INCORPORATED OWNERS OF WESTERN COURT v. CONRAD SALAT CZAKAT RUMJAHN appointed by the Court to represent the Estate of USUF RUMJAHN, Deceased

HCMP 2244/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2244 OF 2012

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DECISION

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I.  INTRODUCTION

(a)  Western Court / Lot

1.  The land situated at Nos 450, 450A-G, 452, 452A-G, 454, 454A-G, 456 and 456A-G Queen’s Road West (“QRW”), Hong Kong known as the Remaining Portion of Section A of Inland Lot No 834 (“Lot”) was held under a government lease dated 18 March 1865 (“Lot Lease”). In/about 1961, the developer erected 8 buildings (“Buildings”) thereon known as “Western Court”.[1] On 8 January 1971, the plaintiff (“P”) was incorporated as an owners’ corporation (“IO”) under the Multi-Storey Buildings (Owners Incorporation) Ordinance 1970 (“MSBO”) to represent all owners for the time being of Western Court / Lot (“Owners”). By an assignment dated 22 February 1996, P became the registered owner of 8 equal undivided 364^th parts/shares of and in the Lot (ie roofs and exterior walls of Western Court, “8/364 Shares”).

(b)  RW Lot

2.  Paper title By an assignment dated 11 September 1912, Usuf Rumjahn (“Deceased”) became the owner of inter alia a piece of land (about 210ft x 16ft) at the back of Western Court to the south and contiguous to the Lot known as Subsection 1 of Section B of Inland Lot No 834. Section A of Subsection 1 of Section B of Inland Lot No 834 was sold by an assignment dated 22 August 1938, and the Deceased remained as registered owner of “[the] Remaining Portion of Subsection 1 of Section B of Inland Lot No 834” (“RW Lot”). To the south of the RW Lot but elevated by over 10m was government land on which the road/pavement at “Clarence Terrace” was situated (“CT Lot”). On 27 February 1947, the Deceased passed away in Hong Kong with no grant of probate/administration in respect of his estate (“Estate”). In 2012, P managed to contact some descendants and possible beneficiaries including the Deceased’s grandson Conrad Salat Czakat Rumjahn (“Rumjahn”).

3.  RW Lot before 2010  The RW Lot was occupied by retaining walls (“RWs”) with ancillary drains/pipes (collectively, “RW Structures”). P claimed (but D denied) it was entirely so occupied with some trees/ vegetation since 1920s or possibly earlier.[2] Lui Ah Bing (“Lui”)[3] claimed no one lived at or used the RW Lot, but P arranged to clear fallen leaves / other debris, trim/prune trees and maintain/repair RWs. But D claimed (and P denied) there was at least 1 illegal structure (used/occupied on regular basis) at the north-eastern part of the RW Lot from about 1996 until about 2011.  

4.  The RW Lot comprised the following main parts:

(a)   on the RW Lot at the south of the Lot (about 156ft in length), there was (i) a lower portion of about 4.5m of near-vertical masonry/concrete RW (“Lower RW”) with drainage pipes and with its base on the common boundary between the Lot and RW Lot, (ii) an upper portion of about 6m of near-vertical masonry/concrete RW (“Upper RW”) with drainage pipes and with its top abutting the CT Lot, and (iii) a 2.3m wide horizontal platform/berm (“Berm”) with concrete cover and open drains connecting the Upper and Lower RWs;

(b)   at the eastern end of the RW Lot (about 54ft in length), there was (i) sloping ground contiguous with the slope at the south- eastern corner of the Lot (“SELot”),[4] and (ii) continuation of the Upper RW that abutted the CT Lot and extended to the eastern end of the RW Lot.

P claimed the physical location of the RW Structures showed that the RW Lot was to support the CT Lot and to prevent it and the structures thereon from collapsing onto the Lot and its vicinity.

5.  According to the affirmations of Lui, Kung Hung (“Kung”)[5] and Tang Hoi Yan Felix (“Tang”)[6] all filed on 11 October 2012 (“Lui Aff”, “Kung Aff” and “Tang Aff”), to the south of an electric sub-station located along the eastern boundary but within the common areas of Lot were RWs along the foot of sloping ground at SELot (that ran perpendicular to the RWs on the RW Lot) in order to “retain” such sloping ground (“East RW”). When the East RW reached the Lower RW, its top was about the same height/level as the Berm (ie top of the Lower RW). Trees grew on the RWs and Berm on the RW Lot.[7] The Tang Aff claimed P engaged workers/contractors to regularly clear fallen leaves / other debris at the Berm, and to trim overgrown branches that extended to the back of the Buildings (very close to the RWs) and affected the residents.

6.  RW Lot since 2010  Since about 2010 the MTR Corporation Ltd (“MTRC”) carried out works at the eastern part of the RW Lot (“ERWLot”) and SELot for the “West Island Line” (“MTR Works”). The Lui Aff stated that due to the MTR Works the aforesaid sloping ground was covered with concrete, and MTRC also put up some temporary structures. The Liu/Tang Affs claimed available photographs showed (a) the slope had always been very steep, (b) the MTR Works occupied the slope at SELot, East RW and alley between the eastern end of the Buildings and East RW, and (c) temporary structures, concrete plinths (with temporary metal ladder/structures thereon), concrete-covered slope and concrete poles on the East RW were found at ERWLot. But the Tang Aff confirmed that apart from these changes the RW Lot remained largely as shown in photographs taken in the 1990s (see footnote 7 above).

(c)  Access to the RW Lot

7.  Before MTR Works  There were metal gates (“Gates”) at the eastern/western entrances of Western Court (“Entrances”) to prevent unauthorised entry to Western Court or its common areas. P said building attendants manned the security booths next to the Gates, but D said there was only occasional deployment of management staff at the Entrances. P claimed (but D denied) the location of the RW Lot and physical layout of the surrounding land meant the RW Lot was only accessible via the Entrances/ Gates and common areas of Western Court:[8] 

(a)   The western end of the RW Lot was sealed up by wall/building (eastern external wall of Shek Tong Tsui Municipal Service Building since 1991) erected by the government (not P or its predecessor), so D said it was not for interfering with access to the RW Lot, but P said such wall/building effectively prevented any access to the RW Lot from the western end.

(b)   The ERWLot abutting government land was on sloping ground, and P claimed (but D denied) it was so steep that one could not reasonably hold one’s footing or walk on it (see footnote 4 above).

(c)   The southern side of the RW Lot had a low (about 1m) parapet wall with wire mesh fence (“Fence”) along the entire section of the CT Lot at the top of the Upper RW (not erected/maintained by P or its predecessor). But P averred (i) they and other features of the RW Lot rendered any access from the southern side impossible, (ii) there was no opening/staircase from the CT Lot to RW Lot, and (iii) the Fence (there since the 1990s) enclosed the RW Lot within the Lot.

(d)   The northern side of the RW Lot abutted the Lot.

To access the Berm, Kung and P’s cleaning workers/contractors would have to climb up the slope via the cat ladder (“Cat Ladder”) at the back of the electric sub-station (reached via the common areas of Western Court), and then walk along the open rainwater drains at the top of the East RW to reach the Berm on the RW Lot (“Old Route”).

8.  After MTR Works There was no dispute P caused its contractor to install on the western side of the Lower RW near Shek Tong Tsui Municipal Building a metal ladder (“Metal Ladder”) (reached via the common areas of Western Court). P claimed it facilitated access to the RW Lot (particularly the Berm) for regular management/maintenance (“New Route”) since the Old Route was blocked by the MTR Works, but D said he did not know when or why it was constructed.

9.  Access  D averred the public could access the RW Lot from QRW via 3 points, ie (a) through the eastern (front) Entrance to shops on the ground floor of Western Court and then to the RW Lot as there was no fence/obstruction separating Western Court and RW Lot, (b) through the western Entrance of Western Court, and (c) from QRW between the eastern boundary of the Lot and the strip of government land immediately next to St Louis School and on the west side of the old Whitey Street public lavatory (that was without fencing/obstruction from 1974 to 1996 and 2007 to 2011).

10.  But P contended the RW Lot (or the best part of which) was enclosed within the Lot to become a single piece of land, and the Old/New Routes were the only practical means of access to the RW Lot/Structures from QRW via the Entrances and through the Lot, but the Gates and security staff at (a)-(b) above prevented unauthorised entrants from accessing Western Court or its common areas, and there were structures  preventing/ obstructing access at (c) above. Anyway, P claimed members of the public visiting the ground floor shops via the front Entrance were only allowed onto the common areas of Western Court for such purpose, and they would be trespassers if they tried (by the Old/New Routes) to gain access to the RW Lot unless authorised by the management of Western Court (before P’s incorporation) or by P (since its incorporation). Further, ladder shields at the bottom of the Cat/Metal Ladders were closed/locked to prevent persons from climbing the same to access the RW Lot unless authorised.

11.  D averred (but P disagreed) the MTR Works only set up temporary fences around a small area of land at QRW adjacent to the RW Lot so members of the public could access the RW Lot by walking through such area. P claimed the MTR Works site was properly fenced/guarded so the contractor would regard unauthorised entrants as trespassers, and it was not intended to be a point of access to the RW Lot.

(d)  Present proceedings

12.  On 11 October 2012, P issued an originating summons (“OS”) against the personal representative of the Estate (“D”) for inter alia the following declarations:

(a)	that the title of the Deceased/D to the RW Lot had been extinguished by virtue of section 17 of the Limitation Ordinance Cap 347 (“LO”), and the Deceased/D as registered owners of the RW Lot had lost the right (and were no longer entitled) to bring any action to recover possession of the RW Lot or any part thereof by virtue of section 7(2) of the LO;
(b)	that P had acquired all right, title and interest (including ownership/right to exclusive physical possession and occupation) of and in the RW Lot;
(c)	that P had established a possessory title to the RW Lot and was accordingly entitled to be registered as the owner of the RW Lot at the Land Registry,

and applied for P’s name be entered in the register at the Land Registry as registered owner of the RW Lot. D denied P had capacity/locus to adversely possess the RW Lot and/or to commence/maintain any legal action on such basis. But P said as IO of Western Court it had such capacity and locus (either in its own right and/or for and on behalf of the Owners).

13.  On 8 August 2013, Rumjahn was appointed to represent the Estate for the present proceedings (ie the current D), and the OS was amended accordingly (“AOS”). Pursaunt to case management directions made on 12 November 2014, P filed its statement of claim (“SoC”) and reply on 3 December 2014 and 4 February 2015 respectively, and D filed his defence on 24 December 2014.

14.  On 24 July 2015, P filed a summons (“P’s Summons”) for (a) leave to join Group Leader Limited (“Group Leader”) as the 2^nd plaintiff and for P to stand as the 1^st plaintiff, (b) leave to re-amend the AOS and to amend the SoC as per drafts attached thereto (“RAOS Draft” and “ASoC Draft”), and (c) consequential case management directions. At the hearing on 31 July 2015, I granted retrospective leave for continuation of the present proceedings as if the cause or matter had been begun by writ of summons. P opposed D’s wish to have a trial of preliminary issues (“PI Trial”), so I granted inter alia directions that within 28 days D shall (if so advised) take out application for an order for a PI Trial (“D’s Summons”) and that affidavits be filed/served to support/oppose P’s Summons and D’s Summons to be issued (if any) (“Directions”).

15.  On 28 August 2015, D issued D’s Summons for:

(a)   PI Trial of the following preliminary issues (“Proposed Issues”) and dismissal of P’s action against D with costs upon determination of such issues (“PI Trial Application”):

(i)	whether P as an IO of the Owners of the Lot under the Building Management Ordinance Cap 344 (“BMO”) had no capacity/right to possess or adversely possess the RW Lot (which was entirely outside the Lot and of which P was not the registered owner);
(ii)	whether P as an IO under the BMO was incapable of having animus possidendi of being in exclusive possession of the RW Lot;
(iii)	whether P as an IO of the Lot under the BMO had no locus/right to sue in relation to the RW Lot;
(iv)	whether the limitation period had never started to run against the Deceased as registered owner of the RW Lot or against D from the death of the Deceased in1947 to the date of the OS in 2012 since the Deceased died intestate without grant of probate or administration, and D was appointed by court order to represent the Estate for the present proceedings only on 8 August 2013;

(b)   alternatively, an order that the SoC be struck out and the present action be dismissed with costs (“D’s Application”).

16.  This court noted the Directions merely permitted D to apply for an order for PI Trial, so D’s Summons was to determine whether there should be such PI Trial or alternatively whether the SoC should be struck out. Upon enquiry by the court, D’s solicitors clarified on 13 October 2015 D would pursue D’s Application only if the court declined to grant an order for PI Trial, so the PI Trial Application and D’s Applications should be heard together (“D’s Clarification”).

17.  P’s/D’s Summonses were heard on 9 March 2016 (“Hearing”). But contrary to D’s Clarification, Mr Chan SC (and Ms Mohamed and Mr Chan with him), counsel for D, submitted D would seek to (a) dismiss P’s action upon determination of question(s) of law arising from the cause or matter under Order 14A rule 1 of the Rules of the High Court (“RHC”), (b) alternatively strike out the SoC under Order 18 rule 19 of the RHC and/or inherent jurisdiction of the court, and (c) then alternatively have a PI Trial under Order 33 rules 4(2) and 7 of the RHC.

18.  The margin notes of D’s Summons referred to “O.14A, r.1, RHC”, but Mr Neoh SC (and Mr Yim with him), counsel for P, complained that such application (let alone any precisely framed question of law) did not feature in D’s Summons/Clarification. Mr Chan SC orally suggested the relevant questions of law were same as the Proposed Issues. Next, Mr Neoh SC submitted the uncertain mix of applications under Order 14A rule 1, Order 18 rule 19 and Order 33 rule 4(2) and 7 of the RHC with differing tests/ criteria would lead to unwarranted confusion, but Mr Chan SC suggested this would not be of concern as D would proceed on the basis of P’s pleaded case and proposed amendments as well as undisputed facts.

19.  As a matter of case management, I confined the Hearing to P’s Summons and D’s Application but not D’s proposed application under Order 14A of the RHC. I note D initially wished to seek an order for PI Trial, but was given time/opportunity to form a considered view as to appropriate applications to be made under D’s Summons, so he tacked D’s Application thereto. Although “O.14A, r.1, RHC” was in the margin notes, the contents of D’s Summons gave no hint of any such application, and there was no mention of such in D’s Clarification.  In my view, it would not be fair or just for D to slip in such application by written submissions. Further, the PI Trial Application was premature in view of P’s Summons and D’s Application. Should this court allow Group Leader to be joined as a plaintiff and allow P to amend the AOS/SoC (per the RAOS/ASoC Drafts or any parts thereof), these matters would impact on the PI Trial Application as it would be difficult (if not impossible) to elicit the pleaded issues in dispute and to consider the propriety of a PI Trial (and if so, to frame the relevant preliminary issues) before completion of this round of amendments.

(e)  Redevelopment

20.  The Recitals (“Recitals”) of an assignment dated 19 December 2014 (“2014 Assignment”) summarised the steps taken to redevelop the Lot. Henderson Land Development Company Limited (by its staff, subsidiaries, associated companies and/or joint venture partners, “Henderson”) purchased units at Western Court, so Group Leader and other companies became registered owners of premises being the “First Property” in Schedule 1 of the 2014 Assignment (Recital (A)). The estates or personal representatives of 4 deceased persons (“4 Estates”) were registered owners of premises being the “Second, Third, Fourth and Fifth Properties” and P was the registered owner of the 8/364 Shares being the “Sixth Property” in Schedule 2 of the 2014 Assignment (Recitals (B)-(F)). These properties made up all undivided shares of and in the Lot and all units of and in Western Court (Recital (G)). The registered owners of the Second to Sixth Properties were the minority Owners under section 2(1) of Land (Compulsory Sale for Redevelopment) Ordinance Cap 545 (“LCSRO”).

21.  By 3 August 2011, Henderson bought 345 out of 364 shares of and in Western Court / Lot, and the registered owners of the First Property applied to the Lands Tribunal to commence LDCS27000/2011 (with P was named as the 16^th respondent) for an order for compulsory sale of the minority Owners’ units/shares to Henderson (Recital (H)). By a judgment dated 8 October 2014 (“LDCS Judgment”),[9] all undivided shares in the Lot were to be sold for redevelopment, and trustees were to be appointed to discharge the duties imposed under the LCSRO (“Trustees”). The reserve price was also determined (“Reserve Price”).

22.  On 31 October 2014, the other companies referred to in paragraph 20 above assigned their premises to Group Leader, so Group Leader became the registered owner of the First Property and majority owner of the Lot under section 2(1) of LCSRO (Recitals (J)-(R)). At an auction held on 18 November 2014, Group Leader successfully bid for the Lot (Recital (U)). On the same day, Group Leader, the 4 Estates and P[10] as vendor (acting by the Trustees) and Group Leader as purchaser entered into a Memorandum of Agreement for sale/purchase of the Lot (Recital (U)). On 19 December 2014, Group Leader, the 4 Estates and P (acting by the Trustees) entered into the 2014 Assignment to assign the Lot to Group Leader as purchaser.

II.  PARTIES’ RESPECTIVE CASE

(a)  P’s alleged adverse possession

23.  First, P claimed (but D denied) since around the 1960s the Owners (through the then management of Western Court before P’s incorporation) and P (since its incorporation in its own right and/or for and on behalf of the Owners) had been in exclusive possession of and had been exclusively managing/maintaining the RW Lot/Structures as part of the common parts of Western Court, and P/Owners/occupants of Western Court always regarded the RW Lot/Structures as part of Western Court, hence P was in adverse possession of the RW Lot. But D claimed even if the Owners (whether through the then management of Western Court and/or P) carried out or caused to be carried out any “management”/“maintenance” of the RW Lot and/or any of the structures thereon, it was not on the basis they were part of the common parts of Western Court, and the RW Lot was not or had never been part of the common parts of Western Court / Lot.

24.  Secondly, P claimed that before the MTR Works nearly the whole of the RW Lot was fenced off by the Fence as though it formed part of the Lot. But although D admitted a Fence had been erected at a time unknown but prior to commencement of the MTR Works, he did not know when or by whom it was so erected.

25.  Thirdly, P claimed regular cleaning works (eg clearing fallen leaves / other debris on the Berm) had been carried out at the RW Lot. But whilst D agreed such works had been done on the Berm, he did not admit why they were done or whether they were “regular”, and further denied they were done to assert adverse possession of the RW Lot or any part thereof. P claimed there was also regular pruning/trimming of the trees/vegetation grown on the RWs. But whilst D admitted some such works were done, he did not admit when they were done or whether they were “regular”.

26.  Fourthly, P claimed that due to its control/possession of the RW Lot it was considered by the government to be responsible for the RWs thereon, so the Buildings Department (“BD”) wrote on 28 May and 16 August 1996 to require P to repair the RWs/Berm on the RW Lot, and P did carry out minor repairs pursuant thereto. Tang located certain minutes of meeting relating to such matter in P’s files. Lui claimed that through other Owners and her husband as member of P’s MC she came to know there were discussions by P’s MC members and/or among the Owners about repairs to the RWs on the RW Lot. Lui understood the Owners did decide to carry out repair works as required by the BD and sought quotations from contractors, but eventually they only did some patch-up repairs since full repairs were too costly. D admitted BD’s letters, but claimed he had no knowledge as to what repairs (if any) had been carried out or when they were done.

27.  Fifthly, P claimed (if necessary) the requisite animus possidendiwas evident and/or to be inferred from the above matters. But D denied P (or its predecessor) or any Owner (a) had the animus to possess or adversely possess the RW Lot or any part thereof and/or (b) had ever considered the RW Lot or any part thereof as forming part of the Lot, Western Court or common areas thereof.

(b)  D’s alleged abandonment of possession 

28.  P claimed (but D did not admit) that since at least the 1960s or earlier the Deceased/Estate abandoned/discontinued possession of the RW Lot. It was true that since the 1960s no one acting (or claiming to be acting) for the Estate had assumed possession, management or maintenance of the RW Lot or any part thereof. D averred the RW Lot required neither management nor maintenance qua RWs, but P said the RW Structures required repair, management and/or maintenance from time to time.[11]

29.  The Deceased died without grant of probate or administration, and his heirs/beneficiaries were not aware of his ownership of the RW Lot until about 2012, so no one acting (or claiming to be acting) on behalf of the Estate claimed possession of the RW Lot. D claimed the heirs/beneficiaries did not and could not have been reasonably expected to “assume possession” or to manage/maintain the RW Lot, but as a matter of law all rights/ entitlements to the RW Lot (including the right to possession) were vested in the Estate, so no positive act was required to “assume possession”. D claimed in 2012 Rumjahn was the first person having any or any potential interest in the Estate to learn of the Deceased’s/Estate’s ownership and entitlement to the RW Lot, and he made express claim to the Estate’s right of ownership/possession, and contested P’s claims over the RW Lot.

(c)  P’s claim and D’s defence

30.  P claimed the Owners and later P had been in adverse possession of the RW Lot for more than 20 years immediately before commencement of the present proceedings, (b) by the above facts/matters D’s title (if any) to the RW Lot had been extinguished, and (c) P in its own right and/or for the then Owners had acquired possessory title to the RW Lot. But D claimed at no time prior to August 2011 (ie when P as owner of the 8/364 Shares was named the 16^th respondent in LDCS27000/2011) had any Owner, P (on its own behalf or for the Owners) or Henderson asserted any Owner whether individually or through P had any right, title or claim to the RW Lot by adverse possession, and at no time during LDCS27000/2011 did Henderson, P or any remaining Owners assert any right, title or claim to the RW Lot by adverse possession. D further averred the Land Tribunal’s valuation (and Reserve Price) did not take into account the RW Lot.

III.  LUI, KUNG AND TANG AFFs

31.  Mr Chan SC confirmed D would proceed with D’s Application and oppose P’s Summons on the basis of P’s pleaded case, P’s proposed amendments and undisputed facts, so I will only refer to the Lui, Kung and Tang Affs if necessary even though I have considered their contents.

IV.  LEGAL PRINCIPLES: ADVERSE POSSESSION

32.  To establish possessory title based on adverse possession, the squatter must be shown to have both factual possession of the suit lot and the requisite intention to possess (animus possidendi) for the whole of the 20 (or 12) year limitation period[12] (see sections 7 and 17[13] of the LO).

(a) Factual possession

33.  In Powell v McFarlane & anor, Slade J said this:[14]

“(3) Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. ... The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed. ... Everything must depend on the particular circumstances, but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no‑one else has done so.” (my emphasis)

Lord Hope in J A Pye (Oxford) Ltd & anor v Graham & anor said:[15]

“70. The general rule ...... is that only one person can be in possession at any one time. Exclusivity is of the essence of possession. The same rule applies in cases where two or more persons are entitled to the enjoyment of properly simultaneously. As between themselves they have separate rights, but as against everyone else they are in the position of a single owner ......” (my emphasis)

34.  Further, the acts relied upon had to be unequivocal. In Shine Empire Ltd v Incorporated Owners of San Po Kong Mansion & ors (“Shine Empire (CA)”,Yuen JA said as follows:[16]

“34. The need for acts to be unequivocal was set out in Powell v McFarlane & Another ...... (at p.472) as quoted and referred to as JA Pye (Oxford) Ltd & Another v Gratham & Another ...... (at paras.76-77):

76.   ... It is in cases where the acts in relation to the use of land of a person claiming title by adverse possession are equivocal and are open to more than one interpretation that those acts will be insufficient to establish the intention to possess. ....”

(b) Intention to possess

35.  As to the requisite intention to possess, the principles can be found in Wong Tak Yue v Kung Kwok Wai & Another (No 2):[17]

“The requisite intention to possess has been referred in various authorities under its Latin tag “animus possidendi”. I shall refer to it simply as the intention to possess. As Slade J observed in Powell v McFarlane ...... at pp 471‑472, the intention to possess requisite for adverse possession:

... involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the process of the law will allow.”

V.  LEGAL PRINCIPLES: STRIKING OUT

36.  The principles governing a striking out application are well established. Hong Kong Civil Procedure 2017 states as follows:[18]

“...... It is only in plain and obvious cases that the court should exercise its summary powers to strike out ...... any pleading under this rule. ...... Nor should the court decide difficult points of law in striking out proceedings. The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out. ...... The mere fact that the case is weak and not likely to succeed is no ground for striking it out ......

The court is loath to strike out a case that involves an area of the law which is in the process of developing – summary dismissal would deprive the court of hearing full argument on the subject (Tajudin Sunny v. Bank of America, National Association [2010] 3 H.K.L.R.D. 417).[19] ...... Where an application to strike out pleadings involves a prolonged and serious argument, the court should as a rule decline to proceed with the argument unless, in the rarest of cases, he not only harbours doubts about the soundness of the pleading and considers it likely that he may reach the conclusion that the pleading should be struck out, in that the ultimate issue is quite simple, but is also satisfied that striking out the pleading would not obviate the necessity for a trial hearing sufficiently worthwhile ......

It is for the party seeking to strike out ...... pleading to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail. ......” (my emphasis)

VI. LEGAL PRINCIPLES: JOINDER OF PARTIES

37.  Order 15 rule 6(2)(b) of the RHC provides as follows:

“(2) ...... at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application –

......

(b) order any of the following persons to be added as a party, namely –

(i)   any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii)   any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”[20]

38.  The court has a wide discretion in allowing joinder of parties in proceedings, and even “a person with a doubtful [as opposed to a pure commercial] interest in the subject matter of the litigation was allowed to be joined, so that the doubt over his interest could be resolved at trial together with the relevant issues between the original parties”.[21] An applicant does not have to show merits of his case under Order 15 rule 6(2)(b) of the RHC as a necessary party should be allowed to take part in the proceedings. Hong Kong Civil Procedure 2017 provides as follows:[22]

“...... “The question whether the new plaintiff has a cause of action or not will not be considered on the application to add him, the object of the Rule being, not that the party’s case should be so framed as to succeed, but that it should be so framed that it can be adjudicated on whether in his favour or not” (per Fry J. in Long v. Crossley (1879) 13 Ch. D. 388 at 391).”

Mr Chan SC submitted the 3 authorities in footnotes 20-22 above concerned applications by intended interveners to be joined as defendants to contest the action by asserting sufficient legal interest in the outcome of the action, but he did not seek to dispute the above principles.

VII.  LEGAL PRINCIPLES: AMENDMENT OF PLEADINGS

39.  Order 20 rules 5 and 8 of the RHC provide as follows:

“(1) Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleadings, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct. ......” (rule 5)

“(1) For the purpose of determining the real question in controversy between the parties to any proceedings, or of correcting any defect or error in any proceedings, the Court may at any stage of the proceedings and ...... on the application of any party to the proceedings order a pleading or any other document in the proceedings to be amended on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.

(1A) The Court shall not under paragraph (1) order a pleading to be amended unless it is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs. ......” (rule 8)

40.  According to the broad principles summarised in Ketteman v Hansel Properties Ltd,[23] generally all amendments ought to be made as may be necessary for the purpose of determining the real question in controversy between the parties[24] unless the court is satisfied the applicant has been acting mala fide or the mistake he has made causes injustice to the other party.[25] But as a result of the Civil Justice Reform the Court of Appeal (“CA”) in Topwell Corp Ltd v Kwan Kam Kee put in a caveat as follows:[26]

“39. ...... in the exercise of discretion, the Court must of course have regard to the underlying objectives in O.1A of the RHC ......, so it cannot be assumed that once the principles in Ketteman are satisfied, the amendment would be allowed. The court would need to balance all relevant factors to decide how its discretion should be exercised, if the application is made in circumstances offending one or more of the underlying objectives.  In this particular case, a pertinent consideration in giving effect to the underlying objectives is that the Court “shall always recognise that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties” (O.1A rule 2(2) of the RDC).”

41.  Mr Chan SC did not disagree with the above principles, but reminded that leave to amend would be pointless if the claim based on the proposed amendments is unsustainable as a matter of law and/or is bound to fail. As explained in Hsu Ming Chi v Lam Shu Chit & ors,[27]

“14. Leave is readily granted to amend before trial unless it can be shown that the new claim based on the proposed amendment is bound to fail. While the court is entitled to have regard to the merits of the case, it should only do so when the merits are readily apparent, and are so apparent as not to require prolonged investigation: Natamon Protpakorn v Citibank NA supra at para. 25 (per Cheung JA).

15. If the proposed amendments are bound to fail, no leave to amend should be granted. In this regard, the court will take the applicant’s proposed pleaded case to the highest: Bank of China v Leigh Hardwick unrep., HCA 1110 of 2006, 28 August 2013, per Anthony Chan J at para. 2.”

VIII.  ISSUES

42.  In a nutshell, P’s Summons sought leave to (a) join Group Leader as the 2^nd plaintiff (and to amend the AOS accordingly), (b) amend the SoC to raise further issues not in the original pleadings, and (c) amend the SoC to correct what P perceived to be some defects/errors.

43.  For (a) above, P claimed it was necessary to join Group Leader as the 2^nd plaintiff in the present proceedings because all Owners (including P) had assigned all undivided shares and interests of and in the Lot to Group Leader, and Group Leader as sole owner took possession of the Lot, and as holder of the possessory title over the RW Lot that P acquired in its own right and on behalf of the then Owners by way of adverse possession, so Group Leader had interest in the subject matter of the present proceedings and ought to be joined as a party so all matters might be effectually and completely determined.

44.  For (b) above, P claimed joining Group Leader as the 2^nd plaintiff would raise a real issue to be determined between the parties not found in the SoC, ie whether Group Leader had secured possessory title of the RW Lot. I adopt Mr Neoh SC’s helpful summary of the proposed amendments for (b) above:

Paragraph Nos	Purpose of amendments
1(b), 5(b), 5(f)(i), 8(c), 8(d)	To plead material facts as to the assignment of all undivided shares and interests of and in the Lot to Group Leader in December 2014
5, 7	To plead a point of law, ie P in its own right and on behalf of the then Owners and later Group Leader since the 2014 Assignment had been in adverse possession of the RW Lot
8(a), 8(b)	To plead a point of law, ie the possessory title to the RW Lot acquired by P and on behalf of the then Owners were subject to the presumption of encroachment, which was intended to annex the RW Lot to the Lot, so as to enable P for itself or on behalf of the then Owners to occupy and use the RW Lot as if it were part and parcel of the Lot

45.  Such proposed amendments were essentially found in paragraph 8 of the ASoC Draft, which I set out below in greater detail:

(a)	at all material times, the Lot was/is held under the Lot Lease;
(b)	adverse possession of and possessory title to the RW Lot that P acquired in its own right and/or for the then Owners were/are subject to the presumption that they were/are held and acquired for the benefit of the government as the landlord of the Lot, so possessory title to the RW Lot was/is annexed to the Lot;
(c)	by the 2014 Assignment, all the then Owners (including P) assigned all undivided parts/shares and interests of and in the Lot to Group Leader such that Group Leader became the sole owner thereof;
(d)	clause 1 and paragraph 1 of Schedule 3 to the 2014 Assignment provided inter alia Western Court / Lot were assigned to Group Leader “together with all the estate, right, title, property, benefit and interest of” the then Owners of Western Court / Lot (including P) of and in their respective undivided shares in the Lot and interest in Western Court “together with all rights interests privileges easements or appurtenances in over or appertaining to” Western Court / Lot, including “all rights, rights of way (if any) and other rights and all privileges, easements and appurtenances belonging to or appertaining to” Western Court / Lot;
(e)	by virtue of section 16 of the Conveyancing and Property Ordinance Cap 219 (“CPO”), the 2014 Assignment operated to assign with the Lot “all rights, interests, privileges, easements or appurtenances in over, belonging or appertaining to” the Lot “or at the time of assignment used, held, occupied or enjoyed with” the Lot;
(f)	so the possessory title of P and/or the then Owners to the RW Lot had also been assigned to Group Leader by the 2014 Assignment.

46.  For (c) above, Mr Neoh SC helpfully summarised the proposed amendments as follows:

Paragraph No	Purpose of amendments
1(b), 2(d), 5, 5(b), 5(f), 5(g), 6	To apply for leave to amend the phrase “the Plaintiff” to read as “the 1st Plaintiff”
Reliefs 2, 3 and 5	To apply for leave to amend the phrase “the Plaintiff” to read as “the 2nd Plaintiff”
2(f)	To indicate that the present proceedings were commenced by P as the 1st plaintiff
5(f)(v)	To add a fact that measures had been done at the Lot to prevent unauthorised entrants from gaining access to Western Court / Lot

47.  P claimed the proposed amendments in (b) and (c) above should be allowed as there was no evidence P was acting in bad faith, the proposed amendments would cause injury to D that could not be compensated by costs or otherwise, or there was deliberate delay (trial dates had not been fixed). But D disagreed on the basis that P’s claim in the existing SoC[28] and P’s and Group Leader’s proposed claim in the ASoC Draft[29] were unsustainable as a matter of law and bound to fail, so (a) it would be unnecessary to join Group Leader for ensuring all matters were effectually determined, (b) there was no question/issue arising out of or relating to the reliefs/remedies claimed that should be determined among P, Group Leader and D, and (c) the proposed amendments were unnecessary for determining the real question of controversy between the parties. This naturally led to D’s Summons as D argued (but P disagreed) that for the above reasons P’s existing claim ought to be struck out, and P’s and Group Leader’s proposed claims in the ASoC Draft were without merit and should not be allowed.

48.  Thus, at the Hearing, both senior counsel made global submissions on (a) merits of P’s existing claim, (b) proposed joinder of Group Leader as a party and (c) proposed amendments to P’s pleadings. Following such lead but with the different thresholds that P had to satisfy for P’s Summons, and that D had to satisfy for D’s Application firmly in mind, I now turn Mr Neoh SC’s and Mr Chan SC’s respective contentions.

IX.  D’s APPLICATION

49.  P claimed it had been in adverse possession of the RW Lot in its own right as the IO of Western Court / Lot, as agent on behalf of all the Owners and as owner of the 8/364 Shares. Questions arose as to whether P as an IO had (a) capacity, right or power to be in possession or adverse possession of the RW Lot located outside Western Court / Lot and to have requisite animus possidendi of being in exclusive possession of the RW Lot (“Capacity Issue”), and (b) locus to sue in relation to the RW Lot (“Locus Issue”). Due to the commonality of these 2 issues, senior counsel dealt with them together, and I follow the same approach in the discussion below.

50.  D’s case  D argued that since P was an entity created by statute, it had no capacity beyond what was prescribed in the MSBO/BMO. Section 8(2) of the BMO contains the caveat that an IO’s power is subject to the BMO, and sections 14(1) and 16(1) of the BMO make clear an IO’s powers are with respect to the “common parts” of the “building”:

“With effect from the date of issue of the certificate of registration under subsection (1) –

(a) the owners for the time being shall be a body corporate with perpetual succession and shall in the name of the corporation ...... be capable of suing and being sued and, subject to [the BMO], of doing or suffering all such acts and things as bodies corporate may lawfully do and suffer; ......” (my emphasis) (section 8(2))

“...... at a meeting of a corporation any resolution may be passed with respect to the control, management and administration of the common parts or the renovation, improvement or decoration of those parts and any such resolution shall be binding on the [MC] and all the owners.” (my emphasis) (section 14(1))

“When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of [the BMO], be enforceable against, the corporation to the exclusion of the owners ......” (my emphasis) (section 16)

““building” means:

(a) any building which contains any number of flats comprising 2 or more levels, including basements or underground parking areas;

(b) any land upon which that building is erected; and

(c) any other land (if any) which-

(i) is in common ownership with that building or land; or

(ii) in relation to the appointment of a [MC] under section 3, 3A, 4 or 40C or any application in respect thereof, is owned or held by any person for the common use, enjoyment and benefit (whether exclusively or otherwise) of the owners and occupiers of the flats in that building.” (my emphasis) (section 2)

““common parts” means “(a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and (b) unless so specified or designated, those parts specified in Schedule 1” (and paragraph 15 of Schedule 1 includes “...... retaining walls including sea walls (if any) comprising or forming part of any land which is in common ownership with the building”) (my emphasis) (section 2)

51.  D said express power is required for an IO to deal with matters outside the “common parts” of the “building”,[30] but the BMO has no express provision for an IO to possess or adversely possess private land outside the “building”, and it would be an impermissible extension of the statutory remit of an IO (which is no more than the corporate embodiment of all the co-owners, and what is vested in the IO is either a right or liability of all the co-owners)[31] to occupy private land outside the “building”.

52.  Section 18 of the BMO provides as follows:

“(1) The corporation shall-

(a) maintain the common parts and the property of the corporation in a state of good and serviceable repair and clean condition;

(b) carry out such work as may be ordered or required in respect of the common parts by any public officer or public body in exercise of the powers conferred by any Ordinance;

(c) do all things reasonably necessary for the enforcement of the obligations contained in the deed of mutual covenant [“DMC”] (if any) for the control, management and administration of the building.

(2) A corporation may, in its discretion-

(a) engage and remunerate staff for any purpose relating to the powers and duties of the corporation under [the BMO] or the [DMC] (if any);

(aa) subject to such terms and conditions as to attendance at meetings of a [MC] and its sub-committees as the [MC] may determine, pay the chairman, vice-chairman (if any), secretary and treasurer of the [MC] ...... such allowances as may be approved by the corporation by resolution passed at a general meeting, in accordance with, but in the aggregate not exceeding, the maximum allowances specified in schedule 4;

(b) retain and remunerate accountants for the purposes of auditing the corporation’s books of accounts and preparing the annual income and expenditure accounts and balance sheets;

(c) retain and remunerate a manager or other professional trade or business firm or person to carry on behalf of the corporation any of the duties or powers of the corporation under [the BMO] or the [DMC](if any);

(e) purchase, hire or otherwise acquire moveable property for use by the owners in connection with their enjoyment of the common parts or to satisfy any requirement of a public officer or public body for the purpose of any Ordinance;

(f) establish and maintain lawns, gardens and playgrounds on the common parts;

(fa) carry out any renovation, improvement or decoration work, as the case may be, to the common parts;

(g) act on behalf of the owners in respect of any other matter in which the owners have a common interest.” (my emphasis)

53.  D argued section 18(2) of the BMO demonstrates an IO’s powers are limited to the “common parts” of the “building”. Consequently, consistent with case law discussed below, an IO as a statutory body can instruct lawyers to sue under section 18(2)(g) of the BMO, but as its powers/duties are circumscribed by the BMO and DMC (if any), both of which concern “common parts” of the “building”, an IO cannot instruct lawyers to sue for adverse possession of private land outside the “building”. It was said the fact section 18(2)(e) of the BMO expressly gives power to the IO to acquire “movable property” (in contra-distinction to immovable property) for enjoyment of the “common parts” speaks against an IO’s ability to acquire let alone adversely possess private land outside the “building”.

54.  D contended that since the RW Lot was land outside Western Court not in common ownership with the Lot and not part of the “common parts” of Western Court / Lot, as a matter of law sections 8, 14 and 16 of the BMO preclude any purported control/management of the RW Lot to be within P’s general powers. Further, D said it was misconceived for P to suggest adverse possession of the RW Lot was “in respect of any other matter which the [Owners] have a common interest” since section 18(2)(g) of the BMO is not an empowering provision.

55.  For the above reasons, D claimed P as an IO had no capacity for adverse possession of the RW Lot being private land outside Western Court / Lot, and had no locus to sue in relation thereto. In any event, the BMO concerns the rights of the Owners qua paper-title owners of undivided shares in Western Court / Lot and not qua squatters (or qua possessory owners) over private land outside the “building” (which persons had no rights under the BMO or DMC).

56.  P’s case  But P argued that the Owners of Western Court since the 1960s and P since its incorporation in 1971, by exclusively undertaking the management/maintenance/repair of the RW Lot, had been in adverse possession of the RW Lot which was (a) only occupied by the RW Structures, (b) abandoned by the registered owner, and (c) only practicably accessible through the Lot. P claimed its status as the IO of Western Court (under the MSBO/BMO) did not preclude it from having capacity to be in adverse possession of the RW Lot and accordingly locus to sue. After all, the incidence of co-ownership among the Owners who held undivided shares of Western Court / Lot would allow them to, say, assert rights of way or other easements over adjoining land (and the right to adversely possess such land should be no different). It was said such unity of estate/possession would also allow the Owner of an undivided share to sue as owner of the entire Lot or by agent empowered to exercise the Owners’ rights. P argued the MC appointed by the Owners could act for the Owners as could P being the IO of Western Court / Lot (whether expressly authorised by the Owners or by powers vested in it by the BMO).

57.  Co-ownership Western Court was a multi-storey development with different owners from time to time, but was owned by all Owners for the time being holding equal undivided shares as tenants-in-common. Ribeiro PJ in Leung Tsang Hung v Incorporated Owners of Kwok Wing House explained as follows:[32]

“68. Co-owners in a building ...... hold their proprietary interests in the land and buildings as tenants in common. ...... with each of them prima facie entitled to exert rights of possession over every part of the land and building, in common with the other owners. This “unity of possession” is regulated by mutual covenant. ...... It is by means of the DMC that rights of exclusive possession to individual portions are marked out and common parts, to be used and enjoyed by all owners in common, are designated.

69. Before the advent of statutory owners’ incorporations, the co-owners had to act together in relation to the common parts. An owner’s committee was usually formed to take this in hand and it might in turn engage a manager to carry out the day-to-day management. The cost would be shared among the co-owners and if legal proceedings were taken by or against them, this would be done by naming each of them as a party. ......

70. Such a procedure is obviously very cumbersome ......”

Thus, the “common parts” are parts of the “building” for which exclusive possession has not been carved out by the DMC (see also definition in section 2 of the BMO in paragraph 50 above), but carving out areas of exclusive possession does not abridge other incidences of co-ownership by the Owners of Western Court / Lot.

58.  IO  Cheung CJHC in One Beacon Hill (IO) v Match Power Investment Ltd explained that:[33]

“26. As the number of co-owners of a building may be very substantial, enforcement of these rights or liabilities by or against all the co-owners can be extremely complicated and difficult, and may lead to a multiplicity of proceedings.”

The main purpose of the BMO (formerly the MSBO) is “to make life easier not only for the co-owners, but also for those who ...... have to deal with, the co-owners in terms of legal rights or liabilities”,[34] and this is achieved by creation of the IO under section 8(2)(a) of the BMO. Upon registration of the IO, the owners for the time being shall be a body corporate with perpetual succession holding a separate identity from the individual co-owners, and is capable of (a) suing and being sued in the corporate name and in its own right, and (b) doing all things that a corporate body may lawfully do.

59.  The MSBO/BMO supply the IO various powers and conferred on it various duties “for the general convenience of persons who own such multi-storey buildings as well as for the general convenience of the public at large who may have to deal with them”.[35] For example,[36]

“72. After formation, resolutions passed at meetings of the corporation “with respect to the control, management and administration of the common parts or the renovation, improvement or decoration of those parts” bind all the owners [section 14(1) of the BMO]. The corporation has generally the power to “act on behalf of the owners in respect of any ... matter in which the owners have a common interest” [section 18(2)(g) of the BMO]. ......”

As “...... after all, the IO is simply the corporate embodiment of all the co-owners; and what is vested in the IO is either a right or a liability of all the co-owners[, it] is therefore fair to vest them (together with the attendant costs and risks of litigation that they entail) in the IO in this way.”[37]

60.  Thus, an IO as the “persistent persona of all the owners of the premises at any moment of time” has close identification with co-owners whose rights in relation to the “common parts” of the “building” are exercised by the IO to the exclusion of the co-owners (section 16 of the BMO), and an IO may act in a representative capacity on behalf of all co-owners in respect of any matter in which they have a “common interest” (section 18(2)(g) of the BMO).

61.  As both senior counsel submitted the parties’ propositions were supported by case law, I turn first to a discussion of the cases.

62.  Grenville House Ltd  In Grenville House Ltd & ors v The Incorporated Owners of Grenville House,[38] the IO sued the developer for over landslips onto common property of the building shortly after formation of the IO. Would section 16 of the MSBO (now BMO) give the IO necessary locus to sue? McMullin J said section 16 vests permanently in the IO a right of suit which may accrue to a co-owner due to tortious acts to the common parts (p 239) or which touches the interests of all tenants-in-common of the building (pp 240-241), and he went on to explain at pp 243-244 that:

“[The IO] does purport to sue “on its own behalf” ...... since it is that corporate persona which is given the right to sue but it is not suing on its own behalf in the sense that it has a separate cause of action apart from the several causes of its constituents. Its action on its own behalf is for practical purposes indistinguishable from its action on behalf of the owners. What the [MSBO] has done is to create a persisting entity capable of representing all the owners at any moment in time for any of the give purposes ......” (my emphasis)

So an IO stands in position for the co-owners for the time being with respect to (a) the control, management and administration of the “common parts” or the renovation, improvement or decoration of those parts (section 14 of the BMO) and (b) the powers, privileges and duties as well as liabilities of the owners in relation to the “common parts” (section 16 of the BMO).

63.  A separate issue discussed in Grenville House Ltd & ors[39] is the distinction between the right to enforce the cause of action of all co-owners collectively and that of some co-owners. McMullin J said at p 242:

“...... The emphasis I find there [ie section 18(2)(g) of the MSBO] on the joint interest of the tenants in common, in the matter which is placed in the care of the corporation to pursue on their behalf, is to my mind some indication that the intention of the Legislature is to restrict the agency of the corporation on behalf of the owners to such matters only as show a joint interest in them all. ......”

Indeed, as Cheung CJHC said in One Beacon Hill (IO) at p 388:

“41. It is plain from the judgment of McMullin J that in relation to the right of suit conferred by s.16 on the IO, the emphasis is on the “loss suffered by all the individual owners in common deriving from the damage to the common parts” (remembering that the cause of action involved in that case was a tortious one). In contrast, a personal cause of action, such as a claim for damages for personal injury suffered by a co-owner, whether in his own unit or on any of the common parts of the building, is not one enforceable by the IO under s.16.”

But this issue was not of particular significance here since P’s case rested on adverse possession of the RW Lot in its own right or on behalf of all Owners of Western Court / Lot. But Mr Neoh SC said this theme (irrelevant here) coloured some of the cases Mr Chan SC relied upon.

64.  Shine Empire Ltd  Yuen JA in Shine Empire Ltd (CA) explored whether an IO can dispossess a paper-title owner. The plaintiff acquired 16/800 undivided shares allocated to the roof, but the IO granted licences for installation of telecommunications equipment there for substantial fees. Burrell J rejected the IO’s claim for adverse possession, and his decision was upheld by the CA and Court of Final Appeal (“CFA”). Yuen JA said at p 10:

“35. ...... a court would not lightly find that an [IO], whose statutory remit is to manage common parts and ensure compliance with the DMC, would intend to occupy private property as its own, in breach of the DMC. That is not within the statutory powers and duties of an [IO], and it is unlikely that the IO would have intended to act outside its statutory remit. ...... (Of course, dispossession of land may occur through mistake on the part of the squatter - ie even an IO - believing that the land was his - ie common parts - see the discussion at Gray and Gray, Elements of Land Law (3rd ed., 2001) at p.267 and cases cited. It was not however the IO’s case that such a mistake had occurred and this issue was not argued before the Judge).

36. I accept however that the fact that an act is consistent with a normal activity of an [IO] does not necessarily mean that it cannot be an unequivocal act of dispossession. A simple example is the building of the management office on the roof. The issue remains: had the IO taken physical control with the intention of using and occupying the land as its own?” (my emphasis)

This was approved by the CFA in Incorporated Owners of San Po Kong Mansion & ors v Shine Empire Ltd[40] (“Shine Empire Ltd (CFA)”) where Nazareth NPJ said at pp 599-600 as follows:

“26. ...... what has to be said of this novel submission is that it does not displace in anyway Slade J’s principles in Powell v McFarlane. To dispossess the respondent, the owners would have to establish possession by an appropriate degree of physical control and the requisite intention to possess ie an “intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner”: per Slade J approved by Lord Browne-Wilkinson in JA Pye (Oxford) Ltd v Graham. If they were to succeed in doing so, then they would establish possession for themselves and not for the corporation.”

65.  Mr Chan SC said it was not argued in Shine Empire Ltd (CA) that the very nature of an IO prevents it from having the necessary capacity for factual possession or animus possidendi, and Yuen JA merely considered whether the facts were sufficient to establish adverse possession. But even if an IO may (as Yuen JA suggested) mistakenly treat land outside the building as common parts and thereby have the necessary animus, P did not plead here it was so mistaken.

66.  But Mr Neoh SC submitted that whilst Shine Empire Ltd (CA/CFA) did not expressly say whether an IO has capacity to adversely possess land, Yuen JA’s judgment suggests that notwithstanding “the novel submission” the ultimate issue is to examine whether the IO as squatter can satisfy the requirements of factual possession and animus possidendi for the requisite period as stipulated in Powell, which requirements are no different from those applicable to other squatters, and this means Shine Empire Ltd (CA/CFA) necessarily assume without express articulation an IO has capacity to adversely possess land. Mr Neoh SC said that on such premise it was at least arguable P had legal capacity to (and could) adversely possess private land whether on its own accord or on behalf of the Owners. Mr Neoh SC suggested that if, arguendo, P as an IO had no such capacity in its own right, it could be said to have continued the work of the Owners’ MC (see paragraph 5 of the ASoC Draft), and was acting for and on behalf of all the Owners in continuing adverse possession of the RW Lot.

67.  Mr Chan SC reminded the suit property on the roof in Shine Empire Ltd (CA/CFA) reserved for exclusive possession by a co-owner under the DMC was at least within the same building. But Mr Neoh SC suggested such fact did not distract from P’s contentions because the CA/CFA implicitly accepted an IO has capacity to adversely possess private land on behalf of all owners of the building/property in contra-distinction to merely exercise rights, powers and duties over “common parts” of the “building”, and on such basis there was little to distinguish between adverse possession of private land within the “building” or outside the “building”. Mr Neoh SC therefore suggested it remained an open issue whether an IO on behalf of owners of the building/property has capacity to dispossess land situated outside the building/property, and Shine Empire Ltd (CA/CFA) would not preclude such possibility.

68.  Pearl Island  Mr Neoh SC submitted Incorporated Owners of Block F1-F7 Pearl Island Holiday Flats v Incorporated Owners of Pearl Island Garden & anor[41](“Pearl Island”) dealt more directly with the question whether an IO has capacity to act and has locus to sue vis-à-vis land outside the building/property. In that case, the CA held the plaintiff IO[42] could enforce a right of way over a road outside the developments (and hence not part of the “common parts”) on the basis that the co-owners of the developments had a “common interest” over such right of way that benefited them. Godfrey JA said at p 427 as follows:

“...... I am of the opinion that s 18(2)(g) was properly construed by the judge as enabling the plaintiffs to maintain this action against the defendants in the plaintiffs’ own names. ...... The statutory language is quite general enough to admit of the construction placed upon it by the judge[43] and I see no reason whatever to strain to give s 18(2)(g) a narrower construction. The judge’s construction is entirely consistent with the purpose of the [BMO] ......”

Liu JA at p 428 also agreed to a purposive construction of section 18(2)(g) of the BMO:

“...... It would seem to be an interpretation endorsed by common sense for avoiding the joinder of a great many flats owners in litigation and other matters. ...... In the other paragraphs of [section 18(2) of the BMO], the corporation may act on its own to ‘pay’, ‘retain and remunerate’, ‘retain and remunerate’, ‘insure and keep insured’, ‘purchase, hire or otherwise acquire’, and ‘establish and maintain’. There is little to be said for the proposition that the corporation must not sue in its own name in the last paragraph. ......

In the long title of the [BMO], its purpose is given as facilitating ‘the incorporation of owners of flats in buildings or groups of buildings, to provide ... for matters incidental thereto or connected therewith’. In this way, a multitude of flat owners may simply be represented by the body corporate. When introducing this legislation in the Legislative Council, ...... the then Attorney General stated its object as enabling ‘the owners of multi-storey buildings to form themselves into a corporation which would have the power to deal on their behalf with matters of common interest to them as co-owners’. ......

   On weighing these interpretative factors, like my Lord Godfrey JA, I am driven to the conclusion that s 18(2)(g) should be so construed.”

Pearl Island suggests a “common interest” for the IO does not have to be confined within the “common parts” or within the “building” itself. As Cheung CJHC said in One Beacon Hill (IO) at p 394, “[this] case is notable for the application of s.18(2)(g) to a situation where the common parts of the building were not involved. To this extent, s.18(2)(g), as applied by the [CA], goes beyond the scope of the application of s.16, which is concerned with the common parts”.

69.  But Mr Chan SC suggested the distinctive feature in Pearl Island was the co-owners of the developments had common legal rights qua owners over the right of way on neighbouring land granted to them by deed, and not qua squatters asserting possessory interests over neighbouring land by reason of proximity/convenience, so even though the IO’s enforcement of the right of way on neighbouring land fell outside sections 14 and 16 of the BMO (that concern “common parts”), it could excite the co-owners’ “common interest” qua owners under section 18(2)(g) of the BMO. As the BMO/DMC do not deal with squatters’ rights, Mr Chan SC argued the reasoning in Pearl Island would not assist P.

70.  But such submissions would not alter the reasoning by Godfrey JA (with whom Nazareth VP agreed) and by Liu JA that upon a broad/general construction section 18(2)(g) of the BMO empowers the IO with capacity/ locus to promote the “common interest” of all co-owners of the developments, ie enforcement of right of way over neighbouring land (outside “common parts” or even the “building” under section 16 of the BMO). On such basis, Mr Neoh SC submitted Pearl Island gave arguable support for the contention that P as an IO had capacity to adversely possess the RW Lot on behalf of all then Owners of Western Court / Lot in that it is arguable (a) the management/maintenance of the RW Lot would bring about health/safety benefits for all Owners of Western Court / Lot,[44] and (b) the maintenance of the RW Lot was enjoyed/contributed by all Owners (rather than a single Owner or a few of them), so such management/maintenance and hence adverse possession of the RW Lot would be matters of “common interest” to all then owners of Western Court / Lot.

71.  Mr Neoh SC submitted Pearl Island remains good law binding on the CA and Court of First Instance (“CFI”). But Mr Chan SC argued Pearl Island does not sit well with the subsequent CFA case of Jikan Development Ltd & anor v Incorporated Owners of Million Fortune Industrial Centre[45] and the CA case of One Beacon Hill (IO), and urged this court to heed the warning by Godfrey Lam J in Wing Ming Garment Factory Ltd v Wing Ming Industrial Centre (IO)[46] that previous authorities had to be approached cautiously in view of Litton NPJ’s observation in Jikan Development Ltd & ors and its adoption by Cheung CJHC in One Beacon Hill (IO). Indeed, Mr Chan SC submitted Pearl Island is no longer good law. So I now turn to the trilogy of cases relied by Mr Chan SC.

72.  Jikan Development Ltd  In Jikan Development Ltd & anor, a case concerned with “common parts” of the “building”, the IO (formed in 1997) sued for car parking fees in respect of common areas collected by the manager but paid to an owner from 1989 onwards. To J held the IO lacked power under section 16 of the BMO to sue on rights accrued to the owners before the IO’s incorporation, but found it could sue on behalf of the owners under section 18(2)(g) of the BMO on such rights in respect of which they had a “common interest”. But Litton NPJ (with whom other members of the CFA agreed) said at p 464 as follows:

“62. The trial judge had plainly erred in this regard. Section 18(2) deals with management powers such as the employment and remuneration of staff, the insurance of the building, acquisition of property for use in connection with the common areas, etc. It does not confer power where none existed. If a right of action against an owner, in relation to the common parts, was in law exercisable by the corporation in terms of s.16, then s.18(2)(g) empowers the corporation to engage solicitors to institute proceedings. But it begs the very question.” (my emphasis)

73.  Mr Chan SC said this shows the reasoning in Pearl Island cannot stand, and unless the act falls within sections 14 and 16 of the BMO (that concern “common parts” of the “building”), section 18(2)(g) of the BMO does not empower the IO to sue. But Mr Neoh SC submitted that even if such argument applies to an act that concerns “common parts” of the “building” but falls foul of sections 14 and 16 of the BMO, it is otherwise if (as here) the act touches upon matters outside the “common parts” of the “building” and hence outside sections 14 and 16 of the BMO. Mr Neoh SC contended Pearl Island suggests it is arguable such act (eg adverse possession of adjoining land) constitutes “other matter” in which all co-owners of the building have a “common interest” under section 18(2)(g) of the BMO, which therefore confers upon the IO capacity/right to sue.

74.  One Beacon Hill (IO)  Cheung CJHC in One Beacon Hill (IO) adopted Litton NPJ’s observation in paragraph 72 above. There, the developer sold some units to purchasers on the terms of Consent Scheme contracts, but later sold other units to other purchasers on different terms. Argument arose as to whether the developer acted in breach of certain provisions regarding construction of the common parts of the development found only in the Consent Scheme contracts. The developer was sued by the IO of the entire development rather than by the purchasers under the Consent Scheme contracts. The CA held the IO had no locus to sue.

75.  Cheung CJHC pointed out that whilst the main purpose/object of the BMO is to facilitate management of a multi-storey building co-owned by different people and to avoid multiplicity of suits, it does not follow that in interpreting sections 16 and 18(2)(g) of the BMO one must seek to achieve such object at all costs (pp 382 and 385-386):

(a)   Section 16 of the BMO is to facilitate enforcement of rights/ liabilities arising from common enjoyment of the “common parts” by all co-owners of the “building”, and the need for their upkeep and maintenance. Grenville House Ltd & ors was cited for the proposition that an IO is the “persistent persona of all the owners of the premises at any moment in time” but only in relation to the “common parts” of the “building”, so on plain reading of section 16 of the BMO, “it only applies to vest the right of suit, in relation to the common parts of the building, in the IO, in respect of causes of action that accrued to all of the co-owners. It does not apply where those causes of action accrued only to some, but not all, of the co-owners.” (p 383)

(b)   Section 18(2)(g) of the BMO relates to the IO acting, in its discretion, on behalf of the owners in respect of any matter in which they have a “common interest”, ie a legal right/liability common to all the co-owners, in relation to the common parts (p 392). Further, the reference to the owners as tenants-in- common” in McMullin J’s observations in Grenville House Ltd & anor (see paragraph 63 above) excludes any matters personal to one/some co-owner(s), and what is required is something in which all co-owners as tenants-in-common have a common interest/liability (pp 392-393). 

76.  Cheung CJHC referred to Pearl Island (noting the “common interest” being a right of way granted in favour of all co-owners of the developments), Incorporated Owners of Mirador Mansion v Tecowin Development Ltd[47] and Jikan Development Ltd & ors, and after citing Litton NPJ’s observation in paragraph 72 above said at pp 395-396 as follows:

“66. In other words, s.18(2)(g) does not by itself confer on the IO a right to sue. It is not, by and of itself, a source of locus. It is unhelpful to dwell on whether what was said in Jikan about s.18(2)(g) was obiter, and therefore not binding on the lower courts. Nor is it fruitful to even suggest (as counsel did) that what was said in the [CFA] was said in ignorance of Pearl Island and Mirador Mansion. Equally irrelevant is any discussion, in the context of the present case, on whether the two earlier [CA] cases can survive Jikan on the (narrow) basis that Litton NPJ’s views were expressed in the context of a claim for an account of car parking fees arising out of the use of the common parts, whereas the two earlier [CA] cases were concerned with premises other than the common parts of the building.

67. In the present case, we are indeed concerned with the common parts of the development. Even assuming (for the sake of argument only) that what was said in Jikan about s.18(2)(g) was obiter, it was nonetheless of the highest persuasive authority. For my part, I see no reason not to follow it.

......

69. ...... I hold that s.18(2)(g) does not supply the necessary locus to the plaintiff to sue for two reasons. First, s.18(2)(g) does not confer any power to sue where none existed. Secondly and in any event, even if s.18(2)(g) were capable of supplying such power, it does not do so in the present case because no common interest, in the sense of a legal right common to all of the co-owners, is involved.” (my emphasis)

77.  On the above, Mr Chan SC submitted since One Beacon Hill (IO) held that (a) an IO is the “persistent persona of all the owners of the premises at any moment of time” but only in relation to the “common parts” of the “building”,[48] (b) section 16 of the BMO only gives the IO locus to sue in respect of a right of action vested in all co-owners in relation to the “common parts”, and (c) section 18(2)(g) of the BMO does not confer a power to sue where none exists (which, Mr Chan SC said, meant Cheung CJHC declined to apply the reasoning in the earlier case of Pearl Island), P had no capacity to adversely possess the RW Lot not being the “common parts” of Western Court / Lot, and had no locus to sue in respect of any possessory title over such land.

78.  Wing Ming Garment Factory Ltd  In Wing Ming Garment Factory Ltd, the IO relied on section 18(2)(g) of the BMO as providing a source of standing to bring proceedings to enforce the DMC. Godfrey Lam J said previous authorities had to be approached cautiously in light of Litton NPJ’s observation in Jikan Development Ltd & ors and its adoption by Cheung CJHC in One Beacon Hill (IO) (pp 116-118):

“272. Mr Cooney [counsel for the IO] submits that the passage [ie Litton NPJ’s observation in Jikan Development Ltd & ors] is obiter. However, even if it was, it has since been authoritatively adopted by the [CA] in One Beacon Hill (IO). There, Cheung CJHC, after quoting the above passage from Jikan Development Ltd, said [as set out in paragraph 76 above]

273. That decision is binding on me. It is therefore necessary for the IO to rely on some other source of power than s.18(1)(g).”

79.  Discussion  Mr Chan SC submitted since (a) Jikan Development Ltd & ors and One Beacon Hill (IO) demonstrate that Pearl Island is no longer good law, and (b) Shine Empire Ltd (CA/CFA) merely discusses requirements for adverse possession, P as an IO had no power/capacity to adversely possess the RW Lot (ie not “common parts” of Western Court / Lot that fell within the empowering provisions in sections 14 and 16 of the BMO), so P could not rely on section 18(2)(g) of the BMO to assert any capacity/locus to sue.[49] Further, it would be too artificial to say P as an IO had capacity to adversely possess land but no right to sue, and the reasoning in Jikan Development Ltd & anor and One Beacon Hill (IO) by reference to the construction of the BMO and its policy rationale is apposite to both capacity and locus of an IO. Mr Chan SC argued that whilst P as an IO might commit trespass over the RW Lot by cleaning/clearing the Berm and pruning/ trimming trees there, it could not have formed any animus possidendi to exclude the paper-title owner of the RW Lot. It was said there was no justifiable reason to extend the IO’s statutory remit to enable it, in Mr Chan SC’s colourful expression, to “go to the moon”.

80.  I bear in mind that for D’s Application D must show his propositions on the Capacity/Locus Issues were plain and obvious. It would be insufficient even if P’s case was weak and not likely to succeed. D had to demonstrate P’s claim was unsustainable and its case was unarguably bad. Having carefully considered the authorities and D’s propositions, I am unconvinced D’s contentions were necessarily trite/settled as a matter of law and fact. Rather, at this interlocutory stage, there was still room for Mr Neoh SC’s contrary contentions.

81.  An IO’s capacity and locus were governed by the BMO. The starting point is section 14 of the BMO which says the IO can do all acts/things a body corporate may do “subject to [the BMO]”. Various provisions in the BMO prescribe the IO’s powers, duties and functions in relation to the “common parts” of the “building”, eg sections 14, 16 and 18(1). But these are not the only provisions, and section 18(2) gives further discretionary powers, duties and functions to the IO: (a) section 18(2)(a)-(fa) confers a range of powers/functions to the IO for managing the building and dealing with matters incidental to or connected with the same, and (b) section 18(2)(g) gives the IO discretion and power to “act on behalf of the owners in respect of any other matter in which the owners have a common interest” (my emphasis).

82.  Mr Neoh SC submitted section 18(2)(g) of the BMO of itself is not confined to “common parts”, and this view was fortified by Pearl Island that held section 18(2)(g) of the BMO gives an IO the authority/right to sue in its own name over rights outside the “common parts”. Indeed, Cheung CJHC in One Beacon Hill (IO) recognised section 18(2)(g) of the BMO as applied in Pearl Island “goes beyond the scope of the application of s.16, which is concerned with the common parts”. Mr Neoh SC further submitted the expression “on behalf of” in section 18(2)(g) of the BMO should be construed as enabling the IO to represent the owners in litigation in their interests and for their benefit so long as the matter is of “common interest” to all owners of the “building”, which construction, he said, is consistent with the purpose of the BMO.

83.  Jikan Development Ltd & anor and One Beacon Hill (IO)are squarely concerned with “common parts” of the “building”, so the CFA and CA naturally turned to section 16 of the BMO that concerns the IO’s powers in relation to “common parts” of the “building”, and elicited the principle that any right of action in relation to the “common parts” must be exercisable by the IO pursuant to section 16 in order for the power under section 18(2)(g) of the BMO to arise. Mr Neoh SC thus argued that in relation to “common parts” the reasoning in these 2 cases regarding section 18(2)(g) of the BMO is related to the IO’s right to sue instead of its capacity for the act in question. I note Litton NPJ in Jikan Development Ltd & anor said “[if] a right of action ...... in relation to the common parts, was in law exercisable by [the IO] in terms of s.16, then s.18(2)(g) empowers [the IO] to engage solicitors to institute proceedings” (see paragraph 72 above), and Cheung CJHC in One Beacon Hill (IO) said “[in] the present case, we are indeed concerned with the common parts of the development”, so “in the context of the present case” section 18(2)(g) of the BMO “is not, by and of itself, a source of locus” and “does not confer any power to sue where none existed” (see paragraph 76 above).

84.  Pearl Island (where the right of way fell outside the “building” let alone the “common parts”) and the present proceedings (where the RW Lot was situated outside Western Court / Lot and hence also outside the “common parts” and “building”) were different. Mr Neoh SC submitted it was at least arguable the principle elicited in Jikan Development Ltd & anor and One Beacon Hill (IO) is only applicable where the matter involves “common parts” of the “building”, but the RW Lot would form and fall within “other matter” in which the Owners of Western Court / Lot had a “common interest” (not merely the interest of one or some of the Owners) [50]

that would allow P as the IO to act in its discretion on behalf of the Owners whether (a) qua owners or squatters or (b) within or without the building/property.

85.  Mr Neoh SC submitted the case law was reconciliable on the above analysis, and Grenville House Ltd & anor, Shine Empire Ltd (CA/CFA) and Pearl Island (not overruled by Jikan Development Ltd & anor) remain good law binding on the CFI and CA. He further reminded that even the CA is bound by its previous decisions except where it concludes, after examination of legal developments (including subsequent comparative jurisprudence), that its earlier decision should now be regarded as plainly wrong.[51]  But although the CA in One Beacon Hill (IO) considered Pearl Island, it did not depart from Pearl Island or say it is plainly wrong. Instead, it recognised the “difference” in Pearl Island. Wing Ming Garment Factory Ltd being a first instance decision does not take the matter much further.

86.  So it was said on Pearl Island as explained above and on plain reading of section 18(2)(g) of the BMO, at least for matters outside the “common parts” of the “building” (eg P’s claim for possessory interests in the RW Lot by adverse possession), they would arguably constitute “other matter” in which all Owners in Western Court / Lot had a “common interest”[52] such that section 18(2)(g) of the BMO confers on the IO a right to

sue.[53] Mr Neoh SC gave a few illustrations to highlight his contentions:

(a)	If persons by themselves and/or by placing objects blocked the pavement outside a building, there was no reason why the IO could not sue both upon its own right and acting on behalf of the owners of the building to avoid multiplicity of proceedings.
(b)	If loud music emanated from a club at a building on Lot A (“Building A”) opposite a residential building on Lot B (“Building B”) causing actionable nuisance to owners of Building B, there was no reason why the IO of Building B would not have locus to sue the club for noise nuisance that affected the common interest of all owners of Building B even though the club was not a common area of Building B.
(c)	If the owner of Lot A did some act which had the effect of withdrawal of natural right of support from Lot B (upon which Building B stood with owners holding equal undivided shares) that constituted actionable nuisance,[54] there was no reason why the IO of Building B could not sue the owner of Lot A for nuisance.

87.  Mr Neoh SC submitted this afforded sufficient answer to Mr Chan SC’s fear that the IO would “go to the moon”. Here, P as an IO became squatter of the RW Lot for a particular reason, ie to carry out management, maintenance and repair of the RW Structures to protect the “common parts” of Western Court / Lot and to promote the “common interest” of all Owners. The requirement of “common interest” of all owners of the building/property would put a limitation on an IO’s exercise of its “rights, powers, privileges and duties” in contra-distinction to a sole/individual owner who would be able to do so for any reason (including ill-will and spite). Mr Neoh SC submitted with such in-built limitation in the legislation there was no risk that an IO would “go to the moon”.

88.  Having carefully considered senior counsel’s submissions, I am unable to say it is so plainly obvious that P’s contentions were unarguably bad or P’s claim was clearly unsustainable. I am also not persuaded it was so clear from the interplay of provisions in the BMO and case law discussed above that Pearl Island had been overruled and/or was no longer good law at least in relation to matters outside the “common parts”, which would be the relevant context for P’s claim in the present proceedings. Even bearing in mind the discussions in Jikan Development Ltd & anor and One Beacon Hill (IO) on sections 16 and 18(2)(g) of the BMO in their “common parts” factual context, I cannot say D’s contentions in the present context (taking into account Grenville House Ltd & ors, Shine Empire Ltd (CA/CFA) and Pearl Island) were so clearly bad that P’s claim could not be supported at all. In my view, this is an area of law that required full argument to be advanced in the relevant factual context on evidence to be led at trial so as to properly elicit and understand the scope/ambit of the provisions in the BMO in light of relevant case law and subject factual matrix, and it should not be arrested by a striking out application at this interlocutory stage. In my view, on both Capacity/Locus Issues, there was arguable basis for P’s claim that it had taken adverse possession of the RW Lot in its own right and on behalf of all the Owners for their “common interest”, and as such it has concurrent locus to initiate the present proceedings for itself and on behalf of the Owners for a declaration that possessory title of the RW Lot had been acquired.

89.  Fluctuating body of persons  Possession must be singular and exclusive, and “...... no claim to possession can be made by a fluctuating body of persons (such as in the inhabitants of a parish)”.[55] In Lambeth London Borough Councilv Bigden,[56] occupiers occupied flats in a block, and each had the key to the locked street door. The English CA found their possession was not adverse since it did not follow the squatters and their predecessors who went into occupation at different times were jointly/ collectively in adverse possession of the entire block including the common parts simply because they had the key to the street door:[57]

“The judge was entitled to find as facts that there was no consensual arrangement affecting the basis of occupation of the individual flats within the blocks ......; that there was no exercise of effective joint or communal control over the individual flats themselves; and that there was no physical occupation or joint adverse possession of the common parts, i.e. the hall ways and staircases about which he heard evidence. The judge heard no evidence of joint occupation of other common parts of the blocks, such as the outer walls, foundations and the roof, which would also be relevant to the acquisition of a freehold title to a block of flats by adverse possession.”

90.  Mr Chan SC argued that in considering whether the legislative intent of MSBO/BMO would allow an IO capacity to be in adverse possession of land, one could not ignore the fact co-owners of a multi-storey building (who might change from time to time)[58] were no more than a fluctuating body of persons. He submitted the Owners of Western Court / Lot could not simply by owning undivided shares and occupying their flats be considered joint possessors of the RW Lot, and it would be an impermissible extension of P’s statutory remit to occupy private land on its own since “the IO is simply the corporate embodiment of all the co-owners, and what is vested in the IO was either a right or liability of all the co-owners”.[59]

91.  But Jourdan and Radley-Gardner, Adverse Possession[60] made clear possession and effective control of land can be exercised jointly by 2 or more persons but not severally. The examples cited therein related to claims made by several persons (including Lambeth London Borough Council), who were quite different from the Owners of Western Court / Lot being tenants-in-common owning undivided shares.  In Brown v Faulkner,[61] Higgins J explained “[the] single possession contemplated on behalf of several persons jointly would require possession by a legal entity capable of acquiring possession, exhibiting the necessary animus possidendi, and of attaining title to the land”. Further, it has been held locally that a Tso (necessarily a fluctuating body of persons) can make a valid claim for adverse possession. In Chow Tin Sang (周天生) also known as Chau Tin Sang as manager of Chau Fuk Tso v Citihero International Limited,[62] DHCJ Lok (as he then was) said as follows:

“89. ...... According to Mr Pun, a tso is an ancient Chinese institution of ancestral landholding, or ancestral worship trust, whereby land derived from a common ancestor is enjoyed by his male descendants for the time being, living for their lifetimes and so from generation to generation indefinitely. ...... As adverse possession is a common law principle which is alien to Chinese customary law, Mr Pun doubts whether the Tso is capable of being an adverse possessor in the present case.

90. Whilst I agree that the circumstances under which a tso is able to maintain a claim of adverse possession are rather limited, there is no particular reason why a tso is incapable of being an adverse possessor. ...... As the requisite factual possession and animus possidendi have been proved, there is nothing in principle which prevents the Tso, being an ancient Chinese institution of ancestral landholding recognized by the law, from acquiring the possessory title to the Land. Hence, there is no merit in these challenges.” (my emphasis)

92.  Further, in Grenville House Ltd & ors McMullin J said at pp 242-243 that an IO is the persistent persona of all owners of the premises at any moment of time, and:

“...... [what the MSBO] has done is to create a persisting entity capable of representing all the owners at any moment of time for any of the given purposes. ...... the body of owners may be said to consist of every individual who ever has been a constituent of the corporation. It matters not that at the time of issuing the writ the body of constituents is not the same as it was at the time of accrual of the action any more than it would matter that that body is not the same at the time of judgment even though it had been the same at the time of issue of the writ. In pursuing those purposes it is serving the interests of all including those who are no longer constituents but have been damnified and those who are now constituents and have never been damnified. For a major purpose of the incorporation of the owners is to facilitate convenience in suit. ......”

In One Beacon Hill (IO), Cheung CJHC cited the above with approval and said such passage “dealt with the difficult question of a change of ownership after the occurrence of the tort and concluded that any subsequent changes in ownership would not affect the IO’s right to sue, which [McMullin J] described as an “exceptional statutory right””.

93.  Taking the above matters into account, bearing in mind the corporate persona of an IO that represented the owners for the time being with right to sue irrespective of changes in ownership as well as the underlying relationship among all co-owners of the building as tenants-in- common, I am convinced P had a respectable argument that the co-owners of the building have sufficient unity of possession/estate to maintain a claim in adverse possession. I am not persuaded P’s claim can be struck out on this ground.

94.  Factual possession and animus possidendi  Mr Chan SC argued it was obvious that even if all pleaded acts undertaken by P (whether on its own or the Owners’ behalf)[63] were taken in P’s favour and accepted, they could not amount to unequivocal acts of factual possession. It was said cleaning/pruning vegetation were temporary activities equally consistent with P taking steps to improve the vicinity of Western Court for the benefit of the Owners, and could not amount to unequivocal acts of possession by P. Further, by the time minor repairs to the RWs were done in 1996, P already knew the RW Lot was owned by a third party (and hence not commonly owned).[64] Mr Chan SC submitted the fact P only arranged some patch-up repairs after learning the costs involved was instructive, especially when such repairs could not surmount the higher burden of showing P intended to exceed its statutory remit and occupy third party land as its own.

95.  But P did plead other materials facts, eg (a) prior to the MTR Works in 2010 nearly the whole RW Lot had been fenced off by the Fence as though it formed part of the Lot, and (b) the only practicable access to the RW Lot was from the common areas of Western Court under the management of the Owners of Western Court (before P’s incorporation) and P (after its incorporation). Mr Chan SC complained it was uncertain when the Fence came into existence and reminded it was not alleged the Fence was erected by P or resulted from P’s act/decision, so the Fence could not inform the assessment of whether or not P had the necessary animus. D suggested P’s conduct could not amount to unequivocal acts of an owner/possessor of the RW Lot, and P’s claim for adverse possession was bound to fail.

96.  But Mr Neoh SC argued the above acts of possession together with other incidental acts must be viewed in the context that the RW Lot was a very steep slope, and what might amount to factual possession of a slope in contrast to factual possession of a flat land might be substantially different. P pleaded the existence (which D did not dispute) of the Fence surrounding the RW Lot, and there was plea/evidence that over the years P had made use of the Fence to block access from CT Lot to the RW Lot. It was said these matters as a whole demonstrated not only an intention to possess and exclude others, it also conveyed to the world the RW Lot formed part and parcel of Western Court / Lot. By the same token, the fact it was on P’s case only feasible to access the RW Lot from the common areas of Western Court showed P had intended to exclude the world at large.

97.  In my view, although factual possession and animus possidendi are separate elements, they are closely related in that the latter “must normally be manifested by the squatter’s conduct. Accordingly, the same conduct which is alleged to constitute the factual element of possession will also be the conduct which the squatter has to rely on to establish the animus possidendi”.[65] As Yuen JA said at p 10 in Shine Empire Ltd (CA), “the issue remains: had the IO taken physical control with the intention of using and occupying the land as its own?” Slade J in Powell also explained at p 471 that the question what acts constitute a sufficient degree of exclusive possession must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed. It is best summarised in Adverse Possession at pp 170-171 as follows:

“8-09 That statement was a paraphrase of an often cited dictum of Lord Hagan in Lord Advocate v Lord Lovat, where he said:

‘As to possession, it must be considered in every case with reference to the peculiar circumstances. The acts, implying possession in one case, may be wholly inadequate to prove it in another. The character and value of the property, the suitable and natural mode of using it, the course of conduct which the proprietor might reasonably be expected to follow with a due regard to his own interest. All these things, greatly varying as they must, under various conditions, are to be taken into account in determining the sufficiency of a possession.’

8-10 To the same effect, in Red House Farms (Thorndon) Ltd v Catchpole, Cairns LJ said:

‘The authorities make it clear that what constitutes possession of any particular piece of land must depend upon the nature of the land and what it is capable of use for.’”

98.  In any event, as Mr Neoh SC submitted, the courts had in some cases treated pruning trees as acts of possession.[66] I also do not see why the fact P did not erect the Fence would destroy its relevance to the elements of factual possession and/or animus possidendi. The presence of a physical barrier has been shown in some cases to be relevant:[67]

“This explains why, in cases where there is a physical barrier separating the disputed land from the true owner’s land, and enclosing it with the squatter’s adjoining land, the courts have sometimes been willing to treat the squatter as being in possession based on relatively trivial acts of user. The physical incorporation of the land with the squatter’s property, and its separation from the true owner’s other property, invests the squatter’s use of the land with a significance it would not have if the disputed land were open on both sides. The use of the land in such circumstances manifests the animus possidendi. Because the land physically appears to be the squatter’s, because it is enclosed with his adjoining land, his use of it manifests an intention to treat it as under his exclusive control. ......”

In Hounslow London Borough Council v Minchinton[68] cited in Adverse Possession,[69] the squatters used the disputed strip of land (enclosed on 2 sides originally by a tree on one side and a fence on the other and later by new fences to keep the dogs in) as part of their garden, and the acts of possession relied on (trimming the hedge from time to time, weeding, looking after the bushes and keeping a compost heap) sufficed to put the squatters in possession because “...... that was the only sensible use of the land. It was rough land at the end of a garden”. Likewise, in Red House Farms (Thorndon) v Catchpole again cited in Adverse Possession,[70] the disputed land was marshland between the owner’s land and the squatter’s land that was originally contiguous with the remainder of the owner’s land but was cut off by a stream (and in time the bridge over the steam disappeared). “The fact that the disputed land had become cut off from the true owner’s remaining land was treated as of vital importance by the [CA]. As the disputed land was cut off, there was nothing the squatters could be expected to do by way of asserting their possession of the land other than using it for the only purpose for which it was sensible to use it.”

99.  Further, it had also been held that if the squatter controlled the entrance to the disputed land, it would be strong evidence he had the requisite animus possidendi. At paragraph 13-27 at pp 285-286, Adverse Possession referred to J A Pye (Oxford) Ltd & anor as follows:

“In J A Pye (Oxford) Ltd v Graham, the owner of land granted a neighbouring farmer a licence to graze the land and take one cut of hay. After the permission to take the cut of hay expired, the farmer farmed the land as if it were his own. The land was adjacent to the farmer’s own farm, and was surrounded by fences and hedges. The farmer had control over the access to the land. There was only one point of access from the public highway, via a gate. The gate was padlocked and the farmer held the key to the padlock. The farmer had not fitted the padlock. But, by maintaining the hedging and fencing, he ensured that the disputed land remained effectively enclosed and, by retaining the key to the locked gate, ensured that nobody could get to the disputed land without his consent. The House of Lords held that the farmer was in possession. Lord Browne-Wilkinson said:

‘The Grahams were in occupation of the land which was within their exclusive physical control. The paper owner, Pye, was physically excluded from the land by the hedges and the lack of any key to the road gate. The Grahams farmed it in conjunction with Manor Farm and in exactly the same way.’” (my emphasis)

100.  I agree with Mr Neoh SC that ultimately what would constitute a possession in the present case was a factual dispute that must be considered against the nature, location and surroundings of the RW Lot, the history of the RW Lot and Western Court / Lot as well as the nature/extent of the acts relied upon. In my view, these fact-sensitive matters must be assessed in face of the factual context and should be left to be determined at trial.

101.  Limitation issue Mr Chan SC submitted even if P had the necessary capacity/locus, the limitation period had not started to run against the Estate at all as time only starts to run against an intestate’s estate from the date of the letters of administration.

102.  In Official Administrator v The Luk Hoi Tong Co Ltd & anor,[71] the deceased owner of certain shares had 2 nephews one of whom married W. The deceased died in 1940 but the shares remained in his name until 1985 when they were transferred to W. In 1998, letters of administration of the deceased’s estate were granted to the other nephew, who claimed the transfer of shares to W was null/void in the absence of any grant of representation of the estate until 1998 as no one could represent the estate to transfer the shares to W in 1985. W argued such claim was time-barred, but A Cheung J (as he then was) disagreed:

“155. ...... in relation to a claim made by an estate through its administrator, time only starts to run from the date of the letters of administration. Prior to that date, no one at law had a right to sue in the name of the estate. Williams, Mortimer and Sunnucks, Executors, Administrators and Probate (18^th Ed) para 64-04 says as follows:

There is, however, one notable exception to the general rule that no allowance is made for the interval between the death and the grant. Although the Act provides that in actions for the recovery of land and advowsons by an administrator, the administrator shall be treated as claiming as if there had been no interval of time between the death of the deceased and the grant of letters of administration, it is clear that the old law applies to actions for the recovery of property other than land and advowsons. Under that law, time does not begin to run in actions for the recovery of personalty by an administrator until a grant of letters of administration has been obtained. The reasons for this exception is that in the absence of statutory provision, the administrator has no title until he has obtained a grant. (emphasis added)

156. In Chan Kit San v. Ho Fung Hang [1902] AC 257, an appeal case from Hong Kong, the Privy Council said at p 260 that ‘according to the well-established rule in English law, the statute [of limitation] runs against an intestate’s estate from the date of the grant of letters of administration only’.”

Mr Chan SC submitted this was consistent with the general principle that time does not start to run until there is a plaintiff who can sue.

103.  Section 8 of the LO provides as follows:

“(1) Where the person bringing an action to recover land, or some person through whom he claims, has been in possession thereof, and has while entitled thereto been dispossessed or discontinued his possession, the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance.

(2) Where any person brings an action to recover any land of a deceased person, whether under a will or on intestacy, and the deceased person was on the date of his death in possession of the land or, in the case of a rentcharge created by will or taking effect upon his death, in possession of the land charged, and was the last person entitled to the land to be in possession thereof, the right of action shall be deemed to have accrued on the date of his death.” (my emphasis)

104.  Mr Chan SC submitted that paragraph 2 of Part I of Schedule 1 of the Limitation Act 1980 (equivalent to section 8(2) of the LO) provides that a cause of action to recover land of a deceased person is deemed to have accrued on the death of the deceased if certain conditions are met, ie the deceased was at the date of his death in possession of the land and was the last person entitled to the land to be in possession of it, but if these conditions are not satisfied, “[it] is submitted that in such cases the proper approach is to consider the general principle that there is no cause of action until there is both a claimant who can sue and a defendant who can be sued”.[72]

105.  Mr Chan SC suggested section 8(2) of the LO could not assist because the Deceased (who died in 1947) was not in possession of the RW Lot when P’s alleged acts of dispossession occurred in the 1960s. But it appeared section 8(2) of the LO required the deceased person to be in possession of the land “on the date of his death” and not at the time of dispossession. Here, D claimed through the Deceased who at the time of his death was possessed of the RW lot and was the last person entitled to it, soit was clearly arguable D’s cause of action was deemed by section 8(2) of the LO to have accrued from the time of death or at the latest by section 8(1) of the LO[73] at the time of dispossession.

106.  But even if there is any ambiguity in respect of section 8 of the LO, section 16 of the LO provides that “[for] the purposes of the provisions of [the LO] relating to actions for the recovery of land, an administrator of the estate of a deceased person shall be deemed to claim as if there had been no interval of time between the death of the deceased person and the grant of the letters of administration.”

107.  Mr Chan SC suggested that on a plain reading of section 16 of the LO it only applies to actions for recovery of land by an administrator of an estate where a grant has been made, so this deeming provision was not engaged here in the absence of any grant of administration (and hence no action for possession by the Estate had been or could have been brought). It was said that in the absence of any party capable of suing for recovery of the RW Lot, limitation period had not started to accrue and P’s claim for declaratory reliefs must fail.

108.  Mr Neoh SC traced the history of section 16 of the LO by turning to the English equivalents in section 15 of the Limitation Act 1939 and section 26 of the Limitation Act 1980, and it appeared the only difference was the Act refers to “actions for the recovery of land and advowsons” whereas the LO refers to “actions for the recovery of land”.[74] The legislative intent of such provision was explained in Re Williams,[75] and even Mr Chan SC accepted this case decided such provision meant letters of administration were treated as if they were granted immediately after death. In that case, W died intestate in 1849 leaving his surviving widow MW and children by a former wife. MW died intestate in 1859 leaving surviving children. MW’s estate was taken by WW. In 1886, letters of administration of the estate of MW left unadministered by WW were granted to CD, and later in the year letters of administration of W’s estate were also granted to CD. The question was whether time had begun to run against W’s representatives from his date of death or from grant of administration (p 559). Stirling J noted in In re Bonsor & Smith’s Contracts[76] Chitty J held the relevant limitation provision “applied for all purposes of the Act, that the parties in that case were in the same position as if letters of administration had been granted immediately after the death of the intestate, and accordingly that time under the statute began to run as from the date of death, and not from that of the grant. That is also my view.”  

109.  On such basis, Mr Neoh SC argued the effect of section 16 of the LO is that where possession of the land of an intestate person is taken on his death by a third party, time starts to run from the date of death of the deceased or (as here) from the date of dispossession (as early as 1960s) against the administrator’s right to recover the land even though no title vests in the administrator until the grant is obtained, and there is no necessity for there to be an actual grant of administration or for letters of administration to be taken out before section 16 of the LO can apply. 

110.  Mr Neoh SC also drew a distinction between personalty and realty because for personalty time does not begin to run until the grant of administration is obtained. Previously the English position treated leasehold estate in land as personalty at law (ie “chattels real”), but since the Law of Property Act 1925 leases are considered to be like a freehold estate and therefore treated as realty.[77] Thus, Martyn and Caddick, Williams, Mortimer and Sunnucks on Executors, Administrators and Probate says the general rule is that “[in] computing the period of limitation no allowance is made for the interval between death and the grant of probate or letters of administration”, and whilst such general rule applies to land there is an exception (as discussed above) for personalty. [78]

111.  Mr Neoh SC submitted the position is even less complicated in Hong Kong for there is no freehold land except St John’s Cathedral. “Land” is defined, albeit non-exhaustively, in section 2 of the CPO to include “...... (b) any estate, right, interest or easement in or over any land; (c) the whole or part of an undivided share in land and any estate, right, interest or easement in or over the whole or part of an undivided share in land ......”, which means a leasehold estate is regarded as “land” for the purpose of the CPO. Mr Neoh SC submitted the application of the LO with regard to recovery of land (in contra-distinction to personalty) is clearly that time can run from the death of the deceased against the administrator’s right, especially when section 16 of the LO is read against section 7(2) of the LO (see paragraph 32 above). Then, in general, once time has begun to run vis-à-vis land,[79] it runs continuously.[80] On such basis and bearing in mind the distinction between realty and personalty, Mr Neoh SC said The Luk Hoi Tong Co Ltd & anor was distinguishable as it concerned gift of shares and dividends.

112.  In my view, P’s contentions were respectable arguments to the effect that time had started to run and had expired against the Estate, and there was sufficiently cogent basis to dispute D’s contention that once a landowner died intestate, accrual of action to recover his lands that had been adversely possessed was suspended until grant of administration to his estate. I am not persuaded P’s claim ought not to be struck out on such basis.

113.  Summary  For all the above reasons, I am not satisfied P’s claim was clearly unsustainable or unarguably bad such that it was a plain and obvious case for striking out such claim. In my view, there was arguable basis for P’s claim that it had been in adverse possession of the RW Lot, and had acquired possessory title to the RW Lot by the time the present proceedings were commenced in 2012. Hence, save for the matter discussed in Part XI below, D’s Application must be dismissed.

X. P’s SUMMONS

114.  I now proceed to deal with P’s Summons on the basis that P could arguably establish it had acquired possessory title to the RW Lot by 2012 when it commenced the present proceedings. Mr Neoh SC submitted that Group Leader being the current owner of all undivided shares and interests in the Lot and having obtained possessory title of the RW Lot from P (in its own right and/or on behalf of the then Owners of Western Court / Lot) plainly had an interest in the RW Lot being the subject matter of the present proceedings and should therefore be joined as party. On the other hand, Mr Chan SC submitted Group Leader’s intended claim was unsustainable, so it did not have any sufficient interest to be joined.

115.  Presumption of encroachment  There is a rebuttable presumption that a tenant acquires possessory title for his landlord provided that the relevant land is close to and occupied with the land demised under the tenancy, which presumption applies during the term of the tenancy and not just following its determination. Mr Neoh SC submitted (but Mr Chan SC disagreed) this presumption is applicable irrespective whether the encroached-upon land (a) belonged to the landlord or to a third party or (b) was leased or unleased land of the landlord.

116.  Although the doctrine has been the subject of some judicial discomfort,[81] it was one of some history. As Neuberger LJ said in Tower Hamlets LBC v Barrett,[82]

“26. The doctrine was clearly stated by Parke B in Kingsmill v Millard (1855) 11 Ex 313, at 318 in the following terms:

“It is laid down in all the cases – whether the inclosed land is part of the waste, or belongs to the landlord or a third person – that the presumption is, that the tenant has inclosed it for the benefit of his landlord unless he has done some act disclaiming the landlord’s title ... The encroachment must be considered as annexed to the holding, unless it clearly appears that the tenant made it for his own benefit.”

......

29. The notion that the doctrine exists and is based on a rebuttable presumption also seems entirely consistent with the judgment of Willes J in Whitmore v Humphries (1871-2) LR 7 CP 1, at 5, where he said that “as between the landlord and the tenant, the tenant must prima facie be deemed to have taken in the additional land as part of his tenancy” (emphasis added). He went on to refer to the tenant as having “availed himself of the opportunity afforded him by his tenancy to make encroachments”, thereby rendering it appropriate to “presume” that the encroachment was “for the benefit of the reversioner”.” (my emphasis)

117.  Such doctrine is also applicable in Hong Kong as explained by Lord Scott of Foscote NPJ (with whom Bokhary PJ and Litton NPJ agreed) in Secretary for Justice v Chau Ka Chik Tso as follows:[83]

“108. The principle of “encroachment” is that if a tenant goes into, and remains in, occupation of land belonging to his landlord, it is to be presumed, particularly if the encroached-upon land is adjoining the demised land, that the tenant’s encroachment is intended by him to annex the encroached-upon land to his demised land so as to enable him to occupy and use the encroached-upon land as if it were part and parcel of the demised land (see Kingsmill v. Millard (1855) 11 Exch 313, 318). The presumption, although imposed by judge-made law, is a rebuttable one and can be rebutted by evidence that the tenant intended to occupy the encroached-upon land not simply as tenant but as owner.

......

112. But the effect of the encroaching trespasser’s adverse possession is, as it seems to me, necessarily limited by the unrebutted presumption. The encroacher’s presumed intention is to occupy the land in question as an annex to his or her demised land. The encroacher will, therefore, on the termination of the demise of the demised land, be under an obligation to deliver up to the landlord not only the demised land but also the encroached-upon land held as an annex to the demised land. To that extent, therefore, the encroacher’s possession of the encroached-upon land has not been “adverse” to the landlord. ......

......

120. ...... Reliance on the unrebutted presumption after the expiry of the requisite limitation period would, in my opinion, always provide sufficient and proper protection for a lessor’s proprietary interests. ......

121. The consequences, in cases where the encroachment presumption that binds the encroacher cannot be, or has not been, rebutted, will depend upon what, if any, action is taken by the owner of the encroached-upon land in response to the encroachment.

(1) If the owner of the encroached-upon land has adopted the presumption, or has through conduct or knowing acquiescence become barred from denying it, both parties, tenant and landlord, will be bound to treat the encroached-upon land as annexed to the demised land and held by the tenant on the terms of the demise.

(2) If the owner of the encroached-upon land has done nothing and the relevant limitation period barring an action to recover possession of the encroached-upon land has expired, the owner will be unable to recover possession of that land until the termination of the demise. But the tenant, still bound by the unrebutted presumption, will be bound on the termination of the demise to deliver up possession both of the demised land and of the encroached-upon land to his landlord, the owner of both.

...... ” (my emphasis)

118.  Mr Chan SC submitted the presumption of encroachment only applies where a tenant encroaches upon neighbouring land which his own landlord also owns and has an immediate right of possession. In the present context, the doctrine could only apply if the RW Lot (ie land owned by the government who was also landlord of the Lot) was unleased government land so that upon expiry of the limitation period the government’s power to recover possession of the RW Lot would extinguish but only to the extent of the presumption that would treat the RW Lot (encroached-upon land) as annexed to the Lot (leased land) with rights running coterminously. Thus, the presumption would operate to protect the government as landlord so that its rights over the RW Lot (encroached land) could not (unless the presumption was rebutted) be completely extinguished by his tenant in respect of the Lot. Mr Chan SC submitted the position would be entirely different where the landlord had no present right of possession over the encroached-upon land (eg by virtue of a lease granted to a different tenant) and no accrued cause of action against the encroacher. He reminded that any adverse possession over leased land for the requisite period only bars the lessee from recovering possession from the squatter and does not extinguish the landlord’s reversionary interest, so the landlord remains entitled to recover possession upon expiry of that lease,[84] hence there is no doctrinal basis for the presumption to apply so as to protect the landlord’s reversionary interest, which in any event cannot be extinguished by any squatter. But as the RW Lot was leased to D, no limitation period could run against the reversionary interest, and the government would be entitled to re-enter into possession when the lease for the RW Lot expired. Mr Chan SC submitted the presumption of encroachment was therefore not engaged, and there was no question of any possessory title (if any) over the RW Lot being “annexed” to the Lot.

119.  But Mr Chan SC, quite fairly, agreed his submissions would apply less strongly if the leases for the Lot and RW Lot were for different terms. If the tenant of Lot A (“Tenant A”) under a 50-year lease encroaches (for the requisite period) upon part of Lot B let by the same landlord to another tenant for 30 years, it is at least arguable the presumption of encroachment (if not rebutted) still serves some meaningful purpose for (a) Tenant A will be “presumed to have occupied the encroachment on the same terms as apply to his demised holding and he is stopped from asserting that he was, on the contrary, in adverse possession” to the landlord, and (b) the presumption also applies equally to the landlord who “must accept that [Tenant A] has acquired a leasehold interest over the encroachment, with possession to be recovered by the landlord only after determination of the lease”,[85] so to the extent the squatter’s possession of the encroached-upon land has not been “adverse” to the landlord, the latter will not be able to recover possession of such land after the lease on Lot B expires after 30 years but will have to await termination of the 50-year lease over Lot A.

120.  In Chau Ka Chik Tso Ribeiro PJ (with whom Chan PJ agreed) arrived at the same conclusion as Lord Scott of Foscote NPJ but via a different approach, ie where a tenant encroaches upon a piece of land adjacent to the leased land, the doctrine of encroachment raises a rebuttable presumption that the tenant occupies the encroached-upon land as an annex to the leased land and is estopped from asserting he is in adverse possession. Ribeiro PJ held “[the] presumption and the estoppel were applicable in cases involving encroachment upon the landlord’s land and encroachment upon land belonging to a third party” (pp 891 and 904), and set out his views as follows (pp 900-901 and 914):

“17. The doctrine addresses the position of a tenant who encroaches upon adjoining or adjacent land beyond the boundaries of the land demised to him under his lease. Such encroachment may be (as in the present case) upon land which belongs to his landlord. Or it may be upon land belonging to a third party. As we shall see, the principle operates quite differently in each of those two cases.

......

20. Where the area of encroachment belongs to a third party, the doctrine takes effect where, on the facts, the tenant has by adverse possession barred the third party’s right of action and extinguished his title to the land. Then under the doctrine, a presumption arises (unless previously rebutted) that the encroached upon land has been occupied as an addition to the landlord’s land and the right to possession vests in the landlord at the end of the tenancy. The land encroached upon is not treated as land acquired by the tenant by adverse possession for his own benefit.

21. Where the encroachment area belongs to the tenant’s landlord, the doctrine functions quite differently. The landlord’s interest in the land is not extinguished by limitation but the doctrine operates to deem the tenant to have acquired a leasehold interest in the land encroached upon to be held on the same terms as his tenancy, and to be surrendered up to his landlord and the end of its term.

22. I would respectfully adopt the rationale of the doctrine advanced by Neuberger LJ (as Lord Neuberger of Abbotsbury then was) in a case involving an encroachment on a third party’s land as follows:

...the doctrine summarised by Parke B in Kingsmill’s case appears to be based in part on fairness and in part on practicality. The tenant will normally have been able to encroach on the adjoining land because he was the tenant of his landlord’s land: hence the perception that it is just that he should acquire possessory title of the adjoining land for the benefit of his landlord (see eg per Willes J in Whitmore’s case, cited above). Further, the land to which possessory title is acquired will often be small, will often adjoin the demised land, and will normally have been enjoyed for at least 12 years together with the demised land. Thus, it would normally be much more practical for the freehold of that land to be vested in a person who owns the demised land (ie the landlord), rather than in someone who (after the end of the tenancy concerned) has no interest in it (ie the tenant).[86]

......

29. ...... it should be noted that the doctrine as applied to encroachments by the tenant onto land belonging to a third party operates differently. In such cases, the doctrine proceeds on the basis that the [LO] takes effect in full, not only barring the third party’s right to recover the land, but also extinguishing his title to it. What the doctrine then does is to deprive the tenant of the benefit of such extinguishment by deeming possessory title to the encroachment area to vest in the landlord at the end of the tenancy.

......

64. In my view, the authorities discussed above show that in cases involving encroachment on the landlord’s land, the doctrine operates by giving effect to the presumption and the estoppel discussed above. If the limitation period has not yet expired, the tenant may of course be ejected and cannot plead the [LO] to meet the landlord’s claim. However, upon expiry of the limitation period, the doctrine comes into play and the [LO] would still not provide a defence to the landlord’s claim. This is because the doctrine operates so that the tenant is presumed to have occupied the encroachment on the same terms as apply to his demised holding and he is estopped from asserting that he was, on the contrary, in adverse possession. In such cases, the presumption applies equally to the landlord. The doctrine protects his interest from being destroyed by operation of the [LO] but the price extracted by the law for such protection is that the landlord must accept that the tenant has acquired a leasehold interest over the encroachment, with possession to be recovered by the landlord only after determination of the lease.” (my emphasis)

121.  On such analysis, the presumption applies to encroached-upon third party land so it is “occupied as an addition to the landlord’s land and the right to possession vests in the landlord at the end of the tenancy”, and to encroached-upon landlord’s land so the tenant is “deemed ...... to have acquired a leasehold interest in the land encroached upon to be held on the same terms as his tenancy, and to be surrendered up to his landlord and the end of its term”.  That is why Lord Scott of Foscote NPJ said at p 927 that “[to] that extent, therefore, the encroacher’s possession of the encroached- upon land has not been “adverse” to the landlord”. Bearing in mind that the presumption also binds the landlord (see explanation by Ribeiro PJ in paragraph 64 in Chau Ka Chik Tso – see the above paragraph), and using the example in paragraph 118 above, it is therefore arguable the landlord is not entitled to recover possession of the encroached-upon land during the currency of the tenancy of Lot A after expiry of the tenancy of Lot B for “the price extracted by the law for such protection [afforded by the presumption] is that the landlord must accept that the tenant has acquired a leasehold interest over the encroachment, with possession to be recovered by the landlord only after determination of the lease”. Further, the fact the presumption applies to both landlord’s land as well as third party’s land (as recognised by both Ribeiro PJ and Lord Scott of Foscote NPJ citing Kingsmill) also arguably suggests the encroached-upon land need not be limited to “unleased landlord’s land”.

122.  I therefore find it arguable that possessory title to the RW Lot acquired by P in its own right and/or on behalf of the Owners of Western Court / Lot (assuming P had such power) was subject to the presumption of encroachment, ie P’s encroachment was intended to annex the RW Lot to the Lot as part of the leasehold under the Lot Lease for the benefit of the government as landlord so P (for itself or on behalf of the then Owners of Western Court / Lot) occupied/used the RW Lot as if it was part and parcel of the Lot with both lots due to revert to the government upon expiry or other termination of the Lot Lease.

123.  Mr Neoh SC submitted there was nothing to rebut the presumption given (a) the nature and history of the RW Lot/Structures that clearly showed their purpose was to prevent the CT Lot and structures thereon from collapsing onto the Lot and its vicinity, and (b) the RW Structures on the RW Lot caused nuisance and posed potential danger to Western Court / Lot and/or the Owners generally. Mr Neoh SC reminded that P as the IO in looking after Western Court / Lot and/or serving the common interest and overall benefit of the Owners had taken steps to abate the nuisance and carry out repairs/maintenance. In my view, whether there were any facts to rebut the presumption would best be left after seeing D’s defence to this new plea and the evidence at trial.

124.  Conveyance of the RW Lot  Mr Neoh SC submitted even if (a) section 16 of the CPO was not applicable and (b) the 2014 Assignment only assigned the paper-title of the Lot (and not possessory title of the RW Lot) to Group Leader, on the basis that (i) the RW Lot became annexed to (or became part and parcel of) the Lot under the presumption of encroachment and (ii) P as tenant thereby acquired a leasehold interest in the RW Lot on the same terms as the Lot Lease, no specific conveyance of the RW Lot was required to pass P’s possessory title over the RW Lot to Group Leader (subject to reversion back to the government as landlord upon expiry or other termination of the Lot Lease).[87]

125.  In Tower Hamlets LBC, the tenants of a pub (the freehold of which was owned by the brewery) acquired possessory title to adjoining land and defeated the council’s title thereto. The tenants then bought the freehold of the pub, and the sale agreement merely identified the pub (sold subject to the existing tenancy) as the subject property for sale. The English CA held the freehold of the encroached-upon land adjoining the pub belonged to the tenants because (a) there was nothing to rebut the presumption that the tenants acquired possessory title to such land on behalf of the brewery (ie their landlord), which presumption applied during the term of the tenancy and not just following its determination, (b) since the presumption was applicable, the encroached-upon adjoining land remained included in the tenancy, so when the brewery and the tenants thereafter agreed to a sale of the reversion of the pub there was a presumption that the sale should extend to the encroached-upon adjoining land, and (c) there was nothing to rebut such presumption as it was implicit from the terms of the sale agreement that all property subject to the tenancy (ie the pub and the land adjoining it) was being sold to the tenants. Neuberger LJ said as follows at pp 154-155:

“108. ...... It seems to me that, at least where the adjoining land is still included in the tenancy, it should be relatively easy to conclude, even to presume, that, where the landlord and tenant thereafter agree a sale of the reversion to, or, indeed, a new tenancy of, the land originally comprised in the tenancy, the sale or new tenancy should extend to the adjoining land, especially if subsequent acts confirm that conclusion.

......

110. The arguments of [justice and convenience] strongly suggest that, where the landlord in such a case, having acquired title to the adjoining land, which is thereby also included in the tenancy, sells the reversion to the tenant, the adjoining land is likely to have been included. I would add that, if it were otherwise, one would expect to see provisions dealing with the effect of the reversion to the tenancy being severed (or the effect of part only of the property now comprised in the tenancy being the subject of merger). Yet there are no such provisions in the present case. Indeed, as I have mentioned, the 1993 agreement, with its reference to the tenancy, suggests that all the property the subject of the tenancy is being sold.

111. The arguments of justice and convenience which have been invoked to justify the doctrine, that the possessory title to land acquired by a squatting tenant should be presumed to enure for the landlord’s benefit, appear to me to justify the argument, albeit in a slightly modified way, that, on the sale of the reversion to the land originally comprised in the relevant tenancy, one should presume, or at least be relatively ready to accept, that the possessory title is included in the sale.” (my emphasis)

126.  Mr Chan SC submitted Tower Hamlets LBC concerned sale of the reversion by the landlord and not sale of the remaining leasehold interest by the tenant. It was said in the former case the reversion has been enlarged by the presumption to include the possessory title over the encroached adjoining land. But since all land in Hong Kong except St John’s Cathedral is leasehold interest, so before the reversion falls into place the presumption is not relevant and the encroacher is a mere adverse possessor. Mr Chan SC suggested the discussion in Tower Hamlets LBC concerns the landlord’s interest when the reversion falls in, but before that happens the tenant must specify whether he is selling the unexpired leasehold interest of his demised land, his possessory title over the encroached-upon land or both.

127.  Mr Chan SC gave an illustrative example: if T leases Lots A and B at the same time from the landlord by a single lease document, T can by deed of assignment assign his leasehold interest in Lot A independently from (and without) Lot B. It was said the presumption of encroachment will not add anything further as it deals with rights/interests between landlord and tenant interse. To illustrate, Mr Chan SC referred to Tenant A who encroaches upon and acquires possessory title over the adjoining Lot B which is unleased land owned by the same landlord, and suggested Tenant A can assign the remaining term of his leasehold interest in Lot A separately from his possessory title over Lot B or vice versa even though his interest in Lot B is held under the same conditions and for the same term as his original lease for Lot A, and what is sold/assigned depends on the transaction between Tenant A and his assignee. Mr Chan SC argued what Tenant A sells is unaffected by the presumption of encroachment which only affects the landlord’s interest in Lot B. Importing such analysis to the present proceedings, Mr Chan SC submitted that the true question became whether the 2014 Assignment was sufficient to assign the possessory title over the RW Lot to Group Leader such that Group Leader was required to return the RW Lot to the government upon expiry or other termination of the Lot Lease. Mr Chan SC said the answer must be in the negative.

128.  It appeared the crux of Mr Chan SC’s above argument turned on his contention that a tenant-squatter’s possessory rights over the encroached- upon land could not accrue for the benefit of his landlord until after the reversion fell in so during the currency of the his tenancy the tenant-squatter was no different from an ordinary adverse possessor unencumbered by the rights/liabilities arising from the presumption of encroachment (and consequently he was bound to spell out what parcel(s) of land he was selling). In fact, such argument had been raised/discussed in Tower Hamlets LBC (p 149). Neuberger LJ held the rebuttable presumption of encroachment applies during the term of the tenancy (ie after possessory title over the encroached-upon land was acquired and before expiry or other termination of the lease for the demised land) and not just following its determination, and he went on to say as follows at pp 149-151:

85. So far as principle is concerned, it is worth considering a case where a tenant-squatter encroaches on land belonging to his landlord for more than 12 years. The position is perhaps most clearly summarised by the statement in Megarry & Wade, The Law of Real Property (6^th edn, 2000) at para.21-027, which includes this:

“If the tenant occupies other land belonging to the landlord but not included in the demise, that land is presumed to be an addition to the land demised to the tenant ..., so that it becomes subject to the terms of the tenancy, and although the tenant may acquire title to it against the landlord for the remainder of the term, he must give it up to him when the tenancy ends”.

......

87. ...... the passage I have cited from Megarry & Wade indicates that, where it is the landlord’s land on which the encroachment occurs, the land becomes subject to the terms of the tenancy. Accordingly, it could be said, in my view with rather more force, that, where the tenant’s encroachment is on a stranger’s land, that land also becomes subject to the tenancy. If that is right, then it would assist the argument that it is indeed the landlord on whose behalf the tenant acquires title, where the land encroached on is owned by a stranger, even while the tenancy is running.

......

89. ...... However, I do not believe ...... that the issue of whether the tenant has acquired possessory title to land for himself or his landlord can remain in limbo after the expiry of that period [ie after the 12-year period had accrued] until the tenancy between them expires. Equally, I do not accept that it necessarily means that the ownership of the land could oscillate between the tenant and his landlord between the expiry of the 12 years and the determination of the lease, depending on what the parties do or say during that period.

90. As a matter of principle, once the 12 years of adverse possession have been established, the paper owner loses his title, and someone, either the landlord or the tenant, acquires it. The ownership of land should not, in my view, be in limbo, or be treated as being in limbo, save where statute requires it. Once the 12 years are up, one would expect that either the landlord or the tenant obtains possessory title to the land. If it is the landlord who then acquires title, the land is added to the holding comprised in the tenancy; if it is the tenant, then he holds the freehold of the land in possession.

......

92. Further ...... I cannot accept, at least in the absence of clear and binding authority to that effect, either of the two alternative propositions which Mr McDonnell’s argument on this point involves. The first of those two propositions is that the possessory title acquired at the end of the 12 years is in abeyance, so that the identity of its owner is unidentifiable, in that it could be either the landlord or the tenant. ......” (my emphasis)

129.  In my view, it is clearly arguable the presumption of encroachment was relevant; and it would bind the landlord as well as the tenant. This meant such presumption arguably operated to annex the RW Lot as part and parcel of the Lot even “while the [Lot Lease] is running” (ie before the reversion falls in) so that the RW Lot became subject to the terms of the Lot Lease, and upon P’s sale of the Lot to Group Leader it was presumed/ implied that its possessory title over the RW Lot was assigned as well. Indeed, Neuberger LJ in Tower Hamlets LBC suggested that arguments of justice and convenience justify that “one should presume, or at least be relatively ready to accept, that the possessory title is included in the sale”, and there should be words of severance in the sale agreement if it were otherwise.

130.  On such basis, Group Leader has demonstrated sufficient interest to be joined as a party to the present proceedings, so it is unnecessary to deal with senior counsel’s arguments in respect of (a) section 16 of the CPO and (b) successive squatters for such purpose. But I propose to go on to deal with the issue of section 16 of the CPO in relation to P’s proposed amendments.

131.  CPO  Section 16 of the CPO provides that:

“Unless the contrary intention is expressed in the assignment, an assignment shall operate to assign, with the land, all rights, interests, privileges, easements or appurtenances in, over, belonging or appertaining to that land or at the time of the assignment used, held, occupied or enjoyed with that land and things attached to the land or permanently fastened to anything attached to the land.”

Mr Neoh SC submitted the possessory title of the RW Lot had been assigned to Group Leader by operation of section 16 of the CPO and the express provisions in Clause 1 and paragraph 1 of Schedule 3 of the 2014 Assignment that essentially mirrored the wording of section 16 of the CPO (see paragraph 45(d) above).

132.  Mr Chan SC disagreed and said nothing in the description of the properties being assigned (in the Recitals and Clause 1 of the 2014 Assignment) suggested it was otherwise than an assignment of the residue of the Lot Lease, and there was no basis to suggest the assignment carried with it the possessory title of the RW Lot by virtue of section 16 of the CPO. Mr Chan SC also reminded the Reserve Price was assessed without reference to the RW Lot,[88] and no order for compulsory sale of the RW Lot was ever sought/ made. It was said the 2014 Assignment and section 16 of the CPO could not confer any possessory title in the RW Lot to Group Leader.

133.  Mr Chan SC further submitted it has been held that “all rights, interests, privilege, easements or appurtenances in, over, belonging or appertaining to ...... or at the time of the assignment used, held, occupied or enjoyed with that land” in equivalent provisions in England and Australia could not be construed to cover possessory title acquired over land adjacent to the assigned land.[89] Lowe J in the Australian case of Kirk v Sutherland[90] observed that “the words ‘rights powers and privileges’ ‘belonging or appertaining’ to the estate or interest of the proprietor” cannot be construed as extending to rights acquired by adverse possession in land in another certificate of registered title, so section 62 of the Law of Property Act 1928 would not avail the plaintiffs in that case. Mr Chan SC suggested the same reasoning should apply to section 16 of the CPO in Hong Kong.

134.  Mr Chan SC next referred to Site Development (Ferndown) Ltd & ors v Curthbury Ltd & ors[91] that concerned section 62(1) of the Law of Property Act 1925.[92] In that case, C was the registered owner of the blue land between the brown land owned by S and the highway. C tried to assert its ownership rights by preventing S from crossing the blue land or exercising any rights over it, but S claimed C’s title had been extinguished by adverse possession. S argued section 62(1) of the Law of Property Act 1925 (a more elaborate version of section 16 of CPO) operated to convey to each successor adverse possession rights over the blue land each time the brown land was conveyed, but C said even if there had been adverse possession the resultant title had not been conveyed out of S’ predecessors. It was held the adverse possession title had not passed to S by implication under section 62(1) of the Law of Property Act 1925, but as each new owner in a series of successful transfers of the brown land also took possession of the blue land resulting in an unbroken chain of adverse possession periods up to the conveyance to S, such adverse possession rights acquired by S’ predecessors had been relinquished in sequence by transferor to transferee each time the brown land had been transferred, and as a result  S could rely on any unbroken period of 12 years’ adverse possession arising whenever it asserted its claim.

135.  For the “section 62 argument”, Vos J said at p 239 that the adverse possession rights are not “rights occupied or even enjoyed with the [brown] land” but “rights in respect of an entirely different piece of land which happens to adjoin it”. After referring to St Marylebone Property Co Ltd v Fairweather,[93] Fleet v Silverstein[94] and Kirk v Sutherland, Vos J at p 240 preferred the “more carefully reserved decision in Kirk’s case” rather than the “ex tempore decision in Fleet’s case”, and taking into account “the brown land and the blue land are separate plots in separate titles, and though the brown land is bigger, the blue land is not just a strip adjoining the brown land; it is a plot in its own right”, he concluded that S’ predecessors had not passed their rights to adverse possession of the blue land to S with transfer of the brown land.

136.  I find Mr Chan SC’s analysis persuasive, and it is clear section 16 of the CPO would not assist P. In paragraph 34-28 at p 654 of Adverse Possession, it was said “it may be that s 62 will only operate to convey land in the adverse possession of the party conveying in a situation similar to that in Fairweather v St Marylebone Property Co Ltd, where there is a structure partly on the land which is expressly conveyed and partly on adjacent land in the adverse possession of the party conveying”. However, it is plain Site Development (Ferndown) Ltd & ors is not concerned with the presumption of encroachment, and Vos J’s judgment is premised on the brown land and blue land being separate plots. Where the presumption of encroachment is applicable, the encroached-upon land is annexed to and becomes part and parcel of the demised land subject to the same terms as the tenancy of the demised land. On such basis, it becomes an open question whether instead the principle in Tower Hamlets LBC discussed above is more relevant.[95] In my view, Mr Chan SC’s submissions do not destroy the arguability of P’s contentions based on the presumption of encroachment.

137.  Successive squatters  At the Hearing, Mr Neoh SC did not rely on the contention that Group Leader was in successive adverse possession of the RW Lot by having continued (since the 2014 Assignment) to be in possession immediately after P’s possession on behalf of the Owners. Mr Neoh SC agreed that on P’s case (ie it had acquired possessory title over the RW Lot before commencement of the present proceedings in 2012), it was a conveyance issue (as discussed above) rather than a possession issue. But in deference to Mr Chan SC’s submissions and in case this matter goes further, I shall briefly summarise Mr Chan SC’s contentions.

138.  Mr Chan SC submitted a subsequent squatter cannot acquire possessory title by merely taking up possession immediately after the departing squatter (even if there is no time gap in between their respective possession) when the original squatter has been in possession beyond the duration of the limitation period. This is because once possessory title has accrued it cannot be abandoned but can only be destroyed by another 12 or 20 years of possession by another squatter accruing a new possessory title to extinguish the previous one. For a successive squatter to rely on the original squatter’s possessory title, it must be established that the outgoing squatter consensually allows the next squatter into possession.

139.  In Kirk, a squatter acquired title to adjoining land, and then sold his own land and moved away. Later he conveyed the adjoining land to the defendant. Lowe J at pp 37-38 held the squatter retained title to the adjoining land and made a good conveyance of it to the defendant. Adverse Possession states that “[if] that decision is good law, it means that the expiry of the limitation period does bring about a fundamental change in the nature of the squatter’s title, so that thereafter abandonment of possession does not destroy the title”.[96] Megarry and Wade, The Law of Real Property, summarises the position as follows:[97]

“(c) Possession abandoned. There is no right to add together two periods of adverse possession if a squatter abandons possession where the full period has run and some time passes before either someone else takes adverse possession or he retakes adverse possession of the land. During the gap between the two squatters, the owner has possession in law, and there is no person whom he can sue. The land therefore ceases to be in adverse possession and when adverse possession is taken by the second squatter a fresh right of action accrues to the true owner, who has the full period within which to enforce it.” (my emphasis)

Mr Chan SC suggested once the squatter had acquired possessory title by adverse possession for the requisite limitation period, that title would not be lost merely because the squatter went out of possession, and he would remain as possessory owner unless/until some other person acquired title to the property (a) by conveyance, will or intestacy or (b) by adverse possession.

140.  On the other hand, Mr Neoh SC submitted that periods of possession of successive but unconnected squatters could be aggregated. In Tower Hamlets LBC, Lord Neuberger LJ said at p 141 as follows:

“[36] The central point in this connection is what bars the paper owner from claiming possession is a continuous period of 12 years of dispossession – see s.15(1) of, and para. 1 of Sch. 1 to, the 1980 Act. Accordingly, unless there is a hiatus between the periods of possession of successive squatters (in which case para.8(2) of the Schedule would prevent the second squatter being able to rely on the period of adverse possession by the first) the second squatter, whether he has purchased from the first squatter or dispossessed him in some other way, can rely on the first squatter's period of adverse possession. This view is supported by Asher v Whitlock (1865) L.R. 1 Q.B. 1 and Willis v Earl Howe [1893] 2 Ch. 545.” (my emphasis)

In Willis v Earl Howe,[98] Kay LJ said as follows:

“...... It was suggested in reply that ...... [the last occupier] taking possession formed a new departure, and that the statute would begin to run from that entry, and that the previous possession of [the previous occupier] was not material. The effect of that would be that if a series of occupiers, not claiming under one another, kept out the real owner for 100 years, time would only run against him from the moment when the last of such occupiers entered into possession. I am of opinion that this is not the law. A continuous adverse possession for the statutory period, though by a succession of persons not claiming under one another, does, in my opinion, bar the true owner. ......” (my emphasis)

141.  But these 2 cases do not directly assist P as they do not deal with the situation of successive squatters after the claim is time-barred but with the situation when a squatter has been dispossessed by another squatter before the claim is time-barred, which latter situation has been summarised by The Law of Real Property at para 35-022 at p 1470 as follows:

“(b) Squatter dispossessed by squatter. If a squatter is himself dispossessed the second squatter can add the former period of occupation to his own as against the true owner.[99] This is because time runs against the true owner from the time when adverse possession began,[100] and so long as adverse possession continues unbroken, it makes no difference who continues it.[101] But as against the first squatter, the second squatter must himself occupy for the full period before his title becomes unassailable. ......”

142.  Mr Chan SC, citing Site Developments (Ferndown) Ltd,[102]further argued the previous possessory title can only be extinguished by sufficient facts showing the departing squatter voluntarily relinquishes possession to next squatter[103] and abandons further claim to the adversely possessed land so that there is one continuous possession, and time for the owner to bring an action runs from the date when the departing squatter first took possession. Mr Chan SC submitted that here in the absence of any express plea or proposed plea that possession (or claim to possessory title) in the RW Lot (if any) vested in the previous Owners of Western Court / Lot was voluntarily transferred or relinquished to Group Leader (which Mr Chan SC said was hardly surprising since some of the undivided shares of the Lot were acquired as a result of a compulsory sale order), Group Leader’s claim must fail. Mr Chan SC further submitted it would not help even if Group Leader could add P’s possession with its own as Group Leader allegedly only took possession of the RW Lot upon the 2014 Assignment. Since Group Leader as successive squatter only accrued its own possessory title after commencement of the present proceedings, it could not introduce a subsequent cause of action based its own successive possession since 2014 (hence non-existent in 2012) by amending the AOS and SoC.[104] Mr Chan SC argued that Group Leader had no locus to sue as at the date of OS and its intended claim is bound to fail.

143.  It is unnecessary for me to come to any view on this point as Mr Neoh SC did not rely on the successive squatters’ argument. But I see the force of Mr Neoh SC’s submissions that even if possessory title of the RW Lot remained with P (upon adverse possession for more than 20 years) who issued the OS in 2012 for declaration of its possessory title, Group Leader should still be added as a party to the present action as it has become the sole owner of all undivided shares of the Lot and is now in possession of the RW Lot adverse to Deceased/Estate. In my view, on the principles discussed in Part VI above, that is sufficient interest for joining Group Leader as a party to the present proceedings. And even if the periods of possession by P/Owners and Group Leader could not be aggregated, Group Leader had shown sufficient arguable basis in relation to the presumption of encroachment and assignment of the possessory title of the previous squatter in respect of the RW Lot to it that it had locus to claim the proposed declaratory reliefs sought (but subject to Part XI below).

XI.  RELIEF SOUGHT – POSSESSORY TITLE

144.  Mr Chan SC noted P previously sought and Group Leader intended to seek an order to be registered in the Land Registry as the owner of the RW Lot in substitution for the Deceased (see paragraph 12(c) above). I agree that acquiring a possessory title through possession for the duration of the limitation period (even if established) does not operate as a statutory conveyance and does not entitle the holder of possessory title to be registered as owner in substitution of the paper-title owner.[105] There is no basis to seek such relief. But save as aforesaid and also the argument in relation to section 16 of the CPO which I reject, for the reasons discussed above, I consider the proposed amendments in paragraphs 44-46 above should be allowed as being necessary following the joinder of Group Leader as the 2^nd plaintiff in the present proceedings and for determination of the true controversy between the parties.

XII.  CONCLUSION

145.  In the circumstances, D’s Application is dismissed save and except that the following are struck out:

(a)   the phrase “and is accordingly entitled to be registered as the owner of the Property in the Land Registry” in paragraph 2 of the AOS and in item 2 of the prayer of reliefs in the SoC;

(b)   paragraph 5 of the AOS and item 5 of the prayer of reliefs in the SoC.

146.  As for P’s Summons, I grant the following order:

(a)   Group Leader be joined as the 2^nd plaintiff and P shall stand as the 1^st plaintiff in the present proceedings;

(b)   save and except that (i) the parts described in paragraph 145(a)-(b) above be struck out, (ii) the proposed amendment in paragraph 5 of the RAOS Draft and item 5 in the prayer of relief in the ASoC Draft, and (iii) the phrase “By virtue of section 16 of the Conveyancing and Property Ordinance,” in paragraph 8(e) of the ASoC Draft be disallowed, leave be granted to P to re-amend the AOS in the manner marked in green as per the RAOS Draft and to amend the SoC in the manner marked in red as per the ASoC Draft;

(c)   within 7 days from the date hereof, P shall file and serve the Re-Amended Originating Summons and the Amended Statement of Claim;

(d)   notice of intention to defend by D herein do stand;

(e)   leave for D to file and serve Amended Defence within 28 days after service of the Re-Amended Originating Summons and the Amended Statement of Claim;

(f)    leave for P to file and serve Amended Reply within 28 days thereafter.

147.  I also order that paragraphs 1-2 of D’s Summons be adjourned sine die with liberty to restore. I urge both parties to give careful consideration as to whether it is still necessary or appropriate to further pursue the applications in paragraphs 1-2 of D’s Summons, and if not to take steps to conclude the same.

148.  There is no reason why costs should not follow event. The declaratory relief struck out in paragraph 145 above had minimal overall impact. It was briefly mentioned in Mr Chan SC’s written submissions and did not feature in the oral submissions at the Hearing, and I am not persuaded it had any material effect on costs. In respect of D’s Summons, I grant a costs order nisi that (a) D do pay 95% of P’s costs of D’s Application (including costs of the Hearing in relation thereto and all costs reserved in relation thereto, if any) to be taxed if not agreed with certificate for two counsel, and (b) costs in respect of paragraphs 1-2 of D’s Summons be reserved.

149.  In respect of P’s Summons, I grant a costs order nisi that (i) 80% of the costs of the argument in respect of P’s Summons (including costs of the Hearing in relation thereto and all costs reserved in relation thereto, if any) be paid by D to P to be taxed if not agreed with certificate for two counsel, and (ii) save as aforesaid, costs of and occasioned by P’s Summons be paid by P to D in any event to be taxed if not agreed. The costs order nisi in (i) above is to reflect that P did not fully succeed on the proposed amendments.

150.  I would like to draw the taxing master’s attention to the fact that the hearing bundle had not been prepared in accordance with paragraphs 2(1)(a)-(b) and 4(1)(a)-(b) and (e) of Practice Direction 5.4, which fallacy is compounded by a brief and unhelpful index that made search and reading difficult. The taxing master should take note of such matter if it becomes pertinent in the taxation proceedings.

151.  It remains for me to thank counsel for their assistance.