Mr Lee Ching Lam and his family have occupied land in Wu Kai Sha in the New Territories since the 1950s.
In 1993, a company owned by Mr Lee’s family (Sino Charm Development Ltd) sold the land to Sinbon Development Ltd. Sinbon intended to apply to the Government to change the user of the land and construct multi-storey buildings.
Sinbon and Sino Charm agreed that if the application for change of user was successful, Mr Lee’s family would receive one floor of a building and two car parking spaces. If the application was unsuccessful, 8,000 sq ft of the land would be assigned back to Sinbon. Accordingly, in the sale and purchase agreement (SPA), Sinbon agreed to lease the land back to Sino Charm at a nominal rent of $1 until the date of approval of the change of user application or upon Sinbon assigning 8,000 sq ft to Sino Charm.
The user of land was not modified. In 1996, Sinbon sold the land to Unity Profit Ltd, a company owned by Mr Ho Kwan Chu. Mr Lee continued to occupy the land.
In 2000, Mr Ho went to the land and demanded that Mr Lee pay rent. Mr Lee agreed. In 2007 and 2008, upon Mr Ho’s request, Mr Lee signed written tenancy agreements.
In around May 2009, Mr Ho asked Mr Lee to vacate the land as soon as possible.
At the same time, Mr Lee obtained legal advice that in view of the 1993 SPA, he did not have to pay rent to occupy the land. Mr Lee therefore demanded that Mr Ho return the rent that he had paid by mistake since 2000. According to Mr Lee, Mr Ho orally agreed during a conversation to pay back the money and assign 8,000 sq ft to Sino Charm, and agreed that Mr Lee would only be required to vacate and return the rest of the land after Mr Ho had done so.
After this conversation, Mr Lee stopped paying rent to Unity Profit and continued to occupy the land. Unity Profit did not repay the rent. No action was taken by Unity Profit until 2017 when Mr Lee was asked to vacate the land. Mr Lee refused, prompting Unity Profit to commence legal action in the High Court to seek a possession order. Mr Lee in turn brought a counterclaim based on proprietary estoppel founded on the May 2009 conversation. Mr Lee also brought a counterclaim for adverse possession of an adjacent plot of land.
After trial, Madam Justice Winnie Tsui accepted Mr Lee’s factual account as to the May 2009 conversation. The Court held that Mr Lee had relied on Mr Ho’s representations and consequently suffered detriment by incurring expenditure on maintaining and improving the land. It was unconscionable for Unity Profit to go back on the representations made on its behalf by Mr Ho during the May 2009 conversation. The Court found that proprietary estoppel was established. Mr Lee’s counterclaim for declaratory relief was allowed and Unity Profit’s claim for a possession order was dismissed.
On the other hand, Mr Lee’s counterclaim for adverse possession of the adjacent lot was dismissed as the Court took the view that insufficient evidence had been adduced showing exclusive possession.
Osmond Lam and Jacquelyn Ng, instructed by Lee Wong & Co, acted for Mr Lee.
The judgment handed down on 8 November 2024 ([2024] HKCFI 3178) can be found here.
The decision on costs handed down on 16 April 2025 ([2025] HKCFI 1563) can be found here.
