TSUN WAI MAN v. CHEUNG YUNG AND OTHERS

HCA 14202/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 14202 OF 1999

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J U D G M E N T

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Dispute on land

1. This case is concerned with the ownership of a piece of land in the New Territories, namely, Lot No. 1120 in Demarcation District No. 113 ("Lot 1120"). The plaintiff contends that Lot 1120 was acquired by his father Tsang Kam Chuen (曾錦全) alias Tsang Kam Tsun (曾錦傳) ("Mr Tsang") in 1945. Mr Tsang died on 3 December 1996. Probate of Mr Tsang's will was granted on 25 November 1998. The plaintiff is the sole executor of Mr Tsang's will. Lot 1120, however, is not listed in the schedule of properties of Mr Tsang of which estate duty was paid. Lot 1120 was resumed by the government on 16 January 1999.

2. While the plaintiff said his father was the owner of Lot 1120, the defendants said that their father Mr Cheung Tau (張兜) alias Cheung Ah Tau (張亞兜)was the actual owner and they became the owners by succession on Cheung Ah Tau's death.

3. The compensation payable by reason of the resumption of Lot 1120 was $541,098. As a result of the dispute between the parties on the ownership of Lot 1120 the government has withhold the payment of the compensation.

4. The plaintiff is seeking, among other things, a declaration that he was the true legal owner of the property and he is entitled to the compensation. The defendants on the other hand are also seeking a declaration that they are entitled to the compensation.

The Chinese document

5. The plaintiff's case is that by an "Assignment dated 12 May 1945" made between Cheung Ying (張英)alias Cheung Sau Ying (張壽英) and Cheung Tau as vendors and Mr Tsang as purchaser, Lot 1120 was assigned by the two Mr Cheungs to Mr Tsang. The document is in Chinese and the content is as follows:

The translation is as follow:

"Maker of this deed for "Po" land selling Cheung Ying, due to domestic needs, and after discussing with his/her brothers, was minded to sell the piece of "Po" land left by the late father located in a place locally called Lik Ngau Po.

Offers to sell the land were made first to the kins, but no one went for it. Later visit(s) was/were paid to Tsang Kam Chuen's family in the same village to persuade (them).

Mother and Son of the Tsangs walked and viewed the land and agreed to buy it at the prevailing price of 30 catties. The full quantity was handed to Cheung Ying who personally carried it home for food.

It is worried that words of month is of no proof so a land contract is made as proof.

Signature : Cheung Ying [Chopped], Cheung (1 character unclear) [Chopped]

Date : 12th May of the 34th The Republic of China Year"

"Po" land means dry land. The 34th year of the Republic of China is 1954.

Evidence of the sale

6. The plaintiff's mother Mrs Tsang ("PW2") gave evidence on how this document came into existence. Mrs Tsang is now 75 years of age. She married Mr Tsang when she was 18. Her husband was then 19 years of age. Two years after her marriage her husband bought Lot 1120. According to Mrs Tsang, Cheung Ying offered to sell a piece of farmland in the Lik Ngau Po area to Mr Tsang because he did not have food. She, together with her mother-in-law, and Mr Tsang went to see that piece of land. At that time, Mrs Tsang and her family were living in the Tai Kek (大乪) Village. Lik Ngau Po was near this village. Cheung Ying was living in the Cheung Po (長莆) Village. The two villages were separated by a river. Mr Tsang had many land as well. One of them was also in Lik Ngau Po. The land offered to be sold by Cheung Ying was not very far from the land owned by Mr Tsang in Lik Ngau Po. In fact, these two pieces of land were just at different levels, one was higher than the other. After seeing the land, the Tsang family considered that the land was worth 30 catties or three dau (斗) of grain. Cheung Ying took the grains away and a neighbour who was also the granduncle of Mr Tsang was asked to write out a receipt. The receipt was the document referred to earlier. Mrs Tsang then put the receipt in a metal can and put it in a drawer in her home. The plaintiff also confirmed the Chinese document was kept in the family all these years.

7. After the land was bought, Mrs Tsang and her family ploughed the land and grew sweet potatoes on the land. She cultivated on this land until she went to England at the age of 46. Mr Tsang had earlier gone to England in 1961. Thereafter members of his family including the plaintiff and Mrs Tsang went at different times to England to join him. Mrs Tsang went to England in about 1969 or 1970. She also came back to Hong Kong to take her other children to England. In 1973 Mr Tsang and Mrs Tsang came back to Hong Kong to build a house in Tai Kek Village. Eventually in 1976, Mr Tsang and Mrs Tsang came back to live in Hong Kong. When Mrs Tsang left for England she asked a relative living next door called Tsang Sing Kiu to cultivate the land. As Mr Tsang Sing Kiu was getting old he asked one Mr Fung to cultivate the land. Mr Fung grew vegetables on the land. Mrs Tsang did not ask Mr Fung for any rent. She let Mr Fung cultivated the land to prevent the land from running wild. Mr Fung cultivated the land for about five years. Mr Tsang Sing Kiu cultivated the land for about three years himself. Mrs Tsang said that she in fact spent most of her time in Hong Kong. At that time her mother-in-law who was crippled required Mrs Tsang to look after her. After the land was purchased Mr Tsang did not register the purchase. Mrs Tsang said that at the time of the purchase there was no rule requiring the land to be registered. Later on, as the land was a small piece of land and was not important and as the family had enough to eat, Mr Tsang did not bother to register the land.

Historical documents

8. (a) Cheung Ying and Cheung Tau were brothers. Their father was Tsang Kam Shang. By a memorial registered in the District Land Office of Tai Po Cheung Ying and Cheung Ah Tau acquired Lot 1120 and the following pieces of land by way of succession : DD106 Lot 1940, DD113 Lot 1077, 1078, 1080, 1102, 1105, 1399, 1367 and also Cheung Po House Lot Nos. 70 and 76.

(b) According to a memorial dated 4 August 1971, Cheung Yung Hing acquired Lot 1120 and the following properties by succession from Cheung Ying: Lot Nos. 1077, 1102, 1105, 1399, 1565 and 1547 in DD113, Cheung Po House Lot Nos. 70 and 76.

(c) According to a memorial dated 13 December 1996 registered in the Yuen Long New Territories Land Registry an error in the memorial of 4 August 1971 was corrected in that:

"The share affected for Lots Nos. 1077, 1102, 1105, 1120 and 1399 in DD113 and Cheung (Tseung) Po Lots Nos. 70 and 76 should be 1/2 share instead of the whole share." (emphasis added)

(d) By an assignment dated 17 August 1972, Cheung Yung Hing assigned, by way of gift, to Cheung Ah Tau 1/2 share of Lot 1120 and Lot Nos. 1077, 1102, 1105, 1399 in DD113 and also Cheung Po House Lot Nos. 70 and 76.

9. From these historical documents it can be seen that between 1913 and 1945 Cheung Ah Tau was one of the two owners of land including Lot 1120. In 1971 the descendants of Cheung Ying acquired half of Lot 1120. In 1972 Cheung Ah Tau acquired this other half of Lot 1120 from Cheung Yung Hing as well. If Lot 1120 had not previously been sold, Cheung Ah Tau would become the sole owner of Lot 1120. It is not disputed that after the death of Cheung Ah Tau the defendants acquired his interest in Lot 1120.

The defendants' case

10. The defendants denied that Cheung Ying and Cheung Ah Tau had assigned their interest in Lot 1120 to Mr Tsang and they put the plaintiff to strict proof. Further they said that, even if the two Cheung brothers had signed the Chinese document, the document was null and void by reason of the fact that it had not complied with the requirement of the law for disposition of the legal interest in Lot 1120. It was also not registered under the Land Registration Ordinance. The plaintiff's case is also defeated by limitation and delay.

Was there a sale in 1945?

11. Leaving aside the Chinese document for the time being, the first question to be decided in this case is whether there was in fact a sale of land by Cheung Ying to Mr Tsang. The only witness who had given evidence on the transaction in 1945 was Mrs Tsang. The 1st defendant, who is now 72 years of age, said that his father Cheung Ah Tau had not told him about the sale of land. He also had not seen the Chinese document. When asked whether his father had any red chop, the 1st defendant stated that he had not seen the chop. He said his father was a village representative and was literate. He would write his name instead of using a chop. He maintained that the family had not sold any land in Lik Ngau Po prior to 1945. The 1st defendant's wife, Madam Fu Mei Kiu ("Mrs Cheung"), said that her mother-in-law had told her that their family had three pieces of land in Lik Ngau Po and that her father-in-law's brother, Cheung Ying, had sold two pieces of such land to Mr Tsang. However, Lot 1120 was not sold to Mr Tsang.

12. I found Mrs Tsang to be a truthful and honest witness. Although she is advanced in age, she gave her evidence in a cogent and straightforward manner. I accept her evidence that there was indeed a sale by Cheung Ying in 1945 of a piece of land in Lik Ngau Po to Mr Tsang for 30 catties of grain. This piece of land was next to another piece of land owned by Mr Tsang. The transaction was recorded in the Chinese agreement. Mr Lee, counsel for the defendants, submitted that Mrs Tsang's evidence is untruthful. He drew my attention to the fact that in the Chinese document it was merely recorded that Mr Tsang and his mother had visited the land sold by the Cheungs but the evidence of Mrs Tsang was that she had also visited the land together with her mother-in-law and her husband. In my view, the fact that the Chinese document did not record Mrs Tsang had also attended the land is not an indication that she had not in fact attended the land together with her husband. It was also said that in paragraph 5 of Mrs Tsang's witness statement she said that she saw Cheung Ying came to her home and personally carried a large bag of rice away and:

"When he left, I saw there was a paper written by Chinese brush. Later, I learned from my mother-in-law it was about the transfer of title of the land in dispute from Uncle Ying and Cheung Tau to my husband. My mother-in-law told me to keep it in a safe place. That paper was since then kept in a cabinet for keeping important documents."

In Mrs Tsang's oral evidence she said that she had seen Tsang Seng, the neighbour wrote out the receipt, but she did not know what he had written because she was illiterate. This is different from what she said in paragraph 5 of the witness statement. The evidence in this case was given by way of oral evidence. The witness statements were not treated as evidence-in-chief. Mrs Tsang's response to this is that what she said in court were the facts and she had taken part in the purchase of land. There is a slight difference in these two versions but I accept what Mrs Tsang said in her oral evidence to be the true events. The overall impression is that she was telling the truth on how the transaction took place.

What was the land that was sold in 1945?

13. It is accepted by both parties that Lot 1120 is situated in Lik Ngau Po. According to Tsang Sze Sang, one of the plaintiff's witness, the Hakka pronunciation of Lik Ngau Po means the land is sick, and that some part of the land can grow things while other parts cannot. The Chinese agreement merely recorded a piece of Po land situated in Lik Ngau Po. The plaintiff's family had a piece of land in Lik Ngau Po, namely, Lot 1145 section B in DD113. This is a relatively large piece of land. According to the Yuen Long Land Register, this lot had been with the Tsang family since 1898. Mr Tsang acquired this lot by succession in 1937. According to the plan of the area, Lot 1120 is situated immediately next to Lot 1145 section B.

14. The plaintiff's case that Lot 1120 was the land sold by the Cheungs is supported by evidence. As a matter of physical location, Lot 1120 is immediately next to Lot 1145 section B owned by Mr Tsang. This supports Mrs Tsang's evidence that the land sold by Cheung Ying was next to her family's land. The Chinese agreement referred to "a piece of Po land left by the late father located in a place locally called Lik Ngau Po." According to the memorial dated 16 December 1913, Cheung Ying and Cheung Ah Tau acquired land from their father by succession which included Lot 1120. Although at the same time they also acquired other lots such as Lots 1077, 1078, 1080, 1102, 1105, 1399 and 1367, these other lots, insofar as they can be identified on the plans, are located in areas away from Mr Tsang's Lot 1145 section B.

15. There is a dispute on the evidence as to the exact size of Lik Ngau Po. The defendants' evidence is that Lik Ngau Po covers a much larger area than that indicated by the plaintiff and his witnesses. I accept the plaintiff's case that Lik Ngau Po covers a much smaller area. Mr Tsang's family and Mr Tsang Sze Sang have been living in the Tai Kek Village which is very close to Lik Ngau Po and among the villagers, I am satisfied that they know the approximate size of Lik Ngau Po. In any event, Lots 1077, 1078, 1080 and 1102 are not in close proximity to Lot 1145 section B.

16. The defendants submitted that notwithstanding the plaintiff's evidence that the Lik Ngau Po area is basically the area around Lot 1120 and in close proximity to the Li Sang Bridge where at most there are less than ten pieces of land, Mrs Tsang in her evidence stated that Mrs Cheung's land was next to Lot 1120. What Mrs Tsang said was that Mrs Cheung did not cultivate on Lot 1120 and that she did not know Lot 1120. Mrs Tsang further said:

"The land next door belong to (Mrs Cheung) and she came to scramble my land. I told her of this last year."

17. In my view, what Mrs Tsang said is not an indication that the area covered by Lik Ngau Po is much larger than as described by the plaintiff's evidence. Mrs Tsang used some very vague terms "the land next door", but can be seen from the plan and Land Office records the Tsangs simply did not have any land next to Lot 1120.

18. According to Mrs Cheung, of the two lots of land which were sold by Cheung Ying to the Tsang family, one is big in size the other one is small in size while Lot 1120 is of the middle size. Of the two pieces that were sold, one is adjacent to Lot 1120 and the larger one is separated from Lot 1120. Mrs Cheung's suggestion on the sale of two other properties in Lik Ngau Po to the Tsang family had never been raised either in the defendants' pleadings or in their witness statements. In the cross-examination of the plaintiff and his witnesses it had never been suggested that Cheung Ying had sold two other properties to the Tsang family which did not include Lot 1120. The plaintiff applied, after the conclusion of the defendants' evidence, for rebuttal evidence to be given in the form of Land Office records. I allowed such evidence to be given. The rebuttal evidence were records of the land surrounding Lot 1120, namely, Lot 1119, 1118, 1123, 1121, 1143 in DD113. None of these properties belonged to the Cheung family in 1945. In other words, Mrs Cheung's evidence was not borne out by the facts. I do not find Mrs Cheung to be a credible witness. Her evidence of what her mother-in-law told her is clearly hearsay in nature. In any event, I do not accept what she said regarding the sale of two other pieces of land to be credible.

Parole evidence rule

19. The defendants argued that the agreement was defective in that it fails to identify the subject matter of the sale. It is said that a written contract is subject to the parole evidence rule. Parole evidence is only admissible where a contract was affected by fraud or misrepresentation or where the contract contains a latent defect or ambiguity (Chitty on Contract, 27th Edition, Vol. 1, Para. 600-604).

20. In my view, the subject matter of the sale is clear, it is a piece of land in Lik Ngau Po succeeded by the Cheung brothers from their late father. Lewison on The Interpretation of Contracts, 2nd Edition, para. 10.03 stated that as a general rule extrinsic evidence is admissible to identify the subject matter of the conveyance. This principle is referred to in the case of Freeguard v Rogers [1999] 1 WLR 375 in which Peter Gibson LJ held that when a property is described as "the property known as ---" it is permissible, indeed inevitable that recourse would be had to extrinsic evidence to identify the property so known. That case is merely an illustration of the general rule. In my view, in this case the description in the Chinese document of the land sold by the Cheungs can likewise be identified by reference to extrinsic evidence.

21. In the less sophisticated era of 1945 one can hardly expect that the villagers in the Pat Heung area of New Territories would identify their land by reference to lot numbers specified in the Land Registry. In any event evidence identifying the land sold by the Cheungs as Lot 1120 does not offend the parole evidence rule. It did not add or contradict the terms of the agreement. This is clearly not a situation where additional terms to the agreement were provided by the evidence.

The Chinese document

22. Two red Chinese chops appeared on the Chinese document below the words "的筆人簽名". While the characters in these two chops did not come out in a legible form in photocopies, one can see the characters in the original document itself although somewhat faintly. These borne the characters of Cheung Ying and Cheung Tau respectively. Although Mrs Tsang did not give evidence that she had seen Cheung Ying or Cheung Ah Tau imposing their chops onto the Chinese document, the likely event is that after the neighbour had drafted the Chinese document the two chops were imposed on it by them. While it was Cheung Ying who had arranged for the sale, the two chops signified that both brothers had sold their land to Mr Tsang. Although the 1st defendant stated that he had not seen his father using a chop, one has to bear in mind that use of a chop is, in fact, a very common usage by the Chinese in the old days.

The Chinese document as a conveyancing document

23. The Plaintiff had described the Chinese document in the pleading as "an assignment". The document is certainly not in the form of an assignment commonly used in Hong Kong to assign properties which is usually in the English language. If the plaintiff intends to rely on this Chinese document as a valid conveyancing document in the New Territories in 1945 then he has to adduce expert evidence on the Chinese customary law applicable to the New Territories that the document had such an effect. Mr Chan, counsel for the plaintiff, relied on the Privy Council decision of Wu Koon Tai v Wu Yau Loi [1997] AC 179 in which evidence was given by a Chinese law expert that under Chinese customary law, the document in that case operated to convey the title of the property to the purchaser. Mr Chan said that the terms of the Chinese document in this case are similar to that in the Wu Koon Tai case. I do not think the plaintiff can derive assistance in such a manner. There are clearly difference in the wording of these two documents. In my view, if the plaintiff wants to rely on this Chinese document as a conveyancing document, expert evidence of Chinese customary law must be given. There is none in this case.

24. In the amended translation of the Chinese document, the translator used the word "deed". In my view this is merely a literal translation of the Chinese character "契". The word "契" means a contract, an agreement or a deed. The use of the word "deed" does not mean that the document is a deed in the sense known in English law.

Evidence in writing

25. Although there is no evidence that the Chinese document may operate to convey a title to Mr Tsang, clearly there was a contract of sale of land by the two Cheungs to Mr Tsang for the consideration of thirty catties of grain. This contract was clearly evidenced by the Chinese document. This document fulfils the requirement either under section 3 of the Conveyancing and Property Ordinance or the Statute of Frauds 1611. The Chinese document is an agreement or a memorandum in writing and signed by the parties to be charged: see the judgment of Liu JA in the Court of Appeal in Wu Koon Tai v Wu Yau Loi at page 747 and that of the Privy Council at page 188.

Part performance

26. Furthermore, there is clearly part performance of the contract: see again the judgment of Liu JA and the Privy Council in Wu Koon Tai. Cheung Ying received the thirty catties of grain and gave possession of the land to Mr Tsang. I am satisfied from the evidence that Mr Tsang and his family had retained possession of Lot 1120 until it was resumed by the government.

Limitation

27. The defendants argued that if the Chinese document is in the nature of a contract then by reason of section 4(1) of the Limitation Ordinance, the plaintiff cannot enforce this contract after the expiration of six years from the date on which the cause of action had accrued. The claim of the plaintiff, however, is not simply based on a contract which may attract the operation of section 4(1) of the Limitation Ordinance. The plaintiff's claim in fact is based on an equitable interest under a contract of sale of land in which the purchaser had entered into possession. The principle is quite clear:

"Where, however, the claimant has been let into possession under the contract and has obtained the equitable interest, so that all he requires is a mere conveyance of the legal estate, even many years' delay in enforcing his claim will not prejudice him.: Snell's equity 30th edition para. 40-61."

As pointed out in Wilkinson & Shihombing's Hong Kong Conveyancing at VIII 201, the outstanding characteristics of the contract for the sale of land which distinguishes it from most other contracts is that its ultimate effect is to create proprietary rights in land which are governed by property law. By reason of the part performance of Mr Tsang, the position is not governed by contract.

28. The defendants then argued that the plaintiff's claim is defeated by section 10(1) of the Limitation Ordinance which provides that:

"Subject to the provisions of section 20(1), the provisions of this Ordinance shall apply to equitable interests in land, including interests in the proceeds of the sale of land held upon trust for sale, in like manner as they apply to legal estates, and accordingly a right of action to recover the land shall, for the purposes of this Ordinance but not otherwise, be deemed to accrue to a person entitled in possession to such an equitable interest in the like manner and circumstances and on the same date as it would accrue if his interest were a legal estate in the land."

Section 7(2) further provides that:

"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."

Again, the defence is misconceived. It is necessary to state the principle in this field: No right of action to recover land accrues unless the land is in the possession of some person in whose favour the period of limitation can run (adverse possession); and where under the provisions of the Limitation Act 1980 any right of action is treated as accruing on a certain date and no person is in adverse possession on that date, the right of action does not accrue unless and until adverse possession is taken of the land. Time therefore cannot begin to run unless and until the true owner ceases to be in possession of his land: Halsbury's Laws of England, 4th Edition Reissue, para. 977.

29. The evidence revealed that after Mr Tsang acquired Lot 1120, it was cultivated by Mrs Tsang. Lot 1120 was on a higher level than their own property in Lot 1145 section B. It was dry land and they only cultivated sweet potato and peanuts there. When Mrs Tsang left for England in 1969 or 1970 she had asked a neighbour to look after the land and cultivate the land for her. This neighbour personally cultivated the land for three years and then asked a Mr Fung to cultivate it for five years. This means Mr Tsang's family had retained possession of the land. The plaintiff accepted that by 1978 the land had not been cultivated. Though the plaintiff said the land was then abandoned, this does not mean the plaintiff and his family had abandoned possession of the land in the sense of allowing someone else to be in possession adverse to their interest.

30. The defendants' case is that Lot 1120 was never sold and their family had been in continuous possession by cultivating on it until they stopped in 1990. The defendants' evidence that they had continued to cultivate on Lot 1120 is simply not credible. Mrs Tsang's family owns Lot 1145 section B. This is immediately next to Lot 1120. If any of the Cheung's family had cultivated on Lot 1120 Mrs Tsang must have noticed them. Mrs Tsang was someone who was concerned with her family's land. She said that she came back to Hong Kong from time to time and inspect her land because of her worry that people would cultivate her land without permission and claim ownership of the land later on. I accept her evidence.

Other equitable defences

31. The defendants relied on laches and submitted that the court of equity would refuse to aid stale demands, where the plaintiff has left upon his right and acquiesced for a great length of time: Halsbury's para. 925. The defendant further relied on the principle that when claims are made in equity which are not, as regards equitable proceedings, the subject of any express statutory bar, but the equitable proceedings correspond to a remedy at law in respect of the same matter which is subject to a statutory bar, a court of equity, in the absence of fraud or other special circumstances, adopts, by way of analogy, the same limitation for the equitable claim.: Halsbury's para. 934.

32. In my view, these defences are not available to the defendants because the plaintiff and his family had been in possession of Lot 1120 since 1945. It was only when the plaintiff received papers from the government about the resumption and discovered that Lot 1120 was not included in those properties which he would receive compensation, he began to gather evidence and pursue this case. The position is best dealt with by Hodson LJ in Williams v Greatrex [1957] 1 WLR 40:

"What is the position if the plaintiff was in possession? In Fry L.J.'s book on Specific Performance (6th ed. 1921) - which was not, of course, edited by him - at p. 517 it is stated: '1110. Where the contract is substantially executed, and the plaintiff is in possession of the property, and has got the equitable estate, so that the object of his action is only to clothe himself with the legal estate, time either will not run at all as laches to debar the plaintiff from his right, or it will be looked at less narrowly by the court'; and the authority for that proposition is stated to be that of Lord Redesdale in Crofton v. Ormsby, to which reference has been made. The paragraph continues: 'for the plaintiff has not been sleeping on his rights, but relying on his equitable title, without thinking it necessary to have his legal title perfected. 1111. Therefore, where a tenant holds under a contract for a lease, pays his rent, and has possession of the property and the enjoyment of all the benefits given him by the contract, the effluxion of time will not be a ground for resisting its enforcement."

Ex gratia payment

33. The government, apart from paying compensation to the land owners whose land was resumed, also paid ex gratia payment to those who cultivated on the land affected by the resumption. The plaintiff accepted that he had not cultivated on Lot 1120 for many years. When he realised that ex gratia payment would be paid he started to clear up Lot 1120. When officers came to enquire who cultivated on that lot, the plaintiff replied he was. He also asked the officer to take a picture of him in the Lot 1120 whose boundary was then set out by the officers. The photograph was taken on 7 September 1998 and produced as evidence. It was suggested by the defendant that the plaintiff was acting dishonestly to receive the ex gratia payment from the government. I do not wish to give the impression that such a conduct is being approved. However, this is not an issue that is germane to this case. It is true that the mere fact someone had received ex gratia payment in purported cultivation of the land is not an indication that he had been in possession of that land, but in this case what the plaintiff did is consistent with his claim to ownership of Lot 1120.

Ownership of the property is proved

34. In my view, the plaintiff has proved ownership of Lot 1120 by reason of the purchase of the land by his father in 1945. As Cheung Ying and Cheung Ah Tau had already disposed of their interest in Lot 1120, the purported succession to 1/2 share Lot 1120 by Cheung Yung Hing on 4 August 1971, the assignment of 1/2 share of Lot 1120 by Cheung Yung Hing to Cheung Ah Tau on 17 August 1972 and the succession by the defendants to Lot 1120 were of no effect.

Registration of the sale

35. The sale of Lot 1120 was not registered by Mr Tsang or the plaintiff. I accept Mrs Tsang's evidence that the registration was not effected because Lot 1120 was not an important piece of land to her family and as they had enough to eat so they did not registered the sale. While they had applied for registration of another piece of land they had also acquired, the purpose of the registration was to enable them to carry out building work on that land. The failure to register Lot 1120 is not an indication that there was no sale in 1945. Further, even though there was no registration, as the defendants are not purchasers for value of Lot 1120 but only acquired it by way of succession from their late father, the defence of bona fide purchaser for value without notice of the transaction is clearly not available to them.

Adverse possession

36. The plaintiff also relies on an alternative cause of action based on adverse possession of Lot 1120. He said his family had since 1945 to the date of resumption by the government been in adverse possession of Lot 1120 and as such the defendants' title had been defeated. Having found for the plaintiff on the basis of ownership it is not necessary for me to base my decision on adverse possession. However, as the matter has been canvassed I would briefly deal with this topic.

37. Mr Lee stated that the plaintiff cannot rely on adverse possession because he had claimed to be the owner of the property. In Hyde v Pearce [1982] 1 All ER 1029, the plaintiff purchased a property and entered into possession of the property before completion of the contract for sale. The conveyancing was never completed and he remained in possession for 14 years. The vendor subsequently conveyed the property to a third party and the third party dispossessed the purchaser. The purchaser was claiming title to the property by adverse possession for a period exceeding the limitation period. It was held that since the plaintiff in bringing his action against the defendant had relied on the existence of the contract of sale to support his continued occupation of the property, and since he could have set up the contract as a valid defence to any proceedings brought against him for possession, he could not thereafter assert that he had obtained a title by adverse possession, that he had been squatting unlawfully on the property or that he had a right to remain on the property other than by virtue of the contract to purchase. It followed, therefore, that notwithstanding that more than 12 years had elapsed since the plaintiff had entered into possession of the property, his possession was not adverse possession within s.10 of the 1939 Act.

38. This approach was followed in Country Rich Development Limited v Ma Chan Fuk Kiu & Others High Court Action No. A5503 of 1993. This approach may now be in doubt by reason of the case of Hughes v Cork English Court of Appeal (unreported) (date of hearing 14 February 1994) where Saville LJ held that:

"The learned Judge appears to have held that it is impossible for someone who believes himself to be the true owner to acquire title by adverse possession since such a person cannot, ex-hypothesi, have an intention to exclude or oust the true owner. If this were the law then only those who knew they were trespassing, that is to say doing something illegal, could acquire such a title, while those who did not realise that they were doing anything wrong would acquire no rights at all. I can see no reason why, as a matter of justice or common sense, the former but not the latter should be able to acquire title in this way. What the law requires is factual possession ie. an exclusive dealing with the land as an occupying owner might be expected to deal with it, together with a manifested intention to treat the land as belonging to the possessor to the exclusion of everyone else.

Obviously if the possessor knows or believes someone else has the paper title to the land he must intend to exclude that person along with everyone else. But in the absence of such knowledge or belief it is in my judgment sufficient for this part of the second requirement simply to establish a manifest intention to exclude everyone."

Beldam LJ held that "the fallacy in Mr Downey's argument lies in the failure to distinguish between an intention to possess, which is required, and an intention to dispossess, which is not."

39. Hughes v Cork was applied in the Hong Kong case of Wong Luen Chun & another v Secretary for Justice [1998] 4 HKC 122. It should be noted that Hyde v Pearce was not cited either in Hughes v Cork or in Wong Luen Chun. Without finally deciding on this topic because counsel had not provided me with full arguments, my view is that the reasoning of Hughes v Cork is sound. The decision of Hyde v Pearce should now be read subject to this later decision. Accordingly, insofar as may be necessary, by reason of adverse possession of the plaintiff and his family of Lot 1120, the title of Cheung Ying and Cheung Ah Tau had been extinguished.

The counterclaim

40. The defendants' case is that there was no sale of Lot 1120 to the plaintiff's family and the defendants' family had been cultivating the land from 1945 to 1990 when they stopped cultivating on it. As I have found against them the defendant is not entitled to the counterclaim on the compensation.

Conclusion

41. The plaintiff is entitled to the following relief :

(1) A declaration that the plaintiff was the true owner of Lot 1120.

(2) A declaration that the purported succession of Cheung Yung Hing of 1/2 share of Lot 1120 on 4 August 1971; the assignment by Cheung Yung Hing of 1/2 share of Lot 1120 to Cheung Ah Tau on 17 August 1972 and the succession by the defendants of Lot 1120 from Cheung Ah Tau were null and void and of no effect.

(3) A declaration that the plaintiff is entitled to the compensation under the Railways Ordinance.

42. As the plaintiff has succeeded in his claim, he is entitled to the costs of the action.