PANG YIU CHOR AND OTHERS v. WONG WAI LEUNG AND OTHERS

HCMP 3972/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO3972 OF 2000

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D E C I S I O N

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1.  This is the plaintiffs’ application for summary judgment and the defendants’ cross application for judgment in default of defence to counterclaim.

Background

2.  By a conveyance on sale dated 5 October 1972 (“the conveyance”), the plaintiffs became the owners with the paper title to the remaining portion of Lot No. 3982 in DD 51 at Fanling (“the land”).  At the time of the conveyance, the 3^rd to 5^th plaintiffs were minors.

3.  At a time unknown to the defendants and long before the conveyance, the government had mistaken the land as government land and gave out land permits (“the permits”).  The permits were first granted to permittees in around 1961 to 1965[1] and were renewed every year upon payment of land license fees.  The defendants are now in occupation of the land as the sons, grandson or villager of the permittees under various permits.  The defendants have been paying government rent of the land until 2003.

4.  The 3^rd to 5^th plaintiffs attained majority on 1979, 1981 and 1981 respectively.  Their interests in the land were vested in them by assignments in 1987, 1987 and 1983 respectively.

5.  The plaintiffs discovered the existence of occupants in January 1999 and houses built on the land.

6.  The plaintiffs filed the originating summons in the present proceedings on 7 August 2000 against unnamed occupiers for possession of the land. The action had remained dormant since for the next 12 years.

7.  By a letter dated 24 January 2002, the government informed the plaintiffs that the occupants were covered by various government land licenses (“the 4 licenses”). 

8.  On 16 April 2002, the plaintiffs commenced proceedings against the government in HCA 1414 of 2002 (“the 2002 action”) for an injunction restraining the government from depriving the plaintiffs of enjoyment of the land.  The government pleaded the defence of limitation.  By an order dated 4 November 2004 made by consent (“the 2004 order”), the plaintiffs obtained judgment on liability against the government with damages to be assessed.  In the interim, the government had terminated the 4 licenses on 5 February 2003.

9.  Pursuant to the order of Master Ko (as he then was) dated 25 June 2012, the defendants were joined as parties.  Notwithstanding Master Ko’s directions for the filing of pleadings, the statement of claim was filed out of time on 12 October 2012 and the defence was filed out of time on 14 November 2012.  The time for filing the reply and defence to counterclaim has expired on 24 December 2012 without such filing. 

10.  By their defence, the defendants claim possessory title based on their possession of the land since the 1950s. 

The issues

11.  The following issues are disclosed on the pleadings:

A. Whether the defendants have acquired possessory rights by virtue of their unbroken occupation since 1961-1965 as licensees of the government;

B. Whether the government has acknowledged the plaintiffs’ title;

C. Whether the plaintiffs’ title has been extinguished as a matter of law and there was no more title to acknowledge; 

D. Whether the defendants have a counterclaim for possessory title in their own right upon the death of the original permittees.

Applicable principles

12.  The burden is on the defendants to raise a triable issue on the Order 14 summons.  On the Order 19 summons, clearly the plaintiffs were out of time in the filing of their defence to counterclaim and there has been no direction to defer its filing till after hearing of the Order 14 summons.  Disposal of these 2 summonses ultimately depends on the court’s view of the defence case on adverse possession.

13.  A person claiming to be in adverse possession must show both possession and the requisite intention to possess.  Adverse possession could be described as “possession as of wrong” and with limitation it was the intention of the squatter that was essential: Wong Tak Yue v Kung Kwok Wai (1997-98) HKCFAR 55, 68 G-H.

14.  The intention to possess requisite for adverse possession:

“…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 if he be not himself the possessor, so far as is reasonably practicable and so far as the process of the law will allow.” Wong Tak Yue v Kung Kwok Wai, at 68 I-J

15.  Since the defendants’ alleged possession started to run from the 1960s, it is not in dispute that the governing statute should be the Real Property Limitation Act 1833 (“the 1833 Act”), and not the Limitation Ordinance, Cap 347: Leung Kuen Fai v Tang Kwong Yu Tong [2002] 2 HKLRD 705, at paras 6 and 12.

16.  The applicable limitation period in the present case was therefore 20 years, expiring on 1981 to 1985: section II of the 1833 Act .

17.  Section XVI of the 1833 Act provided that:

“… if at the Time at which the Right of any Person to … bring an Action to recover any Land … shall have first accrued as aforesaid such Person shall have been under any of the Disabilities herein-after mentioned, (that is to say,) Infancy … then such Person, or the Person claiming through him, may, notwithstanding the Period of Twenty Years herein-before limited shall have expired … bring an Action to recover such Land … within Ten Years next after the Time at which the Person … shall have ceased to be under any such Disability …”

18.  There was no evidence that the defendants were still in infancy at the time the cause accrued, so section XVI did not apply.  In any case, an extension of 10 years for an infant to take action would not have affected the overall results of this case.

19.  Section XXXIV of the 1833 Act provided for extinguishment of title upon expiry of the limitation period:

“… at the Determination of the Period limited by this Act to any Person for bringing any … Action…, the Right and Title of such Person to the Land … or … Action …, shall be extinguished.”

20.  Section XIV of the 1833 Act, (similar to sections 23 and 24 of the Limitation Ordinance, Cap 347), provided:

“… That when any Acknowledgement of the Title of the Person entitled to any Land … shall have been given to him or his Agent in Writing signed by the Person in Possession or in Receipt of the Profits of such Land … the Right to … bring an Action to recover such Land … shall be deemed to have first accrued at and not before the Time at which such Acknowledgement … was given.”

A.    Whether the defendants have acquired possessory rights by virtue of their unbroken occupation since 1961-1965 as licensees of the government

21.  For the purpose of these applications, the plaintiffs do not dispute that the defendants have first come into possession since 1961-1965 when the permits were first granted to the defendants’ predecessors.

22.  The following principles are relevant:

(1) To constitute possession, control must be exercised by the defendant in his own right: Jourdan and Radley-Gardner, Adverse Possession, 2^nd ed, at para 7-103.

(2) If a person (the licensee) takes possession by virtue of a license granted by another, it is the licensor who is treated as being in possession: Radley-Gardner, Adverse Possession, 2^nd ed, at para 7-127.

23.  The 2^nd principle is made clear by the Privy Council decision in Sze To Chun Keung v Kung Kwok Wai David & anor [1997] 1 WLR 1232.It applies even where the license was given by some person (in that case, the government) other than the true owner or on his behalf, since the possession is that of the licensor.

24.  In the Sze To v Kung case, the defendant went into possession of the plaintiff’s land in 1955.  The government, in ignorance of the private rights of the plaintiff, granted licenses to the defendant to occupy the land since 1961.  Those licenses were terminated in 1988 only after lapse of the relevant limitation period.  The original defence relied on a right to retain possession by virtue of the government permit and was struck out.  The defendant applied for leave to amend the defence to substitute a defence under the Limitation Ordinance.  The Privy Council gave leave to amend.

25.  The Privy Council held that the effect of the permit was to make the government the squatter, which possessed the land through its licensee, the defendant. The Privy Council also held that the plaintiff’s title had been extinguished in about 1975 to preclude the plaintiffs from bringing an action to recover possession after 20 years.  According to Lord Hoffmann, at page 1236 C-D:

“… the Limitation Ordinance is not concerned with whether the defendant has acquired a title but with whether the plaintiffs’ right of action has been barred. For this purpose, all that matters is that there should have been continuous adverse possession for the period of limitation. The rights inter se of the successive persons who may have been in possession adversely to the plaintiffs since they were dispossessed are for this purpose irrelevant.”

26.  In the present case, applying Sze To v Kung, the squatter in possession was the government.  If the defendants are to rely on their possession as of right under the government licenses, they are bound to fail.

27.  However, at the commencement of the present action, the plaintiffs’ right of action has been barred in 1981-1985.  Their title had been extinguished under section XXXIV of the 1833 Act by virtue of the government’s adverse possession.  Despite knowing about the government’s wrongful issue of licenses over the land (see paragraphs 23 and 24 of the statement of claim in the 2002 action), the plaintiffs had not sought any relief for recovery of possession from the government. 

28.  Nor had the government abandoned its rights over the land as evidenced by the fact that it continued to collect license fees from the defendants until 2003.  The 2004 order was not one for the government to redeliver possession of the land to the plaintiff.  There has thus been continuous adverse possession for the period of limitation.  The rights inter se of the government and the licensee defendants are for this purpose irrelevant.  Once the squatter government has dispossessed the owner, it can hardly be arguable that each time the squatter licensed another to use his land, the owner would have a cause of action against that licensee.  The government’s termination of the permits over the land was no more than renouncing as between itself and the defendants it right to permit the defendants to occupy and therefore take the benefit of the defendants’ possession.  This could not re-write the history that the government had been continuously in adverse possession for over 20 years so as to extinguish the plaintiffs’ title: Sze To v Kung, at page 1236A.

29.  Ground A is triable.

B.  Whether the government has acknowledged the plaintiffs’ title

30.  The plaintiffs say that there were 3 acts of acknowledgement of their title by the government:

(i) The government’s resumption of part of the land in February 1985: para 2(b) of the defence.

(ii) The government’s proposal to relocate the plaintiffs to another vacant piece of land by a letter dated 31 August 2000.

(iii) The government’s defence in the 2002 action (“the amended defence”) acknowledging the plaintiff’s title.

31.  For a start, it must be noted that the plaintiffs have never pleaded acknowledgement of title in its statement of claim.  It was only raised on affidavit and in counsel’s submission.

32.  With regard to (i), resumption of part of the land that was not the subject matter of this action could hardly be acknowledgement of the plaintiffs’ title. 

33.  With regard to (ii), nowhere in the body of the letter had the government acknowledged anybody’s title.  It only acknowledged a “complicated situation”.

34.  With regard to (iii), a statement made in a pleading recognizing the title of another party to the proceedings is capable of being an acknowledgement having the effect of postponing the running of time under the Limitation Ordinance.  An acknowledgement can be implied: Ofulue v Bossert [2009] 1 AC 990.

35.  The pleading in question was the amended defence of the government in the 2002 action.  It was not clear if it was just a draft.  It did not bear a physical signature but merely represented that it was signed.  It did not fall within the letter of section XIV of the 1933 Act but I shall assume for present purposes that it had been filed in the 2002 action.

36.  The amended defence showed that in paragraph 1 of the original version of the defence dated 11 June 2002, the government had expressly acknowledged the plaintiffs’ title.  This acknowledgement of title which came subsequently arguably could not affect the defendants’ position at the time of the commencement of this action in 2000.

C.  Whether the plaintiffs’ title has been extinguished as a matter of law and there was no more title to acknowledge

37.  Mr Szeto, counsel for the defendants, submits that once the limitation period has expired by 1981-1985, the plaintiffs’ title would have been extinguished by operation of section XXXIV of the 1833 Act.

38.  In Cheung Yat Fuk v Tang Tak Hong (2004) 7 HKCFAR 70 at 73H-74B, the Court of Final Appeal, following Perry v Clissold [1907] AC 73, at 79, held that:

“… if the rightful owner does not come forward and assert his title by process of law within the period prescribed by the provisions of the Statute of Limitations applicable to the case, his right is forever extinguished, and the possessory owner acquires an absolute title.” (emphasis added)

39.  Applying Sze To v Kung case, the possessory owner was still the government.  However, it is arguable, as Mr Szeto submits, that after 1985, the plaintiff’s title would have been extinguished; the government would have the lawful right to grant the subject licenses and the defendants were entitled to rely on those licenses to defend any possession claim.  The plaintiffs could not evict the government and henceforth could not evict its licensees, the defendants, in 2000.  There was no more title for the government to acknowledge.

40.  Ground C is triable.

D.  Whether the defendants have a counterclaim for possessory title in their own right upon death of the original permittees

41.  Mr Szeto submits that as a matter of law, a license terminates upon death of the licensor.  It is not necessary for the licensee to have received notice of the death: Ho Hang Wan v Ma Ting Cheung [1990] 1 HKLR 649. Upon the happening of that event, Mr Szeto submits that the defendants would have been in possession of the land in their own right.

42.  With respect, this argument is flawed.  The persons who had died in this case were the original permittees, not the licensor government.  Ho Hang Wan is not applicable.

43.  Ground D is not arguable.

Conclusion

44.  Triable issues have been raised.  It is arguable that the plaintiffs’ right of action, as against the government squatter, had been barred in 1981-1985.  Their title had been extinguished.  Thereafter the government had the lawful right to grant licenses and had not abandoned those rights at the commencement of this action.  The defendants can arguably have a limitation defence on the authority of Sze To v Kung. The acknowledgement of title in 2002, if at all, was arguably not relevant to the present action which was instituted earlier in time in 2000.  Accordingly, the defendants should have unconditional leave to defend. 

45.  Given the arguments put forth in this case, it cannot be said that the plaintiffs have no case on the merits.  I see no reason why judgment should be entered against them on their technical failure to file a defence to the counterclaim. 

46.  The defence apparently needs some amendment after this decision.  I therefore order:

(1) That the defendants do have leave to amend their defence and counterclaim within 14 days from this decision;

(2) The plaintiffs do have leave to file and serve a reply and defence to counterclaim within 21 days thereafter; 

(3) The Order 19 summons is dismissed.

Costs

47.  The defendants’ case has genuine merits, known to the plaintiffs before the Order 14 summons was taken out.  I make an order nisi that the defendants should have costs to be summarily assessed on 3 October 2013. No attendance is required.  The defendants shall file and serve their statement of costs by 24 September 2013.  The plaintiffs shall file and serve their grounds in opposition by 2 October 2013.

48.  The costs solely arising under the Order 19 summons, unconnected to the Order 14 summons are relatively small.  In the end, the plaintiffs get extension of time to file a reply, something it would have got anyway after disposal of the Order 14 summons if summary judgment is not granted.  Overall, I order, on a nisi basis, that there be no order as to costs on the Order 19 summons.

49.  I thank counsel for their assistance