LIU KAM HOI AND OTHERS v. LIU PING KUEN

HCA6728/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6728 OF 1998

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BETWEEN

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RULING

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1.  This is the plaintiffs' application seeking :

(a)   Leave to be given to the plaintiffs to be released from the undertaking given by the plaintiffs to the court on 12 October 1999; and

(b)   an inquiry as to the amount of damages suffered by the plaintiffs pursuant to the defendant’s undertaking as to damages on 12 October 1999. 

2.  There is a long history and background to this matter. 

Background

3.  The plaintiffs are the registered owners of Lot No. 258 in Demarcation District No. 52, Fu Tei Au, Sheung Shui, New Territories (“the Lot”). 

4.  This action was commenced by the plaintiffs in April 1998 to recover possession of a portion of the Lot leased to the defendant. 

5.  The claim in the original Statement of Claim was that Liu Fun Kee, the original defendant named in the Writ, (“the Deceased”) occupied a portion of the Lot as tenant.  That tenancy was granted in 1967 and ended on 31 December 1996 upon the service of a notice to quit dated 22 March 1996. 

6.  In the Defence and Counterclaim dated 9 July 1998, it was admitted that the Deceased occupied a portion of the Lot as tenant.  It was pleaded that there was an oral agreement to the effect that the Deceased and his family would be entitled to stay as long as they paid rent each year.  However, that position of the Lot occupied by the Deceased as tenant was not properly defined either in the original Statement of Claim or in the Defence and Counterclaim dated 9 July 1998.  

7.  The Deceased passed away on 21 October 1998 and his son, Liu Ping Kuen, took over the defence of the action and was substituted as the defendant in his capacity as the personal representative of the estate of the Deceased. 

8.  By summons dated 14 July 1999 application was made by the defendant to amend the Defence and Counterclaim.  In the draft Amended Defence and Counterclaim, the location of that part of the Lot which was leased to the Deceased was identified by a plan annexed thereto on which the leased portion of the Lot was coloured yellow (“the Yellow portion”).  [Annex 1 to this Ruling shows the Yellow portion alleged by the defendant in 1999 to have been leased to the Deceased.] 

9.  At the same time, the defendant applied for an interlocutory injunction to restrain the plaintiffs and their family members, employees, and agents from interfering with the Yellow portion, being that part of the Lot alleged in the Amended Defence and Counterclaim to have been leased to the Deceased. 

10.  The plaintiffs’ case however was that not all of the Yellow portion was leased to the Deceased, in particular, that part of the Yellow portion on the right side of the road. 

11.  Nevertheless, the plaintiffs were prepared to offer an undertaking not to interfere with the Yellow portion and that was recorded in the order of Deputy Judge Muttrie dated 19 July 1999. 

12.  On 12 October 1999, I granted leave to the defendant to amend the Defence and Counterclaim and at the same time the interlocutory injunction was disposed of upon the undertaking given by all the plaintiffs and their sons, grandsons, family members and their employees and agents not to interfere with the Yellow portion.  (This is the undertaking which the plaintiffs now seek to be released from.)

13.  At the same time there was a cross undertaking given by the defendant not to use the Yellow portion for purpose of open storage or other purposes in contravention of the Conditions of Use imposed by the Planning Department as a result of complaint by the Planning Department in its letter dated 15 November 1995. 

14.  Thereafter nothing much happened in the proceedings apart from some minor amendments to the pleadings and other interlocutory steps relating to lists of documents and exchange of witness statements. 

15.  By summons dated 21 October 2009, the defendant applied for leave to further amend the Amended Defence and Counterclaim. 

16.  Initially that application was refused by the master.  However, on appeal by the defendant to a judge in chambers, the defendant was given leave to re-amend the Amended Defence and Counterclaim which was filed on 4 January 2011. 

17.  Those amendments as contained in the Re-Amended Defence and Counterclaim drastically amended the defendant’s case. 

18.  The case now put forward by the defendant in the Re-Amended Defence and Counterclaim is that in the Yellow portion, only two small parts of it (Portions 1 and 1A) were leased to the Deceased in 1959 and 1970 respectively. 

19.  In respect of other parts of the Yellow portion (namely, Portions 1B, 1C and 1D) they were adversely possessed by the Deceased and his family members since 1970, 1985 and 1986 respectively such that the plaintiffs’ title to those parts have now been extinguished by operation of the Limitation Ordinance by reason of adverse possession.  [Annex 2 to this Ruling shows the position of Portions 1, 1A, 1B, 1C and 1D on the Lot.] 

20.  It should also be noted that a large part of the Yellow portion on the right side of the road dividing the Lot into two distinct halves is left out of the picture in the Re-Amended Defence and Counterclaim. 

21.  The Re-Amended Counterclaim makes a counterclaim for possessory title by adverse possession of Portion 1B only. 

Plaintiff’s application for release from undertaking

22.  This application by the plaintiffs to be released from their undertaking given to the court on 12 October 1999 is made on the basis that by the Re-Amended Defence and Counterclaim, that part of the Yellow portion on the right side of the road is now left out of the picture completely by the defendant and no claim is made thereon. 

23.  Moreover, even for the Yellow portion on the left side of the road, the defence case now is that only Portions 1 and 1A were leased to the Deceased, but not Portions 1B, 1C and 1D. 

24.  That is to be contrasted with the picture in 1999 when the undertaking was given, when the defendant’s case then was put on the footing that the whole of the Yellow portion was leased to the Deceased. 

25.  Given the present position of the defendant, the plaintiffs say that they had been misled by the defendant in 1999 (as the defendant’s case then stood) into giving that undertaking.  Alternatively, that they had labored under a mistake that the defendant’s case was that the Yellow portion on the right side of the road was part of the Lot leased to the Deceased when it is now clear that it was not. 

Stance of the defendant and the update position

26.  At the start of the hearing before me, the defendant informed me that a new claim, being HCA 73 of 2011, had been commenced by the defendant and handed up the Writ (with only an indorsement of claim) which was issued on 13 January 2011, namely, the day immediately prior to this heaing. 

27.  The parties to HCA 73 of 2011 is simply the reverse to the present case.  There, the present defendant is claiming against the present plaintiffs for :

(a)   a declaration that the present defendant has been in adverse possession of Portions 1C, 1D and a part of the Yellow portion on the right side of the road for a period in excess of 20 years;

(b)   declarations that the present plaintiffs’ title to those parts of the Lot have been extinguished by virtue of the Limitation Ordinance and that they have lost the right to bring any action to recover same; and

(c)   a declaration that the present defendant has acquired an indefeasible possessory title thereto. 

28.  I am informed by counsel for the defendant that although reference had been made to Portions 1C and 1D in the Re-Amended Defence and Counterclaim, the Re-Amended Counterclaim did not make any claim for possessory title in relation to Portions 1C and 1D because the 20 years adverse possession would only have accrued some time in or after 2006 and therefore could not have been the subject of the Re-Amended Counterclaim. 

29.  It was for that reason that HCA 73 of 2011 was taken out and the claim for possessory title by adverse possession made therein. 

30.  Counsel for the defendant further pointed out that at all times in the affidavits of the defendant, it has all along been the case of the defendant that the the Deceased and his family had occupied and taken possession and control of that part of the Yellow portion on the right side of the road and that was a position that the defendant had never resiled from despite the fact that in so far as the pleading goes, that part of the Lot on the right side of the road had been left out completely from the Re-Amended Defence and Counterclaim. 

31.  That position has now been redressed by the defendant issuing HCA 73 of 2011 in which possessory title by adverse possession is now claimed by the defendant in respect of Portions 1C, 1D and part of the Yellow portion on the right side of the road. 

32.  I am further told that it is the intention of the defendant to apply for HCA 73 of 2011 to be consolidated with the present proceedings on the basis that there will be common issues of fact and common questions of law to be decided in both cases. 

33.  It was therefore submitted by the defendant that given that such a claim has now been made by the defendant for possessory title by adverse possession, the undertaking given by the plaintiffs relating to the Yellow portion in 1999 should continue and the plaintiffs should not be released from such undertaking. 

Decision

34.  I have no doubt in my mind but that based on all the circumstances stated above, the plaintiffs ought to be released from the undertaking given by them in 1999 as a matter of principle. 

35.  That undertaking was given by the plaintiffs on the basis that the defendant claimed that the entire Yellow portion had been leased to the Deceased and his family which has now been shown to be untrue, as the case of the defendant now stands. 

36.  That “mistake” can only have come about as a result of the fault of either the defendant or his legal advisers including his former legal advisers.  The explanation given by the defendant is contained in his 4^th Affirmation in which he says that the previous pleaded case was the result of a mistake, in that when the defence was prepared for the original Defence and Counterclaim, he was told by his lawyers that the plaintiffs were seeking to recover land which had been leased to the Deceased but because there was no identification by the plaintiffs of which part of the land had been leased, the defendant simply told his lawyers that some land had been leased to the Deceased also without identifying which part of the land had been leased and without mentioning to his lawyers about the lands adversely possessed by the Deceased and his family. 

37.  When preparing the Amended Defence and Counterclaim, the defendant states that he told his lawyers that part of the Lot had been let to the Deceased and parts of it to others (i.e. Chu To Keung and Chu Yun) and did identify on a plan those parts let to Chu To Keung and Chu Yan, but as far as he could remember, did not identify exactly which part of the Lot had been let to the Deceased.  As a result, the defendant says that the plan annexed to the Amended Defence and Counterclaim was mistakenly coloured. 

38.  This mistake on the part of the defendant and/or his legal advisers have led the court and the plaintiffs into believing that the defendant’s case was that the entire Yellow portion had been leased to the Deceased but which was not factually true. 

39.  Moreover, the allegation by the defendant which led to the application for an interlocutory injunction against the plaintiffs was that the plaintiffs were sending in bulldozers to clear that part of the Yellow portion on the right side of the road thereby interfering with the leased area on the right side of the road. 

40.  There was no allegation by the defendant that the plaintiffs were doing or had done anything in 1999 to interfere with Portions 1 and 1A, those parts actually leased to the Deceased, or indeed any parts of the Yellow portion on the left side of the road. 

41.  Had the factual basis been made known to the court (and to the plaintiffs) in 1999 that the status of the defendant to the Yellow portion on the right side of the road was merely that of a trespasser, at which time the defendant could not have acquired any right due to the fact that 20 years of adverse possession had not accrued as yet, there could be no question that the defendant could have obtained an interlocutory injunction against the plaintiffs merely as a trespasser.  A fortiori therefore, there could be no question that the plaintiffs would have had to give any undertaking not to interfere with the Yellow portion as was given in the undertaking by them. 

42.  For this reason therefore, the plaintiffs must be released from that undertaking given on 12 October 1999 as a matter of principle. 

43.  In coming to this conclusion, I have also taken into account the following matters. 

44.  While it is true that the defendant’s case in so far as Portions 1 and 1A has always been on the basis that those two portions were leased to the Deceased and his family, there has never been any allegation by the defendant of any interference by the plaintiffs onto any part of Portions 1 and 1A.  That coupled with the fact that there has not been the slightest indication that since giving the undertaking in 1999, the plaintiffs or any of them have done anything in breach of that undertaking leads me to the view that by releasing the plaintiffs from that undertaking, the defendant will be put at risk, during the interim period between now and the trial of this matter, of having to suffer any kind of interference by the plaintiffs on any part of the Lot now occupied by him, whether as lessee or as trespasser albeit with a claim to possessory title by adverse possession. 

45.  After all, the initial act of interference by the plaintiffs which led to the application by the defendant for an interlocutory injunction and the undertaking given by the plaintiffs stemmed from the plaintiffs’ belief that the Yellow portion on the right side of the road were not the subject of any lease or claim by the defendant. 

46.  Given these circumstances, I feel that the defendant will still be sufficiently safeguarded without that undertaking given by the plaintiffs in 1999. 

47.  However, should I be wrong in that view, and given now that the defendant has mounted a claim for possessory title on Portion 1B in the present counterclaim, as well as claiming for possessory title to Portions 1C, 1D as well as parts of the Yellow portion on the right side of the road in HCA 73 of 2011, should it transpire that after the release of the plaintiffs from their undertaking, if anything is done by the plaintiffs to interfere with those parts the subject of claim for possessory title by the defendant, it would be open to the defendant to come back to the court to apply for an interlocutory injunction until the matter can be determined at trial.  After all it would be merely just to preserve the present status quo until this dispute between the parties can be resolved by the court. 

48.  Therefore looking at the matter from all angles, I have no hesitation in acceding to the plaintiffs’ application to be released from their undertaking given in 1999 and I so order. 

49.  As for the second part of the plaintiffs’ application, namely, for an inquiry as to damages, the parties are agreed that the normal practice would be for such inquiry to be made only after determination of all the disputes between the parties and when findings of facts can and have been made. 

50.  This is particularly so in a case such as the present where the disputed facts are numerous and far reaching. 

51.  Accordingly, any inquiry as to damages will have to be held over until final determination of all the issues between the parties in this matter and in HCA 73 of 2011. 

Costs

52.  This application for release from the undertaking came about as a result of the mistake of the defendant, the fault for which can be put squarely at the door of the defendant. 

53.  Moreover, the defendant came to court contending against the release of the undertaking but has failed in that contention. 

54.  Both these matters stated above point in the direction that costs ought really to follow the event in this case and I can see no good reason to depart from that general rule. 

55.  Accordingly, there will be a costs order nisi that the defendant pays to the plaintiffs the costs of and occasioned by the plaintiffs’ application made by summons dated 16 November 2010 including the hearing on 15 December 2010 as well as the hearing for full argument on 14 January 2011 in any event.