CHAN PUI LOK DANIEL v. The Personal Representatives of LEUNG SHU MING AND OTHERS

HCA 2400/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2400 OF 2015

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DECISION

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1.  This is an application by the Plaintiff for leave to enter into default judgment for the following declarations and other reliefs against the Defendants:

(1)   a declaration that the 1^st Defendant’s title to the property at First Floor of No 388 Lai Chi Kok Road, Kowloon, Hong Kong (the “Property”) has been extinguished by reason of adverse possession; and

(2)   a declaration that the Plaintiff in his personal capacity holds possessory title to the Property.

Background

2.  The Plaintiff is the sole executor of the Will dated 17 May 2003 of Madam Annie Woo (the “Deceased”) who passed away on 18 July 2005.  The sole beneficiary of the Deceased’s Will is the Tung Wah Group of Hospitals (“Tung Wah Hospitals”).

3.  The Deceased is the aunt of the Plaintiff’s godfather Mr Wong Chi Lam (“Mr Wong”) and they knew each other since 1978.  The Deceased inherited all the assets of Mr Wong after he died in 1982.  It is alleged that the Deceased told the Plaintiff that she believed Mr Wong had expected her to be generous to the Plaintiff and therefore she would want to give some of her assets to the Plaintiff. 

4.  The Deceased rented the Property since about 1962 from one Madam Ho Ping (“Madam Ho”).  Madam Ho was not the owner of the Property.  The registered owner of the Property is Leung Shu Ming, whose personal representative is the 1^st Defendant in these proceedings.

5.  The Plaintiff alleged that since about February 1984, no rent was paid by the Deceased to Madam Ho as she had disappeared.  The Plaintiff also alleges that the tenancy between the Deceased and Madam Ho was a monthly tenancy.  By reason of section 12(2) of the Limitation Ordinance, such tenancy was deemed to have been determined at the expiration of one month since the Deceased last paid the rent in January 1984 and the right of action by the 1^st Defendant was deemed to have accrued from the date of the determination. 

6.  Since no action was commenced by the 1^st Defendant against the Deceased for a period of over twenty years since February 1984 or by reason of the Deceased remained continuously in exclusive possession of the Property to the exclusion of the whole world, including the 1^st Defendant, as if she were the sole owner, the Plaintiff alleges that the title, rights and interest of the 1^st Defendant in the Property had been extinguished in 2004.  The Plaintiff relies on Sections 7 and 17 of the Limitation Ordinance.

7.  I should pause and say that the present action for adverse possession is not made by the Deceased’s personal representative, even though the Deceased was said to have been in continuous possession of the Property to the exclusion of the whole world for over twenty years between 1984 and 2004.  The present action was brought by the Plaintiff in his personal capacity and he relied on a number of alternative cases to claim title to the Property. 

8.  Subject to the Plaintiff proving title to the Property, he is seeking to claim possession and damages against the 2^nd and 3^rd Defendants who allegedly occupied two rooms in the Property as trespassers.

Service

9.  The Amended Writ of Summons was served on the 2^nd and 3^rd Defendants pursuant to an order by the Court for substituted service.  On 5 January 2017, an order was made appointing the Official Solicitor to represent the 1^st Defendant for the limited purpose of accepting service of the amended Writ of Summons.  Service was made pursuant to such an order. 

10.  No acknowledgment of service was filed by any of the Defendants.

11.  The present summons for default judgment was not served on the Defendants. The Plaintiff relied on an order they obtained on 13 June 2017 that these proceedings be proceeded with in the absence of a person representing the 1^st Defendant. 

12.  The Plaintiff also relied on Order 65, rule 9 of the Rules of the High Court (“RHC”) which states that:

“ Where by virtue of these rules any document is required to be served on any person but it is not required to be served personally or in accordance with Order 10, rule 1(2), and at the time when service is to be effected that person is in default as to acknowledgment of service or has no address for service, the document need not be served on that person unless the Court otherwise directs or any of these rules otherwise provides.”

13.  In Shue Huei Yue v Tang Chung Meng DCCJ 2294/2013, 1 August 2014, Deputy District Judge J Chow held that service of the summons for a default judgment for declaratory judgment must be served on the Defendant who had failed to file an acknowledgment of service, despite Order 65, rule 9.  The learned judge’s reasoning is set out in paragraphs 7 – 11:

“ 7. … Mr. Wong, counsel for the plaintiff submitted, pursuant to Order 65 rule 9, Rule of the District Court, Cap 336H, service of the Summons on the defendant is unnecessary ...

8. I do not agree. The plaintiff is seeking a declaration that the Defendant’s title in respect of the Property be extinguished and be barred from taking action against the Plaintiff to recover it. Albeit the defendant has disappeared since 1986, I am not satisfied a hearing for obtaining a declaratory judgment can be heard when the defendant has no knowledge of the hearing itself.

9. I draw Mr. Wong’s attention to Law Yuk Cheung v Loa Ku Tai (DCCJ 4 of 2012), the Plaintiff in that case made similar application on ground of adverse possession. The writ of summons, statement of claim and the summons for declaratory judgment have all been served on that Defendant by way of substituted service.

10. In revisiting applications by way of summons, Order 32, rule 3 of the Rules of the District Court, Cap 336H reads:-

‘ Services of summons (O 32, r 3):

A summons asking only for the extension or abridgement of any period of time may be served on the day before the day specified in the summons for the hearing thereof but, expect as aforesaid and unless the Court otherwise orders or any of these Rules otherwise provides, a summons must be served on every other party not less than 2 clear days before the day so specified.’  [emphasis added]

11. Apart from that, the Summons for declaratory judgment is taken out pursuant to Order 13, rule 6 of the Rules of District Court, Cap 336H:-

‘ Other claims (O 13, r 6):

Where a writ is indorsed with a claim of a description not mentioned in rules 1 to 4, then, if any Defendant fails to give notice of intention to defend, the Plaintiff may, after the prescribed time and, if that Defendant has not acknowledged service, upon filing an affidavit proving due service of the writ on him and, where the statement of claim was not indorsed on or served with the writ, upon serving a statement of claim on him, proceed with the action as if that Defendant had given notice of intention to defend.’  [emphasis added]”

14.  Order 32, rule 3 and Order 13, rule 6 (1) of the Rules of the District Court are in the same terms as the corresponding provisions in the RHC. 

15.  With greatest respect to the Deputy District Judge, I disagree with her reasoning and decision.  The case of Law Yuk Cheung v Loa Ku Tai was merely an example where the Plaintiff there had obtained an order for substituted service of the summons on the Defendant.  Order 32, rule 3 expressly states that the rule applies unless any of the rules in RHC otherwise provides.  Order 65, rule 9 has expressly dispensed with the service of the summons where the Defendant has been served but failed to file acknowledgment of service. 

16.  The effect of Order 13, rule 6(1) was to preclude a Plaintiff from entering judgment in default of notice of intention to defend in a case where the claim is not within Order 13, rules 1 – 4.  It is premised on the situation covered by Order 65, rule 9, namely, the failure by a Defendant to give notice of intention to defend by filing an acknowledgment of service. 

17.  I consider that subject to any direction the Court might make, service of the summons for default judgment on the Defendants is not required by reason of Order 65, rule 9:

(1)   Order 65, rule 9 is only subject to two things: any contrary direction by the Court or if any of the rules of RHC provides otherwise.  There are examples where Order 65, rule 9 was expressly excluded, for example, Order 88, rule 6(2) (mortgagee action) and Order 37, rule 1(2) (notice of appointment to assess damages).  None of those exclusions relates to a summons for default judgment for declaratory relief. 

(2)   This is not a case where personal service or service under Order 10, rule 1(2) is required.  The Defendants have failed to file an acknowledgment of service.  Accordingly Order 65, rule 9 is engaged, subject to any direction the Court might make.

18.  The Court retains a discretion to order service and I agree with Deputy District Judge J Chow that where a Plaintiff is seeking a declaration that a Defendant’s title to a property be extinguished, this might be a case where the Court would require service of the summons for default judgment on a Defendant. 

19.  The Court would have to assess each case on its own particular facts.  Having considered the materials before me, I do not consider necessary to direct service of the summons on the Defendants:

(1)   It is apparent that the 1^st Defendant or his personal representative cannot be found.

(2)   By reason of the evidence of death of the 1^st Defendant and that no personal representative can be found, the Plaintiff has obtained an order appointing the Official Solicitors only for the purpose of accepting service.  As soon as service was accepted, the Official Solicitors had become functus officio. 

(3)   The 1^st Defendant was subject to two Court proceedings and default judgment for adverse possession had been obtained against him in his absence. 

(4)   The Plaintiff has obtained an order on 13 June 2017 to proceed with this action in the absence of a person representing the estate of the 1^st Defendant. 

(5)   The 2^nd and 3^rd Defendants were mere trespassers and it appears from the Affidavit of Tai Siu Ching filed by the Plaintiff that they had notice of these proceedings since copies of the Amended Writ posted up on the main door of the Property and the doors of the two rooms occupied by the 2^nd and 3^rd Defendants were all removed. 

Default Judgment Application

20.  The relevant legal principles are summarized in paragraph 19/7/14 of the Hong Kong Civil Procedure 2017:

“ The statement of claim (or counterclaim) must, on motion or summons hereunder, show a case for the order the applicant seeks to obtain.

On the other hand, it is not the practice of the Court to make a declaration of right in default of defence, or on admissions or by consent but where such relief is to be granted without trial or evidence, the right course for the Court is not to make a declaration but to state on what footing the relief is to be granted (Wallersteiner v. Moir [1974] 1 W.L.R. 991; per Buckley and Scarman L.JJ.).  The court’s power to grant judgment under O.19, r.7 is discretionary…”

21.  And at paragraph 19/7/20:

“ Declaration — It is not the normal practice of the Court to make a declaration without a trial, particularly where the declaration is that the Defendant in default of defence has acted fraudulently (Wallersteiner v. Moir (No. 1) [1974] 1 W.L.R. 991); Top One International (China) Properly Group Company Ltd v. Top One Property Grp Ltd [2011] 1 H.K.L.R.D. 606, [83] & [85], per Fok J (as he then was). However, this is only a rule of practice which should not be followed when the Plaintiff had a genuine need for the declaratory relief and justice would not be done if such relief were denied (Lam Shing Shou v. Lam Hon Man [2002] 1 H.K.L.R.D. D3; Lai Wai Kuen v. Wong Shau Kwong, (unrep., HCA 3424/2003, [2004] H.K.E.C. 1373). This rule of practice does permit limited exceptions (Kin Ming Holdings International Ltd v. Lam Moon Yuen, (unrep., HCA 2350/2005, [2006] H.K.E.C. 269) and John Robert Lees v. Dragon Investment Co. II LLC, (unrep., HCA 1180/2003, [2006] H.K.E.C. 214).

Where declaratory relief is sought, the Court will scrutinize the application for default judgment carefully and does not hastily grant the relief sought; Chau Yan Chi Catherine v. The Incorporated Owners of Fung Wah Factorial Building (unrep., DCCJ 1459/2014, [2014] H.K.E.C. 1211), [14]; Chan Wing Go v. The Incorporated Owners of Wing Hong Factory Building (unrep., DCCJ 1736/2014, [2014] H.K.E.C. 1649), [20] …”

22.  In summary, whether or not to grant default judgment is a matter of the Court’s discretion.  It is not the normal practice of the Court to grant default judgment without a trial though in appropriate cases exceptions can be allowed.

23.  The present case is more complicated than the usual adverse possession claim where the registered owner has disappeared for many years.  In this action, the Plaintiff not only seeks a declaration that the 1^st Defendant’s title to the Property has been extinguished by reason of the Deceased’s adverse possession of the Property from 1984 to 2004 (the year when the Deceased passed away), he also seeks a declaration that he, in his personal capacity, holds possessory title to the Property.  He commenced this action not as a personal representative of the Deceased, but in his personal capacity. 

24.  A major part of the Statement of Claim deals with his personal claim for possessory title.  The Plaintiff relies on numerous alternative cases which reflect the rather complicated nature of his case:

(1)   The primary case of the Plaintiff is that by reason of a representation made by the Deceased to him in 1995 that the Plaintiff should have all the Deceased’s rights and interests in the Property and the Plaintiff’s reliance of that representation to his detriment in, for example, attending owners’ meetings, the Deceased had been holding all her rights and interests in the Property, including her interest as an adverse possessor of the Property, on constructive trust for him (the “1995 Trust”).

(2)   Further or alternatively, in 1995, the Deceased had made a gift of all her rights and interests in the Property, including her interest as an adverse possessor, to the Plaintiff (the “1995 Gift”).

(3)   That the Deceased (and her estate) is estopped from denying the 1995 Trust and/or the 1995 Gift.

(4)   Further or alternatively, after the Deceased’s adverse possession had extinguished the title of the 1^st Defendant in the Property, the Deceased held her possessory title, rights and interests of the Property on constructive trust for the Plaintiff from about March 2004 (the “2004 Trust”).

(5)   Further or alternatively, in 2004, the Deceased had made a gift of all her possessory title, rights and interests over the Property to the Plaintiff (the “2004 Gift”).

(6)   Alternatively, the Deceased (and her estate) is estopped from denying the 2004 Trust and/or the 2004 Gift.

(7)   To the extent that the 1995 Gift or alternatively the 2004 Gift was imperfect at law, it was rendered perfect by virtue of two matters pleaded.

(8)   As a further alternative, in 2004 the Deceased made a donation mortis causa of her possessory title, rights and interests over the Property in favour of the Plaintiff.

25.  The Plaintiff raises a number of allegations against the Deceased in order to establish his personal claim for possessory title of the Property.  Yet, the personal representative of the Deceased is not made a Defendant in this action and thus there is no claim for declaration of the constructive trust or gift against the Deceased’s personal representative.

26.  The Plaintiff sought to justify the failure to do so by saying that his solicitors had contacted Tung Wah Hospitals as the sole beneficiary under the Deceased’s Will.  The Plaintiff alleges that Tung Wah Hospitals’ solicitors confirmed that they had no objection to the Plaintiff’s present application. 

27.  Mr Lo submitted that in relation to the question of interested party, the Court can look at the affidavit evidence, in particular the correspondence with the solicitors acting for Tung Wah Hospitals. 

28.  With respect, I read the reply from Tung Wah Hospitals differently and it would be helpful to go to the correspondence to see the proper context. 

29.  By a letter dated 25 September 2015, Plaintiff’s solicitors wrote to Tung Wah Hospitals enclosing a copy of the draft writ and statement of claim that they eventually filed in these proceedings.  The letter stated that if Tung Wah Hospitals intended to contest the Plaintiff’s claim, they would be added as a Defendant and he will seek costs against them as he may deem necessary.

30.  Tung Wah Hospitals’ solicitors wrote in reply on 2 October 2015 asking for certain documents.  On 9 October 2015, the Plaintiff’s solicitors gave a copy of the grant of probate of the Deceased and a schedule of property annexed to it, the Deceased’s Will and a one-page statement of a former occupier of the Property in support.

31.  On 18 October 2015, Tung Wah Hospital’s solicitors gave this reply:

“ We refer to your letter dated 9^th October 2015.

We are instructed by our client, Tung Wah Group of Hospitals (“TWGHs”), the sole beneficiary of the estate of [the Deceased] that, based on the copy land search record of the property and the copy Probate in respect of the estate of the Deceased provided by your goodselves, the Deceased was not the registered owner of the Property.

In the premises, we are instructed by TWGHs to inform you they have no objection to the intended applications of [the Plaintiff] in his personal capacity against the registered owner and the existing occupiers of the Property as set out in the draft Writ of Summons and Statements of Claim enclosed in your letter dated 25 September 2015.

All our client’s rights and interests, if any, are expressly reserved.”

32.  The statement of no objection was apparently made on the basis that in the land search records and the Grant of Probate, the Deceased was not the registered owner of the Property.  So on the face of it, the Property did not form part of the Deceased’s estate and would not be transferred to them.  Also, since the intended action would be in the Plaintiff’s personal capacity and the Deceased’s personal representative was not a party, in raising no objection to the intended application, Tung Wah Hospitals should not be taken to have accepted the allegations made by the Plaintiff against the Deceased.

33.  Irrespective of what was the actual intention behind Tung Wah Hospitals’ reply, in view of the various allegations made by the Plaintiff in his personal capacity against the Deceased and her estate, it seems to me that the Deceased’s personal representative should be joined as a Defendant.

34.  Furthermore, it appears that the Plaintiff is in a position of conflict or potential conflict.  On one hand, he is the sole executor of the Deceased’s estate.  On the other hand, he is claiming against the Deceased (and her estate) in his personal capacity. 

35.  My concerns over the missing party and conflict of interest (whether they are eventually proved to be correct or not) are factors to be taken into account in considering whether to exercise my discretion to grant default judgment without a trial. 

36.  Coming to the Amended Statement of Claim, Mr Lo submitted that despite the numerous alternative cases pleaded, if any one of them succeeds, the Plaintiff is entitled to the reliefs sought. 

37.  However, there is apparent inconsistency in the allegations made by the Plaintiff under the alternative cases.  For example, the Plaintiff alleges that the Deceased had in 1995 gifted all her rights and interests in the Property to the Plaintiff, and that since that year, the Deceased had been holding all her rights and interests in the Property on constructive trust for the Plaintiff.  The Plaintiff went on to allege that the Deceased was estopped from denying such gift and trust.  Yet, the Plaintiff alleges as an alternative case that the Deceased had made another gift to the Plaintiff in 2004 of all her rights and interests in the Property to the Plaintiff and that since March 2004 (around the time when the Deceased became terminally ill), she was holding her possessory title, rights and interests of the Property on constructive trust for the Plaintiff. 

38.  In paragraph 25 of the Amended Statement of Claim, in alleging why any imperfection in relation to the granting of the 2004 Gift was made perfect, the Plaintiff relied on the Deceased’s appointment of the Plaintiff as sole executor of her Will.  This cannot be right as the Deceased made her Will in 2003, which was before the 2004 Gift was allegedly made. 

39.  The Deceased’s Will seems to contradict the Plaintiff’s case of gifts.  The Deceased’s Will was drafted by and signed before her solicitors.  Yet, the Deceased had not made any reference to any gift of all her rights and interests in the Property, including her interest as an adverse possessor, to the Plaintiff. If it is the Plaintiff’s case that the Deceased had always intended to give her rights and interests in the Property to the Plaintiff, it is not clear why this was not mentioned by the Deceased when she made her Will in 2003.  Instead, the Deceased gave all her real and personal properties whatsoever and wheresoever to Tung Wah Hospitals.  The Plaintiff was merely appointed as the sole executor to implement the Deceased’s Will. 

40.  I am not objecting to the use of alternative cases by the Plaintiff.  Also, in considering the present application, I am not deciding whether the Plaintiffs’ cases are consistent or not.  However, these matters have to be taken into account in deciding whether to grant default judgment. 

41.  Even assuming that the Plaintiff was able to prove his case on the Deceased’s adverse possession of the Property and the extinguishment of the 1^st Defendant’s title, having considered all the materials before me, I am not satisfied that I should exercise my discretion in granting default judgment of the reliefs sought without a trial.  The Plaintiff should prove his case in the usual way to establish adverse possession by the Deceased and also the possessory title to the Property in his personal capacity.  In the event that he fails to prove his case, such interest might form part of the estate of the Deceased and should be passed to Tung Wah Hospitals.  

42.  In relation to the claims against the 2^nd and 3^rd Defendants as trespassers, since the Plaintiff has failed to obtain default judgment for a declaration that he in his personal capacity holds possessory title to the Property, he is not entitled as the owner of the Property, to default judgment for the reliefs claimed against the 2^nd and 3^rd Defendants.

43.  In the premises, the Plaintiff’s application for default judgment is dismissed.  Since none of the Defendants attended the hearing, I will make no order as to costs.