SHAM SUN LAI, the administratrix of the estate of LAU CHUEN, deceased v. THE INCORPORATED OWNERS OF ERNEST COURT

DCCJ 3924/2015

[2024] HKDC 989

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3924 OF 2015

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REASONS FOR JUDGMENT

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Introduction

1.  By an Inter-Parte Summons dated 14 May 2024 (“the Summons”), the Plaintiff (“P”), administratrix of the estate of Lau Chuen, deceased (“the Deceased”), applied for default judgment under O 19, r 7 of the Rules of District Court, Cap 336H (“RDC”) against the Defendant (“D”).

2.  In the Summons, P sought inter alia the following:

(1)  A declaration that D’s title, interest and/or right in and/or over the area on which a wall shop is situated as shown in Annex 1 to the Amended Statement of Claim filed on 29 January 2024 (“ASOC”) (“the Wall Shop”) or any part thereof has been extinguished by virtue of sections 7 and 17 of the Limitation Ordinance, Cap 347 (“the Ordinance”);

(2)  A declaration that P has been in continuous adverse possession of the Wall Shop for a period of no less than 20 years prior to the commencement of the present action, and P has thereby acquired an indefeasible possessory title, and acquired all the estate, right, title, interest and benefit, including, inter alia, the ownership and the right to exclusive possession and control, and physical occupation of and in the Wall Shop, and is accordingly entitled to be registered as the owner of the same in the Land Registry; and

(3)  Costs.

3.  Following a hearing before me on 17 June 2024 (“the hearing”), attended by Ms Lisa Lam, counsel for P, and Mr Yat, solicitors for D, I granted default judgment against D and made the following orders:

(1)  A declaration that D’s title, interest and/or right in and/or over the area on which a wall shop is situated as shown and coloured and hatched indigo in Annex 1 to the Amended Statement of Claim filed on 29 January 2024 (“the Wall Shop”) has been absolutely extinguished by virtue of sections 7(2) and 17 of the Limitation Ordinance, Cap 347;

(2)  A declaration that Lau Chuen, deceased, has been in adverse possession of the Wall Shop for a period of not less than 20 years prior to the commencement of the present action, and has thereby acquired an indefeasible possessory title to the Wall Shop; and

(3)  There be no order as to costs of this action, including this application.

4.  I now set out my reasons for doing so.

Procedural Background and the Parties’ positions

5.  P is the natural daughter of the Deceased.

6.  On 26 August 2015, the Deceased (suing by P, as her next friend) commenced the present action by issuing a Writ of Summons endorsed with a Statement of Claim against D.

7.  D is the Incorporated Owners of Ernest Court located at Inland Lot No 2367 and Inland Lot No 3883. The Wall Shop is located within Inland Lot No 2367.

8.  As no Defence was ever filed by D, on 12 September 2018, an application was taken by the Deceased by Summons under O 19, r 7(1) of RDC for default judgment against D (“Previous Summons”). The Previous Summons seeks judgment be entered for P against D for:

(1)  A declaration that D’s paper title and ownership of the Area on which Wall Shop is situated as shown in Annex 1 has been extinguished by virtue of adverse possession and/or proprietary estoppel;

(2)  An order/declaration that P has acquired an indivisible possessory title of the area on which the Wall Shop is situated as shown in Annex 1 by virtue of adverse possession and/or proprietary estoppel; and

(3)  D do pay P’s costs of this action including costs of this application.

9.  However, following certain observations made on the application and the Statement of Claim (including that there is no Annex 1 annexed to the Previous Summons) by Deputy District Judge Eugene Yim, by Order dated 11 October 2018, the Previous Summons was adjourned sine die with liberty to restore.

10.  On 30 November 2018, the Deceased passed away, intestate.

11.  By a Letter of Administration granted on 27 May 2022 (“Letter of Administration”), P became the administratrix of the estate of the Deceased.

12.  By Order of Master Anny Chak dated 27 July 2023, it was ordered inter alia that:

(1)  P be appointed as the administratrix of the estate of the Deceased for the purpose of carrying on this action;

(2)  This action be carried on by P; and

(3)  P’s name in the Writ and other pleadings be amended.

13.  Upon a Consent Summons filed on 21 December 2023 and by an order of Master Maurice Lam dated 19 January 2024, P was granted leave to amend the Amended Writ and file the Re-Amended Writ of Summons and ASOC.

14.  On 12 June 2024, Skeleton Submissions of P (“P’s Submissions”) and a Bundle of Documents were lodged on behalf of P. It was submitted that default judgment ought to be entered against D in terms of the Summons.

15.  As in P’s Submissions it was asserted that to the understanding of Ms Lam, D does not contest the substantive relief as sought by P in the Summons, on 14 June 2024, I directed my clerk to inquire with D’s solicitors D’s position and whether they will attend the hearing scheduled before me.

16.  Later that afternoon, D’s solicitors lodged their Submissions on Costs (“D’s Submissions”). It was confirmed therein that D had no objection to the substantive relief sought by P save that the Order to be made by the Court shall be in the following terms:

(1)  A declaration that D’s title to the part of the area as shown and coloured Indigo hatched Indigo in the plan annexed herein (the “Wall Shop”) has been extinguished by virtue of sections 7 and 17 of the Limitation Ordinance, Cap 347; and

(2)  The Deceased, by reason of adverse possession, acquired possessory title of the Wall Shop.

17.  As to costs, it was submitted in D’s Submissions that there should be no order as to costs of this action and this application save and except the costs of the Previous Summons, the hearing on 11 October 2018 and the 5^th Affirmation of P be borne by P, to be taxed if not agreed.

Applicable principles

18.  The applicable principles governing an application for default judgment under O 19, r 7 as well as a claim for adverse possession are well-settled. As these were both helpfully summarized by Cheng J in Lee Wah Put and Anor v Li Ip Shing [2022] HKCFI 529, §§5-10, I gratefully adopt them herein:

“C.1 Applications for default judgment

5. On an application for default judgment under O.19 r.7, the court gives such judgment as the plaintiff appears entitled on the statement of claim: O.19 r.7(1). Accordingly, the court will not consider any evidence.

6. It is not the normal practice of the court to make a declaration without a trial. However, this is only a rule of practice which should not be followed when the plaintiff has a genuine need for the declaratory relief and justice would not be done if such relief were denied. The court will scrutinise the application carefully and will not hastily grant the relief sought. The declaratory relief should not be in terms wider than what the plaintiffs are entitled to and what is necessary to do justice to them. See Hong Kong Civil Procedure 2022, note 19/7/20.

C2. Adverse possession

7. Pursuant to s.38A of the Limitation Ordinance (Cap. 347) (‘LO’) and s.7 of the Limitation Ordinance 1965, actions for recovery of land are statute-barred after twenty years from the date on which the right of action accrued, where the right of action accrued prior to 1 July 1991.

8. No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run: s.13 LO.

9. At the expiration of the prescribed period for any person to bring an action to recover land, the title of that person to the land shall be extinguished: s.17 LO. However, the effect of expiration of the period is only that it extinguishes the title of the dispossessed against the squatter; it does not convey the owner’s title to the squatter: Chan Tin Shi & Others v Li Tin Sung & Others (2006) 9 HKCFAR 29 at [13]; St Marylebone Property Co Ltd v Fairweather [1963] AC 510 at 535.

10. A person claiming to be in adverse possession must be shown to have both possession and the requisite intention to possess: Wong Tak Yue v Kung Kwok Wai & Another (No 2) (1997-98) 1 HKCFAR 55 at 68E.”

Analysis and Disposition

19.  Even where the defendant does not contest the application, the court will not rubber stamp an application for default judgment without further ado: see Hong Kong Civil Procedure 2024, Vol 1, §19/7/20.

20.  Upon scrutiny of the application and the ASOC, as I indicated to Ms Lam at the hearing, I saw a number of difficulties in so far as P claims that she (ie in her personal capacity, on her own behalf, as opposed to on behalf of the Deceased) had been in adverse possession of the Wall Shop and is entitled to the various declarations from this court without a trial.

21.  Firstly, I was vexed by the different and somewhat inconsistent pleas throughout the ASOC as to who/whom had been in exclusive and continuous possession of the Wall Shop and had the requisite intention to possess the same. See ASOC:

(1)  Paragraph 1:

“[P]… avers that [the Deceased] and their children have had undisturbed, exclusive and continuous adverse possession of [the Wall Shop].”;

(2)  Paragraph 1A:

“[P] is the lawful and natural daughter of [the Deceased] who died intestate on 30 November 2018. She brings this action as the administratrix of the estate of the [Deceased] under Law Amendment and Reform (Consolidation) Ordinance (Cap.23)”;

(3)  Paragraph 19:

“After the death of the Late Mr Sham on or about 8^th November 1976, [the Deceased] and the Children continued to have exclusive and continuous possession of the Wall Shop and the area on which the Wall Shop was situated to the exclusion of the Defendant.”;

(4)  Paragraph 20:

“[The Deceased] continued her exclusive possession of the Wall Shop for running the Business without any disturbance or interruption…”;

(5)  Paragraph 28:

“Since the completion of the improvement works to the Wall Shop, [the Deceased] continued her exclusive and continuous possession of the Wall Shop…”;

(6)  Paragraph 29:

“In the premises, since the Late Mr. Sham and [the Deceased] entered into and took exclusive possession of the area now occupied by the Wall Shop and settled on that area and erected structures that became the Wall Shop in or about 1969, they and/or their children have evinced the unequivocal the requisite intention to possess the Wall Shop and the area on which the Wall Shop was situated to the exclusion of all other person, including the Defendant.”; and

(7)  Paragraph 33:

“By reasons of the matters pleaded hereinabove, it is averred that: (a) Since 1969 or thereabouts, the Late Mr Sham, [the Deceased] and their children have undisturbed, exclusive and continuous adverse possession of the area now occupied by the Wall Shop to the exclusion of the Defendant, and have exercised acts of ownership over the same without any consent or authority of the Defendant for a period in excess of 20 years since 1969, prior to the commencement of the proceedings…”.

22.  Even in P’s Submissions, there was no clarity on this matter as it was submitted therein that “P and/or her late parents” have been in adverse possession of the Wall Shop.

23.  Secondly, to the extent P claims adverse possession to the Wall Shop in her own capacity, there was never any plea that she had dispossessed the Deceased or the other children of the Deceased.

24.  In Powell v McFarlane and Another (1979) 38 P & CR 452 at 471-472, Slade J explained that animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title. See also Wong Yat Wang v Kam On Property Consultants Limited & Anor [2023] HKDC 1100, §§14-15.

25.  Prior to the hearing, I also referred parties to the case of Lau Siu Kwong David, Lau Shui Chen Constance, Lau Shiu Hung, Lau Sau Ping Cons, Lau Sau Wah Christine and Lau Sau Yee v The Personal Representatives of Lee On Yuen, Deceased (Unrep), HCA 10001/2000, 9 April 2001. In that case, the plaintiffs were the children of Lau Fung Jim. Prior to the death of Lee On Yuen, Lau Fung Jim was given permission to live in the property. When Lee On Yuen passed away, Lau Fung Jim continued to occupy the property, together with the plaintiffs, as if it was his own.

26.  The learned Recorder held that since the death of Lee On Yuen, it is clear that the property had been occupied by Lau Fung Jim and also his children as his licencees and other persons claiming title through him, like his tenants (see §13). Whilst he held that he would grant a declaration that the Estate of Lee On Yuen has lost the right to bring any action to recover the property by virtue of section 7(2) of the Ordinance, and a declaration that the deceased’s title to and interest in the property has prior to the action been extinguished by virtue of sections 7(2) and 12 of the Ordinance, he refused to grant a declaration that the plaintiffs had acquired a good possessor title to the property (see §§14-18). See in particular at §16:

“I am however not in favour of granting a declaration in terms of paragraph (c) where the Plaintiffs asked me to grant a declaration that the Plaintiffs had acquired a good possessor title to the property. The reason is that on the face of the Pleading, the Plaintiffs are licensees of Lau Fung Jim and while I am satisfied that the property had been in adverse possession as against the deceased Lee On Yuen since the date of his death, there is no evidence of any dispossession of Lau Fung Jim by the Plaintiffs. Furthermore I am of the view that since the Plaintiffs were licensees of Lau Fung Jim, they derived their title to the property from Lau Fung Jim, and unless they had since dispossessed Lau Fung Jim, their father, they could not claim a better possessory title to the property than Lau Fung Jim.”

27.  I also took the view that similarly in the present case, given there is no plea that P has dispossessed the Deceased, this was fatal to P’s claim to the Wall Shop in her own right.

28.  Thirdly, it seemed to me that properly understood, this action was initially commenced by the Deceased and was ordered to be continued on behalf of the Estate of the Deceased. As I see it, P is not currently a plaintiff in her own right.

29.  To the extent P wishes to claim that she has personally acquired possessory title to the Wall Shop, this would put her in a position of conflict (or potential conflict) with her role as administratix of the Estate of the Deceased (“the Estate”).

30.  As mentioned above, by Order of Master Anny Chak, P was ordered to carry on this action by her as administratrix of the Estate. The ASOC pleads that P brings this action as administratix of the Estate of the Deceased under Law Amendment and Reform (Consolidation) Ordinance, Cap 23. Section 20(1) provides:

“Subject to the provisions of this section, on the death of any person after 26 October 1951, all causes of action subsisting against or vested in him shall survive against, or, as the case may be, for the benefit of, his estate.”

31.  Under “Chose in action”, the benefit of this action was expressly listed in the Schedule of Assets and Liabilities annexed to the Letter of Administration.

32.  Accordingly, as administratrix, P has to continue this action for the benefit of the Estate. However, any personal claim against the Wall Shop would be contrary to the interest of the Estate. That is a matter that I could and would take into account in the exercise of my discretion. See Chan Pui Lok Daniel v Personal Representatives of Leung Shu Ming [2017] 4 HKLRD 625, another case which I referred parties to prior to the hearing.

33.  In that case, the plaintiff, the sole executor of the deceased, made a claim for adverse possession against a property that the deceased had remained in continuous and exclusive possession for a period over twenty years. Deputy Judge Joseph Kwan observed that the plaintiff is in a position of conflict or potential conflict and held that this was a factor to be taken into account in considering whether to exercise his discretion to grant default judgment without a trial (see §§34-35 and 41).

34.  For this reason I also would not have exercised my discretion to grant default judgment in favour of P in her personal capacity without a trial.

35.  Lastly, in relation to the declaration sought that P (or even the Deceased) has acquired ownership of the Wall Shop and is entitled to be registered as the owner of the Wall Shop in the Land Registry, that is wholly misconceived and unsustainable. It is trite that the effect of expiration of the prescribed period under the Ordinance is only that it extinguishes the title of the dispossessed against the squatter, it does not convey the owner’s title to the squatter: see Lee Wah Put, §9 quoted above.

36.  Only after indication of all the above concerns with Ms Lam at the hearing, she then acknowledged that it was not clear from P’s Submissions but she confirmed that the declarations sought are only on behalf of the Deceased. She also acknowledged that no declaration should be made in respect of registration of ownership in the Land Registry.

37.  In those circumstances, I was satisfied that there was sufficiently and properly pleaded both factual possession and the requisite intention to possess the Property by the Deceased for more than the period of adverse possession as required by the Ordinance.

38.  Furthermore, I was satisfied that there was a genuine need to grant the declarations sought to do fullest justice to the Deceased. Where a plaintiff claims adverse possession of land and declaratory relief is the only and substantial relief sought, the courts have held that justice could not be done if declaratory relief is not granted: see eg Law Yuk Fong v Man Chung Wai and Man Chung Choi (Unrep) HCA 2195/2015, 16 January 2017, §§17-21 and the cases discussed therein.

Costs

39.  It was not disputed that this Court retains a wide and unfettered discretion on costs.

40.  Mr Yat referred me to various paragraphs in Hong Kong Civil Procedure 2024, Vol 1 (§§19/7/11, 19/7/19 and 62/5/6) and the case of Wong Yat Wang (§§10, 11, 13 & 17). In the latter case, the court held that in an uncontested adverse possession case, the court should be careful in making costs order against a faultless legal owner of the property in favour of the squatter who dispossessed the legal owner.

41.  Mr Yat therefore submitted that having regard to the nature of P’s claim (adverse possession), the delays in these proceedings (which he submitted was unreasonable and unexplained) and the filing of the lengthy 5^th Affirmation of P in support of the Summons which was demonstrated to be mostly identical to the 1^st Affirmation of P filed in support of the Previous Summons, in the exercise of my discretion, I should make no order as to costs.

42.  Ms Lam at the hearing conceded there should be no order as to costs for the costs of and occasioned by the Previous Summons, the hearing on 11 October 2018 and the 5^th Affirmation of P, but submitted that otherwise, costs of the action including the Summons should be to P.

43.  Whilst Ms Lam sought to give some explanations from the Bar table on the delays in the present proceedings, which included the untimely and unforeseen demise of the Deceased and even the Deceased’s former solicitors as well a the intervening pandemic, even accepting all that, I still took the view that there was no justification for the unnecessary incurring of costs and duplications. The Previous Summons could have been restored, amended as necessary, rather than taking out the Summons seeking substantially the same relief.

44.  In respect of the affirmations filed in support of the application, these were unnecessary because it is trite that the court cannot receive any evidence and must give judgment according to the pleadings alone. Thus the costs of any affirmations in support of the claim will be disallowed: see Hong Kong Civil Procedure 2024, Vol 1, §19/7/11.

45.  Furthermore, even with respect to the Summons, P has not been wholly successful in the present application.

46.  Having regard to the manner and conduct in pursuing these proceedings, the extent of success by P, the nature of these proceedings, and the underlying objectives set out in Order 1A, r 1 of RDC, I was of the view that it was just to order that there be no order as to costs.