TSANG SIU TUNG v. THE INCORPORATED OWNERS OF ARGYLE HOUSE

HCA 166/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 166 OF 2012

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BETWEEN

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J U D G M E N T

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1.  This is an appeal by the defendant against Master Lai’s decision dated 12 September 2012 that dismissed its application to strike out the statement of claim.

2.  The defendant’s application was made pursuant to Order 18, rule 19(1)(a) of the RHC that the statement of claim disclosed no reasonable cause of action.  As expressly provided by Order 18, rule 19(2), no evidence shall be admissible on the application.   It is thus imperative to examine the statement of claim closely to see if it has or has not disclosed any reasonable cause of action.

3.  The plaintiff claims against the defendant for a declaration that the title of all owners of the Remaining Portion of Kowloon Inland Lot No 2245 known as No. 43 Argyle Street to the premises called “Shop South” on the ground floor is extinguished, by virtue of section 17 of the Limitation Ordinance. 

4.  In the statement of claim, Shop South is described as in the middle portion of the common parts on the ground floor of No. 43 Argyle Street.  The genesis of the claim as pleaded started with an assignment dated 19 November 1980 whereby Wan Yiu Sun (“Wan”) and Ho Chau Yee (“Ho”) became the owners of the two shops at the front and rear portions on the ground floor of No. 43 Argyle Street.  The other relevant parts of the statement of claim are set out below.

“9. On a date unknown to the Plaintiff shortly after November 1980, Wan and Ho entered into and took possession of an area at the middle portion on the ground floor of No. 43 where the lavatories and the adjacent open area were situated as shown in Plan A annexed hereto coloured pink.

10. Wan and Ho demolished the lavatories and converted the area with the adjacent open area into a shop (hereinafter referred to as ‘The Shop’) and let or licensed it to one Sun Wah Medicine and Herb (‘Sun Wah’).

11. By an assignment dated 21^st December 1981, Wan and Ho sold the shop at the front portion (also known as Shop A) of ground floor of No. 43 to Lui Kwai Chiu (‘Lui’) who also with the consent of Wan and Ho began to collect rent/license fee for The Shop from Sun Wah.

12. When Sun Wah vacated The Shop, Lui recovered and took possession thereof.

13. Lui then let or licensed The Shop first to Mak Sui Kuen, and later to Tsui Wang Hing (‘Tsui’) who was let into possession in about 1985.

14 The Defendant is the Incorporated Owners of No.43 incorporated on 9^th January 1989.

15. By a written agreement in Chinese dated 16^th March 1989 when Tsui was still in possession, and in consideration of the amount of HK$620,000.00 paid by the Plaintiff and Tsui to Lui, Lui agreed to ‘sell’ The Shop to the Plaintiff and Tsui, both parties acknowledged that Lui had no title to The Shop.

16. By an agreement between the Plaintiff and Tsui, the Plaintiff agreed to buy out Tsui’s interest in The Shop, and Tsui delivered possession of The Shop to the Plaintiff in or about April 1989.

17. Since about April 1989, the Plaintiff has been in possession of The Shop to the exclusion of all the world including the Defendant and all owners of No.43, such possession being adverse to the Defendant and all owners of No.43.

18. The Plaintiff has since April 1989 been enjoying all incomes from letting or licensing The Shop to Tat Cheong Building Materials Company Limited (‘Tat Cheong’) which was at all material times a company beneficially owned and controlled by the Plaintiff, again to the exclusion of the Defendant and all owners of No.43.

19. The rights of the owners of No.43 in relation to The Shop are by virtue of s. 16 of the Building Management Ordinance, Cap.344 since its incorporation exercised by the Defendant to the exclusion of the owners.

20. On or about 16^th March 1990, the Defendant commenced proceedings in the Tsuen Wan District Court under Action No.1180 of 1990 against Tat Cheong to recover possession of The Shop.

21. In or about February 1991, in consideration of, inter alia, the Plaintiff agreeing to give up possession of part of The Shop to the Defendant for use as a caretakers office, the Defendant agreed to, and withdrew its claim against Tat Cheong.

22. The Plaintiff then partitioned off and delivered part of The Shop to the Defendant for use as a caretakers office, and Tat Cheong continues to remain in exclusive possession of the remaining part of The Shop as shown in Plan B annexed hereto coloured pink hatched black (hereinafter referred to as ‘Shop South’) adverse to the Defendant and all owners of No.43.

23. In or about 2002, Tat Cheong delivered possession of Shop South to the Plaintiff who continues to remain in exclusive possession thereof adverse to the Defendant and all owners of No.43.

24. More than 12 years has elapsed since the right of action first accrued to the Defendant or any other owners of No.43 to recover Shop South.”

5.  Mr Wang, for the defendant, presents a two-pronged argument.  First, the plaintiff was and has been a licensee, as opposed to an adverse possessor; and secondly, irrespective of whether the plaintiff is a licensee, he cannot be said to have the intention to possess Shop South to the exclusion of all others. 

6.  Mr Wang puts his case as that the plaintiff has admitted that he gained access to Shop South by paying Lui a sum of $620,000 together with another licensee Tsui in exchange of Lui’s permission (para 15 of the statement of claim).  No conveyance is ever alleged to have been made.  Therefore, the plaintiff can only be said to have taken occupation of Shop South as the licensee of Lui, in the same position as Tsui who has been expressly pleaded (in para 13 of the statement of claim) as a licensee of Lui. 

7.  Mr Wang further argues that it is clear from the statement of claim that the plaintiff is only a licensee who entered into Shop South upon voluntary payment of $620,000 and that having paid for his occupation, the plaintiff cannot now be heard to assert that he intended to exclude the whole world and hence he does not possess the requisite animus possidendi for claiming adverse possession.  It is a lack of the required intention, without which the plaintiff can never succeed in claiming adverse possession.

8.  Mr Wang relies on a number of authorities, notably Wong Tak Yue v Kung Kwok Wai David & Anor [1998] 1 HKLRD 241 (CFA).  He directs my attention to Litton PJ’s judgment where it was held that the burden was upon the trespasser “to establish his intention to exclude the whole world”.  The learned judge went on, at p251D:

“Here, the appellant has come nowhere near establishing adverse possession. He unequivocally declared that at all times he was ready willing and able to pay rent to the owners, and did not do so only because no one came along on behalf of the landlords to collect the rent. … the fact remains that he had no intention to exclude the owners.”

9.  Mr Wang stresses that since a willingness to pay rent (or licence fee, as the case may be) defeats adverse possession, a fortiori in the present case, the plaintiff (with Tsui) not only had the intention to make payment for his possession of the premises but had also actually paid a sum to Lui to obtain possession.  Thus, the plaintiff’s pleaded case is contrary to the intention of his having adverse possession, let alone having an unequivocal intention.

10.  I have earlier set out a major part of the statement of claim in order to show that Mr Wang’s argument that the plaintiff is clearly a licensee of Shop South is unsubstantiated.  It is not so specifically pleaded and indeed the plea in para 15 of the statement of claim that

“in consideration of the amount of HK$620,000.00 paid by the Plaintiff and Tsui to Lui, Lui agreed to ‘sell’ The Shop to the Plaintiff and Tsui, both parties acknowledged that Lui had no title to The Shop”

is obviously opposed to the idea that either Tsui or the plaintiff was merely a licensee vis-à-vis Lui subsequent to and consequent on the payment.

11.  The fact that there was no conveyance by Lui to the plaintiff and Tsui is also reflected by the plea is that the plaintiff and Tsui of the one part and Lui of the other acknowledged that Lui had no title to The Shop (that included Shop South).  Yet this does not in any way help the defendant’s case on this appeal.

12.  I have not been able to discern any material in the statement of claim, as properly understood, that contradicts the plaintiff’s intention of adverse possession, as Mr Wang has submitted.

13.  One does not need any reminder that it is only in plain and obvious cases that the court should exercise its summary powers to strike out a pleading under Order 18, rule 9 – see para 18/19/4 of Hong Kong Civil Procedure, 2012, Vol 1.  I am not persuaded that the plaintiff’s claim of adverse possession of Shop South is plainly unsustainable.  This is not a clear case that the statement of claim discloses no reasonable cause of action.  The Master was correct in dismissing the defendant’s application, and for me, there is no other alternative but to dismiss the defendant’s appeal.

14.  Counsel for the parties have agreed that costs should follow the event.  I therefore make an order that the defendant’s appeal be dismissed with costs.