Chan Yan Cheong, The Lawful Attorney of Chan Yuen Chow, The Executor Under the Will of Ho Kam Kiu Deceased v. Chan Yan Shum
Read the full judgment text of DCCJ 519/2013 on BabelCite. This District Court judgment was delivered on 25 August 2014.
1. The dispute concerned a family property located at 9 th Floor, Koon Mei Building, 129 – 131 Lockhart Road, Wanchai, Hong Kong (“the Property”).
Cited by 3 cases · Cites 3 cases
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DCCJ 519/2013 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 519 OF 2013 --------------------
--------------------- JUDGMENT --------------------- Introduction 1.The dispute concerned a family property located at 9th Floor, Koon Mei Building, 129 – 131 Lockhart Road, Wanchai, Hong Kong (“the Property”). Background / undisputed facts 2.Chan Woon Nam （陳煥南）(“Chan”) and Ho Kam Kiu, (何金嬌）(“Ho”) are husband and wife. They have 9 siblings:-
3.The plaintiff and the defendant are respectively the 6th son and the 4th son of Chan and Ho. 4.Chan operated a grocery store（陳卓記） in Wanchai since 1972, it ceased business after his death in 1994. 5.On 27 March 1975, as joint tenants, both Chan and Ho purchased the Property as their matrimonial home. 6.The Property is a three-bedroom flat, the rooms were occupied by Chan and Ho; the defendant’s family, and the rear bedroom was left for exclusive use of all other family members and/or for storage. 7.The defendant and Madam Lo resided with Chan and Ho in the Property since their marriage on 26 May 1975. They gave birth to one daughter and one son in 1976 and 1978. At present, both of their children have moved out, only the defendant and Madam Lo are residing at the Property. 8.Chan and Ho acquired two other properties in their lifetime. They purchased a shop premise in 76 – 78 Thompson Road (for carrying on business of the grocery store) and a residential property in Wanchai (秀華坊) (“the Wanchai Property”). 9.Chan Woon Nam Family Investments Limited (“the Company”) was incorporated for the purpose to hold family assets. Ho and all surviving siblings were shareholders of the Company. The Company is responsible for the outgoing expenses of the Property and the two family assests. 10.The Wanchai Property (秀華坊) and the shop premise in 76 – 78 Thompson Road was sold in 1994 and 2011 respectively. The Company was deregistered in May 2013. 11.Chan passed away on 3 August 1991, by way of succession, Ho became the sole beneficial owner of the Property. Ho passed away on 9 April 1998. The Property forms part of the estate of Ho. 12.In Ho’s last will dated 13 August 1991 (“the Will”), Wah and Chow were appointed as her executors and trustees. Letter of Administration was granted to Chow as the executor. 13.Clauses 4(a) and 4(b) of the Will was reproduced as follows:-
14.Paragraphs 6 and 7 of the Will expressly stated the trustees, have an absolute discretion to sell the Property, the proceeds shall be divided into six equal shares for her six sons. 15.On 31 October 2012, Chow granted his power of attorney to the plaintiff. Events leading to the dispute 16.Notwithstanding the intention of the Will, on 25 April 1998, two weeks after Ho’s demise, a meeting was held in the Property, a handwritten note was drafted by Tong to evidence, inter alia, an alleged agreement that the defendant can occupy the Property, rent free for a period as long as he wishes (“the Note”). As recorded in the Note, Tong, Wo, Chow, the defendant, Wah and the plaintiff were all present at the meeting. Only Tong, Chow, Wah and the defendant had signed. 17.The Note is reproduced as follows:-
18.Notwithstanding the existence of the Note, the plaintiff notified the defendant in a letter dated 31 October 2012 (“the 1st Letter”), that the plaintiff is exercising his power as a trustee, for and on behalf of Chow, under Clauses 4(a) and 4(b) of the Will, to demand the defendant for payment ofa monthly licence fee of the Property, at $16,000.00 (or at an annual licence fee of $192,000.00) commencing from 1 January 2013. The licence fee was derived from the prevailing market rent of the Property. 19.The defendant failed and refused to pay the licence fee as demanded. The plaintiff further issued a letter dated 3 January 2013 (“the 2nd Letter”), to give notice to the defendant that should the he refused to pay the sum within 7 days thereof, the defendant’s licence to occupy the Property will be revoked and terminated. The defendant shall deliver vacant possession of the Property to the executor. 20.The defendant refused to accede to the plaintiff’s requests, The plaintiff formally revoked the defendant’s licence to occupy the Property on 7 February 2013. Expert evidence 21.By consent, a joint valuation report on the market rent prepared by Mr Steven CW Lam of CS Surveyors Limited was adduced by parties without calling the makers. In the report, Mr Lam opined the market rent of the Property as at 7 February 2013, for a two-year lease was $18,400 per month, exclusive of rates and management fees. The plaintiff’s case and the defence 22.The plaintiff’s case is straightforward. Chow, as the executor / trustee of Ho, exercised his right under Clauses 4(a) and (b) of the Will and had demanded the defendant to pay the requisite licence fees. The defendant refused, the licence was thereby revoked. The plaintiff seeks an order for vacant possession and damages for trespass of the Property from 1 January 2013. 23.The plaintiff disputed Wo and himself were present at the family meeting, neither did they sign nor agree to the alleged representations and/or agreement. The plaintiff only came to know the existence of the Note about 2 years ago. 24.The defendant put forward a defence of proprietary estoppel. He claimed he has relied on the alleged representations and/or agreement to the effect that he could occupy the Property (excluding the rear bedroom) rent free for a period as long as he wishes. He suffered detriment by (i) forgoing an opportunity to purchase a permanent home for himself and (ii) spending a considerable sum of money to renovate the Property. The defendant should be granted a life licence and the plaintiff is estopped from exercising his right under Clauses 4(a) and (b) of the Will. Preliminary issues 25.On the 1st day of trial, the defendantindicated he elected not to testify at trial. I granted leave for the defendant to adduce two psychiatric expert reports prepared by Dr David Chan (“Dr Chan”) and Dr David Chai (“Dr Chai”) dated 14 June 2014 and 17 June 2014 respectively, to explain the defendant’s medical conditions which rendered him unsuitable to give evidence. In the same application, he defendant further applied for leave to adduce a supplementary witness statement of Madam Lo of which I have dismissed[1]. 26.On the 2nd day of trial, the plaintiff applied for leave to amend his defence, to plead Madam Lo’s presence at the family meeting and to further adduce a 2nd supplementary witness statement of Madam Lo. Both applications were dismissed[2]. Evidence 27.Tong passed away on 19 March 2014. Leave be granted to Chow has filed a supplemental witness statement. The plaintiff called 2 witnesses, namely, the plaintiff and Chow. 28.The defendant elects not to testify and not to call Tang Chiu Ping to testify, both their witnesses statements were expunged pursuant to Order 38 Rule 2A(6), Rules of the District Court, Cap 336H. Only Madam Lo testified for the defendant. The Defendant’s health condition 29.Mr Yuen, counsel for the defendant, invited me not to draw adverse inference against the defendant by citing Lee Cheung Ching v. Lok Hsiao Pei, John HCA 978 of 2014, 17 March 2008, at para 63:-
30.Both Dr Chan and Dr Chai adopted their medical reports at trial. Dr Chan said, the defendant was his patient for 42 years. He has a history of psychotic illness and cognitive impairments with frequent relapses. There is a high risk the defendant will recur from psychotic disorder if he was called as a witness. He might be unable to stand cross examination. Dr David Tsai agreed with Dr Chan’s opinion. Dr Tsai supplemented, the defendant is now suffering from an impending recurrence of his long standing schizophrenia, court attendance will trigger relapse. 31.I accept the defendant’s election not to testify is well explained and justified and therefore no adverse inference will be drawn against the defendant. The issues 32.The issues of this action:
The plaintiff’s evidence 33.The plaintiffis an established professor and an independent non-executive director of a listed company. His evidence is essentially the pleaded case. He confirmed Chow was responsible to handle all family matters, including the Company throughout the years. The plaintiff suggested Chow to exercise his power as an executor to enforce the Will, Chow had only granted him his power of attorney to do so on 31 October 2012, he issued the 1st Letter on the same day. 34.Chow is now 72 years of age. He said Tong, Wo and himself have worked in the grocery store with Chan. Tong worked for a period from 1950 until 1974 and then emigrated to Canada afterwards. Both Chow and Wo worked in the grocery store from 1956 until 1980. The defendant worked in the grocery store from 1970 until 1994. 35.The Note was signed shortly after Ho’s demise, he said Tong allowed the defendant to occupy the Property without paying rent. Chow confirmed he had signed on the Notebut denied he agreed to the contents of the Note. 36.Chow explained, the note was some sort of a memorandum of the Company, both Wahand himself did not sign the note in the capacity of an executor. Other beneficiaries, including the plaintiff has no knowledge of the Note until 2011. He was unheard of the verbal arrangement that the defendant could have occupied the Property without paying rent for a period as long as he wishes. 37.Chow complained he was not allowed to enjoy free access to the rear bedroom of the Property, he has to seek prior approval from the defendant or his wife to gain free access. 38.During cross examination, Chow explained he had resisted the plaintiff’s suggestion toexercise the power as an executor to Clauses 4(a) and (b) of the Will because, after Ho’s demise, the was still suffering from mental illness, and his siblings were still at school age. Not until 2012, when all 6 siblings had each enjoyed around $7.6 million sales proceeds of the Thompson Road property, he found the defendant could be at least, financially sound to settle the licence fees. The defendant’s children are grown up and had moved out. Chow considered it is an appropriate time to exercise his power to enforce Clauses 4(a) and (b) of the Will. Hegave his power of attorney to the plaintiff to commence this action. The defendant’s evidence 39.Madam Lo came to know the defendant in 1972 when he was working in the grocery store with Chan and Ho. She recalled only the defendant was working there. She said, both Chan and Ho preferred the defendant to stay with them in the Property after they married. She gave birth to a daughter and a son in 1976 and 1978 respectively. She recalled Chan and Ho had reassured the defendant that he can occupy in the Property without paying rent, only that he has to pay the utilities expenses. 40.At present, both of her siblings have moved out. Only the defendant and herself are residing at the Property. The Property was meant to be the only permanent residence of the defendant and herself. 41.Madam Lo was present on the meeting on 25 April 1998, she said the Note was drafted by Tong, she witnessed Tong, Wah, Chow and the defendant had signed on the Note. 42.Madam Lo confirmed the improvements done on the Property. Analysis Factual issues 43.The plaintiff gave evidence with precision. It is clear, unequivocal. I accept he is an honest and credible witness. I find the plaintiff a prudent man who has tried his best endeavour in handling the present litigation. 44.Chow is a capable person to handle Chan’s family matters: as a brother, as a director of the Company and as an executor of the Will. Chow has well answered and explained in cross examination of the reason of not exercising his power under Clauses 4(a) and 4(b) of the Will for more than 13 years. I accept this is a reasonable and considerate gesture. Chow has an admirable character, with compassion to the defendant’s family. I could nowhere criticize Chow’s evidence,he is an honest and credible witness. 45.Madam Lo, relied and insisted on the Note throughout the trial. Her believe that the Note is determinative of the life licence is misconceived. In fact, She did not participate in the meeting on 25 April 1998, only that she was a bystander to the meeting. Her evidence could not assist the defence. 46.Madam Lohas deliberately ignored the 1st and 2nd Letters, which were sent as early as 31 October 2012 and 3 January 2013. She was under an impression upon the reassurance from both Chan and Ho, she(or the defendant) could have occupied the Property without paying rent for an period as long as the defendant’s wishes. Madam Lo is over confident that the Note, which came after Ho’s demise, could have assisted her (and the defendant) to achieve a rent-free place to live in. Her evidence is far short to establish the alleged representation, not to mention reliance and detriment on the part of the defendant. She is evasive during cross examination, her evidence is unbelievable. 47.It must be the fact that the plaintiff and Wo were not present at the meeting on 25 April 1998. The meeting was meant to be a family note or minutes of the Company. Madam Lo was a bystander, no evidence can be elicited from her that the alleged representation came from the participants of the meeting. Proprietary estoppel 48.It is trite law that proprietary estoppel involves a representation, which may be factual or promissory, to the effect that the representee has acquired, or will acquire, an interest in, or rights over, property[3]. The basics of establishing proprietary estoppels are (i) representation; (ii) reliance; and (iii) unconscionable disadvantage[4]. The defendant bears the burden of proof. 49.In applying the elements into the context of this case, the defendant has to prove:
50.Mr Ng, counsel for the plaintiff, submitted a pleading point, the defendant has no evidence to prove his pleaded case. In paragraph 7(2) of his Defence, the defendant pleaded the alleged representation came from Chow and Wah, it is not open to the defendant to shift the pleaded representation to that of the agreement solely evidenced by the Note. Paragraph 7(2) of the Defence is reproduced as follows:
51.On this pleading point, I rely on the principles in Kwok Chin Wing v. 21 Holdings Ltd (2013) 16 HKCFAR 663, per Ma CJ in para 21,
52.The representation for a life licence came from Chow and Wah in the presence of Tong in the meeting. As the defendant’s witness statement has been expunged, the only evidence to prove such alleged representation left with Madam Lo. She was a bystander to the meeting, Madam Lo’s evidence did not touch upon the source of the alleged representation. Nothing in her witness statement relates to the defendant’s pleaded case, no evidence could be elicited from Madam Lo to prove the alleged representation. 53.Mr Yuen invited me in his closing submissions, to find the representation should be “the agreement” contained in the Note. I cannot hold the same view because agreement itself is not an element of proprietary estoppel. The alleged representation, as pleaded, must be established in the first place. The defendant could not have shifted to rely on the Note, upon failure to establish the alleged representation. 54.The defendant pleaded, in reliance, the defendant decided (i) not to purchase any property as his permanent home; and (ii) has spent considerable sums of money in repairs and improvements to the Property and (iii) has paid the management fees of the Property. Madam Lo’s witness statement was silent on the amount incurred on these areas. 55.If I revisited the requirements of establishing reliance and detriment, E & L Berg Homes Ltd v. Grey (1979) 253 E.G. 473, per Brandon LJ at page 476, he decided
56.In this case, the defendant lacks clear and cogent evidence to prove the unconscionable conduct. Madam Lo could not assume the role of the defendant’s spokesmanto explain the reason of not purchasing a property as his permanent home. The financial means of the defendant is unknown. In the event the defendant was a person without means to purchase a property, it is redundant to say he has suffered detriment of not having purchased one as his permanent home. 57.For the amount of money that the defendant has spent on the repairs of the Property, it was agreed in Clause 4 of the Note the Company was liable to pay the repairs of the Property. Chowtestified, he (or the Company) is willing to pay for them,only that the defendant had not requested for reimbursement. 58.With respect of the costs of renovation and management fees, Madam Lo failed to state specifically the amount in her witness statements, the defendant is also short of evidence to prove the same. 59.In the premises, there is no unconscionable advantage on the part of the plaintiff (or Chow, the executor) to exercise the rights and to enforce Clause 4(a) and (b) of the Will. The defendant failed to establish his defence of proprietary estoppel. Interpretation of the Note / Capacity of Chow when he signed on the Note 60.The Note is a memorandum of Chan’s family. To pitch the defendant’s case to the highest, it is an agreement between the Company and the defendant. The Company is not the registered owner of the Property, the Note could not have prevailed over the Will, the intention of Ho. 61.Mr Yuen put considerable effort in persuading me to find Chow signed in his capacity as an executor of the Will, he submitted, Chow has conceded to allow the defendant and his family to occupy the Property as alleged. Nonetheless, at time of signing this Note, there was no evidence that Chow and Wah were acting in the capacity of the executors of the Will. As the Will was pronounced few weeks after the Note, there is no evidence that Chow was aware he was the executor of the Will at time of signing the Note, not to mention, the knowledge of Clause 4(a) and (b) of the Will. The Note is incapable of binding the beneficiaries of the Will. 62.Notwithstanding the above, the wordings of the Note itself were ambiguous. The crucial line is:-
I agree with Mr Ng, the above sentence consisted of two separate parts, the former part concerns the payment of government rates by the Company, whereas the latter part concerns the agreement that the defendant and his family member could have stayed in the Property without paying rent. No definite period was mentioned for the period of stay, no conclusion can be drawn that the signatories of the Note gave consent to the defendant to stay in the Property rent-free indefinitely. 63.Even if the defendant is able to substantiate his defence by representation on agreement, the defendant could not have advanced his case by relying on Clause 1 of the Note, this is because the permission to occupy the Property without paying rent did not specify an indefinite period. The defendant’s failure to reply to demand letters 64.An observation of DHCJ L Chan (as then he was) in Lee Cheung Ching v. Lok Hsiao Pei John HCA 978/2004 (unreported, 17 March 2008) at para 107,
65.Madam Lo was evasive during cross examination in explaining what the defendant had done after receiving the 1st and 2nd Letters. Although Madam Lo was unsure whether the defendant has replied to them, she could not rebut the fact that no reply was actually given by the defendant, be it by himself or legal representatives, to the plaintiff. 66.The defence was simple: the alleged representation and the Note. The defendant could have simply replied to the plaintiff by stating them. The credibility of the defence case is further doubted because of this obvious omission. Time to revoke the licence 67.I accept Mr Ng’s submission that the plaintiff could not be penalized by not taking action in exercising his right to enforce Clauses 4(a) and (b) of the Will for more than 13 years. In E & L Berg Homes Ltd v. Grey, per Ormrod LJ at 479, he enunciated,
68.Especially in family arrangements, it is particularly so when family members are prone to withhold from enforcing some rights against other family members. I shared Chow’s view. The 1st and 2nd Letters were only issued in late 2012, after the defendant was at least, financially capable to settle the licence fees. In fact, the defendant (and his family) has enjoyed an advantage to house themselves without costs for more than 13 years. The plaintiff should not be penalized or even criticized for not enforcing his strict legal rights during this period. The Licence 69.I accept the market rent of the Property, as at 7 February 2013,was $18,400 per month, exclusive of rates and management fees as opined by Mr Steven CW Lam of CS Surveyors Limited in his joint valuation report dated 13 January 2014. 70.The plaintiff is entitled to exercise his right to enforce Clauses (4)(a) and (b) of the Will as pleaded. The 1st and 2nd Letters were validly issued. In both letters, the plaintiff demanded a monthly licence fee at $16,000 only, a lesser amount of the market rent, from 1January 2013. I accept this lesser sum should be opted for as the licence fees of the Property. 71.As the defendant has failed to settle the licence fees as requested. He was a trespasser of the Property as at 1 January 2013. Conclusion 72.I therefore enter judgment to the plaintiff as pleaded. I so order the defendant to deliver vacant possession of the Property to the plaintiff. The defendant shall pay damages to the plaintiff at the rate of $16,000 per month for the period from 1 January 2013 until the date of judgment and at the same rate from date of judgment until the date of actual vacant possession. The damages awarded shall carry interest at judgment rate from the date of judgment until full payment. Costs 73.Costs should follow the event. I make an order nisi that the defendant shall pay costs of the plaintiff in this action, with certificate of counsel, to be taxed if not agreed. The order nisi shall become absolute in absence of application to vary within 14 days.
Mr Lawrence K F Ng, instructed by Lam & Partners, for the plaintiff Mr Ross M Y Yuen, instructed by Joseph C T Lee & Co, for the defendant [1] See written decision on 23 June 2014. [2] See written decision on 24 June 2014. [3] Spencer Bower’s The Law Relating to Estoppel by Representation, 4th Edition, para XII.1.1. [4] Gray’s Elements of Law, 5th Edition, para 9.2.8 [5] This principle was approved by Privy Council in Knowles v. Knowles [2008] UKPC 30. | ||||||||||||||||||||||||||||||
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