WONG SHIU HUNG AND ANOTHER v. LUI KUO

HCA8352/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.8352 OF 1999

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J U D G M E N T

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1. The plaintiffs herein issued a Writ of Summons on 25 May 1999, seeking an injunction requiring the defendant to remove an illegal structure said to occupy a portion of Sung Chi Street, Kowloon, adjacent to the plaintiffs' property known as Shop No.1A, Ground Floor, 24-36A Bailey Street, Hong Kong and a further injunction restraining the defendant from operating a business in that structure together with a claim for damages. Certain facts are undisputed.

2. In October 1982, the defendant rented premises at the junction of Bailey Street and Sung Chi Street in To Kwa Wan District, Kowloon. On 26 September 1986, those premises were purchased by the plaintiffs. The premises has a 29-foot frontage facing Sung Chi Street and an 8-foot frontage facing Bailey Street. The shop is known as Shop No.1A ("Shop 1A").

3. It is common ground that Shop 1A and the illegal structure complained of by the plaintiffs are both within the lot boundary of Shung Yan House, being one of the buildings of all those pieces or parcels or parcels of land situate and lying and being at Kowloon Hong Kong registered in the Land Office as Section A of Kowloon Marine Lots Nos.86 and 69. The owners of all the units within the houses, including Shung Yan House, are bound by a common Deed of Mutual Covenant. Sung Chi Street is within the leased lot of land and hence the pavement of Sung Chi Street is a common area of the houses.

4. At the time in dispute, the plaintiffs saying in February 1999 and the defendant saying in 1978, the defendant erected a structure adjacent to Shop 1A in Sung Chi Street. There are some disputes as to the length of that structure. However, one end was a narrow frontage on Bailey Street and the structure extended parallel to Shop 1A along Sung Chi Street and has, for the purposes of this action, been described in two parts as "Structure C", being the piece of the structure closer to Bailey Street and "Structure D" behind it along Sung Chi Street.

5. The defendant ceased to be a tenant of Shop 1A on 17 March 1999 and gave up vacant possession of those premises on that date. The basis of the action brought by the plaintiffs against the defendant is one of nuisance. Although trespass and nuisance were pleaded, Mrs Dora Chan for the plaintiff elected to proceed only on the basis of nuisance at trial. Three defences were raised, namely adverse position, estoppel and waiver.

6. I will first deal with the factual issues. This case for the defendant was that he first erected a structure on the portion in 1978, being the first predecessor of Structure C, calling it No.3 Sung Chi Street and said that was made up of wooden boxes nailed to the pavement, steel posts and a canvas roof and was about 16-foot in length. The defendant's evidence is that the steel posts were being used back in 1978 and that they supported the roof of canvas. Those posts or ten successors in 1998 supported a metal top in Structure C. He said that he had from time to time maintained and improved the structure throughout the years and whilst the changes meant it did not always look the same, it was a structure supported by metal pipes for the whole of the period from 1978 until its demolition on 15 September 2000 by the incorporated owners, but paid for by the plaintiffs. The defendant changed his position later in the trial to one where there were no metal posts but the canopy was self-supporting.

7. A witness for the defendant, DW3, said that he saw the defendant setting up the structure sometime in 1978 and selling fruits and other goods and that he was a frequent customer there. This evidence was denied by the plaintiffs and their version of events was supported by the chairman of the incorporated owners whose evidence was that, although she was not particularly clear about the details of the early history of the defendant's fruit stall, she was aware that he was selling from that vicinity, but said that prior to the construction of the structure which was demolished in September 2000, the defendant had no more than a broken table on that area of Sung Chi Street. She testified that the defendant did not have anyone's permission to use the said portion for erecting the structure of No.3 Sung Chi Street and did not pay any rent or licence fees to anyone. She also claimed that in a meeting between herself and the defendant that he had stated to her that he had constructed the premises in Sung Chi Street in the condition that they were at the time of demolition because he had been refused an extension of his tenancy of Shop 1A. She was clearly alleging a malicious motive on the part of the defendant.

8. Mr Wong Wai Ho, who testified for the plaintiffs, said that when the plaintiffs purchased Shop 1A in 1986, there was no structure on the footpath in Sung Chi Street in the position where Structure C, stood at the time, was demolished. Although he was sometimes vague in his evidence and sometimes clearly mistaken as when he said that he was unaware of the extension to the side of Shop 1A between the premises, said to be those of the defendant on Sung Chi Street and Shop 1A which can be clearly seen in the Schedule of the Tenancy Agreement between the plaintiffs and the defendant made on 15 June 1989. Notwithstanding that the state of vagueness, I am satisfied by his evidence. I am not satisfied by the evidence of the defendant. He was, from time to time, evasive, and somewhat aggressive in the manner which he gave evidence. I am satisfied that Madam Siu Yuen Sheung, the chairman of the incorporated owners, was truthful when she gave evidence. She is not a party to this action and stood to gain nothing from victory by either party. She denied that there had been any structure of boxes and steel posts from 1978 and testified that the structure shown as Structure C in the photographs at page 255 of the bundle appeared about the year 1999.

9. When it was suggested to her that it was not erected but renovated, she said, "I disagree". She testified that she was not willing to come to give evidence for the plaintiffs and that she had only done so having been persuaded by the solicitors. She testified that the defendant said to her in a meeting that he had with her that he had a dispute with the plaintiffs because the plaintiffs would not continue letting the shop to him. That referred to Shop 1A. For that reason, he deliberately put something along the front of the shop to play a trick on the plaintiffs. She said that the defendant said to her that if she could convince the plaintiffs to give up the legal action against him, he would pull down the structure. Subsequent to that, the structure was demolished by the incorporated owners at the cost of the plaintiffs. I am satisfied that Madam Siu was a witness of truth. I was not impressed by the defendant nor by his witness, Mr Wong Man Hong.

10. The defendant was evasive and argumentative. He did not answer questions clearly and I could not put faith in what he had to say. Similarly, his witness Mr Wong Shiu Yue who testified as to the presence of the premises Structure C since 1978 and who had been present throughout the trial listening to the evidence that preceded his was not an impressive witness. He also was evasive and I did not put weight upon his evidence.

11. I find that the defendant did not have uninterrupted use of that section of land in Sung Chi Street where Structure C stood until it was demolished in 2000 for any period longer than from 1998. I accept that he may have, from time to time, used that portion of the footpath to sell goods. However, his initial claim in his evidence to have placed iron pipes to support a structure on that piece of land which survived until the date of demolition is not borne out by photographs he produced, showing Chinese New Year sales in the 1980s. It is quite clear from an examination of three photographs which he placed in evidence and which can be found at page 311 of the bundle that goods are placed upon boxes on the stretch of pavement where Structure C stood until demolition but there are no posts holding up any canopy. There is a canvas awning attached to the side of the building which clearly can be extended out over that area but that could in no way be said to comprise a structure. This must be taken with the evidence of Madam Siu that at least for some period of time prior to 1998, the defendant did no more than sell from a broken table if he sold at all on this portion of Sung Chi Street. I am satisfied that as a matter of fact that the defendant has not had adverse possession of that portion of Sung Chi Street for any period of time sufficient to bring him within the period necessary for a claim for adverse possession.

12. I say this being aware that he has used the address No.3 Sung Chi Street to make an application for a business registration in 1982. At that time, he took up the tenancy of Shop 1A which in fact had a frontage to Sung Chi Street which could be so described. Much has been made in the trial to an extension made by the defendant to Shop 1A. Between Shop 1A and the structure known as Structure C is a piece of land, the length of Shop 1A and approximately 3-foot wide. At sometime after taking over the tenancy of Shop 1A in October 1982, the defendant occupied that 3-foot wide stripe of land by extending Shop 1A to cover it and fitting roller shutter doors along its length so as to make it part of Shop 1A. His possession of that piece of land ran from October 1982 to 17 March 1999, when his tenancy of Shop 1A ceased. The relevance of that 3-foot wide piece of land running the length of Shop 1A is no more than whether the existence of Structure C some 3-foot from the boundary of Shop 1A, the area recently covered by that extension still constitute a nuisance.

13. I find, as a matter of fact, that the defendant has not at any time been in possession of the land covered by Structure C and/or Structure D for the period of 20 years necessary to bring it within the Limitation Ordinance, Cap.347.

14. Accordingly, any defence that he may raise to this writ based upon his adverse possession of that piece of land fails. This action is brought by the plaintiffs on the basis that the action of the defendant in building and maintaining Structure C was a nuisance at the time the writ in this matter was issued, it is not a nuisance at the present time, the structure having been demolished as referred to above. However, in one of the many amendments to the pleadings in this matter is an amendment seeking an injunction restraining the defendant from rebuilding any structure upon the land which was occupied by Structure C.

15. Mrs Chan concedes that if the plaintiffs are to succeed, they must establish the following :

(1) that the plaintiffs are the owners of the landed property which suffered from the unlawful interference;

(2) the defendant was a creator of the interference or nuisance;

(3) that the defendant's act interfered with the plaintiffs right in exercising a quasi easement over the pavement adjacent to Shop 1A; or

(4) the defendant's act interfered with the comfort and enjoyment of Shop 1A and was an unreasonable act.

16. As to the first matter the plaintiffs must established, I am satisfied from the evidence and there is no dispute from the defence that the plaintiffs are the owners of the property comprising Shop 1A as described above. I must go on to consider then whether that property has suffered from an unlawful interference.

17. The defendant does not dispute that he built upon the footpath parallel to Sung Chi Street, frontage of Shop 1A, the premises which had been described as Structure C. As I have described above, Structure C did not directly abut Shop 1A and there was a gap of approximately 3-foot between the rear wall of structure of Shop 1A and the boundary of Shop 1A. Until the date of demolition of Structure C, that gap was filled by an extension as I have described above, enclosing that space with roller doors and put in place by the defendant when he was a tenant of Shop 1A.

18. Had that structure not been put in place by the defendant, there would have been a gap through which foot traffic could have passed from Bailey Street between Structure C and Shop 1A, albeit a dead-end passageway as there was no exit to it. The fact is, therefore, that the extension created to Shop 1A by the defendant during his tenure of those premises abutted the rear metal wall of Structure C as it existed at the time of the issue of this writ.

19. In my view, the existence of the gap covered by the extension between Structure C and Shop 1A makes no difference to the question I must decide. The whole of the land covered by Structure C and the extension was land owned by the incorporated owners of Shung Yan House. The existence of the extension to Shop 1A prevented people from passing between Structure C and Shop 1A and even had that extension been removed since the only opening to the passageway was on to Bailey Street, Structure C still effectively denied persons seeking access to Shop 1A from Sung Chi Street from doing so.

20. Nuisance as defined in Winfield and Jolowicz on Torts, page 404 is :

"an unlawful interference with a person's use or enjoyment of land, or some right over or in connection with it."

21. I accept that a right in connection of land can be an easement or quasi easement. The category which is covered in respect of the law of nuisance is opened in Thompson-Schwab v. Costaki [1956] 1 WLR 335 at 338, Lord Evershed M.R. said :

"The forms which activities constituting actionable nuisance may take are exceedingly varied, and there is the highest authority for saying that they are not capable of precise or close definition. If the principle is rightly stated in the passage which I have read, then it must depend upon the facts of each particular case whether the conditions, which I have stated as required to constitute a nuisance, are satisfied; and in considering whether they are satisfied or not the court must, I apprehend, apply to the matter the usages of civilized society as they may be at the relevant date."

22. In the matter before me, the defendant is the occupier of land adjoining that of the plaintiffs. It has been argued that the defendant's occupation of the land does not adjoin the land of the plaintiff inasmuch as there is the gap between the two properties which has been described above as the extension to Shop 1A. I do not accept that the gap between the two properties has any relevance for two reasons. Firstly at all times relevant to this matter, that extension was enclosed by roller shutters erected by the defendant when he was the tenant of Shop 1A and the construction of Structure C was hard against those roller shutters completely blocking off Shop 1A. Secondly, the piece of land occupied by the extension was part of the land to be crossed to, approach the Sung Chi Street side of Shop 1A. It was necessary to cross both the piece of land occupied by Structure C and the land occupied by the structure if the side of the shop was to be reached.

23. The defence argument is that the Structure C did not cover the whole of the side frontage of Shop 1A and therefore does not constitute the nuisance. However, Structure C abutted Structure D and no access was available to Shop 1A from Sun Hing Street unless you passed into Bailey Street and then to the shop from there. Even if Structure D is taken into account, then that abutted the next shop in Sung Chi Street and no access was provided through that structure to any part of Shop 1A.

24. The plaintiffs, their tenants and customers were therefore precluded from any approach to Shop 1A form Sung Chi Street, and any display of goods and any commercial activity whatsoever aimed at passers-by in Sung Chi Street was blocked by Structure C. Structure C and Structure D were both illegal structures and Structure C was in existence for a period of 19 months prior to its demolition.

25. I accept the evidence of the expert called by the plaintiffs that the rental prospects for Shop 1A were materially affected by the presence of Structure C and I am satisfied and accept that the existence of that structure constituted an interference with the enjoyment of the land and by the plaintiffs in Shop 1A and thereby constitutes a nuisance.

26. Having been satisfied that interference took place, it is for the defendant to proof that his act was reasonable. I find nothing in the case for the defendant upon which I can find on a balance of probabilities that his action was reasonable. In considering the case for defence, I have considered the equitable defences raised by Mr Ho for the defendant. He raises the defence as estoppel, acquiescence, laches and waiver, as well as the defence of prescription which I have dealt with and dismissed above. The argument raised by the defence in respect of estoppel is that the defendant's action was open and visible and the plaintiffs failed to take action against him for the use of the predecessor of Structure C and that equated representation or alternatively an acquiescence that the plaintiffs would not enforce their right against the defendant. Further, the defence argues that by the Tenancy Agreement, the plaintiffs agreed the defendant could use the extension and Mr Ho argues that it is an implied representation that the plaintiffs would not enforce their rights to prevent the use of the predecessor of Structure C which was beyond the extension. The evidence from the plaintiffs was that they rarely visited the premises and had not fully appreciated the extent of the use of the pavement adjoining Shop 1A until the Structure C was erected some 19 months before its demolition.

27. I do not hold that the plaintiffs are estopped in their claim nor that they had acquiesced to the structure. I have found that the defendant had not prior to the commencement of this proceeding acquired the prescriptive right to use the portion occupied by Structure C for his own purposes the defence of laches does not therefore arise. The arguments adopted in respect of estoppel or acquiescence were also raised by Mr Ho in his argument that the plaintiffs had waived their rights. These were rights in respect of Structure C. Given that I have found that structure only occupied the land for some 19 months prior to demolition and that prior to that whilst some usage was made to the land it was not upon the scale or in the nature of Structure C, I am satisfied also that waiver does not apply.

28. I find for the plaintiffs, that the erection by the defendant of Structure C represents an actionable nuisance. What are the remedies? The plaintiffs seek two injunctions. The first restraining the defendant by himself, his servants or agents or otherwise from erecting any structure anywhere near Shop 1A and secondly an injunction restraining the defendant whether by himself, his servants or agents or otherwise from selling and/or operating the selling of newspapers or articles and/or carrying on any business at any structure anywhere near Shop 1A.

29. I am satisfied that the first injunction sought is appropriate and there will be an order in terms of that injunction. In respect of the second injunction, it seeks to prohibit the defendant from carrying on a specific business at any structure anywhere near Shop 1A. At the present time, no structure exists in any form in a position which causes a nuisance to Shop 1A. The defendant is prohibited by the injunction which I have just ordered from constructing any such structure.

30. I accept Mr Ho's argument that as sought, the second injunction is so wide as to prohibit the defendant taking up a tenancy of shop adjacent to or in the vicinity of Shop 1A or doing any business in the vicinity. I do, however, order an injunction restraining the defendant whether by himself, his servants or agents or otherwise from selling and/or operating the selling of newspaper or articles and/or carrying on any business whatsoever in Sung Chi Street or Bailey Street so as to in anyway affect the access to or the sight of any part of Shop 1A whatsover.

31. The next matter I must consider is the question of damages. In the re-amended of Statement of Claim, the plaintiffs claimed for exemplary or aggravated damages. This is in reliance upon the evidence of PW2 as to the conversation which I have accepted took place between PW2 and the defendant. There the defendant said he was maintaining the structure out of malice. I accept there was a degree of malice on the part of the defendant in his action in this matter.

32. The plaintiffs relies on the case of Rookes v. Barnard [1964] AC 1129 where Lord Devlin said in respect of the two categories where exemplary damages were appropriate and in respect of the second category :

" ... those in which the defendant's conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff. ... It is a factor also that is taken into account in damages for libel; one man should not be allowed to sell another man's reputation for profit. Where a defendant with a cynical disregard for a plaintiff's right has calculated that the money to be made out of his wrongdoing will probably exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity. This category is not confined to moneymaking in the strict sense. It extends to cases in which the defendant is seeking to gain at the expense of the plaintiff some object - perhaps some property which he covets - which either he could not obtain at all or not obtain except at a price greater than he wants to put down. Exemplary damages can properly be awarded whenever it is necessary to teach a wrongdoer that tort does not pay."

33. Mrs Chan went on to cite various cases from Australia and Hong Kong where exemplary damages had been awarded. She argues that the trend in these cases is to award damages purely as punishment and not necessarily on the basis that a defendant has used the tort to make a again for himself. Further to be an award of exemplary damages seems to me that either the defendant must have a cynical disregard for the plaintiffs' rights and to have calculated that the money to be made out of his wrongdoing would probably exceed the damages at risk. Rookes v. Barnard Or where the defendant has formed and been guided by the view that, though he may have to pay some damages or compensation because of what he intends to do, yet he will in some way gain, whether while moneymaking or not, or may make money out of the event which he hopes and expects will worth his while. Broome v. Cassell & Co., [1972] AC 1027.

34. I accept that in both of these two alternatives, there has to be an element of gain in some way by the defendant. I do not accept that the award of exemplary damages can be solely punitive. I also accept that the standard of proof for exemplary damages is the criminal standard of beyond reasonable doubt. I am not satisfied to the required standard on the evidence that I have heard that an award of exemplary damages is appropriate in this case. An award of general damages is appropriate.

35. The plaintiffs' claim loss of rent for Shop 1A for the period from 17 March 1999 when the defendant ceased his tenancy of Shop 1A and maintained his business in Structure C to 15 September 2000 when the structure was demolished. A period of 19 months. The plaintiffs accept credit should be given for 7 to 14 days rent free periods and argue that an addition of the same period should be made to reinstate the wall and ceiling structure which were broken during demolition and to clear up debris left behind from the removal of the illegal structure. I accept their argument.

36. The plaintiffs claim a period of 19 months rent at $28,000 per month being a sum of $523,000. Firstly, I am satisfied that the period of the claim is appropriate. I have held that there was an actionable nuisance and the nuisance persisted for the period of 19 months. Mr Ho argues that any rental of the premises in any event would have been frustrated by an admitted lack of electricity to the premises. I do not accept this argument. If that were so, then no business could have been able to be conducted in that building.

37. During the trial, evidence was given of an offer by a Mr Chan Sik Kwong, to rent the premises of Shop 1A for a period of one year fixed and two years non-fixed at a monthly rent of $28,000. This offer was made through solicitors and I accept that it was a true offer. Taking that into consideration together with the evidence of the expert called by the plaintiffs as to the rental value of the premises, I am satisfied that a starting point of $28,000 per month exclusive of rates and other outgoings, was an appropriate figure. That witness further agreed that Shop 1A had a rental value with Structure C present and gave the monthly rental value of Shop 1A with the presence of Structure C as $18,500 per month. I accept that the plaintiffs have said that they were unable to find any tenant. No evidence has been led before me to indicate to what extent they had exhausted their efforts to search for a tenant with Structure C in existence. The sum of $18,500 is put forward by the expert on behalf of the plaintiffs and that is the figure I propose to adopt as the figure at which the plaintiffs ought to have mitigated their damages.

38. Damages will therefore be assessed in respect of the loss of rent on the premises in the sum of $9,500 per month for a period of 19 months, being a total sum of $176,500.

39. The next claim for damages is for rates. Mr Ho argues that rates are not normally payable by tenants but in this case it is clear that the offer by Mr Chan at $28,000 a month was exclusive of rates. I order an award of damages in the sum of $10,348.67 for rates.

40. The same argument applies in respect of management fees. Management fees for the appropriate period of 19 months would have been $2,869. The claim for the costs of the expert witness in the sum of $10,000 is of course a matter of costs, not a matter of damages. Damages are therefore assessed in the total sum of $189,717 for the plaintiffs.

41. There will be judgment for the plaintiffs in the sum of $189,717 together with the two injunctions I have set out above.

42. I have considered the question of costs and I am satisfied that costs should follow the event. There will be costs for the plaintiffs to be taxed if not agreed.