FUNG YUK LUEN v. WONG FUNG LAN AND OTHERS

CACV 398/2021

[2021] HKCA 1991

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 398 OF 2021

(ON APPEAL FROM DCCJ NO. 447 OF 2017)

________________________

________________________

________________________

D E C I S I O N

________________________

Hon Cheung JA (giving the Decision of the Court) :

I.   Introduction

1.  This is the defendants’ application by a summons dated 28 September 2021 (the ‘Striking Out Summons’) to strike out Grounds 1, 2 and 3 set out in the notice of appeal filed by the plaintiff on 19 August 2021 on the ground that Grounds 1, 2 and 3 do not comply with section 63A(2) of the District Court Ordinance (‘the DCO’) (Cap. 336).  The parties had lodged written submissions for this application.  We will deal with the application on paper.

II.  Background

2.  The plaintiff was the registered owner of Lot No. 372 (‘Lot 372’) in Demarcation District 326.  He claimed adverse possession in respect of two lots of land on either side of Lot 372, namely the Remaining Portion of Lot No. 365 (‘Lot 365RP’) and Lot No. 371 (‘Lot 371’).  The defendants were the registered owners of Lot 365RP and Lot 371 (collectively, the ‘Disputed Land’) as tenants in common.

3.  After a four-day trial, by a judgment dated 22 April 2021 ([2021] HKDC 487) (the ‘Judgment’), H H Judge Harold Leong (the ‘Judge’) dismissed the plaintiff’s claim.  The Judge found it more likely that the plaintiff occupied the Disputed Land pursuant to a ‘land borrow’ arrangement which is a local practice between the relatives in the village, and the plaintiff was unable to establish the existence of the requisite animus possidendi to possess the Disputed Land during the relevant time period.

4.  By a summons dated 20 May 2021, the plaintiff applied for leave to appeal against the Judgment (the ‘Leave Application’).  The following four grounds of appeal were set out in [1]‑[4] of the draft notice of appeal annexed thereto :

‘ 1) Having found the evidence from the 1^st defendant in support of the defendants’ case that the Disputed Land was occupied by the plaintiff under an oral agreement (‘the Licence’) granted in 1994 by the defendants’ predecessor‑in‑title not credible, the Judge erred in making an inconsistent finding that the plaintiff had been in possession of the Disputed Land under a ‘land borrow’ arrangement (‘the Land Borrowing Arrangement’) with the owner in the form of a license (‘Inconsistent Finding’).

2)  Further or alternatively, the Judge erred in finding the Land Borrowing Arrangement where there was no supporting evidence, relying on the following irrelevant matters instead :

(i)  the general practice of land borrowing said to be common in the village concerned;

(ii)  in 1980 when the plaintiff built his house in Lot 372 (which he owned), the plaintiff did not extend the house into the adjacent Disputed Land or build any permanent structure therein;

(iii)  the defendants’ witness paid government rent for the Disputed Land over the years;

(iv)  the plaintiff started a café business in the Disputed Land in around 2008-2010; and

(v)  the plaintiff allowed a surveyor instructed by the 2^nd defendant to enter the Disputed Land to do a survey in 2016 (‘No Supporting Evidence & Irrelevant Considerations’).

 3)  Further or alternatively, in formulating the Irrelevant Considerations the Judge failed in noting the evidence that the defendants’ proposal for entering a tenancy agreement with the plaintiff on the Disputed Land was refused by the plaintiff, and the plaintiff’s evidence that the negotiations were pre‑action matters to avoid litigation between relatives (‘Omitting Key Evidence’).

 4)  Further or alternatively, while accepting the principle established in the authorities that once the limitation period expires, the registered owner would lose his rights to claim possession even if the trespasser was subsequently asked to acknowledge the title, the Judge erred :

(i)  in disregarding the authorities and found the discussions/negotiations between the plaintiff and the defendants in 2013-2016 for purchasing or swapping the Disputed Land (‘the Negotiation’) to infer that the plaintiff did not have animus possidendi to possess the Disputed Land during 1980-2000;

(ii)  in reaching the above conclusions, the Judge erred in relying on an authority (‘the Wrong Authority’) that the offer to purchase by the trespasser was found ‘to be plainest possible form of acknowledgment’; and

(iii)  in adopting the Wrong Authority, the Judge failed to note that the acknowledgment in that case was in writing, distinguishable from the present case where the negotiations were oral and inconclusive (‘Applying Wrong Legal Principles’).’

5.  After setting out these four grounds of appeal, [5] of the draft notice of appeal stated as follows :

‘ 5. In the premises, despite compelling evidence on possession and the requisite intention to possess adduced by the Plaintiff, the Judge erred in dismissing the Plaintiff’s claim for adverse possession of the Disputed Land.’

6.  The Judge dealt with the Leave Application on 2 August 2021 and handed down a decision ([2021] HKDC 990) (the ‘Leave Decision’) on 13 August 2021.  The Judge stated at [5] of the Leave Decision that :

‘ 5. I would agree with the defendants’ submission that the first 3 grounds are all challenges with this court’s findings of facts, which the Court of Appeal would only intervene when the trial judge has fallen into palpable error. The arguments under these grounds were disagreements about the weight the court gave to various evidence, and given that a reasoned judgment was given, I do not think that there is a reasonable prospect of success for such.’

7.  The Judge further held that the fourth ground is a legal argument and that ‘...there is a genuine legal issue in question’ and ‘[t]here is clearly a reasonable and not merely fanciful prospect of success for an appeal’.  He then concluded at [12] of the Leave Decision that ‘I would therefore allow leave for appeal with costs of the application be in the cause of the appeal’.

8.  On 19 August 2021, the plaintiff filed and served the notice of appeal, which contained substantially the same four grounds of appeal as set out in the draft notice of appeal.  The only differences were the removal of the word ‘adjacent’ from [2) (ii)] and the addition of the phrase ‘not submitted by parties’ in [4) (ii)].  

9.  The plaintiff also proceeded to draw up a draft order in respect of the Leave Decision (which the defendants say was without consultation with their solicitors).  On 24 August 2021, the plaintiff’s solicitors served on the defendants’ solicitors the sealed order stating that :

‘1. Leave be granted to the Plaintiff to appeal against the Judgment of His Honour Judge Harold Leong made on 22^nd April 2021; and

2.  Costs of this application be in the cause of the appeal.’

10.  Upon receipt of the sealed order, the defendants’ solicitors by a letter dated 27 August 2021 wrote to the Clerk to the Judge seeking clarification as to whether leave to appeal was granted in respect of Ground 4 only.  The defendants’ solicitors contended that according to the Leave Decision, Grounds 1 to 3 lacked a reasonable prospect of success, and hence Ground 4 was the only ground of appeal that met the statutory criteria under section 63A(2) of DCO.  The defendant invited the Judge to correct the order to the effect that leave to appeal was only granted in respect of Ground 4.

11.  In response to the defendants’ letter dated 27 August 2021, the plaintiff’s solicitors issued a letter dated 9 September 2021, contending that ‘leave to appeal was allowed by [the Leave Decision] without expressly restricting leave to which particular ground’ and that ‘the order should stand’.

12.  On 21 September 2021, the Judge directed that : ‘The Decision was made after due overall consideration of all four grounds raised.  Order stands’.

13.  On 28 September 2021, the defendants issued the striking out summons.

III.  The defendants’ position

14.  The defendants in gist relied on two points in support of their application.

1)  The Judge had not granted leave in respect of Grounds 1, 2 and 3, hence these grounds in the notice of appeal ought to be struck out in that the appeal on these grounds does not accord with the requirement of section 63A(2) of the DCO which provides that :

‘ (2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that –

(a)  the appeal has a reasonable prospect of success; or

(b)  there is some other reason in the interests of justice why the appeal should be heard.’

2)  In any event, even where the Court below had granted leave to appeal, the Court of Appeal still has jurisdiction to strike out a notice of appeal or the particular parts of the notice of appeal.

IV.  Our view

15.  In respect of the first ground, we have to say the position on whether leave has been granted in respect of Grounds 1, 2 and 3 is ambiguous.  The starting point is that leave to appeal is to be granted if the ground has a reasonable prospect of success and the Judge had said that Grounds 1, 2 and 3 did not have a reasonable prospect of success.  But his sealed order did not restrict the leave to Ground 4 only.  With respect, the Judge’s subsequent response to the defendants’ invitation to correct the sealed order was unsatisfactory.  A direct answer to whether leave has been granted on Grounds 1, 2 and 3 should be the preferred response.  But given the Judge’s view that the terms of the sealed order should stand and he would not amend the sealed order, we are not prepared to say in the circumstances that leave had not been granted by the Judge in respect of Grounds 1, 2 and 3.

16.  We will proceed to consider the defendants’ second point that, in any event, we should strike out the first three grounds of appeal.

17.  The applicable legal principles concerning the jurisdiction of this Court to strike out a notice of appeal are well established and have been summarised in Leung Chung Lan Lorraine v Hang Seng Bank Ltd [2019] HKCA 1408 at [34]‑[35] :

‘ 34. The Court of Appeal has inherent jurisdiction to strike out a notice of appeal where an appeal is plainly not competent (Aviagents Ltd v Balstravest Investments Ltd [1966] 1 WLR 150 at 154B to E, 155D to G; Ng Shek Po & Anr v Director of Lands [1996] 4 HKC 616 at 619D to E), or where the appeal is frivolous, vexatious or an abuse of the process of the court (Burgess v Stafford Hotel Ltd [1990] 1 WLR 1215 at 1220A to G, 1221B to D; Fok Siu Wing v Hong Kong Housing Authority [2016] 1 HKLRD 238 at [6], [11] to [13]). In the case of the latter, the inherent jurisdiction would be exercised on precisely the same basis as if Order 18 rule 19 strictly applied to notices of appeal (Burgess v Stafford Hotel Ltd at 1221D).

35. The jurisdiction to strike out a notice of appeal should be confined to clear and obvious cases. It should not be utilised, and an order to strike out should not be made, where any extensive inquiry into the facts is likely to be necessary (Burgess v Stafford Hotel Ltd at 1222C to D).’

18.  The defendants referred to Chan Lap Kit v Yushun Technology Ltd [2018] 1 HKLRD 192 at [53] where it was held that the Court of Appeal has power to re‑visit the leave granted by the Court below in a renewed application for leave to appeal on other grounds which had been refused.  It was further held that the Court of Appeal has ‘inherent power to control its own proceedings by striking out, on its own motion, a notice of appeal if there is no possibility that the grounds of appeal are capable of argument’ (at [57]).  The defendants invite the Court to exercise such power in their present application.

19.  However, as emphasised by the Court of Appeal in Chan Lap Kit at [57]‑[58], such a power to strike out a notice of appeal should only be exercised in ‘clear and obvious cases’ and ‘the hurdle is very high indeed’ :

‘ 57. … For completeness, we would mention that the Court of Appeal has inherent power to control its own proceedings by striking out, on its own motion, a notice of appeal if there is no possibility that the grounds of appeal are capable of argument. Of course, this power should be confined to clear and obvious cases (Hong Kong Civil Procedure 2018, Vol.1, para.59/3/6; Burgess v Stafford Hotel Ltd [1990] 1 WLR 1215, 1219B-1220G, 1221B-D and 1222C-D).

58.  It would be appropriate to sound a word of caution. The power to strike out a notice of appeal where leave was granted by the court below is exercised in very clear and obvious cases, and the hurdle is very high indeed. In most instances, on a renewed leave application the Court of Appeal would need much persuasion before it finds it necessary to reconsider the issues for which leave to appeal was granted by the judge. The mere fact that the appeal court has full discretionary powers to deal with the application as a whole does not mean it would readily entertain arguments from an unsuccessful respondent to strike out a notice of appeal. It would entertain such arguments only in an exceptional situation, which by definition must be rare. Hence, our decision in this appeal should not be read as a charter to renew an unsuccessful attempt in opposing leave at the court below. Unmeritorious attempts in that regard will be met by costs sanction.’

20.  In Chun Wo Construction & Engineering Co Ltd v Hong Kong Housing Authority [2019] 2 HKLRD 683, this Court further addressed the issue of an appeal against the granting of leave :

‘ 1. … Whilst as a matter of jurisdiction… it is open to this Court to re-visit a leave granted by the judge below (eg in case where this Court dismissed a renewed application for leave on specific ground and revoked leave already granted below on some other grounds, see Chan Lap Kit v Yushun Technology Ltd [2018] 1 HKLRD 192), in most cases it would not be appropriate for an appeal to be brought against such grant of leave. In addition to the requirement of s.14AA leave (High Court Ordinance (Cap. 4)) as discussed by my Lord at [9.4] below, arguments in an appeal of that nature are most likely to be overlapped with arguments to be canvassed in the appeal which had been brought pursuant to leave granted by the judge in the Court of First Instance. The two appeals are likely to be heard together and no advantage is gained by having the second appeal. In such circumstances, bringing another appeal against the grant of leave to appeal to this court only adds overall costs to the litigation process and rarely serves any good. In most cases, appeals of such nature are in substance satellite litigations which our Civil Justice Reform sought to discourage. Legal practitioners should reflect on the utility of a process before they advise their clients to embark on the same.’

21.  In the present case, the defendants mainly relied on the Judge’s views set out in [5] of the Leave Decision that Grounds 1, 2 and 3 are all challenges with findings of facts and do not have reasonable prospects of success.  However, this is neither here nor there in circumstances where the Judge has eventually indicated that leave to appeal was granted without restricting it to any particular ground.

22.  No doubt, Grounds 1, 2 and 3 involve challenges to findings of facts by the Judge :

1)  As for Ground 1, the plaintiff’s argument is that the Judge erred in making an inconsistent finding.  The plaintiff also says that the oral ‘land borrow’ arrangement was not put to the plaintiff or his witness during cross-examination.

2)  As for Ground 2, the plaintiff claims that the Judge’s finding on the ‘land borrow’ arrangement was not supported by any primary evidence and was made by drawing inferences from irrelevant matters.

3)  As for Ground 3, the plaintiff contends that the Judge failed to consider that the defendants’ proposal for entering into a tenancy agreement with the plaintiff with respect to the Disputed Land was refused by the plaintiff and that the negotiations since around 2012 were merely pre‑action matters to avoid litigation (as opposed to acknowledgment of ownership).

23.  It is trite that the threshold to challenge findings of facts in an appeal is high (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at 350-351); ZJW v SY [2017] HKFLR 612 at [26]‑[34]).  On the strength of these authorities, the defendants submitted that the plaintiff could not meet such a high threshold.

24.  It is equally clear that the determination whether the first three grounds are reasonably arguable requires an extensive inquiry into the facts (Leung Chung Lan Lorraine at [35]; Burgess at 1222C to D).  Thus, the present case does not fall within the category of ‘very clear and obvious cases’ that the Court would exercise its power to strike out at this stage.

25.  The defendants also argued that if Grounds 1, 2 and 3 are to be retained, ‘the scope of the substantive appeal would be significantly widened to include multifarious challenges to the factual findings in the Judgment’ and ‘it would not be a fair, proper and efficient use of judicial resources for Grounds 1, 2 and 3 to remain’.  In our view, this will be inevitable given our view on the ambit of the leave and the defendants not being able to meet the threshold for striking out.

26.  In the present case, the defendants, of course, have not appealed against the Judge’s granting of leave.  Nonetheless, in light of the ground set out in the Striking Out Summons and the arguments advanced by the defendants, they are essentially challenging the basis of the Judge’s decision to grant leave in respect of Grounds 1, 2 and 3.  Viewed thus, the observations in Chun Wo Construction & Engineering Co Ltd regarding the futility of an appeal against the grant of leave to appeal will also apply to the present case.

27.  Accordingly, the Striking Out Summons is dismissed.

V.  Costs

28.  The plaintiff is entitled to the costs of the application to strike out. 

29.  Although both the plaintiff and the defendants have each submitted a statement of costs for summary assessment for the Court’s consideration, we would direct that the plaintiff’s costs are to be taxed if not agreed, in view of the fact that the costs below have to be taxed and the costs of the appeal when eventually decided will also have to be assessed.

30.  The plaintiff’s solicitors had lodged supplemental application bundles without leave.  We do not see the necessity of these bundles and, accordingly, we will disallow the plaintiff’s costs of the preparation of these bundles.