CHAN SIU CHEUNG HENRY AND OTHERS v. CHEUNG WING KEUNG PETER

DCCJ 1500/2016

[2022] HKDC 325

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1500 OF 2016

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JUDGMENT

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A. INTRODUCTION

1.  The plaintiffs are the owners of the building located at No 51 Carnarvon Road, Tsimshatsui (“the Building”).

2.  There is a scavenging lane between the Building and the adjoining building at No 49 Carnarvon Road (“the Lane”). The defendant operates a fruit stall at the Lane facing Carnarvon Road.

3.  This is essentially a landlord and tenant dispute, although the defendant denies there was any tenancy between the parties.

B. THE PLAINTIFFS’ CASE

4.  The plaintiffs inherited the Building from their late father, “Chan Senior”. In the past, the Chan family resided at the top floor of the Building and Chan Senior rented out the rest of the Building for rental income.

5.  According to the Re-Re-Re-Amended Statement of Claim (“the SOC”), one of the premises that have been rented out (which is the subject matter of this action) is called “the said premises”. It comprises “part of the external wall (‘the External Wall’) of the Building facing the scavenging lane between the Building and the building on No 49 Carnarvon Road and part of the scavenging lane, which is a Government land, as coloured green hatched black on the plan (not to scale) annexed [to the SOC]”. The defendant had been the tenant of the said premises since about January 2010.

6.  Chan Senior passed away in June 2014. Administration of his estate was granted to one of his sons, the third-named plaintiffs herein (“Shiu Leung”). By a deed of assent dated 19 December 2014, the plaintiffs became the joint owners of the Building.

7.  The plaintiffs instructed a firm of solicitors, Messrs Kitty So & Tong (“KST”), to handle the tenancy matters for them. On 24 December 2014, KST wrote to inform the defendant that they had been instructed to collect rent from him. Since January 2015, the defendant had been paying rent to the plaintiffs through KST.

8.  By KST’s letter dated 8 January 2016, the plaintiffs terminated the tenancy and demanded the defendant to vacate the said premises by 29 February 2016. However, the defendant has refused to leave.

9.  By this action, the plaintiffs seek: (a) vacant possession of the said premises; (b) an injunction to oblige the defendant to demolish his stall and the associated canopy, failing which the plaintiffs be empowered to remove them; and (c) mesne profits and/or damages for trespass and nuisance.

C. THE DEFENDANT’S CASE

10.  In about 1976, the defendant began assisting his uncle (陳松弟) at the fruit stall at the Lane.

11.  After the passing of his uncle, the defendant took over the business and was issued a fixed-pitch hawker licence by the Government for the operation of the fruit stall (“the Licence”).

12.  The defendant’s primary contention is that he is entitled to operate his fruit stall by virtue of the Licence and he denies any tenancy between him and Chan Senior or the plaintiffs. Through the industry of his counsel, he has mounted a number of factual and legal challenges to the plaintiffs’ claim.

13.  The defendant claims to have followed the practice of his uncle in paying “tea money” to Chan Senior and then to the plaintiffs to avoid disruption to his business. In this action, he counterclaims for repayment of the money paid to the plaintiffs (totaling $70,000) as money had and received.

D. THE TRIAL

14.  The main issues for trial are:-

(a)  What was the nature of the monthly payments made by the defendant to the plaintiffs between January 2015 and February 2016?

(b)  Whether there was any tenancy between the plaintiffs and the defendant in respect of the said premises?

(c)  If the answer to (b) is yes, what is the appropriate remedy to the plaintiffs upon termination of the said tenancy?

15.  In terms of evidence:-

(a)  Shiu Leung and Chan Senior’s widow (“Madam Leung”) testified for the plaintiffs.[1]

(b)  With leave of the court, the plaintiffs adduced in evidence the reports of their land surveying expert and valuation expert.[2]

(c)  Only the defendant gave evidence. There was no expert evidence from the defence.

(d)  There is no dispute over the documentary evidence included in the trial bundles (“the Bundle”).

E. DISCUSSION

16.  In my view, the key to resolving this dispute is an appreciation of two things:-

(a)  the design and construction of the defendant’s stall; and

(b)  the legal effect of the Licence.

E1. The design and construction of the defendant’s stall

17.  According to the plaintiffs, the defendant modified his stall sometime between 2016 and 2019 after the commencement of this action:-

(a)  Previously, the defendant “… had erected a canopy (‘the said Canopy’) above the Defendant’s Wall Stall the height of which ranging from 4.64m at the front end to 3.54m towards the rear end of the Wall Stall above the ground supported by some metal bars fixed on the External Wall…”.[3]

(b)  “When the Defendant’s Wall Stall was re-surveyed on 13 August 2019, it was found that the Defendant’s Wall Stall had been modified. The previous canopy was demolished, but there is another canopy fixing on the top of the wall stall and abutting the External Wall… The Defendant’s Wall Stall is attached to the External Wall by iron bracket…”.[4]

18.  Whilst the defendant admits having modified his stall,[5] he:-

(a)  denies that “the said Canopy … is fixed on the External Wall”;[6] and

(b)  avers that there is no “direct contact” between his stall and the External Wall.[7]

19.  The defendant’s denial and averment are not borne out by the evidence.

20.  The evidence regarding the said Canopy is that:-

(a)  After the commencement of this action, the plaintiffs were informed by the Buildings Department in August/September 2016 that there was an unauthorized building works at their premises, namely, “a canopy attached to the external wall facing No 49 Carnarvon Road” (ie the said Canopy). The plaintiffs conducted a site inspection and took photograph of the said Canopy.

(b)  In October 2016, KST wrote to the defendant through his solicitors on the unauthorized building works, enclosing the Buildings Department’s letter and the photograph.[8]

(c)  The defendant made references to the said Canopy in his third and fourth affirmations filed in opposition to the plaintiffs’ application in this action for an interlocutory injunction.

In para 20 of his third affirmation, the defendant did not deny ownership of the said Canopy and confessed that: “I have no objection if the Plaintiffs want me to take steps to detach the canopy.” 

In para 4 of his fourth affirmation, the defendant deposed to the fact that after the filing of his third affirmation: “I have caused the canopy to be physically detached from the external wall of the Building. Now the canopy is supported by metal bars erecting from the land where the Stall is situated, and is not physically touching any part of the Building.”

21.  As to whether there has been “direct contact” between the defendant’s stall (including its canopy) and the External Wall, the following evidence is relevant:-

(a)  In 2016, the Government surveyed the defendant’s stall in response to the defendant’s enquiry and confirmed that: “Site investigation revealed that portion of the wall stall structure and facilities were touching the building wall behind it (the external wall of the premises)”.[9]

(b)  In August 2019, the plaintiffs’ land surveying expert noted that the relative position and size of the defendant’s stall had changed and that: (i) “the canopy … is found fixing on top of the wall stall and abutting the External Wall”; and (ii) “the wall stall is attached to the External Wall by the iron bracket”.

22.  Based on the evidence, I find that:-

(a)  at the commencement of this action, (i) the design and construction of the defendant’s stall included the said Canopy which was affixed to the External Wall; and (ii) there was direct contact between the defendant’s stall and the External Wall; and

(b)  at present, the defendant’s stall is attached to the External Wall by iron brackets and the canopy on top of it also abuts the External Wall.

E2. The legal effect of the Licence

23.  The main plank of the defendant’s defence is that he is entitled to operate his stall at the Lane by virtue of the Licence issued under section 8 of the Hawker Regulation, Cap 132AI (“the Regulation”).[10]

24.  The Licence, bearing the defendant’s name and photograph, is produced at pp 133-134 of Bundle 2. It is entitled “Fixed-Pitch Hawker Licence” (固定攤位小販牌照) and carries, inter alia, the following endorsements:-

“Type of Licence: Wall Stall” (牌照類別：靠牆攤檔)

“Licence conditions – see overleaf” (牌照條件見背頁)

25.  The conditions printed overleaf include the following:-

“…

11. The licensee shall vacate the pitch either permanently or temporarily if required to do so by the Director under section 34 of the Hawker Regulation (Cap 132, sub leg).”

…

13. The licence is valid only for the operation of a wall stall.”

…

16. The licence does not vest any property rights and interests in land in the licensee. Any dispute over the use of any part of the stall (or pitch) between the licensee and a private land owner has to be resolved between the parties and the Director disclaims any responsibility or liability in such a dispute.”

26.  In September 2016, the defendant’s solicitors wrote to the Government to enquire “whether our client is entitled to use the designated space up to and until the termination of [the Licence] by your department for his Wall Street Store and the space being now occupied by our client is in truth and in fact a public area which belongs to the Government but not to [the plaintiffs].”

27.  In a reply dated 4 November 2016, the Government elaborated that:-

“The wall stall pitch situated at the side lane of No 51 Carnarvon Road, Tsimshatsui, Kowloon (“the Premises”) is covered by a valid Fixed Pitch (Wall Stall) Hawker licence (the “Licence”), which was issued by the then Urban Council since 1984 and [the defendant] succeeded the Licence on 29.6.2010. Afterwards, the Licence has been renewed annually and is valid until 28.6.2017.

According to our record, the location of the licensed wall stall pitch location falls within the Government land. Site investigation revealed that portion of the wall stall structure and facilities were touching the building wall behind it (the external wall of the premises). According to the Hawker Regulation (Cap. 132AI), a fixed-pitch hawker licence authorizes a licensee to hawk from a fixed pitch. It should however be noted that licensing condition No 16 of the Licence provides that ‘the licence does not vest any proprietary rights or interests in land in the licensee. Any dispute over the use of any part of the stall (or pitch) between the licensee and a private land owner had to be resolved between the parties and the Director of Food and Environment Hygiene disclaims any responsibility or liability in such a dispute.’ In the case of the building owner(s) which the captioned fixed pitch (wall stall) adjoins, objects continual operation of the wall stall thereat and has obtained a Court Order for the removal of the wall stall, the licensee is required to vacate his stall pursuant to the Court Order, in which case, the Director will serve a notice on the licensee ordering him to vacate the pitch under section 34(1) of Cap. 132AI.”

28.  I note from the Regulation that:-

(a)  Under section 8, the Director[11] may, upon application, grant a fixed-pitch hawker licence to authorise the applicant to hawk from a fixed pitch.

(b)  There are a number of modes upon which the holder of a fixed-pitch hawker licence may hawk at the fixed pitch allocated to him: (i) a stall may be provided by the Director (section 40); (ii) the hawker may provide his own stall (other than a wall stall) in accordance with the approval of the Director (section 40); (iii) the hawker may erect a wall stall at the pitch in accordance with the approval of the Director (section 41); and (iv) an itinerant hawker licence holder may use a mobile stall in accordance with the approval of the Director (section 42).

(c)  The Director is required by section 43 to cause the approval and any conditions subject to which it is given under sections 40 to 42 to be endorsed on the licence.

29.  Two points should be noted.

30.  First, the Licence only authorises the defendant to operate a “wall stall” at the fixed pitch allocated to him at the Lane. “Wall stall” is defined in section 2 to mean “a stall which is affixed to or placed against any external part of any building or similar structure and which faces onto a street.”

31.  In 2016, the Government confirmed that the defendant’s stall was “touching the building wall behind it (the external wall of the premises)” and so “[t]he wall stall pitch at the said lane of No.51 Carnarvon Road, Tsimshatsui, Kowloon … is covered by a valid Fixed Pitch (Wall Stall) Hawker licence…”.

32.  The defendant has pleaded that: “… there was and is no trespass to the External Wall in the absence of any direct contact between [his stall] and the External Wall”.[12] Insofar as the defendant is contending that there was and still is no contact between his stall and the External Wall, he is in breach of the Licence (condition 13 of the Licence).

33.  The Government has specifically drawn the defendant’s attention to the fact that whilst the Licence may authorize him to hawk on Government land, it does not entitle him to use the External Wall and it is for him to procure the necessary consent from the owner of the External Wall (condition 16 of the Licence). And the Government has stated in no uncertain term that in case the plaintiffs succeed in obtaining a court order to evict the defendant in this action, “the Director will serve a notice on the licensee ordering him to vacate the pitch under section 34(1) of Cap. 132AI” (condition 11 of the Licence).

34.  With the design and construction of the defendant’s stall and the legal effect of the Licence in mind, we shall now explore the main issues.

E3. What was the nature of the monthly payments made by the defendant to the plaintiffs between January 2015 and February 2016?

35.  The defendant does not deny making monthly payments to the plaintiffs during the whole course of the alleged tenancy. But he is adamant that those were “tea money”. According to him:-

“在我協助打理陳記前，原告人父親曾向舅父投訴陳記的營運影響51號樓宇。原告人父親因此要求舅父每月給他一些茶錢，並聲稱如舅父不給茶錢，原告人父親會派人滋事、阻礙陳記運作。為了息事寧人，舅父只好就範，每月給原告人父親茶錢。隨著舅父年事漸高，他亦有提醒我要給茶錢，以免多生事端，影響陳記運作。在我獨力經營陳記後，我亦遵從舅父忠告，繼續每月給茶錢予原告人父親。”

“大約在2000年左右，其中一位原告人陳肇良的母親梁少文曾到陳記要求我交出身分證副本及住址證明，否則便聲稱會騷擾陳記的運作。因為我不可能改變原告人一家是51號樓宇業主的既定事實，和原告人一家硬碰亦會得不償失，加上原告人父親要求的茶錢金額相對陳記生意額而言並不算多，於是選擇大事化小，交出身分證副本及住址證明，並繼續給予茶錢。”

“我必須強調，不論是原告人父親、梁少文抑或是原告人，他們都從未向我提過我們所付的茶錢實為租金...我所付的茶錢，只為息事寧人，好讓我能不受滋擾地繼續經營陳記。”

36.  The plaintiffs maintain that they were rental payments and deny there had been any payment of “tea money”.[13] In fact, Madam Leung was offended by the defendant slandering the good name of her deceased husband.[14]

37.  I have no hesitation in rejecting the defendant’s evidence:-

(a)  Under cross-examination, the defendant retracted his evidence about what his uncle had told him. He confirmed that he had not witnessed any disruption to his uncle’s business by the Chan family.

(b)  Whilst he still maintained that he had been “threatened” by Madam Leung, he was unable to recall what Madam Leung had said that gave him that impression. At the trial, he blamed Madam Leung for speaking loudly at his stall which might scare customers away and claimed that Madam Leung might disconnect the electricity supply if he did not pay up. I do not believe him.

The defendant is a seasoned hawker. He has been working at the stall since about 1976 and should be well-acquainted with the Chan family. When he took over the stall in 2010, he was at his prime (about 50 years old) running his own business. I do not believe he could be intimidated by Madam Leung who was already 80 years old.

(c)  If the defendant was right, the practice of paying tea money for the operation of the stall started at the time of his uncle (陳松弟). But the plaintiffs have adduced the counterfoils of the rental receipts issued to 陳松弟’s predecessors-in-title in evidence to confirm that Chan Senior had been charging “rent” for the said premises since the 1950s. These counterfoils are bound together with counterfoils relating to the other rentals of the Building (Exhibit P1) and are unlikely to be forged.

(d)  The plaintiffs have also adduced the correspondences between KST and the defendant in evidence, such as the letter dated 24 December 2014, the monthly demands and the rental receipts. I do not believe the plaintiffs would have instructed a firm of solicitors to document their misdeeds if the payments were tainted with illegality.

(e)  The defendant’s contention that the court should not hold the documentary evidence (such as (c) and (d) above) against him as he did not sign on any of them is a pretty lame excuse.

The counterfoils in evidence, including those relating to the defendant, are all in Chinese. The plaintiffs have produced a sample with the receipt still attached for the court’s reference (Exhibit P1-Z). It is clearly stated that the receipt is for rent received (“茲收到 ... 租銀”). It is the unchallenged evidence of Shiu Leung that he handed over a receipt (prepared in advance by Chan Senior) upon receipt of the rent from the defendant. He recalled that unlike other tenants who paid by cheque, the defendant always paid in cash. The defendant could not have been mistaken as to the nature of the payments.

Although the defendant only studied up to primary education level, I do not believe the correspondences from KST were beyond his comprehension as they were in simple English and he had acted on the letter dated 24 December 2014 by paying through KST.

(f)  It is common ground that Madam Leung retains a copy of the ID card of the defendant as well as his correspondence address. The fact that the defendant willingly handed over such information does not sit well with his claim that he was in terrorem.

Madam Leung has kept the defendant’s particulars in the same notebook where she kept the particulars of the other tenants (Exhibit P2). The evidence is more consistent with a tenant providing personal particulars to his landlord at the start of his tenancy.

(g)  The defendant has likened his payment of “tea money” to paying protection money to triads. Surprisingly, he did not report the matter to the relevant authority – not when he allegedly clarified with the Government about the status of the Lane about 1-2 years before he took up the business; not when he applied for the Licence in 2010; not at the annual renewal of the Licence; not when his solicitors wrote to the Government in September 2016 to enquire about the effect of the Licence; and not to the police.

E4. Whether there was any tenancy between the plaintiffs and the defendant in respect of the said premises?

38.  The defendant has mounted a number of factual and legal challenges to the tenancy alleged by the plaintiffs.

E4.1 The factual challenges

39.  On the facts, the defendant argues that:-

(a)  There is no positive evidence on the formation of the alleged tenancy, as Madam Leung’s evidence is unreliable. Anyway, her evidence was that Chan Senior and the defendant had only agreed on the amount to be paid each month, without discussion on other essential terms of a tenancy such as the area demised, the starting date and duration of the tenancy, which part of the External Wall and the scavenging lane was let, how Chan Senior could have let part of the scavenging lane to the defendant when he was not the owner of it, and whether the amount charged was inclusive of rates, government rent and management fees, etc.[15]

(b)  The defendant was not cross-examined as to what had happened on 2 October 2009 when the tenancy between Chan Senior and the defendant was allegedly concluded. Based on Phipson on Evidence, 19^th edition (2018), para 12-12, the plaintiffs may not suggest in closing submission that the defendant’s evidence should be rejected.[16]

(c)  There was no reason for the defendant to agree to pay rent to Chan Senior as: (i) both the defendant and Chan Senior knew that Chan Senior had no right to let the Lane; and (ii) the defendant had not paid rent for operating the stall next to the building at No 49 Carnarvon Road.[17]

(d)  According to Shiu Leung’s evidence, the other tenancies of the Building were fixed term and in writing but the arrangement with the defendant was oral, periodic and of a much lower rent. The disparities point to the fact that the arrangement with the defendant was not a tenancy.[18]

(e)  The alleged letting of part of the External Wall is a recent invention because: (i) the External Wall should form part of the letting to the tenant(s) of the G/F and 1/F premises of the Building; (ii) Chan Senior used the term “水巷牆邊” to describe the premises, which referred to “牆邊” rather than “牆”; (iii) there is evidence from Madam Leung that at the very beginning, 陳振成 hawked from baskets placed on the floor and had no use of the External Wall; (iv) if Chan Senior had meant to let part of the External Wall to the defendant’s predecessor-in-title, he would not have reported to the Rating and Valuation Department in 2007 that the tenement was “wholly let” to 陳松弟;[19] and (v) there was no mentioning of the External Wall in the plaintiffs’ affirmations and pleadings filed at the early stage of these proceedings.[20]

40.  In my view, the defendant is taking advantage of the loss of the plaintiffs’ main witness. Chan Senior used to personally handle the rentals of the Building whilst Madam Leung only assisted him on clerical matters. Fortunately, Chan Senior is survived by the meticulous records kept by him which shed light on the relationship between Chan Senior and the defendant and his predecessors-in-title in relation to the said premises.

41.  From the records kept by Chan Senior, the plaintiffs have been able to reconstruct the following timeline:-

(a)  Chan Senior began letting the said premises out in the 1950s. His first tenant was陳振成who sold fruit there. The monthly rent was increased from $100 in 1958 to $320 in 1973, to $650 in 1977, and then to $1,100 in 1979.

(b)  In around 1980, the business was taken over by陳松經who became the tenant of the said premises. The monthly rent remained at $1,100 in 1980, and was increased to $1,500 in 1982, to $2,000 in 1990, and to $2,500 in 1995.

(c)  In around 2004, 陳松經’s younger brother (陳松弟) became involved in the business. Chan Senior let the said premises to the brothers at the monthly rent of $2,500.

(d)  The defendant took over the business in about January 2010, and Chan Senior let the said premises to him at $4,000 per month. The monthly rent was increased to $4,600 in 2012, to $4,800 in 2013, and then to $5,000 in 2014.

42.  It is important to bear the context in mind when assessing the evidence. Prior to the defendant taking over the fruit stall in 2010, the business had been operating for almost 60 years (from the 1950s) and the defendant had been working there for over 30 years (since 1976). Both Chan Senior and the defendant were familiar with the operation of the fruit stall, such as its location and dimension, which part of the External Wall and the Lane it occupied, and the starting date of each cycle of the periodic tenancy, etc. That was why, according to Madam Leung, Chan Senior and the defendant were able to conclude a tenancy without much discussion. As not much was discussed, there is no merit in the submission that the defendant was not cross-examined as to what had happened. In any event, it was put to the defendant that he had rented the said premises from the owner of the Building.

43.  As the plaintiffs have pleaded, the defendant offered to “take over the said fruit stall and rent the said premises.”[21] The fact that none of the plaintiffs’ witnesses were privy to the discussion between Chan Senior and the defendant is neither here nor there, as the alleged tenancy is well supported by documentary evidence.

44.  Having taken over the stall and entered into possession, the defendant is estopped from denying Chan Senior’s title to the said premises. It is stated in Megarry and Wade’s The Law of Real Property, 9^th edition (2019) at para 16-125 that:-

“There is a general rule that a tenant is estopped from denying his or her landlord’s title, and a landlord from denying that of his or her tenant… In either case, the landlord cannot question the validity of his or her own grant, nor can the tenant question it once in possession with the benefit of the lease, ‘for so long as a lessee enjoys everything which his lease purports to grant, how does it concern him what the title of the lessor, or the heir or assignee of his lessor, really is?’… Even if the landlord was not the true owner when he or she granted the lease, the tenant may not deny the landlord’s title to grant the lease if in fact the tenant has the benefit of it.”

45.  Thus, it does not matter if Chan Senior did not own the part of the Lane occupied by the stall. The fact that Chan Senior recognised that he did not own the part of the Lane occupied by the stall might be the reason why he had charged the defendant and his predecessors-in-title a much lower rent.

46.  None of the points taken by the defendant has caused me to doubt that the tenancy covered the use of the External Wall. As said above, there is clear evidence that the defendant has made use of the External Wall for the operation of his stall.

47.  The defendant referred to the judgment in DCMP 2043/2013 and argued that if “the Defendant did not pay anyone for operating the Stall next to No.49 Carnarvon Road … why the defendant would voluntarily agree to pay rent to [Chan Senior]”?[22] With respect, I do not accept his argument.

48.  The defendant herein was D2 in DCMP 2043/2013.[23] The owner of Shop G on G/F of No 49 Carnarvon Road claimed for vacant possession of the “Wall Shop” at “the wall on the side adjoining [the shop]” in that case. The defendant as D2 counterclaimed for adverse possession of the premises on the basis that he and his uncle (陳松弟) had operated a fruit stall at the scavenging lane and that “[w]hen operating at the Stall, the late Mr Chan [ie 陳松弟] and the D2 have also been occupying the Wall Shop as part of the area of their business operation since about 1980 to the exclusion of others by placing carton boxes of fruits, tables and other miscellaneous items at the Wall Shop… Neither the late Mr Chan nor the D2 had ever paid any rent or fee for the occupation of the same…”.[24]

49.  His evidence was rejected by the trial Judge who held (at para 28) that:-

“The Payment Record shows the payment of the sum of $3,800 by cheques drawn by the late Mr Chan dated 15 April 2005 and 1 May 2005 respectively with the payee being the plaintiff. This is inconsistent with the saying by the D2 that the occupation of the Wall Shop had nothing to do with any permission from the plaintiff. The amount drawn on the cheques the same as the monthly rental alleged by the plaintiff. The only inference to be drawn must be that this is a payment of rental by the late Mr Chan in accordance with the [tenancy agreement].”

50.  Thus, the defendant was disbelieved in DCMP 2043/2013 and that judgment does not support his present contention.

51.  There is no merit in the factual challenges.

E4.2 The legal challenges

52.  The defendant also questions the legality of the tenancy alleged by the plaintiffs:-

(a)  Since Chan Senior did not own the Lane in the first place, the plaintiffs could not have “taken over”[25] the alleged tenancy from the estate as pleaded.

(b)  Under section 4 of the Conveyancing and Property Ordinance, Cap 219, the plaintiffs need an assignment to become the defendant’s landlord but the deed of assent dated 19 December 2014 is not in evidence.[26]

(c)  The tenancy is uncertain in that the premises allegedly demised to the defendant is ill-defined.[27]

(d)  The alleged tenancy is an illegal contract.[28]

53.  First, I do not accept that the demised premises were uncertain. The fact that the demised premises was not spelt out expressly in a written document (such as a lease) does not mean that its delineation is uncertain. As I have said above, when Chan Senior and the defendant concluded the agreement, they both knew what they were talking about and could not have been mistaken as to the subject matter of the tenancy.

54.  This case was commenced after the passing of Chan Senior. The fact that it has taken the plaintiffs several amendments to particularize “the said premises” is neither here nor there. As the defendant has submitted in Section B3 of his closing submissions, this action should be tried based on the present pleadings. The attempt to contrast the present pleading with previous versions of it serves no useful purpose.

55.  Secondly, I disagree with the defendant that the point on illegality hinges on a contest between two Court of Appeal decisions: Fung Siu Kam & Ors v Lo Shun Cheung [1984] HKC 107 and Yip Alice and others v Wong Shun (No 2) [2003] 2 HKC 528. In my view, Fung Siu Kam has, in effect, been overruled (see paras 13-16 of Yip Alice). That is why subsequent cases all applied Yip Alice.[29]

56.  Section 4 of the Land (Miscellaneous Provisions) Ordinance, Cap 28 is in these terms:-

“Unleased land shall not be occupied except under a licence or a deed or memorandum of appropriation.”

57.  In Yip Alice, Rogers VP and Le Pichon JA reasoned that:-

“16. … the issue is whether as a matter of statutory construction, the effect of s 4 [of the Land (Miscellaneous Provisions) Ordinance, Cap 28] is to deprive parties of their civil remedies where the contract or its performance necessarily implicates an infringement of the section. …it could hardly have been intended that where a contract or its performance involves a contravention of s 4, the parties should be deprived of their civil remedies.

17. Moreover, there are considerable difficulties with the defendant’s interpretation of s 4 to the effect that any ‘occupation’ of unleased land would be unlawful and illegal, and rendering any agreement to do so unenforceable. …it must follow that the legislature could not have intended that a contract or the performance of which implicates a contravention of s 4 of the Ordinance be made void.

18. The appropriate question to ask is whether it would be contrary to public policy to enforce the management agreement, having regard to the Ordinance and the evils against which it was intended to guard and the circumstances in which the contract was made and to be performed…

19. … As a matter of construction, I see nothing in the Ordinance that requires depriving parties of their civil remedies in relation to the making or performance of a contract such as the management agreement, albeit that it can only be performed by occupying unleased land.”

58.  Likewise, Yuen JA expressed that:-

“26. … just because a contract or its performance is implicated with breach of a statute, that does not entail that the contract should be avoided…

…

29. If the mischief of Part II is effective land management for the Government as land-owner, I do not see why s.4 should impact (independently, without more) upon civil rights and remedies of private parties whose dealings involve the occupation of the land, and I can see nothing in Part II that points clearly (expressly or impliedly) to such an intention of the legislature.”

59.  The defendant’s contention is a rerun of the argument rejected by the Court of Appeal in Yip Alice. Just because the tenancy alleged by the plaintiffs or its performance necessarily involves occupation of unleased land does not mean that the tenancy should be avoided. I can see nothing in the Ordinance that points to the legislative intention to deprive parties of their civil remedies.

60.  Thirdly, I do not know why the deed was not adduced in evidence. Be that as it may, I do not doubt its existence as it was registered in the Land Registry.[30] In any event, the defendant is estopped from denying the plaintiffs’ title.

61.  Lastly, the defendant argues that “bolts and nuts were not used in the External Wall”[31] and that there was “[m]ere touching of External Wall”[32]. Whilst he did not expressly take the point, the submissions taken together suggest that the tenancy alleged by the plaintiffs may be a legal impossibility in terms of Sunbroad Holdings Ltd v Occupiers and others [2012] 2 HKLRD 599.

62.  Sunbroad Holdings is the authority for the proposition that there cannot be a lease of the surface of a wall. There,Tang VP (as he then was) explained that:-

“10. … the plaintiff … has referred us to Leung Kwok Kau v Tam So Wa [1968] HKLR 673. There the question was whether a lease of the surface of the outer wall of a building could be created. The Full Court held that it could not. Their lordships explained why:

‘… A corporeal hereditament … has always included an area of the surface of the earth or of some horizontal plane either below, or in a building erected above, the surface of the earth. The area need not be large, but it must have some substance.’ Per Huggins J held at p 680.

‘… It is possible to grant a lease of a wall but that is because a wall is situated on the ground and in effect a lease of a wall is a lease of the ground on which the wall is standing together with the wall itself. However, this is not to say that there can be a tenancy of the surface of a wall by itself as was argued in this appeal. I do not think that that is possible. The surface of a wall of its very nature has no depth, it is not standing on any part of the ground: and therefore it cannot in my view be the subject matter of a lease.’ Per Briggs J held at p 675.

‘… In the absence of a defined portion of the soil, to which a letting can be distinctly related, no lease or tenancy can arise. Where the subject matter of an alleged lease or tenancy is but the bare surface of such a wall, it has no width or breadth of soil to support it, as a lease or tenancy. No estate or interest in land is created; I use the word 'land' in its widest sense.’ Per Mills-Owens J at p 679.

11. With respect, I agree that just as there could not a lease of the surface of a wall, there could be no adverse possession of such surface.”

63.  For the avoidance of doubt, there is clear evidence in this case that the tenancy alleged by the plaintiffs involves more than the surface of the External Wall. As said before, the plaintiffs’ expert has confirmed that the defendant’s stall is “attached to the External Wall by the iron bracket”. I read that finding to mean the stall is attached to the External Wall by means of iron brackets and the depth of the wall is engaged. The photographs at pp 165-168 of Bundle 1 show that the defendant’s stall is a metal structure. Given its dimension, it must be very heavy.[33] It would be a very dangerous structure if it merely rests on or touches the surface of the External Wall. I do not think Sunbroad Holdings is applicable.

E4.3 My findings

64.  I have rejected the defendant’s case that he had paid “tea money’ to the plaintiffs. Now that I have also disposed of the defendant’s factual and legal challenges, I can safely conclude that there was a tenancy between the plaintiffs and the defendant in respect of the said premises between January 2015 and February 2016 and the payments were rental payments.

E5. What is the appropriate remedy?

65.  KST’s letter dated 8 January 2016 served as a notice to quit but the defendant has refused to leave.

66.  The defendant raises two issues on the remedy to be granted to the plaintiffs. He disputes the plaintiffs’ entitlement to an order for vacant possession and challenges the quantum of mesne profits to be awarded.

E5.1 Whether vacant possession should be ordered?

67.  The parties have debated whether the plaintiffs should be granted vacant possession of the said premises. On one hand, there are cases such as Toho Limited v Ng Sik Yu, unreported, CACV 36/2004, 29 October 2004 where the court granted vacant possession given the prior landlord and tenant relationship of the parties. On the other hand, there are cases in which the court refused the relief where there was no such prior relationship.[34] The distinction is explained by Anthony To J in Kayway Investment Ltd v Focus Winner Ltd [2016] 5 HKLRD 267 in these terms (at para 25):-

“… The landlord gave vacant possession to the tenant to use and enjoy the property during the term of the tenancy, which must necessarily include unimpeded access and physical enjoyment of the property. Thus, when that tenancy expires, the tenant must be under the obligation to return the property with vacant possession in the same condition as he received it, including unimpeded access and physical enjoyment of the property. A trespasser is different. He is not engaged in any contractual relationship with the landlord. He comes and goes. If he trespassed someone else’s property, so long as he makes good the damage caused and leaves, that must be the end of his obligation. He has no duty to ensure that the landowner enjoys unimpeded access and physical enjoyment of the property after he has vacated it.”

68.  I do not need to go into the authorities cited in argument. Given my finding that there was a tenancy between the plaintiffs and the defendant, there is no reason why I should not apply Toho Limited.

69.  As said before, the defendant has hold over after the termination of the tenancy. There is unchallenged evidence that after the commencement of this action, he demolished the said Canopy and modified his stall.

70.  According to the plaintiffs’ expert:-

(a)  the present canopy “is found fixing on top of the wall and abutting the External Wall. There are retractable sunshades which could be extended to cover portions of the lane and pavement during its operating hours”;[35]

(b)  “the wall stall is attached to the External Wall by the iron bracket” leaving “a gap of distances varying from about 30 millimetres to about 50 millimetres … measured from the back of the wall stall to the uneven surface of the External Wall”;[36] and

(c)  “[d]uring the operating hours of the wall stall, its extent almost occupies two-thirds of the width of the scavenging lane”.[37]

71.  The circumstances of this case is similar to that in Delight Surplus Ltd v Lam Hung [2014] 4 HKC 310. As summarised in the headnote, the defendant there rented a wall and side space from the plaintiff which he used for a hawker stall. After the expiry of the tenancy agreement, the defendant erected a metal framework for a separate stall about an inch from the boundary of the premises. The plaintiff sought vacant possession and an injunction to remove the new stall. In granting summary judgment, HH Judge Wilson Chan (as His Lordship then was) ruled that:-

“9. Whether in a given case the tenant has in fact delivered up vacant possession is a question of fact. The question is whether the landlord could, if it wanted to, occupy the premises without difficulty or objection.

10. In the present case, while the New Stall is an independent structure away from the Premises, the gap in between this stall and the Premises is only about 15 mm to 60 mm (ie 0.59 to 2.36 inches). The plaintiff obviously cannot gain access to the Premises through that thin gap. This thin gap between the Premises and the New Stall is quite meaningless in the context of giving vacant possession.”

72.  Notwithstanding the works undertaken, the defendant’s stall is still impeding the plaintiffs’ access to and use and enjoyment of the External Wall especially when it is in operation. There is evidence that the stall is still attached to the External Wall and the new canopy is abutting the External Wall. In my view, the plaintiffs are clearly entitled to vacant possession of the said premises.

73.  As the Court of Appeal explained in Toho Limited:-

“11. … The right to vacant possession means actual unimpeded physical enjoyment of the wall. The impediment does not mean any impediment but one which substantially prevents or interferes with the enjoyment of the right of possession of a substantial part of the property. This principle is clearly stated in Cumberland Consolidated Holdings, Limited v. Ireland [1946] 1 KB 264 where the English Court of Appeal was dealing with the question of giving vacant possession in a contract of sale of land. At completion there was rubbish (in the form of many sacks of cement which had hardened) in the property which the vendor refused to remove. The court found that vacant possession was not given by the vendor.

12. The right of an owner of a property has as much right to the use and enjoyment of the internal part of his property as the external walls of his property. Again this principle is firmly established in Cobb v Saxby [1914] 3 KB 822 where Rowlatt J at page 826 held that, ‘He (i.e. the owner) has the right to do anything he likes to the wall, for example to display advertisements upon it, and if these rights are invaded or obstructed, he has, in my opinion, a good cause of action against the person causing the interference with his rights.’

13. In this case, the wall space let to the defendant is on the external wall of the property. If the defendant is to deliver vacant possession of the wall space let to him then he has to do so in a way which will enable the plaintiff to have unimpeded use of that space. By demolishing the original stall, the defendant would, of course, have provided the plaintiff with unimpeded access and use of the wall space. However, by erecting the new stall in front of the wall space, the defendant in effect prevented the plaintiff from using that part of the external wall of the property. While the new stall is an independent structure away from the exterior wall, the gap in between this stall and the exterior wall is only about 2.5 inches. The plaintiff cannot gain access to the external wall of his property through that thin gap. This thin gap between the wall space and the new stall is meaningless in the context of giving vacant possession. Although the new stall is on government land, it substantially prevents and interferes with the plaintiff’s enjoyment of the right of possession of a substantial part of its property. If the principle on the giving of vacant possession is recognized and applied, then on no account can it be said that vacant possession had been given by the defendant.”

E5.2 How to assess mesne profits?

74.  The plaintiffs’ valuation expert was instructed to assess the market rent of the part of the External Wall occupied by the defendant’s stall (measuring about 24.7962 m²) for the purpose of calculating mesne profits. The expert employed three methods in his assessment: (a) direct comparison approach; (b) assessing the rental value of the ground floor shop in the presence/absence of return frontage; and (c) the investment approach in making the assessment. He opined that the market rent as at 1 March 2016 and 1 March 2018 were $11,300 and $11,600 respectively.

75.  I share the defendant’s doubt about the assessment done due to a lack of suitable comparable:-

(a)  The single comparable used in method (a) was located in a different neighbourhood (in Mongkok) with different characteristics (facing a pavement).

(b)  None of the three comparables used in method (b) had a return frontage facing a scavenging lane.

(c)  The two comparables adopted for method (c) were (i) on the roof and external wall facing Nathan Road and (ii) a showcase facing an arcade, which are different from the External Wall which is on the ground floor and facing a narrow scavenging lane.

76.  As Peter Ng J has reiterated in Lo Yuk Sui v Fubon Bank (HK) Ltd [2016] 1 HKC 462 at para 120:-

“… it is well-established that the court is not bound to accept the evidence of an expert even if it is contradicted. Instead, the court must arrive at its own independent view of whether and if yes to what extent to the expert evidence put before it is acceptable: Traffic Stream Infrastructure Co Ltd v Full Wisdom Holdings Ltd (2004) 7 HKCFAR 442 at para 21.”

77.  In the absence of better evidence and doing the best I can, I shall apply the rent which had previously been agreed between the parties ($5,000 per month) in my assessment.[38]

F. DISPOSITION

78.  For the above reasons, I enter judgment in favour of the plaintiffs against the defendant for: (i) vacant possession of the said premises; (ii) an injunction to oblige the defendant to demolish and remove his wall stall, the canopy and all chattels placed there to enable the plaintiffs to gain unimpeded access to the External Wall; (iii) payment by the defendant to the plaintiffs of mesne profits at the rate of $5,000 per month from 1 March 2016 until delivery of vacant possession; and (iv) an order in terms of prayer (ca) of the SOC to enable the plaintiffs to demolish and remove the defendant’s stall, the canopy and all chattels placed there should the defendant fails to comply with (ii) within 28 days from the date of this order or such further period as the parties may agree.

79.  The defendant’s counterclaim is dismissed.

80.  There be an order nisi that the defendant do pay the plaintiffs’ costs of this action including the costs of defending the counterclaim and all reserved costs to be taxed if not agreed.