HERO SMART CORPORATION LTD v. 謝美娟 AND ANOTHER

DCMP 346/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 346 OF 2010

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JUDGMENT

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Introduction

1.  This is an adverse possession case.

2.  The land in question is situated at Lot No. 301 in D.D. No. 11, Tai Po, New Territories, Hong Kong (“the Land”). The place where the Land situated is known as Fung Yuen Tsuen (“the Village”). There is a hut on the Land.

3.  The Plaintiff became the registered owner of the Land on 14 April 2008 and commenced this Action against the Defendants for vacant possession of the Land on 2 February 2010.

4.  The 1^st Defendant (“Ms. Tse”) is the daughter of Mr. Tse Chi Ming (“Mr. Tse senior”). The defence is that Mr. Tse senior was the tenant of the Land and resided there with his family since 1974. Tse’s family including Ms. Tse is in adverse possession of the Land since 1993 by reason of non-payment of rent.  Thus, this Action is time-barred under the Limitation Ordinance, Cap 347 (“the Ordinance”). Ms. Tse also counterclaims for a declaration that she has acquired a possessory title.

5.  There is no other occupier of the Land defending in this case and thus this Action is one between the Plaintiff and Ms. Tse.

Registered Owners of the Land

6.  The parties agreed the following are the owners of the Land:

Date	Name of Owner
12 April 1947	Lai Shui Lun, by way of succession
16 October 1995	Lai Kwai Hang and 3 others, by way of succession
3 February 1997	Chow Yat Shan, by way of assignment
12 May 1997	Mak Bing Sum, by way of assignment
13 October 1998	Concenwin Land & Investment Ltd (“Concenwin”), by way of assignment
14 April 2008	The Plaintiff, by way of assignment

The Plaintiff’s Case

7.  There are 5 witnesses for the Plaintiff.

Ms. Man Yin King (“Ms. Man”)

8.  Ms. Man is a director of the Plaintiff. 

9.  On 1 April 2008, the Plaintiff entered into a sale and purchase agreement of the Land with the then owner, Concenwin. Before signing the sale and purchase agreement, she was told by Mr. Woo, the handling solicitor, that Mr. Tse Kam Moon (“Mr. Tse”) was the tenant of the Land. Further, Mr. Tse has failed to pay rent to Concenwin since 13 October 1998.

10.  Ms. Man was also shown a copy note signed by Mr. Tse in February 1997 (“Feb 1997 Note”) (Bundle B, p138) acknowledging that he rented the Land from Mr. Lai Shui Lun (“Mr. Lai”) at an annual rent of $450.

11.  The sale and purchase was completed around 2 weeks later on 14 April 2008.

12.  In June 2008, the Plaintiff through its solicitors gave notice of termination to Mr. Tse demanding him to deliver up vacant possession of the Land by 30 June 2009.

13.  In late June 2009, the Plaintiff learned that Mr. Tse had moved away from the Land but Ms. Tse and some other persons were still occupying the Land.

Mr. Sit Moon Yau (“Mr. Sit”)

14.  Mr. Sit is an indigenous villager of the Village. He left for United Kingdom in 1963 and resided there until 2005 when he came back to Hong Kong and resided at 18 Fung Yuen Tsuen. Mr. Sit then erected a new building at the Remaining Portion of Lot No. 295 in D.D. No. 11 (“Lot 295”), which is next to the Land, in 2007. In the course, he found that there was a low cement ridge (1 ft height) surrounding the Land.  Since part of the ridge trespassed into Lot 295, he pulled down the trespassing part of the ridge. 

15.  Apart from the ridge, there is no fencing wall on the boundary of the Land.

Mr. Sit Pak Kan (“Mr. P.K. Sit”)

16.  Mr. P.K. Sit is also an indigenous villager of the Village. He knows Mr. Tse senior and his family members including Ms. Tse. He said that he had not seen Ms. Tse for a period of time in 1990’s.

Mr. Mak Kwong Sang (“Mr. K.S. Mak”)

17.  Mr. K.S. Mak is an indigenous villager. He became the owner of 2 pieces of land which are next to the Land in 1995 and 1997 respectively. Prior to 2001, there was no boundary wall or fence surrounding the Land. Further, villagers can walk pass the open area of the Land and use it as a passageway. 

Mr. Tang Sze Kin Eric (“Mr. Tang”)

18.  Mr. Tang is the expert witness. He has prepared a report dated 25 August 2011 on the historical usage and ground occupation of the Land (Bundle A, p83-112). His opinion is based on the aerial photographs taken by the Lands Department.

19.  Mr. Tang said that whether an object, for example, a boundary wall or fencing, could be seen in the aerial photographs depends on a number of factors including shooting angle, sunlight angle and the altitude of the plane taking the photographs. If an object cannot be seen in the photographs, it does not necessarily mean that the object does not exist. 

The Defendant’s Case

20.  There are 2 witnesses for the Defence.

Ms. Tse

21.  Mr. Tse senior leased the Land from Mr. Lai, the then owner the Land, since 1974. At that time, the annual rental is $260.

22.  Mr. Tse senior built a one-storey wooden hut (“the Hut”) on the Land for his wife (“Mdm. Leung”) and their 5 children to live at. Mr. Tse is the eldest child while Ms. Tse is the eldest daughter.

23.  In about 1975, low metal and wooden planks were erected to surround the Land.

24.  Mr. Tse senior passed away on 11 January 1978. The Tse’s family continued to stay at the Land. After the death of Mr. Tse senior, it was Mdm.  Leung or Ms. Tse who paid the annual rent which was later increased to $320 and $520. The rent had never been at $450. The rent is paid to Mr. Lai or any one of his family members.

25.  In 1980, Mr. Wong Ping Lam (“Mr. Wong”), the nephew of Ms. Tse, joined the Tse’s family and lived at the Land.

26.  In or around the end of 1992 or early 1993, Mdm. Leung and Ms. Tse went to pay the rent for 1993. They met Lai Kwai Hang, one of the sons of Mr. Lai. The son told Mdm. Leung that the Land was sold and thus no rent would be accepted. From then onwards, no rent was paid and no one has ever demanded for rent.

27.  Thereafter, Mdm. Leung told Ms. Tse that she would not pay rent even if the landlord came to collect rent.

28.  In about 2000, Ms. Tse replaced the surrounding planks with sturdy wire mesh. She also erected a gate to replace the origin flimsy entrance.

29.  Mdm. Leung resided at the Land until she passed away in November 2006. Mr. Tse moved from the Land in 2009.

30.  Ms. Tse is still in occupation of the Land.

Mr. Wong

31.  Mr. Wong heard about the refusal to accept rent from Mdm. Leung. He also said that the Tse’s family had not paid any rent after 1993. He left the Land in 1996.

Discussion and Analysis

32.  There is no dispute that the Plaintiff is the registered owner. The burden is thus on Ms. Tse to prove adverse possession.

33.  The following provisions of the Ordinance are important: -

“Section 7(2): No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person.

Section 8(1): Where the person bringing an action to recover land, or some person through whom he claims, has been in possession thereof, and has while entitled thereto been dispossessed or discontinued his possession, the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance.

Section 13(1): No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as adverse possession) and where under the foregoing provisions of this Ordinance any such right of action is deemed to accrue on a certain date and no person is in adverse possession on that date, the right of action shall not be deemed to accrue unless and until adverse possession is taken of the land.

Section 17: Subject to the provisions of section 10, at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished.

Section 23(1): (1) Where there has accrued any right of action (including a foreclosure action) to recover land or any right of a mortgagee of personal property to bring a foreclosure action in respect of the property, 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) in the case of a foreclosure or other action by a mortgagee, the person in possession as aforesaid or the person liable for the mortgage debt makes any payment in respect thereof, whether of principal or interest,

the right shall be deemed to have accrued on and not before the date of the acknowledgement or payment.

Section 24(1): (1) Every such acknowledgment as aforesaid shall be in writing and signed by the person making the acknowledgment.

(2) Any such acknowledgment or payment as aforesaid may be made by the agent of the person by whom it is required to be made under section 23, and shall be made to the person, or to an agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.

Section 25(1): An acknowledgment of the title to any land or mortgaged personalty by any person in possession thereof shall bind all other persons in possession during the ensuing period of limitation.”

34.  In Yu Kit Chiu and Others v Chan Shek Woo, CACV 137/2010, 18 February 2011,Cheung JA summarized the legal principles as follows:-

“15. A person claiming to be in adverse possession must be shown to have both factual possession and the requisite intention to possess animus possidendi. This requirement has been authoritatively affirmed by the Court of Final Appeal in Wong Tak Yue v. Kung Kwok Wai & Another (No. 2) (1997-1998) 1 HKCFAR 55 which approved the principles enunciated by Slade J in Powell v. McFarlane (1979) 38 P & CR 452 and adopted in the subsequent line of cases such as R v. Secretary of State for the Environment ex p Davies (1990) 61 P & CR 487, Buckinghamshire County Council v. Moran [1990] Ch. 623.

16.  The intention to possess 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 process of law will allow (per Slade J in Powell at pp 471-472).  The question of intention to possess is one of facts.”

Occupation until 1993

(a)  Who was the tenant?

35.  While there is no dispute that Mr. Lai leased the Land to Mr. Tse senior back in 1974, there is no evidence as to the terms of it. We only know that rent was paid annually. It is therefore my ruling that the tenancy is a periodical tenancy for one year.

36.  Mr. Tse senior passed away in early 1978. It means that from 1979 onwards, someone else became the tenant of the Land. Mr. Leung, Counsel for the Defendant submitted that the Tse’s family became co-tenants. Alternatively, Mdm. Leung was the tenant.

37.  The Plaintiff’s pleaded case is that Mr. Tse became the tenant.  The main supporting evidence comes from the indigenous villagers who admitted that they heard about this only. There is no evidence as to when the villagers came to know this and the source of information. I thus attach no weight to their evidence in this regard.

38.  There is also the Feb 1997 Note which was shown to Ms. Man by Mr. Woo, the handling solicitor, on 1 April 2008. According to Ms. Man, this note was given to Mr. Woo by Mr. Mak Bing Sum (“Mr. Mak”) who also told Mr. Woo that it is signed by Mr. Tse. However, there is no evidence as to the circumstance under which it is signed. The Defendant’s case is that she has not seen this note before. 

39.  I accept Ms. Tse’s evidence that Mr. Tse did not have a job for most of the time and thus he is financially incapable of taking up the lease. Since it was Mdm. Leung who paid the rent, it is my finding that Mdm. Leung became the tenant as from 1979.

40.  It should be noted that on 16 October 1995, Lai Kwai Hang and 3 others became the owners of the Land by way of succession. However, we have no idea as to when Mr. Lai passed away. This is however not material as it is the Defendant’s case that she was in adverse possession of the Land since 1993 when the then owner of the Land refused to accept rental.

(b)   Refusal to accept rent

41.  Mr. Shum, Counsel for the Plaintiff, submitted that there is no reason for the owners not to accept rent in 1993. Lai Kwai Hang and the others did not become owners until 1995 and the Land was not sold until to Mr. Chow Yat Shan (“Mr. Chow”) until 1997.  

42.  Mr. Leung reminded the Court that there was a sale and purchase agreement dated 10 November 1992 in favour of Mr. Chow. There is no evidence as to the terms of this agreement. There is also no evidence as to who is the vendor.  Mr. Leung submitted that Mr. Lai or the Lai’s family might think that they should not or are no longer entitled to accept rent any further in the light of the agreement. I accept Mr. Leung’s submission.

43.  There is no evidence from the Plaintiff to contradict Ms. Tse’s evidence. I accept Ms. Tse’s evidence on this issue. It is my finding that the owner of the Land refused to accept rent in 1993. Further, from then onwards, no rent was paid and no one has ever demanded for rent.

Occupation after 1993

(a)  Factual Possession

44.  Just to reiterate, Mdm. Leung continued to stay at the Land until she passed away in 29 November 2006. Ms. Tse also remained at the Land until 1994 when she left for Taiwan to work. She returned to Hong Kong sometime before July 1997. In between, she did come back to Hong Kong from time to time and whenever she returned, she stayed at the Land. Mr. Tse moved out in March 2009. There are other family members who moved out in 1980’s.

45.  What is the capacity under which Ms. Tse and her family members stayed at the Land?  The tenancy came to an end in 1992. Since the owner refused to accept rent, it is not possible that Ms. Tse and her family members remained at the Land as a tenant.

46.  Are Ms. Tse and her family members licencees? Mr. Leung submitted that the continued possession of a tenant is to be considered adverse once the period covered by the last payment of rent has expired. He relied on Hayward v Chaloner [1968] 1 QB 107 at p108-109, Lodge v Wakefield [1995] EWCA Civ 41and Williams v Jones [2002] EWCA Civ 1097.Mr. Shum does not dispute this. I accept Mr. Leung’s submission.

47.  Even if I am wrong here, the Tse’s family must be licencees. However, the licence at the most is an implied one and should have expired when the Land was sold to Mr. Chow on 3 February 1997.

48.  Mr. Shum submitted that Mr. Tse has signed a note dated 8 March 1997 and acknowledged the title of Mr. Chow (“March 1997 Note”). The March 1997 Note reads like this:-

“本人周日山, 現買了大埔鳳園村DD11 Lot 301 地段, 因為黎瑞麟已故, 所以通知, 我是新業主。1997年3月8日”

49.  The March 1997 Note states that Mr. Chow has purchased D.D. 11 Lot 301 at Fung Yuen Tsuen, Tai Po. Since Mr. Lai has passed away, notice is given that Mr. Chow is the new owner. It should be noted that the March 1997 Note is not before the Court. However, this piece of evidence comes from Ms. Tse. Mr. Shum submitted that by virtue of ss23 to 25 of the Ordinance, there is a fresh accrual of action. I accept his submission.

50.  Mr. Shum further submitted that the conversation between Ms. Tse and Mr. Tse on 11 July 2007 (See the transcript at Bundle B, p223 to 243. The conversation is recorded by Ms. Tse.) clearly demonstrated that Mr. Chow had (i) told Mr. Tse that he did not intent to recover possession and (ii) granted a licence to Mr. Tse and his family members to stay at the Land. While I accept that the point of not recovering possession was mentioned, Mr. Tse said nothing about licence. Indeed he said that Mr. Chow did not mention anything about letting him to stay at the Land (Bundle B, p232, paragraph 59-60).

51.  Even assuming that Mr. Shum is right, any licence impliedly granted by Mr. Chow must have expired on 12 May 1997 when Mr. Mak became the owner of the Land.

52.  There is no allegation that Mr. Mak or the subsequent owners of the Land have granted permission to Ms. Tse or her family members to stay at the Land.

53.  In the Premises, taking the Plaintiff’s case to the highest, Ms. Tse can still clearly establish that she and her family members has occupied the Land without permission of the owner since July 1997 when Ms. Tse returned to Hong Kong from Taiwan.

(b)   Intention to Possess

54.  In Powell v McFarlane [1979] 38 P & CR 452 at 471-472, Slade J. observed that the intention to possess requisite for adverse possession “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 process of the law will allow”.

55.  Mr. Shum submitted that Ms. Tse has failed to prove this requisite intention to possess (animus possidendi).

56.  Mr. Shum submitted that Mdm. Leung appeared to be a hard working person and shouldered the burden of the family after the death of her husband. In hard times, she even asked for time to pay rent. It shows that Mdm. Leung would not take any advantage of others.  There is no plausible explanation as to why Mdm. Leung would suddenly change her attitude to deny the rights of the owner of the Land as described by Ms. Tse. Mr. Shum also submitted that Mr. Wong had told the Court that all along Mdm. Leung intended to pay rent.

57.  Mr. Shum may be right if we are just talking about the position in 1993. All along, Tse’s family is residing at the Land. If the landlord refuses to accept rent, it means that it is likely that the tenancy will be terminated in the near future and the Tse’s family has to move away from the Land where they have lived at for almost 20 years. There is no reason that Mdm. Leung would decline paying rent if the landlord demands rent later.

58.  However, as in July 1997, the position is different. By July 1997, Ms. Tse has left Hong Kong for 3 years. The Tse’s family has also by then been staying at the Land without paying anything for more than 4 years. Throughout these years, no one has demanded for rent or take any positive action against the Tse’s family notwithstanding there are changes of ownership for 3 times between  October 1995 and May 1997.

59.  I have carefully considered the evidence and submission made by Counsel. On the balance of probability, I accept the evidence of Ms. Tse. It is my ruling that Ms. Tse has proved that Mdm. Leung and Ms. Tse do have the intention not to pay any rent as described at the least from July 1997 onwards.

60.  Mr. Shum argued that Ms. Tse has also failed to prove sufficient degree of physical control of the Land. He referred to the evidence of the indigenous villagers and Mr. Tang that there is no boundary wall surrounding the Land and thus anyone can walk pass the open area of the Land. This submission, of course, only touches upon the open area of the Land but not the Hut.

61.  Mr. Leung, in reply, submitted that there is ample evidence to show that the Tse’s family intended to own the Land to the exclusion of the entire world including the registered owners :-

“(1) It is undisputed that the Tse family had been residing in the Dwelling since 1974

(2) Other villagers and strangers had no access to the Dwelling

(3) The Plaintiff’s witnesses also accepted that they saw a 1 ft low ridge surrounding the Land and the Dwelling (of at least 3 meters long)

(4) Madam Tse further supplemented that in or around 2000, she built another extensive 1-2 ft low ridge on her own; she collected bricks from others and bought cement to put together the low ridge of 9 meters long (about 20 ft) which would block the access other strangers into the Land: see Bundle B, p316, 319

(5) Back in 1970s, the Tse Family already erected the “chicken wire-mesh fence” to surround the Land

(6) In her examination in chief, Madam Tse gave evidence in court that taller wire-mesh fencing was erected in 2000 to surround the Land (Bundle B, p318)

(7) 2 tall wire-mesh gate with locks and key were built to control access to the Land and provide further security in 2004 (Bundle B, p318); see generally (Bundle B, p071) at pp 22-23

(8) In or around 2008, a Yeung Wai Kwong of the registered owner came to visit Madam Tse and requested her to move out in return for a monetary sum; Madam Tse flat turned him down and treated the Dwelling as her own (Bundle B, p072-73) (Bundle B, p326)

(9) Going back to 2003, Madam Tse and the Tse Family had vigorously defended their home and their rights in possession of the Land when disputes ensued between them and other neighbours of Fung Yuen Tsuen in respect of cutting down lychee trees and road access (Bundle B, p066-07) at pp9

(10)  During cross-examination, Madam Tse gave further evidence that even the villagers and the villager leader     knew and said the Tse Family had been adversely possessing and occupying the Land as “地霸”

(11) In addition, Madam Tse says the Lai Family also had knowledge of the Tse Family’s adverse possessory    claim in   or around 2007; Madam Tse met Lai Kam    Fu in 2007 in   Fung Yuen Tsuen, Lai Kam Fu inquired with her the status of   the claim in adverse possession to the Land”

62.  I have considered the evidence carefully. I accept Ms. Tse’s evidence, most of which is not contradicted, in relation to the use, maintenance and control of the Land. It is my finding that Ms. Tse and her family put up wire mesh and wooden planks were erected as fencing in about 1975. They grew vegetables and trees and reared chickens. The roof zinc planks were changed and electricity supply was rewired. In around 2000, Ms. Tse put up a new sturdy wire mesh and a proper gate.

63.  Even if the Land is not fenced up or enclosed completely at the early stage of the occupation, it is only a piece of evidence the Court has to consider. Although it may be the strongest piece of evidence in favour of a squatter, the absence of it is not vital.  

64.  In Powell at p470-471, Slade J. said:-

“The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed. In the case of open land, absolute physical control is normally impracticable, if only because it is generally impossible to secure every part of a boundary so as to prevent intrusion. “What is a sufficient degree of sole possession and user must be measured according to an objective standard, related no doubt to the nature and situation of the land involved but not subject to variation according to the resources or status of the claimants”: West Bank Estates Ltd. v. Arthur,8 per Lord Wilberforce.”

65.  There is no doubt that the Hut is properly secured that no one can gain entrance without permission. Would it be probable that the Tse’s family would only have the intention to possess the Hut but not the open area of the Land? As a matter of theory, it can be argued like that. However, in real life, it is unrealistic.

66.  I accept Mr. Leung’s submission. It is my finding that Ms. Tse has proved that Mdm. Leung and Ms. Tse intended to own the Land (the Hut and the open area of the Land) to the exclusion of the entire world including the registered owners. 

67.  In the light of my findings, I do not think that I really need to deal with whether Ms. Tse can acquire the interest in the Land as adverse possessor by way of succeeding the previous possessor as a squatter. Mr. Leung relied on Ng Lai Sim v Lam Yip Shing and Another, HCA 2963/1998, Cheung J (as he then was), 22 November 1999. In fact, Mr. Shum does not seek to argue otherwise.

Conclusion

68.  Ms. Tse, to say the least, has proved that she was in possession of the Land since July 1997 and she has no intention to pay any rent. Ms. Tse has also proved that she intended to own the Land to the exclusion of the entire world including the registered owners since July 1997. The limitation period in this case is 12 year. It expired by June 2009. This action was only taken out on 2 February 2010 and by then, the title of the Plaintiff has extinguished under the Ordinance.

69.  The Defendant has proved all the elements of her Defence and Counterclaim.

70.  I dismiss the Plaintiff’s claim. I enter judgment in favour of the 1^st Defendant in relation to her Counterclaim. I also grant the declarations as sought by her.

71.  I make an order nisi that the Plaintiff to pay the 1^st Defendant’s costs of this action together with all costs reserved to be taxed if not agreed with certificate to Counsel. The 1^st Defendant’s costs be taxed in accordance with the Legal Aid Regulations. This order shall become absolute unless there is application to the otherwise within 14 days after handing down of this Judgment.