed plan. I accept that, generally, where such or similar words are used, if there exists any conflict or uncertainty between words of description and the plan referred to, the latter would prevail: Neilson v. Poole (1969) 20 P & CR 909, 915-6. However, this is not to say that where the court is of the view that the wording in an assignment, when seen as a whole, clearly expresses what the parties intended to be assigned (as in the present case), the court is then bound somehow to follow the plan regardless if the words "as more particularly delineated and described" in a plan are used. In my view, cases like Neilson v. Poole are not authorities for this proposition at all. Upon analysis, they merely provide useful tools to enable the court arrive at a correct interpretation. The basic rule is that as expressed by Chan CJHC in Secretary for Justice v. Wing Lung Wai Community. Afterall, in Lintock Co. Ltd v. Attorney General [1985] 2 HKC 555, Hunter J construed a Crown lease containing those words of reference to a plan contrary to what was represented in that plan.”

6.4The difference between counsel is on the application of the above principles to the present case. As will be seen below, the arguments put forward by Mr But and Mr Lau respectively lean towards the textual analysis and the contextual analysis. Mr But submitted the relevant conveyancing documents, which were professionally drafted, are clear and unambiguous. Mr Lau, on the other hand, invited me to pay regard to the context and commercial common sense, and I should not be deterred from, as in Harvest Rise, to depart from the assignment plans.

(i) The relevant conveyancing documents

6.5There is no dispute on the physical location of Room M12: Attachment 1 hereto.

6.6As mentioned earlier, IL 3289 Section K (“SK”) was divided into 8 subsections, namely SS1 to SS7 and RP: Attachment 2 hereto.

6.7By the 1955 SS3 Reassignment, by Kwan Shun Yee and Ho Tim as mortgagee/reassignors to Sang Hop as reassignee dated 24 May 1955, SS3 was carved out from the then RP of SK, which included the present SS4 to SS7 and RP:

(1) The Recital stated that the entire SK (ie the land of the entire Grandview Mansion) had earlier been assigned by Sang Hop to Kwan Shun Yee and Ho Tim by an indenture of mortgage dated 4 June 1954 for securing the repayment of the principle sum of $400,000. Subsequently, SS1 and SS2 had been reassigned to Sang Hop upon the repayment of $50,000;

(2) By the 1955 SS3 Reassignment, in consideration of $50,000, Kwan Shun Yee and Ho Tim assigned to Sang Hop “ALL THAT portion of the said piece or parcel of and which said portion together with its abuttals and dimensions was more particularly delineated and described on the plan thereto annexed and thereon coloured Pink, Brown and Brown hatched Red and was intended to be registered in the Land Office as SS3” and delineated in the plan annexed: Attachment 3 hereto.

6.8Pausing here, it seems to me relevant that the 1955 SS3 Reassignment was not one between a vendor and a purchaser. The whole SK was mortgaged and the subsequent “division” of SK was done in the circumstances that partial repayments were made and successive parts of SK were redeemed.

6.9The next set of relevant conveyancing documents, dated 3 June 1955, are (1) First assignment by Sang Hop as the vendor to Irene Goh as the purchaser and (2) the Deed of Mutual Covenants between Sang Hop and Irene Goh concerning SS3:

(1) By the said assignment, Irene Goh was assigned 1 out of 6 equal undivided shares of SS3, together with the exclusive right to use, occupy and enjoy 'the ground floor of the said Building'. There was no plan attached to the Assignment. Instead, the Recital referred to the plan annexed to the 1955 SS3 Reassignment;

(2) Under the said assignment, Irene Goh was only assigned with the G/F unit within the boundaries of SS3. There is a flat roof (“Goh Flat Roof”) located above the Triangular Area and it is common ground that the Goh Flat Roof was adjacent to and only accessible through the said G/F unit;

(3) The Recital to the Deed of Mutual Covenants stated that there was erected on “the said premises” a six-storey building and defined such building as “the said Building” [B/356]. “The said premises” referred to SS3 (and not RP);

(4) Clause 1 of the Deed of Mutual Covenants stated that each of the parties shall have the right to the exclusive use, occupation and enjoyment to the floor of “the said Building” as set out in the Schedule;

(5) The expression “Upper Basement” first appeared in the Schedule to the Deed of Mutual Covenants. According to the Schedule to the Deed of Mutual Covenants, Irene Goh had the exclusive right to use the Ground Floor of “the said Building”, while Sang Hop retained the exclusive right to use the “Garage-floor”, “Upper Basement” and the 1^st to 3^rd floors of “the said Building”.

6.10On 30 November 1962, Sang Hop as the vendor assigned to Szeto Mei Kam as purchaser 3 out of 6 equal undivided shares together with the exclusive right to use the 1^st, 2^nd and 3^rd floors of the ‘said building’ as erected on SS3:

(1) By the Recital to the Assignment between Sang Hop as vendor and Szeto Mei Kam as purchaser dated 30^th November 1962, Szeto Mei Kam was assigned 3 equal undivided shares of SS3. SS3 with its “abuttals and dimensions” was stated as “more particularly delineated and described on the plan hereto annexed and thereon coloured Pink, Brown and Brown Hatched Red”. The assignment plan is identical to the Reassignment Plan of the 1955 SS3 Reassignment in all respects, except that by 30 November 1962, SS4, SS5, SS6 and SS7 had been carved out from RP;

(2) The Recital to the Deed of Mutual Covenants was written in identical terms as the Recital to the Deed of Mutual Covenants between Sang Hop and Irene Goh. It stated that a six-storey building had been erected on SS3 and defined such building as “the said Building”;

(3) Clause 1 of the Deed of Mutual Covenants, in identical terms as Clause 1 of the Deed of Mutual Covenants between Sang Hop and Irene Goh, stated that each of the parties shall have the right to exclusive use of the floor of “the said Building” as set out in the Schedule;

(4) The Schedule to the Deed of Mutual Covenants stated that Szeto Mei Kam had the exclusive right to use the 1^st , 2^nd and 3^rd floors of “the said Building”, while Sang Hop retained the exclusive right to use the “Upper Basement” of “the said Building”.

6.11Also on 30 November 1962, by the 1962 RP Assignment between Sang Hop as vendor and “Kwan Nang Gay” (“KNG”) as purchaser, Sang Hop assigned to KNG the entire RP:

(1) The Recital to the Assignment stated the property assigned was RP, “which said piece or parcel of ground with its abuttals and dimensions is more particularly delineated and described on the Plan No. 1 hereto annexed and thereon coloured Pink Brown and Green And of to and in the messuage erections and buildings thereon and seven car-parking spaces in the said premises marked Nos. 22, 26, 28, 29, 30, 31, 32 respectively on the Plan No. 2 hereto annexed and thereon coloured Pink’;

(2) Plan No 1 annexed to the Assignment identified RP: Attachment 4 hereto. The “Triangular Area” including Room M12 is within RP as coloured in “Green”.

(3) Plan No 2 annexed to the Assignment, titled “Garage Plan”, identified car parking spaces Nos. 22, 26, 28, 29, 30, 31 and 32: Attachment 5 hereto. The car parking spaces are within the “Triangular Area”.

6.12Pausing here, it is to be noted that RP (or Block 8) is at a distance from the Triangular Area including Room M12. It is also common ground that there was no physical connection between Block 8 and Room M12. Room M12 is only accessible via Block 5 or Block 4’s staircases. There is also no dispute that despite the 1962 RP Assignment, the Developer continued to collect rent from Room M12 between 1962 to 1966. KNG as at the material time one of the directors of the Developer.

6.13Eventually, by the 1966 Assignment dated 25 October 1966, Sang Hop as vendor assigned to Madam Wong as purchaser 1 out of 6 equal undivided share in SS3 with the exclusive right to use, occupy and enjoy the “Upper Basement of the said building”:

(1) The operative part (ie the parcel clause) of the 1966 Assignment stated that the subject property under the assignment to be as follows:

“Subsection 3 of Section K which the said piece or parcel of ground with its abuttals and dimensions is more particularly delineated and described on the plan hereto annex and thereon coloured PINK BROWN and BROWN Hatched Red and of to and in the messuage erections and buildings thereon TOGETHER with exclusive right to use occupation and enjoyment of all that UPPER Basement of the said building.”

(2) The rights and interests assigned was identified by the plan attached, titled “Plan Showing Chauffeurs & Gardener’s Quarters (Upper Basement)”: Attachment 6 hereto.

6.14Pausing here, there is no dispute that Madam Wong started to collect rent in relation to Room M12 (as well as other rooms in the area) in about 1966.

6.15By an Assignment between KNG as the vendor and Canion Investment Ltd (“Canion”) as the purchaser dated 14 March 1978, re-registered on 10 March 1984 with corrections, KNG assigned to Canion the entire RP, including car parking spaces nos. Nos. 22, 26, 28, 29, 30, 31 and 32. The assignment referred to Plans Nos 1 and 2 annexed to the 1962 RP Assignment.

6.16By a special resolution dated 22 April 1982, Canion was wound up voluntarily by its members. KWC was appointed as the liquidator of Canion and was authorized to divide the assets of Canion as he thought fit among the members of Canion.

6.17On 18 May 1983, RP was divided among the members of Canion in the following manner:

(1) By an Assignment between Canion acting through KWC as its liquidator on one hand and KWC in his personal capacity on the other hand, KWC was assigned 1 out of 4 equal undivided shares of RP, with the exclusive right to use the 2^nd Floor of Block 8, “the BASEMENT under the Ground Floor of the said Building”, and car parking space no 31 in the Garage. As shown in Plan No 2 annexed to the Assignment, car parking space no 31 is one of the car parking spaces in the garage level of the Triangular Area;

(2) By an Assignment between Canion acting through KWC as its liquidator on one hand and Kwan Wong Lin on the other hand, Kwan Wong Lin was assigned 1 out of 4 equal undivided shares of RP, with the exclusive right to use the Ground Floor of Block 8 and car parking space no 29;

(3) By an Assignment between Canion acting through KWC as its liquidator on one hand and Kwan Hoi Leung on the other hand, Kwan Hoi Leung was assigned 1 out of 4 equal undivided shares of RP, with the exclusive right to use the 1^st Floor of Block 8 and car parking space no 30;

(4) By an Assignment between Canion acting through KWC as its liquidator on one hand and Kwan Wong Yui on the other hand, Kwan Wong Yui was assigned 1 out of 4 equal undivided shares of RP, with the exclusive right to use the 3^rd Floor of Block 8 and car parking space no 32.

6.18Kwan Wong Lin, Kwan Hoi Leung, KWC and Kwan Wong Yui, who were the assignees in the 4 assignments, executed a Deed of Mutual Covenant with respect to RP:

(1) The Recital stated that Kwan Wong Lin, Kwan Hoi Leung, KWC and Kwan Wong Yui held RP as tenants in common in equal shares;

(2) The Recital stated that there is erected on RP a building known as Block 8, which included 7 car parking spaces Nos. 22, 26, 28, 29, 30, 31, 32;

(3) Clause 1 provided that the parties to the Deed of Mutual Covenant shall have exclusive right to use, occupy and enjoy floors or car parking spaces as set out in the Schedule;

(4) The Schedule stated that KWC had the exclusive right to use “SECOND FLOOR and BASEMENT of the said building and CAR PARKING SPACE NO.31 in the Garage thereof”.

(ii) R’s arguments

6.19Mr But’s arguments may be summarized as follows.

6.20After the 1962 RP Assignment, Sang Hop already vested all of its interest in RP in favour of KNG. Sang Hop no longer owned or retained any title or proprietary interest in RP (including Room M12), in the form of undivided share or otherwise.

6.21Without any title, interest or ownership of undivided share in RP, Sang Hop could not have assigned or otherwise granted any interest in any part of RP including Room M12 or the Triangular Area to Madam Wong by the 1966 Assignment (even if it intended to do so). A proprietary right to exclusive ‘possession’ or ‘use, enjoyment and occupation’ of a unit within a multi storey building must be attached to an owner’s title/ownership of such land. No such right can exist in isolation without any ownership: Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279 at 290G and King Prosper Trading Ltd v Urban Renewal Authority HCAL 56 of 2009, 17 December 2010 §§78-79.

6.22In relation to the 1966 Assignment:

(1) The “exclusive right to use enjoy and occupy the Upper Basement” under the 1966 Assignment must be an assignment of Sang Hop’s existing rights to exclusively use, enjoy and occupy the “Upper Basement” as previously defined under the schedules of Deed of Mutual Covenants executed by Sang Hop with other first purchasers of SS3 in 1955 and 1962 respectively.

(2) Such right is confined to those parts within SS3 as identified in Pink. Room M12 (and the exclusive rights to enjoy, use and occupy it) did not (and could not) form part of the 1966 Assignment.

6.23R relies on the principle that an interest in land includes the land under it and the space above: Bocardo SA v. Star Energy UK Onshore Ltd [2010] UKSC 35, [2011] 1 AC 380 per Lord Hope at §§10 and 26-28 and Kayway Investment Ltd v Focus Winner Ltd [2016] 5 HKLRD 267. There is nothing in the relevant conveyancing documents which would override the assignment plans to suggest that the space on the upper basement level within the lot boundaries of RP would somehow belong to SS3.

6.24Unlike the conveyancing documents related to SS3, the term “the said building” in the 4 assignments and the Deed of Mutual Covenant of RP dated 18^th May 1983 is not limited to the area within the residential Block 8 because RP is expressly stated to include car parking spaces Nos. 22, 26, 28, 29, 30, 31, 32 in the Triangular Area.

6.25The ‘Basement under the Ground Floor’ assigned by Canion to Kwan Wong Chow must refer to the entire basement level area below ground floor level within RP, including the Triangular Area and Room M12. There is no evidence that any basement exists below ground floor level underneath the residential development known as Block 8.

6.26The issue of admission of extrinsic evidence (in particular subsequent conduct) is primarily only relevant to the effect of the 1955 SS3 Reassignment and 1962 RP Assignment.

6.27The crux of R’s case is that the operative part of these documents (ie the parcel clause) and their assignment plans is plain, clear and unambiguous: The entirety of the Triangular Area which fell within RP (as demarcated and coloured in Green in the assignment plans) had already been carved out from SS3 in 1955. It became eventually assigned and conveyed to KNG in 1962. No reservation clause was found. There is no room for A to dispute the effect of such assignments. Upon their plain reading, the effect of both documents is clear-cut. They do not require the Tribunal to look into anything further in a “proper construction” exercise.

6.28In any event, the tribunal should only consider subsequent conduct if the conveyance is unclear or ambiguous, and even then, any evidence of subsequent conduct must be mutual conduct between the original parties to the conveyance: Siu Chi Tat v Land Zone Ltd [2023] HKCFI 610 §§47-49.

(iii) Analysis

6.29For the following reasons, I disagree with Mr But.

6.30In my view, the crucial document is the 1962 RP Assignment, which is the “source document” to determine whether KWC has an interest in Room M12. In this regard, I accept the following submissions made by Mr Lau.

6.31As set out in Harvest Rise, even where a conveyancing document expressly provides that the property assigned as “more particularly delineated and described” in the plan, the tribunal should still ascertain the parties’ intention. To this end, it is entitled to modify or even supply words into a contract to give effect to the parties’ intention.

6.32R’s interpretation that “all spaces above the green area” were assigned to KNG sits uncomfortably with the terms of the 1962 RP Assignment itself. In addition to the pink, brown and green areas, the 1962 RP Assignment additionally assigned “seven car-parking spaces… respectively on the Plan No. 2 hereto annexed thereon and coloured Pink”. These car parking spaces were all located in the “green” area. If (as R now contends) that everything “above” the green area has already been assigned to KNG by way of the assignment of the “green” area, the additional assignment clause regarding the car parking spaces would have been completely redundant. I have not lost sight of Mr But’s argument that Plan No 2 was useful as KNG thereafter entered into deeds of grant in relation to a number of car parking spaces. Mr But reasoned Plan No 2 was useful in that it delineated portions of the lower basement within RP to facilitate the granting of further licenses/assignments by KNG in the future. I do not accept Mr But’s submission. If the entire Triangular Area had been assigned to KNG, there was no reason for the Developer to come up with Plan No 2 for KNG. KNG could have done or even changed the delineation himself, for example by changing the configuration to more or less carparks.

6.33R’s submission is also inconsistent with the background leading to the 1962 RP Assignment:

(1) The entire “Upper Basement” floor of Block 5 was constructed as the quarters for chauffeurs and Gardeners: Attachment 6 hereto;

(2) The area shares a common entrance (and one has to pass through SS3 to get in);

(3) The entire area also shares common facilities such as lavatories. It would be unreal to suggest that certain parts can realistically be sold independently without access to such basic amenities;

(4) There was no physical partition between (1) the portion built above the “green” area and (2) the portion not situating above the “green” area;

(5) Likewise, for the ground floor, Irene Goh’s Flat was the only access to the Goh Flat Roof over the “green” area. Having “sold” such to Irene Goh, it would have been inherently unlikely that the Developer would resell such rights to somebody else thus rendering itself to be in breach of contract.

6.34The tribunal is entitled to take into account the parties’ subsequent conduct to assist in construing an ambiguous conveyance. In this regard, the subsequent conduct of the parties points towards the same conclusion that KNG did not own Room M12. As pointed out above, despite the 1962 RP Assignment, the Developer (of whom KNG was a director) continued to collect rent during the period between 1962 to 1966. This would have been implausible if the Developer had already sold Room M12 out to KNG in 1962. The Developer and KNG were of course the immediate parties to the 1962 RP Assignment. There is no evidence from R to explain the foregoing, and it is notable that R’s own evidence (R’s statement §4(d)), although R was not an immediate party, was that between 1964 to 2021, her own understanding was that Sang Hop was the owner of Room M12.

6.35By the 1966 Assignment, the Developer assigned to Madam Wong an undivided share over Subsection 3 of Section K of Inland Lot No. 3289; together with “the exclusive right to the use occupation and enjoyment of ALL THAT the UPPER BASEMENT of the said building”. The plan annexed to the 1966 Assignment was Attachment 6. Were R’s case correct, in the 1966 Assignment, the Developer could simply have referred to the plan annexed to the assignment to Szeto Mei Kam (suitably modified to reflect all the subsections) as set out at §6.10 above.

6.36The consideration paid by Madam Wong (who was one of the wives of one of the directors of the Developer) was HK$62,000 for the upper basement of Block 5. The price was far higher than the price paid for the upper basement of Block 4 (which assignment was executed on the same day, ie 25 October 1966). The difference in price can only be explained on the basis that the upper basement of Block 5 consisted of a much larger area.

6.37In about 1966, Madam Wong started to collect rent. As explained by A, over the years, her successors (including Madam Kwan and later A) continued to collect rent in relation to Room M12 as well as other rooms in the area.

6.38Against the foregoing, I agree with Mr Lau that it is more likely than not that, by the 1962 RP Assignment, the drafters only intended the “green” area to only include the “way” on the ground. Whereas “erections and buildings thereon” included buildings built on the Remaining Portion, the term was not intended to include structures and spaces which overhung into the “green” area (such as part of Block 5).

6.39For the above reasons, I agree with Mr Lau that R has failed to adduce sufficient and satisfactory evidence to show that KWC was the title paramount of Room M12.

7.Conclusion

7.1I enter judgment on the following terms for A:

(1) R do deliver vacant possession of Room M12 to A;

(2) R do pay to A the Unpaid Rent;

(3) R do pay to A mesne profit from 1 August 2021 up to the date of vacant possession at the rate of HK$4,500 per month.

7.2I reserve the issue of interest as counsel have not specifically addressed the appropriate rate and period. R is to lodge and serve written submissions within 7 days hereof (limited to 2 pages) and A within 7 days thereafter (also limited to 2 pages). I shall deal with the issue on interest on the papers.

7.3I also make a costs order nisi that R do pay the costs of the present application (including any costs reserved) to A, to be taxed if not agreed at the District Court scale with a certificate for counsel.

Mr Martin Lau instructed by Messrs. Hau, Lau, Li & Yeung for the Applicant

Mr Adrian But and Mr Matthew Choi instructed by Messrs. Ernest Tang & Solicitors for the Respondent

Attachment 1

Attachment 2

Attachment 3

Attachment 4

Attachment 5

Attachment 6