JIN YU CHIA v. THE PERSONAL REPRESENTATIVE OF LEE AH HSIN, DECEASED

HCA 1121/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1121 OF 2011

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J U D G M E N T

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Introduction

1.  This action concerns the property known as Flat E, 9^th Floor, No 454E, Queen’s Road West, Hong Kong (the “Property”).

2.  The registered owner of the Property was Madam Lee Ah Hsin, deceased (the “Deceased”).  The Deceased died in Hong Kong on 5 January 1994 at the age of 72.

3.  The Deceased died suddenly because of intracerebral haemorrhages.  According to one 李羨惜, the Deceased was admitted to the Queen Mary Hospital on 4 January 1994.  And she was later buried in Mainland China.

4.  The Property, together with other units built on the same piece of land, had now been sold by public auction to one Group Leader Limited in consideration of $2,957,000,000 pursuant to the Judgment of the Lands Tribunal in LDCS 27000 of 2011 dated 8 October 2014.  The relevant part of the net proceeds of the sale relating to the Property is held by Mr Chow Wing Kin Anthony and Ms Chow Suk Han (the “Trustees”) pending final determination of the proceedings in this action.

5.  Upon the death of the Deceased in 1994, to the knowledge of the plaintiff, she had a younger brother surviving her, namely, one李洪翔 (the “Brother”).  The Brother passed away on 6 July 2011.

6.  Previously, the plaintiff had brought proceedings in HCMP 1227/2009 against the personal representative of the Deceased.  The Brother had filed a home-made Defence in those proceedings. 

7.  The plaintiff formerly claimed adverse possession of the Property against the estate of the Deceased.  And now in this action, she claims the proceeds of sale of the Property held by the Trustees. HCMP 1227/2009 was discontinued by Notice of Discontinuance dated 5 July 2011.

8.  The defendant is the nephew of the Deceased, being the son of the Brother.  By the order of Master R Lai dated 10 October 2012, the defendant was appointed to represent the Deceased’s estate for the purpose of this action.  The defendant defends the plaintiff’s claim in this action and lodged a counterclaim, originally for vacant possession of the Property, and now for the proceeds of sale as well as mesne profits.

The plaintiff’s case

9.  The plaintiff and the Deceased became acquainted with each other in or around the year 1970 and later on they developed a closer relationship.  As time went by, the Deceased and the plaintiff regarded each other as respectively the sworn-mother and sworn-daughter.

10.  Since about 1991, the plaintiff had been occupying the Property together with the Deceased until the latter’s death in 1994. Since the death of the Deceased in 1994, the plaintiff continued to occupy the Property and had been in uninterrupted and exclusive use, occupation, possession and control of the Property.

11.  It is also the plaintiff’s case that since the death of the Deceased, the plaintiff has been settling the outgoings of the Property including management fees, ad hoc repair expenses of the building at which the Property is situated, utility charges and rates from time to time.  In this regard, documentary evidence includes: –

(1)   Since 1995, the plaintiff had paid for the share of the Property in relation to the remedial and maintenance works of the buildings where the Property is situated.

(2)   At all material times, the plaintiff had also been paying the management fees of the Property.

(3)   As far as documentary evidence is available between December 2008 and February 2015, it was the plaintiff who had paid the electricity bills of the Property.  During the said period of time, there had been readings of use of electricity at the Property.

12.  Also, it was the plaintiff who promised to deliver up vacant possession of the Property to the developer.

13.  The plaintiff claims that since the death of the Deceased in 1994, she had been in exclusive possession of the Property for more than 12 years which was and is adverse to the defendant, and pursuant to sections 7(2) and 17 of the Limitation Ordinance, Cap 347, the plaintiff has acquired all the title, rights, benefits and interests of and in the Property.

The defendant’s case

14.  In his written Opening Submissions, the defendant makes clear that he does not challenge the plaintiff’s case that she had been in possession of the Property since 1994.

15.  The defendant however contended that the plaintiff’s possession of the Property could not have been adverse, as the plaintiff was entrusted with the task of looking after the Property for the purpose of its eventual sale, the proceeds of which were to be shared between the defendant’s father and the plaintiff.  In short, the Property was occupied by the plaintiff initially with the consent of the Deceased, and after the death of the Deceased, with the consent of the Brother being one of the beneficiaries of the estate of the Deceased.

16.  The defendant further contends that the building containing the Property has been sold by an order of the Lands Tribunal for compulsory sale for redevelopment.  The net proceeds of sale of the Property amount to $7,557,612.48, which sum is being held by the Trustees pending the outcome of this trial.  In the event that this court finds for the defendant, the defendant asks that such sum be released to the estate of the Deceased.

17.  The defendant further submits that the plaintiff should also be ordered to pay mesne profits to the estate of the Deceased in respect of the use and occupation of the Property from 6 January 1994 to 19 December 2014 at the rates which have been agreed by the parties.

Relevant Legal Principles

18.  On the plaintiff’s case, she obtained a key to the Property as early as 1991, and started to live there with her three sons and the Deceased.  And although she moved with her sons to a public housing unit in 1993, they had continued to live at the Property from time to time until the death of the Deceased on 5 January 1994.

19.  In the circumstances, a licence granted by the Deceased to the plaintiff and her sons to live at the Property from 1991 to 5 January 1994 must be inferred.  Indeed, the plaintiff has not sought to argue that her possession of the Property from 1991 to 5 January 1994 was “adverse”.

20.  I agree with the defendant that the question is this: is it right to say that such licence was automatically revoked on the death of the Deceased as a matter of law, so that time automatically started to run from 6 January 1994 for the purpose of limitation of actions?

21.  I agree that such an approach is not correct by reason of the decision of the Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai & Anor (No 2) (1997-98) 1 HKCFAR 55 and the decision of the Court of Appeal in Cheung Chung Yan v Chan Man Kwong, CACV 268/2003 (Judgment dated 12.02.2004).

22.  In the Wong Tak Yue case at page 70E, Litton PJ held that the “owner of the land with the paper title is deemed in possession of the land.  If the law is to attribute possession to a person who can established no paper title to possession, and claims to be a mere trespasser, the burden is upon him to establish his intention to exclude the whole world: including the owner of the land.  Only in this way can he establish ‘adverse possession’…”.

23.  The Court of Final Appeal further held that “adverse possession can be described as ‘possession as of wrong’ and with limitation it is the intention of the squatter that is essential” (per Li CJ at 68H) and that “The question of intention to possess, as with any other question of intention, is one of fact.  Whether it can be established depends on an assessment of all the circumstances in the particular case” (per Li CJ at 69A).

24.  In Cheung Chung Yan, the defendants argued that on the death of the father, who had granted a licence to the daughter to work on the land, such licence would have expired and time would have started to run.  But the Court of Appeal disagreed.  Ma CJHC (as the Chief Justice then was) held that “More important, nothing in the evidence demonstrates that as from 1964 [when the father died], the defendant had the intention to exclude the true owner (the plaintiff) from the Land.” (at paragraph 16(2))

25.  Further, at paragraph 22 of the Cheung Chung Yan case, Rogers VP held that: “Although Mr Hui argued that the death of the father would have terminated any licence to occupy the land, that it seems to me, is not the point.  The defendants seek to establish that they have been in adverse possession.  Clearly on the judge’s finding the possession cannot have been adverse during the father’s lifetime.  It is not a question of a licence, it is a question of the relevant defendants not having any intention to occupy the land adversely to anyone.  On the death of the father the plaintiff became the owner of the land.  The judge held that the relevant defendants would have known that, despite the fact that the 2^nd defendant claimed to be ignorant of this fact.  The judge also held that in those days the plaintiff and the defendants were on good terms.  Hence it is necessary for the defendants to show that after the father’s death their intention changed from occupying the land respecting the true owner’s ownership, to occupying the land intending to dispossess the true owner.” (Emphasis supplied)

Evidence of animus possidendi on the part of the plaintiff

26.  On the plaintiff’s own evidence, after the death of the Deceased, she continued to hold the key to the Property as before, and she and her sons continued to live at the premises as before.

27.  The defendant thus contends that the continuation of possession of the Property by the plaintiff and her sons after the death of the Deceased does not establish an intention to possess the Property adverse to the estate of the Deceased.

28.  The plaintiff now produces and seeks to rely on a document dated 4 April 1994 (called the “Note” by the plaintiff), whereby the defendant’s father purportedly gave up all his rights as beneficiary under the estate of the Deceased and acknowledged that the plaintiff was entitled to the entire estate of the Deceased including the Property as per the wishes of the Deceased.

29.  Implicit in the plaintiff’s case is that by reason of the Note, the plaintiff then genuinely believes that she has become the true owner of the Property (and more precisely the entire estate of the Deceased including the Property), so that thereafter she has been in possession of the Property to the exclusion of not only the world at large, but also the estate of the Deceased.

30.  Thus, the circumstances surrounding and leading to the making of the Note are crucial in determining whether the plaintiff has been in adverse possession of the Property.

31.  I agree that in the final analysis, it is a question of credibility: does the court prefer the evidence of the plaintiff and her witness, or does the court prefer the evidence of the defendant and his witness?

Analysis of the Evidence

Evidence of the defendant and his wife

32.  I agree that the evidence of the defendant and his wife is simple, straightforward and convincing.  Their evidence has not been shaken under cross-examination.  Their evidence is also consistent with the home-made Defence filed by the defendant’s father in HCMP 1227/2009 commenced by the plaintiff back in 2009.

Evidence of the plaintiff and her witness

33.  On the other hand, I agree that the evidence of the plaintiff and her witness is inherently implausible, mutually contradictory, and contradicted by the home-made Defence filed by the defendant’s father in 2009.

34.  First, on the evidence, although the Deceased was illiterate, she was nevertheless a shrewd investor.  She knew the importance of investing her savings in real property, not only to provide a roof over her head, but also as an investment to provide herself with a steady income by way of rent.  In her dealings with her properties, she was not unfamiliar with the law, lawyers and even the courts.

35.  Yet, despite the plaintiff’s testimony that the Deceased all along wanted to give her the Property, the Deceased did not give her anything by way of either an inter vivos gift or a testamentary gift, let alone the Property.  In particular, there is the evidence that when the Deceased sold the property at To Kwa Wan, the Deceased did not give the plaintiff any part of the proceeds of the sale.

36.  Although the plaintiff in her testimony emphasised that the Deceased only intended to give her the Property, the Note purported to record the Deceased’s intention and wishes to give the plaintiff the entirety of her assets, and not just the Property.

37.  Further, contrary to the plaintiff’s evidence, Madam Li Sin Sik (李羨惜) testified that the Deceased had in mind at least two options, one of which was to sell the Property and give the plaintiff just half of the proceeds.

38.  Further still, the Deceased’s alleged wishes and intention to give either the Property or the entirety of her assets to the plaintiff is also inconsistent with her wishes to have a legal adoption of the defendant as her son, and the defendant had actually taken steps to carry out the Deceased’s wishes in accordance with the instructions given by the Deceased.

39.  Second, on the plaintiff’s case and evidence, the defendant’s father was so generous that he was prepared to forego the entirety of his entitlement under the estate of the Deceased, and to give the entirety of the estate of the Deceased to the plaintiff so as to comply with the wishes and intention of the Deceased.

40.  However, according to Madam Li Sin Sik, both the defendant’s father and the defendant were greedy for money, and had persistently pestered the Deceased with requests for gifts of money.  If that is the case, one asks rhetorically why would the defendant’s father be so generous as to sign away his entitlement to the Deceased’s estate?

41.  But irrespective of such alleged greed, why would the defendant’s father be prepared to sign away his entitlement under the Deceased’s estate in return for nothing?

42.  I further agree with the defendant that if the defendant’s father were really so generous and both he and the defendant had continued to maintain a good and cordial relationship with the plaintiff, why would he be so upset by the plaintiff’s application to obtain the Property through the proceedings HCMP 1227/2009 in 2009.  Why should he care about the Property at all when he had given it away 15 years before?

43.  Third, I agree that the plaintiff’s evidence regarding the events leading to the defendant’s father writing out the Note is incredible and contrary to her own earlier affidavit evidence and witness statement.

44.  The plaintiff’s written case was that she just requested the defendant’s father to confirm the Deceased’s wishes and intention to give her the Property, whereupon of his own initiative and with no prompting of any kind from the plaintiff, the defendant’s father wrote out the Note, and two days later, the defendant again of his own initiative took the Note to be authenticated by the local government in China.

45.  The plaintiff gave an entirely different story in her oral testimony in court.  According to the plaintiff, she did not make any explicit request of that kind.  Yet, the defendant’s father then wrote out the Note, and then the defendant took the Note to be authenticated.  At that stage, she was not even capable of making out what the defendant’s father was writing in the Note and was only able to do so many years later.

46.  I further agree that both the content of the Note and the many traditional Chinese characters used in the Note show that the Note could not have been written by the defendant’s father of his own initiative and without prompting of any kind.

Conclusion and Disposition

47.  For the reasons stated above, I prefer the evidence of the defendant and his wife over the evidence of the plaintiff and Madam Li Sin Sik.  Accordingly, the plaintiff’s claim that she had been in adverse possession of the Property must fail.

48.  However, I do not think that the defendant is entitled to claim mesne profits in respect of the plaintiff’s use and occupation of the Property from 6 January 1994 to 19 December 2014.  Even on the defendant’s own case, the plaintiff had stayed in the Property for the joint benefit of herself and the estate of the Deceased, and with the consent of the Brother being one of the beneficiaries of the estate of the Deceased (see: paragraph 15 above).

49.  Accordingly, I order as follows: –

(1)   the net proceeds of sale of the Property in the sum of $7,557,612.48 together with interest thereon (if any) held by the Trustees be released to the defendant; and

(2)   the claim by the plaintiff against the defendant in this action be dismissed.

50.  I further order that the plaintiff do pay to the defendant the costs of this action and the counterclaim, such costs are to be taxed if not agreed.

51.  The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

52.  Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.