WONG KWOK WA v. HO SUK YAN

DCCJ 1777/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1777 OF 2012

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ASSESSMENT OF DAMAGES

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Introduction

1.  Interlocutory Judgment was entered by consent on 20 December 2013 for damages to be assessed.

Background

2.  The plaintiff became the registered owner of Lot No 167 in DD 167 ("P's land") on 19 June 2000.

3.  Adjoining P's land is Lot Nos165 and 166 in DD 167 on which a house was erected.  On 18 May 2010, the defendant became the registered owner of the ground floor thereof ("D's property").

4.  A wall ("the wall") erected outside of D's property was situated on P's land.

5.  Despite requests of the plaintiff, the defendant refused to demolish the wall.

6.  On 7 March 2011, the plaintiff was given permission by the Lands Department to redevelop the P's land by building a three-storeys village house thereon.  On 12 March 2012, 3 Certificates of Exemption were issued by the Lands Department for that purpose.

7.  It was the plaintiff's case that by reason of the existence of the wall on P's land, he was unable to commence building works and thereby suffered damage.

8.  In the Statement of Claim, the plaintiff pleaded 2 heads of damages:-

(1) mesne profits from 18 May 2010 when the defendant became registered owner of the ground floor until the wall is removed; and

(2) loss of rental of the building to be erected on Lot No 167 caused by the defendant's wrongful encroachment so that no construction works could be carried out from 21 March 2012 until the wall is removed.

9.  The wall was demolished on 11 November 2013.

10.  It is not in dispute that building works have not been commenced as at 10 June 2014.

Defendant's objection

11.  Before the commencement of the plaintiff's evidence-in-chief, I allowed the plaintiff to elaborate on materials and photographs which were introduced by the defendant after the filing of his witness statement.  This was in line with the provisions of Order 38 rule 2A(7)(b) and (7A) of the Rules of District Court.

12.  In the course of the plaintiff's evidence, when he was answering questions either from his counsel or from Mr Lau, counsel for the defendant, Mr Lau objected to certain answers which related to the plaintiff's experience as a village house builder.  I allowed those answers to be given.  The plaintiff should be allowed to give his answers to questions put to him freely.  If the defendant considers that she would need to call further evidence or even expert evidence, she could make the application at the appropriate time.

13.  Eventually, no application was made by the defendant.

Issues

14.  The issues for determination are the following:-

(1) What is the mesne profits during the period of trespass;

(2) Does the plaintiff intend to build a house on P's land;

(3) If so, how long would it take to commence building works;

(4) What is the likely duration of the building works;

(5) Does the plaintiff intend to rent out the house so constructed for rental income;

(6) If so, how long would it take the plaintiff to rent out the house; and

(7) What is the loss of rental income of the plaintiff.

What is the mesne profits during the period of trespass?

15.  Both parties accepted that the mesne profits during the period of trespass is nominal.  That being the case, I adopt the figure of $100 per month as the nominal damage under this head.  The period of trespass is from 18 May 2010 to 11 November 2013,the damages under this head is therefore $4,177 ($100 x 41months 23days).

Does the plaintiff intend to build a house on P's land?

16.  Mr Lau commented that since the wall was demolisheed on 11 November 2013, no building work was carried out as at 10 June 2014.  The inaction for 7 months, Mr Lau submitted, is inconsistent with the plaintiff's claim that he intended to build a house on P's land as soon as possible.

17.  The District Lands Office, Tai Po of the Lands department issued a letter of no objection to the plaintiff dated 7 March 2011 in respect of his application for permission to redevelop the P's land.

18.  Whilst there may be delay in commencing building works on P's land, I do not accept that inaction of 7 months is an indication that the plaintiff has abandoned the plan of building the house.  Indeed, there is no evidence before me that the plaintiff has changed his mind.  From the photographs taken on 11 June 2014, they show that certain workers were already working at P's land. 

19.  Mr Lau submitted that there is no evidence of the plaintiff applying to the Water Supplies Department and the electricity company for the supply of water and electricity to the house.  It seems that Mr Lau is saying that the application for water and electricity supplies is a pre-requisite, without which, the building works should not or could not be carried out.

20.  The plaintiff, in his evidence, explained that those applications would only be made after commencement of building works.  There would be sufficient time for the application to be processed and supplies to be connected.

21.  I see no reason to disbelieve his explanation nor do I accept that such application must be made before the commencement of building works.

22.  I hold that the plaintiff is still intending to build a house on P's land.

How long would it take to commence the building works?

23.  It is the plaintiff's evidence that but for the encroachment of P's land by the defendant, he could have commenced building works on 22 March 2012, that is 1 day after the issuance of a letter of exemption from excavation permit in unleased land by the District Lands Officer, Tai Po.  He said he was a main contractor of village house building, building works could commence within 10 to 20 days after the decision was made.  He said the arrangement to build a house would be made prior to the permission of the Lands Department.

24.  Mr Lau submitted that the assertion of the plaintiff is unreal and should not be accepted.  He urged this court to hold that if building works were to commence, the commencement date should at least be 7 months from the date of permission of the Lands Department.

25.  The plaintiff on one hand claimed that he could arrange building works to commence 1 day after the Lands Department's permission is given.  He said as a main contractor of village house building, he could assemble sub-contractors that are required of within 10 to 20 days.  On the other hand, no work has been done after demolition of the wall for 7 months. 

26.  The plaintiff attempted to explain that originally, his plan was to make use of Lot 1195 in DD 167, which was owned by King's Development Investment Company Limited (恒鋒發展投資有限公司) ("King's"), a company of which he is the sole shareholder and director, for the storage of building materials at the time when the house on P's land is built.  Nevertheless, due to the encroachment by the defendant, the plan could not be carried out.  Eventually, the building works on Lot 1195 had to commence first in August 2012.  When the wall was demolished in November 2013, he spent time to look for a site for the storage of building materials.

27.  I do not find the explanation of the plaintiff convincing.  First, Lot 1195 was another site whereon a house was to be built.  If it were to be utilized for storage purpose, this would inevitably delay the building works thereon.  So the gain in time of building a house on P's land would mean a loss of time for a house to be built on Lot 1195 and hence a loss to King's.  I see there is no reason at all for King's to delay its building works in order to give way to the building works on P's land.  Secondly, King's and the plaintiff are 2 separate entities.  The control of King's by the plaintiff is not a reason to delay the building works on Lot 1195.  If the building works on P's land is to commence, the plaintiff must look for a suitable site other than Lot 1195 for storage purpose.

28.  Mr Lau also made it a point that the encroachment did not obstruct the building works to be carried out.  He suggested to the plaintiff that he could build the septic tank and construct the sewer system first.

29.  In answer to the suggestion, the plaintiff explained that the soil excavated from the septic tank site would been used as part of the foundation of the house and sewer system would not be constructed before the house is built.  Therefore, he said, the suggestion of Mr Lau is illogical as far as the procedure of house building is concerned.

30.  I find the plaintiff's explanation reasonable and acceptable.  The suggestion of Mr Lau is tantamount to putting the cart before the horse. 

31.  More importantly, Mr Lau's suggestion would take the defendant's case nowhere as it is indisputable that as long as the wall is encroaching on P's land, the foundation work of the house could not be done.

32.  On the evidence before me, I hold that the time for the preparation work (including looking for a suitable site for storage, the assembly of sub-contractors, drawing of plans etc) to be done before commencement of building works is 7 months as demonstrated by the lack of action by the plaintiff after the demolition of the wall.

What is the likely duration of the building works?

33.  It is the plaintiff's case that it would take 10 months to complete the building works.  Thereafter, the house would be inspected by the Lands Department before a Certificate of Compliance is issued.

34.  Mr Lau submitted, based on the documents produced by the plaintiff in relation to house on Lot 1195, the time required to build the house and to obtain a Certificate of Compliance is around 12 to 17 months.

35.  The time frame in respect of the house on Lot 1195 is the following:-

36.  It is immediately apparent that building works were commenced 7 months after the issuance of Certificates of Exemption.  Certificate of Compliance was issued 10 months after commencement of building works.  In arriving at the figure of 17 months, Mr Lau is counting from the date of Certificates of Exemption rather than from the date of commencement of building works.

37.  The plaintiff's evidence is that it would take 10 months to complete the building works on P's land.  The estimation is in fact longer than the time it took in the case of Lot 1195 bearing in mind that according to the plaintiff, it would take 3 months to obtain a Certificate of Compliance.

38.  I see no contradiction in the plaintiff's estimation.  I therefore accept that the building works would take 10 months and it would take another 3 months in obtaining a Certificate of Compliance.

Does the plaintiff intend to rent out the house so constructed for rental income?

39.  Relying on Hoo Cheong Building Construction Company Limited v Jade Union Investment Limited, HCCW400/2003, 5/3/2004, unreported and Wan Yuk Wing v Wong Kwok Hing Patrick & another, HCA1713/2007, 4/8/2011, unreported, Mr Lau put it as his strongest point, and urged this court to reject the claim for loss of rental income.

40.  Mr Lau submitted that the plaintiff was merely asserting loss of rental without showing his intention to rent out the house.  Mr Lau further submitted that there is no evidence to show that the plaintiff did rent out P's land between June 2000 to 22 March 2012 and that the plaintiff did not state in his witness statement that he did intend to rent out the house on completion of the redevelopment.

41.  Hoo Cheong is a case concerning a petition for winding up of the respondent company.  The question the court has to decide is whether the cross-claims raised by the respondent company were genuine disputes of substance.  In that case, Barma J (as he then was) took the view that the alleged cross-claims of loss of rental was not a bona fide dispute of substance because the house was all along said to be built as the residence of the group chairman.  Also, there was no evidence that the house was intended to be placed on the rental market upon completion.

42.  Wan Yuk Wing is an enquiry as to the loss and damage suffered by both the plaintiff and the defendants as directed by the Court of Appeal.  The dispute concerns the use of a footpath by the plaintiff which is leading from the plaintiff's land running over and across the defendants' land.  In the enquiry, the plaintiff alleged that prior to the denial of access by the defendants, he intended to rent out the 1/F, 2/F and roof and garden.  Due to the denial of access by the defendants, he claimed loss of rental of his property.  The learned Master did not accept the claim because not only that such claim was inconsistent with what was pleaded in the Statement of Claim, but also there was no supporting evidence that he had the intention to rent out his property prior to the denial of access and even at any time before the Court of Appeal’s decision.

43.  In the present case, the plaintiff claimed loss of rental income since the commencement of the action.  The claim was substantiated by his witness statement at paragraphs 20 and 21.  There is no inconsistency as was found in Hoo Cheong and Wan Yuk Wing.

44.  Renting out a house for rental income is very different from renting out a piece of land.  The usage is different and so is the market.  I doubt very much if there is any market for a small piece of land (27.65 square metres) with a part of it being encroached. I do not accept Mr Lau’s submission in this regard.

45.  I am satisfied that the plaintiff intends to rent out the house after its completion for rental income.

How long would it take the plaintiff to rent out the house?

46.  Mr Lee, counsel for the plaintiff, submitted that a hypothetical period of 3 months should be allowed for the plaintiff to look for a suitable tenant.  He said, therefore, that the period during which the plaintiff has suffered loss of rental income should be reduced accordingly.  Mr Lau for the defendant is in agreement with this hypothesis.

What is the loss of rental income of the plaintiff?

47.  There is no dispute that the encroachment by the defendant lasted for 19 months 20 days (ie 22 March 2012 to 11 November 2013).  Therefore, the encroachment must have delayed the plaintiff from deriving rental income for 16 months 20 days (ie 19 months 20 days - hypothetical 3 months under paragraph 46 of this judgment).

48.  It is not in dispute that the market rent of the house so constructed is $15,600 per month.

49.  The loss of rental income, therefore, is $259,896 ($15,600 x 16 months 20 days).

Conclusion

50.  Based on the above findings, I hold that the damages suffered by the plaintiff are:-

Order

51.  Accordingly, I order that the defendant do pay damage to the plaintiff in the sum of $264,073 together with interest thereon at judgment rate from the date of Writ of Summons to the date of payment.

Costs

52.  Costs shall follow the event.  I make an Order nisi that the defendant do pay the plaintiff costs on quantum with certificate for counsel, to be taxed if not agreed.

53.  The Order nisi shall become absolute in the absence of application for variation within 14 days.

( Brian Mak ) Deputy District Judge