CHEUNG KWAN KEI v. CHEUNG KWAN FAI

DCCJ 838/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 838 OF 2008

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ASSESSMENT OF DAMAGES

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1.  The present action concerns a residential property on the 5^th Floor, Chew Onn Building, Yen Chow Street, Kowloon (“the Property”). The plaintiff is the registered owner of the Property. The defendant is his brother.

BACKGROUND

2.  In February 2008, the plaintiff commenced the present action against the defendant for the delivery of the title deeds in respect of the Property, vacant possession and mesne profits for the defendant’s occupation of the same.

3.  The plaintiff applied for summary judgment.  On 11 March 2009, I handed down the written decision in the case (“the Decision”).  For reasons stated (§§10-38 and 46 of the Decision), I gave judgment against the defendant for vacant possession of the Property or such part of it as might be occupied by him and mesne profits for his occupation of the same to be assessed.  The claim for the delivery of title deeds had to be tried (§§39-45).

4.  By then, both parties were represented by solicitors and counsel.

5.  Some 2 years later, in March 2011, the plaintiff made appointment for the assessment of the mesne profits.

6.  In the same month, the defendant filed a notice to act in person.

7.  In October 2011, the plaintiff amended the statement of claim, essentially to abandon his claim for the return of the title deeds in respect of the Property.

THE DISPUTE

8.  According to the statements filed on behalf of the defendant, he somehow seeks to dispute the plaintiff’s entitlement to possession of the Property against him.  As mentioned, the case has been argued on his behalf by counsel.  The Decision was handed down in March 2009.  No appeal has been lodged.  This is therefore no occasion for the defendant to re-open the issue.

9.  According to the plaintiff, the attempt to recover vacant possession of such part of the Property as might be occupied by the defendant since the Decision has not been successful.  He now asks for assessment of the mesne profits for the defendant’s occupation until now.

10.  According to the defendant, he has moved out of the Property since 1 June 2009.  Only the mother of the parties still resides there.  For the purpose of the assessment, he also disputes the evidence in respect of market rental value of the Property adduced by the plaintiff.

DISCUSSION

11.  Mesne profits are damages payable for wrongful occupation and thus trespass of property. To determine the period of such trespass by the defendant, it is necessary to decide: (i) when the plaintiff revoked the defendant’s licence to occupy the Property; and (ii) whether and, if yes, when the defendant moved out of the Property.

When the defendant’s licence was revoked

12.  The pleaded case of the plaintiff is that he demanded the defendant to move out of the Property in about 2001.  I also recited that in the Decision (§4).  By his statement now, the plaintiff reiterates that he is entitled to mesne profits from the defendant since 1 December 2001.  The same was repeated in the letter from the plaintiff’s then solicitors dated 21 September 2010.  In other words, he considered the defendant’s occupation of the Property since 1 December 2001 to be wrongful and amounting to trespass.

13.  As a matter of law, when the plaintiff commenced the present action on 28 February 2008, any claim for mesne profits accrued more than 6 years prior to that date would be barred by the Limitation Ordinance, Cap.347.  The claim for mesne profits from 1 December 2001 is in any event out of the question.

14.  As a matter of fact, when the plaintiff unequivocally revoked the defendant’s licence to remain in occupation of such part of the Property is far from certain either.  In this regard, both parties made reference to the affirmations filed for the purpose of the application for summary judgment. The documentary evidence referred to were essentially those exhibited to the affirmations.

15.  There is no dispute that the plaintiff ordinarily resides in the United States.  According to his affirmations, the plaintiff admitted that he allowed the defendant to continue to reside at the Property when he returned to Hong Kong in January 2000.

16.  Then there was a written agreement dated 1 December 2001 between the eldest brother, Cheung Kwan Pang, and the defendant (and witnessed by sister, Cheung Sau Yee). According to the plaintiff in court, this happened after he had already told the defendant to acquire his own property and to move out of the Property.  Amongst other things, the written agreement provided that the defendant should purchase his own property and move out of the Property by 31 December 2002.  Further the defendant had to return the title deeds in respect of the Property to the plaintiff.

17.  The plaintiff was not a party to that agreement.  In any event, whether enforceable or not between the parties, that agreement stipulated that the defendant should move out by the end of 2002.  Any claim that the licence to the defendant to occupy the Property was revoked so that he became a trespasser earlier than the end of 2002 must be incorrect as a matter of fact.

18.  Obviously things did not happen according to what the above agreement stipulated.  Nevertheless there was no evidence that any step had been taken during the interim with the effect of unequivocally revoking the defendant’s licence to occupy the Property before the plaintiff next returned to Hong Kong in May 2004.

19.  According to the plaintiff, the parties had an argument during the plaintiff’s stay in Hong Kong in 2004.  The argument arose out of the defendant’s demand for reimbursement of management fee and expenses in exchange for the return of title deeds to the plaintiff.  True or not, the alleged argument ended with no result.

20.  The plaintiff did not return to Hong Kong until November 2007.  Again, there was no suggestion that any further step had been taken with the effect of revoking the defendant’s licence to occupy the Property so as to render him as a trespasser during the interim.  That the plaintiff might hold the view that the defendant ought to have paid him “rent” (as suggested in his affirmation) was not equivalent to, or implication of, the status of the defendant as a trespasser during the interim.

21.  Through his then solicitors, the plaintiff sent a letter dated 30 November 2007 again requesting for the return of the title deeds in 7 days; and upon that, the plaintiff would agree to pay to the defendant a sum of HK$60,000 and to waive any “rent” payable by the defendant for the past years (as it was described in the letter).

22.  By that letter, the plaintiff communicated his stance that further occupation of the Property by the defendant could only take the form of a tenancy on the terms proposed.  Nevertheless the status of the defendant’s occupation of the Property in the mean time pending the acceptance of the terms and, if accepted, the performance of the terms (including the conclusion of a written tenancy agreement) was unclear. Concluding the letter by inviting the defendant to consider the proposal, the plaintiff, through his then solicitors, did not actually terminate the defendant’s licence immediately or from a specific date.

23.  For the purpose of the present assessment, it is the plaintiff’s burden to prove unequivocal termination of the licence to occupy the Property at a specific time.  In the above circumstances, the earliest time when the plaintiff can be said to have really done that was when the plaintiff eventually commenced the present action to recover possession of the Property from the defendant at the end of February 2008.

Whether and, if yes, when the defendant moved out of the Property

24.  It was common ground that the Property used to house various members of the family of the plaintiff.  The mother of the parties, Madam Leung Chau Mei (“Madam Leung”), was and still is residing at the Property.  Being legally represented all along, the plaintiff can only be taken to have consciously decided not to join Madam Leung as a party to the present action.  In the absence of determination of whether she claims any right to occupy the Property merely under the defendant, Madam Leung is not bound by the order for possession against the defendant.

25.  No wonder the plaintiff encountered difficulty when he sought to enforce the order by way of a writ of possession concerning the Property.  The order for the defendant to deliver vacant possession of “such part of the Property as may be occupied by him” effectively means the defendant has to move out of the Property.  The dispute is whether and, if yes, when the defendant did that.

26.  In his evidence in court, the plaintiff referred to the attempts by his solicitors to recover possession; but admitted that all those were hearsay.  Amongst them was what was deposed to in an affirmation of service filed by his then solicitors on 22 August 2011.  According to the affirmation, court documents, including a summons returnable on 24 August 2009, were served on the defendant personally at the Property on 19 August 2011.  That was relied on as evidence of the continued occupation of the Property by the plaintiff on that date.  The defendant denied that in court.

27.  According to the court record, the defendant did attend the hearing of the summons mentioned above on 24 August 2011.  Though the deponent of the affirmation of service was not called as a witness, I am sceptical about defendant’s denial of accepting service of the documents on 19 August 2011 as deposed to.

28.  Having said that, I also noted from the court’s record that during that hearing on 24 August 2011, the defendant actually supplied to the court another address for service, which was the address of his brother, Cheung Kwan Leung (“Leung”), at Tai Po Road, Kowloon.

29.  In court, the defendant was adamant that he moved out of the Property to Leung’s home on 1 June 2009.  Leung corroborated such evidence.

30.  Objectively, the fact that the defendant was present at the Property did not necessarily mean that he materially possessed the Property.  Particularly, Madam Leung resided and still resides at the Property.  Both the defendant and Leung admitted that they and their other siblings in Hong Kong would visit Madam Leung every now and then.  They all have keys to the Property for such purpose. So does the plaintiff.  Evidence to that effect from Leung was not contradicted; and counsel for the plaintiff acknowledged that.

31.  In the absence of determination of the status of Madam Leung vis-à-vis the plaintiff in occupying the Property, that her children, including the defendant, have access to the Property as visitors of Madam Leung during daytime in my view is not to be lightly equated with material possession of the Property.

32.  Madam Leung was called as a witness for the defendant.  She was illiterate.  It did not take long to transpire that she was not quite able to verify what was said to be her statement.  However, she did say in court that she used to live with her children but has been living alone for years.  She was unable to calculate which year it was.  She is now by herself at night; and the children would visit her and brought her food.

33.  According to the defendant and Leung, the defendant is a night shift taxi driver; and would not be spending the night at the Property.  Leung added that since the defendant has moved to his place, the defendant has been visiting Madam Leung less frequently than before.  Instead Leung, his wife and children would also visit Madam Leung, depending on the needs of the elderly.  Such evidence was not effectively contradicted.

34.  The plaintiff referred to what happened in July 2009.  He received a telephone call from his then solicitors who had a dispute with the defendant when they sought to recover possession of the Property.  Police was summonsed; and the plaintiff managed to talk to the police on the telephone.  This was the only incident that was within the plaintiff’s own knowledge to tell.  However the dispute arising out of the attempt to recover possession of the Property, where Madam Leung was still residing, and the presence of the defendant at the Property at that time, who could be visiting her, must be understood in the light of the discussion above.  According to Leung in court, he was also present at the Property when the police was summonsed on that occasion in July 2009.

35.  For the present purpose, the plaintiff has the burden to prove that the defendant has not moved out of the Property but retained possession of the same since the Decision.  But his statement was rather sketchy on the facts relied on in support of such contention.  Being resident abroad, the plaintiff has not much to offer in evidence in this respect that was within his personal knowledge.  Apart from relying on the affirmation of service mentioned above, the plaintiff or those representing him provided no other direct evidence in this respect.  Whilst he disputes that the defendant has moved away his belongings from the Property, the plaintiff adduced no direct evidence to establish that as distinguishable from the belongings of his mother who still resides there.

36.  In the circumstances, I must say that on the balance of probabilities, the evidence in hands do not suffice to rebut that of the defendant and Leung that the defendant has moved out of the Property to Leung’s residence and has ceased to materially possess the Property since June 2009.

The mesne profits

37.  Directions for the engagement of a single joint valuation surveyor and subsequently for the filing of joint report of separate valuation surveyors had been made.  In view of the defendant’s decision not to adduce surveyor’s evidence, the previous directions were eventually cancelled and fresh directions were given on 5 January 2012*.

38.  The plaintiff was given leave to adduce the report of Lau Ho Wai Lucas, valuation surveyor (of Vigers Appraisal and Consulting Limited) (“the Surveyor”) on the market rental value of the Property on 1 March of each year from 2002 until 2011.  The report had to be filed by 9 February 2011*.

39.  In the hearing bundle were in fact 2 reports.  One of them was dated 11 May 2011, which was prepared prior to the ultimate direction of the court mentioned above.  In that report, the Surveyor set out the market rental value of the Property as at 1 December of each year from 2001 to 2010.

40.  Pursuant to the ultimate direction of the court, the other report was prepared and was dated 23 March 2012.  But it was filed out of time and slightly more than a week prior to the assessment hearing.  During the hearing, the defendant did not take issue as to the late filing but the substance of the report.

41.  The recent report recorded that external inspection of the Property was carried out on 22 March 2012.  No internal inspection was available and therefore no comment on the internal condition of the Property could be made.  It was assumed to be finished to a reasonable standard.  The size (473 sq ft) and interior layout were obtained from the public record and the registered floor plan respectively.

42.  The Surveyor testified.  According to the valuation method as explained in the report, and subject to the typographical and mathematical corrections made in court, the Surveyor concluded that the market rental value of the Property as at the following dates should be as follows:

43.  The defendant challenged the valuation.  The criticism went so far as categorising the report as coarse and reckless.  In my judgment, he had but forgone the opportunity of putting forward contradictory or alternative valuation.  His assertions in court and evidence in this respect were neither objective nor professional.  On balance, I accept the expert evidence adduced by the plaintiff.

44.  The defendant argues that various members of the family had at different points resided at the Property.  Properly understood, the defendant was referring to the times when his siblings returned from abroad would lodge at the Property.  That included the plaintiff.  In court, the plaintiff confirmed that he and his siblings abroad would return to Hong Kong for 2 to 3 weeks over the years; and during which would indeed stayed at the Property.  Such stay was apparently not objected to by the plaintiff.  More importantly, such stay could hardly be treated as substantial possession of the Property on the scale of things.

45.  Indeed Madam Leung resided and still resides at the Property.  Her possession was and is material and substantial.  The defendant contends that since he and Madam Leung occupied the same bedroom, assessment should in any event be confined to that of the market rent for the bedroom.  In my judgment, this contention is unrealistic.  Whilst Madam Leung and the defendant might share a bedroom, they had the use of the Property including the sitting and dining area as well as the kitchen and bathroom facilities.  Their occupation was in reality occupation of the Property.

46.  Having said that, I can see reason behind the contention that the defendant should not be made liable to pay mesne profits as if he was in sole occupation of the Property irrespective of the mother’s occupation.  Mesne profits to begin with are damages for depriving the lawful owner of his possession of the property. In the present case, the plaintiff was deprived of the possession of the Property not just because of the defendant but also Madam Leung.  Madam Leung was neither a party nor established to be in possession of the Property under the defendant.  Even when the defendant moved out of the Property, the plaintiff nevertheless could not obtain vacant possession of the Property as whole because of Madam Leung.

47.  In the circumstances, it would not be fair to order the defendant to pay mesne profits irrespective of Madam Leung’s occupation of the Property.  A fair way, in my judgment, will be to order the defendant to pay mesne profits for his occupation of the Property at half the rate of the market rent for the Property.

48.  The defendant also argues that the plaintiff has not contributed towards the management fees and other expenses for the maintenance of the Property.  He asserts a sum in excess of HK$450,000 that the plaintiff allegedly owes him as a result.

49.  When he was legally represented, no such allegation against the plaintiff was made either by way of defence (of set off) or counterclaim.  This is no occasion for considering whether the defendant has any right of recourse in respect of any of those expenses against the plaintiff.  The allegation does not compromise the plaintiff’s entitlement to mesne profits.

50.  Lastly, the defendant also sought to argue that he was no different from a domestic servant being at the Property to take care of Madam Leung, and hence should not be made to pay “rent”.  I find such argument lacks legal sense and detracts from the reality.

Conclusion

51.  I find the defendant is liable to pay mesne profits for the period between 1 March 2008 and 31 May 2009.  The amount would be as follows:

52.  The plaintiff is entitled to interest.  On the one hand, the mesne profits accrued along with the continued possession of the Property by the defendant.  On the other hand, there has been substantial period of delay before the notice of appointment of assessment of damages was taken out on 11 March 2011.  In my discretion, I order interest to run on the above sum from 11 March 2011 at the judgment rate until full payment.

ORDER

53.  The defendant shall pay damages (mesne profits) in the sum of HK$32,704.50 together with interest as aforesaid.  The defendant shall pay the costs of these assessment proceedings to the plaintiff.  Costs shall be taxed, if not agreed. Considering all the circumstances including the quantum, I refrain from certifying the engagement of counsel.  The costs order is nisi; and will become absolute in the absence of application (by summons) in 14 days to vary.