WONG CHAAU HOP as sole administratrix of LEUNG FUNG, deceased v. CHEUNG CHI WAI

HCMP 2342/2015

[2021] HKCFI 318

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2342 OF 2015

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J U D G M E N T

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A. INTRODUCTION

1.  This action arises out of a dispute in respect of First Floor, 22 Kowloon City Road, Kowloon, Hong Kong (the “Property”).

2.  It is the plaintiff’s pleaded case in the Statement of Claim that the late Leung Fung (the “Deceased”) had purchased the Property in 1970.  The plaintiff and Ms Huang Zhuan Hao (“HZH”) were the natural daughters of the Deceased.  The Deceased had died intestate in Jiangmen in May 1992.  As such, the plaintiff was entitled to possession of the Property as one of the beneficiaries.  On a date unknown to the plaintiff, during the lifetime of the Deceased, a man named Cheung Pui (the “Father”) moved into the Property with his infant daughter and his son, the defendant.  The defendant has remained in occupation of the Property and refused to deliver vacant possession.  The plaintiff therefore brought an action for the tort of trespass to land.

3.  The defendant’s pleaded case is that:

(1)     Notwithstanding that the Deceased was at all times the registered owner of the Property, the Father had paid the purchase price of HK$46,000 and mortgage repayments for the Property.  As such, this gave rise to a resulting trust in which the Father was beneficially entitled to the Property.  The defendant, being beneficiary and administrator of the intestate estate of the Father, is entitled to the Property.

(2)     Alternatively, if there is no resulting trust in favour of the Father, the defendant had acquired possessory title of the Property by way of his continuous adverse possession of the Property from the death of the Deceased in 1992 till now.

(3)     Further and/or alternatively, if the Deceased was the beneficial owner of the Property, the defendant became the beneficial owner of the Property by way of common intention constructive trust and/or proprietary estoppel.

4.  The plaintiff’s case in reply is as follows:

(1)     The defendant had moved to live in the Property with the consent of the Deceased in her lifetime.  The continuation of possession of the Property therefore did not amount “dispossession” or possession by the defendant for the purposes of the Limitation Ordinance, Cap 347 (“LO”).

(2)     Before the grant of letters of administration to the plaintiff (the “Letters of Administration”) in 2015, nobody had the right to recover the Property. As such, time under the LO only ran after the grant of Letters of Administration in 2015.

(3)     The plaintiff’s brother-in-law, Mr Huang Changyang (“HCY”), had given the defendant the original will of the Deceased (the “Original Will”) shortly after the death of the Deceased in 1992.  The purpose was to facilitate the grant of probate to the defendant as the executor.  The defendant, however, concealed the Original Will and never applied for the grant of probate.  The plaintiff only discovered this concealment in September 2014.  As a result, the limitation period only began to run in September 2014 by virtue of section 26(1)(b) of the LO.

5.  Thus, the following issues are to be determined at the trial:

(1)     Whether or not the Deceased held the Property on a resulting trust in favour of the Father (the “Resulting Trust Issue”).

(2)     For the purpose of section 7(2) of the LO, should time start running from the date of the death of the Deceased in 1992, or from the date of the grant of Letters of Administration in 2015 (the “Time Issue”).

(3)     Whether or not (i) the defendant had intentionally concealed the Original Will, and (ii) the plaintiff had exercised reasonable diligence to discover the concealment of the Original Will (the “Concealment Issue”).

(4)     Whether or not the defendant had adversely possessed the Property from 1992 to the present day (the “Adverse Possession Issue”).

(5)     Whether or not the defendant became the beneficial owner of the Property under a common intention constructive trust (the “Common Intention Constructive Trust Issue”).

6.  At trial, the plaintiff ran the further point that the defendant’s possession of the Property after the death of the Deceased was not “adverse” because the defendant was the executor under the Original Will (the “Executor Issue”).  At paragraph 68 of her Closing Submissions, the plaintiff succinctly put the point as follows:

“68. The Deceased left the Will as her last will. In law, upon her death the Deceased’s interest in the Property vested immediately in the defendant in his capacity as the sole executor appointed by the Will (Williams, Mortimer and Sunnucks: Executors, Administrators and Probate (21^st ed, 2018) at §5-05, p 56 [LA/13/p56/§5-05]). The defendant has never been in adverse possession since, before the deceased’s death the defendant occupied as a licensee of the Deceased and thus was not adverse; upon death of the Deceased the defendant’s occupation could not be adverse to his other capacity of executor in whose hand the Property immediately vested. Hence, the defendant was at no time in adverse possession of the Property. Further, by reason of the defendant’s denial even of knowledge of the Will, there is no evidence that the defendant had ever renounced probate of the Will (Sections 28(3) and 29 of the Probate and Administration Ordinance, Cap 10 (the “PAO”)). Hence, all along until the Letters of Administration was granted formally to the plaintiff in 2014 who then had the right to sue, the defendant’s rights including right of possession of the Property qua the defendant’s executorship had remained.” (Original emphasis by the plaintiff)

B.     THE TIME / CONCEALMENT / EXECUTOR / ADVERSE POSSESSION ISSUES

7.  At trial, under cross-examination, the plaintiff admitted in her oral evidence that the defendant had occupied the Property for “several tens of years” until the present and refused to hand it over.  As submitted by the defendant, the following documentary evidence clearly shows that the defendant was in factual possession of the Property from 1992 onwards. None of the documentary evidence below was challenged during the course of the trial by the plaintiff. 

Item	Description
1	Kwe Hing Construction receipts, representing repair fees of the Property in 1994.
2	Receipt issued by the Mutual Aid Committee being fee for electrical installation work of the Property on 28 November 2003.
3	Receipt issued by the Mutual Aid Committee for management fees and staircase lighting in the total sum of $480 in respect of the Property on 31 October 2005.
4	漢城棚業水電工程公司 receipt, representing repair fees of the Property in 2011.
5	Receipts from the Mutual Aid Committee in respect of public utility fees of the Property from 2010 until 2014.
6	Letter issued by the Rating and Valuation Department to the defendant in respect of the Property on 30 March 2015.
7	12 copies of Demand for Rates issued by the Rating and Valuation Department to the defendant in respect of the Property for the period from April 2010 to June 2013, October 2013 to December 2014, April 2015 to September 2015.
8	Copy of Demand for Rates and Government Rent (inclusive of surcharges) issued by the Rating and Valuation Department to the defendant dated 17 February 2015.
9	Copy of Acknowledgement of Change in Payer’s Particulars issued by the Rating and Valuation Department to the defendant dated 7 March 2014.

8.  Instead, the main issue in dispute centred around the existence of the alleged Original Will of the Deceased.  The plaintiff argued that the defendant could not be in adverse possession as he was the executor named under the alleged will.  I agree that, as submitted by the defendant, this line of argument is simply not open to the plaintiff to make, given that their pleaded case is that the Deceased died intestate. It would be clearly contradictory to say on the one hand that the Deceased had died intestate, and on the other that the defendant was the executor under the alleged will of the Deceased thus entitled to possession of the Property and such possession was not “adverse”.

9.  As submitted by the defendant, the plaintiff cannot blow hot and cold.

10.  Not only is the plaintiff’s case on the Executor Issue contrary to her pleaded case in the Statement of Claim, the plaintiff had in fact stated this in paragraph 7 of her affirmation dated 19 January 2015 made in support of the application for the Letters of Administration: “Since the death of the Deceased, I have caused to be made a diligent search among her papers and effects for any Will made by her, but I have been informed that no such Will has been found.”

11.  The plaintiff cannot adopt a position which is a departure from her pleaded case.  Order 18, rule 10(1) of the Rules of the High Court provides that a party shall not in any pleading make any allegation of fact, or raise any new ground of claim, inconsistent with a previous pleading of his.  In my view, a fortiori, the plaintiff cannot run a case which is inconsistent with the position pleaded in the Statement of Claim.

12.  Further, as submitted by the defendant, as the validity of the Original Will appointing the defendant as executor was not in issue at the trial, no evidence was adduced towards that issue.

13.  Also, logically the plaintiff cannot run her argument on the Concealment Issue.  The plaintiff’s argument on the Concealment Issue is not runnable because, for the reasons set out in paragraphs 8 to 11 above, the plaintiff is precluded from running a case based on a valid will having been handed to the defendant.

14.  Section 26(1)(b) of the LO provides that where in the case of any action for which a period of limitation is prescribed by this Ordinance … (b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant … the period of limitation shall not begin to run until the plaintiff has discovered the concealment or could with reasonable diligence have discovered it.

15.  In my view, the reference to “any fact relevant to the plaintiff’s right of action” must be to facts that are legally relevant. This is patently not the case in these proceedings: on the plaintiff’s pleaded case, the plaintiff’s right to the Letters of Administration is based on the intestacy of the Deceased and not on the concealment of the alleged Original Will.

16.  As regard the Time Issue, the defendant’s position is that the limitation period in respect of the plaintiff’s right to recover the land started running as of the Deceased’s date of death on 5 May 1992, as opposed to the granting of the Letters of Administration to the plaintiff on 21 July 2015.

17.  Under section 7(2) of the LO, it is provided that:

“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 ...” (Emphasis supplied)

18.  Section 8(2) of the LO provides that:

“Where any person brings an action to recover any land of a deceased person, whether under a will or on intestacy, and the deceased person was on the date of his death in possession of the land or, in the case of a rentcharge created by will or taking effect upon his death, in possession of the land charged, and was the last person entitled to the land to be in possession thereof, the right of action shall be deemed to have accrued on the date of his death.” (Emphasis supplied)

19.  Under section 16 of the LO, it is provided that:

“For the purposes of the provisions of this Ordinance relating to actions for the recovery of land, an administrator of the estate of a deceased person shall be deemed to claim as if there had been no interval of time between the death of the deceased person and the grant of the letters of administration.” (Emphasis supplied)

20.  The language of section 16 of the LO can be traced back to section 6 of the Statute of Limitations 1833 (3 & 4 Will 4, c 27) which was cited in Re Williams (1886) 34 Ch D 558:

“The 6^th section of 3 & 4 Will 4, c 27, enacts that ‘for the purposes of this Act an administrator claiming the estate or interest of the deceased person of whose chattels he shall be appointed administrator, shall be deemed to claim as if there had been no interval of time between the death of such deceased person and the grant of the letters of administration.’”

21.  In Re Williams, counsel for the plaintiffs submitted that the effect of the expression “no interval of time” must be to bring the two events, the death and the grant of the letters of administration, together, and that time only ran from the grant.  Counsel for the defendants submitted to the contrary, that according to the true construction of the section, time ran not from the date of the grant of letters of administration but from that of the death of the intestate.

22.  Stirling J dismissed the plaintiffs’ claim and held as follows:

“The construction of this section was adjudicated upon by Mr Justice Chitty in a case in Chambers, in which I was counsel, where he held that this section applied for all purposes of the Act, that the parties in that case were in the same position as if the letters of administration had been granted immediately after the death of the intestate, and accordingly that time under the statute began to run as from the date of the death, and not from that of the grant. That is also my view.” (emphasis added)

23.  In light of the above, the defendant herein correctly submitted that the plaintiff’s position, namely, that the time under the LO only began to run after the grant of Letters of Administration to the plaintiff in 2015 is misconceived.

24.  As a matter of law, it is clear that the effect of section 16 of the LO is that where possession of the land of an intestate person is taken on his death by a third party (ie the defendant in the present case), time starts to run from the date of death of the Deceased (ie 5 May 1992) against the administrator’s right to recover the land, notwithstanding that no title vests in the administrator until the grant of Letters of Administration was obtained by the plaintiff. 

25.  For the reasons set out above, I rule in favour of the defendant on the Time Issue, the Concealment Issue, the Executor Issue, and consequently on the Adverse Possession Issue.

C.     THE RESULTING TRUST / COMMON INTENTION CONSTRUCTIVE TRUST ISSUES

26.  Given my view on the Adverse Possession Issue, it is not strictly necessary to determine the Resulting Trust Issue and the Common Intention Constructive Trust Issue.

27.  However, for the sake of completeness, I would say as follows.

28.  It is not disputed that in the present case the burden of proving a resulting trust or a constructive trust is squarely on the defendant.  The disputes to be tried concerning the defendant’s causes of action of resulting trust/constructive trust/proprietary estoppel are largely factual.  The three causes of action rest on one single premise that the Father of the defendant had paid the purchase price of the Property at the time of acquisition of the Property, hence they could be decided upon the resolution of that allegation and should stand or fall together.  In discharging his burden of proof, the defendant relies substantially on his mere allegations of what was said or agreed among him, the Deceased and/or the Father, ie conversations allegedly exchanged with the defendant by persons who are now dead and could not give evidence.

29.  As submitted by the plaintiff, from the defendant’s pleadings and evidence, his case on resulting trust/constructive trust/proprietary estoppel is based on two fundamental facts:

(1)     The Property was bought with the Father’s money; and

(2)     By reason of the above fact, the Deceased told the defendant that the Deceased would transfer the Property to the defendant.

30.  For the reasons set out in paragraphs 6 to 16 and 29 to 43 of the plaintiff’s Closing Submissions, I am not satisfied that the defendant was credible or reliable regarding his case on resulting trust/constructive trust/proprietary estoppel.  I hold that the defendant has failed to discharge his burden to prove either of the two essential matters referred to in paragraph 29 above.  

31.  Accordingly, the defendant’s claims based on resulting trust/constructive trust/proprietary estoppel must fail.

D.      CONCLUSION AND DISPOSITION

32.  For the reasons stated in paragraphs 7 to 25 above, I hold that the defendant is entitled to succeed on his counterclaim based on adverse possession.

33.  Accordingly, I order as follows:

(1)     A declaration that the plaintiff’s title to the Property was extinguished under sections 7 and 17 of the Limitation Ordinance, Cap 347.

(2)     A declaration that the defendant has acquired good possessory title to the Property by virtue of his continuous adverse possession of the same.

(3)     The plaintiff’s claims against the defendant in these proceedings be dismissed.

(4)     The costs of these proceedings (including all costs reserved, if any) be paid by the plaintiff to the defendant, such costs are to be taxed if not agreed.

34.  The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

35.  Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.