陳淑珍及另一人 v. 陳玉珍

DCCJ 3460/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3460 OF 2008

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BETWEEN

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J U D G M E N T

1.  In 1971, Madam Kwok Yuk Mui (“Madam Kwok”) became the registered owner of the land, namely, Section A of Lot 1870 (“Lot 1870 SA”) in Demarcation District No. 244 (“DD 244”), Sai Kung, New Territories. In 2006, she gave the lot of land to her daughters, the Plaintiffs. The Plaintiffs say the Defendant has occupied part of Lot 1870 SA under a licence; and such licence has by now been terminated. They seek vacant possession of that part of Lot 1870 SA. The Defendant disagrees; and puts forward a counterclaim for her rights in that part of the lot of land.

Background

2.  Lots 1866, 1868 RP, 1870, 1871, 1872 and 1879 are various lots of land situate at Luk Mei Village, Sai Kung, New Territories (“the Village”).  Lot 1870 was subdivided into 1870 SA and the Remaining Portion (“1870 RP”) in 1971.  These lots of land adjoin each other and thus making the owners/occupiers of them neighbours.

3.  There is no dispute that Madam Kwok and her late husband started to reside in the Village in late 1950s.  So did the Defendant and her late husband.  Madam Kwok’s husband passed away in 1969.

4.  The documents show that in September and October 1971, Madam Kwok purchased Lots 1868 RP and 1870 SA.  The Defendant purchased Lots 1870 RP and 1871.  Liu Yau Fong (“Liu”) purchased, among other lots, Lot 1872.  Ip Muk Ling (“Ip”) purchased Lots 1866 and 1879.  The various lots of land were all purchased from the same owner Chong Chi Yan.

5.  Boundary dispute arose because each owner was in fact occupying part of the other’s lot of land. Specifically:

(1) Ip was occupying part of Lot 1872 belonging to Liu;

(2) Liu was occupying part of Lot 1871 belonging to the Defendant; and

(3) the Defendant, with her husband, was occupying part of Lot 1870 SA belonging to Madam Kwok.

For identification of the various lots of land and the parts so occupied by the neighbours, reference could be made to the plan enclosed with the surveyors’ report [*].

6.  Since the above lots of land are located at a gradient, there was also complaint about discharge of farming waste down slope that caused nuisance to the land occupied by Madam Kwok.

7.  After mediation by 「西貢區潮州同鄉會」(“the Clansmen Association”), the 4 neighbours entered into a Chinese written agreement in the following terms:

“立合约人： 郭玉梅  黄德益夫人  廖友逢  葉木玲  等 関于郭玉梅自置輋地一幅  座落244約編号1870  以前為荒僻之地  人口稀少  建屋地界不明  後因郭玉梅發覺 1870地段被德益等人佔過一部份  经调停數年不決 後由潮僑人士陳福成等调解 判定以佔地多少分别補還地價  計開益出弍仟元  友逢出壹仟元  木玲出伍佰元  至水渠出水问题則判以上三人負責修理  若中途玉梅有改建屋宇  須修改渠道 应由玉梅自理  兹因大家俱属街坊友好  诚恐今後再生纠纷  故訂立此约  各执一份俾便共同遵守此訂“

8.  The agreement was signed by Ip, Liu, Madam Kwok and the Defendant; as well as witnessed by various other persons including the mediator.  It was dated 28 August 1977 (“the Agreement”) [**].

9.  No certified English translation of the Agreement was provided.  Literally, the Agreement is capable of the following meaning:

(1) The Agreement recited the background: Madam Kwok had acquired Lot 1870.  It used to be bare land, scarcely inhabited and building boundary was unclear.  Madam Kwok subsequently discovered that part of Lot 1870 had been occupied by Wong (the Defendant’s husband).  Mediation for several years yielded no resolution.

(2) The Agreement then set out the terms agreed:

(a) Through the mediation of clansmen, Chan Fuk Shing and others, it was resolved that compensation for the value of the land should be made in accordance with the size of the part of each lot of land that they were occupying respectively.  Wong should pay HK$2,000; Liu HK$1,000; and Ip HK$500.

(b) As to the drainage, it was resolved that Wong, Liu and Ip should be responsible for repair in relation to the discharge into the area occupied by Madam Kwok. In the event of any re-construction or modification of building by Madam Kwok that necessitated any alteration of the drainage, it would be Madam Kwok’s own responsibility.

(3) The Agreement ended with the remark: With a view to maintaining neighbourhood comity and avoiding dispute again in the future, the Agreement was made; and each party would keep a copy and abide by it.

10.  The parties to the Agreement have since continued to occupy the various plots of land as before until now.

11.  By a deed of gift dated 20 March 2006, Madam Kwok gave her lots of land including Lot 1870 SA to the Plaintiffs.

12.  In October 2007, the husband of the Defendant passed away.

13.  In August 2008, the first named Plaintiff, through solicitors, commenced the present action.

14.  In November 2009, the second named Plaintiff was added; and the writ amended.

The Plaintiffs’ case

15.  According to the Statement of Claim, the Plaintiffs say that pursuant to the Agreement, Madam Kwok agreed to let the Defendant use the part of Lot 1870 SA that the Defendant had been occupying by then (“the Subject Portion”).  It is in the Amended Reply where the Plaintiffs actually describe that as a licence.  The licence, they say, was subject to termination by reasonable notice, which they allegedly gave by way of letter dated 18 September 2007.

16.  The Plaintiffs seek an order that the Defendant do demolish the structure erected on the Subject Portion; and deliver vacant possession of the Subject Portion to them.  They also claim damages representing the portion the rates and Government rent that Madam Kwok has paid since February 1981in respect of the Subject Portion (being part of Lot 1870 SA).

The Defendant’s case

17.  The Defendant says that her late husband and she started to occupy the Subject Portion in about 1960. This continued after their acquisition of the rest of Lot 1870 and 1871 in 1971.  The boundary dispute came to surface only in 1972.

18.  By virtue of the Agreement, the status quo of occupation of the land there by the various owners was maintained in consideration of payment of compensation of the value of the part of the other’s land respectively occupied by the Defendant, Liu and Ip; and their acceptance of responsibility to pay for the repair of the drainage running through the land occupied by them.

19.  The Defendant contends that the Agreement amounted to an outright sale of the respective parts of the land affected.  Alternatively, an easement was created.  Alternatively this amounted to a covenant running with the respective parts of the land affected.  The Defendant has expended substantially on the construction and improvement of her land including the Subject Portion.  This and the history mentioned above, the Defendant contends, are or ought to have been known by the Plaintiffs who are therefore bound by the Defendant’s equity in the Subject Portion; and are estopped from recovering it.  As to the claim for damages representing the rates and rent, the Defendant further argues that that is time-barred.

20.  The Defendant puts forward a counterclaim for, among others, declaration of her rights over the Subject Portion; and an order that the Subject Portion be conveyed to her at the Plaintiffs’ cost.

Issues in dispute

21.  When the trial began, Mr Szeto for the Defendant abandoned the contention on the basis of easement.

22.  During submission, Miss Mak for the Plaintiffs informed the court that the parties had actually reached settlement in respect of her clients’ claim for damages so that this was no longer in issue.

23.  That leaves the following issues to be determined:

(1) In respect of the Subject Portion, whether the Agreement created an outright sale or a licence.

(2) If it was a licence, whether it was revocable; or one coupled with an equity that runs with the Subject Portion.

(3) If the licence was revocable, whether it has been revoked by the time of the commencement of the present action.

(4) Depending on the conclusion, what relief would be appropriate under the claim or the counterclaim.

The witnesses

24.  The first named Plaintiff, Madam Kwok, the Defendant and Ip gave evidence.  The last three are of advanced age while Liu, according to counsel, was prevented from attending the trial for serious health condition.  The statement of Liu has to be disregarded.

25.  At the time of the Agreement, the first named Plaintiff was only 9 years old.  Her evidence in respect of what happened prior to and around the time of the Agreement, as she confirmed, originated from Madam Kwok.

26.  The Defendant is illiterate.  According to her, she did not take part in the discussion leading to the Agreement.  It was her late husband who did that; and as told by him, the Defendant signed the Agreement.  Her understanding of what was agreed mainly came from her late husband.

27.  The rural background of the people and events, together with the abovementioned observation, must be borne in mind when the witnesses’ oral evidence in respect of what were agreed by virtue of the Agreement is assessed.

The situation prevailing at the time of the Agreement

28.  The occupation of the various lots of land for habitation, farming and cottage industry by the parties to the Agreement and the adjoining neighbourhood had been the pre-existing situation for a decade well before the neighbours actually came to purchase their respective lots of land in 1971.

29.  According to the Defendant, she and her husband first obtained the consent from an elderly surnamed Wong (or “黄婆婆”) to use the piece of farmland for farming and rearing pigs in late 1960.  The land by then had already been separated by iron wire fences from the neighbours, i.e., Madam Kwok, Liu and Ip.

30.  As mentioned, she and the neighbours purchased their respective lots of land from Chong, the owner, in 1971.  According to the Defendant and Ip, the lots of land occupied by them respectively were sold to them at the unit price of about HK$38-40.  They believed Madam Kwok purchased her lots at similar unit price.

31.  The respective conveyances on sale show that Madam Kwok purchased her 2 lots at HK$8,712; the Defendant purchased her 2 lots at HK$6,968; Liu purchased his 4 lots at HK$10,200; and Ip purchased his 2 lots at HK$5,140.

32.  Both the Defendant and Ip claimed ignorance about the lot numbers of the land they were then purchasing until they were arranged to execute the conveyances on sale.

33.  On the contrary, Madam Kwok stated that according to Chong, the Subject Portion was then occupied by the Defendant and her husband pursuant to a tenancy.  The Subject Portion was identified as part of Lot 1870 SA that Madam Kwok was purchasing then.

34.  Madam Kwok complained that the Defendant and her late husband ought to have surrendered the Subject Portion to Madam Kwok after her purchase of Lot 1870 SA from Chong in 1971.  Not only did the Defendant and her husband refused to do so, they erected a bungalow there in 1972.

35.  I have reservation about what Madam Kwok suggested.  To begin with, though allegedly learned from Chong, Madam Kwok gave no detail of the alleged tenancy, such as the term of tenancy, which one would reasonably expect to be of relevance to her.

36.  Further, the Defendant and her husband were actually living and farming in the Subject Portion.  There was no suggestion that Chong was selling Lot 1870 SA to Madam Kwok subject to the alleged tenancy over the Subject Portion.  In the circumstances, it would be strange for Madam Kwok to nevertheless proceed to complete the purchase of the land without having Chong sort out the tenancy situation first.

37.  On balance, I think what the Defendant and Ip said in this respect was more akin to the true situation then.  The dispute arose only upon the discovery of the occupation of each other’s land by the neighbours.  That happened subsequent to the purchase. This was indeed the background of the dispute recited in the Agreement.

Sale

38.  Was the Agreement one for the sale of the part of each lot of land to the neighbour occupying it?

39.  In resolving the boundary dispute, the Agreement, properly construed, aimed at maintaining the status quo of the neighbours’ respective occupation of the lots of land.  The resolution of the dispute in respect of the drainage, properly understood, was not without connection with that goal.

40.  The Agreement referred to “以佔地多少分别補還地價”.  Properly construed, that means that the Defendant, Liu and Ip agreed to compensate the owners whose land was partly occupied by another; and the compensation was meant to represent the value of the part of the land so occupied.

41.  Miss Mak submitted that the Agreement was incapable of constituting an enforceable sale and purchase agreement because the subject matter was uncertain.

42.  Indeed the Agreement concerned the occupation of not just the Subject Portion by the Defendant, but also part of the land of the Defendant by Liu as well as part of the land of Liu by Ip.  Not only was Lot 1870 (instead of Lot 1870 SA) mentioned in the Agreement, but there was also lack of description of any other lots of land.

43.  As far as the enforceability of the Agreement as a sale and purchase agreement of land is concerned, the likely fact that the parties might have an idea about which part of which lot of land was intended to be covered did not suffice.

44.  No mention was made in the Agreement in respect of any formalisation of the alleged sale and purchase.  The fact was that there has never been any formalisation of the alleged outright sale.  This differed from the parties’ experience in 1971 when they executed conveyances for purchasing their respective lots of land in 1971.

45.  Further, formalisation of the sale of the parts of each lot of land that the parties are occupying respectively would have been more complicated than what they have experienced before.  To begin with, there has got to be application for division or sub-division of the lots in the first place.

46.  In those circumstances, I do not agree that one can go so far as suggesting that the Agreement legally amounted to one for sale and purchase of the part of each neighbour’s land to the one occupying it at the time.

Licence

47.  Having said that, I am not to be taken to be suggesting that I do not understand the manner in which the Clansmen Association chose to resolve the dispute.  The fact, as confirmed by the parties, was that the formalities for their purchases of land in 1971were arranged for them by Chong.  The manner in which the Clansmen Association chose to resolve the dispute in 1977 was apparently homemade.  It should be noted that even the Agreement was sent for stamping only in October 2008 after the commencement of this action.

48.  In my judgment, that the Agreement did not legally amount to an enforceable sale and purchase agreement does not compromise what it intended, and actually managed, to achieve at the material time.

49.  The Plaintiffs’ pleaded case is that pursuant to the Agreement, the Defendant agreed to pay HK$2,000 for the licence to use the Subject Portion; and the Defendant, Ip and Liu agreed to pay HK$1,500 towards the construction of drainage to prevent any future discharge of farming waste into her land.

50.  The Defendant and Ip understood that their payments represented the value of the land of the others that they had been occupying by the time of the Agreement so that the status quo could be maintained.  That I find was the nature of their payments.

51.  The Defendant and Ip confirmed that they did not directly pay one another but to the Clansmen Association instead.  To address Madam Kwok’s complaint about the Defendant’s occupation of the Subject Portion, the Clansmen Association handed over the sum of HK$2,000 to her pursuant to the Agreement.  Madam Kwok admitted having received that sum.

52.  The evidence suggests, and I accept, that the remaining HK$1,500 was spent on the drainage repair.  That was the utilisation of the payments to discharge the liability pursuant to the Agreement.  That, I find, did not alter the nature of the payments being compensation by Ip and Liu for their continuing occupation of part of the land of the Defendant and Liu respectively.

53.  Evidence of the surveyors’ valuation of the lots of land in question was adduced at the trial. But I agree with Mr Szeto that it matters not whether the amounts paid by them match the then market values as now assessed.  While referring to compensation, the mediator and the Clansmen Association never purported to have professional valuation of the land.

54.  In principle, the fact that the amounts paid by the parties did not match the assessed market value of the respective parts of the lots of land did not compromise the compensation as valuable consideration for the parties’ agreement to maintain the status quo of their respective occupation of the various lots of land.

55.  In fact, the amounts of payment by the parties respectively were by no means nominal relative to the purchase prices of the various lots of land in 1971 mentioned above.

56.  What then is the nature of the right of the Defendant in the Subject Portion that the Agreement managed to achieve?  The case of the Plaintiffs is that this was contractual licence which was subject to the implied term as to termination by reasonable notice.  The Defendant says that the licence to occupy the Subject Portion is coupled with an equity that binds the Plaintiffs as the successors in title apparently with notice.

Implied term that the licence was subject to termination by notice

57.  At common law, a licence, unless coupled with an interest, was always revocable, for the licence had no estate or interest in the land that would entitle him to remain there: see Megarry & Wade, The Law of Real Property (7^th ed) (at §34-007).

58.  The learned editors in Megarry & Wade continued to explain that this simple position of a licence has been modified in various important aspects.  The first one is that revocation is restricted by contract (see §§ 34-008 to 34-010):

“1. Revocability a matter of construction. Except in those cases which are governed by statute, then whether or not a contractual licence is revocable is a question of construction of the contract. If the contract makes no express provision for determination, the court will imply a term that is appropriate in the circumstances……

…… The judicial consensus is now to the effect that a licensor has no right to eject a licensee in breach of contract, even where equity will not assist the licensee……”

59.  Miss Mak relied on Winter Garden Theatre (London) Ltd v Millennium Productions Ltd [1946] 1 All ER 678 in support of her clients’ case that the licence is subject to an implied term of termination by reasonable notice, in the absence of express provision for determination in the Agreement.  Winter Garden Theatre was indeed one of the cases referred to by the learned editors of Megarry & Wade.

60.  Is the implied term of termination by notice “appropriate in the circumstances” of the present case? I think not.

61.  One must always remember that the status quo was not just that between Madam Kwok and the Defendant.  It was the status quo of the occupation of the various lots of land by all 4 neighbours.  Unless the parties agree otherwise, no party reasonably expected any of them would unilaterally dispossess the other from the part of his land being occupied by that other party.  Otherwise the status quo would be disturbed.

62.  In other words, Madam Kwok was not expected to unilaterally dispossess the Defendant from the Subject Portion while part of the Defendant’s land is being occupied by Liu.  Likewise, the Defendant was not expected to unilaterally dispossess Liu from the part of her land being occupied by Liu while part of Liu’s land is being occupied by Ip.

63.  In her evidence, Madam Kwok stated that she once demanded the Defendant and her late husband to vacate from the Subject Portion.  They refused on the basis that the Defendant’s land was occupied by Liu.  That, in my view, was effectively what the Agreement, properly understood, aimed at preserving.

64.  I also agree with Mr Szeto that the Agreement is clear in that this was a once and for all resolution of the dispute as to occupation of land and the drainage problem for the future.  The Agreement made this clear:”诚恐今後再生纠纷 故訂立此约”, i.e., it was made with a view to preventing dispute from arising again in the future.

65.  It is most unlikely that whilst the Agreement served the purpose of maintaining the multi-party status quo for the future, the Defendant, Liu and Ip understood and agreed to pay their respective sums of money pursuant to the Agreement for a licence that could be subject to termination by notice say after a fortnight of the signing of the Agreement, if Madam Kwok’s case is accepted.

66.  Implying a term that the licence would be subject to termination by notice at any time after the Agreement is inconsistent with the intention of the parties that could be derived from the circumstances prevailing at the time of the Agreement and the wordings of the Agreement; and therefore cannot be appropriate in the circumstances.

Licence acted upon

67.  Lot 1870 SA has been succeeded by the Plaintiffs by way of gift.  The contractual licence to occupy the Subject Portion does not bind the Plaintiffs unless this is coupled with an equity.  This is what is contended on behalf of the Defendant.

68.  Megarry & Wade (above) (at §34-012) explains the second aspect of the simple position of a contractual licence being revocable that has been modified:

“2.   No revocation of a licence acted upon.  It has already been explained that it is a long-established rule of the common law that a licence once acted upon cannot usually be revoked.  “If A gives authority to B for the doing of an act on A’s land, and the act is done and completed, then, whatever be the strict description of the authority …… it is, generally speaking at any rate, too late for A, who gave the authority, to complain of it”  The principle which underlies this rule is similar to the equitable doctrine of proprietary estoppels.  It is unreasonable for B to incur expense in reliance upon A’s licence, and for A then to revoke that licence and treat B as a trespasser ….. The doctrine applies even where A has merely started to perform the act authorised by B and has not completed it.  The doctrine has been overlooked on occasions, and has in any event been largely eclipsed by the equitable doctrine of proprietary estoppel.”

69.  Beside paying the compensation in performance of the Agreement, the Defendant’s family, according to her, continued to live and to farm their land and the Subject Portion as before.  After the Agreement, fences were further erected to demarcate the area occupied by them from her neighbours’ lands.  As mentioned, the drainage was repaired partly at her expense pursuant to the Agreement.  It was until mid-1980s when she ceased keeping pigs on the land occupied.

70.  The Defendant stated, and as suggested by the documents, that due to the depilated state of their hut, she applied for permission from the Government to rebuild it in about 1992.  However, the Defendant was on record not the owner of the Subject Portion, permission was not granted in respect of rebuilding on that part of the land occupied by the Defendant.

71.  In about 1993, the old hut was torn down; and she built a new house on Lot 1870 RP.  She converted the Subject Portion to an open yard slated with cement and marble.  Boundary walls and plantations were erected.  As Madam Kwok admitted, the Defendant is still using the Subject Portion as an open yard and for drying clothes.  The state of the Subject Portion is shown in the photographs produced.

72.  Both the Defendant and Ip confirmed that no further dispute arose in connection with the occupation of the various lots of land by the neighbours since the Agreement.  There is no dispute that Madam Kwok also emigrated to Canada in 1993 and has since spent her time only partly here.

73.  I find what the Defendant said in this respect to be the fact.  I reject the Plaintiffs’ pleaded case that it was due to the persistent objection by Madam Kwok that the Defendant proceeded to demolish the old hut in the Subject Portion in the early 1990s.

74.  Miss Mak submitted in court that the licence granted pursuant to the Agreement was subject to whether the Defendant actually lives on the Subject Portion.  Upon the demolition of the hut, the purpose for which the licence was granted was served; and hence the licence came to an end.  I disagree.

75.  To begin with, it is never the Plaintiffs’ pleaded case or Madam Kwok’s evidence that the licence under the Agreement was one limited to the purpose of preserving the hut in the Subject Portion at which the Defendant’s family was residing at the time of the Agreement.  The evidence is clear that the Defendant and her late husband had been using the land occupied, including the Subject Portion, for the mixed use of habitation and farming.

76.  Further, the suggested licence for a duration limited to the life of the existing hut would have been inconsistent with the terms of the Agreement.  The compensation was fixed by reference to the value of the parts of the lots of land respectively occupied by the neighbours.  No reference was made to variation in the duration of the licence contingent upon particular event.  On the contrary, the Agreement expressly provided a settlement once and for all to prevent dispute from arising again in the future.

77.  In my judgment, the Defendant (with her late husband) has acted upon the licence in terms of and as intended by the Agreement.  There is no room for the implication or operation of a term for the termination of the licence by notice without regard to the multi-party status quo.  This applies to the licence granted by the Defendant to Liu to continue to occupy part of her land; and by Liu to Ip to do the same to part of Liu’s land.

Proprietary estoppel

78.  The Defendant relies on the alternative contention of proprietary estoppel.  Megarry & Wade (above) (at §34-013) explains the third aspect of the general position of revocability of licence that has been modified:

“3. Revocation restricted by estoppel. The doctrine of proprietary estoppels has already been explained. It has no necessary connection with the law of licences, though the converse was once thought to be true. If A has a licence over B’s land, and B encourages him to act to his detriment in the belief that he will acquire certain rights over B’s property, an equity may arise in A’s favour. One way in which the court may satisfy that equity arising by estoppels is by declaring A’s licence to be irrevocable, either in perpetuity or only on the occurrence of certain events or only by giving an extended period of notice.”

79.  Inwards v Baker [1965] 2 QB 29 was the case cited by the learned editors, and by Mr Szeto as well, to illustrate this principle (at p.36G-37G, per Lord Denning MR):

“So in this case, even though there is no binding contract to grant any particular interest to the licensee, nevertheless the court can look at the circumstances and see whether there is an equity arising out of the expenditure of money. All that is necessary is that the licensee should, at the request or with the encouragement of the landlord, have spent the money in the expectation of being allowed to stay there. if so, the court will not allow that expectation to be defeated where it would be inequitable so to do……

……But I think that any purchaser who took with notice would clearly be bound by the equity……It is an equity well recognised in law.  It arises from the expenditure of money by a person in actual occupation of land when he is led to believe that, as the result of that expenditure, he will be allowed to remain there.  It is for the court to say I what way the equity can be satisfied.  I am quite clear in this case it can be satisfied by holding that the defendant can remain there as long as he desires to as his home.”

80.  This is really the consideration of the abovementioned circumstances from the perspective of equity.  As mentioned, what underlies the principle that a licence acted upon becomes irrevocable is similar to the equitable doctrine of proprietary estoppel.

81.  The basis on which the terms of the Agreement were agreed; and the performance of them, I find, was that the multi-party status quo of occupation of the land by the owners would be maintained in the future.  For the matters discussed above, it is not equitable to allow Madam Kwok to seek to unilaterally disturb such status quo by mere notice.

Whether the Plaintiffs are bound

82.  According to Madam Kwok and the first named Plaintiff, Madam Kwok transferred her various plots of land to the Plaintiffs with a view to facilitating the future inheritance.  That the Plaintiffs had knowledge about the circumstances that gave rise to the Defendant’s right in the Subject Portion is beyond dispute.  In these circumstances, being donee of the lands including the Subject Portion, the Plaintiffs take the lands subject to the equity of the Defendant.

Revocation of the licence

83.  For the above reasons, the question of whether the Plaintiffs have revoked the licence to the Defendant by notice has no more bearing on the determination of the parties’ rights. I deal with this for completeness.

84.  It was in the Amended Reply that the Plaintiffs first allege that the licence was terminated by written notice dated 18 September 2007.  This alleged notice was nowhere to be found until Miss Mak for the Plaintiffs sought to produce it only when the trial began.  On its face, this was a letter from the solicitors for the Plaintiffs sent on the instruction of both Madam Kwok and the first named Plaintiff.

85.  Mr Szeto expressed his scepticism about this lately disclosed letter.  I can understand why.  Though issued under the letterhead of the solicitors for the Plaintiffs, the reference number, contact person and even the address of the recipient of the letter were lacking.  This is most unusual.

86.  The letter suggested that it was Madam Kwok’s instruction that the Agreement was a licence that would be terminated with effect from 30 November 2007.  Had that been communicated to the Defendant, the continued occupation of the Subject Portion since 1 December 2007 would have been treated as trespass.

87.  In the following year, the Plaintiffs’ solicitors sent 2 letters of demand dated 12 February and 25 April 2008 to the Defendant, which the Defendant did receive.  Different from the letter allegedly sent on 18 September 2007, they bore their reference numbers and the name of the responsible solicitors for contact.

88.  More importantly, these letters made no reference whatsoever to the letter allegedly sent on 18 September 2007.  As mentioned, their position would have been that by then, the Defendant’s occupation was trespass, after the termination of the licence with effect on 30 November 2007 had allegedly been communicated to the Defendant. On the contrary, the letters made reference to the Agreement as if it had never been referred to before.  It was also alleged that the Agreement was entered into by the Defendant’s late husband; and it had allegedly ceased to have effect following his passing (in October 2007).  On this basis, the Plaintiffs’ solicitors demanded the Defendant to hand over the possession of the Subject Portion on or before 15 March 2008.

89.  All these lead one to suspect whether the so-called 18 September 2007 notice was at most a draft at the time.  Of course that could only be a matter of speculation.  What matters is that when confronted with this letter in court, the Defendant denied having seen it before then.  The evidence of the first named Plaintiff in this regard did not impress me as reliable personal knowledge about the existence and the posting of this letter by her solicitors in September 2007 to the Defendant.  Considering the above evidence, I am not satisfied that the sending and receipt of this letter is proved.

Other allegations

90.  In court, Madam Kwok emphasized that she reluctantly signed the Agreement as a result of the representation allegedly made by the Clansmen Association.  She was allegedly assured that signing the Agreement did not mean she would lose title to the Subject Portion.  She was also alleged warned against the consequence to the safety of her family if she refused to sign the Agreement.

91.  Insofar as the allegation that Madam Kwok might be misled or threatened into signing the Agreement is concerned, there is no alternative plea for nullifying the Agreement for any vitiating factors, such as misrepresentation or undue or unconscionable factors at the time.  Nor is there alternative plea for rectifying the Agreement on the basis that the terms of the Agreement did not accord with her understanding of what was agreed.

The Plaintiffs’ claim for damages

92.  The pleaded case of the Defendant is that the parties agreed to be responsible for the rates and rent of the land they own irrespective of the fact that part of it was occupied by another party.  Mr Szeto conceded that the alleged agreement in respect of rates and Government rent was not proved.

93.  The concession must be right, as the allegation is not borne out by the wordings of the Agreement at all or evidence.  According to section 21 of the Rating Ordinance, Cap.116, the liability for payment of rates is primarily on the occupier of the land.

94.  As mentioned, Miss Mak informed the court that this part of her clients’ claim has been settled and therefore no longer an issue before me.  Mr Szeto pointed out that his client’s plea in defence of this part of the claim has been overtaken by events.

The counterclaim

95.  I find that the Agreement did not amount to an outright sale of the Subject Portion by Madam Kwok to the Defendant; but this was a licence to occupy the portion as part of a multi-party status quo of occupation of land by the parties to the Agreement in the future.  An equity arose in favour of the Defendant which is binding on the Plaintiffs as the donee of the Subject Portion with notice.  The question now is how the court should satisfy that equity.

96.  In my judgment, the appropriate way to satisfy the equity in the circumstances of this case is to uphold the multi-party status quo of occupation of the land by the neighbours. In practical terms, the Defendant should be entitled to occupy the Subject Portion for as long as she wishes, in the absence of contrary agreement between the neighbours, the Plaintiffs included.  For delineation of the Subject Portion, reference should be made to the surveyors’ report produced [*].

Conclusion and order

97.  No order is required in respect of the claim for rates and Government rent.  The rest of the claim is dismissed.  In respect of the counterclaim, I make a declaration of the Defendant’s entitlement in the practical terms mentioned in the preceding paragraph.

98.  I make a nisi order that the Defendant shall have the costs of this action, including any costs reserved.  Costs shall be taxed, if not agreed, with certificate for counsel. The Defendant’s own costs shall be taxed in accordance with the Legal Aid Regulations.  In the absence of application within 14 days to vary, the nisi costs order shall become absolute.

[*] Particularly, the coloured plan on page 239 of the trial bundle

[**] The original of the Agreement is produced and marked agreed exhibit no.1