LI KWONG SING AND OTHERS v. PERSON(S) UNKNOWN IN OCCUPATION OF PART (AS MARKED IN ORANGE IN THE ATTACHED PLAN) OF LOT NO. 2223 IN D.D. 76, NORTH, NEW TERRITORIES AND ANOTHER

DCMP 845/2019

[2024] HKDC 142

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 845 OF 2019

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JUDGMENT

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INTRODUCTION

1.  This action concerns the plaintiffs’ claim for the recovery of possession of land against the 1^st and 2^nd defendants and the 2^nd defendant’s counterclaim for adverse possession.

2.  The plaintiffs are the descendants of 李善慶堂 (“the Tong”), which owned quite a number of parcels of land (over 100 land lots) in Ko Po North (高埔北) and nearby in Fanling, New Territories. They also own some other parcels of land in their personal capacity as natural persons in the same locality, such as the land concerned in this action, known as Lot No 2223 in Demarcation District No 76, North, New Territories (“the Lot”). Most of the lands (the Lot included), whether owned by the Tong or by the plaintiffs themselves, were rented out for rental purposes. Whilst there is a manager of the Tong to manage all the tong lands, the other individual lots owned by the plaintiffs would also be managed by the same manager, although in such situation the manager was acting as a personal representative appointed by the plaintiffs. Nevertheless, the Lot is not a tong land.

3.  It is not disputed that the plaintiffs are the landlords and registered owners of the Lot and, according to the land search records, they inherited the Lot as heirs or devisees, through succession to property or deed of gift, and administratrix of the deceased predecessors-in-title or ancestors.

4.  The subject area in dispute in this action is located within the Lot. For identification purposes, I shall refer to the plan annexed to the Originating Summons for Possession filed on 11 March 2019 (see Appendix 1 hereto) and the plan marked as Exhibit P1 produced by the plaintiffs at trial (see Appendix 2 hereto). Appendix 1 is the plan originally relied on by the plaintiffs in claiming against the defendant, being the unknown person(s) in occupation of the land as shown in orange on the plan (“the Orange Area”). After the 2^nd defendant being joined to the proceedings, Appendix 2 is the revised plan in which the plaintiffs adopted the plan annexed to the 2^nd defendant’s Amended Defence and Counterclaim where the 2^nd defendant counterclaimed the encroached area in pink (“the Pink Area”), and the plaintiffs added on that plan Area 1, Area 2, and Area 3 in blue (“the Blue Area”) replacing the Orange Area against the unknown occupiers, namely the 1^st defendant.

5.  As the 1^st defendant has never appeared in these proceedings, the main area in dispute in this action is the Pink Area of approximately 288 square meters with a temporary structure (“the Hut”) being built thereon by the 2^nd defendant’s father.

6.  The address of the Hut was 69B Ko Po North Tsuen (as shown in the 2^nd defendant’s marriage certificate). Only after the extended part of it was sold as 69B in 2003, the electricity supply company CLP Power (“CLP”) named the place of the Hut as 71C. As expected, the timing of which CLP named the Hut as 71C is also in dispute.

THE 2^ND DEFENDANT’S CASE

7.  In late 1950s, the 2^nd defendant’s father Mr Yeung Siu Lun (楊兆麟), also known as Yeung Lun (楊粦), Yeung Sui Loon (楊兆粦) and Chau Hon Ping (周漢平) (“the father” or “Yeung Lun”) had migrated from Mainland China to Hong Kong.

8.  In 1959, on the introduction of the 2^nd defendant’s uncle Li Chun (李春), the father rented a piece of farmland in Ko Po North Tsuen (高埔北村) from the plaintiffs on a yearly basis. The father was illiterate. All he wanted was to rent the farmland for cultivation, to raise pigs, and to have a place to live. The said farmland consisted of the Pink Area and an extended area of approximately one-third of the size of the Hut immediately to the east and adjacent to the Pink Area (collectively referred to as “the Rental Area”). The father had since then built several huts on the Rental Area and even beyond it.

9.  The father had paid the yearly rent (from $260 to $1,300) to the plaintiffs through Li Chun or one Yeung Kau (楊九) from 1959 to 1996. However, from 1997, he stopped paying rent and claimed that he would commence his wrongful occupation of the Rental Area against the plaintiffs. It is the 2^nd defendant’s case that the father began his adverse possession there and then.

10.  The father died on 13 January 2003 at the age of 76. It is the 2^nd defendant’s case that she either succeeded the father’s adverse possession period from 1997 (although she did not live there) or started adverse possession in her own right immediately after the father’s death. In 2003, she began to occupy the Hut as a second home for family vacations and for storage purposes until 2007. In August 2003, the 2^nd defendant sold a part of the Hut that built on the extended area to one Madam Lam Ping Kiu (藍萍嬌) at a consideration of $20,000. As such, the 2^nd defendant limited her claim of adverse possession to the Pink Area only.

11.  In 2007, the 2^nd defendant carried out a renovation of the roof of the Hut, followed by some renovation works inside.

12.  Since 2008, the 2^nd defendant has rented out the Hut to a number of immigrants or refugees from Southeast Asia. The rental agreements have been renewed several times and continue to this day.

13.  The 2^nd defendant counterclaims for a declaration that she has acquired a possessory title to the Pink Area since either 1997 or 2003, and that the plaintiffs’ right to recover possession is time-barred and the plaintiffs’ title to the Pink Area has been extinguished by the operation of s 7(2) of the Limitation Ordinance (Cap 347).

THE PLAINTIFFS’ CASE IN REPLY

14.  The plaintiffs’ case is that the father remained as a tenant at all times and the plaintiffs visited him in 1999. On that occasion, the father acknowledged that he had to pay rent to the plaintiffs, but he lamented his poor financial situation and his inability to pay rent. However, the father agreed that he would arrange for the land to be returned to the plaintiffs upon his death. Subsequently in 2001, the father was only able to pay to the plaintiffs $100 as a partial payment of the rent. In view of the father’s frail condition, the plaintiffs did not press on the matter and allowed the father to stay for the last stage of his life.

15.  In 2003, the plaintiffs visited the Hut and found it empty (believing that the father had left or passed away). The plaintiffs deny the 2^nd defendant’s counterclaim for adverse possession since 1997 or 2003.

16.  The plaintiffs do not contend that the 2^nd defendant has been using the Hut to let to other people since 2008, as it is the plaintiffs’ case that the plaintiffs have commenced legal proceedings by filing the Originating Summons on 11 March 2019 (dated 27 February 2019), and that the 2^nd defendant has to prove the requisite 12 years of factual possession at least since March 2007. The plaintiffs say that the 2^nd defendant only started to occupy the Hut sometime between July and November 2007, when she renovated the roof (as shown in the government’s aerial photographs). The rental activities at the Hut since 2008 would not be sufficient to support her claim.

SITE VISIT

17.  The court conducted a site visit to the disputed area, which I have often found to be an important part of the process, particularly in determining whether aerial photographs or survey sheets can accurately represent the case.

18.  Had the court not personally visited the disputed area, it would have erred in entering judgment against the unknown occupiers (ie the 1^st defendant) who were absent from the trial and throughout the proceedings. Further details will be provided when discussing the service of the court process on the 1^st defendant in the following section. Suffice it to say that the court appreciates the informative site visit, which effectively clarified many previously uncertain issues in the case.

19.  The disputed area was located at Ko Po North Tsuen (高埔北村), which appeared to be a peaceful and solitary area without connections with any other town centers. Nevertheless, it is conveniently located within a short walking distance of the main road, providing easy access to Fanling Railway Station in just 20 minutes by bus.

20.  Some of the houses in the area were made of stone and painted in bright white or off-white with blue window frames. However, some houses, such as the Hut in this action, were constructed using a combination of brick and iron sheets, but they were painted in striking blue with red contrasts, as these colours were preferred by the immigrant foreigners who moved in sometime in 2008. Additionally, almost all of the houses had a private garden or backyard. Each house was separated by a wire fence or brick wall, with a private entrance. They all looked very tidy and were occupied by individual families. The pathways leading to the houses were clean and well-paved. It gave the court an impression that the village was very well-managed and maintained. The aerial photographs provided by the experts confirmed that there had been minimal changes to the area’s settings since the 1990s.

21.  During the site visit, the court’s attention was drawn to the resident letter boxes located at the village’s main entrance. Each house in the village had a corresponding box number assigned to its letter box, although the house number was not displayed. It was a fact agreed upon by both parties that these letter boxes were installed only approximately 10 years ago. The original house number was causing problems with postal services, hence the change was necessary. There was also an extra-large common letter box for receiving oversized mail or documents.

22.  There was a pathway running across the whole lot from east to west in the middle of the Lot. There were four houses (if not counting the 1^st stone house) that abut the south side of that pathway. The Hut was located at the dead-end of the pathway on the western boundary, being the fourth and last of them. After the inspection of the dead-end area, the parties confidently agreed on the western boundary of the Pink Area.

23.  The main entrance of the Hut was located in the center of its front side, although it was not shown in Appendix 2. Upon entering, one could see the Hut was being converted into three sub-divided units, each comprising a living room, one or two bedrooms, a kitchen and a toilet. The unit to the left of the main entrance was identified as 71C1B by the 2^nd defendant, while the unit to the right was known as 71C1A. In front of the main door facing in the opposite direction were the common corridor and unit 71C. Outside 71C on the left was a garden area (with 2 flowerbeds implanted) seemingly to be shared with 71C1B and 71C1A. On the right of 71C, there was an L-sharp corridor with a kitchen and toilet being installed and an open-aired corridor. During the site visit, it was observed that tenants were residing in 71C1B and 71C, whereas 71C1A was unoccupied.

24.  The court’s attention was also drawn to the electricity meters and fuse boxes. It was apparent that the old style of electric switch boxes installed at 71C were of antiquity, whereas the fuse box installed at 71C1A was relatively new. The court also observed that the electricity meters of 71C1A and 71C1B were newly installed by CLP in recent years. As shown in the CLP electricity bills, those meters were marked as Hung Leng West Village (not Ko Po North Tsuen). It resolved the parties’ concern as to whether the electricity bills for the request of supply of electricity made by the 2^nd defendant in late 2007 belonged to the location of the Hut.

25.  The house immediately adjacent to the Hut was 69B Ko Po North Tsuen (as observed as roughly printed on the exterior), which was the 3^rd house on the pathway. As the 2^nd defendant claimed, it used to be part of the Hut that built on the extended area and was accessible inside from the unit or room now called 71C1B. The 2^nd defendant asserted that the father installed a partition in 1992 to separate the two areas. 69B was later sold by the 2^nd defendant to Madam Lam in August 2003.

26.  The 1^st and 2^nd houses (by counting the door entrances) along the said pathway could also be seen as individual houses being occupied by different families. These 2 houses together with 69B were later identified by the plaintiffs as structures erected on Area 1 in Appendix 2.

27.  There is another smaller pathway that ran along the southern part of the Orange Area. Walking along that smaller pathway, the court observed several other houses (front-facing to that smaller pathway), with individual fencing and air-conditioners installed. They all had a garden attached. The houses and the gardens appeared to be very well maintained. It occurred to the court that those houses were currently occupied by different individual families as dwellings. They were later identified by the plaintiffs as the structures built on Area 2 and Area 3 in Appendix 2.

SERVICE OF THE ORIGINATING SUMMONS

28.  The significance of the detailed description of the other houses is that, after conducting the site visit, it was found that the remaining Orange Area claimed by the plaintiffs against the unknown occupiers comprises four to five different individual houses, occupied by different families. This is inconsistent with what was shown in Appendix 1 as one large temporary structure extending from the Hut of the 2^nd defendant.

29.  It seemed to me that it must be wrong for the plaintiffs to name all these individual families collectively as one defendant, ie the 1^st defendant herein, being one person(s) unknown in occupation of the remaining part of the Orange Area. I doubted whether these individual families would have due notice of the proceedings.

30.  Order 113 rule 1 provides that:

“Where a person claims possession of land which he alleges is occupied solely by a person or persons (not being a tenant or tenants holding over after the termination of the tenancy) who entered into or remained in occupation without his licence or consent or that of any predecessor in title of his, the proceedings may be brought by originating summons in accordance with the provisions of this Order.”

31.  The application of Order 113 is narrowly confined to the particular circumstances described in rule 1, ie to the claim for possession of land which is occupied solely by a person or persons who entered into or remain in occupation without the licence or consent of the person in possession or of any predecessor of his (Hong Kong Civil Procedure 2024, para 113/8/2).

32.  The requirement of “occupied solely” means that, while the special procedure provided under Order 113 allows the plaintiff not to name the unknown occupiers, it does not allow the plaintiff to claim possession of land which consists of separate and identifiable premises owned by multiple groups of unknown occupiers by simply referring them as one general unknown occupier(s). Each parcel of land which is occupied solely by the unknown occupier(s) must be clearly identified, and the summons must be served separately in accordance with rule 4(2).  Order 113 should never be treated lightly as a general catch-all provision.

33.  At trial, I granted the plaintiffs leave to file a further affirmation of service to explain whether the Originating Summons had been served on each of the individual families. However, having considered the affirmation, I am still not satisfied that the Originating Summons against the 1^st defendant has complied with Order 113 rule 1 and rule 4(2). I hold that the service of the Originating Summons on the 1^st defendant was invalid.

34.  In such circumstances, and having considered the background of the plaintiffs’ case, I will order that the plaintiffs’ proceedings against the 1^st defendant be adjourned sine die with liberty to apply. There be no order as to costs between the plaintiffs and the 1^st defendant.

LEGAL PRINCIPLES ON ADVERSE POSSESSION

35.  The law of adverse possession had been summarised by Slade J in Powell v McFarlane (1979) 38 P&CR 452 and I would respectfully adopt it here.

36.  I would highlight that “what must be shown as constituting factual possession 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” (at p 471).

37.  Where the question is whether a trespasser has acquired possession, 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 (at p 472).

38.  Factual possession and intention to possess are the twin requirements for acquiring a title by adverse possession (J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419).

39.  The test is whether the alleged possessor can exercise dominion control over the land.

40.  Section 7(2) of the Limitation Ordinance provides: 

“No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person …”

Therefore, the alleged possessor has to prove at least 12 years of adverse possession in order to succeed in his claim.

41.  The burden of proof is on the alleged possessor to provide compelling evidence to support his claim. However, the standard of proof remains the civil standard, ie on the balance of probabilities.

THE WITNESSES

42.  The plaintiffs called two witnesses, Mr Li Kwok Ling (“Kwok Ling”) and Mr Li Kwong Loi (“Kwong Loi”). Kwok Ling emigrated to the UK in 1971 and only returned to Hong Kong in 2013. He was appointed as the manager of the Tong from 2015 to the present. Kwong Loi also emigrated to the UK in 1968 and came back in 1996 (at the age of 46). He was the manager from 1999 to 2014.

43.  The 2^nd defendant gave testimony on her own behalf. She was born in Mainland China and arrived in Hong Kong in 1979. She lived in the Hut with the father and therefore she was on record of the Squatter Occupancy Survey conducted in 1984/1985 in the respect of the Hut. However, it was also her case that she had moved out in 1987 after getting married. She said that her mother also lived in the Hut from 1983 to 1995 until she passed away. Her elder sister lived there from 1972 and moved out in 1989. The father passed away in January 2003 and therefore, no affirmation or witness statement had been made by the father.

44.  Both parties’ surveyor experts produced various aerial photographs and survey sheets in their Expert Reports and a Joint Expert Report. They attended the trial to render assistance upon the request of the court.

45.  As this action would largely turn on the credibility of the factual witnesses, it is pertinent to bear in mind the importance of contemporaneous documents in testing the assertions made by the witnesses.

46.  In Taishin International Bank Co Ltd v QFI Ltd [2020] HKCFI 2116, DHCJ Paul Lam SC set out the general principles that the court should apply in assessing the credibility of a witness; in particular, at para 14:

“14. In Simetra Global Assets Ltd & Another v Ikon Finance Ltd [2019] EWCA Civ 1413, Males LJ of the English Court of Appeal stressed the importance of contemporaneous documents at §48:

"In this regard I would say something about the importance of contemporary documents as a means of getting at the truth, not only of what was going on, but also as to the motivation and state of mind of those concerned. That applies to documents passing between the parties, but with even greater force to a party's internal documents including emails and instant messaging. Those tend to be the documents where a witness's guard is down and their true thoughts are plain to see. Indeed, it has become a commonplace of judgments in commercial cases where there is often extensive disclosure to emphasise the importance of the contemporary documents. Although this cannot be regarded as a rule of law, those documents are generally regarded as far more reliable than the oral evidence of witnesses, still less their demeanour while giving evidence.”

FINDINGS ON EVIDENCE

Father as tenant (1959 to 1996)

47.  The father came to Hong Kong in 1959. There is no dispute that the father had been a tenant of the plaintiffs rented through Li Chun from 1959 to 1996. Both parties accept that a tenant cannot be an adverse possessor. For the purposes of the trial, the 2^nd defendant has produced 10 odd pages of annual rent receipts issued by the representative of the plaintiffs to Li Chun or Yeung Kau in the Tong’s standard form receipts. Mr Ng pointed out that these receipts had the same date and rental period between 1972 and 1977, making it impossible for the father to have rented through both of them simultaneously, even though no address was mentioned.

48.  The 2^nd defendant admitted that she did not possess any direct knowledge of the father’s tenancy matters. She explains that she constructed the father’s case only by examining the documents she discovered in his belongings after his passing. This raises, I think, concerns about the reliability of the case. It is important to note that the father did not make any affirmation in support of a case for adverse possession before he passed away in 2003. The 2^nd defendant's evidence regarding the father's interactions with the plaintiffs appears to be hearsay.

The father’s claim for adverse possession (1996 to 2003)

49.  The 2^nd defendant said that, in 1996, the father received a letter written by one Li Kwok Ko (李國高) dated 18 May 1996 alleging the father had been wrongfully occupying part of the Lot and asked him to vacate, followed by a solicitors’ letter (undated) issued by Messrs Leung Kin & Co on behalf of the plaintiffs to the father to the same effect.

50.  Subsequently, a man who claimed to be the representative of the landowner confronted the father and accused him of selling the landowner’s land. He demanded the father to pay $200,000 for compensation and kept shouting in front of the Hut.

51.  The father therefore discussed this matter with the 2^nd defendant and her husband. The 2^nd defendant said that the man (believed to be the representative of plaintiffs) made wrongful accusation and that he displayed a very hostile attitude causing the father to feel so frightened. The father also worried about losing the Hut as the letters suggested. Upon discussion within the family, the father felt that the letters were entirely disrespectful, given that he had paid his rent on time for the past 40 years. His fear was turned into anger and decided not to pay rent to the plaintiffs, commencing his wrongful occupation which the 2^nd defendant now described as “不遷不拆”.

52.  Kwong Loi unequivocally denied any confrontation taken place, but did acknowledge that the solicitors’ letter was issued at the plaintiffs’ instruction. He confidently stated that his father, Li Kwok Hay (now deceased), was still the manager in 1996. Upon returning to Hong Kong in 1996, Kwong Loi was informed about the matter concerning Yeung Lun by his father. His father told him that it was discovered that one Yeung Lun had occupied the Rental Area which used to be rented to Li Chun after Li Chun passed away (as so informed). As the said Yeung Lun was not a person on the record of the Tong or the plaintiffs, his father instructed solicitors to issue a letter to ask him to vacate.

53.  Kwong Loi was not aware of the letter written by Li Kwok Ko. However, he pointed out that upon a closer inspection of the signature on the letter, it was signed as Li Kwok Fung (李國鳳). And there was no such person named as Li Kwok Ko in the clan. Instead, Li Kwok Fung had been a member of the District Council for 20 years and was also a former manager of the Tong. He said that it was not likely for Li Kwok Fung to confront with the father as the 2^nd defendant alleged. I accept Kwong Loi’s explanation.

The two letters

54.  It is the 2^nd defendant’s case that after having received the two letters, the father promptly asked Li Chun to prepare a letter dated 10 June 1996 (referred to as “Li Chun's Letter”) to prove that the father had been renting the land through Li Chun since 1959. The 2^nd defendant suddenly made new revelations only at the stage of oral testimony but not before, by saying that after having received Li Chun’s Letter, she had not given it to the father or the plaintiffs, which she had kept in her pocket.

55.  I reject the 2^nd defendant’s evidence that she never gave Li Chun’s Letter to the father. The tenancy had been under Li Chun’s name for the past 40 years, so it was reasonable for the father to seek Li Chun’s assistance in proving that he was the actual occupier. Her evidence is simply incredible and was in clear contradiction with her earlier evidence that Li Chun’s Letter was a proof to her father’s rightful tenancy in case the plaintiffs denied having rented to the father. Mr Ng submitted, and I agree, that Li Chun’s Letter was prepared for the only purpose to explain to the landowner and tried to settle the dispute amicably with the landowner. I find that the father kept the letter to show the plaintiffs that he was the real tenant.

56.  The 2^nd defendant made another change in her case in court again, to distance the father from Li Chun, claiming that the father paid rent directly to the Tong. It contradicts the case stated in her Defence and witness statement that the father always paid through Li Chun, and sometimes through Yeung Kau.

57.  I find that her version of account is devoid of logic and coherent narrative. Her last-minute changes in her case further undermined the reliability of her evidence as well as the inherent plausibility of her version of account in court. In any event, I find that Li Chun’s Letter is the only contemporaneous document which I consider to be an important piece of evidence, revealing the intention of the father at the material time. The 2^nd defendant is not able to state what the final outcome of the dispute was. I think that it would be more probable that the father and/or the 2^nd defendant had used Li Chun’s Letter to settle the plaintiffs’ claim. The alleged wrongful occupation “不遷不拆” by the father was contradicted by Li Chun’s Letter. I therefore find that the father did not have the requisite intention to possess against the plaintiffs.

58.  Mr But on behalf of the 2^nd defendant submitted that the Li Chun’s Letter was intended solely to refute the plaintiffs’ allegations and not as a starting point for negotiation. I disagree. If that were the case, the father would not have found it necessary to establish his previous tenancy status to the plaintiffs. I believe that a squatter would not typically feel compelled to rectify his status to the landowners before beginning his adverse possession against them. I find that the father’s claim for adverse possession must fail as he lacked the animus possidendi.

The confrontation

59.  In fact, I reject the 2^nd defendant’s evidence that there was such confrontation. It is simply incredible and does not accord with logic. If it had been the case described by the 2^nd defendant, the plaintiffs would have mentioned it in their lawyer’s or handwritten letter. Yet the two letters made no mention of such a complaint.

60.  However, I cannot exclude the possibility that there might have been some confrontation between the father and other purchasers of the huts he sold.

Other houses sold by the Father

61.  It is noteworthy from the 2^nd defendant’s evidence that, ever since the 1960s, the father had been helping his relatives to build several houses near the Rental Area. From 1980s to 1990s, the relatives were assigned public housing unit and gradually moved out from the area. Once the relatives moved out from the houses, the father would sell the houses without selling the lands. It was the 2^nd defendant’s unequivocal evidence that the father did not sell the land, he only sold the house. She referred to the three houses to the right of the Pink Area, as shown in the aerial photographs (in Area 1) which the father sold in the early 1990s.

62.  She said that the father had told her that there was a clear distinction between the land and the hut. As the huts were built by him, the father was only entitled to sell the huts, not the land. The 2^nd defendant said that the father only sold the hut for receiving a “move-in payment” (頂手費), it was all understood between the purchaser and him that the sale did not include the land, which belong to the land owners. This part of her evidence shows that the father had a clear mind on distinct ownership of the Hut and the land. He never intended to acquire any land interest or exclude the true owners. It is no adverse possession against the paper title owner even though the father had built the huts, or might have sold the huts, let alone he did so as a tenant. He acknowledged he lived under the legal title of the true owner.

63.  The rent receipts found among the father’s belongings suggest that he rented another piece of land adjacent to the Rental Area under the name of Yeung Kau in the 1970s. It is likely that he continued to pay rent for that land until he sold the houses to new owners and they took over the rental payments. It also explains why no other rent receipts showed that the father had paid rent under the name of Yeung Kau in the 1980s or 1990s, by which time he had already sold the houses.

Tenant became trespasser

64.  Mr But argued that the father had become a trespasser from a tenant due to “the drastic events” that occurred in 1996. The drastic events referred to by Mr But was the alleged false accusation of wrongful sale of land and the demand for compensation. To say that they were drastic events leading to a change of intention or capacity is too far-fetched.

65.  Furthermore, the 2^nd defendant asserted that the father had a strong emotional attachment to the Hut and was unwilling to vacate the premises. During the trial, the 2^nd defendant made a bold claim (which was not included in her witness statement) that “if the plaintiffs did not consider us as tenants, then we would not consider the plaintiffs as landlords.”  This argument is again illogical and is against inherent probabilities. In reality, when the landlord requests rent, the tenant is simply not in a position to confront the landlord (unless there has been a breach). The tenant cannot ignore the landlord or inform them that he has decided not to pay rent and will begin adverse possession.

66.  Mr But submitted that unlike renting an apartment, the Hut the father constructed holds sentimental values, representing his life efforts since the 1960s. I am not able to take this view, bearing in mind that Mr But’s description of the father’s emotional attachment to the land (the Hut) only pertained to the time when the father was a tenant. Additionally, the father was aware that he did not own the land and that he would eventually have to vacate.

67.  In my view, mere non-payment of rent is not sufficient to show that there was an intention to dispossess the owner. It was not clear cut. It could be that the tenant could not afford to pay the rent.

68.  In the present case, it is important to note that the plaintiffs were not absentee owners, distinguishing it from other cases where the landlord disappeared before or after the tenancy expired or simply forgot about the land. The manager (Kwong Loi) stated that his house, known as “三棟屋”, was immediately adjacent to the Tong house and he only lived a 20-minute walk from the Lot. The primary responsibility of the manager (or representative) was to collect rent. This evidence was not challenged and is therefore accepted.

69.  As previously mentioned, the outcome of the dispute and how the incident was resolved has not been explained by the 2^nd defendant. It did not occur to me at any rate that the plaintiffs would have forgotten about the arrears of rent and did not pursue further. I do not accept the 2^nd defendant’s case that the father could stay there without paying any rent and free of disturbance from the landowners.

Meeting in 1999

70.  Kwong Loi said that since he took up the role as the manager of the Tong in 1999, he began to manage all the parcels of land and responsible for collecting rent. He said the tenant would usually come to the Tong on the 1^st day of the month to pay rent and they queued up in a group of 10 to 20 people. He did not need to visit each house to collect rent unless the tenant defaults on payment. He said that they would hold an annual meeting to discuss about the tenants.

71.  He recalled the first time he met the father in 1999 when visiting him to collect rent. The father invited him in for tea and they discussed the matter of rent. The father explained that he was aware of his obligation to pay, but he was unable to do so due to his poor financial condition. The father pleaded for the plaintiffs’ indulgence to allow him to reside there for the remainder of his life and expressed hope that the plaintiffs could waive his rent. Kwong Loi subsequently reported back to his father, Li Kwok Hay.

72.  Kwong Loi described the Hut when he entered into there. He said that there was the unit now called 71B1C, but there was no other room, neither 71C1A nor the unit 71C. In front of the living room, there was a pigsty but seems not used for long time.  The sub-divided units were not constructed during that period of time. In this connection, I noted that the electricity switch box fixed on wall of 71C was quite old and probable 71C was already in existence. However, I do accept that there was no 71C1A and that area was used as a living room or sitting area as Kwong Loi described. It is because the fuse-box on 71C1A seems to be installed more recently than those on 71C. And I accept that the open-aired corridor could have been the pigsty area that no longer in operation.

73.  Kwong Loi said that his father told him that the Tong rented out land to others for living. The Tong did not concern much as to the identity of the tenant, so long as he could pay rent. As per his father’s perspective, earning a livelihood would have been quite challenging. His father had faith that if it was feasible for the father to pay at a later time, he would do so. He mentioned that the Tong was involved in a considerable amount of charitable work. The Tong had lands that could support two to three generations. He did not pursue further on the rent issue with the elderly Yeung Lun.

74.  I accept Kwong Loi’s evidence as he gave evidence in a straightforward manner. The father’s non-payment of rent was due to his financial difficulty, not able to afford paying the rent. And I accept that in view of the father’s infirm condition and financial difficulty, the plaintiffs allowed him to stay.

75.  In conclusion, I am not persuaded that the nature of the father’s occupation of the land had changed. In my judgment, he was still a tenant, but could not afford to pay the rent. He asked for indulgence from the landlord landowners because of his old age and poor financial condition. His subsequent occupation of the land was under the permission of the landowners. In such circumstances, he did not have the intention to possess the land against the landowners.

Payment of rent in 2001

76.  In 2001, Kwong Loi revisited it to find out whether the father could pay the rent or, alternatively, the plaintiffs might take legal action. The father, who appeared to be in poor health conditions, had no choice but to pay $100 to the plaintiffs as partial payment of the rent. During cross-examination, Mr But questioned why it took the plaintiffs two years to return to collect the rent. Kwong Loi explained that he had visited on and off, but the timing was not right, for example, the father was not at home. I accept his explanation. He further explained that the Tong had more than 110 houses to manage and as he said, he was not there to serve just one tenant. It has been noted that the members of the Tong have a more laid-back lifestyle, conducting certain activities annually, such as collecting rent yearly, holding annual meetings, and initiating legal proceedings after a significant amount of time (as in this case). This could also be attributed to the fact that they have 110 houses to manage.

77.  When questioned by Mr But that why there was no receipt issued for that $100, he answered that the father had not paid the full rent yet. If the father had come to the Tong house to pay the full rent, he would definite have the rent receipts, but he only paid $100. I accept Kwong Loi’s evidence who answered questions in confidence. He recounted his event with the father in detail and his testimonies were coherent and inherently plausible.

78.  I find it as evidence of truth that the father did pay $100 as partial payment of rent to the plaintiffs and the plaintiffs allowed the father to stay until he passed away.

The 2^nd defendant’s claim for adverse possession (from 2003 to 2007)

79.  It was originally pleaded and as stated in the plaintiffs’ witness statement that the Hut was abandoned since 2003 when the father passed away until 2013. Kwong Loi corrected at trial that it should be from 2003 to 2008. I accept his explanation. He mentioned that even his name was misstated in the pleading and witness statement, and also the year of 2013. When cross-examined several times about the year period, he was adamant that it was 2003 to 2008. I accept his correction and his evidence which was not shaken under cross-examination.

Electricity supply

80.  In mid-2003, when Kwong Loi visited the Hut, he found the door left open.  Upon entering, he discovered that the room was empty, dark, and without electricity. The dusty floor was covered in leaves, which could suggest that the father may have left or passed away. He picked up a wire from the floor to tighten the door. He then went back to report to his father.

81.  He said he would visit the Hut about once a year from 2003 to 2007 to ensure no one occupied it. During his inspections, he entered the Hut to check the inside and noticed that the Hut was in a dilapidated state with a damaged roof and no access to electricity. Therefore, he believed that the Hut was unoccupied and secured the door with wire before leaving.

82.  It was until his next visit in 2008, he discovered that the property was occupied by tenants who were allegedly rented by the 2^nd defendant to Southeast Asian refugees.

83.  The 2^nd defendant’s version is that she received the key to the Hut from her late father, after which she considered the Hut to be her own. By a Chinese Sale and Purchase Agreement dated 28 August 2003, she sold a portion of the Hut to one Madam Lam at a consideration of $20,000. That was the room extension built by the father over the extended Area. It was then partitioned into a separate unit by the father in 1992. Originally, the Hut was numbered as 69B Ko Po North Tsuen, but since the 2^nd defendant sold the extended portion as 69B, so the remaining portion of the Hut is now called 71C Ko Po North Tsuen. (The plaintiffs contend that there was no electricity supply or water supply to the Hut in 2003).

84.  The 2^nd defendant once accepted Mr Ng’s suggestion that the Hut had “no electricity and no water supply” (斷水斷電) after the part (of 69B) being sold to Madam Lam. The 2^nd defendant then changed her evidence by saying that even though the electricity meter of 69B was sold together with the extended hut to Madam Lam, there was still electricity for the Hut. She explained that the electric supply to 69B previously served both 69B and 71C1B. And 71C1A and 71C have had their individual electricity supply since 1980s. Therefore, after the electricity meter was sold with 69B, her husband simply connected the electricity from 71C1A to 71C1B. It was later in late 2007 then she applied for a sperate electricity supply for 71C1B which was done in anticipation of renting the Hut to others.

85.  I pause here to make the following observations that the partitions were not built earlier, and there were no sub-divided units as such before 2008. Based on the observation made on the site visit, the L-shape corridor for the kitchen and toilet of 71C (ie constructed outside 71C), the open-aired corridor, and the unit 71C1A were later additions. Three electricity meters (69B, 71C1A, and 71C) in the father’s hut during the 1980s appear excessive for a single occupant or even a family. Furthermore, it is hard to believe that an individual or even a family living in illegal structure, with no disrespect, would occupy three sub-divided units with a total of five or six bedrooms, three kitchens, and three toilets. In her testimony, it was obvious that the 2^nd defendant had difficulty fitting the three not-yet-existed unit numbers into the past events from the 1960s to 2007, when these sub-divided units were not even built.

86.  On the other hand, the CLP statements being contemporaneous documents show that the electricity meters were newly applied by the 2^nd defendant in July to October 2007. There were three new applications for 71C, 71C1A and 71C1B. The site visit confirmed that the meters for 71C1A and 71C1B were newly installed. This alone goes against the 2^nd defendant’s version that 71C1A was from the 1980s. Therefore, I do not accept her explanation that those were only applications for change of name from the father’s and her sister-in-law’s to the 2^nd defendant. I find that the 2^nd defendant only applied new electricity supply/meters to the Hut when she started to renovate the Hut and the roof in July 2007 when she took possession of the Hut and planned to turn the Hut in to sub-divided units for rental. Accordingly, I reject the evidence of the 2^nd defendant and accept the version of account given by Kwong Loi that when he visited the Hut in 2003, there was no electricity supply and he could not turn on the lights.

Electricity bills

87.  As to the payment of any electricity bills, this part of the 2^nd defendant’s evidence is again unsupported by documentary evidence. She claimed that those bills were paid by the father and her sister-in-law. She said that her sister-in-law once lived in 71C1A for several years in early 1980s. After the father passed away, those bills were paid by her, the 2^nd defendant. Mr Ng pointed out that, not only that all a sudden there was a sister-in-law came into the picture, the 2^nd defendant could not produce any electricity bills because she allegedly had discarded them all immediately after payment, except one bill of 2002, which she recovered from her late father’s belongings. She made no attempt to seek proof of account user or usage from CLP or the Water Supplies Department. Hence, she has no proof at all that there was in fact usage of electricity during the period from 2003 to 2007. As noted above, the 2^nd defendant has at times changed her evidence, I reject her evidence entirely. What I believe is that the 2^nd defendant knew that there was no electricity supply to the Hut between 2003 and 2007.

88.  Furthermore, the 2^nd defendant said on the one hand that she used the Hut for business storage of company documents, as she had to keep the books and accounts for her husband’s company. On the other hand, she said that she threw away the electricity bills of the Hut because they were just family bills that were not tax deductible. I find her explanation perplexing. If the electricity bills for the Hut were for the storage of company documents, they would certainly be company expenses and therefore tax deductible. The same applies to the renovation of the Hut and the roof, with a certain proportion of the renovation costs being company expenses.

Water supply

89.  As to the water supply, I find that the account of 69B was also sold with the extended hut as the 2^nd defendant once accepted there was no water supply after the extended hut was sold. She later explained as 69B had another water supply, so 71C, 71C1A, and 71C1B could still have water supply. However, I find it more probable the case that, as shown in the Water Supplies Department statement, the 2^nd defendant was only asked to pay for deposit of $400 when she newly applied for water supply in 2008. As observed in the site visit, the water meter was connected outside the sold 69B or the remaining 71C. It was a recent connection to the Hut. I reject the 2^nd defendant that she merely applied to change of name of the water meter. Again, the 2^nd defendant was not able to produce any water bills, and she said those were thrown away immediately after payment.

Abandonment

90.  When the 2^nd defendant’s evidence is tested against the totality of evidence and undisputed documents, I find that she was not telling the truth. The 2^nd defendant claimed that the Hut was used by her family as a holiday home from 2003 to 2007. She brought her children to stay there for summer holiday planting fruits and trees and to commemorate the memory of the father. But she was challenged by Mr Ng when she could not even produce one single photograph taken during the holiday. In fact, at no time, whether in the 1980s, 1990s, or early 2000s, was there even one photograph of the 2^nd defendant with the father or her family in the Hut. I have the impression that the relationship between the 2^nd defendant and the father was indeed distant. Nor was there any photograph of the Hut at all.

91.  I also do not accept the 2^nd defendant’s evidence that she took care of the longan tree (龍眼樹) and the wampi tree (黃皮樹) between 2007 and 2007 as alleged. Given the size of those trees, it was likely that they could have grown independently in the natural environment. (Also, the 2^nd defendant only applied water supply in 2008, it casts serious doubt on her evidence when there was no water source for irrigating the trees). The 2^nd defendant has resiled from her previous allegations on various occasions and is found to be incorrect in her evidence. The upshot was that the totality of the evidence showed strong indication that the 2^nd defendant did not live there or used the Hut.

92.  In addition, I actually think she was making up evidence when she said the Hut was used to store documents from 2003 to 2007. She could not say where she had stored these company documents, which she described as many boxes over many years. It took her a considerable amount of time and several attempts before she was able to identify the storage location, which was finally either 71C1A or still perhaps the corridor.

93.  Mr But submitted that, for the period between 2003 and 2007, there was no abandonment of possession on the part of the 2^nd defendant. He referred to Shing Luen Fat v Shing Chi Fing (unreported, DCCJ 3789/2010, 30 September 2013), where the court held that if possession passed to the squatter at any point, then he would not have needed continuous use to have maintained possession (Chambers v Havering London Borough Council [2011] EWCA Civ 1576, adopted in Chow Ting Sang also known as Chau Ting Sang as manager of Chan Fuk Tso v Citihero International Ltd, CACV 121/2012).

94.  With respect, I do not see how Shing v Shing would be applicable here. Abandonment denotes a sense of possession in the first place. If there was no possession, there would not be any abandonment. As I have found above, the father did not have a case for adverse possession, and the 2^nd defendant has not proved that she had taken up possession. I therefore find no abandonment of possession by the 2^nd defendant.

95.  Mr But further submitted that the way that the 2^nd defendant sold 69B to Madam Nam in August 2003 showed the 2^nd defendant had regarded herself as owner and having the right to deal with the property, ie to sell the structure without seeking the consent from the registered owner.

96.  In this regard, with respect, I have to disagree. In my opinion, the new purchaser of the Hut can well be an adverse possessor if he or she does not pay rent to the registered owner. However, the seller, ie the 2^nd defendant, by selling the Hut without the audacity to sell the land is inconsistent with an act of ownership. It showed clearly that she had no dominion control over the land. The 2^nd defendant shared the same methodology with the father. In my judgment, the 2^nd defendant’s act was inconsistent with any adverse possession claim. She did not have the animus possidendi to exclude the true owner; rather, she preserved the interest of the true owner that the land would not be sold.

97.  Mr Ng commented that the sale of 69B was the 2^nd defendant’s last attempt to get some money out of that property, where she believed at least the Hut belonged to the father. I agree.

98.  I find that, in this action, the request for electricity supply is a clear indication of when the 2^nd defendant took possession. I find that there was no electricity supply after the father passed away in 2003. She only applied to have electricity supply in July to October 2007 during the construction of turning the Hut into sub-divided units. The 1^st application was made on 17 July 2007 to CLP. I find that this was the time the 2^nd defendant needed an electricity supply to carry out the renovation of the roof, and later to carry out the renovation of the interior for making sub-divided units. The 2^nd and 3^rd applications on 14 September 2007 and 4 October 2007 were the time the sub-division was about to complete and therefore further requests were made for the installation of electricity meters for 71C1A and 71C1B.  This is the timeline I so found.

99.  I also attach great importance to the fact that the 2^nd defendant only sold the hut 69B, but not the land. This is inconsistent with acting as owner.

100.  Having considered the evidence, I find that the 2^nd defendant has failed to establish factual possession and the requisite intention to possess for the purpose of adverse possession in her own right since 2003 to 2007.

The 2^nd defendant’s claim for adverse possess (since 2007)

The replacement of the roof

101.  As to the timing of the replacement of the roof in 2007, it was hotly contested between the parties at trial.

102.  The 2^nd defendant gave oral evidence in court that, in late 2006, she found a contractor to give a quotation for the repair work of the roof but the contractor was then busy with other projects. It was further delayed due to the contractor having injured his back. Therefore, the renovation did not start until his recovery in about May or June 2007. She said that it took the contractor three weeks to change the entire roof.

103.  However, it was a different version in her witness statement. In the witness statement, she said she hired “3 local workers” to repair the roof directly. She went on to provide details that the workers were stopped by the police during the renovation works to check whether they were illegal workers. In no time did she ever mention a contractor in her statement, bearing in mind that her husband was a contractor for building work. I find that the dealing with the contractor who caused the delay of the commencement works for repairing the roof was a fabrication. It was her whole attempt to push back the relevant date to December 2006 in order to support her claim for adverse possession, when she realized that she was just short of the required 12-year limitation period.

104.  When she was asked why she would have waited for the contractor for such a long time since November or December 2006, the 2^nd defendant unexpectedly shifted to use Chinese lunar calendar to explain her way by saying that she was referring to Chinese lunar calendar when she said “end 2006”. She said that it would mean early 2007 or February 2007 in western calendar.

105.  It is common ground between the parties that if there were renovation of the Hut in 2007, the repair of the roof would take place before the renovation of the interior. In this context, two aerial photographs are important and relevant. The first was a government aerial photograph of the Lot taken on 25 July 2007. It showed no evidence of the roof being refurbished. The other aerial photograph was taken on 13 November 2007. It showed that the entire roof was being replaced. It is therefore undisputed that the renovation of the roof must have taken place sometime between 25 July 2007 and 13 November 2007. And that the 2^nd defendant’s assertion that the roof was repaired by the contractor in May or June 2007 is incorrect.

106.  It is also apparent that this period of July to November 2007 still falls short of the 12 years’ requirement for adverse possession. That’s why the 2^nd defendant tried to push back her case of renovation to end 2006 (Chinese lunar calendar) or Feb 2007 (western calendar). I reject her bare assertion. I find that there was no such event that she had first contacted a contractor in end 2006 and waited until May or June 2007. She only directly engaged three local workers by herself to do the repair works of the roof sometime between July and November 2007.

107.  In any case, taking the 2^nd defendant’s case to the highest level, she only proved adverse possession for 11 years and 8 months. This is still 4 to 8 months short.

The 2^nd defendant’s claim for adverse possession (2008 onwards)

108.  Since 2008, the 2^nd defendant has rented units 71C, 71C1A, and 71C1B to people recommended by International Social Service until the present.

109.  It is well established that a squatter can be in adverse possession through a tenant by the receipt of rent (Cheung Yat Fuk v Tang Tak Hong & Others (2004) 7 HKCFAR 70).

110.  And the plaintiffs confirmed that they would not challenge the tenancy agreement made between the 2^nd defendant and the unknown foreigners from 2008 to the present. Mr Ng submitted that the focus is on the year of 2007.

111.  Kwok Ling gave evidence not directly related to the dispute between the parties, as he only became the manager in 2015. I would only record that his evidence, if it ever touches on the disputed issues, did not contradict any of Kwong Loi’s evidence.

MESNE PROFITS

112.  The 2^nd defendant accepted that she has been using the Hut as rental property to others since 2008 to the present.

113.  I will adopt the monthly open market rentals estimated in the Joint Valuation Report of the parties’ joint expert.

114.  The mesne profits from the date of the Originating Summons to the date of Judgment will be $591,600 ($237,600 + $114,000 + $240,000); and thereafter at $10,000 per month until delivery up of vacant possession of the Pink Area.

CONCLUSION

115.  For the above reasons, I allow the plaintiffs’ claim for the recovery of possession and hold against the 2^nd defendant’s counterclaim for adverse possession.

116.  I make an order that:

(1)  The plaintiffs’ proceedings against the 1^st defendant is adjourned sine die, with liberty to apply, and no order as to costs between the plaintiffs and the 1^st defendant;

(2)  The 2^nd defendant shall deliver up vacant possession of the Pink Area to the plaintiffs within 3 months from the date of service of the Order made under this Judgment; 

(3)  The 2^nd defendant shall pay to the plaintiffs the mesne profits in the sum of $591,600 within 28 days from the date of service of the Order made under this Judgment, and $10,000 per month from the date of Judgment until the delivery up of vacant possession; and

(4)  The 2^nd defendant’s counterclaim is dismissed.

117.  I make an order nisi that the 2^nd defendant is to pay the plaintiffs’ costs of the action (such costs as between the plaintiffs and the 2^nd defendant only) and of the Counterclaim, with certificate for counsel, to be taxed if not agreed. The costs order nisi shall become absolute in 14 days from the date of Judgment.

118.  I would also record that the parties agreed that the time spent in this trial hearing for the 1^st defendant was 20% and for the 2^nd defendant was 80%.

Appendix 1

Appendix 2