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FACV No. 1 of 2021

IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO.1 OF 2021 (CIVIL) (ON APPEAL FROM CACV NO.107 OF 2017)

BETWEEN:

CHEUNG LAI MUI, the executrix of the estate of CHEUNG PING KAU and the administratrix of the estate of CHEUNG PING FUK (alias CHEUNG BING FUK)

Plaintiff (Appellant)

AND

CHEUNG WAI SHING

1st Defendant (1st Respondent)

CHEUNG WAI MIN

2nd Defendant (2nd Respondent)

CHEUNG CHI YUNG 3rd Defendant

(3rd Respondent)

CASE FOR THE RESPONDENTS

[A/1]: Part A of the Record, Page 1

A. Material Background 1. The main dispute in these proceedings concern the equitable

ownership of a piece of indigenous land in Sai Kung, i.e. Lot No. 1101 in Demarcation District 221 (the “Land”).

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2. The Land was owned by late Mr. Cheung Tak Ming (“Great

Grandfather”). He had 3 sons, namely Wan, Kau and Fuk. Upon the death of the Great Grandfather, the 3 sons became registered co-owners of the Land in equal shares.

CFI Judgment §§1-3 [A/6]

3. D3 is the only male decedent of the family. He is the grandson of Wan, and the son of D1.

CFI Judgment §4 [A/6]

A1. Ds’ Case 4. It is Ds’ case that there has been a Common

Understanding/intention amongst Wan, Fuk, Kau (as well as other members of the family including Ds) that D3 should use and own the Land as his home, and he could build a shall house there when he became an adult.

D3’s RRAD&C §§8-9; CFI Judgment §6 [A/7]; CA Judgment §1.28 [A/61]

5. Such Common Understanding/intention was expressly discussed on many family occasions from 1970s to 1996.

CFI Judgment §99 [A/35]

6. Acting in reliance on such Common Understanding/intention, since early 1990s, D3 (who is a professional construction contractor/builder) has, with the knowledge of the elders in the family, continuously carried out very extensive building works and improvement works (manually) to improve the Land. D3 has been using the same as the home for himself and his family all along. Indeed, when D3 was a teenager (i.e.

CFI Judgment §§75, 85 [A/29]; D3’s RRAD&C §10; D3’s WS §15; and D3’s Supp WS §§14-19, 23; photographs

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around 1980s1), he had started collecting stones for building stone walls surrounding the Land. Throughout the years, D3 was also the one who paid all the expenses in relation to the Land (such as government rent and rates).

7. Fuk, Wan and Kau passed away in respectively 1991/19922, 1997 and 1999. P (who is the adopted daughter of Kau) is the personal representative of the estates of Kau and Fuk, whereas D1/D2 (who are the son/daughter of Wan) are the personal representatives of the estate of Wan. They are vested with the registered title of the Land.

CFI Judgment §§4-5 [A/6-7]

8. It is Ds’ case that P was perfectly aware of the Common Understanding/ intention within the family, and she previously accepted that she had no interest in the Land at all.

D3’s WS §§18-19; D3’s Supp WS §6

9. This explains why although P were all along perfectly aware of the extensive works carried out by D3, she never took steps to interfere.

CFI Judgment §§87, 100 [A/32-33; 36]

A2. P’s Case 10. P denied the existence of the Common Understanding/

intention. She alleged that prior to 2003, D1, D2 and D3 did not use and/or occupy the Land at all, and she had access to the Land all along until 2011 or 2012. She claimed that in an alleged conversation that took place in 2003, D3 even agreed

Pre-action letter dated 5/4/2012; Re-Amended Reply §§3(f)-(j); P’s WS §§23, 50;

1 D3 was born in 1971: D3’s WS §2. Hence, when D3 was around 10-odd years old, it was in the 1980s. 2 It is P’s own pleaded case that Fuk died sometime between Sep 1991 and 7th May 1992: see SoC §6(a)

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to demolish these structures when she built a small house on the Land in the future (the “Alleged 03 Conversation”). P also claims that in 2004, D3 and to seek his consent before he could build some garden structure on the Land (the “License Allegation”).

P’s 1st Supp. WS §16; P’s 2nd Supp. WS §§52, 55

11. For reasons best known to herself, P only sued D1 and D2 when she started the present Action. D3 was not added as a party until 6 months after the Action was started. It is P’s case that D3 acted as an agent and/or servant of D1 and/or D2. In the premises, P seeks, inter alia, an injunction order compelling Ds to demolish the houses built on the Land and an order that the Land be sold pursuant to the provisions of the Partition Ordinance.

Re-Amended Reply §§3(d) & (n); ASoc §§10

B. Procedural History of the Proceedings Below B1. The CFI 12. After hearing a 16-day trial, Wilson Chan J (the “CFI Judge”)

found that P was an appallingly dishonest litigant, whereas Ds (particularly D2 and D3) were impressive witnesses.

CFI Judgment §§24-70, 72-76, 90-99 [A/14-26; 26-29; 33-36]

13. The CFI Judge found that P ran a false case. In particular, the Alleged 03 Conversation was a concoction, and D3 never sought P’s consent as alleged. Further, there was also no truth in P’s allegation that D3 acted as D1/D2’s agent in building the two houses (or structures) on the Land. The truth is that

CFI Judgment §§25, 51-52, 53-56, 100-103 [A/15;

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D3 built these houses (or structures) for his own benefit pursuant to the Common Understanding/intention, and he never sought the consent from P. Adopting a “could-not-care-less attitude”, the registered owners of Land (i.e. P, D1 and D2) never bothered about the Land, and they had no control at all.

21-22; 22-23; 36-38]

14. In light the overwhelming objective circumstances, the CFI Judge preferred Ds’ case. He found that Common Understanding/intention did exist, and D3 did carry out extensive works in detrimental reliance on such Common Understanding/intention. In the premises, it was held that D3 has established interest over the Land by reason of (a) common intention constructive trust (“CICT”); (b) proprietary estoppel; (c) estoppel by standing by; or (d) adverse possession (alternative to the aforesaid causes of action).

Sections C2, D, E & F of CFI Judgment [A/26-40]

15. The CFI Judge also ruled in favour of D1/D2 on their counterclaim for the rental income arising from a house erected on another piece of land, i.e. Lot 774 (“House 774”). The CFI Judge held that P was liable to account for 1/3 of the rentals arising from House 774 to D1/D2.

CFI Judgment §§110-114 [A/40-42]

B2. The Court of Appeal (the “CA”) 16. P brought an appeal to the CA. Whilst the CA rejected P’s

challenge against the CFI Judge’s factual findings, the CA allowed the appeal to a limited extent on the bases that CFI

CA Judgment §1, 1.44 [A/51-52, 66]

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Judge did not make sufficient findings on certain matters in relation to various legal questions raised by P on appeal.

CICT 17. The CA held that in order for a CICT to arise, the promisee

must suffer adequate detriments before the death of the promisor(s). However, the CFI Judge did not make specific findings on (1) the cut-off date for ascertaining if there was detrimental reliance on the part D3; and (2) whether D3 suffered adequate detrimental reliance prior to such cut-off date. Hence, the CA remitted these matters back to the CFI Judge.

CA Judgment §§1.3, 1.6, 1.8-1.9, 6.29-6.35 [A/52; 53; 54; 90; 93]; CA Order §1(1) [A/47]

Proprietary Estoppel 18. As regards proprietary estoppel, the CA held that a proprietary

estoppel might arise even though the promisee’s detriments were suffered after the death of the promisor(s), so long as the promisee was not unreasonable in relying on the promisor’s promise or assurance. However, the CFI Judge did not make specific findings on (1) whether D3 was reasonable to rely on the promises of Wan, Kau and Fuk after their deaths; and (2) the appropriate relief if D3 is successful on the claim. Hence, the CA also remitted these matters back to the CFI Judge.

CA Judgment §§1.10-1.38 [A/54-64]; CA Order §1(2) [A/47];

Estoppel by Standing By 19. The CA agreed that if P had knowledge of D3’s works and yet

stood by well knowing Kau and Fuk’s common share in the

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Land, then, the doctrine of estoppel by silence or acquiesce will preclude her from complaining. However, the CFI Judge did not make specific findings on (1) whether P was entitled not to take action until 1998 and 2006 when she respectively obtained grant of letter of administration and grant of probate in respect of the estates of Kau and Fuk; and (2) whether P was entitled not to take action because D3 is the son and nephew of D1/D2 (who are co-owners). Hence, the CA remitted these matters to the CFI Judge.

CA Judgment §§6.40-6.41 [A/96]; CA Order §1(3) [A/47]

Adverse Possession 20. The CA held that in light of the existence of the Common

Understanding/intention, D3’s possession of the Land was not “adverse” at all, and as such he could not rely on the doctrine of adverse possession.

CA Judgment §§1.39, 6.64-6.66 [A/64; 107-108]

Account of the Rental of House 774 21. The CA held that the modern approach as reflected in the

English authorities of Re Pavlou (A Bankrupt) [1993] 1 WLR 1046 and Re Byford (deceased) [2004] 1 P & CR 12 159 should be adopted, and the Court will order an enquiry and payment of occupation rent when it is necessary to do so to do equity between the parties. The CA remitted the matter back to the CFI Judge with a direction that he should take into consideration the expenses on rebuilding House 774.

CA Judgment §§1.40-1.43 [A/64-66]; CA’s Order §§1(4) & 2 [A/48]

B3. Leave to Appeal to the Court of Final Appeal (“CFA”)

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22. P sought leave to appeal to the CFA. 23. The Appeal Committee of the CFA disagreed with the

approach adopted by the CA. It was held that questions of law and evaluative questions of mixed law and fact ought not to have been remitted back to the CFI Judge. In the premises, the Appeal Committee granted leave to appeal to the CFA on:- (1) the basis that 2 questions proposed by P on proprietary

estoppel and account of rental 3 are reasonably arguable and of requisite general or public importance; and

(2) the “or otherwise” basis in respect of the correctness of the decisions of the Courts below regarding CICIT and estoppel by acquiescence.

Appeal Committee’s Reasons for Determination §§13-14

C. Common Intention Constructive Trust

C1. The Legal Issue

24. The legal issue in question is whether the promisee must suffer detriments before the death of the promisor(s) in order for a CICT to arise.

C2. The Views of the CA and the Arguments of P

3 These questions are set out in §8 of the Reasons for Determination [A/148-149] and §2 of the Appellant’s Case

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25. The CA took the view that “it makes sense to regard the time of the death” of the promisor(s) as the “relevant moment for the purpose of ascertaining whether detriment had occurred so as to bind [promisors’] conscience because that moment is their last chance to go back on their promise of their representation.” (per Cheung JA)

CA Judgment §6.35 [A/93-94]

26. Banging the same drum, P argues that if the promisee’s detriments were only suffered after the death of the promisor, it could not be said that the promisor’s conscience is affected, and without any unconscionability on the part of the deceased promisor, no CICT could arise.

Appellant’s Case §§45-49

C3. Submissions on Ds’ Primary Position 27. The analysis of the CA and P is flawed in multiple respects. Objective Test, not Subjective Test

28. At the core of P’s submission, P is suggesting that there must be something operating on the “conscience” of Wan/Fuk/Kau. However, the fundamental problem with this is that it is wrong to assume that the question of “unconscionability” is to be assessed subjectively with reference to the deceased promisor’s state of mind.

29. It is submitted that the test of “unconscionability” is an objective one:-

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(1) As pointed out by Lord Walker in Cobbe v. Yeoman’s Row Management Ltd [2008] 1 WLR 1752, 1788G:- “But Birks was there criticizing the use of ‘unconscionable’ to describe a state of mind…Here [the term “unconscionability”] is being used (as in my opinion it should always be used)as an objective value judgment on behavior (regardless of the state of mind of the individual in question.)” and the question is if it would “shock the conscience of the court”.

(2) In the context of promisor-based proprietary estoppel, the

learned author of McFarlane, “The Law of Proprietary Estoppel” at §5.55 also point out that, “a claim may succeed in the absence of any culpability of [the promisor]”

(3) In Handley, Estoppel by Conduct & Election (2nd Ed), §1-027, it is pointed out that:-

“There is no need to characterize the conduct of the representor…; “ [t]he Court had to look at conduct of the party alleged to be estopped and its result, and not his state of mind; “an objective test” is to be applied4.

30. Indeed, the Courts have repeatedly explained that the purpose

of the law is to protect a promisee whose position has changed: Gillet v Holt [2001] 1 Ch 210, 232G-233D, per

CA Judgment §§1.22-1.23 (per Lam VP)

4 The learned authors cited Taylor Fashions [1982] QB 133, 152

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Lord Walker5; Sarat Chunder (1892) LR 19 Ind App 203, 215-6, per Lord Shand6; Kelly v Fraser [2013] 1 AC 450 §177 per Lord Sumption;

31. The courts have also observed that the promisor should have known that the promisee would act in reliance on the promise or encouragement, and as such it suffices so long as the promisor intended or had reasonable grounds to suppose that the promisee would act on his/her promise or encouragement (which is an objective test): Martin Joyce v. Epsom & Ewell Borough Council [2012] EWCA Civ 1398, §39, (per Davis LJ) 8; Thorner v Major [2009] 1 WLR 776, §5 (per Lord

5 His Lordship cited Grundt v Great Boulder Pty Gold Mines Ltd (1938) 59 CLR 641, 674-675, per Dixon J as well as Inwards v Baker [1965] 2 QB 29; “If and when the father (or his personal representative) decides to go back on the assurance and assert an adverse claim then (as Dixon J put it) ‘if [the assertion] is allowed, his own original change of position will operate as a detriment.’” 6 “What the law…mainly regard[s] is the position of the person who was induced to act; and the principle on which the law…rest[s] is that it would be most inequitable and unjust to him…if…the person who made the representation should be allowed to…repudiate the effect of his former statement.” 7 Lord Sumption pointed out that “the relevance of detrimental reliance in the law of estoppel by representation is that it is generally what makes it unjust for the representor to resile from his previously stated position”. 8 "…the person encouraging necessarily must know just what the person encouraged may have actually done in reliance on the encouragement: see, for example, Crabb v Arun District Council [1976] 1 Ch. 179 at p.189 D-E (per Lord Denning MR) and at pp. 197H-198E (per Scarman LJ); and Taylors Fashions at p.151 (per Oliver J)….”

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Hoffman)9 Spiro v Lintern [1973] 1 WLR 1002, 1012 per Buckley LJ10; Freeman v Cooke (1848) 2 Exch 654, 66311.

32. Bearing in mind the need to protect a promisee whose position

has changed, the question to ask is whether it would be objectively unconscionable to allow a promisee to suffer detrimental reliance without holding the promisor to the promise or assurance.

33. After all, the purpose of the law is to avoid unfair outcomes, and as such the focus is whether the result would be objectively unconscionable: Handley, Estoppel by Conduct & Election (2nd Ed), §1-02712.

34. Unless the promisee has been disabused by the promisor (or

his/her personal representative(s)), it is hard to imagine a situation where the answer to the aforesaid question would be in the affirmative.

9 “In my opinion it did not matter whether Peter knew of any specific alternatives which David might be contemplating. It was enough that the meaning he conveyed would reasonably have been understood as intended to be taken seriously as an assurance which could be relied upon. If David did then rely upon it to his detriment, the necessary element of the estoppel is in my opinion established. It is not necessary that Peter should have known or foreseen the particular act of reliance.” 10 “…it is not necessary that the representation relied on should be false to the knowledge of the representor, provided that the representor acts in such a way that a reasonable man would take the representation to be true and believe that he was intended to act upon it.” 11 “If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would take the representation to be true, and believe that it was meant that he should act upon it, and did act upon it as true, the party making the representation would be equally precluded from contesting its truth” 12 citing Taylor Fashions [1982] QB 133, 152

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35. In the present case, D3 was promised and/or assured that he “should use and own the Land as his home and he could build a shall house there when he became an adult”. (per Lam VP)

CA Judgment §1.28 [A/61]; CFI Judgment §§6, 99 [A/7; 35-36] D3’s D&C §9

36. Having made the assurance/promise, Fuk/Kau/Wan must have intended or known that their promise/assurance would be acted upon by D3.

37. In fact, D3 had never been “disabused” by Fuk/Kau/Wan. Neither Fuk/Kau/Wan nor their personal representatives ( i.e. P, D1 and D2) had ever said to D3 that the promise/ assurance under the Common Understanding/ intention was to be reneged.

38. In the circumstances, D3 genuinely believed that he was entitled to the Land. He kept carrying out all sort of hard-core labour works manually to improve the Land throughout the years. He erected and expanded the two houses/structures on the Land, and borne all the expenses (such as Government rents/rates) in relation to the Land.

CFI Judgment §§75, 85 [A/29; 31]; D3’s RRAD&C §10; D3’s WS §15; and D3’s Supp WS §§14-19, 23

39. Applying the legal principles, it would be “objectively” unconscionable to renege from the promise or assurance under the Common Understanding/intention, and the requirements of detrimental reliance and unconscionability are satisfied.

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Personal Representatives Stepping into the Shoes of the Promisor 40. The CA also wrongly assumed that the last chance to renege

from a promise or assurance is the moment when the promisor dies. The CA overlooked the fact that following the death of the promisor, a personal representative would step into the shoes of the promisor. The personal representative has a choice and control over honouring the promise, or reneging from the promise.

CA Judgment §6.35 [A/93-94]

41. In Gillet v Holt [2001] 1 Ch 210, 232E-F, Robert Walker LJ (as Lord Walker then was), alluding to Jones v Watkins 26 Nov 1987, Court of Appeal Transcript No 1200 of 1987 (per Slade LJ), stated:

“[t]he issue of detrimental reliance must be judged at the moment when the person who has given the assurance seeks to go back on it.”13

CA Judgment §1.22 (per Lam VP) [A/58]

42. In Grundt v Great Boulder Pty Gold Mines Ltd (1938) 59 CLR 641, 674-675, Dixon J stated that:-

“So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion

CA Judgment §1.22 (per Lam VP) [A/58]

13 Contrary to P’s incorrect suggestion (see Appellant’s Case §21(4)), the dictum of Robert Walker LJ is not concerned with questions relating to reliefs. The dictum is concerned with the point of time for assessing whether the claimant had suffered detrimental reliance, such that the constituting requirements of the cause of action is met: see §1.22 of the CA Judgment.

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of right against him then, if it is allowed, his own original change of position will operate as a detriment…”

43. The aforesaid propositions in Gillet v Holt (supra) and Grundt (supra) must be correct. They are consistent with the authorities which suggest that promises from a legal owner would be binding on the legal owner’s personal representatives: Goo and Lee, “Land Law in Hong Kong” (4th Ed.) at §3.72; Mountney v. Treharne [2003] Ch. 135 (CA) at §§71-72, per Jonatan Parker LJ; Inwards v. Baker [1965] 2 QB 29 at 3614; Thorner v Major [2009] WLR 77615; Jennings v Rice [2003] 1 P & Cr 100

44. In the premises, the question to ask is whether D3 (i.e. the promisee) had already suffered sufficient detriment as of the time when P, acting as personal representatives of Fuk/Kau (i.e. the promisors), sought to resile from the Common Understanding/intention .

45. The relevant point of time in determining whether sufficient detrimental reliance had been suffered should be (1) 7/3/13 (when P sued D3 in this Action); or alternatively (2) 5/5/12 (when P issued a demand letter to D1/D2).

RASoC §16; demand letter dated 5/5/12

46. It is not in dispute that as of March 2013 or May 2012, D3 had already completed constructing the two houses (or structures)

14 the Plaintiff being the personal representative of the deceased promisor father was held not entitled to an order for possession evicting the son who expended money on the land in the expectation that he would be allowed to remain in occupation. 15 the majority of the House of Lords held that the promisor’s personal representatives were bound by the promise and the land was ordered to be transferred to the promise (§§10, 28, 48, 66, 104); while the dissenting Lord Scott reached the same outcome on the basis of remedial constructive trust (§§14, 20-21).

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erected on the Land (which were built as early as 2002/2003). This involved highly intensive physical labour works carried out by D3 manually. As such, the requirements of detrimental reliance and unconscionability must have been satisfied. In this connection, it is trite that physical labour works could constitute sufficient detriments : Halsbury’s Laws of England §§117 (fn 14); 14916; Maharaj v Chand [1986] AC 898 at 907.

47. For all the above reasons, the legal issue in question should be answered in Ds’ favour.

C4. Submissions on Ds’ Alternative Position 48. In any event, even if the CFA takes the view that detrimental

reliance is to be determined subjectively as of the point of time when the promisor(s) passed away, on the facts and evidence of the present case, D3 had already suffered sufficient detriment as of the time when Fuk/Kau/Wan passed away in respectively 1991/1992, 1997 and 1999.

CA Judgment §1.28 [A/61]

49. Knowing about the Common Understanding/intention, when D3 was a teenager (i.e. around 1980s 17 ), he had started carrying out works to build stone walls to surround the Land. These were tough and hardcore physical works.

D3’s Supp WS §14(2); photos; Yim Kwong King’s WS

16 Direct contributions to the purchase price by a party who is not the legal owner, whether initially or by payment of mortgage instalments, readily justify the court in drawing the inference of a common intention, but many non-financial contributions, especially labour improving the property can be taken into account 17 D3 was born in 1971: D3’s WS §2. Hence, when D3 was around 10-odd years old, it was in the 1980s.

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50. In 1991/1992, D3 further carried out very substantial physical labour works to improve and heighten the stone walls surrounding the Land. He also installed a new gate at the entrance of the Land. These were done to enhance security and to ensure that strangers could not enter the Land.

D3’s WS §15(1); D3’s Supp WS §14(4)

51. In around 1992, D3 also carried out substantial physical works to install underground electricity cables on the Land. Around the same time, he also started carrying out physical works to maintain the tress, plants, flowers and storage houses within the Land: Halsbury’s Laws of England §§117 (fn 14); 149; Maharaj v Chand [1986] AC 898 at 907.

D3’s RRAD&C §§10(1), 14(a)

52. In the premises, D3 had already suffered substantial detriments as of the time when the 3 elders passed away. It is obvious that D3 would not have carried out the aforesaid hardcore physical works but for the 3 elders’ assurance under Common Understanding/intention.

53. There is no room for P to belittle D3 by suggesting that the hardcore physical works being carried out on the Land were insubstantial or trivial. Such untrue suggestion was not even put to D3 when he was cross-examined at trial. As pointed out by the CFI Judge, D3’s evidence on the works on the Land was “uncontradicted and indeed indisputable”

CFI Judgment §75 [A/29]

C5. Response to other Miscellaneous Arguments raised by P 54. P argues that the Common Understanding/intention was

negated or nullified by the Intestates’ Estate Ordinance as Fuk

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died intestate in 1991/1992. She suggests that Fuks’ share of the Land should be distributed in accordance with the provisions of the Intestates’ Estate Ordinance

Appellant’s Case §50(1)

55. This argument is completely bad: (1) P is unable to cite any statutory provisions or authorities

which suggests that the Intestates’ Estates Ordinance would dispel or oust the operation of the doctrines in equity, such as CICT (or proprietary estoppel).

(2) Indeed, as soon as the promisee suffered adequate detriments in reliance of the promise, a constructive trust (or proprietary estoppel) would arise, and the property in question would no longer be within the estate of the deceased. It is hence wrong for P to suggest that the doctrines in equity would “override” the statute. There is simply no conflict between the two.

(3) Further, it is important to note that a personal representative would step into the shoes of the deceased promisor. If P’s argument were correct, a personal representative would be at liberty to renege from the promises made by the deceased promisor, which would lead to absurdity in law. Bearing in mind that the purpose of the law is to protect a promisee whose position has changed: Gillet v Holt (supra) 232G-233D; Sarat Chunder (supra) 215-6; Kelly v Fraser (supra) §17, this outcome would be absurd, and P’s argument must be wrong.

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56. P further argues that the Common Understanding/intention was contradicted and/or superseded by the wills of Kau and Wan dated respectively 27/2/1993 and 5/8/1999.

57. Likewise, this argument is also completely bad:-

(1) s.19 of the Wills Ordinance is merely a deeming provision providing that “every will shall, with reference to the property comprised in it, be construed to speak and take effect immediately before the death of the testator.” It does not provide that a will shall have the effect of negating or nullifying the promises that were made when deceased was alive; nor does it create any deeming effect in respect of the intention of a deceased under the laws/rules in equity.

(2) In the premises, it is hardly surprising that P is unable to cite authorities which suggests s.19 of the Wills Ordinance would dispel or oust the equitable doctrines of CICT (or proprietary estoppel).

(3) Further, if P’s argument were correct, an estate would

not be bound by the promises made by the deceased, and a promisor could easily make use of a will to renege from his/her promises. As mentioned, the law aims at protecting the promisee and avoiding outcome that

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would be objectively conscionable. As such, P’s argument must be wrong.

(4) For completeness, it should be pointed out that there

were concurrent factual findings18 by the CFI Judge and the CA that the Common Understanding/intention did exist. Having signed the 97 Consent Statement, Kau and Wan’s intention had not changed prior to their death. Hence, there is no room for P to rely on the wills of Kau and Wan to challenge or dispute the Common Understanding/intention.

C6. Some Conclusive Remarks

CFI Judgment §§77-99 [A/29-36]; CA Judgment §§1.28-1.29, 6.2-6.12 [A/61-62; 77-83]

58. It is important to bear in mind that the purpose of the law on CICT is to give effect to the intention of the parties in a domestic context, and the Courts will strive the ascertain the such intention: Stack v Dowden [2007] 2 AC 432, §5 (per Lord Hope). If P’s argument were correct, the purpose of the law would be defeated. P is unable to cite one single authority suggesting that the common intention would disappear like a puff of smoke in the air upon the promisor’s death.

59. Finally, it should be noted that after years of development, the constituting elements of common intention constructive trust and proprietary estoppel should not differ in any material aspect. “The distinction between the claimant’s rights under an estoppel and under a constructive trust is now dismissed

18 Sky Heart Ltd v. Lee Hysan Co. Ltd (1997-98) 1 HKCFAR 318 at pp 333F-338B

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since both may operate as interests in land and be overreached. The difference remains, however, that the remedy by which an estoppel is enforced is discretionary, while under a constructive trust the claimant is entitled to his agreed beneficial share”: Snell’s Equity (34th Ed.), §24-047.

D. Proprietary Estoppel (arising from Promise/Assurance) D1. The Legal Issue 60. Similar to the legal question on common intention

constructive trust (see Section C1 above), the legal issue to consider is whether promisee must suffer adequate detriments before the death of the promisor(s) in order for a proprietary estoppel to arise.

Appeal Committee’s Order §1(1) [A/141-142]

D2. The Views of the CA 61. The CA took the view that the answer lies in the affirmative.

Lam VP pointed out that: (1) “[T[he equitable doctrine of estoppels is more flexible in

achieving justice between the parties.” As such, “the whole chronology of events starting from the communication of the common intention…to the time when the plaintiff commenced the action has to be taken into account instead of rigidly dissecting the events into two different phrases”.

CA Judgment §§1.10, 1.13 [A/54; 55]

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(2) The “authorities clearly show that the equity arising from an estoppel can bind the estate of the promisor after his death”, and “ the issue of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it”. Hence, “[t]he going back from an assurance can take place either during the lifetime of a promisor or after his death when his estate is administered by his personal representative.”

(3) “Thus, if there were reasonable reliance, the

unconscionability is to be assessed at the time when the promisor or, after his death, his personal representative goes back on the assurance. The question of detriment is to be considered only when dispute has arisen.”

CA Judgment §§1.20, 1.22, 1.24 [A/57-60] CA Judgment §1.24 [A/59-60]

D3. Ds’ Further Submissions 62. For the reasons elaborated by Lam VP, it is submitted that the

CA was correct to hold that the detriments could be suffered after the death of the promisor(s), and the question of detriment is to be judged at the moment when the dispute arises or when promise is reneged: see Gillett v Holt (supra) at pp.232E, 233D (per Robert Walker LJ); Jones v. Watkins (supra) (per Slade LJ); and Grundt v Great Boulder Pty Gold Mines Ltd (supra) 674-675 (per Dixon J).

CA Judgment §§1.10-1.26 [A54/-61]

63. Ds further repeat the submissions set out in Section C219 above (which is also pertinent in the contexts of proprietary estoppel). In particular, it is repeated that:-

19 Whilst it is recognized that common intention constructive trust and proprietary estoppel are 2 different doctrines or causes of action, their constituting elements overlap.

23

(1) When a promisor makes a serious promise to induce the

promisee, the promisor should have known that the promisee would act in reliance thereon (which is an objective assessment): Martin Joyce v. Epsom & Ewell Borough Council (supra) §39, (per Davis LJ); Thorner v Major (supra), §5 (per Lord Hoffman) Spiro v Lintern (supra) 1012 per Buckley LJ; Freeman v Cooke (supra), 663. (see §31 above)

(1) Hence, the test of “unconscionability” must be an objective one, and the focus is whether the outcome would be objectively unconscionable (not whether the promisor is subjectively blameworthy): Cobbe v. Yeoman’s Row Management Ltd (supra) 1788G (per Lord Walker); McFarlane, “The Law of Proprietary Estoppel” at §5.5; Handley, Estoppel by Conduct & Election (2nd Ed), §1-027. (see §§29, 32-33 above)

(2) After all, the purpose of the law is avoid outcomes that would be unjust or unfair, and equity will seek to protect a promisee whose position has changed: Gillet v Holt (supra) 232G-233D,; Sarat Chunder (supra) 215-6,; Kelly v Fraser (supra) §17 (see §30 above).

64. Bearing in this mind these factors, it is submitted that the CA

was correct to hold that the equitable doctrine of proprietary estoppel is wide enough to do justice to a promisee, whose detriments are suffered after the death of the promisor (so long as the reliance on his part is unreasonable).

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D4. Response to P’s Argument 65. In the premises, there is simply no merit in P’s argument that

upon a person’s death, “the promise…must be taken to have lapsed”. P is unable to cite any authority to support this extreme proposition. Bearing in mind the unfairness involved (which equity seeks to avoid and address), there is no surprise that P is unable to cite any authority suggesting that upon death, a promise shall vanish like a puff of smoke in the air.

66. It is also hard to understand why P would suggest that a promise made by a person could never be made good upon death. The simple answer is that the personal representative of the promisor could choose to honour the promise.

67. In any event, it is trite that proprietary estoppel is a well-

established means of giving effect to an incomplete gift: Snell’s Equity (34th Ed) §24-013. Therefore, it simply begs the question whether proprietary estoppel has been established and arisen in the circumstances.

Appellant’s Case §19

D5. D3’s Reasonable Reliance in the Present Case 68. It is further submitted that in the circumstances of the present

case, it was reasonable for D3 to act in pursuant to Common Understanding/intention that he should “use and own the Land as his home”, both before and after the death of the 3 elders in the 1990s.

CA Judgment §1.28 [A/61]; CFI Judgment §§6, 99 [A/7; 35-36]

25

69. As pointed out, as early as 1980s, D3 had already started carrying out physical works to build a stonewall surrounding the Land. In 1991/1992, D3 further heightened/improved the stone walls, installed a new gate, installed underground electricity cables and started maintaining the trees, plants, flowers and storage houses.

D3’s WS §15(1); D3’s Supp WS §14(4); D3’s RRAD&C§§10(1), 14(a)

70. All these labour works on the Land were done with the knowledge and approval of the elders, and as found by the CFI Judge D3’s evidence on the works was uncontradicted and indisputable.

D3’s WS §15; D3’s Supp WS §14; CFI Judgment §75

71. In March 1997, Wan and Kau even signed the 97 Consent Statement to facilitate D3’s intended application to the Land District Office for building a small house on the Land. In the 97 Consent Statement, Wan and Kau unconditionally agreed D3 could build a house on the Land. As found by the CFI Judge, “Fuk was unable to sign the 97 Consent Statement only because he had already passed away as of March 1997.”

CFI Judgment §82 [A/31]; D3’s WS §§16-17

72. After the 3 elders passed away, D3 continued to live on and occupy the Land. He continued to carry out very substantial works to improve the Land. In particular, he erected the two houses (or structures) on the Land in 2002 and 2003.

CA Judgment §1.28 [A/61]; CFI Judgment §§75, 85 [A/29; 31]; D3’s RRAD&C §10; D3’s WS §15; and D3’s Supp WS §§14-19, 23; photographs

26

73. All along, no one (whether within the family or otherwise) had ever interrupted D3’s use and occupation of the Land. No one had ever indicated to D3 that the Common Understanding/ intention should not be followed anymore.

74. Since D3 had been using, occupying and building on the Land all along without any interruption, he had no reason to think Common Understanding/ intention would be reneged one day.

75. After all, the Common Understanding/intention was an informal arrangement within a traditional New Territories family, whose members dealt with each other based on trust, not mistrust.

76. Whilst P was not a party to the Common Understanding/intention (as she did not participate in the discussion in respect thereof), all along P knew about the existence of the Common Understanding/ intention. This was why when P and D3 were still on good terms back in 2005/200620, they agreed that:- (1) P would make an application to become the personal

representative of Fuk’s estate. Thereupon, P should transfer Fuk’s 1/3 title and Kau’s 1/3 title to D3, such that when D3 obtained Wan’s 1/3 title from D1/D2 he could become the sole registered owner, and hence be entitled to apply to build a small house.

(2) P would honour the Common Understanding/intention.

D3’s WS §§18-19; D3’s 2nd Supp WS §12

20 As found by the CFI Judge in §67 of the CFI Judgment [A/25], P and D3 had become friendly with each other after 2003, and she would visit D3’s home on the Land.

27

(3) D3 would pay all the expenses incurred by P in relation

to the administration of the estate of Fuk.

77. As found by the CFI Judge, the registered owners of the Land (i.e. P, D1/D2) simply adopted a “could-not-care-less attitude”. They never used the Land, and never interfered D3’s extensive works.

CFI Judgment §§87-88 [A/32-33]

78. Insofar as P is concerned, the CFI Judge further specifically found that after 2003 (when P became friendly with D3), P would from time to time visit D3 at his home on the Land, and she would even stay there for dinner as a guest. Hence, P was perfect aware of all the building works and garden works that D3 carried out on the Land.

CFI Judgment §§67, 100-101 [A/25; 36-37]; D3’s Supp WS §6

79. However, P never complained. She never indicated that the Common Understanding/intention should no longer be adhered to. She never do anything to assert the titles of Kau or Fuk (until she sued D3 on 7/3/2013).

CFI Judgment §§67, 87, 100-101 [A/25-37]; ASoC

80. In the circumstances, it was all along reasonable for D3 to continue to use, occupy and improve the Land. This was exactly what he had been doing for years without interruption.

81. As accepted by the CFI Judge, D3 has been treating the Land as his own property. Since the Land was “his home”, “it was only natural for him to invest so much”. “[I]t was his hobby to improve [the Land], and he built things for himself and his wife to enjoy”.

CFI Judgment §73(1), (3) [A/27]

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D6. The Question of Relief 82. It is not in dispute that under the doctrine of proprietary

estoppel, the Court has wide discretion to grant appropriate reliefs.

83. In Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1, §70 (p.26H), Ribeiro PJ held that in situations involving clear-cut promises, “the court’s natural response is to fulfill the claimant’s expectation”.

84. Further as pointed out in Snell’s Equity (34th Ed) §12-051, if

the promisee has successfully made out an acquiescence or promise-based claim, it may be unsatisfactory if the Court’s does not clarify the nature of his/her right.

85. The promise or assurance under the Common Understanding/intention is clear-cut, i.e. “D3 could use and own the Disputed Land as his home and he could build a small house there when he became an adult”.

CA Judgment §1.28 [A/61]; CFI Judgment §6 [A/7]

86. In the premises, in order to fulfil the expectation of D3 (and to give effect to the Common Understanding/intention), the most appropriate order to make is to compel P to transfer the legal title of the Land in favour of D3, such that D3 could “own” the Land.

D3’s WS §§16, 20

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87. Indeed, until and unless D3 becomes the sole registered owner of the Land, he may not be in a position to make a successful application for building a small house thereon.

E. Estoppel by Standing By or Acquiesce E1. Legal Principles 88. The law on estoppel by standing by is summarized in Mo Ying

v. Brillex Development Ltd [2015] 2 HKLRD 985, §8.2 (per Cheung JA). Mo Ying was cited and applied by the CFI Judge.

CFI Judgment §16

E2. Application of the Legal Principles in the present Case 89. Ds repeat the findings and factual matters set out in Section

D5 hereinabove. In particular, it is repeated that:- (1) From 2003 to 2012, P and D3 were on friendly terms. P

would (as a guest) visit D3 and his family on the Land for dinner and parties from time to time. As such, P was fully aware of the extensive building works and improvement works that D3 carried out on the Land. She also knew that D3 and her family treated the Land as their permanent home.

(2) Further, P knew about the existence of the Common Understanding/intention within the family. At one stage, P even agreed with D3 that she would honour the Common Understanding/ intention.

CFI Judgment §§67, 100-101 [A/25; 36]; D3’s Supp WS §6; D3’s RRAD&C §§11A-11B D3’s WS §§18-19; D3’s 2nd Supp WS §12

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(3) Despite her knowledge of D3’s continuous works on the Land as well as the Common Understanding/intention, P never complained that D3 should not build or live on the Land. She never indicated that the Common Understanding/intention should be reneged. She never did anything to assert the titles of Kau or Fuk (until she sued D3 on 7/3/2013).

CFI Judgment §§67, 87, 100-101 [A/25; 32-33; 36]

90. In the premises, it is clear that P had accepted or acquiesced D3’s de facto ownership and/or beneficial interest over the Land. Without hearing any objection or complaints, D3 continuously invested a substantial amount of financial resources, time, efforts (in terms of physical labour) to improve the Land. As such, P must be estopped from complaining.

E3. P’s Case below 91. In the CFI, P argued that that there was no estoppel by

standing by, because (1) she was the one who authorised D3 to build garden features on the Land; and (2) under the Alleged 03 Conversation, D3 agreed to demolish the structures built on the Land in the future.

P’s RA Reply §28A(d); P’s WS §§23, 50; P’s 1st Supp. WS §16; P’s 2nd Supp. WS §§52, 55

92. The CFI Judge found that P’s allegations were all concoctions,

and P simply had no defence to D3’s claims based on estoppel by standing by.

CFI Judgment §§53-56, 100-103 [A/22-23, 36-38]

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93. P did not even challenge the aforesaid factual findings made by the CFI Judge when she brought the matter to the CA.

E4. P’s Argument Now 94. Being desperate to renege from her previous position, P now

raises a bunch of highly forensic arguments.

95. None of these new arguments (which were not even raised before the CFI Judge) has merits.

96. First, relying on an obsolete case21, P appears to suggest that she would not be caught by the doctrine of estoppel by standing by unless she knew that D3 acted on a belief that was mistaken.

Appellant’s Case §§53, 58

97. There is no merit in this argument:- (1) It is wrong to suggest that estoppel by standing by is

confined to situations of mistaken belief: Mo Ying §8.2. The better view is that it suffices as long as the legal owner knowingly acquiesced the claimant’s de facto ownership or disposition of the property.

(2) In any event, D3, acting in pursuant to the Common Understanding/intention, all along acted on the basis that he was entitled to use and own the Land as the de facto owner. As such, if D3 had no such entitlement (as P contends), there would be a mistake on the part of D3.

21 Ramsden v Dayson (1866) LR 1 HL 129

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(3) Hence, the argument on mistaken belief would not avail

P.

98. Second, relying on the same obsolete case22, P suggests that she would only be caught by the doctrine if equity considers that her passivity was dishonest.

99. It is submitted that:-

(1) The yardstick is “unconscionability”, not “dishonesty”: Mo Ying §8.2.

(2) In any event, by reason of the matters set out hereinabove, P is both unconscionable and dishonest. Putting aside the fact that she was repeatedly caught lying on oath at trial, her change of stance and flagrant disregard of the promises made by the elders in the family (who were her predecessors-in-title) were most abhorrent and dishonest.

Appellant’s Case §54

100. Third, P makes a song and dance about the fact that she only became the personal representatives of Kau and Fuk in respectively 1998 and 2006.

Appellant’s Case §56

101. This is neither here nor there:-

D3’s RRAD&C §10; D3’s WS §15;

22 Ditto

33

(1) Even before their death, the elders had already known and/or acquiesced D3’s physical works to improve the Land in the 1990s.

(2) In any event, there is no dispute that during the period from 1998 (or 2006) to 2012/2013, D3 carried out very substantial labour works himself to build on the Land and to improve the Land, and he also continuously occupied the Land as the home for his family. P was happy and contented to acquiesce D3’s de facto ownership throughout this period of time.

and D3’s Supp WS §§14-19, 23; photographs; CFI Judgment §75

102. Fourth, P now belatedly alleges that she did not know the basis on which D3 carried out the substantial works on the Land, and she emphasises that she was not a party to the Common Understanding/intention.

Appellant’s Case §58

103. This is a bad and disingenuous argument:- (1) For the reasons elaborated above, the “basis on which

[D3’s] work was carried out” is a red-herring. As a matter of law, there is no requirement that the defendant must know the basis on which the claimant suffers determinant.

(2) In any event, on the Judge’s findings and the facts/evidence, P knew (or objectively ought to know) that D3 continuously carried out substantial building works on the Land throughout the years because he

34

assumed de facto ownership thereover. In other words, the “basis” is D3’s de facto ownership, which P had knowingly accepted and acquiesced. In light of the CFI Judge’s findings against her, it is not open to P to argue before the CFA that she never knew about the fact that D3 had assumed de facto ownership over the Land throughout the years.

(3) In any event, all along P knew about the existence of

the Common Understanding/intention within the family. As such, P knew (or objectively ought to know) that D3 continuously carried out all these works on the Land because the elders of the family had promised or assured him that he could own and use the Land as his home.

D3’s WS §§18-19; D3’s 2nd Supp WS §12

104. Fifth, P suggests that she could not have raised any objection, because D1/D2 (stepping in the shoes of Wan) were co-owners of the Land, and they must have consented to D3’s extensive works on the Land.

Appellant’s Case §59

105. This allegation is contradicted by the findings, facts and evidence in the present case. It is even inconsistent with P’s stance at trial:

(1) Having visited D3 frequently, P was aware that D3 built

the 2 houses on the Land in 2002 and 2003. She was also aware of D3’s continuous works to improve the garden facilities throughout the years. P did not object to these works because she was then on good terms with

CA Judgment §1.28 [A/61]; CFI Judgment §§67, 87, 100-103 [A/25, 32-33, 36-38];

35

D3. She accepted D3’s de facto ownership over the Land. She also knew about the Common Understanding/intention.

(2) In the proceedings below, P did not make any plea nor

filed any evidence, suggesting that she was not in a position to raise objection to D3’s extensive works because D1/D2 (being co-owners) had consented to the same. This was not even P’s case at trial. There is not even a shrewd of plea nor evidence suggesting that D1 and D2 consented to D3’s construction works, and that P had ever ascertained D1/D2’s wish regarding these extensive works.

(3) As mentioned, at trial, the focus of P’s contention was

that (1) she was the one who authorised D3 to build garden features on the Land and (2) D3 agreed to demolish the structures built on the Land in the future. These false allegations were rejected by the CFI Judge. Further, these allegations also contradict P’s current stance or allegation D3 carried out the extensive works with D1/D2’s consent.

(4) In fact, P ran a case at trial that D3 erected structures on

the Land as the “agents or servants [sic] of the 1st and/or 2nd Defendants”. She then went on to seek an injunction order against D1/D2 compelling them to demolish the 2 houses/structures.

D3’s WS §§18-19; D3’s Supp WS §6; D3’s 2nd Supp WS §12 P’s RA Reply §28A(d); P’s WS §§23, 50; P’s 1st Supp. WS §16; P’s 2nd Supp. WS §§52, 55 ASoC §10, prayer (1)-(2)

36

(5) The false allegation of agency and the unmeritorious claim for an injunction against D1/D2 (which were rejected by the CFI Judge) was also wholly contradictory to and inconsistent with P’s current stance that it was her understanding that she had to respect D1 and D2’s rights and wish as co-owners.

(6) The CFI Judge further found that throughout the years,

D1/D2’s stance was that they were not in a position to stop D3 from carrying out the works in light of the Common Understanding. They simply adopted a “could-not-care-less” attitude. This was because they only had a “bare legal title”.

(7) The CFI Judge never found that D3 had to obtain D1/D2’s consent before he could carry out any works; nor did he found that P had ever ascertained the wish and stance of D1/D2 regarding the extensive works of D3.

(8) In the premises, it is wholly disingenuous for P to make

use of D1/D2’s bare legal title as an excuse to explain her previous acceptance or acquiesce of D3’s de facto ownership over the Land.

(9) There is simply no basis whatsoever to suggest that the

extensive works on the Land by D3 was consented by D1/D2 at all and that D3 respected and followed the wish of D1/D2.

CFI Judgment §§51-52 [A/21-22]; Appellant’s case §59 CFI Judgment §§87 -88 [A/32-33]

37

106. Sixth, now P belatedly alleges that D3 did not come to Court with clean hands as the 2 houses were unauthorised structures, and approval of the Government has not been approved.

Appellant’s Case §60

107. P did not even plead that D3 was not entitled to rely on the doctrine of estoppel by standing by because he did not come to Court with clean hands. The argument on “clean hand” was not raised before the CFI Judge (nor the CA). This is a new point raised for the first time before the CFA.

108. In the premises, P must be debarred from raising this new point now (which not even raised at the CA). This point has “in truth nothing to do with any appeal” as it “does not involve alleging that the lower courts erred in any way” but is “merely an attempt to get the Court of Final Appeal to allow the appellants to start the litigation all over again, running a point which was deliberately not pursued”: Champion Concord Ltd v Lau Koon Foo (No 1) (2011) 14 HKCFAR 534, §11; Flywin Co Ltd v Strong & Associates (2002) 5 HKCFAR 356.

109. Had P pleaded and raised the matter properly in the

proceedings below, D3 would have adduced evidence on, inter alia, the legality of the 2 houses that he built on the Land, his liaison with the Government, and the permissions granted by the Government pursuant to the “squatter control policy” (which was discussed and elaborated in Lee Siu Fong v Wong Wan Leung (HCA 122/2012, 3/1/2017) §§16-17 (per Lok J); Chong Hing Bank Limited v Fairview City Limited & ors (HCMP 3225/2014, 25/7/2018) §§50-53 (per Lok J). Further,

38

D3 would also have advanced submissions before the CFI Judge and the CA regarding the implication of the “squatter control policy” to answer any argument on clean hands.

110. In any event, putting aside the 2 houses/structures, throughout the years D3 manually carried out a huge amount of physical labour works in respect of the gardening facilities (as well as electricity facilities and water facilities) on the Land; he also endeavoured to maintain the plants and flowers on the Land manually and physically. These works constituted sufficient detriments on the part of D3, and there is no suggestion that D3’s works in this regard were unauthorised.

111. Lastly, the clean hands doctrine is “limited” and “great care

should be taken in invoking the maxim where there is no “serious immoral and deliberate misconduct, which is an “immediate and necessary relation to the equity sued for”: Snell’s Equity (34th Ed.), §5-010.

CFI Judgment §§75, 85; D3’s RRAD&C §10; D3’s WS §15; and D3’s Supp WS §§14-19, 23; photographs

112. Seventh, relying on Knowles v Knowles [2008] UKPC 30, P seeks to argue that the Court should be slow to penalize those “who through acts of kindness simply allow other family members to inhabit their property rent free”

Appellant case §61

113. This is not even the scenario of the present case. The facts of the present case are miles from Knowles. P had never granted any license or consent to D3 at all. What happened was that the elders of this traditional Chinese family unanimously agreed that D3 (the only male descendent of the family) should inherit one of the lands left behind by the ancestors,

39

and D3 was expressly promised/assured. In light of the Common Understanding/ intention in the family, D3 occupied the Land as his home, and took steps to improve it bit by bit throughout the years.

114. Knowing about the wish of the elders under the Common Understanding/intention, at one stage, P even agreed to abide the Common Understanding/intention. She only reneged out of greed when she was lured by some developers to sell the Land to them. It is hard to see how Knowles would avail P at all.

D3’s WS §§18-19 P’s Supp WS §6

F. Account of the Rental of House 774

115. The legal issue is framed in two alternative parts: (a) whether a co-owner should be ordered to account for occupation rent in cases other than partition or ouster; and (b) whether Re Pavlou should be confined to partition or analogous proceedings.

116. The two questions are different ways of asking the same question. The principles in Re Pavlou clearly establish a flexible approach in equity to order occupation rent without confinement to ouster, partition or anything in analogy.

117. As a matter of law, it is now recognised that a co-owner may

claim occupation rent from another co-owner where it is “fair”, “just” or “in order to do equity between the parties”: Gray and Gray, Elements of Land Law (5th ed) at §7.4.45, without restrictions to “partition”, “ouster”, “agreement”.

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(a) “[A] court of equity will order an inquiry and payment

of occupation rent, not only in the case where the co-owner in occupation has ousted the other, but in any other case in which it is necessary in order to do equity between the parties that an occupation rent should be paid”: In Re Pavlou (A Bankrupt) [1993] 1 WLR 1046, per Millett J (as he then was), at 1050D.

(b) In determining the question of occupation rent, “[w]hat

the court is endeavouring to do is board justice or equity as between co-owners”, and the Court would take into account of the use or benefit derived by the co-owner in occupation: Re Byford (deceased) [2004] 1 P & CR 12 159, per Collins J (as he then was), at 168. Whether occupational rent would be charged on the facts of each case is “ultimately a matter of discretion”: French v. Barcham and another [2009] 1 WLR 1124, per Blackburne J at §43.

118. This position is further reinforced in Leung Siu Man & Ors.

v. Leung Yiu Tai (HCA 713/2014, unrep., 16/8/2019) at §63. There, Peter Ng J, citing Re Pavlou (supra), pointed out that a Court of Equity will intervene where “it is necessary to do equity between the parties”, and “[t]he fact that there has not been an ouster or forceful exclusion therefore is far from conclusive…”.

119. These authorities are certainly supported with sound legal

reasoning and good policy considerations:-

41

(a) The position relied on by P is outdated and overly rigid.

It is illogical to confine occupational rent and mesne profits to cases of ouster, partition and agreement. It overlooks the reality that there could be many situations where a co-owner does not reside in a co-owned property that falls short of ouster, where it would be unjust for the other co-owner to pocket all benefits. Indeed, in Re Pavlou, the Court did consider the older authorities confining order of occupation rent to ouster cases but considered that to be too rigid.

(b) If the co-owned property is rented out, there is no reason

why one of the co-owners should pocket all rental income. Otherwise the law would encourage co-owners to self-pocket benefits to the exclusion of others. This is to encourage chaos and barbarism, and could not be the law.

120. In the present case, it cannot possibly be said that P never

expected to pay occupational rent. D1 and D2 made written and oral demands for rental share to P: (a) the posting of the demand letter on the gate of House 774 and (b) oral demands when they bumped into her in Sai Kung.

121. In the present case, it cannot possibly be said that P never

expected to pay occupational rent. D1 and D2 made written and oral demands for rental share to P: (a) the posting of the demand letter on the gate of House 774 and (b) oral demands when they bumped into her in Sai Kung.

Appellant’s Case §33

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122. Having considered all the circumstances surrounding the

parties, including in particular that there were clearly benefits enjoyed by P arising from rental income (not just residing in House 774), it was plainly correct for the CFI Judge to “do broad justice and equity between the parties” by ordering P to account for 1/3 of the rentals arising from House 774 to D1/D2. After all, D1/D2 are the 1/3 registered owner of House 774. It was unfair and unconscionable for P to pocket the entirety of the rental income.

CFI Judgment §113(2) [A/41]

Dated this 16 March 2021.

William Wong S.C. Alan Kwong

Stephanie Wong Counsel for the Respondents