MA KAM CHOI AND ANOTHERS v. MA KA WO AND ANOTHER

DCCJ 5453/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5453 OF 2007

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REASONS FOR DECISION

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1.  In this case, the tong, through its managers (the Plaintiff) sought to recover, among other things, vacant possession of part of its land from another manager, Wo (the 1^st Defendant), and the occupiers (the 2^nd Defendant).  Wo resisted and counterclaimed on the basis of adverse possession of the land.

2.  The managers took out the present application under O.14 and O.14A of the Rules of the District Court for summary determination of this case.  At the end of the hearing, I gave the following order as prayed for:

“(1) The 1^st Defendant do deliver vacant possession of the edged green portion of the Lot No 727 in DD 22, TAI PO, NEW TERRITORIES which is situated and lying at Sheung Wun Yiu Village, New Territories, Hong Kong (as shown on the Plan dated 6 November 2007 annexed hereto) (“the Annexed Plan”) to the Plaintiff;

(2)  The 1^st Defendant do pay rent in arrears from 8 March 2006 up to 10 December 2007 in the sum of HK$175 and mesne profits at the rate of HK$100 per year from 11 December 2007 up to the actual date of delivery of vacant possession of the edged green portion of the LOT NO 727 IN DD 22, TAI PO, NEW TERRITORIES to the Plaintiff;

(3)  The 1^st and the 2^nd Defendants do demolish and/or dismantle the illegal and unauthorised structure on the edged red portion of the LOT 727 IN DD 22, TAI PO, NEW TERRITORIES which is situated and lying at Sheung Wun Yiu Village, New Territories, Hong Kong (as shown on the Annexed Plan) and the Government Land adjacent to it and do reinstate the same;

(4)  Judgment for damages as a result of the 1^st and the 2^nd Defendants’ unauthorised building works on the edged red portion of the LOT NO 727 IN DD 22, TAI PO, NEW TERRITORIES and the Government Land adjacent to it to be assessed;

(5)  The 1^st Defendant’s counterclaimed be dismissed;

(6)  Costs of this action including this application be to the Plaintiff to be taxed, if not agreed;

(7)  The Plaintiff do prepare the Chinese version of this Order for service, together with this Order, to the 1^st and the 2^nd Defendants.”

3.  The court documents were in English.  The hearing was conducted in Chinese with the submissions by counsel for the tong in both languages for the benefit of Wo.  As indicated at the hearing, I am handing down my reasons in writing in English*.

The lot of land

4.  The tong was and is the registered owner of the land, namely, Lot No.727 in D.D.22, Tai Po, New Territories situated at Sheung Wun Yiu Village, Tai Po, New Territories, Hong Kong.  This is identified and coloured yellow on the lot index plan annexed to the amended statement of claim.

5.  By a written acknowledgement of tenancy in 1999, part of the lot was let by the tong to Wo for a term of 10 years commencing on 8 March 1999 at the nominal yearly rent of HK$100 for the purpose of erecting temporary structures.  This is identified as the edged green portion of the lot as shown on the other plan annexed to the amended statement of claim.

6.  Wo also occupies another part of the lot.  This is identified as the edged red portion of the lot as shown on the same plan annexed to the pleading mentioned above.  On this portion, Wo apparently erected structures which encroached upon the adjacent Government land that does not belong to the tong.

7.  According to the Buildings Department and the Lands Department, the structures erected by Wo on the edged red portion of the lot are unauthorised and those encroaching on the Government land constitute illegal trespass.

8.  Since October 2006, the managers have been demanding Wo to stop taking the unauthorised building works onto the edge red portion of the lot and to demolish the same as well as to reinstate the portion of the land.

9.  In June 2007, Wo, through his former solicitors, claimed that he has been occupying the lot of land for over 25 years and built a house there in about 1990 at his own expense.  He claimed to have been living there without any objection or payment of rent to the tong.

10.  Due to the situation, the Buildings Department and the District Lands Office have been taking joint action and threatened enforcement action against the owner of the land, namely, the tong.

11.  During the period between August 2007 and January 2008, the Departments have repeated their demands for the removal of the unauthorised building works on the edged red portion of the land and cessation of trespass of the adjacent Government land.  Building order has been issued.  The District Lands Office has threatened prosecution against the tong.  So has the Buildings Department.

12.  The above background is evidenced by the contemporaneous documents and correspondence.

The parties’ respective cases

13.  On behalf of the tong, the managers sought to recover the edged green portion of the lot let to Wo on the ground of his non-payment of rent since March 2006.  It should be noted that the tenancy has expired since March 2009 in any event.

14.  In respect of the edged red portion, the managers sought an order compelling Wo to remove the unauthorised structure erected on that portion, which also encroached upon the adjacent Government land, and to reinstate the land.

15.  By pleading, Wo claimed adverse possession of the lot for over 20 years since 1980.  He counterclaimed for a declaration that the interest of the tong had been extinguished and that the interest in the lot should be vested in him.

No effective factual dispute

16.  According to the affirmation filed by the managers on behalf of the tong, Wo used to occupy another lot (Lot No.1088 in the same Demarcation District) with his brother.  Wo started to occupy the edged green portion of the lot since about 1998 and not 1980 as Wo alleged.

17.  However, on 5 February 1997, Wo was admittedly appointed as one of the managers of the tong.  To discuss Wo’s occupation of the land, the tong held a meeting on 7 March 1999.  The minutes of that meeting exhibited to the manager’s affirmation shows that Wo was present at that meeting.  It was resolved that Wo’s brother would have to pay the annual rent of HK$100 for Wo’s occupation of the portion of the lot, if Wo did not do so.

18.  It was after that meeting that Wo entered into the tenancy agreement mentioned above in respect of the edged green portion of the lot.  The document exhibited shows the terms of the tenancy as mentioned above.  It was written in Chinese and signed by Wo.  According to its wordings, the document at least recorded Wo’s acknowledgement of his tenancy over the portion of the lot in terms as stated therein.

19.  During another meeting on 1 July 2007, the tong discussed the issue of Wo’s failure to pay rent for the tenancy (over the edged green portion of the lot) and also the unauthorised building works (on the edged red portion of the lot).  The tong finally resolved to refer the matter to solicitors to follow up in order to protect the interest of the tong.  The minutes of that meeting was also exhibited to the manager’s affirmation.  It was also recorded that the tong had terminated Wo’s duties as the manager since March 2007.

20.  Wo used to be legally represented.  His pleading was signed by counsel.  In May 2009, he became acting in person.  Notwithstanding an unless order, Wo has neglected to file his affirmation in opposition to the present application.  Accordingly he was barred from adducing any evidence at the hearing.  It follows that the affirmation evidence addcued by the managers on behalf of the tong in support of the present application was not effectively contradicted.

Adverse possession

21.  Section 20 of the Limitation Ordinance, Cap.347 provides:

“(1)    No period of limitation prescribed by this Ordinance shall apply to an action by a beneficiary under a trust, being an action –

(a)  ……

(b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.”

22.  Mr Chan for the tong submitted that the manager of the tong stand in a position as trustee.  The present action was commenced by the managers for and on behalf of all the members of the tong to recover from another manager, Wo, property in the possession of and converted by him to his use.  Insofar as the edged red portion of the lot is concerned, I agree with Mr Chan.  This is also true insofar as the edged green portion is concerned upon the termination of the tenancy.

23.  Section 23 of the Ordinance provides:

“(1)    Where there has accrued any right of action …… to recover land ……, and –

(a)    the person in possession of the land or personal property acknowledges the title of the person to whom the right of action has accrued; or

(b)   ……

 the right shall be deemed to have accrued on and not before the date of the acknowledgement ……”

24.  Mr Chan submitted that by accepting his appointment as a manager of the tong on 5 February 1997, Wo acknowledged the title of the tong in the land.  This must be right.  It also follows that in his capacity as a manager of the tong since 1997, he could not possibly be in a position to make any claim of interest in the land adverse to the tong.  This was reinforced by the fact that he signed the acknowledgement of his tenancy over the edged green portion of the lot in 1999.

25.  Even assuming that Wo were not a manager of the tong but was a mere outsider occupying the relevant portions of the lot purportedly adverse to the tong, I still do not see how this could have extinguished the interest of the members of the tong in any part of the land or their right of action to recover the lot.

26.  Section 10 of the Ordinance provides:

“(1)    ……

(2) Where any land is held upon trust, including a trust for sale, and the period prescribed by this Ordinance has expired for the bringing of an action to recover the land by the trustees, the estate of the trustee shall not be extinguished if and so long as the right of action to recover the land of any person entitled to a beneficial interest in the land or in the proceeds of sale either has not accrued or has not been barred by this Ordinance, but if and when every such right of action has been so barred, the estate of the trustee shall be extinguished.

(3)   Where the land is held upon trust, including a trust for sale, an action to recover the land may be brought by the trustee on behalf of any person entitled to a beneficial interest in possession in the land or in the proceeds of sale whose right of action has not been barred by this Ordinance, notwithstanding that the right of action of the trustees would apart from this provision have been barred by this Ordinance.”

27.  The managers provided evidence of the birth of male descendants, and therefore new members of the tong, in 1997, 2006 and 2007 respectively.  They were also identified in the family tree of the clan exhibited to the affirmation of the manager.

28.  In the circumstances, there indeed exists new members or beneficiaries of the trust (the tong) whose beneficial interest in the land is yet to be extinguished by any adverse possession by Wo.  The right of the managers of the tong to bring this action to recover the land from Wo for the benefit of these beneficiaries is likewise not extinguished.  See Leung Kuen Fai v Tang Kwong Yu (or U) T’ong or Tang Kwong Yu Tso [2002] 2 HKLRD 705.

29.  Insofar as the O.14A application is concerned, the following questions of law need to be answered:

“(1) Whether by reason of the 1^st Defendant was appointed and the 1^st Defendant expressly and/or impliedly accepted the appointment as a manager/trustee of MA SZ U TONG (“the Tong”) on 5 February 1997 and by sections 20(1)(b) or 23(1) of the Limitation Ordinance, Cap.347 (“the Ordinance”):

(a)   no period of limitation prescribed by the Ordinance shall apply to this action taken by the Plaintiff suing as the managers of the Tong to recover the LOT NO.727 IN D.D.22, TAI PO, NEW TERRITORIES ……, a trust property of the Tong, from the 1^st Defendant; or

(b)  the 1^st Defendant acknowledged the title of the Tong or the Plaintiff of and in the subject Lot on 5^th February 1997 and the Plaintiff’s right to recover the subject Lot shall be deemed to have accrued on the date of the acknowledgement and not before,

so that the 1^st Defendant’s defence and counterclaim of adverse possession must fail;

(2)   Alternatively, whether by reason of the male descendants/new members of the Tong including those born in 1997, 2006 and 2007 as affirmed in the Affirmation of MA PING FAN CHARLIE and by sections 10(2) and 10(3) of the Ordinance,

(a)  the Plaintiff’s estate or title to the subject Lot shall not be extinguished so long as there is at least one member/beneficial owner of the Tong whose right to recover the subject Lot is not barred; and

(b) the right on the part of the Plaintiff to recover possession of the subject Lot has been preserved intact,

   so that the 1^st Defendant’s defence and counterclaim of adverse possession must fail.”

30.  It follows from the discussion above that each part of both questions above should be answered in favour of the tong and that the defence of and counterclaim for adverse possession must fail.

31.  Insofar as the O.14 application is concerned, the tong’s evidence was not properly or effectively contradicted.  It follows that in discharge of his evidential burden as a defendant in the present application, Wo has put forward no evidence.

32.  The tong is entitled to recover the edged green portion of the lot from Wo on the ground of non-payment of rent since 2006.  No meaningful relief against forfeiture, which was not claimed in any event, would be available to Wo as the tenancy has in any event expired since March this year.

33.  Wo’s contention in court with reference to what he had allegedly spent on building on this rented portion of the lot is not a sound defence to the tong’s recovery of possession.  The tong sought to terminate the tenancy and to recover this portion of the lot by the present action.  The tong is therefore entitled to rent in arrears since March 2006 until the commencement of this action in December 2007.  Thereafter mesne profits accrue until delivery of vacant possession of the portion of the lot.

34.  The tong is also entitled to an order from the court to compel Wo to remove the unauthorised structures from the edged red portion of the lot that also encroached upon the adjacent Government land.  The documents from the authorities have made it clear that failure to do so could lead to legal consequence on the tong as a whole, not Wo alone.

35.  It is both the duty and right of the managers of the tong to bring this action for the benefit of the tong and the fiduciary duty of Wo as the manager of the tong to refrain from putting the tong in a potentially dire situation as a result of his self interest in the use of the tong’s land.  Likewise the tong is entitled to damages as a result of Wo’s act, which are to be assessed.

36.  Wo and the occupiers of the lot do not have any valid defence to the managers’ claim on behalf of the tong in this case; hence the judgment and order against them.

* If necessary, assistance of court interpreter may be arranged.