SUM KAM WUN v. LEE SAI MUI and Others

1990, No.A7872

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The plaintiff is 77 years of age, although he said in his statement he was born in China in 1916. He had a wife, Madam Chan Chi Ha and they had no children. Initially, they lived in Hung Shui Kiu. In 1956, the plaintiff met Madam Lee Tai Mui, the eldest daughter of the 1st defendant, Madam Chan Fok Tai. The 1st defendant had since the commencement of this action died and is now represented by her second daughter, Madam Lee Sai Mui who is the 2nd defendant.

2. The plaintiff said that with the consent of his wife, Madam Chan, he married Madam Lee Tai Mui. They lived together in Hung Shui Kiu. The plaintiff and Madam Lee Tai Mui had several children. The whole family then moved firstly to Sha Tin and then to No.1 Ma Wan Back Street which was the place of the 1st defendant who was then described as the mother-in-law. According to the plaintiff, in about 1959, the 1st defendant gave him $300 odd and asked him to repair her house at No.34 Ma Wan Main Street. He said that the 1st defendant told him if he could repair the house, he could live there. So he set about repairing the house. The plaintiff was a carpenter. He did the worked himself and employed other workers. Part of the $300 was used to buy materials and part of it was used to pay the workers including himself. In those days, according to the plaintiff, an ordinary worker would get $20 to $30 a day but for skilled workers, it was as high as $100 a day. He said that he did not have to spend any money personally on House No.34. After the repair, he and his family lived on the ground floor while the 1st defendant lived on the 1st floor.

3. House No.28 stood on the land which is now under dispute. The plaintiff said that he later demolished the ruined and deserted hut at No.28. He then started to put up a stone house there. In his statement, which was adopted as his evidence, the plaintiff said the 1st defendant suggested that he could do that. But in his evidence in court, he said that he did not even ask the lady before he did. He just did it himself. He said that he paid for the building costs and he did the work himself, being a carpenter/mason himself. After the construction of the house, he and his family including Madam Lee Tai Mui, their daughters and the plaintiff's own mother lived there. His first wife, Madam Chan had gone to live and work elsewhere. In 1965, the plaintiff started to operate a restaurant at the same place, i.e. House No.28. About a year later, according to the plaintiff, Madam Lee Tai Mui left him and moved away. I do not propose to deal with the rights and wrongs of these two persons as partners to their "marriage". The documents showed that the plaintiff obtained a restaurant licence in 1969. It was a family business and members of the family assisted in the business. The 1st defendant also did some work in the restaurant. The business ceased in 1986. The plaintiff has remained at the place until now.

4. The plaintiff claims that he has, for more than 20 years, the exclusive undisturbed and uninterrupted occupation and possession of the land where House No.28 stands.

5. The plaintiff also said that over the years he had spent money in improving and repairing the house and the land and the following figures were mentioned : in 1969, $60,000 on decoration and extension; in 1974, $30,000 on an extension to the kitchen; in 1975, $50,000 on works to the kitchen; in 1976, $100,000 on the interior decoration of the restaurant; in 1980, $50,000 on the floor tiles. All these amounted to a total of $290,000.

6. The 1st defendant passed away in 1993 but she had made an affirmation in these proceedings before her death. This affirmation was admitted in evidence by way of a hearsay notice. The 2nd defendant represented her and also gave evidence in this trial. The case of the 1st defendant which presumably also includes the 2nd and 3rd defendant is this. She was born in 1900. She was married to a person called Mr Lee Cheuk in 1917. She therefore claimed to be known as Lee (or Li) Chan Si. I must say that strictly speaking this is correct - her husband was a Lee and she was a Chan, Si being a Chinese character meaning housewife. The 1st defendant's husband was a sailor but had disappeared and never returned home since World War II. She had two daughters, namely, Madam Lee Tai Mui (the plaintiff's second wife) and the 2nd defendant. She was the owner of No.1 Ma Wan Back Street and had lived there before. It was property given by her father-in-law, Mr Lee Wah. It was given to Madam Lee Tai Mui who had sold it some time ago. The 1st defendant had lived at House No.34 which was the ancestral home until her death.

7. With regard to the land at House No.28, it is accepted that it was originally registered in the name of Mr Lee Pui. Mr Lee Pui and the 1st defendant's father-in-law, Mr Lee Wah were described as brothers but I think in fact they were remote brothers or first cousins. The 1st defendant said that in 1918, Mr Lee Pui conveyed the land at No.28 to her as a wedding gift. The reason given was that the 1st defendant's husband, Mr Lee Cheuk was then a sailor and they did not feel safe to convey the property to him. The 1st defendant said that in 1962, her eldest daughter, Madam Lee Tai Mui and her own daughter (the daughter by the plaintiff) came to live with her at No.34. The plaintiff only came from time to time but did not live there. In 1965, Lee Tai Mui asked the 1st defendant to allot a portion of the land as a residence for her and her family including the plaintiff. The 1st defendant agreed and gave financial support to the plaintiff to build a house at No.28. It was an open area but had previously been used by the 1st defendant and her family for drying shrimps. There was a shed used for storage. I think it was not disputed that the plaintiff built a roof over the open area which was then extended to the shed to form a single structure. The 1st defendant also agreed to the plaintiff using it as a cooked food stall at the beginning and later as a tea house and a restaurant. The 1st defendant said that she supported the plaintiff financially.

8. I think it is only fair to say that it is not disputed by the plaintiff, when he gave evidence, that from time to time the 1st defendant as a "mother-in-law" had supported him, done work for him, cooked for him and on one or two occasions lent him money.

9. In 1981, there was a statutory declaration made by the 1st defendant saying that she was the Li Chan Si referred to in the 1918 assignment from Mr Lee Pui. There were also two other statutory declarations by two villagers. They were very similar or even identical. However, it is quite clear that there were at least two mistakes which are common to both documents. Both of the villagers said that they were 76 or 77 years of age. However, both said that they had known Mr Lee Pui for 50 years until Mr Lee Pui passed away about 50 years ago. That certainly cannot be right because if it were, then these two villagers must have been over 100 years of age. But the more important mistake was that these two villagers said that the 1st defendant was an aunt of Mr Lee Pui. This is clearly not correct. It was the other way round. Mr Lee Pui was the "uncle" of the 1st defendant.

10. At the time of the statutory declarations in 1981, the 1st defendant also executed a Power of Attorney in favour of the 3rd defendant, her nephew. In 1990, she purported to assign the property and the land at No.28 to the 2nd defendant and the 3rd defendant. The three defendants now want to evict the plaintiff and obtain vacant possession.

11. The plaintiff said that the 1st defendant was not the Li Chan Si who was the registered assignee of the 1918 Assignment. The 4th defendant, Mr Lee Kwok Shing and his family, according to the plaintiff, came to see him in 1966 and asked to see the 1st defendant's husband Mr Lee Cheuk. It was found out that the 4th defendant, Mr Lee Kwok Shing was in fact the grandson of Mr Lee Pui. The plaintiff said that the 1st defendant showed the 4th defendant, his brother and family the ancestral tablet of their mother, the real Li Chan Si. The plaintiff said that after he had moved in, he saw a paper on the wall in the house at No.28. He said that the name of Li Chan Si was written on that piece of paper. The implication of all these was that the 1st defendant could not have been Li Chan Si, the 1918 assignee, who must have died long time ago. The plaintiff said that upon the request of the 1st defendant, he made a wooden ancestral tablet for Li Chan Si and this was placed at House No.28. Again, the implication was that the 1st defendant was not that Li Chan Si because she would not otherwise have asked the plaintiff to make an ancestral tablet for herself while she was still alive.

12. The plaintiff said that the 4th defendant also brought him to see Li Chan Si's grave at Tso Wan. Unfortunately, the photographs produced by the plaintiff in court did not show that to be the grave or tombstone of Li Chan Si.

13. Another witness, PW2, Mr Lam Kui gave evidence on behalf of the plaintiff. He was a retired Legal Aid Assistant. He gave evidence to the effect that on 5th June 1990, he was instructed by his senior to interview the 1st defendant. He made a record of his interview and what the 1st defendant said to him. That was done on the day following the interview. Later, he made a written statement which was made in accordance with the record he made. According to him, the 1st defendant admitted to him that she was not the Li Chan Si, who was the wife of Mr Lee Pui. She told PW2 that Lee Pui was the first cousin of her father-in-law, Mr Lee Wah, and that she was instructed to be an attorney to look after the land. She also said that her father-in-law told her that she could use the land but could not sell it. And as a matter of fact, she had also made use of the land for drying shrimps. According to PW2, the 1st defendant said that she was asked in 1981 to put a name on certain documents relating to the land.

14. It is only fair to point out that the witness statement of PW2, which he now confirmed in court, was filed after the 1st defendant's death and so there is no way that the 1st defendant could make any comment on these allegations. However, it is also clear that the record which was made in June 1990 which was the basis of the witness statement was an exhibit in an affirmation which was filed before the 1st defendant passed away. But there was no affirmation by the 1st defendant to counter this affirmation by PW2. That is to say, the 1st defendant had the opportunity to comment on these allegations about her but she did not do anything. PW2 is of course a third party and has no interest in the case. I would therefore bear in mind this fact and also the fact that the 1st defendant is not here to defend herself.

15. Having heard the evidence and considered the documents before me, I do not believe that Mr Lee Pui would have conveyed the land at House No.28 to the 1st defendant as a wedding gift. Mr Lee Pui had his wife and children. Even if there was such a reason, he would have given the property to his brother, Mr Lee Wah, or his nephew, Mr Lee Cheuk. There was no reason, in my view, for Mr Lee Pui to convey the property to the 1st defendant, the wife of a remote nephew. I do not accept the explanation that Mr Lee Pui did so because Mr Lee Cheuk, the husband of the 1st defendant was a seaman and there was a risk that he might disappear and never return. This explanation is simply not acceptable. The two villagers clearly had hearsay evidence and they also got it wrong. I do not think I ought to attach any weight to their statutory declarations. There is also the evidence of the plaintiff that there was the ancestral tablet of Li Chan Si. Having considered all the evidence before me, I must say I am not satisfied that the 1st defendant was the Li Chan Si who was the assignee of the 1918 Assignment from Mr Lee Pui.

16. With regard to the 1st claim by the plaintiff, I do not think I should, in the present circumstances, make a declaration that the 1990 Assignment from the 1st defendant to the 2nd defendant and 3rd defendant is fraudulent or therefore null and void. Since this involves an allegation of fraud, the burden is clearly higher than the balance of probability. While I think she was more likely than not a different person than the assignee Li Chan Si in the 1918 Assignment, I do not think I ought to hold that she had fraudulently assigned the land to the 2nd defendant or 3rd defendant without having had an opportunity of hearing her. The 1st defendant had died and is not able now to counter this serious allegation.

17. I would however disagree with counsel for the defendants who submitted that the 1990 Assignment was still effective to pass whatever interest or title in the land in the 1st defendant to the 2nd and 3rd defendants. The 1st defendant purported to assign in the 1990 Assignment to the 2nd and 3rd defendants as Li Chan Si, the 1918 assignee and not in any other capacity such as a person having adverse possessory title in the land. The 1990 Assignment was intended to pass title as the 1918 Li Chan Si. Its recital referred to the interest and title of this Li Chan Si. If she is not that person, I simply cannot see how she could have passed any interest to the 2nd and 3rd defendants as a fall-back. The 2nd and 3rd defendants would be well advised therefore not to rely on this Assignment.

18. As I have found the 1st defendant had no intention to dispossess anyone, be it the 1st defendant and the real Li Chan Si or her estate, I do not think the plaintiff's claim for possessory title under paragraph 2 of the Statement of Claim can succeed.

19. As I said, if the 1st defendant is not the 1918 Li Chan Si, she was either a trespasser or occupier with the permission of the real owner. If PW2 is to be believed, the 1st defendant had admitted that she had been permitted to occupy the land as an attorney and she and her family did make use of the land. In the present case, I am not inclined to think that the 1st defendant was a trespasser. However, I do not make any specific finding because this was what PW2 said what he was told by the 1st defendant before her death.

20. But whatever the status of the 1st defendant, I do not believe that the plaintiff was a trespasser of the land, vis-a-vis, the 1st defendant. The 1st defendant had permitted, expressly and/or impliedly, the plaintiff to occupy and make use of the land. That was the understanding of the plaintiff. He was simply allowed to be there. He said that he did not ask but consent would have been forthcoming if he did. Furthermore, the 1st defendant was almost next door, at House No.34. She must be aware of what was going on and what was being done by the plaintiff who had lived with the 1st defendant at House No.34 before and he later moved to House No.28. So in the circumstances, there is clearly no intention whatsoever in the plaintiff to trespass on the land standing at House No.28. There is simply no intention to dispossess anyone, be it the 1st defendant or anybody else. He was then not even aware who the real owner was. I have to say his claim for adverse possessory title must fail.

21. However, I am satisfied that the plaintiff did do something on the land. He had demolished part of the previous hut, made improvement to it, put up or improved the structure there so that it would become a stone house. The 1st defendant's only evidence that she had made any contribution was in paragraph 9 of her affirmation. However, no detail was given by the 1st defendant as to when and how much she had financed the plaintiff in the improvement or repair of the structure at House No.28. Having heard the plaintiff, while I think he might have expended some money on the property, I do not believe that he had spent a total of $290,000 on the land over the years. I am not satisfied that he had the means, over the years, to spent $290,000. He had been living on the assistance of the 1st defendant. Although he had run a business and presumably had made some money, I do not accept that he could have spent that large amount of money over the years. However, I do accept that he did spend some money there, particularly during the years when the place was run as a restaurant. Furthermore, I also accept that he had spent labour and done some work in respect to the land. The question is whether the plaintiff has acquired an equity in the land by way of proprietary estoppel. As Snell on Equity says at page 573 :

"The equity is based on estoppel in that if a person is encouraged to act to his detriment by the representation or encouragement of another so that it would be unconscionable for the other to insist on his strict legal rights, the conditions to be satisfied are detriment, expectation or belief, encouragement and lack of a bar to the equity."

22. The evidence shows that the plaintiff had incurred labour and spent some money, although not $290,000 as he said, to put up a stone hut or to repair the hut there and/or to extend the existing structure there and/or to act on and improved and repaired the structure and the place there. That, in my view, was a detriment to him.

23. When he first entered on the land at No.28, he had the tacit, if not the expressed permission from the 1st defendant. He did the improvement to the land with the knowledge of the 1st defendant. I think it is clear that the plaintiff would have expected or at least believed that with what he had done onto the land, he would be allowed to stay on the land and make use of it as a residence or as a business. He had that expectation or belief also from the fact that he had been allowed to stay, at one stage, on the ground floor of House No.34 while the 1st defendant stayed on the 1st floor as a result of his working on the repairs to that house at the request of the 1st defendant. There was, of course, no active encouragement by the 1st defendant to the plaintiff to do the repairs or carry out the improvement onto the land. However, these were carried out over the years, the 1st defendant had stood silently by while these were going on from time to time. I am satisfied that there was tacit encouragement by the 1st defendant to the plaintiff.

24. Finally, in the circumstances of this case, I do not think there is any bar to the plaintiff's equity. So in the circumstances I hold and declare that the plaintiff has an equity in the land by way of proprietary estoppel but not any title as he claimed in prayer No.3 of his Statement of Claim. It is not clear from the evidence the extent of the plaintiff's equity. There is simply no evidence to this effect. As Snell on Equity says at page 577 : "In many cases because of this equity, a claimant's claim for possession has to be dismissed." This might, in my view, be the case here. The parties may, of course, assess whatever value of the stone hut or structure in relation to the whole piece of land. That is a matter which is not canvassed before me and I do not propose to make any particular order on this issue.

25. So the result is that I would declare that the plaintiff has an equity by way of proprietary estoppel in the land. The defendants' claim for possession against the plaintiff is dismissed. With regard to the 4th defendant, I have also mentioned that I do not find any intention on the part of the plaintiff to dispossess the real owner, if there is one, that is Madam Li Chan Si. Therefore, I do not think the plaintiff's claim against the 4th defendant can succeed. I would make an order nisi that there would be no order for costs on the claim and the counterclaim.

(Patrick Chan)

Judge of the High Court