TSANG WING KIT ERIC AND ANOTHER v. THE OCCUPIER(S) AND OTHERS

HCMP 1154/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1154 OF 2005

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J U D G M E N T

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Introduction

1.  This is an action for re-possession of land namely: portions of Lot No 4324RP, 4328ARP and 4462ARP in Demarcation District No 51 in Wo Hop Shek in the New Territories (hereinafter referred to as “Subject Land”) presently occupied by the 2^nd and 3^rd Defendants.  The 2^nd and 3^rd Defendants’ defence is adverse possession and they counterclaim for declaratory relief in respect of their possessory title. 

2.  The Plaintiff is a t’ong registered in accordance with the New Territories Ordinance, Cap 97.  It was founded by the late Tsang Yuk Hey.  Since 1916, the Plaintiff has been the registered owner of about 370,000 square feet of land in Wo Hop Shek including the Subject Land.  The land is held in trust for the benefits of members of the t’ong, i.e. the living male descendants of the late Tsang Yuk Hey. 

3.  Since 1960, the Plaintiff became aware that its land was being unlawfully occupied and took action to evict the occupiers during 1963 to 1965.  In July 1965, the Plaintiff obtained a writ of possession.  However, in view of the violent protest by the occupiers, the Plaintiff allowed them to stay on the land as licensees but without paying any rent.  One of the occupiers was Lee Ho Kwong.  He is also known as Lee Lok and Lee Yik Cheung.  In 1968, Lee Ho Kwong applied for business registration and started trading as Luk Kee Furniture(六記傢俬)(hereinafter referred to as “Luk Kee”).  In October 1978, the Plaintiff received an offer of a short term waiver from the District Office to convert the use of most of the Subject Land as a furniture factory for use by Luk Kee.  The waiver was for a term certain of one year from 1 November 1978 and thereafter three monthly subject to three months notice by either party.  The area covered by the waiver was 768.3 square metres.  The Plaintiff accepted the offer in collaboration with Luk Kee.  Towards the end of 1982, the Plaintiff and Luk Kee entered into an oral tenancy agreement for the use of the Subject Land at an annual rental of $6,000.  With the collaboration of the Plaintiff, two other short term waivers were granted to Luk Kee by the District Office on 14 March 1985 to cover the entirety of the Subject Land of 840 square metres.  The area covered by these two waivers overlapped and extended beyond the area covered by the first waiver.  As shown in the business registration application form, Lee Ho Kwong’s daughter, Lee Sui Lin took over the business of Luk Kee in September 1986.

4.  Luk Kee was in arrears of rent in 1993.  On 30 July 1993, the Plaintiff’s then solicitors issued a notice to quit to Luk Kee requiring it to vacate the Subject Land on or before 31 December 1994.  On 12 August 1993, Luk Kee paid the Plaintiff $6,000 as rent for 1993.  On 14 November 1994, Luk Kee requested the Plaintiff for three years’ tenancy to enable it to fulfil its orders and to sell its stock.  The Plaintiff refused and commenced legal action for recovery of the Subject Land under High Court Action No 3779 of 1995 (hereinafter referred to as “HCA 3779/1995”).  At the same time, the Plaintiff also commenced recovery action in respect of a piece of adjacent land against Lam For Kwai under High Court Action No 3778 of 1995 (hereinafter referred to as “HCA 3778/1995”).  On 26 June 1997, the Plaintiff obtained a writ of possession against Luk Kee.  The Plaintiff attempted to execute the writ of possession in April 1998.  However, Luk Kee refused to deliver up possession of the Subject Land and the Plaintiff agreed to stay the execution of the writ of possession pending resolution of HCA 3778/1995.

5.  In September 1999, Lam For Kwai and the Plaintiff reached settlement in HCA 3778/1995 by buying that piece of adjacent land from the Plaintiff.  Then, as the Plaintiff was about to resume execution of the writ of possession against Luk Kee, its then manager suffered a stroke and died in January 2000.  In September 2004, the newly appointed managers of the Plaintiff resumed action for recovering the Subject Land.  The Plaintiff discovered that the Subject Land was still being occupied, though Luk Kee was not operating its furniture business therein.  Instead of resuming execution of the writ of possession under HCA 3779/1995, it started the present action against the occupiers on 3 June 2005.  On 1 September 2005, the Plaintiff obtained an order for possession of the Subject Land by default.  Subsequently, the 2^nd and 3^rd Defendants obtained an interim stay of the order for possession and were joined as parties pursuant to the order of Master Levy dated 28 November 2007. 

The Defendants’ case

6.  The 2^nd Defendant is now 81 years of age.  He moved into Wo Hop Shek Village in about 1964.  In about 1979, he bought a plot of land within the Subject Land (hereinafter referred to as “Plot 2”) for a few baskets of rice grain.  He cannot now recall the name of the man who sold him the land.  He built a hut of about 1,200 square feet on Plot 2.  There he lived with his wife Wong Oi Lin (deceased) and operated a business making simple household furniture and mainly sewing machine boards.  After Wong Oi Lin passed away in 1994, he married his present wife in China.  Two of his daughters moved to live with him in Plot 2 since 2000 and 2003 respectively.  He had two other daughters born in Hong Kong in 2002 and 2004.  His present wife left China to live with him in Plot 2 since 2003.  Luk Kee had never occupied Plot 2. 

7.  The 3^rd Defendant is now 58 years of age.  He moved into Wo Hop Shek Village in 1968.  He rented a hut with surrounding land of about 7,000 square feet (hereinafter referred to as “Plot 3”) from an old woman.  In 1970, that old woman sold Plot 3 to him for a red packet.  He could not recall how much money he put in the red packet but it was a small casual amount.  He operated a decoration business on the land.  Luk Kee was his neighbour located opposite Plot 3 but had never occupied Plot 3.  He came to know Lee Ho Kwong of Luk Kee and later married his daughter, Lee Sui Lin.  He built extensively on Plot 3 where he lived with his mother and family.  Thus, the 2^nd and 3^rd Defendant together occupied the entirety of the Subject Land.

The issue

8.  The Plaintiff’s action is based on their legal title in the Subject Land and that the Defendants’ possession amounted to trespass.  The Defendants do not dispute the Plaintiff’s legal title in the Subject Land.  It is also common ground that Plot 2 and Plot 3 together formed the entirety of the Subject Land.  The Defendants admit that they did not have the Plaintiff’s consent or permission to occupy their respective plots of land.  They plead adverse possession.  Mr Shum, counsel for the Defendants, agrees that the Defendants bear the burden of proving exclusive possession for more than twenty years prior to the issue of the Originating Summons for possession in this action, i.e. before 3 June 1985.

9.  The defence raised by the Defendants is very peculiar.  They acknowledge that the Plaintiff is the registered owner of the Subject Land which they occupy.  The parties have no dispute that the physical location of Plot 2 and Plot 3 occupied by the Defendants is the Subject Land.  The Plaintiff’s case is that the Subject Land was occupied by Luk Kee pursuant to an oral tenancy agreement granted by the Plaintiff in 1982.  The Defendants’ case is that Plot 2 and Plot 3, which together formed the entirety of the Subject Land, have all along been occupied respectively by the 2^nd and 3^rd Defendants and that Luk Kee was their neighbour and had never occupied the Subject Land at all. 

10.  It is common ground that Plot 2 and Plot 3 occupied by the 2^nd and 3^rd Defendants together formed the entirety of the Subject Land.  Thus, on a proper analysis of the parties’ case, the single most important issue is whether Luk Kee had occupation of the Subject Land pursuant to the 1982 oral tenancy agreement or that the Subject Land had been adversely possessed by the 2^nd and 3^rd Defendants while Luk Kee had occupation of some adjacent land.  Under the former scenario, the 2^nd and 3^rd Defendants’ possession was not adverse to the Plaintiff until the 1982 oral tenancy agreement was terminated on 1 January 1995 or when Luk Kee abandoned the Subject Land at the earliest after April 1998 when the Plaintiff failed to execute the writ of possession.   This has an effect on the limitation period, which I shall elucidate below.  Under the latter scenario, it is a straightforward case of adverse possession.  The 2^nd and 3^rd Defendants’ possession since 1979 and 1970 respectively was adverse to the Plaintiff.  The cause of action accrued before 1991 and the limitation period was twenty years.  With respect to both counsel, they have completely missed the former scenario and proceeded on the basis of the latter scenario and the limitation period of twenty years.  The position of Mr Shum is understandable because the former scenario is fatal to the Defendants’ defence.

11.  The factual issues are:

(1) whether the Subject Land was leased to Luk Kee, and if it was, when did the tenancy or Luk Kee’s possession terminate; and

(2) if it was not, whether the Defendants had exclusive possession of their respective plots of land prior to 3 June 1985.

12.  If the Defendants are successful in proving adverse possession, the Plaintiff relies on its own peculiar feature as a t’ong and the ancient Chinese institution of ancestral land-holding in the New Territories which is preserved by section 13 of the New Territories Ordinance, Cap 97.  In essence, land held by a t’ong or tso is inalienable, indivisible and perpetual for the benefit of existing and future members of the t’ong or tso.  Hence, it was held in Leung Kuen Fai and Tang Kwong Yu (or U) T’ong or Tang Kwong Yu Tso [2002] 2 HKLRD that whenever a new member of the t’ong or tso is born, a new equitable interest in the t’ong or tso is created and a new limitation period under sections 7(2) and 22 starts to run.  The new limitation period will not expire until six years after the new member ceases to be an infant, i.e. twenty-four years since birth of the youngest new member.  Leung Kuen Fai was approved by the Court of Appeal in Wong Shing Chau v To Kwok Keung [2008] 5 HKC 372.  Mr Shum has no dispute about these principles.  It is also common ground that the burden is on the Plaintiff to prove that new equitable interest was created by birth of such new member(s) and such member(s) is/are still living.  If these are proved, the burden will be shifted to the Defendants to prove that the right of that new member(s) to take action has been time-barred.  A little dispute introduced by Mr Shum over the second of the above requirements is that he argues that the Plaintiff must prove at least one such new member is still living at the time of trial.  Mr Lee, counsel for the Plaintiff, argues that proof up to commencement of the action is sufficient.

13.  The dispute between counsel is a short one and I think it is convenient to dispose of it here.  I do not think the point has been argued in Leung Kuen Fai.  Of necessity where an action would otherwise have been time-barred, the new member must have been born at the time of commencement of the action.  If not, the statement of claim may be struck out as disclosing no cause of action or otherwise an abuse of process under Order 18 rule 19 of the Rules of the High Court (hereinafter referred to as “RHC”).  Mr Shum takes the point further and submits that the new member must also be alive at the time of trial to maintain the action and that the Plaintiff bears the burden of proving survivorship or its claim will fail.  I asked, what if the member died while the court is deliberating?  Mr Shum’s answer was to leave it to his pupil.  I think the key to the question is whether the t’ong has any interest, which has not been time-barred, to sue.  The issue is not whether the cause of action survives the death of the new member for the new member is not suing under his own name.  It matters not that this new equitable interest is subsequently extinguished during trial by death of the new member.  To hold otherwise, the Plaintiff would have to keep proving that the new member is living from day to day up to the close of the Plaintiff’s case, or the time of sealing of the judgment order, or expiration of the time to appeal, if Mr Shum’s argument is to be taken to the extreme.  This is absurd.  The parties’ rights and liabilities could not be left as precarious as Mr Shum submits.  A line must be drawn somewhere.  In my opinion, it is to be drawn at the time of commencement of the action for the simple reason as I have earlier mentioned, otherwise the action may be struck out.  Death of the member thereafter has no consequence. 

14.  The further factual issues are:

(1) whether any new members have been born to the t’ong within twenty-four years prior to the commencement of the action, i.e. since 3 June 1981; and

(2) whether at least one such new members is still alive at the time of commencement of the action, i.e. 3 June 2005.

15.  Counsel have no dispute about the other general legal principles applicable to adverse possession.  Those are trite principles, anyway.

The relevant limitation period

16.  Section 7(1) of the Limitation Ordinance, Cap 347 provides for a limitation period of twelve years in an action to recover land.  However, under the transitional provision, section 38A, a limitation period of twenty years applied to cause of actions which accrued before 1 July 1991.  Section 8(1) provides that in an action to recover land, the right of action shall be deemed to have accrued on the date of dispossession or discontinuance.  These provisions are applicable to the latter scenario.  On the basis that adverse possession commenced before 1 July 1991, counsel proceeded on the basis that the limitation period is twenty years.

17.  What counsel have failed to address is the former scenario where the land occupied by the squatter is land subject to a tenancy.  Sections 12(1) and (2) of the Limitation Ordinance, Cap 347 are relevant:

 “ (1)    A tenancy at will shall, for the purposes of this Ordinance, be deemed to be determined at the expiration of a period of 1 year from the commencement thereof, unless it has previously been determined, and accordingly the right of action of the person entitled to the land subject to the tenancy shall be deemed to have accrued on the date of such determination.

(2)        A tenancy from year to year or other period, without a lease in writing, shall, for the purposes of this Ordinance, be deemed to be determined at the expiration of the first year or other period, and accordingly the right of action of the person entitled to the land subject to the tenancy shall be deemed to have accrued at the date of such determination:

Provided that, where any rent has subsequently been received in respect of the tenancy, the right of action shall be deemed to have accrued on the date of the last receipt of rent.”

Thus, in the case of land subject to a tenancy, no matter when dispossession occurred, time does not run against the landowner until the tenancy is terminated.  If the landowner grants the tenant a lease for a certain term and the tenant is dispossessed by a squatter, the limitation period runs against the tenant from the dispossession but against the landowner only from the determination of the lease.  While the squatter can retain the land as against the tenant during the rest of the term, the landowner can recover it from the squatter at the end of the term, provided he takes proceedings within the limitation period from that date.  If the landowner grants the tenant a new lease at the end of the term, the tenant can evict the squatter by reason of his new interest in land.

18.  In the present case, if Plot 2 and Plot 3 had been leased to Luk Kee, even if they were occupied by the Defendants to the exclusion of Luk Kee and the Plaintiff, such occupation is not adverse to the Plaintiff and time does not start to run against the Plaintiff until the tenancy to Luk Kee was terminated or when Luk Kee abandoned the Subject Land.  The lease was terminated on 31 December 1994 upon expiry of the notice to quit.  There is no evidence when Luk Kee abandoned the Subject Land, but the undisputed evidence is that it was still resisting the execution of the writ of possession in April 1998.  Thus, time started to run against the Plaintiff at the earliest on 1 January 1995 or even after April 1998.  On either dates, the cause of action accrued after 1 July 1991.  The relevant limitation period is twelve years and not twenty years as assumed by counsel.  Even on the earlier date, the Plaintiff’s action will not be barred until 1 January 2007.  The action commenced by the Plaintiff on 3 June 2005 is well within time.  Thus, only if the Subject Land had not been leased to Luk Kee could the Defendants rely on adverse possession.  This shows how narrow the Defendants’ defence is.  A finding in the affirmative and that the lease terminated on 31 December 1994 in respect of the first issue is fatal to the defence.

The location of Plot 2 and Plot 3 allegedly possessed by the 2^nd and 3^rd Defendants

19.  Both parties have filed expert reports from their surveyors: Henry Chan Surveyors Limited (hereinafter referred to as “HCSL”) for the Plaintiff and Memfus Wong Surveyors Limited (hereinafter referred to as “MWSL”) for the Defendants.  The two experts are largely in agreement in their reports.  According to MWSL, the Subject Land is now immediately adjoining Tai Wo Service Road West, which runs parallel to Tai Po Road.  Back in 1980s, as shown in the plans annexed to the short term waivers, Tai Wo Service Road West was not in existence and the Subject Land was some distance off Tai Po Road.  Between then and now, Tai Po Road was very much widened and Tai Wo Service Road West was opened by land resumed from the Plaintiff and/or other landowners.  According to HCSL, the Subject Land cover exactly the areas covered by the two 1985 waivers.  It is now common ground that Plot 2 and Plot 3 covered the entirety of the Subject Land.  The 2^nd and 3^rd Defendants have no dispute and cannot dispute that the land they occupied is not wholly within the Subject Land because of MWSL’s report and HCSL’s report.  The question is whether the Subject Land was or formed part of the land leased to Luk Kee under the 1982 oral tenancy agreement.

20.  The Plaintiff’s case is that Luk Kee was located on the Subject Land which was leased to Luk Kee.  One of the members of the Plaintiff, Tsang Ting Shek (hereinafter referred to as “Shek”) gave evidence that he accompanied the then manager of the Plaintiff and some elders of the t’ong to inspect Luk Kee after the Plaintiff had entered into an oral tenancy agreement with Lee Ho Kwong in 1982.  He described Luk Kee as occupying a plot of land fenced off by iron fence and structures.  There was only one entrance to the land, above which was the signboard of Luk Kee.  The entrance was secured by a gate and lock.  He was shown inside the enclosed area by Lee Ho Kwong and Lee Sui Lin.  There was an office, a workshop, some staff quarters and a kitchen.  In February 1991, Shek also accompanied the then manager to inspect Luk Kee and the surrounding land owned by the Plaintiff.  They made a record of the occupiers there and took some photographs.  He confirmed that the situation of Luk Kee in 1991 was not much different from what it was in 1982 and that Plot 2 and Plot 3 are located in the Subject Land.

21.  The 3^rd Defendant’s case is that all along the Subject Land was occupied by him and the 2^nd Defendant, that Luk Kee never occupied any part of the Subject Land and that Plot 3 was opposite to Luk Kee.  He said that back in 1970s, Luk Kee was just off Tai Po Road and was located outside the Subject Land.  Luk Kee was then reduced in size as a result of successive land resumption for building highways.  Then, when Luk Kee ceased business, he found the signboard of Luk Kee abandoned on the ground.  Then he picked it up and fixed it on the entrance of Plot 3, because Luk Kee was a well-recognised landmark in the community.  The 2^nd Defendant’s evidence is less substantial, but supports the 3^rd Defendant’s.  He said that Luk Kee was just located at an adjacent piece of land nearby and that Plot 2 which he occupied was never occupied by Luk Kee.  The Defendants’ evidence is in direct conflict with Shek’s.  When their evidence is tested against indisputable facts, the 2^nd and 3^rd Defendants’ evidence is manifestly inherently incredible while Shek’s evidence is inherently credible.  The 2^nd and 3^rd Defendants are not to be believed.

22.  The starting point is the three temporary waivers.  There is no dispute that the waivers covered the Subject Land.  In October 1978, Luk Kee in collaboration with the Plaintiff obtained a waiver from the District Office to use most part of the Subject Land as a furniture factory.  In March 1985, Luk Kee and the Plaintiff obtained two other waivers which effectively covered the entirety of the Subject Land.  According to MWSL and HCSL, the land occupied by the Defendants together made up the Subject Land.  Luk Kee would not have applied for the waivers if it was not using the Subject Land as a factory for itself in 1978 and 1985 and while it was being occupied as early as 1960 by the Defendants to the exclusion of Luk Kee.  Luk Kee and the District Office would not have erred about the location of the land in respect of which the waivers were to be granted.  The likelihood is that the Defendants were not telling the truth.  This is particularly so in the case of the 3^rd Defendant who is the son-in-law of the operator of Luk Kee.  As the waiver documents show, the 3^rd Defendant’s wife was actively involved in the business of Luk Kee as well as in the application for the waivers.  Furthermore, she operated Luk Kee since 1986.  The 3^rd Defendant said that he was living with his mother and wife in Plot 3, while the 3^rd Defendant’s wife said in her affirmations in defending HCA 3779/1995 that she was living inside Luk Kee.  The 3^rd Defendant was obviously residing with his wife in the Subject Land leased to Luk Kee under the 1982 oral tenancy agreement.  Thus, Plot 2, Plot 3 and the land leased to Luk Kee under the 1982 oral tenancy agreement referred to the same piece of land, i.e. the Subject Land.

23.  During the inspection in February 1991, the Plaintiff made a record of the occupiers of its twenty-five plots of land in the vicinity of the Subject Land.  The record shows that Luk Kee and the name of the 3^rd Defendant’s wife were described as the occupiers of one of the plots.  The telephone number of Luk Kee was recorded.  Photographs of Luk Kee were also taken.  The photographs show the frontage of Luk Kee and its signboard.  They also show a lorry with the words「六記」(Luk Kee) painted on its off side parked just outside Luk Kee.  The outward appearance of Luk Kee as depicted in those 1991 photographs is very similar to that as shown in the recent photographs taken by the Plaintiff.  There could be no truth whatever in the 2^nd and 3^rd Defendants’ evidence that Plot 2 and Plot 3 were distinct plots of land from the land occupied by Luk Kee. 

24.  I accept the evidence of the Plaintiff and reject the evidence of the 2^nd and 3^rd Defendants.  I find that Plot 2 and Plot 3 which the Defendants claim to have occupied is the Subject Land which had been leased to Luk Kee under the 1982 oral tenancy agreement.  As I have said, such a finding is fatal to the defence.  The Defendants have demonstrated themselves to be dishonest witnesses making up a fictitious case.  This finding seriously destroys their credibility.  It casts grave doubts on their evidence that they had exclusive possession of the land they claimed to possess and the nature of their occupation.  It also casts an entirely different light on the rest of the Defendants’ evidence.  Even if the Defendants had exclusive possession of their respective plots of land, as a matter of law, such possession is not adverse against the Plaintiff until at the earliest after 31 December 1994.  The defence of adverse possession is doomed to fail.  This finding is sufficient to dispose of the defence, but I shall nevertheless complete the analysis of the 2^nd and 3^rd Defendants’ evidence.

The 2^nd Defendant’s use of the address of No 1 Tai Po Road

25.  The Defendants rely heavily on their use of the address of No 1 Tai Po Road as evidence of their occupation of the Subject Land.  They both claim that that is their address.  They said that all mails to the nearby residents were delivered to Luk Kee or See Hing Store nearby or just left at the roadside.  However, according to the business registration application form filed by the 3^rd Defendant’s wife, Luk Kee was also operating at No 1 Tai Po Road.  In view of my finding at paragraphs 19 to 23 above, the address of No 1 Tai Po Road must be the address of Luk Kee, which was where, even according to the Defendants’ evidence, their mails were delivered to.

26.  The 2^nd Defendant produced letters with envelopes dating back to 1982 as evidence of his occupation of Plot 2 since 1982.  The letters were sent by his relatives to him and his wife.  There is no doubt about the authenticity of those letters.  Few of the envelopes were addressed directly to them at No 1 Tai Po Road, but most were addressed to them care of that address, i.e. with the word 「交」 or 「煩交」 or 「轉交」.  One of the envelopes was addressed to the 2^nd Defendant care of Lee Yik Cheung of Luk Kee, i.e. Lee Ho Kwong (「寄香港九龍新界粉嶺和合石大埔道一号，六記傢俬李益祥先生轉交李旭新先生收啓」).  This way of addressing is more consistent with the addressee not residing than residing at the address.  On the face, the senders were requesting the occupier of that address to re-direct the mails to the addressees who were not ordinarily residing at that address.  The writers of the letters were the 2^nd Defendant’s family members, such as his son-in-law and grandson who were very close and familiar to him.  They must have been impressed upon by the 2^nd Defendant and his then wife that the address was not their own residential address and hence it became necessary for their family members to request the occupier of No 1 Tai Po Road, i.e. Lee Ho Kwong of Luk Kee, to re-direct the mails to the 2^nd Defendant.  I reject the evidence of the 2^nd Defendant and drew the inference that he was not a regular resident at No 1 Tai Po Road.  He might be someone who was employed by Luk Kee or frequented Luk Kee or familiar with Luk Kee or permitted by Luk Kee to use that address as a postal address.  But he did not reside at that address, let alone to the exclusion of Luk Kee.

27.  The 2^nd Defendant produced a business card in the name of 「李新」(Lee Sun) showing the address of his business to be “Wo Hop Shek Village, No 1 Tai Po Road” and his China Re-entry Permit issued on 28 October 1983 showing his then address to be No 1 Tai Po Road, Ground Floor.  By themselves, these were contemporaneous documents and are strong evidence of residence.  However, as the 2^nd Defendant has shown himself to be lying by saying that he occupied the land at that address to the exclusion of Luk Kee, when it was not, I reject his evidence that he resided at that address.  I draw the inference that the address was merely used by him as a postal or correspondence address.

28.  He produced a telephone bill dated 26 July 2006 addressed to him at that address.  There is no evidence when this telephone line was installed, though such information is not expected to be shown on the bill.  In view of his lack of credibility, I give no weight to the evidence based on this telephone bill. 

29.  He also produced an electricity bill for the months of June to July 2006 addressed to Lee Lok of No 1 Tai Po Road as evidence of his occupation of Plot 2.  However, his evidence is that he was supplied electricity by the 3^rd Defendant via a sub-meter and he did not know who was Lee Lok.  It should be noted that according to the 3^rd Defendant, he was in turn supplied electricity from Luk Kee.  It should also be recalled that “Lee Lok” is the alias of Lee Ho Kwong of Luk Kee.  The likelihood is that Plot 2 and Plot 3 were within the Subject Land occupied by Luk Kee and hence supplied electricity from Luk Kee.  This bill actually supports the Plaintiff’s case that Plot 2 is within the Subject Land rented to Luk Kee.  That evidence is probably produced to rebut Mr Lee’s suggestion that there was no such address as No 1 Tai Po Road.

30.  I conclude that none of those evidence supports the 2^nd Defendant’s case that he had exclusive possession of Plot 2.

The 3^rd Defendant’s use of the address of No 1 Tai Po Road

31.  The 3^rd Defendant relies heavily on his address as shown in his daughter’s birth certificate issued on 18 July 1972, the Secondary School Places Allocation Form of his son dated 7 May 1987 as evidence of his occupation of Plot 3.  These were contemporaneous documents and supportive of his evidence that he was residing at that address at the material time.  But the usefulness of these documents to the 3^rd Defendant is negated by my finding of his incredibility and that the address was indeed the address of Luk Kee.  The 3^rd Defendant said that he was living at that address with his wife and family, though that was said in the context that Luk Kee was not located at that address.  The inevitable conclusion must be that he was residing at the address of Luk Kee with the permission or licence of his father-in-law and then Lee Sui Lin, who were the proprietors of Luk Kee.  According to Lee Sui Lin’s affirmation filed in support of Luk Kee’s defence in HCA 3779/1995, she averred that she was living in the Subject Land leased from the Plaintiff with the 3^rd Defendant and their children.  His wife’s affirmation also discredited the 3^rd Defendant.

32.  Similarly, the 3^rd Defendant relies on various electricity bills and water bills as evidence of his exclusive possession of Plot 3.  For the same reason, the inference raised by those bills is just neutral.  In fact, the water bills were even destructive of his case.  The bills were addressed respectively to Lee Lok and Lee Ho Kwong of No 1 Tai Po Road.  This evidence supports my finding that that address is the address of Luk Kee.  The electricity bills and water bills only proved that the 3^rd Defendant is residing in the Subject Land leased to Luk Kee.

33.  I have no doubt that 3^rd Defendant resided in the Subject Land, but he did so only as a member of the household of Lee Ho Kwong.  He did not have exclusive possession of Plot 3 until at the earliest on 1 January 1995 when the 1982 oral tenancy agreement expired or when Luk Kee abandoned the Subject Land after April 1998.  There is no evidence when Luk Kee actually abandoned the Subject Land, but certainly not before April 1998 as it was still resisting the Plaintiff’s execution of the writ of possession at that time.   

Whether the 2^nd Defendant has established adverse possession

34.  The 2^nd Defendant’s evidence is that he moved into Wo Hop Shek Village in 1960s.  He rented a piece of land for a few baskets of rice grain per year and lived there until it was resumed by the Government.  Then someone introduced him to rent Plot 2.  He rented it at the beginning and later bought it for a few baskets of rice grain in about 1979.  He admitted that he was not purchasing the land from the legal owner but someone who merely had been using the land before him.  He built a hut and operated his furniture business there.  Occasionally, he worked as a casual labourer and painter for Luk Kee or others.  His evidence is vague and disconcerted.  I give him generous allowance because of his old age.  However, he has been shown to be lying when asserting that Plot 2 was distinct from the land where Luk Kee operated.  He was clearly dishonest.  His evidence about paying for his rent and for purchase of Plot 2 by a few baskets of rice grain in 1979 is unbelievable.  Such barter trade could not have existed even in the New Territories in 1979.  He was exaggerating his evidence by giving it an old flavour.  I do not believe in his evidence.

35.  I have no doubt that the 2^nd Defendant was a resident in Wo Hop Shek Village and was very familiar to Luk Kee.  He used the address of Luk Kee, i.e. No 1 Tai Po Road, as his correspondence address.  But I reject his evidence that he had bought Plot 2 from someone in 1979 for a few baskets of rice grain.  Whether he had actually resided in Plot 2 at all and since when is irrelevant.  I do not accept his evidence that he had exclusive possession of Plot 2 since 1979.  Luk Kee was still in possession of Plot 2 as part of the Subject Land in April 1998 when it resisted execution of the writ of possession.  Thus, the 2^nd Defendant could not have exclusive possession of Plot 2 until at the earliest since 1 January 1995 or after April 1998.  In view of the way the defence is run, there is simply no credible evidence when his exclusive possession actually began.  For reasons as explained in paragraphs 10, 17 and 18, even if he had exclusively possessed Plot 2 since the termination of the tenancy of Luk Kee on 1 January 1995, he could not establish his adverse title over Plot 2 by 3 June 2005 when the Plaintiff commenced the action.  He has failed to discharge the burden of proving adverse possession against the Plaintiff.  

Whether the 3^rd Defendant has established adverse possession

36.  The 3^rd Defendant’s evidence is that he bought Plot 3 from an old woman who used to rent him the piece of land.  The crucial part of his evidence is that Plot 3 is opposite to and distinct from the land occupied by Luk Kee.  His evidence is only to be rejected once I accept Shek’s evidence, which I do, that Plot 3 in fact formed the major part of the Subject Land rented to Luk Kee under the 1982 oral tenancy agreement.  I have no doubt that the 3^rd Defendant resided in the Subject Land.  But he did so as part of the household of the tenant Lee Ho Kwong or Lee Sui Lin.  As such, his possession was neither exclusive nor adverse to the Plaintiff, until the tenancy was terminated on 1 January 1995 or when Luk Kee abandoned possession of the Subject Land after April 1998. 

37.  Mr Lee submits that the 3^rd Defendant is a licensee of Luk Kee.  Then, Mr Shum raises a pleading point under Order 18 rule 8(1) and rule 12(1) of the RHC that if a party has a special ground of defence or an affirmative case to destroy a claim or a defence, he must specifically plead it together with sufficient particulars.  He submits that Mr Lee may not rely on the fact that the 3^rd Defendant was a licensee as this point has never been pleaded.  With respect to Mr Shum, his argument is misconceived.  The 3^rd Defendant bears the burden of proving adverse possession of the land which he claims.  If the facts which he proved shows he occupied the land as a licensee, he failed to discharge the burden of proof.  Mr Lee is entitled to submit that the 3^rd Defendant failed to discharge the burden of proof for the reason that his occupation was not adverse to the Plaintiff because he occupied with the permission or license of the Plaintiff’s tenant.  The 3^rd Defendant launched his case that he has exclusively occupied a piece of land not leased to Luk Kee.  He failed and landed back on the same piece of land which had been leased to Luk Kee where he lived as part of the household of the proprietor of Luk Kee.  With or without identifying him as a licensee of Luk Kee, he has failed to discharge his burden of proving that his occupation was adverse to the Plaintiff. 

38.  In view of the way the defence was run, there is no evidence when the 3^rd Defendant ceased to be a licensee of Luk Kee and had exclusive possession of Plot 3.  As Luk Kee was still resisting execution of the writ of possession in April 1998, the 3^rd Defendant could not have acquired exclusive possession prior to that date.  Even assuming (and I am not making any such finding) that he had somehow displaced Luk Kee, his possession could not be adverse to the Plaintiff until the tenancy expired on 1 January 1995.  The Plaintiff commenced action on 3 June 2005, well within the twelve years limitation period.  The 3^rd Defendant has failed to discharge the burden of proving adverse possession against the Plaintiff.  

Whether new members have been born to the Plaintiff t’ong within twenty-four years prior to the commencement of the action

39.  Even assuming that the Defendants were able to establish adverse possession, Mr Lee submits on the principle of Leung Kuen Fai that the defence would be defeated by the interest of new members born to the Plaintiff t’ong within twenty-four years prior to the commencement of the action, i.e. since 3 June 1981.  Mr Shum submits that the burden of proof is on the Plaintiff and the Plaintiff has failed to adduce evidence of birth dates of the relevant alleged new members and evidence that they are living at the time of trial.  I have rejected Mr Shum’s argument in respect of the second requirement.  I hold that proof that such new members are living at the time of issue of the Originating Summons suffices. 

40.  In the Re-Amended Reply and Defence to Counterclaim filed on 14 February 2008 (hereinafter referred to as “Re-Amended Reply”), the Plaintiff pleaded that twelve new members, with their names and birth dates, were born to the Plaintiff t’ong between 30 July 1973 and 14 March 2003 who are surviving and entitled to the interest in the Subject Land.  On 4 October 2008, the Plaintiff’s solicitors wrote to the Defendants’ solicitors asking them to admit certain facts.  Enclosed in the letter, among other things, are a copy of birth certificate of Tsang Paul Yeu-Kwong showing his date of birth as 13 June 1975 and copies of identity cards of five of the new members with dates of birth between 1957 and 1981.  They requested admission in the follow terms:

“In order to save unnecessary time and costs, the Plaintiff hereby serves on your clients through you a notice, in pursuance of Order 27 rule 2 of RHC, requiring the 2^nd and 3^rd Defendants to admit the fact that:-

(a)   “Sam Tsoi & Co.” is a registered Tso Tong registered respectively in the North District Office and Tai Po District Office in accordance with the New Territories Ordinance (Cap.97).

(b)   Members as listed in the said member list of “Sam Tsoi & Co.” as at 25/6/2008 are the surviving beneficiaries under Sam Tsoi & Co. Tso.”

41.  On 17 October 2008, the Defendants’ solicitors replied as follows:

“The 2^nd and 3^rd Defendants, for the purpose of these proceedings only, hereby admit that:-

  1.    according to the 2 letters issued by North District Office dated 28 September 1999 and 7^th August 2008 respectively, Sam Tsoi & Co (“Sam Tsoi”) is a registered Tso Tong registered under the New Territories Ordinance; and

2.    according to the member list of Sam Tsoi dated 25^th June 2008 verified by Tsang Wing Kit Eric and Tsang Tang Chau, the surviving beneficiaries of Sam Tsoi as at 25^th June 2008 are those set out in the said list.”

42.  Mr Shum submits that such formal admission is inadequate.  He argues that the Plaintiff has the duty of proving birth by showing the relevant birth certificates and survivorship as at the date of trial.  I have rejected his submission about proof of survivorship as at the date of trial.  But I have to agree with him that the formal admission is inadequate.  The admission is only an admission of existing members.  But there is no admission as to which of those existing members are new members born to the t’ong since 3 June 1981.  The birth certificate of Tsang Paul Yeu-Kwong shows he was born on 13 June 1975.  His right to take action was extinguished.  Of the copies of five identity cards produced, only one shows that it bearer, namely Tsang Hing Yi Herrison was born on 20 July 1981, within twenty-four years prior to the commencement of the action.  But no admission has been sought of his date of birth, though the Defendants admitted that he is a surviving member as at 25 June 2008.  No evidence has been adduced in respect of the other six members pleaded in the Re-Amended Reply.  Accordingly, there is no evidence of any new member born to the t’ong within twenty-four years prior to the commencement of the action.  The Plaintiff’s solicitors set the terms of the admission sought.  They did not seek admission of the date of birth of Tsang Hing Yi Herrison.  They would have to adduce such evidence at trial if they wish to rely on the interest of Tsang Hing Yi Herrison.  The Defendants’ solicitors have no obligation to assist the Plaintiff to prove its case by admitting more than what they were asked to admit.  If the Defendants succeed in proving adverse possession, their claim will not be defeated by the interest of any member born to the t’ong through lack of evidence.

Conclusion

43.  Accordingly, I find that the Plaintiff is the registered and legal owner of the Subject Land which had been leased to Lee Ho Kwong and later to Lee Sui Lin trading as Luk Kee Furniture under an oral tenancy agreement since 1982.  The tenancy was terminated on 1 January 1995 by the Plaintiff’s notice to quit. Plot 2 and Plot 3 which the 2^nd and 3^rd Defendants claim to have exclusive possession of formed the entirety of the Subject Land.  Luk Kee was in lawful occupation of the Subject Land until the 1982 oral tenancy agreement was terminated on 1 January 1995 and then wrongful occupation of the Subject Land at least until April 1998.  Before either of those dates, the 2^nd and 3^rd Defendants could not have exclusive possession of the respective plots of land which they claimed.  They have failed to discharge the burden of proving exclusive possession of the respective plots of land.  Even if they had exclusive possession, such possession was not adverse to the Plaintiff until 1 January 1995 or April 1998.  The relevant limitation period is twelve years.  The action was commenced on 3 June 2005.  The Plaintiff’s claim is not time-barred.  As the 2^nd and 3^rd Defendants have no title and their occupation of their respective plots of land was without the consent of the Plaintiff, the Plaintiff is entitled to judgment with costs. 

44.  The 2^nd and 3^rd Defendants counterclaim for a declaration that the Plaintiff has lost the right to bring any action to recover the respective plots of land which they claimed exclusive possession of and that the Plaintiff’s title, rights, benefits and interests had been extinguished in favour of the 2^nd and 3^rd Defendants.  In view of the conclusion reached above, the Defendants’ counterclaim must also be dismissed with costs.

45.  Accordingly, I grant the Plaintiff an order of possession of the Subject Land and an order that the Defendants do remove their personal properties from the Subject Land within fourteen days hereof.  I also award the Plaintiff nominal damages of $5,000 against the 2^nd Defendant and $10,000 against the 3^rd Defendant, with interest at judgment rate from 3 June 2005.  Having granted an order of possession and damages, I do not consider a declaration and other relief necessary.  The 2^nd and 3^rd Defendants’ counterclaim is dismissed. 

46.  I also make a costs order nisi that the 2^nd and 3^rd Defendants shall pay the Plaintiff’s costs in this action.  The 2^nd and 3^rd Defendant’s own costs shall be taxed in accordance with Legal Aid Regulations.  All costs are to be taxed if not agreed.