Yip Alice and Others v. Wong Shun

HCA012614A/1999

HCA12614/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.12614 OF 1999

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Coram: Deputy High Court Judge Reyes SC in Court

Dates of Hearing: 27, 28 March and 3 April 2002

Date of Judgment: 19 April 2002

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J U D G M E N T

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Background

1.In the 1960s the plaintiffs' family ("the Yips") entered into possession of land known as No.44 Praya Road, "C" Lei Yue Mun, Kowloon ("the Land"). The Land was unleased Crown Land. The plaintiffs accept that no Crown or (since 1 July 1997) Government lease, licence or permit has ever been granted to the Yips for the occupation of the Land. In other words, the Yips came into possession of the Land as squatters.

2.In the mid-1960s, the Yips having settled on the Land, the plaintiffs' father noticed that people often travelled to Lei Yue Mun for photographs. It occurred to him that the Land had potential as a tourist attraction and he decided to take advantage of this by starting a business there under the name Hyde Park Garden Restaurant ("the Restaurant"). The Restaurant appears to have been the 1st seafood restaurant in Lei Yue Mun.

3.The plaintiffs' father died in about 1972. The plaintiffs' mother then ran the Restaurant until her own death in about 1985. Thereafter the plaintiffs continued the family business.

4.In January or February 1986 the plaintiffs' younger brother Yip Chee Wai introduced the plaintiffs to the defendant. Both Yip Chee Wai and the defendant ("Wong") were then working in the Tung Yat Restaurant ("Tung Yat") at Admiralty, Wong being employed there as a manager. Yip Chee Wai had told Wong that his family were looking for someone to manage the Restaurant and Wong had said that he was interested. Wong alleges that Yip Chee Wai also told him that the Land had been inherited by the plaintiffs and was accordingly owned by them. Wong claims that Yip Chee Wai made such representation ("the ownership representation") a number of times, including at least once in the presence of the 1st plaintiff ("Madam Yip"). Madam Yip denies this.

5.Paragraph 4 of Wong's Defence goes so far as to allege that the ownership representation was made to Wong fraudulently :

"in the belief that it would enable him to lease the said land from the Plaintiffs to operate a restaurant and not otherwise, without knowing that it was a contract for providing management services to operate a restaurant and without any negligence part."

In response to a question from me on Day 1 of trial, Mr Cheung (who appeared on Wong's behalf) informed me at the start of Day 2 of the trial that, having taken instructions, he was withdrawing the allegation of fraud. I note that Mr Cheung was instructed on this running list case at the 11th hour and was not responsible for the Defence and Counterclaim which he inherited from other counsel.

6.After some negotiation, on 4 March 1986 the plaintiffs and Wong entered into an Agreement ("the 1st Agreement"). The terms of the 1st Agreement, which was in English, are reproduced in an appendix to this Judgment.

7.Neither the plaintiffs nor Wong understand English. The 1st Agreement was interpreted to them collectively in Cantonese by a Mr Lee prior to their signing the contract. Mr Lee was a solicitor at Messrs Yu, Tsang & Loong ("YTL"), the firm which drew up the 1st Agreement on behalf of both the plaintiffs and Wong. Wong alleges that, consistently with the ownership representation, he had all along understood (and Mr Lee had said in the course of his interpretation) that the 1st Agreement took effect as a lease of the Land to Wong. Whatever it says in English, the 1st Agreement (Wong says) was supposed to be a tenancy agreement between the plaintiffs as lessor and Wong as lessee. The plaintiffs dispute this. They say that everyone understood the 1st Agreement to be what its English text states it to be, namely, a contract whereby the plaintiffs engaged Wong to manage the business of the Restaurant. This (the plaintiffs contend) is precisely what Mr Lee had explained to the parties when interpreting the 1st Agreement.

8.On the same day Wong paid $86,000 to the plaintiffs. The English receipt ("the Receipt") which the plaintiffs gave in return for the payment stated as follows :

"Received from Mr. Wong Shun the sum of HONG KONG DOLLARS EIGHTY-SIX THOUSAND only (HK$86,000) as security for the minimum net profits guaranteed under an Agreement dated 4th March 1986 signed between Yip, Alice, Yip Chee Keung and Yip Chee Ming of the one part and Mr. Wong Shun of the other part. If the Agreement be terminated for any cause or expire by effluxion of time, we guarantee jointly and severally to return a sum of $16,000 only to Mr Wong Shun without interests within 14 days of such termination."

Wong claims that the $86,000 payment referred to in the Receipt comprised two components. $70,000 was for the right to carry on business under the name "Hyde Park Garden Restaurant". This component included payment for the Restaurant and liquor licences. To this day in fact the licence for the Restaurant remains in Madam Yip's name, although Wong has since been taking out liquor licences for the Restaurant on his own initiative without reference to the Yips. The second component of $16,000 was intended (Wong claims) as security for the payment of the rent due under the 1st Agreement, the amount of $16,000 being twice the initial monthly payment of $8,000 stipulated in clause 10 of the 1st Agreement. At trial Madam Yip was adamant that the $70,000 was solely for use of the tables, chairs and utensils which the plaintiffs provided to Wong to run the Restaurant. The $16,000 was (Madam Yip said) security for payment of the guaranteed profit due under the 1st Agreement.

9.Soon after signing the 1st Agreement, Wong entered into possession of the Land and started operating the Restaurant. Pursuant to his obligations under the 1st Agreement, Wong paid to the plaintiffs the guaranteed profit stipulated in clause 10 of that contract. So between May 1986 and April 1991 Wong paid $8,000 per month and between May 1991 and April 1996 he paid $12,000 per month.

10.When the 1st Agreement expired at the end of April 1996, Wong did not vacate the Land or cease to run the Restaurant. Instead he continued to pay the plaintiffs $12,000 per month. The plaintiffs did not evict Wong but accepted Wong's monthly payments of $12,000.

11.In September 1997 Madam Yip asked Wong to renew the 1st Agreement at a higher monthly payment. According to Madam Yip, Wong offered to pay $30,000 per month. Madam Yip says that Wong also wanted a term enabling either party to terminate the new contract by giving one month's notice. Madam Yip says that she agreed to both proposals. A new oral agreement ("the 2nd Agreement") came into effect based on a monthly payment of $30,000. Wong claims that the 2nd Agreement further included a term that the $30,000 monthly payment was subject to review after six months. I examine the content of the 2nd Agreement more carefully below.

12.Wong paid the agreed sum of $30,000 for the six months from October 1997 to March 1998. He has not paid anything from April 1998, but has run the Restaurant and remained in occupation of the Land since then. Wong says that he stopped paying because he learned that, contrary to what had been represented to him when he entered into the 1st Agreement, the Land was not owned by the plaintiffs but was unleased Government Land.

13.Having unsuccessfully demanded payment of the $30,000 monthly fee on a number of occasions from Wong, the plaintiffs' solicitors sent a letter on 23 June 1999 in the following terms :

"We reiterate that you have, wrongfully in breach of the said agreements made between your clients and your goodself as referred to in our letter of 4th August 1998. Further, despite our client's repeated demands, you still have failed and/or refused to pay our client the said guaranteed net profit of $30,000.00 per month which has now accumulated to an amount of HK$450,000.00 for the period of 15 months, that is from April 1998 to June 1999 exclusively.

We trust that you are aware that your wrongful act has constituted a repudiatory breach of contract. In the circumstances, and particularly in view of your procrastination and evasion of liability in respect of the payments of the said guaranteed net profit, our client has not other alternative but to accept your reputation [repudiation].

In this reference, we are instructed, and we hereby do give you formal notice that :-

(1) should the said sum of $450,000 not be wholly settled and paid to us, to be received on our client's behalf; and

(2) should possession of the premises where the Restaurant is situate and known as Ground Floor, 44 Praya Road, 'C', Leiyuemun, Kowloon, Hong Kong not be delivered up to our clients.

within the next seven days from date of this letter, legal proceedings will be instituted against you without further notice."

14.The plaintiffs issued a Writ on 5 August 1999, whereby they claimed possession of the Land; $450,000 for sums due under the 2nd Agreement between April 1998 and June 1999; and damages for trespass at the rate of HK$30,000.00 per month until possession is delivered up.

15.The plaintiffs applied for summary judgment before Master Kwan on 17 May 2000. She gave Wong conditional leave to defend upon payment into Court of $750,000, comprising the sum of $450,000 and mesne profits of $300,000 calculated at $30,000 per month for the period from July 1999 to April 2000.

16.On appeal Recorder Ronny Wong SC by an Order dated 18 August 1999 upheld Master Kwan's grant of conditional leave but reduced the requisite payment into Court to $450,000. Of the $300,000 mesne profits, Recorder Wong observed as follows in his judgment :

"As far as the cause of action in trespass is concerned, Miss Lan submitted that the Plaintiffs failed to identify the interest which forms the basis of their present right to possession of the land. Standard precedents in relation to a trespass plea [See pp.924-927 of Bullen & Leake & Jacob's Precedents of Pleadings] lend weight to her contention. Miss Lan further submitted that there is no evidence to indicate that $30,000 represents the correct measure of damages. In response Mr Chan cited for my consideration passages in Hill & Redman on Tenancies by Estoppel. I find it difficult to see how the concept sits with the Plaintiff's case of an oral agreement in September, 1997. No other evidence has been placed before me to support the Plaintiffs' case that they 'are entitled to possession of the restaurant' as pleaded in paragraph 1(2) of the Statement of Claim. I am therefore of the view that the Defendant has demonstrated that there is a triable issue vis-a-vis the cause of action in trespass. It would not be right to impose any condition in these circumstances."

17.Wong's pleadings in this action included a Counterclaim seeking restitution of all amounts paid to the plaintiffs by Wong on the ground that the same had been paid by mistake. On Day 2 of the trial, Mr Cheung informed me that he would not be pursuing the Counterclaim.

Discussion

18.There were four main issues canvassed at trial :

(1) What were the rights or interests granted to Wong by the plaintiffs under the 1st and 2nd Agreements?

(2) Was Wong entitled to treat the 2nd Agreement as discharged because of the ownership representation?

(3) Are the 1st and 2nd Agreements illegal and unenforceable?

(4) If Wong breached the 2nd Agreement, what reliefs are the plaintiffs' entitled to claim?

19.Before discussing those issues, I state my impressions of the two witnesses called. The plaintiffs adduced evidence from Madam Yip, while Wong testified on his own behalf. I found Madam Yip to be a credible witness. She did not strike me as a sophisticated person. She was plain-speaking and straightforward. Save in matters of detail where (understandably after the passage of time) Madam Yip's recollection may not have been wholly accurate, I have no hesitation in relying on her evidence. By contrast, I have grave reservations about Wong's evidence. On certain matters, which I discuss in greater depth below, I found Wong's version of events incredible in light of known or accepted facts. Thus, in general, where there has been a conflict between Wong and Madam Yip or between Wong's account and events as evidenced by contemporaneous documents, I have either preferred Madam Yip's version or the facts as manifested in the documents.

The nature of 1st and 2nd Agreements

20.This 1st issue sub-divides into four questions :

(1) What did the parties in fact agree on in March 1986?

(2) What was the legal effect of whatever it was that they agreed?

(3) What did the parties in fact agree in September 1997?

(4) What was the legal effect of whatever it was they agreed then?

21.On the 1st question, Wong invites me to ignore the English text of the 1st Agreement. In effect, he pleads a defence of non est factum. He claims to have been under the impression that he was entering into a lease of the Land, especially since (Wong alleges) that was what Mr Lee in Cantonese told him was being signed.

22.I do not accept Wong's evidence on this matter.

23.Mr Lee interpreted the 1st Agreement in a conference room at YTL's offices to Wong and the plaintiffs gathered together. Mr Pun (who appeared for the plaintiffs) put to Wong that Mr Lee explained to the parties that the 1st Agreement was a service agreement whereby Wong undertook to manage the Restaurant for the plaintiffs. Wong disagreed. But examine carefully what Wong says happened. Wong said that the 1st Agreement was "not explained in a clear way" to him by Mr Lee. He initially alleged that the explanation was unclear because Mr Lee had not been facing him during the interpretation. Mr Pun countered that, whether or not Mr Lee had been facing Wong, Wong should have been able to hear what Mr Lee was saying. To this Wong unconvincingly replied that Mr Lee had spoken in a low voice and so Wong could not hear clearly. In that case, Mr Pun came back, why had Wong not asked Mr Lee to speak louder? Wong answered, again unconvincingly, that it was not necessary to do so because, before the explanation by Mr Lee, the terms of the 1st Agreement had been talked about and he had assumed that what had been discussed had been reduced to writing in the 1st Agreement. He was at YTL simply to sign. Mr Pun asked Wong to clarify when the 1st Agreement had been discussed. Wong replied that he had discussed the terms of the 1st Agreement with the plaintiffs before 4 March 1986. Mr Pun then put to Wong that Mr Lee had spoken clearly. To this Wong lamely replied by repeating that he was not sure what had been interpreted because Mr Lee had spoken in a low voice. He added though that he was sure that he had heard about a tenancy agreement from Mr Lee.

24.Wong was unimpressive during the entire stretch of this critical cross-examination which I have just summarised. On the one hand, Wong claims not to have heard Mr Lee clearly throughout. On the other hand, Wong claims that he just happened to have clearly heard Mr Lee describe the 1st Agreement as a contract for a tenancy.

25.It would have been the easiest and most natural reaction in the world to have asked Mr Lee to speak up if Mr Lee had been inaudible. Wong seemingly did not. Wong attempts to excuse his failure to do so by saying that he did not have to hear Mr Lee in light of previous discussions with all three plaintiffs that the 1st Agreement was to be a tenancy agreement. I do not find that testimony credible.

26.Early in cross-examination, Wong alleged that the ownership representation had been made by Yip Chee Wai and not the plaintiffs, although Yip Chee Wai had at least once made the representation in the presence of Madam Yip. Later in cross-examination, Wong was specifically asked whether Madam Yip had told him in 1986 that the Land was owned by the Yips. Wong said that she had not, but Yip Chee Wai had done so in February 1986. Had the other plaintiffs told Wong that the Land belonged to the Yips? Wong replied that they had not.

27.Given this evidence, it is hard for me to understand how there could have been a discussion among the plaintiffs and Wong prior to the signing of the 1st Agreement in March 1986 to the effect that the Land was leasehold property of the Yips which was to be let to Wong. The thrust of Wong's evidence is that the plaintiffs never told him that the Land was land owned by them. If anyone mentioned the matter, it would have been Yip Chee Wai who was not a party to the 1st Agreement. Wong could have called Yip Chee Wai to corroborate his evidence. He did not.

28.Wong contended in cross-examination that Yip Chee Wai made the ownership representation "to introduce me to his family members so that we could strike a deal". I have serious doubts that Yip Chee Wai made the ownership representation. Given that Yip Chee Wai was not called, I make no such finding. Even if Yip Chee Wai had done as Wong alleges, as a matter of law, Wong's complaint (if any) could only conceivably be against him not the plaintiffs.

29.The above constitute problems enough for Wong. However, there is an even more fundamental flaw in Wong's evidence. In Paragraph 9 of his Witness Statement, Wong states this :

"At the time of signing the agreement, since I could not read English, a Mr Wong who seemed to have the conduct of this matter told me that it was a formal document executing the lease. The contents of the very long document was not interpreted to me and of course he did not go through the document with me either. Mr Wong only said that the terms of the lease were that I was allowed to use the licences and the trading name of the existing restaurant and that the lease was for 10 years with the agreed monthly rental. Since those were all the terms I had agreed with the Plaintiffs and I had to trust in this Mr Wong who appeared to me as a lawyer, I did not see any problem at that time and I signed the document without knowing what the actual contents were."

At the start of his evidence, Wong confirmed that he stood by his Witness Statement. In cross-examination, he accepted that he had wrongly identified Mr Lee in Paragraph 9 as a Mr Wong. That is of small import. What matters is that the whole rest of Paragraph 9 is at odds with Wong's evidence. In oral examination and contrary to Paragraph 9 of his Witness Statement, Wong accepted that the contents of the 1st Agreement had been interpreted to him along with the Plaintiffs. There is nothing in Paragraph 9 about Wong misunderstanding because he had not heard. Paragraph 9 instead alleges that Wong heard Mr Lee and Mr Lee misled Wong as to the true nature of the 1st Agreement.

30.Given Wong's oral evidence, for all Wong knows the interpretation was comprehensive and correct. On his version of events Wong would hardly know. He did not pay attention. He did not ask Mr Lee to speak louder. Wong says he caught the words "tenancy agreement". Even if one accepts Wong's testimony at face value, Mr Lee could have been talking about some other tenancy agreement in a wholly different context. Mr Lee might even have been explaining what the 1st Agreement was not. How would Wong know if he did not hear clearly or listen attentively? There is no evidence that anyone (including Mr Lee) was misleading Wong. Mr Lee could have been called as a witness. He was not.

31.Wong fails to meet the heavy burden on a person who raises a defence of non est factum. I hold that the English text of the 1st Agreement accurately reflects what the parties agreed in March 1986. The 1st Agreement was correctly interpreted to the parties by Mr Lee. Wong was not misled. On the contrary, Wong fully understood the contents of the 1st Agreement as Mr Lee interpreted them to him and the plaintiffs in Cantonese. In March 1986 Wong knew that the 1st Agreement was not, and was not intended to be, a lease of the Land.

32.I now consider the second question which arises under this issue : what was the legal effect of the 1st Agreement? Despite the parties' intentions, did the 1st Agreement nonetheless give rise to a lease or license at law?

33.In construing an agreement to see whether it gives rise to a lease or licence, the Court examines whether there has been a grant of exclusive possession to the person claiming to be a tenant. The relevant legal principle has been succinctly summarised in the following passage (endorsed by Lord Templeman in Street v. Mountford [1985] 1 AC 809, at 827B-F) from the judgment of Windeyer J in Radaich v. Smith (1959) 101 CLR 209, at 222 :

"What then is the fundamental right which a tenant has that distinguishes his position from that of a licensee? It is an interest in land as distinct from a personal permission to enter the land and use it for some stipulated purpose or purposes. And how is it to be ascertained whether such an interest in land has been given? By seeing whether the grantee was given a legal right of exclusive possession of the land for a term or from year to year or for a life or lives. If he was, he is a tenant. And he cannot be other than a tenant, because a legal right of exclusive possession is a tenancy and the creation of such a right is a demise. To say that a man who has by agreement with a landlord, a right to exclusive possession of land for a term is not a tenant is simply to contradict the first proposition by the second. a right of exclusive possession is secured by the right of a lessee to maintain ejectment and, after his entry, trespass. A reservation to the landlord, either by contract or statute, of a limited right of entry, as for example to view or repair, is, of course, not inconsistent with the grant of exclusive possession. Subject to such reservations, a tenant for a term or from year to year or for a life or lives can exclude his landlord as well as strangers from the demised premises. All this is long established law : see Cole on Ejectment (1857) pp 72, 73, 287, 458."

34.On its own terms, the 1st Agreement patently does not create a leasehold interest. The 1st Agreement as a whole appoints Wong to manage the Restaurant on the plaintiffs' behalf. Clauses 6 (plaintiffs not parting with possession of the Land) and 7 (occupation by Wong not to create any tenancy nor confer any estate or interest in the Land) not only provide specifically that Wong obtains no lease over the Land. They also make it clear that Wong has no exclusive possession over the Land : he cannot refuse the plaintiffs entry into the Land.

35.Mr Cheung submitted that the 1st Agreement must be a lease, because otherwise there would be no need to provide in clause 6 for the appointment by the plaintiffs of a representative "to remain in or upon the premises and to ensure that all terms and conditions of this agreement including Government regulations are fully complied with". In the same way that a landlord who has demised property to a tenant needs to reserve a limited right of entry to effect repairs, so (Mr Cheung argues) the reservation in clause 6 of a right to appoint an agent is consistent with the grant of exclusive possession. Unfortunately, clause 6 goes far beyond reserving a limited right of entry. It expressly states that the plaintiffs "will not part with possession of the premises". Nor can clause 6 be read in isolation. Clause 7 is even more blunt : "The fact that [Wong] shall be in and upon the said premises ... shall not in any way create any tenancy thereof". I reject Mr Cheung's argument.

36.Mr Cheung suggested that the 1st Agreement was effectively a tenancy because, whatever clauses 6 and 7 might have stipulated, the subsequent reality was that the plaintiffs did not often visit the Land and then usually only at Wong's request when an inspector wished to verify the restaurant licence which was in Madam Yip's name. I disagree. It is not possible to construe a contract by reference to subsequent conduct. What is important is the parties' intention, objectively ascertained from the wording of an agreement and the factual matrix, at the time of contracting. I have already found that the parties did not think that they were entering into a lease when they executed the 1st Agreement. I have pointed out that the terms of the 1st Agreement in their plain and ordinary meaning make it clear that no leasehold interest is being created. It seems to me that there is no scope for arguing that, whatever the parties may have originally intended and however they expressed themselves in writing in March 1986, the 1st Agreement suddenly became a lease because the plaintiffs did not enter the Land as often as they might have.

37.The 1st Agreement had two effects. First, Wong obtained the right to operate the Restaurant. Second, the 1st Agreement operated as a contractual licence whereby the plaintiffs permitted Wong to enter and occupy the Land for the purposes of operating the Restaurant. In consideration of these rights, Wong came under certain obligations, the most prominent of which was the payment of a fixed fee (not rental) regardless of whether the Restaurant did well or badly. Any profit in excess of the fixed amount was for Wong to do with as he wished. If the Restaurant's profit was less than the fixed amount, Wong was obliged to make up the difference from his own resources. The plaintiffs conveyed, and Wong obtained, no interest in the Land by the 1st Agreement.

38.I move now to the 3rd question : what did the parties agree by the 2nd Agreement?

39.Before considering this question, it is worth analysing what happened in the interim between the expiry of the 1st Agreement and entry into the 2nd Agreement. Wong did not vacate the Land upon expiry of the 1st Agreement in April 1996. Instead he continued to pay $12,000 per month which the plaintiffs accepted. It seems to me that the most natural and obvious analysis of this chain of events is that each tender of $12,000 by Wong constituted an offer to extend the 1st Agreement by an additional month. Acceptance by the plaintiffs of the $12,000 constituted in turn an acceptance of Wong's offer and the extension of the 1st Agreement by another month.

40.There is no dispute between the parties that a 2nd Agreement was concluded. There was a difference between them as to who suggested an increased monthly payment of $30,000. Madam Yip says that Wong unilaterally proposed $30,000 and she had no choice but to accept. Wong disagrees. If I had to chose between the competing versions, I would favour Madam Yip's account. But I do not think it matters who first offered what. The fact is that the parties agreed on an enhanced monthly payment of $30,000 instead of $12,000.

41.What is more in dispute is whether or not it was agreed that the $30,000 payment would be subject to review after six months. Wong says yes. Madam Yip says no. Here I am again inclined to find in Madam Yip's favour. This is because, as I have explained above, I have doubts over the credibility of Wong's evidence as a whole.

42.But I am not sure that it matters for the purposes of this case whether or not there was a review clause as Wong alleges. The reason is that Wong never asked for a review. Wong simply stopped paying. He stopped paying because he says he discovered that he had been misled. He learned from neighbours (identified only as "Ah B" and "Ah Hak") that the Yips were squatters on the Land. Wong puts it thus in Paragraph 17 of his Witness Statement :

"At the expiry of the trial period in or about March 1998, it came to my notice that the said land was and indeed still is a piece of Crown Land which the Plaintiffs had no legal title on it. It was thus illegal and against public policy for the Plaintiffs to demand any rental from me for the use of the land. Since the trial period has expired, I found that I had no legal obligation to pay any rental to the Plaintiffs any more."

I discuss this allegation of Wong's in greater detail below. For the present, I only note that, no review having ever been sought by Wong, none ever took place.

43.Madam Yip says that Wong also asked that each party have the right to terminate their agreement on one month's notice. I accept her evidence on this. In any event, by clause 12 of the 1st Agreement, it seems to me Wong already had the right to terminate the 1st Agreement (including later extensions) by giving one calendar month's notice in writing.

44.Having clarified specific terms of the 2nd Agreement, one can step back and consider the whole. There was an offer and acceptance to vary the terms of the 1st Agreement which until then had merely been extended from month to month. Under the 2nd Agreement a similar relationship to that which arose under the 1st Agreement was to continue, either indefinitely or (as with the 1st Agreement) for a 10 year period (the precise duration for the 2nd Agreement envisaged by the parties was not fully explored at trial), subject to either side having the right to terminate on one month's notice and subject to an increased payment by Wong of a fixed fee of $30,000 per month.

45.The 4th question is : what was the legal effect of the 2nd Agreement?

46.The answer must be similar to the legal effect of the 1st Agreement. For an increased fee (not rental) of $30,000 per month, Wong obtained the right to continue to manage the Restaurant on the plaintiff's behalf and to remain in occupation of the Land as the plaintiff's licensee in order to operate the Restaurant. Again no leasehold interest was created by the 2nd Agreement.

47.Before leaving this issue, I raise two footnotes.

48.First, it was suggested that the 1st and 2nd Agreements were leases because Madam Wong acknowledged payment using standard pre-printed Chinese rental receipt forms. Here I accept Madam Yip's evidence. She used such forms for no other reason than that they "were the only form of receipts which would be bought from the book store which I know".

49.Second, there was a suggestion that the fixed fee due under the 1st Agreement was a rent, because Wong separately purchased the right to use the name of the Restaurant when he paid the $70,000 acknowledged by the Receipt. As to the $70,000 payment, I am doubtful of the accuracy of Madam Yip's recollection in the witness box. The $70,000 may have gone in part towards payment of chairs, tables and utensils. But I suspect that, as Madam Yip herself acknowledged in Paragraph 5 of her Witness Statement, the sum was for "using licences, restaurant name and equipment therein". Nonetheless, I do not think that, by reason only of the payment evidenced by the Receipt, one can construe the fixed fee under the 1st Agreement as being something other than what the 1st Agreement expresses the fee to be.

Wong's allegations on the ownership representation

50.The next issue is whether Wong was entitled to treat the 2nd Agreement as discharged by reason of the ownership misrepresentation. This issue can be sub-divided into three questions :

(1) Was there a representation?

(2) Did Wong rely on such representation?

(3) If he did rely, was Wong entitled to ignore the 2nd Agreement?

51.I have already discussed the 1st question. In my view, there was no representation made to Wong whether by the plaintiffs or Yip Chee Wai that the Land was land belonging to the Yip family.

52.On the 2nd question, even if there was a representation, Wong could not have relied on it when he entered into the 2nd Agreement. There are three reasons for this.

53.First, by the 1st Agreement the plaintiffs did not guarantee that they were entitled to occupy the Land. Clause 11 of the 1st Agreement stated :

"In the event of the Landlord of the said premises obtaining possession thereof or in the event of [the Plaintiffs] being required to deliver up vacant possession of the said premise to the Landlord by order of any court of competent jurisdiction or any other competent authority this agreement shall ipso facto come to an end."

Given (as I have found) that Mr Lee interpreted this clause to Wong, Wong would have known prior to signature that there was a risk of his being ousted from the Land in the event that the Plaintiffs were ousted by a person holding superior title, including (presumably) the Government.

54.Second, more importantly, the evidence is that Wong knew all along that the Land was squatter land. Wong's own evidence was that in 1989, during the currency of the 1st Agreement, he had the rear yard of the Land "rebuilt" and for that purpose applied to the Squatter Control Unit to permit the erection of a two-storey structure. Madam Yip's evidence was that there has always been a two-storey structure on the Land. But assume that Wong is right or, at any rate, that he at least applied to the Squatter Control Unit for permission to do something on the Land. Why would Wong be applying to the Squatter Control Unit in 1989 unless, whatever he may have been led to believe in early 1986, he knew the Restaurant was built on squatter land, that is, unleased Government land? In re-examination by Mr Cheung, the suggestion was floated that Wong simply regarded the obtaining of permission from the Squatter Control Unit as a bureaucratic formality akin to applying for permission to carry out construction works from the Building Department. But I find it incredible to think that Wong did not know in 1989, if not earlier, that the Restaurant was on unleased land.

55.Third, I find it hard to believe that, having occupied the Land for 12 years, suddenly in April 1998 Wong learned from two neighbours whom he could only identify as Ah B and Ah Hak that the Land was unleased Government Land and he had been misled. The story is incredible. The fact is that, during the life of the 1st Agreement, Wong got precisely what he bargained for : the right to run the Restaurant and retain for himself profits in excess of the monthly fee. The bargain was presumably so attractive that he remained on the Land, notwithstanding the expiry of the 1st Agreement. Here, despite claiming to have been materially misled by the ownership representation, he does not vacate the Land in disgust when he allegedly discovers the truth. Instead he continues in occupation and continues to run the Restaurant. It is business as usual for Wong, without payment of the agreed monthly fee. The irresistible inference is that he does not care whether the Land is or is not unleased Government land. He is simply looking for an excuse not to have to pay a fee to the plaintiffs.

56.In the witness box Wong repeatedly asserted that, while he had spent much of his own money (Wong estimated the amount to run to some $6 million) improving the Restaurant on his own initiative, the plaintiffs had not spent a cent. I believe that this is at the heart of Wong's refusal to pay the agreed monthly fee. Wong's true motivation is simple. To put it bluntly : Why should he pay the plaintiffs anything, when as far as he is concerned the Restaurant's development and success has all been due to him?

57.At trial, Wong's evidence in support of his contention that he had spent $6 million on the Restaurant was unimpressive. Mr Pun pointed out that the receipts, invoices and other documents exhibited in his affirmation statement in purported support of alleged expenses evidence less than $500,000 and then largely only covering a period from 1988-89. When asked for receipts for the years from 1989 onwards, Wong said that he no longer had such because the Inland Revenue did not require a business to keep receipts beyond a six-year period. When asked by Mr Pun how much he had spent on the Restaurant in the last six years, Wong said roughly $50,000. When taken by Mr Pun in detail through the individual receipts, invoices and other documents exhibited to his affirmation statement, Wong was unable to explain anomalies or answer queries. Wong claimed that he was uncertain about details because some other person handled the accounts for the Restaurant. At the end of the day, I am unable to find that Wong spent anywhere near as much as he claims to have spent in improving the Restaurant.

58.Further, if Wong feels aggrieved at having spent any substantial sum on improving the Land in 1988-89, he has only himself to blame. Clause 5 of the 1st Agreement provides :

"[Wong] shall not without the previous consent in writing of [the Plaintiffs] erect or suffer to be erected any other partition in or upon the premises or make or suffer to be made any alterations in the premises or any addition thereto."

Insofar as Wong acted without the approval of the plaintiffs, he must bear the consequences of not following clause 5.

59.There is no merit in the allegation of a misrepresentation. Moreover, if I am right as to Wong's true motivation for refusing to pay, on the evidence, his premise of having spent $6 million or some other substantial amount has not been established to the Court's satisfaction.

Whether the 1st and 2nd Agreements are illegal

60.On the 2nd day of the trial I gave leave to the defendant to amend his Defence by the insertion of a Paragraph 6A as follows :

"Further or alternatively, the Defendant avers that the previous Agreement and the said Agreement were agreements under which the Plaintiffs permitted the Defendant to take occupation of the said land at a premium (i.e. a lease). The said Agreements were prohibited under Section 4 of the Crown Land Ordinance, Cap.28 (now Land (Miscellaneous Provisions) Ordinance, Cap.21). In the premises, the said Agreements were and are illegal and unenforceable as against the Defendant. Section 4 states: 'Unleased land shall not be occupied except under a license or a deed or memorandum of appropriation'."

61.To consider this pleading, it is necessary briefly to consider the history of section 4 of the Land (Miscellaneous Provisions) Ordinance (Cap.21) ("LMPO").

62.Prior to 1972 the Summary Offences Ordinance (Cap.228) ("SOO"), section 9 (later section 10) provided as follows :

"Any person who, except under and in accordance with a valid current licence or permit issued by a lawful authority, occupies any land which is not held under a Crown lease shall be guilty of an offence and shall be liable to a fine of one thousand dollars."

63.On 1 October 1972, SOO section 10 was repealed and replaced by section 4 of the Crown Lands Ordinance (Cap.28) ("CLO") which provided as follows :

"Unleased land shall not be occupied except under a license or a deed or memorandum of appropriation."

CLO section 2 defined "leased land" as land "held under a Crown lease" or "vested in a person by an Ordinance". The same section defined "unleased land" as "land which is not leased land". CLO section 6 further provided as follows :

"(1) If unleased land is occupied, otherwise than under a licence or deed or memorandum of appropriation, the Authority may cause a notice, requiring the occupation of the land to cease before such date as may be specified in the notice, to be posted in one or more places--

(a) on or near the land;

(b) on any property or structure on the land.

....

(4) Any person occupying unleased land, otherwise than under a licence or a deed or memorandum of appropriation, who without reasonable excuse does not cease to occupy the same as required by a notice under subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine of ten thousand dollars and to imprisonment for six months.

...."

64.By SOO section 10 it was a criminal offence to occupy unleased Crown Land otherwise than under a licence or permit from the Crown. The enactment of CLO section 4 in place of SOO section 10 meant that it was no longer a criminal offence to occupy unleased land without a proper licence or permit. It became, however, a criminal offence to continue to occupy unleased land after the expiry of a Government notice to vacate.

65.In 1998 the CLO was renamed as the LMPO.

66.Mr Cheung submits that the 1st and 2nd Agreements were contracts to permit occupation of unleased land contrary to CLO section 4 (as in force in March 1986 and September 1997). The 1st and 2nd Agreements are therefore (Mr Cheung concludes) unenforceable.

67.The general approach in assessing whether a statute renders a contract unenforceable for illegality is summarised in Halsbury's Laws of England (4th edn Re-issue), Vol.9(1), pp.625-6, Paragraph 870 as follows :

"In determining whether a contract is struck down by the relevant statute where that statute contains no express provision regarding the contractual rights of the parties the first question is normally one of construction: does the statute intend to render the contract unenforceable (or, as it is often expressed, to prohibit the contract) by one or both of the parties or does it merely intend to impose the penalty, if any, provided by it for contravention? This issue may arise in the context of the formation of the contract or in the context of its performance. If the formation of the contract is prohibited by statute neither party may enforce it.... On the other hand, the way in which a contract, which is lawful according to its terms, is performed may turn it into a contract prohibited by statute...."

68.Mr Cheung primarily relies on two authorities in support of his submission that the formation of the 1st and 2nd Agreements was prohibited by the CLO.

69.The 1st case which Mr Cheung cites, Li Wing Sun v. Wu Man [1978] HKLR 575 (CA), involved an action by the plaintiff, who held a permit to occupy Crown Land X, for rent and mesne profits from the defendant, to whom the plaintiff had granted a tenancy of X in 1969. The plaintiff's permit did not allow him to transfer X. The defendant admitted the existence of a tenancy. The plaintiff failed at 1st instance on the ground (among others) of illegality. His appeal was dismissed.

70.Huggins JA stated (at p.576) :

"It has been argued that, whatever may have been the position in 1969, upon the repeal of s.10 of the Summary Offences Ordinance the Defendant became tenant at will of the Plaintiff and that by reason of the payment and acceptance of a monthly rent that tenancy at will was changed into a tenancy from month to month. Had the occupation of the Defendant in truth become lawful the Appellant might have been on firmer ground, but the Defendant's occupation was still contrary to a statutory prohibition and I do not think that he acquired a right of any kind to be upon the land. That being so, the claim of the Plaintiff was bound to fail and the inconsistency which appears in the Statement of Claim as to the date on which the rent ceased to be payable is immaterial."

71.Leonard J stated (at p.578) :

"What does concern me, however, is whether the court can allow either party successfully to sue on the agreement entered into. The original agreement was entered into in 1969. It clearly visualized the occupation of Crown land by the defendant. Such occupation was then a crime.....

The plaintiff's permit itself makes this clear. The parties could not rely on any transfer of this permit to justify the defendant's occupation for the permit was not transferable. The agreement was varied in that the rent was increased, according to the defence in February 1972 and according to the statement of claim 'sometime in 1972'. The only evidence as to the date of the increase in rent came from the plaintiff who said that the rent was increased 'in 1972'. On the coming into operation of the Crown Land Ordinance (Cap. 28) on the 1st October 1972 occupation of Crown land except under and in accordance with a valid current permit ceased to be an offence. By section 4 of the Ordinance 'unleased land' (that is to say land neither held under a Crown lease nor vested by an Ordinance) 'shall not be occupied except under a licence or a deed or memorandum of appropriation'; but unlawful occupation of Crown land is, since October 1972, no longer, of itself, an offence. Section 6(4) of the Crown Land Ordinance makes it an offence not to cease to occupy unleased land (except unleased land occupied under a licence or deed or memorandum of appropriation) as required by a notice. Can the plaintiff benefit as a result of this change in the law? I do not consider that he can for a number of reasons. Firstly we do not know the precise date on which the rent was increased. The plaintiff does not claim and it is most unlikely that the increase occurred after the change of the law. The defendant's pleading that it took place in February has not been controverted. Secondly even if the increase did occur after the change in the law that does not change the nature of the original agreement which was to commit an offence. Thirdly the occupation was continuous, and the change in law did not make it legal; it remained illegal although no longer an offence.

I would therefore hold that the original agreement as varied by the agreement to increased the rent was and remained illegal. This court is obliged to take notice of that illegality and the plaintiff cannot benefit by an illegality to which he was a party. He had full notice of that illegality because it was brought to his notice in the Chinese version of the Crown Land Permit which he himself produced to the court so that I have little sympathy with him."

72.Pickering JA agreed with Huggins JA and Leonard J.

73.The 2nd case cited by Mr Cheung is Fong Siu Kam and others v. Lo Shun Cheung [1984] HKC 107. Here the plaintiff, who held a licence to occupy Crown Land X, obtained default judgment for forfeiture and mesne profits against several defendants. The plaintiff had purported to lease X to the father of one of the defendants in 1968. The father sold X to the defendants in 1982. At the time of the sale, the defendants accepted that the father had no legal right to X. The defendants appealed.

74.Huggins VP stated (at 111D-112C) :

"It is not every contract prohibited by statute which is wholly unenforceable : see Halsbury's Laws of England (4th Ed) Vol.9 p.290 para.423. As in the interpretation of all statutes one must ask what was the intention of the legislature in so far as that is ascertainable from the language it has used. We should not interpret a statute so as to deprive a subject of rights which he would have at common law unless it is clear that the legislature intended to take away those rights. The question here is whether the prohibition against occupation of Crown land was intended for the benefit of the public at large or merely for the benefit of the Crown as a land owner. It seems to me that the former must be the correct view. The nature of a licence itself prevents the licensee from allowing another into exclusive occupation, so that the Crown as land owner would already have the right to terminate the plaintiff's licence and thus to defeat any tenancy by estoppel created in favour of the defendants. The statutory prohibition must, I think, have been intended to prevent any contract purporting to confer exclusive occupation of the land or nay part thereof.....

It is common ground that this is 'unleased land'. It was occupied by the plaintiff under a licence but, although occupied by the defendants through the plaintiff, was not occupied by them under the licence to him. The contract by which the plaintiff agreed to let them into occupation was therefore prohibited.

Two results flow from that. First, the Crown at its pleasure could sue the defendants for possession without previously terminating the licence of the plaintiff. Secondly, the plaintiff is barred from obtaining for himself any benefit under such contract and the court should decline to enter judgment in his favour for rent or mesne profits. That is enough to require us to allow the appeal.

It does not necessarily follow that the entire judgment must be set aside. In so far as the plaintiff has framed his action for possession upon an alleged forfeiture, and therefore has relied upon the illegal contract, he must fail. However, if had claimed by virtue of his title as licensee, the defendants would have had no answer, for they could not raise the illegal agreement: see Singh v. Kulubya [1964] AC 42. In such circumstances I do not think it right that we should set aside the judgment for possession, even though it was obtained upon a wrong basis.

As it is, I would allow the appeal and set aside the judgment to the extent that it relates to the claim for rent and mesne profits. As that claim must fail, I would order that it stand dismissed."

75.Mr Pun submitted that both cases are distinguishable in that the illegal contracts involved in each were made before the repeal of SOO section 10. Mr Pun says that, since the 1st and 2nd Agreements were made after the repeal of SOO section 10 in 1972, they must be regulated by the new regime in the CLO and the effect of that was not to render an agreement for occupation of unleased land illegal in itself. Illegality only arises under the CLO where a person refuses to vacate unleased land for which Government has issued a notice pursuant to CLO section 6.

76.Mr Pun's argument is an attractive one. There is support for it in both Li Wing Sun and Fung Siu Kam. The passage which I have quoted from the judgment of Huggins JA in Li Wing Sun suggests that he was concerned that the defendant's initial coming into occupation in 1969 having been plainly unlawful, it remained so even after repeal of SOO section 10. The later repeal of the SOO did not somehow retrospectively validate the initial unlawful entry onto the land by the defendant.

77.In Fung Siu Kam Huggins VP's attention was drawn to the passage which I have cited. Huggins VP commented thus (at 110G-111B) :

"There was, however, a dictum which, it is submitted, indicated that the court was holding that occupation under a tenancy granted after the repeal of the section, being no longer a crime but merely prohibited by statute, would nevertheless be illegal. At p.576 I posited a new tenancy and said :

'... the defendant's occupation was still contrary to the statutory prohibition and I do not think that he acquired a right of any kind to be upon the land. That being so, the claim of the plaintiff was bound to fail ...'

Leonard J did not consider what might have happened had the plaintiff acquired a new tenancy. He referred to a variation of the rent payable under the tenancy and took the view that the defendant held under 'the original agreement as varied by the agreement to increase the rent', which he said was and remained illegal. He said :

'... the occupation was continuous, and the change in law did not make it legal; it remained illegal although no longer an offence.'

It is argued that the emphasis there upon the continuity of the occupation showed that occupation begun under an illegal tenancy could never become lawful even if continued after the statutory provision creating the illegality has been repealed. I do not think the judge had any such proposition in mind."

78.In the latter passage Huggins VP points out that Li Wing Sun should be read as solely dealing with the situation where a person entered onto unleased land as a result of a contract rendered illegal by SOO section 10. The case says nothing about whether a contract entered into during the currency of the CLO is illegal and unenforceable. What pre-occupied both Huggins VP and Leonard J in Li Wing Sun was that occupation by the defendant stemmed from the time of original entry under a contract concluded in 1969. That contract was illegal at the time of formation and repeal of the SOO could not change that reality.

79.In Fung Siu Kam Huggins VP went further. He disagreed with the submission that Li Wing Sun was authority for a blanket proposition that, given the fact of entry and occupation of unleased land under a contract made illegal by the SOO, continued occupation by virtue of such contract could never become lawful even after repeal of the SOO. One had to examine the legislative intent behind the repealing statute. See the 1st passage from Huggins VP's judgment in Fung Siu Kam quoted above. The pertinent question in the present case is thus whether the 1st and 2nd Agreements are contrary to the legislative intent of the CLO.

80.Once again Fung Siu Kam offers helpful guidance on this question. Both Li Wing Sun and Fung Siu Kam involved grants of tenancies : in Li Wing Sun by the plaintiff to the defendant and in Fung Siu Kam by the plaintiff to the father of a defendant. In both cases, there was accordingly an attempt to grant a right of exclusive possession to unleased land. Huggins VP in the 1st passage from Fung Siu Kam quoted above held that this was precisely the type of act which the CLO prohibited. Presumably this was because in claiming to confer exclusive possession to an individual, the would-be grantor was seeking to exclude the rest of the world. This was contrary to the legislative intent of the CLO section 4 (as discerned by Huggins VP in Fung Siu Kam) to benefit the public at large. That being so, the Court could not enforce an agreement which was contrary to the intention behind the prohibition in CLO section 4.

81.Contrast the present case. The 1st Agreement goes out of its way to stipulate that no right of exclusive possession is being granted under it. The 1st Agreement also provides that any rights given are precarious, being subject to an order to vacate from the Landlord holding superior title. The 2nd Agreement is essentially the same as the 2nd Agreement subject to a variation in respect of monthly fee payable. It neither claims to confer exclusive possession nor to oust the Landlord's superior right. There is no attempt to exclude the public at large or contravene the legislative intent of the CLO or (now) the LMPO.

82.I am mindful of the surrounding circumstances in this case. For nearly 40 years the Restaurant has existed at Lei Yue Mun and contributed to the Hong Kong economy. The Government must be aware of its existence. There is evidence that the Squatter Control Unit, a governmental organisation, has had dealings with the Restaurant over the years. The Government has given, and regularly renewed, restaurant licences for the Plaintiffs' business. No order to vacate the Land has ever been issued by the Government under the CLO or LMPO.

83.In the absence of clearer words in the CLO and LMPO, I am loathe to conclude that the Government or the legislature intended to render illegal and unenforceable an agreement for the management of the Restaurant, which happens to include an ancillary permission or license for the appointed manager to enter on the land to operate the Restaurant. To conclude otherwise could risk (as Huggins VP put it in Fung Siu Kam) unfairly depriving subjects of rights which they would otherwise have at common law. If the Government wishes to evict the plaintiffs or their licensees from the Land, it can readily do so. There is a simple procedure by which that can be achieved under CLO (or LMPO) section 6. So far the Government has not done so. It is not for the Court to second-guess the Government's intentions in respect of the Land.

84.The alternative outcome espoused by Wong is a cynical result. The proposition candidly advanced by Mr Cheung on behalf of Wong is that, given that the 1st and 2nd Agreements are illegal and the plaintiffs' claim for possession is predicated on those two contracts, the plaintiffs cannot obtain possession of the Land from Wong. Wong can remain and carry on the Restaurant's business without paying any fee to the plaintiffs, until such time (if ever) when the Government asks Wong to vacate.

85.Mr Cheung further submitted that, if I were to find that the 1st and 2nd Agreements were enforceable, I would be placing persons such as the plaintiffs, who hold no license to occupy unleased land but whose presence is only tolerated there by the Government, in a more favourable position than persons such as those in Li Wing Sun and Fung Siu Kam who hold permits to occupy Government Land. I do not agree.

86.As mentioned above, Li Wing Sun and Fung Siu Kam do not in my view go so far as to prohibit a person in occupation of Government land under permit or not) from (whether purporting to license another to enter the landby those two cases is an . What is enjoined attempt to grant exclusive possession as opposed to a mere licenseThe ability of a licensee . under an arrangement such as the unleased land is extremely 1st or 2nd Agreement to remain on precariousGovernment has not authorised the . The licensee may be ousted at any time if the grant of a license to himmay have contractual or other . The licensee takes that risk. He remedies against the person who purported to grant him a license. But he does not acquire a right or interest in unleased land which he can assert against the public at large.

87.Finally on this issue, Mr Cheung invited me to treat the 1st and 2nd Agreements as shams which were intended to get around the prohibition in CLO section 4. This effectively asks me to conclude that the parties really intended to grant a lease, despite my finding above that the parties merely intended to enter into an agreement for the management of the Restaurant coupled with a licence to enable Wong to enter the land to carry out such management. There is just no evidence to support the contention that the parties meant otherwise than what they expressed in the 1st and 2nd Agreements. I reject Mr Cheung's submission.

88.In summary, I do not think that the 1st and 2nd Agreements are illegal or unenforceable.

Remedies

89.By remaining on the Land and refusing to pay $30,000 Wong has breached the 2nd Agreement. Wong's failure to pay constituted a repudiatory breach of he 2nd Agreement. Wong's breach was accepted and the 2nd Agreement rescinded by the letter dated 23 June 1999 from the plaintiffs' solicitors to Wong. The question is what remedies are available to the plaintiffs.

90.The plaintiffs claim damages and an order for possession. I consider each head of relief separately.

91.The plaintiffs must at least be entitled to receive $30,000 for the period from April 1998 (when Wong stopped paying) to June 1999 (when the 2nd Agreement was rescinded). That period of 15 months gives rise to damages of $450,000 (15 months x $30,000 per month). I note here Wong's evidence that the monthly fee was due on the 1st of each month. I award interest on this amount of $450,000 from date of writ to date of judgment at 1% over prime and thereafter at the judgment rate.

92.In my judgment the plaintiffs must also be entitled to damages for the 34-month period from July 1999 to the present (April 2002), during which Wong has continued to remain on the Land and run the Restaurant but has not paid the plaintiffs. Mr Cheung submitted that there was no evidence of the plaintiffs' loss during that period. I disagree.

93.There is evidence that Wong was willing to pay $30,000 under the 2nd Agreement for the right to continue managing the Restaurant on the Land on similar terms as the 1st Agreement. I think that the agreement between Wong and Madam Yip in September 1997 to pay a monthly fee of $30,000 either for an indefinite period until termination by notice or (as in the 1st Agreement) for a period of 10 years, is strong evidence of the value of the right to manage the Restaurant. That amount is therefore an appropriate measure of the plaintiffs' loss consequent upon Wong's refusal to cease to operate the Restaurant and vacate the Land.

94.The plaintiffs are accordingly awarded further damages of $1,020,000 (34 months x $30,000 per month) for breach of the 2nd Agreement. I award interest on this amount of $1,020,000 from the date of judgment at the judgment rate.

95.It seems to me that the plaintiffs are additionally entitled to an order for possession. Wong's continued occupation has prevented the plaintiffs from resuming and enjoying their Restaurant business on the Land. Clerk & Lindsell on Torts (18th edn), Paragraph 18-053 states : "A licensee who remains on land after his licence expires or is properly revoked is a trespasser." Wong has wrongfully remained on the Land despite revocation by the plaintiffs of the 2nd Agreement along with Wong's right to remain on the Land to run the Restaurant.

96.The plaintiffs have locus to sue Wong as trespasser. It is not necessary to be an owner to maintain an action in trespass. See Clerk & Lindsell, Paragraph 18-10 : "[A] person in possession can sue although he neither is the owner nor derives title from the owner, and indeed may be in possession adverse to the owner."

97.I propose to make an order nisi that Wong deliver up possession of the premises to the plaintiffs by no later than the end of this month (April 2002). Such order should allow Wong a reasonable period in which to "pack-up" and remove goods belonging to him from the Property. See Clerk & Lindsell, Paragraph 18-053.

98.The plaintiffs have claimed damages in trespass (mesne profits) for the period from June 1999 until the date when possession of the Land is delivered. For the period from June 1999 to April 2002, I have already awarded damages for breach of the 2nd Agreement. The plaintiffs' action for mesne profits covering that period is to my mind simply another way of claiming the same relief. I will, however, order that Wong pay mesne profits at the rate of $30,000 per month for such period (if any), following the date of this Judgment, as has not already been dealt with above, until possession of the Land is delivered to the plaintiffs.

Conclusion

99.The plaintiffs succeed on their Statement of Claim. The Counterclaim, which was not pursued at trial, is dismissed.

100.The following consequential orders are made :

(1) I order that final judgment be entered in favour of the plaintiffs on their Statement of Claim for damages in the amount of $1,470,000, covering the period from April 1998 to April 2002.

(2) I award interest on $450,000 of the aforesaid amount in Sub-Paragraph (1) above at the rate of 1% over prime from date of writ until date of judgment and thereafter at the judgment rate.

(3) I award interest on $1,020,000 of the aforesaid amount in Sub-Paragraph (1) above at the judgment rate from the date of this judgment.

(4) I make an order nisi that such amounts as the defendant may have paid into Court as a result of the plaintiffs' Order 14 application, together with any interest accrued, be paid out to the plaintiffs and credited towards the damages and interest awarded by Sub-Paragraphs (1)-(3) above.

(5) I make an order nisi that the defendant deliver possession of the land known as No.44 Praya Road, "C" Lei Yue Mun, Kowloon to the plaintiffs by no later than 30 April 2002.

(6) I order that the Defendant pay mesne profits at the rate of $30,000 per month for such period (if any), following the date of this Judgment, not already covered by the aforesaid award of damages in Sub-Paragraph (1), until delivery of possession of the land known as No.44 Praya Road, "C" Lei Yue Mun, Kowloon to the plaintiffs.

(7) I make an order nisi that the costs of the action and the defendant's Counterclaim be to the plaintiffs, to be taxed if not agreed.

Representation:

Mr Hectar Pun, instructed by Messrs Eli K. K. Tsui & Co., for the Plaintiffs

Mr Jeremy Cheung, instructed by Messrs Ivan Tang & Co., for the Defendant

Remarks:
Appeal by the Defendant to the Court of Appeal for a stay of execution. Stay of execution granted but upon terms. Please refer to the Appeal Judgment CACV000239/2002.