IP CHIU FAT AND ANOTHER v. WONG FUNG LING AND OTHERS

HCA 1107/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1107 OF 2012

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D E C I S I O N

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1.  This is the adjourned hearing of a summons dated 21 December 2015 taken out by the 1^st defendant (“D1”) and the personal representative of Yip Chiu Fu (“the deceased”) for an order to set aside the default judgment dated 28 February 2013 and to dismiss the claims of the 1^st and 2^nd plaintiffs (“Ps”) in the present proceedings. By a consent order dated 10 May 2016 Wong Fung Ling (D1) was appointed the personal representative of the estate of the deceased for the purposes of the present proceedings and joined as the 3^rd defendant (“D3”).

2.  Ps have consented to the setting aside application but oppose the dismissal part of the application.  They seek leave to amend their statement of claim and have exhibited a draft of the proposed amended statement of claim.

Background facts

3.  The present dispute involves two branches of the Yip family.

4.  The late Yip Lai Yung had four sons.  The deceased was his second son.  The deceased and his descendants will be referred to as “the 2^nd fong”.  D1 is the widow of the late Yip Fong who was the deceased’s son and hence a member of the 2^nd fong.

5.  Ps are Yip Lai Yung’s great‑grandsons being the descendants of his third son Yip Luk.  Yip Luk and his descendants will be referred to as “the 3^rd fong”.

6.  Ps are and have been the registered owners of the land known as Section A of Shek O Inland Lot No 3 (“the Lot”) since 27 November 1989.  The Lot formed part of a much larger piece of land granted under a government lease to Yip Luk and another in 1922 since which date the Lot has been the family home of the three fongs.

7.  At some stage, an informal division of the land took place between Yip Luk and the other lessee of the Government lease and the Lot came to be registered in the name of Yip Luk, Ps’ grandfather.

8.  The building on the Lot used to have two storeys only (“the original building”).  The ground floor (“G/F”) was occupied by the 2^nd fong free of rent or any charge and the first floor (“1/F”), a small area of land on the G/F (referred to as “the roost” in the judgment in HCA 1113/2012 referred to below) and the staircase adjacent thereto leading to the 1/F was occupied by the 3^rd fong.

9.  Government rent and rates were shared between the 2^nd and 3^rd fongs.  They also shared the costs of a major renovation to the original building in the early 1980s.

10.  Those facts are taken from the findings of L Chan J in his judgment dated 3 February 2015 (“the judgment”) in HCA 1113/2012 (“the 2^nd action”).

11.  Ps commenced HCA 1107/2012 (“the 1^st action”) on 26 June 2012, a day prior to the 2^nd action.  They claimed to be the sole legal and beneficial owners of the Lot and that D1 was in occupation as a mere licensee whose licence had been terminated.  She was thus a mere trespasser.

12.  It was also Ps’ case that D1 was responsible for “unauthorised works” carried out at the Lot.  Those comprised (1) a small open area on one side of the building on the G/F which was enclosed (“the extended G/F”)and occupied by the 2^nd fong together with the G/F as well as a new first flooradjacent to the original 1/F and built on what was formerly part of the uncovered rooftop of G/F (“the new 1/F”), (2) a new second floor built over the roof of part only of the new 1/F (“the new 2/F”) and a new staircase connecting the new 1/F and the new 2/F and (3) building a new entrance to the G/F and a new staircase connecting the G/F with the new 1/F.  The unauthorised works were allegedly carried out in the early 1980s, 2002 and 2011.

13.  Apart from D1, Ps sued persons using and occupying the new 1/F and the new 2/F without the consent of Ps as “D2”.  Although the personal representative of the deceased filed an acknowledgement of service to be joined in the capacity of D2, Ps objected on the basis that the personal representative was not within the description of D2 named in the writ.  The acknowledgment was eventually withdrawn by consent on 28 February 2013.  According to Ps, D2 described persons using and occupying the new 1/F and the new 2/F as licensees of D1.

14.  Ps alleged that D1’s occupation was as licensee. D2’s interest was as D1’s licensee and so it was dependant on, and stood or fell with, D1’s asserted rights/interest in the Lot.

15.  Ps maintained that as D1’s licence had been terminated, Ps being the sole legal and beneficial owners of the Lot were entitled to vacant possession of the same.  They also sought an injunction for demolition of the unauthorised works, reinstatement, possession, mesne profits, damages and other consequential relief. Accordingly, the true ownership of the Lot was the central issue in the 1^st action.

16.  As earlier noted, on the following day, the personal representative of the Deceased (D3) commenced the 2^nd action claiming a half share of the Lot and the right to the exclusive use possession and enjoyment of the G/F.  No claim as such was specifically advanced in respect of the new 1/F, the new 2/F or the extended G/F.

17.  Master de Souza made an order on 24 October 2012 staying the 1^st action to abide by the results of the 2^nd action.  The order was not to the liking of Ps who appealed the master’s order.

The order dated 28 February 2013 (“the 2013 order”)

18.  As Ps considered that the disposal of the 2^nd action would not dispose of the consequential relief claimed in the 1^st action in relation to the unauthorised works, they sought an order that both actions be heard together or one after the other.

19.  Mr Poon (counsel for D1 in the 1^st action) strenuously opposed the continuation of the 1^st action because of his client’s exposure to costs as she was being sued in her personal capacity and as earlier noted, Ps had objected to the acknowledgment of service filed by the personal representative of the deceased as D2.

20.  D1’s case was that her occupation of the G/F was purely as a member of the 2^nd fong under a trust arrangement agreed by the Yip family at a family meeting the effect of which was that each of the 2^nd and 3^rd fongs should have the exclusive right to use and possess one floor of the building: the 2^nd fong was to have the G/F and the 3^rd fong the 1/F.

21.  D1’s position was that if the personal representative were unsuccessful in the 2^nd action, D1 would not contest Ps’ claims but would be willing to submit to any consequential order to be made in the 1^st action following the outcome of the 2^nd action.

22.  The parties agreed to set aside the master’s order upon a default judgment being entered in favour of Ps against D1 in the 1^st action but which judgment would be stayed pending resolution of the 2^nd action.  As is clear from the transcript, the 2013 order (except for the costs provisions relating to that hearing) was made by consent.

23.  The trial of the 2^nd action took place over a period of 5 days in November 2014 and judgment was handed down on 3 February 2015 (“the judgment”).

24.  The issue between the parties was whether the 2^nd fong (of which D1 was a member) and its licensees had any ‘right’ to be on the Lot at all and the nature of the right (if any).  Put differently, the question was whether the 2^nd fong’s occupation of the Lot was pursuant to a personal licence to occupy (per Ps) or pursuant to a trust resulting from a family arrangement (per D3).  The premise underpinning Ps’ claims for possession and consequential relief in respect of the unauthorised works was Ps’ legal and beneficial ownership of the Lot.

25.  The judge ruled in favour of D3 and rejected Ps’ case that the 2^nd fong had no more than a personal licence to occupy which licence had been terminated.  He held that D3 was entitled to a half share of the Lot with the exclusive right to use, possess and enjoy the G/F save and except the roost on the G/F (which is now a kitchen and bathroom) and the staircase adjacent thereto with dimensions as shown on a plan used at the trial of the 2^nd action.

26.  It is common ground and accepted that “the G/F” at §246 of the judgment corresponds to the part shown coloured yellow in the plan used at the trial which reflects Schedule 1 to the statement of claim in the 1^st action and includes the extended G/F.

The present application

27.  On 21 December 2015, D1 in the 1^st action and the personal representative of the deceased (since joined by consent as D3 in the 1^st action) applied by summons to set aside the default judgment and for an order dismissing Ps’ claims in the 1^st action.

28.  Mr Suen, counsel for Ps (but who was not Ps’ counsel at the hearing on 28 February 2013 or at the trial), explained that as the unauthorised works was not an issue raised and decided in the 2^nd action, that issue remained outstanding and Ps should be allowed to pursue it now through the proposed amended statement of claim which takes into account the findings in the 2^nd action in the judgment.

29.  Upon analysis, that characterization does not appear to be correct.  The amended case proceeds on an entirely different legal footing from that upon which Ps’ whole case was grounded in the 1^st action.  ‌Ps have reformulated their claim based on a subsequent event, namely, the judgment.  The cause of action is one of ouster of one of two tenants in common by the other.

30.  The issue to be decided is whether they should be allowed to do so now.

31.  In keeping with CJR principles, the common objective at the hearing when the 2013 order was made was that there should be but one trial to resolve the disputes.  Indeed, that was the reason for Ps’ appeal.

32.  The Ps’ claims in the 1^st action (for vacant possession as well as for relief in respect of the unauthorised works) were premised solely on their successfully establishing sole and beneficial ownership of the Lot and on no other basis.  ‌That basis has gone given the rejection of their evidence at trial.

33.  Ps knew what relief D3 was seeking when they agreed to the default judgment.  As the 2^nd action could have gone either way, its eventual outcome and its effect could not have been wholly unanticipated.

34.  While the judge was not concerned to determine the unauthorised works as such, (the same allegedly having been carried out by D3 sometime between 1980 and 1985 and further unauthorised works in 2002 and 2011), they did feature in Ps’ defence as is clear from §§15(4) and (8) of Ps’ amended defence and the judgment (at §§115 – 117).

35.  In the 2^nd action, Ps adopted the position that D3 (and not D1) was responsible and hence liable for the unauthorised works.  ‌They led evidence to that effect but in the reformulated case they are also pursuing D1 personally.

36.  The judge found that Ps’ father did not object to or interfere with the unauthorised structures D3 had erected.  Ps’ evidence was that throughout the years the 3^rd fong had tolerated the 2^nd fong’s unauthorised works because the two fongs were relatives and preferred to live with anything done by the 2^nd fong so long as the building was still used by the Yip family.

37.  From that evidence the judge drew the inference that Ps (and their father) would not have repeatedly tolerated the unauthorised works if the 2^nd fong was merely a bare licensee: (§189 of the judgment).  He also found Ps’ case (that for about nine decades the 2^nd fong had enjoyed a free bare licence to occupy) “incredible and hard to believe”.

38.  There is little doubt that both parties had proceeded on the basis that resolution of the question of ownership of the Lot would resolve all disputes between them. Neither party considered it necessary to raise any specific issue in relation to the unauthorised works.  It is too late to do so now.

39.  The judge was well aware that the extended G/F formed part of the alleged unauthorised works when he made the order that he did.  The fact that the extended G/F was part of the unauthorised works did not affect the outcome described in §§25 – 26 above.

40.  In my view, it would be contrary to all notions of fairness to grant the Ps leave to amend their claim now and mount an entirely new case based on a subsequent event, and on a wholly different legal footing.

41.  Accordingly, Ps’ application for leave to amend is refused.

42.  Since the legal basis of the claims made in the 1^st action ceased to be sustainable after the judgment, it follows that those claims fall to be dismissed as against D1 and D3.

43.  I also make an order nisi of costs in favour of D1 and D3.