HCMP 3279/2013
[2020] HKCFI 293
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO. 3279 OF 2013
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IN THE MATTER of Order 113 of the Rules of the High Court
and
IN THE MATTER of the Properties known as Lot No. 2643RP in D.D.120, Yuen Long, New Territories, Hong Kong
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BETWEEN
TSANG SHU WO 1st Plaintiff
MAN CHEUNG LAM 2nd Plaintiff
and
Person unknown in occupation of Lot No. 2643RP in D.D.120, Yuen Long, New Territories, Hong Kong 1st Defendant
CHEUNG KWAN HO 2nd Defendant
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Before: Hon Anthony Chan J in Court
Date of Hearing: 7, 8 and 13 January 2020
Date of Judgment: 5 March 2020
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J U D G M E N T
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1. By this action the Plaintiffs seek to obtain possession of a piece of land on which stands a house (“House 41”). They claim to be entitled to such possession by reason of their sub-tenancies over the land in question (“Land”). The 2nd Defendant is the only party responding to this action. He and his family have been residing at House 41 for many years, and he is resisting this action.
Issues
2. The 2nd Defendant says that he and his family have a licence to occupy the Land. It is clear from his pleading that such licence can only be a bare or gratuitous licence. It is trite that such a licence gives no right in the land which the licensee is permitted to occupy, and the licence may be revoked at any time by the grantor. Mr Koo, who appeared for the 2nd Defendant, accepted that if there is a valid sub-tenancy over the Land enjoyed by the Plaintiffs, they would be entitled to possession of the same as a matter of law.
3. However, the 2nd Defendant has a number of challenges in respect of the Plaintiffs’ title as sub-tenants of the Land. These challenges concern :
(i) the validity of the head tenancies under which the Plaintiffs’ sub-tenancies were derived. In particular, whether the head tenancies were properly granted by the Managers of Tang Siu Yu Tso (“Tso”), which owns the Land;
(ii) whether the grant of the sub-tenancies to the Plaintiffs were in breach of the terms of the head tenancies;
(iii) the validity of the sub-tenancies which were only granted by 1 of the 3 joints tenants of the head tenancies;
(iv) the genuineness of the latest head tenancy and sub-tenancy.
4. The Plaintiffs do not accept that the 2nd Defendant or his family have a licence to occupy the Land. In addition, there is an argument on tenancy by estoppel relied upon by the Plaintiffs in the event of any irregularity over the head tenancies or sub-tenancies.
5. Further, the Plaintiffs take issue with the locus standi of 2nd Defendant in challenging the validity of their title to the Land.
Background
6. The Plaintiffs claim that they are sub-tenants of a large plot of land (“Plot”) known as Lot No 2643 RP in DD 120, Yuen Long, New Territories of which the Land forms part. The Plot is situated in a village known as Lam Hau Tsuen.
7. The 1st Plaintiff’s sub-tenancy had in fact expired on 20 July 2017. His claim is of little relevance now. Mr K M Chong, who appeared for the Plaintiffs with Mr Alvin Chong and Mr Cheng, had informed the court that the 1st Plaintiff is no longer seeking any relief in these proceedings.
8. The Plaintiffs’ title to the Plot (including the Land) can be traced to the head leases. On 4 July 2007, a lease of, inter alia , the Plot was granted by the Tso to Tang Chi Yung (“Yung”), Tang Tung Chiu (“Chiu”) and Tang Wing Shing (“Shing”) for a term of 6 years from 4 July 2007 to 3 July 2013 at an annual rent of HK$1,300 (“2007 Lease”). The 3 tenants were members of the Tso.
9. The 2007 Lease was signed by the 3 elders of 3 sub-Tsos: Chik Son Tso; Man Son Tso; and Min Son Tso. Those sub-Tsos represented the 3 branches of the descendants of Tang Siu Yu. According to one of the signatories, Tang Kin Kwok (“Kwok”), who was the elder of Chik Son Tso and a witness of the 2nd Defendant, it was the practice of the Tso that a lease would be signed by the elders of the sub-Tsos[1] .
10. Those 3 elders were Kwok, Tang Tong (“Tong”) and Tang Kau. It is common ground that out of the three only Kwok was a registered Manager of the Tso (there were 3 such Managers at the time).
11. As shown by the documents, the rent under the 2007 Lease was all paid and accepted by the Tso.
12. On 21 July 2012, Yung granted a sub-lease of the Plot to the 1st Plaintiff for a term of 5 years from 21 July 2012 to 20 July 2017 at an annual rent of HK$60,000 (“P1’s Sub-lease”). This Sub-lease was recorded in a booklet printed for rental purposes. The last page of that booklet as reproduced in Trial Bundle C, pg 96, contained a Remark acknowledging the payment of the entirety of the rent in 1 lump sum of HK$300,000. The receipt for that payment was dated 1 August 2012. Both the acknowledgment and the receipt were signed by Yung.
13. It was admitted by the 2nd Defendant that the 1st Plaintiff discovered his occupation of House 41 in about August 2012.
14. On 7 July 2013, after the expiration of the 2007 Lease the Tso granted another 6-year lease to the same 3 members from 4 July 2013 to 3 July 2019 (“2013 Lease”) at the annual rent of HK$1,450. The 2013 Lease was signed by 2 elders, namely, Tong and Tang Ching Ning. They represented Man Son Tso and Min Son Tso respectively (Chik Son Tso was not represented).
15. At the time of the extension, there were 2 Managers of the Tso, namely, Tong and Kwok.
16. Like the 2007 Lease, all the rent had been paid as recorded in a book kept by the Tso. However, the 3 pages of record (“Payment Records”) concerning the rental payments under the 2013 Lease were only adduced at the trial with the leave of the court, and they are the subjects of challenge as to authenticity by the 2nd Defendant.
17. On 14 January 2017, there was a meeting of the members of the Tso during which it was resolved, inter alia , that the 2013 Lease be confirmed by unanimous consent; and that Kwok’s resignation as a Manager of the Tso be accepted with immediately effect.
18. It should be pointed out that Kwok’s unchallenged evidence is that none of the members of his sub-Tsos had attended that meeting.
19. On 20 July 2017, P1’s Sub-lease expired.
20. On 1 August 2017, Yung granted a sub-lease of the Plot to the 2nd Plaintiff for a term of 5 years from 21 July 2017 to 20 July 2022 at an annual rent of HK$60,000 (“P2’s Sub-lease”). P2’s Sub-lease was also recorded in a booklet. The 2nd Defendant challenges the authenticity of this document.
21. Like P1’s Sub-lease, all the rent was paid in 1 lump sum. The undated acknowledgment (part of the booklet) and the receipt dated 1 August 2017 were signed by Yung.
22. Both of the receipts dated 1 August 2012 (see para 12 above) and 1 August 2017 are being challenged as to authenticity.
23. There is a 2-page document dated 4 September 2017 which was described by Mr Chong as a “Confirmation by the Landlord, Tenant and Sub-tenant”. It was signed by Tong on behalf of the Tso, Yung and the 2nd Plaintiff confirming, inter alia , the 2013 Lease and that Yung agreed to sub-let the Plot to the 2nd Plaintiff from 21 July 2017 to 3 July 2019 .
24. From the contents of the document, it was apparently made due to the dissent by Kwok over the 2013 Lease as it was not signed by all the Managers of the Tso[2] . The document was stamped as a lease on 4 October 2017.
25. The 2013 Lease came to an end on 3 July 2019.
26. According to a Confirmation of record of meeting of the Tso (“鄧宵羽祖會議記錄確認”) (“2019 Confirmation”), on 26 August 2019, Yung confirmed that a members’ meeting had been held for the Tso during which it was resolved that the Plot would continue to be leased to him, Chiu and Shing from 20 July 2019 to 30 September 2022 (“2019 Lease”). Further, Yung had sub-let the Plot to the 2nd Plaintiff from 21 July 2019 to 20 July 2022, and it referred to a rent book having been signed by Yung and the 2nd Plaintiff to record the sub-lease.
27. The 2019 Confirmation was signed by Yung and Tong (with the stamp of the Tso) with Tang Chi Hok signing as a witness.
28. At the time of the 2019 Confirmation, there were 2 registered Managers of the Tso, namely, Tong and Kwok.
29. Although the authenticity of the 2019 Confirmation is not challenged, the 2nd Defendant disputes the “authenticity” of the 2019 Lease and the recorded sub-lease to the 2nd Plaintiff.
30. Save as noted, the above is either uncontroversial or based on undisputed contemporaneous documents. However, it should be said that Kwok in his evidence had expressed disquiet about the Record of the 14 January 2017 meeting (“Record of Meeting”) (see para 17 above). He said that notice of the meeting was not given to members of his sub-Tso, and none of the members of the same was present at that meeting.
The Licence
31. The evidence of the Licence came from the 2nd Defendant’s father. Together with Kwok, they were the only witnesses called by the 2nd Defendant, who also gave evidence. The Licence was allegedly granted before the 2nd Defendant was born, and therefore what he knew about it came from his father.
32. According to the witness statement of 2nd Defendant’s father (“Cheung”), which was adopted as his evidence in-chief, in about 1979, Kwok made an oral promise (or guarantee) to him that he and his family could all continue to live in House 41.
33. When asked by the court to repeat what was said to him by Kwok, Cheung said that Kwok told him that he might live there [House 41] for as long as he liked, including his next generation.
34. Under the pressure of cross-examination that such a promise would tantamount to gifting him the Land, Cheung agreed that if the Tso wanted to have the Land back earlier, he and his family would have no objection. Cheung acknowledged that the Tso’s promise was subject to its right to take back the Land.
35. However, Cheung said that in this case the sub-tenants want to take back the Land. Due to question(s) over the validity of the Plaintiffs’ lease(s), this matter has to go to court.
36. I regret to say that Cheung’s evidence of the Licence granted by Kwok was contradicted by Kwok’s evidence. Kwok denied making the alleged promise. He said that he merely told Cheung that there was a meeting of the members of the Tso[3] . Nothing was decided but there was no request for Cheung to leave [the Land].
37. I prefer Kwok’s evidence over that of Cheung on the alleged licence. The latter’s evidence is inherently improbable. It is quite unlikely for Kwok to have given permission for Cheung’s unborn children to stay for as long as they like.
38. Kwok’s evidence that the meeting made no request for Cheung to leave the Land is quite ambiguous. On the other hand, it may be said that given that Cheung’s family had been residing at House 41 since the 1920s, it was an implicit permission to continue to stay on the Land. If it is relevant to do so, I am prepared to make that finding.
39. However, the 2nd Defendant was only born in 1987. I am unable to see how he can take advantage of the implicit permission given by Kwok in about 1979. The evidence establishes no licence granted in his favour by the Tso.
40. Cheung’s witness statement also referred to a telephone conversation between him and Shing which took place in about August 2012 during which he was told that Shing did not agree to the sub-letting of the Plot, and therefore Shing had not signed P1’s Sub-lease. Further, Shing indicated that Cheung and his family could continue to reside in House 41. However, no reliance had been placed in either the 2nd Defendant’s Opening or Closing Submissions on these matters.
Locus
41. I am unable to agree with the Plaintiffs that the 2nd Defendant does not have locus to challenge their title to the Land. The 2 authorities relied upon by them are plainly distinguishable[4] . Although the 2nd Defendant is, at the highest, a mere licencee, he must be entitled to see if the title of the person who seeks to evict him from his home is a valid one. Otherwise, any stranger can ask him to leave House 41. I am in agreement with Coleman J on this issue: see his Decision in this case dated 16 October 2019 [2019] HKCFI 2529 , §26.
42. However, the 2nd Defendant’s challenge to the Plaintiffs’ title must be viewed in light of the fact that he is not a party to any of the contracts which underpin the same. He is not a proxy of the Tso, and this action cannot be turned into a proxy action by the 2nd Defendant on behalf of the Tso.
Validity of the head leases
43. There is no issue concerning the validity of the 2007 Lease. However, I am unable to agree with the Plaintiffs that the lack of challenge to this Lease based on want of signature of all the Managers means that the subsequent Leases cannot be invalid for that reason. The real issue is whether the Managers had unanimously agreed to the Leases. There is no requirement that all the Managers must sign the Lease so long as they all agreed with it (see So Kee Transportation Co Ltd v The Secretary for the Environment, Transport and Works , CACV 363/2005, 12 October 2006, §6). There is no evidence of any dissent by any of the Managers over the 2007 Lease.
44. The same cannot be said in respect of the 2013 Lease. Kwok’s evidence was that he disagrees with it because the sub-letting by the tenants under the 2007 Lease was in breach of its terms which prohibited such activity. Further, the demand by the sub-tenant (1st Plaintiff) of rental payment by the occupants of the Plot was not in the interest of the Tso or in accordance with the wishes of its members. If such rent was to be charged, the benefit of which should go to the members instead of the sub-tenant. Therefore, after the expiration of the 2007 Lease, Kwok had refused to agree to let the Plot to the 3 tenants. This evidence was not challenged.
45. It is well-established that a tso is a trust and the manager registered under s.15 of the New Territories Ordinance , Cap 97 (“Ordinance”), is a trustee. As trustee, the manager holds the property of the tso as legal owner for the benefit of all its members: Tang Kam Wah v Tang Ming Yat , HCA 10141/1998, 26 November 2002, §§62-68.
46. Further, the unanimity principle applies to the managers of a tso: Tang Kam Wah , §72. This requirement cannot be overridden by the decision of the members: Light Ocean Investments Ltd v Enway Development Ltd [1994] 3 HKC 31, at 40D. Thus, the unanimous consent of the Managers of the Tso was required for the 2013 Lease, and the meeting of the members on 14 January 2017 (see paras 17 and 30 above) does not assist the Plaintiffs. If Kwok is acting against the wishes of the members, they may apply to the Secretary for Home Affairs (“Secretary”) to have him replaced.
47. There is no dispute that Kwok had refused to agree to the 2013 Lease. I do not believe that Kwok’s evidence that the practice of the Tso was for leases to be signed by the elders of the sub-Tsos (see para 9 above)[5] is an answer to this problem. The legal requirement for dealing with the property of the Tso cannot be overridden by the practice of the Tso. No authority has been advanced by the Plaintiffs to suggest otherwise.
48. It should be added that even if the requirement was confined to the consensus of the elders, Mr Chong had not provided any justification or authority as to why the 2013 Lease could be validly granted in the face of the disagreement by one of the elders.
49. In respect of the Plaintiffs’ argument that the grant of a lease did not require the agreement of the Managers, firstly, contrary to their submissions, I do not find the authorities of Man Ping Nam or Tang Man Kit (see footnote 4 above) supportive of that proposition. Those authorities support the proposition that a lease granted by the managers does not require the consent of the Secretary.
50. Secondly, some support that a lease has to be granted by the managers can be found in So Kee Transportation Co Ltd , supra , §6.
51. Thirdly, under s.15 of the Ordinance the Managers were empowered to “dispose of or in any way deal with the [land of the Tso]”. This sits perfectly with the notion that they were the legal owners of the Tso’s land. See also the analysis of Cheung JA in his dissenting judgment in Man Ping Nam on disposal of land by managers. I therefore do not accept that the 2013 Lease did not require the Managers’ unanimous consent.
52. As regards the resignation of Kwok, his evidence is that he did mention his resignation on 2 occasions, namely, 8 July 2007 and 8 February 2012, as recorded in the Record of Meeting. Kwok also said that he proposed that his brother be appointed as Manager to replace him, which was also reflected in the Record of Meeting. However, it is common ground that no application was made to replace Kwok as he suggested or otherwise. Therefore, he remains as a registered Manager of the Tso up to now.
53. I do not believe that Kwok’s status as a Manager can be changed simply by the tendering of his resignation and acceptance by the members. Both the appointment and replacement of manager are subject to the approval of the Secretary pursuant to s.15 of the Ordinance. It must be the case that prior to the approval by the Secretary of his replacement, Kwok remains a Manager and is liable for the obligations under s.15.
54. The 2013 Lease was recorded in a book kept by the Tso. The same book contained the Payment Records (see para 16 above). That book was shown to Kwok, who made no suggestion that it was anything other than genuine. I reject the 2nd Defendant’s challenge over the authenticity of the Payment Records.
55. In respect of the 2019 Lease, whilst it was stated in the 2019 Confirmation, the court was not provided with a copy of that Lease. On the other hand, the 2019 Confirmation bore the signature of Tong and a stamp of the Tso. Kwok was asked about the Confirmation and he made no suggestion that it was not genuine.
56. I am prepared to accept that Yung, Chiu and Shing had been granted the 2019 Lease by the Tso. I am not satisfied the Lease is not “authentic” as suggested by the 2nd Defendant.
57. On the other hand, I am not so confident about the existence of the sub-lease to the 2nd Plaintiff as recorded in the 2019 Confirmation. Mr Chong accepted that the sub-lease was not produced to the court. In order words, it could not be a reference to the 2nd Plaintiff’s Sub-lease despite the fact that the same period of sub-tenancy was referred to in the 2019 Confirmation. For reason which will become apparent, it is unnecessary to resolve this issue. If it is necessary to so, I believe, on balance, that more likely than not a sub-lease as recorded in the 2019 Confirmation was granted to the 2nd Plaintiff because of the existence of the 2nd Plaintiff’s Sub-lease (see also para 63 below).
58. Kwok’s unchallenged evidence was that he had not been informed of any members’ meeting as referred to in the 2019 Confirmation, nor did he ever agree to continue to the let the Plot to the 3 tenants.
59. Therefore, the above analysis in respect of the 2013 Lease applies equally to the 2019 Lease given the common factor: lack of unanimous agreement by the Managers.
60. In the premises, those Leases must be void. Mr Chong had expressed no disagreement to Mr Koo’s submission that Yung could not give a better title than he had. Therefore, subject to the Plaintiffs’ argument on tenancy by estoppel, I am unable to see how it can be said that the 2nd Plaintiff is entitled to an order for possession as a sub-tenant of the Plot[6] .
61. For completeness, I should mention that the issues set out in paras 3(ii) and (iii) above were not pressed by the 2nd Defendant. It is unnecessary to deal with them. However, it is worth mentioning that I would have rejected the argument on breach of the terms against sub-letting because it was a matter for the Tso as landlord whether to enforce the head leases, and I do not see why the 2nd Defendant has locus to make that complaint.
Tenancy by estoppel
62. The Plaintiffs rely on the payment and acceptance of rent under both the head leases and sub-leases for their argument on tenancy by estoppel.
63. I shall briefly deal with the remaining issues on authenticity of documents. In respect of the dispute over the 2nd Plaintiff’s Sub-lease, I am inclined to the view that it is authentic. However, probably due to (a) realisation that it covered a period which exceeded the duration of the 2013 Lease and (b) knowledge of Kwok’s objection to the Sub-lease, the parties then entered into the 4 September 2017 sub-lease (see paras 23 and 24 above) which was duly stamped.
64. As for the 2 receipts, I believe that more likely than not they were created long after the rental payments were made because they were only produced to the Plaintiffs’ solicitors in November 2019. However, I see no reason to doubt the rental payments. They were acknowledged in the rental booklets, and it is inherently unlikely for Yung to be providing the Plaintiffs with the documents needed for this action if he had not been paid.
65. I do not believe that the tenancy by estoppel argument assists the Plaintiffs. As accepted by Mr Chong, such an estoppel operates only between the lessor and lessee and not binding on strangers. It is therefore difficult to see how the 2nd Plaintiff is entitled to an order for possession against the 2nd Defendant based on a sub-tenancy by estoppel, the head lease of which was also premised upon an estoppel. See Woodfall’s Law of Landlord and Tenant , Vol 1, [1.041] and Hill & Redman’s Law of Landlord & Tenant , A[47], [64] and [65].
66. For completeness, in answer to this issue, Mr Koo had relied upon 2 authorities in his written Closing Submissions, namely, Rhyl UDC v Rhyl Amusements Ltd [1959] 1 WLR 465 at 475 and Preedy v Dunne [2015] EWHC 2713 (Ch), §§35-42. I do not find these authorities to be helpful for the present purpose. Rhyl UDC was about estoppel against a statutory body and in Preedy the court was concerned with principles of agency (see §43).
Disposition
67. For the above reasons, this action is dismissed and I make an order nisi that the costs of this action be paid by the Plaintiffs, to be taxed if not agreed. The 2nd Defendant’s own costs be taxed in accordance with Legal Aid Regulations.
(Anthony Chan)
Judge of the Court of First Instance
High Court
Mr K M Chong, Mr Alvin Chong and Mr Alvin Cheng, instructed by Raymond Chan, Kenneth Yuen & Co, for the 1st and 2nd Plaintiffs
The 1st Defendant was not represented and did not appear
Mr Ernest Koo, instructed by Simon Wong & Co, for the 2nd Defendant
[1] This part of his evidence contradicts a previous Declaration made by him (see below).
[2] There is a Declaration made by Kowk on 8 February 2016 to that effect that leases of the Tso had to be signed by the Managers.
[3] There was no elaboration of what was discussed but it is likely that Cheung’s occupation of the Land was discussed during the meeting.
[4] Man Ping Nam v Man Mei Kwai , CACV 193/2002, 11 December 2002, §24 and Tang Man Kit v Hip Hing Timber Co Ltd , CACV 137/2002, 13 May 2005, §43.
[5] Kwok actually said that all the elders were Managers of the Tso, but that was not borne out by the evidence.
[6] It was accepted by Mr Chong that unless the 2nd Plaintiff can establish title as a sub-tenant of the Land, no order for possession should be granted by the court.