HUI WING SZE v. CHIU KA KEUNG

DCCJ 441/2021

[2024] HKDC 2169

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 441 OF 2021

(TRANSFERRED FROM LANDS TRIBUNAL BUILDING

MANAGEMENT APPLICATION NO 155 OF 2019)

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DECISION

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1.  By way of a Summons dated 10 July 2024, the plaintiff seeks leave to appeal against the Judgment I handed down on 30 April 2024 ([2024] HKDC 685). Whilst the Summons appears to have been issued out of time, this might be explained by the time taken to process the plaintiff’s application for legal aid to support her leave application. I see that Mr Dixon Co, counsel for the defendant, does not dwell on the timing of the plaintiff’s application; I shall thus treat the plaintiff’s application as having been raised within time.

2.  The plaintiff took out another Summons on 5 November 2024 (“the Amendment Summons”) to substitute the draft Notice of Appeal attached to the Summons with the revised Notice of Appeal attached to the Amendment Summons. Since parties made submissions on the basis of the revised grounds of appeal, I decided to hear the parties whilst reserving my decision on the plaintiff’s amendment application.

3.  I continue to adopt all the definitions I used in the Judgment.

Ground 1A

4.  The plaintiff complains that I erred in requiring her to discharge the burden to show that the Licence Agreement covered the Trespassed Area. I referred to burden of proof regarding the Licence Agreement in the following parts of the Judgment:

4.1  In §51 of the Judgment, I referred to the fact that the plaintiff was the one who sought to rely on the Licence Agreement, and should thus carry the evidential burden of proof. I do not accept the Judgment involved any error in this respect. I made it clear that the plaintiff had to put forward evidence to make good her allegation. This must be understood to be distinct from the burden the defendant had to shoulder to show that his occupation of the Trespassed Area was adverse.

4.2  The above analysis applies to §53.1 of the Judgment.

4.3  In §47.1 of the Judgment, I found the plaintiff to have failed to discharge the burden to show that the Licence Agreement should be interpreted in the way she proposed. This was simply a reference as to which of the parties’ interpretations of the Licence Agreement should be preferred. I do not think it should be understood as assigning a specific burden on the plaintiff. In any event, the analysis in §4.1 above must equally apply here as well.

5.  Moreover, I made the specific finding in §49 that the defendant’s evidence was sufficient to show me the correct interpretation of the Licence Agreement. Any perceived error in terms of burden of proof could not have remained significant.

6.  I do not find this ground of appeal reasonably arguable.

Ground 1B

7.  The plaintiff submits that I erred in finding that the defendant and Mr Li (acting for the previous owners of Flat 3503) proceeded on the mistaken basis that the Trespassed Area belonged to the 3502 Roof. The plaintiff’s submissions can be summarized as follows:

7.1  The assignment by which the defendant purchased Flat 3502 specifically referred to the plan annexed to the first assignment back in 1985 for the roof he purchased with Flat 3502. As the plan only gave the defendant exclusive occupation of the 3502 Roof, he could not have mistakenly thought that he also owned the Trespassed Area.

7.2  Since the layout of the roof tracked the layout of the flats below, the defendant and Mr Li could not have misunderstood about who was the true owner of the Trespassed Area, as it fell within the layout of the Flat 3503 below. In any event, there was no evidence showing Mr Li was indeed so mistaken.

8.  I do not accept the plaintiff’s submissions that the defendant could not have been mistaken about the correct ownership of the Trespassed Area based on what he purchased in 2004. The copy of the assignment in 2004 in the trial bundles shows that the plan was not reproduced as an annexure; the copy plan included in the trial bundles was stated to be an annexure to the first assignment in 1985. The defendant was not cross examined on his knowledge about the details shown in the plan when he purchased Flat 3502 in 2004[1]; nor whether he appreciated that the layout of the 3502 Roof (together with the Trespassed Area) did not correspond to the layout of Flat 3502.

9.  Based on the above, I cannot agree with Mr Adrian But, counsel for the plaintiff, that the correct inference ought to be that the defendant knew the Trespassed Area did not form part of the roof he purchased.

10.  I also disagree with Mr But that there was no sufficient evidence to support an inference that Mr Li was similarly mistaken as to the correct ownership of the Trespassed Area. In my view, the circumstantial evidence strongly supports such an inference. The following could not have happened if the plaintiff’s predecessors-in-title did not mistakenly think that the Trespassed Area belonged to Flat 3502 rather than Flat 3503: (i) the floor tiles of the Trespassed Area followed those of the 3502 Roof; (ii) the long side fence and the short side fence separated the Trespassed Area from the rest of the 3503 Roof[2]; and (iii) after the defendant moved into Flat 3502 but before the conclusion of the Licence Agreement, there was no complaint from the then owners of Flat 3502 about the defendant’s occupation of the Trespassed Area.

11.  I cannot detect any error in my factual finding about the mistaken belief held by the defendant and Mr Li. I do not find this ground of appeal reasonably arguable.

Grounds 2A & 2B

12.  Under ground 2A, the plaintiff complains that I was plainly wrong to conclude that the defendant had sufficient factual possession of the Trespassed Area and the requisite intention to dispossess the paper owner.

13.  Under ground 2B, the plaintiff complains that I failed to consider whether the defendant was able to prove ouster of the plaintiff and all other co-owners as an additional requirement for a claim of adverse possession against co-owners in a multi-storey building.

14.  I think it is convenient for me to deal with these 2 grounds together, as they both concern how I ought to have approached the question of adverse possession.

15.  Mr But submits that the burden of showing adverse possession between co-owners is higher than that in other cases; actual ouster or dispossession is required: Fung Sau Mui Janne v Fung Wing Tong [2018] HKCFI 2247 (Deputy Judge William Wong SC; 3 October 2018) at §80. This higher burden applies to the present case because the plaintiff and the defendant have been tenants in common in Amoy Gardens Phase IIIA.

16.  In §37 of Tang Tak Sum v Tang Kai Fong [2015] 1 HKLRD 286, Cheung JA held that “actual ouster” meant no more than dispossession in modern parlance. In my view, “actual ouster” denotes a requirement that there should be clearer evidence to show that the dispossessed co-owner was indeed stripped of his possession of the land, because the possession of co-owned land by one tenant in common, in his capacity as a tenant in common, does not automatically bar the possession of the other tenant(s) in common. A refusal of the latter’s title is required: Tang Tak Sum in §34.

17.  I have no quarrel with Mr But on the legal principles. But the fact that these were not spelt out in the Judgment does not mean, in my decision, that leave of appeal ought to be granted. It remains to be seen whether the plaintiff can reasonably argue that the Judgment came to the wrong conclusion in applying the correct principles to the facts. One thus needs to consider the plaintiff’s arguments under ground 2A.

18.  Generally speaking, I am of the view that the findings in the Judgment show that there was actual ouster by the defendant. As the defendant mistakenly thought he owned the Trespassed Area and used it as such, he must have occupied the Trespassed Area to the exclusion of the plaintiff and other co-owners of the building. This underlined the findings I made in the Judgment, and is consistent to how co-ownership in a multi-storey building operates in Hong Kong. In my decision, the Judgment contained no error in finding that the defendant established sufficient factual possession of the Trespassed Area.

19.  I think the present case is distinguishable from Fung Sau Mui Janne and Tang Tak Sum, in that the co-owners in those cases had the same right to use and occupy the disputed land; whereas in the present case, co-owners in the same multi-storey building had rights to exclusively use and occupy different parts of the building. Thus, the cogency of the evidence requirement is naturally different.

20.  Going to the specific evidence identified by the plaintiff, she first submits that the defendant could not have exclusive possession of the Trespassed Area because the management office held the key to gain access to the roof; and the Trespassed Area could be freely accessed by the staff from the management office. She points to §§7, 42.2 and 42.3 of the Judgment.

21.  Secondly, she submits that there could be no exclusive possession because the defendant had to leave a passageway next to the long side fence to allow the management office to check the utilities meter installed on the external wall.

22.  I do not accept the plaintiff’s submissions on these points. As against the whole world except the management office and the owners of Flat 3503, the defendant must have intended to possess the Trespassed Area to their exclusion on the basis of the covenant that they do not have access to the roof. As against the management office and the owners of Flat 3503, the act of encircling the Trespassed Area by the fences (and later by other objects) must have signaled to them that they could not gain access to the Trespassed Area, even when the management office carried out any inspection of common facilities on the roof as allowed under the DMC. As I see it, the plaintiff’s argument conflates the possession of the whole roof with that of the Trespassed Area.

23.  It seems to me perfectly open to construe the intention of erecting the long side fence and the short side fence in the way I proposed in the Judgment. I made the finding that that was the interpretation I preferred. Mr But has not shown how such finding could be said to be wrong.

24.  Thirdly, the plaintiff argues that the defendant admitted that he did not place objects on the Trespassed Area at all times; and those objects were in any event movable. Hence, there could not have been sufficient possession of the Trespassed Area.

25.  This was a matter I pondered with for some time in the preparation of my Judgment. Hence, I deliberately set out the permitted use of the roof according to the DMC, and my reasoning stemming from that in §42 of the Judgment. I do not consider myself wrong in the way I approached this factually sensitive question.

26.  Fourthly, I was said to have erred because the defendant must be willing to include the use of the Trespassed Area in the Licence Agreement, if he were told the correct ownership of the same. I was said to have failed to take that into account when I found that the defendant had the requisition intention.

27.  I disagree. I do not think the requisite intention should be ascertained through hypotheticals. The fact was that the defendant possessed the Trespassed Area thinking he was the owner. This was sufficient.

28.  Finally, Mr But argues that there was no ouster because the defendant admitted that the plaintiff’s predecessors-in-title were allowed entry through the Trespassed Area to the 3502 Roof to view flowers[3]. With respect, I see no substance in this argument. Given the existence of the Licence Agreement, the plaintiff’s predecessors-in-title must have entered the Trespassed Area as guests of the defendant, but not as the co-owner exercising their rights to enter the same. This cannot be taken as evidence rebutting ouster.

29.  I do not think these 2 grounds are reasonably arguable.

Ground 3

30.  The plaintiff submits that I erred in law in failing to appreciate the effect of section 9(1) of the Limitation Ordinance (Cap.347), in that time only accrues against a leasehold interest (i.e. a tenant) and not a reversioner (i.e. the plaintiff’s predecessors-in-title) until such leasehold interest has been determined and that the reversioner has taken back possession of the land.

31.  I do not think this ground is reasonably arguable. The short answer is that there is no evidence showing the true relationship between the plaintiff’s predecessors-in-title, and what the defendant in his witness statement describes as the tenant of Flat 3503. This issue was simply not explored at trial to see whether the defendant’s understanding is accurate. In my decision, it is now unfair for the plaintiff to turn around to suggest that the plaintiff’s predecessors-in-title only had a reversionary interest during the period when there was a tenant in Flat 3503.

Ground 4A

32.  The plaintiff complains that I misunderstood the plaintiff’s counsel at trial, and treated him as having confirmed that the plaintiff’s claim under the DMC must stand or fall together with the plaintiff’s defence against the defendant’s claim for adverse possession.

33.  In §55.7 of the Judgment, I noted the plaintiff’s confirmation that her claim under the DMC must stand or fall together with her defence against the defendant’s claim for adverse possession.

34.  In this regard, Mr But submits that he went through the audio recording of the trial, but he could not detect his predecessor having so confirmed to the court.

35.  According to my own notes, the plaintiff’s confirmation stems from §1 of her opening submissions, which I quote as follows:

“The Plaintiff claims recovery of vacant possession and damages for trespass … Alternative to the claim of damages for trespass, the Plaintiff claims damages for the Defendant’s breach of the deed of mutual covenant which is concurrent and adds nothing to the claim.”

36.  This prompted Mr Co to state the following in §1.6 of his closing submissions:

“As P’s counsel acknowledged at §1 of P’s Skeleton Opening Submissions, the claim for breach of the DMC adds nothing to P’s claim. These submissions will therefore be focused on the possession claim and adverse possession.”

37.  I note that the written closing submissions were filed in sequence, i.e. the plaintiff filed her written closing submissions after considering those filed by the defendant. The plaintiff did not seek to contradict the defendant’s observations on her concession in her closing submissions.

38.  Hence, I do not agree with Mr But that the plaintiff never conceded that her claim under the DMC must have the same outcome as the defendant’s claim on adverse possession.

39.  I do not think it is fair to allow the plaintiff to withdraw the concession in the context of her intended appeal. Mr But does not appear to seriously suggest that the plaintiff was prevented from making a correct decision regarding how her case should be run at trial. If the plaintiff argued that her claim under the DMC was not co-extensive with the defendant’s claim in adverse possession, the defendant would obviously seek to adduce more evidence, or would adopt a different stance at trial.

40.  I do not think this ground of appeal is reasonably arguable.

Ground 4B

41.  Mr But starts his submissions by referring to The Incorporated Owners of Man Hong Apartments v Kwong Yuk Ching & Ors CACV 498/2000 (Mayo VP, Keith JA & Sakhrani J; 27 April 2001). Man Hong Apartments were subsequently applied in Mountain View (IO) v Heart Cuisine [2012] 4 HKLRD 628 and The Incorporated Owners of Po Hang Building v Sam Woo Marine Works Limited HCMP 415/2014 (Lam VP & Chu JA; 6 August 2015). These cases are usually referred to now for the proposition that the restrictive covenant in a deed of mutual covenant prohibiting co-owners from occupying common areas for their own use remained enforceable by an incorporated owners, despite any proof of adverse possession. In other words, to borrow the words of Chu JA in §2 of Po Hang Building, a co-owner in a multi-storey building cannot rely on adverse possession as a defence to an action by the incorporated owners to enforce the provisions of the deed of mutual covenant and/or the Building Management Ordinance (Cap.344).

42.  Mr But submits that the same logic should apply for a co-owner (i.e. the plaintiff in the present case) seeking to enforce the DMC against another co-owner (i.e. the defendant in the present case) regarding the exclusive occupation of the part of the building she enjoys. Hence, even if the defendant established adverse possession vis-à-vis the Trespassed Area, this cannot be a defence to the plaintiff’s claim under the DMC.

43.  Given what I said with respect to ground 4A above, it is not open for to the plaintiff to argue that her claim under the DMC should yield a different result from the defendant’s claim in adverse possession. Hence, I do not think it is fair to now give leave to the plaintiff to argue ground 4B on appeal.

44.  In any event, I do not think Mr But’s submissions show the plaintiff has any reasonable prospect of success under this ground.

45.  In my decision, the proper approach can first be seen from Chu JA’s judgment in §§27-28 of Po Hang Building, in which her Ladyship referred to the judgment of Yuen JA in Wong King Lim v Incorporated Owners of Peony House [2013] 4 HKC 295:

“27. Yuen JA went on to consider the decision in the Mountain View Mansion case, in which the incorporated owners sued a registered owner and his licensee for trespass of a service lane that formed part of the common part of the building. The defence of adverse possession failed on the facts and the owner’s appeal to the Court of Appeal was dismissed. Notwithstanding this, in deference to arguments of counsel, Yuen JA considered the obiter dictum of Cheung JA in the Mountain View Mansion case (at §§31 to 34) and said:

“31. After referring to Man Hong Apartments in para.19, Cheung JA said (in para.20):

‘Further the principle in Nisbet and Potts’ Contract is clearly applicable because once the service lane is found to be a common part then whoever occupies it, be it another owner from the building or a trespasser who acquired a possessory title by adverse possession, he is bound by the terms of the DMC. The latter cannot be in a stronger position because his paper title is still subject to the covenants in the DMC and he cannot use the service lane to the exclusion of the owners in the building.’

32. I will first examine the judgment in Nisbet and Potts’ Contract on which the above passage in Mountain View Mansion was based. Nisbet and Potts’ Contract was a case where there were two neighbouring pieces of land. There was a covenant restricting the user of one piece of land A (“the covenantor’s land”), with the neighbouring land B (“the covenantee’s land”) enjoying the benefit of that covenant. A squatter dispossessed the covenantor of his land A. Subsequently on a sale of A, the issue arose whether the covenant could still be enforced by the owner of B.

33. It was held that the covenant could still be enforced by the owner of B, the covenantee’s land, against any subsequent owner of A, the covenantor’s land, as the owner of A was not a bona fide purchaser for value of the legal estate without notice of the covenant. A restrictive covenant was binding in equity upon land to which a squatter had subsequently acquired a statutory title by adverse possession against the owner and covenantor, as the statutory extinguishment of the title of the dispossessed owner of the land did not have the effect of destroying the covenant, the equitable right of the covenantee not being in any way affected by the statute of limitations which had barred the original owner from recovering his land.

33.2 It is important not to confuse land with title. Land A remained subject to the covenant in favour of land B, even though the title of the owner of land A had been extinguished by the squatter’s adverse possession. Thus Collins MR held at p.402 that the whole (meaning the entirety of the) right the squatter acquires under the statute of limitations is the extinguishment of a title adverse to his own, and nothing else. Put another way, the statute of limitations affects the right of the original owner and covenantor to sue the squatter to recover possession of land A. However the statute does not affect the right of the covenantee (the owner of land B), unless and until his right to enforce the covenant has been infringed. Unless and until that happens, “it is a matter of absolute indifference to him [the covenantee, owner of land B] what person is the owner of the land over which that right exists [land A] until that land is used in some way incompatible with the assertion of that right [the covenant] on the part of the person entitled to it [the covenantee, owner of B]”.

34. When Nisbet and Potts’s Contract is so understood, I do not see how it assists the IO in this case. The owners of the Building had covenanted only with one another to possess the Lane in common and not exclusively. The plaintiff was not a party to the DMC. The learned judge found that as far as possession of the Lane was concerned, the plaintiff’ intention was to exclude all the owners (and the IO) of the Building. Accordingly at the end of the relevant period under the Limitation Ordinance, the plaintiff extinguished the title to the Lane which was adverse to his own, ie the title of all the owners of the Building (and the IO). By then it did not matter what were the restrictions imposed on the use of the Lane by the owners under the express provisions in a deed of mutual covenant, or by the IO under the incorporated provisions of s.34I BMO. Once their title to the Lane was extinguished, the owners (and the IO) no longer had any right to it which they could enforce against the plaintiff, unlike in Nisbet v Potts where the statute of limitations had no effect on the covenantee (the owner of land B) who therefore retained his right to enforce the covenant binding land A, which was separate and distinct from the original owner and covenantor’s adverse title against the squatter. It is important to note that in LLC v Allen [1914] 3 KB 642, at 660 the English Court of Appeal held: ‘the doctrine in Tulk v Moxhay does not extend to the case where the covenantee has no land capable of enjoying, as against the land of the covenantor, the benefit of the restrictive covenant’.”

28. We agree with the Judge that the above passages should be considered in its proper context. Yuen JA was addressing the part of Cheung JA’s obiter remark in the Mountain View Mansion case that a trespasser who acquired a possessory title by adverse possession would be bound by the terms of the deed of mutual covenant by reason of the principle in Nisbet and Potts’ Contract. Her Ladyship pointed out that the ratio in Nisbet and Potts’ Contract is that the statute of limitations only affects the right of the original owner to sue the squatter to recover possession; where the original owner is at the same time the covenantor to a covenant that runs with the land, the statute of limitations will not affect the right of the covenantee to enforce the covenant, unless and until his right to do so has been infringed. Yuen JA concluded that in the Peony House case, unlike the facts in Nisbet and Potts’ Contract, the co-owners (represented by the incorporated owners) have lost their right to enforce the covenant against the squatter because the squatter has extinguished their title to the lane by being in adverse possession.”

46.  In the present case, what the defendant’s adverse possession extinguished was the plaintiff’s right to exclusive occupation of the Trespassed Area, granted to her as an incidence to her ownership of certain undivided shares in Amoy Garden Phase IIIA. Since this legal right was extinguished, she can no longer enforce a right in equity to seek an injunction to mandate the defendant to return the exclusive occupation of the Trespassed Area to her. For cases like Man Hong Apartments, a co-owner’s adverse possession does not extinguish the right of the incorporated owners to police the proper use of the common areas.

47.  For myself, I think the present case (i.e. a dispute between co-owners with respect to a part of a multi-storey building of which one of them has exclusive occupation) is more akin to a case between a squatter and an incorporated owners with respect to the common areas of a building.

48.  In my view, if Mr But’s submissions were correct, then adverse possession would be largely irrelevant to multi-storey buildings in Hong Kong. I think it is a matter for the Court of Appeal to consider whether the plaintiff should be allowed to appeal against the Judgment on this point, which may in turn affect the court’s view whether the plaintiff should be allowed to withdraw her concession.

Conclusion

49.  I grant an order in terms of paragraphs 1 to 3 of the Amendment Summons. I consider the Amendment Summons a late application, and it is reasonable for the plaintiff to pay for the indulgence of this Court to consider her leave application on the basis of the revised Notice of Appeal. I order that costs of and occasioned by the Amendment Summons be to the defendant, with a certificate for counsel, to be taxed if not agreed. My reasons are as follows:

49.1  Contrary to the plaintiff’s stance, I accept the submissions of Mr Co that the revised Notice of Appeal does not actually touch upon anything arising out of the audio recording of the trial the plaintiff obtained on 30 August 2024, which could otherwise not be gleaned from the trial documents;

49.2  I cannot see why the plaintiff could not have sought to amend the draft Notice of Appeal, if she saw fit, well in advance of this hearing upon the assignment by the Director of Legal Aid of her current solicitors on 10 July 2024; the assignment of her current counsel on 29 July 2024; and the provision of the audio recording by the court; and

49.3  In any event, most of the amendments were just submissions elaborating on the grounds already stated in the draft Notice of Appeal[4].

50.  The plaintiff’s application for leave to appeal is refused with costs to the defendant (with certificate for counsel), to be taxed if not agreed.

51.  The plaintiff’s own costs for the Amendment Summons and her application for leave be taxed in accordance with the Legal Aid Regulations.

52.  All costs order are nisi. Any application to vary any of the costs order nisi shall be raised by letter within 14 days of this decision, and shall be disposed on paper.

53.  I thank Mr But and Mr Co for their helpful assistance.