FUPO INVESTMENTS LTD v. MA WING KWONG AND OTHERS

HCA 297/2007

[2019] HKCFI 2394

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 297 OF 2007

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HCA 869/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 869 OF 2008

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HCA 2303/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2303 OF 2014

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HCA 2487/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2487 OF 2014

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HCA 2488/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2488 OF 2014

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JUDGMENT

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1.  This is a trial involving 5 actions: HCA 297/2007, HCA 869/2008, HCA 2303/2014, HCA 2487/2014 and HCA 2488/2014. For easy reference, I will refer these actions as Actions 1 to 5 respectively.

2.  Though considerable evidence and submissions have been presented to the court, this case basically involves the following 2 main issues:

(i)  Whether the father had made representations to his eldest son that he could stay at certain family properties for the rest of his life, thereby conferring a life interest on him to stay in those properties?

(ii)  As to certain tenancy agreements made at the initiation of the father in respect of some of the family assets, whether the tenants, which were corporate vehicles established by the father, had renewed the tenancies or had occupied the relevant properties after the expiry of the terms of the tenancies, and as a result the owners of those properties are entitled to ask the tenants to pay for the rent or mesne profit for the occupation of the same?

BACKGROUND

(i)  The family

3.  Notwithstanding the existence of 5 actions in which various corporate vehicles have been named as parties, this is essentially a dispute between members of a family over the possession, and not ownership, of various family properties.  This is a typical case where the patriarch of the family, the late father Mr Ma Shu Tau (“the Father”), established a successful business and accumulated wealth.  The Father’s wife, Madam Leung Wai Fong (“the Mother”), is a traditional Chinese lady who, albeit not well-educated, devoted herself predominantly to looking after the family and bringing up all the children.

4.  The Father and the Mother have 9 children.  The present dispute is largely between Mr Ma Wing Kwong who is the second eldest child and the eldest son in the family (“Wing Kwong”), together with his wife Madam Cheung Hui Chin (“Hui Chin”) (collectively referred to as “Wing Kwong’s Camp”) on the one hand and, on the other hand, some of his siblings, Madam Ma King Chu (“King Chu”), Mr Ma Wing Kei (“Wing Kei”) and his wife Chu Siu Fung, and Mr Ma Wing Fung (“Wing Fung”), with whom the Mother has joined (collectively referred to as “Mother’s Camp”).

5.  The Father accumulated wealth through his successful business as real estate investor and developer since around 1970s.  By the time of his death on 14 September 2007, the family had owned around 46 properties.

6.  There is no serious dispute that the Father made all the decisions on the acquisition, disposal, rental or investment of the properties.

7.  In 1966, the Father and the Mother purchased the property known as Flat A, Ground Floor, Grand Court, No. 41-43, Grampian Road, Kowloon City in their joint names.  In 1978, they also purchased Flat B on the Ground Floor in Grand Court in their joint names.  They lived in such premises (“the Grand Court Property”) as their residence.

8.  The Father also purchased properties for investment purposes, which included the buildings at Nos 92 and 94 of Fuk Lo Tsun Road.  In the early 1980s, the Father redeveloped the sites and erected thereon the new “Ma Shu Building”, using the first two Chinese characters of the Father’s name as the name of the building.  Even since, Ma Shu Building was owned by the Father and the Mother as joint tenants.

9.  Ma Shu Building is a 5-storey building with 6 residential units on each floor and shops on the ground floor.  In the mid-1980s, the Father gradually sold all the residential units in Ma Shu Building, whilst the shops on the ground floor (“the Ma Shu Building Shops”) had been kept for investment purposes.

10.  In 1970, the Father and the Mother also purchased Nos 95 and 97 of Fuk Lo Tsun Road as joint tenants. Ever since, they sold all but one of the units in No 95.  For No 97, the land was redeveloped and a new building, “Ma Shu Court”, was built on the site. Again, they sold all the residential units in Ma Shu Court whilst keeping the shops (“the Ma Shu Court Shops”) for investment purposes.

11.  Between 1970 and 1991, the Father and the Mother also purchased some other properties as joint tenants.

12.  There is no serious dispute that, amongst all the properties purchased, the whole building in No 351 Prince Edward Road (“the Old 351 Building”) was most valuable.  This property was purchased in 1986 in the names of the Father, the Mother, King Chu and Wing Kwong as joint tenants. In 1988, Wing Kwong transferred his shares in the Old 351 Building to the other 3 owners.  In the early 1990s, the site was redeveloped and a new building was built (“the 351 Building”).

13.  The reason for the transfer is a matter of some dispute.  According to the Mother, Wing Kwong stole some of the rents that he collected for the Father, and as a result the Father demanded him to transfer back his shares in the Old 351 Building together with his interests in some other properties.  There was then a bargain and the Father finally agreed to pay Wing Kwong a sum of $500,000, together with a Volvo car, as consideration for Wong Kwong to transfer his interests in the Old 351 Building and other properties[1] to the Father or other family members nominated by the Father.  There is no serious dispute that Wing Kwong received these considerations.

14.  According to the Mother, due to his distrust of Wing Kwong, the Father did not allow Wing Kwong to have interest in any family assets in the period from 1988 to June 2003.

(ii)  The corporate vehicles

15.  From 1990 to 1999, the Father set up 4 different limited companies (“the 4 Companies”) for the purposes of investment and holding properties.  3 of these companies are: (i) Fupo investment Limited (“Fupo”); (ii) Hope 88 Limited (“Hope 88”); and (iii) Fook Hong Holdings Limited (“Fook Hong”).  The fourth company is known as Gold Horse Resources Limited, which is not relevant to the issues in these proceedings.

16.  It is interesting to note that: (i) the shareholdings of the 4 Companies were held by different family members with different percentages of shares; and (ii) Wing Kwong was not allotted any of the shares of the 4 Companies.  There is reason for the court to believe that the Father intended to allot the shares of the 4 Companies to different family members as beneficial owners.  If they were only holding the shares as trustees for the Father, there was no need for such detailed arrangements to be made, with different shareholdings allotted to different family members.  But no matter who were registered owners, the Father treated all these family properties as his own and dealt with them as he pleased.

17.  Fupo, the Plaintiff in Action 1, was incorporated on 17 September 1991.  On 28 August 1998, Fupo purchased the property known as Flat D, 6^th Floor, 41-43A Grampian Road, Kowloon, Hong Kong (“Flat 6D”) at a consideration of $3,050,000 and has since been the sole owner thereof.  Since September 2002, the shareholders consisted of the Father holding 60% shares, and the other members of the Mother’s Camp collectively holding 40% shares.  As at September 2002, all the shareholders were also the directors of Fupo.

18.  By a tenancy agreement dated 9 October 1997, the Father and the Mother leased the Ma Shu Court Shops, which are the subject properties in Action 4, to Fupo for a term of 3 years from 1 October 1997 with a right of renewal for another 3 years.  Upon the expiry of such term, Fupo exercised the right of renewal twice eventually extending the term of the tenancy to 30 September 2006.  When the term finally expired on such date, it seemed that Fupo did not exercise the right of renewal because no consensus for the renewal could be reached by the registered owners, who by that time were King Chu, Wing Fung and Hui Chin[2]. For easy reference, I will refer the latest tenancy agreement before 30 September 2006 as “the Fupo Tenancy Agreement”.

19.  Hope 88, the Plaintiff in Action 2, was incorporated on 25 August 1994.  Since September 2002, the shareholders consisted of the Father holding 51% shares, and the Mother, King Chu, Wing Fung of the Mother’s Camp collectively holding 39% shares, and Wing Fai holding 10% shares.  As at September 2002, all the shareholders were also the directors of Hope 88.

20.  Fook Hong, the Plaintiff in Action 3, was incorporated on 4 October 1999.  On 1 September 2000, Fook Hong purchased the properties known as Flat 2B, 41-43A Grampian Road, Kowloon (“Flat 2B”) and Car Port No. 3, Ground Floor Level, 41-43A Grampian Road, Kowloon (“Car Port 3”) at a consideration of $3,800,000 and has remained the sole owner thereof.  At all material times before the Father’s death on 14 September 2007, the shareholders of Fook Hong consisted of the Father holding 5% shares, and the Mother, King Chu and Wing Fung of the Mother’s Camp collectively holding 95% shares.  By then, the Father, the Mother and King Chu were the directors of Fook Hong.

(iii)  The deterioration of the Father’s health

21.  Since 2001, the Father’s health had begun to deteriorate. The Father and the Mother decided to give King Chu and Wing Fung some properties as gifts.^[3]

22.  By another tenancy agreement dated 25 November 2002 (“the Hope 88 Tenancy Agreement”), the Father and the Mother as landlord leased the Ma Shu Building Shops to Hope 88 as tenant for a term of 3 years from 5 December 2002 with a right of renewal for another 3 years.  Since then, Hope 88 had been sub-letting the Ma Shu Building Shops to other sub-tenants. However, as Wing Kwong and Hui Chin were occupying Shop D (“Shop D”), Hope 88 was unable to lease it to other tenants.

23.  There is no serious dispute between the parties that the purpose of making the Fupo Tenancy Agreement and the Hope 88 Agreement (collectively referred to as “the 2 Tenancy Agreements”) was to delegate the work of managing the tenancy matters relating to the Ma Shu Court Shops and the Ma Shu Building Shops to the relevant corporate vehicles, so that the Father and the Mother did not need to trouble with these matters in view of their advancing age and deteriorating health condition.

24.  In around June 2003, the Father suffered from a kidney disease and was admitted to hospital.  On 13 June 2003, the Father had a talk with Wing Kwong and his younger brother Mr Ma Wing Fai (“Wing Fai”) prior to a high-risk kidney treatment.  He expressed that he wished to make arrangements in relation to his properties, and asked Wing Kwong to record his intended arrangements as an aide-memoire for estate planning purpose. Wing Kwong did so according to the Father’s instructions and wrote 6 handwritten notes (“the Handwritten Notes”).

25.  After this procedure, on 7 July 2003, the Father asked the solicitor from Johnny KK Leung & Co to attend his office for the execution of 5 assignments (“the 2003 Assignments”), assigning the interests of the Father and the Mother in 5 properties (“the 5 Properties”) to different family members.  The arrangements under the 2003 Assignments were not entirely the same as those stated in the Handwritten Notes.  For the present purpose, the relevant transactions of the 2003 Assignments are as follows:

(i)  by one assignment, the Father and the Mother assigned the Ma Shu Court Shops to King Chu, Wing Fung and Hui Chin as joint tenants; and

(ii)  by another assignment, the Father and the Mother assigned the Ma Shu Building Shops to Wing Kwong, Wing Fai, Wing Kei, Wing Fung, King Chu and Hui Chin as joint tenants.

26.  The 351 Building was also assigned to different children.  The assignees also signed a declaration on 7 July 2003 to define their rights and interests in the 351 Building and to declare their shares of ownership in such property.

27.  There were purchase prices stated in the 2003 Assignments which had not been paid.  The parties accept that the 2003 Assignments were in substance gifts made by the Father and the Mother to the various family members concerned.

28.  In April 2004, the Father suffered a stroke and was hospitalized in Hong Kong Sanatorium Hospital. It is not disputed by parties that the Father lost his mental capacity as a result of the stroke in 2004.

(iv)  The deterioration of the relationship within the family

29.  At about the same time, the shareholders and directors of the 4 Companies, i.e. the Mother, King Chu, Wing Kei and Wing Fung, proposed to increase the authorized share capital of the companies by 900% and to allot shares to the existing directors of the companies.  Such move caused great mistrust within the family.  The Mother’s Camp claimed that it was done pursuant to the advice from accountants.  However, Wing Kwong suspected that the Mother’s Camp intended to take the opportunity, while the Father was still unconscious, to take control of the 4 Companies.

30.  Such move was opposed by Wing Kwong, together with 5 other siblings, namely, Wing Fai, Mr Ma Wing Chung (“Wing Chung”), Mr Ma Wing Cheong (“Wing Cheong”), Madam Ma King Po (“King Po”) and Mr Ma Wing Fu (“Wing Fu”), who then commenced proceedings under the Mental Health Ordinance (Cap 136) (“the Mental Health Proceedings”)[4] in 2005 and applied for the appointment of a committee to protect the interests of the Father and his estate.  On 31 January 2005, Lam J (as he then was) made an order declaring that the Father was a mentally incapacitated person (“MIP”) and appointing 2 professional accountants as committee (“the Committee”) for the purpose of managing and administering the Father’s properties and affairs.

31.  Unfortunately, the Mental Health Proceedings caused the family members to become more divided and things also turned rather personal and hostile.

32.  At around the same time, the terms of tenancy under the 2 Tenancy Agreements were about to come to an end and the 2 camps began to engage in correspondence as to whether the tenancies should continue.

(v)  The death of the Father and the commencement of various legal proceedings

33.  On 14 September 2007, the Father died intestate. The Committee was dissolved, but the same accountants were appointed as the administrators of the estate of the Father (“the Administrators”).

34.  Actions 1 to 3 were commenced on 9 February 2007, 16 May 2008 and 30 May 2008 respectively.

35.  In Action 1, Fupo, as the registered owner, claimed for possession of Flat 6D against Wing Kwong and his family.  In Action 2, Hope 88, as the tenant under an alleged tenancy at will, claimed for possession of Shop D against Wing Kwong and Hui Chin.  In Action 3, Fook Hong, as the registered owner, claimed for possession of Car Port 3 against Wing Kwong.

36.  The Plaintiffs in these actions (“the 3 Subject Companies”) claimed that the Defendants including Wing Kwong and Hui Chin have wrongfully remained in occupation of the 3 subject properties (“the 3 Subject Properties”) without the payment of rent.  Hence, they claimed for possession orders and mesne profit for the wrongful occupation of the properties.

37.  On 18 January 2012, the Administrators commenced HCA 13/2012 (“the Administrators’ Action”) against the family members, i.e. the Mother and the 9 children, claiming for a declaration that the properties held by the family as contained in Schedule 2 of the Statement of Claim (“the Schedule 2 Assets”), which did not include the Ma Shu Court Shops and the Ma Shu Building Shops but included the shareholdings held by the Mother’s Camp in the 4 Companies, were wholly and beneficially owned by the Father’s estate.

38.  The Administrators accepted that the 5 Properties under the 2003 Assignments, including Ma Shu Court Shops and the Ma Shu Building Shops, were assigned to the different family members under the direction and wish of the Father.  In other words, the Administrators accepted that these transfers were gifts and the assignees of the 5 Properties became the beneficial owners of such properties.

39.  In the Administrators’ Action, Wing Kwong’s Camp supported the stance taken by the Administrators.  On the other hand, the Mother’s Camp contended that the registered owners of the Schedule 2 Assets were also their beneficial owners.

40.  On the first day of the trial of the Administrators’ Action, Wing Kwong’s Camp made a compromise with the Mother’s Camp that they would not ask for the reliefs claimed in the Administrators’ Action.

41.  Consequentially, a consent order dated 2 October 2013 (“the Consent Order”) was made, under which Wing Kwong’s Camp informed the court that “they no longer seek the reliefs claimed in the Statement of Claim” and they undertook that they “will not make any claim for such reliefs in the future”.  It was by consent ordered, inter alia, that no order be made as claimed in the Statement of Claim (“the SOC”).  In other words, all the family members accepted that the registered owners of the various family assets, including the properties and the shares of the corporate vehicles, were also the beneficial owners of the properties without holding the same as trustees for the Father’s estate.

42.  About 7 years after the death of the Father, Actions 4 and 5 were commenced in 2014.

43.  In Action 4, Hui Chin, one of the co-owners of the Ma Shu Court Shops, claimed for possession of such property and mesne profit against Fupo on the ground that Fupo had continued to occupy the Ma Shu Court Shops after the expiry of the term of the tenancy on 30 September 2006.  In Action 5, Wing Fai, Wing Kwong and Hui Chin, as owners of the Ma Shu Building Shops, claimed for possession of such property (excluding Shop D) and mesne profit against Hope 88 on the ground that it had continued to occupy the Ma Shu Building Shops after the expiry of the term of the tenancy on 4 December 2005.  Wing Fai eventually discontinued his claim against Hope 88, leaving Wing Kwong and Hui Chin as the remaining Plaintiffs.

44.  The parties agree that the main battlefield lies in the fight between the 2 camps in Actions 1 to 3.  Actions 4 and 5 are relatively straightforward since they merely concern the enforcement of the legal rights of Wing Kwong’s Camp as landlords against the alleged tenants. Actions 4 and 5 primarily stand on their own, though there are a couple of issues arising from Actions 1 to 3 which may impact upon the determination of the questions in Actions 4 and 5, and vice versa.

ISSUES INVOLVED IN THE VARIOUS ACTIONS

(i)  Issues in Actions 1 to 3

45.  As mentioned above, in Actions 1 to 3, the Mother’s Camp seeks vacant possession of the 3 Subject Properties on the basis that they have been unlawfully occupied by Wing Kwong’s Camp without paying any rent.  These actions have been instituted by the 3 Subject Companies which are under the control of the Mother’s Camp.

46.  The beneficial ownership of the 3 Subject Companies is not challenged.  However, it is the case of Wing Kwong’s Camp that:

(i)  Wing Kwong, his wife (i.e. Hui Chin) and his children have been staying in the 3 Subject Properties, as early as 1989, by virtue of a gift, licence coupled with proprietary interest granted irrevocably by the Father who made the representations for their free use, occupation and enjoyment (“the Representations”).  Hence, the Mother’s Camp is not allowed to and is estopped from claiming possession of such properties.

(ii)  The claims in Actions 1 to 3 are barred by laches, in view of the significant lapse of time and delay in taking actions by the Mother’s Camp.

47.  Another issue in Actions 1 to 3 raised by the Mother’s Camp relates to the effect of the Consent Order made in the Administrators’ Action.   The Mother’s Camp argues that the effect of the compromise made in the Consent Order is to preclude Wing Kwong from re-litigating herein the issue of the beneficial ownership of the Schedule 2 Assets, including the shares of the 4 Companies not registered in the name of the Father, and the matters pleaded in §12 of the SOC in the Administrators’ Action.  Furthermore, it is an abuse of process for Wing Kwong to seek to revive the issue of the beneficial ownership of these assets having regard to the principle of res judicata in the wider sense and the rule in Henderson v Henderson[5].

48.  Hope 88 in Action 2 is also different from the other Plaintiffs in Actions 1 and 3, as it is suing not as the owner but an alleged tenant of the subject property, i.e. Shop D.  There is therefore an issue as to the status of Hope 88 and whether it has the locus to bring the claim in Action 2 against Wing Kwong and Hui Chin.

(ii)  The issues in Action 4

49.  By way of one of the 2003 Assignments and the Deed of Severance dated 6 May 2010, the Ma Shu Court Shops, which are the subject matters of Action 4, are owned by Hui Chin, King Chu and Wing Fung as tenants in common.

50.  The first issue that arises is whether Hui Chin, holding only one-third share of the Ma Shu Court Shops, has the locus to bring the proceedings against the tenant or occupier of such property.  In this regard, Hui Chin relies on the principle that a tenant in common has no unity of interest as contrasted to the case of joint tenants. Each tenant in common is therefore entitled to deal with the property without the authority of the others.[6]   A tenant in common can also enforce his interest in land, including terminating a lease, without joining the other tenants in common.[7]

51.  Apart from the issue of locus, Fupo’s other defences can be summarised as follows:

(i)    Upon expiration of the Fupo Tenancy Agreement on 30 September 2006, Fupo did not exercise the right of renewal because no consensus could be reached by the registered owners.

(ii)   Except that a sub-tenant of Fupo continued to occupy Shops B & C of the Ma Shu Court Shops up to 19 November 2006, the other premises of the Ma Shu Court Shops had been left vacant after 30 September 2006.  Under such circumstances, Fupo was not in possession or occupation of the Ma Chu Court Shops from 1 October 2006, or at least from 20 November 2006.

(iii)  Prior to the commencement of Action 4, Hui Chin had never demanded for rent or vacant possession of the Ma Shu Court Shops.  Further, Hui Chin never disputed Fupo’s assertion that it ceased to be a tenant in a letter dated 18 February 2011 sent to Hui Chin’s solicitors.  Hence, Hui Chin had by conduct accepted that the Fupo Tenancy Agreement no longer existed.

52.  Hui Chin disputes these allegations by Fupo.

53.  For Action 4, the issues are therefore are:

(i)    whether Hui Chin has the locus to bring the claim by herself;

(ii)   whether Fupo had exercised the right of renewal;

(iii)  whether Fupo was in occupation of the Ma Shu Court Shops after the expiration of the Fupo Tenancy Agreement on 30 September 2006; and

(iv)  whether Hui Chin had by her conduct treated the Fupo Tenancy Agreement as being no longer valid and subsisting.

(iii)  The issues in Action 5

54.  By way of one of the 2003 Assignments and the Deed of Severance dated 6 May 2010, the owners of the Ma Shu Building Shops, the subject property of Action 5, are Wing Kwong, Wing Fai, Wing, Kei, Wing Fung, King Chu and Hui Chin being tenants in common each holding one-sixth share.

55.  In Action 5, the remaining Plaintiffs, Wing Kwong and Hui Chin, claim against Hope 88 for wrongful occupation of the Ma Shu Building Shops.  The claim does not cover Shops B & D.  Wing Kwong claims to have a life interest to occupy Shop D, whilst the evidence shows that Shop B had all along been occupied by the Father.

56.  In its Defence and Counterclaim, Hope 88 asserts the following:

(i)    As expressly stipulated in the agreement, the Hope 88 Tenancy Agreement covered Shops B & D of the Ma Shu Building Shops.

(ii)   After the expiration of the Hope 88 Tenancy Agreement on 4 December 2005, Hope 88 continued to occupy the Ma Shu Building Shops under a tenancy at will rent-free with knowledge and consent of all registered owners, including Wing Kwong and Hui Chin.

(iii)  Hope 88 relies on a letter dated 7 December 2006 from King Chu, Wing Kei and Wing Fung to claim that they had no objection to Hope 88 remaining in possession of the Ma Shu Building Shops but, using the words in the pleading, “they would not accept delivery of possession of the [Ma Shu Building Shops] by [Hope 88] if at the time of delivery Shop D of Ma Shu Building [Shops] was still occupied by [Wing Kwong and Hui Chin].”

(iv)  It is also alleged that by letter dated 28 December 2006, Wing Kwong’s Camp had no objection to Hope 88 remaining in possession of the Ma Shu Building Shops and that the arrangements in place prior to the Father’s admission to hospital should continue to apply.

(v)   Further, Hope 88 counterclaims against Wing Kwong and Hui Chin for an indemnity for their occupation of Shop D.

57.  Wing Kwong’s Camp disputes these allegations.  In particular, in respect of the letter dated 28 December 2006, Wing Kwong only emphasised the importance of preserving the status quo as at the time prior to the Father’s admission to hospital and it did not amount to Wing Kwong’s agreement to forgo any of their rights under the Hope 88 Tenancy Agreement.

58.  The issues in Action 5 are therefore:

(i)    whether the Hope 88 Tenancy Agreement covered Shops B & D;

(ii)   whether there was a tenancy at will created after the expiration of the Hope 88 Tenancy Agreement; and

(iii)  whether Hope 88 continued to occupy the Ma Shu Building Shops, excluding Shops B and D, and whether such was within the knowledge of or approved by the registered owners.

EVIDENCE AT THE TRIAL

59.  As I see it, except on the issues as to whether the Father had made the Representations to Wing Kwong and what were the terms of the Representations if such were indeed made, credibility of the witnesses does not play a key role in the determination of the various issues involved in these proceedings.  Nevertheless, I will give my findings on the credibility of the witnesses.

(i)  Evidence in support of the case of Fupo, Hope 88 and Fook Hong (the Mother’s Camp)

60.  The Mother, Wing Kei and Wing Fung testified on behalf of the Mother’s Camp.

61.  The Mother was aged 79 at the time of the trial.  The Father and the Mother got married in 1958, and their martial relationship had all along been good.  They both came from poor families and had not received formal education.

62.  The Father made a fortune by way of property investment.  The Mother took care of the family matters at home.

63.  The Mother had testified in length about Wing Kwong’s relationships with the Father and the other members of the family.  The Mother’s Camp seems to take the view that, if Wing Kwong was a non-filial son and his relationship with the Father was not good, the Father could not have made the Representations to Wing Kwong to allow his family to stay in the Father’s properties without consideration.

64.  In my judgment, rather than being conclusive, this is only one of the background matters that the court would take into account in determining the various issues in this case.  One thing is clear from the evidence.  The Father had allowed Wing Kwong and his family to occupy the 3 Subject Properties as early as 1989.  The Father was not seriously demanding Wing Kwong to pay rent for the occupation of these premises.  Further, though the Father did not allot any shares of the 4 Companies to Wing Kwong, the Father still assigned his interests in various properties to Wing Kwong and Hui Chin in 2003, and that a joint account in the names of Wing Kwong and Wing Fung was set up for keeping the rental income from property investment. In other words, the Father still treated Wing Kwong as his son in his late years.

65.  The Mother has kept on saying that Wing Kwong is a non-filial, greedy and dishonest son.  Though the Mother may believe what she told the court are true, I have to approach her evidence with some caution.  The evidence shows that the Mother had cared for Wing Kwong in the past.  Her recent perception of Wing Kwong may have been distorted by the hostility experienced by her in the bitter litigations throughout the years. Hence, though I may find her to be an honest witness, I will not accept everything said by her on face value.

66.  As compared with the other witnesses, Wing Kei has less interest in the outcome of these proceedings.  He is not a shareholder of Hope 88 or Fook Hong, and he only holds 5% shares in Fupo.  As Wing Kei had testified, since the Father’s estate is a majority shareholder of Fupo and Hope 88 holding 60% and 51% of their shares respectively, the outcome of the 5 Actions would affect the estate of the Father the most.

67.  Wing Kei is an honest and credible witness who was forthright and not shaken during his cross-examination.  He was trying his best to tell the court what he remembered.  He had nothing to hide from the court.

68.  Wing Kei loved the Father.  Though they quarrelled a lot, he had his own way to communicate with the Father.  There is also no basis for Wing Kwong to suggest that, when the Mother took legal proceedings against Wing Fai seeking possession of a room at the Grand Court Property, the Mother acted so under the influence of Wing Kei as revenge for Wing Fai’s siding with Wing Kwong.

69.  Wing Kei may be quick-tempered and impulsive, but I do not find that he was evasive when he was asked about his relationship with the Father.  He might have different view with the other family members as to whether the Father should move to live in the elderly home, or to increase the share capital of the 4 Companies, or whether Wing Fai and King Po should be allowed to keep their rooms at the Grand Court Property, but I do not find that these differences in opinion would affect the credibility of his evidence.

70.  Wing Fung, being the youngest son, was very much loved by the Mother and the Father.  It is the Mother’s unchallenged evidence that as Wing Fung was his youngest son, the Father was particularly fond of him.  As the Mother explained, Wing Fung’s personality, emotion, desire and interest are very much the same as the Father, and they spent most of their time together.

71.  In my observation, Wing Fung is a most typical prodigal child who has been spoiled by his parents.  He did not conceal, in fact he even bragged about, the fact that whenever he was short of financial resources, his parents would immediately provide him with ample money.  When the Father was in hospital in 2004, Wing Fung was only 20 years old.

72.  In the Mother’s eyes, Wing Fung is honest and upright.  That was why after Wing Fung attained the age of 18, when the Mother and the Father purchased new properties or established new companies, they would always add Wing Fung’s name to the properties and the companies concerned.

73.  Wing Fung may have an interest in the outcome of these proceedings.  He is a minority shareholder of Fupo and Hope 88 holding 3% and 10% of their shares respectively.  Although he is a majority shareholder of Fook Hong holding 70% of its shares, given that the value of Car Port 3 (which is owned by Fook Hong) is much less than that of Flat 6D (which is owned by Fupo), Wing Fung’s interest in these proceedings is not that significant.

74.  What is more important is that I find Wing Fung to be an unsophisticated and straightforward person.  He made no attempt to hide that fact that he was a spoilt kid of the family.  He is genuinely a naïve person.  Even Wing Kwong admitted in cross-examination that Wing Fung is a blank sheet of paper (“白紙一張”).  There is simply no reason for him to lie, and no one has suggested that he was in fact lying.  To me, he is not the type of calculated person putting his self-interest at the forefront.

75.  For these reasons, I accept the evidence of Wing Kei and Wing Fung as the truth.

(ii)  Evidence in support of the case of Wing Kwong and Hui Chin (Wing Kwong’s Camp)

76.  Wing Kwong and Hui Chin testified at the trial.

77.  According to them, other than the incident in 1988, Wing Kwong maintained a good relationship with the Father.

78.  In around September 1988, following a heated dispute between Hui Chin and the Father over some minor household issue, Wing Kwong decided to move out to find a new home for his family.  Around the same time and upon the Father’s instructions, Wing Kwong transferred his interests in 3 properties to the Father and other members of the family.  Wing Kwong did not dispute that he had received $500,000 and a Volvo car from the Father.  After moving out, Wing Kwong purchased a flat in City One, Shatin (“the Shatin Flat”), and he started to earn his own living.

79.  After a while, following heated quarrels between the Father and Wing Kei, the Mother and King Chu arranged to meet Wing Kwong and asked Wing Kwong to return to assist the Father in the operation of his business. Wing Kwong was initially reluctant to accept the request.  According to Wong Kwong and Hui Chin, the Father then made a proposal for Wing Kwong: in exchange for working in his business, the Father would provide: (1) Shop D of the Ma Shu Building Shops free of rent for him to run an estate agency business; (2) a property free of rent for use, occupation and enjoyment as their residence for as long as they would like in their lifetime; and (3) exclusive use of a car-parking space without charge as long as Wing Kwong desired (“the Representations”).

80.  It is the evidence of Wing Kwong and Hui Chin that, in reliance on the Father’s Representations, Wing Kwong resigned from his job and started to occupy Shop D.  Using his own funds, Wing Kwong renovated Shop D and set up Strong Health Development Limited (“Strong Health”), which was a real estate agency company run by Wing Kwong and Hui Chin.

81.  Further, upon the Father’s suggestion and reassurance, Wing Kwong and his family moved to live in Flat 4B of Fook Hong Court at 18 Grampian Road (“Flat 4B”) in 1989 and subsequently sold the Shatin Flat.  Since the Father wanted to rent out Flat 4B in late 1999, Wing Kwong and his family moved to live in Flat 6D.  Wing Kwong also continuously enjoyed the use various car-parking spaces and he started to occupy Car Port 3 in around 2000.

82.  Throughout the years until 2005 when family disputes broke out, Strong Health actively served as the real estate agent for the family’s properties, including looking for potential tenants to lease such properties.

83.  Whether the Father had made the Representations and the contents of such Representations are the main factual disputes in the present case.  As the Father is no longer alive, direct evidence relating to the alleged Representations all comes from Wing Kwong and Hui Chin.  However, I have great reservation about the reliability of their evidence.  I will set out my reasons for rejecting their evidence in the next part of this Judgment specifically on the factual finding about the making of the Representations.

MAIN ISSUE IN ACTIONS 1 TO 3: THE DEFENCE BASED ON PROPRIETARY ESTOPPEL AND LICENCE TO OCCUPY THE 3 SUBJECT PROPERTIES

(I)  The factual finding on the making of the Representations

84.  Since Wing Kwong and Hui Chin do not dispute the beneficial ownership of the 3 Subject Properties, the main issue in Actions 1 to 3 is whether they can rely on the alleged Representations to establish the defence of proprietary estoppel or licence to occupy the 3 Subject Properties during Wing Kwong’s lifetime.  The first question to ask is, therefore, whether the Father had made the Representations.

85.  Having carefully considered the evidence in this case, I do not find that the Father had made the Representations to Wing Kwong as alleged by him and Hui Chin.

86.  Firstly, if the Father had made the Representations, I find it extremely strange that Wing Kwong had not mentioned the Representations or his interests in the 3 Subject Properties on a number of previous occasions, which I would expect him to do so in the circumstances.

87.  It is clear that Wing Kwong had made no such mention in his affirmations filed in the Mental Health Proceedings.  It is also most unusual that he had not raised the subject about his life interest in the meeting on 13 December 2005.

88.  On that day, all the owners of Ma Shu Building Shops, including Wing Kwong and Hui Chin, attended a meeting to discuss the renewal of the Hope 88 Tenancy Agreement which had recently expired on 5 December 2005.  As shown in the draft minutes of that meeting, Wing Kwong requested to exclude Shops B and D of the Ma Shu Building Shops from the proposed principal tenancy agreement.  During cross-examination, Wing Kwong admitted that he had not mentioned anything about his alleged life interest to occupy Shop D.  This is extremely odd, given that the registered owners were discussing the renewal of the Hope 88 Tenancy Agreement and, more specifically, how to deal with Shop D.  If Wing Kwong had a life interest to occupy Shop D, the most natural thing for him to do was to inform all the registered owners of his alleged right instead of just requesting to exclude Shop D from the proposed principal tenancy agreement.  When asked why he had not done so, he simply could not provide a satisfactory answer.

89.  Later when Wing Kwong and Hui Chin requested to continue to use Shop D in their letter dated 28 December 2006, again Wing Kwong did not mention the Representations to justify his continuing use of Shop D. There was also no mention of the Representations in the letter dated 20 November 2006 from his solicitors in reply to the demand for rent for the occupation of Shop D.  In my judgment, the failure to raise the subject about the alleged Representations certainly undermines the credibility of the evidence of Wing Kwong and Hui Chin.

90.  Secondly, Wing Kwong’s evidence about the exact content of the Representations is extremely vague and has not been all along consistent.

91.  In his 4^th affirmation filed in the Mental Health Proceedings on 26 November 2005[8], he said he had commenced his estate agency business in the name of Strong Health at Shop D in April 1989, and it was only after the completion of the Father’s purchase of Flat 4B in mid-1989 that the Father expressed his wish that Wing Kwong might return to live at Flat 4B.  The land search shows that the Father’s purchase of Flat 4B was completed on 15 June 1989. However, in his consolidated witness statement filed in the present proceedings, Wing Kwong stated that it was in “late 1988 or early 1989” that the Alleged Representations were made.  When Wing Kwong was asked about the inconsistency in the timing for the making of the Representations, Wing Kwong alleged for the first time that there were 2 promises made by the Father to him: the first one was made before the purchase of Flat 4B when the Father asked him to open a shop, promised to let him stay in a flat and car port but did not specify which one; and the second one was after the purchase of Flat 4B when the Father told him again the same thing. However, such explanation still contradicts the allegation made by Wing Kwong in the Mental Health Proceedings that it was only after the completion of the Father’s purchase of Flat 4B in mid-1989 that the Father expressed his wish that Wing Kwong might return to live at Flat 4B, there is also no satisfactory explanation why Wing Kwong had not mentioned the first promise in his affirmations filed earlier in the Mental Health Proceedings.

92.  There is also some confusion about the exact nature of the right allegedly granted under the Representations.  Apparently, it has all along been Wing Kwong’s case that he has a life interest to occupy the 3 Subject Properties.  Yet in §50 of his consolidated witness statement, he stated that the Father “also offered to provide [him] and [his] family to live at a premises free from any payment for the use, occupation and enjoyment by [him] and [his family] as [their] residence for the life time of each of [them]”.  His statement seems to suggest that the life interests extend to all the family members of Wing Kwong.  Which was the case?

93.  Further, in his witness statements filed in the Administrators’ Action, Wing Kwong never once mentioned Flat 4B, Flat 6D or Car Port 3.  He merely alleged that after the Father’s “persuasion”, he finally agreed to stay with him and assist him in his business, that the Father “suggested providing [him] with a shop unit for [him] to operate [his] own estate agent business”, and that the Father said he would not charge him any rent and he would also pay all the utility bills for him.[9]  No mention was made about the use of the flat for accommodation or the car-parking space.  There was also no mention about the use of the car-parking space when Wing Kwong described the Representations in §§49-50 of his consolidated witness statement. In his supplemental consolidated witness statement at §§26-27, Wing Kwong gave more detailed evidence about the making of the Representations, and yet no mention was made about the use of any car-parking space.

94.  It is true that Wing Kwong did mention in §18 of his consolidated witness statement that the Representations made by the Father included the use of a car park “for as long as [he] desired”.   However, I find such allegation extremely strange.  Apart from the fact that there was no mention of the car-parking space as mentioned above, Wing Kwong admitted in cross-examination that he did not have a car at the end of 1988 or early 1989, having sold the Volvo (which was given by the Mother and the Father to him as part of the consideration for him to transfer his interest in the 3 properties)[10] on 7 September 1988.  There is simply no reason for the Father to represent or promise to him by then anything about the use of a car-parking space, particularly when the allegation is that Wing Kwong could use that car-parking space “for as long as [he] desired”.

95.  Further confusion arises when Wing Kwong, during cross-examination, claimed that the Father had allowed him to use Car Port 3 “forever”, which is certainly more than a life interest claimed by him in the present proceedings.

96.  Thirdly, I also find it odd that, if the Representations had been made, the Father and Wing Kwong had not taken the trouble of recording the Representations and Wing Kwong’s life interests in occupying the 3 Subject Properties in writing.

97.  According to the evidence, though the Father had treated all the family assets as his own properties, he would make detailed arrangements if he sought to transfer his interests in certain properties to other family members by way of gift.  Over the years, there had been an elaborate scheme under which different properties were held by different family members or corporate vehicles.  Even for the corporate vehicles, there were different and yet detailed shareholding arrangements.  Although the Father might be able to change his mind before his death, the elaborate scheme indicates that it was the intention of the Father that the registered owners of these properties and corporate vehicles would also become their beneficial owners after his death.  Under such circumstances, I find it odd that, if the Father had made the Representations as alleged by Wing Kwong’s Camp, he had not made any attempt to reduce the arrangements into writing.

98.  Equally strange is that Wing Kwong had not asked the Father to do so.  It is clear that the Father’s health very much deteriorated in 2003 and 2004.  Given the oral nature of the alleged Representations, one would expect Wing Kwong to have asked the Father to formalise the arrangement between them.  This was particularly so because it would be a simple thing to so.  Surprisingly, Wing Kwong never did.

99.  One must appreciate that the Representations, if made, would be a highly contentious matter, as the Father had agreed to allow Wing Kwong and his family to occupy the 3 Subject Properties for the rest of his life at the expense of the interests of the other family members.  Given that the Mother and the other siblings had not been told about the Representations, it would bound to create conflicts.

100.  In fact, after the Father was discharged from the Intensive Care Unit of St Teresa’s Hospital in June 2003, he and the Mother had transferred the 5 Properties held in their joint names to the children by way of the 2003 Assignments.  Part of those properties were transferred to either Wing Kwong or Hui Chin, or both, together with other family members.  All these transfers were accompanied by written documentation, namely deeds of assignment and a declaration of trust.  In my judgment, it would have been a very convenient occasion for Wing Kwong to have asked the Father to formalise the arrangement between them to avoid further argument. The fact that he had not done so undermines the credibility of his evidence.

101.  There are also other reasons as to why I reject the evidence of Wing Kwong and Hui Chin.

102.  First, Wing Kwong has always shifted his stance on the beneficial ownership of the 5 Properties transferred under the 2003 Assignments.  In his 1^st affirmation filed in the Mental Health Proceedings on 3 January 2005, he maintained that the 5 Properties were owned by the Father beneficially.  If that was the case, it is very difficult to justify why, Wing Kwong, together with Wing Fai and Wing Fung, sold one of the 5 Properties at the Carpenter Road in 2010 for $35 million and pocketed one-third of the sale proceeds.  Wing Kwong simply could not provide a satisfactory answer at the trial.  In the questionnaire to the Administrators dated 4 November 2010, Wing Kwong changed his stance to say that the 5 Properties were beneficially owned by the registered owners concerned.

103.  The same happened in respect of Wing Kwong’ evidence about the beneficial ownership of the property known as No 73 Fuk Lo Tsun Road.  In his consolidated witness statement made on 19 February 2016, he alleged that the registered owners including himself were only holding the property on trust for the Father.  However, the registered owners sold part of that property in January 2012 in the sum of $4,900,000 and Wing Kwong pocketed one-third of such sale proceeds.

104.  It is clear that Wing Kwong would not hesitate to change his stance on the beneficial ownership of the properties whenever the change suits his interest.

105.  In an attempt to explain his change of stance, Wing Kwong and Hui Chin alleged that it was upon legal advice “in or about late 2010” that they accepted that the current registered owners of the 5 Properties were also their beneficial owners.  However, such explanation does sit well with the fact he and Hui Chin had treated themselves as the beneficial owners of the 5 Properties long before 2010.  Firstly, Hui Chin had since 2005 received her share of the rent of the roof of the Ma Shu Court Shops from a telecommunication company.  Secondly, Wing Kwong pocketed his share of the rent of the 351 Building since 2005.

106.  I also have difficulty with Wing Kwong’s evidence that he should have one-sixth interest in the 351 Building, which is the most valuable property, when the Declaration of Trust dated 7 July 2003 and the rent payment records clearly show that Wing Kwong had only one-twelfth interest in the 351 Building.

107.  For the above reasons, I reject the evidence of Wing Kwong and Hui Chin that the Father had made the Representations to them.

108.  Even if the Father had said something along those lines to Wing Kwong, it is neither reasonable nor justifiable for him to rely on such “persuasions” to claim for a life interest to occupy the 3 Subject Properties.

109.  The evidence shows that it was the Father who built up the family wealth, in particular the real properties acquired or redeveloped by him throughout the years.  All the family members accept that the Father had all along treated the family properties as his own, and he had complete freedom to deal with these properties as he pleased.  No one would challenge any decision made by the Father relating to these assets.  During cross-examination, Wing Kwong agreed that, even if the Father had transferred the interests of certain family assets to some family members, the Father could change his mind later.  For Wing Kwong himself, he would accept such decision without any question.  With such kind of family relationship, Wing Kwong should have known that, whatever promises made by the Father, those would not be definite promises.  Hence, even if the Father might have made some kind of vague promises persuading Wing Kwong to come back to help him with his business, which I do not find it to be the case, Wing Kwong should not be allowed to rely on these vague promises as any kind of proprietary estoppel, gift or licence to establish a life interest to occupy the 3 Subject Properties.

(ii)  Other arguments relied on by the 3 Subject Companies to oppose the claim for proprietary estoppel or licence

110.  By reason of my ruling on the Representations issue, it is not necessary for me to deal with the other arguments put forward by the 3 Subject Companies to oppose the claim for proprietary estoppel or licence.  However, since the parties have made considerable submissions on these issues, in particular the possible effect of the Consent Order on the right of Wing Kwong to make such claim, I feel obliged to give my views, though very brief ones, on these arguments.

111.  I first start with the effect of the Consent Order.  It is the argument of the Mother’s Camp that, since Wing Kwong’s Camp undertook in the Consent Order not to make any claim for reliefs stated in the SOC filed in the Administrators’ Action, Wing Kwong should not be allowed to claim any interests in the 3 Subject Properties by way of proprietary estoppel, gift or licence.

112.  The Administrators’ Action was an action commenced by the Administrators of the estate of Father seeking the court’s determination as to whether certain assets were wholly and beneficially owned by the Father.  Though it was commenced by the Administrators, the Administrators’ Action was mainly fought between Wing Kwong’s Camp and the Mother’s Camp.  The assets in dispute included the shares owned by the Father in the 3 Subject Companies.

113.  As stated in the Consent Order, Wing Kwong’s Camp informed the court that “they will no longer seek the reliefs claimed in [the SOC]” and they undertook that they “will not make any claim for such reliefs in the future”.  It was by consent specifically ordered, inter alia, that no order be made as claimed in the SOC in the Administrators’ Action.

114.  The reliefs claimed in the SOC included, inter alia, the following:

(i)   a declaration that the Schedule 2 Assets are wholly and beneficially owned by the Father’s estate; and

(ii)  an order that the legal and registered owners of the relevant properties do transfer or convey such properties to the Administrators, or alternatively an order that the properties do vest in the Administrators pursuant to the Trustees Ordinance (Cap 29).

115.  In the SOC, “the Properties” was expressly defined as “the properties … set out in Schedule 2”.  However, Schedule 2 did not refer to the 3 Subject Properties involved in Actions 1 to 3 although it referred to the 3 Subject Companies.  Instead, the relevant properties were set out only in Schedule 3 of the SOC.  In the circumstances, the Consent Order, on the face of it, simply does not touch upon the 3 Subject Properties in Actions 1 to 3 and it cannot possibly have any impact on Wing Kwong’s present claim that the Father, by way of a gift or a licence, allowed him and his family to occupy the 3 Subject Properties in 1988 or 1989, when the 3 Subject Companies had yet been formed.

116.  Further, even assuming that the Consent Order somehow does relate to the 3 Subject Properties, the Consent Order only recorded the undertaking of Wing Kwong’s Camp that “they will no longer seek the relief claimed in [the SOC]” and “will not make any claim for such relief in the future”.  It is clear from the Consent Order, which contains the term “no order be made as claimed in [the SOC]”, that the issue of beneficial interests regarding the 3 Subject Properties has never been determined.

117.  I agree with the submission of Mr Khaw, SC, counsel for Wing Kwong’s Camp, that there is a distinction between an undertaking not to seek reliefs set out in the SOC, and an undertaking not to raise the issue of proprietary estoppel, gift or licence as a defence to a claim for possession of the 3 Subject Properties.  Hence, Wing Kwong’s Camp is not precluded from raising a factual defence in Actions 1 to 3 simply because of their undertaking not to claim for reliefs in the Administrators’ Action.

118.  Further, there is no reference in the Consent Order to Actions 1 to 3 which were commenced earlier than the Administrators’ Action.  If it was the intention of the parties that, by agreeing to the making of the Consent Order, the issue of the beneficial interests of the 3 Subject Properties should never be raised again in Actions 1 to 3, I cannot understand why the parties, with the benefit of very able legal representations, had not expressly provided for the same in the Consent Order.

119.  I also do not accept that there is any Henderson v Henderson kind of abuse in the present case.  On the first day of the trial of the Administrators’ Action, all the parties came to a compromise that there should be no order made on the claims made in the SOC.  This is not a case where a party has decided not to pursue a claim in an earlier action and later comes up with a new claim which should have been prosecuted in the earlier action, thereby causing the other side harassment and unnecessary expenditure of time and costs.  In the present case, since all the parties had consented to there being no order regarding the matters raised in the SOC, there is simply no room for any argument on harassment or abuse.

120.  Other arguments relied on by the 3 Subject Companies to oppose the claim for proprietary estoppel, gift and licence are as follows:

(i)    The Representations were allegedly made by the Father in late 1988 or early 1989.  However, the owners of the 3 Subject Properties are all corporate vehicles established by the Father after the alleged making of the Representations.  The 3 Subject Companies argue that the Representations, even if made, are not binding on them as they did not even exist at the time.

(ii)   As the Father was only one of the two joint tenants of the Ma Shu Building Shops at the time of the alleged making of the Representations, he could not grant any interest in Shop D to Wing Kwong without the consent of the other joint tenant, ie the Mother.

(iii)  The Representations relating to the use of a premises for residential use of Wing Kwong and the car-parking space did not specify a particular property.  As there is no certainty as to the properties involved, there is no available defence of proprietary estoppel in respect of the claims for possession of Flat 6D and Car Port 3 under Actions 1 and 3.

121.  It is not necessary for me to resolve these issues of law.  I just want to emphasise that these arguments reinforce the fact that, even if the Representations had been made, the promises could not and should not be regarded as serious or binding promises.  The evidence of this case shows that the Father, being the head of the traditional Chinese family and the main person responsible for building up the family wealth, had the complete discretion to deal with the family assets as he pleased.  That can explain why: (i) he could establish a corporate vehicle to hold a particular family asset; (ii) he was able to deal with the Mother’s interests in any family assets as he pleased; and (iii) even if the Father had made any promises relating to any family assets, there was no certainty as to the property involved.  In fact, Fook Hong had not even purchased Flat 2B and Car Port 3[11] when the alleged Representations were made.  Hence, the pleas of proprietary estoppel, gift and licence are bound to fail, as Wing Kwong should have known that he was occupying the 3 Subject Properties at the mercy of the Father.

THE DEFENCE BASED ON LACHES

122.  Laches is a defence relied on by Wing Kwong’s Camp. According to Wing Kwong and Hui Chin, due to the the significant lapse of time and delay in the action, it would be unjust and unconscionable to grant the 3 Subject Companies possession of the 3 Subject Properties or damages resulting from the occupation thereof. 

123.  I find no substance in such defence.  Simply put, looking at the history of the proceedings, there is no evidence or suggestion that as a result of any delay in the prosecution of the claims, evidence has been destroyed or lost by which the claims in Actions 1 to 3 might have been resisted.  Further, there is no evidence or suggestion that the 3 Subject Companies have released or abandoned any right.  Hence, there is no merit in the laches defence.

124.  In fact, Wing Kwong has somewhat mixed up such defence with the requirement of detriment necessary to establish the claim for proprietary estoppel.  In his pleading, the detriments relied on by Wing Kwong in support of the plea of laches are particularized as follows:

(i)   Wing Kwong continued to assist in the family’s property investment business by running the estate agency business through Strong Health instead of pursuing an independent career.

(ii)  In reliance that the family would be given a stable home, Wing Kwong had foregone opportunities to purchase a property for the residence of his family.

125.  To me, these alleged detriments are more relevant to claim for proprietary estoppel, in the sense that these detriments were the alleged result of the Representations made by the Father rather than the result of any delay in the prosecution of the claims.  In determining the claim for proprietary estoppel, I have already held that it was not reasonable for Wing Kwong to have relied on the alleged Representations, as he should have known that the Father might at any time change his mind relating to the interests enjoyed by the family members in different family assets.  He also accepts that no one could challenge any such decision made by the Father.  In such circumstances, Wing Kwong cannot blame anybody for continuing to assist the family in the running of the investment business or foregoing the opportunity to purchase a property.

SPECIFIC DEFENCE TO THE CLAIM FOR POSSESSION IN ACTION 2 – HOPE 88 NOT BEING THE OWNER OF THE PROPERTY

126.  As mentioned above, by way of one of the 2003 Assignments, the existing owners of the Ma Shu Building Shops are Wing Kwong, Wing Fai, Wing Kei, Wing Fung, King Chu and Hui Chin.

127.  The Plaintiff in Action 2, Hope 88, was the tenant of the Ma Shu Building Shops under the Hope 88 Tenancy Agreement dated 25 November 2002 made between the Father and the Mother as the then landlords and Hope 88 as the tenant.

128.  After the expiration of the Hope 88 Tenancy Agreement on 4 December 2005, it is Hope 88’s case that it continued to occupy the Ma Shu Building Shops under a tenancy at will, and as a result Hope 88 has the locus to bring the claim in Action 2 for possession of Shop D.

129.  For the reasons given in the latter part of this Judgment[12], I do not find that there was a tenancy at will created after the expiration of the Hope 88 Tenancy Agreement.  Hence, Hope 88 has no locus to make the claim in Action 2 and the same should therefore be dismissed.

THE FINAL ORDER IN ACTIONS 1 AND 3

130.  For the reasons given above, Wing Kwong’s Camp has failed to establish the defence of proprietary estoppel, gift, licence or laches to oppose the claims for possession of the subject properties in Actions 1 and 3.  I make the orders for possession accordingly.

131.  Regarding the claim for mesne profit for the occupation of Flat 6D and Car Port 3, I only allow Fupo and Fook Hong to claim for mesne profit starting from 1^st October 2007 in the case of Action 1 and 1 June 2008 in the case of Action 3, which were the first day of the month following the death of the Father and the issue of the writ in Action 3 respectively.

132.  The history of this case shows that the Father had no serious intention to ask Wing Kwong to pay rent for the occupation of Flat 6D or Car Port 3, otherwise he would have taken some action against Wing Kwong for the payment of rent.  There was no such action in this case.  In my judgment, it was the Father’s intention to allow Wing Kwong to occupy Flat 6D and Car Port 3 rent-free at least during the Father’s lifetime.  After his death, the elaborate arrangements he made for the distribution of his family assets would take effect.  In other words, the legal owners of these properties would become their beneficial owners and they then have to sort out the matters amongst themselves.  For Action 3, I take the commencement of the legal proceedings as the notice given to Wing Kwong to vacate Car Port 3, and so Wing Kwong has to pay for his occupation of Car Port 3 starting from 1 June 2008.

133.  As the parties have no disagreement over the market rental values of these 2 properties, I would leave it to them to work out the exact quantum of the mesne profit in Actions 1 and 3.  I direct the parties to submit the draft orders for Actions 1 to 3 to the court for approval within 21 days.  In case of disagreement, the parties are at liberty to restore the case for further arguments.

THE MERITS OF THE CLAIMS IN ACTIONS 4 AND 5  

134.  The factual disputes involved in Actions 4 and 5 are much narrower.  It is common ground that these actions are not the main battlefield between the parties.

135.  In determining the merits of the claims in Actions 4 and 5, one has to bear in mind the relationships within the family and the nature of the tenancy agreements involved.

136.  In the course of the proceedings, Wing Kwong has complained that the Hope 88 Tenancy Agreement was a “sham”.  In my judgment, “sham” is certainly too strong a word to describe the informal nature of these agreements.

137.  As mentioned above, the Father treated all the family assets as his own properties.  The parties of the 2 Tenancy Agreements were all members of the family.  Hence, unlike other commercial tenancy agreements, the 2 Tenancy Agreements were more like informal family arrangements, at least amongst the family members, whereby the tenants concerned, i.e. Fupo and Hope 88, would be placed in a position to handle the tenancy matters relating to the Ma Shu Court Shops and the Ma Shu Building Shops respectively.  Fupo and Hope 88, as the respective tenants under the 2 Tenancy Agreements, would then sublet the shops to other third parties on behalf of the landlords, i.e. the Father and the Mother.

138.  As the Father was getting old and his health started to deteriorate, the Father could, through such kind of informal arrangements, delegate the task of handling the tenancy matters to the corporate vehicles.

139.  Such informal arrangements can easily explain why: (i) it was the Father who pocketed the rents collected from the sub-tenants before he became a MIP; (ii) the Hope 88 Tenancy Agreement, according to its express terms, covered all the shops of the Ma Shu Building Shops, when the evidence shows that all along Shop B had been used by the Father and Shop D had been used by Wing Kwong and Hui Chin.

140.  As expected, the disputes between the parties relating to the 2 Tenancy Agreements only broke out after the Father became a MIP. No one knew exactly what their rights were under the 2 Tenancy Agreements. There were also uncertainties as to the beneficial ownerships of various family assets.  The parties then came to a deadlock, and as a result substantial parts of the subject properties were left vacant for a long period of time.

141.  Both sides have sought to rely on the correspondence exchanged between the parties and their solicitors[13] and the minutes of the meeting held on 13 December 2005, with a view to establish whether or not tenancy relationships continued to exist between the registered owners on the one part and Fupo and Hope 88 on the other after the expiration of the 2 Tenancy Agreements.  I have perused these letters and minutes in some details.  My conclusion is that these correspondence and minutes do not show that the parties had made any definite agreements between them.

142.  The letters show that there was no consensus between the registered owners relating to the continuance of the Fupo Tenancy Agreement.  For the Hope 88 Tenancy Agreement, the parties’ positions were further complicated by fact they did not quite know how to deal with Shops B and D in the context of a renewal of the Hope 88 Tenancy Agreement.

143.  With the deadlock, the parties did not know how to deal with the situation, and as a result most of the premises of the Ma Shu Court Shops and Ma Shu Building Shops had been left vacant after the expiration of the terms under the 2 Tenancy Agreements.

144.  The issues involved in Action 4 are more straightforward.  Action 5 is more complicated, as the positions taken by the parties in this Action are far from clear.

145.  The Mother’s Camp maintains that there was a rent free tenancy at will, and so it was entitled to occupy the Ma Shu Building Shops without the payment of rent and to claim for the possession of Shop D against Wing Kwong’s Camp.  However, the position of Wing Kwong’s Camp is rather convoluted.  On the one hand, it maintains that Hope 88 continued to occupy the Ma Shu Buildings Shops (excluding Shops B and D) after the expiration of the Hope 88 Tenancy Agreement on 4 December 2005.  However, as to why Hope 88 continued to occupy the premises and the capacity under which it continued to occupy the premises, the case of Wing Kwong’s Camp is not clear.  The position of Wing Kwong’s Camp is further complicated by its allegation that Wing Kwong has a life interest to occupy Shop D.

146.  There is a specific issue as to whether, by their letter dated 28 December 2006, Wing Kwong, Wing Fai and Hui Chin had agreed for the creation of a rent-free tenancy at will in respect of the Ma Shu Building Shops.

147.  In my judgment, this letter has to be read together with the 2 earlier letters dated 28 November and 7 December 2006.  In the first letter, the solicitors acting for Hope 88 wrote to all the registered owners of the Ma Shu Building Shops, enquiring whether they had any objection for Hope 88 to remain in possession of such property.  However, such letter did not specify under what capacity Hope 88 continued to occupy the property and whether Hope 88 had to pay rent for its occupation.  In the subsequent letter dated 7 December 2006, 3 of the owners including King Chu, Wing Kei and Wing Fung stated that they had no objection for Hope 88 to exercise the right of renewal for a term of 3 years.  However, they insisted that the occupiers of Shop D (i.e. Wing Kwong and Hui Chin) would have to pay rent.  Then came the letter dated 28 December 2006.  In such letter, the other 3 owners including Wing Kwong, Wing Fai and Hui Chin agreed for the existing arrangement to continue provided that Wing Kwong’s Camp was entitled to continue the occupation of Shop D without the payment of rent.

148.  From these letters, it is clear that the deadlock had remained.  It is unrealistic to suggest that, under such circumstances, a rent-free tenancy at will had been created or Hope 88 had continued to occupy the Ma Shu Building Shops (excluding Shop D).  If the deadlock had been solved, one would expect that Hope 88, with some of its beneficial owners also the registered owners of the Ma Shu Building Shops, would have taken the initiative to sublet the shops to other third parties. This was not the case here.

149.  There are some issues as to: (i) whether the shops were in fact left vacant; (ii) whether Fupo or Hope 88 had returned the keys of the premises to the registered owners; and (iii) whether the parties had done anything affirming the continuing tenancy relationships between them.

150.  The returning of keys would have been a significant issue in most of the other tenancy cases, but the present one is very different.  The 2 Tenancy Agreements were no more than informal arrangements between the family members.  All the relevant family members should have been aware of the deadlock situation after the expiration of the 2 Tenancy Agreements.  They should also have known about the uncertainties and the difficulties facing the parties.  Under such circumstances, it is unrealistic to suggest that the tenants had continued to occupy the subject properties simply because they had not returned the keys to the landlords. With the deadlock continuing, the parties, being family members themselves, did not have a clear idea about their true legal positions, and so who possessed the keys to the premises was, in my judgment, not a significant factor at all.

151.  Further, I do not find that the parties had done anything affirming the tenancy relationships between them.  It is alleged that after the expiration of the sub-tenant’s tenancy in respect of Shops B and C of the Ma Shu Court Shops, Fupo further offered the sub-tenant to stay for another 3 months and the sub-tenant did in fact occupy the shops for a longer unspecified period.  However, I take the view that Fupo, in view of the deadlock, was only making attempt to generate some income for the “family assets”.  It should not be regarded as an unequivocal act to affirm the tenancy relationship.  Obviously, Fupo would have to account to the registered owners for the rent it received on their behalf.

152.  In Action 5, Hope 88 is relying on its alleged status as a tenant under a tenancy at will to claim for possession of Shop D against Wing Kwong and Hui Chin.  However, as all the parties were in a deadlock situation without knowing their exact legal rights, the court should not regard such conduct on the part of Hope 88 as a positive affirmation of the continuing tenancy relationship.  In any event, Hope 88 did not believe that it had to pay any rent to the registered owners of the Ma Shu Building Shops.

153.  I then turn to the issue about the occupation of the Ma Shu Court Shops and the Ma Shu Building Shops after the expiration of the terms under the 2 Tenancy Agreements.  There is no serious dispute between the parties that at least 80% of the shops had been left vacant.

154.  The Ma Shu Court Shops had been left vacant since 20 November 2006 or at least 2007.  Although Wing Kwong and Hui Chin dispute that the shops had been left vacant, it is clear from the third report of the Committee dated 6 June 2007 that none of the 16 shops were rented out by that time.[14] In fact, the letters exchanged between the parties’ solicitors between 2 to 23 February 2011 speak for themselves.  Hui Chin refused to rent out Shops A to E and K & N when asked by King Chu and Wing Fung to do so.  Wing Kwong and Hui Chin claimed that they did not know the law, but that does not alter the fact that Fupo Tenancy Agreement had not been renewed and the shops had been left vacant.

155.  There was an incident about 4 companies (apparently referring to the 4 Companies) moving from the Ma Shu Building Shops to the Ma Shu Court Shops at around November 2005 due to the electricity cut in the former premises.  According to the letter dated 3 November 2005 apparently from the solicitors acting for the 4 Companies, it only referred to the movement of few items from Shop B of the Ma Shu Building Shops, which was occupied by the Father, for storage in the Ma Shu Court Shops.  These items probably belonged to the family business.  I therefore do not accept the evidence of Hui Chin and Wing Kwong that the Ma Shu Court Shops had been occupied by the 4 Companies whether as sub-tenants of Fupo or at all.

156.  For the Ma Shu Building Shops, it seems that only 3 units (out of more than 10 units) were occupied after the expiration of the Hope 88 Tenancy Agreement.  These 3 units related to old tenancies made in 1985 and 2002.  In other words, these tenancies were made when the Father was still in charge of tenancy matters of the Ma Shu Building Shops.  Since the person responsible for creating the Hope 88 Tenancy Agreement was not able to deal with the renewal of the tenancy and there was no clear consensus between the subsequent landlords and Hope 88 as to how to solve the deadlock, their tenancy relationship should be treated as terminated at the time of the expiration of the Hope 88 Tenancy Agreement.

157.  Based on the aforesaid, I make the following findings.

158.  Firstly, the 2 Tenancy Agreements were only informal arrangements made within the family.  When they were first created, it had never been the intention of the family members that the 2 Tenancy Agreements would be given their full legal effect.  That should remain the case even after the Father became incapable of dealing further with the family assets.  Unless the relevant parties had made clear agreements to change the status of the 2 Tenancy Agreements or to extend the terms of tenancy under the 2 Tenancy Agreements, which I do not find it to be the case here, the “tenancy” relationships between the parties should have ended at the expiration dates of such tenancy agreements.

159.  Secondly, by reason of the termination of any kind of “tenancy” relationships between the parties, I find that Hope 88 has no locus to claim for possession or mesne profit against Wing Kwong or Hui Chin for their occupation of Shop D.

160.  Thirdly, unless it can be shown that Fupo and Hope 88 continued to occupy any parts of the Ma Shu Court Shops and Ma Shu Building Shops as “tenants” vis-à-vis other third parties as “sub-tenants” (for example, a sub-tenant of Fupo continued to occupy Shops B and C of Ma Shu Court Shops up to 19 November 2006 until the termination of the sub-tenancy agreement), under which they have to account for the rent they received on behalf of the landlords, Fupo and Hope 88 would not be liable for any mesne profit for the period after the expiration of the 2 Tenancy Agreements.

161.  Since the positions of the parties in Actions 4 and 5 are not clear, partly due to the reason that they do not regard these 2 Actions as their main battlefield, there is some uncertainty as to the exact orders that should be made by the court.  No possession order should be made against Fupo in Action 4 as it had never exercised the right to renew the tenancy and was not in occupation of the Ma Shu Court Shops after the expiration of the Fupo Tenancy Agreement.  For Action 5, I am not sure whether Wing Kwong’s Camp still requires a possession order in light of my findings above.  Further, it is uncertain whether Hope 88 seeks to take the point that Wing Kwong and Hui Chin, being only 2 out of the 6 co-owners as tenants in common, are entitled to possession order by themselves.  I therefore direct the parties to submit draft orders for Actions 4 and 5 to the court for approval within 21 days.  In the case of any disagreement, the parties are at liberty to restore the matter for further arguments.

162.  For costs, I make an order nisi that:

(i) costs of Actions 1 and 3 be to the respective Plaintiffs; and

(ii) there be no order as to costs in respect of Actions 2, 4 and 5.

163.  As the parties will have to submit draft orders to the court for approval within 21 days, they have to by then indicate to the court whether there is any application to vary the costs order nisi.