CHI YUM BUDDHIST HALL ASSOCIATION LTD v. YU LIK WAI WILLIAM AND OTHERS

DCCJ 642/2019

[2022] HKDC 1169

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 642 OF 2019

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BETWEEN

(By Original Action)

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AND BETWEEN

(By Counterclaim)

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DECISION

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1.   Introduction

1.1  There are two applications before me.

1.2  The first is an application by a summons dated 13 May 2022 by the Named Defendants[1] for leave to appeal against the Judgment dated 14 April 2022 and for a stay of the Judgment pending the outcome of the leave application (“1^st Application”). The 1^st Application was issued whilst the Named Defendants were not legally represented.

1.3  The 1^st Application was to be heard on 20 July 2022. Due to medical reasons on the part of Yu and Kong, the hearing was adjourned to 31 August 2022.

1.4  On 24 August 2022, solicitors for the Named Defendants issued another summons seeking to set aside the Judgment (“2^nd Application”).

1.5  At the adjourned hearing on 31 August 2022, Mr Dickson Chan and Mr Neal Clough[2] appeared respectively for the plaintiff and the Named Defendants. In the light of its (lack of) merits, Mr Clough confirmed that the Named Defendants no longer pursued the 1^st Application.

1.6  The trial was conducted in the absence of the Named Defendants. At Judgment §§7-24, I recapped the decisions made by other judges (1) refusing the Named Defendants’ informal applications to adjourn the pre-trial review and (2) ordering the Named Defendants’ counterclaim be provisionally struck out. I also set out the reasons for my dismissal on the first day of the trial (on 13 September 2021) of yet another informal application by Kong and Yu made on 6 September 2021 to adjourn the trial. As may be gleaned from the identified paragraphs of the Judgment, Kong and Yu had consistently alleged that they were stranded in Malaysia because of the measures which the Malaysian government had put in place in response to COVID-19, and as a result, were not able to attend the trial.

2.   The applicable principles

2.1  As set out at Karla Otto Limited v Bulent Eren Bayram Karla Otto Limited, HCA 821 of 2011, 18 May 2017 §§2-3, RDC Order 35, rule 2 gives the court a discretionary power to order a retrial where a party was absent at the trial. The application must be made within 7 days after the trial but the court has discretion to extend time. In the exercise of the court’s discretion, the relevant considerations include the following factors:-

(1) where a party with notice of proceedings has disregarded the opportunity of appearing at and participating in the trial, he will normally be bound by the decision;

(2) where judgement has been given after a trial, it is the explanation for the absence of the absent party that is most important: and that the absence was not deliberate but was due to accident or mistake, the court will be unlikely to allow a rehearing;

(3) Where the setting aside of judgement would entail a complete retrial on matters of fact which have already been investigated by the court, the application will not be granted unless there are very strong reasons for doing so;

(4) The court will not consider setting aside judgement regularly obtained unless the party applying enjoy real prospects of success;

(5) delay in applying to set aside is relevant, particularly if during the period of delay, the successful party has acted on the judgement, or third parties have acquired rights by reference to it;

(6) in considering justice between parties, the conduct of the person applying to set aside the judgement has to be considered: where he has failed to comply with orders of the court, the court will be less ready to exercise its discretion in his favor;

(7) a material consideration is whether very successful party would be prejudiced by the judgement being set aside, especially if you cannot be protected against the financial consequences; and

(8) there is a public interest in there being an end to litigation and in not having the time of the court occupied by two trials, particularly if neither is short.

2.2  As I understand the submissions of Mr Clough, his focus is placed on factors 1, 2, 4 and 5.

3.   The Named Defendants’ evidence

3.1  The (1^st) and 2^nd Applications are supported by the affirmations of Yu and Kong filed respectively on 26 and 29 August 2022. The plaintiff decided to proceed without filing an evidence in opposition. As summarized in Mr Clough’s written submissions, the evidence deals with:-

(1) the facts in relation to the Named Defendants not attending the pre-trial review and the trial and not making an application for video link;

(2) the facts in relation to the Named Defendants’ legal representation, in particular on how it came about that they came to be acting in person and how the retained their current legal team;

(3) the reasons for the delay in making the application to set aside the Judgment; and

(4) the underlying merits.

3.2  The evidence of Kong and Yu may be summarized as follows:-

(1) As set out at Judgment §§9-10, I made reference to a letter of the plaintiff’s solicitors dated 9 June 2021 (“June 2021 Letter”) objecting to the Named Defendant’s informal application made on 12 May 2021 for an adjournment of the pre-trial review and the trial. Kong now asserts that the Named Defendants never received the June 2021 Letter to explain why the Named Defendants did not consider an application for VCF.

(2) As set out at Judgment §9, Yu and Kong filed their Notices to Act in Person in May 2021.[3] The Named Defendants were previously represented by Mr Michael Bough (“MB”) of Messrs Bough & Company. Kong explains that around Christmas of 2020, MB’s secretary told Kong that MB had suffered a stroke. In the months leading up to the filing of the Notices to Act in Person, MB started to mention more concrete plans about closing his office and for that reason he would need the Named Defendants to file Notices to Act in Person. The Named Defendants did not immediately engage new solicitors as Kong and Yu were in Malaysia and would need to come back to meet prospective solicitors before retaining them.

(3) Yu and Kong first spoke to their current solicitors on 7 July 2022. The handling solicitor contracted COVID-19 on 11 July 2022 and Yu and Kong also did so at various points in July 2022 which slowed the engagement process. The Named Defendants first met their current counsel team on 23 August 2022 and the current solicitors filed their Notice to Act on 24 August 2022. On counsel’s advice, the 2^nd Application was issued on the same day.

(4) Kong and Yu went to Malaysia for business reasons. It is fair to say that the businesses they were conducting were of a sizeable scale. Kong entered Malaysia on 8 February 2020 and did not return to Hong Kong until 8 June 2022. Yu entered Malaysia on 4 March 2022 and returned to Hong Kong on 26 January 2021. He left Hong Kong for Malaysia on 14 May 2021 and did not return to Hong Kong until, as in the case of Kong, 8 June 2022.

(5) Kong and Yu explained that as they were not of Malaysian nationality, there were only allowed to legally stay in Malaysia for an approved duration. In the case of Kong, as she is a holder of a British passport, she was allowed to stay in Malaysia for 90 days. As for Yu, as he was a holder of a HKSAR passport, he was allowed to stay in Malaysia for 30 days.

(6) During the period which Kong and Yu were allegedly stranded in Malaysia, they had to obtain special passes to extend their stay in Malaysia. In the case of Kong, the last such special pass was valid until 22 January 2021, and in the case of Yu, 20 February 2021.

(7) Kong explains that as she had overstayed, she was unable to exit Malaysia at all without risking imprisonment and/or a fine. Through her attempts (including engaging solicitors and barristers in Malaysia and paying visits to both the Chinese embassy and the British embassy), she eventually obtained a special pass on 24 May 2022. As stated above, she returned to Hong Kong on 8 June 2022.

(8) In the case of Yu, in mid-January 2021, through the assistance of a business associate with some influence, he obtained multiple entry visas to exit and return to Malaysia. It was on that basis that he was about to return to Hong Kong in January 2021. However, when he returned to Malaysia, this channel no longer worked and he was not even able to obtain a special pass to stay in Malaysia. As a result, similar to Kong, Yu ran the risk of imprisonment and/or a fine should he decide to return to Hong Kong. Through Kong’s channel, he was able to obtain a special pass on 2 June 2022 and he returned to Hong Kong on 8 June 2022.

(9) On the issue of merits, Mr Clough very fairly accepted at the hearing that the case now contained in the affirmations of Kong and Yu are largely unpleaded issues and put forward previously undisclosed evidence.

4.   Analysis

4.1  In my view, the 2^nd Application should be dismissed by reason of issues (1) and (2) identified at §2.1 above. The Named Defendants disregarded the opportunity of appearing at and participating in the trial and I am not satisfied that their evidence shows that their absence was not deliberate.

4.2  The evidence of Kong and Yu is primarily targeted at the observations made at Judgment §20, namely that the Named Defendants did not address or adequately address the plaintiff’s challenged that the MCO did not have the effect of preventing Kong and Yu from returning to Hong Kong, and even if it did, there was no or no proper explanation by the Named Defendants as to why it was impracticable for them to attend the trial by VCF or as to why no application for the same was considered or made.

4.3  It seems to me that the evidence of Kong and Yu fails on both fronts. Indeed, I am bound to say that their evidence simply highlights that fact that their previous applications for adjournment were disingenuously pursued.

4.4  At Judgment §9, I referred to the letters sent by Kong and Yu to the Registry on 12 May 2021 seeking an adjournment of the pre-trial review and the trial. Kong’s letter gave the following reasons:-

(1) She was unable to give proper and full instructions to her lawyers and to remit fees to her solicitors in Hong Kong as she was severely hampered by the Emergency Movement Control Order (“MCO”) which was in place in Malaysia.

(2) She was prevented by the government of Malaysia from leaving and/or entering Malaysia.

4.5  Neither of the above two explanations is consistent with the stance adopted by the Named Defendants at the hearing.[4] As to the first, Messrs Bough & Company’s involvement in the case did not stop because of any issues over fees. As to the second, as set out a §4.12 below, Kong’s focus has shifted away from the contention that she was prevented by the government of Malaysia from leaving the country.

4.6  In Yu’s letter of 12 May 2021 (which was beguilingly not exhibited and not dealt with in his affirmation), he adopted the contents of Kong’s letter of the same date and stated that he was making a similar application to adjourn the pre-trial review and the trial pending his arrival in Hong Kong.

4.7  However, as stated at §3.2(4) above, Yu was in fact in Hong Kong between 26 January and 14 May 2021. Quite apart from the fact that the content of Yu’s letter gave the impression he was stranded in Malaysia (when he was not), Yu was in fact in Hong Kong when he signed the Notice to Act in Person on 12 May 2021. Where it is Kong’s evidence that MB had in the months prior to May 2021 indicated that he would close his office and no longer be able to represent the Named Defendants, there is no evidence that Yu even attempted to make alternative arrangements for a replacement solicitor during his rather lengthy stay in Hong Kong.

4.8  Perhaps more importantly, the letters of Kong and Yu of 12 May 2021 were sent on the basis that there was a risk that they might not be able to return to Hong Kong because of the MCO. Yet, when Yu was in Hong Kong, there is no evidence that he sought any advice from solicitors as to what alternative arrangements (such as the use of VCF) might be put in place to cater for that eventuality.

4.9  I also do not accept Kong’s assertion that the Named Defendants did not receive the June 2021 Letter. As set out at Judgment §§9, 11 to 13, Kong and Yu were clearly engaged in correspondence with the clerk of DDJ Tara Liao. I have difficulty in accepting that the Kong and Yu received letters from the court but somehow did not receive the June 2021 Letter. In any event, Kong and Yu did not assert that they did not receive the letter sent by the plaintiff’s solicitors on 7 July 2021 referred to a Judgment §14 where the possibility of using VCF was again canvassed. Mr Clough submitted that the Named Defendants should not be penalized for their lack of knowledge of the available alternatives (whilst they acted in person), one must bear in mind that a litigant acting in person should bear responsibility for the proper preparation of his or her own case in accordance with the rules and procedures of the court: AXA China Region Insurance v Leong Fong Cheng [2016] 6 HKC 220 at §47. In the AXA case, the Court of Appeal held that the litigants acting in person should not shift the responsibility for the preparation of their case to the court. It seems to me that it is a fortiori that the Named Defendants cannot shift the responsibility to the plaintiff on the basis that they did not receive the June 2021 Letter (even if true).

4.10  The evidence of Kong and Yu also did not address Judgment §15, where a reference was made to the fact that Messrs Bough & Company, on the instructions of the Named Defendants made an inquiry with DYC on 27 July 2021 of the outcome of the pre-trial review heard on 12 July 2021. Where, as here, the Named Defendants were clearly aware that their counterclaim had been provisionally struck out, it is incumbent for them to provide an explanation what steps were taken by them to restore their counterclaim as part of their attempt to demonstrate genuine intention to defend the trial. None was forthcoming apart from an assertion that the Named Defendants did not immediately engage new solicitors as Kong and Yu were in Malaysia and would need to come back to meet prospective solicitors before retaining them.

4.11  However, as pointed out by Mr Chan (and accepted by Mr Clough), the Named Defendants did engage another firm of solicitors whilst Yu and Kong were in Malaysia. Shortly after the Judgment was handed down on 14 April 2022, Messrs Eric Cheung & Lau issued a letter dated 28 April 2022 on behalf of the Named Defendants to DYC warning the plaintiff to refrain from removing or handling the Named Defendants’ properties left on the Property. Whilst I accept Mr Clough’s observation that different considerations apply when engaging a firm of solicitors for trial (as opposed to engaging one to issue a warning letter), I note that the Named Defendants’ pleadings were settled by counsel and the evidence of Kong and Yu has not condescended upon any particulars as to what difficulties they would encounter in engaging new solicitors to replace MB. In any event, one would have thought that even solicitors without intimate knowledge would have been in a position to advise on the possibility of using VCF (if justified on the evidence).

4.12  The Named Defendants have shifted their contention away from one that the MCO prevented Kong and Yu from leaving Malaysia. The present contention is that Kong and Yu were prevented from leaving Malaysia because they had overstayed and their departure from Malaysia exposed them to a risk of criminal consequences. To that end, Kong and Yu rely on a letter dated 12 May 2022 from their Malaysian lawyers, Messrs Hock & Associates.

4.13  There are at least two problems with the present contention. First, as set out at §3.2(6) above, both Kong and Yu did manage to obtain special passes until January and February 2021. Once the prospects of obtaining further special passes were not promising, there was nothing preventing Kong and Yu from leaving Malaysia legally prior to the expiry of the special passes. The choice of overstaying in Malaysia seems to me to be a deliberate decision. Secondly, in the case of Yu, as stated at §3.2(8) above, his focus was on his ability to return to Malaysia. As I understand the evidence, it seems to me quite clear that Kong and Yu were more focused on their ability to either stay in or return to Malaysia. In other words, but for such priority, there was in fact nothing to prevent them from returning to Hong Kong, albeit arguably earlier than necessary for the purpose of this litigation (ie in January or February 2021). For example, in the case of Yu, he obtained special passes for the period of 6 May to 4 June 2020, 5 June to 4 July 2020, and 22 January to 20 February 2021.[5] In other words, there was a period between 5 July 2020 to 21 January 2021 during which he did not have a special pass and had therefore overstayed. Yet, he was not prosecuted for the “vacuum” period for which he had overstayed when he departed Malaysia on 26 January 2021.

4.14  That Yu was not held accountable for the “vacuum” period is inimical to the contention of Yu and Kong that they were liable to be criminally prosecuted for overstaying. The letter of Messrs Hock & Associates simply referred to the possibility and there is no evidence that any foreigner was in fact prosecuted for overstaying because of COVID-19 related reasons or that such cases would not be dealt with leniently.

4.15  For the above reasons, I am of the view that the 2^nd Application should be dismissed, as I am not satisfied with their explanation for their absence at the trial (whether appearing in person or remotely).

4.16  In so far as necessary, I am also of the view that the 2^nd Application should be refused on the basis of delay and lack of merits.

4.17  On the issue of delay, where, as here, the Named Defendants had already engaged Messrs Eric Cheung & Lau by 28 April 2022 (whilst Kong and Yu were in Malaysia), I am not satisfied that concrete steps should have been taken only upon their return to Hong Kong. Further, where both Kong and Yu returned to Hong Kong on 6 June 2022 and was subject to a 7-day quarantine thereafter, there is no explanation as to why they only contacted their current solicitors on 7 July 2022. But for the fortuitous adjournment of the original substantive hearing 20 July 2022, the 2^nd Application would not have been taken out.

4.18  On the issue of merits, as stated at §3.2(9) above, Mr Clough accepted that matters identified in his written submissions do not give rise to a defence with real prospects of success.

5.   Conclusion

5.1  For the above reasons, I dismiss the 1^st and 2^nd Applications.

5.2  As regards the 1^st Application, the plaintiff in his Skeleton Submissions seeks costs on an indemnity basis on the basis that it is devoid of merits. I am inclined to agree with Mr Chan, as is evidenced by Mr Clough’s concession at the hearing that it was no longer pursued. However, as I have not heard any submissions from Mr Clough on the issue of costs generally, the costs order which I make below is on a nisi basis.

5.3  The costs order that I will make is therefore as follows. On a nisi basis, the Named Defendants are to pay to the plaintiff the costs of and occasioned by the 1^st Application (on an indemnity basis) and the 2^nd Application with a certificate for counsel to be summarily assessed. Absent any application to vary, the plaintiff is to lodge its statement of costs within 7 days after the expiry of the 14-day period for the Named Defendants to take out an application for variation and the Named Defendants are to lodge their comments within 7 days thereafter.

5.4  I thank all counsel for their helpful assistance.

Mr. CHAN Dickson, instructed by Danny KH Yu & Co, for the plaintiff (by original action)

Ms. CLOUGH Michelle, instructed by WMC Partners, for the 1^st, 2^nd and 4^th defendant (by original action)

DCCJ 642/2019

[2022] HKDC 282

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 642 OF 2019

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JUDGMENT

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INTRODUCTION

1.  These proceedings are concerned with a piece of land in Demarcation District No 226 more particularly delineated and coloured on Plan No SKM9152a annexed to Government Land Licence S12116 (“Licence”) issued by the Lands Department which is also known as “No 14 Lung Wo Tsuen, Tseng Lan Shue, Sai Kung, New Territories, Hong Kong” (“Land”).  In around 1963, a Chinese Buddhist Hall in the name of “慈蔭精舍” (“Buddhist Hall”) was built on the Land.  The Land and the Buddhist Hall are collectively referred to as “Property”.

2.  The plaintiff is a Hong Kong company.  Madam Lau Pik Kwan Echo (“Lau”) and her husband Mr Tsang Yuk Piu (“Tsang”) are and were at the material time the directors of the plaintiff.  The plaintiff has since 1 November 2017 been the licensee of the Land pursuant to the Licence.  Lau and Tsang are respectively the 2^nd and 3^rd defendants by Counterclaim.

3.  The 1^st defendant (“Yu”) and the 2^nd defendant (“Kong”) are and were at all material times respectively the sole director and only shareholder of the 4^th defendant (“Shun Yu”), a Cayman company.  Yu, Kong and Shun Yu are collectively referred to as “Named Defendants”.

4.  Although a number of relief, including monetary ones, are sought in its Amended Statement of Claim,[1] the plaintiff only pursued an order for possession of the Property and an injunction restraining the defendants from entering, remaining or in other way trespassing the Property.  The plaintiff’s claim for possession of the Property is disputed by the Named Defendants, as it is their case, inter alia, that Shun Yu and Kong (and their agents including Yu) have a contractual right to occupy the Property pursuant to an agreement made on or about 1 November 2010 between Shun Yu and Kong on the one hand and the plaintiff, Tsang and Lau on the other.  The Named Defendants counterclaim against the plaintiff, Lau and Tsang for, inter alia, an injunction restraining the plaintiff, Lau and Tsang from preventing, hindering of interfering with the occupation of the Property.

5.  The plaintiff, Lau and Tsang were represented by Mr Dickson Chan and Ms Malanie Chan both of counsel.  The Named Defendants were not represented and did not appear at the trial.

6.  Before I deal with the substantive issues, I should first deal with two housekeeping matters.  The first is in relation to my decision that the trial should proceed in the absence of the Named Defendants.  The other is in relation to an application by the plaintiff for leave to amend its Statement of Claim which was made and granted at the trial.

ABSENCE OF THE NAMED DEFENDANTS AND ITS CONSEQUENCE

7.  The pre-trial review of the present case was heard on 12 July 2021 and the trial was fixed to commence on 13 September 2021.

8.  The Named Defendants were clearly aware of the pre-trial review and the trial.  Between May and September 2021, a number of letters were sent by the Named Defendants to the court seeking an adjournment of these proceedings.  A brief chronology is as follows.

9.  On 12 May 2021,[2] Yu and Kong each sent a letter to the Registry seeking an adjournment of the pre-trial review and the trial on the basis that they were stranded in Malaysia, purportedly by reason of the measures which the Malaysian government had put in place in response to COVID-19, one of which allegedly was to prevent any person from leaving and entering Malaysia.  Kong’s letter was expressly stated to be sent also on behalf of Shun Yu, as, despite no leave having been obtained, Kong was purportedly representing Shun Yu.[3]

10.  By their letter dated 9 June 2021, the plaintiff’s solicitors (“DYC”) objected to the Named Defendants’ application for an adjournment.  DYC’s letter pointed out, inter alia, that the measures imposed by the Malaysian government did not prevent travelers from leaving Malaysia, and in any event, even if Yu and Kong were stranded in Malaysia, an application for the pre-trial review and the trial to be heard by video conferencing facilities (“VCF”) could be made and for the Named Defendants to justify.

11.  On 22 June 2021, DDJ Tara Liao responded to application of the Named Defendants in the following terms:-

“PTR and trial are milestone dates which shall not be disturbed save in exceptional circumstances. No application to adjourn such will be entertained unless and until there is a proper application by way of summons together with supporting affidavit evidence.”

12.  On 29 June 2021, Kong and Yu sent a joint letter to the clerk of DDJ Tara Liao.  In that letter, they explained that as there was a lockdown in place, they were unable to travel to any attorney’s office to prepare an affirmation in support of their inability to travel to Hong Kong in time for the pre-trial review.  It was further pointed out that as vaccination was not widely available in Malaysia, even if they were able to travel to Hong Kong, they would have to be held an isolation and be quarantined for 21 days.

13.  On 2 July 2021, Kong and Yu wrote again to the clerk of DDJ Tara Liao and attached the Emergency Movement Control Order which was in place in Malaysia.  I note that the said order did not have the effect contended for by Kong and Yu, namely that it would prevent them from travelling to an attorney’s office to prepare an affirmation in support.

14.  On 7 July 2021, DYC responded to Kong and Yu’s letters of 29 June and 2 July 2021.  It was pointed out, inter alia, that no application was made for VCF and that the plaintiff would apply to provisionally strike out the Named Defendants’ counterclaim pursuant to RDC Order 25, rule 1C(2) at the pre-trial review.

15.  At the pre-trial review on 12 July 2021, DDJ Rebecca Li ordered, inter alia, that the Named Defendants’ counterclaim be provisionally struck out. The Named Defendants’ former solicitors, Messrs Bough & Company, on the instructions of the Named Defendants, made an inquiry with DYC on 27 July 2021 of the outcome of the pre-trial review.

16.  On 6 September 2021, Kong wrote to the Registry (endorsed by Yu) seeking an adjournment of the trial, on the basis that they were still stranded in Malaysia and Kong’s inquiry “last week” ascertained that the quarantine hotels in Hong Kong were fully booked and the earliest date she was able to reserve any available room was 26 October 2021.

17.  At the trial, Mr Chan resisted the application to adjourn the trial and referred me to Ng Nim Chung, deceased & Anor v Ng Wing Man Terry[2021] HKCFI 2423 §§13-20. 

18.  As stated in Ng Nim Chung, whether an adjournment should be granted is a matter to be decided on the facts of each case.  However, one of the important considerations is whether or not a defendant applying for an adjournment is dilatory or has demonstrated no genuine intention to defend. The court will also take into consideration the cogency and the promptness of the defendant’s explanation, but recognizing that the pandemic was no longer new and that alternatives were available to enable a trial to take place.  For example, as noted at Ng Nim Chung §19, there was in place a mechanism whereby application might be made to the Department of Justice with a view to special mandatory quarantine requirement upon arrival at Hong Kong.

19.  In the present case, like Ng Nim Chung, notwithstanding the provisional striking out of their counterclaim at the pre-trial review on 12 July 2021, the Named Defendants did not take any step to seek to restore it.  At Ng Nim Chung §14, DHCJ Leung regarded such fact to be indicative of defendant’s lack of any genuine intention to defend the trial.  I hold the same view as regards the present case.

20.  Further, the Named Defendants did not address or adequately address the plaintiff’s challenge that the measures imposed by the Malaysian government did not have the effect of preventing Kong and Yu from returning to Hong Kong.  Even if it did, there was no or no proper explanation by the Named Defendants as to why it was impracticable for them to attend the trial by VCF or as to why no application for the same was considered or made, despite it having been raised by DYC even before the pre-trial review.

21.  In addition, like Ng Nim Chung, if quarantine was an impediment, there was no material to show that the Named Defendants had sought to explore an application for special mandatory quarantine requirement upon arrival at Hong Kong (§18 above) or that Kong and Yu were for any reason not eligible.

22.  For the above reasons, I did not grant an adjournment on the first day of the trial and decided to proceed in the absence of the Named Defendants.

23.  As stated at Jotz, Klaus-Berhard Markus v Hamaway, Trarek MahMoud & Anor, HCA 1150 of 2013, 30 June 2017 §4, where I have decided to proceed in the absence of the Named Defendants, the proper approach to adopt is to require the plaintiff to prove its case as pleaded, having due regard where appropriate to the pleaded case by way of defence of the Named Defendants.

24.  As regards the Named Defendants’ counterclaim, in the absence of Yu and Kong coming forward to give evidence to support the counterclaim and any application for restoration of the counterclaim, I am of the view that the counterclaim should stand dismissed. 

AMENDMENT APPLICATION

25.  During the trial, I granted leave to the plaintiff to amend the Statement of Claim.  The amendment essentially consisted of amending the references to Shun Yu already pleaded in the Statement of Claim to make it clear that Shun Yu was the 4^th Defendant.

26.  The present proceedings were commenced by the plaintiff against Kong, Yu and the 3^rd defendant (ie the unknown occupiers).  The parties to the Original Action was therefore the plaintiff, Kong, Yu and the 3^rd defendant.  By Counterclaim, only Kong and Yu originally counterclaimed against Lau, Tsang and the plaintiff.

27.  On 13 July 2020, by consent, Master B Mak granted leave for Shun Yu to be added as the 4^th defendant in the Original Action and the 3^rd plaintiff by Counterclaim.  Leave was granted to the Named Defendants to amend the Defence and Counterclaim and to the plaintiff, Lau and Tsang to amend the Reply and Defence to Counterclaim.  The exclusion of Shun Yu as a party was precipitated by the fact that it had been struck off by the Cayman Registrar at the time of the commencement of the present action.  Shun Yu was subsequently reinstated on Kong’s application.

28.  The parties in their joint application did not seek an order to amend the Statement of Claim, despite their agreement to add Shun Yu as the 4^th defendant in the original action.  However, despite that oversight, it appears clear that, since the reinstatement of Shun Yu, the parties have always proceeded on the basis that the plaintiff’s claim are also directed at Shun Yu, it being the corporate vehicle of Kong and Yu.

29.  As submitted by Mr Chan, the general principle on amendment before the limitation period has expired is that all such amendments ought to be made for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings.

30.  In the present case, there is no issue of time bar, as the plaintiff only obtained the Licence on 1 November 2017 in respect of the Land. I do not see how any prejudice can be caused to the Named Defendants by the clarifications that the references to Shun Yu pleaded in the Statement of Claim (originally only as part of the factual background) are also directed at it after its reinstatement from being struck off from the Cayman Registrar of Companies.

31.  I also accept Mr Chan’s submission that, where, as here, the parties have always proceeded on the basis that the relief sought the is a dispute between the parties including Shun Yu and the Named Defendants have not come forward to actively defend their case, this is a suitable case where dispensation of service of the Amended Statement of Claim should also be granted.

32.  For the above reasons, I allowed the plaintiff’s application to amend the Statement of Claim at the trial with no order as to costs.

THE PARTIES’ RESPECTIVE PLEADED CASE

33.  The plaintiff’s pleaded case is relatively straightforward.  In its capacity as Licensee of the Land since 1 November 2017, it seeks an order for possession of the Property and an injunction restraining the Named Defendants from entering, remaining, or in other way trespassing the Property.

34.  The pleaded defence is as follows.

35.  First, it is said that an agreement was made in 2010 partly in writing and partly orally (“Alleged Agreement”).  In so far as the Alleged Agreement was made in writing, it was contained in a written agreement dated 1 November 2010 made between Shun Yu and the plaintiff (“Written Agreement”).  The oral part was made in conversations between Kong, Lau and Tsang in 2010.  Under the Alleged Agreement and its implied terms, Shun Yu and Kong had the sole right to occupy the Property and also the obligation to fund its operation including the maintenance and upkeep of the Property and the plaintiff would permit Shun Yu, Kong and/or their agents to occupy the Property during the pendency of the Licence.

36.  Secondly, Shun Yu relies on proprietary estoppel.  It is said that in reliance on and pursuant to the Alleged Agreement, Shun Yu had occupied the Property and operated the Buddhist Hall since 2010.  The plaintiff through Lau and Tsang was well aware of Shun Yu’s performance of its obligations under the Alleged Agreement and encouraged Shun Yu to incur substantial expenditure in running and refurbishing the Buddhist Hall over the years.  Shun Yu is entitled, by virtue of proprietary estoppel, to occupy the Property through its agents, employees or licensees during the pendency of the Licence.

37.  Thirdly, in the alternative, the plaintiff had acquiesced in Shun Yu expending substantial sums on the operation and the refurbishment of the Buddhist Hall when in occupation of the Property since 2010.

THE PLAINTIFF’S EVIDENCE

38.  The plaintiff called Tsang and Lau.  Although Tsang was called first, it is fair to say that Lau was the main witness, and Tsang’s evidence was more corroborative in nature.  The scope of the issues at the trial was narrowed by reason of (1) the plaintiff not pursuing a number of issues (ie mistake and misrepresentation to vitiate the Written Agreement) and relief and (2) the dismissal of the Named Defendants’ counterclaim.  In this section, I will only set out the evidence germane to the issues requiring my determination, namely the plaintiff’s claim for possession of the Property and the related injunctive relief.

(a) Lau’s evidence

39.  In 1963, by Government Land Licence No S3636 (“Original Licence”), the Land was licenced to four individuals, namely Kwan Yiu Shing (“Aunt Kwan”), Ng Sau Fong, Cheng Yuk Chi and Fung Hui Yue (collectively “Founders”).  The Founders were all Buddhist followers and the Buddhist Hall was built on the Land following the granting of the Original Licence.

40.  Lau is the grandniece of Madam Liu Loh (“Grand Aunt”). Grand Aunt was the only disciple (入室弟子) of Aunt Kwan.

41.  On 16 August 1964, the plaintiff was incorporated.  Aunt Kwan was one of the first directors of the plaintiff.  In July or August 1968, the plaintiff registered the Buddhist Hall as a Chinese Temple as required under section 5 of the Chinese Temple Ordinance Cap 153.

42.  Lau was born in Guangzhou in 1971 and came to Hong Kong when she was 13 years old.  She lived with Grand Aunt and Aunt Kwan and followed them to attend rituals and events in the Buddhist Hall.  She married Tsang in 2000.

43.  In 1996, the Founders raised concern over the future management of the Buddhist Hall due to their advanced age.  They therefore engaged a company named Buddha Light Association of HK Limited (香港佛光協會) (“Buddha Light”) in August 1996 to manage the Buddhist Hall and to take care of the aging elderly members who resided there.  Buddha Light delegated the duties to its employee, Wong Sik Hung (“Wong”). 

44.  However, in June 2001, the Social Welfare Department did not approve Buddha Light’s provision of elderly home services, resulting in the plaintiff terminating the engagement of Buddha Light.  At the time, there were still around 4 to 5 elderly members residing at the Buddhist Hall.  Aunt Kwan accepted Wong’s proposal that he could continue to live at the Buddhist Hall on the condition that he continued to take care of the elderly members and the Property.

45.  Aunt Kwan passed away in 2003 and Grand Aunt became the successor to all of Aunt Kwan’s properties.  At that time, Grant Aunt was 77 years old. In late 2003, at the request of Grand Aunt, Lau and Tsang became directors of the plaintiff.  Grand Aunt passed away on 7 October 2016, and since then, Lau and Tsang have been the only persons running the plaintiff. 

46.  In late 2008, the last elderly member residing at the Buddhist Hall passed away.  Wong asked Grand Aunt that he be allowed to continue living at the Buddhist Hall rent free and in return he would take care of the Property. Grand Aunt was sympathetic towards Wong’s circumstances and acceded to Wong’s proposal.  At the time, the Buddhist Hall was rather run down without any worshippers.  Lau and Tsang therefore only made very occasional visits to the Property after 2008, as Lau was busy taking care of her children born in 2002 and 2006 and Tsang was a pre-occupied with his job as a civil servant.

47.  In around late June 2010, in one of their visits to the Property and to their surprise, Lau and Tsang discovered that building works were being carried out in the Buddhist Hall, including the construction of columbarium shelves.  The erection of the columbarium shelves were not authorized by them and was in breach of the Special Conditions of the Original Licence.  Special Condition 4 provided that “No grave or columbarium shall be erected or made within the Licenced Area, nor shall any human remains or animal remains whether in earthenware jars, cinerary urns or otherwise be interred therein or deposited thereon.”

48.  Lau and Tsang confronted Wong.  Wong admitted that he had entered into an agreement with Shun Yu to allow the latter to construct columbarium shelves on the Land with a view to sell and/or lease for profits.  Wong further admitted that he had allowed Yu, Kong and Shun Yu to occupy the Property and/or operate the columbarium business, allegedly on the persuasion of Yu and Kong (“Wong’s Arrangement”).

49.  Lau and Tsang were extremely upset by Wong’s Arrangement and Tsang told Wong to pack and leave immediately, which he did.  Lau and Tsang have not seen or heard from Wong since then.

50.  After the departure of Wong, in or around July 2010, Lau and Tsang met Kong and Yu a few times at the Property in the hope to persuade them to remove the columbarium shelves, reinstate the Buddhist Hall and leave the Property.

51.  In those meetings, Kong and Yu complained that they had been misled by Wong that he had full authority to deal with the Property.  Due to Wong’s misrepresentations, Kong and Yu had procured Shun Yu to spend substantial sums on renovating the Buddhist Hall and building the columbarium shelves.  Kong and Yu asked if the plaintiff would run the columbarium business at the Buddhist Hall, which request was refused by Lau and Tsang as such activity was in contravention of the Special Conditions of the Original Licence. 

52.  Kong and Yu then suggested that since the Property was being renovated, instead of wasting the money which had already been spent, the plaintiff should join force with them to turn the Property into a venue for worship and charity functions so that more people can benefit. 

53.  In addition, Kong and Yu further said that they could assist the plaintiff with the process of transferring the Original Licence to the plaintiff as the Founders had all passed away.  They further reminded Kong and Tsang that since the plaintiff was not the holder of the Original Licence they had no right to occupy the Land and hence had no right to evict Shun Yu in any event.

54.  Prior to signing the Written Agreement, Kong and Yu represented to Lau and Tsang, inter alia, as follows.

(1)     Through their connections, they could assist in the licence transfer application.

(2)     They would procure Shun Yu to remove the columbarium shelves. However, the renovation works of the Buddhist Hall, which had almost been completed, should remain and be used for entertaining elderly for charity purposes and for Buddhist followers to worship.

(3)     The day-to-day operations of the Property could be entrusted to a charitable organization “香港愛護長者協會” (“Organization”) and the profits arising therefrom should be paid to Shun Yu as reimbursement of the renovation money it has spent, with a small portion to be paid to the plaintiff to cover its running costs.

(4)     In order for Shun Yu to stay on and properly complete the rest of the renovation and demolition works, the plaintiff had to sign an agreement with it.

55.  On 1 November 2010, the plaintiff entered into the Written Agreement with Shun Yu.  In the Written Agreement, Shun Yu and the plaintiff are referred respective to as “甲方” and “乙方”.

56.  The relevant terms of the Written Agreement are as follows.

(1)     Recital B: “該地段的業權人屬香港政府，以牌照形式批予牌照持有人使用，並受 Licence No S3636的條款所規管（“該牌照”）。”

(2)     Recital D：“由於該牌照之原持有人已年紀老邁，加上過去多年該地段及該建築的日常管理與運作，已全權交由乙方負責，乙方現已擬向有關政府部門申請，將該牌照轉名至乙方名下。”

(3)     Clause 2：“甲方於簽署本協議後儘快完成正在該地段及該建築的修葺及維修工程，並協助乙方申請該牌照之轉名手續。”

(4)     Clause 3：“乙方承諾於簽署本協議後與香港愛護長者協會（或甲方指定之機構或公司）（“該管理機構”）簽訂一份管理協議書，聘請該管理機構由簽署管理協議書日開始直至該牌照終止日全權負責該地段及該建築之管理及運作。”

(5)     Clause 5：“甲、乙雙方同意該管理機構可全權營運及操作該地段及該建築，營運及操作該地段及該建築所得利益或盈利（如有的話），在扣除修葺及維修工程費用和該管理機構的所有開支後，餘款按下列比例分配於甲、乙雙方 [甲方：85% 乙方：15%]。”

57.  In the Written Agreement, the removal of the columbarium shelves was simply termed as修葺及維修工程as Lau and Tsang were afraid that any express reference to columbarium shelves might create an impression that the plaintiff had authorized the building of such at the Land.

58.  No agreement with the Organization was entered into pursuant to Clause 3 and Shun Yu did not nominate another entity for the purpose of entering into a management agreement.

59.  In around August 2010 to early 2011, Kong and Lau had two to three meetings with the staff of the District Lands Office (“DLO”) in Sai Kung.  In those meetings, the staff repeatedly reminded them that the columbarium shelves had to be removed prior to any application of transfer. Instead of acting according to the request of the DLO, Kong kept seeking to persuade the DLO to approve the columbarium business and thereby prolonged and jeopardized the process.  The DLO even posed a warning notice outside the Property.

60.  Between 2011 and 2017, Tsang and Lau made repeated request to Yu and Kong to remove the columbarium shelves and to leave the Property.  It had become increasingly difficult to evict Kong and Yu after guard dogs were kept and caretaker was engaged since mid-2011.

61.  On 29 August 2016, Lau was informed by the DLO that the Original Licence was not transferable but that they would consider allowing direct relatives or religious organizations such as the plaintiff to obtain a new licence upon revoking the Original Licence.

62.  On 8 September 2017, Lau met with Yu and Kong in a restaurant in Festival Walk.  Kong repeatedly emphasized that the columbarium business should not be conducted on the Land, but Yu and Kong brought up the Wong’s Arrangement again.  At one point, Yu and Kong suggested that they could purchase the plaintiff or Lau and Tsang could buy out Yu and Kong.  Lau rejected the offer and told Kong that she should keep her promise to demolish the columbarium shelves and leave the Property.

63.  On 9 November 2017, Lau managed to get the DLO to issue the Licence upon her own efforts.  Hence, the plaintiff replaced the Founders as payee of the licence fees.  The Licence are subject to similar Special Conditions as the Original Licence.

64.  In early 2018, Lau and Tsang consulted DYC on how to recover possession of the Property.

65.  On 21 February 2018, Lau and Tsang went to the Property together with their friend Mr Tsang Chau Hoi.  They brought the Licence with them, with a hope to show to Yu and Kong and formally re-enter and retake possession of the Property.  Yu later arrived at the Buddhist Hall but altercations ensued, leading to a report being made to the police.

66.  On 1 March 2018, DYC issued a letter to the DLO, hoping that the DLO would assist in evicting Yu and Kong.  However, the officer of the DLO considered that the complaint was a private issue and declined to take action. Nevertheless, the DLO conducted a site inspection.  On 23 March 2018, the DLO sent a letter to Lau notifying her of unauthorized building structures which were used to keep what appeared to be animal remains and stating that such amounted to a breach of the Licence which might lead to revocation of the Licence.

(b) Tsang’s evidence

67.  Tsang’s evidence was consistent with that of Lau’s.  He gave further details of the altercations which happened on 21 February 2018 and his discovery that Yu and Kong continued to organize profit-making activities in the Buddhist Hall after the commencement of these proceedings.

68.  There was no challenge against the evidence of Lau and Tsang and the material aspects of their evidence is consistent with the cotemporaneous documents.  I accept their evidence in their entirety.

ANALYSIS

69.  On the pleadings, there is no dispute between the parties that since early 2011, Kong and Yu had engaged a caretaker to occupy the Property to the exclusion of the plaintiff: Amended Statement of Claim §20 and Amended Defence and Counterclaim §25. 

70.  As submitted by Mr Chan, which I accept, the plaintiff, as a licensee under the License which is not in occupation, may claim possession against a trespasser if that is a necessary remedy to vindicate and give effect to such rights of occupation as by contract with its licensor it enjoys: Manchester Airport Plc v Dutton [2000] QB 133 at 150A-C.

71.  The issues for my determination are therefore (1) whether the Named Defendants are permitted to occupy the Property by reason of the Alleged Agreement, (2) if the Named Defendants are not permitted to occupy the Property under the Alleged Agreement, is the plaintiff nevertheless estopped from denying the Named Defendants’ right to occupy the Property by reason of proprietary estoppel and (3) in the alternative, was there an acquiescence on the plaintiff’s part so as to justify the Named Defendants’ occupation of the Property.

(a) The Alleged Agreement

72.  As stated earlier, the Alleged Agreement was said by the Named Defendants to have been made partly in writing (as evidenced by the Written Agreement) and partly orally.  Whilst the plaintiff accepts that it entered into the Written Agreement with Shun Yu, there is no evidence to support the oral part of the Alleged Agreement.

73.  I therefore proceed on the basis that the only agreement between the Named Defendants and the plaintiff was the Written Agreement (which was an agreement only between Shun Yu and the plaintiff).  As canvassed above, in so far as relevant, the content of the pre-contractual discussions was consistent with express terms of the Written Agreement.

74.  In my view, the express terms of the Written Agreement did not confer a contractual right to Shun Yu (or the other Named Defendants) to occupy the Property.  The Written Agreement clearly contemplated that the Property would be managed by the Organization or an entity nominated by Shun Yu, but only upon the execution of a management agreement between the Organization (or the nominated entity as the case may be) and the plaintiff.  As I have found above, no management agreement was ever entered into between the Organization and the plaintiff and no entity was nominated by Shun Yu in place of the Organization.

75.  Given that the only operative agreement was the Written Agreement (and the relevant factual matrix was consistent with the terms of the Written Agreement), I fail to see how a term that can be implied to the effect that the plaintiff would cooperate with Shun Yu and Kong or their agents and the plaintiff would not interfere with, prevent or hinder the occupation of the Property by Shun Yu or Kong or their agents including Yu as long as they maintained the Property at their expense: Amended Defence and Counterclaim §23.  The alleged implied term is not consistent with the express terms of the Written Agreement, as any occupation was expressly contemplated to be by the Organization or a party nominated by Shun Yu but only after the execution of a management agreement with the plaintiff.  Indeed, the Named Defendant does not plead on what basis that the alleged term was to be implied, whether by reason of business efficacy, necessity or operation of law.  In any event, even if such a term was to be implied, one would have thought that reasonableness would dictate that the Named Defendants would not put the License at risk by conducting activities which were in breach of its Special Conditions.  As I have found above, even as late as on 23 March 2018, the DLO discovered activities which contravened the Special Conditions were being carried out.

76.  For the above reasons, I find that the Written Agreement does not confer a contractual right to Shun Yu to occupy the Property.

(b) Proprietary estoppel

77.  At Amended Defence and Counterclaim §§29A and 29B, the Named Respondents case of proprietary is pleaded as follows:-

(1)     in reliance on and pursuant to the Alleged Agreement, Shun Yu has occupied the Property and operated the Buddhist Hall since about 2010;

(2)     the plaintiff was aware of Shun Yu’s performance of its obligation under the Agreement and encouraged Shun Yu to incur substantial expenditure in running and refurbishing the Buddhist Hall over the years;

(3)     the detriment which is said to have been suffered by Shun Yu included a sum of HK$260,000 paid to Lau, the professional fees incurred for the purpose of the application for the licence including legal fees and surveyor’s fees in the sum of HK$10,000,000 and the sums expended on the maintenance, renovation and repairs of the Buddhist Hall.

78.  I agree with Mr Chan’s submissions that the Named Defendants’ case on proprietary estoppel is fraught with difficulties.

79.  First, the Named Defendants have failed to prove the Alleged Agreement, which is pleaded to be the premise upon which Shun has occupied the Property since about 2010.

80.  Secondly, as set out at Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 §54, proprietary estoppel is inapplicable where, as here, the plaintiff is not an owner but merely a licensee and as such not in a position to confer a proprietary interest.

81.  Thirdly, even were I to allow the Named Defendants to depart from its pleading to reply on promissory estoppel, there is no evidence to support a clear and unequivocal promise or assurance on the plaintiff’s part to Shun Yu that the plaintiff would not enforce or exercise its rights to occupation, which only accrued when the plaintiff obtained the Licence on 1 November 2017: Luo Xing Juan §55.

82.  Fourthly, there is no evidence to support the monetary detriment pleaded to have been suffered by Shun Yu.  In particular, in so far as the construction works carried out at the Buddhist Hall are concerned, I have found that they were incurred for the most part before the execution of the Written Agreement.  It is therefore not that case that the plaintiff had encouraged Shun Yu to incur substantial expense in refurbishing the Buddhist Hall whether before or after the Written Agreement.  The plaintiff’s evidence, which I accept, is that the majority of the construction works were carried out on the strength of the Wong’s Arrangement in which the plaintiff, Lau and Tsang played no part.

83.  For the above reasons, I do not accept the Named Defendants’ case on proprietary estoppel.

(c) Acquiescence

84.  Amended Defence and Counterclaim §29A also pleads that, in the alternative to the plaintiff encouraging Shun Yu to incur substantial expenditure, the plaintiff had acquiesced in Shun Yu doing do.  Viewed thus, the plea of acquiescence is only an alternative factual plea within the rubric of the Named Defendants’ plea of proprietary estoppel.

85.  As such, the observations set out at §§79 to 82 are applicable.

86.  Further, as submitted by Mr Chan, the acquiescence-branch of proprietary estoppel applies where B adopts a particular course of conduct on a mistaken belief as to B’s current rights and A, knowing both B’s belief and of the existence of A’s own, inconsistent right, fails to assert that right against B.  If B would then suffer a detriment if A were free to enforce A’s right, the principle applies: Snell’s Equity, 34^th ed at §12-034.  The application can be seen in Ramsden v Dyson (1886) LR 1 HL 129 at 140-141 that:-

“[i]f 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.”

87.  There is no evidence that to show that the plaintiff knew that Shun Yu’s alleged expenditure was expended on the basis of Shun Yu’s mistaken belief.  As I have found above, the bulk of the construction at the Buddhist was carried out before the execution of the Written Agreement, and more likely than not, pursuant to the Wong’s Arrangement for which the plaintiff was not responsible.  Indeed, as the material time (§53 above), the contemporaneous view of the Named Defendants was that the plaintiff was not a licensee of the Land and had no right to evict Shun Yu.

88.  I therefore find that the plea of acquiescence does not add to the Named Defendants’ defence.

CONCLUSION

89.  For all the above reasons, I enter judgment against the Named Defendants and the 3^rd defendant in respect of Relief 4 and 5 pleaded in the Amended Statement of Claim, namely (1) possession of the Property and (2) an injunction restraining the Named Defendants and the 3^rd defendant from entering, remaining, or in other way trespassing the Property.  As stated earlier, I dismiss the counterclaim made by the Named Defendants.

90.  I also make a costs order nisi that (1) the Named Defendants do pay the costs of the action to the plaintiff and (2) the Named Defendants do pay the costs of the Counterclaim to the plaintiff, Lau and Tsang to be taxed if not agreed with a certificate for one counsel.

91.  I thank counsel for their assistance.