Hong Kong Settlers Housing Corporation Ltd v Yan Kwok Yip & Ors [2026] 3 HKC 1154, [2025] HKDC 1800 (Christopher KH To)
Christopher KH To represented the defendant in DCCJ 5509/2023 (for 1st and 2nd days of trial), the defendant in DCCJ 5546/2023, and the defendant in DCCJ 5582/2023 in Hong Kong Settlers Housing Corporation Ltd v Yan Kwok Yip & Ors [2026] 3 HKC 1154, [2025] HKDC 1800.
The plaintiff was a non-profit charitable organisation incorporated in 1952 as a company limited by guarantee, with the object of providing resettlement housing to persons living in poor conditions, including the residents who became homeless after the Shek Kip Mei fire in 1953. The plaintiff built stone cottages in, amongst other places, Kwong Man Village (which occupied the site of the present Tai Hang Sai Estate), and allocated these cottages to affected residents either by sale for a one-off payment or on hire-purchase terms. In 1958, the Government decided to resume the Kwong Man Village cottages and agreed to grant suitable land to the plaintiff for rehousing the residents. Pending the plaintiff providing permanent rehousing, the Government undertook to temporarily accommodate the displaced tenants in resettlement estates. For tenants who had not yet completed their hire-purchase payments to the plaintiff, they would pay standard rent to the Government for the remaining payment period; for those who had already completed all payments, they would pay no rent to the Government for the balance of a 10-year period. After the expiry of the 10 years, all tenants were required to pay standard rent to the Government. In May 1961, the Government granted New Kowloon Inland Lot No 4479 (ie Tai Hang Sai, Kowloon) to the plaintiff and cancelled the occupation permit granted for the Tai Hang Sai resettlement cottages. The Government also issued clearance notices and resettlement arrangements, including the arrangement made by the plaintiff at the time for the residents of the resettlement area to relocate back to the new buildings in the area. Between 1964 and 1967, the plaintiff constructed seven 7-to-10-storey residential blocks on the Lot, and in 1981 completed the final block, thereby forming the present Tai Hang Sai Estate. Thereafter, former Kwong Man Village residents who elected to return to Tai Hang Sai Estate, together with other eligible persons whose applications were approved, periodically entered into tenancy agreements with the plaintiff and became tenants of Tai Hang Sai Estate. The plaintiff planned to redevelop the considerably aged Tai Hang Sai Estate. To facilitate the redevelopment project, the plaintiff has offered various forms of assistance to tenants, including rehousing arrangements, rent subsidies and moving allowances for tenants who qualify for rehousing, and ex-gratia moving allowances for those who do not. Since late 2023, the plaintiff, in its capacity as registered owner and landlord, had commenced possession proceedings against tenants who have failed to deliver up vacant possession of their flats, including the five defendants in the present consolidated actions (Chan, Cho, Kwan, Ma and Tam). The tenancy agreements between the plaintiff and all five defendants had already expired before the actions were commenced. Each tenancy agreement contained an identical clause II(26), which provided that on the determination of the tenancy hereby created forthwith to deliver up vacant possession of the said flat to the Landlord notwithstanding any rule of law or equity to the contrary. The grounds on which the respective defendants refused to deliver up vacant possession were as follows: Chan claimed that his grandfather purchased a cottage in Kwong Man Village under the then hire-purchase scheme, and upon moving into the flat in Tai Hang Sai Estate, became the owner of the flat; the flat formed part of his grandfather’s estate and belongs to him, and the so-called rent he pays was merely management fees. Cho claimed that her grandfather had purchased a cottage in Kwong Man Village, subsequently agreed to its demolition and to be rehoused in Tai Hang Sai Estate, and therefore, by virtue of promissory estoppel and proprietary estoppel, she could not be compelled to move out without rehousing arrangements. Tam contended that there was an implied term in the tenancy agreements entitling tenants to continue in occupation unless and until they were in default of payment of rent or in breach other tenancy terms. Kwan, Ma, Cho and Tam further contended that clause II(26) of the tenancy agreement was invalid. Cho, Kwan, Ma and Tam originally filed counterclaims, but confirmed at the opening of the trial that they would no longer pursue their counterclaims.
Held, giving judgment to the plaintiff and ordering the defendants to deliver vacant possession:
(1) The plaintiff is the lawful owner of Tai Hang Sai Estate, and there is no dispute that the relevant tenancy agreements were valid and had already expired. A fixed-term tenancy automatically terminates upon effluxion of time without need for notice. By virtue of estoppel by tenancy, estoppel by contract, and estoppel by convention, tenants are bound by the tenancy and cannot deny the landlord’s title or depart from the factual assumptions on which the tenancy was granted. On the established facts and applying the above legal principles, upon expiry of the tenancies the plaintiff is entitled to recover vacant possession. The defendants must deliver up vacant possession of their respective flats unless they can prove a valid defence, the burden of proving which lies on the defendants. Tang Man Kit and Foo Tak Ching v Hip Hing Timber Co Ltd [2005] HKCU 610, (CACV 137/2002, Cheung JA, 13 May 2005, unreported), Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] 2 Lloyd’s Rep 511 and First Laser Ltd v Fujian Enterprises (Holdings) Co Ltd [2013] 2 HKC 459; (2012) 15 HKCFAR 569 applied (paras 31–47).
(2) Yan and Cho and their family predecessors claimed that in the 1950s they acquired ownership of cottages in Kwong Man Village through hire-purchase or sale agreements. In fact, those agreements concerned only the purchase or hire of a ‘house/structure’ and conveyed no land title or interest in land. None of the agreements identified the lot on which the cottage stood or annexed any plan to specify the lot details. Clause 1 of the sale agreements expressly provided that the cottage was sold ‘SUBJECT to the terms and conditions of the Permit issued by the Government’, and purchasers remained obliged to pay permit fees to the Government after the purchases. Section 45 of the Resettlement Ordinance 1958 conferred the Government with absolute power to cancel the occupation permit in the Tai Hang Sai resettlement area. Once the permit was cancelled, the former permit-holder and his dependants became trespassers, entitled only to remove cottage building materials, and no court should accept any case in relation to claims or remedies arising from such cancellation. In 1961, the Resettlement Department cancelled the occupation permit for Kwong Man Village cottages pursuant to the Resettlement Ordinance 1958. Upon cancellation and demolition of the structures, all interests in the cottages were extinguished. The defendants retained no ownership or equitable interest in the Kwong Man Village cottages, and no such interests were capable of being transferred to the present flats in Tai Hang Sai Estate. Considering the inherent probability, when the defendants’ families moved out of Kwong Man Village, they received rehousing and rental arrangements or ex-gratia payments according to their circumstances, and were therefore not exploited or unfairly treated (paras 56–69).
(3) Cho could not rely on promissory estoppel or proprietary estoppel to resist delivery of possession, because she failed to prove that the plaintiff ever made a clear and unequivocal representation or promise to her grandfather or family that they could remain in Tai Hang Sai Estate flats permanently or indefinitely without conditions, or that they suffered detriment in reliance on any such promise by the plaintiff. The only promise made by the plaintiff in its letter in 1961 was to give unconditional priority rehousing in Tai Hang Sai Estate and that was fully performed decades ago. Cho’s assertion that the promise extended to a right of perpetual occupation far exceeded its scope and had no factual foundation. The reason the Kwong Man Village residents had to move out was the Government’s lawful cancellation of the occupation permit, not reliance on any promise by the plaintiff. Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1; [2008] HKCU 918, Thorner v Major [2009] 1 WLR 776, Szeto Chak Mei (The Sole Administratrix of the Unadministered Properties of the Late Szeto Chiu, Deceased) v Chan Lam Shan [2016] HKCU 466, (HCMP 836/2012, Deputy High Court Judge Cooney SC, 1 March 2016, unreported) and Guest v Guest [2024] AC 833 applied (paras 42-47, 70–78).
(4) There was no implied term of perpetual or automatically renewable tenancy in the tenancy agreements as contended by Tam. For a term to be implied, it must be so obvious as to go without saying or be necessary to give business efficacy to the contract, and the practice of renewing tenancies every two years without re-screening. However, the facts that the plaintiff offered cheap rental flats and was subsidised by the government did not amount to a legal promise of perpetual tenancy to individual tenants. The court leans against perpetual renewals, which require unequivocal expression. Long practice of renewal is insufficient to establish an enforceable right of perpetual renewal. The alleged implied term was uncertain as it lacked any mechanism for rent review or vary renewal terms. This would clearly deprive the plaintiff of reasonable flexibility to adjust its service targets and rents according to the societal changes, contrary to business common sense and objective intention. The matters relied upon by Tam wholly failed to establish that the alleged implied term of perpetually renewable tenancy was either so obvious that it goes without saying or necessary to give the tenancy agreement business efficacy. Nazir Ali v Petroleum Co of Trinidad and Tobago [2017] UKPC 2; Kensland Realty Ltd v Whale View Investment Ltd [2002] 1 HKC 243; (2001) 4 HKCFAR 381; [2002] 1 HKLRD 87; and Hantec Investment Ltd v Li Yau Man [2020] HKLdT 40; [2020] HKCU 4468 applied (paras 82–92).
(5) Whether clause II(26) of the tenancy agreements is invalid as a result of unequal bargaining power and unconscionable dealing required no discussion or decision had therefore become purely academic. This was because the defendants had failed to establish any substantive defence in common law or equity against delivery of vacant possession, and the plaintiff is entitled to possession simply by virtue of being the registered owner and landlord, without needing to rely on clause II(26) (paras 94–98).
[The above is excerpted from the headnote to the report in HKC.]
