TEAM GLORY DEVELOPMENT LTD v. SO LUEN FAI

CACV 231/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 231 OF 2008

(ON APPEAL FROM HCA NO. 7943 OF 1995)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  This was an appeal from a decision of Deputy High Court Judge To given on 23 June 2008.  The judge allowed an appeal from a decision of Master Lung who had dismissed the plaintiff’s claim for want of prosecution on the ground that there had been inordinate and inexcusable delay by the plaintiff.  The judge held that there had been inordinate delay but that the delay had been explained and that, on balance, he was satisfied that the delay by the plaintiff was excusable.  He then went on to consider the question of serious prejudice and held that he was not satisfied that the prejudice caused by the plaintiff’s delay was serious prejudice.

2.  At the conclusion of the hearing this appeal was allowed, the plaintiff’s claim was dismissed and the costs of the action including the costs here and below were awarded to the first named defendant.

Background

3.  The plaintiff’s claim is relatively simple.  It is pleaded that the plaintiff is the registered owner of land situated in Ku Tung, New Territories, namely Section A of Lot No. 2030 in DD No. 95 in the Tai Po New Territories Land Registry.  It is said that the land was held under an Agreement and Conditions of Grant dated 16 December 1959.  The claim is made that the defendants were occupying the land without the consent of the plaintiff and were trespassers upon the premises.

4.  It emerges from the amended defence and counterclaim, and there appears to be no dispute about this, that the plaintiff purchased the premises under a sale and purchase agreement dated 22 March 1994 with the assignment dated 21 July 1994.  The defence is that the defendant’s father, So Cheung, commenced occupation of the property as long ago as 1953 after he had paid $6000 to a fellow villager of his brother-in-law.  It is said, first of all, that So Cheung and his family had since then been continuously residing and carrying out agricultural work thereon, including such things as fish farming and poultry stock raising.  Not only were the provisions of section 7(2) and 17 of the Limitation Ordinance, Cap. 347 relied upon, but it was also said that because the plaintiff’s predecessor in title was well aware of the occupation of the land by So Cheung and his family members, including the first named defendant, the first named defendant was entitled to rely upon laches, acquiescence and delay as a defence to the action.

5.  In the amended defence there is extensive reference to the terms of the sale and purchase agreement under which the plaintiff acquired title.  The purport of those terms is that the plaintiff acknowledged that it was fully aware of the presence on the premises of “squatter huts including stores, chicken sheds, pig sheds and abandoned house etc.”  The purchaser was required under that the agreement to waive any rights it might have in respect of the presence of the illegal structures and was permitted under clause 37(A) as of the date of the agreement to take all necessary action, including taking legal proceedings, to obtain vacant possession of the property from the existing occupiers.

The course of the action

6.  This action was commenced on 8 August 1995.  A defence was filed on 30 October 1995.  At that stage, as well as at the time when the plaintiff entered the sale and purchase agreement, the law had been held to be that under the provisions of the New Territories (Renewable Crown Leases) Ordinance Cap. 152 the original Crown lease had determined as of 30 June 1973 and a new Crown lease of the property was deemed to have been granted for a term of 24 years less 3 days commencing 1 July 1973.  That much was pleaded in the statement of claim.  It was thus considered that the relevant period under the Limitation Ordinance started again as of 1 July 1973.  It was not until 8 July 1996, when the Privy Council gave judgment in the case of Chung Ping-kwan v Lam Island Development Co. Ltd (1997) AC 38, that it was appreciated that, because of the lessee’s option to renew the lease contained in the original lease, the right to bring an action to recover land from a trespasser accrued to the lessee on the date of the dispossession.  It followed that as against the trespasser section 17 of the Limitation Ordinance operated to extinguish the registered owner’s title to the new lease as much as the original lease.

7.  The judge below referred to that litigation in the context of considering whether the delay by the plaintiff in prosecuting the action was excusable.  It is likely that his reference to the New Territories (Renewable Crown Leases) Ordinance and the Privy Council decision in May 1996 arose from submissions by counsel since it did not arise from the plaintiff’s evidence.  Mr Wong Wing Cheung, who is a senior property officer of the plaintiff, referred in his first affidavit to the New Territories Leases (Extension) Ordinance Cap. 150 and the litigation which centred on that culminating in the decision of the Court of Final Appeal in the case of Harvest Good Development Ltd v Chan Tin Shi and Others (2006) 1 HKSFAR 29.  So far as the outcome of that litigation would affect this case, it can be said that those relying upon the provisions of the Limitation Ordinance could pray in aid events which happened prior to 28 June 1997 and were not limited to being able to rely only upon adverse possession which occurred after 27 June 1997.

The delay

8.  There were various pleadings in this action the last of which was an amended defence and counterclaim filed on 2 October 1996.  The next step in the proceedings was on 22 March 2007.  That was the date the plaintiff filed a notice of intention to proceed.  That was followed on 21 May 2007 by the issuance of the summons on behalf of the first named defendant to strike out the plaintiff’s action.

9.  It may be noted that the plaintiff never applied to the court for a stay of the proceedings.  Nor did the plaintiff seek the first named defendant’s agreement to delay the action and leave it dormant.  The plaintiff simply did nothing.  The only explanation given by the plaintiff for the inaction over that 10½-year period was the existence of litigation involving the New Territories Leases (Extension) Ordinance.  But what the plaintiff has failed to explain, and Mr Chan SC, who appeared on behalf of the plaintiff on this appeal, also failed to be able to provide a reasonable explanation, is why, if the plaintiff intended to proceed with the action even if the outcome of the litigation involving that ordinance were not to its advantage, not only did it not proceed with the action with due diligence but allowed so long a period to elapse.

10.  In my view that period of 10½ years of inaction must be regarded as inordinate delay.  Although the judge was prepared to accept that waiting for the outcome of the litigation over the ordinance was an excuse for that inaction, I regret that I do not see that it can be so considered.

Serious prejudice

11.  The judge considered the first named defendant’s contention that there had been serious prejudice caused to the defence case by reason of the delay.  That was based primarily on the fact that the first named defendant’s mother, Madam Yuen Kwai, had died on 10 March 2004.  There was also a neighbour, Madam Hung Tor Lan, who had died in September 2001.  The judge considered that the defendant would have access to such items as “electricity deposit receipts and bills, telephone bills, water deposit receipts and bills, demand notes for rate, his own birth certificate and those of his siblings, his and his siblings’ school reports and above all records from the Registration of Persons Office when applying for identity card”.

12.  It may be that the first named defendant might have access to some of those documents, but I find it difficult to imagine that a person in the position of the first named defendant would have such things as electricity deposit receipts and bills, telephone bills and water deposit receipts and bills going back for more than a few months, let alone going back as far as 1953.  But even if he did, the evidence that Madam Yuen Kwai might have given seems to me to be extremely important.  She was, after all, So Cheung’s wife.  Any evidence she could have given might, indeed, have assisted the plaintiff.  But she was certainly somebody whom the defendant would be expected to call as a witness and it would be reasonable to expect that her evidence might, on its own, have been sufficient to establish the first named defendant’s case.  Her evidence would have been very relevant on such issues as the intention of holding the premises to the exclusion of others.  Such evidence could not be adequately replaced by documentary evidence or hearsay evidence from the first named defendant or his siblings, who were far too young for a great deal of the relevant time and not even born at the time that occupation is said to have commenced.

13.  The death of the neighbour in the intervening time and the fact that other neighbours, at least on paper, would seem to have progressed from late middle age to old age, where their memory and facilities might well be impaired, is something which, also, I consider constitutes a severe and serious prejudice to the first named defendant.  I consider that it is not correct to say that the deprivation of these witnesses’ evidence was merely a “luxury”.  I would also add that I am far from convinced that the evidence that could be gleaned from the aerial photographs over the years would be either satisfactory or conclusive in either party’s favour.

The conclusion

14.  I regret I have come to the conclusion that not only has there been inordinate delay which is, in the circumstances, inexcusable but also that the first named defendant has suffered serious prejudice by reason of the delay which would prevent there being a fair trial.  I have to say that in so far as a different conclusion was reached by the judge below I consider it was clearly wrong.

15.  I would, therefore, allow this appeal, restore the decision of the Master and dismiss the plaintiff’s action with costs here and below and of the action to the first named defendant.

Hon Le Pichon JA:

16.  I agree.