HANTEC INVESTMENT LTD v. LI YAU MAN

LDPE 1313/2019

[2021] HKLdT 14

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

APPLICATION NO. LDPE 1313 OF 2019

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D E C I S I O N

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BACKGROUND

1.  By a summons dated 13 January 2021, the Respondent applies for leave to appeal against my judgment dated 24 December 2020 (“the Judgment”) and for a stay of execution of the Judgment pending determination of the appeal.

2.  The Respondent asks the Court of Appeal to determine the following issues:-

(1)	Whether the Tribunal erred in finding the facts as set out in Ground 1 (a) to (d) of the draft Notice of Appeal, which were unsupported by and in contrary to the documentary and viva voce evidence of the Applicant and the Respondent (“Issue 1”).
(2)	Whether the Tribunal erred in concluding that the Respondent failed to establish estoppel by convention as a defence (“Issue 2”).

ISSUE 1

3.  The Respondent claims that I have made the factual findings as set out in paragraph 1 (a) to (d)[1] of the draft Notice of Appeal, which were perverse or irrational.

Paragraph (1)(a) of draft Notice of Appeal – §57-61 of the Judgment

4.  The Respondent contends that I was erred in making a finding that “there was no pleading or evidence to support the Respondent’s contention that he had made substantial investments in the said land lots” in paragraphs 57 to 61 of the Judgment.

5.  The Respondent’s reasons are set out in paragraph 2[2] of the draft Notice of Appeal which are essentially that, facts relating to “estoppel by convention” had been pleaded by the Respondent and mentioned in his witness statement, and that the Respondent’s evidence including the documentary evidence about application for short term waiver had been produced and never been challenged by the Applicant.

6.  First of all, I did not make the said finding in paragraphs 57 to 61. Neither did I say that the erection of structures had not been pleaded. The Respondent appears to have mixed up “the erection of structures”, which was pleaded (and was so mentioned in the judgment), with “the incurring of huge expenditure (over $10 million) in the erection of structures”, which was not pleaded.

7.  In paragraphs 57 and 58 of the Judgment, I pointed out that the alleged huge expenditure “in the region of millions” or “over $10 million” in erecting the structures etc. was not pleaded in the Respondent’s Amended Notice of Opposition (“ANOO”). Paragraph 19(c) of the ANOO only pleads that “the Respondent incurred money or money’s worth in the erection of the said structures”.

8.  It is beyond dispute that the huge expenditure “in the region of millions” or “over $10 million” has not been pleaded in the ANOO nor mentioned in the Respondent’s witness statement as the contents of the Respondent’s ANOO and witness statement speak for themselves[3].

9.  The above was not a finding of fact but an observation on the deficiency in the Respondent’s pleading and the problem in Mr Chong’s line of argument.

10.  To put it simply, the Respondent pleaded that he had incurred “money or money’s worth” in erecting structures on the land. In the Applicant’s Reply, the Applicant did not take issue that “money or money’s worth” had been spent by the Respondent in erecting structures which position was fair because as a matter of course erecting structures would involve expenditure of some money.

11.  However, what the Respondent was trying to do at trial was to expand the “money or money’s worth” to “over $10 million”, label such huge expenditure as “undisputed fact” because the Applicant did not dispute “money or money’s worth” in their Reply, and then invent a formula based on that very substantial sum to illustrate that no businessman with commercial sense would incur that sum had there not been an option to renew so as to establish estoppel by convention. That way of putting argument was unfair. My fuller analysis on this line of argument of Mr Chong is set out in paragraphs 52 to 58 of the Judgment which I shall not repeat here.

12.  Paragraphs 59 to 61 of the Judgment actually relate to another matter and do not concern the question of substantial amount investments.

13.  The above should have dealt with paragraph (2) of the draft Notice of Appeal. Lastly, paragraph (2) in the Respondent’s draft Notice of Appeal also inappropriately brings in the question of “short term waiver” which was not even discussed or mentioned in paragraphs 57 to 61 of the Judgment.

Paragraph (1)(b) of draft Notice of Appeal – §48 – 50 of the Judgment

14.  The Respondent contends that I was erred in finding that “there was no evidence to support the Respondent’s contention that he purported to exercise and the Applicant purported to accept an option to renew throughout their 26 years of relationship of landlord and tenant” in paragraphs 48 to 50 of the Judgment.

15.  His reasons are set out in paragraph (3)[4] of the draft Notice of Appeal, contents of which are highly similar to the contents of paragraph (2) of the draft Notice of Appeal (which has been summarized in paragraph 5 above).

16.  In short, the Respondent says that it has been the Respondent’s case that the previous tenancies renewals were resulting from his exercising an option to renew, that such case was pleaded in the RNOO and mentioned in the witness statement which was adopted at trial, and that the Applicant did not challenge the same and their evidence even supported the same. Hence it was wrong for me to make the finding as described in paragraph 14 above.

17.  In my view, it is misleading for the Respondent to say that the Respondent’s purported exercise of an option in the previous renewals are uncontroversial, not challenged or even supported[5] by the Applicant. It has always been the Applicant’s case that the previous tenancy renewals were not a result of the Respondent’s exercising an option to renew but were a result of the Applicant’s commercial decision made on a case-by-case basis.

18.  It also appears that the Respondent has mixed up “the Respondent’s case or the Respondent’s evidence” with “documentary or objective evidence in support of the Respondent’s case”. Paragraphs 48 to 50 of the Judgment obviously are not talking about the former but the latter otherwise the Respondent’s case would not have been summarized in the way it was in paragraph 6 of the Judgment.

19.  In paragraph 48 of the Judgment, I observed that no documentary evidence like letter, email, or communications via social media had been produced by the Respondent to show that any of the previous tenancy renewal was a result of the Respondent’s purporting to exercise an option to renew. In other words, all we have is the Respondent’s own assertion, whether by witness statement or oral testimony, together with one letter dated 11 September 2019 purporting to exercise an option.

20.  Paragraph 49 deals with that particular letter, the contents of my analysis shall not be repeated here.

21.  In paragraph 50, I came to the view that “drawing a conclusion of shared assumption of perpetual option to renew between the parties from the mere fact that the tenancy has been renewed for many years is way too arbitrary”.

22.  The Respondent has not explained how I was erred in the reasoning in paragraphs 48 to 50 of the Judgment.

Paragraph (1)(c) of draft Notice of Appeal – §45 to 47 of the Judgment

23.  The Respondent claims that in paragraphs 45 to 47 of the Judgment, I made a finding that it was “factually incorrect” for the Respondent to say that there was a “habit” for the Applicant and the Respondent to renew the tenancy before the succeeding tenancy agreements being signed. The Respondent opines that I was erred in making such a finding.

24.  I am afraid this is not an accurate description of the contents of paragraphs 45 to 47 of the Judgment. I did not make such a finding in paragraph 45 of the Judgment. What I said in paragraph 45 was, the Respondent’s Counsel should not assume and put forward as a piece of established fact that “the parties had a habit of the Applicant accepting the Respondent’s exercise of its “option” without having the new tenancy agreement signed first”.

25.  Paragraph 46 explains why I did not observe such a habit. In short, it is because among the 13 renewals altogether, documents only showed three occasions where the tenancy agreements were signed after the commencement of the term which were not persistent or repetitive enough to form a “habit”. These documents were provided by the Applicant as exhibit to the witness statement of Au-Yeung. It is, therefore, highly misleading and confusing for the Respondent to claim in paragraph (3) of their draft Notice of Appeal that the Applicant had never disputed or refuted paragraph (1)(c) by contrary documentary evidence.

26.  Paragraph 47 of the Judgment goes further to explain why even if I was prepared to accept that Mr Chong’s alleged habit was factually correct, it still could not be an indicator of the existence of an option to renew in the previous tenancy agreement.

27.  The Respondent has not explained how I was erred in the reasoning in paragraphs 45 to 47 of the Judgment.

28.  The Respondent’s reasons are set out in paragraph (3) of the draft Notice of Appeal, contents of which have been summarized in in paragraph 16 above.

29.  I cannot comprehend how that the Respondent’s reasoning in paragraph (3) of the draft Notice of Appeal (which is basically about he had pleaded facts about estoppel and his previous exercise of option and erection of structures were not disputed by the Applicant) is relevant to the alleged finding in paragraph 23 above (which is about I did not observe the existence of the alleged habit between the parties from the evidence available).

Paragraph (1)(d) of the draft Notice of Appeal – No specific paragraph in the Judgment is referred

30.  The Respondent contends that I was erred in finding no “common assumption” between the Applicant and the Respondent for the continuation of their relationship of landlord and tenant for the 26 years of relationship. The reasons are set out in paragraphs (2)[6] and (3)[7] of the draft Notice of Appeal, contents of which are highly similar as between themselves and have already been summarized in paragraphs 5 and 16 above.

31.  As regards why I found no “common assumption” between the parties, the reasons are set out in paragraphs 33 to 37 of the Judgment summarizing the Applicant’s arguments which I agreed. In paragraphs 43 to 62 of the Judgment, I set out my further observations on the fallacy of the Respondent’s argument.

32.  The Respondent has not explained how I was erred in finding no “common assumption” between the Applicant and the Respondent.

Paragraph (4) of the draft Notice of Appeal

33.  Paragraphs (1) to (3) of the draft Notice of Appeal have been dealt with above.

34.  In paragraph (4)[8] of the draft Notice of Appeal, the Respondent says that I was wrong in concluding that there was no “option to renew” and/or “estoppel by convention” between the parties if certain “uncontroversial facts and evidence” had been taken into account.

35.  I note that those so-called “uncontroversial facts and evidence” are by and large a repetition of the Respondent’s arguments at trial which have already been dealt with in the Judgment[9]. They are also similar to the arguments in paragraph (1)(a) to (d) of the draft Notice of Appeal which have also been dealt with in the above discussions.

36.  As regards the Applicant’s consent for the Respondent’s application for a short term waiver mentioned in paragraph 4(3) of the draft Notice of Appeal in particular, I do not see why the Applicant’s assistance to the Respondent, as made upon the Respondent’s request, in the waiver matter so to prevent the disastrous result of immediate enforcement action by the Government during the subsistence of a tenancy could be taken as the Applicant’s recognizing an perpetual option to renew the lease exercisable by the Respondent as of right against the Applicant. It is particularly so when the Applicant’s consent was expressed to be given without prejudice to their legal and equitable rights and also without prejudice to their right to require the Respondent to remove the structures[10].

ISSUE 2

37.  In Paragraph (5) of the draft Notice of Appeal, the Respondent says that by reasons of paragraphs (1) to (4) thereof, my “findings” in the aforesaid paragraphs of the Judgment were perverse and I ought to have drawn the followings as the only reasonable conclusions:-

(a)	there had been a “common understanding” and supported by the “convention” between the parties that, despite the express wordings of Clause (3), save and except for cases of the government resumption and/or Applicant’s intention to develop the said land lots, the Respondent had a right to renew his tenancy; and
(b)	the Respondent’s tenancy had been renewed upon oral and written notice of the same having been given to the Applicant.

38.  The Respondent did not set out the particulars in support of Issue 2 in the draft Notice of Appeal. I shall, therefore, take the matters set out in paragraph 2(a)(i) and (v) of the document entitled “Statement of the Issue of Law to be Determined”, which is attached to the Respondent’s Summons dated 13 January 2021, as their particulars in support of Issue 2.

39.  Again, those particulars are by and large a repetition of the Respondent’s arguments at trial which have already been dealt with in the Judgment. They are also similar to the arguments in paragraph (1)(a) to (d) of the draft Notice of Appeal which have been dealt with in the above discussions.

40.  In paragraphs 33 to 62 of the Judgment, I explained why I found that “common assumption” could not be established. I found Mr Au-Yeung (i.e. the Applicant’s factual witness) a credible witness[11] and found his version of events to be true in case of any inconsistency between his version of events and the Respondent’s version[12]. The Respondent does not seek to challenge this finding in this application for leave to appeal.

41.  In paragraphs 61 and 62 of the Judgment, for analysis purpose I was prepared to assume in favour of the Respondent that substantial amount of moneys had been expended by him on erecting the structures but be that as it may, it still could not lead to the conclusion that a perpetual option to renew must exist.

42.  In paragraph 63, for analysis purpose I was prepared to further assume in favour of the Respondent that even if common assumption and reliance are established, “… I do not see any detriment having been suffered thereby. The Respondent has been utilizing the Land for profit-making or business purpose for over 20 years already …”.

43.  In this leave application, the Respondent has not sought to appeal against my finding about lack of detriment. Hence, even if I am wholly persuaded by the Respondent on the point of common assumption, estoppel by convention still could not be established.

LEGAL PRINCIPLES

44.  Section 11(2) of the Lands Tribunal Ordinance provides that any party to the proceedings before the Tribunal may appeal to the Court of Appeal against a judgment, order or decision of the Tribunal on the ground that such judgment, order or decision is erroneous in point of law, subject to section 11AA.

45.  Section 11AA(1) requires that leave shall be obtained from the Tribunal or the Court of Appeal before an appeal under section 11(2) can be made.

46.  Section 11AA(6) provides that leave to appeal shall not be granted unless the Tribunal is satisfied that:- (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice why the appeal should be heard.

47.  It is trite that findings of fact by the Tribunal are generally immune from challenge as they often involve no error of law unless such is perverse or irrational or where there is no evidence to support the decision or where the decision was made by reference to irrelevant factors or without regard to relevant factors[13].

48.  In Kwong Mile Services Limited v Commissioner of Inland Revenue[14], Bokhary PJ has this to say:

“In an appeal on law only the appellate court must bear in mind what scope the circumstances provide for reasonable minds to differ as to the conclusion to be drawn from the primary facts found. If the fact-finding tribunal’s conclusion is a reasonable one, the appellate court cannot disturb that conclusion even if its own preference is for a contrary conclusion. But if the appellate court regards the contrary conclusion as the true and only reasonable one, the appellate court is duty-bound to substitute the contrary conclusion for the one reached by the fact-finding tribunal …”

49.  Not being able to explain why my analysis concerning the question of “common assumption” was unreasonable, the Respondent is far from being able to explain why the existence of a perpetual option to renew as commonly assumed by the parties is the true and only reasonable conclusion in light of the evidence before the Tribunal.

50.  As the Respondent’s intended appeal does not have a reasonable prospect of success, leave is refused.

STAY OF EXECUTION

51.  Parties have no dispute on the legal principles on whether a stay of execution pending appeal should be granted.

52.  As there is no reasonable ground in the Respondent’s intended appeal being the minimum requirement for the grant of a stay, I also refuse the Respondent’s application for a stay of execution.

COSTS

53.  Parties agreed that costs of the leave application should follow the event. I therefore order the Respondent to pay the Applicant’s costs of the leave application, to be taxed on the District Court scale if not agreed with certificate for Counsel granted.

54.  I thank Counsel for their assistance.