LEE SIU FONG v. WONG WAN LEUNG AND OTHERS

HCA 122/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 122 OF 2012

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JUDGMENT

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1.  This is a claim for adverse possession in respect of certain land in Cheung Chau. After the trial in January 2016, the parties had tried to explore whether there was any other way to dispose of the case and so the handing down of the judgment was postponed. About 3 months after the trial, the parties informed me that they would still require the court to adjudicate on the dispute. Hence, this is my judgment in this case.

BACKGROUND

2.  The adverse possession claimed by the Plaintiff was by way of occupation of a hut (“the Hut”) built with metal sheets measuring about 510 square feet which sat on a small piece of land (“the Land”) partly in Lot 322 and partly in Lot 307 in Cheung Chau.  It is the Plaintiff’s pleaded case that the Hut was built by his father Lee Ying Choi (李英才) also known as Lee Pak Shing (李北勝)(“the Father”).  Since then, it was used by the Father as his family residence.  After his death in 1984, the Hut was used as the ancestral house of the Plaintiff’s family.

3.  Wong Wai Tsak Tong (“the Tong”) was the registered owner of Lot 322.  There was resumption of land by the Government in 2004 affecting Lot 322, and what remains of Lot 322 which is still privately owned should be Lot 322RP.

4.  The history and unique features of landholding in Cheung Chau were detailed in the past decided cases of Suen Sun-Yau v Wong Wai-kwan & ors[1], Wong Wan Leung & ors v Secretary for Transport[2] and Wong Wan Leung & ors v Director of Lands[3].

5.  In short, the Tong was the registered owner of over 90% of the private land in Cheung Chau held under the Block Crown Lease dated 18 March 1905 (“the Block Crown Lease”).  Most of the Tong’s lands were sub-leased on a 5 years’ term renewable on the same terms until the termination of the Crown lease 3 days before the end of June 1997.  Dispute erupted between the Tong and some of its sub-lessees in the 1980’s.  The impasse between the two camps was eventually brought to an end by the enactment of the Block Crown Lease (Cheung Chau) Ordinance, Cap. 488 (“the Cheung Chau Ordinance”).

6.  The Cheung Chau Ordinance took effect on 8 September 1995.  Broadly speaking, it operated to convert all the registered sub-leases between the Tong and its sub-lessees into direct government leases between the Government and the sub-lessees thereby removing the Tong at the intermediary level.  Those lands of the Tong which were not subject to any registered sub-leases were by s 6(1) re-granted to the Tong.  Lot 322 was one of such lands to which s 6(1) applies, and so the Tong remains the direct lessee of the Government after the effective day of the Cheung Chau Ordinance.  Hence, the registered owner of Lot 322 is the Tong.

7.  The registered ownership of Lot 307 is more complicated.  The schedule of the Block Crown Lease recorded the owner of Lot 307 as “福德廟 Fuk Tak Temple” (“the Temple”).  The land registry record for Lot 307, on the other hand, suggests that the 2^nd Defendant, the Secretary for Home Affairs Incorporated (“the SHAI”), is the owner.  The owner’s name is stated as “Registrar for Fuk Tak Temple”, and the record contains the following notion: “The [SHAI] is the Successor-in-Office to the Former Registrar General”.

8.  The SHAI is a corporation formed under s 2 of the Secretary for Home Affairs Incorporation Ordinance (Cap 1044)(“the SHAI Ordinance”).  The SHAI is the incorporated form of the Secretary for Home Affairs.[4]

9.  It is the Government’s position that the title of Lot 307 actually belongs to the Government.

10.  The Plaintiff’s claim of continuous possession of the Hut is by way of successive possession firstly by the Father and then by the Plaintiff himself.  At the trial, the Plaintiff gave details of the occupation by his family of the Hut.  In short, the Father lived there with his family since late 1939 after he sold the sub-lease of No 78 Chung Hing Back Street in Lot 305.  In the 1940’s and 1950’s, there were minor works done in respect of the Hut and so there was some slight changes in the exact location of the Hut during that period.

11.  After the death of the Father in 1984, the Plaintiff’s mother and other family members continued to live there until the mother died in 1995.  Before the death of the Father, the Plaintiff himself had moved out of the Hut in 1970’s to live in a public housing unit in Wah Fu Estate with his wife and children.  After the death of his mother, the Plaintiff claimed that the Hut was maintained as the ancestral home, keeping things there belonging to the Plaintiff’s parents.  For a period, the Plaintiff rented out the Hut for a rent of $1,200 to $1,500 a month.

12.  It is common ground that the Father occupied the Hut under a Modification of Tenancy under Permit No 114 (“the MOT”).  The MOT was a permit granted by the District Commissioner for the New Territories on behalf of the Government for occupation of Lot 322 between 1 April 1957 and 31 March 1958 upon payment of $13.  The MOT was to be renewed annually at the same fee of $13.  There is no serious dispute that the annual fees were paid up to 2011.[5]

13.  The concept of a MOT permit was explained by Cheng Ping Chuen, an officer of the Lands Department, in his witness statement:

(i) block crown leases (now called block government leases) typically contain a prohibition against erecting buildings, and hence any lessee would be unable to erect a building unless permission was obtained from the Government; and

(ii) such building permission would be issued by the Government (in practice by the Lands Department) in a number of formats, and one of such formats was the MOT permit, which was normally issued for a period of 1 year renewable annually upon payment of a fee.

14.  The MOT allows the “registered owner [the Tong]” to “maintain the temporary structures of ... ... dwelling and kitchen respectively”.  The MOT also contains other conditions, such as the MOT can be cancelled with 1 month’s notice, the MOT is not transferrable and any breach of its conditions may result in the cancellation of the MOT.

15.  Other than paying the annual fees for the renewal of the MOT, the Father and the Plaintiff sought consent from the District Lands Office and the Tong for various matters relating to the occupation of the Hut:

(i) in 1961, the Father applied for retrospective approval for reinstating the kitchen with different building materials namely bricks and zinc sheeting to avoid the demolition order regarding the kitchen;

(ii) in 1984, the Plaintiff himself wrote to the District Lands Office asking for the MOT to be transferred to his own name after the death of the Father;

(iii) upon the request of the District Lands Office, the Plaintiff successfully obtained the consent of the Tong for the transfer of the MOT from the Father to him;

(iv) in 2010, the Plaintiff wrote to the District Lands Office for permission to repair the roof of the Hut, and approval was subsequently given; and

(v) in 2011, the permission given to the Plaintiff to repair the Hut was revoked because the District Lands Office took the view that the Plaintiff had been in breach of the repair permit by rebuilding the Hut.

16.  It is also not disputed that the Hut was given 3 squatters registration numbers under the Government’s Squatter Control Policy (“the Squatter Policy”), and that these squatter registration numbers were cancelled by the Government in August 2011.

17.  According to the Government, the Squatter Policy was established in 1970’s to deal with the problem posed by many illegal squatter structures at the time.  The Squatter Control Unit of the Lands Department conducted 2 territory-wide surveys in 1976 and 1982 respectively on squatter structures which existed on Government lands including those in Cheung Chau.  The purpose was to control the number of squatter structures erected on Government lands.  In the surveys, each squatter structure was given a registration number and its location, dimensions, materials and usages were recorded.  Any alterations to these matters may result in the demolition and the removal of the squatter structures, and any new squatter structures erected after the surveys would also be subject to demolition and removal.

18.  It is also not in dispute that the Plaintiff paid the Government rents and rates in respect of the occupation of the Hut from 1 April 2001 to 31 December 2012.

LEGAL PRINCIPLES APPLICABLE TO AN ADVERSE POSSESSION CLAIM

19.  The following legal principles applicable to a claim for adverse possession are now well settled:[6]

(i) To succeed in a claim for adverse possession, the adverse possessor must prove: (i) a sufficient degree of factual possession; and (ii) animus possidendi (i.e. an intention to possess);

(ii) The elements required of factual possession are: (i) there must be an appropriate degree of physical control; (ii) possession must be single and conclusive, though there can be single possession exercised by or on behalf of several persons jointly; (iii) factual possession must be exclusive, continuous, open, visible and notorious, and it must not be equivocal, occasional, or for a special or temporary purpose; and (iv) the question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances having regard to the nature of the land and the manner of possession;

(iii) Unless there is contrary evidence the registered owner of the land is presumed to be in occupation, and the party claiming adverse possession has the burden of proving otherwise;

(iv) Intention to possess is the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with paper title so far as is reasonably practicable and so far as the processes of law will allow;

(v) In ascertaining the adverse possessor’s intention to possess, little regard should be given to self-serving statement of subjective intention, rather the court would make inference from the actions of the adverse possessor in the light of all the circumstances; and

(vi) The burden is on the adverse possessor to prove both factual possession and the intention to possess, and the evidence adduced must be compelling although the standard of proof is still the normal civil standard based on the balance of probabilities.

20.  It is also trite law that occupation under a licence or otherwise with the permission of the legal or paper owner does not amount to possession for the purpose of adverse possession as the occupation is enjoyed under lawful title.[7] In Tsang Foo Keung v Chu Jim Mi Jimmy[8], it was held that occupation of a hawking stall on a private land under a hawking licence granted by the Government pursuant to the Hawker (Urban Council) By-laws was not possession for limitation purpose.  The finding was made following Pang Yiu Chor v Wong Wai Leung[9] and Sze To Chun Keung v Kung Kwok Wai David[10].  These cases have established the principle that there is no adverse possession where the occupation was one by licensee as this will not be possession in his own right.  It matters not whether the licence was granted by the paper owner or by someone else.  Even if the licence was granted by someone else, the possession will be by the licensor and not by the occupier.[11]

21.  There is, nonetheless, an issue as to whether the test of determining animus possidendi is purely objective.  Relying on authorities such as the Privy Council’s judgment in Ocean Estates Ltd v Pinder[12], the English decision in J A Pye (Oxford) Ltd v Graham[13] and the local decision in Ho Hang Wan v Ma Ying Cheung[14], the Plaintiff says that the test is purely objective.

22.  I disagree.  First, the learned authors in Jourdan & Radley-Gardner: Adverse Possession[15] have stated that there are two aspects to animus possidendi: (i) there must be an actual, subjective intention to possess; and (ii) the intention must be manifested by unequivocal actions.

23.  Second, the requirement of a subjective element is consistent with the Court of Final Appeal’s decision in Wong Tak Yue v Kung Kwok Wai (No 2)[16], which held that the subjective willingness to pay rent if asked negated the requisite animus possidendi.  In reaching the decision, the Court of Final Appeal followed the decision of the English Court of Appeal in R v Secretary of State for the Environment, ex parte David[17]. Further, Lam J (as he then was) in Hong Kong Kam Lan Koon Ltd v Realway Investment Ltd[18], after reviewing the authorities, came to the conclusion that he was bound by Wong Tak Yue and the contrary view expressed in Pye did not represent the law in Hong Kong.  Hence, Wong Tak Yue remains the governing authority on the point.

24.  Although I find that the test for determining animus possidendi is both subjective and objective, I do not think that such issue would affect the final outcome of the case.  As I will demonstrate in the latter part of this Judgment, even by just looking at the conducts of the Plaintiff and the Father objectively, there was simply no intention to possess the Land on their part.

25.  Having outlined the relevant legal principles, I proceed to deal with the Plaintiff’s claims first against the Tong in respect of Lot 322 and then against the Government or the SHAI in respect of Lot 307.

CLAIM AGAINST THE TONG IN RESPECT OF LOT 322

(i) The evidence as to the occupation of the Land by the Father and the Plaintiff

26.  As mentioned above, the first thing that the Plaintiff has to establish is that the Father and then the Plaintiff have been occupying the Land as squatters for the full length of the limitation period.  It is the Plaintiff’s case that the Father had first started to occupy the Land in 1939.

27.  There is no serious dispute that the Father and his family had been occupying the Hut since the granting of the MOT in 1957. The purpose in obtaining the MOT was to enable the Father and his family to occupy the Hut which was erected on the Land which was situated partly in Lot 322 and partly in Lot 307.

28.  The occupation of the Land prior to 1957 is far from clear.  At the very least, it is uncertain whether the structure then used by the Father as his residence was actually situated on the Land itself.

29.  The Plaintiff was born on 13 January 1934, and so he was aged 5 in 1939.  According to his evidence, he started to live at the hut since the days when Hong Kong was under Japanese occupation.  He also recalled that his family used to live at No 78 Chung Hing Back Street before moving to live in the hut.

30.  According to the record, the Plaintiff’s father sold the sub-lease of No 78 Chung Hing Back Street in Lot 305 in 1939.  For the purpose of this case, I am prepared to accept that the family of the Father moved to live somewhere near the Land in 1939.

31.  However, the problem is that the court has very limited information as to the exact location of the house or hut occupied by the Father by that time.  According to the evidence of the Plaintiff as contained in his first witness statement, there was “slight change of [the] location [of the hut occupied by his family] in the 1940/50s, but it had been where it was until 2011 since 1950s”.

32.  During cross-examination, the Plaintiff admitted that the Hut was rebuilt by contractors in the 1950’s and he was unsure of the location of the previous structure.

33.  Neither can the report by the surveyor assist the Plaintiff’s case.   According to the Plaintiff’s surveyor Joseph Wong, the hut was said to be barely visible from the aerial photos taken in 1945 and 1956.  In his oral testimony, Mr Wong clarified that he could only see the Hut in the 1963 aerial photo but not in the earlier two photos.  In fact he was not sure whether there was any structure on the Land in the 1945 and 1956 aerial photos.  Based on such evidence, it is simply impossible for the court to come to any conclusion regarding the exact location of the hut before 1957.

34.  The Plaintiff has the burden to prove adverse possession with compelling evidence.  The subject matter of the claim, i.e. the Land, is small in size, and so any changes in the exact location of the hut in the 1940’s and 1950’s may have a serious impact as to whether the Land now claimed by the Plaintiff was exactly the land occupied by the Father before 1957.  Under such circumstances, I find that the Plaintiff has failed to discharge the burden of proving that the Father was in adverse possession of the exact location now occupied by the Hut before 1957.

35.  But this factual issue is an academic one at least so far as the claim against the Tong is concerned.  As I will demonstrate in the latter part of this Judgment, the Plaintiff’s claim cannot succeed even if he can establish the occupation of the Land by the Father as early as in 1939.

(ii) The limitation period has not expired against the beneficiaries of the Tong who were born from time to time

36.  The first reason as to why the Plaintiff cannot possibly succeed is that, since there had been beneficiaries of the Tong born from time to time and these new born beneficiaries had the right to claim for possession of the Land at certain time after they ceased to be infants, it is impossible for the Plaintiff to establish occupation of the full limitation period against the Tong.  This is the case even if the Father had first started to occupy the Land as early as in 1939.

37.  This becomes quite settled law after the landmark decision of Leung Kuen Fai v Tang Kwong Yu[19] which had been affirmed in the subsequent Court of Appeal’s decision in Tsang Kwong Keun v Hau Wai Keung Gaius[20].  The Plaintiff concedes that since the latter Court of Appeal’s decision is binding on this court, the Plaintiff’s claim must fail vis-à-vis the Tong at least at the Court of First Instance level.  However, he reserves the right to take this matter for further argument in the appellate court.   Despite such concession by the Plaintiff, I feel obliged to give a brief explanation here about the issues involved in these arguments.

38.  In the pleading, the Plaintiff admits that the Tong is a t’ong within the meaning of s 15 of the New Territories Ordinance, Cap 97 (“the NTO”).  However, he contends that:

(i) the Tong is not a trust recognised under the English law of trust because the holding of land by the Tong infringes the rule against perpetuities;

(ii) the Tong is not a trust within the meaning of s 10(2) of the Limitation Ordinance, Cap 347 (“the LO”); and

(iii) members of the Tong only had a share of rent or income accruing from the Tong’s general assets and so in an action to recover land, they can only recover a rentcharge as defined in the LO but not physical possession of land.

39.  All these arguments had been considered and rejected by DHCJ J Lam (as he then was) in Leung Kuen Fai v Tang Kwong Yu[21]. After reviewing all the relevant cases, the learned judge derived a number of legal propositions regarding land holding by a tso among which are:

(i) The members of a tso are the living male descendants of the focal ancestor from time to time.  They have the beneficial interest in the property;

(ii) Each member only has a life interest in the tso property.  The interest of a member arose automatically by birth and extinguished automatically upon the death of the member.  The extent of the life interest at any point in time depends on the number of living members in the tso;

(iii) The concept of trust is applicable to a tso with the managers as trustees and the members as beneficiaries.  This is an application of the concepts of English law to a Chinese customary institution with certain concepts of English trust law, e.g. the rule against perpetuity, having been held not applicable.

40.  With these propositions in mind, DHCJ J Lam accepted that the defendant tso was a trust for members for the time being rather than a trust for purpose.

41.  Having rejected that the right of the members of the tso is only in the distribution of income and therefore not an interest in land, DHCJ J Lam went on to find that the interest of a member of a tso is a beneficial interest in land for limitation purposes and such interest falls within s 10(1) of the LO.   The learned judge also came to the conclusion that the application of Chinese customary law as recognized by s 13 of the NTO does not prevent the application of the provisions in the LO to New Territories land.

42.  DHCJ J Lam further held that the aforesaid principles apply whether it is a t’ong or a tso.  In Tsang Kwong Kuen v Hau Wai Keung Gaius[22], the Court of Appeal confirmed the legal principles enunciated in Leung Kuen Fai and applied them to a t’ong.  Leung Kuen Fai was also subsequently followed in Wong Sing Chau v To Kwok Keung[23], Wealth Hill International Investment Ltd v Wong Kwan Siu[24] and Tang Man Kit v Chong Kee Ting Vicwood[25].

43.  The application of these principles means that it would be very difficult to establish a claim of adverse possession against a t’ong or a tso.  S 10 of the LO provides for an extension of time in recovering land under s 7(2) where the land is held subject to a trust.  In essence, it is not enough for the prescribed time limitation to have run in full under s 7(2) against the estate of the trustee, it must run in full under s 10 against each and every beneficiary entitled to the trust before the adverse possessor can successfully claim that recovery of the subject land is time-barred.  In the case of new born members of the family t’ong or tso, the prescribed statutory limitation is that provided in s 22, which extends the time limitation by 6 years in the case of infant from the time the infant attains full age.  With a t’ong or tso, a new equitable interest is therefore created whenever a new infant is born and a new limitation period under s 7(2) of the LO starts to run.  As infants have the benefit of s 22 of the LO, the time limit against them is 6 years after they attain full age.

44.  The requisite limitation periods under ss 7(2), 10(2) and 22 as prescribed by different statutory enactments applicable at different periods of time were discussed in full in Leung Kuen Fai[26]. To sum up, they are as follows:

(i) Before 1965 from 1843, the Real Property Limitation Act 1833 applies.  The normal limitation period for recovery of land is 20 years.  The limitation period for an infant is calculated as follows: the majority years of 21 together with extension of 10 years after cessation of disability for infants makes a total of 31 years from the date of birth;

(ii) After the enactment of the 1^st LO in 1965 and before the enactment of the Age of Majority (Related Provisions) Ordinance, Cap 410 on 1 October 1990, the limitation period for infants born during this period is 21 disability years plus 6 years extension after cessation of disability, making a total years of 27;

(iii) From enactment of Cap 410 onwards, the limitation period for infants born after that date is 18 disability years plus 6 years extension after cessation of disability, making a total years of 24.

45.  The limitation period under s 7(2) of the 1^st LO since 1965 is 20 years until 1 July 1990.  After that date the limitation period is 12 years.

46.  Applying these limitation periods to the present case, the Plaintiff’s claim for adverse possession of the Land in Lot 322 since 1939 would be defeated in the following scenarios:

(i) Where there was at least one surviving infant member of the Tong born during the 20 years limitation period for recovery of land (s 7(2) period) prior to commencement of writ on 20 January 2012 (i.e. 21 January 1992), 20 years is applied since it is always the Plaintiff’s case that the Tong’s action accrued before 1 July 1991;

(ii) Where there was at least one surviving infant member born within 24 years backward from the issue of the present writ on 20 January 2012 (i.e. 21 January 1988), the Plaintiff’s claim in adverse possession in respect of Lot 322 is defeated;[27]

(iii) The Plaintiff would have a valid claim in adverse possession if full limitation period has run against the Tong before there was any surviving infant born on 21 January 1988 or 21 January 1992[28], and so adverse possession prior to these two dates have to be looked at;

(iv) From 1939, the normal limitation period for recovery of land is 20 years expiring in 1959.  If immediately before its expiry there was at least one infant member born, a new limitation period of 31 years would run in favour of this new born as long as he survived the full 31 years.  The 31 years would complete in 1990;

(v) If before the expiry of the 31 years in 1990, there was at least one infant born and depending on whether he was born before or after 1 October 1990, a further extension of 27 or 24 years as the case may be would have been gained by this new born infant.  That takes the requisite limitation period to 2017 or 2014.  In either case, the requisite limitation period has not run its full course against all members of the Tong by the time of issue of the present writ in 2012.

47.  In the present case, the Tong has demonstrated that by linking up the limitation periods under s 22 or its equivalent provisions of 3 existing Tong’s members, the Plaintiff’s claim in adverse possession against the Tong cannot possibly succeed.  The 3 members are:

(i) Wong Wan Leung born on 21 November 1939 (31 years expiring on 21 November 1970);

(ii) Wong Chun Sing born on 6 August 1964 (31 years expiring on 6 August 1995); and

(iii) Wong Siu Yin born on 1 October 1990 (27 years expiring on 1 October 2017).

48.  The birth dates of these 3 members are evidenced by way of a birth certificate or their written applications for “annual distributions to beneficiaries”(人丁銀) in 2014 or 2015.  In such written applications, these members signed personally signifying they were still alive at the time of filling in the applications and acknowledging their birthdays as stated in these applications.

49.  These matters are not challenged by the Plaintiff.  At the commencement of the trial, the Plaintiff and the Tong agreed the following in writing:

“1. The Plaintiff agrees that as at the time of the issue of the present writ on 20 January 2012, there was at least one living member (and in fact there were more than one such member) of the Tong against whom the relevant limitation period ran under Section 22 of the Limitation Ordinance, Cap 347 or its equivalent (“the Section 22 Provisions”) had not expired.  This is the case no matter at what time the Plaintiff’s adverse possession is found by the Court to have started.

2. The Plaintiff further agrees that the Tong is at all material times a t’ong within the meaning of section 15 of the New Territories Ordinance, Cap 97.

3. Without prejudice to the Plaintiff’s right to appeal on the legal principles decided in Leung Kuen Fai v Tang Kwong Yu (or U) T’ong or Tang Kwong Yu Tso (2002) 2 HKLRD 705, the Plaintiff accepts that the decision as confirmed by the Court of Appeal in Tsang Kwong Kuen v Hau Wai Keung Gaius (2014) 5 HKLRD 622 is binding on this court in that as a matter of interpretation of Section 22 Provisions ‘ ... ... a person who is in adverse possession cannot extinguish the title of the t’so or t’ong under the Limitation Ordinance (Cap. 347) unless he can establish the requisite limitation period against all the living members of the t’so or t’ong.”

50.  In view of such concession, the Plaintiff cannot possibly succeed in his claim for adverse possession of the Land in Lot 322. The claim against the Tong is therefore dismissed.

(iii) The effect of MOT

51.  There is also another important reason as to why the Plaintiff’s claim against the Tong must fail.  Since the Father acknowledged that the Tong was the registered owner of Lot 322 when he applied for the MOT in 1957, the Father was not in adverse possession of the Land in Lot 322 at least in the period from 1957 to 1984 when he died.

52.  It is trite law that occupation under a licence or otherwise with the permission of the paper owner does not amount to adverse possession as the occupation is enjoyed under lawful title.  Further, if an occupier acknowledges that he is occupying the land under the lawful title of the paper owner, he may lack the intention to possess the land.

53.  The MOT was a permission given by the Crown to the Tong as Crown lessee to modify the original Crown lease by allowing the Tong to maintain a structure for accommodation in Lot 322.  The effect of a MOT in negating adverse possession is confirmed in Lam Ngok Ching v  Tsang Yuk Ming[29] and Yu Kit Chiu v Chan Shek Woo[30] (CA).

54.  In Yu Kit Chiu, it was held by the Court of First Instance and approved by the Court of Appeal that by acknowledging that he signed the MOT permit on behalf of the registered owner, the occupier was acknowledging that he was:

“32. ... ... maintaining the structures, and hence using the site and in possession of the site, for and on behalf of the registered owner. No one could reasonably have come to the conclusion that the named owner on behalf Mr Chan was purporting to act was being excluded.

33. ... ...  [the occupier] was required by the process of the law to acknowledge the deceased as the owner of the site, and he chose to do so.  Having so acknowledged, he should be bound by such acknowledgment, and such as acknowledgment to the whole world is clearly inconsistent with a professed intention to exclude the acknowledged owner.”

55.  The court in Lam Ngok Ching came to the same conclusion.[31]

56.  In each of these two cases, the party claiming adverse possession signed the MOT in question acknowledging it to have been done on behalf of the registered land owner.  Though the present MOT did not have the same acknowledgement, it does not really matter.  The terms of the MOT made it clear that it was a permission given to the registered owner, i.e. the Tong.  By making the MOT application, the Father therefore clearly acknowledged the Tong’s right over Lot 322, and so there was simply no animus possidendi.

57.  Further, the involvement of the Tong by giving its consent to the MOT is well supported by evidence.  First, the wording in the MOT clearly suggests that the Tong had given its consent to the MOT application.  In fact, the issue of MOT is a matter affecting the terms of a Crown lease of which the privies are the Crown as the landlord on the one hand and the registered owner as the lessee on the other.  Under such circumstances, it would be quite unthinkable that the Tong, as the registered owner of Lot 322, could be left out when the District Commissioner for New Territories was considering whether to issue the MOT in 1957, the effect of which was to modify the terms of the Crown lease.  The involvement of the Tong as the registered owner in consideration regarding the MOT application is also supported by the fact that, in 1984, the Government requested the Plaintiff to obtain the consent of the Tong when he applied for the transfer of the MOT.  Further, the unchallenged evidence of Wong Wan Leung relating to the setting up of a working desk in the District Lands Office also supports that consent had in fact been given by the Tong for the MOT application.

58.  It is clear that, during his life time, the Father recognised his position as licensee by renewing the MOT every year and paying the annual fees as required.  He also sought the retrospective approval for rebuilding the kitchen in 1961, an act which was inconsistent with himself being in occupation as an adverse possessor.  As shown by the Tong’s consent letter in 1985, the Father had all along been regarded as a “tenant (租户)” by the Tong.

59.  Further, in the survey carried out in 1972, the Father or the other 2 occupiers represented to the interviewer that rent was paid to the Tong.  This certainly supports the occupation of Lot 322 by the Father as the Tong’s “tenant”.  Further, even if no rent was in fact been paid by the Father to the Tong, by claiming that the occupation was legitimised by the payment of rent, the Father and the other 2 occupiers had failed to make clear to the world at large of their intention to possess the Land.

60.  Hence, for the period between 1957 and 1984, there is no evidence of any subjective thinking on the part of the Father to adversely possess the Hut.  His objective conduct also demonstrated recognition of the Tong’s right over the Land.  The Plaintiff’s claim of adverse possession by the Father during that period must therefore fail. 

61.  In an attempt to salvage the Plaintiff’s claim, Mr Yau, counsel for the Plaintiff, suggests that the MOT terminated automatically when the Father died in 1984.  On the basis that the Plaintiff occupied the Hut for 20 years after the death of his father, the Plaintiff was able to establish the claim for adverse possession in 2004.

62.  There is again no merit in such argument.  It is clear that the Plaintiff applied to have the MOT transferred to his name after the death of the Father.  For this purpose and as required by the District Lands Office, the Plaintiff sought the consent from the Tong.

63.  Under cross-examination by counsel for the Tong, the Plaintiff admitted that he needed the Tong’s consent before he could live in the Hut and then carried out the repair he had planned, and so he sought the Tong’s consent for the transfer of the MOT.  When asked by counsel for the Government and SHAI, the Plaintiff said that upon request he would pay rent to the Tong and to whoever was in charge of Lot 307 if he lived in the Hut, and that the intention to pay rent was not limited to 1985 when he asked for transfer of the MOT but continued afterwards.

64.  In my judgment, such intention to live in the Hut under a MOT and to pay rent when asked for demonstrated the Plaintiff’s intention not to take adverse possession of the Hut.  The intention continued throughout, as in 2010 he still acknowledged the Government’s title as the licensor by seeking the Government’s consent before he carried out repair to the Hut.

65.  It is true that the MOT has not been transferred to the Plaintiff since the death of the Father.  Nonetheless, the Plaintiff continued to pay the annual fees to keep the MOT renewed from year to year. Payment of a licence issued in the name of another tantamount to continuing recognition of possession by another and is therefore inconsistent with an intention to possess.[32]

66.  As a matter of fact, neither the Plaintiff nor the Government has treated the MOT as having been terminated after the death of the Father, which can be shown in a series of correspondence exchanged between the District Lands Office and the Plaintiff’s solicitors between July and October 2011.  In the letters, the District Lands Office mentioned the possibility of cancelling the MOT, which suggested that the MOT was at that time subsisting so far as the Government was concerned.  Meanwhile, the Plaintiff responded on the same basis that the MOT was subsisting and indeed governing the Plaintiff’s use of the Hut.

67.  As between the Government and the Plaintiff, it is clear that the Plaintiff recognised the title of the Government.  The Government was aware of the death of the Father, and yet the Government allowed the Plaintiff’s family to remain in occupation of the Hut out of humanitarian consideration.  So far as the Tong is concerned, consent was given in 1985 to permit the Plaintiff himself to be in occupation of the Hut in place of the Father.

68.  From all these facts, it is clear that the Plaintiff’s occupation of the Hut since the death of the Father was one without the intention to possess.  It follows that there was no adverse possession since the death of the Father.  At the very least, they were equivocal acts giving rise to more than one interpretation which would not establish the necessary intent to possess.  The Plaintiff’s claim for adverse possession since the death of his father must also fail.

69.  In the final submissions, the Plaintiff has raised a new issue which has not been pleaded before.  According to Mr Yau, the MOT ceased to be valid (not terminated as stated in his opening submissions) either in 1985 or in 2011 when the Government returned the Plaintiff’s payment of annual renewal fee under the MOT.  Since the Plaintiff was possessing the Land in his own right at the time of the writ, he is entitled to take advantage of the previous adverse possession period enjoyed by the Government as the licensor under the MOT and treated it as his own.

70.  Apart from the fact that such issue has never been pleaded, I doubt whether such line of argument can take the Plaintiff’s case any further.  For Lot 322, it is clear from the evidence above that the Plaintiff, the Tong and the Government had all along treated the MOT as subsisting even after the death of the Father.  In such case, there had to be an implied licence of some sort to occupy the Hut.  So long as the Government continued to accept the annual renewal fees from the Plaintiff and the Tong had not withdrawn its consent, the Plaintiff continued to occupy the Hut under the lawful title of the owners of the Land.

71.  Under such circumstances, whether the Plaintiff was occupying the Land as an adverse possessor in his own right at the time of the writ is a non-issue.   As against the Tong and the Government, he had no animus possidendi at least before the Government rejected his payment of annual fee in 2011.  Hence, the occupation by the Plaintiff of the Land before such date cannot be regarded as adverse.  Furthermore, as I will demonstrate in the latter part of this Judgment, Lot 307 has all along been owned by the Government, and so there is no question of the Plaintiff taking benefit of any “adverse possession” by the Government.  For Lot 322, the MOT arrangement has all along been that the Government, the Tong and the Plaintiff recognised the ownership of the Tong over Lot 322 and the Government was only granting a permission to the Tong to erect or maintain a structure on Lot 322.  That was the understanding of all the parties at least before 2011.

72.  Neither can the Plaintiff rely on the occupation of the Father in the pre-MOT period to establish adverse possession.   Even if the Father had been in adverse possession of the Land since 1939, which I do not accept it to be the case, the Father acknowledged the Tong’s title by obtaining the Tong’s consent for the MOT application in 1957.  This was before the expiry of the 20 years’ limitation period.  S 23 of the LO provides for limitation period to run afresh from time of acknowledgment of title.  The 20 years run afresh from 1957.  However, the nature of events taking place since that year suggests that the Father and the Plaintiff himself was not in occupation of the Hut in their own right but under the lawful title of the Tong and the Government.  Hence, the Plaintiff’s claim for adverse possession of the Land in respect of Lot 322 cannot possibly succeed.

CLAIM AGAINST THE SHAI OR THE GOVERNMENT IN RESPECT OF LOT 307

(i) True owner of Lot 307

73.  I then turn to the claim against the SHAI or the Government in respect of Lot 307.  For this matter, the first thing that the court has to determine is who is the true owner of Lot 307: whether it is the Temple, the SHAI or the Government?

74.  In Hong Kong, the land registration system operates on the basis of “registration of deeds”, and not “registration of title”.  Therefore, an owner’s title must derive from the deeds to the property.  Registration in the Land Registry does not create title where there is none, and does not cure any defect in the purported owner’s title.  The legal effect of registration is simply to confer priority over another person deriving title from an instrument that is registered later.[33]

75.  This means that the ownership of Lot 307 must ultimately be determined by tracing through the title instruments and not merely by looking at the Land Registry record.  In the present case, the first and only title document is the Block Crown Lease.

76.  Prior to 1905, a public office called “Registrar General” was created.  When the Block Crown Lease was executed in 1905, Lot 307, unlike most of the land in Cheung Chau, was not granted to the Tong. Instead, Lot 307, which was described in the schedule of the Block Crown Lease as “Temple”, was granted to the owner in the name of the Temple (i.e. 福德廟 Fuk Tak Temple) with the remark: “Public Property”.

77.  At an unknown date, “Registrar General for Fuk Tak Temple” was registered as the owner of Lot 307 in the Land Registry.  The registration of documents affecting land in the New Territories was introduced by s 5 of the New Territories Land Ordinance (Ordinance 3 of 1905) which carried the date of 7 July 1905.  However, the SHAI and the Government are unable to locate any deed of assignment by which Lot 307 became vested in the Registrar General.  In fact, there is no direct evidence of the title ever being transferred to the Registrar General or the SHAI.

78.  In 1913, the office of “Registrar General” was re-titled as the “Secretary for Chinese Affairs”.

79.  On 10 April 1928: the Secretary for Chinese Affairs Incorporation (Ordinance 3 of 1928) was enacted.  Under s 7 of this Ordinance, certain land lots listed in the Schedule thereto were transferred to and vested in the Secretary for Chinese Affairs Incorporated.  However, Lot 307 was not one of the lots listed in the Schedule.  Hence, Lot 307 was not one of the lots transferred to the SHAI pursuant to s 7.

80.  In 1949, another public office called “the Registrar General” was created.  However, this Registrar General was entirely different in function from the Registrar General whose office had been re-titled as the Secretary for Chinese Affairs in 1913.

81.  In 1969, the “Secretary for Chinese Affairs” was re-titled as the “Secretary for Home Affairs”.  In 1985, the “Secretary for Home Affairs” was re-titled as the “Secretary for District Administration”.  In 1989, the “Secretary for District Administration” was re-titled as the “Secretary for Home Affairs”.

82.  Between September 1991 and January 1992, there were discussions between the Registrar General and the Secretary for Home Affairs about whether it was necessary to vest the title of certain land lots situated in Cheung Chau and registered in the name of “Registrar General” for certain temples in the SHAI.  That discussion resulted in the direction given to the add the notation “The [SHAI] is the Successor-in-Office to the Former Registrar General” in the Land Registry record of lots with situation similar to that of Lot 307.

83.  The Plaintiff is not in a position to challenge the aforesaid evidence adduced by the Government relating to the tracing of the ownership of Lot 307.

84.  Based on these background facts, Lot 307 could not be owned, whether legally or beneficially, by the Temple.

85.  According to the photographs produced to the court, the temple situated in Lot 307 is a small and windowless temple (with the floor area of 100 square feet) dedicated to the worship of certain Chinese gods.  There has not been any registration of any members or managers of the Temple as a religious t’ong and no member or manager can be found.  The Temple is not registered in the Companies Registry, the Business Registration Registry, the Registry of Societies under the Societies Ordinance, Cap 151 or the Registry of Charitable Institutions under s 88 of the Inland Revenue Ordinance, Cap 112.

86.  In fact, the whole system of land tenure in the New Territories was fundamentally altered after the Peking Convention, and the Chinese customary law is applied under the strict regulation of ss 15 to 17 of the New Territories Ordinance.[34] Landholding Chinese customary institutions are regulated, inter alia, by s 15 of the NTO, which imposes the registration of managers and the exercise of ownership in the registered managers under the supervision of the relevant Government official.  The section is clearly premised on the foundation that a valid landholding t’ong is run by managers, who have to be registered, on behalf of its members.  As there has not been any registration of any members or managers of the Temple as a religious t’ong, the Temple is plainly not a landholding t’ong with managers and members.

87.  The Court of Final Appeal has also held in Secretary for Justice v To Kan Chi[35] that, under Chinese customary law, a Chinese temple is not a juristic entity capable of independent legal existence.  Neither is that a religious t’ong without members.  Hence, despite what was stated in the Block Crown Lease, the Temple was not the owner of Lot 307.  As the Temple was not capable of independent legal existence as a juristic entity, it could never have owned any property.  Insofar as the Block Crown Lease purported to grant a lease of Lot 307 to the Temple, that grant failed because the purported grantee did not have the legal capacity to receive the grant.  The legal consequence is that the title of Lot 307 reverted to or had all along remained with the Crown or the Government.

88.  Neither can Lot 307 be owned by the SHAI.  There is no evidence of any instrument whereby the title to Lot 307 had ever been transferred to the Registrar General or the SHAI.  The only evidence as to how the Registrar General or the SHAI became registered as the purported owner in the Land Registry stems from the discussions between the Registrar General and the Secretary for Home Affairs in 1991 to 1992.  However, under the system of land registration in Hong Kong, that discussion and the resulting notation in the Land Registry record could not create a title to Lot 307 if the Registrar General or the SHAI did not have one in the first place.  Hence, on the evidence that the title of Lot 307 had never left the Crown or the Government, it follows that the Government is the true owner of Lot 307.

89.  The Plaintiff’s position is that Lot 307 is owned by the SHAI on trust for the benefit of the Temple.  Again there is no merit in such contention.  Since the Temple is not a juristic entity capable of independent existence and holding land in the New Territories, it cannot be the beneficiary of any trust over Lot 307.  It is incapable of holding beneficial title to property.  Accordingly, even if Lot 307 is owned by the SHAI held on trust (which I do not accept it to be the case), when the trust for the benefit of the Temple failed, the title reverted back to the Government.

90.  The Plaintiff also prays in aid of the Chinese Temples Ordinance, Cap 153 (“the CTO”).  However, the CTO essentially makes it mandatory for all Chinese temples to be registered[36] and provides for their revenue to be controlled by a specialised committee[37].  It is a fact here that the Temple has not been registered under the CTO.  Further, whether a temple is a Chinese temple and whether it is registered under the CTO have no bearing on whether it is a juristic entity capable of owning property.  Hence, the CTO cannot assist the Plaintiff’s case.

91.  The Plaintiff also suggests that the Crown might have granted the lease of Lot 307 to an unincorporated association of persons in Cheung Chau.  Apart from the fact that such contention has never been pleaded and so the Plaintiff should not be allowed to run such argument, there is simply no evidence to support this contention.  It is purely speculative to suggest that, behind the name “Fuk Tak Temple”, the Crown was in fact intending to grant the lease to an unincorporated group of local residents none of whom the Plaintiff is able to name.  Further, an unincorporated association is by definition not a legal entity unless it exists as a Chinese customary landholding institution regulated by s 15 of the NTO or the predecessors of that section.  The Plaintiff has accepted that the Temple is not an institution, and he has not been able to establish any such institution relating to Lot 307.   Hence, even if the Crown purported to grant Lot 307 to an unincorporated association, the result will be the same: the title would remain with, or revert to, the Government.

92.  The Plaintiff also argues that Lot 307 held in the name of the Temple was potentially registrable under s 15 of the NTO, even though up to now there has been no appointment of managers of that Temple. According to Mr Yau, there are quite a number of associations or groups which do not bear the name or the connotation of a clan, family or t’ong, and yet the land they “own” are treated as land to which s 15 of the NTO applies, with managers being appointed and registered thereunder.  One of the examples is Lot No 361.  The original named lessee is the “Shrine (大社壇)”.  For many years, that piece of land bore the name of the registered owner “Registrar General for Cheung Chau Community”.  Lot 361 was still recognised by the Government to be capable of valid landholding under s 15 with managers eventually appointed. The first appointment did not take place until 1974.

93.  This line of argument cannot salvage the Plaintiff’s case.  First, the Plaintiff has never pleaded that the Block Crown Lease was a valid grant to the Temple for the reason that the Temple was potentially registrable under s 15.  Secondly, there is simply no evidence to support that the Temple was potentially registrable under s 15.  The evidence available so far shows that the Temple has no member or manager, or any type of management or any organised activities and no manager has ever been registered in the Land Register of Lot 307 or the T’ong Register kept by the Secretary for Home Affairs.  They all firmly point against the Temple being a Chinese customary institution potentially registrable under s 15.  One must not forget that Chinese institutions are regulated and exist under the regime under s 15 of the NTO.

94.  For the landholding in respect of Lot 361, the Government’s witnesses could not tell the court what happened about the registered religious t’ong of Lot 361 because they were not asked to do so before the trial.  There might be a lot of reasons to explain the situation.  For example, the Government might be prepared to consider the question of landholding of that piece of land differently and without insisting on its legal rights because of certain historical factors which might exist in that case.  All these matters are fact-sensitive and should be properly investigated. I therefore agree with Mr Mok, counsel for the SHAI and the Government, that the evidence concerning the t’ong of Lot 361 was incomplete, and it would be dangerous for the court to draw inference of any sort concerning what happened in Lot 361.

95.  Finally, Mr Yau tries to rely on the principle of estoppel by convention and argues that the Government is now estopped from denying the subsistence of the Crown lease by the reason of the fact that it recorded the owner of Lot 307 as “福德廟 Fuk Tak Temple”.

96.  Again there is no merit in such argument.  As set out in The Law of Real Property by Megarry & Wade[38], landlord and tenant are estopped from denying each other’s title.  However, the concept should not be extended to cover matters other than title, such as whether the tenant is a legal entity capable of holding land.  If the landlord is granting a lease to a non-person, is the Plaintiff seriously suggesting that the landlord cannot take back the land and has to leave the land vacant even if no one is paying the rent?  This simply cannot be right.

97.  Further, as pointed out by the Court of Final Appeal in Unruh v Seeberger[39], there are a number of ingredients that have to be established before one can rely on the principle of estoppel by convention.

98.  The first ingredient is that there must be a common assumption which “must, however, be shown that the assumption was communicated between the parties and acted upon”[40], and the second ingredient is that the matter assumed must be clear and unequivocal[41].  In these regards, there is simply no evidence that the Government and the Temple had communicated with each other clearly and unequivocally that the Temple was not a legal entity and nonetheless the Government proceeded with the grant of Lot 307 to the Temple.  The Block Crown Lease merely put down the Temple as the owner. Such description cannot be a clear and unequivocal assumption sufficient to bar the Government from subsequently challenging the Temple as not being a legal entity.

99.  The final ingredient is that the other party would suffer detriment arising out of his having entered into the relevant transaction on the basis of the common assumption if the opposite party were allowed to set up rights against him inconsistent with the assumption when abandoning[42]. Unless there was a clear and unequivocal communicated common assumption that the grant of Lot 307 was proceeded to be made notwithstanding the Temple was not a legal entity capable of holding land, allowing the Government to subsequently challenge the legal capacity of the Temple would not result in the Temple suffering any detriment,  In other words, all that was contained in the Schedule of the Block Crown Lease was to describe the Temple as the owner.  It did not contain anything as to whether the Temple was a legal entity.  To allow the Government to subsequently raise the question of whether the Temple is a legal entity should not be unfair and should not cause the Temple to suffer any detriment.  Hence, there was no estoppel by convention.

100.  For the above reasons, the true owner of Lot 307 has all along been the Government.

(ii) The relevant limitation period

101.  Since Lot No 307 is owned by the Government, the limitation period is 60 years.[43] But even if the SHAI is the owner of Lot 307 (which I do not accept it to be the case), the Court of Appeal in Chan Po Kee v Financial Secretary Incorporated[44] had held that a reference to “the Crown” in a statute includes a government servant who has taken the legal form of a corporation sole.  Hence, the limitation period of 60 years is also applicable to the SHAI, which is the principal official of the Government who has taken the legal form of a corporation sole pursuant to the SHAI Ordinance.

102.  As mentioned above[45], since the Plaintiff has failed to discharge the burden of proving adverse possession of the Land prior to 1957, the time for the limitation period only started to run against the Government in 1957.  As the 60 years of limitation period had not expired at the time of the writ, the Plaintiff’s claim against the Government or the SHAI must fail.

(iii) The effect of the MOT application on animus possidendi

103.  This would have been sufficient to dispose of the claim against the Government.  However, even if the Plaintiff can establish the occupation of Lot 307 as early as in 1939, the Plaintiff’s claim would still fail because of the lack of animus possidendi.  I will now explain why.

104.  Based on my ruling above, Lot 307 has all along remained as Government land.  In such case, there is no issue of the Government being “the lucky squatter”, i.e. the MOT was issued by the Government without the consent of the paper owner and so the Government was in adverse possession of Lot 307 as against some other true owner such as the Temple or the SHAI.

105.  According to the evidence in the present case, it is fair to say that the Government on the one hand and the Plaintiff and the Father on the other had all along treated Lot 307 as owned by the Registrar General or the SHAI arguably on trust for the Temple.  The Registrar General and the SHAI as successor-in-title had been stated in the land registry record as the owner of Lot 307.  When the Plaintiff applied for the transfer of the MOT to him after the death of the Father, the District Lands Office asked the Plaintiff to obtain the consent of the Temple so far as Lot 307 was concerned.   Further, the granting of the MOT would be premised upon the granting of a crown lease to a person, otherwise there would be no need to obtain a modification to the tenancy which had purportedly been entered into between the Crown and that person.  If Lot 307 has all along remained as Government land, the premise for issuing the MOT was not there.

106.  Yet such “misunderstanding” should not affect the lawful title of the Government being the owner of Lot 307.  Even if the Government was previously under the mistaken belief that Lot 307 was owned by the Registrar General or the SHAI on trust for the Temple, that should not prohibit the Government from exerting the right of the lawful owner of Lot 307 when it later found out about such mistake.

107.  The issue here is whether, in view of the arrangements or “misunderstanding” between the parties throughout the years, the Plaintiff and the Father had the intention to possess Lot 307.   In this regard, I agree with Mr Mok that the application of the MOT negates the animus possidendi of the Father and so the occupation of the Hut in Lot 307 after 1957 cannot be regarded as adverse.

108.  It is clear that a MOT application could only be made by the lessee of the Crown lease, and that was why the District Lands Office required the Plaintiff to obtain the consent of the Tong and the Temple when he applied for the transfer of the MOT after the death of the Father.  The MOT itself also specified that it was a permission granted to the lessee (i.e. the Tong) and not the Father to modify the terms of the Crown lease.  Hence, when the Father and the Plaintiff applied for the MOT, they recognised the title enjoyed by such “owners” in respect of the different lots of land in which the Hut was situated.  In other words, he was not excluding the world at large so far as the possession of the Land is concerned.

109.  Further, a person who occupies the land by consent, licence or permission of the true owner is not in adverse possession. By accepting the benefit of the MOT, the Plaintiff and his family were estopped from denying that the Government had the right to allow them the right to occupy the Land.[46] One must bear in mind that the intention to possess must be “as of wrong”, and the squatter must intend to exclude the lawful owner.[47]

110.  Although the MOT might have been issued based on a misunderstanding that Lot 307 had been assigned to the Registrar General or the SHAI, the signature of the Father on the MOT was fully capable of amounting to an acknowledgment that the right of possession belonged to someone else, which would in turn undermine any alleged animus possidendi.[48]

111.  It is different from a case where the squatter was under the mistaken belief that he was the owner of the land in question. By wrongly believing that he was the true paper owner, he would have had the requisite animus possidendi to exclude the world at large so far as the possession of the land is concerned.  In our present case, the squatter had all along been under the belief that he was occupying the land with the consent of the “owner”.  Even if that “owner” might be not be the true owner, it does not alter the fact that the squatter did not have the intention to exclude the world at large so far as the possession of the land is concerned.

112.  It is correct that the Permit, on its face, related only to Lot 322.  However, there can be no doubt that the entirety of the Hut (which occupied portions of both Lot 307 and Lot 322) was built and maintained pursuant to the permission given under the MOT, and that was how the arrangement was regarded by the Father, the Plaintiff and the District Lands Office.[49]

113.  What is crucial here is the squatter’s intention, in particular whether he intended to exclude the world at large, including the paper owner, from the property.  The facts here clearly show that the Plaintiff and the Father did not have such intention to adversely possess the Hut, whether in relation to the portion occupied by it on Lot 307 or Lot 322.

114.  As mentioned above[50], the Plaintiff and the Father had all along treated the MOT as a valid arrangement between the parties throughout the years.  In such case, the MOT negates the existence of animus possidendi.  This is the case even if the MOT was granted on a wrong basis that the Registrar General or the SHAI was the owner of Lot 307.

(iv) Other instances showing lack of animus possidendi

115.  Further, if the Plaintiff or the Father accepted the Hut as coming under the control of the Squatter Policy, then the Plaintiff or the Father might lack the animus possidendi because the Squatter Policy only applied to structures on Government land.  By accepting that the Hut was subject to the control under the Squatter Policy, the Plaintiff and the Father were accepting that the Government was the rightful owner of Lot 307 and the latter was entitled to exert control over the structures erected on its lands.

116.  In 1976, the squatter registration numbers were painted on the exterior of the Hut in a clearly visible manner.  The numbers were not removed by the Plaintiff or the Father but were instead retained until the Plaintiff demolished the Hut.  When the Squatter Control Unit conducted the squatter population survey in 1985, the Plaintiff’s family co-operated with the conduct of the survey and provided information.[51]  Further, the Plaintiff, through his solicitors, protested against the cancellation of the squatter registration numbers.[52] All these show that the Plaintiff and the Father accepted that the Hut was subject to the control under the Squatter Policy.  They knew that the Hut would be temporarily tolerated by the Government subject to the conditions of the Squatter Policy being complied with.  Under such circumstances, the Plaintiff’s possession of the Hut: (i) amounted to possession pursuant to consent, permission or licence; and (ii) was without the requisite animus possidendi.

117.  Finally, the Plaintiff, when cross-examined, admitted that he would have been willing to pay the owner of and the Government department responsible for managing Lot 307 for retaining the Hut on Lot 307 at and as from time of the application for the transfer of the MOT to his own name.  As from 2001, the Plaintiff agreed to and actually paid the post-1 July 1997 Government rent, which was demanded and paid, and he agreed to make the payment because of the occupation of the Hut in Lot 307.

118.  As mentioned above[53], the test for determining animus possidendi is both subjective and objective.  It has also been held in Wong Tak Yue v Kung Kwok Wai (No 2)[54] that subjective willingness to pay rent if asked negated the requisite animus possidendi.  Hence, I agree with Mr Mok that the Plaintiff lacked the intention to possess the Land in Lot 307.

119.  For the above reasons, the Plaintiff cannot establish a claim for adverse possession against the Government even if the Father occupied portion of Lot 307 as early as in 1939 which I do not accept it to be the case.

(v) Time to run afresh against the Government after the change of sovereignty in 1997?

120.  The Government has also raised another argument to oppose the Plaintiff’s claim based on the change of sovereignty in 1997 (“the 1997 Argument”).  Due to my rulings in the earlier part of this Judgment, it is not necessary for me to determine the merits of the 1997 Argument.  However, since the parties have dealt with the 1997 Argument in some length at the trial and such issue may be a matter of some general public importance, I feel obliged to give my view briefly on such issue.  I must emphasise that my view on the 1997 Argument is strictly obiter.

121.  Mr Mok has formulated the 1997 Argument based on the following three limbs:

(i) First, as a matter of Hong Kong domestic law, the title of the British Crown over the land in the New Territories was a leasehold title of a 99-years’ term expiring on 30 June 1997;

(ii) Second, it then follows that, in the absence of legislative intervention, when the 99-years’ term of the Crown over New Territories expired on 30 June 1997, whatever squatter rights accumulated by the Plaintiff over the land which was occupied by the Hut against the Crown would end with the 99 years’ term of the Crown; and

(iii) Third, the reversionary title of the Chinese Government over New Territories land would come into play as State Property under Article 7 of the Basic Law on 1 July 1997, and the Plaintiff’s adverse possession against the area occupied by the Hut only commenced against this reversionary title on 1 July 1997.

122.  Mr Mok submits that the first limb of the 1997 Argument is fully supported by the judgments in the first stance court[55], the Court of Appeal[56] and the Privy Council[57] in Winfat Enterprises (HK) Co Ltd v AG.  After reviewing the Peking Convention of 1989, the relevant constitutional documents and the local legislations relating to New Territories land, the Court of Appeal had expressly stated that as far as domestic law is concerned, all land in the New Territories became the property of the Crown for the period of 99 years from 1898 specified in the Peking Convention.[58] Such dicta was approved by the Privy Council.[59]

123.  According to Mr Mok, the first limb of the 1997 Argument was accepted in the following decisions: (i) Chau Ka Chik Tso v Secretary for Justice[60]; and (ii) Jade’s Realm Ltd v Director of Lands[61]. The judges in both cases did not accept that the legislations were to treat the land in New Territories as having vested in the Crown in perpetuity.  Mr Mok submits that Ng J in Jade’s Realm Ltd[62] even went further and accepted the second and third limbs of the 1997 Argument, and applied Lord Hoffmann’s dicta in Chan Tin Shi v Li Tung Sung[63] which included this statement:

“Adverse possession by a squatter may therefore bar the remedy of the lessee but will not affect the right of the freeholder to claim possession when the lease falls in.”

124.  On the other hand, G Lam J took a different view in Li Kwok Ching v Secretary for Justice[64]. The learned judge saw that there was a fundamental problem with the 1997 Argument:[65]

“ ... ... The fundamental problem with [the 1997 Argument] is the inherent attempt to apply a common law found in the land tenure system of Hong Kong (and in English land law) to the position of the British Hong Kong Government under the Peking Convention and the position of the HKSAR Government after 1997 .... ... Whatever its effect might have been, the Peking Convention operated on an international level and did not create any leasehold estate in favour of the British Crown or any reversionary estate in favour of the Chinese state that is justiciable in domestic courts. It is well established that the Peking Convention did not give rise to rights enforceable in the municipal courts of Hong Kong.”

125.  G Lam J considered the legal effect of s 30(1) of the Hong Kong Reunification Ordinance, Cap 2601 (“the Reunification Ordinance”) and Article 120 of the Basic Law and came to the following conclusion:[66]

“The HKSAR Government is to be regarded for these purposes as simply having stepped into the shoes of the British Hong Kong Government as owner of the land, rather than as a reversioner who came into possession upon expiry of the 99-year lease upon 30 June 1997. This in my view is the effect of s 30(1) of [the Reunification Ordinance] and Article 120 of the Basic Law.”

126.  S 30(1) of the Reunification Ordinance provides:

“For the avoidance of doubt, it is declared that all property, rights and liabilities vested in or belonging to the Crown or the Government of Hong Kong immediately before 1 July 1997 have been on and from that date, subject to the Basic Law, vested in or transferred to the Government of the HKSAR.”

127.  Article 120 of the Basic Law provides:

“All leases of land granted, decided upon or renewed before the establishing of [HKSAR] which extended beyond 30 June 1997, and all rights in relation to such leases, shall continue to be recognised and protected under the law of the region.”

128.  Mr Mok challenges the decision of G Lam J as an erroneous one because he wrongly construed the legal effect of the said two statutory provisions and failed to recognise the binding effect of the appellate judgments in the Win Fat case.  When under domestic law the 99-years’ term of the Crown was a leasehold interest which expired on 30 June 1997, in the absence of any legislative intervention, the title of the HKSAR Government under domestic law must be traceable from a reversionary interest.  In order to bring about the result stated by G Lam J (namely the HKSAR Government stepping into the shoes of the Crown as land owner and not as a reversioner at the expiration of the 99-years’ term on 30 June 1997), s 30(1) of the Reunification Ordinance and Article 120 of the Basic Law would have to make very clear provisions: (i) to extend the 99-years’ term of the Crown to become a term up to 2047: (ii) to remove the reversionary interest (up to 2047) that was in place at the expiration of the 99-years’ term of the Crown; and (iii) to substitute the Crown by the HKSAR Government as the land owner of the extended term of the Crown.  But when properly construed, s 30(1) and Article 120 cannot have those legal effects.  In particular, DHCJ L Chan and Ng J in Chau Ka Chik Tso[67] and Jade’s Realm Ltd[68] respectively agreed that s 30(1) of the Reunification Ordinance cannot extend the expired interest into the new regime.  Mr Mok also argues that G Lam J had wrongly relied on the Privy Council’s decision in Chung Ping Kwan v Lam Island Co Ltd[69] and the decision of DHCJ M Ng in Lee Bing Cheung v Secretary for Justice[70] in reaching his conclusion.

129.  With respect, I agree with the decision of G Lam J.  First, Win Fat is not a case on the construction of s 30(1).  The Reunification Ordinance came into force on 1 July 1997, and so the position after the change of sovereignty should now be considered in light of the new provisions in the Reunification Ordinance and the Basic Law.  Hence, I do not accept that G Lam J had failed to recognise the binding effect of the appellate judgments in the Win Fat case.

130.  I also share the view of G Lam J about the fundamental problem relating to the application of the Peking Convention on an international level to the domestic law relating to adverse possession.  In my judgment, the whole purpose of s 30(1) of the Reunification Ordinance is to transfer all the rights and liabilities of the former British colonial Government, including those associated with ownership of land, to the post-1997 HKSAR Government so as to avoid any argument or uncertainty which may arise from the change of sovereignty at the international level.  In other words, it preserves any rights which might be enforced against the former British Government as also valid against the HKSAR Government.  Although the right of an adverse possessor may not have accrued before 1997, he still enjoyed some “rights” as against the former British Government which that adverse possessor can enforce against the HKSAR Government despite the change of sovereignty at the international level.  Hence in my judgment, G Lam J was correct in his analysis of the legal effect of s 30(1) of Reunification Ordinance and Article 120 of the Basic Law, and I do not accept that, so far as the land in New Territories is concerned, the time of limitation would have to run afresh after 1 July 1997.

131.  I therefore rule against the Government on the 1997 Argument.  However, Mr Mok has made repeated attempts to advance the 1997 Arguments before different courts in the Court of First Instance.  It seems that, until the 1997 Argument is conclusively determined in the higher courts, this issue will continue to haunt the courts in the future.

CONCLUSION

132.  For the above reasons, I dismiss the Plaintiff’s claim against all the Defendants.

133.  There is an issue about the counterclaim for possession by the Government.  According to Mr Mok, if the court were to find that the Plaintiff is now occupying Lot 307 with the permission of the Government, then the counterclaim is not needed because the Government by definition is already in possession of Lot 307.

134.  I have dealt with this issue briefly in §70 of this Judgment.   Because the Plaintiff has not pleaded any issue relating to the validity of the MOT after the death of the Father, the witnesses had not been asked to deal with such issue in their oral testimony.  However, based on the factors referred to in §§61 to 68 of this Judgment, I can only conclude that, despite the MOT had not been formally transferred to the Plaintiff, he had been occupying the Land under some sort of implied licence after the death of the Father.  So far as Lot 307 is concerned, the Government had withdrawn the licence in the end of 2011 when it returned the annual renewal fee to the Plaintiff.  Hence, the Government is entitled to obtain an order for possession of the occupied parts of Lot 307 against the Plaintiff.  I therefore grant judgment in favour of the 3^rd Defendant on the counterclaim for such order of possession.  The counterclaim by the 2^nd Defendant is dismissed.

135.  I also make a costs order nisi that the costs of the action be to the Defendants which shall be made absolute 14 days after the date of the handing down of this Judgment.