Yuen Lai Tui v. All Occupiers of Ground Floor of the Building Erected on the Property Known As Lot No. 2352 in Demarcation District 83, North, New Territories, Hong Kong and Another

HCMP 280/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 280 OF 2005

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BETWEEN

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Before:  Hon Chung J in Court

Dates of Hearing:  7 to 9 November 2006

Date of Handing Down Judgment:  20 November 2006

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J U D G M E N T

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Introduction

1.The plaintiff commenced this action in February 2005 purportedly pursuant to RHC Ord. 113 alleging that the defendants are trespassers occupying the suit property (described in more details in para. 2 below). 

2.The properties concerned are two 3-storey village houses.  They are located at Lot No. 2352 in Demarcation District 83, North, New Territories.  The two houses are next to each other, and are respectively known as Nos. 47 and 48 Siu Hang Village, Lung Yuek Tau, Fanling.  The plaintiff and her family reside in No. 48.  The defendants are said to have occupied the ground floor of No. 47 (“the suit property”).

3.By consent of the parties, the master ordered in April 2005 inter alia that this action be continued as if it had been begun by writ (Ord. 28 r. 8); other consequential directions were also given.

The Parties' Pleaded Case

4.The plaintiff’s pleaded case is relatively straight-forward and it can be summarized as follows.  The suit property was owned by the late Tang Yuk Wai (“the deceased”) who passed away in October 2002.  The plaintiff was his lawfully wedded wife who, by a grant dated 21 March 2003, was appointed the administratrix of his estate.

5.The plaintiff avers that the 2^nd defendant (“Ho”) began to trespass the suit property since about 1996 (more than 8 years before the commencement of this action).  A letter demanding Ho to vacate the suit property was sent to him on 8 November 2004 (“the Nov 2004 letter”).

6.The pleading of Ho is far from being a model of clarity.  But, in short, he pleads that:-

(a)     he entered into an agreement with a Madam Wu Yee Lai (“Wu”) for the sale of the suit property;

(b)    the price payable for the purchase was $600,000 and an additional one-third of the premium chargeable by government for the removal of the non-assignment clause in the government lease.  The total price would be about $940,000;

(c)     so far he has paid $475,000 to Wu;

(d)    he has met the deceased on numerous occasions since about September 1996.  The deceased agreed to his entering into and staying at the suit property.

Ho also pleads that:-

“… [he] was led and/or reasonably led to believe Wu was acting with full capacity and on behalf of [the deceased] to deal with the sale and purchase of [the suit property] and in allowing [him] to move into [the suit property]pending completion of the sale and purchase of [the suit property] … ” (para. 5, defence and counterclaim).

7.The plaintiff’s reply is in essence that any agreement made, and any sum paid, by Ho is unrelated to the deceased (and therefore the plaintiff).  Hence, Ho is not entitled to occupy the suit property.  In any event, the Nov 2004 letter has revoked any licence which might have been granted to Ho earlier to occupy the suit property.

Witnesses’ Credibility and Findings of Fact

8.The plaintiff testified and did not call any other witness.  Ho also testified and called a Mr Yim Shing Chi (“Yim”) to be his witness.  Yim was a sub-contractor who helped Wu to build the two village houses.  He was also the one to introduce Ho to purchase the suit property.  Unfortunately, Wu also passed away earlier and could not be called to be a witness.

9.Effectively, the plaintiff claimed to be completely ignorant of the reason for Ho’s occupation of the suit property.  She testified that all matters relating to the two village houses were handled by the deceased and she was never informed about them.

10.I do not accept her testimony to be truthful.  She accepted that she and her family (including the deceased before he passed away in October 2002) had been residing in one of the houses.  It is also accepted that Ho began to occupy the suit property since about 1996.  The two village houses are just next to each other.  In these circumstances, it is inherently implausible for her not to know of the reason for Ho’s presence.

11.On the other hand, I accept Ho and Yim to be truthful witnesses.

12.Consequently, I find as facts the matters set out in para. 6 above.  I also find as a fact Wu was acting as the deceased’s agent when she entered into the Chinese document called “Letter of Intent” (意向書) (undated) with Ho in September 1993 (“the said agreement”).

Is the Said Agreement Binding on the Plaintiff?

13.The plaintiff argues that the said agreement is not binding for the following two reasons:-

(1) Wu entered into it as a principal in her own right;

(2) the said agreement was merely an agreement to agree.

14.In relation to sub-para. (1) above, the plaintiff relies on the following parts of Yim’s testimony.  Yim said he had been shown the agreement entered into between Wu and the deceased.  That agreement provided in essence that the deceased was to provide the land for building the two village houses whereas Wu was to provide the funds for doing so.  After the houses were constructed, four of the six units (including the suit property) were to be conveyed to Wu while the other two units were to remain as the deceased’s.

15.There is no merit in the plaintiff’s first argument.  The precise nature of the agreement between Wu and the deceased was unknown to Ho.  Wu entered into the said agreement expressly as acting for the land owner (that is, the deceased).  The relevant part of the said agreement reads:-

“業主將[涉案物業交]與[胡倚勵]發展，該業主同意將建築該樓宇工程完成後，以補地價手續分層出售，並將 … 出售事宜全權委托[胡倚勵]處理 … ”.

Further, the conduct of Wu and the deceased in allowing Ho to occupy the suit property since 1996 is consistent with the suit property having been sold on the deceased’s behalf.  Whether the deceased was a disclosed principal is irrelevant for present purpose.  Although an agreement for the sale of land needs to be made in writing, an agreement appointing an agent to sell land does not: Bowstead & Reynolds on Agency (2006) 18^th Ed., para. 2-035 to 2-039 (especially para. 2-037); Megarry & Wade: The Law of Real Property (2000) 6^th Ed., para. 12-041.

16.I do not find any substance in the plaintiff’s second argument either.  S. 3(1), Conveyancing and Property Ordinance (Cap. 219) requires:-

“… no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose”.

The said agreement is in writing and has been signed by the parties (that is, Ho and Wu on behalf of the deceased).

17.The learned authors of Megarry & Wade said:-

“The written terms of the contract must incorporate ‘all the terms which the parties have expressly agreed’. …

There are three essential elements upon which the parties must expressly agree if there is to be a valid contract for the sale of land or an interest in land.  These are —

(i)      the parties;

(ii)     the property;

(iii)     the consideration.

… This is so even though the parties have not agreed on other terms, such as the completion date, whether a deposit should be taken, or whether vacant possession should be given on completion.  Such lacunae will be regulated by the open contract rules implied by law … ” (para. 12-027).

The Court of Final Appeal in Kwan Siu Man Joshua v. Yaacov Ozer [1997-1998] 1 HKCFAR 343 decided, on the facts in that appeal, that there was no binding agreement between the parties (and reversed the lower courts’ finding that there was an open contract).  But here the parties clearly intended by the said agreement (which contains terms set out in a detailed manner) to enter into a legally binding relationship.  In these circumstances, the absence of some of the terms does not affect its validity or enforceability.

18.I therefore conclude that the said agreement is binding on the deceased.  I also conclude that the payments to Wu were a good discharge of part of Ho’s payment obligations under the said agreement, it being within her authority (as stipulated in the said agreement) to receive those sums.

Can Ho Occupy the Suit Property?

19.The plaintiff also argues that Ho does not have a right to occupy the suit property.

20.This argument is based on the relief sought by Ho in his counterclaim.  The plaintiff says that Ho has not put forth a claim as a licensee, but merely puts forth a claim for the return of the sums he paid to Wu earlier.

21.I already observed Ho’s pleading (drafted by his former legal advisers) is unclear.  The relief he sought include:-

(a)     a declaration that there is a trust of the suit property in his favour;

(b)    a declaration that he is beneficially entitled to an estate in the suit property;

(c)     various kinds of monetary claims (by way of additional or alternative relief);

(d)    a declaration for a lien against the suit property for his monetary claims.

22.But it should also be noted that one of the relief sought is an order vesting the suit property in him (para. (2), prayer for relief).  Thus, Ho’s counterclaim can be understood to include a claim for the specific performance of the said agreement.

23.Ho confirmed during trial he is willing and able to complete the sale by paying the balance of the purchase price (including one-third of the premium chargeable by the government).

24.Such being the case, I disagree with the plaintiff.

25.I also disagree that Ho is merely a bare licensee whose licence can be revoked at any time.  Rather, Wu and/or the deceased must have been allowed Ho to occupy the suit property in his capacity as its purchaser.  The licence granted to him by Wu and/or the deceased should thus be one coupled with the grant of an interest in land: Chitty on Contracts (1999) 28^th Ed., para. 13-026, text to n. 26.  Even if Ho was a contractual licensee, in the above circumstances, it should be treated as a licence given for consideration and coupled with an agreement that it would not be revoked until the happening of an event, namely, the discharge of the said agreement: Chitty, para. 13-026, text to n. 30.  There is no evidence the said agreement has been discharged.  In this action, there is accordingly little practical difference regarding precisely which of the said two types of licence Ho’s occupation of the suit property should fall within.

26.The plaintiff also argues that specific performance, being an equitable remedy, should not be granted in Ho’s favour because of his delay in making a claim.  Snell’s Equity (2000) 13^th Ed. said this:-

“Laches essentially consists of a substantial lapse of time coupled with the existence of circumstances which make it inequitable to enforce of the claim … But apart from such circumstances delay will be immaterial” (emphasis supplied) (para. 3-19).

27.Even assuming in the plaintiff’s favour that any delay has only been caused by Ho and not by the deceased or the plaintiff, I do not find any inequity in ordering the specific performance of the said agreement.

28.If the agreement between Wu and the deceased had been fully performed, the deceased would retain two units out of six (the other four (including the suit property) would be conveyed to Wu (or perhaps her company)).  The evidence adduced at trial suggests that his estate now retains all units except the suit property.  I therefore do not find decreeing specific performance is likely to cause injustice to the plaintiff.

Conclusion

29.The plaintiff’s claim is dismissed.  Judgment will be entered in Ho’s favour on the part of his counterclaim relating to the vesting of the legal title to, and beneficial interest in, the suit property.

Relief

30.The relief which should be granted in Ho’s favour is as follows.

31.First, there be an order that the plaintiff do convey to Ho the legal title to, and the beneficial interest in, the suit property in accordance with the terms of the said agreement.

32.For such purpose (and subject to para. 36 to 38 below):-

(1) the plaintiff is to execute all necessary documents, including an assignment, and do all acts for the purpose of performing the said agreement and conveying the legal title to, and all interests of the deceased in, the suit property, within 28 days from the date of this judgment;

(2) Ho is to pay to the plaintiff the balance of the purchase price:-

(a) the sum of $125,000 (600,000 – 475,000) upon completion;

(b) other sums payable under the said agreement (especially one-third of the premium payable to government) as and when they become due and payable.

33.Because Ho is acting in person, I should mention s. 25A, High Court Ordinance (Cap. 4) in case it becomes necessary for that provision to be invoked.  The relevant parts of that provision stipulate:-

“(1) Where the Court of First Instance has given or made a judgment or order directing a person to execute any conveyance, contract or other document, … , then, if that person-

(a) neglects or refuses to comply with the judgment or order; or

(b) cannot after reasonable inquiry be found,

the Court of First Instance may, on such terms and conditions, if any, as may be just, order that the conveyance, contract or other document shall be executed, … , by such person as the Court may nominate for that purpose.

(2) A conveyance, contract, document or instrument executed or endorsed in accordance with subsection (1) shall have the same effect as if it had been executed or endorsed by the person originally directed to execute or endorse it”.

Further, RHC Ord. 45 r. 8 provides:-

“If an order … for the specific performance of a contract is not complied with, then, without prejudice to its powers to punish the disobedient party for contempt, the Court may direct that the act required to be done may, so far as practicable, be done by the party by whom the order or judgment was obtained or some other person appointed by the Court, at the cost of the disobedient party, and upon the act being done the expenses incurred may be ascertained in such manner as the Court may direct and execution may issue against the disobedient party for the amount so ascertained and for costs”.

34.The two houses in which the suit property is located appear to have been constructed and sold pursuant to what is commonly called the “Small House Procedure”.  The plaintiff has referred to this in her closing submissions.

35.Conveyancing under the “Small House Procedure” in the New Territories can be a complicated process.  Passages quoted by the plaintiff from Wong On Na v. Harbour Well Development Ltd., HCA 1010/2000 (2 January 2002) show what the parties to a conveyancing transaction may have to undergo:-

“7. The Government has set strict limitations on the nature and type of building to be erected as a Small House and a fixed procedure for the development of the building must be followed. Progress is assessed at intervals by the relevant District Land Office and payment of a premium is required when all procedures are completed.

8. Once a Licence is granted the owner cannot assign, partition or mortgage without permission from the District Lands Office (DLO) which grants a Certificate of Exemption. … Building could then begin and sales from the plan could start.

9. After building and concomitant development is completed the owner must apply to the Government to pay the premium required to effect the removal of the alienation restriction. When the premium is notified to the owner and the sum is paid, a Certificate of Compliance (CC) is issued and the sale can then be completed.

10. To a large extent the rate of progress of the development depends not on the speed and skill of the builders and developers, but on the dates of application for and the eventual grant of, the Certificate of Exemption, payment of Premium and the issue of the Certificate of Compliance. Inspection of building works and issue of those documents is governed by the workload of the DLO for the relevant district and the dates when the DLO can arrange the inspections which necessarily precede the issue of the certificates. As the owner and/or developer cannot speed the issue of the documents by the DLO once they have been applied for, it follows that any PA cannot specify the exact date of completion” (emphasis supplied).

36.With this background in mind, it is possible:-

(a)     the certificate of compliance has not yet been issued.  If so, it is also possible such a certificate may not be issued by the government at the end;

(b)    in any event, the payment of premium may take place beyond the 28-day period ordered in para. 32(1) above,

(for reasons beyond the control of the parties herein).

37.In view of these possibilities, I give liberty to the parties (including any person who may later be appointed pursuant to s. 25A and/or Ord. 45 r. 8) to apply to court for the variation of the above orders and/or the addition of other order(s).

38.The last-mentioned order(s) may include an order for the return of the sums paid by Ho earlier and/or for damages: Johnson v. Agnew [1980] AC 367; McGregor on Damages (2003) 17^th Ed., para. 22-033 and 22-038.

Costs Order

39.The parties agree on the applicability of the usual rule that costs should follow the event.  There will accordingly be a costs order that the costs of this action are to be paid by the plaintiff to Ho to be taxed if not agreed.

Mr George Chu, instructed by Messrs Leung Kin & Co., for the Plaintiff

The 2^nd Defendant acts in person and present