TSANG WOON MING v. TSAN HING TAT HEIDI AND OTHERS

DCCJ 3791/2016

[2018] HKDC 845

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3791 OF 2016

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DECISION

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INTRODUCTION

1.  The dispute concerns a piece of land at Lot No 141 in DD 313 in Tai O, Lantau Island.  Erected on the lot is a single storey stone house and a wooden hut.

2.  The plaintiff presently occupies the lot.  He claims that it has been the home of his family since the 1940’s.  His mother moved in there when she married his father in 1943 and has lived there until this day.  The 1^st to 6^th defendants are the registered owners.  The parties are relatives and, according to the plaintiff, all descendants of a Mr Tsang Hei.

3.  In this action, the plaintiff claims against the defendants for adverse possession of the lot.  Further or alternatively, he seeks, on the grounds set out in para 32 of his statement of claim, that the title of the lot be transferred to him praying in aid the principles of proprietary estoppel and unjust enrichment.

4.  By summons dated 12 December 2016, the defendants ask for that paragraph and the corresponding relief set out in para 4 of the prayer be struck out on the ground that it discloses no reasonable cause of action, pursuant to Order 18, rule 19(1)(a) of the Rules of the District Court. 

5.  Mr Ross Yuen, counsel for the plaintiff, confirmed at the hearing that notwithstanding that unjust enrichment is pleaded alongside the plea of proprietary estoppel, the former cause of action does not add anything to the latter.  There is therefore no need to examine the viability of the former as a cause of action separately.  The only issue in the present application is whether the proprietary estoppel claim, as pleaded, is arguably sustainable such that it should be determined at trial (alongside the adverse possession claim), or is bound to fail and must therefore be struck out at this stage.

6.  No affidavit has been filed in support of the striking out application as evidence is not admissible under Order 18, rule 19(2).  The summons came before Master SH Lee on 7 August 2017.  The master dismissed the summons after hearing arguments.  The defendants lodged a notice of appeal against that decision.  Shortly after that, they applied for a time extension to file their defence to 28 days after the final determination of the appeal.  That application was effectively refused by the Registrar who ordered that time be extended to 19 October 2017 instead.  On appeal to a judge, the Registrar’s decision was affirmed.  Following that, a defence and counterclaim was filed, followed by a reply and defence to counterclaim.

7.  The upshot of all these is that while Master Lee had before him only the statement of claim when he heard the summons, at the appeal stage, I have also before me the subsequent pleadings.  This matters because there are indeed factual allegations pleaded by the plaintiff in the reply and defence to counterclaim, which he now seeks to rely on in this appeal.  At the hearing, Mr Frederick Chan, counsel for the defendants, said that as a matter of law, I should not consider these subsequent factual allegations as they were not there when the master heard the application.  Mr Yuen disagreed.

8.  In my view, it is permissible for me to look at the entire set of pleadings.  An appeal against a master’s decision is by way of re-hearing. Pleadings are not evidence.  The restriction set out in Order 58, rule 1(4) therefore does not apply, namely that the receiving of further evidence at the appeal stage is not allowed unless special grounds are made out.  Because of the way in which events have unfolded as this action progresses, subsequent pleadings have been filed.  As a general rule, the factual matters contained in the reply and defence to counterclaim form part of the plaintiff’s pleaded case.  To the extent that they are relevant to the striking out application, I fail to see why they should be disregarded.  Mr Chan did not point to any specific rules or practice or any good reason which would support the contrary. 

LEGAL PRINCIPLES ON STRIKING OUT

9.  The principles governing striking out are well-known and trite. 

10.  It is only in plain and obvious cases that the court should exercise its summary powers to strike out any pleading.  It should not decide difficult points of law at this interlocutory stage.  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out: see Hong Kong Civil Procedure 2018 at 18/19/4.

11.  It is common ground that under Order 18, rule 19(1)(a), the court should look at the pleadings without resort to any extrinsic evidence and that the facts as pleaded by the plaintiff are to be taken as true for the purpose of the striking out application: see Hong Kong Civil Procedure 2018 at 18/19/3.

THE PLAINTIFF’S PLEADED CASE

12.  I set out below the plaintiff’s pleaded case.    

13.  As noted in the introduction, the plaintiff says that the parties are all descendants of Tsang Hei.  The following family tree shows how they are related, as pleaded by the plaintiff.  (“D” denotes a deceased individual.)

14.  Apart from the parties, Madam Tsan Luk Yuk Yin (“Luk”) features prominently in the plaintiff’s case.  She was the mother of the 1^st and 2^nd defendants and the 3^rd defendant’s wife.  The 4^th to 6^th defendants are the 3^rd defendant’s children.  Luk was their maternal grandmother.  The plaintiff is therefore the uncle of the 1^st to 3^rd defendants and granduncle of the 4^th to 6^th defendants.

15.  The legal ownership of the lot changed hands over the years as follows:-

(a)   Since about January 1969, it was owned by a company, of which Tsan Yung, the plaintiff’s uncle, was the director and shareholder.

(b)   Since about September 1981, Luk became the owner.  As revealed in the reply and defence to counterclaim, she held the lot, together with other lots in Tai O, “for her children”.

(c)   Luk passed away some time before December 2014.  The date of death is not pleaded.  By an assignment in September 2015, the 1^st to 3^rd defendants became co-owners of the lot, with different holdings.  The 3^rd defendant was assigned the lot in his capacity as the administrator of his wife’s estate.

(d)   By an assent in December 2015, the 3^rd defendant’s share was assigned to himself and the 4^th to 6^th defendants, again, with different holdings. 

(e)   As a result of the above, the six defendants became, and remain, the legal co-owners of the lot.  Their respective holdings are not presently material.

16.  The plaintiff’s parents had lived on the lot since at least the 1940’s. He was the second son and was born in 1949.  His father passed away in around 1955.  His mother has continued to reside on the lot up to now.  That is, for over 70 years.  Between the 1960’s and early 1980’s, the plaintiff moved out and lived on the Hong Kong Island for his studies and his work.  During that period, he would return home during weekends to see and stay overnight with his mother.  In about 1984, the plaintiff moved back to the lot to look after his mother.  The two of them have continued to reside there up to the present day, without any interruption. 

17.  Since then and over the years, the plaintiff has continuously repaired, maintained, improved and renovated the lot and guarded it against other persons.  In doing so, the plaintiff has expended substantial amounts of his own money.  All along, he has treated the lot as his own property.  His works included:-

(a)   Upgrading the wooden door at the main entrance to iron gates;

(b)   Erecting fences and gates at the backyard;

(c)   Keeping the premises in good repair, including fixing the ceiling, replacing the water pipes, repairing the walls, gates and window frames, installing roof tiles, restoring flood damage, replacing the electrical wiring and renovating the interior; and

(d)   Erecting a mail box at the wall of the main entrance of the house.

18.  These works were carried out from 1984 to about 2014.

19.  The plaintiff’s case is that since at least 1984, he has been in continuous and exclusive possession of the lot and that he has used it without the permission or consent of anyone.  This forms the basis of his claim for adverse possession.  His further or alternative case is set out in para 32 of the statement of claim.  The relevant parts read:-

“(a) the aforesaid use, possession, occupation, improvement, maintenance and works done by the Plaintiff and his family were open and notorious and for a substantial period of time;

(b) the Defendants and/or their predecessors-in-title at all material times have had or ought to have knowledge of the aforesaid use, adverse possession and/or occupation of the Lot by the Plaintiff and his family, but nevertheless they at all material times did not commence any legal proceedings against the Plaintiff for possession of the Lot; nor had they exercised any control or ownership of the Lot for a very substantial period of time. The Defendants and their predecessor-in-title including inter alia Tsang Luk Yuk Yin have never visited the Plaintiff’s family in the Lot, nor did they ever exercise any control or any right of ownership of the Lot. Such notorious and avowed acquiescence and/or waiver bar the Defendants from recovery of the Lot or any part thereof;

(c) further and/or in the alternative, as a result of aforesaid matter including inter alia the matters pleaded in paragraphs 7-27 hereof, the Plaintiff at all material times was led to believe that he already owned and/or obtained a beneficial interest in the Lot, and, acting in reliance on such belief, he had to his detriment carried out the aforesaid occupation, improvement and maintenance works and devoted substantial time, effort and money on the Lot; as a result, the Defendants should be and are estopped from claiming, and/or otherwise not allowed to claim, against the Plaintiff for the Lot or any part thereof;

(d) further and/or in the alternative, in the circumstances as pleaded herein, it would be unconscionable, after the lapse of such a substantial period of time, for the Defendants to be allowed to assert ownership in or recover possession of the Lot or any part thereof against the Plaintiff; and

            … ”

20.  The material issue here concerns the knowledge possessed by the defendants and their predecessors-in-title over all these years of the use of and the works done by the plaintiff and his family on the lot.  As can be seen from para 32(b) of the statement of claim, the plaintiff pleads both actual and constructive knowledge.  He pleads further facts in his reply and defence to counterclaim. 

21.  In summary, the plaintiff relies on the following matters to establish knowledge:-

(a)   The above use and works were “open and notorious” and “for a substantial period of time”.

(b)   Tsan Yung had lived on the lot and the tombstone of Tsan Yung’s ancestor was placed at Ling Yan Monastery in Tai O.

(c)   Luk owned other land lots in Tai O.

(d)   She also held other land lots in Tai O, including the lot in question, for her children.

(e)   The plaintiff first met the 1^st and 2^nd defendants in a family gathering at the home of Tsan Yung in Kowloon when he was a child. They are all about the same age.  From about the 1950’s to about 1980’s, the plaintiff and his family would go to Tsan Yung’s home during Chinese New Year and (until his death) to celebrate his birthday.  On those occasions, the plaintiff would meet the 1^st and 2^nd defendants.  (The plaintiff admits that he is not acquainted with and has had no personal dealings with the 3^rd to 6^th defendants.)

(f)   In about 1986 or 1987, Luk called the plaintiff at his telephone number at the lot and asked him to hire a worker for her to cut down a tree at her property in Tai O.

22.  The plaintiff contends that this is a case of proprietary estoppel by acquiescence or standing by arising from silence and inaction.

THE DEFENDANTS’ GROUND FOR STRIKING OUT

23.  There are two grounds on which the defendants seek to challenge the claim for proprietary estoppel. 

First ground

24.  First, the plaintiff’s plea of knowledge possessed by the defendants is bad and insufficient to found an estoppel by acquiescence.  Mr Chan’s submissions are broadly as follows.

25.  In estoppel by acquiescence cases, it is incumbent on the claimant to establish that the landowner had knowledge of the former’s mistaken belief that he had or would acquire some interest in the land.  Mr Chan cited the following passage in Ramdsen v Dyson (1866) LR 1 HL 129 at 140-141:-

“If a stranger begins to build on my land supposing it to be his own, and I, perceiving his mistake, abstain from setting him right, and leave him to persevere in his error, a Court of equity will not allow me afterwards to assert my title to the land on which he had expended money on the supposition that the land was his own. It considers that, when I saw the mistake into which he had fallen, it was my duty to be active and to state my adverse title; and that it would be dishonest in me to remain willfully passive on such an occasion, in order afterwards to profit by the mistake which I might have prevented.”

26.  The above concerns the landowner’s knowledge of the claimant’s mistaken belief.  In addition, it must also be established that the landowner was aware of (a) his own proprietary rights, and (b) the claimant’s expenditure or other detriment: see Megarry & Wade, The Law of Real Property (8^th ed) at para 16-009.  (I should note at the outset that the knowledge of item (a) is not in issue in this application.)

27.  In his written submissions, Mr Chan described the landowner’s knowledge as “the relevant and overarching question”.  The knowledge requirement however does not generally apply to cases where the estoppel is claimed to have arisen out of active encouragement, such as an express assurance in Dillwyn v Llewelyn type of cases.  The rationale of the knowledge requirement in estoppel by acquiescence cases was explained in Priestley v Priestley [2017] NSWCA 155:-

“However, in a Ramsden v Dyson type of case, where A does not make any express or implied promise in relation to his or her property but B acts to the benefit of A in the mistaken belief that B has or will have rights in relation the property, A’s state of mind is of critical importance. If A has not promised anything to B, A will not have acted unconscionably unless A knew that B was mistaken in his or her belief about B’s rights to the property and A stood by in silence while B acted to his or her detriment for the benefit of A. In such circumstances, A’s knowledge constitutes the element of a Ramsden v Dyson type of estoppel that I have referred to in [10] above, and which must be established for such an estoppel claim to succeed.” (emphasis added)

28.  In essence, absent the landowner’s knowledge of the claimant’s mistaken belief, there is, logically speaking, no basis for the court to find that the landowner was acting unconscionably.

29.  Applying the above legal principles, Mr Chan criticised the plea of knowledge in para 32 of the statement of claim as “fundamentally flawed”.  He argued that the plea “distinctly lacks the necessary and essential particulars of “had or ought to have knowledge” of D1-6 concerning the alleged use, occupation and improvements made by P”. 

30.  Worse still, the plea that the defendants and their predecessors have never visited the plaintiff’s family in the lot is in conflict with the knowledge plea.  On the one hand, the plaintiff is saying that the defendants and their predecessors have had or ought to have knowledge of the plaintiff’s use of the lot.  On the other hand, he is saying that they never visited the lot.  Mr Chan submitted that the two pleas “effectively offset and wiped out each other”. 

31.  Taking at its highest, all that is averred in para 32, Mr Chan contended, is that the defendants had abandoned the lot and they have never visited the plaintiff’s family.  It does not have anything to say about the defendants’ knowledge of the plaintiff’s occupation and use of the lot.  The lack of the requisite knowledge, as disclosed by the pleading, is fatal to the plaintiff’s case.  That being the case, his claim for proprietary estoppel must fail.

Second ground

32.  According to the events as chronicled by the plaintiff, his family has resided at the lot since at least the 1940’s and he himself has done works to the lot from 1984 when he returned to live there to about 2014.  When that chronology is placed alongside the timeline of the legal ownership of the lot, one can immediately see that these works were allegedly done before the defendants became legal owners of the lot in 2015.  These alleged works all took place when Luk was the legal owner, holding the lot “for her children”. Moreover, some of the matters relied upon by the plaintiff to establish the requisite knowledge concern Luk only – see paras 21(c) and (f) above.

33.  Against this factual matrix, a question arose in the course of oral submissions as to whose knowledge would need to be established in order to raise an estoppel against the defendants, they being the present owners of the lot, but only recently. 

34.  On this point, Mr Yuen confirmed orally that the plaintiff’s case is that Luk had been holding the lot as trustee, with the 1^st, 2^nd and 3^rd defendants being the beneficial owners.  However, that has not been reflected in the pleadings, apart from the plea that Luk was holding the lot “for her children”.  (And it is not clear if it was the 3^rd defendant or his wife, ie Luk’s daughter, who was one of the beneficiaries).  In the event that the plaintiff is able to establish that only Luk had the requisite knowledge, but not any of the defendants, a point of law arises.  Is it possible for beneficiaries of a trust to be bound by a proprietary estoppel created by their trustee, in the absence of knowledge or acquiescence on their part; and, if so, to what extent?  

35.  In his further written submissions, Mr Chan seemed to answer the question in the negative, relying on the decision in Preedy v Dunne [2015] EWHC 2713.  That was a contested trial before Master Matthews in the Chancery Division.  It was concluded in para 55 of the judgment that there is nothing in the Trusts of Land and Appointment of Trustees Act 1996 which would authorise proprietary estoppel claims binding on beneficiaries who have not at least acquiesced in them.

36.  Accordingly, Mr Chan submitted that in the present case, it is incumbent on the plaintiff to plead clearly and sufficiently that each of Luk and the six defendants had “personal, individual and full knowledge” of the works done by the plaintiff and his mistaken belief.  In other words, where only Luk’s knowledge can be established, the proprietary estoppel claim against the defendants would fail.  The plaintiff has failed to meet that threshold in his pleaded case and his claim is bound to fail.

DISCUSSION

37.  The broad principles governing proprietary estoppel are not in dispute. I shall not attempt to recite them but only to highlight three points which I consider are relevant to the present application.

The court’s task is to undertake a broad and overall enquiry

38.  The first point concerns the proper approach which a court should adopt when considering a claim for proprietary estoppel.

39.  It is generally accepted that the doctrine is based on three elements – assurance, reliance and detriment: Thorne v Major [2009] 1 WLR 776 at para 29.  In that case, Lord Walker said that if all proprietary estoppel cases are to be analysed in this way, in cases of estoppel by acquiescence, the landowner’s conduct in standing by in silence serves as the element of assurance (para 55). 

40.  Notwithstanding that cases are invariably analysed and dissected under these three elements, the courts have, time and again, stressed the importance of taking a broad and overall approach and that unconscionability is the essential element of the doctrine.

41.  In Gillett, Robert Walker LJ highlighted this point:-

“… it is important to note at the outset that the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments … it repeatedly became apparent that the quality of the relevant assurances may influence the issue of reliance, that reliance and detriment are often intertwined, and that whether there is a distinct need for a “mutual understanding” may depend on how the other elements are formulated and understood.  Moreover the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine.  In the end the court must look at the matter in the round.” (at 225C-D) (emphasis added)

42.  The key point here is that the basic elements of the doctrine must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances: see Gillett at 232D. 

43.  A court may interfere in cases where the assertion of strict legal rights is found to be unconscionable.  It has been stressed that it is a flexible and wide jurisdiction such that the criteria for relief can be stated only in broad terms: see, eg, Megarry & Wade at paras 16-001and 16-018. See also the remarks in some of the leading cases in this area, eg, Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] 1 QB 133, 147B; Gillett v Holt [2001] Ch 210 at 225D. 

44.  This sentiment is reflected throughout the discussion of the doctrine in Megarry and Wade.  See, eg, footnote 85 to para 16-007:-

“While it is convenient to examine the three prerequisites for a claim as if they were separate components, they do not in fact operate in isolation and must necessarily operate on each other.”

The enquiry is context-sensitive

45.  The second point which I wish to highlight is that the court’s evaluation of the elements of proprietary estoppel in any given case must necessarily involve a fact-sensitive enquiry of the surrounding circumstances in which the estoppel is said to have arisen.  In other words, the enquiry is always context-sensitive.

46.  One of the main issues in Thorne v Major is “the character or quality of the representation or assurance made to the claimant” (para 30). On this, Lord Walker commented, at para 56:-

“I would prefer to say (while conscious that it is a thoroughly question-begging formulation) that to establish a proprietary estoppel the relevant assurance must be clear enough. What amounts to sufficient clarity, in a case of this sort, is hugely dependent on context.” (emphasis added)

47.  Thorne v Major is an active encouragement case.  It was explicitly recognised in the judgment that the context of the case was unusual as it concerned two taciturn and undemonstrative countrymen who communicated obliquely with each other (para 59).  And it was against this context that the quality of the assurance fell to be assessed.  There, what was relied upon by the claimant were indirect statements and conduct (para 2).  In the end, the House of Lords affirmed the trial judge’s decision that such statements and conduct, even though indirect and oblique, were sufficient to found a case of estoppel. 

48.  It could well be the case that the same indirect statements and conduct conveyed and communicated between individuals of different personalities and in different surrounding circumstances would not amount to a sufficiently clear assurance to found a proprietary estoppel.  The short point here is this – context is key.

49.  While Lord Walker’s remark regarding context was made in a case of estoppel by active encouragement, it should apply with equal, if not more, force in cases of acquiescence.  It is therefore vital for the court to look closely at the factual circumstances in which the estoppel is alleged to have arisen by acquiescence or standing by.  The context-based approach is necessarily a nuanced one.

Knowledge in acquiescence cases

50.  The third (and last) point which I would highlight relates to the requirement of knowledge in the case of estoppel by acquiescence.  There are two relevant aspects.  First, knowledge of what?  Second, what kind of knowledge would suffice? 

51.  The passage at para 16-009 in Megarry and Wade relied on by Mr Chan answers the first question:-

“In cases of passive encouragement, it is unlikely that O’s conduct will be regarded as unconscionable unless he was aware of:

(i) his own proprietary rights;

(ii) C’s expenditure or other detrimental acts; and

(iii) C’s mistaken belief that he had or would acquire an interest in or over O’s land.” (emphasis added)

52.  I have highlighted the word “unlikely” above.  It seems implicit in the use of the word that it is possible (although unlikely, however not impossible) to find unconscionability even though not all three of the listed items are established.  On the one hand, this is in line with the point emphasised in Gillett – the court does not apply a rigid or compartmentalised approach in proprietary estoppel cases but takes an overall or holistic view of the matter in answering the unconscionability question.  On the other hand, this does not sit well with the reasoning in Priestley – see para 27 above.  For present purposes, I am prepared to assume that the plaintiff has a burden to show at least an arguable case of knowledge of all the three items.

53.  As to the second question, it would appear that either actual or constructive knowledge would suffice.  On this point, Mr Yuen relied on the English Court of Appeal’s decision in Hoyl Group Ltd v Cromer Town Council [2016] 1 P&CR 45 at para 37. 

54.  However, it is not entirely clear in the context of proprietary estoppel, what would legitimately count as constructive knowledge.  In Hoyl, counsel accepted that “Nelsonian blindness” would be sufficient.  Generally understood, it refers to something which a person suspected but deliberately refrained from finding out.  In other words, he turned a blind eye to what was obvious.  Would anything less “culpable” be sufficient?  For instance, should a landowner be fixed with knowledge which a reasonable person in his position making proper inquiries would have found out in the ordinary course of things? If so, are we effectively imposing a positive duty on a landowner to make enquiries or (at least) be on the alert so as to ward off potential proprietary estoppel claims?

55.  Applying the broad and overall approach as stressed in the authorities, it seems that there is no (and should not be any) rigid rule dictating the nature or content of constructive knowledge in any given case.  As emphasised in Gillett, that question must be answered “as part of a broad inquiry” as to whether repudiation of an assurance (understood in the Thorne v Major sense) is or is not unconscionable in all the circumstances.  That is the ultimate question.  And the answer would hugely depend on the context, or surrounding circumstances, of the case.

The first ground of striking out

56.  The defendants’ objection here is that the plaintiff’s plea of knowledge is insufficient to found an estoppel by acquiescence.

57.  The starting point of the discussion is Order 18, rule 12(1)(b).  By virtue of that rule, it is unnecessary for a party to give particulars of actual knowledge in a pleading.  However, constructive knowledge does not come within that rule.  Where that is averred, the party must give particulars.  In any event, in the case of a plea of actual knowledge, if a party chooses to give particulars, the court can examine if they are adequate to support the plea: Shun Hing Electronic Holdings Ltd v Wong Pui Fan CACV 211 and 212/2016, 21 August 2017, paras 18 to 20.

58.  Here, the plaintiff’s plea is one of “have had or ought to have knowledge”. In other words, he relies on actual or, alternatively, constructive knowledge. Applying the above principle, the court is entitled to examine the particulars given in order to determine if the plea of knowledge is sufficient.

59.  As highlighted above, the issue of knowledge should not be approached in isolation and the question of the sufficiency of the knowledge, as pleaded, must be considered as part of the broader enquiry into whether it would be unconscionable for the landowner to now assert their strict legal rights against the claimant.  The enquiry would invariably be a fact-based and context-sensitive one.  As such, a claim for proprietary estoppel such as the present one is generally not vulnerable to being struck out at an interlocutory stage when the full facts are not yet explored.

60.  But that is not to say that a proprietary estoppel claim can never be struck out.  Where it is unarguably bad, it should not be allowed to proceed to trial. 

61.  I have to say that my first impression of para 32 of the statement of claim was that it says very little about the defendants’ or Luk’s state of mind or knowledge of both (a) the plaintiff’s mistaken belief of his right in the lot, and (b) the works he has done over the years.  In his oral submissions, Mr Yuen highlighted a number of “pointers” disclosed in the pleadings to establish the requisite knowledge.  Most notably:-

(a)   The parties are all relatives.

(b)   Luk held a number of land lots in Tai O, the area in which the lot in question is located.  Some of these lots were held by Luk and others by her for her children.

(c)   Luk called the plaintiff at his telephone number in the lot once asking him to hire a worker to cut a tree for her in Tai O.

(d)   The plaintiff’s family has resided in the lot for a very long period of time – over 70 years.

(e)   His use of the lot and the works done by him there were “open and notorious”.

62.  Mr Yuen confirmed at the hearing that apart from the above “pointers”, the plaintiff does not rely on any other matter in support of the knowledge plea.  He submitted that based on these “pointers”, it is at least arguable that the defendants and Luk ought to have known of the plaintiff’s use of the lot and his works there.  The issue should therefore be left to be determined at trial. 

63.  Having reflected on the rival submissions made by counsel, while it does seem to me that the “pointers” relied upon by the plaintiff do not indicate a strong case, I am not able to come to a definitive view that it is impossible for his case to succeed either, as I am unable to say at this stage that it is impossible for the plaintiff to establish the requisite knowledge on the strength of his pleadings.

64.  The plaintiff is not able to plead to any direct dealings or conversations between his family and the defendants’ family regarding the lot. In fact, it is his own allegation that the latter had never visited him or his family at the lot.  It is therefore unclear how actual knowledge can be proved, whether directly or inferentially.  But the same may not be said of constructive knowledge.  As noted above, whether the landowner should be taken to have the requisite knowledge (when he in fact did not) is tied to the broader question of conscionability.  A prominent feature of the plaintiff’s case is the extraordinarily long period of occupation of the lot by his family. We are talking about a period of over 70 years.  This would certainly form an important part of the context, or surrounding circumstances, against which the issue of constructive knowledge falls to be evaluated. 

65.  Separately, while the phrase “open and notorious” is no doubt a vague one, it is not completely meaningless.  The works, as pleaded, relate to the front gate main entrance, the back yard fences and gate, the ceiling and the walls. In theory, they would affect the outward appearance of the lot and might be apparent to those who frequented the neighborhood.  And part of the pleaded case is of course that the defendants and Luk were owners of other land lots in the area.

66.  Whether the works would be obvious and, if so, to what extent, to the defendants and Luk would partly depend on the actual extent of these works.  And the actual extent of the works is clearly a factual matter which can only be determined after trial.  Again, the extent of the works would be part of the context, or surrounding circumstances, against which the issue of constructive knowledge is to be determined.

67.  I ask myself whether, on the face of the plaintiff’s pleaded case, I can say conclusively at this stage that the defendants and Luk cannot possibly be fixed with (at least) constructive knowledge of the plaintiff’s use of the lot and the works there.  I bear in mind the three points I have highlighted in the previous section.  First, a broad and holistic approach should be adopted; and an examination of each element of the doctrine is inextricably tied to the ultimate issue of unconscionability.  Second, the enquiry is context-sensitive and often involves a nuanced approach on the facts.  Third, the issue of constructive knowledge is not a straightforward one and would be part of the broad enquiry. 

68.  In the circumstance, I would answer the question I pose in the negative.  The claim should be allowed to proceed to trial for facts to be found and for the issue of knowledge to be resolved on those facts, taking into account all the relevant surrounding circumstances.

69.  I therefore hold that the first ground of striking out fails.

The second ground of striking out

70.  In view of my conclusion on the first ground, I shall be able to deal with the second ground quickly.

71.  To recap, the question here is this.  In order to raise an estoppel against the defendants, is it essential for the plaintiff to establish that as the beneficiaries of the trust of which Luk was the trustee, the defendants had, before becoming legal owners in 2015, had knowledge of the plaintiff’s mistaken belief and his works done to the lot?  Or would Luk’s knowledge alone suffice?

72.  The defendants’ position, as stated in paras 35 and 36 above, is that Luk’s knowledge alone would not be sufficient.  It must be shown that each of the defendants had had the requisite knowledge.  The plaintiff takes a different view.  Mr Yuen submitted that it is arguable that an estoppel created by a trustee would be binding on a beneficiary, even in the absence of knowledge or acquiescence on the latter’s part.  He relied on the decision in Fielden v Christie-Miller [2015] EWHC 87 (Ch) in which the judge refused to accede to a striking out application made by the trustees there.  It was argued on their behalf that under trust law trustees cannot fetter the exercise at a future date of a discretion possessed by them as trustees and that this non-fettering principle operates as a complete defence to a plea of estoppel founded on a representation.  The judge found it difficult to accept the submission.  He was of the view that the issue is in an area of developing jurisprudence where the relevant principles are still very much in the course of development and should therefore be left to be fully argued based on actual findings made after trial, rather than on assumed facts (see paras 37 to 40).

73.  I have to say that the discussion of the legal issue in Fielden (relied on by Mr Yuen) and Preedy (relied on by Mr Chan) are perhaps in a slightly different context from the present one.  They both concern disputes between trustees on the one hand and a beneficiary of the trust in question on the other.  It is to be contrasted with the plaintiff’s case here in which the plaintiff has nothing to do with the trust of which Luk was allegedly the trustee.  Moreover, in Preedy, the decision also turns on an English legislation which, according to Mr Chan, has no Hong Kong equivalent.

74.  It is however unnecessary for me to resolve the legal issue in this application.  In para 32 of the statement of claim, the plaintiff has in fact pleaded knowledge of “the Defendants and/or their predecessors-in-title”.  Hence, even if the trustee/beneficiary question is ultimately answered in favour of the defendants, namely that the beneficiaries’ knowledge and acquiescence is an essential element, the plaintiff’s plea in this regard is sufficient as the “and/or” wording explicitly contemplates two scenarios, one of which is that both the defendants and Luk possessed the knowledge.

75.  It is true that a number of matters pleaded in support of the knowledge plea concern Luk only, eg, the call she allegedly made to the plaintiff in about 1986 or 1987.  However, as analysed above, there are other factual matters which can be relied upon by the plaintiff to show (at least) constructive knowledge on the part of the defendants (as well as Luk).  For that reason, I do not consider that it is right to strike out the claim based on the second ground put forward by the defendants.  In any event, neither counsel has cited any Hong Kong authority on the trustee/beneficiary issue, which appears to be a point not yet settled in this jurisdiction.  If the issue does become relevant, it should be decided on facts as found after trial. 

CONCLUSION

76.  For the above reasons, the defendants’ appeal is dismissed. 

77.  I make an order nisi that the defendants do pay the plaintiff’s costs of the appeal, including any reserved costs, with certificate for counsel, to be taxed if not agreed, and that the plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.