YU SIU CHEUK v. REALRAY INVESTMENTS LTD

CACV 181/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 181 OF 2009

(ON AN INTENDED APPEAL FROM HCA 277 OF 2007)

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BETWEEN

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J U D G M E N T

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Hon Cheung JA :

1.  On 7 February 2007 the plaintiff commenced the present action seeking, among other things, a declaration that the title of the defendant to part of the property known as Lot No. 575 and No. 574 in Demarcation District No. 121 (‘the property’) had been extinguished by section 17 of the Limitation Ordinance (‘the Ordinance’) (Cap. 347) as a result of the plaintiff’s adverse possession of the property. The action was heard and dismissed by Recorder Paul Shieh S.C. The plaintiff now appeals.

The plaintiff’s case

2.  According to the plaintiff’s pleaded case he took possession of the property in the winter of 1979 and has been in continuous possession thereof. He has been using the property as a dwelling and also keeps a large number of animals, including 70 cats, 50 dogs and one monkey on it. He has fenced off the property and has grown fruit trees there. Since May 1995, he has also applied for and obtained electricity and water supply to the property. Prior to that there was no electricity supply and he used water from a pond nearby.

3.  The plaintiff entered into possession of the property shortly after he returned to Hong Kong from the Mainland in August 1979 after an absence of 29 years. He was working in a dye factory near the property. He met a villager called Hui Tat Fai (‘Mr. Hui’) who agreed to transfer the property to him for the sum of HK$30,000. Mr. Hui told him that the owner to the property had died. Mr. Hui had previously occupied the property for over 20 years but was no longer using it when he agreed to the transfer.

4.  When the plaintiff took over the property there was a house which was about 100 sq. ft. in size. There were also two pigsties nearby. The plaintiff had since used one of them as a kitchen/toilet and the other as a storeroom.

5.  The plaintiff also called three factual witnesses in support of his case on his possession of the property. He also called a surveyor to give evidence.

The defence

6.  The defendant did not call any factual witness but it called a surveyor to give evidence.

7.  The defendant became the owner of Lot 574 on 31 July 1995 and Lot 575 on 20 May 1996. The assignments were registered in the Land Registry on 17 August 1995 and 6 June 1996 respectively. The defendant claimed that the plaintiff only entered into the property without the consent of the defendant after the defendant became the owner.

The Limitation Ordinance

8.  Section 17 of the Ordinance provides that at the expiration of the period prescribed by the Ordinance for any person to bring an action to recover land, the title of that person to the land shall be extinguished. The current relevant period of limitation to bring an action to recover land is 12 years. This has been the position since 1991 by reason of the Limitation (Amendment) Ordinance 1991. Prior to that, the period was 20 years. The parties in this action agreed (and it was accepted by the Recorder) that by virtue of the transitional provision prescribed by section 38A of the Ordinance, the relevant limitation period for the purpose of the plaintiff’s claim is still 20 years.

9.  Section 38A provides that

‘  (1)  The time for bringing proceedings in respect of a cause of action―

(a)  to recover any land;

......

which accrued before 1 July 1991 shall, if it has not then already expired, expire at the time when it would have expired apart from the provisions of the Limitation (Amendment) Ordinance 1991 (31 of 1991).’

10.  The plaintiff claimed that he entered into possession in 1979. By 1 July 1991 the cause of action by the defendant’s predecessor in-title to recover the property had not expired because the then limitation period was 20 years. By then the plaintiff would only have occupied the property for about 12 years. The time for bringing proceedings would only have expired in 1999. By virtue of 38A(1) the shortened 12 year limitation period is therefore not applicable.

The issue as identified by the Recorder

11.  In dismissing the plaintiff’s claim the Recorder addressed the issue that called for judgment as follows :

‘ 70.  First, the burden of proof is on Yu (i.e. the plaintiff).  His case is that he had entered into possession of the Disputed Land in late (or the winter of) 1979.  That is a little more than 27 years prior to the issue of the Writ herein and (if proved) more than adequate for a plea of adverse possession to succeed.  Be that as it may, that is Yu’s case on the primary facts.  There is noalternative (or fallback) case to the effect that if he had not commenced occupation in 1979 then he had commended occupation at another point in time which was more than 12 years prior to the commencement of thisaction.

71.  This means that ifYu isunable to prove that his occupation ofthe Disputed Land commenced in late 1979 as he alleged, that is the end of this case on adverse possession….’  (emphasis added)

The plaintiff was disbelieved

12.  The Recorder disbelieved the plaintiff and his factual witnesses. In dealing with the plaintiff’s evidence he held that

‘  Even with all the above factors in mind, I regret to say that I do not accept Yu’s evidence that he had been occupying the Disputed Land since winter 1979 whether as al1eged by him or at all.  Much of his evidence is inherently incredible, internally inconsistent and not foreshadowed by or inconsistent with his pleadings and witness statements.  When these inconsistencies and inherent improbabilities were pointed out to him he tried to explain his evidence in a thoroughly unsatisfactory manner.  I am not talking about points of minute detail which an ordinary person can be forgiven for not carrying in his head.  He is unable to adequately and satisfactorily deal with and explain a large number of major points in his case.’

13.  The Recorder held that the other oral evidence adduced by the plaintiff’s witnesses did not assist the plaintiff.

The ground of appeal

14.  The ground of appeal relied upon by Mr. Erik Shum, counsel for the plaintiff, is a short one, namely, the Recorder was wrong to identify the issue in such a narrow compass. The plaintiff had expressly pleaded that he has been in continuous adverse possession of the property since 1979, i.e. more than 20 years before the commencement of his action which would have defeated the defendant’s paper title to the property. Even if the Recorder rejected the plaintiff’s case on the time he entered into possession, he was still required to address the issue whether the plaintiff has been in adverse possession for 20 years prior to the commencement of the action.

The opposition

15.  Mr. Chan Chi Hung SC, counsel for the defendant, opposed the appeal on three grounds :

(1)  The Recorder adopted his approach because the plaintiff chose to proceed in such a way at the trial.

(2)  The Recorder was correct in ruling that the plaintiff had failed to prove his case because he had failed to discharge the burden of proof that he had been in possession for twenty years before the issue of the writ.

(3)  In any event, the Recorder had considered not only whether the plaintiff entered into possession in 1979 but also the question of the plaintiff’s possession as a whole and he would have found that the possession was less than 20 years.

Overview : Issue of continuous possession

16.  I will address these arguments in turn but I will take an overview of this topic first.

17.  For the purpose of establishing his claim, the plaintiff has to establish that for at least 20 years prior to the issue of writ in February 2007 he has been in continuous adverse possession of the property thereby defeating the paper title of the defendant. This means that he must show that he has been on the property since at least 1987. For the purpose of deciding whether the defendant’s title has been defeated by limitation the Court does not need to decide the precise point of time when the plaintiff entered the property so long as it is satisfied that the plaintiff has proved that he has been there for twenty years with the necessary intention to possess. This is what the Court which is seized of the matter should decide. The plaintiff has, of course, stated he was there even earlier in 1979. If that is the case, then the title of the defendant would be defeated at an earlier time in 1999.

18.  Even if the plaintiff cannot establish that he first entered in 1979, the Court still has to address the issue of the 20 years’ adverse possession. It is true that the plaintiff had not put forward some other specific alternative date or dates when he entered into possession of the property. He had chosen not to do so but it does not mean that the Court could ignore the plaintiff’s case that he had been in continuous possession since 1979 which encompasses the 20 years’ adverse possession issue.

19.  The plaintiff certainly did not confine his case that either he had entered in 1979 or he had not entered at all. To the contrary he had called evidence on the use of the land since he entered into possession : he had converted the structures on the land for domestic use, he had cultivated the land, he had kept domestic animals, he had fenced the land and obtained electricity and water. Some of these activities were confirmed by contemporaneous evidence such as the aerial photographs on fencing and the connection of electricity and water to the property. The Recorder has not made specific finding on these matters because he has not addressed the plaintiff’s case on the 20 years’ adverse possession.

Did the plaintiff confine himself to such a narrow issue?

20.  In respect of the first argument of Mr. Chan Chi Hung SC, the then counsel for the plaintiff at the trial (not Mr. Shum who only appeared in this appeal) had in his written closing submission stated that :

‘4.  As had been identified in the parties’ pleadings, insofar as factual issues are concerned, the following are the only trial issues between the parties (relevant to adverse possession):-

(a)  Whether P entered into possession of the said land lots in the winter of 1979 or only after their acquisition by D (i.e. after 31.7.95 and 20.5.96); and

(b)  Whether, in his occupation of the said land lots P had the necessary animus possidendi.’

21.  Mr. Chan relied on this as the plaintiff’s position that his case stands or falls on his entering into possession in 1979. I do not regard this statement as an indication that the plaintiff had adopted an ‘all or nothing’ approach by pinning his case solely on the basis that he entered into possession in 1979 and if he failed to establish that it would be the end of his case. Counsel for the plaintiff clearly did not intend that consequence. He had referred to the issues as identified in the parties’ pleadings. The plaintiff’s statement of claim expressly pleaded that he ‘has been in continuous occupation and possession of the (property) since at least the winter 1979’. Hence the plaintiff is also relying on continuous possession since that time. This is also made plain by counsel’s written opening submission at trial. He stated that

‘ 1.  Upon the close of pleadings, the following issues of law and fact emerge:-

(a)  Issues of fact

(i)  Whether, in the winter of 1979, the Plaintiff (‘P’) took possession of that part of Lots 574 and 575 in DD 121 as identified in the annexure to the Statement of Claim (‘the said land lots’) from one Hui Tak Fai (‘P’s predecessor-in-title’)[I, 3-4, 9, 12 (Statement of Claim, para.4 & annexure; Defence & Counterclaim, para.5)].

(ii)  Whether:-

(1)  since the winter of 1979 and up to the issue of the Writ herein, P has been in exclusive possession of the said land lots [I, 4, 12 (Statement of Claim, para.5; Defence & Counterclaim, Defence & Counterclaim, para.6)]; or

(2)  subsequent to 31.7.95 and 20.5.96 (when D obtained assignments of respectively the said land lots), P entered into possession of the said land lots without the consent of D (I, 12-13 (Defence & Counterclaim, para.7)).’  (emphasis added)

This part of the opening was repeated in the closing submission.

22.  As I said earlier this case was not fought on the basis that either the plaintiff had entered possession in the winter of 1979 or he had not entered into possession at all. Had this been the basis of the contest then what counsel for the plaintiff said in his written closing may be construed in a narrow way. That, however, was not the case. In my view he was merely describing the issue in an abbreviated manner without abandoning the plaintiff’s case that he has been in continuous possession since 1979. The issue whether the plaintiff was able to establish the requisite period of adverse possession was clearly alive. Mr. Chan’s own closing submission had also sounded a caution that the Court must also be satisfied that there was no adverse possession of 12 years prior to the writ before the Recorder could dismiss the plaintiff’s case.

‘ 1.  The burden of proving adverse possession is on P.  P’s case of adverse possession is defined in his pleadings.  Yu’s case, in his pleadings and in his evidence, is that he came to the Land in late 1979, the year he returned to Hong Kong and obtained his ID card (his present ID card recorded the month and year of first issue), and continued to possess in the way Yu alleged in his pleadings and his evidence.

2.  Thus, for the issue of adverse possession, the Court only has to decide whether Yu’s case is proved.  If not, the claim should be dismissed.  To dismiss Yu’s claim, the Court does not have to make a specific finding as to when, if not end of 1979, Yu started occupying the Land (if at all), as long as the Court cannot be satisfied that Yu has been in continuous adverse possession with animus for 12 years before the date of Writ (7^th Feb 2007).  (Note: for counterclaim for possession, the counterclaim should be granted unless Yu proves adverse possession for 12 years before the date of counterclaim on 20^th March 2007)  (emphasis added)

23.  In my view the Recorder was wrong to focus the issue that is determinative of the plaintiff’s case on such a narrow basis.

Burden not discharged?

24.  Mr. Chan Chi Hung relied on the detailed findings by the Recorder to support his argument that the plaintiff had failed to discharge the burden which was imposed on him that he has been in continuous possession of the property for 20 years.

25.  The Recorder identified five major and one minor problematic areas in the plaintiff’s evidence :

(1)  The evidence about how he acquired possession of the property from Mr. Hui and the payment he had made to Mr. Hui was inherently incredible and internally consistent.  The Recorder disbelieved the plaintiff had $30,000 in 1979 to pay for the transfer.

(2)  The plaintiff did not mention in his pleadings and his first witness statement that he had carried out farming or agricultural activities, in particular, the growing of sweet potatoes, which could result in the formation of ‘pattern growing’ that was observed in aerial photographs for some years since 1980.  Although the plaintiff later referred to growing sweet potatoes after the defendant disclosed the aerial photographs and expert report, his evidence on this topic was internally contradictory.

(3)  The plaintiff’s evidence about the structures on the property was unsatisfactory and was inconsistent with the aerial photographs and the contemporaneous documents.

(4)  The plaintiff’s evidence on fencing was undermined by the contemporaneous aerial photos.  The plaintiff said there were already some fences of about three feet tall when he possessed the property and he surrounded the property with a 5 feet tall fence after he moved in.  But the aerial photograph taken in November 1994 did not show any fencing.  Despite the plaintiff’s claim that many fences had collapsed, fencing actually appeared from the aerial photographs from May 1995 onwards.

(5)  The Recorder held that he was extremely skeptical of the plaintiff’s suggestion that he had lived without electricity for 16 years from 1979 to 1995.

(6)  The plaintiff claimed that after he had moved into the property he was told by a neighbour that staff from the Government Squatter Control Unit (‘the Unit’) had visited the property with a view to register it, but as the plaintiff was not there that day, the officers left without registering it.  The evidence showed that the Unit had disclosed that the record of registration of the property was 2 December 1976 when a temporary structure was observed on the property, the usage of which was described as ‘duck shed’.  The Recorder held that the plaintiff was not truthful about the visit and he made up the story about the visit to bolster his case although the Recorder also said that it did not mean the plaintiff has not been living there since 1979.  He regarded it as a point ‘marginally in (the defendant’s) favour’.

26.  My view is that when the Recorder addressed the weakness and discrepancies of the evidence adduced by the plaintiff and his witnesses, he was doing it on the basis of the issue as identified by him, namely, whether the plaintiff had established his case that he entered the property in 1979 and not generally to the issue of the plaintiff’s adverse possession for 20 years (or 12 years) prior to the writ. This can be seen from paragraphs 70 and 71 of the judgment which I have already cited and also from the following passages in his judgment :-

1)  Para. 75 : “The important point to note, ...is that the relevant issue is the time when Yu commenced his occupation of the Disputed Land. In particular the issue is whether he had commenced his occupation of the Disputed Land since late 1979 as alleged.”

2)  Para. 77 : “...evidence obtained from such inspection would have little if anything to do with the issue of whether Yu had commenced occupation of the Disputed Land in late 1979.”

3)  Para. 78 : “...let us assume that Realray had adduced evidence...But that has nothing to do with the issue of whether Yu had begun to occupy the Disputed Land in late 1979.”

4)  Para. 79 : “The law on adverse inference therefore does not provide any assistance to Yu in terms of proving the essential ingredient of his cause of action namely the date of commencement of his occupation.”

5)  Para. 81 : “Even with all the above factors in mind, I regret to say that I do not accept Yu’s evidence that he had been occupying the Disputed Land since winter 1979 whether as alleged by him or at all.”

6)  Para. 102 : “The point is not so much .... The point here is what S1, S2 and S3 (i.e. the structures on the property) represented “on ground level” and whether, as of late 1979 (when Yu allegedly moved into the Disputed Land), only S1 was there or whether S1 and S2 were already there.....”

7)  Para. 157 : “As can be expected, a number of other evidential matters have been relied on by both sides as relevant to the issue of when Yu began to occupy the Disputed Land...”

8)  Para. 163 : “For Yu to be able to rely on a “perfected” title on 1 July 1997...He therefore had to show that his adverse possession commenced in mid 1977. Because of my conclusion that he had not entered into possession of the Disputed Land in late 1979, a fortiori he has not been in occupation since 1977 and I so find.”

27.  If the Recorder proceeded on such a narrow basis then clearly he had not addressed the issue relevant to the plaintiff’s adverse possession of the property for 20 years.

The same result?

28.  Likewise for the third argument advanced by Mr. Chan Chi Hung S.C., the Recorder had simply not addressed the issue of 20 or 12 years’ adverse possession at all. Hence I reject the argument that the Recorder would have in any event dismissed the claim.

12 year limitation

29.  At the hearing before us, I raised the issue whether the plaintiff could also rely on 12 years’ adverse possession to defeat the title of the defendant. In the statement of claim the plaintiff has certainly pleaded that he has been in adverse possession of the property in excess of 20 years and also ‘in excess of 12 years’ before the commencement of the action. It is true that for the purpose of deciding whether a 20 years’ or 12 years’ limitation period will apply, the plaintiff has said that he has entered prior to the cutoff date of 1991 and hence has to establish a 20 years’ adverse possession. But if the objective evidence shows that adverse possession only began at a much later day but is long enough to cover a period of 12 years prior to the commencement of the action (namely in February 1995), I cannot see any reason why the plaintiff is not entitled to rely also on the shorter period to establish his claim.

Conclusion

30.  As the 20 or 12 years’ adverse possession is a live issue and the Recorder has not made any finding on it, his dismissal of the plaintiff’s case cannot stand. The appeal must be allowed. This is not a case where this Court can make a finding of fact by itself. Mr. Shum did not ask us to assume such a task. Accordingly there must be a retrial which unfortunately is unavoidable even though there was already a ten day trial below.

Costs

31.  I will make the following provisional costs order:

(1)  The plaintiff is to have the costs of the appeal.

(2)  The costs below be in the cause of the re-trial.

(3)  The plaintiff’s own costs be taxed in accordance with Legal Aid regulations.

 

Hon Yeung JA :

32.  I agree and have nothing to add.

Hon Yuen JA :

33.  I agree.