SAM SHUI NATIVES ASSOCIATION v. KWOK WAI CHIU AND OTHERS

HCMP 4224/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4224 OF 1996

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HCMP 1384/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1384 OF 2000

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(Consolidated pursuant to the Order of Master Poon dated 11 September 2000)

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J U D G M E N T

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Introduction

1.  HCMP 4224/1996, which was commenced in December 1996, was concerned with:-

(a)	a piece of land located at Yu Lok Lane, Western District (“property A”);
(b)	a piece of land located at Queen’s Road West (“property B”);
(c)	another piece of land located at Yu Lok Lane (“property C”).

2.  HCMP 1384/2000, which was commenced in March 2000, was concerned with:-

(1)	property B;
(2)	property C.

All the above properties are collectively called “the suit properties” below.

3.  By a master’s order made on 11 September 2000, the actions were consolidated, with the direction that the affirmations filed in HCMP 4224/1996 are to stand as affirmations in the consolidated action.  For convenience, “this action” in the paragraphs below refers to the consolidated action.

4.  The relief sought herein is in short:-

(a)	a declaration that the plaintiff is (and has been) the legal and beneficial owner of the suit properties;
(b)	alternatively, a declaration that the plaintiff has been in adverse possession of the suit properties since September 1960;
(c)	a declaration that the plaintiff has thereby become the legal and beneficial owner of the suit properties;
(d)	an order vesting the legal title of and the legal estate in the suit properties in the plaintiff (whether by virtue of the primary or alternative claim).

It is common ground the relief sought in sub-para. (a), (c) and (d) above is based on trusts created in the plaintiff’s favour whereas that sought in sub-para. (b), (c) and (d) above is based on the provisions of the Limitation Ordinance (Cap. 347).

5.  The Official Solicitor (“OS”) became involved in this action in the following circumstances.

6.  As will be set out in more details below, the defendants passed away before the commencement of these proceedings.  The plaintiff sought the OS’s consent to represent the estates of the second to thirteenth defendants and the sixteenth defendant.  By a consent order dated 12 March 1998, the OS was appointed to represent the said defendants.  The fourteenth defendant appears in person.

Background Facts

7.  The only source of evidence relating to this comes from the affidavit evidence filed on the plaintiff’s behalf.

(a) Events Leading to the Plaintiff’s Incorporation

8.  Prior to about 1888, a piece of land was allocated by the government for use as the communal graveyard of 41 clansmen from Sam Shui (三水).  The graves were known as “Sam Shui Yee Chung” (三水義塚).

9.  A fund-raising was organised in 1888 by some clansmen from Sam Shui.  The fund raised was used for repairing and maintaining the “Yee Chung” and acquiring real properties (in particular, property A (see para. 13 below)).

10.  An unincorporated body “Sam Shui Doon Yi Tong” (三水敦義堂) was formed in about 1888.  “Doon Yi Tong” became “Lui Kong Sam Shui Sheung Kung Mo Kuk” (旅港三水商工務局) in about 1911.  The latter was an organisation approved by the government.

11.  In May 1946, the “Sheung Kung Mo Kuk” became “Sam Shui Natives Association” (三水同鄉會), which was registered with the then Secretary of Home Affairs.  It was later registered under the Societies Ordinance (Cap. 151).

12.  In September 1960, the plaintiff was incorporated and approval was given for the use of the word “limited” to be dispensed with.

(b) Acquisition of the Suit Properties

13.  As stated above, surplus from the fund raised in 1888 was used to purchase property A (in 1888).  It was registered in the names of 8 members of the “Doon Yi Tong” as tenants-in-common (D4 to D11).  The income from property A was used for maintaining the “Yee Chung”, annual worship and memorial ceremony, and providing relief to needy clansmen or the poor.

14.  By a declaration of trust dated 27 February 1913 (some 25 years later), 3 of the 8 registered owners (D9 to D11) declared that property A was held on trust for the “Sheung Kung Mo Kuk” and the “Yee Chung”.

15.  Property B was purchased in 1928 in the names of 5 members of the “Sheung Kung Mo Kuk” as tenants-in-common (D12 to D16).

16.  A declaration of trust was executed by 3 of the said 5 members (D12, D14 and D15) in November 1954 (about 26 years later).  The trust instrument states that property B was held on trust for all members for the time being of the “Natives Association”.

17.  Finally, property C was purchased on 30 November 1948 in the names of 3 members of the “Natives Association” (D1 to D3).  A declaration of trust was executed by them on the same date declaring that property C was held on trust for the “Natives Association”.

18.  Hence, the suit properties were all purchased prior to the plaintiff’s incorporation.  Likewise, the declarations of trust were all executed before that time.

The Trust Claim

19.  It is common ground that the creation of a trust over the suit properties amounted to the disposition of equitable interest in land and hence s. 5(1)(a), Conveyancing and Property Ordinance (Cap. 219) (formerly s. 5, Law Amendment and Consolidation Ordinance (Cap. 23)) is applicable.  In short, any such disposition requires a written instrument.

20.  Indeed, this part of the plaintiff’s claim is premised on the declarations of trust.

21.  Further, leaving aside the issue of the certainty of a trust, an express trust is created where the settlor intends to do so: Underhill and Hayton: Law of Trusts and Trustees (2006) 16^th Ed., para. 8.1.  There is no difficulty relating to this point because the OS does not dispute the declarations of trust were in the nature of express trusts.

22.  The test for the interpretation of trust instruments, though not entirely free from complications, is generally similar to that for the interpretation of contracts: Drafting Trusts and Will Trusts (2007) 8^th Ed., para. 4.12 citing Botnar v. IRC [1999] STC 711.  Two matters relevant to what the declarations of trust mean are (a) the actual language used therein and (b) all the factual background reasonably known to the parties in which the words therein came to be used: Chitty on Contracts (1999) 28^th Ed., especially para. 12-043.

23.  The OS has levied various criticisms against this part of the plaintiff’s claim.  It is unnecessary to set out or discuss the criticisms except one: the plaintiff was never intended by the declarations of trust to be a beneficiary thereunder.  Neither the actual language used in the declarations of trust nor the relevant factual background suggests that the plaintiff was their intended beneficial owner.  The plaintiff was simply not yet in existence at the material time.

24.  There is really no answer to such criticism, and the plaintiff sensibly does not seek to advance any.

25.  By virtue of the above matters, I am not satisfied that the plaintiff has established this part of its case.

The Adverse Possession Claim

26.  The matter can also be stated relatively shortly.

27.  The law relating to a claim based on adverse possession is briefly this.  In order to make out such a claim, 3 matters have to be established:-

(1)	there is an unequivocal act of possession of the land on the “squatter’s” part;
(2)	the possession must have been “adverse”: s. 13(1), Cap. 347;
(3)	there must be an intention to possess on the “squatter’s” part: Wong Tak Yue v. Kung Kwok Wai (1997-98) 1 HKCFAR 55, 68-9.

The OS does not dispute the plaintiff has established the first matter, namely, an unequivocal act of possession.

28.  When the plaintiff was incorporated, of the trustees named in the declarations of trust, only 3 were still alive, namely, D12 (one of the 5 trustees of property B) and D1 and D2 (2 of the 3 trustees of property C).  They were respectively aged about 73, 56 and 60 years old in September 1960.

29.  It is part of the plaintiff’s own case the suit properties have all along been either:-

“	… used as the office of the Association, and since its incorporation, the [plaintiff’s] registered office … ” (para. 41, Tsin King Wai’s affirmation dated 2 December 1996)

or:-

“	… rented out to various tenants … All rental income [has] always been received by the Association and subsequently the Plaintiff for the purpose of furthering the interest and objects of the Association and the Plaintiff … ” (para. 41 and 43, Tsin’s affirmation).

30.  Further, although quite a few of the named trustees have passed away by the time of the plaintiff’s incorporation, it was deposed on the plaintiff’s behalf:-

“	… the [plaintiff’s] committee members … well knew and were acquainted with the sons/grandsons of the deceased [trustees] … ” (para. 6, Ho Siu Yuen’s 2nd affirmation).

The above was deposed to in answer to the OS’s criticism that there were discrepancies in the documents relating to the names of some of the deceased trustees.

31.  In brief, what the plaintiff says is that no one who may be concerned with the suit properties has objected to the plaintiff’s occupation and use of the suit properties.

32.  In other words, the impression the plaintiff must have trying to give is that the use to which the suit properties have been put by the plaintiff was consented to by the trustees (or their close relatives for those trustees who have already passed away).

33.  In these circumstances, I agree with the OS that the plaintiff’s possession of the suit properties since its incorporation up to now has not been “adverse”.  Hence, time never started to run against the plaintiff under the provisions of Cap. 347.

34.  Lest there be any misunderstanding, I will elaborate on this aspect below.

35.  S. 13(1), Cap. 347 provides:-

“

No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as adverse possession) and where under the foregoing provisions of this Ordinance any such right of action is deemed to accrue on a certain date and no person is in adverse possession on that date, the right of action shall not be deemed to accrue unless and until adverse possession is taken of the land” (emphasis supplied).

36.  Whether the possession is “adverse” is to be judged from the viewpoint of the “paper owner”.  The decision of the English court of appeal in BP Properties Ltd. v. Buckler (1987) 55 P & CR 337 fully illustrates how the concept should be applied.

37.  The defendant in BP Properties Ltd. was the descendent of the former tenants of the suit property.  The tenancy commenced in 1916 and (omitting some factual complications for present purposes) was effectively terminated by 1955.  The defendant and his family remained on the suit property nevertheless.  Proceedings were earlier brought for possession of the suit property and possession orders were obtained in 1955 and 1962.  The suit property was registered in the plaintiff’s name in 1982.  But as early as in October 1974, both the plaintiff and the then registered owner wrote letters to the defendant’s mother.  The one from the plaintiff was in the following terms:-

“	… we are prepared to allow you to remain in occupation of the house and garden rent free for as long as you may wish and for the rest of your life if you so desire”.

The defendant’s mother passed away in 1983.  The court of appeal noted that the letters were:-

“	never expressly accepted or rejected”

by the defendant’s mother during her life time.

38.  In a claim by the plaintiff to obtain possession of the suit property commenced after 1983, the court of appeal said:-

“

It is said for [the plaintiff] that under the letters [the defendant’s mother] became a licensee for life of the [suit property].  Therefore she was no longer in adverse possession and time ceased to run in her favour.  This is supported by the statement of Slade J. in Powell v. McFarlane (1979) 38 P & CR 452, 469, that time can never run in favour of a person who occupies or uses land by licence of the owner with the paper title and whose licence has not been duly determined.  In so far as it is urged for the other side that [the defendant’s mother’s] possession continued to be adverse before and after the receipt of the letters, without any change, and was referable to her own expressed belief that she was the owner of the [suit property] because of her grandfather’s title, it is said for [the plaintiff] that there is a rule that ‘possession is never adverse if it can be referred to a lawful title,’ and reference is made to the judgment of Harman L.J. in Hughes v. Griffin [1969] 1 WLR 23, 27.

The claim that a unilateral licence can stop time running is a new one.  It may be of some general importance in that it would enable a person who is not prepared to incur the obloquy of bringing proceedings for possession … to keep his title alive for very many years until it suits him to evict” (emphasis supplied) (pp. 345-6).

39.  The court of appeal observed:-

“	It might be thought that ... was contrary to the policy of the statute …”

but, without further discussing this counter-argument, continued:-

“

The nature of [the defendant’s mother’s] possession after receipt of the letters cannot be decided just by looking at what was locked up in her own mind.  It must depend even more, on this aspect of the case, on the position as seen from the standpoint of the person with the paper title.  What could that person have done?  The rule that possession is not adverse if it can be referred to a lawful title; the lawful title would still preclude the person with the paper title from evicting the person in possession.  So far as [the defendant’s mother] was concerned, even though she did not ‘accept’ the terms of the letters, [the plaintiff] would … have been bound to treat her as in possession as licensee … ” (emphasis supplied) (p. 346).

40.  The court of appeal also stated that:-

“

It may be that the result would have been different if [the defendant’s mother] had, as soon as she learned of the letters, plainly told [the plaintiff] that she did not accept the letters, and maintained her claims to be already the owner of the [suit property]; she did not however do that … ” (p. 346).

41.  The facts in this action are far less complicated than those in BP Properties Ltd.  As stated in para. 32 and 33 above, the only reasonable inference in this action is the plaintiff has been occupying and using the suit properties with the consent of everyone who may have an interest in the suit properties.  In legal terms, the plaintiff has been granted a licence to do so.  It can also be inferred that the plaintiff considers itself to be in the position of a “successor-in-title” of the suit properties (see para. 29 to 32 above).

42.  The plaintiff argues that any licence granted to it was a revocable one and was in fact revoked when the surviving trustees passed away.  Reliance is placed on Ho Hang-wan v. Ma Ting-cheung [1990] 1 HKLR 649.

43.  I do not agree.  The surviving trustees (and very probably others having an interest in the suit properties) must have intended the plaintiff to enjoy the suit properties as if it were their legal owner (whether they succeeded in law in doing so by way of trust is a different subject and has been discussed above).  This is very different from the facts in Ho Hang-wan where a mere licence was granted; a mere licence would clearly be revocable.

44.  For the above reasons, I do not consider the plaintiff to be able to establish this part of its claim either.

Conclusion

45.  The claim is accordingly dismissed.

Costs

46.  All the parties who appeared at the hearing agreed that there is no need for any costs order.  None will therefore made.