AU YEUNG SHUN MEI POON KIT FONG the manageresses of MAN WAH TONG, a Religious Tong v. JAN FUNG AND OTHERS

HCA 595/2019

[2021] HKCFI 1432

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 595 OF 2019

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D E C I S I O N

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A. INTRODUCTION

1.  This is the Defendants’ appeal against a Master’s decision granting summary judgment for recovery of possession of premises against the Defendants and striking out some paragraphs of the defence and counterclaim relating to the possession.  The Defendants ask that they be granted unconditional leave to defend.

2.  The Plaintiffs are the manageress of Man Wah Tong (“Tong”), and its statutory representative under section 15 of the New Territories Ordinance, Cap 97 (“NTO”).

3.  The Tong has been the owner of Lot No. 1255RP in DD 453 (“the Land”) since May 1971.  The Special Conditions to the grant provided that the grantee could only erect and maintain a monastery relating to religious and institutional purpose, only together with such ancillary domestic accommodation as may be approved by the government.

4.  The Monk Yung-Chau Memorial Hall (“Memorial Hall”) was built on the Land and completed for occupation in 1991.  The permitted user was non-domestic use.  The Memorial Hall is the subject matter of this appeal.

5.  The 1^st Defendant had been the former accounting clerk of the Tong from 1 January 1989 to about December 2017. According to the Plaintiffs, she had resided with her husband from time to time at the Memorial Hall since about 1994.  The 2^nd Defendant had, since his retirement as a civil servant in about 1996, been a volunteer of the Tong and has been living at the Memorial Hall.  Neither Defendants were members of the Tong.

6.  This action concerns conduct of members of the Tong and the Defendants, which is not relevant to this appeal.  What is relevant is that the Plaintiffs allege that the Defendants are in wrongful occupation of the Memorial Hall after the 1^st Defendant was terminated for alleged misconduct.

7.  By a letter of 3 January 2018 (“the Letter”), the Plaintiffs demanded the 1^st Defendant to, amongst others, surrender possession of the Memorial Hall by 31 January 2018.  The Defendants failed to move out. 

8.  The writ was issued on 4 April 2019.  The Plaintiffs claim that the Defendants have changed the lock to the Memorial Hall without approval of the Plaintiffs.  Between 1996-2017, the 2^nd Defendant was responsible for service of incense and light (香燈).  The Plaintiffs permitted the Defendants to take rest inside the Memorial Hall but had never authorized them to reside there.  On the ground of trespass, the Plaintiffs seek an order for possession of the Memorial Hall together with mesne profits to be assessed against the Defendants.

9.  The Defendants do not dispute that they are in possession of the Memorial Hall as their residence and have been there for 29 years.  The sole issue raised by them is proprietary estoppel, as set out in §13, and §5 to Schedule 3 of the defence, and confirmed in §8 of D2-1^st [1].

10.  The factual bases were these: in 1991, half a year before inauguration of the Memorial Hall and as a result of the request of the former manager of the Tong (Sik Kwong Yuen) and members of the Tong (“the Request”), the 2^nd Defendant and his brother had been guarding the Memorial Hall as a form of dedication and sacrifice[2].  The 2 of them were responsible for cleaning, gardening, simple repair and daily service of incense and light (§13 of the defence).  The 2^nd Defendant and his brother were to live at the Memorial Hall, and the Pong family should all along guard the Memorial Hall as a token of ancestor teachings and sacrifice.

11.  The 2^nd Defendant claims that he could live there for life.  He claims to have relied on the Request to his detriment by:

(1)  Improving the Land by carrying out various renovation works of the Memorial Hall and gardening the surrounding area of the Memorial Hall;

(2)  Providing volunteer service over the last 29 years to safeguard and manage the operation of the Memorial Hall, including daily service to maintain and take care of the hall such as cleaning, lighting incense; preparation of fruits, flowers and articles for the monthly ritual; and service at annual religious events; and

(3)  D2 sold his apartment before he moved into the Memorial Hall (this will be the subject of amendment to the defence and counterclaim).

12.  There was no counterclaim by any of the Defendants.  It is conceded by Mr Wang, counsel for the Defendants, that the pleadings prepared by the Defendants in person had not been done in the clearest way possible.  Mr Wang makes clear that the Defendants’ case rest on proprietary estoppel and not constructive trust.  The Defendants’ assertion that this is a fraud case to which Order 14 does not apply, is not relied on.

13.  The sole issue in this appeal is whether there was proprietary estoppel in favour of the Defendants.

B.    LEGAL PRINCIPLES ON SUMMARY JUDGMENT AND STRIKING OUT

14.  The legal principles are not in dispute.  In respect of an application for summary judgment, the Defendants need to show a triable issue and that they have a real and bona fide defence.  Disputed facts are taken in favour of the Defendants.  There should not be a mini-trial of the action on the affidavits.  Leave to defend ought to be given unless there is clearly no defence in law, or the defence is frivolous and practically moonshine.  See Hong Kong Civil Procedure 2021, Vol 1, §14/4/8 and §14/4/9-9B.

15.  For a strike-out application, the Court will only strike-out a pleading only in plain and obvious cases.  Again, disputed facts are taken in favour of the party whose pleading is under challenge.  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the Court will strike it out.  The mere fact that a case is weak and not likely to succeed is no ground for striking it out.  If there be a legal issue, it should be no more than a crisp legal issue that could be decided summarily.  Hong Kong Civil Procedure 2021, Vol 1, §18/19/4.

16.  The Court should be slow to strike-out a pleading if, though defective on its face, the pleading can be improved by amendments.

C.    LEGAL PRINCIPLES ON PROPRIETARY ESTOPPEL

17.  There are broadly speaking, two species of proprietary estoppel: “proprietary estoppel by representation” and “proprietary estoppel by standing by”.  Best Star Holdings Ltd v Lam Chun Hing & ors, HCA 409/2008, unrep, 22 February 2012, §§134-136, Recorder Horace Wong SC.

18.  For proprietary estoppel by representation, three elements are necessary:

(1)  A representation or assurance made by the landowner to the representee that the representee would have some rights or benefits over the land;

(2)  Reliance on it by the representee; and

(3)  Detriment to the representee.

Tang Lui Leo v Wong Elaine [2020] HKCFI 3087 at §35, DHCJ Burns SC; and Shun Pong Ltd v Chan Koo Kai Felix [2018] HKCFI 2628, §52, DHCJ Marlene Ng (as she then was).

19.  These elements are not distinct or separate but intertwined and the essence of proprietary estoppel is “the unconscionable conduct of the representor in inducing the representee to act on his assurance/representation and withdrawing from his promise.  The Court shall undertake a broad inquiry as to the unconscionability of the representor in considering whether a case of proprietary estoppel was made out.” Tang Lui Leo,§36.

20.  Detriment should be “substantial”.  It is to be tested by whether it will be unjust or inequitable to allow the assurance to be disregarded.  This is judged at the time when the representor seeks to go back on the assurance.  Tang Lui Leo,§38; and Shun Pong Ltd,§§55, 78 & 81.

21.  For proprietary estoppel by standing by, there are 5 probandas:

(a)  The plaintiff must have a mistaken belief as to his legal rights;

(b)  The plaintiff must have expended money or done some act on the faith of his mistaken belief (ie detrimental reliance);

(c)  The defendant must know of the existence of his own legal right which is inconsistent with the right claimed by the plaintiff;

(d)  The defendant must know of the plaintiff’s mistaken belief of his legal rights; and

(e)  The defendant must have encouraged the plaintiff in his expenditure of money or in the acts which he has done, either directly or by abstaining from asserting his legal rights.

Lee Bing Cheung v Secretary for Justice [2013] 3 HKC 511, §42, DHCJ Marlene NG (as she then was).

22.  The above probandas are simply guidelines and it is not necessary that all 5 probandas need to be satisfied: Lee Bing Cheung, §§44 & 198.

23.  In either category of proprietary estoppel, the Court has to ask “whether it will be unconscionable for the [landowner] to deny that which he has allowed or encouraged toassume to his detriment rather than ‘whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour’ ”.  See Lee Bing Cheung, at §43.

24.  The remedy for proprietary estoppel is to look for the minimum equity to do justice but it does not mean that the relief is insignificant. Once proprietary estoppel is established, the court has a wide discretion to give any relief which is necessary to prevent unconscionable conduct of the representor.  Where the equitable claim arises from a clear-cut promise, the natural response of the court is to compel the representor to fulfil the promise, provided that the relief is not disproportionate to the detriment. See Tang Lui Leo, §40.

D.   CLAIM AGAINST THE 1^ST DEFENDANT

25.  The 1^st Defendant does not assert beneficial interest in the Memorial Hall.  She was not the person to whom the Request was made.  She has not alleged improvement to the Memorial Hall.  She has no counterclaim. Her affirmation only referred to service of documents.  Even if accepted in its entirety, her affirmation has not raised any defence.

26.  I agree with the Master that summary judgment against the 1^st Defendant is appropriate.  Related to that, §§16-17 of her defence and §§5-8 to Schedule 3 of her defence should be struck out.  The Master was correct not to strike out §9 to Schedule 3 as that paragraph concerns the case on the Memorial Hall being a charitable organization and not trespass.

E.    CLAIM AGAINST THE 2^ND DEFENDANT

E(1)  Assurance

27.  The only relevant documentary evidence from the 2^nd Defendant was a set of minutes of meeting of the Monastery (竹林禪院).  The minutes showed that after occupation commenced, the Memorial Hall should “temporarily” be managed by Pong Kwong Wai, the brother of the 2^nd Defendant.  There was neither mention of the 2^nd Defendant nor of the brother being permitted to reside at the Memorial Hall.

28.  Nevertheless, the 2^nd Defendant relies on the Request from Sik Kwong Yuen that he would be permitted to live there for life.  The existence of the Request and its effect are fact sensitive and triable.

29.  Mr Chong, counsel for the Plaintiffs, submits that:

(1)  This was assertion of a licence.  By operation of law, the licence had been revoked in 2013 and the personal right of the 2^nd Defendant ceased upon the death of Sik Kwong Yuen, the promisor: Ho Hang-wan v Ma Ting-cheung as Personal Representative of Ma Sz-tsang, deceased [1990] 1 HKLR 649 (CA).

(2)  The Tong as manager of the Land derives its power and authority under section 15 of NTO.  Once appointment of the manager is registered, the manager “shall, after giving such notices as may be prescribed, have full power to dispose of or in any way deal with the land as if he were sole owner thereof, subject to the consent of the Secretary for Home Affairs…”  As a manager of the Tong, Sik Kwong Yuen had no authority to grant permission to the 2^nd Defendant to reside for life.

(3)  The Request effectively amounted to the grant of a life interest in the Land.  It was invalid and unenforceable for lack of writing under section 3, Conveyancing and Property Ordinance, Cap 219.  There was also no consent in writing from the government under section 15 of NTO.

30.  In respect of Mr Chong’s first proposition, the Court of Appeal has made clear that it applied to a “revocable” licence.  Here, the pleaded case about the Request at §5 to Schedule 3 did not say that the permission to reside was for life but the 2^nd Defendant claimed it was in his affirmation.  This inconsistency may be cured by amendment if needs be.  Taken at its highest, it is arguable that the 2^nd Defendant was granted a licence which was not revocable in his life time.

31.  In respect of Mr Chong’s second proposition: as representative of the landowner, the ex-manager could exercise his powers as if he were the landowner and grant a licence. Even under the Special Conditions, the Plaintiffs plainly could allow ancillary domestic accommodation.  If it is accepted that the 2^nd Defendant has been taking care of the maintenance and operation of the Memorial Hall for it to function as a monastery, it could not be said that his residence was not ancillary domestic accommodation.  It is questionable whether consent of the government was required to give that permission to reside.

32.  Further, after Sik Kwong Yuen’s death, the Plaintiffs did nothing to recover possession until it issued the writ against the 2^nd Defendant. The Letter was not addressed to the 2^nd Defendant.  In other words, the Plaintiffs had stood by for 6 years whilst the 2^nd Defendant continued to reside there and, presumably, performed volunteer work.

33.  In respect of Mr Chong’s third proposition, the 2^nd Defendant is involving the equitable jurisdiction of the Court.  Even if government consent was required, there is no evidence that in the past 29 years the government has ever taken issue with the 2^nd Defendant’s residence in the Memorial Hall.

34.  In summary, there is an arguable issue on assurance.

E(2).  Detriment

35.  There is no requirement that the disadvantage suffered by the claimants must be land-related.  It may take the form of personal assistance, abandonment of an existing job and home in order to live with or near the representor, undergoing any sacrifice which is not of exclusively emotional significance or failure to purchase or retain other land for use as a home, or stepping off the “property owning ladder”, or any conduct which indicates that the claimants deprived themselves of the opportunity of trying to better themselves in other ways: Shun Pong Ltd, at §§79 and 87, citing Elements of Land Law at §§9.2.66-9.2.67, at pp 1225-6.

36.  The 2^nd Defendant relies on 3 aspects of detriment.

37.  Firstly, his improvement to land can be regarded as substantial and permanent.

(1)  The renovation improved the interior structure such as restroom, tearoom and kitchen; and the exterior structure such as walls.

(2)  The gardening, including purchase of trees with his own funds, was in relation to the entire garden of the Memorial Hall of several thousand square feet for 29 years.

38.  Mr Chong submits that the 2^nd Defendant did the renovation work and incurred costs to beautify his living environment only.  The Plaintiffs had never invited him to invest in the land. 

39.  I do not agree.  The improvements were arguably for the environment of the Memorial Hall as a whole. The authorities do not say that an invitation to invest/improve is necessary.

40.  Secondly, the 2^nd Defendant provided undisputed volunteer services for 29 years.  Those services were substantial, being on daily, monthly and yearly bases.

41.  Thirdly, before the Master, the 2^nd Defendant asserted that he had sold his apartment in order to move into the Memorial Hall.  As this was not in his pleading or affirmation, I disregard this.

42.  In my view, it is at least arguable that the first 2 aspects may be sufficient to constitute detriment.

E(3).  Reliance

43.  The first two aspects of detriment evidenced reliance on the assurance.

E(4).  Unconscionability

44.  It is hardly possible for the 2^nd Defendant to get proprietary interest in this case as he knew from the beginning that the Memorial Hall was for religious purpose.  It is also his pleaded case that the Memorial Hall was and is a charitable organization.  Expending his own money on the Memorial Hall may not, in itself, be sufficient detriment because it is common for believers to make donations.  He could not have held any mistaken belief that if he were to invest money to renovate the Memorial Hall and its surrounding, he could get proprietary interest in land.

45.  The best case for the 2^nd Defendant is a licence for life. Whether or not the licence should be upheld or some other form of relief should be granted is for trial.  The fact that his case may not be strong is not a reason to strike it out.

F.    CONCLUSION

46.  The appeal of the 1^st Defendant is dismissed with 50% costs to the Plaintiffs with certificate for one counsel.  On a nisi basis, the costs are assessed at $110,000.

47.  The appeal of the 2^nd Defendant is allowed such that he be given unconditional leave to defend.  The Master’s order against him is set aside.

48.  The costs should be apportioned between the 2 Defendants.  On a nisi basis, 50% of the costs before the Master and this appeal should be to the 2^nd Defendant, summarily assessed at $100,000.

49.  I thank counsel for their assistance.