KING POLICY DEVELOPMENT LTD v. WAN KIN SHING

CACV 107/2018

[2020] HKCA 428

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 107 OF 2018

(ON APPEAL FROM HCA 696/2015)

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JUDGMENT

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The Court:

Introduction

1.  This is the defendant’s appeal from the judgment (“the Judgment”) of Chung J (“the Judge”) given on 29 March 2018 entering judgment for the plaintiff and dismissing the defendant’s counterclaim with costs to the plaintiff [1].  The Judge granted two injunctions in favour of the plaintiff.  The first injunction restrains the defendant from (i) excavating and/or carrying out any construction work on the plaintiff’s land; (ii) connecting and/or constructing any pipe or drain on or underneath the plaintiff’s land and/or running any pipe or drain from or through the plaintiff’s land; and (iii) placing, keeping or leaving any items, articles or chattel on the plaintiff’s land.  The second injunction compels the defendant to take steps to (i) disconnect and remove any pipe, drain and other items, articles or chattels which were connected, installed and/or placed by the defendant on and/or underneath the plaintiff’s land; and (ii) reinstate the part of the plaintiff’s land that has been dug, excavated and/or damaged by the defendant. 

The background

2.  The plaintiff is the registered owner of a multi-storey building known as “Century Court”, which is located at the junction of Stewart Road and Jaffe Road, Wanchai.  The building next to it on Stewart Road is “City Centre Building” which is a residential building (“City Centre”).  Located between the two buildings is a scavenging lane (“the lane”).  Part of the lane lies within land owned by the plaintiff and part of it lies within land owned by the registered owner of City Centre.   It is not disputed that there is a right of way over the lane whereby people can go pass and repass along it.

3.  There exists a structure at the lane built along the exterior wall of City Centre and the defendant operates a shop there (“the defendant’s shop”). The defendant claims adverse possessory title over the part of the lane occupied by the defendant’s shop. In High Court Action 354 of 2015, the defendant (as plaintiff in the action) sued the plaintiff and the owner of City Centre (as defendants in the action) for declaratory relief to that effect.  There is a dispute over whether the defendant’s shop occupies any part of the plaintiff’s land. That action has yet to come to trial.

4.  On or about 16 March 2015, the defendant, without any consent or permission of the plaintiff, caused some excavation works to be carried outfor the purpose of installing a fresh water pipe to serve the defendant’s shop. The paved surface of part of the lane within the plaintiff’s land was dug up.  The plaintiff demanded the defendant to cease the excavation works and to reinstate the excavated area, but the defendant did not comply with the demand.

5.  On 30 March 2015, the plaintiff commenced this action seeking injunctive relief against the defendant to restrain him from carrying out any excavation and construction works at the lane for installing water pipes connecting the defendant’s shop and to compel him to reinstate the piping and the excavated part of the lane.  

6.  It is the defendant’s case that, by its nature, the lane is not exclusively for the use of the plaintiff or the Incorporated Owners of City Centre, and that a right of way exists for other people to pass and repass along the lane.  The defendant also claims to have carried out excavation works on the lane for similar purposes in or about 1991, 2002 and 2013 without seeking the prior consent or approval of the plaintiff, and the plaintiff did not object to it[2]. 

7.  The defendant further relies on:

(a)     an agreement reached in May 2006 among (i) the parties to this action; (ii) the owners of City Centre and (iii) the Buildings Department, which provided for a right to use the lane for the maintenance and servicing of Century Court, City Centre and the defendant’s shop (“the 2006 Agreement”); and

(b)     an agreement reached in July 2007 among the same parties, which provided that in return for the defendant reducing the coverage of the canopy of the defendant’s shop:

(i)     the Buildings Department would withdraw the Building Order dated 25 August 2005 against City Centre for the demolition of the defendant’s shop and

(ii)     one meter between the coverage of the defendant’s shop and the external wall of Century Court could be used by the parties and the owners of City Centre for the maintenance of, and provision of public utilities to, their respective properties (“the 2007 Agreement”)[3].

8.  The defendant further claims that on 16 to 18 March 2015 he had several encounters (collectively “the March 2015 encounters”) with people “connected to” Century Court, whom he believed were authorized to represent the plaintiff regarding the excavation and installation works carried out on the lane.  The defendant says that, in reliance on the plaintiff’s representations and conditions conveyed through these people, he carried out and continued the excavation works at the lane. 

The judgment below

9.  In the Court below, the defendant sought to rely on two lines of defence:

(a)     Estoppel, including proprietary estoppel, promissory estoppel or estoppel by convention; and

(b)     Easement.

10.  At the trial, the Judge regarded the main issue to be whether the parties had reached any agreement concerning the defendant’s entitlement to carry out the disputed excavation and installation works.  As there was no written record or document to evidence the alleged 2006 and 2007 Agreements, the Judge resolved the issue by assessment of the witnesses’ testimonies given during the trial. 

11.  The Judge found the plaintiff’s witnesses truthful and reliable and rejected the 2006 and 2007 Agreements as inherently implausible.  According to the defendant, the issue that led to the meeting in May 2006 was a canopy erected by the defendant that protruded from the defendant’s shop towards the external wall of Century Court; and the Buildings Department was involved because of a complaint lodged by Century Court.  The Judge found that the plaintiff’s witness Mr. Liu, the estate assistant of the management company engaged by Century Court, who was present in the 2006 meeting, had no authority to make any commitment concerning a property right on behalf of the plaintiff.  The Judge also found there was no valid basis, legal or otherwise, on which the Buildings Department could have conferred legal title or any land interest on any individual, and it was highly unlikely for a government department like the Buildings Department to be a party to an agreement dealing with the rights and interests of privately held land lots. For similar reasons, the judge reached the same conclusions as regard the 2007 Agreement.

12.  Regarding the March 2015 encounters, the Judge found that the people who met with the defendant at the lane were merely responsible for the daily maintenance of Century Court.  They asked the police to intervene as they considered the defendant’s acts illegal and objectionable.  Soon after the encounters, the plaintiff commenced this action. In these circumstances, the Judge considered, it was far-fetched to suggest that the March 2015 encounters could give rise to any kind of estoppel.

13.  On the totality of the evidence, the Judge found against the existence of the 2006 and/or 2007 Agreements.  The Judge also did not find any basis for estoppel of any kind to arise. The Judge granted the injunctive relief sought by the plaintiff and dismissed the defendant’s counterclaim.

The appeal

14.  At the first hearing on 18 September 2019, the appeal was adjourned part-heard due to the submission of Mr Lin, who appeared for the plaintiff, that the defence based on easement had been disallowed by the Judge due to the state of the pleadings.  To make good the submission, Mr Lin requested for an adjournment to enable the plaintiff to obtain the transcript of the trial. Counsel also indicated that he would advance a legal submission that the plea of easement cannot be advanced by a squatter as a matter of law since the doctrine of lost modern grant is not applicable.

15.  The plaintiff subsequently obtained the transcript of the trial and added it to the appeal bundle.  Supplemental submissions were also lodged by both parties.  The hearing of the appeal resumed on 26 May 2020. 

Grounds of appeal

16.  The Re-Amended Notice of Appeal filed on 18 December 2018 contains 33 pages and the content is more in the nature of a submission instead of setting out the grounds of appeal in a concise and succinct manner. Such a document is unhelpful to the proper and fair disposal of an appeal, see: Chow How Yeen Margaret v Wex Pharmaceuticals Inc [2018] 3 HKLRD 163 at [13]. 

17.  Having regard to the Re-Amended Notice of Appeal and the defendant’s submissions, the grounds advanced by the defendant can be summarized as follows:

(1)     The Judge overlooked the approval letter of the Water Supplies Department (“WSD”), and erred in finding the defendant did not complete his excavation works by 18 March 2015 when what was required of him was only to expose the main water pipe.  The Judge also erred in his findings at [29] to [31] of the Judgment due to his failure to understand water installation practice. 

(2)     The Judge misunderstood and overlooked the evidence that (i) part of the lane has been occupied by the defendant’s shop for over 60 years and the defendant is currently claiming adverse possession of the same in HCA 354/2015, and excavation works had been carried out in the past for the installation and maintenance of utilities services; and (ii) the 2006 Agreement was supported by documents, meeting records and communication and exchanges with the Buildings Department.

(3)     The Judge neglected the evidence of Ho Kin who gave evidence at the trial. The defendant also complained that his trial counsel failed to conduct sufficient cross-examination of the plaintiff’s witnesses.  

(4)     The Judge failed to pay proper regard to “the timing and responses of events” concerning the excavation works from 16 to 18 March 2015 in the analysis of the defence of promissory estoppel.

Discussion

(A)      Estoppel

18.  Grounds (3) and (4), as well as (2)(ii), relate to the defence based on estoppel.  They can be addressed together since they are all directed at the Judge’s findings against the defendant in respect of representations alleged to have been made on behalf of the plaintiff that underline the defence case on estoppel.  The Judge found, in a nutshell, there were no 2006 and 2007 Agreements.

19.  As regard the March 2015 encounters, the Judge held at [20] of the Judgment that the encounters, at the highest, only showed that the people responsible for the daily maintenance of the plaintiff’s building did not see a need to take imminent legal action, despite that they considered the defendant’s act to be unlawful or objectionable. The Judge concluded that the encounters could not give rise to any estoppel.   

20.  Ho Kin was the plaintiff’s witness.  He was an assistant property manager employed by the manager of the plaintiff’s building in 2015. His evidence[4] concerns what happened on 17 March 2015. To some extent, it overlaps with the evidence of Chan Kin Sang, another witness of the plaintiff.  Like Chan, Ho refuted the defendant’s suggestion that there was an agreement to allow him to continue with the excavation works.  As pointed out by the Judge, the manager made a complaint to the police about the defendant’s excavations, and police officers had attended the scene.  After hearing what the parties said, the police officers regarded the dispute was a civil matter and left it to the parties to resolve by legal proceedings. 

21.  We have reviewed the video and audio clips of the encounter on 17 March 2015[5]. There is nothing in them to support the defendant’s assertion that either Ho or Chan had promised to allow him to continue the excavations even though this involved works being done on the plaintiff’s land, as opposed to works on the other part of the lane.

22.  Hence, there is nothing in Ho’s evidence that can assist the defendant. The defendant’s arguments in the Re-amended Notice of Appeal are based on a misreading of Ho’s affirmation. Importantly, the Judge had referred to, and accepted, the evidence of Chan.  His omission to refer to Ho’s evidence does not materially affect the analysis of the defendant’s case on estoppel based on the 17 March 2015 encounter.

23.  As regard the cross-examination of witnesses, the defendant is bound by how his counsel conducted the trial.  In our judgment, there is no merit in the criticism that the defendant levelled against his trial counsel in the Re-amended Notice of Appeal, which were simply premised on the number of questions asked in cross-examination.  

24.  There is also no merit in the defendant’s attempts to implicate the plaintiff’s solicitors for misleading the court through the trial bundles. The defendant was legally represented at the trial. If there were anything misleading in the trial bundles, one would expect his lawyers to have pointed it out to the Judge.  No such complaint was made at the trial.  There is no evidence from the defendant’s former lawyers to account for the absence of such complaint.  In these circumstances, this Court cannot act on the defendant’s bare assertions, which were based on his impression of the arrangement of the trial bundles formed by reference to the state of the bundles returned to him.

25.  As to the evidence relating to the sequence of events between 16 and 18 March 2015, we have read them. We do not discern any incontrovertible evidence that can invalidate the Judge’s observations at [20] of the Judgment.

26.  In respect of the 2006 Agreement, the Judge’s reasoning in rejecting the defendant’s case is set out in [12] to [17] of the Judgment.  Having considered it against the defendant’s submissions and the evidence identified in his revised summary of 20 August 2019, we do not find any valid basis for faulting the reasoning.  We are not persuaded that the Judge had misunderstood or overlooked any material evidence in coming to his finding on the facts that there was no agreement reached in 2006 about the right of the defendant to use the lane.  The evidence identified by the defendant in his revised summary (apart from those assertions made by the defendant which the Judge was entitled to reject in assessing the evidence and the weight to be attached) is consistent with the Judge’s analysis.

27.  There is, in short, no palpable error on the part of the Judge, and the defendant has failed to show that the Judge is plainly wrong in his finding on the facts.  This being the case, there is no basis for this Court to disturb the Judge’s rejection of the 2006 and 2007 Agreements and his finding on the March 2015 encounters: see China Gold Finance Ltd v CIL Holdings Ltd CACV 11/2015, 27 November 2015; Hoptai Sharkfins Co Ltd v Productos Pesqueros Gallegos SL CACV 240/2014, 7 December 2015.

28.  It follows that the defendant fails in his challenge of the Judge’s rejection of the defence based on estoppel.

(B)      Easement

29.  As to the other grounds advanced by the defendant in this appeal, they may be seen as somehow related to his other line of defence based on easement. 

30.  In the Judgment, the Judge did not specifically address the issue of easement as his focus was solely on the defence of estoppel and the evidence associated with it.  In the section under the heading “Other Matters”, the Judge alluded to the defendant’s reference to the pre-2006 events, and rejected the evidence and the related legal argument as “too weak and/or ambiguous to properly ground any kind of estoppel”[6]. The Judge also rejected the defence case that the works were undertaken by the Waterworks Department[7] (sic).[8] With regard to the defendant’s plea in [104] of the counterclaim that he had acquired a right to arrange for the laying of underground water supply pipes to connect the water mains to the defendant’s shop, the Judge rejected it as “nothing more than a recent invention”[9].

31.  Mr Lin submits that the defendant should not be allowed to raise any ground of appeal on the basis of easement by prescription or based upon a lost modern grant as it has not been distinctly pleaded and the evidence adduced at the trial does not support it.  

32.  In the Defence and Counterclaim, after referring to the nature of the lane and averring in [12] that the occupiers of the other portions of Inland Lot 2756 “have a right to go pass and repass along [the lane]”, it avers in [18] that “by virtue of the Confirmatory Reassignment and Confirmatory Assignment, the defendant as owner of the Wall Shop, enjoys at least a right of way over [the plaintiff’s land]” (emphasis added).  This is an ambiguous plea because it is not clear whether it is contending that there are some additional rights over and above the right to go pass and repass the lane and, if so, what are the rights.

33.  At [20] to [22], it refers to past excavation works carried out in 1991, 2002 and 2013 by the defendant on the lane, for which no consent was sought from the plaintiff or any other person.  At the plaintiff’s request, the defendant had provided further and better particulars of these excavation works. The 1991 and 2013 excavations concerned the laying and maintenance of power cables for the supply of electricity to the defendant’s shop, and the 2002 excavation was for the maintenance of broken water pipe.  It is also averred that in 2002 and 2013, the plaintiff observed and took photos of the excavation works and did not raise objection to them.

34.  At [26] to [42], the Defence and Counterclaim pleads the 2006 and 2007 Agreements and the representations made at the 2006 and 2007 meetings.  At both [32] and [37], it is averred that the excavation works at the lane were necessary because the water mains and the electricity power cables for Inland Lot 2756 were laid underneath the lane.  At [39], it pleads that the plaintiff’s course of conduct gave rise to various estoppel (i.e. promissory estoppel, estoppel by convention and estoppel by representation). Then at [40], it avers that “Further, or in the alternative, the Plaintiff’s course of conduct gave rise to a proprietary estoppel in favour of the Defendant, and the Defendant thereby acquired an easement and/or proprietary right to lay underground water pipes and electricity power cables to connect the Wall Shop to the water supply pipes and electricity supply underneath the Service Lane.” (emphasis added)

35.  The pleading goes on to make averments to support the estoppel defence. At [43], reference is made to the approval given by the Water Supplies Department on 4 February 2015 for the installation of fresh water supply to the defendant’s shop.  Then at [44], which is related to Ground (1) in this appeal, the defendant makes the point that while the excavation works were arranged by the defendant (as required by the Water Supplies Department), the work of attaching a pipe to connect the water mains to the water meter of the defendant’s shop was to be undertaken by the Water Supplies Department or its contractor. This is reiterated at [52] of the Defence and Counterclaim.

36.  Between [54] and [96], the events that took place between 16 and 18 March 2015 are set out in great detail as if the pleading was a witness statement.  This culminates in averments in [97] of various estoppels. Then at [98], it avers in terms similar to [40] that “Further, or in the alternative, the Plaintiff’s course of conduct gave rise to a proprietary estoppel in favour of the Defendant, and the Defendant thereby acquired an easement and/or proprietary right to arrange for lay underground water pipes to connect the Wall Shop to the water supply pipes underneath the Service Lane …”  (emphasis added)

37.  The plea is further repeated in the Counterclaim at [104], which states that “By reason of the matters pleaded above, the Defendant has acquired a right to arrange for laying underground water supply pipes in the Service Lane to connect the Wall Shop to the water mains pipe … by way of proprietary estoppel.” (emphasis added)

38.  Looking at [40], [98] and [104] of the Defence and Counterclaim, it can be seen that what is pleaded is an easement or “proprietary right” to lay underground water pipes based on proprietary estoppel by virtue of the plaintiff’s course of conduct.

39.  However, what the defendant sought to advance at the trial is an easement based on prescription.  In his written opening submission at [43(1)],  the defendant’s trial counsel formulated the issue as “whether or not the defendant (as a squatter) has acquired an easement and/or proprietary right to lay underground water pipes and electricity underneath the Service Lane.”[10].  He outlined the arguments on prescriptive easement at [46] to [52] of the written submission, referring to passages in Chung Yeung Hung & Ors v Law Man Nga [1997] HKLRD 1022, at 1025I to 1026B and Jourdan and Radley-Gardner on Adverse Possession (2nd ed) at [23.21] at p. 497.[11]

40.  In opening the plaintiff’s case on the first day of the trial, Mr Lin referred to the defendant’s written opening submission and indicated that he would be taking the point that it was not open to the defendant to raise the defence of easement because it was not pleaded.[12]

41.  In the same afternoon at the start of the defence case, the defendant’s counsel applied to amend the Defence and Counterclaim by adding a few words to [18], [19] and [105], which counsel contended would remove any obscurity as to whether the issue of easement had been pleaded[13].  The amendments were opposed by Mr Lin primarily on the basis that the amendments were useless.[14] In the course of exchanges with counsel, the Judge remarked that the proposed amendments did not seem to him to make much difference.[15]  We have perused the proposed amendments.  They do not advance a case of easement by prescription based on the doctrine of lost modern grant.  On the contrary, it is clear that he was trying to advance a case of easement based on the Confirmatory Reassignment and Confirmatory Assignment.[16]  In the end, the Judge refused the application.[17] 

42.  Although the Judge refused the amendments, he had not ruled on whether the defendant was entitled to raise the issue of prescriptive easement.  That this was the position can be seen from the parties’ written closing submissions. The plaintiff’s written closing submission referred to [46] to [52] of the defendant’s opening submission and contended that it was not open to the defendant to raise the issue of prescriptive easement because it was not pleaded.[18] The defendant’s closing submission, on the other hand, reiterated that whether the defendant as a squatter had acquired an existing easement and/or proprietary right to lay underground water pipe and electricity power cable under the lane was an issue to be determined, and went on to canvass the evidence and legal principles in detail.[19] 

43.  Mr Lin informed us that, after the parties had put in their written closing submissions and before the case resumed to hear the closing submissions, the Judge had, through his clerk, referred counsel to Bullen & Leake & Jacob’s Precedents of Pleadings (18^th ed) at pp 766-767.  There is a passage at [93-07] which stated that “Where a claim is based on express or implied grant, or upon a lost grant, or even upon prescription at common law, the basis on which it arises should be distinctly pleaded.” 

44.  In his oral submission, the defendant’s counsel did not submit on the passage in Bullen & Leake & Jacob’s Precedents of Pleadings.  Neither side’s counsel addressed the court on the issue of easement by prescription, and the Judge did not refer to counsel’s written submissions on the issue. 

45.  Looking at the events in the round, although the Judge did not specifically say so, it must be clear to both counsel he was of the view that in the absence of a distinct plea of easement by prescription, it was not open to the defendant to take the issue.   

46.  Had the defendant’s counsel still wished to pursue a line of defence based on easement by prescription, he should have addressed the Judge how he could have done so without amending his pleadings. As he did not do so, the Judge was entitled to proceed on the basis that he had abandoned that line of defence.

47.  It is trite that pleadings serve the important function of defining the issues in a trial and dictating the course of proceedings both before and at trial.  A pleading must therefore fairly and precisely inform the other party in the litigation of the pleader’s case and the issues to be tried so that proper preparation for the trial can be made, and time and costs are not expended unnecessarily on other issues. The requirements of pleadings are to ensure fairness between the parties and to protect parties against being taken by surprise by unpleaded issues: see Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663 at [21]; and Sinoearn International Ltd v Hyundai-CCECC Joint Venture (2013) 16 HKCFAR 632 at [30], [31] and [34].       

48.  A claim for easement should be pleaded distinctly with the basis giving rise to it and the material facts relevant to it clearly identified and set out.  As the discussions above show, the defendant’s pleading in this regard is unsatisfactory. The only easement pleaded in the Defence and Counterclaim is an easement based on proprietary estoppel by virtue of the plaintiff’s course of conduct (see [40], [98] and [104]).  There is no plea of a claim for a prescriptive easement. Proprietary estoppel and easement are two different concepts. While some material facts giving rise to the two concepts may overlap, there are also matters which are relevant to one but not to the other.  It is therefore confusing to link easement to proprietary estoppel.  It is also not clear from the Defence and Counterclaim whether the defendant is relying on some other “proprietary rights”, and if so what are these rights, to “arrange for” the laying of underground piping to connect the water mains to enable the supply of water to the defendant’s shop. 

49.  At the same time, the pleading has not clearly identified the material facts relied on for the prescriptive easement to arise.  Putting aside the representations and the 2006 and 2007 Agreements (which the Judge had rejected), it may be argued that the following matters are relevant to the defendant’s case on easement or proprietary right:

(a)     the right of way provided in the Confirmatory Assignment and Confirmatory Reassignment relating to the land;

(b)     the occupation of the part of the lane by the defendant’s shop since 1952 and the claim for adverse possession;

(c)     the past excavation works; and

(d)     the approval given by the Water Supplies Department and the undertaking of the installation of the connection piping to the water mains underneath the lane.

50.  It can be readily seen that the right of way in the assignments can only give rise to a right to go pass and repass the lane (as held by the Judge at [2] and [25] of the Judgment).  Further, although there is reference to the claim for adverse possession in HCA 354/2015, [20] the defendant is not seeking to establish this in the action below.  

51.  As to the past excavation works and the past dealings with the Water Supplies Department, Mr Lin points out that although the pleading has referred to these matters, it has not related them to a claim of easement.  These matters are not admitted by the plaintiff in the Reply and Defence to Counterclaim.  Mr Lin submits that had the pleading contained a distinct plea of prescriptive easement and these matters properly pleaded as material facts supporting the plea, the plaintiff would have explored and/or adduced additional evidence at the trial, including the history of water supply to the defendant’s shop and whether there was any interruption when excavation works were carried out in the past.  In particular, it is observed that the excavation works in March 2015, which gave rise to these proceedings, were to enable fresh water supply from the water mains underneath the lane to the defendant’s shop. This, he argues, suggests that before 2015 there was no supply of water from the water mains and/or through the water pipes underneath the lane to the defendant’s shop.  

52.  In our view, these are valid points that highlight the importance of a proper plea for a claim of prescriptive easement. At the trial, the defendant had been alerted to the inadequacy in the pleading.  He had an opportunity to amend the Defence and Counterclaim to properly plead his case on prescriptive easement so that the plaintiff could properly consider and prepare for it.  The proposed amendments, however, fail to advance a proper plea of easement by prescription.  Further, in view of the way the defence case was conducted by counsel at the trial as stated above, the defendant had actually through counsel chosen to run his case without reliance on easement by prescription at the trial.  It is now too late to allow the defendant to argue the issue in this appeal.  It would also be unfair to the plaintiff to allow the argument to be run.  Accordingly, we hold that it is not open to the defendant to advance arguments relating to easement by prescription in this appeal.     

Disposition

53.  For the reasons set out above, we dismiss the appeal.

54.  Applying the usual rule of costs follow the event, we make an order nisi that the defendant pays the plaintiff the costs of the appeal, to be taxed if not agreed.