XCHRX FORTUNE YEAR DEVELOPMENT LTD. v. MUI SHU HUEN

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

1993 No. A2951

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H E A D N O T E

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Trespass - "tenant" not adverse possession against landlord not shown to be any registered owner of the property - O.14 Summons - defendant to show a bona fide defence on the balance of probabilities. New Territories (Renewal Crown Leases) Ordinance, Cap.152 - statutory renewal of Crown Lease from 1st July 1973 - adverse possession started to run again on the renewed Crown Lease from 1st July 1973.

1993 No. A2951

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. On 4th May 1993 I gave judgment for the plaintiff. The following is my written reasons therefor given pursuant to O.42 r.5B (1).

2. The plaintiff claimed against the defendant for trespass on the date unknown to the plaintiff onto the plaintiff's piece of land known at lot No.372 in D.D. No.22 Tai Po ("the said property"). The plaintiff is the lawful and registered owner of the said property. The defendant admitted occupying the said property but alleged that his occupation thereon was lawful.

3. The defendant filed an affidavit on 30th April 1993 in opposition to the plaintiff's application for summary judgment. On the day of the hearing Mr. Yeung, for the defendant, applied for an adjournment on the ground that certain legal arguments were required and the defendant intended to instruct counsel to argue the same. Counsel had not been instructed at that time but I was told one would be instructed in due course. Mr. Yuen, counsel instructed to appear for the plaintiff, opposed strenuously to the defendant's application for an adjournment on the ground that those facts alleged by the defendant, taking at their highest and the legal position thereof, would not afford the defendant any defence at all. After I heard argument on both sides, I am in full agreement with Mr. Yuen and therefore refused the application to adjourn and gave judgment to the plaintiff accordingly.

4. I shall deal with the plaintiff's application for summary judgment and the defendant's case in opposition thereto. The defendant filed an affirmation as aforesaid and exhibited a defence and affirmed to the truth of the contents therein. The defendant alleged that the said property was owned and occupied by one Ng Leung Shi who on or about 21st August 1951, assigned the said property to the defendant. Since then the defendant has been in occupation of the said property. He exhibited a receipt to evidence such an assignment. The receipt reads as follows:

"It is hereby acknowledge receipt from Mui Shu Huen of rent of agriculture, paid to Ng Leung Shi, Manager of Lai Chi Shan Ng Loi Li Tong, in the sum of $10.00.

Recipient, Ng Leung Shi

21st August 1951"

5. The plaintiff submitted that the document produced does not support any assignment. At the best it goes to show that rental was received by a Ng Leung Shi from the defendant. (Ng Leung Shi in Chinese simply means a married woman whose husband had a surname "Ng" and her maiden name "Leung".) She on behalf of a "Tong" in the name of "Ng Loi Lee Tong" received the said rental for a piece of agricultural land. The said document does not even specify the location of the property except to say that the property was in respect of a piece of agriculture land. There was no reference whatsoever to Lot No.372 in D.D. No. 22 of Tai Po. It is not even clear whether the description "Lai Chi Shan" or "Lai Chi Hill" was a description of the location of the said property or the location of the said "Tong". In any event the only evidence of course is from the defendant himself saying that this receipt was given in respect of the land, the said property now in question.

6. In the defendant's defence it was alleged that the said property was owned and occupied by Madam Ng Leung Shi and she was the manager, trustee, attorney or agent of the registered owner. It is clear from the original Crown Lease dated 27th March 1905, Exh.LTF-7 of the plaintiff's company, and the land search Exh.LTF-1, that neither Ng Leung Shi or the said Ng Loi Lee Tong was ever the registered owner of the said property. In 1941 the registered owner was one Ho Ming Chung. In 1976 the registered owner was Ho Chung Chung described as executrix, and in 1982 Annie Lin, also described as executrix.

7. It also goes without saying that the said assignment as alleged by the defendant was not registered at all and thus it is void against the plaintiff under s.3(2) of the Land Registration Ordinance, Cap.128. I agree with the plaintiff that this alleged defence of the defendant must fail as the mere assertion by a defendant on oath in O.14 proceedings would not necessarily afford a defence and the defendant has to show a bona fide defence on the balance of probabilities (see: Murjani v. Bank of India [1990] 1 HKLR 586).

8. The second line of defence of the defendant was that the plaintiff's claim is time-barred under the Limitation Ordinance since the defendant allegedly started his occupation on the said property since 21st August 1951. The plaintiff submitted that this line of defence must fail for two reasons. First, from the evidence produced by the defendant, i.e. the said receipt dated 21st August 1951, he paid rental for his occupation of the said property. That being the case, the defendant's occupation could not be "adverse" within the meaning of s.13 of the Limitation Ordinance Cap.347 and hence the doctrine of adverse possession is not applicable in the defendant's case.

9. Secondly, it was submitted by the plaintiff that even if the defendant's possession amounted to adverse possession, such period of adverse possession is broken by the automatic renewal of the Crown lease under s.4 of the New Territories (Renewal Crown Leases) Ordinance, Cap.152, and that the relevant limitation period only started to run from the said automatic renewal of the Crown lease, i.e. in 1973. (It is common ground between the parties that the relevant limitation period applicable to this case is 20 years and the 1991 amendments to the Limitation Ordinance which reduced the relevant limitation period to 12 years has no application to the case before me.)

10. The Crown lease in respect of the said property is originally for a period of 75 years from 1st July 1893 which in due course expired on 30th June 1973. However, the said Crown lease contained a right to renew for a further term of 24 years less three days, i.e. up to 27th June 1997. Cap. 152 provided that Crown lease of the kind before me would automatically renew. Under s.4 of Cap.152, on 1st July 1973 such a new Crown Lease would be deemed to be granted on 1st July 1973. The plaintiff, therefore, submitted that the relevant limitation period is 20 years from 1st July 1973 and thus the present action of the plaintiff is not time barred since the writ was issued on 8th April 1993.

11. Mr. Yuen, for the plaintiff, cited the following authorities in support of his contention:

1. Cheuk Chau Co. Ltd. v. Chau Kwan Nam H.C.M.P. No.274 of 1982 per Mantell J. (6th July 1983)

2. First Base Development Ltd. v. Or Hau Chun & Ors. H.C.A. No.A2669 of 1990 per Keith J. (9th December 1991).

3. Lam Kee On v. Lam Hing H.C.A. No. A5458 of 1991 per Godfrey J. (15th April 1992)

12. In the case of Lam Kee On the writ was issued on 23rd July 1991 for a claim to recover possession of a piece of land at Shatin against the defendant for wrongful and mistaken possession and occupation of the said land since 21st September 1949. It was also common ground that the relevant limitation period is the period of 20 years. Apparently the plaintiff's predecessor in title would have been adversely dispossessed by the defendant by 21st September 1969. The hearing before Godfrey J. was originally an appeal from the Master who refused to strike out the statement of claim of the plaintiff on the application of the defendant. However, during the course of the proceedings, parties agreed that the court can treat the issue as a preliminary issue set down for hearing under the provisions in O.33 r.3, i.e. not only whether the plaintiff's case is arguable for the purpose of O.18 r.19 but whether for this preliminary point the court would find for the plaintiff or the defendant on the undisputed facts. Godfrey J., after hearing counsel argument on both sides, decided that the plaintiff should be entitled to possession of the said land against the defendant. He said at p.4 thereof:

"But for the statutory exercise of the option to renew contained in the original lease, and the statutory grant of a new lease for a term commencing immediately after the expiration of the term created by the original lease, the plaintiff would not, on 23rd July 1991, have had any cause of action against the defendant; not because of any limitation point, but because the plaintiff's own title to and interest in the disputed land would have come to an end on 30th June 1973, when the term created by the original lease came to an end by effluxion of time. No question arises of the extinguishment by virtue of the Limitation Ordinance of the plaintiff's title under the original lease. That title, and so the plaintiff's interest, terminated on 30th June 1973 anyway. The only question which now arises is whether the plaintiff's claim to recover possession of the disputed land, a new lease of which was granted to him for a term of 24 years (less 3 days) from 1st July 1973 by virtue of the operation of the New Territories (Renewable Crown Leases) Ordinance, is barred by virtue of s.7(2) of the Limitation Ordinance. The answer is that it is not; because the new lease did not commence until 1st July 1973 and the plaintiff issued his writ on 23rd July 1991, which is within the period of the 20 years commencing on 1st July 1973, and thus less than 20 years before action brought.

The plaintiff's present right to possession under the new lease first accrued with the commencement of the term created by that new lease, with the defendant then in possession, and in possession adverse to the plaintiff, of the disputed land. The position of the defendant is exactly the same, no better and no worse, than it would have been if the Crown on 1st July 1973 had granted a new lease of the disputed land, not to the plaintiff, but to somebody else altogether.

If this is the correct analysis of the matter, as I hold that it is, the limitation point is, in the end, a bad one. Since the parties were agreed that I should decide the point as if it had come before me as a preliminary issue, I propose to treat that issue as before me and decide it in favour of the plaintiff.

In coming to this conclusion, I have not forgotten the provisions of s.4(4) of the New Territories (Renewable Crown Leases) Ordinance. I appreciate that the renewal of the plaintiff's lease of the disputed land took effect subject to rights affecting the disputed land when held under the original Crown lease. But, as it seems to me, the 'rights' of a squatter against a tenant do not survive the end of the term created by the tenant's lease. When that term comes to an end, whether by effluxion of time (as in fact happened here) or in any other way, e.g. surrender, compare Fairweather v. St. Marylebone Property Company Ltd. [1963] AC 510, that marks the end of the squatter's title. I know that the case cited, much discussed in the argument before me, has been criticised, on the ground that a surrender ought not to operate in favour of the landlord and that the landlord should have to wait until the expiration of the term by effluxion of time before recovering possession; but that criticism, whether justified or not, is irrelevant to anything I have to decide in the present case, where the original lease was not brought to a premature end by surrender but ran its full course. In my judgment, the present right of the plaintiff to sue for recovery of possession here first accrued on 1st July 1973, not on any earlier date. The earlier history of the matter has no more to do with the case than the flowers that bloom in the spring."

13. Accordingly it seems quite clear that even if the defendant's adverse possession started to run from 1951 to 1971 and adversely possessed the said property against the then registered owner, the then registered owner's lease would in any event have expired by 30th June 1973. The statutory provision in Cap.152 automatically renewed the Crown Lease from 1st July 1973. It is a new lease renewed by statute. Any accrued right of the defendant from 1971 to 1973 would expired altogether by 30th June 1973. Accordingly, it is also in my judgment that the present right of the plaintiff to sue or his predecessor-in-title for recovery of possession here first accrued on 1st July 1973 and not on any early date. Accordingly the plaintiff's action is not statute barred and the defendant can in no way show any defence to the plaintiff's action by relying on the Limitation Ordinance. It is clear to my mind that all points put forward by the defendant would not afford him any defence at all.

14. I now come back to the original application of the defendant for an adjournment in hearing the O.14 application. Mr. Yeung, for the defendant, incessantly and repeatedly told me that I must grant him an adjournment since he would like all the points to be argued by counsel. After I invited both sides to address me on the main issue of the O.14 Summons, Mr. Yeung told me that he had not prepared the case at all since his instructions were to ask for an adjournment.

15. I must say at the outset that this is a kind of unwarranted demand on the court. The vigour of his argument runs like this. He wanted an adjournment for counsel to be instructed since he has not prepared the case. Should the court rule against him it will be unfair to his client since he came to this court on the premises that he would be granted an adjournment for argument. It is not clear where he got this idea that the court would certainly grant an adjournment if he asked for one for full argument. Having failed in his persuasion, he submitted that it would be unfair because he was under the false impression that the case will be adjourned for argument and thus he had not prepared the case in full. That is what I mean by "unwarranted demand".

16. I must make it clear that any counsel or solicitor must prepare the case in full when appear in court and should not rely on the fact that an adjournment might be granted for argument later on. In fact the impression I got from Mr. Yeung was that he was not so ill-prepared as he wanted me to believe. He was astute to point out that the first two cases cited by Mr. Yuen concerned with adverse possession which would only accrue after 1973 and, of course, in reply Mr. Yuen pointed out that the third case Lam Kee On is one which accrued before 1st July 1973.

17. In the end I find all points raised by the defendant, taking at their highest, could not afford the defendant any defence at all and the case should not be adjourned for any arguments and the plaintiff is entitled in this clear case before me to judgment as claimed with costs to the plaintiff.