CHUNG KOON WAH v. 詹瑞潮

DCCJ3221/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3221 OF 2002

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JUDGMENT

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1. The Plaintiff is the registered owner of a piece of agricultural land known as Section A Lot 1024 in Demarcation District 19 in the New Territories (hereinafter called "the said land"). The said land is situated within the village boundary of Sun Tsuen at Lam Tsuen, Tai Po, New Territories, a recognised village registered in the District Land Office, Tai Po (hereinafter called "the said village").

2. The Defendant is the elder brother of the Plaintiff's wife and a tenant of the Plaintiff leasing the said land for agricultural purpose under a written Chinese tenancy agreement for a term of five year dated 1 May 1986 (hereinafter called "the said tenancy agreement") at an annual rental of $1,000. At the expiry of the five year term, the tenancy was renewed on a yearly basis at the same rental on the same terms and conditions.

3. In the present proceedings, the Plaintiff claims repossession of the said land and mesne profits from the Defendant from 1 May 2002 until delivery of possession to the Plaintiff.

4. The Plaintiff claims that the said land having been used for agricultural purposes by the Defendant is outside the application of the Landlord and Tenant (Consolidation) Ordinance Cap. 7, alternatively he claims that the said land is reasonably required by the Plaintiff for the occupation as a residence of his son which the Plaintiff intends to rebuild pursuant to S.53(2)(b) and (c) of the Ordinance. Under the government's small house policy and by virtue of the fact that the Plaintiff's son is over 18 years and is descended through the male line from a resident in 1898 of a recognised village in the New Territories, the Plaintiff's son has been granted permission to build a village house in the said village. The said land being a piece of land owned by the Plaintiff within the village boundary is intended to be used for that purpose.

5. The Plaintiff claims that by a notice of termination in writing dated 4 October 2001, the Defendant was notified to vacate and deliver up vacant possession on 30 April 2002.

6. The Defendant, in his defence, claims that the said land was let by the Plaintiff's father, Mr. Chung senior, to him for the purpose of chicken breeding and agricultural purposes in 1976 under an oral agreement. The Defendant further claims that Mr. Chung senior orally permitted him to occupy the said land for domestic and agricultural purposes.

7. The Defendant further admits that the said written tenancy agreement was entered into by the parties for a 5 year term commencing on 1 May 1986 at a rental of $1,000 per annum. That the tenancy would be renewed upon agreement by both parties.

8. The Defendant's defence is that he had paid a total of $28,000 in rental to the Plaintiff's elder sister, Ah Ku, (Madam Chung Hing Lan) (PW2) as his agent between 1992 and 1998 and to the Plaintiff's wife Mrs. Chung in 1999 and 2000. In that between 1992-1995, he paid $2,000 per annum and between 1996-2000, $4,000 per annum. As a result, he had paid rental up to 30 April 2019, consequently, the tenancy had been extended up to that date. On this basis, the Defendant counterclaims for a declaration that he is entitled to occupy the said land until 30 April 2019.

The Plaintiff's case

9. The Plaintiff gave evidence on his own behalf. He confirmed in his witness statement that in 1982, his father had orally agreed to lease the said land at an annual rental of $500 to the Defendant for agricultural purposes and as a chicken hatchery. The Defendant then erected a chicken shed in the said land. In 1986, when the Plaintiff returned to Hong Kong on vacation from Germany where he was living he signed the said tenancy agreement with the Defendant for a term of five years increasing the rental to $1,000 per annum. He pointed out the land is for agricultural and farming purposes. The lease was renewed annually at the expiry of the said tenancy agreement on 30 April 1991. It is his evidence that by 1990, the Defendant had erected five chicken sheds at said land for the breeding of chicken and storage purposes.

10. Between 1968 and 1998, the Plaintiff resided and worked in Germany. He would return to spend his annual vacations in Hong Kong, he left his elder sister Madam Chung Hing Lan (Ah Ku) (PW2) in charge to look after the said land on his behalf.

11. It is the Plaintiff's evidence that since 1990, upon the enforcement of new environmental regulations, the Agricultural and Fisheries Department required the Defendant to install animal waste treatment facilities at the said land. The Defendant failed to satisfy the required standards and told the Plaintiff in or about 1992 he intended to sub-let some of the chicken sheds for rental income.

12. He claimed that his elder sister Ah Ku (PW2) had collected the annual rent on his behalf around winter solstice festival annually. Between 1992 and 1998, she was given $2,000 annually and was told by the Defendant that $1,000 was for rental payment while the extra $1,000 - 2,000 was pocket money for the Plaintiff's two sons. He confirmed that when Ah Ku (PW2) handed over the rental and the extra cash, the extra cash was understood to be the pocket money for his two sons.

13. The Plaintiff pointed out that on 1 October 1994 he had applied to the Tai Po District Land Office to build a village house for the use of his son Chung Ho Kit in 1994 at a piece of land owed by him in Lot No. 1307A3 Demarcation District 8 (hereinafter called "the other piece of land"). The application was turned down because the villagers had objected to the house being erected close to the 'Dai Wong Yea Shrine'. In spite of repeated attempts the application to build on that other piece of land was rejected.

14. Consequently, the Plaintiff has applied to build the village house at the said land and served a notice of termination on the Defendant on 4 October 2001. Unfortunately, the Defendant refused to deliver vacant possession and continued to extend the size of the existing sheds on the said land.

15. The Plaintiff further pointed out that the permitted size of the original watchman shed at the said land was 100 sq. ft. while the other structures were chicken sheds and a storeroom. Their respective sizes were stipulated by the Tai Po District Land Office.

16. The Plaintiff claimed that between 1996 and 1999, the Defendant sublet to four separate tenants as a barbeque processing workshop, furniture store and construction equipment storage. He alleged that a female subtenant was found living at the said land without his consent. He believed that the Defendant received a monthly rental income of over $10,000. He claimed some of the sheds in the said land is still being sublet for furniture storage.

17. He said the total size of the said land is 7,000 sq.ft., out of which the Defendant used about 500 sq.ft. for domestic purpose. According to Form TR4A issued under S. 115A(7)(a) of the Landlord and Tenant (Consolidation) Ordinance by the Commissioner of Rating and Valuation, the primary user of the said land was assessed to be non-domestic on 18 February 2003 (see p.14 of bundle of documents).

18. The evidence of the Plaintiff's eldest sister Chung Hing Lan (Ah Ku) supported the Plaintiff's evidence. She confirmed that the said land was rented out to the Defendant by her father in 1982 while the Plaintiff was residing in Germany at $500 per annum. The Plaintiff signed the said tenancy agreement with the Defendant on 1 May 1986 for a 5 year term which expired on 30 April 1991 at $1,000 per annum. Thereafter, the tenancy was renewed at the same rental annually. She was responsible as his attorney in the management of the same land. She further confirmed that the Defendant in 1992 to 1998 had paid to her $2,000 annually, $1,000 was the rental, while the extra $1,000 cash the Defendant told her was pocket money for the Plaintiff's two sons. She considered that it is only natural for the Defendant who is the uncle to the Plaintiff's two sons to give to them pocket money. She also admitted she was on one of these occasions given $300 tea money by the Defendant. She denied that these extra cash were payments of rental for the future.

19. The evidence of the Plaintiff's wife, Mrs. Chung Jim Shui Ying (PW3), sister to the Defendant, supported the evidence of the Plaintiff and Ah Ku (PW2). It is her evidence that she had collected the rental from the Defendant directly in 1999 and 2000. That in 1982, because the Defendant had a quarrel with their mother in the running of their chicken hatchery business that he wanted to set up his own hatchery business. He asked the Plaintiff's father for a tenancy of the said land for the use of this chicken hatchery business at a rental of $500 per annum. She claimed that both the Plaintiff and she had agreed to the said tenancy in order to give assistance to the Defendant.

20. It is Mrs. Cheung's evidence that that at the initial stage in 1982 the Defendant built one chicken shed and a watchman shed on the said land. However, between 1983 and 1986, he had erected a total of 5 sheds including 3 chicken sheds, a watchman shed and a storage shed. The tenancy was renewed for a period of 5 years under the 1986 agreement at an annual rental of $1,000. The said tenancy agreement specified the land's use to be agricultural and that the Plaintiff may repossess the said land should the Plaintiff require it for his own use or if the government resume the said land.

21. It is Mrs. Chung's evidence that the Defendant under the government's new environmental protection policy, had gradually stopped his chicken hatchery business. He began sub-letting the sheds in the said land as a warehouse reserving one shed as his residence. Then in 1996-1999, the sheds were let out to four tenants and were used as a BBQ processing workshop, furniture warehouse, tools and equipment storage and further to a female tenant for domestic purpose. That she had personally witnessed the sheds being used for such purposes.

22. She claimed that the Defendant had told her in 1992 that due to the government's new regulations, he had to rely on sub-letting the sheds on the said land to supplement his income. She was told the monthly rental he received was over $10,000.

23. She alleged that Ah Ku (PW2) as the Plaintiff's agent before 1999 would pay over the rental collected annually from the Defendant to her with extra cash specified as pocket money for her two children. She was never told these were rental in advance.

24. She had first mentioned the Plaintiff's intention to build a village house on the said land for her son in 1994. Further, at a meeting in 1996 on her visit to Hong Kong, she re-iterated the same intention and the repossession of the said land to the Defendant. But, she was told by the Defendant not to consider using the said land for that purpose if at all possible. She claimed that thereafter on her annual visit to Hong Kong, she would request the Defendant to hand back the said land to the Plaintiff for her son's village house application.

25. She admitted that in 1999 and 2000 she was living in Hong Kong, and she had personally collected the annual rental from the Defendant. She said she was given $4,000 twice and on each occasion, the Defendant had said to her the extra money was pocket money for her two sons.

26. Further, in or about January 2001, when Mrs. Chung went to the Defendant's home to collect the rental for 2000, she repeated again the Plaintiff's request to repossess the said land for the erection of a village house for her son Chung Ho Kit. The Defendant had resisted the repossession and she had offered to repossess 5,000 sq.ft. of the said land if the Defendant would demolish two chicken sheds on that part of the land to be repossessed, thus, the Defendant may keep the watchman shed for his own use. She claimed the Defendant had only agreed to demolish one chicken shed which at the time was used as a furniture warehouse. However, soon after that, the Defendant ignored her request and started building an extension to the existing chicken sheds and refused to deliver back the said land to the Plaintiff in spite of the service of a notice to quit by the Plaintiff.

The Defence Case

27. It is the Defendant's evidence that he rented the said land from the Plaintiff's father in 1976 at an annual rental of $500. He claimed that Mr. Chung senior had kindly assisted him in the application to the Tai Po District Office for an approval to erect a chicken shed and a shed for his own use in the said land.

28. He claimed the Plaintiff and his wife Mrs. Chung were unhelpful. He claimed the Plaintiff had cancelled his application for an extension of the living quarters after the birth of his two daughters.

29. He admitted that in spite of the Plaintiff's attitude, he did not repossess the land and had renewed the tenancy by a written tenancy agreement on 1 May 1986 i.e. the said tenancy agreement.

30. He claimed he assumed the tenancy continued at the expiry of the tenancy in 1991 when Ah Ku (PW2) continued to accept rental from him. He agreed there were no increase of rental and between 1992 and 1995, he had paid $2,000 each year in cash to Ah Ku and between 1996 and 2000, he paid $4,000 each year. He, therefore, claimed he had paid a total of $28,000 since 1992 and consequently, his tenancy does not expire until 30 April 2019 by virtue of the rental he paid to and accepted by the Plaintiff.

31. He claimed he had never told either Ah Ku (PW2) or his sister Mrs. Chung (PW3) that the extra cash were for the Plaintiff's children "for buying snades"[買嘢食]. He claimed they were paid as advance rental payments and that specific instructions were given to Ah Ku, that in January 2001 he had also told Mrs. Chung the same.

32. The Defendant claimed that in 1994, he ceased breeding chicken and found a job working for the then Regional Services Department and sub-let some of the chicken sheds on the said land. He claimed the advance payment of rental was to secure his home and to save for the future.

33. He admitted that Mrs. Chung had told him that the Plaintiff wanted to repossess the said land in 1996. He had counter-proposed the surrender of 3,000 sq.ft. of the land. It was in reliance of this proposal that he carried out substantial repairs and improvements to the structures on the said land at a cost of $200,000. He claimed he was misled by the Plaintiff who had changed his mind into spending the money on the said land.

Findings

34. The issues to be decided are :

(i) Was the extra cash paid by the Defendant future rental payments or pocket money for the Plaintiff's children?

(ii) Was the Plaintiff estopped from repossession under the principle of proprietary estoppel?

Payment of extra cash

35. The issue of the payments of extra cash over and above the $1,000 annual rental, were these payments of future rental or payments of pocket money to the Plaintiff's two children?

36. The evidence before me is clear. The Plaintiff's father transferred the said land to the Plaintiff in 1973, the consideration for the transfer was $5,000 according to District Land Office record. The said land is rightfully registered in the Plaintiff's name. The parties agreed that Mr. Chung senior did rent out the said land to the Defendant for $500 per annum so that he could breed chicken on the land. It is not disputed whether the date was in 1976 or 1982 is not a matter of importance. Suffice it to say, Mr. Chung senior was renting it out on the Plaintiff's behalf because he had already transferred it to the Plaintiff in 1973. He was merely acting as the Plaintiff's agent. It is possible that Mr. Chung senior agreed to lease the land to the Defendant because he was brother to Mr. Chung senior's daughter-in-law. The Plaintiff continued the lease to the Defendant in 1986 and, furthermore, the parties signed a written tenancy agreement of 5 years at an annual rent of $1,000. As can be seen from the documents produced, any application to extend the user of the said land has to come from the Plaintiff himself.

37. On the expiry of the five year lease, the said tenancy continued on a yearly basis at the same annual rental of $1,000 up to the time of the notice to terminate tenancy served on the Defendant in October 2001.

38. During most part of this period, the Plaintiff and his family lived in Germany. Up to 1998, he authorised his elder sister Ah Ku to collect the rental from the Defendant on his behalf until his wife came back to live in Hong Kong in 1990 and 2000. The evidence of rental came from Ah Ku (PW2) and Mrs. Chung (PW3).

39. I find the Plaintiff, Ah Ku (PW2) and Mrs. Chung (PW3) to be honest and credible witnesses. The Plaintiff and his wife were direct and frank in their evidence. I accept Mrs. Chung's evidence that she first raised the matter of the possibility of repossessing the said land with the Defendant, her brother, in 1994 on her visit to Hong Kong from Germany. She raised it again in 1996. But, she was told by the Defendant that she should not consider building on the said land if at all possible. The obvious reason was because the Defendant was in occupation of the said land. The Plaintiff concentrated on his application to the Tai Po District Lands Office to build on the other piece of land at Lot No. 1307A3 in Demarcation District 8. However, due to persistent objections of the people in the village because of its proximity to the shrine, he failed to persuade the villagers and the Tai Po District Lands Office. These objections were expressed in the letter of Lam Tsuen Valley Committee of 10 January 2002 (p. 13 of the bundle of documents) and letters from the District Commissioner's office of the Tai Po District Lands Office on 1 April 1998, 28 December 1998 and 14 May 1999. The 28 December 1998 letter to the Plaintiff referred to his application to build on the other piece of land Lot 1307A3 of Demarcation District 8 on 1 October 1994.

40. I find the Plaintiff and his wife Mrs. Chung to be both patient and tolerant in nature. They had permitted the Defendant to remain in the said land paying a small rental for over 20 years. The land was agricultural land, not intended for residential purpose. Unless one has the District Lands Office's permission to build a village house on it under the government's small house policy, the user of the said land cannot be changed to residential purpose. The Defendant had used the land to breed and rear chicken in the 1980's but this was stopped by the Department of Agriculture and Fisheries because the said land is in the catchment area of Lam Tsuen River. The Defendant did try to keep his chicken hatchery business in the late 1980's and early 1990's. His fight finally failed in 1995. Meanwhile, from 1991 and 1992 onwards, it is quite clear that he could not carry on his chicken breeding business in a large scale anymore because the Department of Agriculture and Fisheries was checking on him constantly. This is supported by the evidence of Mrs. Chung and the correspondence from the Department of Agriculture and Fisheries.

41. I accept Mrs. Chung's evidence, when she visited the Defendant in 1992, she was told by the Defendant's wife that there was very little chicken breeding going on there, and she could see that was true and that the Defendant had sub-let some of the sheds to others for storage. Further, she was also told that the Defendant was collecting a monthly rental of $10,000.

42. On a balance of probability, I am satisfied that was the reason why the Defendant was paying extra cash to the Plaintiff as pocket money to his children. Because he had been subletting some of the sheds out and collecting quite a good rental income monthly he was making a profit on top of his using the said land as his residence. For this reason, he was much better off than before, he felt obliged to give some money to the Plaintiff's children as their uncle. As more of the sheds were let, his pocket money to the Plaintiff's children increased from $2,000 to $3,000 or $4,000. This was particularly so when at the same time, he worked full time for the Regional Services Department. In spite of what the Defendant now claims, it is obvious that Mrs. Chung and her children had enjoyed a warm relationship with the Defendant whom she and her sons would visit on their visits to Hong Kong from Germany bringing him gifts from Germany.

43. I find the Defendant an unreliable witness. He tried to cater his evidence to the question with little respect for the truth. He failed to comply with the Department of Agricultural and Fisheries's requirement of the installation of a septic tank for the treatment of chicken waste from his chicken farm. Yet, he insisted in court that he had done so in spite of overwhelming evidence showing the contrary.

44. I find that both Ah Ku and Mrs. Chung told the truth. The Defendant never told either of them that the extra cash was for rental in advance. Had that been the intention at the time the money was handed over, he would have asked for a rental receipt. This is particularly so because no further written tenancy agreement had been signed after 1986. Therefore, the only tenancy between the Plaintiff and the Defendant was an annual tenancy renewable annually at the agreement of both parties. The tenancy cannot be unilaterally extended at will according to the wishes of the Defendant.

45. The condition of this tenancy is further confirmed by the agreement as to compensation and indemnity in respect of former registered interest registered in the District Land Office dated 3 June 1991 between the Hong Kong Government and the Plaintiff (see p. 22-27 of the bundle). The Plaintiff surrendered 130 sq.ft. of the said land to the government for purposes of infra-structure building. Under the said tenancy agreement of 1 May 1986, the Plaintiff is entitled to repossess the land should the Plaintiff wish to recover it and, should the government wish to resume it (see p. 1-2 of the bundle).

46. It is further incredible that the Plaintiff facing strong oppositions from the villagers to build on the other piece of land, would have agreed to extend the lease of the said land to the Defendant to 2019 or accept advance rental which would have such a result.

47. I accept the evidence of Mrs. Chung and reject the evidence of the Defendant that the extra money paid were rental in advance and not pocket money for the Plaintiff's children. I reject also his claim that he had specifically told Mrs. Chung or Ah Ku that these were rental in advance.

48. I find the Defendant had deliberately extended one of the sheds in spite of the warning from Mrs. Chung that the Plaintiff was repossessing the land. The extension was clearly against the Tai Po District Office's permit (see p. 19-21 of the bundle). The permit set out precisely the size of each of the 10 structures. The watchman shed is the only structure that allowed human habitation, it stated that a shed of 3.05 m x 3.05 m = 9.30 m² with a height of 3.35 m was to be built. The only purpose was to accommodate a watchman of the chicken farm, not to house his whole family.

49. The Defendant cannot under the law ask the Court to enforce a tenancy which consists mainly of he and his family's residence with parts of it rented out for storage of furniture and other articles which are non agricultural in nature. I do not doubt the accuracy of the certificate of primary user of premises under the Landlord and Tenant (Consolidation) Ordinance - Part IV dated 31 March 2003. The said land is about 7,000 sq.ft., I am sure the part occupied by the Defendant and his family does not take up a majority share of the said land. On the other hand, I accept the evidence of Mrs. Chung that the Defendant is not residing in the watchman shed of 9.30 m² either, that he had occupied one of the larger chicken sheds. This is supported by the photographs (p. 33-35 of the bundle) of the sheds in the said land. The watchman shed is an isolated structure on the top left corner of the said land (p. 21 of bundle), from the photographs, the shed occupied by the Defendant is not the watchman shed reflected in the plan.

50. The complete contempt to the permit of user granted by the Tai Po District Office shown by the Defendant does not entitle him to the relief he is now seeking. I agree with Mrs. Chan, counsel for the Plaintiff, that he has not come with clean hands. He failed to establish his claim of proprietary estoppel. It is completely without merits.

51. The Plaintiff has successfully shown that he is entitled to recover vacant possession of the said land by the service of notice of termination. He is further entitled to recover $1,000 per annum in mesne profits from 1 May 2002 up to and until vacant possession is delivered to him. Interests at half judgment rate from date of writ to date of judgment and thereafter at full judgment rate until full payment.

52. Costs nisi to the Plaintiff to be taxed if not agreed, with certificate for counsel.