AEGI CAPITAL LTD v. WAI SIK YIN FELICIA

HCMP 851/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 851 OF 2009

____________

____________

______________

J U D G M E N T

______________

1.  The Plaintiff is appealing against the order of the Master in directing the Originating Summons for summary possession of land under O. 113, Rules of the High Court (Cap. 4A) be tried as if begun by Writ.

2.  Mr Wong, for the Plaintiff, submitted that in the event the Court do allow the appeal, an order for possession may also be entered summarily if it is satisfied that no further evidence is required.

Introduction

3.  The Plaintiff is a BVI company holding Flat 17/F, Borrett Mansions, 9B Bowen Road, Hong Kong (“Property”).  The Defendant is currently the occupier of the Property.

4.  The Property was acquired by Dr and Mrs Timothy Kong in 1967.

5.  In 1982, the Defendant was married to Dr Kong’s son Edward.  In 1992, the Defendant, Edward and their children moved into the Property as their matrimonial home. 

6.  In 1993, the Plaintiff was formed and the Property was transferred to the Plaintiff.

7.  Until 2007, the Plaintiff was constituted by only 1 bearer share.  Under the relevant law, the bearer of the share is the owner of the company.  The share was at some stage held by Edward, and later by a solicitor.

8.  In 2006, the bearer share was converted into a registered share, and Dr Kong’s daughter, Grace, became the sole registered shareholder.  She attested that she is holding the share as a trustee for Dr Kong.

9.  In 2003, the Defendant and Edward were separated, and Edward moved out of the Property.

10.  In 2006, divorce proceedings were commenced and transferred to the High Court (HCMC 1/2006).

11.  On 29 February 2008, Saunders J handed down the judgment on financial arrangement, and paras.133 to 137 dealt with the Property:

“The wife’s claim to B Mansions

133. It is convenient now also to deal with the wife’s position in respect of B Mansions. This property has been the matrimonial home since September 1992, when the wife returned to Hong Kong from New York.

134. B Mansions is owned by A Ltd, a BVI company owned by the husband’s father. The wife’s position is that she should be able to continue living in that property. I accept that that property has been the home that the children have known most recently, but I am satisfied that that matter is no longer relevant. The daughter seeks to return to the USA to work. The son is in the USA in education and will soon be at full legal maturity. Desirable through it may be for them to be able to return to the home they knew most recently as children, their situation is no longer relevant.

135. The wife was obliged to acknowledge that the husband’s father wished her to vacated the property now that the marriage is at an end. Unlikely though it may seem, now that they are in their 90’s, the husband, says that his parents may wish to live in the property should they return to live in Hong Kong. The husband says this in an attempt to justify his father’s attitude to the occupation of B Mansions by the wife. There is no evidence from the parents that they hold any wish at all to return to Hong Kong to live.

136. But no justification is required to deprive the husband’s parents of the right to use a property they own as they wish. In any event, there is simply no jurisdiction in the court to make any order which might permit the wife to remain in the property. It is right that the husband has been paying the maintenance and the outgoings in respect of the property while the family occupied it, but that does not provide any basis upon which it might be asserted that in reality the property belongs to the husband. It belongs to the husband’s parents and I have no option but to respect the husband’s father’s wishes in respect of the property.

137.  The wife must accept that she must vacate B Mansions. I am satisfied that, whatever the outcome of the case might be, she will have more than sufficient funds to be able to acquire an appropriately equivalent residential property for herself, and still have more than adequate funds to maintain her standard of living.”

12.  The Defendant appealed against the judgment of Saunders J, but the appeal did not touch on the Property.

Legal principles

13.  O. 113, r. 1, RHC provides that:

“Where a person claims possession of land which he alleges is occupied solely by a person or persons (not being a tenant or tenants holding over after the termination of the tenancy) who entered into or remained in occupation without his licence or consent or that of any predecessor in title of his, the proceedings may be brought by originating summons in accordance with the provisions of this Order.”

14.  The circumstances in which O.113, RHC can be used are restricted to cases where the land is occupied by persons who have entered into or remain in possession without the license or consent of the person claiming possession.

15.  The Court may deal with the matter summarily on affidavit, or if it appears there are issues to be tried the Court can make appropriate order under O. 28, r. 8, RHC for the continuation of the proceedings as if begun by writ.

16.  If the issue (on facts or law) is seen on analysis to be capable of determination in favour of the plaintiff only, then it is proper for the Court to exercise the power conferred on it by O.113 and determine the matter however vigorous the contest may have been (see Vipac Engineers & Scientists Ltd v Karpovich [1989] 2 HKC 538; Matilda & War Memorial Hospital v Henderson [1997] 1 HKC 509).

Plaintiff’s case

17.  Mr Wong submitted that:

(1)    The Defendant was found to have no proprietary interest in the Property in the family proceedings;

(2)    The Defendant was a bare licensee and the licence was revoked by the Plaintiff after the termination of the marriage;

(3)    The Defendant is estopped from raising any claim of gift and/or proprietary estoppel in the Property herein as she did not raise any such claims in the family proceedings.

Defendant’s case

18.  Ms Cheung, for the Defendant, submitted that:

(1)    The Property was excluded from the Defendant’s claim of the family assets in the family proceedings;

(2)    There is no final finding of fact on the Property in the family proceedings for any issue estoppel to arise;

(3)    The Property was a gift to either Edward or Edward and her;

(4)    Proprietary estoppel arises from the Defendant’s expenditures on the Property upon the representation by Dr Kong and/or Edward that the Property was gifted to Edward and/or her;

(5)    The Defendant was granted a perpetual licence in March 2008 after the divorce proceedings as Dr Kong had promised her that she could remain in the Property forever and there had been no direct evidence from Dr Kong himself rebutting that.

Discussion

19.  Ms Cheung submitted before White and White [2001] AC 596 was held to apply in Hong Kong, it was open to the parties to define what properties go before the judge in ancillary relief.  For tactical reasons not to complicate the matter, the Defendant had excluded the Property.

20.  With respect, Saunders J held that following White v White,the concept of reasonable requirements of the wife did not properly reflect the law, and the Court has to determine the pool of family properties from the husband’s assets and the wife’s assets in order to achieve a fair distribution based on starting point of equal distribution.

21.  It is evident from the dicta cited, Saunders J found that:

(1) The Property has been the matrimonial home since 1992 but that consideration is no longer relevant as the children have left home to study and/or live in the USA;

(2)    The Property is owned by the Plaintiff, a BVI company owned by the husband’s father;

(3)    The Defendant’s position is that she should be able to continue living in the Property;

(4)    The Defendant is obliged to acknowledge that the husband’s father wished her to vacate the Property now that the marriage is at an end;

(5)    No justification is required to deprive the husband’s parents of the right to use a property they own as they wish;

(6)    There is simply no jurisdiction in the court to make any order which might permit the Defendant to remain in the Property;

(7)    That the husband has been paying the maintenance and outgoings in respect of the Property while the family occupied does not provide any basis upon which it might be asserted that in reality the Property belonged to the husband;

(8)    The Property belongs to the husband’s parents;

(9)    The Defendant must accept that she must vacate the Property;

(10)  The Defendant will have more than sufficient funds to be able to acquire an appropriately equivalent residential property for herself.

22.  During cross-examination, the Defendant was asked whether she believed her husband was the true or beneficial owner of the Property, she said she believed the true owner of the Property was Edward’s parents.  When asked whether it was not surprising that the husband’s parents might say the arrangement where she had lived rent-free in their accommodation during her marriage would come to an end and she said yes.

23.  Given those answers by the Defendant, it is not hardly surprising that Saunders J came to the conclusion on the Property as he did.  The Defendant should have appealed against Saunders J’s findings on the Property if the matter were outside His Lordship’s purview.

24.  In Tebbutt v Haynes & anor [1981] 2 All ER 238, the husband and wife lived at the husband’s mother’s house.  Later it was arranged that house should be sold and the husband should carry out certain alterations before the sale to increase the price, and a larger house should be purchased out of the proceeds where they could all live.  The new house was purchased in the husband’s name to facilitate the grant of a mortgage.  The husbands and wife only stayed in the new house for a short while.  The husband’s mother and aunt continued to reside there.  Later the husband disappeared and the wife obtained a divorce.  The wife applied for a property transfer order for the new house against the husband under s. 24(1) of the Matrimonial causes Act 1973.  The Registrar granted leave for the mother to intervene but ordered the husband interest in the house be transferred to the wife.  The husband’s mother appealed, and Hollings J found that there was an oral agreement between the mother and the husband that legal title to the house should be vested in the husband and the mother would pay the purchase price and mortgage instalment and she would be entitled to an absolute interest in it when the mortgage was paid off and the wife had no claim through the husband to the house except to the extent the husband had contributed to the purchase and the alterations to the old house. 

25.  The mother then issued a writ in the Chancery Division against the husband and wife claiming an interest in the house.  The wife counterclaimed a declaration that she was entitled to a 90% (or such) interest in the house.  The master ordered a trial of a preliminary issue that, by reason of the findings of Hollings J, the wife was estopped from asserting that she was entitled to an equitable interest in the house.  Vinelott J held that Hollings J’s findings did not give rise to an estoppel against the wife.  On appeal, the English Court of Appeal allowed the appeal and held that:

“(1) On an application by a spouse under s.24 of the 1973 Act for a transfer of property order the court had jurisdiction to determine not only the rights and interests of the husband and wife in the property but also the rights and interests of third parties who had intervened in the application to claim an interest in the house, for it was fundamental to the jurisdiction under s 24 that the judge should know over what property he was entitled to exercise his discretion, and, if there was a dispute between a respondent spouse and a third party as to the ownership of the property, that dispute had to be resolved before the judge could make an effective order under s.24.

(2)     Since the issue of the rights and interest of the husband and wife and the mother in the house had been fully and fairly inquired into and dealt with by Hollings J, who in effect had found that the husband and wife had no claim to an equitable interest in the house (subject only on any charge the wife might have in right of the husband in respect of his contributions towards the purchase of the house), it followed that that findings was conclusive as between the wife and the mother and that the wife was estopped from reopening in the Chancery action the issue of her and the mother’s interests in the house, unless there were circumstances which made it fair and just that the issue should be reopened.”

26.  Ms Cheung submitted that the Plaintiff never intervened in the family proceedings, and no res judicata or issue estoppel could have arisen (whether in the wider sense that the matter could have been raised before in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581).

27.  Whether or not the Plaintiff had intervened in the family proceedings, the issue of the right and/or occupation of the Property was squarely before Saunders J.  First, under White v White, His Lordship would have to find out the extent of the assets of the husband and the wife in order to reach a fair division of property between them.  Secondly, he dealt with the issue of matrimonial home and the claim of the Defendant to remain in the Property after the divorce.  Thirdly, he found the Property belonged to the parents and rejected the claim that in reality it belonged to the husband because he had been paying the maintenance and outgoings in respect of the Property while the family occupied it.  The Defendant ought to have raised any claim of rights in the Property before Saunders J.  The occasion of any intervention by the Plaintiff simply did not arise given that the Plaintiff did not assert any proprietary claim over the Property.  If the Defendant had thought Saunders J was dealing with any matter which was not in issue, they should have appealed against it.

28.  On proprietary estoppel, a statement of the elements of the doctrine was given by Oliver J in Taylor Fashions Ltd v Liverpool Victoria Trustee Co Ltd  [1982] QB 133 that:

“If A, under an expectation created or encouraged by B that A shall have a certain interest in land thereafter, on the faith of such expectation and with the knowledge of B and without objection from him, acts to his detriment in connection with such land, a Court of Equity will compel B to give effect to such expectation.”

29.  According to the Defendant, the expenditures on the Property were made before conclusion of the divorce proceedings.  Insofar as they were made by the husband, any claim of equity had been rejected by Saunders J, and insofar as they were made by the Defendant, no such claim was asserted before Saunders J.

30.  Whatever tactical consideration the Defendant might have been labouring under, the fact that she did not assert any proprietary claim and/or estoppel in the family proceedings made it unfair for her to re-open the case now as Saunders J must have taken into account the exclusion of the Property as the family assets in reaching such financial arrangement that would enable the Defendant to have sufficient funds for acquisition of an appropriately equivalent residential property for herself.

31.  On the perpetual licence, the Defendant’s affidavit stated that in late March 2008, she had a long distance call with Dr Kong, and Dr Kong denied wanting her to leave the Property, and said he did not own nor have any authority to do anything in relation to and had no say over the Property.  He said the matter could be discussed over time and asked her to make proposals through him and he would see how things go and he denied ever instructing solicitors to write any letter to her.

32.  Grace Kong said she was the person in-charge of the Property, and her father was a 90 years old gentleman and one of the last thing he would wish to happen was direct confrontation with the Defendant.

33.  The Defendant said neither Dr Kong nor Edward had filed any affidavit and Grace might be acting without authority. 

34.  The starting point is that the licence has been revoked by the legal owner, and it is up to the Defendant to demonstrate that was not the wish of the beneficial owner.

35.  From the Defendant’s own evidence, it is clear that Dr Kong was polite and euphemistic in stating the rider that he did not own nor have any say over the Property.  I fail to see how someone could be so circumspect and yet be held to be granting a perpetual licence.

Conclusion

36.  In the event, there is no need for a trial on oral evidence as it is simply inescapable that the Defendant’s right to remain in the Property has been terminated. 

37.  Hence, the appeal is allowed and an order for possession is entered.

Costs

38.  I make the order nisi that the Defendant do pay the costs of the proceedings (including the appeal) to the Plaintiff.