Attorney General v. Stephen Chiu Kwok Chun

CACV000167/1984

HEADNOTE

Former government servants who continue to occupy departmental quarters after the revocation of their licences so to do are liable to pay the equivalent of market rents by way of mesne profits at the suit of the Attorney-General.

BETWEEN

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Coram: Roberts, C.J., McMullin, V.-P. & Kempster, J.A.

Date of hearing: 22 March 1985

Date of judgment: 9 April 1985

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JUDGMENT

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Kempster, J.A.:

1. This is the judgment of the Court.

2. By letter dated 9th December 1982 the defendant was informed that H.E. The Governor had directed his compulsory retirement from the Hong Kong Fire Services with effect from the preceding day. Against that direction, on 11th March 1983, he petitioned the Secretary of State. He was informed of the rejection of such petition by letter dated 28th October 1983.

3. Meanwhile by letter dated 13th December 1982 the Director of Fire Services determined the defendant's licence to occupy a departmental quarter at Baguio Villas, Hong Kong, granted by virtue of his employment, as from 31st January 1983. In the light of his continued presence a writ claiming possession and mesne profits was issued in the Victoria District Court on 21st April 1983 naming the Attorney-General as plaintiff. The proceedings were subsequently transferred to the High Court.

4. By his Defence the defendant placed reliance, by way of estoppel, upon a letter from the Director dated 1st March 1983 inviting him to authorise an equivalent deduction from his pension by way of "rent" to that which would have been appropriate had he remained in employment. The defendant had in fact signed such an authorisation on 14th December 1982 but the Director never availed himself of it. The plea was not maintained. On 4th July 1984 judgment was entered for the plaintiff, by consent, for possession and for damages to be assessed.

5. Although Master Boa heard the legal representatives of the parties in chambers on 20th September 1984, he did not give his reasoned assessment until 6th November. Subject to certain deductions he calculated damages on the basis of HK$6,000 per month from 1st March 1983 to 24th May 1984; being the date when the defendant yielded possession. Against what is claimed to be the inadequacy of that assessment the plaintiff appeals to this Court.

6. It is common ground that damages, howsoever assessed, should run from 1st February 1983 and that the plaintiff is entitled to HK$1,950.07 for contractual liabilities riot deducted from salary or pension prior to that date. The matter which has been the effective subject of argument is the proper measure.

7. Master Boa held in the circumstances that such part of the rent payable by the plaintiff, standing in the shoes of Colonial Treasurer Incorporated under a lease dated 10th January 1978, as was attributable to the departmental quarter in question constituted the measure. From the resulting figure of HK$6,000 per month he subtracted the sums which would have been paid by the defendant on account his licence had he remained in government employment; albeit not in fact deducted from his pension. In effect, by invoking the plaintiff's duty to minimise his damage, the Master awarded him the notional monthly loss to government arising from its policy of renting the flat in the open market and as a very valuable perquisite of his employment, licensing an officer in the Fire Services to occupy it for a much smaller sum. He overlooked the management charges payable by the plaintiff to the landlord. But on the probable hypothesis that another employee in receipt of equivalent remuneration would have been allocated the quarter but for the defendant's presence there the real loss to government arising from the trespass was no more than the sum of the notional deductions.

8. Be that as may Mr. Osborne for the plaintiff submitted that the measure was to be calculated by reference to the value to the defendant of his tortious occupation rather than to the real loss to which we have just adverted. The assessment of that value necessarily involves an inquiry into market rates by reference to the terms of the lease of 10th January 1978.  Mr. Tang for the defendant contended that there is no room for such an approach since the amount of the actual damage sustained by the plaintiff as a result of the trespass is apparent. This, he submitted, was generally as found by the Master though he conceded that management charges should have been added. The fact that the name of the plaintiff is a euphemism for the Hong Kong Government is, Mr. Osborne further and, we believe, correctly submitted, neither here nor there.

9. In Whitwham v. Westminster Brymbo Coal and Coke Company ⁽¹⁾ Chitty J. was seized with a claim for damages for trespass to land by tipping on to it spoil from a colliery. By analogy with the principles which had been applied in way-leave cases he held that the proper measure was the reasonable value of the land for the purpose for which the defendants had used it; a measure founded on the principle that a wrongdoer shall not make a profit out of his own wrong. A strong Court of Appeal comprising Lindley, Lopes and Rigby LJJ upheld him,. Whitwham v. Westminster Brymbo Coal and Coke Company⁽²⁾. To quote Lindley L.J. at p.541 -

"Why are not the plaintiffs to be entitled to some compensation in respect of that user? The plaintiffs have  been injured in two respects. First, they have had the value of their land diminished; secondly, they have lost the use of their land, and the defendants have had it for their own benefit. It is unjust to leave out of sight the use which the defendants have made of this land for their own purposes, and that lies at the bottom of what are called the way-leave cases. Those cases are based upon the principle that, if one person has without leave of  another been using that other's land for his own purposes, he ought to pay for such user."

Since damages compensating the plaintiff both for injury to the land, the amount being apparent, and for the use to which it had been put were awarded this decision runs directly counter to Mr. Tang's main submission.

10. In Strand Electric & Engineering Co. Ltd. v. Brisford Entertainments Ltd. ⁽³⁾ the Court of Appeal was concerned with the proper measure of damages for the detention of a chattel but at pp.253 and 254 Denning L.J. (as he then was) said -

"....... a wrongdoer, who keeps the owner out of his land, must pay a fair rental value for it, even though the owner would not have been able to use it himself or to let it to anyone else. So also a wrongdoer who uses land for his own purposes without the owner's consent, as, for instance, for a fair ground, or as a wayleave, must pay a reasonable hire for it, even though he has done no damage to the land at all."

When sitting as an additional judge of the Queen's Bench Division in Penarth Dock Engineering Company Limited v. Pounds(4) at pp.361 and 362 Denning L.J. returned to this theme in the context of a claim for damages for breach of contract and for trespass by failing to remove a floating pontoon from a dock:

"True it is that the Penarth company themselves (the plaintiffs) would not seem to have suffered any damage to speak of. They have not to pay any extra rent to the British Transport Commission. The dock is no use to them; they would not have made any money out of it. But, nevertheless, in a case of this kind, as I read the law, ........ the test of the measure of damages is not what the plaintiffs have lost, but what benefit the defendant obtained by having the use of the berth; ........."

11. The relevant law was most recently explained in England by Megaw L.J. in Swordheath Properties v. Tabet⁽⁵⁾ at p.288; Swordheath Properties v. Tabet ⁽⁶⁾ at p.242:

"        It appears to me to be clear, both as a matter of principle and of authority, that in a case of this sort the plaintiff, when he has established that the defendant has remained on as a trespasser in residential property, is entitled, without bringing evidence that he could or would have let the property to someone else in the absence of the trespassing defendant, to have as damages for the trespass the value of the property as it would fairly be calculated; and, in the absence of anything special in the particular case it would be the ordinary letting value of the property that would determine the amount of the damages."

If the plaintiff has suffered a greater loss he is entitled to prove it. Clifton Securities Ltd. v. Huntley & Others⁽⁷⁾; Lau Wing-keung v. Ng Ah-kiu and Another⁽⁸⁾. As Kennedy L.J. pointed out in Walker v. Murphy^{( 9)} at p.87 this whole approach departs "from the general and well-recognized rule that the measure of damages is the loss that the plaintiff has sustained, and any benefit which accrues to the defendant is not an element to be taken into consideration."

12. The lease by which the property was granted to the plaintiff contained a clause prohibiting him from subletting or parting with possession of the premises, other than to a government servant, without the written consent of the landlord "which consent shall not unreasonably be withheld".

13. Thus it would have teen open to the plaintiff, subject to such consent, to let the premises at the open market rent to a non government servant without such consent. For this reason, the present case is to be distinguished from the decision of the Full Court in La Salle Court Co-operative Building Society Ltd. v. H.A. Steward ⁽¹⁰⁾, in which mesne profits recoverable by the plaintiff society from a trespasser were limited by the terms of its own lease to the lesser amount which it could have charged another of its members.

14. So we are of the opinion that there is nothing special in this case which precludes the plaintiff from having his damages assessed on the basis of the normal letting value of the property and that Mr. Osborne's main submission is correct.

15. The appropriate evidence eras before the Master and is before us in the form of a valuation report made by Mr. Chan, who holds the qualification A.R.I.C.S., dated 19th September 1984. Allowing for changes over the relevant period the total rent and management charges notionally recoverable amount to HK$246,951.61 and HK$8,202.58 respectively. Adding the contractual arrears of HK$1,950.07, we arrive at an overall figure of HK$257,104.26. The appeal is allowed accordingly.

(1)   [1896] 1 Ch. 894

(2)    [1896] 2 Ch. 538

(3)    [1952] 2 Q.B. 246

(4)    [1963] 1 Lloyds Rep. 359

(5)    [1979] 1 W.L.R. 285

(6)    [1979] 1 All E.R. 240

(7)    [1948] 1 All E.R. 283

(8)    [1984] H.K.L.R. 241

(9)    [1915] 1 Ch. 71

(10)    [1966] H.K.L.R. 449

Representation:

Mr. Osborne for Attorney-General.

Mr. Ronald Tang (S.C. Mok & Co.) for Defendant.