HUANG CHUN KAN v. SHINE EXCEL LTD

DCCJ 872/2019

[2020] HKDC 592

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 872 OF 2019

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BETWEEN

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JUDGMENT

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INTRODUCTION

1.  This is a short trial involving the plaintiff’s claim for, inter alia, adverse possessory title to a piece of land which belongs to the defendant, namely, a delineated portion of Lot No 2370 in Demarcation District No 130, Tuen Mun, New Territories (“the Land”). 

2.  The plaintiff first issued the writ of summons on 21 February 2019, together with the statement of claim on the same day.  The claim was originally made against a person by the name of ‘Li Shiu Kwan’ as the defendant in the case.  However, by the time when both the writ and the statement of claim were served on 8 May 2019, it had been amended and the name of the present defendant ‘Shine Excel Limited (杰輝有限公司)’ had been substituted as the defendant in the case.  This is because the defendant has, by virtue of an assignment dated 7 August 2018, became the registered owner of the Land.

3.  By a summons dated 16 March 2020, the plaintiff applied to enter default judgment against the defendant, based on the failure on the part of the defendant in acknowledging service and to file a defence.  The summons was originally fixed for hearing on 27 April 2020.  However, due to the General Adjournment Period (“GAP”) caused by the coronavirus pandemic, the hearing was adjourned to 18 May 2020 for directions.

4.  On 18 May 2020, the defendant failed to turn up at the hearing nor had it sent any legal representatives to represent it.  This is despite both the summons and supporting documents, together with the court’s notice of hearing, had been served on it at its registered address.  At the hearing, I gave directions for a speedy trial to be held on 15 June 2020 and ordered the affirmation previously filed by the plaintiff for the default judgment application to be treated as the plaintiff’s witness statement for the purpose of the trial.  I also gave the direction that the expert report of Mr Tang Sze Kin Eric dated 24 September 2018 to stand as the plaintiff’s expert evidence at the trial.  I further gave directions that the trial bundles and opening submissions be served on the defendant 7 day prior to the trial.

5.  On 28 May 2020, a notice to act was filed by Messrs Peter W K Lo & Co, informing the court that it has been appointed to act for the defendant in the present proceedings.

6.  By an open letter dated 2 June 2020 issued by the defendant’s solicitors, the defendant, for the first time since the writ and the amended statement of claim have been served on it, indicated that “it does not intend to defend the captioned action and has no objection to (the plaintiff’s claim) for the declaratory reliefs” sought in the amended statement of claim.  In the same letter, the defendant’s solicitors also indicated that they would write to the court to seek leave to be excused from attending the trial on 15 June 2020.

7.  On 8 June 2020, pursuant to the order of the court on 18 May 2020, the plaintiff’s solicitors served the trial bundles and the opening submissions on the defendant’s solicitors.

8.  On 11 June 2020, the defendant lodged a written submission with the court and served the same on the plaintiff.  It only deals with the issue of costs and submits that there should be no order as to costs in respect of the present proceedings.  However, they ask for “the costs incidental to the present argument on the issue of costs” to be paid by the plaintiff.

9.  On 12 June 2020, pursuant to the defendant’s request, the court directed that the defendant’s attendance at the trial to be excused and the parties’ applications for costs to be dealt with on paper.      

10.  On 15 June 2020, the trial took place before me when the plaintiff gave evidence in the absence of the defendant who chose not to contest the case.  

11.  I reserved judgment at the end of the trial.

BACKGROUND

12.  The plaintiff’s case is that since at least 1980, the plaintiff and his family have remained in continuous and exclusive possession of the Land for more than 20 years and/or 12 years (after 1991) and therefore he has acquired an adverse possessory title to the Land under the Limitation Ordinance, Cap 347 (“the Ordinance”).

13.  According to the Government’s land search record, since 26 July 1997, the plaintiff’s parents have been the registered owner of Lot 2367 (“Lot 2367”) in DD 130, Tuen Mun, New Territories.  Lot 2367 has been further divided into:

(1) Section A of Lot 2367 in DD 130 (“Lot 2367 SA”); and

(2) the Remaining Portion Lot 2367 (“Lot 2367 RP”) in DD 130 since 28 November 1997.

14.  The plaintiff has a total of six siblings in the family, including five elder sisters and one elder brother.  The plaintiff is the youngest child in the family.

15.  The plaintiff’s case is that since around 1980, his parents and siblings and himself have been in exclusive, continuous and successive possession and control of:

(1) the Land; and

(2) the adjoining lot, namely Lot 2367 (which was subsequently subdivided into Lot 2367 SA and Lot 2367 RP).

16.  The plaintiff alleges that he, his parents and his siblings were and are at all material times occupiers of the Land, Lot 2367 (later known as Lot 2367 SA and Lot 2367 RP) and the structures erected thereon (“the Structures”).

17.  In terms of factual occupation of Land, the plaintiff has provided the following information which has been pleaded in the amended statement of claim and confirmed by the plaintiff in his affirmation.  Since they were not challenged by the defendant at the trial, I would accept the following facts as proven in this case.

Undisputed and proven facts

18.  The plaintiff was born on 9 September 1980.  He is almost 40 years old by the time of the trial. 

19.  On 13 November 1980, the plaintiff’s father purchased a farm (“the Farm”) which is located on the Land and its adjoining lot (ie Lot 2367) for the purpose of raising poultry thereon.  The Farm also served as a place of residence for the plaintiff, his parents and his siblings.  In respect of Lot 2367, on or about 1 December 1980, the plaintiff’s father as tenant and one Mr To Kam Cheung, a co-owner of Lot 2367, entered into a tenancy agreement for the lease of Lot 2367 for a term of 3 years with an annual rent of HK$3,000 payable by two instalments of HK$1,500 each.  The tenancy agreement for Lot 2367 was renewed until July 1997 when his parents purchased Lot 2367 and became the registered owner thereof.

20.  Hence, since or around 13 November 1980, the plaintiff and his family have been residing on the Land and at Lot 2367 where they have their home.  His family also operated the Farm on the Land as well as on Lot 2367 until the business was ceased in about 1988.  Thereafter, both the Land and Lot 2367 have been used and occupied by the plaintiff, his parents and siblings as their family home.

21.  Since around November 1980, two structures have been erected, one on the Land and another one on Lot 2367.  They have been respectively referred to as Structure A and Structure B in the plaintiff’s pleadings and affirmation.  It has been confirmed by the different photos produced by the plaintiff at the trial that, from 1980 onwards and up to the present day, both Structures A and B have been used, occupied and possessed by the plaintiff and his family. Despite undergoing various repairs, renovation and expansion from time to time, both Structures A and B have remained intact throughout the years.

22.  What is significant to note in the context of the present case is that, since November 1980 and up to the date of trial, both the Land and Lot 2367 have been enclosed by iron wire mesh fencing and the entrance has been defined by a metal gate and secured by a lock.  A plate stating that it is a ‘private property’ has been clearly displayed at the entrance.  Save from the plaintiff and his family, nobody from outside was allowed inside the fenced off area.

23.  In around 2009, some other structures which had been erected on the remaining part of Lot 2370 (outside the boundary of the Land) were demolished. However, the iron wire mesh fending which is used to fence off the Land and Lot 2367 and the structures built therein have remained intact.

24.  In regard to the Land itself, the plaintiff’s parents and his family (including the plaintiff himself) have spent money over the years to improve the Land and to maintain the structures erected thereon.  They included installing, repairing and maintaining the iron wire mesh fencing; applying for and installing electricity meters and water meters; applying for and installing fixed telephone line; and erecting, repairing and maintaining the structures built on the Land and Lot 2367 (including Structures A and B).

25.  It seems what has led the plaintiff to issue the present proceedings was due to a few unpleasant incidents which happened between 2011 and 2014 to his family.  During those incidents, the plaintiff and his family members had received threats from unknown persons at the Land and on one occasion the plaintiff’s elder brother was attacked by an unknown male near the Land.  It is however important to note that these “harassment incidents” happened to the plaintiff’s family well before the current defendant became registered owner of the Land in August 2018.  There is no evidence to suggest that the defendant was in any way associated with the harassments and threats experienced by the plaintiff and his family between 2011 and 2014. 

26.  In February 2016, an agreement has been reached by the plaintiff’s parents and all his siblings where they agreed to assign all the rights and the benefits required by way of adverse possession of the Land in favour of the plaintiff.

DISCUSSION

27.  Based on the above proven facts, I am satisfied that the plaintiff has shown both factual possession and the requisite intention to possess in this case which are the two main elements for any person claiming to have adverse possessory title in a piece of land will have to prove: see Wong Tak Yue v Kung Kwok Wai & Another (No 2) (1997-98) 1 HKCFAR 55, 68E, citing Slade J in Powell v McFarlane (1979) 38 P & CR 452. 

28.  By taking over the Land and building the structures on the Land, the plaintiff and his family have in my view demonstrated a sufficient degree of exclusive physical control over the Land.  By physically fencing off the Land (together with Lot 2367) from any outsiders, the plaintiff has in my view demonstrated unequivocally to world that he and his family have claimed exclusive possession of the Land since that time.  It has been said that although fencing off outsiders is not absolutely essential to establish exclusive occupation, it is the most common way of doing so: See the Court of Appeal’s decision in Gotland Enterprises Ltd v Kwok Chi Yau, unreported, CACV 260/2014 (19 January 2016) per Lam VP at §§ 36-37.

29.  Further, there is no question in my view that the plaintiff can take advantage of the adverse possession of another squatter (like his parents or siblings in this case) provided that the possession continued its own possession.  So long as the paper title owner has been continuously dispossessed, the last squatter would have acquired a superior title: see Magarey & Wade, The Law of Real Property 8 ed §§35-021 and 35-022; Jourdan & Radley-Gardener’s Adverse Possession 2^nd ed §§6.51 and 6.52; Ng Lai Sim v Lam Yip Shing & Another, unreported, HCA 2963/1998; 22 November 1999; and Chong Hing Bank v Fairview City Ltd [2018] HKCFI 1732.

30.  Hence, I am satisfied that the plaintiff has provided ample of convincing and compelling evidence to show that both he and his family have been in exclusive factual possession of the Land for more than 12 years since at least 1991 and before the commencement of this action in 2019.

31.  I am also satisfied that based on the above undisputed evidence, the plaintiff has established that both he and his family have possessed the intention to exclusive possess the Land. 

CONCLUSION ON LIABILITY

32.  In conclusion, in the light of the aforementioned matters, I find the plaintiff has successfully established a continuous and exclusive possession of the Land by him and his family since 1980.  I further find that the plaintiff has been in exclusive possession of the Land for more than 20 years and/or 12 years (after 1991) such that the defendant’s title to the Land has been extinguished before the commencement of the present proceedings by the Ordinance. 

33.  In the circumstances, I shall make the following orders and declarations sought by the plaintiff under the amended statement of claim:

(1) A declaration that the title of the defendant and/or its predecessor-in-title to the Land has been extinguished by reason of sections 7 and 17 of the Ordinance and that the defendant is barred from recovering the Land from the plaintiff by virtue of the provisions laid down in the Ordinance; and

(2) A declaration that the plaintiff has acquired an adverse possessory title to the Land.

COSTS

34.  While costs should normally follow the event, this case is unusual in that, the defendant, who has only become the registered owner of the Land in August 2018, did not contest the proceedings and never bothered to respond to any of the plaintiff’s claim or application until quite close to the trial itself. 

The defendant’s delay and inaction

35.  The defendant initially did not enter any acknowledgment of service despite the amended writ of summons and amended statement of claim were properly served on it by the plaintiff in leaving a copy of the documents at the defendant’s registered address on 17 May 2019: see affirmation of service of Kwong Kam Tin Christopher filed on 31 July 2019.  

36.  The defendant’s registered address is a shop premises located on the ground floor of a busy road in the middle of Kowloon.  There is no suggestion to say that the defendant had not received those documents.   

37.  However, no acknowledgement of service was filed.  In fact, from 17 May 2019 to 28 May 2020, a period of just over a year, the defendant had taken no action in this case at all, whether by filing an acknowledgement of service or by correspondence to indicate to the court or the plaintiff that it did not intend to contest the case.

38.  On 16 March 2020, the plaintiff issued the inter parte summons to apply for default judgment based on the defendant’s failure in filing the defence.  Again, the summons, together with the plaintiff’s affirmation and its exhibits, had been duly served on the defendant by ordinary post on 18 March 2020:  see affirmation of service of Kwong Kam Tin Christopher filed on 12 May 2020.  There is no suggestion that the defendant had not received the summons and the supporting documents.

39.  The substantive hearing for the default judgment application was originally fixed on 27 April 2020.  However, that hearing was adjourned due to GAP.

40.  Despite the court’s letter to the parties dated 7 April 2020 requesting them to attend the direction hearing, the defendant failed to turn up on 18 May 2020.

41.  In the absence of the defendant, the court gave directions for a speedy trial of this action and the case was fixed to be heard on 15 June 2020.  On that occasion, I also gave the direction that trial bundles as well as the plaintiff’s written opening submissions be lodged with the court and served on the defendant 7 days before the commencement of the trial. 

42.  On 28 May 2020, which incidentally was almost exactly one year after the amended writ of summons and the amended statement of claim were first served on the defendant, a ‘Notice to Act’ was filed by Messrs Peter W K Lo & Co, on behalf of the defendant.  However, there was still no indication from the defendant’s solicitors as to whether it was going to contest the plaintiff’s claim or not up to that date.

43.  It was not until 2 June 2020, by way of an open letter, that the defendant’s solicitors had, for the first time, indicated on behalf of the defendant that “it does not intend to defend the captioned action and has no objection to the plaintiff’s claim for the declaratory reliefs” sought in the amended statement of claim.

44.  Further, it was only on 10 June 2020 that the defendant’s solicitors had allegedly filed an ‘acknowledgment of service’ on the amended writ of summons, indicating that it does not intend to contest the plaintiff’s claim: see §2 of the defendant counsel’s written submission.  However, that document was never filed with the court as it does not appear in the court’s filing system to date.          

45.  Also, on 10 June 2020, the defendant’s solicitors wrote to the court asking the issue of costs to be dealt with by way of paper submissions and that leave to be granted to the defendant for it to be excused from attending the trial.

46.  Those requests were acceded to by the court and written directions were given accordingly on 12 June 2020.

47.  However, on 11 June 2020, without waiting for the court’s directions, the defendant’s counsel lodged its written submissions (in relation to the issue of costs only) on behalf of the defendant.  Mr Jevons Chan for the defendant contends there should be no order as to costs of the trial itself and that the plaintiff should pay the defendant’s costs in dealing with the arguments on costs, to be summarily assessed.

The court’s findings on costs

48.  Despite Mr Chan’s submissions, I find both the amended writ and the amended statement of claim had been properly served on the defendant on 17 May 2019.  I further find the present summons together with the supporting documents had been successfully served on the defendant pursuant to the court’s directions on 18 May 2020.  I also find there was inordinate delay and inaction on the part of the defendant in responding to the proceedings and to notify the plaintiff of its intention as to whether to contests the case or not.     

49.  The defendant has over a year to respond to the plaintiff’s claim.  Yet it has decided to do absolutely nothing about it until after the court had ordered a speedy trial to take place and after the trial bundles and opening submissions were served on it, pursuant to the court’s directions.

50.  Even after it has finally decided to respond by open letter dated 2 June 2020 expressing for the first time of an intention not to defend the action, the defendant has still failed to file an acknowledge of service with the court.

Court’s unfettered discretion on costs

51.  It is trite that the court has a wide and unfettered discretion on the issue of costs: section 53(1) of the District Court Ordinance, Cap 336.

52.  The general rule is that costs should follow the event, ie the successful party will be entitled to his costs of the action or application.

53.  In deciding the question of costs, in the post-Civil Justice Reform (“CJR”) era, the court is also guided by Order 62 of the Rules of the District Court (“RDC”) and in particular the underlying objectives of Order 1A & 1B of the RDC to see if there is any unreasonable conduct on the part of any of the parties which entitles the courts to award costs against a particular party on the particular facts of the case.

54.  Mr Adrain Leung for the plaintiff produces a number of cases involving with uncontested adversary possession claims where the courts endorsed the general rule that “costs should follow the event”.  In those cases, costs were awarded in favour of the successful claimants in the absence of the defendant:

(1) Kwong Wing Lan v The Personal Representative of the Estate of Edward Chan otherwise known as Chan Tak Tai, deceased [2019] HKDC 908, HHJ Kent Yee;

(2) Wong Oi Ling, the administratrix of the estate of Tsang Chi Kiu, Deceased v Lai Yu [2018] HKDC 767, HHJ Andrew Li;

(3) 香港中山同鄉會有限公司v高榮及另二人 [2018] HKDC 134, DDJ Lawrence K F Ng;

(4) Royal Mortgage Ltd v Blissful Year Ltd & Ors, HCA 302/2013, DHCJ Alex Lee;

(5) Chan Wing Go v The Incorporated Owners of Wing Hong Factory Building, DCCJ 1736/2014, DDJ Amy Chan;

(6) Chau Yan Chi Catherine v The Incorporated Owners of Fung Wah Factorial Building, DCCJ 1459/2014, HHJ Andrew Li; and

(7) Ho Kwai Chun v Lai Yu, DCCJ 916/2103, HHJ Kent Yee.

55.  On the other hand, Mr Chan for the defendant has cited the following 5 cases to contend that the “usual practice” of the court is to make “no order as to costs” in cases where the registered owner does not give notice of intention to defend and that a hearing is scheduled for the squatter to prove his case on adverse possession:

(i) Law Yuk Fong v Man Chung Wai & Anor, HCA 2195/2015 (unreported, 16 January 2017);

(ii) Wong Wing Yiu v Bell Investment Company Ltd & Anr, HCMP 1606/2016 (unreported, 28 February 2017);

(iii) Li Kang Hung v The Personal Representative of the Estate of Yu Choi Ying, deceased [2019] HKDC 1536;

(iv) Seto Yim King v Soo Hooyet Dew [2019] HKCFI 2640; and

(v) Tang Lai v The Personal Representative of the Estate of Tang Yee Shee, deceased, DCCJ 5042/2014 (unreported, 13 June 2017).       

56.  Having read the above cases, in my view, it is clear that in none of those cases the court was addressed fully on what costs order is more appropriate in the uncontested adverse possession cases, nor any arguments were invited before each of the costs order were made, save perhaps in Tang Lai, supra where the issue of costs was dealt with very briefly at the end of the judgment.  Thus, I think it is fair to conclude that there is no hard and fast rule laid down on the above cases on whether an absent and unrepresented defendant in an uncontested adverse possession case must pay the costs of the claimant.  In my opinion, each case much be looked at individually and determine according to the facts and circumstances of that particular case.  

57.  In deciding whether the plaintiff is entitled to his costs in this case, I have taken into the following factors which I consider are relevant:

(i) the nature of the plaintiff’s claim;

(ii) the conduct of the parties; and

(iii) whether any costs have been unnecessary incurred as a result of the defendant’s failure in responding to the plaintiff’s claim.

58.  I accept the defendant’s submission that adverse possession by nature is very different from other cases based on, for example, breach of contract, tort or recovery of possession of property.  The nature and relationship of the possessory title of an adverse possession claimant has been succinctly summarized by the court of appeal in the case of Ng Tung v Grand Wayfair Investment Company Limited [2019] HKCA 969 at §10:

“…Until the running of the full limitation period under the Limitation Ordinance, [the squatter’s] possession is not perfect as it could be defeated by a claim for possession by the registered owner. However, his possession is still good against the whole world except the registered owner. Upon expiry of the limitation period, his possession cannot be defeated by the registered owner as the latter’s title is extinguished vis-à-vis the squatter. The possessory title of the squatter becomes indefeasible in that sense. A squatter does not need to seek a declaration to perfect his possessory title though such a declaration may serve as a proof of his possessory title for conveyancing purposes.” [emphasis added]

59.  The claimant of adverse possession, whether he is the plaintiff or the defendant in the case, is in fact the squatter / trespasser of the piece of land and he is trying to dispossess the rightful or registered owner from the land.  The registered owner, like the defendant in this case, has committed no wrong against the squatter.  To the contrary, the squatter is in possession of the land “as of wrong” so that the registered owner has a cause of action against him.  Therefore, the essence of an adverse possession claim is that any cause of action the registered owner has against the squatter has become time-barred.

60.  The plaintiff, like most claimants in an adverse possession claim where the defendant did not enter an appearance, is asking the court for a declaratory relief by way of default judgment.  Under such circumstances, the court will scrutinize the application for default judgment carefully and will not hastily grant the relief sought, and the court expect maximum assistance to be provided in order for the relief to be granted: see Tang Lai, supra at §8.        

61.  In this case, to be fair to the defendant, the main reason I ordered the default judgment application to be turned into a speedy trial on 18 May 2020 was not due to the defendant’s absence at the hearing or failure to file an acknowledgement of service and/or defence. Rather, as this case involves with the possible dispossessing of the rightful owner from the Land, I opined the plaintiff should be asked to give viva voce evidence so that his evidence can be scrutinized by the defendant (if it chose to appear at the trial) or by the court (in the absence of the defendant) before the court would grant him the declaratory relief he sought.          

62.  Thus, to be fair to the defendant, whether it was going to file an acknowledgment of service before 19 May 2020 or not, in all likelihood, the plaintiff would still have to attend the trial in order to prove his case. Therefore, the plaintiff will still have to incur the costs of the action and the costs of proving his case at the trial on 15 June 2020.

63.  However, in my judgment, the fact that the defendant had delayed in indicating its intention of not going to contest the case did lead to the unnecessary issue and service of the default judgment summons, service of the trial bundles and the written submissions on it prior to the trial.  In my judgment, these costs could have been saved had the defendant acted promptly and within a reasonable time.  I consider that at least those costs should be borne by the defendant.

64.  Equally, I consider the costs resulting from the (written) arguments on costs could be saved had the defendant acted promptly or within a reasonable time.  Hence, those costs in my view should be borne by the defendant also.

CONCLUSION ON COSTS

65.  On the issue of costs, I make the following orders:

(1) Save and except for the items stated in paragraph (2) below, the costs of the action (including the costs of the trial) to be borne by the plaintiff with certificate for counsel;

(2) The defendant to bear the costs for the following items:

(a) The costs of issuing and serving of the default judgment summons (together with its supporting documents) on the defendant;

(b) The costs of serving the trial bundles and opening submissions of the trial on the defendant; and

(c) The costs in arguing who should bear the costs in this case (including all relevant correspondence and written submissions on the issue).

(3) The plaintiff’s own costs to be taxed in accordance with the legal aid regulations.