Mak Lau Sui-kan v. Lai Man-yau and Another

HCA002038/1971

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 2038 OF 1971

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Coram: Hon. Li J. in Chambers

Date of Judgment: 12th November, 1971.

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JUDGMENT

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1. This is an application by the Plaintiff under Order 29 rule 1 for an interlocutory injunction against the 1st Defendant and 2nd Defendant that they be restrained from remaining in the property known as Dragon View, be prohibited from obstructing the Plaintiff's enjoyment of the said property and be restrained from taking away anything from the said property except the 1st Defendant's personal effects and the 2nd Defendant's goods.

2. By an affidavit in support dated and filed on the 9th September 1971 the Plaintiff deposed that she is the sole registered and beneficial owner of the land and premises known as Dragon View N.K.I.L. 3755 which she acquired in an auction on the 17th February 1970. In March she permitted her sisters LAU Yeuk-ling and LAU Chow-wei to live therein rent free. On the 22nd March 1970 LAU Yeuk-ling moved into Dragon View with her son POON Wing-tak, her daughter Diana, LAU Chow-wei's son CHAN Chi-ho and Chan's wife WONG Suet-man. LAU Yeuk-ling at that time was closely associated with the 1st Defendant who used to stay in Dragon View with her. In July 1971 LAU Yeuk-ling died. 1st Defendant since then refused to move from Dragon View and locked up the gates of the driveway to Dragon View. As a result the Plaintiff took action for possession and injunction and now applies for this interlocutory injunction.

3. By his affidavit dated and filed 19th October 1971 the 1st Defendant deposed that LAU Yeuk-ling was in fact his concubine. He further deposed that LAU Yeuk-ling provided the deposit of $238,000 and later transferred a sum of U.S. $55,000 to the Plaintiff as part purchase price of $1,190,000 of the properties known as N.K.I.L. 3753 and 3755 together with the buildings - a 3-storey building and Dragon View on the said lots of land respectively.

4. It was agreed between the Plaintiff and LAU Yeuk-ling that the former would enjoy the rents and profits deriving from the 3-storey building and the latter was given full dominion of Dragon View. In March 1970 LAU Yeuk-ling let Dragon View to the 2nd Defendant which is a limited company for the purposes of accommodating its directors of whom the 1st Defendant and LAU Yeuk-ling were two and for storage purposes for the monthly sum of $1,700. He referred to the affidavit of one TSE Wah-so, 2nd Defendant's accountant, dated and filed the 16th October 1971 together with the accounts and rent receipts exhibited therein and subsequently spent money for improvement and decoration in the sum of $150,000.

5. By her affidavit in reply dated 21st October 1971 the Plaintiff admitted that at the time of her successful bid at the auction on 17th February 1970 the said LAU Yeuk-ling did pay over a cheque as deposit in the sum of $238,000 at the Plaintiff's request and on her behalf. But on the 18th February 1970 she gave a cashier Order of Nanyang Commercial Bank in sum of $150,000 (Exh. MLSK1) together with $90,000 in cash to LAU Yeuk-ling. As to the balance of the purchase price she paid the whole lot with her own money in the sum of $952,000 through Messrs. Yung, Yu, Yuen & Co. on or about 27th February 1970. She admits the transfer of U.S.$55,000 from the deceased's account to her account. But she says that the transfer was made in repayment of the debts owed to her by LAU Yeuk-ling and has nothing to do with the purchase price of Dragon View. She further states that she is the sole beneficial owner of both properties - the 3-storey building and Dragon View, she never authorized LAU Yeuk-ling to create any tenancy and that the decorations and improvements to Dragon View were done through LAU Yeuk-ling with moneys paid by the Plaintiff and with rents and profits from the 3-storey building.

6. In view of the foregoing facts as deposed in affidavits I have first to consider whether the Plaintiff has established a clear case that she is the sole beneficial owner of Dragon View. If the answer to this question is in the affirmative I have further to consider whether the Plaintiff by express or implied authority or by holding out authorised LAU Yeuk-ling to create a tenancy in favour of the 2nd Defendant. In addition I have to consider whether the 1st Defendant, if a mere licensee, is one coupled with an interest by virtue of the decorations and improvements he alleged to have made on the property at the inducement of the Plaintiff. Then I shall consider the conduct of the parties and other factors as to how I should exercise my discretion.

7. With regard to the first issue learned counsel for the Plaintiff contends that there is a clear and unequivocal case that the Plaintiff is the sole beneficial owner of Dragon View. It has been conceded that the Plaintiff is the sole registered owner of the property. There is evidence that she provided all the purchase money. There is evidence in the receipts and statement of accounts. Exhs. MLSK2, MLSK3 and MLSK4 annexed to the Plaintiff's affidavit dated the 21st October 1971 show that the Plaintiff paid on the 27th February 1970 the professional charges and disbursement and the purchase price for the property in the amounts of $26,604 and $952,000 respectively. There is also documentary evidence in MLSK1 annexed to the Plaintiff's said affidavit showing that the Plaintiff repaid LAU Yeuk-ling on the 18th February 1970 - one day after the auction - the sum of $150,000 by a cashier order. The balance of $88,000 the Plaintiff deposed was repaid at the same time in cash in the sum of $90,000 together with the cashier's order.

8. Learned counsel for the Defendant contends that it is not in dispute that LAU Yeuk-ling paid the deposit of $238,000 at the time of the successful bid at the auction. He further contends that there is evidence that LAU Yeuk-ling caused a transfer from her bank account in America to the Plaintiff in the sum of U.S.$55,000. These two sums together represent approximately half of the purchase price. On these allegations as deposed he urges me not to decide on the issue lest I might usurp the function of the trial judge or the jury. He says that the course now taken by the Plaintiff amounts to an impeachment of the title of a deceased person (LAU Yeuk-ling) and this court should view it with great suspicion and caution. He cites in support of his contention the case of Wenlock v. Moloney⁽¹⁾ and In re Garnett⁽²⁾.

9. In an application of this nature this court has to be satisfied that on the facts before it there is a probability the Plaintiff is entitled to relief. This Court has, of necessity, to consider the application on affidavit evidence at this stage. The balance of probability is to be viewed from the inherent strength or weakness of the facts deposed. An order is not a final judgment. In Wenlock's case the pleadings had been filed and it was decided that the statement of claim, on the fact of it, did disclose a cause of action and that affidavit evidence saying that such action was unlikely to succeed would be inadmissible. Sellers L.J. said:-

"If, in here, the only ground on which the action can be said to disclose no reasonable cause of action is that it is not one which is likely to succeed, then I doubt whether affidavit evidence was admissible."

10. That is clearly distinguishable from the present case in which there is no statement of defence has been filed to-date and the Plaintiff's case does not rely entirely on the weakness of the Defendant's case. Further the present case is distinguishable from In re Garnett when it is appreciated that in this case it is the Defendant who impeaches the Plaintiff's title by setting up some beneficial interest of a deceased person (LAU Yeuk-ling).

11. There is corroborative evidence in this case that all professional fees and purchase price had been paid by the Plaintiff. There is corroborative evidence that $150,000 of the $238,000 deposit put up by LAU Yeuk-ling had been repaid to her immediately the next day. The property was registered in the name of the Plaintiff as sole owner. All the receipts were issued by Yung, Yu, Yuen & Co. in the name of the Plaintiff. The transfer of a U.S.$55,000 was made in February 1971 over one year after the purchase of the property and no written reference was made that it was transferred to the Plaintiff as part of the purchase price. LAU Yeuk-ling's account showed that this sum was available in her account since June 1970. In view of the aforesaid I am satisfied, on the balance of probability that the Plaintiff is the sole beneficial owner of Dragon View.

12. Once I came to this conclusion the second issue is more academic than real. If LAU Yeuk-ling was never a beneficial owner of the property she was not in a position to create any tenancy in favour of the 2nd Defendant - Nemo dat quod non habet. The question of holding out does not arise. The 1st Defendant's contention is that she created a tenancy in favour of the 2nd Defendant, a limited company of which she was a director. In her personal capacity LAU Yeuk-ling knew and ought to have known that she had no title to or beneficial interest in the property. Such knowledge must be imputed to the 2nd Defendant which must, of necessity, act through its officers of whom LAU Yeuk-ling was one. I do not feel that the contents of the ledger and the receipts are relevant. Without suggesting any element of fraud they could be entered in such a way for internal accounting purposes for the benefit of LAU Yeuk-ling who attained a gratuitous licence to live in Dragon View. In view of these I find that the 2nd Defendant has no standing whatever vis-a-vis the property and 1st Defendant's claims in his capacity as a director of 2nd Defendant must also fail.

13. I now come to the question whether the 1st Defendant has acquired a licence coupled with an interest in the property because he had spent money with the knowledge and consent of the Plaintiff. There is evidence that the 1st Defendant spent some $150,000 for furniture, decorations of the house and improvements of the property. There is also evidence for the Plaintiff that she paid for such improvements from rents and profits from the 3-storey building. Mr. Litton, citing the case of Inwards v. Baker⁽³⁾ in support, contends that by so doing the 1st Defendant has acquired an irrevocable licence. I do not have to resolve the question as to who in fact spent the money. Even if it was the 1st Defendant who spent money for all the improvements I am of opinion that the facts in this case are clearly different from those in the Inwards case. That case was decided on the basis that the father by his conduct gave the inducement that his son could live in the bungalow if the son would build one on the father's land. The son spent money to build it in expectation of being allowed to stay.

14. Lord Denning M.R. said:-

"It is quite plain from those authorities that if the owner of land requests another, or indeed allows another, to expend money on the land under an expectation created or encouraged by the landlord that he will be able to remain there that raises an equity in the licensee such as to entitle him to stay."

In the present case it is alleged that the licence was given to LAU Yeuk-ling to live in Dragon View and to the 1st Defendant to visit her as man and concubine (or mistress) not as an inducement or request to spend money to make improvements. On the 1st Defendant's affidavit it is quite apparent that he made the improvements because he alleged LAU Yeuk-ling had a beneficial interest and full dominion in Dragon View. The improvements were not made until February 1971. In view of these I am of opinion that the inducement for the making of furniture, decorations and improvement was that of their personal comfort and not as a condition precedent for obtaining the gratuitous licence. Thus the principle enunciated in the Inwards case has no application here.

15. Learned counsel for the Defendant contends that to grant an order in the nature sought by the Plaintiff it will have the practical effect of granting the sole relief claimed by the Plaintiff in her action. There is some force in this contention.

16. It is not the practice of the Court to grant an interlocutory injunction which will have the practical effect of granting the sole relief claimed. But this does not deter the Court from granting such interlocutory injunction as may be necessary to preserve property.

17. Dodd v. Amalgamated Marine Workers' Union⁽⁴⁾ is the case in point. In that case the Plaintiff sought, by interlocutory injunction, an order to inspect the Union's books which was the only relief claimed in his action. Lord Sterndale M.R. said that

"inspection of the books is substantially the whole claim. It may be right in certain cases to give all the relief claimed in the action upon interlocutory ...(illegible)otion ......, but that is not the rule ...... Here the Judge has granted the whole relief claimed, with no undertaking by the Plaintiff in damages, and I think that, so stated, the order is contrary to the usual practice of the Court."

In this case the relief asked for by the Plaintiff is possession and the Plaintiff undertakes to pay damages if the injunction was wrongly granted.

18. The case of Shephard Homes Ltd. v. Sandham⁽⁵⁾ merely reiterate the principle in Dodd's case in a more elaborate way. Megarry J. said (at p.411):-

'... if the defendant, after express notice, has committed a clear violation of an express contract ... a mandatory injunction will be granted on an interlocutory application',

is too wide. Both the case itself and the statement founded on it have to be qualified in the light of the other authorities to which I have referred, especially Bowes v. Law and Kilbey v. Haviland (which, although decided earlier, do not seem to have been cited) and Sharp v. Harrison. No doubt a mandatory injunction may be granted where the case for one is unusually sharp and clear; but it is certainly not a matter of course."

19. In the present case I am satisfied that the Plaintiff has the sole beneficial title. This application is made, no doubt, because of the very bad feeling between the Plaintiff and the 1st Defendant. But it is a fact that the Plaintiff has been prevented by 1st Defendant and 2nd Defendant from the enjoyment of her rights. Not only her sister Lau Chow Wei, another of the Plaintiff's licensees, was prevented from enjoying her stay in the property; but even the Plaintiff herself was barred from entry which she formerly enjoyed. Without an Order of this Court there is no way to restore the status quo. As to the damage and detriment which may be suffered by the 1st Defendant I note that the property is not his principal home. He spent money and visited the property solely because his concubine (or mistress) used to live there. Now she is dead. The sole reason for his presence in the property is to assert a right which he fails to justify. He is the person who disturbed the status quo.

20. Taking all into consideration I am of opinion that an Order in terms of the application against both Defendants subject to the condition that the Plaintiff undertakes to move for a speedy trial and to pay damages to both Defendants should the Plaintiff fail to obtain judgment at the trial in her favour.

Representation:

Cheung, Q.C. and Arculli (Johnson, Stokes & Master) for Plaintiff

Litton, Q.C. and Chang (C.C. Lee & Co.) for Defendants.

Judgment handed down

(1) (1965) 1 W.L.R. 1238.

(2) (1886) 31 Ch. D. 1.

(3) (1965) 2 Q.B. 29

(4) (1923) 93 L.J. Ch. 65

(5) ...(illegible)