WONG WAI KING AND OTHERS v. 李夏 AND ANOTHER

DCCJ 935/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 935 OF 2012

--------------------

--------------------

--------------------

DECISION

--------------------

1. This is the Plaintiffs’ application by summons issued on 15 July 2013("Summons") for summary judgment for:

1.  possession of the land in question

2.  Outstanding rent in the sum of HK$12,000

3.  Mesne profit until delivery of vacant possession

4.  Interest and

5.  costs

Background

2.   The Plaintiffs are the landlords of the Lot 450, 451, 464 (thereinafter referred as the Land) and Lot 475, the Defendants are husband and wife and the tenants of the Land and Lot 475.  The share of the Land held by the 6^th Plaintiff was assigned to him in May 2001 by MAN Leung to hold on trust for Man Hong Lim, Man Moon Lim and Man Ho.  The deceased passed away on 23 October 2011, and he held ¼ of the share of the Land and Lot 475, the 1^st Plaintiff is his personal representative.

3.   Before year 2000, the Land and Lot 475 were rented to the Defendants by oral agreement(s).  In January 2000 Man Leung on behalf of the landlords and the 2^nd Defendant on behalf of her and 1^st Defendant entered into a written tenancy agreement for the Land and Lot 475 with the annual rent of HK$4,000 for a period from 1^st January 2000 to 30^th December 2002.  Upon expiration of the tenancy agreement, the parties continued their landlord and tenant relationship on oral periodic tenancy with reference to the previous written terms.      The 2^nd Defendant stated that the 1^st Defendant has deserted her since 1999, leaving her in occupation of the Land alone up till the present moment.

4.   The Plaintiff averred that the Defendants failed to pay rent punctually and despite repeated demanding still failed and refused to pay rent for mid 2004 and onwards; and only learnt from the 2^nd Defendant’s letter dated 23^rd November 2010 that she has allowed Tsang Wai Kwong to occupy Lot 475, thereafter they approached Tsang and Tsang agreed to pay rent from 2006 to 2010 in the sum of HK$2,000.  The 2^nd Defendant alleged that Man Leung knew the existence of Tsang since 1981 and Tsang has been paying his share of the rent directly to the landlord since 2001; while she has made full payment of her share of the rent and she paid her  rent to the deceased up to end of 2012.

5.   By a letter dated 11^th November 2010 issued by the solicitors of the Plaintiffs, the Plaintiffs gave one year notice to the Defendants to terminate the oral tenancy by 30^th December 2011.  The Plaintiffs has since November 2010 recovered the possession of the Lot 475 by entering into a tenancy agreement with Tsang.  The Plaintiff issued the Writ of Summons and Statement of Claim on 20 March 2012, and obtained judgment against the 1^st Defendant on 30 April 2013. 

6.  In essence, the issue for determination in this case is whether the plaintiffs are entitled to summary judgment for the outstanding rent claimed  and possession with mesne profit upon delivery of vacant possession, or whether the 2^nd Defendant has an arguable defence on the basis that the Plaintiffs have actual or constructive notice that Tsang was in occupation of Lot 475 since 1981 and agreed that she was only required to pay half of the agreed rental and she has made full payment of her share of rent to the deceased up till 2012; and that there is an oral tenancy for a term of 3 years for the period from 2010 to 2012 and 2013 to 2015 respectively, and it has been promised to her that the Land would be rented to her until the Government resumes the Land or she ceased to use it for agricultural purposes.

Discussion

Outstanding rent

7.  According to the Plaintiffs initially the leasing of the Land was handled by MAN Leung and Man Leung entered the written tenancy agreement on behalf of all the landlords in January 2000.   Since 2003 the Defendants failed to pay the rent punctually, after repeated demanding, the 2^nd Defendant paid HK$6,000 on 30^th December 2008 which was taken to be the rent for the year 2003 and the first half of the year 2004.  The Plaintiff waived the outstanding rent accured before 2006 and claimed HK$12,000 for the period from 1^st January 2006 to 31^st December 2011, after deducting the part that has recovered from Tsang.

8.  The 2^nd Defendant alleged that the Plaintiffs had knowledge that Tsang was in occupation of Lot 475 since 1981 and receiving his share of the rent in the sum of HK$2,000 directly from him since 2001; the receipt issued in 2001 is the acknowledgment of the receipt of rent received from both of her and Tsang.   Upon the expiration of the written tenancy, she and Man Leung came into agreement to follow the terms of the last tenancy agreement, since then she paid her rent on a 3 year basis to the deceased and she has paid her share of rent up to December 2012 in 2010.  All these are disputed by the Plaintiffs, Man Leung and Tsang, and it is clear that there are material factual disputes in relation to the plaintiffs’ claim for rent in arrears.

9.  On 21 July 2010 the Plaintiffs’ solicitors wrote to the Defendants that they had failed to pay rent since 2003 and it was only after repeated demanding they made a payment of HK$6,000 on 30^th December 2008, which the Plaintiffs’ solicitor apportioned that to be the rent for year 2003 and the first half of 2004.  Mr Lam for the 2^nd Defendant agreed that there is no evidence to suggest that the payment of HK$6,000 in December 2008 did not happen, but there is no evidence as to which period of rent the sum was intended by the 2^nd Defendant.  

10.  The 2^nd Defendant stated in her 3^rd Affirmation that after the written tenancy expired, she went to Man Leung’s home in early 2002 to pay her share of the rent for the next year; but it is not clear which year of rent she is referring.   According to her case she paid all her share of the rent throughout the years though on irregular basis, and she paid the rent for 2010 – 2012 in August 2010, the previous periodic tenancy was between 2007 and 2009.  If so at best the rent for 2007 and 2008 was only paid in December 2008, and when the Plaintiffs’ solicitors complained about rent in arrears by the letter dated 21 July 2010, she was yet to pay her rent for 2010.

11.  Subsequent to that she received the notice of termination dated 11 November 2010, she gave a written reply dated 23 November 2010 to the Plaintiffs’ solicitors that every year she would pay HK$2,000 to the landlord, however there was no mention she has just paid her rent for 2010 to 2012 to the deceased.  The deceased passed away on 23 October 2011.  The next relevant exhibit is the receipt related to the rent for the years 2010 to 2012 purportedly issued by the deceased on 2 August 2010, produced by the 2^nd Defendant on 25 July 2013, after the Summons was issued on 15 July 2013. 

12.  The Plaintiffs said the Defendants failed to pay the annual rent in the sum of HK$4,000 since 2003.  And the rent received in 2008 was taken to be the outstanding rent for 2003 and first part of 2004, since then no further rent was paid by the Defendants.  The 2^nd Defendant stated in her 3^rd Affirmation that she paid rent for 2004 – 2006, 2007 – 2009, and 2010 – 2012, and produced a receipt dated 2^nd August 2010 for the period 2010 – 2012 issued by the deceased, on the face of that receipt the deceased acknowledged the yearly rent payable by the 2^nd Defendant for the Land and Lot 475 is HK$2,000, this is consistent to the 2^nd Defendant’s case. The authenticity of the disputed receipt in 2010 should be determined by trial.

13.  Miss Leung for the Plaintiffs accepts in an application for summary judgment, the Court would not engage in a mini-trial on affidavits.  In view of the evidence before the Court, particularly the receipt produced by the 2^nd Defendant issued by the deceased in 2010, she agrees there should be leave for the 2^nd Defendant to defend on the arrears of rent.

The commencement date of the periodic tenancies

14.  The Plaintiffs pleaded in paragraph 7 of their Statement of Claim that upon the expiry of the Tenancy Agreement, the 2^nd to 6^th Plaintiffs and the deceased continued to let the Land and Lot 475 to the Defendants on the same terms from 1^st January 2003 by oral agreement.  The 2^nd Defendant did not deny that in her Defence dated 18 May 2012 but only averred that she did not know the 2^nd  to 5^th Plaintiffs and had no oral agreement with them, and it was Man Leung who collected the rent from her.

15.  And the 2^nd Defendant stated in her 3^rd Affirmation that after the expiry of the Tenancy Agreement, she went to Man Leung’s home in about early 2002 to pay my share of the rent for the next year.  They discussed about the tenancy and in the end, Man Leung and I agreed to follow the terms of the previous tenancy agreement, such that she continued to rent the property by paying yearly rent of HK$2,000 on a 3 year basis to the deceased.

16.  Thus it is common ground that there is only one written tenancy agreement between the parties, and that was entered in January 2000 for the period between 1^st January 2000 and 30^th December 2002. Upon expiration, the parties did not enter into any further written tenancy and the 2^nd Defendant continued to rent the Land and Lot 475 on the basis of an oral periodic tenancy based on the previous terms, subject to the dispute related to the occupation of Lot 475 by Tsang.

17.  According to the parties’ pleadings and undisputed evidence, the first relevant oral tenancy was from January 2003 to December 2005, and the succeeding one being January 2006 to December 2008, and then from January 2009 to December 2011.  

18.  The 2^nd Defendant together with the 1^st Defendant, her husband, first rented the Land and Lot 475 in 1981 for farming.  The payment of rent throughout the years had been informal, there had been occasions that the Defendants were in arrear of rent close to or over a year, for example the rent for 1992 and 1993 was paid on 15 June 1993, and the rent for 2001 was paid on 18 October 2011. 

19.  It is the 2^nd Defendant’s case that the receipt is a proof of a periodic tenancy between 2010 and 2012.  Miss Leung submitted that the content of the receipt in 2012 is contrary to the background alleged by the 2^nd Defendant that Lot 475 has long been responsible by Tsang directly to the Plaintiffs after 2001.    

Right not accrued when the writ was issued

20.  What make the 2^nd Defendant to hold a belief that the last periodic tenancy was between 2010 and 2012 is unclear in the evidence, and probably contrary to her own evidence.  The 2^nd Defendant stated in paragraph 23 of her 3^rd Affirmation, after the expiry of the tenancy agreement, she went to Man Leung’s home in about early 2002 to pay her share of the rent for the next year, if this is to read together with a receipt dated 18 October 2001, she probably referred to payment of rent for 2002 but that is not clear, in any event on that occasion they came into agreement to follow the term of the previous written tenancy and she is to pay yearly rent of HK$2,000 on a 3 year basis to the deceased.  Thus according to the 2^nd Defendant’s evidence all was settled in 2002.

21.  The 2^nd Defendant in paragraph 25 of her 3^rd Affirmation stated that she has paid the rent for 2004 – 2006, 2007 – 2009, and 2010 – 2012 to the deceased, even so this would not affect the commencement and duration of each of the periodic tenancy after the expiration of the written tenancy in December 2002.  For the present application, on the face of the receipt, the deceased acknowledged on behalf of all the landlords the acceptance of the rent for 2010, 2011, and 2012. With the informal practice in rental payment, the tender and acceptance of 3 years rent in the middle of the then periodic tenancy is possible, whether this actually happened, whether the description is accurate, is a matter for trial.   

22.  Miss Leung submitted there is no evidence for any variation of the oral tenancy when the alleged rent was paid in 2010, I agreed after consideration. Thus section 6 of the Conveyancing and Property Cap.219 I once raised during the discussion is not applicable to the present application.  The periodic tenancy between 2009 and 2011 expired on 30^th December 2011 whether by effluxion of time or by the notice of termination dated 11 November 2011 is not material to the present application.   For the present application the issue is the effect of the notice of termination if any to any tenancy commenced in 2012.

23.  Miss Leung does not seem to argue that should there be a licence or a periodic tenancy between 2010 and 2012; the notice of termination would not be valid to terminate such tenancy before December 2012.  Her case is that the then existing periodic tenancy was between 2009 and 2011, and the notice of termination is a clear message to the 2^nd Defendant that no further tenancy would be granted to her after December 2011. 

24.  The year 2012 supposed to be the commencement of another new periodic tenancy; in my view any rent accepted for such year in 2010 may be taken as prepayment or deposit for the anticipated new periodic tenancy after the existing one expired in December 2011, if so this would be a valid and enforceable contract between the parties.   In such case, the Plaintiff cannot by the notice of termination dated 11 November 2010 to terminate the periodic tenancy commenced in 2012 but this may amount to a message to the 2^nd Defendant that no further lease would be granted to her apart from those that have been entered into, and the issue of the present proceedings confirmed such message. And the 2^nd Defendant arguably has got the message from the Plaintiffs and attempted to tender rent for a new periodic tenancy in 2013 yet she did not make it clear to the Plaintiffs.

25.  For the reasons mentioned above whether as the 2^nd Defendant put it that the receipt in 2010 is a proof of a periodic tenancy between 2010 and 2012 or whether it is a piece of evidence that the deceased by accepting the rent for 2012 has entered into a contract for further periodic tenancy in 2010.  The authenticity of the receipt in 2010 is thus relevant to the claim for possession, and amount to an arguable defence to the claim for possession that when the present action was issued the Plaintiffs had no right to possession. 

26.  This being the case, for the present application, it would not be necessary for me to go on to consider the other defences raised by the 2^nd Defendant in relation to the claim for possession, however, as parties have spent time on the other two defences, I find it appropriate to give my view on those.

New periodic tenancy entered for 2013 – 2015

27.  The next defence raised by the 2^nd Defendant is that she has tendered payment for the 2013 – 2015 rent in the sum of HK$6,000 by cashier order to Man Leung and the 1^st Plaintiff respectively and the same was not returned by the 1^st Plaintiff, as such the Plaintiffs and she had entered into another oral tenancy for a term of 3 years.  One of the claims of the Plaintiffs’ is rent in arrears in the sum of HK$12,000.  The tender of two sums of HK$6,000 by the 2^nd Defendant on 3^rd April 2013, making a total of HK$12,000.  The 2^nd Defendant does not stated in her affirmations how she had made it clear to the 1^st Plaintiff or Man Leung that these are rent for 2013 to 2015.  At no time the Plaintiffs acknowledged that the monies or part of the monies were accepted as rent for 2013 to 2015, and instead they took out a summons for summary judgment on 15 July 2013. 

28.  Further, it is the 2^nd Defendant case that Man Leung did not want to take part in the matter of the lease after 2003 and directed her to pay the rent to the deceased, and she learnt from the Statement of Claim that Man Leung was no longer the owner of the Land and Lot 475, I failed to see any good reason for the 2^nd Defendant to pay any rent to Man Leung.  Likewise the Plaintiffs have instructed solicitors to handle this matter, and all the correspondences and legal documents were handled by their solicitors, the 2^nd Defendant had already written directly to the Plaintiffs’ solicitors in 2010, I failed to see any good reason for the 2^nd Defendant on this occasion to pay any rent to the 1^st Plaintiff who is only the personal representative of the deceased and liable to account to the beneficiaries of the estate in due course.

29.  So far there was only evidence that she sent a cashier’s order in the sum of HK$6,000 to the 1^st Plaintiff and Man Leung respectively.  It is not disputed that Man Leung has returned the same to her and 1^st Plaintiff denied ever in possession of such cashier’s order.  There is no evidence that the cashier to the 1^st Plaintiff has been cashed.  There is simply no evidence that the 1^st Plaintiff has acknowledged the receipt of the “rent” and granted the 2^nd Defendant any further oral tenancy.  

Proprietary estoppels

30.  The 2^nd Defendant also raises proprietary estoppels as one of her defences.  In her 3^rd Affirmation she stated that:

i.   in about August 1999, Man Leung and Man Tai Loi orally promised her the Land would be let to her until the government resumes the same or she decided to cease using it for agricultural purposes;

ii.   in reliance of such promise, she had expended time, effort and expenses and filled up a pond in the Land; and

iii.   carried out extensive renovation on the structures for pig farming on Lot 464 and expended HK$300,000 on this project.

31.  It is not disputed that the 2^nd Defendant has been carried out farming on the Land since 1980s.  The 2^nd Defendant pleaded in her Defence that in 1999 she wanted to fill up a pond, build a hut and pigsty and sought the consent from Man Leung and Man Tai Loi, and the two promised her to let Land to her until she ceased farming or resumed by government.  Her affirmations basically repeated what was pleaded in the Defence.     

32.  The 2^nd Defendant stated in paragraph 34 of her 3^rd Affirmation that, as at 1999 there was a pond on the land of Lot 445, 447, 450 and 451 which she was using as a fishery; and she had been using parts of the Land and other adjacent lots for pig rearing, which was more profitable than fish farming. This must be the case that she was required to obtain consent from the Landlord to carry out her idea to expand her then existing pig rearing activities, this is consistent to the written notes dated 28 August 1999 written by Man Tai Loi and the letter addressed to the Lands Department dated 30 September 1999 by Man Leung.   Since 1980s the 2^nd Defendant has been in occupation of the Land, why would Man Leung or Man Tai Loi gave such assurance/promise as alleged by the 2^nd Defendant on that occasion when the 2^nd Defendant just came over to ask for their consent to build a pigsty.  There is simply no mention how the promise was given.

33.  If this was not the case that the 2^nd Defendant only went up to obtain consent to carry out her own plan, but because of the size of the intended investment, to seek assurance from the Landlord that she would be grant lease until the government resumes the land or she decided to cease using it for agricultural purposes, it would be unusual for her to accept the note on that day from Man Tai Loi to confirm only that the Land has been rented to her without putting the assurance/promise down.

34.  Not long after that meeting in August 1999, the parties entered into their first written tenancy on 1 January 2000, there is no mention of letting the Land and Lot 475 to the 2^nd Defendant until the government resumes the land or she decided to cease using it for agricultural purposes. That was a 3 years fixed term lease, upon expiry of the term, if the landlord wishes to continue leasing the Land, the tenant has the priority right to renew, having considered the length of the landlord and tenant relationship in the past, the terms entered in 2000 would be sufficient to enable the 2^nd Defendant to make long term investment plan for her pig farming. 

35.  The farm of the 2^nd Defendant was originally located on Lot 440, 442-3, 445-8, 450-2, 455, 461-7 as shown on the Livestock Keeping Licence (Licence) dated 26 April 2000.  The 2^nd Defendant applied to fill the pond on 23 September 1999 and was grant permit to do so on 10 March 2000. The pond the 2^nd Defendant mentioned about was situated on the land of Lot 445, 447, 450 and 451; Lot 445 and 447 were not belonged to the Plaintiffs.  Would it be the case that the 2^nd Defendant would not have carried out her plan without the alleged assurance from all the relevant landlords? 

36.  The location of the 2^nd Defendant’s farm remained the same as shown in her Licence dated 28 June 2003 which would remain in force until 27 June 2006.  The Licence for the period between 28 June 2006 and 27 June 2009 is not included in the evidence.  But the location of her farm has changed as shown in the Licence dated 28 June 2009, which was then situated in Lot 440,442-3, 445-8, 461-7 and government land, and the location remained unchanged as shown on her Licence dated 28 June 2012 which valid until 27 June 2015. 

37.  From the plan of the Lots where the 2^nd Defendant’s farm is situated, it appears that Lot 464 is only a small part of the farm, Lots 450 – 2 and Lot 455 are situated at a corner of the farm, and according to the information from the Licence, at the latest since June 2009 Lots 450 – 2 and Lot 455 have ceased to be part of the farm.  By a letter dated 11 December 2007 issued by the Plaintiffs’ solicitors, the Plaintiffs had complaint about wrongfully altered the user of the Land by using the same for storage and/or parking and /or manufacturing purposes, which is consistent to the information as shown in the Licence.    

38.  Lot 450 and 451 are no longer part of the 2^nd Defendant’s pig farm.  Evidence shown that the 2^nd Defendant does not treat the 4 pieces of land stated on the written tenancy collectively as one but separately, lot 475 has long been considered by her not leased to her.  Where any of the remaining lots are no longer used by the 2^nd Defendant for agricultural purposes, in my view even with the alleged assurance/promises, proprietary estoppels is not available to her.

39.  The 2^nd Defendant stated in paragraph 40 in her 3^rd Affirmation that she had also carried out extensive renovations on the structures for pig farming built on Lot 464 during the period from 2005 to 2009.  Many structures such as pig sheds had been completely torn down and rebuilt.  The pig farm has been existed before 1999, to carry on running her farm in such extensive area; she would have to maintain the structures on it irrespective of any alleged promise/assurance from the Plaintiffs.  

40.  There is evidence that for the Lot 443 the 2^nd Defendant entered into a fixed term tenancy with option to renew for a further 4 year with the Landlord in 2012, this suggest when the 2^nd Defendant minded to expend her farm in 1999 she did not have similar alleged assurance/promise from the landlord of Lot 443 yet she included that part in her farm.   There is no evidence whether the 2^nd Defendant got similar alleged assurance/promise from other landlords related to her farm.  In my view the alleged assurance/promises and the alleged reliance are doubtful.

Conclusion

41.  The principles applicable to applications for summary judgment are clear and not in dispute.  To resist an Order 14 application, the defendant must show that there are triable issues.  A concise statement of the standard approach in an application for summary judgment is to be found in the dicta of Ma J, as he then was, in Schindler Lifts (Hong Kong) Ltd. v. Ocean Joy Investments Ltd. [2003] 1 HKC 438.  The court has to determine two questions: firstly, whether what the defendant says is believable as opposed to whether its version of events is to be believed; and secondly, if it is, whether what the defendant says amounts to an arguable defence in law.

42.  In determining the first question, the court should not embark on a mini trial of the action on affidavit evidence.  The burden of proof is not a heavy one.  It is not the function of the court at this stage to assess if a defence will succeed at trial.  Insofar as the second question is concerned, summary judgment will not be granted if there are arguable defences or serious disputes of law.

43.  Miss Leung conceded that leave should be granted for the 2^nd Defendant to defend on the arrears of rent, as mentioned above, when she made such concession, the receipt in 2010 was only one of her considerations; there are also other factual disputes in relation to this claim.   

44.  For the reasons mentioned above, the version of event alleged by the 2^nd Defendant as supported by the disputed receipt in 2010 if accepted amounts to an arguable defence to the claim for possession though it will no longer available to her should the Plaintiffs take out a new writ for possession.  In the circumstances I consider the appropriate course is to grant unconditional leave to the 2^nd Defendant to defend the case.

Costs

45.  Having given the 2^nd Defendant unconditional leave to defend, I consider the appropriate costs order is one of costs in the cause. I therefore grant a costs order nisi to be made absolute within 14 days that the costs of this application be costs in the cause, to be taxed if not agreed, with counsel certificate.  The 2^nd Defendant’s own costs be taxed according to the Legal Aid Regulation.