Chan Mok Yee and Others v. Attorney General

HCA006881/1980

Headnote

Government policy of making ex gratia payments of compensation - Significance of words "ex gratia" - Justiciable issue - Declarations - Promissory and proprietory estoppel.

IN THE HIGH COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Rhind, J. in Court.

Date: 11 January 1982

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JUDGMENT

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Introduction

1. I am at a loss to understand how the present action for a declaration has ever been allowed to reach the hearing stage.

2. In every sense in which the expression is understood, the Statement of Claim was manifestly "an abuse of the process of the court". It was transparently an exercise to put pressure on the Government to pay the Plaintiffs what would have been ex gratia compensation in respect of land which the Plaintiffs have occupied. It is difficult to conceive an issue which could be less justiciable.

3. Having issued a Summons to strike out the Statement of Claim on the ground that it disclosed no reasonable cause of action, the Defendant surprisingly did not proceed with it. This lapse on the Defendant's part afforded the Plaintiffs an opportunity to erect a house of cards on what, to my mind, was all along clearly a foundation of sand. In the result, three days of court hearing time have been wasted on proceedings which should never have been allowed to see the light of day.

The Facts

4. Stripped of rhetoric and extravagant claims which clearly could not be substantiated, the material before me disclosed the following factual situation.

5. From 1964 to 1976, Mr. Lee Tim and Mr. Robert Keung Szeto, who together traded under the name of Chung Ying Hong, occupied some sixteen thousand odd square feet of land at Kai Lung Wan under a Crown Land Permit (See Exhibit 2 of Chan Kam Hing's Affidavit of 11th Dec. 1981. All further references to Exhibit numbers relate to that same Affidavit, unless otherwise stated.) That Crown Land Permit stated explicitly that the purpose for which the land might be used was the storage of dangerous goods. The structures stated to be permitted on the land were two godowns and one cement/brick/ asbestos structure.

6. That Crown Land Permit was suprerseded by a tenancy agreement dated 6th January 1976 between the same parties in respect of the same land. (See Exhibit 3). The term of the tenancy was from the 1st December 1974 for one year certain and thereafter quarterly. The rent was $7,500 per quarter. The tenant agreed inter alia (a) to use the premises only for the storage of dangerous goods and (b) not to assign, underlet, part with the possession or otherwise dispose of the premises or any part thereof or any interest therein or enter into any agreement so to do. It was also specified that the tenancy might be determined by either party giving the other three calendar months' notice in writing to that effect to expire at any time.

7. The rent has from time to time been revised upwards, and by 1978 the Crown was proposing to Chung Ying Hong that, with effect from the quarter commencing 1st January 1979, the rent would be $21,855 per quarter. (See Exhibits 4, 5 and 6).

8. As Chung Ying Hong did not agree to pay the proposed new rent, the Crown, on the 27th November 1978 served it with a Notice to Quit (Exhibit 7), requiring it to delivery up possession on 28th February 1979.

9. Despite the non-withdrawal of the Notice to Quit, Chung Ying Hong, in a letter dated 22nd February, 1979, (Exhibit 7), purported to accept the Crown's earlier offer of a continuation of the tenancy at the proposed new rent of $21,855 per quarter.

10. Clearly, the lease enjoyed by Chan Ying Hong expired on the 28th February 1979 in accordance with the Notice to Quit. (Whether the Plaintiffs admit this is neither here nor there; the facts I am stating are simply incontrovertible on a disinterested appraisal of the material before me ).

11. At some stage the Plaintiffs moved on to the land. Whether it was before 1979 I am not in a position to say. Despite misgivings I vented in court, I was, nonetheless, presented with conflicting versions of some of the facts, but, as the evidence was all documentary, there was no way I could resolve those conflicts other than by resorting to the onus of proof and saying that as the onus was on the Plaintiffs any such conflicts must be resolved against them. Because of the unsatisfactory way in which the material was thus put before me, I am not sure when the Plaintiffs first went into de facto occupation of the land. According to what the Plaintiffs themselves told Mr. Chik Wai Kin (See Exhibits 2 and 3 of his Affidavit filed on 9th December 1981), they had been in occupation since 1976, but Mr. Chan Kam Hung in his Affidavit of 10th December 1981 wants to change that to early in the year 1979.

12. In any event, by 1979 the Plaintiffs were in occupation of the land. There is not a scintilla of evidence to suggest that the Crown approved beforehand of the Plaintiffs moving into physical occupation of the land. The Crown was clearly presented with a fait accompli.

13. The Crown wrote to the Plaintiffs on the 9th December 1979 (Exhibit 10), pointing out quite correctly that Chung Ying Hong's tenancy had terminated on 28th February 1979, and explaining that, although the Plaintiffs' occupation of the land was not approved, the Crown was prepared to offer the Plaintiffs a tenancy on a quarterly basis from 1st March 1979, the rent for the first six months to be at a rate of $21,855 per quarter and thereafter at a full market rent to be assessed.

14. At that stage nothing had been paid to the Crown for the occupation of the land since the expiry of Chung Ying Hong's tenancy on the 28th February 1979. (A claim made by the Plaintiffs by paragraph 6 of their Statement of Claim to the effect that they had taken " ..... an assignment in equity of the Tenancy Agreement from the said Lee Tim and Robert Keung Szeto which was known to and accepted by the Defendant ......" is mere wishful thinking which comes nowhere near to being supported by the material before me).

15. Next, on 30th January 1980, the Crown wrote (Exhibit P 11) to the Plaintiffs saying that the rent from 1st September 1979 had been assessed at $65,000 per quarter. The letter went on to explain that the proposed tenancy would be on the same terms as the tenancy under which Chung Ying Hong had held, except that the term was to be quarterly from 1st March 1979. The Crown asked the Plaintiffs to accept the Crown's offer within one month.

16. On the 22nd February 1980, the Plaintiffs' then solicitor wrote to the Crown (Exhibit P 12), asking the Crown to assess the rent at a lower figure.

17. After that, on 25th February 1980, the Crown sent the Plaintiffs another letter (Exhibit 13), withdrawing its offer of a tenancy, as the Government had re-appraised its future development proposals in the area.

18. That letter went on to say that Government still required the Plaintiffs to pay for their illegal occupation of the land. In characterising the Plaintiffs occupation of the land as "illegal" the Crown was, in my opinion, making an undeniably correct assertion (See the Crown Land Ordinance, Cap. 28, S.2 re definitions of "leased land" and "unleased land"; and S.4;)

19. Presumably within a very short time of sending the Plaintiffs that letter of 25th February 1980, the Crown must have issued a demand note, for, by as early as 2nd April 1980, the Crown was sending the Plaintiffs a first reminder (Exhibit 15) for the fee, namely $173,710, for the use and occupation of the land from 1st March 1979 to the 29th February 1980.

20. Having changed their solicitors, the Plaintiffs by their new solicitors' letter, dated 21st March 1980 (Exhibit 14), offered to accept the grant of a short term tenancy at a maximum rent of $40,000 per quarter. (I do not propose to waste time in commenting on the assertions in the second paragraph of that letter beyond saying that they are either irrelevant, self-serving, or otherwise unsustainable).

21. On 1st May 1980, the Plaintiffs paid the $173,710 which the Crown had demanded.

22. The next development of any interest was a letter. (Exhibit 18 (a)), dated 16th July 1980, from the Crown to the Plaintiffs' solicitors offering a tenancy of nine months certain commencing from the 1st March 1980 and expiring on the 30th November 1980. That tenancy was to be on the same terms as Chung Ying Hong's former tenancy (with the exception of term and rental), the rent for the whole term being $195,000.

23. By their letter (Exhibit 18 (c)) dated 26th July 1980, the Plaintiffs' solicitors accepted the Crown's offer of a tenancy of 9 months certain commencing from 1st March 1980 and expiring on 30th November 1980.

24. Following on the Plaintiffs' solicitors letter of 26th July 1980, the Crown sent a letter dated 5th September 1980 (Agreed Bundle, Item 1), dealing with matters of no consequence for the present proceedings, save that the Crown's closing words were "Please ensure that your clients vacate the site in question on or before December 1st 1980".

25. Next comes a letter (Agreed Bundle, Item 4) from the Plaintiffs' solicitors, dated 25th September 1980, which is full of contention but short on hard facts. That letter appears to have been triggered off by an accompanying Notice dated 28th August 1980 from the Director of Housing, stating, inter alia, that the site must be cleared by the 17th December 1980. That letter of the 25th September 1980 asked the Crown for a further short tenancy.

26. In a letter (Agreed Bundle, Item 3) dated 1st October 1980, the Crown again observed that the tenancy was for a fixed period from 1st March 1980 to 30th November 1980, and that the Plaintiffs were required to vacate on or before 1st December 1980.

27. Again, on 31st October 1980, the Crown wrote (Agreed Bundle, Item 5) to the Plaintiffs' solicitors an the effect that the Plaintiffs had to vacate on or before 30th November 1980.

28. That prompted a reply from the Plaintiffs' solicitors, by a letter dated 11th November 1980 (Agreed Bundle, Item 6), asking for an extension of a further year from 30th November 1980 as the Plaintiffs were in tremendous difficulty finding a suitable site for the setting up of their factory.

29. To that, the Crown replied on 19th November 1980 (Exhibit 21), regretting that the Plaintiffs' request for further occupation of the site after 30th November 1980 could not be acceded to, and going on to state that the Plaintiffs were required to move on 30th November 1980.

30. The Plaintiffs' solicitors' reply (Exhibit 22) of the 27th November 1980 expressed great disappointment at what they described as the Plaintiffs not being given reasonable time to evacuate the tenancy area, but going on to observe that as soon as adequate compensation in accordance with Government policy was paid the Plaintiffs, they would evacuate the site. Elaboration was furnished on how the Plaintiffs required the money to begin to negotiate for alternative premises, the result being that they could not leave till it was paid.

31. There was a lull till the 3rd January 1981 when the Crown replied (Agreed Bundle, Item 7) that due to a delay in the project for which the site was required, the Government was prepared to extend the Plaintiffs' occupation of the site till 28th February 1981, and proposed issuing a tenancy agreement to cover the whole period from 1st March 1979 to 28th February 1981.

32. That was followed up by another letter from the Crown, this one being dated 3rd February 1981 (Exhibit 23), confirming that the Plaintiffs could continue in occupation till the 28th February 1981, the rent for the period 1st December 1980 to 28th February 1981 being $65,000. The tenancy was to be on the same terms and conditions as Chung Ying Hong's, save that the period to be granted was from 1st December 1980 to 28th February 1981.

33. In that letter of 3rd February 1981, the Crown invited the Plaintiffs through their solicitors to signify acceptance by signing a carbon copy of the letter which bore the endorsement (See Agreed Bundle, Item 9) :-

"I/We hereby accept a tenancy as herein set out and agree to be bound by the above mentioned terms and vacate from the tenancy area before 1st March 1981".

34. The Plaintiffs never signed the endorsement on the carbon copy of the Crown's letter of 3rd February 1981. Instead, by a "Without Prejudice" letter dated 10th March 1981, the Plaintiffs' solicitors merely sent the Government its $65,000 as the rent for the period 1st December 1980 to 28th February 1981, the Government duly issuing its receipt for this sum (Exhibit 24(2)). No more rent has been demanded or paid since then.

35. On the 17th March 1981, the Housing Department caused a Notice (Exhibit 25(b)) to be posted on the land, requiring the removal of personal properties before the 16th July 1981, and warning that otherwise the properties would be removed by the Department.

36. Having been warned by Mr. Chan Keung Kwok of the Housing Department on or about the 9th July 1981 that the factory on the land would be demolished and the occupants evicted on the 16th July 1981, the Plaintiffs went to court (Miscellaneous Proceedings 937 of 1981), seeking inter alia, a stay of eviction, after a Notice (Exhibit 26) in accordance with S.6(1) of the Crown Land Ordinance was posted on the land requiring the occupiers to cease their occupation before 16th July 1981. S.6 of the Crown Land Ordinance applied because the land in question fell clearly within the description of "unleased land occupied otherwise than under a licence or a deed or memorandum of appropriation". It is hardly necessary to spell this out, but there is simply no lease to which the Plaintiffs could point after the 28th February 1981 at the latest; there is no licence; there is no deed; there is no memorandum of appropriation.

37. As the result of Court Orders and an undertaking from the Crown, there has been no eviction pending this present Judgment.

Compensation

38. The Plaintiffs do not contend that they were entitled to any statutory compensation. What they rely on is "the policy of the Hong Kong Government to pay compensation, inter alia, in cases where land occupied by buildings was re-entered for a Government project, whether or not the occupants had any existing title from the Crown" (Paragraph 6 of the Statement of Claim). Mr. Chan Kam Hung in paragraph 6 of his Affidavit of 10th December 1981 imparts the information that "it was in fact common knowledge that Government pays adequate compensation to factories if it requires the site back to clear and therefore does not renew the tenancy". Again, in his paragraph 24, he makes reference to "the known and recognized policy of the Government of offering reasonable compensation on the clearance of industrial sites ....." and '' ..... it is generally known that Government does pay compensation where factories are cleared from land either under short term tenancies or even mere squatters on the land".

39. Even if the court were to accept the assertions just mentioned from the Statement of Claim and from Chan Kam Kung's Affidavit as correct, it could not make any difference to the result of this case, Government policy is not justiciable. The courts take cognizance of the law, not Government policy. Government policy belongs to the realm of politics, and also, perhaps, of social and moral duties. Courts do not allow themselves to become entangled in such matters (See Fred Jackson etc. v. A-G⁽¹⁾ and in particular the reference therein at page 329 to Sir Robert Megarry V-C's observations in Malone v. Commissioner of police ⁽²⁾).

40. The, court, however, does not accept what either the Statement of Claim or Chan Kam Hung's Affidavit of 10th December 1981 says about Government policy. There happens to be a conflicting version of what Government policy is in Tse Wai Kin, the Housing Manager's Affidavit of 18th November 1981. I set out his paragraphs 3 and 4 :-

41. I have already indicated the approach I am going to adopt in resolving conflicts on the documentary evidence. The onus of proof being on the Plaintiffs, and the Plaintiffs having done nothing to satisfy me why their version should be accepted in preference to the Defendant's, and having failed to demonstrate that the Defendant's version is wrong, I accept the Defendant's version.

42. I accordingly accept that such payments as the Government offers are ex-gratia. What could be less justiciable than a policy of ex gratia payments?

43. Edwards v. Skyways Ltd. ⁽³⁾ was cited to me on behalf of the Plaintiffs as authority for the proposition that ex gratia payments can be justiciable. All that case is authority for is the proposition that, if where a dispute arises, one side offers the other to settle by making an "ex-gratia" or a "without admission of liability" payment, and the other side accepts that offer, then, as a matter of contract law, the offerer will be bound by his promise and will have to pay up. That is what happens all the time in settlements made by lawyers on behalf of their clients both in and out of court. From that, one cannot go on to argue that a policy of making ex gratia payments creates any legal liability. That would make a complete nonsense of the words "ex gratia". If the Plaintiffs or their lawyers believe that the Plaintiffs are as a matter of law entitled to compensation from the Government, I suggest they pause to consider just how far they would get if they were to sue on such a claim. The answer obviously is "nowhere", because the Government is under no legal liability to pay compensation.

Equity

44. For the Plaintiffs to dare to invoke the fair name of Equity in view of their conduct as disclosed by the documentary material before the court verges close to the sacrilegious, in my opinion.

45. The Plaintiffs were offered arid: accepted a fixed terms of 9 months from the 1st March 1980 to 30th November 1980. They were told umpteen times they would have to deliver up the property by 1st December 1980 at the latest. Once the 30th November 1980 came, they just sat tight. They were offered an extension till 28th February 1981. By themselves failing to acknowledge that they would have to leave on 28th February 1981 in no way improved the Plaintiffs' position. If they want to say they never accepted the offer to stay till 28th February 1981, that avails them nothing, for then the conclusion is their tenancy terminated even earlier, namely on 30th November 1980. The Plaintiffs are in the hopeless position of trying to make bricks without straw, tying to conjure some make-believe tenancy or other title out of the air where the material before the court simply fails to disclose facts 'they could rely on.

46. Let me not mince words. Far from disclosing the type of deserving conduct which might raise an equity in the Plaintiffs' favour, they are revealed as engaged on what smacks of an arm-twisting exercise: pay us compensation to get rid of us.

47. Few lawyers' hearts are not gladdened by the humanity and decency of the doctrines of promissory and proprietory estoppel, as exemplified in such cases as Plimmer v: The Mayor etc. of Wellington⁽⁴⁾; Inwards v. Baker⁽⁵⁾; Crabb v. Arun District Council⁽⁶⁾; Pascoe v. Turner ⁽⁷⁾; Brikom Investments Ltd. v. Carr ⁽⁸⁾; Re Sharpe (A Bankrupt)⁽⁹⁾; Greaseley & Others v. Cooke⁽¹⁰⁾; and Taylor Fashions Ltd. v. Liverpool Victoria Trustees Co. Ltd. ⁽¹¹⁾ which were cited to me. I, for one, feel at ease being a judge in this Age of Denning, when Equity has enjoyed such a resurgence. I applaud all the passages that were cited to me by the Plaintiffs' Counsel from the cases I have just referred to, and agree with every word of them.

48. However, none of it helps the Plaintiffs. They are unworthy suppliants. They entered into a tenancy agreement with the Crown. They agreed to leave by 30th November 1980. They did not go.

The Declarations

49. The Declarations the Plaintiffs seek from the court are the following:-

50. As to (a), I am not prepared to accept on the material before me that any part of the land was the subject matter of an industrial letting in 1976 (I have assumed from the context of the present case that, by "industrial letting", the Plaintiffs mean that a factory was operating on the site or part of it).

51. The Plaintiffs themselves gave information to Mr. Chik Wai Kin, a Housing Department Assistant, to the effect that they had been on the land since 1976, but had only started using it as a factory since 1979. (See Chik Wai Kin's Affidavit of 8.12.81, Exhibits "C.W.K.2" and "C.W.K. 3")

52. Tse Wai Kin, the Housing Manager, makes an assertion to the same effect in paragraph 5 of his Affidavit of 18th November 1981. Chan Kam Hung in his Affidavit of 10th December 1981 seeks to explain that the Plaintiffs must have been misunderstood, and asserts on the basis of hearsay that there was a factory on the land in 1976. A problem for the court in approaching Chan Kam Hung's Affidavit is that accuracy does not appear to be his strong point, judging from his paragraph 15. There are a pair of Affidavits from others, saying there was a factory on the land in 1976.

53. I do not know what the correct position was in relation to when the factory was first there. I cannot say I have been satisfied even on a balance of probability that a factory was there in 1976.

54. Courts do not make declarations lightly. They are not as of right. See such well-known cases as Guaranty Trust Company of New York v, Hannay & Company ⁽¹²⁾. The same point is made in O'Connor J's Judgment in Chiu Ming Sun v. Michael Ma Wing and Others⁽¹³⁾. See also the text of the White Book generally on 0.15, r. 16. I would want a far better explanation than any tendered so far of the Plaintiffs' admission about the factory starting in 1979 before I would go to the length of making such a declaration.

55. As to (b), I would not make the declaration sought because (i), as I think I have already sufficiently indicated, the Plaintiffs have failed to show any entitlement in equity to remain on the land and (ii) the words "unless or until adequate compensation is received" are too vague and question-begging to form part of a declaration by a court. When and how is the adequacy of the compensation supposed to be determined? Courts simply do not make imprecise declarations like that.

56. As (c) presupposes success on (b), it inevitably follows that the application in relation to (c) also fails. Moreover, as I have already indicated earlier, I regard the Housing Authority's Notice under S.6(1) of the Crown Land Ordinance as perfectly valid.

Conclusion

57. In view of the foregoing, the Plaintiffs' claim is dismissed.

58. There will be judgment for the Crown on its counter-claim for damages in respect of mesne profits from 1st March 1981, such damages to be assessed by a Registrar, in default of agreement.

(1)    [1980] H.K.L.R. 323

(2)    (No. 2) (1979) 2 W.L.R. 686 at page 707

(3)    [1964] 1 w. L. R. 349

(4)    [1884] 9 A.C. 699

(5)    [1965] 2 Q.B. 29

(6)    [1976] Ch. 179,

(7)    [1979] 1 W.L.R.431

(8)    [1979] 2 w. L. R. 737

(9)    [1980] 1 W.L.R. 219

(10)    [1980] 1 W.L.R. 1306

(11)    [1981] 1 ALL E.R. 897

(12)   [1915] 2 K.B. 536 (in particular at page 572)

(13)    (Unreported decision, H.C.A. 7013/80 dated 24th December 1980).

Representation:

Mr. Bernacchi, Q.C. & R. Whitehead (Lau, Wong & Chan) for Plaintiffs

Mr. Barlow (Legal Department) for Defendant