CHAU YAN CHI CATHERINE v. THE INCORPORATED OWNERS OF FUNG WAH FACTORIAL BUILDING

DCCJ1459/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1459 OF 2014

--------------------

--------------------

---------------------

DECISION

---------------------

Introduction

1. This is the plaintiff’s application for default judgment pursuant to Order 19, rule 7 of the Rules of the District Court (“RDC”).

2. The plaintiff’s claim is for possessory title to a portion of Fung Wah Factorial Building, Nos 646, 648 & 648A Castle Peak Road, Kowloon, Hong Kong, specifically the portion shaded green on the annexed plan to the statement of claim (“the Shaded Portion”).

3. It is contended that the defendant’s right of action to recover the Shaded Portion was lost and its title was extinguished by virtue of sections 7(2) and 17 of the Limitation Ordinance, Cap 347 (“the Ordinance”)  respectively.

The plaintiff’s assertions

4. In or about 1960, the plaintiff’s predecessor opened a staircase shop (“the Shop”) at the Shaded Portion without the consent of the defendant’s predecessor.  Iron gates were used to enclose the Shop and would be kept shut when the Shop was not in business.

5. In or about March 1989, the plaintiff bought the Shop together with the possessory rights of the Shaded Portion for a consideration of HK$188,000 from her predecessor.

6. Since or about March 1989, the plaintiff has been occupying the Shaded Portion exclusively and continuously without the consent of the defendant.  She would operate the Shop by herself or lease out the Shop for rental income, without interference by the defendant.

Procedural history

7. The writ of summons and statement of claim were issued on 16 April 2014 and served on the defendant the next day by registered post.  This is according to the affirmation of Lam Lai Kim dated 17 June 2014.

8. On 21 May 2014, the Registrar of the District Court received an acknowledgment of service of writ of summons from one Chan Chi Wai purporting to act on behalf the defendant.  The acknowledgement of service was ineffective for want of the company seal, and was promptly returned by the Registrar with a cover letter explaining what would be the proper procedure.

9. The summons for default judgment was taken out by the plaintiff on 17 June 2014 and served on the defendant the next day.  This is according to the 2^nd affirmation of Lam Lai Kim dated 20 June 2014.

10. At the hearing on 8 July 2014, I directed the plaintiff’s counsel to file an amended statement of claim to state clearly whether and how the present case falls within the jurisdiction of this court, something which has not been specifically pleaded in the statement of claim.  This has now been done by way of an amended statement of claim and the plaintiff has now pleaded that the annual rent of the Shaded Portion of the building does not exceed HK$240,000.  Hence, this case falls within the jurisdiction of this court.  The plaintiff also added that the Shaded Portion is a common part of the building which was owned by the defendant.  The prayer was also amended by deleting 2 orders no longer sought by the plaintiff.  The summons was amended to reflect those changes.  Both the amended summons and amended statement of claim were served on the defendant by the clerk of the plaintiff’s solicitors inserting them into the letter box of the defendant at the building.  This was stated in the 3^rd affirmation of Lam Lai Kim dated 21 July 2014.

11. Throughout the proceedings there has not been any communication from the defendant, save for the ineffective acknowledgment of service mentioned above.  However, it has not responded to the letter from the Registrar on the ineffective acknowledgment of service.  It has also not responded to the latest amended statement of claim and amended summons served on it by the plaintiff.

The applicable law

12. I shall first consider the law relating to O 19 r 7 of RDC.  Simply put, the rule empowers the court to enter judgment as the plaintiff appears entitled to on his statement of claim, upon default of defence on the part of the defendant.

13. Two points are noteworthy.  First, the court cannot receive any evidence and must give judgment according to the pleadings alone (see Hong Kong Civil Procedure 2014Vol 1, §19/7/11). Second, the court’s power to grant judgment is discretionary and not mandatory (ibid Vol 1, §19/7/13). 

14. The court will scrutinize application for default judgment and does not hastily grant the relief sought.  It is normal practice for the court of not to make a declaration without a trial, though the rule is not absolute and should be followed only where the claimant can obtain the fullest justice without such a declaration: Patten v Burke Publishing Co Ltd [1991] 2 All ER 821.

15. In light of these principles, it becomes clear that a cautious approach is called for in the present case, for firstly the court has not had the benefit of taking evidence; secondly the relief sought is declaratory in nature; and thirdly the relief sought relates to a possessory title.

16. I now turn to the law relating to the Ordinance and adverse possession.

17. A right of action to recover land expires 12 years after its accrual (see s 7 of the Ordinance).  The title of the person to the land is extinguished along with the expiration of his right of action (s 17). For rights accrued before 1 July 1991, the limitation period is that specified in Limitation (Amendment) Ordinance 1991 ie 20 years (s 38A).  However, this point is now moot as rights accrued before 1 July 1991 should have expired by now in any event.

18. No right of action to recover land shall accrue unless there is adverse possession (s 13).  I should add that “possession” here comprises both factual possession and intention to possess: Powell v McFarlane (1977) 38 P & CR 452.

19. Successive periods of adverse possession between different persons can be aggregated: Wong Kar Sue v Sun Hung Kai Properties Ltd [2006] 2 HKC 600, §6.  However this method of tacking is subject to the two periods being continuous: s 13(2) of the Ordinance.

Analysis

20. Based on the documents before me, in particular the affirmations of Lam Lai Kim and the exhibits contained therein, I accept that the plaintiff has duly served the writ of summons, the statement of claim, the amended statement of claim and the related summons to the defendant.  The defendant has not made any reply save for one ineffective acknowledgment of service of writ of summons.

21. Whether the defendant has chosen not to defend to save costs or for other reasons I do not wish to speculate.  Suffice to say that the defendant has not appeared in court despite due service of the court documents.

22. Once it is established that the defendant is in default of defence, it remains for me to consider whether the amended statement of claim supports a claim of adverse possession.

23. The plaintiff and her predecessor have been operating or leasing out the Shop since or about 1960, with neither consent nor interference from the defendant or its predecessor.  In other words, they have been in possession of the Shaded Portion for decades.  The enclosure of the Shop with iron gates and the plaintiff’s leasing of the Shop cement the plaintiff’s position with regards to both factual possession and intention to possess.

24. It is alleged that the plaintiff bought the Shop along with possessory rights to the Shaded Portion from her predecessor in or about March 1989.  Although the Shop has been in operation since 1960, the plaintiff has only been in possession since 1989.  The issue is which year should be treated as the start of the plaintiff’s adverse possession.

25. There is nothing to indicate the existence of a gap between the plaintiff’s predecessor and her own adverse possession, it would seem the two periods can be aggregated. Moreover, even assuming the two periods were discontinuous, the plaintiff has come into adverse possession no later than March 1989.  The limitation period must have run out in any event as 25 years have since elapsed.

Conclusion

26. Notwithstanding the cautious approach I have adopted in this case, I am satisfied that the plaintiff has established a claim of adverse possession on the face of the amended statement of claim, which is self-contained and is sufficient to displace the norm not to make a declaration without trial.

27. Accordingly, I make the following declarations:-

(1)   the defendant has lost its right to bring any action to recover the land shaded green on the Plan annexed, or any part thereof by virtue of section 7(2) of the Limitation Ordinance, Cap. 347; and

(2)   by virtue of section 17 of the Limitation Ordinance, Cap 347, the title of the defendant has been extinguished in favour of the plaintiff and the plaintiff has acquired all the rights, title and interest including the ownership and right to exclusive possession and occupation of and in the land shaded green on the Plan annexed.

28. I would also make an order of costs against the defendant in favour of the plaintiff, with certificate for counsel, such costs to be taxed if not agreed.