CHENG KA SHING v. BONUS PLUS CO LTD

HCA 674/2013

[2020] HKCFI 277

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 674 OF 2013

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J U D G M E N T

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Introduction

1.  The Defendant is and since January 1994 has been the registered owner of 4 plots of land viz Lot Nos 759, 860, 861 and 862 in Demarcation District No 105, Yuen Long, New Territories (“Lots 759, 860, 861 and 862 respectively” or “Defendant’s Lots”).  The Defendant’s business is property development. 

2.  This Action is concerned with the Plaintiff’s claim to adverse possession of a substantial part of the Defendant’s Lots.

3.  The Plaintiff is and since 2002 has been the registered owner of Lots 863 and 864 in Demarcation District No 105, Yuen Long, New Territories (“Lots 863 and 864 respectively” or “Plaintiff’s Lots”).

4.  The Plaintiff’s case is that in about 1979, his father (“Cheng Senior”) rented Lots 863 and 864 and also fenced off and enclosed parts of Lot 759 which were at first used for the purpose of chicken farming and later pig farming.  After clearing the area, the Plaintiff’s whole family, including his parents, resided on Lot 864.

5.  In about 1980, Cheng Senior rented Lot 865 in Demarcation District No 105, Yuen Long, New Territories (“Lot 865”).  A large part of Lot 865 was at first sub-let to Dah Chong Hong as a car park until the sub‑lease expired in about 1982 which then became part of the farm.  Also in about 1980, Cheng Senior began to occupy Lots 860, 861 and 862 and used them for growing pasture to feed his pigs and seasonal vegetables for own consumption.

6.  In about 1982, Cheng Senior continued to occupy Lots 860‑862 as an extension of his farm on Lots 863-865 and parts of Lot 759 as a single unit for chicken and pig farming.  At the same time, he erected structures and fences on the farm, including a red fence enclosing almost entirely Lots 860, 861 and 862.  The Plaintiff himself at first helped out his father to run the farm but in about 1988 took over from his father so that he could retire.

7.  In 1996, pursuant to the Government’s requirements, the Plaintiff applied to the Agricultural and Fisheries Department for a livestock keeping licence for keeping pigs on the farm (“Licence”) which was first issued to him in 2000.  He ceased to operate the pig farm in about February 2007 after he had surrendered his Licence but he and his family ie his wife, 2 sons and both parents continued to occupy the Disputed Area.

8.  The Plaintiff claims that since around 1980, his father and himself have successively, exclusively and continuously used and occupied parts of Lots 759[1] and 860[2] as well as Lots 861 and 862 (collectively “Disputed Area”).  The Plaintiff claims his father’s and his occupation of the Disputed Area since 1980 is without interruption or consent from any person or making payment to any person for such use and occupation and that they have openly exercised the right of ownership over the Disputed Area.  In the premises, the Plaintiff seeks a declaration that the Defendant’s right to recover possession of the Disputed Area and its title thereto has become statute‑barred and extinguished by virtue of sections 7(2) and 17 of the Limitation Ordinance, Cap 347 (“Ordinance”) whilst he has acquired a possessory title to the Disputed Area. 

9.  The Defendant denies the Plaintiff’s claim and counterclaims for an Order for possession of the Disputed Area on the basis of trespass.  As for consequential relief, Mr Chan SC informed this court on Day 1 that his client would seek only nominal damages for trespass. 

10.  The aforesaid Lots adjoin each other.  For identification purpose, an agreed Lot Index Plan showing the relative locations of the Defendant’s Lots, the Plaintiff’s Lots, Lot 865, as well as the surrounding area, is reproduced and attached to this judgment (“Lot Index Plan”).  The area shaded in red is the subject matter of this Action.

11.  By way of background information only, Mr Chan SC has submitted a survey report setting out the size of the Disputed Area ie approximately 3,054.5 sq m and the market value of it as at 23 April 2013[3] ie HK$4.26 million and as at 22 February 2019 ie HK$8.52 million.

The parties’ witnesses and the Issues

12.  At trial, each side called 1 factual witness viz the Plaintiff himself and Mr Sin Tze Ho (“Mr Sin”), the Defendant’s project manager.  While the Plaintiff has adduced 5 witness statements over a long period ie in September 2014, March 2015, March 2016, September 2016 and March 2017, Mr Sin’s witness statement is brief—consisting of 2 pages and, according to Mr Chan SC, deals only with the issue of deliberate concealment. 

13.  As Mr Shum points out in his Opening Submissions, on the historical use of the Disputed Area, the Defendant has not adduced any evidence to contradict the contents of the Plaintiff’s witness statements, particularly in respect of his alleged exclusive possession and the fencing of it since 1980. 

14.  In response, Mr Chan SC in his Opening Submissions states that even if the paper title owner adduces no positive evidence and pleads no positive case, it does not mean that the squatter’s factual case is not contradicted or unchallenged.  The paper title owner is entitled to put the squatter to proof and to test such evidence at trial.  For this purpose, Mr Chan SC refers this court to a decision of Cheung CJHC (as he then was) in On Yip Property Development Co Ltd v Kwok Tai Kuen Alan,unrep, HCMP 3192 of 2013, 15 April 2014, in which the learned Judge said at [8]:

“8. … Whether, at any material time, there was adverse possession, and whether any such adverse possession once begun continued unbroken for 20 years, are questions of fact to be established by evidence, the burden being on the squatter. He has to discharge the burden of proof by cogent and sufficient evidence. Whilst such evidence can take many forms, including direct oral evidence, documentary evidence and inferential evidence, and the parties’ cases must be considered in light of inherent probabilities and common sense, there is no place for any presumption, whether legal or evidential, in favour of the squatter. Everything must naturally depend on the facts of each case …” (emphasis added)

15.  Similarly, in Birkenhead Properties and Investments Ltd v Lam Kai Man, unrep, HCMP 1588 of 2012, 12 January 2016, To J observed:

“20. Mr Cheung, counsel for the 1^st Defendant, criticises the Plaintiff for pleading no positive case and for calling no factual witnesses. But, in all fairness to the Plaintiff, it does not have to. It is entitled to rely on its paper title, as the burden is on the squatter to prove adverse possession. It may test the squatter’s case and is entitled to judgment if the squatter fails to discharge the very high burden of proof …” (emphasis added)

16.  Apart from factual evidence, both parties have adduced expert evidence from 2 authorised land surveyors viz Mr Leung Shou Chun (“Mr Leung”) for the Plaintiff and Mr Chan Tat Wing (“Mr Chan”) for the Defendant.  In addition to their respective expert reports, they have also adduced 3 joint statements and supplemental joint statements setting out the areas of their agreement and disagreement as well as a 1-page Clarification which is also agreed. 

17.  There is no significant divergence of views between them save for those set out in paragraph 3 of the 1^st Joint Statement dated 21 November 2014 concerning the identity of the occupier of the so-called “Enclosed Area”, defined in Mr Leung’s expert report to cover nearly the whole of Lot 862, the eastern part and about 80% of Lot 861 and the eastern part and about 70% of Lot 860.  While Mr Leung accepted that the occupier of the “Enclosed Area” could not be ascertained by photo study, Mr Chan disagreed and opined that the “Farm” on Lots 863-865 did not encroach upon this “Enclosed Area” because of (i) the erection of the “western fence” and (ii) the different land use on either side of the “western fence”.  This is essentially a factual issue, ie the historical use of the Disputed Area allegedly by the Plaintiff and his father, to be decided by this court on the totality of the evidence presented.

18.  While numerous defences have been pleaded by the Defendant in the Re-Amended Defence and Counterclaim, they have been trimmed down in its written submissions[4]. Accordingly, in this court’s view, the main issues for adjudication can be summarised as follows:

(1)     Whether the Plaintiff has proved the requisite continuous period of factual possession of the Disputed Area together with the necessary animus possidendi, and that the possession was adverse.  (“Issue 1”)

(2)     Whether the possession of the Plaintiff (or Cheng Senior) of the Disputed Area or any part thereof, if any, was under a licence granted by the Government by virtue of the Licence —the Licence being the one issued by the Director of Agriculture, Fisheries and Conservation on 11 December 2000, 31 December 2003 and 8 March 2007.  (“Issue 2”) 

(3)     Whether the possession of the Plaintiff (or Cheng Senior) of the Disputed Area or any part thereof, if any, was tainted by illegality involving the making of a fraudulent representation in the so-called 2000 Pro Forma—a Chinese document dated 18 October 2000 to the Director of Agriculture, Fisheries and Conservation signed by the Plaintiff and used in his application for the Licence; and if so, whether the Plaintiff’s adverse possession claim should be allowed to stand.  (“Issue 3”)

(4)     If the Plaintiff (or Cheng Senior) had rented land adjoining the Disputed Area, whether the possession of the Plaintiff (or Cheng Senior) of the Disputed Area or any part thereof, if any, is presumed to have encroached for the benefit of the Plaintiff’s landlord; and if so, whether the Plaintiff can claim a possessory title against the Defendant over the land so encroached.  (“Issue 4”) 

(5)     Whether the Plaintiff deliberately concealed from the Defendant or its predecessor‑in‑title his use, occupation or possession of the Disputed Area or any part thereof, if any; whether section 26 of the Ordinance applies so that the applicable limitation period did not begin to run until the commencement of this Action.  (“Issue 5”)

(6)     Whether the Defendant is entitled to possession of the Disputed Area or any part thereof and damages for trespass.  (“Issue 6”)

General Principles

19.  It is well established that a person claiming to be in adverse possession must be shown to have both (i) factual possession, and (ii) the requisite intention to possess: Wong Tak Yue v Kung Kwok Wai & Anor (No 2) (1997-98) 1 HKCFAR 55 at 68E.

20.  In Shine Empire Ltd v Incorporated Owners of San Po Kong Mansion [2006] 4 HKLRD 1, at [28], Yuen JA explained these two requirements as thus:

“28. The House of Lords in JA Pye (Oxford) Ltd & Another v Graham & Another [2003] 1 AC 419 has said that whilst the term ‘adverse possession’ should be avoided as no intention of hostility to the paper title owner is required (paras. 36, 69), it is still necessary for the party (‘the squatter’) claiming that it has dispossessed the paper title owner to prove two separate elements: (1) a sufficient degree of factual possession in the sense of physical control, and (2) an intention to possess. To establish factual possession, the squatter has to show absence of the paper title owner’s consent, a single and exclusive possession and such acts as demonstrated that in the circumstances, in particular, the nature of the land and the way it was commonly used, it had dealt with it as an occupying owner might normally be expected to do and that no other person had done so (para. 41). To establish an intention to possess, the squatter has to show that he intended to occupy and use the land as his own (para. 71), to exclude the world at large, including the paper title owner, so far as was reasonably possible (para.43).” (emphasis added)

21.  The Court of Appeal’s decision was upheld on appeal: (2007) 10 HKCFAR 588.  At [7], Nazareth NPJ elaborated on the law as follows:

“7. The principles for the application of ss.7(2), s.17 and the associated provisions of the Limitation Ordinance are well settled. They were formulated and set out by Slade J in Powell v McFarlane (1979) 38 P & CR 452, approved by the House of Lords in JA Pye (Oxford) Ltd v Graham [2003]1 AC 419, and adopted by this Court in Wong Tak Yue v Kung Kwok Wai (1997‑98) 1 HKCFAR 55. Their application has not been disputed in these proceedings, and they have been relied upon by both parties. The authorities mentioned, not only approve those principles, but provide explanation of them and guidance in their application. Of particular relevance to dispossession are the following passages in Slade J’s judgment in Powell v McFarlane:

‘…

(2) If the law is to attribute possession of land to a person who can establish no paper title to possession, he must be shown to have both factual possession and the requisite intention to possess (‘animus possidendi’).

(3) Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances…acts of possession done on parts of land to which a possessory title is sought may be evidence of possession of the whole. Whether or not acts of possession done on parts of an area establish title to the whole area must, however, be a matter of degree….is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no‑one else has done so.

(4) … the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow.

…

An owner or other person with the right to possession of land will be readily assumed to have the requisite intention to possess, unless the contrary is clearly proved.  This is why the slightest acts done by or on behalf of an owner in possession will be found to negative discontinuance of possession.  The position, however, is quite different from a case where the question is whether a trespasser has acquired possession.  In such a situation the courts will require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world.  If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisite animus possidendi and consequently as not having dispossessed the owner.’ (pp470‑472)” (emphasis added)

22.  Regarding the element of factual possession, it has been said that the occupation should be “exclusive, continuous, open and visible and notorious … It must not be equivocal, occasional, or for a special or temporary purpose”: Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy [2015] 6 HKC 200 (CFI) at [43].

23.  Concerning the element of animus possidendi, the adverse possessor must show that he had a “plain and unequivocal intention to exclude the world at large”: Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy supra (CFI) at [44]. 

24.  In JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, Lord Browne‑Wilkinson explained the position at 435‑436 as follows:

“… What is crucial is to understand that, without the requisite intention, in law there can be no possession. … there has always, both in Roman law and in common law, been a requirement to show an intention to possess in addition to objective acts of physical possession. Such intention may be, and frequently is, deduced from the physical acts themselves. But there is no doubt in my judgment that there are two separate elements in legal possession. So far as English law is concerned intention as a separate element is obviously necessary. Suppose a case where A is found to be in occupation of a locked house. He may be there as a squatter, as an overnight trespasser or as a friend looking after the house of the paper owner during his absence on holiday. The acts done by A in any given period do not tell you whether there is legal possession. If A is there as a squatter he intends to stay as long as he can for his own benefit: his intention is an intention to possess. But if he only intends to trespass for the night or has expressly agreed to look after the house for his friend he does not have possession. It is not the nature of the acts which A does but the intention with which he does them which determines whether or not he is in possession.” (emphasis added)

25.  As stated earlier, the burden of proof lies squarely on the person claiming adverse possession and the evidence he has to adduce must be “compelling”: Wu Yee Pak v Un Fong Leung & Ors (2004) 7 HKCFAR 498 at [5] per Chan PJ.  This gives recognition to the serious consequence of a finding that the title of a paper owner is displaced by an adverse possessor, although the standard of proof is still the civil standard of balance of probabilities: Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy supra (CFI) at [42].

26.  Lastly, warnings about a squatter’s self-serving statements are abound in the authorities. 

27.  In Wong Tak Yue v Kung Kwok Wai & Another supra at 69A‑C Li CJ noted:

“ Where the occupier has made self-serving statements as to what was his intention, whether during the period of occupation or when challenged in legal proceedings, the courts should approach them with some scepticism. The courts would scrutinise the circumstances in which they were made and would give them such weight if any as they may deserve. Conversely, where the occupier has made statements as to what was his intention and such statements are against his interest, the courts would usually accord to them considerable weight.” (emphasis added)

28.  In Birkenhead Properties and Investments Ltd v Lam Kai Man supra, To J further observed:

“13. The burden of proof … is a heavy one. The squatter has to adduce objective and compelling evidence: Powell v McFarlane. Self serving evidence is hardly likely to be of assistance. The court will scrutinize such evidence with great care. The squatter’s evidence of his subjective intention will invariably be given no weight as being self serving evidence, but his statements against his interest will usually be accorded considerable weight. Objective evidence will be given such weight as they deserve.” (emphasis added)

29.  In Bolton Metropolitan Borough Council v Musa Ali Qasmi (1999) 77 P & CR 36, it was pointed out that it is not necessary for the adverse possessor to give evidence of his subjective intention, the reason being that “[s]uch self‑serving evidence is hardly ever likely to be of assistance.” 

Issue 1

30.  As stated earlier, the Plaintiff’s case is that since around 1980, his father and himself have successively, exclusively and continuously used and occupied the Disputed Area without interruption or consent from any person.  The Plaintiff’s case is principally supported by his own testimony and a handful of documents.

31.  This court has carefully considered the testimony of the Plaintiff and assessed it against such of the documentary evidence as there is and the surrounding circumstances of this case.  This court has also considered the inherent probabilities or otherwise of the Plaintiff’s case and assessed his credibility accordingly.  Lastly, this court has borne in mind the heavy burden on the Plaintiff to establish continuous and uninterrupted exclusive possession together with the requisite intention to possess by cogent and compelling evidence, as emphasised time and again in the authorities. 

32.  Having done so, this court is not satisfied that the Plaintiff (and Cheng Senior) have since 1980 occupied the Disputed Area[5] as a farm with the plain and unequivocal intention to exclude the world at large, as he alleges.  In other words, in relation to both factual possession and the requisite animus possidendi, this court does not find the Plaintiff’s testimony believable and shall reject it.  The reasons are as follows.

33.  First, the inherent improbabilities and self-contradictions of some of the Plaintiff’s evidence, the dearth of contemporaneous documents from independent sources to corroborate the Plaintiff’s testimony and the unsatisfactory explanation for it.

34.  In his 1^st witness statement dated 2 September 2014 (“Cheng 1”), the Plaintiff said:

(1)     At paragraph 5: “In about 1979, due to difficult business conditions, [Cheng Senior] switched to chicken farming.  For that, he rented Lot Nos. 863, 864 and 865 …”. 

(2)     At paragraph 7: “When my father and I cleared Lots Nos. 863, 864 and 865, we also fenced off and enclosed the following 2 portions of Lot No. 759 in Demarcation District No. 105 as part of my father’s chicken farm …

7.1     a portion at its southwestern corner of Lot No. 759 …

7.2     a narrow strip on the southern side of the dirt track along its southern boundary ...”. 

(3)     At paragraph 8: “A major part of Lot No. 865 was then not required for the chicken farm, so my father sublet it to Dah Chong Hong for use as a car park.  From time to time, minibuses and large container vehicles were parked there until about 1982 when Dah Chong Hong’s tenancy expired.” 

35.  As pointed out by Mr Chan SC, no written tenancy agreement has been produced for Lot 863 or 864.  Nor is there an explanation for it.  By contrast, a Chinese tenancy agreement was adduced by the Plaintiff in respect of Lot 865 dated 1 January 1980 (“1980 TA”) and it is the only “contemporaneous” document dated in or around 1980.  The next document in the trial bundle ie Demand Note for Water Deposit and Copy Connexion/Installation Fee Account issued to Cheng Senior in relation to a water account for Lot 863 was dated 29 June 1987, almost 7½ years later. 

36.  During cross-examination, the Plaintiff told this court that Lots 863 and 864 were leased in 1979 and it was only later in January 1980 that Lot 865 was leased with the intention of rearing chicken.  However, the entire Lot 865 (instead of a major part of it as stated in Cheng 1) was not used to rear chicken due to lack of funding.  Hence, the Lot was orally sub-let to Dah Chong Hong in February 1980 as a car park for 2 years. 

37.  It seems to this court that, if Cheng Senior had already leased Lots 863 and 864 in 1979 for use as a chicken farm, the alleged purpose for leasing Lot 865 on 1 January 1980 ie also as a chicken farm is wholly unconvincing. Given the explanation that Cheng Senior lacked the necessary funding to rear chicken on Lot 865, why leased it in the first place and then almost immediately sub‑let it to others for use as a car park, which was prohibited by the terms of the 1980 TA?  Why did Cheng Senior not wait until he actually required more land and had the funds to extend the farm to Lot 865 before leasing it?  There is no explanation from the Plaintiff or Cheng Senior.

38.  Further, the purpose of fencing off (i) a portion at the southwestern corner of Lot 759 and (ii) a narrow strip on the southern side of the dirt track along its southern boundary in or about 1979/1980 was not explained in paragraph 7 of Cheng 1—the Plaintiff simply made a bare assertion that was what his father and he did at the time when they cleared Lots 863-865.  If Cheng Senior had no use for any part of the land on Lot 865 to rear chicken, what was the point of fencing off a small portion and a narrow strip of other people’s land as part of the chicken farm and what use was actually put to them for the purpose of rearing chicken?  There is no explanation for it either. 

39.  By the way, the 1980 TA was in fact not entered into by Cheng Senior with the owner of Lot 865—it was entered into by the Plaintiff himself who was then in full‑time employment with the Hong Kong Police.^[6]  There is no explanation in Cheng 1 why Cheng Senior did not enter into the 1980 TA himself if, on the Plaintiff’s case, he had already leased Lots 863 and 864 the previous year.  In Cheng 1 at paragraph 5, the Plaintiff gave the impression that it was Cheng Senior who leased Lot 865 as well.  It was only in his 1^st supplemental witness statement dated 23 March 2015 (“Cheng 2”) at paragraph 2 that the Plaintiff explained that his name appeared in the 1980 TA as the tenant because he had a stable job as a police constable.  But then, the Plaintiff did not go on to clarify in Cheng 2 whether the tenancy agreements in respect of Lots 863 and 864, if they existed, were also entered into in his name because he had a stable job or whether he stood by paragraph 5 of Cheng 1 that the 2 Lots were leased by his father.

40.  As Mr Chan SC put it in his closing submissions, although Lots 863, 864 and 865 are not the subject matter of this Action, the Plaintiff’s case that his father extended the farm from Lots 863-865 to the Disputed Area in 1979 and 1980 is contingent upon him establishing the original location of the farm and its history commencing from 1979/1980.  This in turn requires the Plaintiff to satisfactorily prove the existence of the lease of Lots 863 and 864 in 1979 and why he leased Lot 865 in 1980 when the clear evidence is that Lot 865 was used as a carpark.  Otherwise, the Plaintiff’s case simply does not add up.  On the evidence, this court is not satisfied that the Plaintiff has done so.

41.  Next, operating a chicken and pig farm obviously required water and electricity supply.  So did the Cheng family’s residence on the farm.  As stated earlier, after the 1980 TA, the next relevant document in the trial bundle is a Demand Note for Water Deposit and Connexion/Installation Fee Account issued to Cheng Senior for the water account for Lot 863 dated 29 June 1987.

42.  With regard to water supply to the farm, the Plaintiff explained that prior to 1987, the farm had no water account as it was located at a remote area.  The farm sourced water from a deep water well built in 1979 and stored in a water tank built in 1982.  It was only in 1987 when the village chief informed the Plaintiff and his family that water pipes could be installed that Cheng Senior applied for a water account.  Assuming that the Plaintiff and/or his father had built the well and water tank as alleged, there should be documentation as to the construction costs of them—the Plaintiff did not say that he and his father built the well and the water tank themselves at zero costs.  Nevertheless, none is produced.  Nor is there explanation why that is so.

43.  According to the Plaintiff in cross examination, the water well is 120 feet deep so it had always been necessary to use an electric water pump to draw water from it.  In the trial bundle, there is only 1 document evidencing the use of an electric water pump ie a rental agreement dated 23 April 1990.  In cross examination, the Plaintiff was asked about documentation prior to 1990 in relation to such electric water pump and the answer was simply there was none. 

44.  With regard to electricity, in Cheng 2, the Plaintiff said at paragraph 3:

“I applied for electricity supply to Lot No. 865 for use over the whole Farm Area. Attached hereto marked ‘B’, is a copy confirmation of application for electricity supply dated 19^th August, 1999 with deposit advice.”

45.  As far as electricity is concerned, the only document adduced by the Plaintiff is the said confirmation of application for electricity supply dated 19 August 1999 (“Confirmation”).

46.  During cross‑examination, the Plaintiff expanded on what he said in Cheng 2 and explained that the farm in fact had electricity supply since around 1980.  It is just he could not locate any document to evidence this due to the lapse of time.  While the Confirmation was actually for an application to change the name of the electricity account, which suggests that electricity supply had been available at Lot 865 before 1999, it is a quantum leap to say that the Confirmation can be taken as evidence that electricity supply was available in 1980.  If that were in fact the case, given that the Plaintiff is claiming adverse possession as far back as 1980, it is inherently improbable that when he addressed the issue of electricity supply in Cheng 2, he would have omitted to mention that electricity was already available in 1980.

47.  In summary, apart from the 1980 TA, the Plaintiff has not adduced any other contemporaneous objective evidence showing the existence of the farm on Lots 863 and 864 since 1979 and later at Lot 865.  Even the 1980 TA itself does not help the Plaintiff since objectively (from the aerial photos) and admittedly, Lot 865 was used as a car park between 1980 and 1982.  The Plaintiff is not saying the business of rearing chicken or pigs generated absolutely no documents throughout the entire period when Lots 863 to 865 and the Disputed Area allegedly constituted the farm.  Obviously, there would have been, for instance, invoices and receipts for the construction costs of the chicken sheds and pigsties, invoices and receipts for buying and selling chicken and pigs, accounting ledgers, electricity bills, invoices for the construction of the water well and water tank and other structures on the farm.  These documents would reveal the dates of the relevant transactions and support, or disprove, the Plaintiff’s case.  Nevertheless, the Plaintiff rather conveniently claims either those which once existed could not be located due to the lapse of time or that the documents were in such a bad condition due to the lapse of time and were not kept.  This explanation is again unconvincing given that the Plaintiff did keep the 1980 TA intact.

48.  It is true that there are some documents in which it is claimed that Lots 860 to 862 were part of the farm eg the Livestock Keeping Licence dated 11 December 2000, 31 December 2003 and 8 March 2007 respectively.  But these documents can hardly be regarded as evidence that the farm existed back in 1979 or 1980—at most, they can only be evidence of the existence of the farm as at the dates stated in them and allegedly included Lots 860-862. 

49.  It is also true that the Plaintiff stated in his application dated 7 June 2006 to surrender his Livestock Keeping Licence and for compensation for the surrender that the farm had been located on Lots 860‑865 since 1980.  However, as Mr Chan SC rightly points out, this is a self‑serving statement generated many years after—it is neither contemporaneous nor objective evidence from an independent source.  In this court’s view, it is certainly not cogent or compelling.

50.  For completeness, this court does not consider that the expert evidence carries much weight in support of the Plaintiff’s case on factual possession and intention to possess since 1979/1980.  While the experts agree that structures and fences can be observed on the Disputed Area from the aerial photos and survey sheets, the crux of the matter is whether these structures and fences were built and erected by the Plaintiff and his father from 1979 onwards as part of and to delineate the farm as alleged with the intention of keeping out the world at large.  Understandably, the experts are not able to provide any assistance in this regard from observing the aerial photos and survey sheets.

51.  Second, contradictions between the Statement of Claim, the Plaintiff’s witness statements and his oral testimony as well as the continuous evolvement and embellishment of his factual case. 

52.  To take one glaring example. The Plaintiff’s case at paragraph 5(a) and (d) of the Statement of Claim and paragraph 12 of Cheng 1 is that by about 1982, while continuing to use and occupy Lots 860-862 as an extension of his farm on Lots 863-865 and parts of Lot 759, his father erected (1) “fences delineated in red on the [annexed] Plan” (“Red Fences”) (2) “a fence (also delineated in red) at the southern-western boundary of Lot No.860 which cut across some north-western portions of Lot Nos.860, 861 and 862 and continued further up in a north-easterly direction into the south-eastern portions of Lot Nos.864 and 863” the purpose of which was to keep pigs off the pasture growing on the remaining areas of Lots 860A, 861 and 862 (“Red Pig Fence”). This Red Pig Fence essentially separated Lots 863-865 from Lots 860-862 as shown on the plans annexed to the Statement of Claim and Cheng 1[7] and had the effect of an internal barrier within the farm.

53.  When it comes to the Plaintiff’s 2^nd Supplemental witness statement (“Cheng 3”), the purpose of the Red Pig Fence became this:

“13. In about 1982, when we carried out further fencing works to enclose the Farm Area, we fenced off the Enclosed Area from the rest of the Farm Area to prevent our own farm animals from damaging the 橡草being in different stages of growth there.”

54.  According to paragraph 10 of Cheng 3, 橡草 is a kind of grass with crispy and juicy stalks, pigs liked to eat it and so he used it as a supplementary feed for the pigs since about 1980.  As for the farm animals in question, upon enquiry from the bench at the trial, the Plaintiff told this court that they were chicken, pigs, dogs, ducks and cats.

55.  During cross examination, Mr Chan SC showed the Plaintiff a photo of an enclosed pigsty annexed to Cheng 2.  The Plaintiff then admitted that, unlike what is commonly known as free range chickens, pigs were all along kept within the pigsties with gates and locks and would not be able to roam around freely.  That rather undermines the alleged purpose of building the Red Pig Fence as stated in the Statement of Claim and Cheng 1.  The Plaintiff then changed his case and attempted to explain it was to keep out dogs and other farm animals, as stated in Cheng 3. 

56.  The problem with this explanation, as pointed out by Mr Chan SC in his closing submissions, is that while the Plaintiff claims that the 橡草 was used as pig feed because pigs liked it, no reasonable explanation was offered as to why other animals such as dogs and cats, ducks and chicken would venture to the “Enclosed Area” on Lots 860-862 or were able to damage the 橡草 grown in it, to the extent that his father went to the trouble and expenses of erecting the Red Pig Fence back in 1982.

57.  To take another example.  In Cheng 3 at paragraph 14, the Plaintiff mentioned for the 1^st time about the installation of a Mesh Door at a point along the Red Pig Fence which enabled the Plaintiff and his father to access from the “Farm Area” to the “Enclosed Area”:

“14. For our own access to the Enclosed Area from inside the Farm Area, we made an opening, as marked on the Amalgamated Plans, where we installed the Mesh Door, made with angled iron bar frame and wire mesh. From a distance, it has a uniform look as part of the fencing that enclosed the Enclosed Area and may not be readily noticeable.”

58.  The existence of this Mesh Door was not mentioned in the Statement of Claim or Cheng 1 and Cheng 2—it was first revealed in Cheng 3 after the Defendant’s expert opined in the 1^st Joint Statement that “the ‘Farm’ only occupied the peripheral area westerly outside the ‘Enclosed Area’ ”, the reasons being that if the Farm did encroach upon the “Enclosed Area”, the western fence ie the Red Pig Fence should not have been completely enclosed and that the land use or activity on either side of the Red Pig Fence was obviously different. 

59.  Mr Chan SC submits and this court agrees that the Plaintiff’s belated mention of the Mesh Door should be treated cautiously as there is no reasonable explanation as to why such a crucial piece of evidence as to how he and his father could access the eastern side of the Red Pig Fence from the west was not mentioned before. 

60.  What is more, there is no corroboration of this part of the Plaintiff’s evidence.  As admitted by the Plaintiff at paragraph 5 of Cheng 3, the Mesh Door is not shown on any survey plans.  Further, none of his family members have been called as a witness to corroborate the Plaintiff’s evidence that the Mesh Door was installed in about 1982 when his father and him carried out further fencing works so as to fence off the Enlcosed Area from the rest of the farm in order to prevent their own farm animals from damaging the 橡草. 

61.  Another example can be found in paragraph 19 of Cheng 3 in which the Plaintiff said in about 1984, Cheng Senior and him fenced off the south-western boundary of the Farm Area (“865SW Fence”). The overall fencing thereafter is delineated in green on the 1984 Amalgamated Plan annexed to Cheng 3.  When cross-examined by Mr Chan SC on why he omitted to mention about the fencing work in 1984, the Plaintiff was unable to provide an answer—he simply said he did not know why.  But the Plaintiff was quite adamant that by 1984, the entire farm was fenced off subject to a little opening on the right hand side, as he marked on the 1984 Amalgamated Plan.

62.  Normally, a witness’ memory only fades, but not improves, with the passage of time.  In April 2013 when the Plaintiff issued the Writ with a Statement of Claim, he did not mention the 865SW Fence. Yet, in March 2016, when preparing Cheng 3, the Plaintiff was able to remember what he and his father did back in 1984, over 30 years ago.  Mr Chan SC is sceptical about this in his closing submissions and suggests that “[t]he likelihood is that P noticed his expert mentioning the presence of the 865SW Fence in his report from 1985 Aerial Photo, realised that this was missing from his own evidence, and tailored his evidence accordingly.”  It is not necessary, for the present purpose, for this court to making a finding as per Mr Chan SC’s suggestion.  Suffice it for this court to take this into account in assessing the Plaintiff’s overall credibility. 

63.  Third, the failure of the Plaintiff to call available and relevant witnesses to corroborate his own testimony.

64.  In Li Sau Keung v Maxcredit Engineering Ltd & Another [2004] 1 HKC 434 at [28], Le Pichon JA explained the circumstances in which the court can draw an adverse inference in such a situation as follows:

“28. … In Cavendish Funding Ltd v Henry Spencer & Sons Ltd [1998] 6 EG 146 at 148-149, Aldous LJ cited the following passage from the judgment of Newton and Norris JJ in O’Donnell v Reichard [1975] VR 916 at 929:

‘It is sufficient to say that in our opinion for the purposes of the present case the law may be stated to be that where a person without explanation fails to call as a witness a person who he might reasonably be expected to call, if that person’s evidence would be favourable to him, then, although the jury may not treat as evidence what they may as a matter of speculation think that that person would have said if he had been called as a witness, nevertheless it is open to the jury to infer that that person’s evidence would not have helped that party’s case; if the jury draw that inference then they may properly take it into account against the party in question for two purposes, namely:

     (a)  in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; …’ ” 

65.  According to Cheng 1 at paragraph 6, the Plaintiff’s whole family moved to Lot 864 to live on the farm after a one storey store room/watchman shed was erected on it.  Towards the end of his cross‑examination, the Plaintiff accepted that his wife had lived on the farm right from the very beginning ie 1979/1980.  Obviously, she would have personal knowledge of what the Plaintiff now claims he and his     father had done on the farm, including fencing the Disputed Area.  His wife is not called as a witness.

66.  In Cheng 1 at paragraph 13, the Plaintiff said this:

“13. There was a small opening in the fencing on the east side of Lot No. 861. My father deliberately left it there to allow our neighbour on that side, a Mr. Wong and his family, to dump chicken manure on our side for us to use as a natural fertilizer for our pasture. Apart from chicken farming, they also carried on pig farming. In view of their provision of natural fertilizer, we also allowed them to cut some grass from our pasture to feed their pigs.”

67.  Towards the end of his cross-examination, the Plaintiff told this court that his neighbours would know if and when the farm was completely or almost completely fenced off.  He mentioned the name Wong Hoi Leung ie Wong Senior[8], a friendly neighbour with whom he had maintained contact even after the start of this Action, albeit Wong Senior passed away shortly before he prepared Cheng 3. The Plaintiff also mentioned the name of another neighbor Wong Kei Chui ie Wong Junior[9] who is still alive.

68.  In the present case, given the dearth of contemporaneous documents to corroborate the Plaintiff’s case and given the little weight accorded to a squatter’s self-serving statements, it seems to this court reasonable to expect him to call other witnesses, independent or otherwise, who have personal knowledge of the relevant facts to support his case.  But this was not done—the only explanation from the Plaintiff, when asked in court, was that he did not think there was a need. 

69.  In these circumstances, this court considers it appropriate and is minded to draw an adverse inference against the Plaintiff. 

70.  To conclude, this court is not satisfied that the Plaintiff has discharged the burden on him to prove the requisite continuous period of factual possession of the Disputed Area together with the necessary animus possidendi, and that the possession was adverse.  This court must therefore rule against the Plaintiff on Issue 1.  That is sufficient to dispose of the Action.

71.  Given this court’s ruling on Issue 1, it is strictly speaking not necessary to consider the other issues.  But in the event this court’s decision on Issue 1 is challenged on appeal, this court will endeavour to deal with the remaining issues as briefly and economically as the case permits. 

Issue 2

72.  To constitute possession for the purposes of limitation, the claimant must show that he took possession of the land in his own right and not as licensee or representative of another person, even if that other person is not the true owner or an agent acting on behalf of the true owner—the need for the possession to be adverse means that a possession based on licence or permission cannot be relied upon.  For the purpose of adverse possession, occupation by a licensee is to be regarded as occupation by the licensor: Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy supra (CFI) at [48] to [51]; Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy [2017] 3 HKC 527 (CA) at [22].

73.  The gist of the Defendant’s submission is that the aforesaid principles laid down in Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy supra (CFI) and (CA) should be applied to the present case since the Plaintiff was occupying the Disputed Area[10] pursuant to the Licence first issued in 2000 and not in his own right.  The Plaintiff’s claim to a squatter’s title should therefore equally be dismissed. 

74.  Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy was a case involving occupation of private land pursuant to fixed-pitch hawker licences issued by the Government and not in their own right.  At first instance, Chow J rejected the squatter’s claim that his parents had acquired a possessory title by way of adverse possession.  The learned Judge, after reciting various provisions in the Hawker (Urban Council) By-laws as well as the terms and conditions of the hawker licences, concluded at [59] and [60]:

“59. In my view, these By-laws and licence terms and conditions, subject to which Chu Senior and/or Madam Yu carried on business at D1’s Old Hawker Stall and occupied the land on which that hawker stall stood, amply demonstrate that during the period from 1963/64 to 1985:-

(1) The licences granted to them were ‘fixed pitch’ hawker licences which spelt out the specific location and the precise dimensions of their allocated pitch. It is not merely a licence permitting them to carry out certain activities.

(2) Chu Senior and Madam Yu were at all material times subject to the power of the licensing authority to allocate a specific pitch to them as well as the power to require them to vacate from their allocated pitch.

(3) The purpose and the duration of Chu Senior and Madam Yu’s occupation of their allocated pitch, as well as the activities which they were permitted to carry out at their allocated pitch, were subject to close control and regulation by the licensing authority.

(4) Chu Senior and Madam Yu were also subject to stringent restrictions as to how their allocated pitch could be occupied and used.

THE 1^ST DEFENDANT HAS FAILED TO ESTABLISH EITHER FACTUAL POSSESSION OR AN INTENTION TO POSSESS

60. As earlier mentioned, I consider it to be clear that during the period from 1963/64 and 1985, Jimmy Chu’s parents occupied the land on which D1’s Old Hawker Stall stood as Government licensees pursuant to fixed pitch hawker licences granted by the Government, and not in their own right. It follows that their occupation of D1’s Old Hawker Stall cannot be regarded as ‘possession’ for limitation purposes. This is quite apart from the fact that that their occupation of D1’s Old Hawker Stall was for a special or limited purpose (ie hawking) under stringent restrictions imposed by the By-laws and the licence terms and conditions which, in my view, would also lead to the same conclusion.” (emphasis added)

75.  The learned Judge’s conclusion that the 1^st defendant’s parents occupied the disputed area as government licensees pursuant to the fixed pitch hawker licences, there being no evidence to suggest any other basis for their occupation, was endorsed by Cheung JA in the Court of Appeal.  At [2.8], Cheung JA observed that:

“2.8 … This is not a case where the Chus entered the land without consultation and without obtaining permission from any one. The Judge relied on the fact that the Chus were occupying the land by way of a licence from the Government. I am satisfied that the Judge was correct to find that their occupation was as Government licensees pursuant to the fixed pitch hawker licence granted by the Government and not by way of ‘possession’ for limitation purpose. …” (emphasis added)

76.  After reciting paragraph 59 of Chow J’s judgment quoted above, Cheung JA continued to hold at [2.9] that “[f]urther, in light of these factors, the nature of the occupation by the Chus was at best equivocal and open to more than one interpretation.  This being the case … the Court will treat the Chus as not having had the requisite intention and consequently as not having dispossessed the plaintiffs.”

77.  Harris J, at [23], summarised Chow J’s findings of facts,including in particular the terms of the hawker licences, as follows:

“(1) The 1^st defendant’s Parents occupied the disputed area pursuant to the fixed pitch hawker licences, there being no evidence to suggest any other basis for their occupation: §§52-53.

(2) Although the licences for the entire period from 1963/4 to 1985 were not available, from those that were available for both that period and the licence granted to Madam Yu in 1993, it could be seen that the terms of the licences contained a number of restrictions on occupation and use of the disputed area: §58-59.

(3) The licences were for fixed terms of 12 months.

(4) The licences specified that the licensee could be required to vacate a pitch at any time.

(5) The licences prohibited transfer, assignment or sub-letting or otherwise parting with occupation.

(6) The licences specified the trade that could be carried on by the licensee.

(7) The licences specified the precise area on which the trade could be carried out.

(8) The Judge concluded that in the light of these matters the Parents occupied the disputed area as Government licensees and that their occupation could not be considered possession for limitation purposes: §60.

…” (emphasis added)

78.  In the present case, the Defendant submits that the Licence bore similar features to the fixed pitch hawker licences in Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy supra in that they imposed clear restrictions on the use of the subject land.  In particular, the Licence:

(1)     were non-transferrable;

(2)     were granted for fixed terms on a tri-annual basis;

(3)     permitted the licensee to keep livestock only at a specified address at a precise area (defined as “Approved Premises”) delineated by a farm plan;

(4)     stipulated that the Approved Premises should not be used for dwelling purposes or other business apart from that specified in the Licence;

(5)     stipulated that the licensee must allow authorized officers to enter the Approved Premises at all times for inspection;

(6)     were subject to revocation or non-renewal upon the failure to comply with the stipulated conditions. 

79.  With respect, it seems to this court that there are clearly material distinctions between Tsang Foo Keung and the present case which render the principles laid down in that case inapplicable.

80.  First, the squatter’s parents in Tsang Foo Keung could only begin to occupy a certain pitch for the purpose of hawking after the licensing authority had actually allocated one to them and granted them a licence to use it.  By contrast, there is no suggestion that any part of the Disputed Area was allocated to the Plaintiff or his father by any licensing authority. While this court is not satisfied that the Plaintiff (and Cheng Senior) have since about 1980 occupied the Disputed Area as part of the farm, on balance of probabilities, the likelihood is that the Plaintiff had at some unspecified time[11] begun to occupy the Disputed Area, without consultation and without obtaining permission from any one.

81.  Second, according to Cheng 1, the Plaintiff only applied for the Licence for his pig farm in 1996 and that was pursuant to Government requirements.  Judging from the licence conditions, it would appear the Government’s requirements were primarily concerned with public health, water pollution control and waste disposal control.  In other words, it can reasonably be inferred that the licensing requirements were imposed in order to control and regulate the activities which the licensee was permitted to carry on at the designated location.  Unlike Tsang Foo Keung, there is no evidence, and Mr Chan SC could not suggest any, that the Licence was anything more than a licence permitting the Plaintiff to carry out certain activities at, rather than a licence to occupy, the designation location. 

82.  Third, importantly, unlike Tsang Foo Keung, there was no provision in the Licence which empowered the licensing authority to require the Plaintiff to vacate the designated location.  The only power on the part of the licensing authority, in the event of non-compliance with the licence conditions, was to revoke or not to renew the Licence.  In this regard, there is also no evidence that upon the surrender of the Licence in 2007, the Plaintiff was required by the licensing authority to vacate Lots 860-865.  Notwithstanding the Defendant’s submission to the contrary, this is a most material distinction between Tsang Foo Keung and the present case as it reinforces the view that the Licence was there to control the activities which the licensee was permitted to carry on at the designated location, rather than his occupation at the designated location. 

83.  For all these reasons, this court agrees with Mr Shum that the Licence related only to the activities of livestock keeping on the land in question and not the right of occupation of it.  Accordingly, this court must reject Mr Chan SC’s submissions that the Plaintiff should be regarded as the Government’s licensee during the period when the Licence was in force with the legal consequences as laid down in Tsang Foo Keung.

Issue 3

84.  The defence of illegality is only dealt with very briefly in Mr Chan SC’s written submissions, reflecting the uncertainty of the law in this area and its application to the present case.  This court proposes to do the same.

85.  The material part of the 2000 Pro Forma read:

“ * I have at all times rented the land of the farm by way of written * (hereby attach the written lease) / oral * tenancy agreement. I did look for the land owner, but his whereabouts is unknown, so [I] could not obtain his written consent, consenting to my erection of farmhouse and installation of waste treatment facility at Lots 860 – 865 in D.D. 105, Shek Wu Wai, San Tin, Yuen Long.”

86.  In his Closing Submissions, Mr Chan SC invites the Court to find that the Plaintiff signed the 2000 Pro Forma knowing that it contained a false representation to the effect that he was a tenant of Lots 860-865 and that he had looked for the owners of the Lots but was unable to locate them, when in fact that was not true.  He submits the Defendant’s complaint is not that the Plaintiff had carried on unlicensed farming activities on the land in question but that he had made a fraudulent representation regarding his permission to use the Lots and in the process withheld the truth from both the Government and the rightful owners.  He further submits that, on any reasonable view, it would be an affront to public policy if the Plaintiff’s adverse possession claim based on a licence issued in such circumstances is allowed to stand.

87.  There is no dispute that the Plaintiff never looked for the owners of Lots 860-865, or, at the very least, the Defendant as the registered owner of Lots 860-862.  While in his written submissions, Mr Shum has gone to great length to examine both the text and the factual context of the 2000 Pro Forma in light of the Plaintiff’s testimony and submits that there was no fraudulent representation, it is really unnecessary for this court to make any findings in this regard.  Even on the assumption that the Plaintiff had made a fraudulent representation in order to obtain the Licence, this court is still not persuaded that, on the law as presently stands, this illegality defence to the Plaintiff’s adverse possession claim avails the Defendant.

88.  To start with, in relation to Issue 2, this court has already ruled that the Licence related only to the activities of livestock keeping on the Lots in question and not the right of occupation of them—the obtaining of the Licence did not enable the Plaintiff to occupy the Disputed Area; it merely permitted and regulated the activities carried on it by the Plaintiff. 

89.  Importantly, the law on this subject and how it should be applied in any factual scenario is far from settled. 

90.  As observed by Chow J in Tsang Foo Keung at [77]-[78]:

“77. The law on the consequence(s) of illegality on a claim of adverse possession is not yet settled. As mentioned in Jourdan QC and Radley-Gardner, Adverse Possession, 2^nd Ed, at para 7‑140, a number of possible approaches could be taken:

(1) a person should not be granted a remedy where he has to rely directly on unlawful conduct to succeed;

(2) an alternative approach would be to consider whether the policy behind the statutory prohibition in question would be infringed if a squatter was allowed to rely on acts committed in breach of the prohibition in support of a claim to title by adverse possession.

78.     The nature and seriousness of the unlawful conduct in question would be relevant if the bar to making title by adverse possession is based on public policy considerations: see the discussion in Chung Man Yau v Sihon Co Ltd [1997] HKLRD 1221 (relating to a claim for loss of earnings from unlicensed hawking), at 1226-1228 per Mortimer VP, 1228-1229 per Godfrey JA, and 1229-1230 per V Bokhary J.”

91.  As far as the first approach identified in Jourdan QC and Radley-Gardner, Adverse Possession is concerned, in view of this court’s ruling in relation to Issue 2, there is no question of the Plaintiff having to rely directly on the fraudulent representation in the 2000 Pro Forma in order to succeed: the Plaintiff could have continued his alleged possession of the Disputed Area in and after 2000 with or without the Licence and with or without rearing pigs.  While the Licence might be liable to be revoked, there is no suggestion by Mr Chan SC that the making of the fraudulent representation in the 2000 Pro Forma, if found out by the licensing authority, would entitle it to evict the Plaintiff from the Disputed Area.

92.  With regard to the alternative approach, one has to be able to identify the public policy in question in order to apply it.  But what is the public policy behind the prohibition of livestock keeping without a licence? The Defendant has adduced no evidence in this regard and Mr Chan SC has advanced scanty, if at all, arguments about it.  Certainly, there is no evidence or even suggestion that protection of the rights of the paper title owner of the land is behind the licensing system.  In these circumstances, this court is not minded to come to a firm conclusion on the public policy behind the prohibition of unlicensed livestock keeping. Instead, it is content to note that, judging from the licence conditions, it would appear the public policy behind the Government’s licensing requirements was primarily concerned with protection of public health, water pollution control and waste disposal control.

93.  Lastly, as Chow J observed in Tsang Foo Keung at [78], the nature and seriousness of the unlawful conduct in question would be relevant if the bar to making title by adverse possession is based on public policy considerations.  Mr Chan SC submits that it would be an affront to public policy if the Plaintiff’s adverse possession claim based on a licence issued pursuant to a fraudulent representation is allowed to stand, without elaboration.  If, as this court tentatively notes above, the public policy considerations primarily concern the protection of public health, water pollution control and waste disposal control, why should the grant of a remedy to the Plaintiff be an obvious affront to these considerations?  As Mr Shum submits, the Plaintiff’s claim of adverse possession is not against the public or the Government, but the paper title owner.  The public policy of regulating livestock keeping could still be served no matter who has a better title to the Disputed Area.  If it is established that the Licence had been obtained illegally and fraudulently, the licensing authority could, among other things, have revoked the Licence.  There might also be potential criminal sanctions.

94.  For all the reasons stated above, this court is not satisfied that the Defendant has made good this illegality defence.  That disposes of Issue 3.

Issue 4

95.  The law on the principle of encroachment, in so far as third party’s land is concerned, has been succinctly summarised by Ribeiro PJ in in Secretary for Justice v Chau Ka Chik Tso (2011) 14 HKCFAR 889.  For the present purpose, this court needs only recite the relevant parts of Ribeiro PJ’s judgment as follows:

“17. The doctrine [of encroachment] addresses the position of a tenant who encroaches upon adjoining or adjacent land beyond the boundaries of the land demised to him under his lease. Such encroachment may be (as in the present case) upon land which belongs to his landlord. Or it may be upon land belonging to a third party. As we shall see, the principle operates quite differently in each of those two cases.

…

20. Where the area of encroachment belongs to a third party, the doctrine takes effect where, on the facts, the tenant has by adverse possession barred the third party’s right of action and extinguished his title to the land. Then under the doctrine, a presumption arises (unless previously rebutted) that the encroached upon land has been occupied as an addition to the landlord’s land and the right to possession vests in the landlord at the end of the tenancy. The land encroached upon is not treated as land acquired by the tenant by adverse possession for his own benefit.

…

29. … it should be noted that the doctrine as applied to encroachments by the tenant onto land belonging to a third party operates differently. In such cases, the doctrine proceeds on the basis that the Limitation Ordinance takes effect in full, not only barring the third party’s right to recover the land, but also extinguishing his title to it. What the doctrine then does is to deprive the tenant of the benefit of such extinguishment by deeming possessory title to the encroachment area to vest in the landlord at the end of the tenancy.” (emphasis added)

96.  In the present case, assuming the Plaintiff had leased not just Lot 865, but also Lots 863 and 864, and had encroached upon the Disputed Area owned by the Defendant (who was a third party for the present purpose) by “extending” his farm to the Disputed Area for the requisite continuous period of factual possession together with the necessary animus possidendi, the doctrine proceeds on the basis that the Limitation Ordinance takes effect in full, not only barring the third party’s ie the Defendant’s, right to recover the land, but also extinguishing his title to it.  What the doctrine then does is to deprive the tenant ie the Plaintiff of the benefit of such extinguishment by deeming possessory title to the encroachment area to vest in the Plaintiff’s landlord. 

97.  As Ribeiro PJ explained above, the doctrine first proceeds to bar the Defendant’s right to recover the land and extinguishes his title to it.  It is therefore difficult to see how the doctrine can avail the Defendant in the present case.  Whilst the doctrine then deprives the Plaintiff of the benefit of such extinguishment, the Defendant’s right to recover the Disputed Area is nonetheless barred and its title extinguished, and it would still not be entitled to an Order for possession as claimed in its Re‑Amended Counterclaim.

98.  In other words, while the doctrine of encroachment on third party’s land, as applied to the present case, appears to be against the Plaintiff, it does not assist the Defendant either.  In this court’s view, the doctrine of encroachment is simply a red herring and does not serve the Defendant.

Issue 5

99.  Section 26(1)(b) of the Ordinance provides:

“(1) Subject to subsection (4), where in the case of any action for which a period of limitation is prescribed by this Ordinance, either—

…

(b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or

…

the period of limitation shall not begin to run until the plaintiff has discovered the … concealment … or could with reasonable diligence have discovered it.”

100.  For the present purpose, concealment may take the form of non-disclosure as well as active concealment: Parkin & Ors v Alba Proteins Ltd & Ors[2013] EWHC 2036 (QB) at [81].

101.  Mr Chan SC’s submissions in this regard can be seen from the 5 short paragraphs in his Opening Submissions which he adopts in his Closing:

“47. In the present case, the fact that P was applying for a Livestock Keeping Licence which purported to cover the Land owned by D is clearly a ‘fact relevant to the plaintiff’s [D’s] right of action’. Indeed, the application and grant of Livestock Keeping Licences is pleaded as material facts in P’s Statement of Claim.

48. From reading the 2000 Pro Forma, P must have known that the AFD required him to attempt to contact the owner of the subject lots. Indeed, the only two available options were that (1) a written consent is obtained or (2) the applicant tried but failed to contact the owner.

49. In the circumstances, the Court will be invited to find that P deliberately concealed the fact of his licence application from D by refraining from seeking D’s consent.

50. As to the time when D did or ought with reasonable diligence have discovered the fact (i.e. that P applied for and obtained a Livestock Keeping Licence covering the Land), it is important to note that no structures were ever erected on the majority of the Land.

51. Even a physical inspection of the area would not have revealed the fact that P had applied for a licence or that the licence purported to cover the Land under D’s ownership.

52. In the circumstances, the Court will be invited to find that D did not and could not with reasonable diligence have discovered the concealed fact until the commencement of the present action at the earliest and the limitation period did not start to run until then.” (emphasis added)

102.  The fallacy of this argument is that the Defendant’s right of action to recover possession of the Disputed Area from the Plaintiff does not depend on whether the Plaintiff has or has not applied for the Licence.  If one reads the Re‑Amended Counterclaim, all that the Defendant has pleaded, and needed to plead, was the fact that “On a day unknown to the Defendant, the Plaintiff trespassed into and started occupation of the Defendant’s Lots without permission or licence from the Defendant.”  No point was taken as to the adequacy or otherwise of the plea.  Contrary to paragraph 47 of the Defendant’s Opening Submissions, the fact that the Plaintiff has applied for the Licence is clearly not relevant to the Defendant’s right of action.

103.  For this simple reason, Issue 5 must be decided against the Defendant.

Issue 6

104.  Given this court’s ruling on Issue 1, it goes without saying that the Defendant is entitled to possession of the Disputed Area and damages for trespass.

Disposition and Costs Order nisi

105.  The Plaintiff’s Claim is hereby dismissed. 

106.  As for the Defendant’s Counterclaim, there shall be an Order against the Plaintiff for the delivery of vacant possession of the Disputed Area to the Defendant within 12 weeks or such other time as agreed by the parties, together with an Order for the payment of nominal damages by the Plaintiff to the Defendant for trespass to the Disputed Area. 

107.  Liberty to apply.

108.  There shall also be an Order nisi that costs of the Action including the Counterclaim be to the Defendant, to be taxed if not agreed, and paid by the Plaintiff forthwith, certificate for 2 counsel.

109.  Lastly, this court thanks counsel on both sides for their helpful assistance.