KWONG SHOOK LING v. THE OCCUPANTS OF LOT NO. 841 IN SURVEY DISTRICT NO. 3, SAI KUNG, NEW TERRITORIES

HCMP 2859/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2859 OF 2003

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BETWEEN

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D E C I S I O N

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1.  This action concerns Lot No 841 in Survey District No.3, Sai Kung, New Territories (“the Land”). The Land is situated at what is apparently known as Nos. 127 and 127A of Cha Kwo Ling Main Street now. The Land, among other lots of land, forms part of the estate of Yu King Kwok, deceased (“the Deceased”). The Deceased passed away in 2002. The plaintiff (“Madam Kwong”) is the widow and sole administratrix of the Deceased’s estate.

2.  To recover the possession of various lots of land forming part of the Deceased’s estate, Madam Kwong has commenced over 80 sets of summary proceedings in 2003 and 2004 pursuant to O.113 of the Rules of the High Court (“RHC”).  The present one was commenced on 3 July 2003.  The defendant was not named but covered anyone who might be occupying the Land.

3.  On 29 September 2003, Master Lisa Wong (as she then was) granted orders for possession of various lots of land in about 40 sets of proceedings commenced by Madam Kwong, including the present one.  The order for the possession of the Land was granted in the absence of any person claiming to be occupier of the Land (“the Order”).

4.  9 years later, the intervener (“Ngan”) now seeks to set aside the Order.  For such purpose, he applies to be joined as a party pursuant to O.15, r.6(2), RHC.  Execution of the Order has since been stayed pending the determination of this application.

5.  The fact is that the Order has never been executed over the past years.

THE APPLICATION

6.  O.113, r.5 allows any person occupying the premises in question but not named as a defendant to apply to be joined as a party at any stage of the proceedings. Ngan does not claim to be occupying the Land by himself at the time of commencement of these proceedings.  However the rule is expressed to be without prejudice to O.15, r.6, which provides for the joinder of party under r.6(2)(b) generally.

7.  As the applying party, Ngan needs to show by way of affidavit his interest in the matters in dispute in the cause or matter or, as the case may be, the question or issue to be determined as between him and any party to the cause or matter: O.15, r.6(2) and (3).  This Ngan seeks to do by his affirmation as well as those of Lee Chi Ping (“Lee”) and So Chi Shing (“So”). Lee and So have allegedly been Ngan’s tenants of the Land since about 1984; and still are residing there.

8.  Ngan claims adverse possession of the Land (first by him and later through his tenants) since 1982 for not less than 12 years by the time when these proceedings were commenced.  As a result, the right of the Deceased’s estate in the Land has been extinguished pursuant to section 17 of the Limitation Ordinance, Cap 347.  That constituted his interest in these proceedings; and thus the necessity to join him as a party pursuant to O.15, r.6(2)(b).

9.  According to his summons filed on 25 October 2012, Ngan seeks to set aside the Order on the ground that the originating summons filed in July 2003 was not duly and effectively served on him or the other occupiers of the Land.

10.  Ngan’s case is that he came to reside on the Land with 3 other persons surnamed Sin, Chan and Cheuk in 1976-1977, and by himself exclusively since about 1982.  In 1983, where he used to reside on the Land was destroyed by fire.  The Land was then let to Lee and So (and So further sublet to others) for setting up stalls selling chickens, seafood and frozen meat in 1984-1985.  Due to the outbreak of SARS, the business operations there ceased during the first half of 2003.  Lee and So (and through his subtenants) reopened their stalls there in early 2004. Such occupation of the Land continued until about 2007.  Since 2007, Lee and So have constructed bungalows and recently extensions on the Land that they continued to rent respectively from Ngan.

11.  Lee claimed ignorance about these proceedings until Ngan enquired about that in about May 2012.  So had further sublet his part of the Land rented from Ngan. He claimed ignorance about these proceedings or the Order until 2011 when a Mr Wong (now known to be Wong Chun Chung acting on behalf of Madam Kwong) contacted him.  However he still had no clear idea that the Land was indeed subject to the Order until later.

12.  According to Ngan, he came across these proceedings from Madam Kwong’s pleading in another action that he commenced in the District Court (DCCJ 578/2011).  In DCCJ 578/2011, Ngan claims adverse possession of another (but nearby) lot of land also belonging to the Deceased’s estate.  In her defence and counterclaim filed in October 2011, Madam Kwong referred to the Land and these proceedings. Ngan explained that he then did not know the Land by the lot number pleaded.  He therefore did not realise that it actually referred to where he also (allegedly) possessed.  He came to realise only in 2012 from the documents disclosed during discovery in that District Court case.

13.  Ngan took out the present application on 25 October 2012.

REGULARITY OF THE ORDER

14.  O.113, r.4(1)(b), RHC provides that where any person in occupation of the premises is named in the originating summons, the summons together with a copy of the affidavit in support shall be served on him by, among others, leaving copies of the documents or sending them to the defendant at the premises.

15.  O.113, r.4(2) provides that in addition to service on the named defendant (if any), the summons shall be served by (a) affixing a copy of the summons and a copy of the affidavit to the main door or other conspicuous part of the premises, and (b) if practicable, inserting through the letter-box at the premises a copy of the summons and a copy of the affidavit enclosed in a sealed envelope addressed to “the occupiers”.

16.  In support of her application for possession, Madam Kwong relied on the affirmations of service filed by her then solicitors, Messrs Wilkinson & Grist (“WG”). According to those affirmations, Madam Kwong had instructed land surveyor to visit several lots of land owned by the Deceased’s estate.  As far as the Land is concerned, the visits took place on 3 September 2002 and 3 September 2003.

17.  It was also on 3 September 2003 when WG’s representative accompanied the surveyor to the Land for the purpose of service.  The originating summons and affidavit in support were left as well as affixed on the Land on that occasion.

18.  On 17 September 2003, WG’s representative visited the Land again.  On this occasion, the court documents were again left as well as affixed on the Land.

19.  On 16 February 2004, WG’s representative visited the Land for the service of the Order.  The Order was left as well as affixed on the Land.

20.  The photographs exhibited to the affirmations of service depict the state of the Land and its vicinity as well as where and the manner in which the court documents were left as well as affixed on each occasion.

21.  Mr Li, SC (appearing with Mr Cheung) for Ngan took issue as to the stance of Madam Kwong on service.  He submitted that insofar as the court documents were said to have been served by leaving at the Land, Madam Kwong purported to rely on O.113, r.4(1)(b) whilst failing to name the defendant in the originating summons.

22.  In my view, while the defendant was not named in the originating summons and steps were therefore taken to serve the proceedings on the unknown occupier pursuant to r.4(2), WG somehow decided to take steps to also serve the documents in the manner as provided under r.4(1).  That in my view was at most superfluous.  That the copies of the court documents were left at exactly where the same were affixed on the Land reinforces the superfluity in reality.

23.  Mr Lam for Madam Kwong confirmed that this is a case caught by r.4(2) instead of r.4(1).  But Mr Li, SC challenged the basis on which WG then deposed to their belief of Madam Kwong’s instruction that the Land has been occupied from a time and by person(s) unknown to her.  The affirmation in support was first filed by WG at the time when Madam Kwong was said to have been stranded abroad because of the outbreak of SARS in Hong Kong.  Mr Li, SC questioned the complete silence as to why no enquiry had been made about the state of the Land and the identities of the occupiers of the Land.

24.  Indeed the documents, including the aerial photographs and the photographs taken by the surveyor mentioned above, suggest that the Land (and the structures erected there) was by no means isolated at the time of service.  Human activities were observed in the vicinity.  A number of persons were seen present in the vicinity of the Land at the time when the photographs were taken.

25.  I share Mr Li, SC’s query.  Having said that, I have to accept there is no legal requirement that the plaintiff should take or that he should state in his supporting affidavit that he has taken reasonable steps to identify such person or persons.  What is required is that the plaintiff does not in fact know their identities and states this fact positively in the supporting affidavit: see Hong Kong Civil Procedure 2013 (“HKCP 2013”) at 113/8/6-7. He who claims to be occupying the premises or a right to be heard may come forward and to intervene upon service or knowledge about the legal proceedings. The question therefore remains whether the service was effectively in bringing the proceedings to the notice of such occupier(s).

26.  Mr Li, SC questioned the choice of the spot at which the court documents were affixed on the Land.  He suggested the possibility of a main door or entrance to the structures erected there.  He referred to the surveyor who deposed to the effect that the structures were erected apparently for accommodation and storage purposes.  It was only logical, he suggested, that the structures had some sort of main door or entrance.

27.  Mr Li, SC had to acknowledge that the photographs taken by the surveyor did not assist in identifying any main door.  In their affirmations in support of Ngan, both So and Lee explained that the structures were erected as stalls for selling poultry, meat and fish.  That also appears to match the features of the structures and the articles there as depicted in the photographs.

28.  Further, whilst it was in the first place the burden of Madam Kwong to prove due service so as to obtain the order for possession, the query raised by Mr Li, SC cannot be fair if his own client and witnesses never actually stated that there was in fact a main door to the structures there.  I say the same insofar as the possibility of the existence of a letterbox is also suspected.

29.  The remaining mode of service was therefore the affixing of the court documents at a conspicuous part of the Land.  So long as the part chosen is conspicuous, r.4(2) literally does not require that to be the most conspicuous part, if there is more than one.  Nevertheless the rule is still expected to be applied with common sense.  Mechanical compliance with the rules by mere delivery is not a complete, if at all, an answer.  It is whether the process was effectively brought to the notice of the occupier: see (by analogy) Chu Kam Lun v Yap Lisa Susanto [1999] 3 HKC 378 (at 382C); Kwan Kam Wah v Chan Wai Ming [2000] 2 HKC 378 (at 384H-385F).

30.  The structures were erected on substantial part of the Land.  Without a main door, many parts of the structures would still appeal to an objective bystander to be the next most conspicuous parts.  However the process server somehow decided to avoid the structures completely and chose to affix the documents on the part of the Land, either behind or beside the structures, which was completely covered by rubble, shrubs and trees.  A stick was then erected with the copies of court documents affixed to the top of it.  Copies of the documents were also left among the shrubs and rubble there.

31.  The more one studies the photographs, the more one becomes convinced that the spot chosen was far from being conspicuous part of the Land, as opposed to others, for the purpose of effectively bringing the documents to the notice of the occupier.

32.  One of the photographs depicts some clothes hanging over the part of the Land where the court documents were said to have been affixed.  Mr Lam relied on that as evidence of human activities there; and submitted that the occupier must have come across that part of the Land and therefore noticed the documents served.  But to be fair, the photographs show that that part of the Land was not completely, if at all, fenced up.  There is no suggestion or evidence whether those clothes had anything to do with Ngan, Lee or So at the time.  As mentioned, the evidence of Lee and So is that their stalls were closed down during the SARS period until early 2004.

33.  Mr Lam questioned how Lee and So would have missed the court documents when they allegedly reopened the stalls in early 2004 and started to construct bungalows there in 2007.  Again to be fair, it is unknown what happened to the court documents after they had been so left and affixed there.  There is no suggestion that anything further had been done that would have alerted the occupiers, such as fencing up of the Land or erection of any sign even after the Order.

34.  Lee and So claimed to have spent money on the construction and extension of their bungalows since 2007.  According to them, they would not have done so, had they known that their tenancy from Ngan was in jeopardy due to probable re-possession by some third party.  As to Ngan, he initiated the claim in DCCJ 578/2011 in 2011 against Madam Kwong to assert his right over a nearby lot of land.  It was argued that he would not have hesitated in defending his right over the Land, had he known about these proceedings and the Order and that they affect him.  As mentioned, Ngan claimed to realise that in 2012.

35.  Attention was drawn to Ngan’s reply filed in November 2011 in DCCJ 578/2011. As mentioned, Madam Kwong in her defence and counterclaim refers to the occupation of the Land by some temporary structures and these proceedings.  In his reply, Ngan somehow denies knowledge about that.  Mr Lam saw that as a self-contradiction.  Mr Li, SC, who settled the reply in that case, described that as an ambiguity.  But he argued against any inference that his client’s case should therefore be categorised as recent fabrication.  Apart from referring to the corroborating evidence of Lee and So, he also referred to the circumstances in which Ngan actually came to realise the Land by the lot number in 2012.

36.  At the moment, it cannot be said that their explanation is inherently implausible. Considering the evidence, I am satisfied that Ngan (and Lee and So) had no notice of these proceedings or the Order.  I am also satisfied that the service of proceedings, albeit seemingly in accordance with O.113, r.4(2), has failed to bring these proceedings to the notice of the occupiers, i.e., Ngan (and Lee and So).  This is one of those cases where the Order has to be considered as irregular.

MERITS

37.  Subject to the residual discretion of the court, an irregular judgment or order is liable to be set aside ‘as of right’.  Even assuming that I am to consider the merits, I would find it hard at this stage to reject Ngan’s case as bearing no real prospect of success.  It is not merely arguable but carries some degree of conviction: see Premier Fashion Wears Ltd v Chow Cheuk Ma [1994] 1 HKLRD 377.

38.  The case is one of adverse possession.  Ngan has the burden of proving factual possession together with the requisite intention to do so to the exclusion of the world at large including the paper owner: see Wong Tak Yue v Kung Kwok Wai David [1998] 1 HKC 1 (applying Powell v McFarlane (1979) 38 P&CR 452; Buckinghamshire County Council v Moran [1990] 1 Ch 623).  One can adversely possess through others who derive from him their right to do so such as tenant: see Cheung Yat Fuk v Tang Tak Hong & Ors (2004) 7 HKCFAR 70.

39.  Mr Li, SC accepted that his client needs to establish adverse possession exclusively and continuously for a period of not less than 12 years by the time when these proceedings were commenced in 2003.  Ngan’s case is summarised above; and I do not repeat here.

40.  Ngan gave an almost identical account of how he came to start residing on the Land in 1976-1977 as in DCCJ 578/2011.  He gave the surnames of the persons with whom he then resided until 1982.  He identified where he lived there by reference to the lot index plan and aerial photograph dated 1976.  He produced aerial photographs to show the aftermath of the fire that destroyed the residence there in 1983.  Lee and So corroborated his version of tenancy in respect of the Land since 1984.  The structures erected there were identified from the aerial photograph dated 1985.  They lasted until the time when these proceedings were commenced.  As mentioned, the surveyor engaged on behalf of Madam Kwong and the photographs he took confirmed the existence of those structures in 2002 and 2003.  As circumstantial evidence, the structures had since been demolished and replaced by bungalows constructed by Lee and So.  The bungalows were identified from the aerial photograph dated 2008 and clearly depicted in the photographs taken recently.

41.  The major attack launched by Mr Lam was that there is a lack of documentary evidence to back what Ngan asserts.  He also questioned the accuracy of the identification of the structures on the Land from the aerial photographs.  In my view, had there been Ngan’s assertions and nothing else, such attack would have been forceful.  However, in view of the above summary of evidence, it cannot be said that his assertions lack corroboration.  It is also impossible for the court to draw a conclusion against Ngan in respect of the challenge as to the accuracy of his reading of the aerial photographs without contrary evidence.

42.  Whether Ngan’s evidence will be believed in is eventually a matter for trial.  But it cannot be said that his prospect of success is not real.  Further, Mr Li, SC queried Madam Kwong’s explanation of her inaction since the Order.  According to her, she had tried to resolve the dispute with the squatters amicably, notwithstanding the orders for possession that could have been executed since 2003.  As to the Land, it was only in 2011 when she somehow asked her friend, Mr Wong, to contact any occupiers there.  Mr Li, SC suggested that investigation into that at the trial would be relevant to his client’s case.

OTHER CONSIDERATIONS

43.  The court has a residual discretion even when the judgment or order obtained is irregular: see Po Kwong Marble Factory Ltd v Wah Yee Decoration Co Ltd [1996] 4 HKC 157 (at 161C-E; 162B; G).  In the present case, arguments surround the issues of delay and prejudice.  The two are actually related.

44.  On the basis of his client’s case, there was delay for months since Ngan came to know the Land by its lot number and therefore subject matter of the Order in 2012 before he took out the present application.  Mr Li, SC acknowledged that; but submitted that it was not to be condemned as inordinate delay.  In my view, such delay is minimal compared to the time taken by Madam Kwong to enforce her right though armed with the Order.

45.  More importantly, I see no real prejudice if the Order is set aside now.  There is no evidence that the Land is bound by any third party interest.  The dispute in respect of the Land should not stand in the way of the administration of the Deceased’s estate comprising the other lots of land.  In any event, dispute of a similar nature between the same parties in respect of another lot of land, i.e., DCCJ 578/2011, already exists and awaits trial.

SETTING ASIDE ON TERMS

46.  Mr Lam submitted that if Ngan’s application was allowed, that should nevertheless be made subject to terms.  Mr Lam suggested the condition of payment of mesne profits for Ngan’s occupation of the Land until the determination of the dispute.

47.  If a judgment or order is set aside for irregularity but the court is impressed that there has been serious delay on the part of the defendant or that the defence is shadowy, the court may exercise its discretion in the interest of justice to impose condition upon setting aside of the judgment or order.  But this is not such a case.  When the judgment or order is set aside because the court is satisfied with the prospect of success of the defence, the court will rarely impose condition of payment at the same time: see L&M Specialist Construction Ltd v Wo Hing Construction Co Ltd [2000] 3 HKLRD 262 (at 269D-F).

48.  In any event, as it was Madam Kwong who seeks the imposition of such condition of interim payment of mesne profits, I would have expected evidence of the market rental value of the Land.  Except for counsel’s suggestion to adopt the rental value that Ngan is allegedly receiving from Lee and So, which Madam Kwong actually denies, there was no such evidence.

49.  Mr Lam also seeks security for costs in the sum of HK$200,000 as condition for setting aside the Order.  I cannot agree.  The consideration of whether a party is entitled to seek and the other party is liable to provide security for costs differs materially from the question of condition for setting aside judgment.  The two fall to be governed by different principles.

ORDER

50.  I therefore make the following order:

(1) There shall be leave to Ngan to join as the 2^nd defendant in the proceedings herein;

(2) The Order shall be set aside;

(3) The proceedings herein shall continue as if these had been begun by writ;

(4) Madam Kwong do file and serve statement of claim within 28 days from the date hereof;

(5) Ngan do file and serve defence (and counterclaim, if any) within 28 days of service pursuant to (4) above;

(6) Madam Kwong do file and serve reply (and defence to any counterclaim), if any, within 28 days of service pursuant to (5) above;

(7) There be mutual discovery of documents by list within 28 days thereafter; and inspection, if any, within 14 days thereafter;

(8) The parties shall proceed in accordance with O.25, RHC within 28 days after close of pleadings.

51.  I heard counsel on costs in advance.  Ngan succeeds in his application to be joined as well as setting aside the Order both by reason of irregular service and merits.  He should be entitled to the costs of the application: see HKCP at 13/9/11.  Mr Lam fairly accepted that in such event.  Mr Li, SC made clear that in such event he would not be seeking certificate for 2 counsel.

52.  I therefore order that costs of this application be to Ngan in any event.  I see no reason why costs should not be assessed summarily.  Unless the parties agree on costs, Ngan shall submit and serve statement of costs within 7 days; and Madam Kwong shall submit and serve any comments (succinctly) within 7 days thereafter.  Ruling shall be made on paper.

REMARK

53.  As mentioned, factual allegations in relation to how Ngan allegedly came to occupy the Lot and thereafter are common in these proceedings as well as DCCJ 578/2011.  I was informed that the trial of the District Court action will take place this July.  No realistic case management can be carried out in time to line up the disposal of common factual dispute in both actions.  Nevertheless counsel acknowledged that their respective clients, being the same parties in both actions, will inevitably be bound by the findings of fact in that case for the purpose of the present case by reason of the res judiciata principle.