YEUNG MUI CHUN v. TSE MAN YING

DCCJ10029/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 10029 OF 2001

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J U D G M E N T

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Background

1. The plaintiff, Madam Yeung, was the lawful "kit fat" of the deceased, Luk Chiu-yuen - I shall refer to him as "Mr Luk" - they having gone through a customary marriage in Canton on 16 December 1949.

2. The defendant was the cohabitant of Mr Luk from 1961 up to his death on 15 June 1977. Out of their union, the plaintiff and Mr Luk had a son born on 27 April 1968, while the defendant bore him four children, three daughters and a son, in 1962, 1964, 1967 and 1970 respectively.

3. The defendant and Mr Luk's relationship was closed to one of a concubine and her husband, except there has been no evidence or proof that the relationship of concubinage has been established and accepted by the plaintiff who is the lawful "kit fat" wife. So, for the purposes of the present case, the defendant's relationship with Mr Luk can only be considered, at the most, a common law union, not recognised as a lawful union of marriage or concubinage.

4. On 13 June 1972, Mr Luk purchased a property known as Flat B, 13/F Penthouse and a flat roof at Fook Gay Mansion, No. 377 Lockhart Road, Wan Chai, Hong Kong (hereinafter called "the property"). It is not disputed that after the property was purchased it was used by Mr Luk to house his mother, Madam Mak Yau, the defendant and their four children, and they have been living there since 1972 up to, of course, Mr Luk's death in 1977.

5. On 15 June 1977, Mr Luk died of a sudden illness, having left no will for the disposal of his estate. Subsequently, the plaintiff had some difficulties over her application in obtaining the grant of letters of administration of Mr Luk's estate, and these letters of administration of Mr Luk's estate was granted to the plaintiff eventually on 2 May 1991.

6. The plaintiff now applies to the court for an order of vacant possession of the said property in the capacity of the registered owner of the property, for she had purchased the property from the estate at a consideration of $800,000 on 30 November 2000. I refer to this assignment of 30 November 2000 that Madam Yeung assigned to herself, as the purchaser, and as the vendor, she further signed in the capacity of the administratrix of the estate of the late Mr Luk.

The Plaintiff's Case

7. It is the plaintiff's case that in 1972 she was told by the late Mr Luk, her husband, that he had purchased this property ("the property") to house his mother, Mak Yau, who would live there with some relatives, that those relatives would take care of her. Further, that the property was intended for their retirement (that is, the retirement of the plaintiff and Mr Luk).

8. At the time of Mr Luk's death, Madam Mak Yau was still alive. The plaintiff alleged that her husband, Mr Luk, had told her that upon his retirement, he would reside at the property with her. It is also her evidence that she knew nothing about the defendant's existence. She did not know that the defendant was cohabiting with her husband at the time. It is her evidence that although sometimes Mr Luk would stay at his place of work, he would, on the average, return to her home for an average of 15 days a month. She also told the court that at the time she could not live with her mother-in-law, Madam Mak Yau, and as a result, Mr Luk had moved his mother out to live somewhere else, this was in the early 1960s.

9. She alleged that the defendant had told her at the funeral of Mr Luk in 1977 that she was Mr Luk's concubine and they had been living with their four children and Mr Luk's mother, Mak Yau, at the property. The plaintiff alleged that the defendant had further told her at the funeral that she had contributed to the purchase of the property. However, Madam Yeung said she had then made it clear to Madam Tse, the defendant, that she could not accept Madam Tse as her husband's concubine.

10. The probate of the late Mr Luk's estate took a long time. In mid-1982, at the arrangement of a solicitor's clerk at Messrs H M So & Co., Madam Yeung had a meeting with Madam Tse at the solicitor's office. During that meeting, she said Madam Tse repeated the claim that the property was purchased by Mr Luk with Mr Luk's and her money. It is Madam Yeung's evidence that Madam Tse requested her to transfer the property back to Madam Tse's name after Madam Yeung obtained probate of the estate, and Madam Yeung said she turned down Madam Tse's request. However, at the time she said she appreciated that Madam Mak Yau was of old age and Madam Tse's children were still young; should she evict them, they would have nowhere to go and nowhere to live; and thereupon, Madam Yeung claimed that she informed Madam Tse that she would allow Madam Tse and her four children and Madam Mak Yau to reside at the property until Madam Mak Yau's death and the children attained majority. She claimed she had granted them a licence to remain at the property. Madam Tse, however, insisted that Madam Yeung should transfer the property to her name, otherwise she would place obstructions in Madam Yeung's application for the grant of letters of administration of Mr Luk's estate. The meeting ended on that note.

11. Madam Yeung obtained letters of administration of Mr Luk's estate on 2 May 1991, after that she was able to retrieve the title deeds from the safe deposit box at the bank. She claimed that Mr Luk had left the safe deposit box key to her.

12. In spite of the retrieval of the title deeds and the grant of letters of administration, she took no action in retrieving vacant possession of the property. It is Madam Yeung's evidence that she had agreed not to do so as long as her mother-in-law, Madam Mak Yau, was still alive and living at the property, and that the defendant's children were still young and had not attained majority.

13. Some time in the year 2000, Madam Yeung met a relative who told her Madam Mak Yau had passed away 2 or 3 years ago, and that all of Madam Tse's children had grown up. Afterwards the plaintiff, Madam Yeung, started to instruct solicitors in the process of obtaining vacant possession from the defendant.

14. Subsequently, a notice to terminate the licence was sent to the defendant by the plaintiff's solicitor on 19 September 2000, this appears on page 196 of the plaintiff's bundle.

15. Madam Yeung claimed that she now lives with her son, his wife and their two children in a small flat purchased by her son, it is a home ownership scheme flat, and she also said that the living quarters are very cramped, she has no bedroom of her own, and that she wished to repossess the property for her own use and would let out a room for rental income. She now seeks the vacant possession of the property and damages of or mesne profits at $4,000 a month from September 2000 onwards until the delivery of vacant possession.

The Defendant's Case

16. The defendant's evidence is that the late Mr Luk had promised to look after her and provide for her with security if she bore his children, and this was said to her after she discovered she was two months pregnant with his child. He had told her he had a wife in China and could not, therefore, marry her. She was then aged 23 and he was aged 32, and the year was 1961. She gave up her job working as a cleaner in a restaurant where Mr Luk had shares, and she became a full-time housewife. In succession, she bore him four children.

17. At the same time, she also looked after Mr Luk's mother, who had gone to live with them in 1962 after the birth of her daughter. She claimed Mr Luk's mother acknowledged her as her daughter-in-law and Madam Mak had enjoyed the company of her four grandchildren, and Madam Mak did help in looking after the children when they were young. It is the defendant's evidence that Mr Luk and she had lived as husband and wife until his death in 1977.

18. She further claimed that the late Mr Luk promised her again to provide her with security when he purchased the said property in June 1972. She claimed she had asked him to transfer the property to her name at the time, but Mr Luk had told her then that he would only do so when his financial situation became better or had improved. She understood then that he needed to mortgage the property in order to finance his business, and therefore she did not wish to raise the matter with him repeatedly and she accepted his word.

19. She claimed that she met the plaintiff for the first time at the hospital on the day Mr Luk passed away. They met again at the funeral, but according to the defendant, on neither occasion did they speak to each other. In the same year, she said she feared that she may be dispossessed by the plaintiff because she knew the plaintiff was the "kit fat" lawful wife and the property was in the name of the deceased, Mr Luk. She had therefore sought help from the then Urban Councillor, Mrs Elsie Elliott, and later on she instructed Messrs S C Poon & Co. to handle the matter on her behalf. This resulted in her entering the caveat at the Probate Registry against the plaintiff's application for the grant of letters of administration of the estate of Mr Luk.

20. Meanwhile, she went out to work to support the family and she was the sole breadwinner of the family consisting of her four children and Madam Mak Yau. She confirmed that she did meet Madam Yeung at the office of Messrs H M So & Co. some time in 1982. There she was told by Madam Yeung that if she withdrew her caveat, Madam Yeung would let her have half of the estate of the late Mr Luk, and she was asked to sign some documents in English which she could not read. She therefore turned it down and rejected the offer.

21. She claimed that Madam Yeung had never told her at that meeting that she was allowed to continue to reside at the said property until the death of Mak Yau and the attainment of majority of her four children. She denied she had ever told the plaintiff that she had contributed towards the purchase of the property. She claimed that she had told the plaintiff that she had expended money in purchasing furniture and electrical appliances for the property, and she said the plaintiff might have mistaken that as her claim for her contribution to the purchase of the property.

22. Madam Tse claimed that since Mr Luk's death she had been paying all the outgoings at the property, and furthermore, at the time of moving into the property, she had given her own savings to Mr Luk, a sum of $3,000, to furnish the property with refrigerator, air-conditioner and other furniture, and she claimed that at the time, Mr Luk complained to her that he had spent all his money and he had no spare cash.

23. In 1999, Madam Tse further paid $28,000 towards the property's share of repair and maintenance of the building because the building was served a Notice of Repair by the government. She claimed the plaintiff had attempted to sell the property, because she received a letter dated 19 March 2001 from Messrs Yaddy Cheung demanding that they should vacate the property pending the sale completion date on 25 March 2001. She refused to move out.

24. The defendant denies she was a licensee at any stage. She claims that she had been living in adverse possession of the property for over 20 years; that is, since 1972. She is therefore seeking a declaration that the plaintiff, as the registered owner of the property, has lost her right to recover the possession of the property under section 7(2) of the Limitation Ordinance and, under section 17, that the plaintiff's title has extinguished.

25. She further prays for the vesting of the said property to her and she may be registered as its owner, and as an alternative claim, the defendant seeks a declaration that the property was held in trust by the late Mr Luk for her and that the property be vested in her and her name be registered as the owner. Further in the alternative, the defendant counterclaims against the plaintiff for a declaration that she be entitled to occupy the property for the rest of her life; or, alternatively, be compensated for the damages she suffered in reliance of the assurance given to her by the late Mr Luk.

The Issues

The Law

27. On the issue of the licence, the nature of "licence" - and I refer to the authority of Hill and Redman's Law of Landlord and Tenant Volume 1, paragraph 629 on page A205:

"A licence does not create any estate or legal or equitable interest in the property to which it relates. It confers a right making that lawful which would otherwise be unlawful."

The paragraph goes on to say:

"The classic definition of 'licence' has been propounded thus: a dispensation or licensed property passes no interest nor alters or transfers property in anything, but only makes an action lawful which, without it, had been unlawful."

28. The categories of "licence" as set out in Hill and Redman's Law of Landlord and Tenant Volume 1A, paragraph 663 at page A209:

"There are three categories of licence. The category into which a licence falls has consequences in terms of both revocability and assignability. The first category of licence, a bare licence, is granted without any valuable consideration to support it. The second category is that of a licence coupled with the grant of an interest, such as a right to enter onto land and enjoy or profit upon incorporio hereditament."

In paragraph 667 on the following page, A210, is the third category:

"The third category is a contractual licence which is any licence which is not coupled with a grant but which is supported by a valuable consideration."

29. As to the revocation of licences, the writers of Hill and Redman has this to say in paragraph 683 on page 210:

"A bare licence does not even amount to a contract, with the result that it may be revoked by the licensor at any time without giving a right to damages to the licensee. In Aldin v Latimer Clark, Muirhead & Co., it was assumed that a gratuitous licence was revocable at will."

30. During the period between 1972 and 1977, the defendant lived with the late Mr Luk at the property with their four children and his mother, Madam Mak. It is undisputed that they lived there as man and wife, and therefore she was there in that capacity. There is, I find, no question of the granting of a licence if one is living there as part of the owner's family.

The Period 1977 to 1982 (that is, after Mr Luk's death)

31. The plaintiff was trying to process her application for the grant of letters of administration for the late Mr Luk's estate. The plaintiff claimed that the defendant told her that she had contributed in the purchase of the property at the funeral. This was contradicted by the defendant. In any event, the plaintiff had yet to obtain the letters of administration in order to administer the estate. She therefore was unable to do anything about the property meanwhile. It is the plaintiff's case that she had therefore granted an implied licence to the defendant so that Madam Mak and the defendant's four children could reside there.

The Period between 1982 and September 2000

32. The plaintiff claimed she had a meeting with the defendant in 1982 and had made an offer to settle their dispute by permitting the defendant and her children to stay there until the defendant's children attained majority and Madam Mak Yau's death. This, according to the plaintiff, forms the basis of the licence granted to the defendant by the plaintiff.

33. It is the plaintiff's case that by the grant of letters of administration in 1991, her right as an administratrix therefore related back to the implied and express licence to the defendant, and I accept that it can be so construed because in reality, the plaintiff has expressed her intention was to allow the defendant, her children and Mak Yau to stay at the property rent free until Madam Mak Yau's passing and all of the defendant's children attaining majority.

34. However, this licence can only be a bare licence. There was no consideration coming from the defendant. Although the plaintiff had asked the defendant to withdraw the caveat against the grant of letters of administration of Mr Luk's estate, the defendant had refused to withdraw the caveat. It is therefore a licence granted without consideration, and for a bare licence it is revocable at will, therefore it can be revoked any time with reasonable notice.

35. According to the plaintiff's case, this was the position, and therefore the plaintiff claims that she is entitled to recover vacant possession and that reasonable notice has been given by her letter in December 2000.

36. The defendant's defence is adverse possession. The defendant claims that she occupied the property as a squatter since June 1977, at the death of Mr Luk, and it was occupied without permission, consent or licence.

37. In law, by adverse possession, the owner's title may be extinguished, and I refer to Clerk & Lindsell on Torts, 18th edition, chapter 18, paragraph 80, and the author has this to say:

"Adverse possession and licensed possession. Adverse possession for a sufficient period of time extinguishes title and in effect produces an involuntary loss of property by a proprietor who fails to challenge a squatter within the period of time allowed by statute. Since the law permits a successful squatter, even with knowledge of the true title, to expropriate without compensation, it is necessary to define closely the limits of his ability to acquire another's land by adverse possession. The phrase 'adverse possession' in the Limitation Act 1980 means no more than that a person is in adverse possession in whose favour time can run under the statute. On the other hand, the phrase means, to some extent at least, that which it says: time cannot run in favour of a licensee, and therefore he has no adverse possession. Nevertheless, certain recent decisions have adopted, in cases where the owner had retained title with a view to some future utilisation for a specific purpose, a quite general doctrine of implied licence from the owner to the squatter without any specific factual basis for such an implication. Lord Denning, Master of the Rolls, had explained that:

'The reason behind the decisions is because it does not lie in the other person's mouth to assert he used the land of his wrong as a trespasser; rather, his user is to be ascribed to the licence or permission of the true owner'."

38. I accept the evidence of the plaintiff that she did meet and talk with the defendant at the funeral. It is reasonable for the defendant, whose only support had just passed away, to then say to the plaintiff that she and her children and Madam Mak Yau, her mother-in-law, were living in those premises. She may even have said to the plaintiff that she had contributed to the purchase of the property in order that the plaintiff would not evict her from the property, on the balance of probability that it is possible, according to the plaintiff's evidence.

39. The plaintiff being the "kit fat" lawful wife of Mr Luk, it is reasonable for Madam Tse to fear that Madam Yeung could take away the property from her and, as a result, Madam Tse sought the help from Mrs Elsie Elliott. She was for quite a number of years successful in stopping the plaintiff from obtaining a grant of letters of administration by entering of a caveat in the Probate Registry. This has effectively stopped any eviction process in the name of the administratrix of Mr Luk's estate by the plaintiff, and that was why, in 1982, the plaintiff's lawyers had arranged for the parties to meet in the hope that the defendant would withdraw the caveat.

40. On the balance of probabilities, I accept that at the meeting, as related by the defendant, the plaintiff had offered to give the defendant half of the estate if only the defendant would withdraw the caveat to enable the plaintiff to obtain a grant of letters of administration. Of course, this would mean that they could have entered into a family arrangement and this would assist the defendant, who had four children to bring up and who had also Madam Mak to look after.

41. Unfortunately, the defendant turned it down, understandably because she could not understand the language in which the documents were written and she had not the benefit of a lawyer. If she had, the situation may have been different.

42. On the facts before me, I find, on the balance of probabilities, that there was an express licence from the plaintiff to the defendant in 1982 that her children and Madam Mak Yau would be allowed to live in the property until Madam Mak Yau passed away and the children attained majority. It stands to reason the plaintiff well knew that so long as Madam Mak was still alive, the plaintiff would have great difficulties in evicting her and refusing her the accommodation of the property. After all, the plaintiff was working at her mother-in-law's brother's business. Furthermore, the defendant has four children by her husband. Again, she had little choice in the matter but to grant the licence to them to stay at the property.

43. The plaintiff's right to revoke the licence came only after she obtained the grant of letters of administration, but she did not utilise this right immediately to revoke the licence, probably because Madam Mak was still alive at the time. I accept her evidence that it was only in the year 2000 that she came to know for sure that Madam Mak had passed away and the defendant's children had grown up, and she saw that as a good opportunity for her to serve a notice to terminate the licence by the letter of September 2000.

44. As to the defence of proprietary estoppel, I refer to Snell's Equity, 13th edition, chapter 39, paragraph 12 on page 68. This is the definition of "proprietary estoppel":

"Proprietary estoppel is one of the qualifications to the general rule that a person who spends money on improving the property of another has no claim to reimbursement or to any proprietary interest in the property. Property estoppel is older than promissory estoppel. It is permanent in its effect and it is also capable of operating positively so as to confer right of action. The term 'estoppel', though often used, is not altogether appropriate, yet the equity is based on estoppel in that:

(i) it is encouraged to act to its detriment by the representations or encouragement of another so that it would be unconscionable for all to insist on his strict legal right."

Chapter 39, paragraph 14:

"(a) Detriment

There is no doubt that for proprietary estoppel to arise, the person claiming must have incurred expenditure or otherwise have prejudiced himself or acted to his detriment."

Down the page:

"(ii) Other Detriment

The detriment may consist of A giving up his job and going to live near O in a house owned by O, or by A acting as an unpaid housekeeper and later mistress; or by:

(a) a maid cohabiting with O's son and nursing O's daughter; or it may arise from A disposing of part of his land without being able to gain access to his retained land otherwise than over O's land.

(b) Expectation or Belief

A must have acted in the belief either that he already owned a sufficient interest in the property to justify the expenditure, or that he would obtain such an interest; but if A has no such belief and he improves land in which he knows he has no interest or merely the interest of a tenant or licensee or occupier under the incomplete or revocable contract, he has no equity in respect of this expenditure. It is not sufficient that A believes that he will obtain an interest over O's property if he is also aware that O may change his mind. In the case of statements about the intended contents of the will, the facts must be looked at against the ordinary presumption that such intentions are subject to the change. Similarly, if shortly before A incurred the expenditure or asserted his claim to the land, no equity will arise against him even if he claims a greater interest than he in fact had and gave no details of his title, nor need he reassert his title when the expenditure begins.

(c) Encouragement

A's belief must have been encouraged by O or his agent or predecessor in title."

45. It is clear the claimant of the proprietary estoppel must have either acted in her detriment in relying on an expectation or belief such as in the case of Inwards v Baker, Greasley v Cooke, referred to by Miss To. In the present case, there was no positive action to the defendant's detriment. It was argued by Miss To that the defendant would not have borne Mr Luk's four children and looked after his mother had Luk not made her a promise to look after her. According to Madam Tse's evidence, this promise to look after was made to her when she was two months pregnant with Mr Luk's first child, and when she confronted Mr Luk with marriage, he then told her he was already married, that his wife was a big landowner in China and she could not come to Hong Kong. The latter was a lie, because the plaintiff had at all material times been living in Hong Kong and living with Mr Luk. The defendant obviously knew that, if not in 1961, definitely in 1962, because she said in evidence Madam Mak Yau came to live with her and Mr Luk in the small room in Wan Chai in 1962 and Madam Mak was crying to Luk, complaining the plaintiff was treating her badly. Given that Mr Luk was already caught lying by the defendant about his wife being in China, would it be reasonable for the defendant to still trust Mr Luk in his promise?

46. The defendant said the promise that the property would be transferred to her name was made when the property was purchased. She had confronted Mr Luk even before the purchase, and he put her off by telling her the property had not yet been purchased. When she confronted and reminded him again after the purchase of the property, he said to her that the stock market was poor and he needed to mortgage the property to finance his investments.

47. According to the Land Search record of the property, there was a mortgage which lasted 2 years from 1972 to 1974. It was executed as soon as the property was purchased and was redeemed in 1974, 2 years later. From then on to the date of death of Mr Luk in 1977, no further action of transfer had been taken. Furthermore, the title deeds were placed in a safe deposit box and the key to the box was kept by the plaintiff. The plaintiff said Mr Luk had given the key to her, and this lends credence to her claim that Mr Luk told her this property was purchased for their retirement.

48. Further, I cannot find any evidence that the defendant had acted in any detriment. The four children were born before the property was purchased. She had resided with and had looked after Madam Mak Yau since 1962. She was doing exactly the same as before as a housewife before the purchase of the property. Was it encouraged by Mr Luk? One may say so, but then any common law husband would have expected his common law wife to take care of their children, to look after his mother, particularly in a Chinese family environment.

49. It is a very different factual situation from the case of Greasley v Cooke, where the claimant in that case had first entered the household as a maid who was paid, and her later relationship with the owner's son and her looking after the owner's mentally ill daughter later on was more than what was expected of her initially, and therefore, in Greasley v Cooke the court considered that she had acted in her own detriment because she could have gone out to work for someone else for pay.

50. I cannot find in any evidence in the present case that the defendant acted in her detriment in reliance to the assurance in any way. Nor can I find that there was any element of trust that Mr Luk had purchased the property in trust for the defendant. If he had, there would have been some documents to make sure that the defendant, not being accepted as a concubine, in some way has been given some sort of written security. Unfortunately, Mr Luk died a premature death. If he had been given some time, he might have made some preparation for Madam Tse's children and the disposal of this property. He might have even written a will. Unfortunately, that is not the position here.

51. Under the law, it is unfortunate for the defendant to be left unprovided for. She could have applied under the Inheritance (Provision for Family) Ordinance, Cap. 481, if she had applied within 6 months of the representation being granted; or, had she been accepted before Mr Luk's death or at any stage by the plaintiff as a concubine to Mr Luk, it may have been a different story. As it is, she had the enjoyment of this property from 1972 up to now, and this property constituted 53 per cent of the estate of Mr Luk at the time of his death.

52. In any event, according to the records, the plaintiff purchased this property on 30 November 2000 at a consideration of $800,000. It is not known if money had really changed hands. Assuming that it had, she is now the bona fide purchaser and registered owner of the said property. There may be a sum of $800,000 in the estate of Mr Luk. Of course, then, as far as his estate is concerned, that is another issue altogether which is not an issue that I need to consider here.

53. I find, on the balance of probabilities, that the plaintiff has established her case and she has succeeded in her claim. I dismiss the defendant's counterclaim. Mesne profits payable by defendant to the plaintiff from 19 September 2000 to 28 November 2002 at a rent of $4,000 a month, and thereafter 3,500 a month until vacant possession is delivered. Costs follow the event, and costs to the plaintiff to be taxed if not agreed, with certificate for counsel. Each party's own costs to be taxed in accordance with Legal Aid Regulations.