WONG WAN LEUNG AND OTHERS v. CHU PAK SANG

HCA8401/1993

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8401 OF 1993

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J U D G M E N T

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1. The plaintiffs are the duly appointed managers of Wong Wai Tsak Tong ("the Tong"), a tong registered with the District Lands Office, Islands pursuant to the provisions of the New Territories Ordinance, Cap. 97. By virtue of section 15 of that Ordinance, the plaintiffs have full power to dispose of or in any way deal with any land held from the Crown, as it then was, under lease or other grant in the name of the Tong as if they were the sole owners thereof.

2. The plaintiffs seek a declaration that a sub-lease granted by them over a Block Crown Lease dated 18 March 1905 granted to the Tong as Lessee had been forfeited since 11 August 1993. That piece of land is a land property more particularly known as ALL THAT Cheung Chau Lot No. 241, Cheung Chau, Hong Kong ("the Property").

3. The facts are these. Following the survey of land tenure in the New Territories, a Block Crown Lease covering 90% of the private land of the island of Cheung Chau was granted to the Tong. The Tong has just established a system of land registrations in respect of the land held under the Block Crown Lease. In respect of one of the lots of land under the Block Crown Lease, the Tong, as a government lessee, granted a sub-lease to the managers of a tong called Cheung Chau Kai Fong.

4. In 1993, the Tong sought to forfeit the sub-lease to Cheung Chau Kai Fong by legal proceedings in the High Court against the sole manager of Cheung Chau Kai Fong who opposed the proceedings.

5. In January 1997, the sole manager died and his solicitors ceased to act. No new manager was appointed in his place. The Tong obtained an order on 17 July 1997 for the action to continue in a fictitious name. In June 1997, part of that lot was resumed by the government pursuant to the Road (Works, Use and Compensation) Ordinance, Cap.370 ("the Compensation Ordinance"). The Tong through its managers, namely the plaintiffs, lodged a claim in the Lands Tribunal for a compensation under the Compensation Ordinance on the basis that it was the registered owner under the Block Crown Lease which included the lot at the date of resumption.

6. However, prior to June 1997, the Block Crown Lease (Cheung Chau) Ordinance, Cap.488 came into effect which provided for the termination of the Block Crown Lease granted to the Tong and for sub-lessees under the Block Crown Lease to hold directly from the government. The Lands Tribunal held that the Tong was not entitled to compensation under the Compensation Ordinance.

7. The Tong appealed to the Court of Appeal which affirmed the Lands Tribunal's decision. The Tong was dissatisfied with that decision and appealed the matter to the Court of Final Appeal contending that by virtue of the doctrine of "relation back" that Cheung Chau Kai Fong could not be treated as parties "entitled under the sub-lease" in terms of section 4(1) of the Block Crown Lease (Cheung Chau) Ordinance as at the date when the writ for possession had been issued, served and registered in the Land Registry, namely 8 September 1995 when, upon judgment of possession being given, the law would regard the sub-lessees of having no entitlement at that date.

8. The government, on the other hand, contended that the rights of the parties were governed by entries in the Land Registry. The Block Crown Lease (Cheung Chau) Ordinance operated to vest a direct lease from the government in the sub-lessees so long as the registration of the relevant sub-lessees subsisted on the relevant date and, if the earlier proposition was wrong, there was still sufficient entitlement under the sub-lease to trigger the operation of section 4(1) since the Cheung Chau Kai Fong had put in their defence to the action brought by the Tong.

9. The Court of Final Appeal unanimously allowed the appeal and discharged the orders made in the courts below. In the judgment of Litton NPJ (which was the judgment of the court), he held :

(1) That the doctrine of "relation back" applied so that when a landlord issued and served a writ of forfeiture, it would have the same effect as re-entry and the lease would be determined. Accordingly, as at the relevant date, 8 September 1995, the Tong had undoubtedly exercised its right of forfeiture and Cheung Chau Kai Fong had no entitlement of any kind in relation to the land. Hence, section 4(1) of the Block Crown Lease (Cheung Chau) Ordinance had no effect and by the operation of section 6(1) the Tong held a fresh lease direct from the government as from that date. But the sub-lessees had, in the High Court action, lodged a defence denying the cause for forfeiture and, subject to the court's determination, Cheung Chau Kai Fong's position must be that they were entitled to continue in possession of the land. In other words, that section 4(1) applied and they held the land thereafter direct from the government.

(2) In determining that the Tong's claim for compensation against the government in respect of the resumed land, the court could make no assumptions either way. The matter could only be determined one way or the other upon judgment being given in the High Court action.

(3) Once the orders of the courts below were discharged, the rights of the Tong under section 6(1) of the Block Crown Lease (Cheung Chau) Ordinance and of the Cheung Chau Kai Fong under section 4(1) remained indeterminate pending judgment in the High Court action. If judgment for possession were given in the Tong's favour, it would relate back to the date of commencement of the legal proceedings with a logical conclusion that as at that date and any date after that date, the sub-lessees had no entitlement to the land in the eyes of the court.

10. The court having allowed the appeal and discharged the orders of the Court of Appeal and the Land Tribunal and the matter has now come before me for determination of the issue left in the matter, that is, an application for judgment for possession by the managers of the Tong on behalf of the Tong relating back to the date of commencement of the legal proceedings.

11. The defendant was not represented at the hearing and three witnesses, namely, Wong Kang Ying (a manager of the Tong), Wong Pak Hi (a member of the executive committee of the Tong) and Wong Kam Por (also a member of the executive committee of the Tong) gave evidence by adopting statements that they had made and filed.

12. I am satisfied that the plaintiffs are duly appointed managers of the Tong; that the Tong held a fresh lease direct from the government as from 8 September 1995 by virtue of the findings of Litton NPJ in the Court of Final Appeal; that on 18 June 1920 the Tong sub-let the property to the defendant for five years from 7 November 1919, renewed upon the same terms until the termination of the said Crown Lease; that by virtue of section 28(2) of the New Territories Ordinance, the lessor, or being the Tong, "may .... on the breach by the lessee of any covenant, condition or agreement ...., re-enter upon the premises subject matter of the lease or any part thereof in the name of the whole, and thereupon the said lease shall absolutely determine and become void". The provisions of the New Territories Ordinance to this effect were incorporated in the terms and conditions of the sub-lease.

13. I am satisfied on the evidence before me that wrongfully and in breach of the Crown Lease and the sub-lease, the defendant permitted the Property, the subject of the lease, to fall into decay and disrepair and the plaintiffs had, on behalf of the Tong, made repeated requests asking the defendant to make good the defects and cease the breach of the terms of the Crown Lease and the sub-lease. Those requests were incorporated in a letter sent by the solicitors for the Tong dated 28 July 1993 giving notice to the defendant pursuant to section 58 of the Conveyancing and Property Ordinance :

(1) that their failure to keep the Property in good and tenantable repair was a breach of condition of the sub-lease;

(2) requiring the defendant to carry out the necessary repair works within 14 days; and

(3) informing the defendant that the sub-lease was to be forfeited if the breach was not so remedied.

No remedy was made for the breach.

14. I am satisfied that the defendant was wholly in breach of the sub-lease and that the defendant had noticed of the intention of the plaintiffs to re-entering upon the said land and that the sub-lease has been forfeited from the date of the issue of the writ of summons herein.

15. Consequently, I hold that as from 21 September 1993, the date of the issue of the proceedings herein, the sub-lessee has no entitlement to the land and there is judgment for possession in favour of the plaintiffs.