LEE THEATRE REALTY LTD v. TONG WAH JOR AND OTHERS

CACV279/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 279 OF 2009

(ON APPEAL FROM HCA No. 1251 of 2003)

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J U D G M E N T

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Hon Cheung JA :

Background

1. Lee Theatre was a landmark building in Causeway Bay, Hong Kong.  In the 1970’s and 1980’s it staged live shows, performances and also showed movies.  It was formerly located in a triangular shape area bound by three main streets : Sharp Street East, Matheson Street and Percival Street.

2. The plaintiff (whose predecessor in title was Bamboo Grove Realty Limited) owns the land upon which Lee Theatre was located, namely, Inland Lot No. 1452, The Remaining Portion of Section A of Inland Lot No. 1612, The Remaining Portion of Inland Lot No. 472 and the Remaining Portion of Inland Lot No. 476 (‘the Land’). 

3. Next to the Land is another piece of land, namely, Inland Lot No. 472 (Portion) (‘the Neighbouring Lot’).  The buildings on this lot are Nos. 85, 87 and 89, Percival Street.

4. Within the triangle of streets, a lane (‘the Lane’) connects Matheson Street with Percival Street and allows passage by pedestrians.

5. The relevant part of the Lane for the purpose of this appeal is the part represented by an inverted L-shape on the plan attached to the re-amended statement of claim, a copy of which is annexed to this judgment as Plan CA 1.  The top of the inverted L is the part of the Lane which leads from Matheson Street.  It then turns around into the length of the inverted L, which is the rear of Nos. 85, 87 and 89 Percival Street, before it turns round again and leads into Percival Street.

6. The plaintiff is the owner of the Lane represented by the top part of the inverted L and also one side of the length of the inverted L.  The owners of the Neighbouring Lot are the owners of the other side of the Lane along the length of the inverted L.  Their predecessor had granted a right of way to the plaintiff to use their part of the Lane. 

7. In the early part of the 1990’s, the plaintiff wished to redevelop Lee Theatre and it discovered that the defendants had built structures and blocked off the Lane at the entrance at Matheson Street.  This was done without the plaintiff’s consent.  The plaintiff then made complaints to the various government departments with the aim of having the Lane cleared. 

8. Eventually on 4 April 2003, the plaintiff commenced the present action, seeking, among other things, an injunction requiring the defendants to remove their obstructions.  By that time the obstructions had extended into part of the length of the inverted L behind Nos. 85 and 87 Percival Street.  The cause of action is based on trespass of the plaintiff’s part of the Lane and also obstruction of the plaintiff’s use of the Lane together with its right of way over the other part of the Lane granted by the owners of the Neighbouring Lot.

9. The 1^st, 3^rd and 4^th defendants claimed that they have been in adverse possession of the Lane since 1961 and they brought a counterclaim seeking a declaration to that effect. 

10. In the meantime Lee Theatre was redeveloped and it eventually became the present Lee Theatre Plaza.  During the redevelopment the defendants continued to occupy the Lane.

11. On 1 December 2009 Deputy Judge Carlson gave judgment for the plaintiff and dismissed the defendants’ counterclaim.  The defendants now appeal.

The defendants’ case

12. The 3^rd defendant and her husband were living in a squatter area in the slopes of Tai Hang in 1961.  In that year they moved and took shelter at the entrance of the Lane at Matheson Street.  They built basic hut like accommodation for themselves and set up a stall at the entrance of the Lane selling soft drinks and snacks.  The name of the stall was called ‘Tong Hung Kee’.  In 1967, the 3^rd defendant opened another stall, an aquarium next to Tong Hung Kee.  The aquarium stood partly on government land.  The 3^rd defendant and her husband gave birth to eight children.  The 1^st and 4^th defendants are two of the sons of the 3^rd defendant.  The whole family of ten lived in the structures built by the 3^rd defendant and her husband, initially around the entrance of the Lane and then expanding into it and around the corner.  Upper structures were also built for accommodation purpose.  The defendants also said that they had installed a gate at the front of the Lane and a gate at the rear of their accommodation which effectively blocked off the Lane.

13. The Judge summarised the defendants’ case as follows :

‘ 10. The Defendants’ case is that as from 1967 their presence and impedimenta in terms of their stalls and stock-in-trade as well as their living accommodation prevented the Plaintiff’s predecessors-in-title and members of the public from using the alleyway. They had blocked it off…...’

14. In 1989 the family was offered public housing in Lantau and some family members moved there, while others remained and continued to earn their living at the family business at the Lane, particularly the 1^st defendant.

15. Tong Hung Kee was closed down on 13 May 1990 and the aquarium was closed down in 2000.  The 1^st defendant then carried out various businesses including an estate agency and design and decoration shop in a structure at the entrance of the Lane and immediately abutting onto the wall of 2 Matheson Street.

The Judge’s finding

16. The Judge rejected the defendants’ case that they had blocked off the Lane from 1967 onwards. 

17. He accepted the evidence of the Leung (Leong) brothers called by the plaintiff.  Their father, Mr. Leung senior was the manager of Lee Theatre.  Mr. Leung’s family also operated a food kiosk next to Lee Theatre at Percival Street.  Their family lived in a flat at No. 2, Matheson Street provided by Lee Theatre.  The Leung family lived there from 1974 to 1991.  The Judge summarised the evidence of the Leung brothers as follows :

‘ 61. ……. What the Leungs have said is that they could and did go through the alleyway [i.e. the Lane] from the mid-1970’s as a matter of course and without difficulty because there was space for them to enter from Matheson Street and once they turned the corner they could pass along one side of the alleyway which was unimpeded by any living accommodation or furniture. Both of them helped their mother by carrying stock for her kiosk which was kept in the family flat at 2, Matheson Street and was carried by them to her kiosk next to the cinema in Percival Street. Crucially, both have said that this passageway remained passable until 1990 after which the part fronting onto Matheson Street was blocked by the Defendants.’

18. Mr. Leong Nie Ming, who is one of the brothers, identified the passage in the middle of the Lane between the two stalls of the defendants as shown in a photograph taken in about 1970 and produced by the defendants.

19. Based on the acceptance of this evidence the Judge made the following finding :

‘ 63. Accordingly, I find as a fact that the lane remained open to pedestrians until at least 1990 when the Matheson Street entrance was blocked up. The evidence of the Leung brothers stands by itself in proof of this fact and certainly up to 1975 is confirmed by the Buildings Department plan [D48, 50] to which I have already referred.

64.   As to the aerial photography and the evidence of the two experts, whilst it is reasonably clear that structures were present as early as 1963 there is no independent evidence from the aerial photography that can support the case that the whole of the alleyway had been taken possession of by 1970.’

20. As the parties agreed that the required period of adverse possession is 20 years, the defendants were required to establish that they had been in adverse possession by 3 April 1983 (i.e. 20 years before the issuance of the plaintiff’s writ on 4 April 2003).  The Judge found that the possession by the defendants only started at the earliest from 1990 and fell short of the required period.

The principles

21. The Court of Final Appeal in Incorporated Owners of San Po Kong Mansion v Shine Empire (2007) 10 HKCFAR 588 adopted the principles set out in Powell v McFarlane (1979) 38 P&CR 452 on adverse possession :

‘ ……

(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. … 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.

…

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)’

The defendants’ appeal

22. Mr. Kenneth Chan (together with Mr. Billy Ma), as counsel for the defendants, relied on two grounds of appeal :

1)    The Judge erred in giving too much weight to the fact that the lane remained a public free passage before 1990. They contended that despite this, the defendants had shown the requisite factual possession and the intention to possess of the Lane (animus possidendi) (‘the exclusive possession argument’).

2)    Alternatively, the Judge should have held that the defendants had been in adverse possession of certain parts of the Lane (‘the alternative case argument’). 

Exclusive possession

23. In respect of the exclusive possession argument, the basis of the defendants’ challenge is on the following parts of the judgment :

‘ 67. In approaching a matter such as this, I need to take into account that what is claimed had been a public passageway partly in the exclusive ownership of the Plaintiff. Over the years, no doubt emboldened by the passage of time and by the inactivity of the Plaintiff’s predecessors who did nothing to move the family on, they extended their living space into and around the lane. In 1990, when the Plaintiff was beginning to take an interest in the illegal structure at 2, Matheson Street, the Defendants completely shut off the entrance from Matheson Street although it is by no means clear whether this was in reaction to complaints by the Plaintiff to the Buildings Department and the Fire Services Department. Whichever it was, I am satisfied that the Defendants did not have a sufficient exclusive possession until at the earliest 1990 which, at best, would only give them 13 years. On this basis alone, the defence must fail.

68.  Additionally, I am not satisfied that the required mental element, the necessary animus possidendi, has been proved.  I have no doubt that at the start in 1961, Madam Lam and her husband were content to hunker down in the alleyway and live free of charge and set up their stall.  Their occupation of only part of the alleyway, the rest of it allowing the public free passage, is highly indicative of an intention only to share possession.  This is why the nature of the land in question is an important circumstance to be borne in mind.  This is wholly different from, for example, a piece of agricultural land that an occupier can fence off and in that way exclude the world.  The equivalent to that did not happen in this case until much later in the 1990’s, when both ends of the accommodation were sealed off as they are at present.’

24. Mr. Kenneth Chan submitted that,

1)    the defendants did not have to prove that the acts of possession on which they rely have blanketed the whole of the area they claimed : Port of London Authority v Ashmore [2009] EWHC 954 (Ch) (08 May 2009) citing Roberts v. Swangrove Estates Ltd [2007] 2 P&CR 326;

2)    the mere fact that a public right of way runs through will not prevent a squatter from taking possession of the land itself : Terence Chambers v London Borough of Havering [2011] EWCA Civ 1576 citing JA Pye (Oxford) Ltd v. Graham [2003] 1 AC 419;

3)    in respect of the intention to possess, it is sufficient for the defendants that they intend to exclude the owner as best as they can and in so far as is reasonably practical and so far as the processes of the law will allow : Topplan Estates Ltd v Townley [2004] EWCA Civ 1369 (27 October 2004).

25. Mr. Kenneth Chan submitted that according to the evidence of Mr. Leong Nie Ming,

1)    over 50% of the Lane was covered by wooden or zinc material.

2)    in the 1970s, he already saw children of the defendants’ family doing homework on some flat platform and playing around on the Lane.  He testified that he ‘saw people doing homework there and resting there’, and ‘I stated that I believed that they slept there, but I did not see.’  In reply to Counsel’s cross-examination, he answered that there wasn’t anything that might lead him to believe that the defendants’ family was not residing there.

3)    he confirmed that there were wooden rectangular ‘shelves’ (for placing things) ‘fixed’ at eye-level.

4)    he saw ‘mattress’ there (under the covered portion) back in ‘around mid-1970s’.  At a ‘later stage’, ‘probably up to 80s’, there was a ‘TV set’ in the living room of the Lane.

5)    he had seen different items including ‘softdrink bottles’, ‘softdrink boxes’, ‘table lamps/fan’, chairs and table of the defendants’ family there.  He also saw an ‘altar’ within the covered portion of the living area inside the Lane.

6)    he said that ‘the Tong family have been keeping dogs as pets [there] at the material time’.

7)    he said that it was possible that two Photos (No. 19 and No. 20) produced by the 1^st defendant were showing the situation of the living room in 1983.

8)    he also said, despite the alleged ‘passageway’, at night-time there were ‘makeshift boards’ which enclosed part of the Lane. 

26. Mr. Kenneth Chan submitted that in the light of the evidence, the objective acts of physical possession are clear and unequivocal and should constitute a sufficient manifestation of the defendants’ intention to possess.  It would be wrong to hold that the defendants only had an intention to share possession.

My view on exclusive possession

27. In order to address the defendants’ arguments, one has to consider the case put forward by the defendants at the trial below.  They were claiming possession of the entire area of the Lane represented by the inverted L shape starting from the entry at Matheson Street up to the part located at the rear of Nos. 85 and 87 Percival Street.  Their case was that this whole area was enclosed since 1967.  Faced with the evidence from the Leong brothers that there was still a free passageway from the 1970’s to 1990, the Judge was clearly entitled to conclude that there was no exclusive possession of the whole of the Lane as claimed by the defendants.  As Mr. Edward Chan SC and Mr. Bernard Man (counsel for the plaintiff) had submitted, the Judge had only made the common sense point that the placing of objects on, or even the use of, parts of the Lane does not amount to a single and conclusive factual possession of the whole Lane, or manifest an intention to exclude the whole world from the whole Lane.  The following observation by Bramwell LJ in Coverdale v Charlton (1878) 4 QBD 104 at 118 is pertinent :

‘ But it is difficult to say that there is a de facto possession, when there is no possession except of those parts of the lane which are in actual possession, and there is an interference with the enjoyment of the parts which are not in actual possession. My meaning is this, if there were an inclosed field and a man had turned his cattle into it, and had locked the gate; he might well claim to have a de facto possession of the whole field; but if there were an uninclosed common of a mile in length, and he turned one horse on one end of the common he could not be said to have a de facto possession of the whole length of the common.’

28. The use by the defendants of part of the Lane was certainly consistent with the Judge’s view that they intended to share possession of the Lane.  The Judge did not say that the defendants in order to succeed must necessarily have performed acts of possession blanketing the whole of the area claimed.  As Powell pointed out whether or not acts of possession done on parts of an area would establish title to the whole area is a matter of degree.  In the present case if pedestrians could use and actually used the Lane for access throughout the day, then this is certainly material upon which the Judge could find that the defendants had not exclusive possession to the whole area that they had claimed adverse possession.  The Judge also did not say that the right of way in the Lane would preclude adverse possession.  The cases relied upon by the defendants do not assist them.

The alternative case

29. The second ground relied upon by the defendants is that the Judge ought to have found that they were in adverse possession of some part of the Lane.  On the hearing of the appeal, Mr. Kenneth Chan identified the area on a plan marked as Plan 3 but excluding the part described on the plan as Portion I.  The area excluded is basically the area at the back of the entry of the Lane at Matheson Street before it turned around.

30. In the Court below, the plaintiff in its written closing submission stated that,

‘ 74. The cause of action in relation to these portions was trespass. It is submitted that having regard to the burden of proof the Ds had not satisfied the court that they were in adverse possession of these portions for over 20 years before the issuance of the writ on 4 April 2003. The evidence only established that for some parts of Portion I the Ds were in possession for over 20 years before the date of the writ. It is for the Ds to satisfy the court where exactly these portions are. If the court is not satisfied that any particular parts had been the subject matter of adverse possession for over 20 years, then the court should give judgment for the whole of Portion I, II and IV to the P.

75.  On the evidence it is submitted that at the most the part which had been subject to adverse possession was (1) an area of not more than 1.5 feet along the southern side of Portion I immediately to the north of the triangular fenced off area (i.e. up to the point when the lane turns south) (2) an area of not more than 0.5 feet along the northern boundary of Portion I (collectively called “the adverse possession area”). 

Accordingly P asks for an order possession of the whole of Portions I, II and IV in so far as the same should fall within the boundary of IL 472 RP save and except the adverse possession area.’ (emphasis added)

31. This was repeated in the plaintiff’s oral submissions before the Judge.

32. The plan which identified the two areas and handed to the Judge is included in this judgment as Plan CA 2.  The two areas with measurements are coloured ‘yellow’ and ‘pink’ on the plan.  These two areas are basically the areas occupied by Tong Hung Kee and the aquarium (part of which was on government land) but excluding the passageway in between the two stalls.

33. Following the plaintiff’s submission, Mr. Kenneth Chan in the Court below, submitted that the Court could find for the defendants in respect of the parts where adverse possession could be established.  The case of Lau Wing Hong and Others v. Wong Wor Hung and Another [2006] 4 HKLRD 671 was referred to the Judge.  In that case, Recorder McCoy SC held at paragraph 145 that in an adverse possession case, the pleaded factual issues may permit of several possible variations and permutations as to the boundaries of the disputed land at the material time and it would be unnecessarily demanding to require the party to plead every precise possible variation of the underlying factual dispute that could be ultimately found to be proved.  It should also be noted the Court of Appeal further held in Yu Siu Cheuk v. Realray Investments Limited, CACV 181/2009that, on the facts, the trial judge was required to make findings on when the defendant entered into possession even though the defendant had failed to prove the specific date of entry relied upon by him. 

34. Mr. Edward Chan objected to the alternative case notwithstanding that the parties had addressed the issue before the Judge.  Mr. Edward Chan submitted that despite requests by the plaintiff there was a lack of pleading on :

1) precisely where the smaller areas that the defendants say they had possessed, should their primary case regarding the whole Lane fail,

2) when the defendants entered into possession of such smaller areas,

3) whether the defendants had been in continuous possession of these smaller areas for a period of at least 20 years before the issuance of the writ with the requisite intention to possess.

My view on the alternative case

35. The alternative case relied upon the defendants would seem to cover both the area on the ground level and the area above ground on the cockloft level which was used as accommodation.  In respect of the cockloft area, Mr. Edward Chan was clearly right that the defendants had not properly pleaded the area covered by the cockloft but more importantly the evidence did not support their claim that they had been in continuous possession of the cockloft area for the relevant period.  Mr. Kenneth Chan did not press for a claim of the cockloft area.

36. However, the ground level area is different.  In my view, even according to the evidence of Leong Nie Ming, the defendants were in possession of the areas (other than the passageway in the middle) along the entrance of the Lane since the mid 1970’s which is more than the 20 years required to establish adverse possession.  The areas were the parts occupied by Tong Hung Kee and the aquarium.  Leong Nie Ming’s evidence on the household items he had noticed and his evidence that the two stalls were boarded up at night (without engulfing the entrance from Matheson Street) are evidence which pointed to the defendants being in adverse possession of those particular parts of the Lane.  The aerial photographs also established that the structures were present at the entrance of the Lane as early as 1963.  In my view the defendants had established both the factual possession and the intention to possess.  The boarding up of the two stalls at night must be the strongest indication of the intention to exclusively possess those parts.  During the day, in order to carry out business at the stalls, the boards had to be dismantled.  But this does not mean that the defendants did not have exclusive possession of the area covered by these two stalls.  

37. As to the precise area or size covered by these two areas, I think it is a matter of common sense that, after so many years and with the change in nature of the use by the defendants of the part of the Lane at the Matheson Street entrance, it would be difficult to give exact measurements of these two areas.  But my view is that the size and measurement of the areas identified in Plan CA 2 tallies with the evidence on the measurement of the Lane itself and on the areas used by the defendants.  No doubt the measurement was a ‘guesstimate’ on the part of the plaintiff, but it was prepared to accept that this was at least the area occupied by the defendants by reference to the evidence adduced below.  This being the case, although the defendants were not able to prove their claim in respect of the whole area of the Lane which they sought adverse possession, they certainly were able to establish adverse possession of part of the area in the Lane.  In the circumstances the Judge ought to have found for the defendants on these two areas identified in Plan CA 2.

Conclusion

38. To this extent, we will allow the appeal and give judgment to the defendants for their counterclaim for possession in respect of the parts marked pink and yellow in Plan CA 2. 

39. Mr. Edward Chan had, by reference to a draft order, most helpfully stated how the orders made by the Judge should take into account the defendants’ entitlement.  In gist, in respect of the injunction and order requiring the defendants to deliver vacant possession, the area covered will exclude the two areas identified on Plan CA 2 which the defendants had established adverse possession.  Further, instead of dismissing the defendants’ counterclaim, there should be judgment for the defendants for possession of the indicated areas.

Costs

40. The parties are required to make written submission on costs within 14 days.

Hon Kwan JA :

41. I agree with the judgment of Cheung JA.

Hon McWalters J :

42. I agree with the judgment of Cheung JA.