PARKMOST LTD v. WONG YEUNG ON AND ANOTHER

CACV 53/2008 & CACV 383/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEALS NO. 53 AND 383 OF 2008

(ON APPEAL FROM HCA NO. 1193 OF 2006)

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BETWEEN

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(By counterclaim pursuant to the order of Master Q Au-Yeung dated 10^th January 2007)

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JUDGMENT

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Hon Tang VP (giving the judgment of the Court):

1.  Nos. 17 and 19, Yik Yam Street, Happy Valley, Hong Kong (“the building”), was a pre-war building with 4 storeys divided into 8 residential units. It was registered in the name of one Ng Hop Yick in the 1930s. He died in 1941. The property was then registered in the name of his executrix Ng Chan Shi on 29 May 1947. Ng Chan Shi assigned the building to Ng Chuek Lau and Ng Chuek Jing as tenants in common (“the Ngs”) on 4 December 1968 and registered the assignment in the Land Registry by memorial No. 657063.

2.  On 10 August 1998, one Chan Kwok Yun (“Chan”) issued proceedings in HCMP 3929 of 1998 against Ng Chan Shi, Ng Chuek Lau and Ng Chuek Jing for declarations under the Limitation Ordinance, Cap. 347, to the effect that the title of the Ngs had been extinguished and Chan had acquired the interest by adverse possession. On 16 July 1999, Deputy Judge Muttrie made the relevant declaration. The sealed order was filed on 30 July 1999 and registered in the Land Registry on 3 August 1999.

3.  On 4 August 1999, Chan sold the building to the plaintiff Parkmost Limited (“Parkmost”) for $9 million dollars.

4.  On 22 March 2006, Parkmost issued proceedings against one黃哲聰, deceased, for vacant possession of the 1^st Floor of No. 19, Yik Yam Street, Happy Valley (“the premises”), after service of a one-year transitional notice of termination on the 1^st / 2^nd defendants on 23 February 2005 pursuant to section 5(2) of the Landlord and Tenant (Consolidation)(Amendment) Ordinance 2004. The claim was eventually transferred to the High Court and became HCA 1193 of 2006. The 2^nd defendant, Wong Yeung On（黃養安）(“Wong”), is the personal representative of 黃哲聰 and a son of the deceased. Wong is a professional architect. He was added as the 2^nd defendant.

5.  In the same proceedings, the defendants counterclaimed against Parkmost as the 1^st defendant by counterclaim. There are 6 other defendants by counterclaim. The 2^nd defendant by counterclaim is American Harvester Investment Limited (“American Harvester”) together with 7 named individuals, who were directors of American Harvester. The 3^rd defendant by counterclaim is Southern Harvester Finance Ltd (“Southern Harvester”) together with 6 individuals already named, the directors of Southern Harvester. The 4^th defendant by counterclaim is Lee Chow Kee (Holdings) Limited (“Lee Chow Kee Ltd”) and 3 named persons as directors; the 5^th defendant by counterclaim, is Lee Chun Kong, the 6^th defendant by counterclaim is Lai Sin Cheong and Chan, the 7^th defendant by counterclaim.

6.  According to the 2^nddefendant, his parents, who are both deceased, rented the premises in 1941 from the Ngs family. During the Japanese occupation of Hong Kong, the Ngs family fled to the Mainland. The 2^nd defendant and his parents stayed behind and took care of the property for the Ngs family. No rent was required to be paid. At para. 4 of the Defence and Counterclaim, it was alleged:

“4.  … When the Ng Family returned after the War, they promised to rent the premises to the Defendant's parents at a small sum for gratitude and said that provided rent is paid, it is life-long and there is no termination of the tenancy.”

7.  The defendants' case is that because the Ngs family had disappeared since May 1978, they claimed adverse possession of the premises on the basis that they had lived there for more than 12 years. The defendants also claimed a refund of all the payments made since May 1978 to various persons including Chan amounting to $190,000. Various rent receipts have been produced, for example, one dated 4 May 1978 for two months' rent from 1 May 1978 to 30 June 1978 for $108. It appears that the rent had remained at $54 per month perhaps until December 1989. By January 1990, it had gone up to $960.60 inclusive of rates, where it remained until February 2006. It appears from the cheques produced on behalf of Parkmost that Wong had paid rent by cheques signed by Wong and made payable to Parkmost. It also appears from the rent receipts produced by Wong that the rent receipts were issued to the 1^st defendant by name. The last payment of rent was made to the plaintiff by Wong by cheque dated 6 February 2006. (See Exhibit LCK-9 referred to the Affirmation of Lee Chung Keung filed on 13 March 2007.) The plaintiff ceased to collect rent from February 2006.

8.  It appears that one basis of the counterclaim is that Chan had been collecting rent for the various defendants by counterclaim. It is also Wong's case that he had been misled in that he thought rent was being collected on behalf of the Ngs family.

9.  By summons dated 13 March 2007, Parkmost sought summary judgment against the 1^st and 2^nd defendants as well as for an order under O. 18 r. 19(1) to strike out their Re-Amended Defence and Counterclaim on the grounds that it “does not disclose any reasonable defence and/or the Re‑Amended Counterclaim does not disclose any reasonable cause of action” or that it is “an abuse of the process of the Court”. It also asked:

“(3)  that the time for filing the Plaintiff's Reply and Defence to Counterclaim and the time for filing the Defence to Counterclaim of the 2^nd to 7^th Defendants to Counterclaim by extended until 10 days from the date of final determination of this summons;”

10.  There was an earlier summons by the defendants for summary judgment on the Re‑Amended Counterclaim dated 6 March 2007. By this summons the defendants as plaintiffs by counterclaim asked:

“… for a Summary Judgment that all the Defendants of the Counterclaim did not file their Acknowledgment of Service within 14 days upon receipt of the Re‑amended Counterclaim and also did not file in their Defence within 14 days after”.

11.  Both summonses went for hearing before Master Hui.

12.  By order dated 28 June 2007, Master Hui dismissed the 1^st and 2^nd defendants' application for summary judgment by summons filed on 6 March 2007. By an order of the same date, pursuant to the plaintiff's application by summons filed on 13 March 2007, Master Hui ordered that the defendants' Re‑Amended Defence and Counterclaim in relation to adverse possession regarding the premises be struck out. By a Notice of Appeal to a judge in chambers dated 23 August 2007, the 1^st and 2^nd defendants appealed these orders of Master Hui. This appeal was heard by the Deputy Judge L Chan whose decision was given on 16 January 2008. The appeal from Deputy Judge L Chan's decision is CACV 53 of 2008 (“the first appeal”).

13.  Also by an order dated 28 June 2007, Master Hui adjourned the hearing of the plaintiff's application for summary judgment and the application to strike out the other claims in the counterclaim to a date to be fixed.

14.  That was eventually heard by Master Hui on 4 March 2008. By an order of 4 March 2008, the 1^st and 2^nd defendants were ordered to give vacant possession of the premises to the plaintiff as well as mesne profits at a rate of $6,800 per month from 1 March 2006 to the date when vacant possession is delivered up. However, Master Hui did not strike out other parts of the counterclaim. By a Notice of Appeal filed on 18 March 2008, the defendant appealed against Master Hui's decision of 4 March 2008. That appeal was dismissed by Deputy Judge L Chan on 1 December 2008. The appeal from that decision is CACV 383 of 2008 (“the second appeal”).

15.  On 11 June 2008, Yeung JA ordered the defendants to provide security for costs in respect of the first appeal in the sum of $250,000 within 21 days of the order. Security was not provided and as a result, the first appeal was dismissed. By a summons dated 19 January 2010, the defendants asked this court to set aside Yeung JA's order.

16.  In relation to the second appeal, on 23 April 2009, Yeung JA also ordered the defendants to pay security for costs in the sum of $200,000. On 2 June 2009, the defendants paid the money into court.

17.  In the meantime, vacant possession of the premises was recovered on 24 December 2008. According to the plaintiff, they had commenced redevelopment in July 2009 and the building was demolished in October 2009.

18.  As noted, by the summons dated 19 January 2010 the defendants sought to set aside Yeung JA's order for security for costs in relation to the first appeal. It is clear that it was within the discretion of Yeung JA to order security for costs. There is no satisfactory explanation from the defendants regarding the delay in appealing the order of security for costs. Nor explanation why the security was not provided. We can see no basis to set aside the order of Yeung JA. We would dismiss the summons dated 19 January 2010.

The second appeal

19.  This is an appeal against the order giving vacant possession to the plaintiff. This is what Deputy Judge L Chan said in his decision of 1 December 2008.

“11.  The Defendants' arguments in the appeal are the same as the grounds used in support of their counterclaim for adverse possession.  Since their counterclaim for adverse possession has been struck-out, the same grounds cannot assist them in defence of the Plaintiff's claim for possession.  The reasons of refusing these grounds for adverse possession are contained in my decision given on 16 January 2008 and I am not going to repeat them.  The Defendants have therefore failed to state any ground to resist the Plaintiff's claim for possession.”

20.  The defendants repeated the complaint before us that the plaintiff had failed to file a Reply and Defence to Counterclaim within the time limit provided by the rules. This has been dealt with by Deputy Judge L Chan. This is what he said and with respect, we agree.

“14.  I also refer to the Defendants' complaint that the Plaintiff has failed to file a reply and defence to counterclaim within the time limit provided by the Rules of the High Court.  This is strictly not a matter relevant to this appeal.  Nevertheless, I note that to the extent of the claim of adverse possession is concerned, that has been struck-out and no reply or defence to counterclaim in respect of that is necessary.  Regarding the remaining parts of the counterclaim, Master Hui has on 17 June 2008 given the Plaintiff another 14 days to file and serve the reply and defence to counterclaim.  The Plaintiff has duly done so on 30 June 2008.”

21.  In any event, the defendants' claim for adverse possession is hopeless. It is clear that the 1^st defendant was a tenant. Even if there was a life tenancy in favour of the 1^st defendant and his wife, both the 1^st defendant and his wife are dead.

22.  The defendants alleged that Chan and the companies which he allegedly represented, namely, American Harvester, Southern Harvester and Lee Chow Kee Ltd, had falsely pretended to be the agents of the Ngs family after their disappearance in about May 1978. He said:

“15.  … Chan and the companies he represented had falsely pretended to be the agent of the Ng Family and had not disclosed to him the disappearance of the Ng Family for 26 years since May 1978. …”

23.  The names of American Harvester had appeared on some of the rent receipts as collector “經手收銀人”. On the back of the rent receipt for July 1978 was the Chinese name of Lee Chow Kee Ltd.

24.  The learned judge has dealt with the 2^nd defendant's allegations fully in his judgment of 16 January 2008. He said the 2^nd defendant's story was not credible (Para. 28). With respect, we agree.

25.  It is beyond argument that the defendants' claim to adverse possession is hopeless. As noted the defendants had paid rent all these years and in the latter years to Parkmost. The defendants are estopped from denying Parkmost's title. Ever supposing that the Ngs have a better title, that would not avail the defendants. We note that at one time Deputy Judge L Chan had adjourned the hearing to enable the defendants to apply to intervene in HCMP 3929 of 1998, and that there was an unsuccessful attempt to do so. Be that as it may, in our view, the relative strength of Parkmost's title vis-à-vis the Ngs would not in any event have helped the defendants.

26.  For the above reasons, we also dismiss the second appeal as well as the summons to set aside the order of Yeung JA in the first appeal.

27.  Costs should follow the event and we make an order that the 1^st and 2^nd defendants pay the costs of the plaintiff in the second appeal and as well as of the summons dated 19 January 2010 in the first appeal.