WAI CHOW SAU YING OTHERWISE KNOWN AS CHOW SAU YING v. LEE KWOK LING AND LEE PUI TAK SUKY, THE REPRESENTATIVES OF “LI TUN PUN TONG (李敦本堂)”

HCA 278/2017

[2019] HKCFI 2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 278 OF 2017

________________________

________________________

____________

JUDGMENT

____________

Index

Introduction

Introduction

The background

The issues and burden and standard of proof

Credibility of witnesses

The area under the 1971 Tenancy Agreement

The plaintiff’s case

The area leased as stated in the 1971 Tenancy Agreement, 1971 MOT, 1974 MOT and Crown Land Licence

The system of fencing

The southern boundary of the area leased under the 1971 Tenancy Agreement

Occupation of the Private Land in 1991

Lot 500 and Lot 558

Conclusion

The representation by LKC

The plaintiff’s case

Credibility of the plaintiff’s case

What was the promise

The 1997 Tenancy Agreement

The background

The plaintiff’s case

The Tong’s case

The issues

The nature of the 1997 Tenancy Agreement

The area leased under the 1997 Tenancy Agreement

Whether the area leased has been let by the Tong to any party

The period and amount of rent to account for

The counterclaim

Declaration

Return of monthly payments of $3,000 from 2005

Return of the sum of $23,794

Damages for removal of the structures

Conclusion

The plaintiff’s claims

The Tong’s counterclaims

Costs

Annexures	The Leased Land [A/28]
	The Leased Portion [A/53]

INTRODUCTION

Introduction

1.  This is an action by the plaintiff seeking, inter alia, a proprietary interest and related declaration in relation to two plots of farm land in DD 83 allegedly leased to her (the “Leased Land”) by the Li Tun Pun Tong (李敦本堂) (the “Tong”) under a tenancy created in 1971 (the “1971 Tenancy Agreement”) and a claim for damages for breach of an agreement created in June 1997 (the “1997 Tenancy Agreement”).  The Leased Land is alleged by the plaintiff to consist of two plots of land in Lot 501RP and various other lots or portions of lots of land identified as Lot 498RP, Lot 499, Lot 500 and Lot 558 in DD 83 (collectively, the “Private Land”) and a strip of government land (the “Government Land”) sandwiched among these plots of land, as shown in the Annex attached to the Re-amended Statement of Claim (the “Annex”)[1]. The Annex is attached to this judgment and forms part of this judgment. The Leased Land has a total area of 1,613 square metres.

2.  The plaintiff’s proprietary claim is based on proprietary estoppel.  She claims that she was induced by the then manager, Lee Kae Ching (“LKC”), to make substantial investments in the Leased Land in return for a tenancy for indefinite duration subject to payment of rent to be revised from time to time. Her claim for breach of agreement is based on the 1997 Tenancy Agreement between her and the Tong entered into in June 1997 in respect of the Leased Land.  It is the plaintiff’s case that the 1997 Tenancy Agreement is a joint venture agreement to lease the Leased Land to third parties with a view to mutual profit and to share the rental income derived from such letting after disbursing expenditure. It is of the nature of a partnership agreement at common law or under the Partnership Ordinance. She alleges the Tong of breach of implied duty of fidelity and good faith by subletting the Leased Land to third parties without notice to her or her consent since November 2005.

3.  While admitting the 1971 Tenancy Agreement, the Tong asserts that the area leased under the 1971 Tenancy Agreement was only two plots of land within Lot 501RP (the “Leased Portion”) and not the entire lot. It did not cover the Government Land and the other four lots, ie the Private Land, which were not owned by the Tong. The Leased Portion is as shown in the area coloured yellow in Annex A attached to the Re-re-amended Defence and Counterclaim, which is annexed to this judgment and forms part of this judgment [2]. It is about half the size of Lot 501RP, say 360 square metres, or about one-fifth the size of the Leased Land. The Tong also disputes the representation alleged to have been made by LKC.  While admitting the 1997 Tenancy Agreement, the Tong asserts that it is only a tenancy agreement and denies that it was a joint venture agreement or partnership agreement.  In any event, the Tong denies it was in breach of that agreement. The Tong counterclaims for a declaration that the 1997 Tenancy Agreement covers only the Leased Portion; and seeks an order for return of the sums of money erroneously paid to the plaintiff in connection with the 1997 Tenancy Agreement and damages.

The background

4.  The plaintiff initially commenced action in the District Court in 2012 suing under the 1997 Tenancy Agreement.  The statement of claim was amended in 2015 to include a claim for proprietary interest in respect of the Leased Land. It was then re-amended in 2016 to include a plea of proprietary estoppel. The action was then transferred to the High Court in 2017. The following background are either based on common grounds or incontrovertible facts or facts which are not in dispute.

5.  The Tong is the owner of Lot 501, which extended south to Sha Tau Kok Road. In 1997, the government resumed part of the lot for the purpose of widening Sha Tau Kok Road. Since then, it is identified as Lot 501RP. To the east of Lot 501RP is the Government Land. Adjacent to the eastern side of the Government Land are Lot 498RP, Lot 499, Lot 500 and Lot 558, which are owned by Li Sin Hing Tong or its beneficiaries. 

6.  The southern part of the then Lot 501 was leased by the Tong to the plaintiff’s father who operated Hop Fat Saw Mill there. The plaintiff moved out of the saw mill in 1968 when she married.  The saw mill was run by the plaintiff’s siblings since her father’s death in 1985. After the land resumption in 1997, the plaintiff’s siblings closed down the saw mill and vacated the lot.

7.  The plaintiff’s husband, Wai Cho On (“Wai”) was an assistant field officer of the then Agriculture and Fisheries Department.  The plaintiff and Wai wished to lease some land in the locality for building a home.  Through his colleague, he was introduced to LKC.  LKC took the plaintiff and Wai to Lot 501. Upon arrival, the plaintiff realised that the area to be leased, to use a neutral term (whether it be the Leased Land or the Leased Portion), was located immediately at the back of Hop Fat Saw Mill. The Leased Land was a concave piece of land resulting from years of excavation for making bricks. LKC offered to lease the area at a yearly rental of $400. The plaintiff was concerned about the cost in filling up and levelling the land. LKC assured her that the Tong would not repossess the land and she could lease it on a long term basis. On a later occasion, the plaintiff and Wai went to LKC’s home to sign the 1971 Tenancy Agreement. 

8.  Then, the plaintiff filled up and levelled the Leased Land. She also built a concrete ditch of 18-inch diameter in the Leased Land six feet from the northern boundary of Hop Fat Saw Mill. She obtained permission under a Modification of Tenancy to build some structures on Lot 501RP in 1971 (the “1971 MOT”). The structures included a two-storey house which she used as her home. In 1972, she erected some structures in the Government Land. In 1974, she obtained a Crown Land Licence and a Modification of Tenancy (the “1974 MOT”) to regularize those illegal structures. She used those structures for some take home light industry. The plaintiff continued building but without applying for modification of tenancy. By 1980, her illegal structures had extended into Lot 500. 

9.  In 1989, Wai bought his own flat under the government’s home purchase scheme and moved out of the Leased Land. Before moving, the plaintiff had sublet the area leased to someone and then to Lau Siu Keung, a garage operator at a monthly rent of $9,000.

10.  On 8 May 1995, the plaintiff entered into a written agreement with Lau Siu Keung for the lease of the area. A plan of the area leased was attached to the agreement (the “1995 site plan”). 

11.  The Tong learned about the sublease. On 1 May 1997, the Tong’s solicitors, Messrs Leung Kin & Co, wrote to the plaintiff threatening to forfeit the tenancy for subletting the Leased Portion in breach of the 1971 Tenancy Agreement. The plaintiff and Wai pleaded with LKC.  After some negotiation, the plaintiff, Wai and other members of the Tong had a meeting in LKC’s home and agreed to the terms of the 1997 Tenancy Agreement. 

12.  Subsequently, in July 1997, the Tong’s then managers, Lee Kai Bun (“LKB”) and Li Kwok Fung (“LKF”), and the plaintiff signed the 1997 Tenancy Agreement with retrospective effect from 1 February 1997. The agreement contained provisions for subletting the area leased to third parties. 

13.  On 24 August 1997, the plaintiff sublet the area as identified in the 1995 site plan together with the structures to Yip Yun Yeung. The tenancy agreement contained a site plan identifying the area leased which was based on the 1995 site plan (the “1997 site plan”). The tenancy agreement was endorsed by LKB and LKF. The deposit and annual rent payable under this sub-tenancy were deposited into a bank account designated by the plaintiff which were then shared with the Tong in accordance with the 1997 Tenancy Agreement.

14.  On 2 October 2002, the area was let by the plaintiff and the Tong as joint landlords to Wong Sai for a term of four years from 17 October 2002 at a monthly rent of $6,000. That tenancy, however, ended in August 2005.

15.  A few months later, the plaintiff leased the area to Chan. That tenancy lasted for one to two years. This fact has not been pleaded but the evidence was introduced by the plaintiff in the course of her testimony in court. The Tong is in no position to dispute this evidence and does not dispute this fact. This new piece of evidence upsets the timing of the course of events as pleaded in the plaintiff’s statement of claim and as presented in her witness statement. It also affects her claim for damages.

16.  Thereafter, the Tong took over the tenancy matter from the plaintiff. Until August 2010, the Tong has, through LKB, been rendering account to the plaintiff of rents received and disbursements arising from the letting of the area. The Tong paid the plaintiff monthly sums of about $3,000. Such accounting ceased in September 2010. Since December 2010, the plaintiff had been chasing LKB for an account. But LKB put her off giving various excuses.

17.  On 18 March 2011, the plaintiff accompanied by her solicitor visited the Leased Land and discovered that it was occupied by Cheung Fat Metal Trading Company Limited (“Cheung Fat Metal”) and a garage business.

18.  After seeking legal advice, the plaintiff arranged a meeting with LKB. The plaintiff, her husband and their solicitor, Mr Leung, attended the meeting with LKB and his wife in Star Sea Food Restaurant on 20 April 2011. Mr Leung told LKB that the Tong should pay over the plaintiff’s share of rental income if it wished to save a litigation. He produced a computation of the plaintiff’s entitlement under the 1997 Tenancy Agreement in the sum of $26,019 based on the rental income of $6,000 a month received by the Tong from September 2010 to May 2011, but remained unpaid by that time.

19.  Slightly over a month later, on 23 May 2011, LKB deposited $23,794 (instead of $26,019) into the plaintiff’s bank account. But since then, no further payment has been made by the Tong to the plaintiff.

20.  On 30 March 2012, the plaintiff commenced action in the District Court against LKB in his capacity as manager of the Tong for, inter alia, an account to be rendered.

21.  Four months later, LKB died. His son, Li Kwok Hin (“LKF”) and another member of the Tong, Lee Pui Tak Suky, became substituted defendants.

22.  On 27 October 2014, the plaintiff visited the Leased Land. She found it was occupied by Cheung Fat Metal and Kwong Kee Motors. 

23.  On 15 May 2015, the plaintiff visited the Leased Land again. She found it was occupied by Cheung Fat Metal and Sun Kee Motors. 

The issues and burden and standard of proof

24.  The major issues raised by the pleadings are:

(1)  what was the area leased under the 1971 Tenancy Agreement;

(2)  whether LKC made the representation as alleged by the plaintiff;

(3)  whether the plaintiff relied on the representation and suffered detriment as result;

(4)  whether the 1997 Tenancy Agreement was a joint venture agreement;

(5)  what was the subject matter of the 1997 Tenancy Agreement;

(6)  whether the Tong was in breach of the 1997 Tenancy Agreement; and

(7)  whether the monthly sums of $3,000 and the sum of $23,794 paid to the plaintiff ought to be returned to the Tong as a payment erroneously made.

25.  The most crucial factual issue in this case is what was the area leased under the 1971 Tenancy Agreement. Was it the Leased Land as claimed by the plaintiff or just the Leased Portion as asserted by the Tong?  The determination of this issue also determines the credibility of the parties’ factual witnesses. The single most crucial question is whether LKC identified the area leased under the 1971 Tenancy Agreement as the Leased Land which was a huge sunken piece of land of 1,613 square metres covering part of Lot 501RP belonging to the Tong and portions of four other lots making up the Private Land and the Government Land or just two plots of farm land of one-fifth that size within Lot 501RP. The second most crucial factual issue is whether LKC made the representation alleged by the plaintiff. Once these two issues are determined, the resolution of the other factual issues is almost a matter of simple logic and common sense. 

26.  The Tong bears the legal burden of proving issue (7). The plaintiff bears the legal burden of proving all the other issues. Her credibility is at the heart of the dispute in this case. As always, the most reliable test of credibility is inherent probability of the witness’ evidence and its consistency with contemporaneous documents when viewed against the surrounding circumstances. The only persons who had first-hand information to these two questions are LKC and the plaintiff. LKC had passed away long time ago.  The only available live witness is the plaintiff. The plaintiff is effectively making a claim against trust property under the control of a deceased trustee at the material time. It is a rule of practice that courts will not act upon the uncorroborated testimony of a claimant against the property of a deceased person unless convinced that such testimony is true: Phipson on Evidence[3].  But there is no rule of law that requires the evidence in support of such a claim to be corroborated. In my view, this practice is equally applicable to a claim against trust property of which the deceased is the trustee. While the standard of proof is the civil standard of balance of probabilities, the threshold under the circumstances is very high.

CREDIBILITY OF WITNESSES

27.  The plaintiff and Wai testified. She also called two expert witnesses, a land surveying expert and a property valuation expert. The Tong called two factual witnesses but adduced no expert evidence.

28.  The plaintiff is nearly 79 years of age. She is alert and healthy looking. She appeared to have good recollection of the events which happened almost fifty years ago. She responded to counsel’s questions well, though at times she needed to pause and think. Her evidence covered all incidents of the plaintiff’s case.  She departed from her witness statement on a number of issues. When her evidence is tested against the incontrovertible contemporaneous documents, physical features of the land and evidence of the Tong’s witnesses, it is obvious that she was making a blatant exaggeration of the area leased under the 1971 Tenancy Agreement. She is a simple looking but sophisticated witness. I have grave reservation about the veracity of her evidence.

29.  Wai is now 84 years of age. He is healthy looking beyond his age. He is alert and answered counsel’s questions spontaneously. His evidence did not cover the entirety of the plaintiff’s. His evidence covered the making of the 1971 Tenancy Agreement, LKC’s representation, the 1997 Tenancy Agreement and some of the specific incidents, which is generally credible. His evidence did not cover the performance of the 1997 Tenancy Agreement. He is a credible witness save insofar as his evidence which touched on the area leased under the 1971 Tenancy Agreement, it suffers the same defect as the plaintiff’s.

30.  Robert Schermuly of John Barrett & Associates Ltd testified as the plaintiff’s surveying expert. His evidence covered his opinion of the historical and current use and occupation of the Leased Land based on government survey sheets and aerial photographs. He gave evidence in a straightforward manner. His evidence is fair and unbiased. I am satisfied that he was trying his best to assist the court with his professional knowledge.  I accept his evidence.

31.  Leo Cheung of Prudential Surveyors (Hong Kong) Ltd testified as the plaintiff’s valuation expert. He gave evidence on the market rent, the enhancement value from the government licences. Though the Tong adduced no expert evidence, I have some doubts on the basis of his opinion.  As my findings turn out, his opinion becomes irrelevant.

32.  The Tong called two factual witnesses. LKF is one of the current managers of the Tong.  He is the son of LKB, the manager who dealt with the plaintiff on matters relating to the 1997 Tenancy Agreement. He was resident in Holland from 1967 to 2009. His evidence is based on hearsay from his father and the Tong’s solicitors. He has no personal knowledge of the matters in dispute. I give little weight to his evidence, save insofar as it is supported by contemporaneous documents.

33.  Choi Kwai Ming (“Choi”) is a garage operator providing service to heavy duty goods vehicles. He had been a sub-tenant of Lot 487SC and part of Lot 501RP from the Tong since 1991, six years before the making of the 1997 Tenancy Agreement. Since 2003, he formally leased the above lots from the Tong. He testified on the occupation of the Leased Land since 1991. He is an unsophisticated witness and appeared to be impatient at the repeated cross-examination by counsel. His evidence is generally credible and supported by contemporaneous documents. However, he was evasive about the use and occupation of the Lease Area since about 2015. Except for that aspect of his evidence, I find him credible and accept his evidence.

THE AREA UNDER THE 1971 TENANCY AGREEMENT

The plaintiff’s case

34.  According to the plaintiff, LKC took her, Wai and his colleague to inspect the area to be leased. Upon arrival at the site, she immediately realized that the area to be leased was immediately adjoining the northern boundary of her father’s Hop Fat Saw Mill. She had lived there for four to five years until 1968 when she married Wai. LKC pointed at the huge area of about 1,613 square metres which was a concave piece of waste land covered by grass as the area to be leased. According to the plaintiff, that is the Leased Land, which covered the Private Land and Government Land.

35.  The plaintiff expressed her concern about the costs in filling up the land and building walls and structures. Then LKC orally represented to them that they could safely invest in the land and could lease the land for as long as they wish. On the faith of the oral representation, the plaintiff entered into the 1971 Tenancy Agreement. The details of this part of the case will be covered in the next section of this judgment.

36.  The area leased under the 1971 Tenancy Agreement was expressly stated to be “two plots of land situated within Lot 501 of DD 83”.  The plaintiff said she had no idea about the description of the area leased.  She insisted that what was agreed to be leased was the Leased Land pointed out by LKC at the site but LKC erroneously described it as above.

37.  Then the plaintiff cleared the Leased Land, filled up the centre part by six feet for building a structure and filled up the rest of the land by three feet. She erected a system of fence supported by reinforced concrete poles along the eastern, northern and western boundaries of the Leased Land and Hop Fat Saw Mill. With the permission of her father, she demolished the fence separating the Leased Land from Hop Fat Saw Mill so that access to the Leased Land could only be made via Hop Fat Saw Mill.  After filling up the Leased Land, it was still two feet below the level of Hop Fat Saw Mill. Thus, she built a concrete ditch of 18 inches in diameter running from east to west of the Leased Land about six feet from the northern boundary of Hop Fat Saw Mill.

38.  With the consent and support of the Tong, the plaintiff applied to the District Commissioner of Tai Po and was granted the 1971 MOT, permitting her to erect five structures including a two-storey house on Lot 501 for dwelling. However, part of the two-storey house was built on the Government Land.

39.  The plaintiff gave birth to a daughter in April 1972. She erected other structures on the Government Land, but without seeking prior modification of tenancy from the District Commissioner. 

40.  In 1974, with the consent and support of the Tong, the plaintiff applied to the District Commissioner for the 1974 MOT to regularize these illegal structures.  It was in connection with that application that she came to know that part of her two-storey house built in 1971 had trespassed the Government Land.  On 25 March 1974, she was granted a Crown Land Licence by the District Commissioner for building four temporary structures of a total area of 278 square feet on the Government Land. The plan attached to the licence shows the location of the structures to be built on the government land and the location of Lot 501RP.   On 29 April 1974, the plaintiff was also granted the 1974 MOT permitting her to erect and maintain two temporary structures in Lot 501 of 274 square feet and 80 square feet for dwelling and a shade.

41.  The plaintiff continued to build structures from the Government Land into Lot 500. The 1980 survey sheet shows that the structures had been extended into Lot 500. She had not applied for modification of tenancy in relation to those structures, which are therefore illegal structures.

42.  In 1977, the government carried out a survey of the structures erected in the Leased Land and painted the dimension and identification of the structures with red paint on the walls of the structures. Wai then drew a sketch plan on the back of the calendar of November of that year for record (the “1977 sketch plan”). The 1995 plan was drawn according to this sketch plan.

The area leased as stated in the 1971 Tenancy Agreement, 1971 MOT, 1974 MOT and Crown Land Licence

43.  The 1971 Tenancy Agreement expressly stated that the area leased was “two plots of land situated within Lot 501 of DD 83”. That is strong prima facie evidence of what the parties had agreed to lease. The plaintiff asserted that it was an erroneous description made by LKC and that the area leased was the Leased Land pointed out to her by LKC at the site. That is a claim against a dead person who is unable to contest the assertion.  Though there is no need for corroborating evidence, the assertion requires strong and cogent evidence. The plaintiff’s evidence must be viewed against the fact that she signed the 1971 Tenancy Agreement which she knew stated that the area leased was “two plots of land situated within Lot 501 of DD 83”.  Her assertion cannot be viewed in isolation.

44.  The Tong probably has a lot of land. Adverse possession due to lack of knowledge of one’s own property is not uncommon in the New Territories. But on the evidence, there is nothing to suggest that LKC was mistaken. This is particularly so as the Tong had leased other land in the vicinity to other parties. Furthermore, in 1997, although 16 years later, when the Tong’s solicitor sought to forfeit the 1971 Tenancy, it clearly referred to Lot 501 in its letter. The Tong clearly knew what it had leased. The mistake suggested by the plaintiff is highly unlikely.

45.  On the other hand, there is ample evidence in support of the plaintiff’s knowledge that what was leased to her was just a portion of Lot 501. As soon as she took possession of the area leased, she applied for the 1971 MOT. The 1971 MOT expressly stated that it was in respect of Lot 501. When she made the application, she and the Tong must have known that the application was in respect of modification of the tenancy of Lot 501. All the five structures permitted under this MOT were to be erected within Lot 501. If indeed she had leased the Leased Land which was five times the area of the two plots of land in Lot 501 and had filled it up, there was no reason why she would have confined the structures within Lot 501 and did not apply for the structures to be built in the Private Land or the Government Land. Reading the 1971 MOT together with the 1971 Tenancy Agreement side by side, it is obvious that the area leased was just the two plots of land within Lot 501. It lies ill in her mouth to say that LKC made an erroneous description of the area leased. It is also highly unlikely that LKC would have with a point of his finger identified the area to be leased to be the entire concave piece of land making up of part of Lot 501, the Government Land, Lot 498, Lot 499 and Lot 558. It is even exuberant to imagine that a piece of farm land of 1,613 square meter, despite its condition, could only fetch an annual rental of $400 a year even back in 1971 (ie 1.88 cents per square foot!). The plaintiff’s assertion is a wild and wide allegation. Though the structure she built trespassed the Government Land, that is more consistent with a mistake on the part of her builder than reflective of her assertion that the area leased was the Leased Land which included the Government Land.

46.  In 1972, the plaintiff erected some illegal structures on the Leased Land. Then, she applied for a Crown Land Licence and the 1974 MOT to regularize those illegal structures. She asserted that the structures were erected on the Leased Land which she believed was leased to her under the 1971 Tenancy Agreement. She said it was only then that she came to know part of the structures built under the 1971 MOT was built on the Government Land.   Even if she was acting under a misapprehension that the area leased was the Leased Land, the Tong was not. On a fair reading of the 1971 Tenancy Agreement, the area leased was just the Leased Portion.  The plaintiff cannot force her mistake on the Tong. If she were acting under a mistake, she must have by then woken up from her mistake.

47.  For the same reasons as above, I do not think these structures built on the Government Land which the plaintiff sought to regularize supports her case that the area leased was the Leased Land. That she applied for the 1974 MOT in respect of Lot 501 is more consistent with the Tong’s case that the area leased was just the two plots of farm land within Lot 501.  She knew that an application for modification of tenancy is required for building any structures in New Territories. The fact that these structures were initially built as illegal structures and she never applied to have them regularized showed that she knew she had no right over the land on which the structures were built. She was encroaching on other people’s land, which happened to be the Government Land.

48.  Then, as time went by, the plaintiff built more structures extending into Lot 500. She did not apply for modification of tenancy and did not seek to regularize those structures as she did in 1974. By then, she must have known that the illegal structures to be built were neither within Lot 501 as stated in the 1971 Tenancy Agreement nor in the Government Land by reason of the 1974 MOT. She must know by then a modification of tenancy was required to cover any structures built even on one’s own land in the New Territories. Knowing that the structures built or to be built extended onto Lot 500, the plaintiff did not apply for modification of tenancy.  The inference to be drawn is that she knew those structures were to be built or were built on someone else’s land not covered by the 1971 Tenancy Agreement and that she could not secure the support of the owner of Lot 500 for an application for modification of tenancy. This is fatal to her case.

The system of fencing

49.  The plaintiff relies heavily on the system of fence she allegedly built upon taking possession of the Leased Land under the 1971 Tenancy Agreement. She fenced off the eastern boundaries of the Leased Land and well beyond it all the way down to Lung Yeuk Tau section of Sha Tau Kok Road. She fenced off the northern boundary of the Leased Land. She fenced off the western boundary of the Leased Land up to the northern boundary of the land leased to Hop Fat Saw Mill where it joined the existing fence of Hop Fat Saw Mill down to Lung Yeuk Tau Road. She removed the fence which then existed in Hop Fat Saw Mill separating the Leased Land from Hop Fat Saw Mill. All these works are supported by the 1970 survey sheet in which the system of fencing built by her did not exist, and the 1980 survey sheet showing her system of fencing installed and the northern and eastern fences of Hop Fat Saw Mill removed. Thus the Leased Land and Hop Fat Saw Mill were enclosed and formed one package of land. Much expense was incurred in erecting the fence. That apparently supports her case about the Leased Land. 

50.  What the plaintiff did not say and which this court noticed by comparing the 1970 survey sheet with the 1980 survey sheet [4] are two features. First, the plaintiff removed part of the eastern fence of Hop Fat Saw Mill in Lot 498RP. Second, the eastern fencing she erected extended nearly all the way down to Lung Yeuk Tau section of Sha Tau Kok Road enclosing not only the area leased to Hop Fat Saw Mill, but in addition part of Lot 498RP outside the eastern fence of Hop Fat Saw Mill which she subsequently removed. There was no reason why she should do so, if her purpose was to enclose the Leased Land she leased. The effect was to encroach a portion of Lot 498RP not leased to Hop Fat Saw Mill. While the system of fencing supports her case of the Leased Land, it also cast light on her intention to encroach a portion of Lot 498RP. That intention and her encroachment of part of Lot 500 suggests that the plaintiff is a very sophisticated person. Her evidence has to be treated with extreme care. Having considered the totality of the evidence, I discount the significance the plaintiff sought to attribute to the system of fencing. She may have other untold purposes for erecting the system of fencing. I do not need to speculate.  And I would not go that far as to say the fence is evidence of her intention to encroach portions of Lot 498, Lot 499 and Lot 558. I would treat her evidence with great caution.

The southern boundary of the area leased under the 1971 Tenancy Agreement

51.  The Tong relies on Choi’s evidence of the southern boundary of the area leased under the 1971 Tenancy Agreement. Choi is an existing tenant of the Tong. He operates a garage business under the name of Sun Kee Motors in the southern part of Lot 501RP south of the two-storey house.  According to Choi, he and his uncle Wu and Yip Yun Yeung jointly subleased part of Lot 501, Lot 487 Section C, Lot 498 and Lot 499 since 1991. Wu collected the rent and paid over to a person known as Wu Koon Ping. Choi occupied the southern part of Lot 501, which used to be leased to Hop Fat Saw Mill. Yip Yun Yeung occupied Lot 499. Wu occupied Lot 498 and Lot 487 Section C. It is significant that these lots included the Private Land which covered about half of the Leased Land.

52.  After taking over the land, Choi built a ditch for draining away rain water. The ditch was built on top of an old ditch which then existed.  During the site visit, Choi identified the two ditches which are about 15 to 20 feet to the south of the two-storey house. It should be recalled that it is the plaintiff’s case that she built a concrete ditch in the Leased Land about six feet from the northern boundary of Hop Fat Saw Mill. Wai also confirmed that the old ditch was built by him. Thus, the position of this ditch identified the southern boundary of the area leased, the Leased Land and the Leased Portion about six feet south of it.

53.  Mr Chong, leading counsel for the plaintiff, argues that Choi’s evidence is irrelevant as it is about the situation in 1991. With respect, this aspect of Choi’s evidence being relied on is about physical features of the land and which would not change within this span of time.  The evidence is highly relevant and carries weight. 

54.  The plaintiff adduced no evidence to contradict Choi’s evidence.  All that Mr Chong argues is that this evidence is un-pleaded and should be excluded under the principle in Kwok Chin Wing v 21 Holdings Ltd & Another [5]. The principle of that case is binding on me. But, with respect to Mr Chong, what needs to be pleaded are facts and not evidence. The issue about the boundary has been adequately raised. The ditch built by the plaintiff as a marker identifying the boundary of the Leased Land was mentioned by the plaintiff and Wai in their witness statements. The ditch built by Choi was mentioned in his witness statement three days later in response. The two ditches were identified in the site visit and confirmed by Choi and Wai in their evidence. The parties knew the issue and the evidence. There is no reason not to admit the evidence.

55.  Accordingly, I find that the ditch built by the plaintiff in 1971 is the one which now lies underneath the one built by Choi in 1991.  It is about 15 to 20 feet south of the two-storey house.  It identifies the southern boundary of the area leased under the 1971 Tenancy Agreement about six feet to its south, which the plaintiff said is about six feet north of the northern boundary of Hop Fat Saw Mill or 21 to 26 feet south of the two-storey house.

56.  When this incontrovertible evidence is considered against the 1970 survey sheet[6] and the 1973 aerial photograph[7], it becomes evident that the plaintiff’s evidence that the boundary of the Leased Land started from the northern fence of Hop Fat Saw Mill is untrue. Both the survey sheet and the aerial photograph showed there was a large structure immediately north of the fence which extended into the Government Land. The ditch was further north of that structure. The southern boundary of the Leased Land or Leased Portion was 26 feet to the south of the existing two-storey house or some distance from the huge structure which has been removed.  In the sub-section that follows, there is more evidence in support of the position of this boundary.

57.  This interpretation of the evidence is logical. Back in 1971, the huge structure was existing. That structure was not standing on the concave piece of land, because according to the plaintiff after filling up the Leased Land, it was still two feet below the level of Hop Fat Saw Mill.  Because of this huge structure, during the site visit in 1971, LKC could not have stood at the northern fence of Hop Fat Saw Mill and pointed at a concave piece of land immediately north of the fence.  The likelihood is that he was standing somewhere near this huge structure and pointing at the Leased Portion nearby.

58.  The plaintiff’s case about the Leased Land collapsed totally when these ditches are viewed against the Annex. These ditches were located midway in the Leased Land. On the basis of the plaintiff’s evidence that her ditch was built six feet north of the boundary between the Leased Land and what used to be the land leased to Hop Fat Saw Mill, Schermuly confirmed that the area leased under the 1971 Tenancy Agreement coincided with the area coloured yellow in Annex A attached to the Re-re-amended defence and counterclaim, ie the Leased Portion as asserted by the Tong.

Occupation of the Private Land in 1991

59.  Choi noticed that the area north of the ditch, ie the Leased Portion, was occupied. Every now and then a fierce woman, whom he called “Chiu Chow Woman” and whom he later recognized was the plaintiff, warned him not to park his vehicles in her area. The plaintiff denied she was that woman or that she was a native of Chiu Chow. That was 1991.  The plaintiff had moved out of the area leased. But on her evidence, she had sublet it to another and then to Lau Siu Keung since 8 May 1995. There is no dispute that the area leased had been sublet and was occupied. Nothing material turned on the issue of the identity of that fierce woman. If Choi’s evidence is believed, it further confirms that the Leased Area did not cover the southern part of Lot 501.

60.  According to Choi, four to five years later, the government resumed some of the land leased to Choi, Wu and Yip Yun Yeung for the purpose of widening Sha Tau Kok Road. According to Schermuly, which is more credible, the resumption took place in 1997. As a result of the resumption, the area available for lease to Wu became too small to be of use and Wu vacated. Choi and Yip Yun Yeung retained the reduced portions of land they respectively subleased from Wu Koon Ping.

61.  According to Choi, since 1997 Yip Yun Yeung also occupied the Leased Portion for his garage business. Yip Yun Yeung converted part of the structure as a kitchen. He told Choi that he had rented the area. That ties in with Schermuly’s evidence about the land resumption.  The land resumption reduced the area leased to Yip Yun Yeung who then leased the Leased Portion from the plaintiff. This also tallied with the plaintiff’s evidence that she subleased the area leased under the 1997 Tenancy Agreement to Yip Yun Yeung, though it is her evidence that she subleased the entire Leased Land to Yip Yun Yeung pursuant to the 1997 Tenancy Agreement and not just the Leased Portion. As the events further unfold, it becomes apparent that the plaintiff’s version is untrue.

62.  According to Choi, towards the end of 1997 or beginning of 1998, Yip Yun Yeung was prosecuted and fined heavily in relation to his garage business and vacated the Leased Portion as well as Lot 499. Then Wu Koon Ping asked Choi to take over Lot 499, otherwise Choi would have to vacate as well. Choi agreed. Choi was obviously wrong about the date because it is common ground that Yip Yun Yeung last paid rent to the plaintiff on 5 February 2002. Accordingly, I find that Choi took over Yip Yun Yeung’s sub-lease of Lot 499 in about March 2002.  Since that date, Choi occupied the part of the Leased Land south of the ditch and a straight extended therefrom to the eastern end of Lot 499, ie the southern half of the Leased Land. The area covered part of Lot 501RP, Lot 499, Lot 498RP and part of the Government Land. It did not cover the Leased Portion north of the ditch which according to the plaintiff’s evidence was successively occupied by Yip Yun Yeung, Wong Sai and then Chan.

63.  In early 2003, members of the Li clan approached Choi and demanded him to vacate the land because he was in arrears of rent for nine months. This was presumably because Wu Koon Ping or his superior principal tenant, possibly Leung Yiu Man, had defaulted paying rent to the landlord, Li Sin Hing Tong. Then, through the mediation of LKF who was also the chairman of Fanling Rural Committee, the dispute was settled with Choi entering into lease agreements with the Tong in respect of Lot 501RP and Lot 487 Section C and with Li Sin Hing Tong in respect of Lot 498 and Lot 499. The lease continued up to the present. As result of widening of Sha Tau Kok Road, Lot 487 Section C was set apart from Lot 499 and became situated across Sha Tau Kok Road.  This lot is irrelevant to the present dispute.

64.  What unfolded from this series of event is that the southern part of Lot 501RP, Lot 498 and Lot 499, which according to the plaintiff were part of the Private Land within the Leased Land leased to her under the 1971 Tenancy Agreement between 1971 and 1997 and thereafter under the 1997 Tenancy Agreement, were at the same time sub-leased to Wu Koon Ping and sub-sub-leased to Choi, Wu and Yip Yun Yeung at least from 1991 through to 2003 and then thereafter formally leased to Choi by the Tong in respect of the southern part of Lot 501 and Lot 487 Section C and in respect of Lot 489 and Lot 499 by Li Sin Hing Tong. On the plaintiff’s and Choi’s evidence, both the plaintiff and the Tong were collecting rent for the lease of the same lots of land at least from 1991 through to 2005/2006 (ie the end of the plaintiff’s lease to Chan). That is an impossibility. The plaintiff’s and Choi’s evidence could only be reconciled on the basis that the Leased Land is confined to the Leased Portion only over which the plaintiff had control and collected rent, while Lot 498, Lot 499 and the southern part of Lot 501RP were subleased to Choi, Wu and Yip Yun Yeung. Schermuly confirmed that on the basis of the plaintiff’s case and Choi’s evidence, the area occupied by Choi overlapped with the southern part of Lot 501 which formed part of the Leased Land. 

65.  Choi’s evidence of his, Wu’s and Yip Yuen Yeung’s occupation of part of Lot 501, Lot 498, Lot 499 and the Government Land is incontrovertible and supported by documentary evidence from a credible source, more of which will be discussed in the paragraphs to follow. During this period, the plaintiff collected rent and had, on her evidence, full control over the Leased Land and there was tenant in occupation. If part of the Leased Land subleased by her to Lau Siu Keung, Wong Sai and Chan had also been occupied by Choi, Wu and Yip Yun Yeung, her subtenants would have complained to her and she would not have failed to notice it. But she had no complaint during this period.  

66.  Not only that, there is documentary record showing that the majority part of the alleged Leased Land was lawfully occupied by another in 1981. According to LKH, in 1981 the Tong leased the southern part of Lot 501 and Lot 487 Section C to Leung Yiu Man and Leung Cheung. At the same time, Li Sin Hing Tong also leased Lot 498 and Lot 499 to them.  Then the Tong and Li Sin Hing Tong jointly supported Leung Yiu Man’s application for Short Term Waiver from the District Office. While this evidence is hearsay, it is supported by the memorial of registration of the Short Term Waiver dated 14 May 1981 and a related letter dated 16 June 1981 issued by the District Office. This hearsay evidence is both admissible and credible. The leases of these lots were renewed by the two Tongs on 9 July 1996. By inference, Choi, Wu and Yip Yun Yeung were sub-tenants of Wu Koon Ping and sub-sub-tenants of Leung Yiu Man and Leung Cheung in respect of those lots. This evidence corroborated Choi’s evidence. Placing the Short Term Waiver alongside the Annex, it is apparent that slightly less than half of the area of the Leased Land were covered by the Short Term Waiver. 

67.  Most importantly, the occupation of this part of the Leased Land is acknowledged by the plaintiff in the 1997 site plan attached to her sublease agreement with Yip Yun Yeung. When negotiating with the Tong on the 1997 Tenancy Agreement, Wai prepared a site plan of the area to be leased under the 1997 Tenancy Agreement. This plan was based on the plan which he drew at the time of the government survey in 1977, the 1971 MOT, the 1974 MOT and the Crown Land Licence. It is admittedly not to scale but it shows the relative location of the structures and the lot. That plan was annexed to the 1997 Tenancy Agreement[8]. The plaintiff said the area leased under the 1997 Tenancy Agreement is same as that leased under the 1971 Tenancy Agreement. For reasons as I shall discuss later, this is not correct.  But the plan reflects the area leased under the 1971 Agreement. From that copy other copies were reproduced by Wai or the plaintiff for different purposes with different annotations. One of those copies dated 7 August 1997 was a first draft used in the plaintiff’s discussion with Yip Yun Yung in connection with the sublease of the area leased under the 1997 Tenancy Agreement[9]. This first draft showed the southern boundary of the area leased to Yip Yun Yeung, which according to the plaintiff is the southern boundary of the Leased Land. The annotation states that it is the boundary with the land leased by Leung Yiu Man.  A similar copy signed by the plaintiff and Yip Yun Yeung with a similar annotation except that the name of Leung Yiu Man was not mentioned was attached to the sub-tenancy agreement with Yip Yun Yeung[10], ie the 1997 site plan. As it is beyond dispute that Leung Yiu Man and Leung Cheung were in lawful occupation of the southern part of Lot 501RP, Lot 498 and Lot 499, it is amply clear that the southern half of what the plaintiff alleges to be the Leased Land falls outside the area leased to the plaintiff under the 1971 Tenancy Agreement. The plaintiff could not have been honestly mistaken. Her evidence is a gross exaggeration. 

68.  Choi’s evidence is supported by a credible history of subleasing of Lot 501RP, Lot 498 and Lot 499 ending in formal written tenancy agreements with the owners of the lots.  His sub-sub-lease from Wu Koon Ping is supported by the Short Term Waiver in favour of Leung Yiu Man, which is in turn supported by the plaintiff’s 1997 site plan attached to the sub-lease with Yip Yun Yeung.  Choi’s evidence is also corroborated by a series of aerial photographs showing the use of the lots as a garage for lorry parking or repair. More importantly, it is corroborated by Wai’s evidence. When testifying on the sub-lease of the Leased Land to Yip Yun Yeung pursuant to the 1997 Tenancy Agreement, Wai said that Yip Yun Yeung was a nearby lessee, that Choi was occupying a lot next to Yip Yun Yeung and that both of them were motor car repairers.  Wai’s evidence put beyond dispute that Choi, Yip Yun Yeung and the plaintiff’s subtenants co-existed in the Leased Land without any dispute.  There was no question of Choi and Yip Yun Yeung trespassing in area leased to the plaintiff under the 1971 Tenancy Agreement or the plaintiff’s sub-tenants trespassing areas occupied by Choi, Wu and Yip Yun Yeung. Choi’s evidence on this issue is very solid and compelling which I have no reason not to believe. Though in my later analysis, I find Choi evasive and lying on the issue of his occupation of the Leased Portion since 2014, that has no impact on this aspect of his evidence. The plaintiff’s evidence is just her bare assertion, which is not supported by any evidence. It is incredible. I prefer Choi’s evidence to the plaintiff’s. On the basis of Choi’s evidence and the Short Term Waiver, Schermuly indicated on the site lot index plan that the part occupied by Choi in 2003 was within part of the southern portion of Lot 501RP which overlapped part of the Leased Land.  I find that the southern boundary of the Leased Land and the Leased Portion coincided with the southern boundary of the yellow area marked in Annex A and that the Leased Land did not include Lot 487 Section C, Lot 498 and Lot 499. 

69.  In the light of Wai’s evidence, it is clear that the plaintiff was deliberately lying on this issue.  She has also been shown to be deliberately dishonest with the evidence about the southern boundary of the Leased Land.

Lot 500 and Lot 558

70.  The above analysis covered all the lots in the Leased Land except Lot 500 and Lot 558. The answer to the question whether these lots formed part of the Leased Land is to be found in the plaintiff’s sub-tenancy agreement with Lau Siu Keung dated 8 May 1995. Attached to the agreement is the 1995 site plan prepared by Wai showing the structures erected around the two-storey house in the Leased Land[11].  Both the plaintiff and Lau Siu Keung signed on the plan. Comparing that plan with the Lot Index Plan dated 6 December 1996 published by the Lands Department[12], it is obvious that some of the structures to the right of the two-storey house trespassed Lot 500. The open space or driveway and car parking spaces to the right of the structures were therefore obviously within Lot 500. Parking Space Number 4 extended into Lot 558. Note 1 and Note 2 in the site plan stated that four roofed structures and one car parking space immediately adjoining one of the structures were leased to Lau Siu Keung. Note 3 stated that the other structures and open space were for use by other tenants. Under cross-examination, Wai confirmed that there were no other tenants. More importantly, he also confirmed that apart from Lau Siu Keung other people may also use the open space and car parking spaces. From this answer, it is obvious that Wai and therefore the plaintiff knew that the open space and the car parking spaces situated on Lot 500 and Lot 558 belonged to another and were not part of the Leased Land. That was why Wai said that others may also use the open space and car parking spaces.

71.  Another very telling fact of the plaintiff’s lack of control over Lot 500 and Lot 558 is that as shown in the 2004 aerial photograph and as opined by Schermuly, a retaining wall was constructed in the northern portion of the Government Land, Lot 558 and the northern portion of Lot 500 within the Leased Land. At the time, the plaintiff was not in occupation of these areas, but she was, on her evidence, collecting rent in respect of these areas and sharing the rent less expenses with the Tong. But she mentioned nothing about the construction of the retaining wall. It is true that she had not been asked. But there is nothing in the evidence about disbursement in respect of those expenses. The retaining wall must have been built to protect these lots from soil sliding from the adjacent lots of higher level. It must have been erected by the lessee of those lots or their owners, Li Sin Hing Tong and its beneficiaries. If she were the lessee of those areas under the 1971 Tenancy Agreement or the 1997 Tenancy Agreement, she would not have failed to notice their construction; and if she had incurred costs in their construction, she must have claimed a share of the expenses from the Tong.  She did not. The erection of the retaining wall in 2004 or possibly in 2003 ties in well with the timing of Li Sin Hing Tong formally entering into a lease agreement of Lot 498 and Lot 499 with Choi.  That further suggests that these lots had nothing to do with the Leased Land.   They are not part of the area leased under the 1971 Tenancy Agreement.

Conclusion

72.  On the basis of the Short Term Waiver, I am satisfied that Leung Yiu Man and Leung Cheung were lessees of the southern portion of Lot 501RP, Lot 498 and Lot 499 since 1981. On the basis of Choi’s evidence, I am satisfied that he, Wu and Yip Yun Yeung were sub-tenants or sub-sub-tenants of Leung Yiu Man and Leung Cheung in respect of those areas since 1991 and that Choi formally became the lessee of the Tong and Li Sin Hing Tong in respect of Lot 501RP and Lot 498 and Lot 499 since 2003. Obviously, he also became a user of the Government Land sandwiched among those lots. I am satisfied that the ditch he laid on top of the one laid by the plaintiff identified the boundary of the Leased Portion about six feet to the south. On the basis of the 1995 site plan attached to the plaintiff’s sublease agreement with Lau Siu Keung and the 1997 site plan attached to her sublease agreement with Yip Yun Yeung, I am satisfied that the plaintiff knew Lot 500 belonged to another and did not form part of the area leased under the 1971 Tenancy Agreement. Accordingly, the area leased under the 1971 Tenancy Agreement was just the Leased Portion as asserted by the Tong. The plaintiff has failed to discharge the burden of proving her lease of the Leased Area.

73.  My finding on the southern boundary of the area leased has seriously dented the credibility of the plaintiff. The plaintiff had lived in Hop Fat Saw Mill for four to five years before her marriage. She had lived in the two-storey house for 18 years before moving out to the urban area. She built the ditch which identified the boundary of the leased area about six feet to the south and adjacent to the huge structure immediately to the north of the northern fence of Hop Fat Saw Mill. It was only at about the midway of the Leased Land. She knew that Lot 498, Lot 499, Lot 500 and Lot 558 belonged to another and were not within the Leased Land such that she had to provide in the tenancy agreement with Lau Siu that others may use the open space and car parking spaces there. Similarly, she knew that at some stage Leung Yiu Man was the occupier of the southern part of Lot 501RP, Lot 498, Lot 499 and Lot 500. She would not have failed to appreciate that Leung Yiu Man occupied about half of what she alleged to be her Leased Land.  But she never complained.  Her evidence about the Leased Land is five times the actual area leased to her under the 1971 Tenancy Agreement. It is such a gross exaggeration that it could not have been the evidence of a witness honestly mistaken. Her evidence about the Leased Land was a whole sale deliberate and dishonest concoction. 

74.  Since she took possession of the Leased Portion, the plaintiff erected illegal structures extending into Lot 500. Her evidence about the system of fencing is misleading. She did not disclose that the eastern fence extended beyond what she alleged to be the Leased Land all the way down to nearly Lung Yeuk Tau section of Sha Tau Kok Road in such a manner that it encroached part of Lot 486RP not leased to Hop Fat Saw Mill. The system of fencing was not erected to identify the boundary of the land leased under the 1971 Tenancy Agreement but for some other purposes.

75.  Wai’s credibility is also damaged to the extent he supported the plaintiff’s evidence in the above respect.

THE REPRESENTATION BY LKC

The plaintiff’s case

76.  It is the plaintiff’s case that when LKC showed the plaintiff the land to be leased, the plaintiff expressed concern about the expenses in filling it up the land and building structures on it. LKC told the plaintiff and Wai that they could safely invest in the land as it was the Tong’s land which the Tong would not dispose of casually. He promised them that they could lease the land for an indefinite term subject to payment of rent and periodical increases in rent and that the Tong would not repossess it. That was the oral representation pleaded by the plaintiff in this action. On the basis of this oral representation, the plaintiff and Wai agreed to enter into a lease and told LKC to prepare a lease for their execution.

77.  On 13 July 1971, the plaintiff and Wai went to LKC’s home. They were shown a lease in Wai’s name and for a term of five years. They objected as the term of the lease was inconsistent with the oral representation.  LKC explained that it was usual to include a fixed term in the Tong’s leases and to avoid creating suspicion among the Tong’s members, he could not alter that term. He assured them that so long as they wished to continue to lease the land, the Tong would renew the lease. He told them to put their minds at ease. As result, they agreed. They also requested to put the lease under the plaintiff’s name. The plaintiff then signed the 1971 Tenancy Agreement. 

Credibility of the plaintiff’s case

78.  The plaintiff seeks to raise a proprietary estoppel derived from investment in land pursuant to the invitation of the landowner. She bears the burden of proving the representation by the landowner and that upon the faith of such representation or expectation she incurred money on the land with the knowledge of the landlord and without objection by him.  As mentioned above, the claim is made against trust property and the representation was allegedly made by a deceased trustee, the plaintiff has to discharge the burden of proving the representation to a very high standard.

79.  On my finding, the Leased Portion only formed part of Lot 501RP. Lot 501RP was 732 square metres. The Leased Portion consisted of two plots of farm land of about half that size. It is a sunken piece of land which required to be filled up before it could be put to use. Expenses would have to be incurred. The plaintiff claimed that she incurred $15,000 to $20,000 in filling up and levelling the land and constructing the ditch.  That was based on the size of the Leased Land which was about five times that of the Leased Portion. Thus, the cost to be incurred should be reduced to $3,000 to $4,000. In addition, the plaintiff had incurred $25,000 to $30,000 in building the structures. The total investment was about $30,000. That was in 1971. At the time, her husband was earning between $500 and $600 per month.  In salary term, the costs were about 55 months’ of Wai’s salary. It was quite an investment. The annual rental was $400. The plaintiff was 31 years of age in 1971. The life expectancy in 1971 was 75.3 years as pleaded and which she has now well exceeded. The income to the Tong over 44 years representing the balance of her life expectancy would be $211,200. That would be substantially reduced if converted into the then present value.  The value of the structures would also have to be written off in that span of time. 

80.  These facts have to be taken into account in assessing whether an expectation of a life interest was credible. In my view, a promise for a lease of 44 years for a monthly return of $400 was not attractive. Looked at the other way, in answer to my question, Wai said that he would be happy with a term of 16 years for the investment. That is a more reasonable expectation. Viewed in this way, it was inherently improbable for LKC to have made a representation of a life interest. A representation of an indefinite term would be a more reasonable construction of what was said.

81.  Inherent improbability apart, for reasons as explained in paragraphs 73 and 74, the plaintiff has demonstrated herself to be a dishonest and exaggerating witness. I cannot exclude the possibility that she was taking advantage of the fact that LKC is not available to contest her claim and concocted the oral representation. The standard of proof is very high under the circumstances. The plaintiff’s disposition and the inherent improbability of the alleged oral representation drive me to the conclusion that there is a real serious doubt that she was telling the truth. For that reason, she has failed to discharge the burden of proof.  I shall, nevertheless, proceed to consider her case assuming that her assertions are true.

What was the promise

82.  The plaintiff’s case is that by virtue of the oral representation, she was assured a life interest in the Leased Land which, on finding, was only the Leased Portion. 

83.  The conversation in which the oral representation was allegedly made was part of a pre-contract negotiation. Even accepting her evidence to the full, what LKC said could not amount to a promise of a life interest. He only said that the Tong would not sell or dispose of the land casually, not that the Tong would not ever sell. He only assured the plaintiff that the Tong would not sell for no reason. The Tong would sell if there was a good reason or a purpose. If the occasion presents itself such as the availability of a good offer, the need for funds or even a change of investment strategy. 

84.  LKC was alleged to have offered an “indefinite term”. An “indefinite term” is not the same as “forever”. It means an undefined, unknown, indeterminate, unspecified, or unstated length of time. It does not carry with it any sense of permanency, let alone a life term.

85.  In my view, the oral representation made at the time of negotiation did not amount to an assurance of a life interest. In her evidence, the plaintiff said that upon seeing the agreement specifying a five-year term, she refused to sign. She said she signed the agreement as a result of what LKC said at the time of signing of the 1971 Tenancy Agreement. LKC explained that it was usual to include a fixed term in the Tong’s leases and a five-year term was used to avoid creating suspicion among the Tong’s members. LKC said he could not alter that term, but assured them that so long as they wished to continue to lease the land, the Tong would renew the lease. He told them to put their mind at ease. That conversation was un-pleaded.

86.  Even assuming that conversation had been pleaded, it did not amount to a promise of a life interest. That conversation did not replace the oral representation before. It could not be read in isolation, but must be construed with the oral representation as a whole just as one would construe a contract. The combined effect of all these conversations is that the five-year term may not be changed. The agreement must be subject to a definite term but was renewable for as long as the plaintiff wished. That must be read subject to the oral representation that the Tong would not dispose of the land casually, not that it never will. Thus, what was assured was only an indefinite but long term. What was said at the time of signing of the 1971 Tenancy Agreement could not amount to a promise of a life interest.

87.  Furthermore, the agreement contained a forfeiture provision should the plaintiff sublet the land leased. This is inconsistent with a life interest. 

88.  The plaintiff argues that the acknowledgment in the 1997 Tenancy Agreement of her investment in the structures and the Tong’s agreement to share in the rental income equally is a reflection of the Tong’s recognition of her proprietary interest in the area leased under the agreement.  For reasons as I shall go into in detail in the next section, the Tong has liberty to sell the land subject to prior consultation and payment of compensation for the structures only. This is inconsistent with a life interest in the land.  The 1997 Tenancy Agreement is more reflective of the respect the Tong has for the plaintiff’s expenditure incurred on the Leased Portion and the virtuous and Confucius philosophy held in the minds of the earlier generation not commonly seen today. It is far from any reflection of a recognition of the plaintiff’s proprietary interest.

89.  All in all, even if the oral representation at the time of negotiation and the assurance at the time of execution of the agreement had been made, they were just statements of intention. The term was expressly stated to be five years, although renewable. There was always the possibility that a non-casual situation may arise which calls for a sale of the Leased Portion.  Any person entering into such an agreement must appreciate that risk. The representations could not amount to a promise of a life interest. Even if her evidence is accepted in the full, the plaintiff’s claim for a proprietary interest in the Leased Portion must fail.

THE 1997 TENANCY AGREEMENT

The background

90.  There is no dispute that the parties entered into the 1997 Tenancy Agreement. The agreement was made under the following circumstances.  LKC discovered that the plaintiff was in breach of the 1971 Tenancy Agreement by subletting the Leased Portion at a huge profit after she had moved out in 1989. He made a report to the Tong. The Tong instructed its solicitors to demand forfeiture of the tenancy. The plaintiff and Wai had a meeting with LKC and other senior members of the Tong. The plaintiff resisted the forfeiture. She explained that as Wai purchased his own property under the government’s home purchase scheme they had to move out of the area leased. They sublet the Leased Portion as they did not wish to leave it vacant. She pleaded that she had incurred much expenses in filling up the land and building structures on it. After much pleading, the Tong agreed to enter into the 1997 Tenancy Agreement to replace the 1971 Tenancy Agreement.  

91.  After the meeting, Wai prepared a site plan of the area to be leased under the proposed new tenancy agreement. The plan was based on the 1977 sketch plan which he drew during the 1977 government survey, taking into account the 1974 MOT and the Crown Land Licence.  It showed a rough shape of the land to be leased and the structures thereon.  The structures covered part of the Government Land and a small portion of Lot 500.  It was not drawn to scale.

92.  At a meeting in a café in July 1997 between the plaintiff and Wai on the one part and LKC and LKF on behalf of the Tong on the other part, the plaintiff and the Tong signed the 1997 Tenancy Agreement with retrospective effect to 1 February 1997. The site plan prepared by Wai similar to the 1997 site plan attached to the sub-tenancy agreement with Yip Yun Yeung was also attached to the 1997 Tenancy Agreement. The area leased under the agreement was stated to be Lot 501 and a small portion of Lot 500. The agreement contained the following provisions:

(1)  the area to be leased are portions of Lot 501 and a small portion of Lot 500 identified in a plan showing the area enclosed by a system of mesh fence;

(2)  the Tong acknowledged the structures on the area had been constructed at the plaintiff’s costs;

(3)  the Tong and the plaintiff agreed to jointly sub-let the area and the structures thereon to third parties;

(4)  the rental income derived from such subletting be split on 50/50 basis between the Tong and the plaintiff;

(5)  the property tax and government rent would be borne by the Tong and the plaintiff in equal shares; while utilities charges would be borne by the sub-tenant;

(6)  upon expiry of the term of the letting, the plaintiff would have the right to renewal and the rental income shall be distributed in accordance with clauses 4 and 5;

(7)  if the Tong has an opportunity to sell the area leased, the sale shall be subject to prior consultation and the plaintiff would be entitled to reasonable compensation for the structures; and

(8)  in the event of government resumption of the area, the matter would be dealt with in accordance with the law on land resumption.

93.  Then the plaintiff started looking for sub-tenants. After obtaining the Tong’s approval, she entered into a tenancy agreement with Yip Yun Yeung on 24 August 1997 at a monthly rent of $12,000 for two years from 1 September 1997 to 31 August 1999. The area leased was stated to be Lot 501. LKB and LKF also endorsed on the agreement. A copy of the 1997 site plan was attached to the agreement. The rent was paid into the plaintiff’s account with the Bank of China opened specifically for this purpose. The rental income was shared between the plaintiff and the Tong in accordance with the 1997 Tenancy Agreement. The tenancy agreement was renewed upon expiry. For some unknown reasons, the rent was reduced to $9,000 since November 2002. Eventually, the tenancy was terminated by Yip Yun Yeung who last paid rent on 5 February 2002.

94.  Shortly thereafter, Li Kwong Loi (“LKL”) introduced a new tenant by the name of Wong Sai. A tenancy agreement was signed on 2 October 2002 for a term of two years from 17 October 2002 at a monthly rent of $6,000. The area leased was stated to be Lot 501 and a portion of Lot 500.  The rent was paid into the plaintiff’s bank account. The plaintiff shared the income with the Tong as before.  That tenancy was renewed once but was terminated by Wong Sai in August 2005.

95.  A few months later, the plaintiff leased the area to Chan. That tenancy lasted for about one to two years.  Since Chan’s tenancy started a few months after Wong Sai vacated the area leased in August 2005 and it lasted for about one to two years, it would be reasonable to assume that it ended at about the end of 2007, say 31 December 2007. According to the plaintiff, the tenancy agreement was discussed and signed by the plaintiff, LKB and Chan in a restaurant in Fanling, but she could not locate the agreement.  This evidence was proffered by the plaintiff at trial. It is not clear when Chan’s tenancy terminated. That new evidence also caused confusion in the dates of the subsequent events mentioned in the plaintiff’s witness statements.

96.  At an unknown time after the termination of Chan’s tenancy, the Tong took over the tenancy matter in looking for tenants and collecting rent. It is the plaintiff’s case that up until August 2010, the Tong had, through LKB, rendered account of rents received and disbursements made and paid the plaintiff her share of the rental proceeds. In view of that admission, when Chan’s tenancy terminated was unimportant, save for the amount of monthly rental which is disputed by the plaintiff. Such accounting ceased since September 2010. Since December 2010, the plaintiff had been chasing LKB for her shares of the rental income, but LKB put her off using various excuses. 

The plaintiff’s case

97.  The plaintiff’s case is that the area to be leased under the 1997 Tenancy Agreement was the same as the Leased Land. Pursuant to that agreement, she leased the Leased Land to Yip Yun Yeung, Wong Sai and then to Chan up to about the end of December 2007. She collected rent and shared it equally with the Tong in accordance with the 1997 Tenancy Agreement.  After that, despite her objection, she was forced to allow LKL to take over the tenancy matters from her.  LKB accounted to her for the rent up until August 2010 but stopped since September 2010.

98.  The plaintiff visited the Leased Land on 18 March 2011 and found it was occupied by Cheung Fat Metal and a garage business. She had a meeting with LKB on 20 April 2011 and demanded payment of her share of rental income in the total sum of $26,019 for the period up to May 2011 based on a monthly rental of $6,000. On 23 May 2011, LKB paid her $23,794 which was still short of $2,225 of the amount she claimed. 

99.  After commencing the present action, the plaintiff made two further visits to the Leased Land. On 27 October 2014, she found it was occupied by Cheung Fat Metal and Kwong Kee Motor. During the visit on 15 May 2015, she found it was occupied by Cheung Fat Metal and Choi trading as Sun Kee Motor.

100.  The plaintiff disputes the monthly rental of the Leased Land was $6,000. She seeks an account of the rental income received.

The Tong’s case

101.  Consistent with its case in respect of the 1971 Tenancy Agreement, the basic premise of the Tong is that the area leased under the 1997 Tenancy Agreement was the Leased Portion of Lot 501RP, ie the northern portion of that lot and a small portion of Lot 500 on which the plaintiff’s illegal structures trespassed. The Tong admits the sub-lease of the area leased under the 1997 Tenancy Agreement to Yip Yun Yeung and Wong Sai. It was not aware of the sub-lease to Chan disclosed by the plaintiff at trial. All these sub-leases were handled by the plaintiff.  Since the termination of the tenancy of Wong Sai and impliedly the tenancy of Chan in about 2007 as well, the Tong had not leased the Leased Portion to any tenant.  The plaintiff could have no claim for any share of the rental income prior to the termination of Chan’s tenancy in about 2007, the date of which remains unascertained. Instead, she should account to the Tong for the rental income received from Chan’s tenancy.

102.  The Tong admits the lease of the southern portion of Lot 501RP and Lot 487 Section C to Leung Yiu Man in 1981 and then to Choi since 2003.  These lots are outside the area leased under the 1997 Tenancy Agreement. The Tong has no duty to account for this rental income to the plaintiff, whether before or after 1981.

103.  The Tong also avers that since 2010, beneficiaries of Li Sin Hing Tong leased Lot 498RP, Lot 499 and part of Lot 500 to Yu Cheung Lun the owner of Cheung Fat Metal. These lots do not form part of the area leased under the 1997 Tenancy Agreement and do not belong to the Tong. The Tong has no duty to give an account.

104.  On the above basis, the Tong averred that the monthly sums of $3,000 were paid to the plaintiff as result of her representation that they were owed to the Tong and that the sum of $23,794 was paid to the plaintiff as a result of pressure exerted by her. The Tong counterclaims for their return.  In addition, it counterclaims for a declaration that the area leased under the 1997 Tenancy Agreement was the Leased Portion and for damages as a result of removal of some of the structures and installation of a lamppost in the Leased Portion by someone unknown.

The issues

105.  The issues raised by the pleadings are:

(1)  what is the nature of the 1997 Tenancy Agreement;

(2)  what is the area leased under the 1997 Tenancy Agreement, particularly, whether it includes the Government Land, Lot 499, Lot 500 (apart from the small portion admitted by the Tong) and Lot 558;

(3)  on the basis of the above finding, whether any area leased under the 1997 Tenancy Agreement has been let by the Tong;

(4)  if it had been let, what is the period and amount of rental income to account for;

(5)  whether the plaintiff is liable for the return of the monthly sums of $3,000;

(6)  whether the plaintiff is liable for the return of the sum of $23,694; and

(7)  whether the plaintiff is liable in damages for the removal of the structures.

The nature of the 1997 Tenancy Agreement

106.  The parties are in dispute as to the nature of the 1997 Tenancy Agreement. The plaintiff says it is a joint venture agreement with a view to making profit. This is to enable her to launch her argument about implied fiduciary duty and breach of agreement. 

107.  The Tong argues that though described as “Re-defined Agreement for Lease of Land” it is a simple tenancy agreement. It bears all indicia of a tenancy agreement. The title of the agreement states that it is an agreement for lease of land. The parties are described as “landlord” and “tenant”. The subject matter was about lease of land. It specified the duration of the tenancy. But what is surprisingly missing is the amount of rent.

108.  On the other hand, one of the foci of the agreement is the structures on the land and the Tong’s recognition that they were erected at the plaintiff’s expenses and an obligation to compensate the plaintiff for the structures upon sale of the land. The purpose of the agreement as stated in clause 4 is to sublet the land with the structures to a third party. Clauses 5 and 6 provide for sharing of rental income and expenses. Clause 7 gives the tenant the right to renew after expiry of the three-year term. The agreement appears to be renewable perpetually until sale or resumption of the area leased by the government.  Clause 8 provides that the Tong had to consult the plaintiff prior to the sale of the leased area and the plaintiff may claim compensation for the structures.  The plaintiff argues that this provision amounted to a veto. I do not agree. What the clause requires is consultation and not consent or agreement. The consultation is to provide the plaintiff an opportunity to be heard and state her views on the sale. She may attempt to convince the Tong not to sell. But the Tong is at liberty to sell and if the Tong sells, the plaintiff is entitled to be compensated for her structures. It is not a veto.

109.  In my view, the description “agreement for lease of land”, “landlord” and “tenant” etc are of prima facie value only. The nature of the agreement is to be determined by its substance and the intention of the parties and not its label. As I have mentioned, there is a surprising absence of any provision for the amount of rent payable by the plaintiff as tenant to the Tong as landlord. This essential element of a tenancy agreement is missing.  It is clear that the intention of the parties was for the Tong to contribute its land and for the plaintiff her structures on the land to the common pool, to let the structures on the land and to share the proceeds of the rental net of expenses. All in all, I agree with the plaintiff’s argument that in substance the 1997 Tenancy Agreement is a partnership agreement. To make the agreement work, it goes without saying that the Tong may not lease the land itself without accounting for the rental income to the plaintiff in accordance with the terms of the 1997 Tenancy Agreement. This term may be readily implied into the agreement without calling it a partnership agreement or joint venture agreement.   The agreement is perpetually renewable and non-‌determinable without compensation. But subject to the duty to consult the plaintiff and to compensate her for the structures, the Tong has undoubted right to sell the land leased. It is a very bad agreement from point of view of the Tong. But for the Tong’s right to sell, it practically gave the plaintiff a 50% life interest in the area leased.

The area leased under the 1997 Tenancy Agreement

110.  The area leased under the 1997 Tenancy Agreement is stated to be part of Lot 501 and a small portion of Lot 500. The plaintiff’s case is that the area leased under the 1997 Tenancy Agreement is the same as the area leased under the 1971 Tenancy Agreement and that LKB include Lot 500 in the agreement by mistake. This is on the basis of her case that the area leased under the 1971 Tenancy Agreement was the Leased Land. On my finding that the area leased under the 1971 Tenancy Agreement was the Leased Portion, her understanding is incorrect. It should be noted that since taking possession of the Leased Portion, the plaintiff started to expand her structures from the Leased Portion onto the Government Land and then, as the 1996 Lot Index Plan shows, onto Lot 500. To ensure that the structure trespassing Lot 500 fall within the 1997 Tenancy Agreement, it became necessary to include a small portion of Lot 500 in the agreement. That was why, according to the plaintiff’s evidence, when discussing the 1997 Tenancy Agreement, LKB told her that her structures occupied trespassed the Government Land and Lot 500 and it was necessary to include Lot 500 in the 1997 Tenancy Agreement, although LKB knew that Lot 500 belonged to Li Sin Hing Tong.  The plaintiff’s argument that the inclusion of a portion of Lot 500 in the 1997 Tenancy Agreement was LKB’s mistake is contradicted by her own evidence. I agree that except for that little portion, the area leased under the two tenancy agreements are the same.

111.  A particular feature of the 1997 Tenancy Agreement is the Tong’s acknowledgement of the plaintiff’s investment in the structures. Against the background of the 1971 Tenancy Agreement and the acknowledgement of the plaintiff’s investment, the undoubted common intention of the parties was to continue to lease the area leased under the 1971 Tenancy Agreement and to redefine it to include the area trespassed by the plaintiff’s illegal structures. I therefore find that the area leased under the 1997 Tenancy Agreement consists of the Leased Portion, ie the northern portion of Lot 501 (not the Leased Land as asserted by the plaintiff) and a small portion of Lot 500 occupied by the plaintiff’s illegal structure.

Whether the area leased has been let by the Tong to any party

112.  Having reached the conclusion that the area leased under the 1997 Tenancy Agreement consisted of the Leased Portion and a small portion of Lot 500 on which the plaintiff’s structure trespassed, the issue of whether the Tong was in breach of its duty to account for rental income has to be focused on the letting of the Leased Portion and the small portion of Lot 500 by the Tong only. The small portion of Lot 500 on which the illegal structure stands must have been leased together with the rest of the Leased Portion, if the Leased Portion has been let. There is no need to specifically address the letting of that small portion of Lot 500.

113.  In my analysis of the area leased under the 1971 Tenancy Agreement, I have already dealt with the lease and occupation of the Leased Portion up to the present time. The lease of the Private Land and Government Land is irrelevant. 

114.  The plaintiff drew a red line on a copy of the 1997 site plan attached to the sub-tenancy agreement with Yip Yun Yeung[13] to marked the location which she found was occupied by Cheung Fat Metal and the garage business during her first visit in 2011.  Cheung Fat Metal was on the right side of the red line. As the site plan is not up to scale and it is the plaintiff’s case that it covered the entire Leased Land as shown in the Annex, hence I shall interpret her evidence on that basis. Placing that plan alongside the Lot Index Plan dated 6 December 1996 published by the Lands Department[14], it is immediately apparent that Cheung Fat Metal was situated on Lot 558, Lot 500, Lot 498, Lot 499 and the Government Land, while the garage business occupied almost the entire Lot 501RP as shown in the Annex. As the area occupied by Cheung Fat Metal and the southern portion of Lot 501RP occupied by the garage business fall outside the Leased Portion, they are irrelevant for this analysis. The issue is whether the Leased Portion has been let by the Tong to any party since 1 January 2008.

115.  According to Choi, he subleased the southern portion of Lot 501 since 1991. He noticed the Leased Portion was occupied and was told by a fierce woman not to trespass the Leased Portion and he did not. Choi continued occupying the southern portion of Lot 501 as tenant of the Tong and Lot 498 and Lot 499 as tenant of Li Sin Hing Tong since 2003.  But he terminated his lease of Lot 498 and Lot 499 on 1 March 2006 due to poor business. The two lots were then leased by Li Sin Hing Tong to Yu Cheung Lun who operated Cheung Fat Metal.  This evidence is corroborated by the 2008 aerial photograph which showed that the area was being used for recycling business.  Those two lots are in the Private Land and not within the Leased Portion.

116.  Choi said he had not used or occupied the Leased Portion. There could be no dispute that he ever did up to the end of 2007 since the Leased Portion had been leased by the plaintiff to various tenants and occupied by them up to the end of 2007.

117.  During her visit of the Leased Land on 18 March 2011, the plaintiff found the Leased Portion was occupied.  She took some photographs.  Some photographs showed waste materials were placed in front of the two-storey house which seemingly had over-flowed from the waste material heaped up on the adjacent Government Land, presumably by Cheung Fat Metal. Two of the photographs[15] showed an open shed which was located at House Number 3 marked on the 1997 site plan. The shed had been rebuilt as some of the structures in the 1997 site plan had been demolished by Yip Yun Yeung. It is important to note that the fluorescent tubes in the shed were switched on. This suggests that the shed was being used and occupied. Part of the shed was used to store vehicle parts. The other part of the shed was organized and looked like a workshop. These photographs show that the shed was being occupied and used as a workshop for a garage business.  The plaintiff asked a man present about the owner of the garage business, but he declined to answer.

118.  The plaintiff also enquired from a staff in Cheung Fat Metal. He was surnamed Cheung. He told the plaintiff that his employer, ie Cheung Fat Metal, had rented the place for about one year for storing material and the monthly rental was in excess of $10,000 was paid to LKL and LKH. If Cheung was not mistaken, that was another example of a blatant exaggeration by the plaintiff to concoct a case against the Tong.  Since March 2006, the various lots of land on which Cheung Fat Metal stood had been leased by Li Sin Hing Tong to Yu Cheung Lun who is the owner of Cheung Fat Metal.  Anyway, the lease of these lots of land is irrelevant as they fall outside the Leased Portion.

119.  The plaintiff made a second visit on 27 October 2014. A photograph taken of the shed during that visit showed, among other things, metal cans probably containing paints, a gas cylinder, a clock, a fan and a flood light [16]. These items appeared more like equipment used in a garage business than in the recycling business of Cheung Fat Metal.  The shed was well organized and appeared to be in use as a workshop.  There were lorries and a van parked outside the shed and the two-storey house. The Leased Portion appeared to be in active use. The plaintiff enquired from a man at the site and was told that the business was operated by a man called Chan Yau Lun trading as Kwong Kee Motor and that the place had been rented from LKL at a monthly rent of $5,500 for nearly four years.  That would be since about 2010.  Though this is hearsay, it is credible as the Leased Portion was the property of the Tong and LKL was responsible for its tenancy matters since January 2008.

120.  The plaintiff made a third visit on 15 May 2015. The photographs taken showed that the Leased Portion was in active use. One of the photographs showed a heavy duty lorry parked in front of the shed and a private car parked inside a covered parking space near the ditch within the Leased Portion[17]. The inside of the two-storey house was chaotic and full of garbage. It did not appear to be in use. The plaintiff’s solicitor, Mr Leung, made enquiries from a person found at the location which used to be occupied by Hop Fat Saw Mill, ie the southern portion of Lot 501RP.  The man identified himself as surnamed Choi. He said he was the operator of Sun Kee Motor which provided services for heavy duty goods vehicles. It is not entirely clear whether the man was referring to the Leased Portion or the southern portion of Lot 501RP or both. There were signs of Sun Kee Motor at the entrance of the access road leading to the two-storey house, but there were no signboards of any other garage business shown in the photographs. By inference, that man must be referring to the Leased Portion and the southern part of Lot 501RP as one entity and that man must be Choi. The further inference is that sometime in between the two visits, ie between October 2014 and May 2015, Choi took over the Leased Portion from Sun Kee Motors. This inference, to some extent, damaged Choi’s credibility as it is Choi’s evidence that he did not use the Leased Portion. The man also told Mr Leung that the rental for the area occupied by Cheung Fat Metal exceeded $10,000. 

121.  During the court’s site visit in January 2019, a huge yellow machine was found placed near the ditch within the Leased Portion[18]. It was in a tidy condition and appeared to be functional. Huge gas cylinders were placed near the two-storey house and in the area occupied by Cheung Fat Metal. There was another yellow heavy duty machine inside the shed next to the two-storey house[19].  These heavy duty machines were related to the activities of Sun Kee Motor. The southern part of Lot 501RP was in active use in providing services for heavy duty goods vehicle. Viewed together it appeared that the Leased Portion was being used as an extension of Choi’s Sun Kee Motor in the southern part of Lot 501RP. 

122.  Under cross-examination, Choi was asked if he knew who was in occupation of the Leased Portion. He declined to answer. He said he did not wish to reveal the identity of that person and then said he did not know his identity. He was evasive and had something to hide. The overall impression from the photographs and from the court’s site visit is that the Leased Portion has been in active use and occupation since the plaintiff’s visit in 2011 through to the court’s visit in 2019. It might have been operated by different persons during this period. That does not matter.  The Tong was in control of the tenancy matter during this period. It could not have turned a blind eye to all these activities in the Leased Portion over the years. The inference is that the Tong must have subleased the Leased Portion to Choi or others before him. 

123.  The lease is confirmed by LKB paying the plaintiff $23,794 pursuant to her demand for her share of rental income for the period from September 2010 to May 2011. The purpose of this payment is disputed by the Tong. I shall return to this issue in another subsection. Suffice it is to say at this stage that I disagree with the Tong’s argument. 

The period and amount of rent to account for

124.  I am well satisfied that the Leased Portion had been let from 2011 through to to-date and possibly since January 2008. A difficult question raised by the plaintiff’s new evidence in court is the period which the Tong is required to account for. Originally, according to her witness statement, the period should start from the termination of Wong Sai’s tenancy in August 2005. With her new evidence about Chan’s tenancy in respect of which she was responsible for collecting rent, that period should be deferred to the end of Chan’s tenancy. For reasons as explained in paragraph 95, I assume that it ended on 31 December 2007.

125.  In the plaintiff’s witness statement, she said she was then forced to allow the Tong to take over the tenancy matters in respect of the area leased under the 1997 Tenancy Agreement on 16 September 2005. She said on that day she had a meeting with LKB and LKF in a café in Fanling to discuss about leasing the area after Wong Sai had vacated. In view of her new evidence about Chan’s tenancy, that date has to be deferred to sometime in January 2008 and her reference to Wong Sai has to be replaced by Chan.  She said she asked to be allowed to arrange the lease and resisted the Tong’s suggestion to allow LKL or other members of the Tong to handle the tenancy.  No conclusion was reached at that meeting. Eventually, LKB telephoned her and told her that the area had been leased by LKL at the monthly rent of $6,000 but LKB refused to give particulars. 

126.  The plaintiff made a lot of allegations of threats of violence and arson by LKL in relation to her tenancy matters since 1997. Though LKB is dead, the Tong is not without any manager who could dispute the plaintiff’s evidence. The Tong could also have called LKL to challenge the plaintiff’s evidence, but did not. On the evidence, though not a manager, LKL has been an active member of the Tong and involved in its tenancy matters. There is nothing to suggest that he is not available to testify. This court is entitled to draw adverse inference against the Tong for its failure to call LKL to testify.  Suffice it is that I accept that the Tong took over the tenancy matters since 1 January 2008. There is no need to delve into the plaintiff’s accusations against LKL.

127.  It is the plaintiff’s case that after the Tong took over the tenancy matters LKB accounted to her for the rental income and paid her share of the rental proceeds to her until August 2010.  Then, following the April 2011 meeting, LKB paid her $23,794 for the rental income up to May 2011, but the plaintiff disputes the amount of rent. Thus, if that dispute is resolved in favour the Tong, the period to account for should commence from June 2011, otherwise it should commence from 1 January 2008.

128.  As for the rent, the plaintiff’s evidence is that LKB told her in the telephone conversation that the monthly rental for the Leased Portion was $6,000. The plaintiff disputes that amount.  The rent paid by Choi to the Tong in February 2003 for the southern part of Lot 501RP which is of a similar sized plus Lot 487 Section C was $4,000 per month. In March 2003, Choi paid Li Sin Hing Tong a monthly rental of $5,000 for Lot 499 and Lot 498RP which are also of similar size to the Leased Portion.  During the 2014 visit, the plaintiff was told that Kwong Kee Motor paid $5,500 per month for the lease of the Leased Portion.  During the plaintiff’s visit in 2015, she was told that the rent for the area leased to Cheung Fat Metal was in excess of $10,000. That area was about twice that of the Leased Portion. In the face of these figures and having regard to the difference in size of the area let and time of the rent, I accept that the rent as reported by LKB was a true account. Hence, the Tong had accounted for the rental income up to May 2011. The Tong is therefore required to give an account of the rental income and expenditure in respect of the letting of the Leased Portion with effect from 1 June 2011.

129.  In the light of the plaintiff’s own new evidence about Chan’s tenancy, it appears from her evidence and her pleading that she has pocketed the proceeds of rental income without accounting to the Tong. As the plaintiff was responsible for the tenancy matter, the Tong could not have known about Chan’s tenancy, if the plaintiff did not disclose and give an account for it. Though no counterclaim for such an account has been made by the Tong, justice and fairness require the rental proceeds from Chan’s tenancy be accounted for.  The legal costs to be incurred in amending the pleading would be out of all proportion with the amount involved. As an expedient means of disposal of this issue, I would order that any amount found due to be paid to the plaintiff shall be set off against the amount which the plaintiff shall account to the Tong under Chan’s tenancy from 1 January 2006 to 31 December 2007.

THE COUNTERCLAIM

Declaration

130.  The Tong seeks a declaration that the area leased under the 1971 Tenancy Agreement was the Leased Portion. On my finding that was the case. However, there is no real purpose or public interest to be served making the declaration.  The dispute is private dispute between the parties which has no effect to any third party. A declaration is not called for. A judgment of this court is all that is required.  This counterclaim is therefore dismissed.

Return of monthly payments of $3,000 from 2005

131.  The Tong seeks return of the monthly sums of $3,000 paid to the plaintiff since 2005. The pleaded basis of claim is that “the plaintiff wrongfully represented to LKB that she was entitled to the rental payments for the lease other than the Leased Portion pursuant to the 1997 Tenancy Agreement.”  

132.  The Tong’s claim is very difficult to understand.  Its claim is premised on the above pleaded assertion and that as result the Tong paid over the monthly sums of $3,000. Seemingly, the Tong is alleging that because the plaintiff represented to the Tong that the area leased under the 1997 Tenancy Agreement was the Leased Area and she received her share of rental income from the lease of the Leased Area, she had received more than her entitlement as she was only entitled to share in the rental income of the Leased Portion only. The plaintiff is therefore required to return the monthly sum of $3,000 paid. Even on that basis, the Tong is only entitled to return of overpayment. But there was not a scintilla of evidence of what the plaintiff had represented. LKB to whom the representation was allegedly made could not testify. The Tong relied on the evidence of LKH who had no personal knowledge of the representation. LKH’s evidence is that the pleaded case was all his speculation. Apart from a total absence of evidence of what was represented, there was no evidence of what operated in LKB’s mind which caused him to make the payments. 

133.  On the contrary, the unchallenged evidence of the plaintiff was that prior to January 2008 she collected rent from Yip Yun Yeung, Wong Sai and Chan for the areas which, on my finding, all fall within the Leased Portion and shared the proceeds with the Tong. Thereafter, the Tong collected the rent from the same areas and LKB rendered detailed periodical accounts to the plaintiff and paid the plaintiff her share. The sums paid over to the plaintiff could not have been the result of the plaintiff’s representation, but the result of LKB’s reliance on rental income collected by the Tong from the Leased Portion and his own computation. There was also not a shred of evidence that the Tong paid the plaintiff any rent collected from outside the Leased Portion.  There was no evidence of overpayment.

134.  The basis of the Tong’s claim is also contrary to its case that only the Leased Portion and a small portion of Lot 500 was leased under the 1997 Tenancy Agreement and that the plaintiff and the Tong only shared the rental income collected from that area. The fact that the Tong collected rent from Leung Yiu Wing and then Choy for the southern part of Lot 501RP and that Li Sin Hing Tong or its beneficiaries collected rent for the lease of Lot 498, Lot 499, Lot 500 and Lot 558 has nothing to do with this litigation. The Tong’s claim is a muddle which must be dismissed.

Return of the sum of $23,794

135.  After the plaintiff’s visit of the Leased Portion and the surrounding lots in March 2011, she had a meeting with LKB on 20 April 2011 and claimed her share of rental income for the period from September 2010 to May 2011 in the sum of $26,019.   About a month later, LKB paid her $23,794.  It was short by $2,225.  I assume there was some disbursement for expenses, such as government rent and rates. 

136.  The Tong says that the payment was made by mistake and under pressure and counterclaims for its return. LKB has passed away and is unable to testify. His son, LKH testified that LKB was 90 years of age at the time. The plaintiff’s solicitor, Mr Leung, told LKB that he was the son of a District Council member whom LKB had worked with for many years and trusted. LKB therefore also trusted Mr Leung. He was thrusted with the computation and was repeatedly urged to pay. He succumbed to the pressure and paid from his own funds without even verifying the plaintiff’s claim. He did so in order to amicably settle the matter. After making the payment, LKB often asked himself why he paid. And when he learned about the litigation, he felt very angry and depressed.

137.  Even if this account had come from the horse’s own mouth, I do not believe.  LKB was a retired schoolmaster.  He must be well educated, intelligent and sensible. He was in charge of the tenancy matters.  The meeting was amicable. Even if Mr Leung had repeatedly urged the Tong to pay, it could not have amounted to such pressure as to sap his will there and then and not to mention more than a month later. 

138.  The plaintiff had been urging for an account for a long time. LKB must have known the purpose of that meeting. He must have been well prepared for the meeting. The issue was a simple one of whether the land had been leased. If it had not, there was no reason why he did not know. If that was indeed the case, he could have easily told Mr Leung that the land had not been leased. He did not. He told Mr Leung that he would consider his request. Then, more than a month later, he made the payment. He did not pay the sum demanded but a lesser sum which was not a rounded up sum.  That suggests he had taken time to consider and worked out the exact amount due to the plaintiff.  It lies ill in his mouth to say he was pressured to pay. 

139.  LKB’s explanation that he paid from his own funds to amicably settle the matter is even more ridiculous. The plaintiff did not ask for a one off payment but an account and thereafter monthly payments in accordance with the terms of the 1997 Tenancy Agreement. Mr Leung could not have been ambiguous in his explanation of the plaintiff’s claim.  LKB must have known that if he paid, he was deemed to have admitted liability and the Tong would have to make further monthly payments. The matter could not have been settled amicably by a one off payment. He must also have checked from the Tong’s record and discussed with his co-manager or other senior members of the Tong or LKL who was involved in the tenancy matters and told not to pay if the land had not been leased. For these reasons, I reject LKH’s evidence. I draw the inference that the land had been leased and that the payment represented the amount due to the plaintiff. This counterclaim is therefore dismissed.

Damages for removal of the structures

140.  The Tong claims damages to be assessed for demolition of a “large portion of the Temporary Structures” in breach of the 1997 Tenancy Agreement. Apart from pleading the express terms in the 1997 Tenancy Agreement, no part of the Tong’s pleading pleaded the existence of any express or implied term that the plaintiff may not demolish any part of the temporary structures. In answer to the plaintiff’s request for further and better particulars, the Tong replied that it did not know who removed the temporary structures. As submitted by the plaintiff, no cause of action has been raised.

141.  On the evidence, when negotiating the sub-lease of the Leased Portion to Yip Yun Yeung, it was agreed that a number of structures shall be removed. With the consent of the Tong, the plaintiff entered into the tenancy agreement with Yip Yun Yeung to which a copy of the 1997 site plan showing the structures to removed was attached. The agreement was endorsed by two managers of the Tong, namely LKB and LKF. The Tong must be taken to have agreed to the removal of the structures. It lies ill in its mouth to argue that the structures were removed without its knowledge and consent and in breach of the 1997 Tenancy Agreement. This claim must be dismissed.

CONCLUSION

The plaintiff’s claims

142.  The plaintiff claims for a declaration that she has acquired a proprietary interest in the Private Land or that the Tong was and still is holding it upon trust for her benefit. This claim is premised on the area leased under the 1971 Tenancy Agreement was the Leased Land, which included a portion of Lot 501, the Government Land and the Private Land, and that LKC had made the oral representation creating an expectation for a life interest in the Private Land and which was acted on by the plaintiff to her detriment. It is inexplicable why the plaintiff did not seek the same declaration in respect of the portion of Lot 501RP and the Government Land.  Anyway, the plaintiff has totally failed to discharge the burden of proof. This claim must be dismissed.

143.  Further or in the alternative, the plaintiff claims damages being the difference in value of the Leased Land represented by the increase in its value as a result of her investment and/or improvement thereto. There is no express provision under the 1971 Tenancy Agreement for compensation for structures erected by the plaintiff on the Leased Portion or for improvement to the area leased provided by the plaintiff. Having failed in proving the oral representation, there could be no expectation that she would be paid any compensation or any sum for the improvements to the land provided by her.  The plaintiff’s claim must fail for this reason.

144.  For the above reasons, it is not necessary to consider the plaintiff’s expert on enhancement in value of the Leased Portion by reason of the structures erected by the plaintiff, most of which are illegal and on Government Land or land belonging to others. The expert assessed an enhancement value. I think it is not only speculative but also illusory. It depends on whether a buyer would adopt the structures. And more importantly, there is always a risk of enforcement by the District Commissioner and a risk of forfeiture of the government lease. There is also a risk of legal action by the landowner against illegal structures erected on its land. In my view, the illegal structures are a burden and are of negative value.

145.  Furthermore, any enhancement in value must be deemed to have been contributed to the partnership asset under the 1997 Tenancy Agreement.

146.  This further and alternative claim must be dismissed for all these reasons.

147.  The plaintiff seeks an order that the Tong shall provide a true and proper account of all benefit and rental income derived from the letting of the Leased Land from November 2005. Due to the new evidence adduced by the plaintiff at trial, and for reasons as explained above such an account shall be made with effect from 1 June 2011 until the date of this judgment in respect of the Leased Portion only. The plaintiff shall be entitled to such sum as may be found due to her under the 1997 Tenancy Agreement subject to a set off against the amount which she shall account to the Tong in respect of the rental income received Chan’s tenancy from 1 January 2006 to 31 December 2007.  The plaintiff and the Tong shall pay interest on the amounts found due under their respective accounting to the other party at the rate of one percent over and above the prime rate of the Hong Kong and Shanghai Banking Corporation from the expiry of one month after the respective due dates for payment until the date of this judgment and thereafter at judgment rate until full payment or set off.  In the above connection, there shall be liberty to apply for further orders and directions. I would strongly commend to the parties to reach an agreement on the amounts due. The legal costs to be incurred in making the account is not worth the amount to be found payable at the end of the exercise. 

148.  The plaintiff seeks a declaration that the Tong is obliged to pay her half share of all rental income to be derived from letting of the Leased Land and be reimbursed her half share of rates and government rent. These remedies are included in the order for account and shall not be repeated. This claim is therefore dismissed. 

The Tong’s counterclaims

149.  As for the Tong’s counterclaims, the claim for declaration is unnecessary and the claim for return of the monthly payments of $3,000 and the payment of $23,794 are groundless. No order is made for the counterclaim for declaration. The counterclaims for return of the payments are dismissed.

Costs

150.  The plaintiff is overall successful and obtained an order for account. However, when viewed critically, she lost on the major and most time and costs consuming issues, ie the area leased under the 1971 Tenancy Agreement and the oral representation. What is worst is that her case on the Leased Land is, on my finding, a dishonest fabrication. Hence, an issue based costs order is appropriate. On my estimate, the issue relating to the Leased Land took up about 75% of the costs while the issues relating to the 1997 Agreement took up about 25%. There are also the questions of whether the action should have continued in the District Court without the proprietary claim and indemnity costs because of the fraudulent claim. Assuming that the plaintiff’s costs and the Tong’s costs are about the same, I consider it more expedient to set off the costs and therefore make a costs order nisi that the defendant shall have half of its costs of the action against the plaintiff on party and party basis.  This is not an order that a successful plaintiff shall pay costs of the action. The defendant is more successful.

151.  I thank counsel and their legal team for their very comprehensive submissions. I apologize for the time taken in my deliberation. The evidence is related to events which happened half a century ago and there were lots of documents, plans and photographs to consider and lots of evidence to reconcile.

Annex to the Re-amended Statement of Claim [Hearing Bundle A, page 28]

Annex A to the Re-re-amended Defence and Counterclaim [Hearing Bundle A, page 53]