LEE TIM MUI v. HUI SHU PANG

DCMP 33/2019

[2022] HKDC 1427

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 33 OF 2019

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JUDGMENT

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(A) NATURE AND BACKGROUND THE DISPUTE

1.  By this action, the plaintiff claims against the defendant for adverse possession of a property known as 3^rd Floor, 13 Haven Street, Hong Kong erected thereon all that 1 equal undivided 56^th part or share of and in all that the piece or parcel of ground registered in the Land Registry as Sub-section 3 of Section G of Inland Lot No 2147 (“the Property”).

2.  The defendant was and is still the registered owner of the Property.

3.  The Property is a residential unit with three bedrooms. It is on the 3^rd floor of a multi-storey building called Lee Ha Court (the “Building”) at 13 Haven Street, Causeway Bay, Hong Kong.

4.  The Property was previously owned by the defendant’s mother. On about 17 August 1992, the defendant held the Property as the executor of the estate of his mother, deceased. On about 1 October 1992, the defendant succeeded the Property by way of assent.

5.  On about 17 July 1992, the defendant mortgaged the Property in favour of Sheng Zhan Industrial Limited (盛湛實業有限公司) (“Sheng Zhan”), as mortgagee, to secure a loan of US$300,000 repayable on or before 17 January 1993. Also on about 17 July 1992, the defendant handed over the keys of the Property to Chen Rui（陳銳）(“Chen”), the director of Sheng Zhan. On about 17 January 1993, the defendant defaulted in repayment of the capital and interest of the loan on the due date. The defendant thought that Sheng Zhan had sold the Property to settle the outstanding debt. Therefore, he ignored the Property until about 2018 when he was informed by the Social Welfare Department that he still held the Property. He then realized that Sheng Zhan had not sold the Property which was still registered in his name. He therefore paid a visit to the Property in 2018 and demanded the plaintiff, the occupier, to quit.

6.  The plaintiff claimed that, in about 1998, her good friend Chen passed her the keys and the title deeds of the Property for her safe custody. In about one year later, she decided to dispossess her good friend Chen and treated the Property as her own. She claimed that her dispossession started from about 1999.

(B) THE PLAINTIFF’S PLEADED CASE

7.  It is the plaintiff’s case that in or about 1998, Chen gave the keys (“the Keys”) and the title deeds of the Property (“the Title Deeds”) to her for safe custody.

8.  The plaintiff pleaded that since about 1999, she had been in continuous and exclusive possession of Property. The particulars of her continuous and exclusive possession are pleaded as follows:-

(a)  Since 1999, the occupation and use of the Property by the plaintiff have been without the consent, permission or approval of the defendant, Chen or anyone claiming or deriving title from the defendant.

(b)  In or about 1999, she changed the door locks of the Property at her own costs without the consent or authorization of the defendant, Chen or anyone claiming or deriving title from the defendant.

(c)  From about 1999 to 2008, she let the Property to various persons and she received all of the rents paid by her tenants.

(d)  In 2002, she registered her name as the account payer of the electricity supply in respect of the Property.

(e)  In 2005, she registered her name as the account payer of the telephone service of the Property. She also moved into one of the un-rented bedrooms of the Property for living.

(f)  For majority of time between 1998 and 2008, she paid all of the utility bills, management fees, government rates and rents as well as the incidental maintenance expenses of the Property.

(g)  After 2009, she no longer let the Property to her tenants and she decorated the Property at her own costs.

(h)  In about 2009, she changed her name as the payer of the government rate and rent in respect of the Property.

(i)  Subsequently, her sons moved into the Property to live with her.

9.  The plaintiff submitted that the occupation extent of her factual possession was limited to the internal flat area of the Property.

(C) THE DEFENDANT’S PLEADED CASE

10.  The defendant averred that he was and is still the sole registered owner of the Property and he is entitled to possession of the Property. He denied the alleged adverse possession of the plaintiff and put the plaintiff to strict proof.

11.  Furthermore, the defendant denied that the plaintiff had the requisite intention to possess the Property. The defendant said that the plaintiff entered into possession and occupied of the Property pursuant to a licence, permission and/or direction given by Chen and/or Sheng Zhan. The defendant further said the Chen and/or Sheng Zhan was his licensee.

12.  The defendant averred that:-

(a)  by a legal charge dated 17 July 1992 (“the Mortgage Deed”), the Property was charged as a security for a loan in a sum of US$300,000 (“the Loan”) in favour of Sheng Zhan as mortgagee.

(b)  about the same time, the defendant at the verbal request of Chen, who was a director of Sheng Zhan, gratuitously handed over to Chen the Keys and granted Chen and/or Sheng Zhan a licence and/or permission to use and/or occupy the Property at his own free will (referred to as “the 1992 Licence” hereinafter), as a gratitude for Chen’s kindness to procure Sheng Zhan for granting the Loan to the defendant.

(c)  As a result, Chen and/or Sheng Zhan thereafter entered into possession of the Property pursuant to the 1992 Licence.

(d)  On or about 12 October 2018, the defendant sought to recover vacant possession of the Property and revoked the 1992 Licence. He and his family members visited the Property and requested the occupiers for vacant possession (“the 2018 Visit”). However, it was discovered at the 2018 Visit that the plaintiff, who held out as a person of Sheng Zhan, was occupying the Property pursuant to the permission and/or direction of Chen and/or Sheng Zhan. During the 2018 Visit, upon the defendant’s request for vacant possession, the plaintiff responded that the Property should belong to Sheng Zhan and therefore the plaintiff had the right to occupy the same by virtue of Chen and/or Sheng Zhan’s permission.

13.  The defendant counterclaimed for, inter alia, vacant possession of the Property and damages for trespass and/or mesne profit at such rate to be assessed from 12 October 2018, ie the date on which the plaintiff was requested to hand over vacant possession of the Property to the defendant.

(D) SHENG ZHAN INDUSTRIAL LIMITED AND CHEN

14.  Sheng Zhan and Chen played an important role in this case with respect to the factual possession of the Property from about 1992 onwards.

15.  Sheng Zhan was a limited company incorporated in Hong Kong with its registered office at Room 404 Southorn Garden, 2 O’Brien Road, Wanchai, Hong Kong.

16.  In about 1992, Chen was one of the directors of Sheng Zhan.

17.  It is not in dispute that the defendant handed over the Keys to Chen when the Mortgage Deed was executed in favour of Sheng Zhan in about 1992. However, the plaintiff took issue on whether the Keys were part of the mortgage.

18.  Chen later resigned as a director of Sheng Zhan on 9 July 2002. Unless otherwise stated, when Chen was referred to in this judgment, he represented Sheng Zhan as its director until the date of his resignation.

19.  Sheng Zhan was in compulsory liquidation and it was ordered to be dissolved by the Court of First Instance on 29 January 2018. However, for reasons unknown, Sheng Zhan’s interest in the Property was not disposed of upon its winding up.

20.  It is unknown as to why the Property was not sold to settle all of the outstanding debts under the Mortgage Deed after the Loan was due on 17 January 1993. By not selling the Property, Sheng Zhan continued to enjoy the factual possession of the Property after 17 January 1993. After the resignation of Chen in 2002, there was no evidence as to whether the new management of Sheng Zhan had any knowledge about the Loan, the Mortgage Deed, the retention of the Title Deeds or other relevant matters concerning the Property. Upon the liquidation of Sheng Zhan, it is more likely then not that the liquidators did not have such knowledge.

(E) THE PLAINTIFF’S EVIDENCE

21.  The plaintiff adopted her witness statement as her evidence-in-chief. In her witness statement, she stated, inter alia, that:-

(a)  She was born in Zhanjiang (湛江), Guangdong Province, China, in 1951. In about 1981, she joined her husband and moved to live in Hong Kong. But they divorced in 1993.

(b)  In about 1989, she came to know Chen through the introduction of her elder brother in Zhanjiang. Chen was a clansman of Zhanjiang and also a schoolmate of her elder brother. As both the plaintiff and Chen were doing cross-border business between Hong Kong and the mainland, they then became good friend.

(c)  In about 1998, Chen asked the plaintiff to keep the Keys and the Title Deeds. At that time, Chen told her that the Property was used as a security for a loan to his business partner. The plaintiff said that she did not know other details about the affairs between Chen and his business partner.

(d)  Chen was a businessman and he usually travelled overseas. He also spent most of his time on the business affairs on mainland China.

(e)  One day, Chen took the plaintiff to visit the Property jointly. Chen told her that he would stay in Hong Kong less frequently in the future and he had no plan to use the Property. So, Chen asked her to inspect the Property occasionally. In consideration of their friendship, the plaintiff agreed to keep the Keys and the Title Deeds. Thereafter, she irregularly went to the Property for inspection.

(f)  In about 1998, the plaintiff was living in a flat at Mok Cheong Street, To Kwa Wan, Kowloon, Hong Kong (“the Mok Cheong Street Property”).

(g)  One day in about 1998, she went to Causeway Bay to consult her doctor. After the medical consultation, she felt weak and dizzy. She went to the Property and stayed there overnight without the consent or knowledge of Chen.

(h)  Thereafter, in the next several months, she also stayed at the Property overnight occasionally without the consent or knowledge of Chen.

(i)  As the Property had been left vacant for a long time, she decided to let it to foreign domestic workers, so that she could earn money for her family and her sons' school fees.

(j)  In about 1999, she changed the door locks of the Property at her own expense and then let it to the foreign domestic workers who worked nearby. She did that without Chen’s knowledge or consent. Between 1999 and 2008, she rented the Property to different tenants.

(k)  She paid for the electricity bills, the telephone bills, management fees and the government’s rents.

(l)  In about 2002, she applied to the Hongkong Electric Co Ltd to change the account payer’s name.

(m)  On 30 July 2005, she sold the Mok Cheong Street Property and used the sale proceeds to support her sons to study abroad.

(n)  In 2005, she applied to change the telephone account payer’s name to her name.

(o)  Later on, she learned that Chen was sick. From 2005 onwards, Chen spent his time with his family members overseas or on the mainland. Chen only came back to Hong Kong for checking up or medical consultations.

(p)  In about 2008, her two sons returned to Hong Kong and she stopped renting out the Property to her tenants. She spent about HK$300,000 on renovation of the Property. Thereafter, her sons joined her in living at the Property in around 2009. In about 2010, one of her sons moved out and the other son later moved out in about 2011 when he bought his own property.

(q)  She said that her continuous occupation of the Property was without the permission of the defendant, Chen or anyone else.

(r)  On 12 October 2018, she met the defendant and his sons for the first time. The defendant together with his family members went to the entrance of the Property and claimed himself as the owner of the Property. She told them that she had been living there for over 10 years, they left their telephone contact number and left. On about 22 November 2018, she received a letter from the defendant’s solicitors. She was demanded to return the possession of the Property within one month.

(s)  She still kept the original of the Title Deeds up to the date of the trial.

22.  Furthermore, Mr Kong, counsel for the plaintiff, showed the plaintiff a credit report about a company called湛江游士乐食品有限公司 (“Zhanjiang Youshile Food Co Ltd” hereinafter) which was disclosed by the defendant in these proceedings. The said credit report showed that Zhanjiang Youshile Food Co Ltd was registered on 27 August 1993 being a Taiwan, Hong Kong or Macao and domestic joint venture company with limited liability and its main business affair was production and sale of food. Its registered address was a place in Zhanjiang city. The credit report also showed that Chen Guantong (陳观通) was its chairman and general manager, Li Tianmei (李甜梅) was its vice chairman, Chen Rui (陈銳) was its vice general manager. The plaintiff said that the Chinese name of李甜梅was the same as her Chinese name, but the English spelling of “Li Tianmei” was different from her English name.

23.  In her cross-examination, the plaintiff said as follows:-

(a)  She was educated up to technical secondary school on mainland China. After graduation, she worked as a primary school teacher on mainland China. She joined her husband and lived in Hong Kong in about 1981. They had two sons, namely Wong Ting Wa and Wong Yan Wing, who were born in 1982 and 1985 respectively. She used to work in Hong Kong as a clinic assistant. In about 1987, she started her porcelain business in Hong Kong. Her company engaged in import and export business. Also in about 1987, the plaintiff and her husband purchased the Mok Cheong Street Property. She emphasized that her company was small scale which was significantly different from the big scale business of Chen. She also emphasized that she had no business cooperation or dealings whatsoever with Chen or Chen’s companies at all.

(b)  Chen was her elder brother’s university schoolmate. Her elder brother introduced Chen to her in about 1989, so that she could ask Chen if she encountered difficulties in running her business or in English language. She did not know much about the business of Chen, except that Chen was engaging in import and export business between Hong Kong and Zhanjiang. She learned from Chen that Sheng Zhan was one of his companies, but she did not know the business nature of Sheng Zhan.

(c)  She heard of Zhanjiang Youshile Food Co. Ltd. through her friend Chen Guantong (陳观通). She used to visit its factory in Zhanjiang once when it first commenced business. However, she could not recall when she first came to know Chen Guantong. She did not recall exactly the year when she visited the said factory in Zhanjiang, but she said it should be after 1987. Concerning the credit report of Zhanjiang Youshile Food Co Ltd, she did not know why her Chinese name was shown on the said report, but she argued that her English name should be “Lee Tim Mui” instead of “Li Tianmei” as shown on the said report. Later on, she said that she only heard of a company called “Yousile” but she did not know its full name.

(d)  She had become to sole owner of the Mok Cheong Street Property since 10 August 1998.

(e)  Before about 1998, she admitted that she talked to Chen over the phone several times a month, estimated at about 3 to 4 times per month on average. She also met Chen in restaurants for tea gatherings in Hong Kong several times a year. Sometimes, she brought her sons to the tea gatherings as well and Chen brought his own friends to the restaurants. However, the plaintiff claimed that she did not pay attention to the conversations between Chen and his friends during the tea gatherings. She said that she did not know Chen’s friends at the tea gatherings. The plaintiff also admitted that she used to visit Chen at Southorn Garden at Wanchai and Chen also visited her home at Mok Cheong Street Property, To Kwa Wan. The plaintiff also said that she returned to Zhanjiang about once or twice a year during 1989 and 1998. She used to meet Chen once in Zhanjiang.

(f)  She closed down her porcelain business in around 1996 or 1997. Then, she became a private tutor, teaching Chinese language and Chinese pinyin.

(g)  Regarding Chen’s request for safe keeping of the Keys and the Title Deeds, she said that in about 1998, Chen visited her home at Mok Cheong Street Property. Chen did not tell her the purpose of the visit in advance. It was only at their meeting that Chen requested the plaintiff to keep the Keys and the Title Deeds for him. Chen did not tell the plaintiff when he would come back to get back the Keys and the Title Deeds. She said that during the visit, Chen only told her that the Title Deeds were in relation to a mortgaged property in Causeway Bay without mentioning the exact address. Out of their friendship, she agreed to help Chen to keep the Keys and the Title Deeds in safe custody. Their meeting lasted for about one hour. The plaintiff said that the Keys were actually a set of four keys, one for the main door, one for the main metal gate and two for the mailbox of the Property. The plaintiff regarded Chen as her good friend. The plaintiff also said that during their meeting, Chen expressly told her that he trusted her very much, therefore he asked her to keep the Keys and Title Deeds for him. The plaintiff said that she believed that Chen would come back for the Keys and the Title Deeds in the future.

(h)  About one month after Chen’s visit to the plaintiff’s home, upon Chen’s invitation, the plaintiff and Chen jointly visited Property (the “1998 Joint Visit”). That was the first time the plaintiff went to the Property. On that occasion, the plaintiff admitted that she did not bring the Keys. It was Chen who opened the door of the Property with another set of keys held by Chen. Chen told the plaintiff to inspect the door locks of the Property for him when the plaintiff was free and convenient, and to see if the Property was burgled by others. The plaintiff agreed. The plaintiff said that the 1998 Joint Visit was the last time she met Chen. She did not want to contact Chen any further because she had had the intention to occupy the Property as her own to the exclusion of Chen. The plaintiff also said that Chen had never mentioned about the Property or made any kinds of enquiry about the Property in the past 24 years, ie. between 1998 and 2022, although the plaintiff admitted that they had telephone conversations between 1998 and 2005 (or 2009). The plaintiff admitted that she had not changed her mobile phone number since about 1998. The plaintiff said that her last telephone conversation with Chen was sometime between 2005 and 2009.

(i)  After she had let the Property to her tenants in 1999, she said 1999 if Chen demanded for return of the Property and the Keys, she had no way out but to return them to Chen (如果佢返嚟，咁我都係冇辦法啦，都係要俾番佢啦).

(j)  After the 1998 Joint Visit, the plaintiff said that the first time she went to the Property was the incident that she first stayed overnight at the Property in 1998. In particular, the plaintiff specifically remembered that on a day in 1998, she went to Taikooshing on Hong Kong Island to give a private tutorial to her student who lived there. After the tutorial, she went to St Paul’s Hospital in Causeway Bay for her medical consultation in relation to her endolymph fluid problem and coronary heart disease. After the medical consultation, she felt very dizzy and wanted to vomit, and so she went to the Property to take a rest as it was closed to the said hospital. She took a rest in the Property and eventually stayed there overnight. She admitted that the first time she went to the Property alone was not for inspection of the locks of the Property as requested by Chen, it was because of her dizziness.

(k)  However, Mr Koo, counsel for the defendant, put to the plaintiff that paragraphs 7 and 8 of her witness statement seemed to suggest that after the 1998 Joint Visit, she used to go to the Property alone for inspection before the alleged incident of staying there overnight after the alleged medical consultation. The plaintiff then changed her evidence and said that she went to the Property alone was not the incident that she stayed there overnight. She said that what she stated in her witness statement were true, and the first time she went to the Property was inspection of the locks of the Property only.

(l)  Also concerning the first time that the plaintiff stayed at the Property overnight, the plaintiff first said that she did not have any plan to go to the Property on that day when she left her home. She said that after the said medical consultation, she then had the idea of going to the Property. Then, she was cross-examined as to why she had the Keys with her after the medical consultation. The plaintiff first explained that the night before her alleged medical consultation, she had already felt sick and dizzy. So, she planned that she would to go to Taikooshing to give tutorial first on the following day. Thereafter, she would go to have medical consultation at Causeway Bay. But them, she claimed that she in fact put the Keys in her bag all along. So, she could open the door of the Property after her medical consultation at St Paul’s Hospital.

(m)  Starting from about 1998, the plaintiff said that she had inspected Property for about several times before she decided to change the door locks of the Property in about 1999.

(n)  Regarding the first time she paid for the management fee of the Property, she said that she paid for it on 23 December 1998 in respect of the management fees from July 1998 to December 1998, at HK$305 for each month. She paid for them because she was informed by the security guard of the Building that the management fees were due for many months. She made the payments because she had the plan to occupy it and then rent it out to someone back in December 1998 (因為我見丟空咁耐呢，我個思想上面都諗住丟空咁耐，嘥。 當時見佢 [security guard] 咁講之後，我都有思想準備想擅自出租。). Regarding the payment of the monthly management fees of the Property from January 1999 to September 1999, the plaintiff paid for them in one go on 15 October 1999. She said it was the second time she paid for the management fees. As to why she did not pay for management fees for 9 months, she said that life was tight for her at that time, she therefore decided to renovate the Property for letting it out without permission of anyone (因為我呢生活呢，個經濟呢都比較緊絀。跟住呢我都見層樓丟空左咁耐，我都想諗住將佢擅自裝修好，出租). Thereafter, the plaintiff kept paying several months’ management fees in one go. As an example, the management fees from January 1999 to September 1999 was actually paid on 15 October 1999. She said that she was financially tight at that time, so she could only make payment to several months' management fees in one go.

(o)  She changed the door locks of the Property in 1999. Apart from changing the door locks, she had not done anything else, including renovation.

(p)  She let the Property to different foreign domestic workers from 1999 to 2008. But she only liaised with one Filipino domestic worker who would arrange for other foreign domestic workers to live in the Property. Furthermore, she heard from others that it was illegal to let the Property to foreign domestic workers to live, therefore she did not sign any written tenancy agreements with her tenants or made any records or issue any rental receipts. She received cash from one of the foreign domestic worker called “Mila”. Mila would collect rents for the plaintiff from other foreign domestic workers. The plaintiff also said that she would go to the Property to collect rents at the beginning of each month.

(q)  She changed the account payer’s name in respect of the electricity account of the Property to her name on 29 July 2002. Regarding the reason for changing her name as the account payer, she said that her Filipino tenant told her that the electricity company required for the payment of deposit, so she changed the account payer’s name as well when she paid the deposit. In fact, there had already been electricity supply to the Property before July 2002. As to why there was a need to pay deposit in 2002, the plaintiff said that she did not know. It was shown to her a notice of resignation filed with the Companies Registry which showed that Chen resigned as a director of Sheng Zhan on 9 July 2002. It was put to the plaintiff that she changed the account payer’s name for electricity supply to her name in 2002 because she knew Chen resigned as a director of Sheng Zhan in July 2002. The plaintiff denied. It was also suggested to her that before she changed her name as the account payer, the account payer was Sheng Zhan. The plaintiff said that she did not remember.

(r)  She registered a new the telephone account in her name with a new telephone number assigned to the Property in 2005. Between 1998 and 2005, the plaintiff said that she was not clear as to whom the account holder for telephone service was. It was suggested to her that before she registered the new telephone account in 2005, the previous account holder for telephone service was Sheng Zhan. The plaintiff said that she did not remember. Later on, the plaintiff said that she registered a new telephone number for the Property in 2005 because she moved to live at the Property from Mok Cheong Street Property, so she regarded the Property as her own. Hence, she registered a new telephone account in 2005.

(s)  She renovated the Property in 2009 and her sons moved to live with her in the Property after the renovation.

(t)  She changed the payer’s name for the government rates and rents to hers in about May 2009.

(u)  Regarding the first time she had the intention to occupy the Property as her own, she first said that when she changed the door locks of the Property, ie in about 1999. Then, she changed her evidence and said that when she moved to live at the Property in about 2005, she had the intention to occupy the Property as her own. Later on, she said that she started to avoid Chen from 1999 onwards because she intended to occupy the Property.

(v)  She once said that she used to have tea with Chen after the 1998 Joint visit. But then, she said that she had never met Chen again after the 1998 Joint Visit. After the 1998 Joint Visit, she said she only had a few telephone conversations with Chen up to about 2005 or 2009. But they had never talked about anything relating to the Property at all. She said her last telephone conversation with Chen was sometime between 2005 and 2009.

(w)  Concerning the 2018 Visit, she maintained her evidence-in-chief.

(x)  It was put to her that from 1998 to 12 October 2018, ie the 2018 Visit, she possessed the Property on behalf of Chen or Sheng Zhan. She denied.

The plaintiff’s re-examination

24.  In her re-examination, the plaintiff gave her evidence as follows:-

(a)  Concerning the telephone contact with Chen after the 1998 Joint Visit, the plaintiff said that there was no contact with Chen for a long time. She had not attempted to call Chen.

(b)  Concerning the plaintiff’s answer under cross-examination that if Chen returned and demanded for the Property and the Keys, she had to return them to Chen, the plaintiff explained that her actual meaning was that only if Chen returned within a very short period of time, would she return the Keys and Title Deeds to Chen (如果佢好短時間攞番，我會俾番佢). Furthermore, the plaintiff added, if Chen turned up in 1999, she had decided not to return the Keys, Title Deeds and the Property to Chen, nor would she agree to give the new keys of the Property to Chen.

(c)  She said that she was told by her friends that if she occupied the Property as her own for 12 years, the Property was hers. She also said that she had learnt about this legal principle before 2005.

(d)  Concerning the 2018 Visit, she said that when she talked to the defendant, she was inside the Property and the defendant and his family members were outside the Property. They were separated by the iron main gate of the Property. During their conversation, she only slightly opened the main door leaving a narrow gap of 10 cm only. She said that someone claimed that his father was the owner, someone attempted to pass her something to read, but she did not read the document or receive it.

(e)  She claimed that she had lost the water bills and some of the telephone bills of the Property.

Evidence of Wong Ting Wa

25.  Wong Ting Wa (“Mr Wong”) was born in 1982. He is the eldest son of plaintiff. He adopted his witness statement as his evidence-in-chief.

26.  Mr Wong said when he was 10 odd years old and still studying in primary school, he first met Chen, but he did not remember the details of his first encounter with Chen. Then, he would meet Chen around three to four times a year until he was 15 or 16 years of age, ie until 1997 or 1998. Apart from meeting Chen at his home several times in those years, their encounters were mainly at the tea gatherings at restaurants. Sometimes, there were other strangers in their tea gatherings. According to Mr Wong’s recollection, Chen and the plaintiff were in good terms and they had never quarreled with each other.

27.  According to Mr Wong’s recollection, his father also engaged in mainland-Hong Kong cross border business. His parents eventually divorced in 1993. Mr Wong said that when the plaintiff sometimes needed to go to the mainland for her business, the plaintiff would take him and his younger brother to go together, while he and his younger brother were in school holidays. He used to meet his second maternal uncle, ie plaintiff’s elder brother, in his hometown, ie Zhanjiang. His second maternal uncle was the schoolmate of Chen.

28.  Mr Wong said that he had no idea about the conversation between the plaintiff and Chen in about 1998 when Chen visited his home. He was later told by the plaintiff that Chen passed a set of keys and documents to her for safekeeping.

29.  Thereafter, the plaintiff took him to visit the Property and they stayed there for about 10 minutes. He said the Property was vacant. Mr Wong added that before his first visit to the Property with the plaintiff, the plaintiff used to stay in the Property overnight because the plaintiff had a very serious disease and she felt very dizzy on that occasion (其實嗰次[我]上去以前，我Mommy就有一次好嚴重嘅病，所以呢，咁嗰次佢係無返過嚟屋企過夜嘅). Mr Wong said that he was not sure why the plaintiff would take him to the Property. But during the said visit, the plaintiff told Mr Wong that she stayed in the Property overnight when she did not return home on the last occasion.

30.  Mr Wong further said that in late 1998 when he was about 16 years old, he had a basketball training session at Victoria Park early in the morning. Therefore, he stayed at the Property alone the night before his training session.

31.  After 1998, Mr Wong did not pay any attention to the interactions between the plaintiff and Chen. He said he had not seen Chen since 1998.

32.  Mr Wong left Hong Kong for his study at the end of 2003. He returned to Hong Kong from the United States in early 2009 and then he lived with the plaintiff at the Property.

33.  Concerning the 2018 Visit on 12 October 2018, Mr Wong was out for a client meeting and therefore he was not present. When he returned home at around 8 pm on that day, the plaintiff told him that four strangers showed up at the Property.

(F) THE DEFENDANT’S EVIDENCE

34.  The defendant adopted his witness statement as his evidence-in-chief. The defendant was born in 1936 on mainland China. He came to Hong Kong for his study in about 1958. The Property was bought by his mother in about 1959. The plaintiff married in 1962 and thereafter he and his wife lived in the Property together with his mother. His sister also moved into the Property for living the following year. In about 1966, the plaintiff and his wife moved out from the Property. The Property was then occupied by his mother and his sister’s family until 1980. After 1980, the Property was occupied by his mother alone until 1989 when his mother moved to elderly home. From about 1989 onwards, the Property was unoccupied.

35.  The defendant engaged in car parts trading business in about 1983. Two years later, he set up his business and factory in Zhanjiang for manufacture of bags.

36.  In about late August 1992, the defendant had to make repayment in a sum of US$300,000 in respect of the third instalment of a previous loan. So, in July 1992, he was in need of cash flow in a sum of US$300,000.

37.  Mr Yang, the bank manager of Bank of China, Zhanjiang Branch, told the defendant that he could arrange Sheng Zhan which was said to be a company of Zhanjiang City stationed in Hong Kong (湛江市駐香港的公司（盛湛實業有限公司）) to advance a loan of HK$300,000 to the defendant. Then, Mr Yang introduced Chen to the defendant.

38.  Chen, as the director of Sheng Zhan, agreed to advance the Loan to the defendant and the debt was repayable within 6 months. The Loan was secured by charging the Property. Chen knew that the Property was unoccupied at that time. When they had come to the agreement about the Loan, Chen asked the defendant for temporary occupation of the Property because the Property was at prime location and Chen had acquaintance from the mainland who would come to Hong Kong from time to time. Chen had to find places for them to stay. The defendant verbally agreed to let him stay in the Property and keep the Keys temporarily (因為傾好呢個貸款條件後，陳銳提出嚟可唔可以借用呢個物業。因為佢個位置咁好，陳銳就話佢有時好多大陸人出嚟，佢都要搵地方俾佢哋住。咁我就好快答覆佢，俾層樓佢暫住，暫時保管條鎖匙。)

39.  After the Mortgage Deed was executed and the defendant had received the cheque for the Loan on 17 July 1992. He then passed the Keys to Chen at the solicitors firm.

40.  On 17 January 1993, the defendant failed to repay the Loan and the interest at all. He believed that Sheng Zhan would sell the Property to settle all outstanding debt. At the same time, the failure of his business had brought a strong blow to his health. Later on, he had gone through a big surgical operation for his intracerebral hemorrhage problem. Later on, he was diagnosed to have cancer and other diseases, such as diabetes, cardiac disease and etc. He thought that Sheng Zhan had already sold the Property. Therefore, he did not bother to contact Sheng Zhan or Chen at all.

41.  In about 2018, the defendant applied for social welfare. He was informed by the Social Welfare Department that he had a property in his name. He then realized that Sheng Zhan had not sold the Property to settle the outstanding debts under the Mortgage Deed.

42.  On 12 October 2018, he and his family visited the Property and they met the plaintiff at the entrance of the Property. The defendant asked the plaintiff if the plaintiff was the “people of Sheng Zhan”. The plaintiff answered in the affirmative. The plaintiff replied that the defendant still owed money to Sheng Zhan and Sheng Zhan had completed the procedures of the Property (李女士表示我欠盛湛錢，而盛湛已辦妥希雲街物業的手續). Hui Wing Kei Nelson showed the land search record to the plaintiff and pointed out to her that the defendant was the owner of the Property, the plaintiff was confused initially and then she said that she had to make a phone call to a Mr Chen (or Mr Chan). A few minutes later, the plaintiff told the defendant that Mr Chen (or Mr Chan) was not in Hong Kong. She asked for the telephone number of the defendant and claimed that she would get back to the defendant later. Before the defendant left, the plaintiff said that she still recognized the defendant and his appearance had not changed a lot.

43.  Under cross-examination, the defendant was asked by the plaintiff’s counsel if he had ever read the witness statement of his son Hui Wing Kee Nelson. The defendant was reluctant to answer this question initially. But when his duty to tell the truth was reminded by this court, the defendant admitted that he had a glance of the witness statement of his son before the trial. But he denied that plaintiff’s suggestion that he actually recited Appendix 1 of the witness statement of his son which looked like a transcript of the dialogue between the plaintiff and the defendant during the 2018 Visit.

Evidence of Hui Wing Kee Nelson

44.  Hui Wing Kee Nelson (“Nelson Hui”) is the defendant’s son. He adopted his witness statement as his evidence-in-chief. In addition to describing what had happened and what had been said by the parties during the 2018 Visit, Nelson Hui also produced a transcript of their dialogue as appendix 1 of his witness statement. Under cross-examination, Nelson Hui accepted that he made the transcript within one week after the 2018 Visit and in making the transcript, he had sought confirmation from the plaintiff, his mother and his wife who were present during the 2018 Visit.

45.  Nelson Hui recalled that the defendant had serious financial difficulties after July 1992. The defendant was unable to repay the Loan owed to Sheng Zhan and he had to let Sheng Zhan sell the Property upon default of repayment. He also said that the defendant had serious health problems and had to attend medical consultations regularly. So, the defendant did not bother to check the status of the Property after the default of repayment.

46.  On 12 October 2018, Nelson Hui went to the Property with his wife, his mother and the defendant, ie the 2018 Visit. They met the plaintiff at the entrance of the Property. Nelson Hui told the plaintiff that the defendant was the owner of the Property. Then, the defendant asked the plaintiff if she was the people of Sheng Zhan. The defendant answered in the affirmative and said that the defendant still owed money to their company, the procedures had been fully done and they had paid money (你仲欠我哋公司錢都未還，手續已經搞掂晒啦，我地俾錢架).

47.  Nelson Hui then pointed out to the plaintiff that according to the land search record, the defendant was the registered owner. He showed the land search record to the plaintiff. The plaintiff was lost at first and then she said that she had to telephone a Mr Chen (or Mr Chan) and ask him about it. A few minutes later, the plaintiff told the defendant that Mr Chan (or Mr Chen) was not in Hong Kong. The plaintiff suggested the defendant to leave his telephone number for further contact.

48.  Nelson Hui was cross-examined on the background of the loan in 1992, his assistance to the defendant, his involvement in this case with the defendant’s solicitors and the details of the 2018 Visit. He also said that due to the defendant’s old age, he took the defendant to the solicitors firm, he made his own the witness statement in support of the defendant’s claim and he had read the defendant’s solicitor’s pre-action letter dated 22 November 2018. Regarding the 2018 Visit, his evidence under cross-examination was materially consistent with his evidence-in-chief.

(G) LEGAL PRINCIPLE

49.  A person who claims for adverse possession bears the burden of proof in respect of exclusive factual possession and his requisite intention to possess. He has to discharge the burden of proof by adducing compelling evidence. In Wong Tak Yue v Kung Kwok Wai David and Anor (No 2) (1997-98) HKCFAR 55, the Hong Kong Court of Final Appeal affirmed and applied the principles laid down in Powell v McFarlane (1979) 38 P & CR 452 and held that factual possession signified an appropriate degree of physical control. It must be single and conclusive possession. With respect to the intention to possess, the Court of Final Appeal held as follows:-

“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 (1979) 38 P & CR 452 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.” (per Li CJ at p 68)

50.  In JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, the House of Lords highlighted the importance of possession as the basis of a successful claim of adverse possession.

51.  Possession is not adverse if it is enjoyed under lawful title. If a person occupies a piece of land with the permission of the owner, he is not in adverse possession against the owner. Further, if a squatter possesses a piece of land under the permission or licence of another person, or on behalf of another person, the squatter is not an adverse possessor as against the paper owner: Sze To Chun Keung v Kung Kwok Wai David & anor [1997] HKLRD 885. It is not material if his licensor is a rightful occupier or not.

(H) ASSESSMNET OF THE EVIDENCE AND FINDINGS

Credibility

52.  In assessing the credibility of witnesses in this case, I bear in mind the general principles summarized in Lee Fu Wing v Tan Po Ting Paul [2009] 5 HKLRD 513 at 524 para 53 as follows:-

(a)  Whether the party’s case is inherently plausible or implausible;

(b)  Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(c)  Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility; and

(d)  The demeanour of the witnesses.

      (see also: Star Glory Investment Ltd v Kai Two (HK) Technology Co Ltd & Ors HCA 3525/2002, at para 12.)

53.  Each case turns on its own fact. The background of witnesses, their level of education, their age and the contemporaneous evidence are also relevant in assessing the credibility of the witnesses. The credibility of a witness should be assessed as a whole.

54.  The background of this case stemmed from 1990s. The defendant said that he mortgaged the Property in 1992. The plaintiff said that she was asked to keep the Keys and the Title Deeds by Chen in about 1998. The plaintiff is now 70 years of age and the defendant is now 85 years of age. Given the background and nature of the present case, some degree of “discrepancies” or perhaps “confusion” in their recollection of detailed events that happened decades ago are expected or understandable. I appreciate the fact that the witnesses are required to relate to the court the events that happened two to three decades ago. When considering their evidence, I have taken this into account. I am prepared to give the parties some margins for errors in relation to those matters that a reasonable person may be expected to confuse due to lapse of time: Chang Shun Tak and Anor v Leung Sun Fat and 5 Others HCA 13809/1997, unrep, 18 August 2010, Hon A Cheung J (as he then was), at para.73.

55.  While demeanour of witnesses is one of many matters to be considered, undue reliance should not be placed on demeanour. As the present case turns very much on the facts, I bear in mind the warning given by Litton NPJ in Tradepower (Holdings) Ltd v Tradepower (HK) Ltd [2010] 1 HKLRD 674, para 140, against trial judges placing undue reliance upon demeanour and resolving factual issues by using the demeanour of witnesses isolated from the inherent probabilities of the case.

The Mortgage Deed in 1992

56.  According to the Mortgage Deed, it is clear that the Property was charged upon to secure the loan of US$300,000. Clause 8(e) of the Mortgage Deed provided that if default shall be made by the borrower, it shall be lawful for the lender to take possession of the Property and to hold, enjoy the same and to receive rents as the lender thinks fit. Clause 8(f) provided that upon default of repayment, it shall be lawful for the lender to sell the Property. Clause 8(i) provided that upon default in repayment, the sale proceeds of the Property by the lender and it shall be held in trust by the lender to be applied first in payment to expenses incurred and secondly in discharge of the money due. Then, the surplus of the sale proceeds shall be paid to the borrower. Under the Mortgage Deed, the mortgagor was in possession.

The 1992 Licence

57.  The defendant’s evidence about the reasons for permitting Chen of Sheng Zhan to use the Property was reasonable. He had produced written documents to support his allegation that he was in need of US$300,000 urgently in about July 1992 in order to satisfy the repayment of the 3^rd instalment of a previous loan in a sum of HK$300,000. As both the defendant and Chen had connection with Zhanjiang at Guangdong Province and the Property was unoccupied in 1992, it is understandable that the defendant agreed to allow Chen of Sheng Zhan to use the Property on gratuitous basis. Hence, I find that when the defendant said he permitted Chen of Sheng Zhan to use the Property temporarily, his meaning was that he would allow Sheng Zhan to use the Property before the due date for repayment of the Loan. The 1992 Licence was a bare licence.

58.  On 17 January 1993, the defendant defaulted in repayment under the Mortgage Deed. Thus, the 1992 Licence had lapsed, expired or determined in any event. Thereafter, Sheng Zhan was in factual possession the Property as the mortgagee upon default of repayment of the Loan.

Who paid for the Electricity charges, Water charges and Telephone charges, Management Fees and the Government’s Rates and Rents between 1993 and 1998

59.  Under the 1992 Licence, Sheng Zhan and/or Chen was permitted to use the Property temporarily. They then allowed some of their acquaintance on mainland China or the clansmen from Zhanjiang to stay in the Property occasionally while they were visiting Hong Kong.

60.  In respect of the period between 1993 and 1998, it is relevant to determine who actually paid for the electricity charges, water charges, telephone charges, management fees and the government’s rates and rents for the Property during this period. During this period, the defendant had ignored the Property as he thought that Sheng Zhan had sold the Property. The plaintiff had not yet come to picture. On balance of probability, it was Sheng Zhan who made the relevant payments.

The 1998 Permission

61.  The plaintiff said that she was given the Keys and the Title Deeds by Chen in about 1998 for her safe custody. They then jointly visited the Property, ie the 1998 Joint Visit. As confirmed by her counsel in the opening submission, the plaintiff accepted that before the plaintiff allegedly changed the door locks of the Property in about 1999, the plaintiff was permitted, authorized or allowed to enter the Property by Sheng Zhan and/or Chen, ie the 1998 Permission. The plaintiff’s status during this particular period must be a licensee of Sheng Zhan and/or Chen.

62.  The plaintiff’s case is that the 1998 Permission was for a very limited purpose of inspecting the Property only. Therefore, other than inspecting the Property, anything done to the Property by the plaintiff was outside the scope of the 1998 Permission, such as the changing of door locks, paying for the management fees, letting the Property to her tenants, living in the Property, registering or changing her name as account payer for the electricity bills, telephone bills and government’s demand notes for rates and rents, and renovation of the Property were all outside the scope of the 1998 Permission. The plaintiff submitted that her conducts from 1999 onwards had constituted adverse possession.

63.  It is important to decide whether the 1998 Permission is really such a limited scope of permission as testified and submitted by the plaintiff.

64.  It is pertinent to note that Chen actually passed the Keys and the Title Deeds to the plaintiff in about 1998. If the 1998 Permission was really for a very limited purpose of inspecting the Property only and to see if it was burgled as alleged, then it is hard to explain why the Title Deeds were also passed to the plaintiff for custody as well. On balance, the Title Deeds were given to the plaintiff for her safe custody because Chen asked the plaintiff to possess and manage the Property for Sheng Zhan. In case the plaintiff’s management or factual possession of the Property was subsequently queried or challenged by others, the plaintiff could produce the Title Deeds as indicia of title of Sheng Zhan who was a lawful mortgagee of the Property and the mortgagor had already defaulted in repayment of the Loan. Furthermore, the Property was located on the 3^rd floor of a multi-storey building at Causeway Bay, if Chen only wanted to know if the Property was burgled or not, he could have asked the security guard of the Building. There was no good reason for Chen to pass the Title Deeds to the plaintiff for custody. Hence, on balance, the plaintiff was Sheng Zhan’s licensee who was authorized to manage and possess the Property. For this purpose, the Keys and the Title Deeds were given to the plaintiff. In the alternative, Chen personally permitted that plaintiff to manage and possess the Property after about 1998.

65.  Secondly, the Keys consisted of two keys for the mailbox of the Property. It is obvious that Chen did not simply ask the plaintiff to inspect the Property as alleged by the plaintiff. It is more likely than not that Chen asked the plaintiff to manage the Property by receiving the letters, utility bills, demand notes for management fees from the mailbox of the Property.

66.  Thirdly, it is important to note that the plaintiff actually paid the management fees of the Property on about 23 December 1998 in respect of the management fees of the Property from July 1998 to December 1998, at HK$305 for each month. If the plaintiff decided to occupy the Property to the exclusion of Chen in about 1999 by changing the door locks of the Property, she did not explain why she would pay for the management fees from July 1998 to December 1998. Having said that, I accept that this point alone is not sufficient to dispose of the real issue in relation to the scope of the 1998 Permission. It may well be possible that when the plaintiff pleaded “about 1999” it could mean the end of 1998. Hence, payment of management fees of the Property on 23 December 1998 regarding the management fees from July 1998 to December 1998, standing alone, is not decisive. However, if this matter is construed in the light of the rest of the evidence of this case as stated in the latter part of this judgment, it is consistent with the finding that Sheng Zhan in fact authorized the plaintiff to possess and manage the Property in 1998.

67.  Fourthly, according to the plaintiff’s case, the Property had been vacant for a long time before she decided to occupy it to the exclusion of Chen or other persons in about 1999. I do not believe the plaintiff’s evidence that after the 1998 Joint Visit, she had gone to the Property for inspection for about 10 times before she decided to change its door locks in about 1999. In about 1998, the plaintiff lived at Mok Cheong Street Property in To Kwa Wan, Kowloon at that time, there was no good reason for her to inspect an alleged vacant or unoccupied property on Hong Kong Island for about 10 times within about one year for no meaningful purpose, other than checking if the Property was burgled or not.

68.  I find the truth is that in about 1998, Chen, on behalf of Sheng Zhan, asked the plaintiff to possess and manage the Property for Sheng Zhan. The scope of the 1998 Permission is not such a limited scope of permission as alleged by the plaintiff. I find that the scope and the substance of the 1998 Permission was to permit the plaintiff to possess and manage the Property on behalf of Sheng Zhan as a mortgagee in possession. That is why the Keys and the Title Deeds were entrusted to the plaintiff. The two keys for the mailbox of the Property were also entrusted to the plaintiff for her to receive letters, including the demand notes for management fees, utility charges and Government’s rate and rent. Then the plaintiff would make payments on behalf of Sheng Zhan.

69.  I reject the plaintiff’s allegation that she had stayed in the Property overnight in about 1998 after her tutorial at Taikooshing and her medical consultation at St Paul’s Hospital. According to the plaintiff’s case, the Property had been vacant for a long time before 1998. If she felt very dizzy after the alleged medical consultation, it is more likely that she would either return home directly from the hospital or stay in the hospital for further medical examination or observation. Plaintiff added that she had been feeling sick the night before. I do not believe that she would still go to the Property after the alleged medical consultation and stayed there overnight, leaving her two sons, aged 16 and 13 respectively, alone at Mok Cheong Street Property.

70.  The allegation of staying in the Property overnight in about 1998 had no direct bearing to the plaintiff’s case of adverse possession which only started from about 1999. This incident, however, goes to her credibility. I find that the main reason for the plaintiff made up this incident is because she wanted to demonstrate that she used to act outside the scope of Chen’s permission. This is an attempt to lay down the foundation of her subsequent allegation regarding her possession of the Property without the consent or permission of Chen and/or Sheng Zhan in about 1999. In fact, Sheng Zhan or Chen had never prohibited the plaintiff from staying in the Property overnight.

71.  Hence, I find that the plaintiff was actually Sheng Zhan’s licensee who was authorized to possess and manage the Property. This is the substance and the scope of the 1998 Permission. The 1998 Permission was only determined upon the winding up of Sheng Zhan in about 2018 and was unaffected when Chen resigned as the director of Sheng Zhan in 2002. After the winding up of Sheng Zhan, the plaintiff had been staying in the Property as a trespasser without the consent of others. There is no evidence at all as to whether Sheng Zhan’s creditors (if any), the liquidators or the government had any knowledge about the US$300,000 loan and the Mortgage Deed in 1992, in the course of Sheng Zhan’s winding up. In the alternative, the plaintiff was Chen’s licensee who was authorized to possess and manage the Property from 1998 up to this date.

Friendship with Chen

72.  The plaintiff agreed that she treated Chen as her good friend. She also said that Chen passed the Keys and the Title Deeds to her in about 1998 because Chen trusted her. Chen was also the good friend and university schoolmate of her elder brother. The plaintiff and Chen had frequent telephone contacts every month. They also met each other for tea several times a year before about 1998. Sometimes, the plaintiff would bring her sons to the tea gatherings with Chen, and Chen also brought his friends to the tea gathering. On balance, I find that it is more likely than not that the friends whom Chen brought to the tea gatherings were their fellow clansmen from Zhanjiang or their common friends or their business friends. That explained why the plaintiff would bring her sons to the tea gatherings as well. Obviously, the plaintiff and Chen had business dealings in the company called Zhanjiang Youshile Food Co Ltd at least.

73.  Hence, I reject the plaintiff’s allegation that she did not know Chen’s friends whom he brought to their tea gatherings and that she had not paid attention to the conversations between Chen and those friends during the tea gatherings. By denying the business dealings with Chen and the facts that they had common friends or common business friends, the plaintiff was actually trying to distance herself from Chen and/or Sheng Zhan. This is to serve the plaintiff’s claim that after about 1999, Chen had neither met her, nor had he enquired with her about the status of the Property at all.

74.  Although the dealings between the plaintiff and Chen before 1998 did not have a direct impact on the plaintiff’s possession of the Property in about 1998 or 1999, they shed light on the reasons why Chen would entrust the Title Deeds and the Keys to the plaintiff in about 1998. Further, it also goes to the plaintiff’s credibility as a whole.

No Contact with Chen

75.  There was no evidence or suggestion that after the 1998 Joint Visit, the plaintiff and Chen had any kinds of grudges, quarrels or disagreement. However, according to the plaintiff’s evidence, after 1998 Joint Visit, she had never met Chen anymore up to now. Save and except the alleged “rare” telephone calls, the plaintiff said, there was no other contact with Chen at all. It should be noted that, on day one of the trial, the plaintiff was cross-examined on the next occasion that she met Chen after the 1998 Joint Visit. She first said that it was a long time. When she was asked to give an estimate of her meaning of “long time”, she beat about the bush and eventually said that she had never met Chen after the 1998 Joint Visit (應該一直都冇見佢). However, on day two of the trial, she said that she did not have tea with Chen on the day of the 1998 Joint visit, but they did have tea sometime afterwards and she could not remember the exact date (Plaintiff: 「約出嚟飲下茶囉。」D’s counsel: 「哦！即係帶完你上去之後 [ie 1998 Joint visit] 間中都有飲下茶？」Plaintiff: 「睇下先，帶完嗰日佢 [ie Chen] 唔得閒同我飲茶，返去之後，好似係，係，飲過茶。」D’s counsel: 「即係隔咗幾日，又同你飲茶？」Plaintiff: 「一段時間囉。」D’s counsel: 「幾耐呀？」P:「準確日子真係唔記得。」). Subsequently, she realized that her answer contradicted her answer given on day one of the trial, she changed her evidence and maintained her first version, ie she had never met Chen after the 1998 Joint Visit. I do not believe her evidence on this matter. I find that the main reason for her to change her evidence is because she wanted to distance herself from Chen, so that she could advance her case on uninterrupted possession of the Property and also on her intention to possess the Property as her own.

76.  The plaintiff had been testifying in the court for almost two days. I have sufficient opportunity to hear her evidence. I strongly believe that she had not frankly told the court about her actual dealings with Chen and Sheng Zhan after the 1998 Joint Visit. She is far from being a credible witness. Under cross-examination, she once agreed that she could have contacted Chen if she wanted to do so, even up to the date of the trial. However, she later said that she had not telephoned Chen, and she did not know if Chen had changed his phone number. If the plaintiff truly wanted to avoid Chen after 1999 because she had deliberately dispossessed the Property against her good friend Chen, it was unlikely that she did not change her own mobile phone number up to this date. I also reject the plaintiff’s evidence that during the alleged “rare” telephone conversations with Chen after about 1999, Chen had never mentioned anything about the Property, including if the Property had been burgled or not, at the very least. On the contrary, I find that Chen did care about the Property. Instead of asking a casual friend to attend the Property or leaving the Property unattended, Chen asked the plaintiff as his good friend to keep the Title Deeds and the Keys. Chen had another set of the keys of the Property. Hence, I find that from 1999 onwards, the plaintiff did report to Chen about the status of the Property, including the management fees of the Property and utility charges of the Property. It is likely that, I find, she then asked for reimbursement of the management fees from Chen and/or Sheng Zhan for the period between 1998 and the time that she actually moved into the Property for living. That is the reason why the plaintiff retained the management fees receipts of the Property from July 1998 onwards. Hence, regarding the dealings with Chen and Sheng Zhan, the plaintiff was far from being an honest witness. I do not believe that Chen, as the plaintiff’s good friend for so many years and also her elder brother’s classmate in the university, with frequent dealings in and before 1998, would suddenly disappear from the plaintiff’s life after 1998 Joint Visit, save and except that they had “rare” telephone conversations as alleged by the plaintiff until 2005 or 2009.

77.  Regarding the alleged “rare” telephone conversations with Chen after the 1998 Joint Visit, the plaintiff described the frequency of telephone conversations with Chen as “pitiful”, meaning that it was rare. Again, it is unbelievable as to why the plaintiff and Chen had frequent telephone conversations at about 4 to 5 times per month before about 1998, but the frequency had suddenly dropped to “rare” after the 1998 Joint Visit out of no reasons. The plaintiff was just trying to distance herself from Chen and/or Sheng Zhan.

78.  In particular, in respect of the period between the 1998 Joint Visit and the date on which plaintiff allegedly changed the door locks of the Property in about 1999, it is unlikely that their telephone contacts had suddenly ceased or dropped significantly without any reasons. During this particular one year period, the plaintiff claimed that she had not met Chen at all and she had inspected the Property for about 10 times. The plaintiff had not yet formed the idea of dispossessing Chen or Sheng Zhan. It is unbelievable that Chen would suddenly disappear from the plaintiff’s life and the plaintiff did not contact Chen for tea gatherings during this approximate one year period. Likewise, during this approximate one year period, there seemed no reason why their telephone contacts would drop to rare as alleged.

79.  Regarding the rare telephone contacts with Chen after about 1999, I also reject the plaintiff’s evidence that neither Chen nor the plaintiff had mentioned anything about the Property. The plaintiff’s allegation on this matter does not sit comfortably with her case that Chen asked her to inspect the Property in about 1998 and to see if the Property was burgled or not. It is more likely that Chen and the plaintiff had talked about the Property after 1999, on the issues such as the occupancy the Property, the payment of management fees, payment of utility charges and etc. At the very least, Chen would want to know if the Property was burgled or not.

80.  In addition, as pointed out in the earlier part of this judgment, the plaintiff admitted that the first time she paid for the Property’s management fees was on about 23 December 1998 in respect of the management fees from July 1998 to December 1998, at HK$305 for each month. In other words, the management fees of the Property before July 1998 had been paid by others. Apart from Sheng Zhan and/or Chen, it is hard to see who could have paid for the management fees between 1993 and June 1998. Thus, Sheng Zhan or Chen must be alerted when someone else had unilaterally paid for the management fees of the Property after July 1998 because Sheng Zhan needed not pay for them anymore. Hence, I do not believe that Chen would not enquire with the plaintiff about the post July 1998 management fees of the Property during their telephone conversations before 2005 (or 2009), unless Sheng Zhan or Chen had a previous agreement with the plaintiff that the plaintiff would possess and manage the Property for Sheng Zhan, i.e. the 1998 Permission, including payment of the Property’s management fees on behalf of Sheng Zhan. Hence, I reject the plaintiff’s evidence that she paid for the management fees of the Property without the consent of Sheng Zhan or Chen. I also reject her evidence that during their alleged rare telephone conversations after 1999, she and Chen had never talked about anything concerning the Property. I find that the plaintiff paid for the management fees on behalf of Sheng Zhan and/or Chen.

81.  The above analysis also applies to utility charges and government rates and rents. That is to say, between 1993 and 1998, it was Sheng Zhan who paid for the utility charges and the government rates and rents of the Property. If the plaintiff had really paid for the electricity charges, telephone charges and government rates and rents without knowledge or consent from Sheng Zhan after 1999, Sheng Zhan and Chen must must be alerted that someone else had made such payments, as Sheng Zhan needed not paid for them further. Hence, if it were really a case of dispossession by the plaintiff against Sheng Zhan or Chen, then during the alleged telephone conversations between the plaintiff and Chen between 1999 and 2005 (or 2009), Chen would have enquired with the plaintiff by whom those charges were paid. It is unlikely that they had never talked about the Property in their rare telephone conversation as alleged, unless the plaintiff was actually asked manage and possess the Property for Sheng Zhan.

Zhanjiang Youshile Food Co Ltd

82.  Mr Kong, counsel for the plaintiff, submitted that the credit report of Zhanjiang Youshile Food Co Ltd was not an official report or official record. The said credit report was only an investigation report conducted by a credit company called Total Credit Management Services Hong Kong Limited. This credit report had been disclosed by the defendant before the trial. Its authenticity had never been challenged by the plaintiff at all, whether before the trial or during the trial. The plaintiff had not mentioned anything about this report or Zhanjiang Youshile Food Co Ltd in her witness statement.

83.  However, at her examination-in-chief, when the plaintiff was asked by her counsel to simply identify her name on the said credit report, the plaintiff explained that she did not know why her Chinese name “李甜梅” was on the said report. She added that her English name should be “Lee Tim Mui” and not “Li Tianmei” of as shown on the report.

84.  Regarding the plaintiff’s denial of “Li Tianmei” as her English name, I find that it is a bare denial. The plaintiff had not offered to the court what her English name was, when she was on mainland China. When the plaintiff was still living in Zhanjiang before 1981, she should have a mainland Identity card which bore her English name. She might also have other official documents (if any) which bore her English name.

85.  When consideration the entirety of the evidence, including the plaintiff’s admission that Chen Guantong was her friend, Chen’s full name was Chen Rui, the registered address of Zhanjiang Youshile Food Co Ltd was also in Zhanjiang, the plaintiff’s admission that she used to visit the factory of a company called “Youshile”, it is more likely than not that the information on the said credit report was true and correct. It is unlikely to be a coincidence that the name “Li Tianmei 李甜梅” as shown on the credit report referred to another person not being the plaintiff. I find that “Li Tianmei” on the said credit report is the transliteration of the plaintiff’s Chinese name in Mandarin.

86.  I reject the plaintiff’s evidence that she did not have any business dealings with Chen or Sheng Zhan at all. Again, the plaintiff was trying to distance herself from Chen and/or Sheng Zhan, so that she could explain why she did not report the status of the Property to Chen and/or Sheng Zhan after the 1998 Joint Visit. This allegation was to serve the plaintiff’s case that she had uninterrupted occupation of the Property after about 1999.

Change the door locks and Letting the Property to her Tenant in 1999

87.  I reject the plaintiff’s evidence that in about 1999, she had the idea of deliberately dispossessing the Property as her own.

88.  I also reject her evidence that she changed the door locks of the Property in about 1999 and then let the Property to her tenants. The plaintiff failed to come up to prove that she had changed of door locks of the Property in about 1999. Apart from her oral evidence, there was no other evidence on this matter at all. Likewise, letting the Property to foreign domestic workers also came from the oral evidence of the plaintiff and her son only. Further, the plaintiff’s oral evidence on the alleged tenancy was very weak. There was no evidence regarding the particulars of the alleged tenancies, except that one of those tenants was called “Mila”. I find that the real reason for the plaintiff to say that she let the Property to foreign domestic workers is because she seeks to explain why there are no written tenancy agreements, rental receipts, records or etc, as it is illegal to let the Property to foreign domestic helpers.

89.  Given my assessment of her evidence as a whole, I do not find her a credible or truthful witness. I do not find Mr Wong’s evidence on the alleged tenancy issue was reliable or credible. Therefore, I have great hesitation in accepting the plaintiff’s oral evidence that she had changed the door locks of the Property and then let the Property to her tenants in about 1999. If she had ever changed the door locks of the Property, it is more likely that she did that in about 2009 when she renovated her Property as her residence.

Payment of Management Fees of the Property

90.  I have dealt with the plaintiff’s payment of the management fees of the Property from July 1998 to December 1998 in the earlier part of this judgment. With respect to the plaintiff’s payment of the management fees starting from January 1999, there was also the same pattern of making payments, ie the plaintiff paid for several months' management fees in one ago. The plaintiff said that she was financially tight at that time. Therefore, she only paid for several months' management fees in one go. I reject her evidence.

91.  It should be noted that the management fee was only $305 each month. The plaintiff, on the one hand, said that after about 1999, she let the Property to her tenants, so that she could have more income. She also said that she came to the Property in the beginning of every month to collect rents from “Mila” who would help the plaintiff to collect rents from other tenants. On the hand, she said that she was financially tight to an extent that she was unable to pay the monthly management fee of $305 for several months. I do not believe that the plaintiff had financial difficulty in paying $305 a month if she had collected rents in cash from her tenants. At the material times, the plaintiff was the sole owner of the Mok Cheong Street Property which was free from any mortgage.

92.  I find that the real reason for the plaintiff to settle several months' management fees in one go is because she only visited the Property every several months. At the material time, she lived in To Kwa Wan at Kowloon. When she came to the Property which was on Hong Kong Island, she would settle the management fees in one go. At the same time, she would also collect the letters from the mailbox of the Property.

93.  In addition, I prefer the defendant’s evidence that the Property was intended to be used as a place for the clansmen or friends from Zhanjiang to stay while they were visiting Hong Kong. Hence, it is likely that between about 1998 and 2005, the plaintiff came to the Property to visit her fellow clansmen or her common friends with Chen and/or Sheng Zhan. When she visited the Property, she would settle the several months' outstanding management fees in one go for Sheng Zhan or Chen.

Change of the account payer’s name in respect of the electricity bills, telephone bills and government’s demand notes for rates and rents

Generally

94.  A squatter’s conducts in changing his name as the account payer’s name of the utility bills and government’s demand notes for rates and rents of a property may be regarded as conducts consistent with an intention to possess. In addition, the conduct of incurring substantial renovation costs on the subject premises may also be evidence consistent with an assertion of treating the property as his own. But each case must be decided on its own facts. The court must examine the conducts of the squatter against the peculiar facts of each particular case and then give the appropriate weight to the squatter’s evidence as it deserves.

95.  This is not a case in which a squatter innocently possesses the land of his neighbour or a squatter mistakenly believes that the occupied land belongs to him. The plaintiff’s case is that she deliberately ousted her licensor in about 1999 and then possessed the Property exclusively and treated it as her own. In her evidence, she learned from Chen in about 1998 that the Property was a mortgaged property of another person. She also learned from her friends about principle of adverse possession before 2005. If this is the case, the plaintiff had not explained why she did not change the account payer’s name of the government’s demand notes for rates and rents before 2005 in any event. However, she only changed it in about May 2009. I bear in mind that there is no mandatory requirement that a squatter has to change the payer’s name to his name on the utility bills or the government’s demand notes for rates and rents. Here, the plaintiff asserted that she had changed the account payer’s name to her name regarding the electricity charges and telephone charges, she later changed the payer’s name of government’s rates and rents, the details were first set out in paragraphs 15 to 17 of her witness statement and then elaborated in her cross-examination. I note that the plaintiff had not stated what she had done with the account payer’s name in respect of the water bills. The plaintiff only said that she lost the water bills in her re-examination. She did not explain why she did not ask for copies of them from Water Supplies Department. I also note that the plaintiff only produced a few relatively recent water bills starting from 19 November 2019 onwards (which bore her name as account payer) in the trial bundles. The real issue is what and how much weight should be given to her conducts in changing or registering her name as payer for abovementioned utility bills or demand notes against the background this case, especially in the light of the 1998 Permission; and/or her admission in the court that she would return the Property to Chen; and/or her admission made at the 2018 Visit which will be covered in the latter part of this judgment. I shall evaluate the plaintiff’s evidence and attach appropriate weight to it as it deserves. Concerning the missing documents regarding some of the utility bills, I will not draw any adverse inference against the plaintiff in this case because the circumstances of this case do not warrant me to do so, the plaintiff or Mr Wong was not specifically cross-examined on the circumstances under which those were lost, and it is not put to the plaintiff and Mr Wong that they had concealed some of the documents. In fact, the defendant has not asked the court to draw an adverse inference against the plaintiff on this issue.

Change of Account Payer’s Name for Electricity Supply

96.  The plaintiff said that she changed the account payer’s name for electricity supply on about 29 July 2002. In her cross-examination, she said that in about 2002 the electricity company told her tenant that the electricity deposit had to be paid, otherwise electricity supply would be cut off. However, the plaintiff admitted that there had already been electricity supply to the Property when she let the Property to her tenants in about 1999.

97.  The plaintiff said that she paid for the electricity charges between 1999 and July 2002 by herself. She did not disclose old electricity bills before July 2002. She explained that she did not keep a full set of the electricity bills (有時候冇keep到咁齊). However, the heart of the question is that she did not produce a single page of the old electricity bills which bore the former account holder’s name. Regarding the former account payer’s name as shown on old electricity bills before July 2002, the plaintiff confirmed that she had seen them before. But she said that she paid no attention to the former account holder’s name.

98.  The plaintiff confirmed that before the electricity company demanded for payment of deposit in 2002, she had neither contacted the electricity company, nor had she applied for a new electricity meter at all. She said that the reason for her to apply for changing the account payer’s name was because the electricity company demanded for payment of deposit in 2002, she changed the account payer’s name to her name at the same time, so that it would be more convenient for her to pay for the electricity charges.

99.  In the absence of an application for change of account payer’s name for electricity supply or an application to cut off the previous electricity supply to the Property, there seemed to have no good reason for the electricity company to demand for a deposit of HK$1,600 unilaterally in 2002, failing which, it would cut off the electricity. There should be a reason for the electricity company to demand for a deposit of HK$1,600 in July 2002. I believe that the plaintiff had not told the whole truth to the court. I reject the plaintiff’s evidence that she had not contacted the electricity company at all before her tenant received the alleged telephone call from the electricity company who demanded for payment of deposit.

100.  Hence, I find that the plaintiff’s change of account holder’s name with the electricity company in July 2002 was an equivocal conduct which does not constitute a clear manifestation of intention to possess the Property in this case.

101.  Mr Koo, counsel for the defendant, submitted that it was likely that Sheng Zhan was the former account holder for the electricity supply of the Property. He also submitted that the plaintiff changed the account holder’s name in July 2002 because Chen resigned as a director of Sheng Zhan on 9 July 2002. However, there was no positive evidence as to whom the former electricity account holder was. Mr Koo strenuously cross-examined the plaintiff on the name of the former electricity account holder and put to the plaintiff that it was Sheng Zhan, but the plaintiff repeatedly said that she did not remember, despite the fact she claimed she was the person who paid for the electricity bills between 1999 and July 2002. The plaintiff denied that the change of name was because of Chen’s resignation as a director of Sheng Zhan on about 9 July 2002. In the absence of positive evidence on the name of the former electricity account holder of the Property, I am reluctant to speculate whom the former account holder was. It suffices for this court to find that the plaintiff has not told the court the whole truth as to why she had to change her name as the account holder for electricity supply in July 2002. Bearing in mind that the Property had electricity supply all along, the plaintiff’s allegation that the electricity company unilaterally demanded for payment of deposit in 2002 out of no reasons, otherwise, electricity supply to the Property would be cut off, was suspicious and unbelievable. Furthermore, given my finding above that the plaintiff’s conduct in changing the account holder’s name was equivocal, I also find that the change of electricity account holder’s name did not foul the 1998 Permission. That is to say, the plaintiff was still permitted by Sheng Zhan to possess and manage the Property after July 2002 despite the fact that Chen resigned as the director of Sheng Zhan.

Change of holder’s name for Telephone Account for the Property in 2005

102.  It is undisputed that the plaintiff lived in Mok Cheong Street Property before she moved to the Property. Mok Cheong Street Property was purchased by the plaintiff and her ex-husband in 1987 in joint tenancy. A divorce petition was presented in 1992. The decree of divorce was made on 24 March 1997. The mortgage of the Mok Cheong Street Property was then discharged on 13 August 1997. The plaintiff’s ex-husband assigned his interest in Mok Cheong Street Property to the plaintiff on 10 August 1998. The plaintiff became the sole owner of the Mok Cheong Street Property free from any mortgage. This is one of the reasons why I do not believe her evidence when she said that she did not have HK$305 to pay for the monthly management fee of the Property in about 1999, whilst at that time she had Mok Cheong Street Property which was free from mortgage and she received rental income from leasing the Property as alleged. Regarding the Mok Cheong Street Property, the plaintiff entered into agreement to sell it on 7 June 2005 and assigned it on about 30 July 2005 in a sum of HK$705,000.

103.  I accept the plaintiff’s evidence that she moved to the Property and lived there after she had sold the Mok Cheong Street Property in about mid 2005. The plaintiff admitted that there had been telephone service to the Property at that time.

104.  As to the name of the former telephone account holder’s name, the plaintiff had given different answers in her cross-examination. Firstly, she said that she did not remember. Later, she said it was likely to be Sheng Zhan. But then she changed her answer and said she did not know.

105.  The plaintiff said that she had paid for the telephone charges since about 1999. I do not believe that she did not know or had forgotten whom the former account holder’s name was.

106.  Concerning the reasons for changing her name as the account holder for telephone service, she said that as she had moved into the Property for living, it was more convenient if she was the account holder. Then, she said that she regarded herself as the owner of the Property, so she changed the account holder’s name to her name for telephone service. If this is the true reason, the plaintiff failed to explain why he did not change the account holder’s name back in about 1999 because she claimed that she had regarded herself as the owner of the Property since about 1999.

107.  On balance, I find that the plaintiff was still permitted by Sheng Zhan to possess and management the Property in about 2005 pursuant the 1998 Permission and/or further permission by Shen Zhan and/or Chen which the plaintiff had not told this court. The plaintiff continued to keep the Title Deeds and the Keys in safe custody for Sheng Zhan. Given the closed relationship and friendship with Chen, it is more likely than not that the plaintiff had the direct permission from Sheng Zhan and/or Chen before the plaintiff moved into the Property for living in 2005. This explains why when the plaintiff’s possession of the Property was challenged by the defendant during the 2018 Visit, the plaintiff admitted that she was the “people of Sheng Zhan” and claimed that Sheng Zhan had completed the procedures. Furthermore, she had to make a telephone call to Chen. I shall deal with the 2018 Visit in the latter part of this judgment.

108.  In addition, when the plaintiff moved to the Property to live, Chen should have the knowledge of it. The plaintiff must have the consent from Sheng Zhan and/or Chen to do so. In saying that, I have not lost sight to the fact that Chen had already resigned as a director of Sheng Zhan in 2002. I accepted that the defendant’s evidence that, after about July 1992, Sheng Zhan and/or Chen would use the Property as a place for the clansmen from Zhanjiang or mainlander friends to stay while they were visiting Hong Kong. Hence, considering their good friendship, before the plaintiff had moved into the Property for living in 2005, it is more likely that she would seek consent of Sheng Zhan and/or Chen before the plaintiff sold her Mok Cheong Street Property. So that when their fellow clansmen or friends were to stay in the Property, Sheng Zhan or Chen would know that at least one of the bedrooms had been occupied by the plaintiff.

Change of payer’s name for Government Demand Notes for Rate and Rent

109.  The plaintiff was then cross-examined on why she only changed the payer’s name to her name regarding the government’s demand notes for rates and rents in about 2009 and not in 2005 at the same time when she changed the account holder’s name for telephone service. plaintiff’s answer was that she had basically changed the majority of things to her name and she did not remember why she did not change the name for government’s rates and rents as well in 2005 (我基本，大部分嘅嘢都轉咗名，呢個係，我都唔記得點解唔轉喎，真係). She continued to say that she had changed it eventually (唔記得，最後都係轉咗啦) and it came to her that she had to change the payer’s name in about 2009 (最後諗到轉咪轉囉，就係咁). The plaintiff did not explain why it did not occur to her that she had to change the payer’s name of the government demand notes for rates and rents before 2009. Considering her evidence as a whole, I am not satisfied that the change of the payer’s name in 2009 is a clear manifestation of her intention to possess the Property in her own name. Likewise, I am not satisfied that the payments of the management fees, electricity and telephone charges and government rates and rents by the plaintiff is a clear manifestation of her intention to possess the Property in her own name. Her conduct must be viewed together with the peculiar facts of this case, especially the 1998 Permission, her admission that she would return the Property to Chen and her admissions at the 2018 Visit.

110.  In any event, even if she had the intention to possess in 2009 by changing the payer’s name to her name on the government’s demand notes for rates and rents, she did not have the requisite 12 years of dispossession period.

Renovation in about May 2009

111.  The plaintiff said that in about 2009, her two sons intended to live with her in the Property. Hence, it is understandable why the plaintiff incurred substantial renovation costs on the Property in a sum of about HK$279,000 in about May 2009.

112.  I find that the reason why the plaintiff incurred substantial renovation costs on the Property in about May 2009 was because she had been permitted to posses and manage the Property since 1999. She thought that the registered owner of the Property was unlikely to turn up in the future. Against this background, with the consent and permission of Sheng Zhan and/or Chen personally in the alternative, the plaintiff was then willing to incur substantial renovation costs on the Property in 2009. As the plaintiff would be using the whole Property, including the three bedrooms, as her residence, there should be certain kind of agreement, permission or arrangement with Sheng Zhan and/or Chen because Sheng Zhan would not be able to arrange for other mainlander friends or clansmen from Zhanjiang to stay in the Property after about 2009. This is why the plaintiff told the defendant during the 2018 Visit that the “the procedures with Sheng Zhan” had been completed. I shall deal with this issue in the latter part of this judgment. As she was factually occupying the whole Property after about 2009, it followed that she paid for the repair costs of the Building in 2013 as well on behalf of Sheng Zhan.

The plaintiff’s Willingness to Return of the Property to Che

113.  In her cross-examination, the plaintiff was asked after she had let the Property to others after 1999, if Chen returned and demanded for the Keys and the Property, whether she would return them to Chen. The plaintiff said that if Chen demanded for the Property, she had no other way out but to return them to Chen (Q: 你租咗出去之後，陳銳返嚟搵你，問你攞番條鎖匙，攞番間屋，嗰間屋係陳銳交托俾你幫佢看嘅，你都一定唔會反對將間屋俾番陳銳㗎嘛，係唔係? Ans: 如果佢返嚟，咁我都係冇辦法啦，都係要俾番佢啦). Her answer was an unqualified answer. I find that her answer is entirely consistent with the 1998 Permission which was a permission to possess and manage the Property for Sheng Zhan.

114.  I bear in mind the decision in JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 in the context of a squatter who had been occupying a piece of land exclusively with the requisite intention to possess. The House of Lords held that the requisite intention was an intention to possess. The squatter’s willingness to pay rent, had he been asked to do so, would not defeat his intention to possess. The Court of Final Appeal of Hong Kong seemed to take a different view in Wong Tak Yue case (above): ref also to Law Reform Commission Report on Adverse Possession, October 2014, paras 1.28 to 1.30. However, the present case can be distinguished from Wong Tak Yue (above) and JA Pye (above) as I do not accept that the plaintiff was a squatter or trespasser at the material times in the first place. She was a licensee of Sheng Zhan at the material times. Hence, the plaintiff’s willingness to return the Property and the Keys to Chen and/or Sheng Zhan upon demand is entirely consistent with the 1998 Permission and/or further permissions in 2005 and 2009 which the plaintiff was permitted to occupy one bedrooms and the whole Property as her residence respectively.

115.  At her re-examination, the plaintiff tried to qualify her willingness to return the Property and the Keys to Chen by saying that she was only willing to do so if Chen asked for that within a “short period of time” (如果佢好短時間攞番，我會俾番佢). She further said that by the time in about 1999, she had decided not return the Keys, the new keys, the Title Deeds and the Property to Chen even if Chen demanded for the same. In other words, the plaintiff only regarded the period between about 1998 and 1999 as “short period of time”. Given their good friendship and frequent telephone dealings, I do not believe that the plaintiff just agreed to keep the Keys and the Title Deeds for Sheng Zhan between about 1998 and 1999 only. Likewise, I do not believe that the plaintiff only agreed to possess and manage the Property for Sheng Zhan and/or Chen just between 1998 and 1999 only. In her witness statement and examination-in-chief, the plaintiff had neither said that she only agreed to keep the Keys and the Title Deeds for a very short period of about one year, ie between 1998 to 1999, nor had she said that she would only inspect the Property for Chen for about one year only. Obviously, the plaintiff was not telling the truth. She knew that she had given an unfavorable answer in her cross-examination and she tried to qualify her unfavorable answer in her re-examination.

Assessment of the defendant’s evidence

116.  The defendant had produced the relevant bank documents as evidence to show that he was in need of US$300,000 in about July 1992 and he had also explained how he was introduced to Chen of Sheng Zhan. I accept his evidence.

117.  Upon default, Sheng Zhan possessed the Property as mortgagee under the Mortgage Deed. Sheng Zhan did not proceed to sell the Property to settle the outstanding debt owed by the defendant and gave the surplus of the sale proceeds (if any) to the defendant in accordance with the terms of the Mortgage Deed. Instead, Sheng Zhan continued to enjoy possession the Property after 1993 until it was wound up.

118.  The Property was un-occupied in 1992. Sheng Zhan did help the defendant to solve his financial problem by granting the Loan to him, so that the defendant could use the money to pay off the 3^rd instalment of another loan. As defendant and Chen were from Zhanjiang, it is understandable that the defendant allowed Sheng Zhan to use the Property temporarily. Hence, I accept the defendant’s evidence in relation to his reasons for giving the Keys to Chen after he had received the cheque of the Loan. I find that the 1992 Licence is of the nature of a bare licence at that time.

119.  I find that it is likely that after about July 1992, the Property was occasionally occupied by the the business acquaintance of Sheng Zhan and the clansmen from Zhanjiang.

120.  I also accept the defendant’s evidence that he had serious financial and medical problems after 1993. More importantly, he had no money to pay off the debt owed to Sheng Zhan. He thought that Sheng Zhan might have sold the Property already until he was informed by the Social Welfare Department that he was still the registered owner of the Property.

2018 Visit and the Credibility of the Parties and their Witnesses

121.  The relevance of the 2018 Visit is that the defendant asserted that the plaintiff had made certain statements during the 2018 Visit. The defendant said that those statements were inimical to or against her intention to possess the Property in her own name to the exclusion of others, including Sheng Zhan and Chen. The plaintiff denied that she had ever made the alleged statements at all in the 2018 Visit. On this issue, the defendant bears the burden of proof of his allegations.

122.  I have carefully examined the testimony of the defendant and Nelson Hui. I find that they are both truthful witnesses. The only undesirable feature in the defendant’s evidence is that he initially refused to answer a question in his cross-examination in relation to whether he had ever read the transcript annexed to Nelson Hui’s witness statement. After his duty to tell the truth had been reminded by the court, the defendant frankly said that he had a brief glance of it but he denied the plaintiff’s suggestion that he had recited it when he testified.

123.  The fact that the defendant had a glance of the witness statement of Nelson Hui will not affect my assessment of his overall evidence in this case. It is because as a party in civil proceedings, the defendant is entitled to know what his witness is going to say and determine if the witness should be called to give evidence. What is important is whether they have concocted to tell lies or to conceal the truth. I am sure that this is not the case here and this suggestion was not even put to the defendant or Nelson Hui.

124.  Mr Kong, counsel for the plaintiff, complained that in the defendant’s solicitors’ first demand letter dated 22 November 2018, it was only stated that the defendant delivered the Keys to Chen of Sheng Zhan for security purpose. Mr Kong also complained that the said demand letter did not expressly state that there was a licence in 1992 or the 1992 Licence. Mr Kong submitted that the pleading of licence in 1992 was inconsistent with the description in the defendant’s solicitors’ first demand letter. When the said demand letter was shown to the defendant in the witness box, the defendant said that he had no impression. It was also suggested to the defendant that the Keys actually formed part of the mortgage in favour of Sheng Zhan. The defendant did not admit and he maintain his evidence-in-chief. He seemed to be confused by the plaintiff’s suggestion that the Keys were said to be part of the mortgage.

125.  According to the said demand letter, paragraph 1 thereof dealt with the Mortgage Deed. Paragraph 2 thereof stated that at about the time the Mortgage Deed was executed, the defendant also delivered the keys of the Property to Chen of Sheng Zhan for security purpose only (本行客戶敘造該押記時，亦交付該物業的鎖匙予盛湛的陳銳先生作為抵押目的). In fact, the said demand letter only mentioned that the Keys were delivered to Chen of Sheng Zhan for security purpose only, it did not expressly state that the Keys were part of the mortgage under the Mortgage Deed. Furthermore, the plaintiff’s suggestion is contrary to the express terms of the Mortgage Deed under which the mortgagor was in possession until default of repayment.

126.  Mr Nelson Hui impressed me as a truthful and honest witness. He did his best to answer the questions in the witness box. He gave his evidence in the most direct way, without speculating the motive behind the questions. As an illustration, when Nelson Hui was asked to concede that the transcript attached to his witness statement was undated, he readily conceded and told the court that the transcript was not prepared on the same day of the 2018 Visit, but was prepared within a week afterwards. Of his own volition, he also told the court that when the transcript was typed by him, he had also sought confirmation from his parents and his wife. As a layman, he was prudent in making the transcript and sought confirmation of its accuracy from those who were also present during the 2018 Visit. He is a frank and straight forward witness.

127.  However, in determining what had actually transpired at the 2018 Visit, I shall ignore the said transcript all together as evidence in support of the defendant’s case. Firstly, it is not a contemporaneous record of the parties' conversation. More importantly, I do not know which parts of the said transcript were prepared with assistance or confirmation of Nelson Hui’s parents and his wife. I have to determine what had actually been said by the parties during the 2018 Visit by closely evaluating the testimony of the parties and Nelson Hui in the witness box.

128.  The defendant and Nelson Hui were cross-examined on the details of the 2018 Visit, including how they went up to the Property from the ground floor of the Building, the relative standing position of their family members at the entrance of the Property, to what extent the main door of the Property was opened by the plaintiff, the details of the conversation and etc. The defendant’s evidence and Nelson Hui’s evidence was materially consistent on the relevant issues. The plaintiff complained that the defendant said that during the 2018 Visit, the main door of the Property was widely opened, whilst Nelson Hui said that the main door was opened at about 75 degree. I do not regard this as a discrepancy or a material difference. They simply used their own way to describe their observation that the main door was widely opened. Their evidence rebuts the plaintiff’s evidence that she only slightly opened the main door with a narrow gap of 10 cm only while she was talking to the defendant. The plaintiff’s evidence is less believable on this issue. The defendant and his family members were first led by the security guard of the Building to the entrance of the Property. The defendant was an old man of over 80 years old. He was accompanied his wife who was presumably an old lady, Nelson Hui aged 52 and his wife. The parties were separated by the iron main gate of the Property. There was no such need for the plaintiff to talk to the defendant through a narrow gap of 10 com only. The plaintiff further submitted that the defendant said that it was him who passed the land search record to the plaintiff, but Nelson Hui said that he passed to land search record to the plaintiff during the said visit. This minor difference would not affect my assessment of their overall credibility.

129.  Concerning plaintiff’s evidence, I have great hesitation in accepting her evidence. Her evidence was undesirable in many aspects. She has not frankly told the court about her actual dealings with Chen and Sheng Zhan, including the new management of Sheng Zhan after Chen had resigned. As regard Mr Wong’s evidence, I reject his evidence that when he was young, the plaintiff was seriously ill and stayed in the Property overnight. I also do not accept his evidence that he had ever stayed in the Property (which the plaintiff said was a vacant or unoccupied Property) overnight when he was 16 years old, simply because he had a basketball training at the Victoria Park early in the morning of the following day. Such allegations are made to serve his purpose that the plaintiff used to act outside the alleged limited scope of the 1998 Permission. Mr Wong further said that he had not met Chen anymore after 1998. He pursued his tertiary education in a university in the United States and returned to Hong Kong in about 2008. Even if he had not met Chen after 1998, it does not mean that the plaintiff had not met Chen or communicated with Chen at the material times after 1998. Concerning the 2018 Visit, Mr Wong did not have direct knowledge as he was not present.

130.  Concerning the 2018 Visit, there are two completely different versions of facts put forward by parties. If I have to decide which party’s version is more believable, bearing in mind that the defendant bears the burden of proof on his allegations, I have no doubt that the defendant’s evidence and Nelson Hui’s evidence should be preferred. Hence, I find that in relation to the 2018 Visit, the plaintiff did admit that she was the “person of Sheng Zhan”. She also said that the defendant still owed their company money and Sheng Zhan had completed the procedures of the Property. I find that the plaintiff’s meaning is that she had completed certain procedure with Sheng Zhan who permitted the plaintiff and her sons to occupy the whole Property as her residence, including occupying all of the three bedrooms after about 2009. There must be some kinds of agreements, permission or arrangement between Sheng Zhan and the plaintiff at that time. So that the plaintiff would then incur substantial expanses on renovation of the Property. When the land search record of the Property was presented to the plaintiff during the 2018 Visit, the plaintiff did say that she had to make a phone call to a Mr Chen (or Mr Chan). I find that the said Mr Chen (or Mr Chan) referred to by the plaintiff was Chen. The plaintiff then closed the main door of the Property and made a phone call to Chen. Subsequently, the plaintiff told the defendant that Chen was not in Hong Kong. The plaintiff asked the defendant to leave his telephone number and she would get back to the defendant.

131.  I have not lost sight to the fact that Sheng Zhan was wound up on about 29 January 2018 and Chen had already resigned as its director since 9 July 2002. However, it is not in dispute that the plaintiff received the Keys and the Title Deeds from Chen of Sheng Zhan. I have already found that the plaintiff had not fully told this court her actual relationship and dealings with Chen and Sheng Zhan. She even tried to distance herself from Sheng Zhan and Chen. When the plaintiff’s possession was challenged by the defendant during the 2018 Visit, she readily admitted that she was the “person of Sheng Zhen” in order to claim her rightful possession of the Property. She, as a layman, naturally made an enquiry with Chen because she knew Chen well and she received the Keys and Title Deeds from Chen in the past. This clearly shows that before Sheng Zhan was wound up, the plaintiff was Sheng Zhan’s licensee.

Summary of Findings

132.  I have already made my findings on the credibility of the parties and their witnesses. I shall set out a summary of the salient points of my findings of facts:-

(a)  the plaintiff came to know Chen in about 1989. Then, they became good friends with frequently dealings. They also had business dealings, at least in Zhanjiang Yousile Food Co Ltd.

(b)  In about 1992, the Property was unoccupied. The Property was mortgaged by the defendant in favour of Sheng Zhan to secure the Loan. As a gratitude to Chen of Sheng Zhan, the defendant permitted Sheng Zhan to use the Property until the repayment of the Loan before the due date. The defendant passed the Keys to Chen of Sheng Zhan and permitted Sheng Zhan to use the Property temporarily. The 1992 Licence was of the nature of a bare licence. Sheng Zhan then permitted its business friends and/or clansmen of Zhanjiang to stay in the Property while they were in Hong Kong.

(c)  Upon default of the repayment of the Loan on the due date, the 1992 Licence expired, lapsed or was otherwise determined. Instead of applying for an order for sale of the Property to settle the outstanding debt owed by the defendant, Sheng Zhan continued to occupy the Property as a mortgagee in possession. The Property was still used by Sheng Zhan for its business friends or clansmen of Zhanjiang occasionally at least up to 2005.

(d)  Between 1993 and 1998, it was Sheng Zhan or its agent who made payments to the electricity charges, water charges and telephone charges, management fees and government’s rates and rents in respect of the Property.

(e)  By the 1998 Permission, Chen asked the plaintiff to possess and manage the Property on behalf of Sheng Zhan. For this purpose, the Keys and the Title Deeds were passed to and kept by the plaintiff. Sheng Zhan continued to possess the Property through the plaintiff. It is likely that Sheng Zhan still used the Property as a place for its mainland business acquaintance or clansmen of Zhanjiang to stay while they were in Hong Kong. After 1998, the plaintiff did possess and manage the Property on behalf of Sheng Zhan as its licensee.

(f)  The plaintiff failed to prove that she possessed the Property to the exclusion of Sheng Zhan or Chen from about 1999 onwards. When the plaintiff made the payments to management fees, electricity charges, telephone charges and government rates and rents of the Property, she did that on behalf of Sheng Zhan. When the plaintiff purported to register her name as the account payer of the electricity and telephone bills, she did that for her easy management of the Property on behalf of Sheng Zhan, and she did that with consent from Sheng Zhan.

(g)  In about 2005, the plaintiff moved into the Property for living and she occupied only one of the three bedrooms. She was permitted by Shen Zhan and/or Chen to do so.

(h)  In about 2008 or 2009, the plaintiff was permitted by the Sheng Zhan and/or Chen to use the Property as her residence. This is why when her possession of the Property was challenged by the defendant at the 2018 Visit, the plaintiff claimed that she had completed the procedures with Sheng Zhan. Then, the plaintiff incurred substantial expenses to renovate the Property in about 2009. Her two sons then moved into the Property.

(i)  At all material times, the plaintiff was the licensee of Sheng Zhan until Sheng Zhan was wound up on about 29 January 2018. Thereafter, the plaintiff remained in the Property as a squatter. These proceedings were commenced in 2019, the plaintiff had not exclusively possessed the Property in her own name for more than 12 years.

(j)  In the alternative, if the plaintiff was permitted to possess the Property in 1998 by Chen personally, the plaintiff’s possession of the Property was for and on behalf of Chen, as opposed to possessing the same in her own name. Hence, when the plaintiff changed the name of the account payer of electricity bills, telephone bills and government rates and rents, and etc, she did that with permission of Chen and on behalf of Chen personally. Under these circumstances, the plaintiff remains as the licensee of Chen up to this date.

Whether the plaintiff’s Possession was only Adverse to Sheng Zhan

133.  Given all of my findings above, it is enough for this court to dispose of the plaintiff’s claim and the defendant’s counterclaim. In the defendant’s opposing affirmation of the Originating Summons, the defendant raised a legal point that the plaintiff’s possession in any event was not adverse to the interest of the defendant. The defendant submitted that at the material times after 1999, the defendant had already been defaulted in repayment of the loan and Sheng Zhan had already entered into factual possession of the Property as mortgagee in possession under the Mortgage Deed. Hence, the defendant contended that the right of exclusive possession of the Property was enjoyed by Sheng Zhan exclusively. Therefore, even if the plaintiff was in adverse possession of the Property after about 1999 (which the defendant denies), the plaintiff’s exclusive possession was only adverse to Sheng Zhan, but not adverse to the defendant. Mr Koo likened the present situation to that of lessor and lessee situation: Fairweather v St Marylebone Property Co Ltd [1963] AC 510. Hence, the defendant contended that he had no right of possession at all material times after 1993. I opine that in a lessor and lessee situation, the lessor retains the reversion of the lease. Unless his tenant is in breach of the covenants of the lease which triggers the right of re-entry or the lease is surrendered, the lessor can only take possession of the leased property at the expiry of the lease. Whereas in a mortgagee in possession situation, the defaulting mortgagor can take the initiative to pay off the debts and get back the possession of the mortgaged property after his mortgagee had taken possession.

134.  In reply to the defendant’s contention, Mr Kong submitted that it was trite law that a legal mortgagee is entitled to possession upon default of repayment by the mortgagor. Mr Kong relied on the principle of relativity of titles and submitted that the defendant was and is the registered owner of the Property. He submitted that this court was concerned with the relative title of the parties in the Property. As it is admitted that the defendant was and is at all material times the registered owner of the Property with paper title, the real issue between the plaintiff and the defendant is the nature of the plaintiff’s possession vis-a-vis the defendant. Hence, Mr Kong submitted that defendant could have commenced proceedings against the plaintiff back in 1999.

135.  I tend to agree with Mr Kong that this court is concerned with the competing interest of the parties in the Property and the parties are bound by their pleadings. On pleading, the defendant’s paper title in the Property is admitted and the plaintiff had not attempted to claim through Shen Zhan. Hence, the real issue is whether the plaintiff had possessed the Property in her own name with the requisite intention to possess to same, or she merely possessed the Property on behalf of others or with permissions by others, such as Sheng Zhan or Chen.

136.  Hence, it is unnecessary for me to deal with the legal issue based on the assumption that the plaintiff was an adverse possessor, unless the parties have properly pleaded their case and have fully argued on the nature of the legal estate created under a lease and that created under a legal charge, accrual of the right of action to evict a trespasser by a mortgagor after the mortgagee had taken possession of the mortgaged property, and etc.

(I) Order

137.  In light of the above findings, the plaintiff’s claim is dismissed and the defendant’s Counterclaim is allowed. There be an order for vacant possession of the Property. Given the facts that the plaintiff had been using the Property as her residence for some years, I shall allow the plaintiff to give up vacant possession of the Property within 3 months from the date of this judgment.

Damages

138.  The parties have agreed that the mesne profit of the Property is assessed at HK12,000 per month from 22 December 2018 until actual delivery of the vacant possession, together with interest thereon at judgment rate from the date of judgment until full payment.

139.  Hence, this court makes the following orders:-

(a)  the plaintiff’s claim be dismissed;

(b)  the defendant’s counterclaim be allowed;

(c)  the plaintiff do deliver vacant possession of the Property within 3 months from the date of this judgment;

(d)  the plaintiff do pay the defendant mesne profit in a sum of HK$12,000 per month from 22 December 2018 until actual delivery of vacant possession of the Property to the defendant, together with interest thereon at judgment rate from the date of this judgment until full payment thereof; and

(e)  an Order nisi that costs of this action, including the costs of the counterclaim and all costs reserved (if any), be to the defendant, with certificate for counsel for the trial, to be taxed if not agreed. Unless an application has been made to vary this costs order nisi, this costs order nisi shall become absolute 14 days after this judgment is pronounced.

140.  I thank counsel for their assistance to the court.