CHAN QUN YUK v. KWAN SIU MUI

DCCJ 1916/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1916 OF 2006

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DECISION

1.  Chan Chung Mo was an acupressure masseur.  He was the registered owner of the property in question at Lockhart Road, Wanchai.  Kwan (the Defendant) was Chan’s apprentice.  Chan passed away in 1996 and Kwan continued to occupy or to use the property.  The Administrator of Chan’s estate (the Plaintiff) commenced this action in 2006 against Kwan to recover possession of the property and to claim damages including mesne profits since 1996.

2.  Kwan resisted the claim, alleging that Chan had promised and led her to expect the right to possession and exclusive use of the property to practise acupressure massage until she retired.  As a result, Kwan acted to her detriment by taking care of Chan till he passed away and settling the utility expenses, management fees, rates and other expenses in respect of the property.  This, Kwan contended, gave rise to a common intention or constructive trust in her favour.  Kwan claimed to have continued her practice at the property ever since.

3.  By way of counterclaim, Kwan claims a declaration that she was and is entitled to the occupation, use or exclusive possession of the property during her lifetime.  Further or alternatively, Kwan claims for the return of the amount of expenses she has incurred in respect of the property since the passing of Chan in 1996 or damages to be assessed.

4.  The Administrator took out an application under O.14 of the Rules of the District Court for summary judgment for possession, damages to be assessed and costs.  That was heard on 27 October 2006 and decision was handed down on 6 November 2006.  The learned Deputy Judge accepted that Kwan has a bona fide defence and granted her unconditional leave to defend with the costs of the application in the cause.

KWAN’S CONCESSION

5.  As directed by the court, Kwan filed her witness statement in June 2008. Apart from reiterating her case, Kwan revealed that she has actually retired since mid-2006.  The property has since been left vacant and she only visited the property occasionally.

6.  By order dated 24 June, Kwan also consented to delivering up vacant possession of the property in 7 days.  But the costs of the consent application was reserved.

7.  In the circumstances, what remain to be tried should be the rest of the claim and the counterclaim.  The rest of the claim will be that for the mesne profits from 1996 until the delivery up of the vacant possession of the property.  Parties informed this court that vacant possession was delivered to the Administrator on 5 July 2008.

8.  During this hearing, I asked Mr Lai for Kwan to state his client’s position clearly.  Mr Lai confirmed the following:

(1)  Kwan only claims the right and entitlement to the possession of the property until she retired, rather than any interest in the property for life (as the pleading seems to suggest).

(2)  It is therefore conceded that Kwan was not entitled to remain in possession of the property after her retirement in mid-2006.

(3)  It is also conceded that Kwan is prima facie liable to pay mesne profits to the Chan’s estate since her retirement in mid-2006.

9.  The last O.14 application was heard in October 2006.  Had Kwan revealed the above either prior to or during that hearing, there should have been no valid reason to prevent the Administrator from obtaining the order for possession then.  The learned Deputy Judge would probably have considered too Kwan’s liability to pay mesne profits since her retirement, whether she has a bona fide defence in respect of her possession of the property prior to her retirement.

THE PRESENT APPLICATION

10.  The Administrator now took out the present application for the following orders:

(1)  summary judgment against Kwan on liability to pay mesne profit from mid-2006 (when Kwan admittedly retired) until 5 July 2008 to be assessed;

(2)  liberty to proceed with this action in respect of the remainder of the claim (for mesne profit since 1996 until Kwan retired in mid-2006); and

(3)  costs of the consent application for the order for possession (which has been reserved); and

(4)  costs of this application.

11.  Technically, this is another O.14 application in respect of the issues that the learned Deputy Judge had already granted unconditional leave to defend.  Neither party seemed to be concerned whether this is appropriate.  They were prepared to argue the present application as it is.

12.  Nevertheless, Kwan’s concession is in my view as good as an admission by her statement or otherwise as contemplated under O.27, r.3.  Notwithstanding that the present application was not taken out pursuant to that Order, parties were before me precisely for the purpose of deciding the liability of Kwan on the basis and to the extent of her concession.  After all, the discretion under O.27, r.3 is supposed to be exercised to save time and costs by reducing the triable issues between the parties.  I see no concern about possible procedural fairness or prejudice that suffices to call for the refusal by this court to proceed on the basis of such concession. 

13.  In fact, right after the hearing, solicitors for the Administrator sought to obtain Kwan’s consent to amend the present application to include the footing pursuant to O.27, r.3.  This is not appropriate and, as explained above, unnecessary.  The court is in a position to make appropriate order on the basis of the concession made by either party at any time.

Liability to pay mesne profit since retirement

14.  In the O.14 context, Mr Lai for Kwan referred to the various classes of orders that should be made in an O.14 application where the defendant raises a set-off or counterclaim (as summarised in Hong Kong Civil Procedure 2008, Vol.1 at 14/4/14).

15.  Kwan’s case is that during the period from 1996 to June 2006 when she filed her pleading, she had spent in relation to the property a sum of HK$141,130.80.  There is also the un-particularised claim for damages to be assessed.  By her counterclaim, Kwan claims for the return of this quantified amount and/or damages.  Based on this counterclaim, Mr Lai submitted that his client should still have unconditional leave to defend the claim for mesne profit since her retirement.

16.  I do not accept Mr Lai’s submissions.  The reasons are first, Kwan has simply raised no defence of set-off in her pleading.  Secondly, the counterclaim pleaded covers the period up to June 2006 or effectively mid-2006 when Kwan retired.  Kwan has raised no counterclaim in her pleading in respect of the period since then.

17.  The Administrator is prima facie entitled to judgment on the basis and to the extent of Kwan’s concession.  Mr Lai then submitted that execution of such judgment should be stayed pending the determination of the counterclaim.

18.  The mesne profits payable since Kwan’s retirement would still have to be assessed; and it is only sensible that such assessment should be carried out by the trial judge who will be considering the mesne profits for the period prior to Kwan’s retirement.  In reality, there will be no question of execution of judgment until after the trial of this action in any event.

Liberty to proceed with the remainder of the claim

19.  In my view, an order that the Administrator be at liberty to proceed with this action as respects the remainder of the claim is superfluous and unnecessary.

Costs

20.  Though the present application for judgment on liability seems to serve limited purpose to the Administrator, he is prima facie entitled to judgment on liability to the extent as now conceded by Kwan.  In the circumstances, the Administrator should have the costs of this application for judgment.

21.  The costs of the consent application for the possession order has been reserved but not expressly to be decided by the trial judge.  Mr Lai raised no objection to my deciding the question.  In my view, the consent application was necessitated by Kwan’s recent revelation and concession.  The Administrator should have costs of the application for order for possession.

ORDER

22.  I order that Kwan shall pay mesne profits to the Administrator at the rate and for the period from the date when Kwan retired in mid-2006 as may be found by the trial judge until 5 July 2008.  For the avoidance of doubt, parties shall proceed with the rest of the claim and counterclaim in this action as previously ordered by the court.

23.  I also order that Kwan shall pay to the Administrator the costs of the application reserved under the Order of Master R Lai dated 24 June 2008; and the costs of this application, both to be taxed if not agreed.  The order in respect of the costs of this application is nisi and shall become absolute in the absence of appointment in 14 days to argue otherwise.

Representation: