ATTORNEY GENERAL v. POON LEUNG CHOI alias CHI WAN AND ANOTHER

BETWEEN: -

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JUDGMENT

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Preliminary

1. This is an action brought by the Crown in respect of a vacant building site in Kowloon which was let at a quarterly rent of $26,000.00 (approximately $8,650.00 a month) to the defendants on the 17th May 1978, the lease to run from the 3rd April 1978.

2. The tenancy was to run until the 3rd April 1979 and then could be terminated by the Crown on quarterly notice. There was no provision for any increase in rent. The conditions were the usual standard, printed conditions plus some special ones which included that access to the site was limited to points X and Y shown on the attached plan and the defendants had to fence the perimeter of the site and also a watermain pipe. The fence had to be 3 metres back from the centre line of the watermain and was to be 5-foot. The defendants also had to put in a reinforced concrete ramp over part of the watermain so that vehicles could pass over without causing damage. There were other detailed requirements and reservation of rights to the Crown.

3. On the 3rd April 1979 there was no notice from the Crown as to the defendants vacating and they were allowed to remain in occupation accordingly.

4. On the 30th October 1980 the defendants without the Crown's consent sub-let the property to the Tai Fung Hong Co., the sub-tenancy to run from the 15th July 1980. Whereas the defendants were paying $8,650.00 they sub-let it at $27,000.00 per month.

5. The Crown eventually served a notice to quit on the defendants on the 29th May 1981. It was in the pleadings argued that this was not a proper notice to quit, but that point has now been abandoned. It is therefore agreed that the tenancy expired when that notice expired on the 31st August 1981, but it was then extended to the 31st October 1981. Mr. Siu Yu-ming, a survey officer, gave evidence that he went to the site on the 2nd November 1981 and his evidence was that the site was in approximately the same condition as shown in photographs which were taken on the 6th April 1982 and produced by the 2nd Crown witness, Mr. Yu Sau-ming, a Land Bailiff. Mr. Siu, in my view, did not have a particularly good recollection of the condition of the site when he went to it.

6. On the 6th April Mr. Yu Sau-ming, the Land Bailiff, went to the site with bulldozers and trucks and he then proceeded to clear the site. That was completed, he says, on the 19th April. It has remained vacant ever since. Mr. Yu said that he did not remain on the site for the whole of that fortnight and while obviously it is difficult to tell just from photographs, it seems to me that a fortnight was a very generous period in which to clear the site although there were obviously abandoned vehicles and huts on it. Nevertheless, I think it could have been cleared more quickly.

Date possession was obtained

7. It is not in dispute that the lease expired finally on the 31st October 1981. I am satisfied the defendant did remain in occupation and is laible for mesne profits after that. It is true that the Crown can't show that it has suffered any direct loss, apart from the cost of clearance which has not been claimed, but the mesne profits are the market rent of the site from the 1st November 1981 to the date possession was given up. There is conflicting evidence as to when that date was. And there is conflicting evidence as to the amount of rubbish in the form of buildings and abandoned vehicles that were on the site. Photographs taken on the 6th April certainly showed that there were quite a number of vehicles and other litter. Mr. Yuen, the 2nd defendant, says that when he went to the site in mid January there were only about three cars there. He said that he went with somebody in the Public Works Department but he can't say who it was. If that was so, then obviously there had been a rapid increase in the number of vehicles and other things since that time and the only explanation for that would have been trespassers or the sub-tenant. It was using the site to park petroleum vehicles overnight, so it seems unlikely it was them. Mr. Yu, Mr. Siu, Mr. Yuen were all challenged as to their evidence, but on balance I am satisfied that the abandoned vehicles and general rubbish were such as to prevent the Crown from having use of the site, and vacant possession has not given up until early April although I do not accept that it required 14 days to clear. I am satisfied that the defendant is liable for mesne profits for the months of November and December 1981 and for January, February and March 1982.

Market value of site

8. There is considerable conflict as to what the rental value should be. Both parties have called an expert witness and I am satisfied that they have given evidence as to what they honestly believe was the value of the site at the time. The difficulty is that demand for sites such as these fluctuates rapidly from time to time depending on building activity in the area and many other factors. Another is clearly the peculiar nature of the site with its limited access, the watermain running through the middle of it and that it was some distance from Kowloon Bay which was the centre of the building activity going on in the East Kowloon area. Miss Bleach, who was called for the Crown, has produced some figures showing the tenders that were accepted for other sites not in precisely the same area but within a reasonable distance. These figures are for a period from the 6th June to the end of June 1981. There are three others which for various reasons she discounts, but there is one relating to site KX 829 which seems to me to be the most relevant. It is for approximately the same area and it is the latest one, being the 26th June 1981. She however regarded this as being a somewhat one-off tender. It is not shown on the papers whether in fact this was the only tender received whereas the other ones do show the number of tenders. I think I must assume that it was in fact the only tender. Miss Bleach says because of that it may well not reflect an accurate market value.

9. Mr. Thompson who was called for the defendant on the other hand says that he does in fact reflect an accurate market value because it was the latest one and certainly when one looks at the list one sees a very rapidly diminishing number of tenders being put in for each site and a rapidly diminishing rent that was being offered. Miss Bleach said that in fact demand was not falling off and did not fall off until about March 1982 and that in early 1982 tenancy was being renewed at increased rental, but as Mr. Mumford has, I think, quite properly said, we don't know what those rentals were. Nothing has been produced. Nothing has been discovered. And I do not consider that I can place reliance on that. Mr. Thompson on the other hand, who was in Hong Kong at the time, says, and I accept his evidence on this, there was a rapid falling off in all rentals from about September/October 1981. I am satisfied that the figures produced support that view. I am satisfied that there is evidence of a rapidly fall in demand for this sort of site. I accept Mr. Thompson's views as to what he estimates as the market rental for the site for the five months which we are concerned with. On that basis, I estimate the rent on 1,600 sq. metre, and it seems that there is no real conflict that that was the available area of the site, for the months of November, December 1981 at $130.00 per sq. metre per annum i.e. $34,650.00. For the months of January, February and March at $112.00 per sq. metre, $44,800.00. That will give a total of $79,450.00 for mesne profits. There is no dispute that the rent had not been paid since 1st April 1981 and the rent for the period up to the 31st August is $43,250.00 and to the 31st October $17,300.00, which makes a total for rent $60,550.00 mesne profits $79,450.00, a total of $140,000.00.

10. The defendant has paid a deposit of $30,000.00 for which he is entitled to credit. It will therefore be judgment for the Crown for a total of $110,000.00. The Crown is entitled to its costs.