Hantec Investment Ltd v. Lam Kan Yau
Read the full judgment text of LDPE 393/2022 on BabelCite. This LDPE judgment was delivered on 31 December 2024.
1. The foremost major issue of these proceedings is whether the Applicant Hantec Investment Limited ( Hantec ) had, between October 2020 and June 2021 ( the Material Period ), granted a tenancy/licence of the subject lots in dispute ( the Subject Lots ) to the Respondent Mr Lam Kan Yau ( Mr Lam ) as it claimed or to one Tan Tat Godown Company Limited (騰達運輸貨倉有限公司) ( Tan Tat ) as Mr Lam claimed.
Cited by 1 case · Cites 2 cases
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LDPE 393/2022 [2024] HKLdT 105 IN THE LANDS TRIBUNAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION APPLICATION NO. LDPE 393 OF 2022 ____________
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___________________ J U D G M E N T ___________________ A. Who was tenant/licensee during the Material Period? 1.The foremost major issue of these proceedings is whether the Applicant Hantec Investment Limited (Hantec) had, between October 2020 and June 2021 (the Material Period), granted a tenancy/licence of the subject lots in dispute (the Subject Lots) to the Respondent Mr Lam Kan Yau (Mr Lam) as it claimed or to one Tan Tat Godown Company Limited (騰達運輸貨倉有限公司) (Tan Tat) as Mr Lam claimed. 2.Hantec was represented by counsels Mr Bosco Cheng (Mr Cheng) and Mr Francis Chung at trial whereas counsels Mr Lawrence Pang (Mr Pang) and Ms Tiffany Law appeared for Mr Lam at trial. 3.On 24 May 2022, Hantec commenced these proceedings against Mr Lam as its tenant/licensee of the Subject Lots seeking, according to its Amended Notice of Application, to recover 1) vacant possession of the Subject Lots, and 2) mesne profits of the Subject Lots at such rate to be assessed from 4 May 2022 until delivery of their vacant possession. 4.Mr Lam defended these proceedings by saying that Hantec had sued the wrong party. He pointed to the facts that Hantec had, in July 2021, sought vacant possession of the Subject Lots by suing Tan Tat as its tenant and/or licensee of the same from December 2020 onwards in an action brought in the Court of First Instance[1] (HC Action). Tan Tat filed its Defence & Counterclaim of HC Action in December 2021. Hantec later applied in April 2022 for, and was granted, leave to discontinue its claim against Tan Tat in HC Action on 12 May 2022. 5.Mr Lam says in his Notice of Opposition that he and Tan Tat were at all material times and are separate legal entities, that he was not, and is not, the tenant (whether at will or otherwise) or licensee (whether under bare licence or otherwise) of the Subject Lots or any part thereof at any time, and that he was not, and is not, in possession or occupation of the Subject Lots or any part thereof at any time. Rather, it was Tan Tat which was all material times and is the tenant and in possession and occupation of the Subject Lots[2]. 6.Were Mr Lam the correct party to be sued, it is common ground between Hantec and Mr Lam that factual findings to be made in these proceedings on the issue of identity of tenant/licensee during the Material Period is binding, by way of issue estoppel[3], on Tan Tat for the purpose of its counterclaim against Hantec in HC Action that remains to be tried in Court of First Instance. 7.Were Mr Lam sued correctly, Hantec’s case is that it had served sufficient notice on Mr Lam and thereby properly terminated such tenant at will or bare licence in his favour over the Subject Lots. B. What is the proper amount of mesne profits, if any? 8.Were he sued correctly, and his tenancy or licence over the Subject Lots properly terminated, such that Hantec is entitled to vacant possession of the Subject Lots as it claimed, Mr Lam next contested (and the second major issue of these proceedings is) the amount of mesne profits to be recovered by Hantec for the Subject Lots. 9.While Hantec sought at trial a monthly sum of around $1.3M by way of mesne profits, Mr Lam suggested a much lower monthly figure of around $266,000 only. C. Witnesses called at trial 10.Hantec called at trial two factual witnesses i.e. Mr Yu Yuen Por (Mr Yu) and Mr Tuen Chun Sing (Mr Tuen), and one expert surveyor i.e. Mr Alnwick C.H. Chan of Knight Frank Petty Limited (Mr Chan) in support of its case. 11.Mr Yu was and is a land officer of Kowloon Development Company Limited (KDCL), a listed company and an associate company of Hantec. He joined KDCL as a land officer in August 2017 and has remained so until trial. Previously, he worked at Lands Department from 1978 to 2003[4]. 12.Mr Tuen is Assistant General Manager of the Land and Business Department of KDCL. He was the superior of Mr Yu shortly before, during and after the Material Period. He first joined KDCL in May 2005 as a property officer. After promotions, his role became supervisory as from 2020 onwards. 13.Mr Lam elected to give evidence to oppose Hantec’s claim and also called one expert surveyor i.e. Mr Cliff C.H. Lau of Landscope Surveyors Limited (Mr Lau) to give expert valuation evidence. 14.As part of valuation exercise of the Subject Lots, Mr Chan has inspected them on 9 June 2023 and prepared his valuation report dated 4 May 2023 (Mr Chan’s Report). Mr Lau has also inspected the Subject Lots on 3 August 2023 and prepared his valuation report dated 28 September 2023 (Mr Lau’s Report). Mr Chan and Mr Lau (the 2 Experts) have thereafter complied their joint statement dated 21 March 2024 (the Joint Statement). D. Background Facts 15.Most background facts are either common ground or proven by undisputed evidence of the 3 factual witnesses, undisputed/agreed evidence of the 2 Experts, and indisputable contemporaneous documents produced at trial. Mr Lam and Mr Yu had also admitted much under cross-examination. On the basis of all these evidence, I find the background facts as follows. D1. The Subject Lots 16.The Subject Lots are altogether 86 in total number. Their respective section and lot numbers are all set out in Amended Notice of Application. Their total area is, the 2 Experts agreed, 37,186.44 square metre. They are all located in DD 104, Ngau Tam Mei, Yuen Long. They are situated on the Eastern side of Ching Yau Road and also on the Southern side of Chuk Yau Road. 17.Vehicular access is available at the main entrance facing Ching Yau Road which provides a two-lane, two-way traffic flow. There is also a secondary entrance facing Chuk Yau Road[5] which provides a one-lane, two way traffic flow with vehicular access. 18.Village houses and agricultural lands are located along Chuk Yau Road. On their respective inspections of the Subject Lots in 2023, the 2 Experts took photos[6] and found them being used for storage purpose, be it open storage or covered storage. 19.In the immediate vicinity of the Subject Lots, the surroundings primarily consist, also, of brownfield sites that are used for purposes such as storage, container storage, car-repairing workshop or vehicles parking. 20.In the Amended Notice of Application, the Subject Lots are divided into 2 groups and they were said to be particularized in Appendix I and II annexed thereto. But both appendix are in fact missing from the Amended Notice of Application. Luckily, both appendix could still be found within the Notice of Application. The two groups are respectively particularized in Appendix I, and Appendix II, to the Notice of Application and identified in blue, and green, on the plan annexed thereto (Part I Lots and Part II Lots respectively). 21.Under their Government Leases, the Subject Lots were all described as being used for agricultural purpose. 22.Pursuant to Town Planning Ordinance (TPO)[7], the Subject Lots were first zoned within Ngau Tam Mei Interim Development Permission Area (IDPA) Plan gazetted on 14 September 1990. They are now zoned within a “Comprehensive Development Area” (for residential use with commercial, open space and other supporting facilities) on Approved Ngau Tam Mei Outline Zoning Plan dated 5 December 2006. There is no “column one uses”[8] in such outline zoning plan, meaning that planning permission is required for the Subject Lots to be used for storage purpose unless there is an existing use right. 23.Unless it can be shown that any of the Subject Lots had already been used for storage purpose as at 14 September 1990 or that planning permission for the same is obtained from Town Planning Board, the Subject Lots could not be so used lawfully and any such usage may result in prosecution and re-entry. 24.Indeed, between 1997 and 2016, the Subject Lots have had a history of more than 25 previous planning applications submitted to Town Planning Board for the application of temporary open storage, temporary warehouse, container storage and related uses, all of which were rejected. 25.And enforcement notices issued under s.23 of TPO by Planning Department (PD) could be found registered against some of the Subject Lots as early as in 1997, and registered against some others of the Subject Lots in the subsequent years of 1998, 1999, 2001 to 2005, 2008 to 2014 and 2016[9]. D2. The Parties 26.Hantec was and is at all material times since 2009 the registered owner of the Subject Lots. Hantec had purchased all the Subject Lots by stages from 1994 to 2002 and in 2009. 27.Tan Tat was incorporated in March 2002. At all material times since 2003, Tan Tat has carried on a godown business including renting out warehouses and providing services related to handling of containers for profits. 28.In around May 2006, Mr Lam became, and has since then been, the sole shareholder, and one of 2 directors, of Tan Tat. Since January 2013, he also became, and has since then been, the sole director of Tan Tat. But, as early as in 2003, Mr Lam had in fact, he admitted, already been in control of Tan Tat but that he could not be its director due to legal reasons. D3. Period from 2003 to September 2020 29.From around May 2003, Tan Tat (already under Mr Lam’s control as he admitted) started occupying part of the Subject Lots (and using the same for storage purpose) for its business and, over the years, it had expanded its business, came to occupy more and more of the Subject Lots, and eventually occupied all the Subject Lots, for storage use by October 2020. 30.Tan Tat did so first as a sub-tenant to one Mr Man Kam Po (Mr Man) starting from about May 2003 and, after passing away of Mr Man in June 2003, as a sub-tenant to one Mr Ngan Ming Ho (Mr Ngan) starting from about August 2003 onwards. 31.Tan Tat, to Mr Lam’s knowledge, had in about May 2003 entered into a written tenancy agreement with Mr Man but had not done so with Mr Ngan for two decades. As tenant of Mr Man (and of Mr Ngan), Tan Tat had paid rent direct to Mr Man (and to Mr Ngan) and not to Hantec. 32.At all material times from April 2003 and from about August 2003, Mr Man and Mr Ngan were respectively tenant of Hantec of part or all of the Subject Lots under written tenancy agreement(s). The Subject Lots were mostly let by Hantec to them for agricultural use and/or open storage use. 33.Mr Man’s tenancy with Hantec, and most of Mr Ngan’s tenancies with Hantec over the years, did not prohibit sub-letting. Mr Man, and Mr Ngan, had sublet part or all of the Subject Lots to Tan Tat in their own capacities as tenant of Hantec and they were not authorized representatives of Hantec. According to Mr Lam, he knew of Hantec as landlord of Mr Man (and of Mr Ngan) as early as in 2003. 34.Mr Ngan’s tenancies were renewed, and his leased areas had expanded over the years until all the Subject Lots were covered. In August 2019, he last renewed with Hantec 9 written tenancy agreements over some of the Subject Lots, all for a term of 2 years from 1 July 2019 to 30 June 2021. Mr Yu witnessed Mr Ngan’s execution of these 9 agreements. By their terms, the lots concerned were mostly let by Hantec to Mr Ngan for agricultural and/or (open) storage use, but Hantec gave no guarantee as to lawfulness of such users. Save that for one agreement, the terms of the other agreements did not prohibit sub-letting by Mr Ngan. 35.Mr Lam had from time to time met Mr Yu in person at the Subject Lots between 2017 and 2020 and came to know him as Hantec’s site supervisor. In turn, Mr Yu came to know that Tan Tat run a storage business at the Subject Lots with Mr Lam being in charge. 36.In order to run its business on such of the Subject Lots (and to use the same for storage purpose), Tan Tat had over the years since 2003 erected and/or retained on some of the Subject Lots many structures, which the authorities considered to be unauthorized building works (UBWs). Though Mr Lam knew of risk of enforcement (and prosecution) for these UBWs, Tan Tat had persisted in its practice over the years. 37.At the same time, Tan Tat had applied for as many as 4 times with Hantec’s consent and written authorization for planning permission and/or short term waiver (STW) in order to retain these UBWs. Tan Tat failed in its first three applications made respectively in 2003, 2010 and April 2016. 38.Tan Tat managed to succeed in its fourth application made in June 2016 with Hantec’s consent and authorization. In about July 2017, STW No.4691 was issued by the government to Hantec retrospectively from 10 November 2010 and on quarterly basis (2017 STW) to use 9 lots of the Subject Lots for “warehouse (except for dangerous goods) purpose”[10] with total coverage not exceeding 4,036 square metre (and the requisite forbearance fees, administrative fee and deposit were all paid by Tan Tat). 39.Moving back in time, as early as in August 2005, Hantec, and Tan Tat, had received enforcement notice issued by PD under s.23(1) of TPO that “unauthorized development” (including storage use) carried out at some of the Subject Lots should be discontinued by 23 November 2005. The said TPO notice had also been registered at Lands Registry. It was not until after the said “unauthorized development” was discontinued in March 2008 that that another notice issued by PD to Hantec, and Tan Tat, under s.23(8A) of TPO was registered at Lands Registry in May 2008. 40.In April 2015, Hantec was summoned by PD in STS 3030/2015 for breach of s.23(6) of TPO for failing to comply with s.23 TPO notice issued in 2014. Hantec pleaded guilty and was, in July 2015, fined in sum of $180,000. The said fine was, I believe, paid by Mr Ngan, who later got reimbursed by Tan Tat in August 2015[11]. 41.In December 2015, Hantec was summoned by PD again in STS 11142/2015 for breach of s.23(6) of TPO for failing to comply with s.23 TPO notice issued in 2014. Hantec pleaded guilty too and was, in February 2016, fined in sum of $60,000. Mr Ngan paid the said fine for Hantec in March 2016 and was, I believe, later reimbursed by Tan Tat. 42.In March 2016, District Lands Office, Yuen Long (DLO), had issued warning letters to Hantec requiring it to purge breach of Government Leases of many of the Subject Lots by demolishing UBWs erected thereon without approval and advising it that the government reserves its right re-enter the lots concerned. 43.In April 2016, Hantec through its solicitors wrote to Mr Ngan (copied to Mr Lam) demanding him to remove UBWs on some of the Subject Lots as required by DLO’s letter above, or else that legal action may be taken by it. 44.In June 2016, the above March 2016 warning letters were registered at the Lands Registry and DLO advised Hantec by letter on the ground that breach of Government Leases of some of the Subject Lots above had not been rectified. 45.In November 2018, Mr Yu on behalf of Hantec wrote to Mr Ngan referring to his failure to remove UBWs as demanded in 2016 and registration of government warning letters at Land Registry against some of the Subject Lots. Hantec demanded rectification with 28 days and threatened legal action or termination of tenancy in default, and also suggested remedial action by way of STW application be taken. Mr Ngan signed on the letter in acknowledgment. 46.On 20 March 2019, Mr Yu on behalf of Hantec again wrote to Mr Ngan complaining of non-compliance with previous demands to remove UBWs and demanded Mr Ngan to vacate from some of the Subject Lots by 3 April 2019. Mr Ngan also signed on the same in acknowledgment. 47.In May 2019, Hantec’s staff met Mr Ngan in a meeting, during which Mr Ngan promised to remove certain UBWs erected on some of the Subject Lots as a matter of priority or to produce DLO’s exemption papers. 48.On 31 October 2019, Mr Ngan met Hantec’s staff again in another meeting and undertook to remove UBWs erected on some of the Subject Lots by stages. 49.On 6 November 2019, Hantec wrote to Mr Ngan referring to the said October 2019 meeting and Mr Ngan’s undertaking therein as per table and plan annexed, and required him to follow up on the same as soon as possible. Mr Ngan also signed on the same in acknowledgment on 13 November 2019. D4. The Material Period from October 2020 to June 2021 50.Unfortunately, in October 2020, Mr Ngan passed away. 51.Negotiations thereafter ensured between Mr Yu (with Hantec’s instructions and under supervision of his superiors) representing Hantec and Mr Lam over formal agreement(s), if any, to be entered by Hantec with another to replace Mr Ngan as tenant/licensee of the Subject Lots from Hantec. They met each other many times at container yards at the Subject Lots and at Mr Lam’s home and also discussed with one another over the phone many times. 52.At the same time, Tan Tat was allowed by Hantec to continue during such negotiations[12] its occupation of the Subject Lots for storage purpose for its business at such sum and rate below agreed between Mr Yu and Mr Lam after discussions i.e.
53.In order to ascertain total area of Part II Lots actually occupied by Tan Tat (and to calculate total temporary occupation fee payable thereof) in each month, Mr Yu inspected and took photos of occupied Part II Lots himself in each of the following months. 54.On the following dates between October 2020 and April 2021, Mr Yu issued on behalf of Hantec 7 demand letters to “Mr Lam” (“林鏡有先生”) advising him the total areas of Part II Lots occupied[13] in the following years and months and requiring him to pay the following temporary occupation fees at the rate of $1.5 per square feet[14] (collectively Part II Demand Letters) and gave them to Mr Lam.
55.Afterwards, Mr Lam gave cheques drawn by Tan Tat[15] to Mr Yu each month to settle the above temporary occupation fees of Part II Lots for the month concerned. Mr Yu collected, and sent, them to Hantec. 56.Account department of Hantec thereafter issued as many as 8 undated official receipts addressed to “Tan Tat” (“騰達運輸貨倉有限公司”) for payment of occupational fees of Part II Lots for the months of October 2020 to April 2021 (and another undated one for payment made for the month of May 2021) (collectively Part II Receipts). Mr Yu collected and gave them in person to Mr Lam. 57.Moving back earlier in time, from December 2020 to unknown dates, account department of Hantec had issued the following 7 debit notes to “Tan Tat (Mr Lam)” (“騰達運輸貨倉有限公司(林鏡有)”) requiring rental payment of $504,600 for Part I Lots (collectively Part I Debit Notes) in the following years and months and delivered them to Mr Yu for onward delivery to Mr Lam.
58.Mr Lam thereafter gave cheques drawn by Tan Tat[16] to Mr Yu each month as rental payment of Part I Lots. Mr Yu collected them and sent them each month to account department of Hantec. 59.Account department of Hantec had thereafter on unknown dates and 1 January 2021 issued 3 official receipts addressed to “Tan Tat” (“騰達運輸貨倉有限公司”) for the same for the months from November 2020 to January 2021, and had on unknown dates issued another 3 official receipts addressed to “Tan Tat (Mr Lam)” (“騰達運輸貨倉有限公司(林鏡有)”) for the same for the months from March 2021 to May 2021 (collectively Part I Receipts)[17]. Mr Yu collected them and thereafter gave them in person to Mr Lam. 60.In the meantime, on 29 November 2020, at request of, and witnessed, by Mr Yu, Mr Lam had provided his identity card numbers, signed in his personal capacity[18], and gave his undertaking to remove[19] UBWs erected on 8 different portions of the Subject Lots by 6 deadlines ranging from 31 December 2020 to 28 February 2022[20] (the Undertaking), on an A-3 sized document entitled “Plan Showing The Schedule Time For Demolition Of The Illegal Structures Within Mr. Lam Kan Yau’s Tenancy Area at Ngau Tam Mei (Within 15 months) (italics and bold supplied)” (the Demolition Plan)[21] prepared by Hantec. 61.As recorded by the Demolition Plan, some UBWs at locations of the Subject Lots identified in the Demolition Plan had already been demolished shortly before it was signed by Mr Lam. In December 2020 and January 2021, further UBWs identified in the Demolition Plan were also demolished in line with it. 62.In around February 2021, Mr Yu gave a draft tenancy agreement of Part I Lots in Chinese (Draft Tenancy Agreement) and a draft license agreement (准用協議) of Part II Lots in Chinese (Draft License Agreement) both prepared by Hantec to Mr Lam for his review. Both drafts had then not been signed or executed by anyone on behalf of Hantec. 63.On the face of the Draft Tenancy Agreement, Hantec and Mr Lam[22] were stated as the landlord and tenant respectively. It was for a fixed term of 2 years from 1 November 2020 to 31 October 2022 and at a monthly rental of $504,600. 64.Material clauses of the Draft Tenancy Agreement for our present purpose include the followings: -
65.On the face of the Draft License Agreement, Hantec and Mr Lam are stated as the licensor and licensee. The duration of the said licence is one of 2 years from 1 November 2020 to 31 October 2022. The licence fee is to be calculated at $1.5 per square feet of area actually occupied in any particular month. 66.Mr Lam signed on the execution clause of the Draft License Agreement as licensee and, on the next day or so, returned it and the Draft Tenancy Agreement to Mr Yu. He, however, did not sign on the latter. He wrote down on the bottom of the first page of the returned Draft Tenancy Agreement: “可以的話，請接受用騰達公司做租客” (the Remarks). Other Chinese words that he put down on its first page include: “請將此租約分成兩份，一份是合法部分，一份是有非法上蓋部分”. At page 3 of the same, Mr Lam also crossed out the sum of “$4.811M” for the Security Deposit and replaced it with the much smaller sum of “$500,000”. 67.Afterwards, Mr Yu sent the 2 returned draft agreements to his superior at Hantec, which never prepared (nor gave to Mr Lam) another draft license agreement of Part II Lots with Tan Tat as the licensee. Mr Yu were later instructed by his superiors to continue receiving $504,600 rentals for Part I Lots and occupation fees at $1.5 per square feet of Part II Lots actually occupied, and to continue demanding removal of UBWs at the Subject Lots. 68.At about the same time, in February 2021, Tan Tat engaged a consultant company to advise and prepare for another application of STW to PD for retaining UBWs on some of the Subject Lots (the intended 2021 Application). The papers were ready by around April 2021. But, in the end, the intended 2021 Application never received Hantec’s approval or authorization. 69.On 16 April 2021, a meeting was held between Mr Lam on one side and Mr Tuen and one Mr Au-Yeung of KDCL[24] representing Hantec on the other side (the April 2021 Meeting). Mr Yu had, I accept from him, brought Mr Lam to the venue of the April 2021 Meeting but did not himself participate in the same. 70.During the April 2021 Meeting, Mr Lam requested Hantec to allow him to go ahead with the intended 2021 Application in order to retain UBWs on some of the Subject Lots (and maintain the status quo during the application process) but Hantec disagreed and demanded all UBWs be removed from the Subject Lots in line with the Demolition Plan if negotiations are to be continued. The two sides could not, and did not, reach any agreement at the end of the meeting. 71.Notwithstanding further negotiations were conducted between Mr Tuen and Mr Lam afterwards, negotiation between Hantec and Mr Lam in the end produced no result (and no formal document, or binding agreement, was ever executed by Hantec) over letting and/or licensing of the Subject Lots. 72.Neither did Hantec execute the Draft License Agreement for Part II Lots already signed by Mr Lam as the same together with the Draft Tenancy Agreement for Part I Lots are, I accept from Mr Tuen, part and parcel of a composite package for all the Subject Lots. 73.On 27 May 2021 and 21 June 2021, Hantec through solicitors served written notices to quit on Mr Lam and Tan Tat demanding removal of UBWs erected on the Subject Lots and vacant possession of the Subject Lots by 30 June 2021. However, such demands were not complied with and Tan Tat continued to occupy the Subject Lots until trial. D5. Period from July 2021 onwards 74.As was said above, from July 2021 to May 2022, Hantec pursued against Tan Tat in HC Action as its tenant/licensee of the Subject Lots from December 2020 onwards. 75.In the meantime, in August 2021, PD had again written to Hantec advising that storage use at some of the Subject Lots could constitute “unauthorized development” under TPO making it liable to enforcement and/or prosecution. 76.In May 2022, these proceedings were taken out by Hantec against Mr Lam as its tenant/licensee of the Subject Lots for the Material Period. 77.From July 2021 to April 2024, payments by way of cheques drawn by Tan Tat were still made to Hantec (including by way of ATM machines deposits into its account) purportedly for the Subject Lots in purportedly the same or similar amounts as was made to it during the Material Period. E. Assessment of witnesses E1. Mr Yu 78.I find Mr Yu an honest and reliable witness. Mr Yu was slow in answering questions of Mr Pang and, at times, his memory failed him. However, his evidence is, I think, inherently probable and supported by contemporaneous documents and also by Mr Tuen’s undisputed evidence regarding Hantec’s negotiating stances with Mr Lam to be mentioned below. His evidence was consistent throughout and he was not shaken after cross-examination by Mr Pang. 79.I therefore accept Mr Yu’s evidence and prefer his evidence to those of Mr Lam in case of conflict on my assessment of him and that of Mr Lam below. E2. Mr Tuen 80.Mr Tuen did not, I have to point out, come onto the stage until he got himself involved in direct negotiations with Mr Lam in April 2021 and thereafter. He had no prior direct dealing with Mr Lam and no personal knowledge of Mr Yu’s prior direct dealings with Mr Lam. Due to such limitations, his evidence is therefore of limited assistance to Hantec on the identity issue. 81.However, on top of producing written tenancy agreements entered into by Hantec, Mr Man, Mr Ngan and Tan Tat during the last 2 decades, Mr Tuen also gave important background evidence on Hantec’s 2 key stances on negotiations with Mr Lam, namely, that 1) Hantec would only enter into legal relationship over the Subject Lots with a real person as opposed to a limited company (the First Stance) and 2) demolition of UBWs remaining on the Subject Lots was the key condition for Hantec to consider whether to let, or grant licence of, them to Mr Lam (the Second Stance). 82.Mr Pang did not, I observe, challenge Mr Tuen’s evidence regarding the First and Second Stances. The First Instance was, I think, understandable as a matter of law and also supported by the contents of the Demolition Plan, the Draft Tenancy Agreement and the Draft License Agreement. The Second Stance was, one thinks, explainable by DLO re-entry threat made to Hantec in 2016 and supported by Hantec’s repeated (and failed) efforts since then to require Mr Ngan to remove UBWs on the Subject Lots. 83.For the above reasons, I accept Mr Tuen’s evidence and find that Hantec did hold the First and Second Stances during the Material Period and that Mr Tuen had attempted to carry them out in his direct negotiations with Mr Lam (whose contents were not challenged by Mr Pang in cross-examination) but failed in the end as he explained in his witness statement. E3. Mr Lam 84.I do not find Mr Lam an honest or reliable witness. Let me explain as follows. 85.First, material part of Mr Lam’s evidence is, I observe, inherently unlikely. For example, he did not know Hantec before Tan Tat entered into written tenancy agreement with Mr Man in 2003. Mr Man had, he said, shown him Mr Man’s written tenancy with Hantec as landlord. Hantec’s status as landlord of Mr Man was also recorded in recital of Tan Tat’s written tenancy agreement with Mr Man. As such, I fail to see any objective basis for him to believe (as he claimed) that Mr Man was also Hantec’s alleged authorized representative of the Subject Lots on top of being its tenant. 86.Mr Lam’s claim of big developers enlisting “big brothers”[25] to hold and handle their lands in New Territories is, I am afraid, his bare assertion made for the first time in the box and not found in his witness statement. I find it unbelievable and contrary to the tenancy documentation before me. I do not believe that such documentation was “useless” or “sham” as Mr Lam claimed. 87.Secondly, Mr Lam contradicted himself on material points. Under cross-examination, he insisted on intending to make Tan Tat tenant of Hantec during negotiations but he did not sign on the Demolition Plan with Tan Tat’s company chop. He purported to explain that he did not have it with him as the said plan was given to him at a container site. He however later agreed with Mr Cheng that he signed on the said plan in his personal capacity. On being re-examined, he answered Mr Pang saying that he signed on it representing Tan Tat as he was a mere “paid employee” representing Tan Tat all along. 88.I give full weight to Mr Lam’s above admission of signing on the Demolition Plan in his personal capacity, which was in line with the writings (and presence of Mr Lam’s identity card numbers) on the same. I find Mr Lam’s excuse of not having company chop with him incredible. He was well aware of the legal distinction between himself and Tan Tat. If he so desired, he could have, one thinks, first found company chop of Tan Tat before he signed, and chopped, on the same. Lastly, he was not only a “paid employee” of Tan Tat but also its sole director and shareholder. He effectively “owned” Tan Tat. 89.Thirdly, Mr Lam was, I observe, effectively shaken by Mr Cheng’s skillful cross-examination on the above and other material points to be mentioned below. 90.Fourthly, Mr Lam’s material evidence is, I think, inconsistent with his own conducts. He tried his best under cross-examination to claim that he did not intend or agree to be licensee of Part II Lots in his personal capacity notwithstanding that he had admittedly signed on the Draft License Agreement. He claimed that he was ignorant of its different terms from those of the Draft Tenancy Agreement (and claimed that he would not have signed were he aware of such differences) and stressed that the Draft License Agreement was no more than a temporary, and not a binding, document. 91.However, Mr Lam returned these 2 draft agreements to Mr Yu not on the same day so that he should have more time to read and digest their contents by their return. And he could have easily not put down his signature on the execution clause of the Draft License Agreement and/or included similar handwritings like the Remarks on it as he did with the Draft Tenancy Agreement had he intended (or had he agreed) not to incur personal liability for it, or had he really thought that it was merely a temporary document. 92.For above reasons, I therefore decide not to accept Mr Lam’s evidence unless they are not disputed or amount to admissions of Hantec’s case (in which case I give them full weight). E4. The 2 Experts 93.Unless otherwise stated below, I prefer Mr Chan’s evidence and opinion to those of Mr Lau. I find the former more reliable and credible among the two. 94.Mr Chan was, I observe, more experienced than Mr Lau. And Mr Chan impressed me as being more knowledgeable in Hong Kong valuation practice than Mr Lau is. More importantly, Mr Lau appeared to be partial under Mr Cheng’s cross-examination and refused to consider issues from different perspective unfavorable to Mr Lam. In comparison, Mr Chan’s opinion was, I think, more balanced under cross-examination by Mr Pang. 95.This Tribunal shall of course still pay attention to their differing opinions on each issue and consider them on their individual merits. F. Legal principles for resolving identity issue 96.Mr Cheng has referred this Tribunal to Javad v Mohammed Aqil [1991] 1 WLR 1007, where Nicholls L.J. said at 1012C-1013C as follows:-
97.The issue on appeal in Javad, supra, was, however, whether the defendant went into occupation of (and paid quarterly rent of) the suit premises while negotiations proceeded for the grant to him a long lease of it as a tenant at will as the plaintiff claimed or as a quarterly tenant as he contended. No identity issue as arose in these proceedings was, I note, raised or decided on this appeal. 98.Nevertheless, this authority rightly, I think, suggests that that negotiating parties might often fail to agree or direct their attention to identity issue raised in these proceedings while negotiations are on-going and that the key is to ascertain their intention. If necessary, this Tribunal has to infer or impute to the parties what they are to be taken to have intended to apply. 99.Mr Cheng next referred this Tribunal to Cartwright: Misrepresentation, Mistake and Non-disclosure (6th Ed), where the learned author summarized at §13-19 the following legal tests that a tribunal should apply in order to ascertain “whether there is a contract between two parties, and if so on what terms”, in a case “where the contract is alleged to have been formed by successive communications between the parties”, namely: -
100.While neither party had suggested that Hantec had formed legal relationship with no one over the Subject Lots during the Material Period and that the principles above are not directly on identity issue raised in these proceedings, if one substitutes terms X with Mr Lam as tenant/licensee and terms Y with Tan Tat as tenant/licensee, they provide, I think, a well-structured framework to analyze the evidence adduced in these proceedings. 101.On the identity issue raised in these proceedings, Mr Pang first referred this Tribunal to Estor Limited v Multifit (UK) Limited [2009] EWHC 2565 (TCC), where Mr Justice Akenhead said in non-tenancy case at [26] as follows: -
102. Estor Limited, supra, was quoted in the second authority cited by Mr Pang by the name of Muneer Hamid (T/A Hamid Properties) v Francis Bradshaw Partnership [2013] EWCA Civ 470, where Jackson L.J. said at this non-tenancy appeal at [56] and [57] as follows: -
103.These 2 authorities cited by Mr Pang helpfully highlighted, I think, that one adopts an objective (and not subjective) approach to consider what parties had said and done with one another (and to ignore their private thoughts not made known to the other) in determining identity issue of contracting party. G. Parties’ submissions on identity issue 104.Mr Pang submitted by reference to Estor Limited, supra, and Muneer Hamid, supra, that a reasonable person, furnished with all the relevant information in this case, would inevitably have concluded that Tan Tat was Hantec’s tenant/licensee of the Subject Lots during the Material Period. 105.Mr Pang pointed to the following facts I found and the following evidence adduced at trial in support of his aforesaid submissions, namely, that:
106.And Mr Pang submitted that, in view of potentially serious financial consequences for him, it is inherently improbable that Mr Lam would be willing to be personally liable as tenant/licensee of the Subject Lots from Hantec. 107.To the contrary, applying Cartwright, supra, Mr Cheng submitted that any reasonable person in Hantec’s position, in view of the followings, would have believed that, during the Material period, Mr Lam (and not Tan Tat) had agreed to be granted a tenancy or license over the Subject Lots by Hantec pending successful negotiations of the terms of a binding new lease or license over the same, namely, that: -
H. Analysis of parties’ submissions, and further findings, on identity issue 108.I do not find Tan Tat’s continuous occupation of part or all the Subject Lots running its business since 2003 a weighty pointer in support of Mr Pang’s submissions. I say so because: -
109.On my acceptance of the First Stance held by Hantec during the Material Period[26], as Mr Yu negotiated with Mr Lam based on specific instructions[27] and were under supervision of his superior, I find it likely, and accept Mr Yu’s evidence in his witness statement[28], that he had acted in line with the First Stance in his negotiations with Mr Lam and expressed to Mr Lam that negotiations were with Mr Lam himself as the other contracting party in potential agreement(s) to be agreed, though he might not have disclosed to Mr Lam that Hantec held the First Stance as a negotiating stance as such. 110.I find that Mr Lam had at least held himself out to have agreed with Mr Yu’s suggestion above that he be considered to be allowed to take over Mr Ngan’s place in the said negotiations for any future agreements to be agreed upon (the Outward Consensus). It was, one thinks, just natural for Mr Lam to offer another real person i.e. himself to replace Mr Ngan (a real person) as Hantec’s tenant so as to increase chances of his offer being accepted by Hantec as the past 20 years of experience suggested to Mr Lam. 111.Under cross-examination, Mr Lam also admitted that tenancy negotiations with Hantec to be conducted through Mr Yu were to be conducted on the basis of him having “direct dealings” with Hantec[29]. I give full weight to this admission. 112.I would, however, prefer Mr Yu’s evidence to that of Mr Lam to find that it was Mr Lam who approached Mr Yu to start such negotiations (and not the other way round). 113.Mr Lam claimed in his witness statement[30] that, during his negotiations with Mr Yu, he was negotiating as Tan Tat’s representative and with the intention to make Tan Tat the tenant as before (I will separately deal with the Remarks below). Had he really had such intention, he had not, I think, made such private intention of his known to Mr Yu. He agreed upon persistent questioning of Mr Cheng that he had never made known to Mr Yu that he was negotiating with Mr Yu over tenancy matters as Tan Tat’s director representing Tan Tat[31]. 114.Nonetheless, I do not think that Mr Yu (on behalf of Hantec) and Mr Lam had really entered with one another any temporary tenancy or license of the Subject Lots during the Material Period. As was pointed out in Javad, supra, more likely than not, Hantec and Mr Lam had not, I think, directed their attention to their respective interim status during their negotiation process, especially Mr Yu required specific instructions to enter into any tenancy or license binding on his employer. 115.While Tan Tat’s payments of rentals, and occupation fees, of the Subject Lots during the Material Period “would be evidence which would point objectively” to Tan Tat being the other contracting party, that would not be “necessarily conclusive” of the case, as Estor Limited, supra, suggested. Mr Lam could also, I think, have used cheques drawn by Tan Tat to pay for rentals, and occupation fees, of the Subject Lots that he rents but allows Tan Tat to occupy for its business. After all, Mr Lam was effectively the owner of Tan Tat. 116.Looking at all Part I Debits Notes and all Part II Demand Letters available at trial, the earliest in time available at trial was Part II Demand Letter dated 30 October 2020 for occupation of Part II Lots for the month of October 2020. As it was made at a time more or less when Mr Lam and Mr Yu started their negotiations, I think one could attach most weight to it compared with that for other debits notes and demand letters issued during the Material Period. 117.This earliest one above was issued by Mr Yu addressed to “Mr Lam” only, as was the case with all Part II Demand Letters. Mr Yu also made it clear, I think, in all their contents that it was Mr Lam’s personal liability to pay occupational fees for Part II Lots. Hence, it is I think, supportive of the Outward Consensus reached between Mr Yu and Mr Lam and most indicative of Mr Yu’s belief of Mr Lam’s holding out himself being the other contracting party in any future agreement(s) to be reached after their successful negotiations (if any). 118.It is true that, as Mr Pang stressed, account department of Hantec had 1) issued all Part II Receipts to “Tan Tat” only, 2) issued Part I Debit Notes to “Tan Tat (Mr Lam)”, 3) issued some Part I Receipts for the earlier months of Material Period to “Tan Tat” only, and 4) issued remaining Part I Receipts for latter months to “Tan Tat (Mr Lam)”. But I would put lesser weight on these documents for the following reasons: -
119.I agree with Mr Cheng’s submission that Hantec’s preparation of Demolition Plan was consistent with the First Stance, the Second Stance and the Outward Consensus. Not only was Mr Lam required to give the Undertaking personally himself, the title of the document also included the consistent words of “Within Mr Lam Kan Yau’s Tenancy Area at Ngau Tam Mei (italics and bold supplied)”. 120.Mr Lam’s personal signature put (without company chop of Tan Tat) on the Demolition Plan had further reinforced, I think, the Outward Consensus and Hantec’s belief in the same, causing it to prepare the Draft Tenancy Agreement and the Draft License Agreement in the ways they were drafted. 121.Mr Lam had continued, I think, to hold himself out as agreeing to the Outward Consensus by signing on, and returning, the Draft License Agreement relating to Part II Lots in the way he did. 122.Under cross-examination, Mr Lam had no choice but to agree with Mr Cheng that, looking at the documents, Hantec’s belief all along was to deal and discuss with him, such that he was required to give the Undertaking in the Demolition Plan, his name was put down as the tenant in the Draft Tenancy Agreement and that debit notes for rentals were all addressed to him[35]. 123.Knowing full well of the Outward Consensus that he had held out to agree all along since negotiations began, Mr Lam had, I think, second thoughts on himself to be the other party for any binding formal tenancy agreement(s) to be executed for Part I Lots (whose UBWs formed the subject matter of removal of his Undertaking in the Demolition Plan) and acted contrary to it by belatedly putting down the Remarks on the returned Draft Tenancy Agreement in the words he used i.e. “可以的話，請接受用騰達公司做租客 (粗體及底線後加)”. 124.Mr Lam likely, I think, had the aforesaid second thoughts for Part I Lots due to the intended 2021 Application that he then intended to put through to retain UBWs. That, of course, ran against the Second Stance held by Hantec and caused the said negotiations between Mr Lam and Hantec to break down in the end. 125.Regarding the Remarks, while Hantec had done nothing to reject it as Mr Pang submitted, Hantec did not, I think, agree to it either or did anything to hold itself out as agreeing to it. 126.Therefore, Mr Lam could not, I think, have believed that he had been let go as the other party to any binding agreement(s) to be reached on Part I Lots after successful negotiations. I. Mr Lam having tenancy at will during the Material Period 127.In light of my analysis in the last section, applying Muneer Hamid, supra, as Mr Pang suggested, a reasonable person, furnished with all the relevant information in this case, would, I think, have concluded that Mr Lam was Hantec’s tenant/licensee of the Subject Lots during the Material Period. 128.Applying Cartwright, supra, as Mr Cheng suggested, I agree with him that any reasonable person in Hantec’s position would have believed that, during the Material period, Mr Lam had agreed to the other party over the Subject Lots pending successful negotiations of the terms of binding document(s) over the same. 129.It therefore does not matter which legal route suggested by the two counsels above is more appropriate for me to take. My conclusion would have remained the same in either case. 130.Mr Pang’s submissions that Mr Lam was unlikely to agree to bear personal liability for potential serious financial consequences do not, I am afraid, cause me to alter my above conclusion either. 131.I give the following reasons.
132.Neither did Hantec’s prosecution of HC Action against Tan Tat as its tenant/licensee cause me to alter my above conclusion either for the following reasons.
133.As to whether one should imply or impute to Hantec and Mr Lam a tenancy at will or bare licence, Mr Pang made, I note, no submission on this issue of secondary importance in his closing submissions. 134.Considering all the circumstances of this case and that “entry into possession while negotiations proceed is one of the classic circumstances in which a tenancy at will may exist”, per Nicholls L.J. at 1019E of Javad, supra, I conclude that it is appropriate for me to imply or impute to Hantec and Mr Lam that Mr Lam was taken to be intended to take a tenancy at will (and not a bare licence) of the Subject Lots during the Material Period and I so decide. 135.As such, Hantec has proven, I conclude, that it has sued the correct party i.e. Mr Lam in these proceedings. J. Mr Lam’s tenancy at will properly terminated by notice 136.Again, Mr Pang made no submission on this termination issue of secondary importance. 137.In all the circumstances of this case, I find that the two notices dated 27 May 2021 and 21 June 2021 served by solicitors for Hantec on Mr Lam are sufficient at law to determine his tenancy at will by their specified deadline of 30 June 2021. 138.As Mr Lam has failed to arrange for Tan Tat to deliver vacant possession of the Subject Lots to Hantec by 30 June 2021, he became, I find, trespasser of the same as from 1 July 2021. 139.This Tribunal will therefore order Mr Lam to return vacant possession of the Subject Lots to Hantec and to pay mesne profits on the same as from 4 May 2022 as sought by Hantec until such delivery at such monthly amount to be decided below. K. Mesne profits sub-issues in dispute 140.The 2 Experts have both adopted a market approach to value the Subject Lots as at 4 May 2022. And they have adopted the same direct comparison method in arriving at their respective valuations. 141.The 2 Experts disagreed, however, on the following 4 sub-issues i.e. 1) basis of valuation; 2) valuation methodology; 3) selection of appropriate comparables; and 4) making of adjustments to the selected comparables. 142.Using, and making adjustments to, comparables OS1, OS2 and OS3 all owned and provided by Hantec, Mr Chan arrived at an average adjusted unit rate of $32.34 per square metre for 19 lots of authorized open storage out of the Subject Lots. Applying 50% discount to the said rate, he arrived at an average adjusted unit rate of $16.17 per square metre for remaining 67 lots of unauthorized open storage. Using his comparable CS1, Mr Chan also arrived at an average adjusted unit rate of $143.17 per square metre for covered storage under 2017 STW. 143.Applying the said 3 rates above to the above 3 groups of the Subject Lots and adding up the results, Mr Chan valued the Subject Lots as at 4 May 2022 at $1,299,533 per month. 144.Mr Lau’s valuation exercise is simpler. He adopted his own comparables C2 and C4, made adjustments to them and arrived at an average adjusted rate of $7.16 per square metre for the Subject Lots all valued as agricultural lands and used as unauthorized open storage. Applying this rate to the total area of 37,186.44 square metre for the Subject Lots, Mr Lau’s valuation of them as at 4 May 2022 amounts to $266,000 per month after rounding up. 145.By way of fallback, Mr Lau used his 2 comparables LOS1 and LOS2 to arrive at an average adjusted unit rate of $19.98 per square metre for such of the Subject Lots valued as agricultural lands used as permitted open storage. He also arrived at an average adjusted unit rate of $83.01 per square metre for those of the Subject Lots valued as agricultural lands used as covered storage by using his 2 comparables LCS1 and LCS2. L. Sub-issue 1 - basis of valuation 146.In making his valuation, Mr Chan first assumed that the Subject Lots are permitted for storage purpose whereas Mr Lau had valued them as agricultural lands, making no assumption for storage purpose. 147.Secondly, Mr Chan decided to give value to structures erected on the Subject Lots covered by 2017 STW whereas Mr Lau considered them illegal UBWs and gave them no value at all. 148.In disagreeing with Mr Chan, Mr Lau stressed that storage use for the Subject Lots are unauthorized under TPO regime unless permission has been obtained or that there is existing use right. Any term of tenancy agreement, or any tenancy agreement, of the Subject Lots which allows or purports to allow storage use even without guarantee of its lawfulness has its legal validity open to doubt. 149.Mr Lau in his evidence also emphasized that STW gave no validity to the above structures if they had not, in the first place, obtained permission and/or approval under Buildings Ordinance. 150.I prefer Mr Chan’s approach above as opposed to that of Mr Lau for the following reasons: -
M. Sub-issue 2 - valuation methodology 151.Mr Chan sought by his method to value each of the Subject Lots individually and sum up their individual value to arrive at a total market value of the Subject Lots. 152.Mr Chan categorized the Subject Lots into 3 types, namely: 1) unauthorized ones for open storage; 2) authorized ones for open storage; and 3) covered storage (of 9 lots) subject to 2017 STW. 153.Mr Chan did so because he opined that there are 67 unauthorized lots and 19[38] authorized ones[39] and that the two groups entail different rental rates (and should therefore be valued separately) as the former carry potential risk of enforcement action. When enforcement actions are taken, landlord will require tenant to cease the unauthorized use, causing disruption to tenant’s business. Such risk is thus reflected as lower rental rates for the former. On the other hand, the latter group does not carry such risk and thus carry higher rental rates. 154.The second group should, in Mr Chan’s view, be valued at 50% discount to that for the first group. In chief[40], he sought to reinforce his judgment of adopting 50% discount rate in treating $180,000 fine imposed in summons STS 3030/2015 as if it were rental for unauthorized open storage lots concerned at $2.6 per square metre per month during the offence period. He also applied separately another different rate without discount to 9 lots under 2017 STW for their covered storage of 4,036 square metre. 155.In contrast, all the Subject Lots should, in Mr Lau’s view, be valued as a whole as, the 2 Experts agreed, there is to be one hypothetical tenancy to be valued. 156.Though Mr Lau opined that 83 lots of the Subject Lots are agricultural lands used for unauthorized storage use and that 3 lots are agricultural lands with permitted open storage use, he made his valuation of all the Subject Lots as a whole using one single rate of agricultural lands used for unauthorized open storage. 157.As only 3 out of 86 of the Subject Lots are authorized open storage, it is not feasible, claimed Mr Lau, to consolidate the goods from 83 lots to the 3 authorized open storage lots. Even, as claimed by Mr Chan, that 19 lots are authorized open storage lots, it is, Mr Lau claimed, still not feasible to do the same. The risk of being enforced and then being unable to operate on the Subject Lots would still be the same as if all lots are unauthorized open storage lots and thus Mr Lau valued all the Subject Lots as unauthorized open storage lots. 158.Incidentally, Mr Lau expressed the view that, difference of unit rates between that for agricultural lands of the Subject Lots used as unauthorized open storage[41] and that for agricultural lands used as permitted open storage[42] should be as large as 65%. 159.Mr Chan pointed to the followings trying to make good his claim that 19 (instead of 3 suggested by Mr Lau) out of the Subject Lots should be categorized as authorized open storage, namely: -
160.Mr Lau disagreed with Mr Chan’s reading of the pertinent aerial photos. 161.For (2) to (5) in [159] above, Mr Lau gave contrary evidence saying that they had no bearing on the separate issue if there was existing use right of “open storage” for the lots concerned. 162.Regarding (6) in [159] above, Mr Pang had cross-examined Mr Chan to show that Town Planning Board had never, in its rejection reasons, expressly rejected the applications as claimed by Mr Chan “primarily” on any alleged ground of “intensification of storage use” to “other lots having no existing use right for storage use” and “government land”. 163.My conclusions on this sub-issue 2 are the followings: -
164.My reasons are as follows.
N. Sub-issues 3 and 4 - selection of comparables, and adjustments to selected comparables 165.Mr Chan considered the 3 comparables of OS1, OS2 and OS3 owned by Hantec most relevant and suitable comparables for open storage and his comparable CS1 the most relevant and suitable comparable for covered storage. 166.Mr Lau instead considered his 2 own comparables C2 and C4 most relevant comparables for open storage areas[43]. As a fallback, Mr Lau considered his own comparables LCS1 and LCS2 as relevant comparables for covered storage areas, and his own comparables LOS1 and LOS2 as relevant comparables for open storage areas. 167.Neither Mr Chan nor Mr Lau agrees with adoption of any of the comparables proposed by the other. N1. Comparables OS1, OS2 and OS3 168.I accept OS1, OS2 and OS3 as suitable comparables for valuing authorized open storage lots for the following reasons: -
N2. Comparable C2 169.I reject C2 as suitable comparable for making valuation of authorized “open storage” lots because I am not satisfied on the evidence before me that it was used for “open storage” purpose as at our valuation date of 4 May 2022 or at all as claimed by Mr Lau. 170.My reasons are as follows.
N3. Comparable C4 171.I do not find C4 suitable comparable for making valuation of authorized open storage lots because, even on Mr Lau’s own evidence, it requires adjustments on as many as 5 matters of time, location, accessibility, layout and quantum and adjustments as much as -25% at the most, next at 20% and 10% to be made before it is to be used. 172.This is not to mention that this comparable is located at Leung Uk Tsuen at Pat Heung significantly farther away from the Subject Lots as Mr Lau agreed under cross-examination and that Mr Chan asserted that greater percentage of adjustment should have been made. 173.I refer to Keenrich Trading Limited v The Director of Lands [2024] HKLdT11 [16]-[17] and Tin Kung Investment Limited v Secretary for Transport, unreported, LDRW 16/2001, 29 June 2004 [3(1)], cited at paragraphs 63 and 64 of Hantec’s written closing submissions. N4. Comparables LOS1 and LOS2 174.For the reasons below, I cannot accept Mr Lau’s suggestion that these 2 fallback comparables are suitable comparable for valuing “authorized” open storage lots: -
N5. Comparable CS1 175.I accept this comparable found, and suggested, by Mr Chan for valuing covered storage not exceeding 4,036 square metre of 9 of the Subject Lots subject to 2017 STW. 176.I give the following reasons: -
N6. Comparable LCS1 177.I do not find LCS1 suitable comparable for making valuation of covered storage subject to 2017 STW at the Subject Lots as there is no evidence STW being applied for as recorded in tenancy agreement of this comparable was granted in the end. N7. Comparable LCS2 178.I also do not find LCS2 suitable comparable for making valuation of covered storage subject to 2017 STW at the Subject Lots. My reasons are: -
N8. Adjustments to OS1, OS2 and OS3, and Adjusted unit rates for authorized open storage 179.For my earlier views about “private flatted factories rental index” published by RVD, I prefer Mr Chan’s respective time adjustments to these 3 comparables to those suggested by Mr Lau. The said index should, I think, be applied in its entirety as Mr Chan did. 180.Regarding accessibility of these 3 comparables, I also prefer Mr Chan’s respective adjustments to those proposed by Mr Lau. I cannot believe that OS1 could, as claimed by Mr Lau, be superior to the Subject Lots in terms of accessibility when OS1 has only one entrance as compared to two entrances enjoyed by the Subject Lots[52]. I do not believe that the rear entrance of the Subject Lots cannot accommodate container trucks as Mr Lau claimed for the first time in the box. Had it been so, he would have, one thinks, put it down into the Joint Statement earlier. I do not find Mr Lau’s evidence (and photos) on this issue credible or reliable. 181.Moving to quantum (or size) adjustment, while it is true for Mr Chan to say that different sizes of open storage sites target different logistics markets and different types of goods to be stored, I agree with Mr Lau’s view that a smaller average unit rate could often be achieved after bargain in a letting of a larger area. That makes common sense to me. The size of these 3 comparables are only 3,053.67, 3,911.60 and 4,600.35 square metre respectively. I think a common -5% adjustment should at least be made for each of them, if one does not go as far as Mr Lau did from his undisclosed own company research. 182.The 2 Experts agreed on 5% adjustment for redevelopment clause present in tenancy agreements for OS2 and OS3. I agree to adopt. 183.After making adjustments I accept in this section to comparables OS1, OS2 and OS3 I adopt above, adjusted unit rate for valuing authorized open storage lots of the Subject Lots is, I think, $30.72 per square metre, calculated as follows: -
N9. Adjusted unit rate for unauthorized open storage 184.Adjusted unit rate for valuing unauthorized open storage lots of the Subject Lots is, I calculate, $15.36 per square metre (i.e. 50% of $30.72 per square metre) on the opinion of Mr Chan I accept. N10. Adjustments to CS1, and Adjusted unit rate for covered storage subject to 2017 STW 185.For covered storage comparable CS1, the 2 Experts both gave 0.1% time adjustment and -5% site condition adjustment. I agree to adopt. 186.On user adjustment, location adjustment and accessibility adjustment, I prefer Mr Chan’s respective percentages of 10%, 0% and 30% to those suggested by Mr Lau. 187.On quantum (or size) adjustment, I agree with Mr Lau that adjustment is called for. The covered area of this comparable as allowed by STW No.1909 can be no more than 588 square metre. I make a minimum adjustment of -5% too. 188.Accordingly, on my corrected unit rate for comparable CS1 in [176(3)] above, I arrive at adjusted unit rate of $131.65 per square metre for valuing covered storage of 9 lots of the Subject Lots subject to 2017 STW, calculated as follows: -
O. Total market value of the Subject Lots as at 4 May 2022 189.I therefore arrive at total market value of $1,278,030 ($474,999.71 + $531,339.40 + $271,690.91) as at our valuation date for the Subject Lots totaling 37,186.44 square metre as per Mr Chan’s basis and method of valuation calculated as follows: -
P. Dispositions 190.On my findings and conclusions above, the Applicant has proven its case against the Respondent. 191.I therefore enter judgment in favour of the Applicant against the Respondent as follows:-
192.Let me explain two points about the judgment entered above. 193.First, though Mr Lam began his unlawful possession of the Subject Lots as from 1 July 2021 as I found above, as Hantec only sought mesne profits against him from the later date of 4 May 2022, I will grant mesne profits as from the said date and not earlier. 194.Secondly, as Hantec has wrongly sued Tan Tat causing delayed commencement of these proceedings and as Mr Lam has arranged Tan Tat to make payments for the Subject Lots from July 2022 to April 2024 as I found above (though at a total sum lower than its market value as at 4 May 2022 as I have assessed above), I see fit to decline exercising my discretion to order pre-judgment interest in Hantec’s favour for the earlier period from 1 July 2021 to 3 May 2024. Q. Costs 195.Costs normally follow the event after trial. 196.There is, I think, nothing in this case to depart from the above general rule. 197.I therefore make a costs order nisi that the costs of this action, including all reserved costs and costs of this trial, together with certificate for two counsels, be paid by the Respondent to the Applicant to be taxed on High Court scale if not agreed. 198.Finally, I thank counsels of both legal teams for their industry and assistance.
Mr Bosco Cheng & Mr Francis Chung, instructed by So, Lung & Associates, for the Applicant Mr Lawrence Pang & Ms Tiffany Law, instructed by C. Y. Lam & Co., for the Respondent [1] HCA No.1090/2021 [2] Save the Excepted Area as defined (but Mr Pang took no issue on such area in these proceedings) [3] On the basis that Tan Tat is privy to Mr Lam and vice versa. [4] His last rank with Lands Department was一級地政督察in Chinese. [5] See Exhibit R3 for locations of the said main and rear entrances to the Subject Lots [6] See Appendix 2 of Mr Chan’s Report and Appendix V of Mr Lau’s Report [7] Cap.131 [8] Uses that are always permitted [9] These enforcement notices by PD are summarized at pp.18 to 23 of Mr Chan’s Report. See also Exhibit A3 for another summary with focus on “unauthorized users” referred thereto (and such of the Subject Lots without enforcement notice at all). [10] 倉庫（危險品除外）用途 [11] On 6 August 2015, a cheque in sum of $180,000 was cleared from Tan Tat’s bank account. [12] On 6 May 2024, Mr Yu was recorded on the transcripts to have answered Mr Pang’s questions as follows:
[13] as shown by maps annexed to the letters [14] Except for dates, areas and amounts, the heading in all 7 letters are the same i.e. “有關DD104牛潭尾臨時佔用倉地租金一事” and the wordings thereof in all 7 letters are also the same i.e. “本公司現發信通知閣下有關DD104牛潭尾臨時佔用倉地於某日實地視察後，得出某月佔用面積為某平方呎（如附圖所示分佈位置、數量和面積），以每月呎租為港幣$1.5計算得出佔用費為港幣某數。本公司提請閣下必須於某日前繳付！(粗體及底線後加)” [15] Two cheques in the respective sums of $31,695 and $33,585 both dated 21 January 2021 drawn by Tan Tat in favour of Hantec are produced at trial. [16] One cheque dated 3 January 2021 in sum of $504,600 drawn by Tan Tat in favour of Hantec was produced at trial. [17] The receipt for the month of February 2021 is missing at trial. [18] The Chinese words used above Mr Lam’s signatures and identity card numbers are “承諾人簽署” [19] The Chinese words used are “承諾於【某日】之前拆除所有搭建物” [20] The other 4 deadlines are 28 February 2021, 30 June 2021, 30 September 2021 and 31 December 2021. Handwritten words were also put down to indicate progress so far, if any, of such removals at the said 8 different portions of the Subject Lots. [21] Exhibit A1 [22] The Chinese name of tenant was mistakenly written down as “林鏡友” with the word “友” crossed out, and replaced by the word “有” handwritten, by Mr Yu. The English name of Mr Lam was put down correctly as the tenant. [23] The other 3 deadlines are 30 June 2021, 30 September 2021 and 31 December 2021. [24] General Manager of Land and Business Department of KDCL [25] In Mr Lam’s words “大哥” [26] Mr Tuen and Mr Yu both called it “the basis of negotiation” with Mr Lam in their witness statements. [27] Mr Yu had no general authority as a land officer of KDCL to agree on whatever terms he saw fit: see paragraph 5 of his witness statement. [28] Paragraphs 11 to 13 of Mr Yu’s witness statement [29] On 7 May 2024, Mr Lam was recorded in transcripts to have answered Mr Cheng’s questions as follow:
[30] Paragraph 38 of Mr Lam’s witness statement [31] On 7 May 2024, Mr Lam was recorded in transcripts to have answered Mr Cheng’s questions as follow:
[32] Paragraph 6 of Mr Yu’s affirmation [33] On 6 May 2024, Mr Yu was recorded on the transcripts to have answered Mr Pang as follows:
[34] See transcripts of Mr Lam’s answers quoted at footnote 31 [35] On 7 May 2024, Mr Lam was recorded in transcripts to have answered Mr Cheng’s questions as follow:
答：同意。（粗體後加）” [36] Cap.123 [37] Like Mr Lam [38] 1 out of this 19 authorized one is partly authorized and party unauthorized i.e. Lot No.1282 S.H. (Part) [39] Mr Chan treated uncovered part of 9 lots with 2017 STW as authorized open storage. [40] See Exhibit A6 Mr Chan adopted in chief [41] $7.16 per square metre [42] $19.98 per square metre [43] Mr Lau had discarded his comparables C1 and C3. [44] See location plan at p.109 of Mr Chan’s Report [45] It was not so amended until leave was given by me on the first day of trial. [46] I accept from Mr Chan that it takes 10 minutes to drive from the Subject Lots to Lok Ma Chau control point (LMC) and 4 minutes to drive from them to San Tin Highway whereas it takes 21 and 18 minutes to drive from LOS1 and LOS2 to LMC respectively and 11 and 7 minutes to drive from LOS1 and LOS2 to Yuen Long Highway respectively. [47] 租客只可根據該物業之地契内所指定之用途，業主均不會負責及承擔租客之一切違規或違法使用該物業之行爲。 [48] 該物業屬村屋、豬欄與農地，不得對該物業作任何改動或加建，不能儲存危險物品和違禁品或幹一切觸犯香港政府法例之事。 [49] 租客要保持該物業的原貌、一切原來設備及間隔。 [50] Contrary to the views of Mr Lau, these clauses are not, I think, sham or ineffective but binding as between landlord and tenant. [51] See location plan at p.151 of Mr Chan’s Report [52] Mr Lau proposed -3% adjustment while Mr Chan proposed 3% adjustment the other way round. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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