Sham Oi Yun and Others v. Ma Ching Wah

DCCJ 2047/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2047 OF 2014

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DECISION

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Application

1.This is the hearing of the 1^st named plaintiff (“P1”)’s application by summons dated 6 January 2015 for leave to appeal to the Court of Appeal against the Order I made on 24 December 2014.

2.On 24 December 2014, I ordered, among other things, that:-

(1) the Plaintiff’s application for summary judgment against the Defendant (D) be dismissed; and

(2) costs of such application be in the cause (by way of costs order nisi).

Background

3.The relevant background facts have been succinctly summarized by me at paragraphs 4 to 20 of my Decision dated 24 December 2014 (“the Decision”).  I will not repeat the same herein.

4.The plaintiffs (P1 to P9) represent 10% share of the Land.  P1 asked for summary judgment against D for (i) recovery of possession of the Land; (ii) menses profit.

Legal principal

5.Under section 63A(2) of the District Court Ordinance, Cap 336, leave to appeal shall not be granted unless the intended appeal has a reasonable prospect of success, or the matter in the interests of justice ought to be heard by the appellate court. (see: Wynn Resorts (Macau) SA v Mong Henry, HCA 192/2009, judgment of Chu J (as she then was) dated 10 August 2009).

6.For Order 14 appeal, the Court of Appeal will interfere when the reasons of the court below disclose error of law or misapprehension of material facts, or its exercise of discretion is plainly wrong.  (Hong Kong Civil Procedures 2015, Volume l, para 14/4/48)

Proposed Grounds of Appeal

7.P1 puts forward two main arguments in her Skeleton Submissions, namely:-

(1) There are no triable issues on the evidence before the court (“1^st Main Argument”); and

(2) The court erred by holding that the other co-owners of the Land can grant a tenancy of the Land to the defendant and oust her from enjoying the land (2^nd Main Argument).

8.On 19 March 2015, Counsel for P1 recapped the two main arguments for this proposed grounds of appeal as follows:-

(1) In 1^st main argument, P1 essentially says that D’s purported defence is inherently defective by failing to produce evidence as necessary to show that either Sham Man Kwong (SKL) had the personal capacity to grant any tenancy of the Land to D or had authority from any other co-owners to do so on their behalf.

(2) The 2^nd main argument raises a point of law concerning whether the creation of a subsequent tenancy of the Land with D by some co-owner(s) thereof (being tenant(s)-in-common) (assuming a triable issue can be raised but which is denied) can preclude another co-owner (being another tenant-in-common) from recovering possession of the Land which D is obliged to deliver up pursuant to an earlier tenancy entered into between such latter co-owner and D.  P 1 submits that the answer is “No”.

1^st main argument

9.P1 submits that if D cannot show any triable issue that SKL has any personal capacity to grant any tenancy to him or otherwise has authority coming from any other co-owners of the Land, the purported defence is bound to fail and summary judgment should be granted.  Rather and be exact, P1's case is that D has failed to produce the necessary evidence which the law would require him to produce before he can establish a viable defence.

10.In gist, D’s purported defence is that either SKL in his personal capacity granted a tenancy of the Land to him (“the first limb”), or SKL as agent on behalf of the co-owners of the Land granted a tenancy to him (“the second limb”).

The first limb

11.In the Decision at paras 30 to 32 that, I said:-

“30. In 2014-2017 Tenancy Agreement, SKL claimed himself as the landlord and entered the lease in his personal capacity without stating that he was acting on behalf of other co-owners.

31. From the land search record, SKL is not one of the registered owners or a beneficial co-owners in the Land.

32. …  However, by looking at the said Letters of Administration, one cannot tell who is the beneficiary of the estate of LS, deceased or to what extent Leung Ka Li Gordon has administered such estate either.  There is no evidence before the court, apart from the defendant’s assertion, that SKL is one of the legal and/or beneficial co-owners of the Land.  Even so, the defendant could have told but did not tell the court how he had come to such understanding.”

12.At para 37, I came to conclude that there is no prima facie evidence that SKL has any legal title in the land. 

The second limb

13.As for the second limb, P1 further submits that :-

(i) It is trite law that if B is to enter into a contract on A’s behalf with C that would bind A, fundamentally speaking, there must be a representation sourced from A (principal) indicating to C (third party) that B (agent) has its authority to enter into the contract.  Yet, there is totally absent such evidence in this case.

(ii) Given the above proper perspective, it cannot be emphasized enough that there is clearly no evidence of any such representation sourced from any one of the co-owners of the Land (as recognized by the law) indicating to D that SKL had its authority to grant a tenancy of the Land to him.

(iii) There is even no evidence coming from D to inform the Court which ‘co-owner(s)’ had allegedly authorized SKL.

(iv) According to Order 14 rr 2(2) and 4(2) of the Rules of District Court, D is required to state the source and grounds of his statement of information or belief.  Without properly identifying the source of his information or belief in this case, the defendant’s such bare assertion is inadmissible evidence unless the court otherwise directs.  But no such direction has ever been made in this case.

(v) In respect of such bare assertion, the phrase used by D in his affirmation – ‘I was given to understand that’ simply cannot inform the court of the defendant’s source of information or belief.

14.At paras 39 to 40 of the Decision, I found there is a triable issue and dismissed the Plaintiffs application.

15.Prior to hear the Order 14 application, D’s counsel sought leave to adduce SKL’s father (Leung Ka Li Gorden)’s affirmation to support his defence. But due to some reasons, D could not produce SKL’s father affirmation before the hearing.  Hence, D’s Counsel asked for adjournment but was objected by P1. Eventually, I refused D’s application (paras 4 to 6 of the Decision).

16.I maintain my view that whether SKL has authority to enter the tenancy on behalf of other co-owner(s) is a matter of facts which should be decided by the trial judge.  I should not embark a mini trial on the affidavit.

17.Regarding to Order 14 rr(2)(2) and 4(2) of the Rules of District Court, I do not agree that D’s belief is a bare assertion.  D’s affirmation clearly indicate that D’s understanding is from the following facts:-

(a) D has all along lived in Lamma Island;

(b) The Land is situated in a village of Lamma Island;

(c) D’s previous successful dealing with P1’s father who was a village elder (2008-2014 tenancy  agreement);

(d) SKL is also a village elder; and

(e) SKL is a grandson of one of the co-owners of the Land.

18.It is well known that a village elder is well-respected by villagers and may have special influence in dealing with land.  D, being a resident in Lamma Island for many years, there is no doubt he is aware of this feature.  P1’s father, a village elder and holding 10% of the Land, entered the 2008-2014 tenancy agreement with D in his own name alone. At that time D was given to understand that P1’s father was, in fact, acting on behalf of other co-owners to enter the tenancy agreement with him, no proof of authorization had ever been produced to D.  However, throughout the whole 6 years tenancy period, D enjoyed the exclusive use of the Land, none of the other co-owners had interfered his rights in the Land.

19.Taking all the above facts together, it is clear that D’s understanding is not purely moonshine or a speculation.  D’s belief is based on his past experience. SKL’s background is very similar to P1’s father. While considering this case, I cannot totally neglect the background of D’s experience and belief. I do not accept that the phase “was given to understand” is a bare assertion and inadmissible under Order 14, Rules of the District Court.

2^nd main argument

20.It is no doubt that the Plaintiffs, holding 10% of the Land, do not give authority to SKL to enter the 2014-2017 tenancy agreement on behalf of them.

21.It is not in dispute that even all other co-owners had authorized SKL to enter the 2014-2017 tenancy agreement with D, D still cannot enjoy the Land exclusively as 2014-2017 tenancy agreement, in law, is not a real tenancy to D.  But it can be a lease from other co-owners.

22.The main issue left in the 2^nd argument is whether Ps, being one of the co-owners of the Land, can oust the other co-owners’ rights in the Land by asking for vacant possession from D.

23.At para 15 of the Decision, I adopted the legal principle stated in Chin Lan Hong & others v Chung Poh Choo and others (CACV 98/2004).

24.P1’s Counsel submits that the Chin Lan Hong case is materially distinguishable from P1’s case.  His submissions are as below:-

(i) In that case, D1 (a daughter) was allowed to occupy a property non-exclusively by his father (who is the beneficial owner thereof).  After her father passed away, the court found one of the tenant-in-common has the right to grant a license to D1 for her to continue to occupy the property on non-exclusive basis.

(ii) However, in P1’s case:

(1) D was let into possession of the Land by Shum Man Kwong, deceased (P1’s father) in the first place by virtue of the tenancy agreement dated 1 May 2008.

(2) In purportedly acting on behalf of the other co-owners (as D sought to argue), SKL granted a tenancy of the Land to D, ie giving the exclusive possession thereof to D.

(iii) In the premises, it is submitted that although paragraph 32 of CA’s judgment in Chin Lan Hong states that a tenant-in-common is entitled to deal with his own undivided share as he likes such as he may lease it to a stranger has he liked without the concurrence of the tenant-in-common. However, such proposition is read subject to a gloss provided in paragraph 34 of the same judgment which provides that:-

“34. As succinctly explained in the U-Needa case, a lease by a tenant in common of his interest in the land operates differently: the lessee of that interest has to share possession with the other co-owners which could lead to practical inconveniences…”

(iv) Viewing thus, even assuming SKL had authorization from the other co-owners to grant a tenancy to D (purely for the sake of argument but not the otherwise), such purported tenancy would oust the Plainfiffs (being the other co-owner of the Land) from enjoying or otherwise exercising her right of possession to the Land.

(v) Further, D would also be encouraged or allowed to continue to act in breach of the tenancy agreement entered into with P1’s father, whose estate is now being represented by P1.

25.However, I noted that at para 34 of the Chin Lan Hong case, the court also stated:-

In the U-Needa case at paragraph 26, Paterson J cited the following passage from Re Marcellos (1940) 41 SR (NSW) 154, 155:-

“The rarity of a lease by one of two tenants in common is explained by the inconvenience to which it may lead, as illustrated in Woodfall on Landlord & Tenant, 17^th edn 15. But if one tenant in common is willing to submit to or to create this inconvenience and can find a lessee, there appears to me to be no objection in law to his granting a lease.”

26.The well established  legal principle is:-

“A tenant in common is entitled to deal, in whatever way he desires, with his own undivided share: he may lease it or dispose of his right to possession to a stranger as he likes without the concurrence of the other tenants in common. See Incorporated Owners of Chungking Mansion v Shamdasani [1991] 2 HKC 342 at 352 G-H.”

27.In the present case, if one or more co-owners of the Land authorized SKL to represent him/them to assign or deal with his/their undivided share in whatever way SKL desires, there is nothing improper about the 2014-2017 tenancy agreement created by SKL in favour of D.  This agreement definitely will not bind the Plaintiffs, and also cannot oust the Plaintiffs’ rights in the Land.

28.D cannot enjoy the exclusive use of the land, but his rights in the land cannot be denied by the Plaintiffs too.  To make it simple, D cannot take out an injunction to prohibit the Plaintiffs to enter the Land whereas P cannot ask for vacant possession from D, as the vacant possession, if given, will also oust D’s rights in the Land.

29.By the reasons of the above, the Plaintiffs’ application for vacant possession must fail provided that SKL in fact represented one or more of the co-owners.

New Argument

30.During the hearing, P1 raised a new legal argument (the “New Argument”) which had never been raised at the hearing of Order 14 and was neither disclosed in P1’s Skeleton for leave to appeal nor supported by any authority in P1’s List of Authorities.

31.The New Argument is as follows:-

(1) The 2008-2014 tenancy agreement expired on 30 April 2014.

(2) Under the 2008-2014 Tenancy Agreement, D was contractually bound to deliver vacant possession of the Land to Ps upon expiry of the tenancy on 30 April 2014.

(3) The P1’s cause of action is based on breach of the said tenancy agreement.

(4) Therefore, notwithstanding the assumption that D now holds a valid lease from other co-owners of the Land to use and occupy the Land, D must first perform his end of the bargain and deliver vacant possession under the 2008-2014 tenancy agreement.

32.In support of P1's argument, P1 cites:-

(i) In Incorporated Owners of Chungking Mansion v Shamdasani [1991] 2 HKC 342, Jerome Chan DHCJ (as his lordship then was) at p 352G to 353A said:

“… Firstly, one essential feature of a tenancy in common is that apart from the unity of possession, the interest of each is separate and distinct. It is generally open to a tenant in common to deal in whatever way he desires with his own undivided share. He can lease his share or dispose of his right to possession to a stranger as he likes. ‘And if tenants in common all joined in one lease, it operated as a lease by each of his respective shares and a confirmation by each as to the shares of the others’ (see Woodfall on Landlord & Tenant Vol 1 p 58, para 1-0134). Likewise, each tenant in common is entitled to enforce his interest in the land on his own without joining the other co-tenants. Thus, a tenant in common, being entitled to possession of the entirety of the land, can maintain an action for trespass on his own against a trespasser. A tenant in common is entitled likewise to enforce his legal rights against another co-tenant without joining all other co-tenants. He is entitled to sue on his own one of several co-tenants who had ousted him from the land…” (my emphasis supplied)

(ii) In that premise, when the Plaintiffs seek to enforce the obligation as owed by D to their predecessor, viz P1’s father, they are only enforcing D’s obligation made under the earlier lease granted to D in respect of the undivided share of SMK, which interest remains separate and distinct from those of the other tenants-in-common.  If the Plaintiffs were not allowed to enforce D’s obligation to deliver up possession of the Land upon the expiry of such earlier lease, they would be left with no remedy against D for rectifying his breach, which is continuing.  This cannot be right in law.

(iii) Looking into the current legal situation from another perspective, D did not dispute at the Order 14 hearing that Ps are not privy to the subsequent tenancy allegedly granted to him through SKL.  Hence, the alleged subsequent tenancy purported made on behalf of the other co-owner(s) would not bind the Plaintiffs.  In other words, the alleged subsequent tenancy cannot extinguish the aforesaid subsisting obligation of D under the earlier lease granted to him by P1’s father.

(iv) P1 submitted that not only 2^nd main argument is sound in legal principles and consistent with CA’s decision in Chin Lan Hong, ordering D to deliver up possession also accords with justice.  Both the law and equity would recognize and afford the innocent party with appropriate legal remedy against the defaulting party for the latter’s breach of contract.  This is just an elementary principle of contract and justice.  Otherwise, the court would be encouraging or otherwise allowing D (as the defaulting party) to continue to act in breach of the contract against the innocent party’s interest.

(v) On the other hand, if D is ordered to deliver up vacant possession of the Land, this would equally be consistent with the principle of tenancy-in-common of the Land in its entirety.  In principle and if D is prepared to bear with the practical inconvenience in sharing the de facto possession of the Land with the Plaintiffs, D can subsequently ‘re-enter’ into the Land in accordance to the law, but D has to deliver up vacant possession of the Land to the Plaintiffs first.  Otherwise, the law would effectively be encouraging tenants holding over to  resist  from delivering up possession to their landlord (being one co-owner) despite the expiry of the original tenancy hoping that he or she might somehow be able to locate another co-owner, if not the agent.

33.I do not see how Chungking Mansion case which involves a completely different factual matrix that can alter my view.

34.It is not disputed that the Plaintiffs are entitled to sue on their own as one of several co-tenants who had ousted the Plaintiffs’ rights from the Land.  But the present case is, the Plaintiffs’ rights over the Land have never been ousted by D.  No injunction action has ever been taken out by D against the Plaintiffs’ right.  The Plaintiffs are free to enter and enjoy the Land in accordance to their 10% undivided shares, as long as D submits to all inconvenience. D can still use the Land, of course, not exclusively.  The same rationale applies to the Plaintiffs, the Plaintiffs are not entitled to enjoy the Land exclusively. If vacant possession is granted to the Plaintiffs, the other co-owners’ rights would be ousted too.

35.Both counsels for P1 and D agreed that there is no leading case in Hong Kong directly relating to the issue of the New Argument.

36.In the present case, D accepts that he was in wrongful occupation:-

(1) from the expiry of the 2008 Tenancy Agreement, ie 1 May 2014;

(2) to the commencement of the new tenancy with SKL, ie 1 July 2014;

there is a total of 2 months.

37.D, from the very beginning admits that D is liable to pay menses profits in respect of the 2 invoices of wrongful occupation.

38.The writ was taken out in October 2014. 2014-2017 tenancy agreement (if true) had already taken effect since 1 July 2014

39.Assuming that D now holds a valid lease from other co-owners of the Property to use and occupy the Land, an order for specific performance to deliver up vacant possession would serve impracticable:-

(1) If the court made such an order, D would be required to remove his belongings and step off the Land.

(2) D can then immediately step back onto the Land and retake possession on the strength of the 2014-2017 tenancy agreement with SKL.

40.This is absurd for such a court order in the present circumstances.

41.In fact, it is a straight forward case. The only triable issue is whether SKL had been authorized by other co-owners to enter the tenancy agreement with D. If D cannot produce any evidence at the trial, his defence must fail.

42.I would like to say that unless with the leave from court, parties are not entitled to rely on any ground not specified in the notice of appeal or the respondent's notice. There is also a general rule that a party cannot take on appeal a point which he did not take in the court below (The Tasmaniar (1890)15 APP Case 223 at 225)

43.In conclusion, I am not satisfied that P1’s intended appeal has a reasonable prospect of success.  Neither am I satisfied that there are other reasons for allowing an appeal to be heard.

44.In the circumstances, P1’s application for leave to appeal be refused.

45.I make an order nisi that costs of this application be to the defendant, to be taxed if not agreed, with certificate for Counsel.

Mr Simon Ho, instructed by David YY Fung & Co, for the 1^st-named plaintiff

Mr Albert KK Cheung, instructed by KC Ho & Fong, for the defendant