CHEUNG LAI MUI (張麗梅), the executrix of the estate of CHEUNG PING KAU and the administratrix of the estate of CHEUNG PING FUK (alias CHEUNG BING FUK) v. CHEUNG WAI SHING (張偉城) AND OTHERS

FAMV No. 151 of 2020

[2020] HKCFA 41

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 151 OF 2020 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM

CACV NO. 107 OF 2017)

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REASONS FOR DETERMINATION

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Mr Justice Ribeiro PJ:

1.  Having indicated our decision at the hearing, this is the Appeal Committee’s Determination.

2.  The underlying dispute concerns a property in Sai Kung (“Lot 1101”) which had been jointly owned by three brothers who are now all deceased.  The plaintiff (P), is the personal representative administering the estates (including their shares in Lot 1101) of two of them.  The first and second defendants (D1 and D2) are the son and daughter of the third deceased brother and have succeeded to his share of the property. 

3.  The third defendant (D3) is D1’s son and lives on Lot 1101, having built two structures thereon after the deaths of the three brothers.  P has brought proceedings against the defendants seeking orders for the removal of the structures.  The defendants resist those proceedings, denying P’s title to sue and contending that D3 alone is beneficially entitled to the property by virtue of the operation of one or more of the doctrines of common intention constructive trust, proprietary estoppel and estoppel by acquiescence. 

4.  D1 and D2 have lodged a counterclaim against P, seeking an account of rent in respect of a different property (“House 774”) jointly owned by the three of them.

The judgment at first instance

5.  The trial Judge dismissed P’s claim regarding Lot 1101.  He held that during the lifetimes of the three brothers, there had been a common understanding “that the [D3] should become the sole owner of [the property] and that he could use it as his home”[1] and that D3 was entitled to beneficial ownership of the land by virtue of the aforesaid doctrines.  He found in favour of D1 and D2 on their claim for an account of rent.

The Court of Appeal’s decision

6.  The Court of Appeal decided that essential aspects of the claims had not been adequately dealt with at the trial.  Their Lordships set aside the CFI judgment and ordered an extensive remitter to the same Judge, directing that:

1.       “... the following issues be remitted to the Honourable Mr Justice Wilson Chan for determination:-

(1)     In respect of [D3’s] claims based on common intention constructive trust:-

(a)   What date amongst the three dates of death [of the brothers] should be the cut-off date for ascertaining if there were detrimental reliance on the part of [D3]?

(b)   Whether [D3] had suffered adequate detrimental reliance prior to the ascertained cut-off date?

(2)     In respect of [D3’s] claims based on proprietary estoppel:-

(a) Whether it was reasonable for [D3] to rely on the promisor assurance of [the brothers] after their respective demise, including when he proceeded to build the two structures (or houses) in 2002 and 2003?

(b)   The question of relief if [D3] is successful in this claim.

(3)     In respect of [D3’s] claims based on estoppel by silence or acquiescence, whether [P] was entitled not to take action until Structure A was expanded, taking into account that (a) [P] obtained grant of probate in respect of [Kau’s] estate in 1998 and grant of letters of administration in respect of [Fuk’s] estate in 2006; and (b) [D1 and D2] are part owners, and [D3] was their son and nephew?

(4)     In respect of [D1 and D2’s] claim in respect of House 774 for account and payment of occupation rent, whether they are entitled to the relief.

2.       In respect of paragraph 1(4) above, [the Judge] should take into consideration the expenses of rebuilding House 774 in deciding whether [D1 and D2] are entitled to the relief.

3.       Save and except the issue set out in paragraphs 1 and 2 above, the findings by [the Judge in the Judgement] are not to be disturbed.”

7.  That Order is unusual in that the remitted questions do not consist merely of questions of fact but raise legal issues (determining a cut-off date regarding detrimental reliance; deciding what relief is appropriate; ascertaining P’s capacity to sue co-owners; and deciding whether D1 and D2 are entitled to relief) as well as evaluative judgments of mixed fact and law (regarding the adequacy of detrimental reliance and the reasonableness of any reliance).  One might have expected such questions to be determined by the Court of Appeal either definitively, if the facts had been found, or in principle, if not, remitting questions of fact to the Judge only in so far as necessary.  Indeed, the legal principles underlying the remitted questions appear to have been decided by the Court of Appeal and the Judge was directed to determine the remitted questions “in accordance with [the Court of Appeal’s] legal analysis”.[2]

The application to the Court of Appeal for leave to appeal

8.  The Plaintiff sought leave from the Court of Appeal to appeal to this Court and proposed two questions of law:

Question 1

“Whether there can be proprietary estoppel arising from an oral promise relating to interest in land binding on the estate of the promisor in the absence of any or any reasonable detrimental reliance by the promisee prior to the death of the promisor; and in such case whether detrimental reliance of the promisee only after the death of the promisor can give rise to proprietary estoppel against the estate of the deceased promisor overriding the interest of the successors or beneficiaries to the estate?”

Question 2

“Whether a co-owner in sole occupation of land, in cases other than partition or ouster and in the absence of agreement, should be ordered to account to the other co-owners for occupation rent. Alternatively, whether the proposition of law in Re Pavlou (A Bankrupt) [1993] 1 WLR 1046 at 1050D that ‘a court of equity will order an inquiry and payment of occupation rent even if there is no ouster when it is necessary to do so to do equity between the parties’ should be confined to partition or analogous proceedings?”[3]

9.  In dealing with P’s leave application, the Court of Appeal again adopted an unorthodox approach.  It held that Questions 1 and 2 are prima facie reasonably arguable but decided to adjourn the leave application sine die pending the Judge’s determination of the remitted issues:

“We are of the view that these two questions are prima facie reasonably arguable for the purpose of granting leave to appeal but since the Court below has to rehear issues that we have directed, it would be more appropriate as a matter of case management and following the approach of Chee Fei Ming v. Director of Food and Environmental Hygiene (2017) 20 HKCFAR 64 to adjourn the application sine die with liberty to the parties to restore it for hearing, if so advised, in the light of the decision of the rehearing. Costs of the application is reserved.”[4]

The present leave application

10.  In the present leave application, P puts forward Questions 1 and 2 as being of the requisite importance.  She also seeks leave on the “or otherwise” basis, contending that the remitter was wrong in principle and unfairly offered the defendants an opportunity to adduce further evidence on detrimental reliance.[5]  Additionally, in his skeleton argument, Mr Eugene Fung SC[6] argues as part of the “or otherwise” ground, that the Court of Appeal should have determined the common intention constructive trust claim on the available evidence and dismissed it if the evidence was insufficient to establish it.[7]  In the course of the hearing, he also sought leave on the “or otherwise” basis regarding the correctness or otherwise of the Court of Appeal’s approach to estoppel by acquiescence, a necessary course if all disputed issues of principle are to be addressed by the Court.

The Appeal Committee’s jurisdiction

11.  Mr Alan Kwong[8] argues on behalf of D1 and D2 that it is a requirement laid down by the Court’s statute,[9] that the Court of Appeal must have refused leave before a leave application can be made to the Appeal Committee.  Since, he submits, the Court of Appeal has not refused leave but merely adjourned P’s application sine die pending determination of the remitter, that requirement has not been fulfilled and the Appeal Committee lacks jurisdiction to entertain P’s present application.

12.  We do not accept that argument.  As stated in Hong Kong Island Development Ltd v World Food Fair Ltd,[10] “the concepts of ‘absence’ or ‘refusal’ must be given a broad and flexible interpretation” in this context.  The position, certainly from P’s viewpoint, is that her application for leave to appeal has been refused since the Court of Appeal decided instead to adjourn it sine die.  Looked at broadly and flexibly, that constitutes a refusal sufficient to confer jurisdiction on the Appeal Committee.  Calling the decision to adjourn sine die a “case management decision” does not alter the fact that the application for leave was refused.

Leave to appeal

13.  As a matter of discretion, we consider it appropriate to grant P leave to appeal in the terms set out below.  We do not think, with respect, that the approach adopted by the Court of Appeal in the present case was appropriate.  Questions of law and evaluative questions of mixed law and fact ought not to have been remitted back to the Judge.  The points of legal principle ought to have been determined and, only if necessary and only if it could be done without procedural unfairness, should the Court have remitted any outstanding questions of fact.  Referring legal issues back to the Judge while at the same time directing him to determine them in accordance with the Court of Appeal’s legal analysis was confusing.  It also gave rise to the possibility of a further appeal to the Court of Appeal on a point of law arising from the Judge’s decisions on the remitter.  Moreover if, after having gone through the remitter exercise, the case were to proceed to the Court of Final Appeal where a view differing from the legal analysis of the Court of Appeal was taken, the basis and value of the remitter might be put in doubt.  In these circumstances, our decision is to grant leave to appeal to enable the Court to determine the issues of legal principle and to remit any outstanding factual issues to the Judge only if such course proves necessary and possible without procedural unfairness.

14.  We accordingly direct that the Court of Appeal’s remitter Order referred to in paragraph 6 above be stayed and grant P leave to appeal:

(1)   On the basis that Questions 1 and 2 set out in paragraph 8 above are reasonably arguable and of the requisite general or public importance; and

(2)   On the “or otherwise” basis in respect of the correctness of the decisions of the Courts below regarding P’s claims based on common intention constructive trust and estoppel by acquiescence.

15.  The appeal will be heard on 20 April 2021.