RE KUNG YEUK MAN

IN THE COURT OF APPEAL

1996, Nos 61, 62 and 63
(Civil)

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J U D G M E N T

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Nazareth, V.-P. (giving the judgment of the Court) :

1. The plaintiffs are the registered owners of various lots of land in DD124 in the New Territories. On 18th August 1995 they took out summonses under RSC O18 to strike out the defences and counterclaim and, or in the alternative, for summary judgment for repossession of the land under O14. The applications came before Master Jennings on 2nd October 1995. He dismissed them on the grounds that the plaintiffs had failed to give the appellants one month's notice of intention to proceed as provided for by O3 r6. The plaintiffs then appealed to a judge in chambers. On 29th December D1 and D14 took out summonses for leave to amend their defences, and D19, who had not previously been legally represented, took out a summons for leave to file a defence out of time. The plaintiffs' appeal and the defendants' summonses were heard on 11th January 1996 by Le Pichon J. She allowed the plaintiffs' appeal and dismissed the appellants' summonses. The D1, D14 and D19 thereupon appealed against the judge's order to this Court. Their appeals were heard together.

D1's appeal (No. 61 of 1996)

Ground 1

2. The first ground of appeal, which with ground 2 is common to all three appellants, is that the judge was wrong in holding that under O3 r6 where there are a number of defendants to an action, it is sufficient that the last proceeding was against some but not all the defendants. Order 3 r6 is in the following terms:

"6. Notice of intention to proceed after year's delay (O3 r6)

Where a year or more has elapsed since the last proceeding in a cause or matter, the party who desires to proceed must give to every other party not less than one month's notice of his intention to proceed."

On behalf of the appellants, it was submitted to the judge that notice under O3 r6 ought to have been served on all the defendants. This involves "proceeding in a cause or matter" being construed as "proceeding in a cause or matter against a party to it" or as notice of intention having to be given to all the defendants if more than one. The judge pointed out that the first alternative would require amendments to the rule and the other, notice to be given to parties against whom the last proceeding was taken within the preceding 12 months; whereas, the plaintiffs' construction, which was to the contrary, would not require the rule to be rewritten. Quite apart from the foregoing consideration, Miss Audrey Eu QC who, with Mr Nelson Miu, appears for the respondent, points out that the last proceeding in the action was the disposal of the 1st defendant's appeal against an order made by Keith J about 6 months prior to the plaintiffs' summonses. She submits that the appeal was clearly a step or proceeding in a cause or matter and that the latter expression did not have the narrow meaning upon which the appellants' submissions rest. She is clearly supported in that contention by the following definition in Vol. 37 of the 4th Edn of Halsbury's Laws of England at paragraph 22:

"The words 'cause' and 'matter' are often used in juxtaposition, but they have different meanings. 'Cause' means any action or any criminal proceedings, and 'matter' means any proceedings in court not in a cause. When used together, the words 'cause' or 'matter' cover almost any kind of proceeding in court, whether civil or criminal, whether interlocutory or final, whether before or after judgment."

There is accordingly no merit in this ground.

3. In any case, the judge went on to say:

"If I am wrong on the construction of O3 r6, I would nevertheless waive this technical irregularity because I cannot see that the defendants were prejudiced as a result. Should it be necessary, I would exercise my discretion to grant relief under O2, r1.'

At the end of the day it was clear that in such exercise of discretion, the judge would not have been misdirecting herself in principle or in fact and that the discretion would not be plainly wrong; on the contrary it seems to us that such exercise of discretion would be plainly right. Upon this basis, too, the 1st ground would fail.

Ground 2 - Prejudice

4. Although a separate ground, this ground arose in the context of ground 1, the judge having posited the exercise of her discretion partly upon the absence of prejudice. Mr P.K. Chan, for the appellants, submits that the prejudice suffered by the appellants can be inferred from the fact that they did not have sufficient time to prepare their case. However, the evidence and submissions did not demonstrate that; nor does it reveal any prejudice. Mr Chan submits that the respondents' failure to issue a notice of intention to proceed was a substantial irregularity, such that the learned judge ought not to have exercised her discretion to grant relief to the respondents under O2 r1. We are unable to agree.

Grounds 3 and 4 - Intention to dispossess

5. In response to the plaintiffs' summons for possession, D1 by affirmations filed on 11th June and 4th July 1991, claimed adverse possession since 1955. Thereafter on 18th December 1993, D1 filed his defence, pleading only a defence based upon a Crown Land Permit granted in 1961. Under it various temporary structures were permitted to be maintained on the land. It was valid for a period of 12 months, renewable at the Crown's pleasure and was subject to a condition that neither it nor the occupation of land nor payment of the fee for it should be construed as creating a relationship of landlord and tenant. It was renewed every year until March 1988 when it was cancelled on the ground that it had in fact been given in respect of private property. The judge rightly held that the Permit could not have conferred upon D1 any interest or right to occupy the land beyond the date of the validity of the Permit.

6. However, there was before the judge also D1's summons for leave to amend his defence. The proposed amendment was designed to resuscitate the adverse possession defence raised in the 1991 affirmations but abandoned in his defence filed on 18th December 1993. In the 1991 affirmations D1 affirmed that he has been residing on the land since 1955. But the proposed amendment alleges that he has been in possession since February 1953. The difference is most significant because, if true, he would be in a position to establish 20 years' possession prior to the coming in force on 1 July 1973 of the New Territories (Renewal of Crown Leases) Ordinance, Cap.152. D1's explanation for the change does not sound convincing and the new defence, it has to be said, does have every appearance of having been tailored to meet the law. The judge, not without hesitation, was minded to allow the application to amend. But she then encountered what appeared to her to be an insurmountable obstacle to D1's defence of adverse possession, in that D1's occupation was as licensee of the Crown up to 1988, which negatived the necessary intention to dispossess the owner. Mr Chan submits rightly that "what is required is not an intention to own or even an intention to acquire ownership but an intention to possess (per Hoffmann, J. in Buckinghamshire County Council v. Moran [1989]3 WLR 152 at 167; Ho Hang Wan v. Ma Ting Cheung (1989) CA No. 42 of 1989. However that may be, D1's claim, such as it may be, could only be made against the Crown whose licensee he was. And in cancelling the Crown Land Permit in 1988, the Government acknowledged the plaintiffs' title to the land. In any case, the Government could not derogate from its grant to the plaintiffs. Thus, as Miss Eu submitted, there can be no question of D1 acquiring a possessory title. Grounds 3 and 4, therefore, fail.

Ground 5 - Estoppel

7. In his proposed amended defence, D1 raised proprietary estoppel as an alternative defence. He says he expended moneys in 1961 building a store and other accommodation pursuant to permission obtained from the Crown, and that in 1970 he began to operate a store from the premises. He says that Kung Yeuk Man, one of the registered owners of the land, would have to pass the lane adjoining the premises and would therefore have been aware of his occupation and expenditure between December 1958 to 1962. It is upon that basis that he seeks to mount his defence of proprietary estoppel.

8. At p. 14 of her judgment, the judge listed five points which she said must be established in order to succeed in a plea of proprietary estoppel upon the authority of Willmott v. Barber (1880) 15 ChD 96 at 105-6. The fourth of these is that the owner must have known of the claimant's mistaken belief in the claimant's right. Mr Chan submits that the judge was wrong in adopting that point; that a broader approach should be adopted and that O14 is not an appropriate procedure for dealing with such an issue. It has to be said that the judge treated the five requisites stated by Fry LJ in Willmott v. Barber (1880) 15 ChD 96 as inflexible rules. But the modern and true view (as one sees from Taylors Fashions v. Liverpool Victoria Trustees [1981]2 WLR 570 and the cases referred to therein) is that Fry LJ's five requisites constitute no more than a valuable guide when addressing the question of unconscionability, a concept which calls for a broad approach. However those matters may be, they are academic here. The four ingredients of proprietary estoppel stated in Snell's Principles of Equity and adopted by the Court of Appeal in Brinnand v. Ewens (1987) EGLR 1052, clearly, as pointed by Miss Eu, are not satisfied in this case. D1's expenditure must have been incurred pursuant to the Crown Land Permit. D1 knew that the Permit had to be renewed every year. There is no allegation that any expenditure was incurred by reason of encouragement from the plaintiffs or that the expenditure was incurred by D1 in the mistaken belief that he would obtain an interest in the land and that the plaintiffs were aware of the mistaken belief and that it was inconsistent with their rights.

9. Accordingly ground 5 also fails, and with it D1's appeal.

D14's appeal (No. 62 of 1996)

Ground 3 - Evidence on the nature of the tenancy

10. This ground is that there was no sufficient evidence upon which the judge could find the tenancy of the 14th defendant was one of agricultural land and that in reaching her decision, the learned judge failed to take into account the primary use of the premises.

11. The relevant facts are as follows. According to D14, his uncle or adoptive father Wong Wan Po as agent for the family entered into a tenancy agreement with Wong Sai Man on 9th April 1957 for a term of 7 years at an annual rent. The lease was not available allegedly because it had been lost by D14's former solicitors. D14 says Wong Sai Man was a son of the one of the registered owners. D14 affirmed that he and his family moved into the premises with his uncle in 1957 and occupied them partly for domestic purposes and partly use as a farm. D14's uncle signed a modification of tenancy dated 24th July 1957 as a holder of a permit. The Modification authorised the maintenance of various structures on the land including chicken sheds, pigsties and so forth. Rent was collected by Wong Sai Man until 1960 when the land was transferred to the predecessors-in-title of the present plaintiffs. However, no rent was paid thereafter as the latter did not appear.

12. In his original defence D14 raised two defences; first, under Part V of the Landlord and Tenant (Consolidation) Ordinance ("Cap. 7") and second, that of adverse possession. But in December 1995 he applied for leave to amend his defence by deleting the two existing defences and replacing them with a defence that he held a Part II domestic tenancy.

13. The significance of whether D14 held an agricultural tenancy arose in the following way. It was held in Wong Chang-sung v. CTSC [1974] HKLR 350, a decision upon which counsel for D14 relied, that the holder of a domestic tenancy which expired was entitled to protection as a holder of a Part II tenancy. It followed that if D14 was the holder of an agricultural tenancy, i.e. if the premises were agricultural premises, he would not be so entitled. The judge held that the premises were agricultural premises. Far from their being no evidence to support that finding, it seems to us that the evidence was ample. The land was held under a Block Crown Lease under which it was expressly demised as agricultural garden ground. All the other tenancy agreements exhibited by the other defendants were for fixed term agricultural tenancies. It was not alleged by D14 that the allegedly missing written tenancy was different in any way from the tenancy agreements of the other defendants. All the modifications of the tenancies exhibited by other defendants pointed to agricultural use. The modification of tenancy exhibited by D14 authorised structures like chicken sheds, pigsties and other structures for agricultural purposes. The dwelling house occupied by persons working on the land would not prevent the land from being agricultural land (s.50(6)(c) of Cap.7; s.36 of the Rating Ordinance, Cap. 116).

14. But even if the judge were wrong in her finding that the tenancy was one of agricultural land, D14 would yet have to show that he had an arguable case that the family held a domestic tenancy or a tenancy was a domestic tenancy before it expired. That brings us to the next two grounds.

Grounds 4 and 5 - Acquiescence and tenancy at sufferance

15. These grounds were that the judge failed to consider sufficiently or at all whether the plaintiffs or their predecessors-in-title acquiesced in the change of user of the premises if the original tenancy had not been let as a dwelling; and that the judge was wrong in law in holding that D14 became a tenant at sufferance who was not protected by Part II of Cap. 7.

16. Mr Chan argues that D14 avers that there had been a change of user which was acquiesced in by the plaintiffs. The judge noted that the only authority D14 could rely upon was Wong Chang-sung's case to which we have already referred. The English authorities upon which Wong Chang-sung's case apparently founds, relate to English statutory provisions which do not correspond to Part II of Cap. 7. Moreover, it would seem from the following passage in Megarry and Wade's The Law of Real Property, 5th Edn at pp.655, 666 (a passage which was not cited to the Commissioner in Wong Chang-sung's case) that:

"It is strictly incorrect to call [a tenancy at sufferance] a 'tenancy' at all, for there is no 'privity,' i.e. tenure between the parties. But since it normally arises between parties who had been landlord and tenant it has acquired the title of tenancy. ... In reality it would seem that a tenant at sufferance is simply in the position of a squatter, i.e., an adverse claimant."

Upon that basis Le Pichon, J. held that there was no legal basis in that context upon which D14 could claim a Part II tenancy. We agree. Moreover, it follows that acquiescence in change of user would not have availed and did not have to be specifically addressed.

17. These grounds fail and likewise D14's appeal.

D19's appeal (No. 63 of 1996)

Grounds 3 and 4 - Evidence on the nature of tenancy; and acquiescence

18. These grounds were couched in precisely the same terms as D14's third and fourth grounds of appeal. The facts, however, are different although similar in material respects. D19 emigrated from Mainland China with his parents in 1957 to Hong Kong and has resided at the land in question ever since. He relies upon a written tenancy agreement dated 12th march 1957 for a term of 7 years at an annual rent of $325. The agreement was entered into between Wong Sai Man and Ng Sau Ping. Wong Sai Man was the son of Wong Ng Shi, a registered owner of the land. Ng Sau Ping was D19's sister who, D19 says, signed the lease as agent for herself and D19's father who was illiterate. D19 also gave a very different version as to how the land was originally leased. However, the only defence he proposed to rely upon was that he is entitled to protection under Part II of Cap. 7. As the judge pointed out, his position was no better than that of D14. The original tenancy vested in his father by the written tenancy agreement was a tenancy of agricultural land. When it expired by effluxion of time, D19's father became a tenant on sufferance. There was no domestic tenancy vested in D19's father and therefore no question of D19 being entitled to such a tenancy. There was even less room here for mounting a plea of acquiescence in the change of user than in D14's circumstances and the judge understandably gave the point even shorter shrift. There is no merit in either of the two grounds which fail and with them D14's appeal.

19. It remains to say that Mr Chan repeatedly returned to the point that factual issues of the nature sought to be raised in the appellants' defences and grounds of appeal are not the sort that should be disposed of in summary Order 14 proceedings. Indeed, they are usually not. But where for one reason or another, or for more than one reason as in this case, they can quite shortly and clearly be seen to be flawed and to have not the slightest prospect of success, the courts should not shrink from finally disposing of them.

20. For the reasons we have given, we dismiss all three appeals and make an order nisi that the respondents are to have their costs of the appeals, certified for two counsel.