SOONG SOU FUN v. YEW MAN HUM also known as HUM YEW MAN

DCMP 715/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 715 OF 2014

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R U L I N G

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INTRODUCTION

1.  On 19 March 2014, the plaintiff issued an Originating Summons seeking declarations of possessory title of the property situated at Flat T, 6^th Floor, Cheong Wang Mansion, No 17 Cheung Wong Road, Kowloon, Hong Kong (“the Property”).

2.  Substituted service of the Originating Summons (together with the supporting affirmations) and of the subsequent Notice of Appointment for hearing were effected pursuant to two court orders made on 6 October 2014 and 19 January 2013.  The defendant has not filed any acknowledgment of service of the Originating Summons. 

Nature of the hearing before the court

3.  On 27 February 2015, the Originating Summons was heard before me in chambers.  It was the first hearing, and the defendant was absent.  Miss Winnie Chan, counsel representing the plaintiff, urged me to proceed with the hearing in the defendant’s absence and grant the plaintiff the declaratory reliefs as sought.

4.  While normally the substantive hearing of an originating summons should be in open court, Miss Chan was now effectively asking the court to invoke its jurisdiction to summarily determine the matter in chambers (akin to an application for summary judgment) and as such, the subject reliefs sought can be granted provided that the facts are sufficiently clear and liability is established before the court.  See, Wing Hang Bank Ltd v Liu Kam Ying & Ors [2002] 2 HKC 57, per Ma J (as his lordship then was) at para 7; Titan Limited v Deng Zhishun (HCMP 4804 1999, 11 November 1999)See also,Hong Kong Civil Procedure 2015, v1, para. 28/9/2.

5.  After carefully considered Miss Chan’s submission and gone through the evidence before me, I am afraid I cannot grant the declarations sought at this first hearing for the following reasons.

The legal issue on adverse possession in this case

6.  Leaving other aspects of the plaintiff’s case of adverse possession aside, one key issue here is that according to the plaintiff’s own case (as deposed in her supporting affirmation filed on 18 March 2014), she has fully paid the purchase price of the Property and has been its sole beneficial owner at all material times.  I raised a question with Miss Chan whether being so, the plaintiff can as a matter of law claim adverse possession of the Property against the defendant as the bare trustee thereof.  Putting it in another way, whether the plaintiff has been a person in whose favour the period of limitation can run?

7.  Section 13(1) of the Limitation Ordinance (Cap 347) provides that:-

“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 (hereinafter in this section referred to as adverse possession)…”

8.  Miss Chan referred me to the decision of Lam Chi Keung & Anor v Personal Representative of Choi Chung Fun, deceased (HCMP 1202 of 2011, 15 July 2013) where Deputy High Court Judge Leung had considered such legal question.  The plaintiffs there were claiming declaratory possessory title to some land and Miss Chan was also their counsel.

9.  Paragraphs 45 to 50 of his lordship’s judgment are particularly pertinent here:-

“45. Miss Chan submitted that as a purchaser who paid the full contract price and took possession of the Property under a contract of sale but without the conveyance of title, Madam Li would be in adverse possession of the Property. She relied on Bridges v Mee (1975) 1 Ch 476.

46. In Bridges, the plaintiff purchased the land in question from the owner. He paid part of the purchase price and went into possession. The balance of the purchase price was paid in the following year. The interest was not registered. Some 19 years later, the owner sold the same land to the defendant. In the contest between the competing rights to the land, the plaintiff (pursuant to the Land Registration Act 1925) asserted an overriding interest in the land acquired by virtue of the Limitation Act 1939 (“the Act”) (on which the LO here was based) or alternatively actual occupation (pursuant to the Land Registration Act). Harman J found for the plaintiff on both grounds.

47. In respect of the limitation ground, Harman J held (at 484-485) that though possession, when originally taken, might be referred to the vendor’s leave and licence, the position was altered when the vendor’s lien disappeared upon the plaintiff’s full payment of the purchase price. The vendor became a trustee of the legal estate upon the part payment of the purchase price; and a bare trustee upon full payment. As no other beneficiary had any right to recover possession, the period of limitation could and did run in favour of the plaintiff as the beneficial owner against the vendor-trustee’s title. Harman J was referring to section 7(3) of the Act, which is equivalent to section 10(2) of the LO (above). Harman J rejected the defendant’s argument that the vendor had no valid right of action for possession against the plaintiff (being the beneficial owner having paid for the property in full) which could be barred.

48. Miss Chan acknowledged that the case of Bridges was subject to criticism. In S Jourdan, Adverse Possession (2^nd ed) (at 28-29), 6 points of criticism were set out. Of them, a major criticism is that section 7(3) of the Act (or section 10(2) of the LO here (above)) is relevant only if the vendor-trustee had a right of action to recover possession of the property from the purchaser. But any such claim would almost inevitably be struck out as an abuse of process. The reason is that the purchaser, who has paid for the purchase of the property in full, is entitled in equity to possession of the property. In the absence of any right of action, time could not have run against the vendor-trustee as held in Bridges.

49. Having said that, S Jourdan (at 28-31 to 28-32) acknowledged the fact that the same conclusion as that in Bridges had apparently been reached by the courts in various other jurisdictions.

50. The above discussion of Bridges was based on the context of an actual sale and purchase of property. But the circumstances of the present case are not the same.” (emphasis supplied)

10.  In this case, Miss Chan also heavily relied on Bridges as considered by Leung DHCJ in Lam Chi Keung to support her client’s case on adverse possession.  As his lordship rightly pointed out, Bridges has been subject to academic criticisms.  I would further add that the criticisms are in my view substantial.

11.  In S Jourdan, Adverse Possession (2^nd ed), the learned author discussed, among others, three English cases (viz Garrard v Tuck (1849) 8 CB 231, Drummond v Sant (1871) LR 6 QB 763; and Warren v Murray [1894] 2 QB 648) that lend support to his major criticism as identified by his lordship in Lam Chi Keung.  That major criticism is the first among the six points of criticism set out at para 28-29 of the text.

12.  In Warren v Murray (supra), the English Court of Appeal held that time did not run against a landlord under an equitable lease created by an agreement for lease.  Smith LJ at p.651 said:-

“The result of the judgment in Drummond v Sant is that, in considering the effect of the Statute of Limitations as applied to a case such as this, the Court must consider what are the actual legal rights of the parties, meaning thereby their equitable as well as their common law rights; and therefore, if the parties, against whom the Statute of Limitations is vouched, were according to law, including equity as well as common law, unable to recover the land in question, the Statute of Limitations would not apply…” (emphasis supplied)

13.  At p 658, Smith LJ also said:-

“…It seems to me evident that a person must have an effective right to make entry and to recover possession of the land in order that the statute may begin to run. If the argument for the plaintiff is correct, the trustees are to lose their property because they did not enter at a time when they really could not enter with any effect, inasmuch as a Court of Equity would at once have decreed specific performance and put an end to any entry they might have made.” (emphasis supplied)

14.  The three English cases as referred to in Paragraph 11 above had not been drawn to the attention of Kekewich J in Re Cussons Ltd (1904) 73 LJ Ch 296.  And yet, Re Cussons Ltd was relied upon by Harman J in Bridges to hold that lawful possession of the beneficial owner of the property was treated as adverse to the trustee.  In the text, the learned author discussed in great length why Re Cussons Ltd was inconsistent with those earlier decisions and commented that it was wrongly decided.[1]

15.  For the purposes of this hearing, it is not necessary for me to go into the details of the criticism or the ratio of those English cases.  It suffices for me to point out, firstly, the underlying rationale of Bridges on adverse possession ground does not in my view sit well with the earlier English authorities mentioned in Paragraph 11 above.  Secondly, the learned author carefully examined different parts of Harman J’s reasoning on adverse possession ground (set out at pp 485 to 486 of the judgment) and further elaborated how such reasoning had gone wrong by virtue of his other 5 points of criticism stated at para 28 to 29 of the text.  In my view, these criticisms do raise legitimate doubts about the correctness of Bridges which could not yet be properly resolved at this first hearing.

16.  Further, despite Miss Chan’s able arguments, the fact remains that apart from citing the cases of Bridges and Lam Chi Keung, she could not draw my attention to any other authority (whether decided in Hong Kong or in other commonwealth jurisdictions) which can support her proposition, viz the plaintiff, according to her own case, being the true purchaser who paid the subject contract price in full and took possession of the Property (though without the conveyance of title) can be in adverse possession of the Property against the defendant as the bare trustee.

17.  However, his lordship’s decision in Lam Chi Keung does not hinge on Harman J’s holding on the adverse possession ground in Bridges.[2] And, the factual matrix of Lam Chi Keung also appears to be distinguishable from the present one.  In Lam Chi Keung, his lordship observed that the seller in that case actually had a right to recover possession from the purchaser of the property provided that he returned the purchase price.  Leung DCHJ at para 51 of the judgment said:-

“51. As mentioned, what Madam Li in reality contracted for was Choi’s right to require the estate of Toy to convey title to the Property to her couple with possession of the Property. The express proviso that Choi would return the purchase price in the event that he failed to succeed to the Property meant that the 1^st Agreement was subject to a condition subsequent. Unlike the factual basis of Harman J’s judgment in Bridges and the criticism of that judgment by S Jourdan, Choi had a contractual right of action to recover the possession of the Property from Madam Li, provided that he returned the purchase price.” (emphasis supplied)

18.  In contrast, if the court fully accepts the plaintiff’s evidence as deposed in her affirmation in this case (which was unchallenged at the hearing), the defendant does not appear to have any effective right, be it of contractual nature or otherwise, to recover possession of the Property from the plaintiff.  (see: Paragraphs 12 and 13 above)

19.  As for those decisions coming from courts in some other jurisdictions that reached the same conclusion as that in Bridges, the learned author in the text of Adverse Possession sought to explain that those decisions may be justified either by their own peculiar factual circumstances and/or statutory regimes which are materially different from those in Bridges.  With respect, Miss Chan’s submission did not specifically touch on the authorities from these other jurisdictions, not to mention their applicability to the present case.

20.  On the other hand, the learned author also discussed on cases from some other jurisdiction like Australia where it has been held, following Warren v Murray (supra), that time cannot run against the legal owner of land in favour of the beneficial owner, because the legal owner has no effective right to recover the land.[3]  See Mudoch v Reistrar of Titles [1913] VLR 75; Symes v Pitt [1952] VLR 412 at 428-429.

21.  By reason of the foregoing, I do not think the legal question posed for the plaintiff can be satisfactorily answered at the hearing (see: Paragraph 6 above).  However, in these circumstances, it is neither necessary nor appropriate for me to express any conclusive view on the question of the plaintiff’s title to the Property at this first hearing.  In my view, the Plaintiff’s cause and/or matter under the Originating Summons are not ready for determination.

22.  Firstly, it would be fair and proper for this court to afford the plaintiff a chance to make a full legal submission through her counsel on the case of Bridges and those aforesaid authorities in apparent conflict with it as well as addressing the criticisms raised in the text of Adverse Possession highlighted above in the subsequent substantive hearing of the Originating Summons if the plaintiff is minded to continue to seek for the declarations of her possessory title to the Property.

23.  Secondly, I think the legal advisors to the plaintiff should also conduct their own independent review of the evidence in this case to see whether the Originating Summons would need to be amended to include any alternative declaration of the plaintiff’s beneficial title to the Property in line with her case that she has been the sole beneficial owner thereof and that the defendant the bare trustee.  

24.  This court must however make it clear that none of the aforesaid observation shall in any way bind or otherwise affect the judge who is going to hear this case afresh at the subsequent substantive hearing.  Further, since this court has heard evidence only from one side so far, nothing mentioned in this decision per se would preclude the defendant from putting forward any evidence or argument in future to dispute the plaintiff’s case if he subsequently turns up to defend against the plaintiff’s cause in these proceedings.

Ruling and direction for the further conduct of this action

25.  In the premises, I would make no order in respect of the plaintiff’s application for the declaratory reliefs made at the hearing.  I would adjourn the Originating Summons to another call-over hearing to a date to be fixed.  For such purpose, the plaintiff do have leave to take out a summons within the next 28 days for such call-over hearing and setting out any proposed directions as they consider necessary for the further conduct of these proceedings.

26.  Costs should normally follow the event, but the defendant was absent at this first hearing.  Thus, I make no order as to costs of the hearing on 27 February 2015.  The plaintiff’s own costs to be taxed in accordance with Legal Aid Regulations.