CHOI MAN CHIU v. WAN KWAN KAU AND ANOTHER

DCCJ 1873-1876/2022

(Consolidated)

[2025] HKDC 1832

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NOS 1873-1876 OF 2022

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BETWEEN

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(Action consolidated by Order of Master Jocelyn Leung
dated 15 July 2022)

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JUDGMENT

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I. INTRODUCTION

1.  By the order made by Master Jocelyn Leung dated 15 July 2022, DCCJ 1873/2022, DCCJ 1874/2022, DCCJ 1875/2022 and DCCJ 1876/2022 (these “Actions”) are to be consolidated and tried together.

2.  Choi Man Chiu (“P”) claims that he has been in adverse possession of Unit 201 (“Unit 201”), Unit 206 (“Unit 206”), Unit 215 (“Unit 215”) and Unit 217 (“Unit 217”) (collectively the “Units”) on 2^nd Floor, Smiling Plaza, Nos 155/169 Castle Peak Road, Nos 174/188 Un Chau Street, Kowloon (“the Arcade”) since 2003.

3.  Wan Kwan Kau (“D1”) is the Defendant in DCCJ 1873/2022 and is the registered owner of Unit 201. D1 is also the director of Image Investment Limited (“D2”), who is the registered owner of Units 206, 215 and 217 and the Defendant in DCCJ 1874-1876/2022.

4.  The Writs of Summons in these Actions were issued on 24 May 2022. P claims in these Actions that he has been in continuous exclusive possession as well as the requisite animus possidendi of these Units since about September 2003. Unless specifically stated, the various particulars supporting exclusive possession as pleaded under the Consolidated Statement of Claim (“CSOC”) are as follows:

Unit 201

Month/Year	Actions taken by P
09/2003	P entered into and used the unit for storage
02/2007	P changed the door lock, carried out renovation
02/2009	P entered into a one-year tenancy agreement with Man Kai Cheong[1]
07-08/2012	P started paying for electricity, government rents and rates
05/2018 onwards	P started settling outstanding management fees incurred from 2003
08/2019	P entered into a one-year tenancy agreement with Cheung Kin
06/2021	P entered into a one-year tenancy agreement with Ho Kin Fai
08/2021	P paid shares of maintenance costs of the Arcade
06/2022	P entered into a two-year tenancy agreement with Ma Sai Yu[2]

Unit 206

Month/Year	Actions taken by P
09/2003	P entered into and used the unit for storage
02/2007	P changed the door lock, carried out renovation
11/2010	P started paying for government rents and rates
11/2011	P started paying for electricity
08/2019	P started settling outstanding management fees incurred from 2003
09/2019	P entered into a one-year tenancy agreement with Tse Chi Hang
05/2021	P entered into a one-year tenancy agreement with Ho Kin Fai
07/2021	P paid shares of maintenance costs of the Arcade
05/2022	P pursued damages from the Incorporated Owners of Hung Yu Mansion due to water seepage caused to the unit

Unit 215

Month/Year	Actions taken by P
09/2003	P entered into and used the unit for storage
02/2007	P changed the door lock, carried out renovation
12/2009	P started paying for electricity
03/2010	P entered into a two-year tenancy agreement with Lee Fu Cho[3]
10/2012	P started paying for government rents and rates
08/2019	P started settling outstanding management fees incurred from 2003
03/2020	P engaged contractor to renovate the unit
09/2020	P entered into a two-year tenancy agreement with Cheung Kin, terminated orally in 12/2021
08/2021	P paid shares of maintenance costs of the Arcade
08/2021	P entered into a one-year tenancy agreement with Fung Chun Man
01/2022	P entered into a one-year tenancy agreement with Yuen Yat Chun

Unit 217

Month/Year	Actions taken by P
09/2003	P entered into and used the unit for storage
02/2007	P changed the door lock, carried out renovation
03/2010	P started paying for electricity
10/2010	P entered into a three-year tenancy agreement with Wan Kim Fai[4]
06/2011	P started paying for government rents and rates
08/2019	P started settling outstanding management fees incurred from 2003
05/2020	P entered into a two-year tenancy agreement with Tse Chi Kin
08/2021	P paid shares of maintenance costs of the Arcade
05/2022	P entered into a one-year tenancy agreement with Lau Wai Lok

5.  By reason of the matters cited above, P claims that the interest and paper title of D1 and D2 (“Ds”) of their respective Units were extinguished by virtue of sections 7 and 17 of the Limitation Ordinance (Cap 347) and seeking declaratory relief that P has acquired a good possessory title of the respective Units.

6.  The Defence case is simple. D1 purchased Unit 201 in January 2003 whereas D2 purchased Unit 206, Unit 215 and Unit 217 in February 2003. It is not disputed that neither D1 nor D2 has ever leased out the Units, rather D1 claimed that besides Unit 206 which was left vacant since the purchase, all of the other three Units 201, 215 and 217 were used for storing his own personal items. D1 averred that he would visit the Units occasionally from 2003 to around 2016, when he stopped doing so due to his deteriorating health. Ds therefore counterclaim against P to deliver vacant possession of the Units and for the loss and damages they have suffered for P’s unlawful trespass to the Units plus interest.

II. APPLICABLE LEGAL PRINCIPLES

7.  The legal principles applicable to adverse possession are well established. If a squatter is in adverse possession of the land belonging to a paper title land owner for a period of 12 years or more, the title of that other person shall be extinguished.

8.  The Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai David and Anor [1998] 1 HKLRD 241 applied the well-established principles from Powell v McFarlane (1979) 38 P & CR 452 which identified the twin requirements needed to establish adverse possession. The owner of the land with the paper title has the prima facie right to possession and the squatter has to prove that (s)he has (i) factual possession of, and (ii) intention to possess that land and for a period of 12 years or more.

9.  Factual possession signifies an appropriate degree of physical control, which must be a single and conclusive possession.

10.  Intention to possess or animus possidendi is the intention to possess the land in one’s own name and on one’s own behalf, to the exclusion of the world at large, including the owner with the paper title so far as is reasonably practicable and so far as the process of the law will allow.

11.  The squatter bears the burden of proof of all these requirements, and he or she has to adduce objective and compelling evidence. Self-serving evidence, including the squatter’s subjective intention will hardly be given any weight; on the contrary, the slightest act done by the paper owner in manifestation of his title is sufficient evidence to negate any intention to discontinue or abandon possession of the land in question.

III. THE PARTIES’ PLEADED CASES

12.  P rests his case on adverse possession that he began his exclusive possession of the Units starting from 2003. As seen from the pleaded issues table in paragraph 4, the alleged actions taken by P constituting factual possession could be categorized in the following terms: (1) P gained entry upon the Units, placed his belongings therein and changed the door locks; (2) P carried out renovations to the Units; (3) P settled outgoing expenses including utility bills, management fees, maintenance costs and government rents and rates; and (4) P entered into various tenancy agreements (“TA”) with rents received.

13.  As agreed by counsels of both parties, P has the burden to prove that he has been in continuous and exclusive possession of the Units for not less than 12 years before the commencement of these proceedings, thus it is necessary for P to establish adverse possession of the Units at least from 24 May 2010.

14.  The dispute in this case is entirely factual. P bears the burden of proof. The outcome of this trial depends heavily on my finding of P’s credibility. P’s attack on Ds’ case and D1’s credibility will be analysed in turn.

15.  The evidence relied on P in this case comprises of P’s evidence on the factual issues and documents in support, along with his witness Mr Wan Kim Fai, who was allegedly a tenant of Unit 217 between 2010 and 2013. P provided a plethora of receipts showing (1) the change of door locks; (2) the management fees he settled for the respective Units; (3) utility bills he paid for; and (4) TAs he entered into with various tenants.

16.  Despite Ms Mok, counsel for P, contending that the nature of these documents can demonstrate P’s sufficient degree of exclusive physical control of the Units, the peculiar fact that P being an employee of the management company of the Arcade, namely Property Care Management Services Limited (迅達管理服務有限公司) (“the Mgmt Company”) at the material times prompted the need for a closer examination of his evidence.

17.  P admitted under cross-examination that he was employed by the Mgmt Company of the Arcade since 2007 as a property manager. Prior to his employment, in or around 2003, he frequented the Arcade for leisure and decided to gain entry to the Units as they were not locked, and the premises were left vacant. He used the Units as storage for his personal properties, ranging from old newspapers, old school uniforms to furniture he collected over years. He only decided to ‘change the lock’ (「換鎖」as mentioned in his witness statement and the receipts from the locksmith) the same year as he commenced his employment with the Mgmt Company. Under cross-examination, he averred that the words 換鎖 was a misdescription as he only purchased 4 locks for the Units which were otherwise unlocked.

18.  P claimed that he carried out some renovations to all of the Units but no receipts were provided because he performed the work by himself.

19.  In 2009, P averred that he entered into a one-year TA with a Mr Man Kai Cheong (“Mr Man”) in respect of Unit 201 who was, quite remarkably, another employee of the Mgmt Company working as a part-time administrative assistant. It is also noteworthy that this alleged TA was not pleaded in the CSOC, and Mr Man, being P’s tenant and colleague at the material times, was listed as a witness in these proceedings but could not attend the trial at the eleventh hour.

20.  P tendered Mr Wan Kim Fai (“Mr Wan”), a tenant of Unit 217 from 2010 to 2013 as his witness notwithstanding such TA was not pleaded in the CSOC. Mr Wan gave evidence that he was working as a manager at a restaurant in the Arcade at the material time and decided to rent Unit 217 at HK$2,000 a month for storing his red wines. He said he met P, who was a customer of the restaurant and he knew P was working for the Mgmt Company at the time when he decided to rent Unit 217 in 2010. He signed the TA at the management office of the Arcade without studying the land search, and simply assumed that P was the landlord as P was able to give him the key of Unit 217. Mr Wan also gave evidence that he never locked the unit, never paid electricity bill because there was no electricity consumption, and he recalled the Unit 217 was a bare shell without any renovation when he entered upon.

21.  Besides the evidence of Mr Wan, P produced 11 sets of TAs he entered into with various tenants in respect of the Units between 2009 and 2022. All 11 sets of TAs were only stamped in 2022 as confessed by P for the purpose of these proceedings. He nonetheless insisted, after rounds of cross-examination, that they were all properly executed with the respective tenants before the commencement of the tenancy.

22.  As to all the rents P received from these TAs, he produced no bank records but averred that he received cash payments for rent from all tenants.

23.  P averred he started settling various utility bills together with the government rents and rates as early as 2009. Again, the Court was presented with mostly receipts from convenience stores of cash payments without bank records, and the most of the electricity bills as well as the demand notes of the government rents and rates were registered in D1 or D2’s name until P registered his name for the electricity utility in or around 2020. As such, the identity of payer(s) could not be determined from the documentary evidence.

24.  Besides the bills mentioned above, P also averred from 2018 onwards, he started paying off the outstanding management fees from all Units incurred from January 2003. The total amount of management fees he paid up to August 2022 was HK$935,806.00. P produced all the receipts issued by the management office of the Arcade, but without any bank records despite most of the payments were made by cheques. P also averred that he paid HK$17,708 as contribution fund to the Incorporated Owners of Hung Yu Mansion for all the Units in 2021.

25.  D1 explained in his witness statements that the Units were foreclosed properties and he and D2 bought them in 2003 as an investment. And since at that time the outbreak of SARS had a negative impact on Hong Kong’s economy, he had no intention in reselling the Units but also did not want to deal with tenancy matters. He therefore adopted a wait-and-see approach.

26.  It is fair to say that D1 had been idle and disorganized in managing his property investments as he admitted that he had only settled the electricity bills and the rates and government rents occasionally and never paid for the management fees.

27.  D1 averred he did visit the Arcade regularly since it was close to his workplace. He even moved some of his personal belongings to the Units for storage as his house could not accommodate them. During his visits to the Arcade, he never saw other people’s possession being placed in his Units and he always locked the door after his visits. He stopped visiting the Arcade from 2016 when he was hospitalized and was in shock when he received the Writs of these Actions.

IV. ANALYSIS OF EVIDENCE

P’s Credibility

28.  The Court bore in mind the fact that the Arcade was under the management of the Mgmt Company at all material times, whose duties include the daily operation and the overall safety and security of the Arcade. The Court therefore found it incredible that P, being a mere visitor of the Arcade, not only could he gain entry to the Units but also having bulky furniture (eg mattress, desk) delivered and stored in the Units without any interference from the Mgmt Company. P did not give any particulars in the pleadings nor his witness statements as to how he gained access and took possession of the Units, and there was no objective evidence to support such new averments given under cross-examination. I found them to be bare assertions without any force.

29.  I formed the view that P, more likely than not, gained access of the Units through the nature of his employment in the Arcade from 2007. This also explained why he claimed to have changed the door locks and carried out the renovation of the Units in 2007 without any suspicion being cast on him by the Mgmt Company. P explained that the Units were never locked when he gained access in 2003 but blamed the locksmith to have mistakenly put down「換鎖」(change lock) instead of「買鎖」(buy lock) on the cash memo.

30.  I consider that the locksmith, on the balance of probability, would not make such a mistake, and that the costs of buying 4 padlocks at $600 would be unrealistically high. Furthermore, it was P’s pleaded case that he changed all the locks to the Units and he maintained this case in his witness statement. His explanation under cross-examination was obviously a newly invented version and I do not accept it.

Factual Possession

31.  Putting P’s case to its highest that he did change the locks to the Units from 2007 and started to use them as storage for his clutters does not equate to exclusive possession. As Slade J in Powell, supra, at page 470 stated that:

“... The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed.”

And at page 471:

“... I think 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.”

32.  It is not disputed that the Units are in a shopping mall; it does not matter if this Arcade was a popular commercial hub or one suffering from widespread abandonment with empty stores, the nature of a shopping mall is for commercial enterprise, entailing either retail activities or for investment by leasing or selling units therein. Storage for personal belongings simply cannot be a common usage of stores in a shopping mall and in some cases, such usage could even be in breach of the Deeds of Mutual Covenant or tenancy agreement. Thus, those years that P alleged to have used the Units in storing his clutters could not signify a sufficient degree of physical control of a legal owner might have been expected to deal with it.

Tenancy Agreements

33.  While I consider there can be very little dispute that leasing out the Units and earning rental incomes denotes a high degree of physical control, the reliance P sought to place on the TAs could not be sustained for the following reasons:

(i) Pleading issues

34.  Mr Chen, counsel for the Ds, criticized P for failing to plead the following TAs in the CSOC, and thus any evidence in relation to them should be disregarded:

2009 - 2010	Unit 201	P entered into a tenancy agreement with Man Kai Cheung
2010 - 2012	Unit 215	P entered into a tenancy agreement with Lee Fu Cho
2010 - 2013	Unit 217	P entered into a tenancy agreement with Wan Kim Fai

35.  Although Ms Mok argued in her opening submissions that these TAs were sufficiently pleaded in the Consolidated Reply and Defence to Counterclaim, it is trite that all material particulars in support of P’s claim must be contained in the statement of claim and not the reply.

(ii) The Controversies of the TAs

36.  Even if the Court were to treat those unpleaded TAs as part of P’s case, the evidence in support of them must be rejected because all TAs were stamped in 2022, and the ‘date of instrument’[5] or ‘promisor’[6] were all dated with various dates in 2022, which was plainly inconsistent to the alleged tenancy periods specified in clause 1 of the respective TAs.

37.  P admitted none of the TA were stamped but for the purpose of these proceedings, and that the date of instrument was left blank at the time when he and the respective tenants signed on the TA. Even if I were to accept P’s explanation, the Court must be extra cautious in scrutinizing the authenticity of contracts that were modified after the parties entered into the agreement. Since none of these tenants but Mr Wan were able to testify in these proceedings, I found that all the submitted TAs were simply self-serving evidence and refuse to put any significant weight on them.

(iii) Credibility of Mr Wan

38.  Notwithstanding the fact that the TA signed with Mr Wan was not pleaded, the Court hesitated in accepting his evidence in any event. Bearing in mind he was in full time employment as a manager at a restaurant in the Arcade with monthly salary at HK$25,000, I found it simply unrealistic that he would pay HK$2,000 per month to rent Unit 217 for storing ‘cheap red wines’ so that he could drink ‘whenever he wanted to’. I also found it absurd that he would commit to such a lengthy lease notwithstanding his employment with the restaurant was not permanent.

(iv) Failed to show the requisite intention in excluding D1 & D2

39.  As mentioned above, animus possidendi is the intention to possess the land in one’s own name and on one’s own behalf, to the exclusion of the world at large. As Hon To J in Birkenhead Properties and Investments Limited v Lam Kai-Man & Anor (Unreported) HCMP 1588/2012, 12 January 2016, stated in paragraph 11:

“… By contrast, for a squatter, he has to make it perfectly plain to the world at large by his actions or words that he is enjoying the land openly as of right as if he is the rightful owner. 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 court will treat him as not having had the requisite intention and consequently as not having dispossessed the owner: Powell v McFarlane.” (Emphasis added)

40.  Even if the Court were to give full weights to the TAs, it casted grave doubts whether P held himself out as the owner of the Units or merely a manager of the Mgmt Company representing D1 and/or D2 when entering into the TAs with respective tenants. I noticed that Mr Wan said he signed the TA at the management office in the Arcade without verifying P’s owner title; he simply believed P had such ability to enter into the contract because he had the key to Unit 217. I also noticed that some of the TAs relied on by P bear the title 「天悅廣場租用合約」 (“Smiling Plaza Tenancy Agreement”), as such, I found it perfectly reasonable and in fact highly likely that those who signed the TAs held the belief that P was executing the tenancy agreement on behalf of the legal owner.

The Alleged Payments made by P

41.  On the same token, despite P averring that he paid electricity bills and government rents and rates at all material times, he only caused the electricity meters of the Units to be changed into his own name in about 2020 or 2022. The delay in registering in his name indicated a lack of intention to exclude the world at large.

42.  P relied on all the official receipts from the Mgmt Company to prove that he had paid over HK$900,000 to settle all the outstanding management fees incurred from 2003. Despite most, if not all payments were made by cheques or bank transfers, P failed to produce a single bank record proving it was he who made such payments. I firmly rejected these receipts as reliable evidence of payments as P accepted under cross-examination that all these receipts were issued by himself and colleagues, and the signature appended on the receipts were his own.

43.  As Hon To J in Birkenhead, supra, stated in paragraph 20, the paper owner of the property is not required to prove a positive case as the burden of proving adverse possession is on the squatter. The landowner is entitled to rely on its paper title and test the squatter’s case.

44.  So although D1 appeared to be a disorganized person who adopted a nonchalant attitude in managing the Units, the Court assessment was made based on P’s evidence as discussed above. I do not consider it is necessary to make factual findings as to whether D1 did pay some of the electricity bills or not, nor how frequent he visited the Units (if he did at all). D1 & D2 are entitled to judgment as long as the Court finds that P fails to discharge the very high burden of proof.

V. CONCLUSION

45.  The Court has considered all available evidence of P in light of inherent probabilities and common sense, and in my judgment, P has failed to establish a case of adverse possession of all the Units.

46.  In such premise, P’s use and possession of the Units are deemed to be wrongful, and constituted trespassing. For D1 and D2’s counterclaim, they are entitled to damages or mesne profits for P’s act of trespass.

47.  Mesne profits can be awarded based on the market rent agreed upon with a tenant, and Mr Chen asked the Court to adopt the rental amounts as exhibited in P’s submitted TAs.

48.  Since the Court has rejected the TAs as valid evidence, I do not think it is right to adopt those figures in making assessment. D1 and D2 have failed to discharge their burdens in adducing evidence to support the amount of mesne profits, I therefore made no award for damages.

49.  As such, I will order for:

(1) P’s claim is dismissed;

(2) P do deliver vacant possession of the Units within a period as demanded by D1 and D2 in writing but not less than 35 days from the date of this Judgment;

(3) A costs order nisi that P do pay D1 and D2’s costs of this action, including all costs reserved, to be taxed if not agreed with certificate for Counsel.