CIVIC LTD v. 余綺妙 AND OTHERS

HCA 225/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 225 OF 2011

BETWEEN

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R E A S O N S  F O R  D E C I S I O N

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1.  The plaintiff is the paper owner of a property known as Lot No 2061 in Demarcation District No 104, Yuen Long, New Territories, Hong Kong (“Land”). A house named as “漢盧” (“House”) was erected on the Land.

2.  The plaintiff claims that the 1^st, 3^rd and 4^th defendants and all other occupiers of the Land (ie the 2^nd defendant) have wrongfully occupied and are trespassers to the Land and the House, and caused the plaintiff to suffer loss and damages.

3.  By the present proceedings commenced on 7 February 2011, the plaintiff claims against the 1^st and 2^nd defendants for an order that the 1^st and 2^nd defendants be evicted from the Land and the House and for damages for trespass.

4.  Pursuant to the order of Master R Lai dated 2 June 2011, leave was granted for the 3^rd and 4^th defendants to join the present proceedings as additional defendants, and for the plaintiff to amend the Writ of Summons.  The Amended Writ of Summons was filed on 7 June 2011.  Nevertheless, up to now there is no reference to the 3^rd and 4^th defendants in the Statement of Claim, and certainly there is no prayer of relief that specifically addresses the 3^rd and 4^th defendants.  There is also no express mention of the 3^rd and 4^th defendants in the Reply to the Defence of the 3^rd defendant and in the Reply to the Defence of the 4^th defendant save for references to “the 1^st Defendant and her family”.  I shall return to this below.

5.  However, there is no dispute that the 1^st, 3^rd and 4^th defendants have occupied and still occupy the House and the Land.  The 4^th defendant is the 1^st defendant’s eldest son, and the 3^rd defendant is her 6^th son.

6.  In the 1^st defendant’s Chinese home‑made defence filed on 11 April 2011, she claims she was given to understand that the owner of the Land had fled to Mainland China or overseas during the war, and thereafter the Land and the House were unoccupied.  Together with another family, the 1^st defendant and her family moved onto the Land and the House in/about 1961.  She had 3 further children whilst living there.  She raised chickens and carried out farming on the Land.  Since about 1972 or 1973 she worked at a cotton mill in Tuen Mun until her retirement in 1996.  The 1^st defendant never paid rent, and no one demanded rent from her or made any attempt to evict her and her family.  Ever since the 4^th defendant completed his secondary education and started to work in a construction company, he was responsible for all maintenance and repairs in respect of the House.  It was only in 2008 that someone came to ask them to leave, but the 1^st defendant ignored such request and continued to reside at the Land and the House.  In 2009, someone installed a gate over the only access road to the Land.  The 1^st defendant claims that as she and her family have lived on the Land and in the House for 49 years, and no paper owner or agent of any paper owner contacted them during such period, they are entitled to adverse possession of the Land and the House.

7.  On the same day, the 3^rd and 4^th defendants filed their respective Defence that avers similar lines of defence.

8.  The trial of this case is scheduled to commence on 7 August 2013 with an estimated length of 5 days. The parties came before me for Pre‑trial Review (“PTR”) on 29 April 2013, and directions were given for preparing opening submissions and trial bundle, and on agreeing the description and/or identification of the suit property.

9.  On 19 June 2013, the 1^st, 3^rd and 4^th defendants issued a summons (“Summons”) for leave to amend their respective Defence by adding a counterclaim as per the drafts annexed to the Summons (“1^st Drafts”).

10.  In the proposed Counterclaim in the respective 1^st Draft for each of the 1^st, 3^rd and 4^th defendants, the Defence is repeated and it is further averred that the 1^st, 3^rd and 4^th defendants are jointly entitled to adverse possession of the Land and the House.  The prayer for reliefs in each of the proposed Counterclaim seeks inter alia declarations that (a) the 1^st, 3^rd and 4^th defendants have become lawful joint owners of the Land as a result of their adverse possession for over 20 or 12 years, (b) the plaintiff’s ownership of the Land has been extinguished as a result of the 1^st, 3^rd and 4^th defendants’ adverse possession and the operation of sections 7 and 17 of the Limitation Ordinance Cap 347, and (c) the plaintiff is barred from making legal claim for recovery of possession of the Land.

11.  The Summons is supported by the affidavit of the solicitor for the 1^st, 3^rd and 4^th defendants Joseph Tsang dated 19 June 2013 (“Affidavit”).  The Affidavit explains that due to the home‑made nature of the Defence filed by each of the 1^st, 3^rd and 4^th defendants, there is no clear and obvious pleading of a Counterclaim seeking declaratory reliefs consequent upon any finding that may be made by the court in respect of adverse possession of the Land and the House in excess of the minimum statutory period in favour of the 1^st, 3^rd and 4^th defendants.  After a conference with counsel in about a week after the PTR (ie on 10 May 2013), application was immediately made on 15 May 2013 for extension of legal aid to cover the addition of a Counterclaim by each of the 1^st, 3^rd and 4^th defendants for the aforesaid declaratory reliefs.  Legal aid for such purpose was granted on 6 June 2013, and counsel was instructed to draft such Counterclaim in anticipation of the issuance of the Summons.  On 17 June 2013, the solicitors for the 1^st, 3^rd and 4^th defendants wrote to the solicitors for the plaintiff for their consent to the intended application to amend the respective Defence of the 1^st, 3^rd and 4^th defendants by adding the proposed Counterclaim.  But the solicitors for the plaintiff refused such request.  The solicitors for the 1^st, 3^rd and 4^th defendants issued the Summons on the following day.

12.  At the hearing of the Summons on 25 June 2013 (“Hearing”), I granted the following order:

(a)   leave to the 1^st, 3^rd and 4^th defendants to amend their respective Defence in the manner marked in red as per the 2^nd Drafts (defined in paragraph 19 below) submitted to the court at the Hearing;

(b)   within 3 days of the Hearing, the 1^st, 3^rd and 4^th defendants shall file their respective Amended Defence and Counterclaim, and each such Amended Defence and Counterclaim shall be accompanied by its statement of truth;

(c)   service of the 1^st, 3^rd and 4^th defendants’ respective Amended Defence and Counterclaim be dispensed with;

(d)   costs of and occasioned by the said amendments including costs of the Summons be to the plaintiff to be taxed if not agreed;

(e)   the 1^st, 3^rd and 4^th defendants’ own costs be taxed in accordance with Legal Aid Regulations.

13.  I have reserved my reasons for granting the above order.  These are my reasons.

14.  Mr Yip, counsel for the plaintiff, submits that lateness of the application alone justifies dismissal of the Summons (see Practice Direction 5.2 at para 34).  He reminds that throughout the interlocutory stage, the 1^st, 3^rd and 4^th defendants have filed Listing Questionnaires stating that their pleadings were in order, and there would be no further interlocutory applications.  He also submits that notwithstanding the grant of legal aid in 2011, no attempt has been made to revamp the home‑made Defence of each of the 1^st, 3^rd and 4^th defendants to include any Counterclaim (see Liu Chen v Chan Poon Wing & anor HCPI 779/2006 (unreported, 7 October 2009)).

15.  Mr Lam, counsel for the 1^st, 3^rd and 4^th defendants, do not shy away from the fact that the application to introduce the proposed Counterclaim is late, and that the reasons for the delay may not be entirely satisfactory.  But in my view, it is plain the proposed amendments to 1^st, 3^rd and 4^th defendants’ pleadings to add the proposed Counterclaim do not raise any new fact, issue or dimension, and no new discovery or witness evidence is called for.  I cannot see that the trial will be lengthened at all as a result of the proposed amendment.  And quite rightly, Mr Yip, in his submissions does not suggest that the plaintiff will be prejudiced by the proposed amendments.

16.  Quite simply, what the proposed Counterclaim of each of the 1^st, 3^rd and 4^th defendants (if allowed) does is to seek the logical legal conclusion of the Defence as already pleaded.  If the defence contentions are upheld by the court after trial, ie the 1^st, 3^rd and 4^th defendants were and are in adverse possession of the Land and the House for over 12 or 20 years (whichever is appropriate), the plaintiff obviously cannot recover possession of the Land and the House or indeed exercise its paper ownership rights over the suit property.  The mirror reliefs for such state of affairs will be the suggested declarations to be sought in the proposed Counterclaim.  I do not see why the proposed amendments should not be allowed, or how lateness has any material bearing on the exercise of the court’s discretion now being sought.

17.  Further, even without any formal Counterclaim, I am not persuaded that the court actually has no power or jurisdiction to grant the declarations now proposed by the 1^st, 3^rd and 4^th defendants.  In my view, if they are able to establish their case on adverse possession for over 12 or 20 years (whichever is appropriate) to trump the plaintiff’s claim for possession of the Land and the House, the court is arguably empowered to grant consequential orders to give effect to its findings and conclusions at trial.  Indeed, following a reasoned judgment, it is the duty of the parties to ensure that indisputable consequential matters properly within the ambit of the relevant legal proceedings be included in the formal order; otherwise “it would be a recipe for further applications before the court which would generate more costs and time to be incurred”, and which will be inconsistent with the underlying objectives in Order 1A of the Rules of the High Court (“RHC”) (see Lam Chi Tat, Anthony & anor v Kam Yee Wai, Andrew CACV 139/2012 (unreported, 25 March 2013) paras 7‑9).  This also echoes the submissions by Mr Lam that an essential objective in the exercise of the court’s discretion is to achieve finality and avoid multiplicity of proceedings (see section 16(2) of the High Court Ordinance Cap 4).

18.  Mr Yip also takes a procedural point in his written submissions.  He says that since each of the 1^st Drafts only contains the proposed Counterclaim marked up in red without adding such Counterclaim to the existing Defence, the proposed amendments are not in order. But paragraph 1 of the Summons makes clear that if the court grants leave, it is not the intention of the 1^st, 3^rd and 4^th defendants to simply file and serve the Counterclaims as per the 1^st Drafts. Paragraph 1 of the Summons by the 1^st, 3^rd and 4^th defendants seeks leave to “amend their Defence by adding their respective Counterclaim” (my emphasis) as per the 1^st Drafts.  It is plain that the 1^st, 3^rd and 4^th defendants intend to amend their respective Defence in the usual manner by adding the respective proposed Counterclaim to such Defence.  There is no merit to this argument.  Even if there is any procedural error, I cannot see how it cannot be overcome by appropriate directions to ensure compliance with Order 20 of the RHC.  Procedural irregularity which causes no delay or prejudice cannot override the substantive considerations as discussed above.

19.  In any event, Mr Lam has submitted a revised draft of the proposed Amended Defence and Counterclaim for each of the 1^st, 3^rd and 4^th defendants in full (“2^nd Drafts”) at the Hearing, and each of the 2^nd Drafts is accompanied by the requisite statement of truth.  The procedural point therefore falls away.

20.  However, Mr Yip takes a further point at the Hearing not mentioned in his written submissions.  He is concerned that the 1^st paragraph in the prayer of reliefs in the proposed Counterclaim seeks a declaration on the basis of adverse possession of the Land by the 1^st, 3^rd and 4^th defendants for over 20 years or for over 12 years.  He fears that the 1^st, 3^rd and 4^th defendants may seek to assert they have been in possession of some parts of the Land and the House for less than 20 years.  However, he is unable to point to any averment in the pleadings that grounds such fear.  Indeed, the express reference in the proposed relief to the periods of possession before and after 1 July 1991 makes it abundantly clear that the 1^st, 3^rd and 4^th defendants rely on the minimum statutory period of 20 years for the period prior to the statutory amendment to the Limitation Ordinance Cap 347, and 12 years for the period after such statutory amendment to extinguish the paper owner’s rights.  This has nothing to do with alleged factual possession of the Land and the House which is premised on the pleaded material facts.

21.  In the circumstances, I have granted the order in paragraph 12 above at the Hearing.  It is usual for costs of and occasioned by amendments to pleadings to be paid by the applicant.  Mr Lam has conceded such costs and has very fairly also conceded the costs of the Hearing insofar as they relate to the Summons.  But for such concession, it is quite possible (in light of the above analysis) that costs of the Hearing for resisting the Summons may be dealt with differently.

22.  After the hearing of the Summons, I have reminded Mr Yip of the matters raised in paragraph 4 above.  Mr Yip indicates that consideration will be given for making an application for leave of the court to amend the plaintiff’s pleadings.

23.  I also note that the plaintiff has filed its 3^rd List of Documents only on 18 June 2013 that discloses a number of documents.  No application for leave of the court to adduce and rely on such disclosed documents at trial has been made.  It is also unclear whether such disclosed documents speak for themselves or whether witness evidence is required to explain such documents (see Liu Chen at paras 22‑25 and Kinetics Medical Health Group Company Limited & ors v Dr Tse Ivan Cheung Yau HCA 1115/2010 (upreported, 8 May 2013)).  Again, Mr Yip indicates that consideration will be given for making appropriate application for leave of the court to use the disclosed documents at trial.

24.  I have therefore granted directions at the Hearing for the plaintiff (if so advised) to issue appropriate applications within 7 days subject to the caveat and understanding that the 1^st, 3^rd and 4^th defendants’ right to oppose such applications is reserved and that the discretion of the court in dealing with such applications (if any) remains unfettered.