LAM YU SHING AND ANOTHER v. THE OCCUPIER(S) AND ANOTHER

DCCJ 4161/2016

[2024] HKDC 1057

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4161 OF 2016

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BETWEEN

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JUDGMENT

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A. INTRODUCTION

1.  This is the trial of Ps’ action for recovery of possession of land and mesne profits against D2, and D2’s counterclaim in adverse possession. Ps commenced this action on 24 August 2016.

2.  The trial took place from 20 to 22 and 24 November 2023. The parties exchanged multiple rounds of submissions. However, in the course of rendering this Judgment, it is noted that, due to certain procedural complications (as detailed below), further submissions from the parties were required. Thus, the parties exchanged 2 more rounds of submissions on 14 and 21 May 2024.

3.  I thank the learned counsel for their extensive research and assistance to this Court. This Judgment does not seek to encapsulate all the points made by the learned counsel in their voluminous submissions. Suffice to say, I have considered all of them.

4.  Ps are the present registered owners of 3 pieces of land in the New Territories known as Lot nos 82, 86 and 87 in Demarcation District 183, Pai Tau, Shatin, New Territories (“Lot 82”, “Lot 86” and “Lot 87”). Lot 82, Lot 86 and Lot 87 were purchased by Ps’ mother, Madam Tsang Man Shuet, in about 1959. By virtue of a Deed of Gift dated 16 November 2001 and registered in the Land Registry by Memorial No ST1253798, Ps’ mother gifted Lot 82, Lot 86 and Lot 87 to Ps. Ps now claim vacant possession of these three Lots.

5.  D1 is a nominal defendant in this case, being the occupiers of 306 Pai Tau Village, Shatin, New Territories, Hong Kong. D2 is a retired businessman.

6.  D2’s case is that his younger brother Lew Choi Wai (劉彩威) (“Choi Wai”) was in sole adverse possession of Lots 82, 83, 84, 85, 86, 87 and 88 of DD 183 (the “Occupied Lots”) between 1977 to 1992. D2 was in the United Kingdom until 1992, whereby he returned to Hong Kong and joined Choi Wai in joint adverse possession of the Occupied Lots until 9 November 2009 when Choi Wai passed away. During this period from 1992 to 2009, D2’s pleaded case was that the possessory interest in the Occupied Lots was held by Choi Wai and himself as joint tenants. After Choi Wai’s death in 2009, D2’s case is that he remained in sole adverse possession of the Occupied Lots.

7.  In the present proceedings, D2 counterclaims for adverse possession of the entire Lot 86 and certain parts of Lot 82 and Lot 87, which are within the Occupied Lots.

8.  Both parties adduced expert evidence as to the occupation of Lot 82, Lot 86 and Lot 87. Ps obtained a surveyor’s report from Dr Tang Hong-wai, Conrad, while D2 obtained an expert report from Mr Tang Sze-kin, Eric. Ps’ and D2’s experts then produced a joint expert report. D2 additionally adduced an expert valuation report on Lot 82, Lot 86 and Lot 87 prepared by RHL Appraisal Limited.

9.  D2’s encroachment plan (the “Encroachment Plan”) (annexed to its Defence and Counterclaim of 7 June 2017 (“D&CC”) and expert report from Mr Tang Sze-kin, Eric of 2 December 2021) shows that the Occupied Lots are coloured pink, whilst the parts of the Lots Choi Wai and/or D2 allegedly occupied are coloured yellow (the “Disputed Lots”). There is no dispute between the parties as to the boundaries of the Disputed Lots.

10.  To establish adverse possession, where the right of action accrued before 1 July 1991, the requisite period D2 would be required to be in adverse possession is 20 years, whereas if the right accrued thereafter, the requisite period is 12 years.

11.  D2’s pleaded case is that Ps’ title was extinguished either in 1997 (20 years from 1977) or, at the latest, 2004 (12 years from 1992).

B. FACTUAL BACKGROUND

12.  D2 is part of the Lau family. The relevant members of the Lau family for the purposes of this proceeding are as follows:-

a. Mdm Chan Chui Ying (陳翠英), the mother of D2;

b. D2;

c. Choi Wai, younger brother of D2;

d. Ms Lew Choi Sum (劉彩心) (“Choi Sum”), younger sister of D2;

e. Ms Lau Siu Mui (劉小梅) (“Siu Mui”), youngest sister of D2.

13.  D2’s case is that in 1977, Choi Wai moved out of the Lau family flat in Wo Che Estate and into Lot 87 in the Occupied Lots. Upon arrival at Lot 87, Choi Wai demolished and rebuilt the shed that had already been erected. The rebuilt structure became Unit 306 of Pai Tau Village (“Unit 306”). Both experts agreed that the old Unit 306 first appeared in 1979. It had an area of approximately 300 to 400 square feet, comprising one bedroom and one living room.

14.  D2 alleges that between 1976 and 1981, Choi Wai erected wire fences enclosing parts of the Occupied Lots. In addition, two structures were constructed by Choi Wai in the 1980s; namely an area with a metal roof extended from Unit 306 and a fenced storage area. It was also alleged that Choi Wai erected a metal gate at the site's entrance to prevent public entry.

15.  There were retaining walls, slopes and nullah to the south of the Occupied Lots, while there were retaining walls and slopes to the north, resulting in the Occupied Lots having a trough-like topography. D2’s case is that by virtue of the aforesaid geographical features of the Occupied Lots, together with the fences, the Occupied Lots were in substance secluded and public access was in practice excluded.

16.  In or about 1980, Choi Wai applied to CLP Power Hong Kong Limited (“CLP”) for electricity supply, and on about 25 November 1980, a meter was installed at Unit 306. In or about 1983, Choi Wai applied to the Water Supplies Department for water supply, and was the registered user of Unit 306 from 6 October 1983 to 3 September 2010.

17.  According to D2, in 1984, Choi Sum and her family briefly lived in the Disputed Lots. They moved out after she purchased a Home Ownership Scheme flat. On 15 November 1984, Choi Sum filed a squatter registration with the Lands Department regarding Unit 306.

18.  In 1992, D2 returned from the United Kingdom to Hong Kong and joined Choi Wai at Unit 306. The circumstances under which D2 joined Choi Wai in 1992 and the respective capacities in which they occupied Unit 306 are disputed and analysed below.

19.  Between 1992 and 2009, D2’s case was that he and Choi Wai jointly possessed the Occupied Lots and engaged in activities such as cultivating trees and plants, mowing, maintaining the boundary features, and refurbishing and maintaining Unit 306.

20.  D2’s father passed away in January 1993, following which D2 and his family stayed with his mother in Flat 505 of Fung Wo House, Wo Che Estate (“Flat 505”) to take care of her. D2’s case is that he moved back to Unit 306 after less than a month of living in Flat 505 and thereafter was only present in Flat 505 during the day to fulfil caretaking responsibilities but was at Unit 306 at night.

21.  According to D2’s declaration made under the Oaths and Declarations Ordinance (Cap 11) dated 11 November 2009 (“Declaration”), Choi Wai passed away in the Mainland on 9 November 2009.

22.  D2 claims that subsequent to Choi Wai’s death, he was in sole possession of the Occupied Lots and managed the same.

23.  On 8 February 2010, an invoice shows that 16kg of LPG (liquefied petroleum gas) was purchased, indicating Unit 306 as the address and providing D2’s phone number.

24.  The first bill issued by the Water Supplies Department to D2 was for the period between 9 March 2010 and 28 April 2010, and it recorded a deposit of $400 paid on 18 March 2010.

25.  On 19 April 2010, D2 entered into a telecom contract with China Mobile, indicating Unit 306 as his registered address.

26.  12 May 2010 to 12 July 2010 was the first period in which D2 paid CLP for the electricity supply to Unit 306, which recorded a deposit of $1,000. D2 paid for the electricity of Unit 306 from then until July 2016.

27.  On 17 May 2014, D2’s wife, Ai Jian Ping, reported to the Buildings Department in relation to two potential illegal structures on the Occupied Lots.

28.  D2 admits that he only paid against the demand for rates and/or government rent from 2016 onwards.

29.  Unit 306 was also leased to a Mr Tupac Ron under three tenancy agreements dated 16 February 2014, 15 February 2016, and 23 February 2017. Ai Jian Ping signed the 2014 and 2016 tenancy agreements as landlord, while D2 signed the 2017 agreement as landlord.

30.  On 9 September 2016, the Water Supplies Department wrote a letter in response to Siu Mui’s letter dated 1 September 2016 enquiring about the balance of Choi Wai’s water bills.

31.  On 28 September 2016, the Lands Department sent a reply letter about squatters’ registration addressed to Choi Sum at Unit 306. This reply letter was in response to Choi Sum’s earlier letter dated 21 September 2016.

C. LEGAL PRINCIPLES

32.  The principles of adverse possession are well-established.

33.  The starting point is sections 7, 8, 13 and 17 of the Limitation Ordinance (Cap 347) (“LO”):-

“7(2) No action shall be brought by any person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person…

8(1) Where the person bringing an action to recover land, or some person through whom he claims, has been in possession thereof, and has while entitled thereto been dispossessed or discontinued his possession, the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance.

13(1) No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as adverse possession) and where under the foregoing provisions of this Ordinance any such right of action is deemed to accrue on a certain date and no person is in adverse possession on that date, the right of action shall be deemed to accrue unless and until adverse possession is taken of the land.

17 Subject to the provisions of section 10, at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land… the title of that person to the land shall be extinguished.”

34.  Where the right of action accrued before 1 July 1991, the applicable limitation period is 20 years per section 38A LO, section 7 of Limitation Ordinance 1965 (no 31 of 1965): Tang Moon Lam v Tang Ying Yeung [2019] 5 HKLRD 556 at §50.

35.  To establish possessory title based on adverse possession, the squatter has the burden of proving factual possession and the requisite intention to possess (animus possidendi) for the whole of the relevant period.

36.  In respect of factual possession, Slade J in Powell v McFarlane (1979) 38 P & CR 452 observes at p 470-471 as follows (approved in Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd (2007) 10 HKCFAR 588 at §7):-

“(3) Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly... The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances…acts of possession done on parts of land to which a possessory title is sought may be evidence of possession of the whole. Whether or not acts of possession done on parts of an area establish title to the whole area must, however, be a matter of degree…. broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.”

37.  In respect of animus possidendi, Shine Empire at §7, again quoting Slade J, states:-

“(4) … animus possidendi 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 processes of the law will allow.

… the courts will require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world. If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisite animus possidendi and consequently as not having dispossessed the owner.”

38.  I also keep in mind that where the occupier has made self-serving statements as to what his intention was, whether during the period of occupation or when challenged in legal proceedings, the Courts should approach them with some scepticism: Wong Tak Yue v Kung Kwok Wai (1997-1998) 1 HKCFAR 55 at p.69.

39.  If adverse possession is established against a paper owner, it is settled law that section 17 LO does not bring about a “parliamentary conveyance” or transfer of the true owner’s estate to the squatter. Rather, its effect is merely negative by extinguishing the right/title of the dispossessed/true owner. The squatter acquires a new possessory title of his own, which after the requisite period of adverse possession can no longer be defeated by the dispossessed/true owner’s title: Fairweather v St Marylebone Property Co Ltd [1963] AC 510 at p 535, Nam Ching Wun v Tsun Un Pawn Shop (unrep HCA 2151/2008, 22 November 2016) at §§168-172.

D. WITNESSES

40.  Mr Lam Yu Cheong Alfred (“Mr Lam”) testified for Ps, while D2 testified on his own behalf.

41.  In assessing the credibility of the witnesses, a valuable guidance can be found in Hui Cheung Fai and another v Daiwa Development Limited (unrep HCA 1734/2009, 8 April 2014), in which DHCJ Eugene Fung SC said at §77-80:-

“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibilty: Onassis v Vergottis [1968] 2 Lloyd's Rep 403 at 431 (Lord Pearce) ……

78. In deciding whether to accept a witness' account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: eg Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness' credibility, I have also attached importance to the consistency of the witness' evidence with undisputed or indisputable evidence, and the internal consistency of the witness' evidence. The latter type of consistency is often tested by a comparison between the witness' oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses' character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA))."

42.  When there is a long passage of time between the material events and the trial, contemporaneous documentation is of particular importance. In Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd [2007] 3 HKLRD 439⁸ , Stock JA (as he then was) said at p. 480-481:-

"…… Comparison with contemporaneous documentation is always an aid to reliability of oral testimony, unless there is reason to believe that the documentation is contrived or materially incomplete; but where the passage of time between events and trial is as long as it was in the present case, and where there is such a host of contemporaneous documentation, as there was in this case, the documentation must, I would have thought, assume a special importance. ……

I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to have been created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known. This is particularly so in a case such as the present, where events have taken place so long before trial and where there exists a mountain of contemporaneous documentation that can be used to point the way. This is not to say that the documentation should have been treated as if it stood on its own, not to be explained, contradicted or supported by oral testimony. It is however to say that in this case the approach adopted to assessment of the facts placed far too much emphasis on character impression and too little upon what was suggested by the documentation and by the inherent probabilities in their historical context. That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements - these are the factors which in a trial such as this, so long removed from the time of the events in question, were likely to be of particular use in assessing the facts ……"

43.  In general, I found Mr Lam to be an honest and credible witness. As Ps’ counsel, Mr Siu, accepted, Mr Lam frankly admitted his lack of knowledge about the Disputed Lots before he became their owner. But also because of this, his evidence is not ultimately relevant to any of the contested issues, as demonstrated below.

44.  On the other hand, I found D2 to be an unreliable witness.

45.  I accept the submissions of Mr Mak, D2’s counsel, that cross-examination is not a memory test. Considering D2’s age and the scope of the cross-examination (in respect of the sprawling events that happened over decades), it is understandable that D2’s evidence would have some inconsistencies.

46.  However, there is a strong sense that D2 was unwilling to tell the whole truth about some material aspects of the case (see below) and had a tendency to embellish his evidence when answering the questions.

E. THE PLAINTIFFS’ FACTUAL CASE

47.  I first consider the legal effects (if any) of the following events:-

(1) the conveyance by Ps’ mother to Ps by the Deed of Gift dated 16 November 2001; and

(2) Ps’ and/or Ps’ mother demanding the occupiers (orally or in writing) to cease possession of the Disputed Lots.

48.  As to the conveyance from Ps’ mother to Ps by Deed of Gift, section 9(3) LO states:-

“(3) No person shall bring an action to recover any estate or interest in land under an assurance taking effect after the right of action to recover the land had accrued to the person by whom the assurance was made or some person through whom he claimed or some person entitled to a preceding estate or interest, unless the action is brought within the period during which the person by whom the assurance was made could have brought such an action.”

49.  I accept the submissions of Mr Mak, that the conveyance of the land by Ps’ mother to Ps in 2001 does not stop time from running: see Jourdan and Radley-Gardner, Adverse Possession (2^nd edn, 2011) at §15-06.

50.  Ps pleaded that multiple demands were made for the occupiers of the Disputed Lots to cease possession. First, Ps and their mother made an oral demand against a male who identified himself as surname 劉 in 1989, followed by a notice to quit issued by Ps’ solicitors on 24 April 2006 and further notices to quit dated 21 and 26 May 2016. The written notices were accompanied by threats of legal action.

51.  Mr. Mak submits that time will only stop running when the paper owner commences a legal action to recover the disputed land, or take possession physically. A mere demand made by a paper owner to the adverse possessor for possession is insufficient, citing Higgs v Leshel Maryas Investment Co Ltd [2009] UKPC 47 at §57 per Lord Scott.

52.  I accept Mr Mak’s submissions. For adverse possession, it is the intention of the adverse possessor, not that of the paper title holder, that is important. The various demands to quit, as outlined above, would not stop time from running.

53.  Therefore, in the present case, time did not stop running until 24 August 2016, when the writ of summons was filed to commence this action.

F. D2’s PLEADED CASE - JOINT ADVERSE POSSESSION BETWEEN 1992 AND 2009

54.  It is D2’s pleaded case that Ps’ title was extinguished by 1997, or the latest in 2004. Both of these points of time are within the 1992 to 2009 period. It is common ground that the 15 years’ period of Choi Wai’s sole possession between 1977 and 1992 per se is insufficient to satisfy the requisite period of adverse possession.

55.  Regarding the period between 1992 and 2009, D2’s sole pleaded case, also advanced in D2’s opening submissions, is that he and Choi Wai were in joint adverse possession of the Occupied Lots.

56.  Chan Mei Lin v Lee Hong (unrep HCA2861/2001 & HCA1803/2010, 31 October 2018) [2018] HKCFI 2441 at §77 sets out the salient features of joint adverse possession:-

“77. Thus, two or more persons are in joint adverse possession of land belonging to another if they are in physical occupation of the land with the common intention that their possession shall be to the exclusion of everyone else including the paper owner, but not as between themselves. They have effective control over the land as against the whole world. As between themselves, they are entitled to the use and possession of any part of the land but cannot point to any part as his own to the exclusion of the other. Joint possession is distinguishable from the case where one enjoys possession under the licence of the other who has exclusive right to possession. The common example is the case of children enjoying possession of land under the licence of the father who is the person entitled to exclusive possession.” (emphasis added)

57.  Ps’ case with respect to the period between 1992 and 2009 is twofold; firstly, that D2 in fact lived in Flat 505 in Wo Che Estate rather than Unit 306 or the Occupied Lots during the majority of this period, and secondly, to the extent that he was at Unit 306, D2 was merely the licensee of Choi Wai, and they were not in joint adverse possession.

58.  As Godfrey Lam JA observed in Leung Chi Cheong v Liu Che Wun [2022] 4 HKLRD 633 at §§73-74, since D2 and Choi Wai did not enter into adverse possession of the Disputed Lots at the same time, D2 has to establish the facts and events indicating that Choi Wai in 1992 transferred his sole possessory title in the Occupied Lot to himself and D2 as joint possessors, or alternatively show how this can be inferred.

59.  It is clear to this Court that D2 failed to prove joint possession with Choi Wai from 1992 to 2009, and even if he did, I find that he was merely Choi Wai’s licensee.

60.  My reasons are as follows.

61.  Firstly, I accept the submissions of Mr Siu that D2’s explanations as to why Choi Wai invited him to be in joint adverse possession of the Occupied Lots in 1992 are internally inconsistent and unconvincing.

62.  In D2’s supplemental witness statement, it was said that D2 told Choi Wai in March 1992 that he planned to return to Hong Kong in around September 1992 but could not find a residence for his family. Choi Wai then out of brotherhood, invited D2, his wife and 2 daughters to “reside at, manage and enjoy” the Occupied Lots (“邀請本人跟本人前妻及兩名女兒跟他共同居住，管有及享用該地段”).

63.  By contrast, in D2’s cross-examination, D2 claimed that in a telephone conversation, Choi Wai asked him to come back to Hong Kong to occupy others’ land together (“返嚟一齊霸地”). In other words, there was an express agreement to be in adverse possession of the Occupied Lots. D2 further added that his siblings were aware that Choi Wai invited D2 to return to Hong Kong and occupy the Occupied Lots.

64.  As Mr. Siu submitted, the underlying arrangement and intention between D2 and Choi Wai are significantly different in the two versions of events. In the first, D2 wished to return to Hong Kong anyway, but was frustrated by his inability to find accommodation; out of generosity, Choi Wai allowed not just D2, but his entire family to reside in Unit 306. It is likely that the interest granted in this first version is a bare license. In the latter version, there was an express agreement between Choi Wai and D2 specifically to adversely possess the Occupied Lots. As D2 clarified during trial, he would not have returned to Hong Kong but for this express agreement.

65.  When questioned about the inconsistent accounts during cross-examination, D2 failed to provide a satisfactory explanation.

66.  I consider that the inconsistency in D2’s story goes against his credibility. It has a strong flavour of an after-thought and an attempt to embellish the evidence.

67.  Secondly, on about 24 April 2006, Ps’ solicitors posted a warning letter against occupiers of the Disputed Lots. In response, Choi Wai engaged his own solicitors Chan & Associates to respond to the warning letter by a letter dated 4 May 2006, claiming Choi Wai had been in adverse possession since 1976. Neither this letter nor Chan & Associates’ subsequent letter dated 6 September 2006 mentioned anything about joint possession, the year of 1992, or the name of D2.

68.  D2 admitted at trial that he was aware of the warning letter of 24 April 2006. Despite this, D2 did not engage solicitors to assert his own right, nor did he contribute towards Choi Wai’s legal costs. D2’s evidence was that Choi Wai also represented him. However, during cross-examination, D2 eventually accepted that Choi Wai had not said anything to that effect, and it was merely his subjective belief. In any case, it is clear by the content of Chan & Associates’ 4 May 2006 letter that Choi Wai did not seek to represent D2’s interests. I consider that even if D2 was physically present in the Occupied Lots, his inaction and passivity with respect to the warning letter are consistent with him being a licensee, not a joint adverse possessor.

69.  Thirdly, there is undisputed evidence that Choi Wai from time to time allowed his siblings to live in Unit 306, not just D2. It is not disputed that in 1984 Choi Sum and her family briefly lived in the Disputed Lots as well before she purchased a Home Ownership Scheme flat. It is entirely consistent with this pattern of Choi Wai helping his siblings in need that that he granted D2 and his family a license to reside in Unit 306 as well.

70.  In this regard, I have serious doubt as to whether D2 was regularly living at Unit 306 from 1992 to 2009. It is not disputed that in 1993, D2’s father passed away and D2 and his family moved to Flat 505 in Wo Che Estate to live with their mother for caretaking purposes. D2’s case is that he returned to Unit 306 after a month, because Flat 505 was too small and D2 would return home late, disturbing his family.

71.  However, there is a distinct lack of evidence that D2’s regularly lived in the Occupied Lots between 1992 and 2009. Under cross-examination, D2 confirmed that he never contributed towards the payment of electricity, water or any construction costs in the Occupied Lots. This would be unusual if Choi Wai and D2 were in joint adverse possession.

72.  On the other hand, D2 admitted that before Choi Wai’s death in 2009, D2 all along used Wo Che Estate Flat 505 as his correspondence address. Importantly, D2 was also added as list of tenants of Flat 505 (承租人之家屬名單) in 1993. I find D2’s explanations, namely that the mailbox at Unit 306 had no cover or lock, and that D2’s name was added to Flat 505 because they requested the Housing Department to allocate a larger unit, contrived.

73.  Furthermore, the parties’ experts agreed that there were three vertical pillars within the encroached areas, to the north of Lot 86, the erection of which must have been significant and big engineering work which lasted for a substantial period of time. These pillars were first seen in the survey sheet 2007. However, under cross-examination, D2 seemed unaware of such engineering works taking place, and denied anyone, including government contractors, ever entered the Occupied Lots for engineering works after 1992.

74.  Thus, I have serious doubts as to D2’s account that he returned to Unit 306 after a month, and I cannot find that D2 regularly lived in the Occupied Lots from 1992 to 2009 at all. If D2 spent most of his time in Flat 505 instead, that would weaken his case of joint possession.

75.  In any event, on D2’s case, by 1992 Choi Wai was already solely in possession of the Occupied Lots for 15 years. Mr Siu raised the issue of why Choi Wai would at this point suddenly agree to give up half of his interest in the Occupied Lots to D2 for no reason. D2 has not offered a satisfactory answer to this question. I have no doubt that Choi Wai merely granted a license to D2 and his family (as he did for Choi Sum earlier), rather than giving up half of his interest in the Occupied Lots to D2.

76.  In the end, the only evidence in support of Choi Wai and D2’s joint possession is D2’s say-so. I bear in mind that the Court has to treat such self-serving statements with scepticism, per Wong Tak Yue.

77.  Taking all the matters into account, I find that there is insufficient evidence that D2 regularly lived in the Occupied Lots between 1992 and 2009. In any event, the evidence shows that D2 was a mere licensee of Choi Wai when he occupied Unit 306. Thus, I find that there was no agreement to adversely possess the Occupied Lots, and find that Choi Wai and D2 were not in joint adverse possession from 1992 to 2009.

78.  As D2 pleaded his case on the sole basis of joint possession between 1992 and 2009, and no alternative case was advanced, the above findings of fact would dispose of D2’s pleaded case.

G. Whether D2 SHOULD BE PERMITTED TO RUN AN ALTERNATIVE UNPLEADED CASE

79.  However, complications arose when D2 advanced an unpleaded alternative case during closing submissions.

80.  In his closing submissions, D2, for the first time, advanced a fallback case based on Choi Wai’s sole possession from 1992 to 2009 as an alternative to his pleaded case on joint possession. It was argued that even if D2 was not in possession from 1992 to 2009, he could still succeed by tacking onto Choi Wai’s sole possession after Choi Wai’s death. Mr. Mak submits that Ps, having been dispossessed for multiple decades, would have lost their paper title anyway.

81.  It is trite that where there is no breakage in adverse possession, a second squatter can add the former period of occupation by a first squatter to his own as against the true owner: Megarry & Wade, The Law of Real Property 10^th edn at §7-036.

82.  However, I am faced with the difficulty that D2 did not raise this alternative case of D2 tacking onto Choi Wai’s sole possession in either its pleadings or opening submissions. Thus, it was not explored in the evidence, including during cross-examination.

83.  The importance of pleadings has been reiterated recently in Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663 as per Ma CJ at §§21, 23 and 26:-

“21... It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced...

...

23. The purpose of pleadings, in clearly and unambiguously setting out the true extent and nature of a dispute not just for the benefit of the parties but also for the Court in managing and trying cases, remains important under our system of civil justice...

...

26. This appeal is the second case in which this Court has recently had occasion to comment on pleadings (or rather, the lack thereof). In Sinoearn International Limited v Hyundai-CCECC Joint Venture, Ribeiro PJ referred to the “extraordinary” position of a party being permitted to run at trial an unpleaded case. I associate myself with the sentiments expressed in that judgment. As stated by Ribeiro PJ:-

“34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly.”

84.  In the present case, D2’s D&CC pleads:-

“17. Upon the 2^nd Defendant’s return from the United Kingdom in 1992, the 2^nd Defendant resided at the Shelter with Lew. Since then, the 2^nd Defendant and Lew jointly occupied and possessed the Occupied Lots including the Disputed Lots...

18. In January 1993, the 2^nd Defendant’s father, Lew Tet Syn (劉德勝), passed away and the 2^nd Defendant also stayed with his mother, but he also came back to the Disputed Lots and jointly used the Disputed Lots with Lew” (emphasis added)

85.  There is no ambiguity that joint possession was the sole basis on which D2’s case was pleaded, and no alternative case was advanced.

86.  When asked by the Court, Mr. Mak also fairly accepted that there was no material before the Court which could point to the fact that this alternative case has been pleaded, or that the other side could be said to have been made aware of it.

87.  This has significant follow-on consequences.

88.  Firstly, as a result of D2’s case on joint possession, D2 had also specifically pleaded in his D&CC at §26 that Ps’ title has been “extinguished since in or about 1997, or by the latest 2004”. Both of these dates are within the period of joint possession in D2’s original case. However, on D2’s alternative case, Choi Wai would be in sole adverse possession from 1977 all the way until 2009. Thus, the whole period of adverse possession pleaded would not touch upon D2’s own possession at all. As analysed in Section H below, the extinction of the paper owner’s title under section 17 LO operates only vis-à-vis the specific squatter in adverse possession and those claiming under him. Thus on the alternative case, D2 would not be able to show that Ps’ paper title was extinguished vis-à-vis himself just by examining the period up to 2004. For that, D2 would have to establish his tacking onto Choi Wai’s possession without interruption in 2009.

89.  Secondly, although D2 pleaded he was in sole possession after Choi Wai’s death in 2009, the issue of how he obtained possession would be entirely different. If D2 and Choi Wai were in joint possession, in the absence of contrary evidence, they would have held the possessory title as joint tenants following Leung Chi Cheong at §§54-63, 73. In that situation, upon Choi Wai’s death, D2 would have obtained sole possessory interest by way of survivorship as Mr. Mak submitted in his supplemental opening submissions. By the nature of joint tenancy, the possessory interest held by Choi Wai and D2 jointly, and by D2 solely after Choi Wai’s death would be the very same one. By contrast, in his alternative case, D2 would need to adduce evidence that shows when and how he obtained possession in 2009 or thereafter. Thus, both the nature of the issue and, importantly, the evidence required to prove or disprove D2’s sole possession might be different for the post-2009 period.

90.  In this regard, although a party is entitled to rely on a shorter period of adverse possession than what was pleaded (Cheung JA in Yu Siu Cheuk v Realray Investments Ltd (unrep. CACV 181/2009, 10 November 2009) at §29), in this case, the longer post-2009 period had not been properly put in issue by the pleadings. Had this been done, the evidence and arguments advanced by the parties would have been affected.

91.  I agree with Mr Mak that pleading is not a game of words, and it serves the function of informing parties and the Court the factual and legal issues in dispute, thus enabling a proper trial preparation: JG8 LLC v QUWU Trading Ltd [2023] HKCFI 2775 at §36. However, as described above, in the present case, the way D2’s case was pleaded had substantive effects on the relevant issues at trial.

92.  In this regard, it was important that D2’s pleaded case on joint possession and extinction of Ps’ title by 1997 or at the latest 2004 was maintained in his opening submissions as well:-

“18. Since his return to Hong Kong from the United Kingdom in 1992 onward, D2 and Lew jointly occupied and possessed (D&CC §17) the Disputed Lots...

...

21. It is D2’s case that... Ps’ or Ps’ mother’s title of interest has been extinguished since in or about 1997, or by 2004 [D&CC §26].” (emphasis added)

93.  In D2’s supplemental opening submissions, D2 stated, “Ps were well aware of D2’s case that upon D2’s return from UK in 1992, he jointly occupied and possessed the Occupied Lots...” (§4(1)), and clarified that D2’s sole possessory title after 2009 depended on D2’s right of survivorship of the possessory title held on joint tenancy upon Choi Wai’s death (§10).

94.  Thus, as a result of the way D2’s case was pleaded and argued, both parties at trial had focused extensively on events between 1992 and 2009. Mr Siu’s primary focus at trial and in submissions was disproving joint possession between D2 and Choi Wai. He did not seek to advance any arguments for the post-2009 period, and little attention was paid to how and when D2 acquired possession after 2009, and whether there was a gap between Choi Wai’s and D2’s possession. Mr. Siu’s approach cannot be faulted given D2’s pleaded case. But on the alternative case of tacking on, such questions would have been crucially important. While the principles of ‘tacking on” are trite, Ps are not required to pre-emptively advance counter-arguments for an unpleaded case.

95.  In deciding whether to consider D2’s alternative case, I must take into account the guidance repeatedly given by appellate Courts on the importance of pleadings, and the underlying considerations of fairness. The point about pleadings in the present case is not merely a game of words, but goes to substance. I consider that there would be substantial unfairness and prejudice caused to Ps if I were to allow D2 to run its alternative case which involves (i) a factual case of Choi Wai’s sole possession from 1992 to 2009 which was different from what was pleaded, and (ii) the aforementioned significant changes to the factual and legal issues at stake.

96.  After careful consideration, I am of the view that D2 should not be allowed to advance an alternative unpleaded case raised only in closing submissions. Having rejected D2’s sole pleaded case on joint possession, his defence and counterclaim of adverse possession fail on this basis alone.

H. D2’s ALTERNATIVE CASE BASED ON CHOI WAN’S SOLE POSSESSION FROM 1992 TO 2009

97.  Nevertheless, for completeness, I will also address the position if D2 was not barred by pleadings from running his alternative case based on tacking onto Choi Wai’s sole adverse possession between 1992 and 2009.

H1. The factual basis of D2’s alternative claim

98.  The factual basis of D2’s alternative case comprises two parts.

99.  The first part is that Choi Wai was allegedly in sole adverse possession of the Occupied Lots from 1977 to 2009. It matters not whether Choi Wai granted licenses to Choi Sum or D2’s family during this period, since it is well established that a person can be in adverse possession through a licensee.

100.  The second part is that D2 obtained sole possession of the Occupied Lots after Choi Wai’s death on 9 November 2009. D2 must show when and in what circumstances he obtained possession. I also note that D2’s own alleged period of possession from 2009 to 24 August 2016 (the date of writ) would not satisfy the requisite 12-year period.

101.  Mr. Siu for Ps launched several challenges to the first part regarding Choi Wai’s possession from 1977. It is not necessary to resolve these issues in view of my ruling. But for completeness, I set out my brief observations in Section I below.

102.  In this section, I will focus on the second part of D2’s alternative case.

103.  Unfortunately, as D2’s case was run solely on joint (adverse) possession and obtaining possessory title by survivorship, the parties did not focus on when and how D2 took over from Choi Wai’s sole possession after Choi Wai’s death.

104.  As stated above, I find that D2 did not regularly live in Unit 306 from 1992 to 2009, and when he did, he was Choi Wai’s licensee. It, therefore, cannot be assumed that D2 was occupying the Disputed Lots, particularly during the period immediately after Choi Wai passed away. Nor can it be assumed that D2 had the requisite intention to possess (animus possidendi) at the relevant time.

105.  On the available evidence, it is, in my view, clear that there was a substantial gap between Choi Wai and D2’s earliest possession of the Occupied Lots.

106.  According to D2’s Declaration, Choi Wai passed away on 9 November 2009 in the Mainland, not Hong Kong. There is no evidence as to when and for what reason Choi Wai moved to the Mainland.

107.  As for D2’s occupation, surveying the evidence immediately after Choi Wai’s death, I note that there were:-

(a) An invoice for 16kg of LPG dated 8 February 2010, with Unit 306 as the address and D2’s phone number 97155309 being provided;

(b) A telecommunications contract dated 19 April 2010 in D2’s name with Unit 306 as the registered address;

(c) The first bill from the Water Supplies Department to D2 for the period between 9 March 2010 to 28 April 2010, recording a deposit of $400.00 paid on 18 March 2010; and

(d) The first electricity bill in D2’s name from CLP Power Hong Kong Limited, covering the period from 12 May 2010 to 12 July 2010, recording a payment of a $1,000 deposit.

108.  Of the above, I consider that the LPG invoice and the telecommunications contract (which was just for a SIM card) are inconclusive as to D2’s occupation of Unit 306. The key evidence of D2’s occupation would be the first water supplies bill and CLP electricity bill addressed to him. In this regard, the Water Supplies Department’s letter of 18 June 2010 noted that because of a mistaken reading of the water meter, the water bill for 9 March 2010 to 8 June 2010 should be adjusted from the previous $46.03 to $0.00. Thus, I find that D2 was likely in occupation of Unit 306 and the Occupied Lots from around May to June 2010. In any case, even if I accept the LPG invoice as evidence of D2’s occupation, the earliest date would be 8 February 2010.

109.  As a result, on available evidence, there is at least a gap of several months between Choi Wai and D2 having any intention to possess or factual possession of the Occupied Lots – see Section H3 below on whether D2 could in fact prove possession. As stated above, counsel did not focus on this aspect of the case, and D2’s evidence might not have been fully tested by Mr. Siu.

H2. Section 17 LO

110.  But what are the legal implications of my findings above?

111.  Mr Mak, in his written closing submissions, stated that because Ps had been dispossessed for multiple decades by Choi Wai, they would have lost their paper title anyway by the operation of section 17 LO.

112.  Perhaps a result of D2’s deviation from his pleaded case affecting the issues at stake, the arguments as to the application of section 17 LO, when a squatter tacking on the earlier possession (exceeding 20 years) did not have continuous possession of the disputed land were not explored in detail by the parties in trial and submissions. As a result, on 7 May 2024, I invited the parties to file supplemental submissions by 14 May 2024 simultaneously and reply submissions thereafter by 21 May 2024 on the following question:-

“Whether, assuming that the Court finds that (1) Lew Choi Wai had been in adverse possession of the land in question for more than 20 years, but (2) Lew Choi Wai was not in joint possession of the same with D2 and (3) D2 was not in continuous possession after Lew Choi Wai passed away (in other words, there is a gap in possession around 2009), Ps’ title to the Disputed Lots would nevertheless be extinguished as against D2 by the operation of section 17 of the Limitation Ordinance, such that D2 prevails.”

113.  Both parties made further detailed submissions.

114.  The relevant statute is section 17 LO, which states:-

“Extinction of title after expiration of period

Subject to the provisions of section 10, at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished.”

115.  In the supplemental and reply submissions, Mr Siu submitted that the extinction of the paper owner’s title by section 17 LO operates only against the specific squatter satisfying the requisite period of adverse possession (Choi Wai) and those claiming under him. On the other hand, Mr Mak took the position that upon Choi Wai satisfying the requisite adverse possession, section 17 LO extinguishes Ps’ title against the entire world.

116.  In my view, Mr Mak’s contention must fail for the following reasons.

117.  In Fairweather v St. Marylebone Property Co. Ltd [1963] AC 510, the House of Lords held that the extinction of a tenant’s title to a lease by adverse possession of a squatter did not destroy the lease as between the tenant and lessor, but only prevented the tenant from claiming possession against the squatter. Lord Radcliffe at pp.538-539 stated:-

“...in section 16 of the Limitation Act, 1939, runs: "... at the expiration of the period prescribed by this Act for any person to bring an action to recover land ... the title of that person to the land ... shall be extinguished." On one view, which seems not an implausible one having regard to the structure of the respective sections, the right or title extinguished is coterminous with the right of action the barring of which is the occasion of the extinguishment. This would mean that, when a squatter dispossesses a lessee for the statutory period, it is the lessee's right and title as against the squatter that is finally destroyed but not his right or title as against persons who are not or do not take through the adverse possessor. On the other view, that upon which the appellant's case depends, the lessee's right and title to the premises becomes extinguished for all purposes and in all relations, so that as between himself and the lessor, for instance, he has thereafter no estate or interest in the land demised.

My Lords, I think that even at first impression I should have been inclined to favour the former of these two possible interpretations as being more consistent with the apparent purpose of the Limitation Acts...

...I think, therefore, that it is a false approach to the provisions of the Limitation Acts to regard the "extinguishment of title" as extinguishing more than the title of the dispossessed against the dispossessor...” (emphasis and underlining added)

118.  Fairweather was approved in Hong Kong in Chan Tin Shi v Li Tin Sung (2006) 9 HKCFAR 29, which also concerned a lease-lessor scenario. The CFA considered that although the lessee’s title is extinguished as against the squatter (having established adverse possession), the lease still continued to subsist as between the government (landlord) and the lessee. In reaching this conclusion, the Court reasoned that the title of the paper owner is “extinguished only as against the squatter” (§19), and “the lessee... was barred by s 7(2) from bringing proceedings for possession and his title was, as against the squatter, extinguished by s 17” (§20).

119.  Indeed, in Ocean Estates Ltd. v Pinder (Norman) [1969] 2 AC 19, the Privy Council also held that there is no such concept as an ‘absolute’ title at common law. Lord Diplock at 24H-25B stated:-

“At common law…there is no such concept as an “absolute title”. Where questions of title to land arise in litigation the court is concerned only with the relative strengths of the titles proved by the rival claimants. If party A can prove a better title than party B he is entitled to succeed notwithstanding that C may have a better title than A, if C is neither a party to the action nor a person by whose authority B is in possession or occupation of the land.”

See also Megarry & Wade, The Law of Real Property 10^th edn at §7-008.

120.  Nevertheless, Mr Mak submitted that Fairweather and Chan Tin Shi should be confined to the lessor-lessee factual matrix, and thus not applicable to the present case. He also explained the two cases on the basis that the estate between the lessor and lessee was not destroyed because the right was founded upon contract, and the Limitation Act / Ordinance would not destroy such contractual rights.

121.  I do not accept Mr. Mak’s submissions.

122.  While I accept that some of the observations in Fairweather at pp 538-541 were confined to the lessee-lessor relationship, when Lord Radcliffe at p 538 set out the 2 possible views (above) on the operation of extinguishment of title under the Limitation Act, and endorsed the former view that “right or title extinguished is coterminous with the right of action the barring of which is the occasion of the extinguishment”, he was making observations on the general law of extinguishment of title. I do not read this part of Lord Radcliffe’s reasoning as being confined to the lessor-lessee relationship.

123.  Furthermore, as Mr Siu submits, the actual decisions in Fairweather and Chan Tin Shi that the lessee’s title as against the landlord was not extinguished by adverse possession necessarily precludes the view that the title was extinguished as against the entire world (which would include the landlord). I do not accept Mr Mak’s submission that the two cases are explained on the basis that the contractual rights between the lessor and the lessee survive the establishment of adverse possession against the lessee. This was never the reasoning in Fairweather itself, and not how subsequent cases interpreted Fairweather. Mr Mak produced no authority to support this reading of the cases.

124.  On the contrary, local judgments and academic texts have interpreted Fairweather as establishing a broader principle beyond the lessor-lessee relationship.

125.  The learned authors of Jourdan and Radley-Gardner, Adverse Possession (2^nd edn, 2011) observed at §20-12: “The extinction of the true owner’s title is not absolute. It is not destroyed for all purposes, but only in so far as is necessary to prevent the true owner from claiming against the squatter, or those claiming under the squatter. In Fairweather...”.

126.  This interpretation has also been adopted in numerous Hong Kong cases. In The Incorporated Owners of Chungking Mansions v Shamdasani [1991] 2 HKC 342, DHCJ Jerome Chan at p 353 cited Fairweather and observed:-

“[C] Secondly, the scheme under the [LO] is to prohibit the bringing of action by a person in whose favour a right of action had accrued before the limitation period. And the extinction of his title and interest in land under s 17 is predicated upon his loss of such a right to bring an action to enforce his said title or interest.…… The [LO] only regulates the relationship between the person being dispossessed and the person dispossessing him, and no others. Usually this would suffice for the one claiming the benefit of the statute. But in some cases, it would not be so.” (emphasis added)

127.  In Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5) [2007] 5 HKC 122, the defendant contended that the extinguishment of title by reason of adverse possession is contrary to Articles 6 and 105 of the Basic Law. In analysing the constitutionality of the LO, Lam J (as he then was) observed that the effect of section 17 LO was as follows:-

“34. a squatter’s possessory title is defeasible by the superior title of the paper title owner until the former has successfully dispossessed the latter for 12 years under the current Limitation Ordinance. After the expiry of the limitation period, the paper title owner can no longer recover possession from the squatter and the possessory title of the squatter becomes superior to the paper title owner.

35. But it does not mean the paper title owner loses everything. He still has a good title against the whole world except this particular squatter and his successor in title, see St Marylebone Property Co Ltd v Fairweather [1963] AC 510. The Limitation Ordinance does not effect a parliamentary conveyance passing the title from the paper title owner to the squatter. Hence, if the squatter abandons the property, the paper title owner has a good title to it that cannot be defeated by others.” (emphasis added)

128.  Mr Mak also relied on §48 of the CA decision in Leung Chi Cheong and contended that “…Leung Chi Cheong is an appellate authority holding that the effect of adverse possession is to extinguish a paper owner’s title against the whole world, except his lessor”. However, it is important to appreciate the context in which the discussion occurred.

129.  In Leung Chi Cheong, the first defendant’s case was put on “a very narrow basis” that she was in joint possession with the deceased from 1980 to 2000: §§34-35. However, the deceased had, in an earlier case (HCA 6145/1992), succeeded in its counterclaim that he alone was in adverse possession against Birkenhead (registered owner), where it was found that the title of Birkenhead to the land was extinguished on 10 September 1992: §§11, 44. As the deceased had succeeded in adverse possession with his sole possessory title, the first defendant could not claim to be in joint possession with the deceased for the same period; the Court observed “the 1^st defendant simply has no legitimate basis to craft out another possessory title against Birkenhead inconsistent with the Birkenhead judgment”: §48. It was in this context that the Court observed Fairweather had “no application”. It does not stand for the proposition that Section 17 LO extinguishes title vis-à-vis the whole world.

130.  Thus, the weight of the authorities is in favour of the view advanced by Mr Siu that section 17 LO only extinguishes the paper owner’s title as against the specific squatter and those claiming under him.

131.  The next question is how this principle should be applied in the context of successive squatters.

132.  In this regard, Mr. Siu accepts that where a first squatter establishes the requisite 20 or 12 years of adverse possession, and a second squatter (who does not satisfy the requisite period himself) tacks onto the first squatter’s possession without any gap in possession, the paper owner’s title is extinguished as against the second squatter as well. However, where there is a gap between the first and second squatters’ possession, the paper owner’s title would not be extinguished as against the second squatter.

133.  I agree with Mr. Siu’s submissions. It has been said in the above authorities:-

(a) “[I]t is the lessee's right and title as against the squatter that is finally destroyed but not his right or title as against persons who are not or do not take through the adverse possessor”: Fairweather at p 538 (emphasis added);

(b) The paper owner’s title is extinguished as against “the squatter, or those claiming under the squatter” (Jourdan and Radley-Gardner, Adverse Possession (2^nd edn, 2011) at §20-12), or “this particular squatter and his successor in title” (Kam Lan Koon at §35) (emphasis added).

134.  Thus, where there is tacking on without any break in possession, the second squatter can be seen as taking through or claiming under the first squatter, and the paper owner’s title is extinguished as against the second squatter as well. This is supported by the reasoning of Godfrey Lam J (as he then was) in King Benji Henry v Asia Harbour Investment Ltd (unrep. HCMP 1823/2017, 423/2018) [2019] HKCFI 1596 at §27 said:-

“Mr Sham submitted that while the paper title owner cannot recover possession from a squatter who has been in adverse possession for the requisite period, this does not mean the paper title owner loses everything: he still has a good title against the whole world except that particular squatter and his successors in title, citing Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5) [2007] 5 HKC 122, §§34-35. This submission, in my view, fails to deal with the situation where a second squatter is enabled to come into possession following the first squatter without interruption, thereby enabling him to "tack on" the period of possession of the first squatter. For the reasons explained above, the title of the defendants as legal owners is not superior to the plaintiff's possession as aggregated with his Guardians'.” (emphasis added)

135.  By contrast, where there is a gap in possession between the first and second squatter’s possession, the second squatter can be regarded as acquiring possession independently, as opposed to taking through the first squatter. This proposition can be derived from Kam Lan Koon at §35 (supra), as well as Jourdan and Radley-Gardner, Adverse Possession (2^nd edn, 2011) at §§20-12 to 20-13:-

“The extinction of the true owner’s title is not absolute. It is not destroyed for all purposes, but only in so far as is necessary to prevent the true owner from claiming against the squatter, or those claiming under the squatter...

This suggests that if S takes adverse possession of O’s land for 12 years, and S then vacates the land, O can bring possession proceedings against a subsequent squatter, S1, who takes possession. Although O’s title is extinguished so far as claiming possession against S is concerned, or against those deriving title under S, there is no effect on O’s title against a third party.” (emphasis and underlining added)

136.  In response to the above, Mr Mak made the following arguments.

137.  Firstly, Mr Mak relied on Wan Kin Shing v. Incorporated Owners of City Centre Building [2023] 3 HKC 535 at §38(4), which reads:-

“But where S2 enters into possession after O’s title has been extinguished by S1’s adverse possession and the latter has become the “absolute legal owner ” as explained above, S2 has a possessory title of his own, good against the whole world (including O whose title has been extinguished by S1’s possession) except S1...” (emphasis added)

138.  In turn, §38(4) of Wan Kin Shing cites §20 of Ricas Properties Ltd v Armed Forces Trading Co Ltd [2008] 5 HKC 210, which sets out in similar terms:-

“...there is no reason why the Grandson cannot rely on the period of the prior occupation by the Grandfather in asserting the right vis-à-vis the Plaintiff. Assuming [S1] occupied the land for over 20 years and then [S2] occupied the land for, say, another 2 years, [S2] should then be able to rely on the period of previous occupation by [S1] in asserting his right vis-à-vis [O]. [S2], however, cannot assert the right vis-à-vis [S1], unless [S2] occupies the land himself for a period of 20 years for the purpose of this case or 12 years under the existing statutory regime”. (emphasis added)

139.  In response, Mr Siu submitted that both Wan Kin Shing and Ricas Properties are distinguishable from the present case as they are concerned with continuous tacking on, not a situation where there is a gap in possession. I agree with Mr. Siu.

(a) On the facts of Wan Kin Shing, there was no discontinuation or breakage in possession. It was found that either Wan Ming Hoi (the plaintiff’s father) alone or Wan Ming Hoi together with his family exclusively possessed the Wall Shop and extinguished the paper owner’s title by December 1990 at the latest (§§41, 64). The plaintiff, his wife and son claimed to have lived there from 18 December 1990 (§23), although the plaintiff only claimed to be in exclusive possession from January 1991 onwards (§39);

(b) Similarly, there was no breakage in possession between the grandfather and his grandson in Ricas Properties. On the facts, the grandson emigrated to Hong Kong and cultivated the Land with the grandfather around 1985, and the grandfather died in 1987 (§4);

(c) Further, it should be noted that the following passage from Megarry & Wade, The Law of Real Property 6^th edn at §21-022 was cited with approval by the Court in Ricas Properties (at §25) and Wan Kin Shing (at §37, citing Ricas Properties):-

“(b) ‘Squatter dispossessed by squatter. If a squatter is himself dispossessed the second squatter can add the former period of occupation to his own as against the true owner. This is because time runs against the true owner from the time when adverse possession began, and so long as adverse possession continues unbroken it makes no difference who continues it. But as against the first squatter, the second squatter must himself occupy for the full period before his title becomes unassailable. This has already been explained, but a simple example may be useful here. If land owned by A has been occupied by X for eight years and Y dispossesses X, A will be barred when 12 years have elapsed from X first taking possession. But although at the end of that time A is barred, X will not be barred until 12 years from Y's first taking possession; for Y cannot claim to be absolutely entitled until he can show that everybody with any claim to the land has been barred by the lapse of the full period”.

140.  Thus, these propositions are not made in the context where there was a gap in possession. Furthermore, neither Wan Kin Shing nor Ricas Properties had cited or analysed the authorities as to the effects of the extinguishment of title by the Limitation Act / Ordinance. Insofar as the statements in Wan Kin Shing, such as §67 cited by Mr Mak, suggest section 17 LO extinguishes title as against the whole world, I would regard that as being inconsistent with authorities such as Chan Tin Shi and the many first instance cases cited above.

141.  Secondly, Mr Mak submitted that for D2 to be prevented from relying on Choi Wai’s possession to extinguish Ps’ title as against D2, Choi Wai must have abandoned his possession, and a mere gap in possession would not suffice. On the facts of this case, Mr Mak argues that Choi Wai had not abandoned possession.

142.  One must not lose sight of the underlying legal principle set out above that section 17 LO extinguishes the paper owner’s title against a second squatter only if he is taking through or claiming under the first squatter. Thus, as per King Benji Henry at §27, if the second squatter is enabled to come into possession by the first squatter without interruption, he takes through the first squatter. But if a second squatter acquires an independent possessory title of his own with a gap in possession, he cannot be said to be taking through the first squatter.

143.  Mr Mak’s second argument, together with his third (as will be dealt with below), presuppose that the second squatter (ie D2) can automatically take through or claim under the first squatter (ie Choi Wai) unless there is an abandonment by the first squatter. As the above authorities show, no such automatic presumption exists and there is a positive burden on D2 to show that he came into possession following Choi Wai without interruption, ie the possession must be continuous: see Cheung Yat Fuk v Tang Tak Hong & Others (2004) 7 HKCFAR 70 at §4.

144.  In that regard, though this issue is again academic, none of the authorities adduced by Mr Mak supports the proposition that abandonment by the first squatter is the only circumstance which renders the second squatter unable to take through or claim under the first squatter.

145.  In any event, as stated above, there is insufficient evidence on what happened to the Disputed Lots before and after Choi Wai’s death. Choi Wai died in the Mainland. There is no evidence on how Choi Wai’s estate dealt with the Disputed Lots (if at all). Also as stated above, the lacuna is a result of D2’s belated change of case.

146.  Thirdly, Mr Mak argues that once adverse possession is completed, there can be no gap between the possession of the first and second squatter unless the paper owner steps onto the land, regains factual possession, and interrupts the squatter’s possession.

147.  None of the authorities adduced by Mr Mak supports this proposition, which is inconsistent with the above authorities.

148.  Fourthly, Mr Mak relies on Bligh v Martin [1968] 1 WLR 804 at p 811 and Jourdan and Radley-Gardner, Adverse Possession (2^nd edn, 2011) at §§8-12 to 8-15 to argue that possession does not require continuous use of the land, and therefore Choi Wai and D2 were in continuous possession regardless of whether they were in physical occupation of the same.

149.  These authorities suggest that a possessor does not need to give a detailed, day-to-day account of the use of the land to establish possession, for instance, of a farmland where there may be long intervals between users. The present case is very far off from the factual situations to which this proposition applies, because it is about how and when D2 obtained possession after Choi Wai’s death. As Mr. Siu submits, Ngan Cheung Wah v Kwong Shook Ling (unrep. CACV 92/2014, 20 August 2014) sets out at §33 that Bligh v Martin “cannot be applied to a situation where the squatter has yet to establish he has taken possession at some point in time”. Thus, the doctrine cannot be used to abridge the gap between two different parties’ possession.

150.  Fifthly, Mr Mak suggested that even if a gap in possession defeats D2’s case, Choi Wai’s possessory title would have been passed onto his estate upon his death, and D2 could then tack onto the possessory title held by Choi Wai’s estate, thus bridging any gap in possession.

151.  Not only is there no pleaded case to this effect, but also, again, there is no evidence whatsoever of what happened to Choi Wai’s possessory title after his death, including who the representatives of his estate were (if any) and whether or how the estate dealt with the possessory title at all. Indeed, there may well be a question of abandonment of the possessory title of the Occupied Lots either by Choi Wai himself or his estate: see the analysis of Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 1 WLR 1078 in Jourdan and Radley-Gardner, Adverse Possession (2^nd edn, 2011) at §§20-57, 20-59, 20-63, 20-64, although there is no evidence to make a finding one way or another. Thus, without any evidence, I am unable to find that D2 tacked onto the estate’s possessory title, which would require pure speculation.

152.  Taking a step back, one must not lose sight of the fundamental point that it is incumbent on D2 to show how he took through Choi Wai’s possession, and only then would he be able to rely on Choi Wai’s adverse possession to extinguish Ps’ title as against himself by section 17 LO. D2 cannot establish this since no evidence has been provided on how D2 obtained possession post-2009 (other than the rejected case of joint possession). Given that there was at least a few months’ gap between Choi Wai’s death and D2’s possession, I cannot find that D2 took through Choi Wai’s possession. Even then, the issue of whether Choi Wai satisfied the requirements of factual possession and animus possidendi starting from 1992 (such that D2 could take through Choi Wai’s alleged possession) was not fully examined.

153.  In light of the above, notwithstanding Mr Mak’s detailed and persuasive submissions, I find that Ps’ title to the Disputed Lots has not been extinguished as against D2.

H3. Whether D2 had possession in law post-2009

154.  In the previous section, I assumed for the sake of argument that D2’s occupation of the Occupied Lots post-2009 amounted to possession in law. However, in fact I am not satisfied on the balance of probability that D2 was the party in legal possession of Unit 306 and the Occupied Lots.

155.  It is important to appreciate that in Powell v McFarlane, Slade J set out factual possession and animus possidendi as necessary to the legal concept of possession in general. Slade J’s famous observations at pp.470-472 were preceded by the following:-

“...I propose to devote the greater part of the rest of this judgment to consideration of the question whether in 1956 or 1957 the plaintiff acquired possession of the disputed land in the ordinary sense of possession recognised as such by law...

It will be convenient to begin by restating a few basic principles relating to the concept of possession under English law” (emphasis added)

156.  This was further made clear by Lord Browne-Wilkinson in J A Pye (Oxford) Ltd and Another v Graham [2003] 1 A C 419 at §40 (cited in Tsang Foo Keung v Chu Jim Mi Jimmy [2017] 3 HKC 527 at §2.1):-

“...the problem could be avoided by saying there are two elements necessary for legal possession: (1) a sufficient degree of physical custody and control ("factual possession"); (2) an intention to exercise such custody and control on one's own behalf and for one's own benefit ("intention to possess"). What is crucial is to understand that, without the requisite intention, in law there can be no possession... there has always, both in Roman law and in common law, been a requirement to show an intention to possess in addition to objective acts of physical possession. Such intention may be, and frequently is, deduced from the physical acts themselves. But there is no doubt in my judgment that there are two separate elements in legal possession. So far as English law is concerned intention as a separate element is obviously necessary. Suppose a case where A is found to be in occupation of a locked house. He may be there as a squatter, as an overnight trespasser, or as a friend looking after the house of the paper owner during his absence on holiday. The acts done by A in any given period do not tell you whether there is legal possession. If A is there as a squatter he intends to stay as long as he can for his own benefit: his intention is an intention to possess. But if he only intends to trespass for the night or has expressly agreed to look after the house for his friend he does not have possession. It is not the nature of the acts which A does but the intention with which he does them which determines whether or not he is in possession.” (emphasis added).

157.  Hence, if D2 does not satisfy the requirements of factual possession and animus possidendi for the post-2009 period, he can have no possessory title that is recognised in law.

158.  I take into account that there is evidence of D2’s occupation of Unit 306 and intention to possess from 2010 onwards as set out above, comprising various LPG tank invoices in his name from February 2010 to July 2011, various invoices relating to decoration, electricity from 2013 to 2016, the telecommunications contract in April 2010, payment of water supply bills from March 2010 to November 2013 and CLP electricity bills from May 2010 to July 2016.

159.  However, the picture is complicated by the following matters:-

(a) D2 admitted in his testimony that he had access to Flat 505 in Wo Che Estate all the while post-2009. He testified that he lived on both sides of Flat 505 in Wo Che Estate and Unit 306 after his mother moved to an elderly home in 2008, and acknowledged that during the trial, he resided in Flat 505 while his wife lived in Unit 306;

(b) Unit 306 was leased out to Mr Tupac Ron by three tenancy agreements dated 16 February 2014, 15 February 2016, and 23 February 2017. While the last tenancy agreement was signed by D2, the first two agreements were signed by Ai Jian Ping as landlord instead. D2 acknowledged during cross-examination that there was no reason why he could not have signed those tenancy agreements;

(c) Two letters were sent to Unit 306 from the Buildings Department, dated 28 April 2014 and 6 October 2014 and pertained to the Reporting Scheme for Unauthorised Building Works. Both letters were addressed only to Ai Jian Ping, not D2 himself. The letters refer to an application to conduct building works and a safety report submitted by her in November 2012 and May 2014;

(d) D2 only paid the water bills up to November 2013, while Ai Jian Ping paid the water bills for Unit 306 from November 2013 to May 2016. In March 2017, the name on the water bill switched to D2 again;

(e) On 9 September 2016, the Water Supplies Department wrote a letter in response to Siu Mui’s letter dated 1 September 2016 enquiring about the balance of Choi Wai’s water bills;

(f) On 28 September 2016, the Lands Department sent a reply letter about squatters’ registration addressed to Choi Sum, and not D2, at Unit 306. This reply letter was in response to Choi Sum’s earlier letter dated 21 September 2016. During cross-examination, D2 said the reply letter was a response to an inquiry made by Siu Mui personally at the office of the Lands Department. However, this explanation is inconsistent with the reply letter.

160.  Having considered the above, I cannot find that D2 had demonstrated sufficient factual possession and animus possidendi in relation to Unit 306 and the Occupied Lots after 2009, particularly bearing in mind the high standard a trespasser is required to demonstrate for intention to possess per Shine Empire at §7 above.

161.  The difficulty is again because D2’s original case was based on survivorship instead of him having to prove possession post-2009, there were no arguments or evidence as to the capacity in which D2, Ai Jian Ping, Siu Mui or Choi Sum were acting vis-à-vis Unit 306 and the Occupied Lots. As a result, based on the above, for factual possession, I cannot find that D2 “has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no one else has done so”. For animus possidendi, I find that D2’s acts are open to more than one interpretation, and he has not made his intention perfectly plain to the world that he intends to exclude the world at large concerning Unit 306 or the Occupied Lots.

162.  Hence, D2 does not satisfy the requirements of possession in law.

163.  As set out above, section 17 LO does not operate as a conveyance of the paper owner’s title to the squatter, and the squatter has to rely on his own possessory title to the land in question. I find that D2 did not have such a possessory title post-2009, and therefore his defence and counterclaim cannot prevail in any event.

H4. Conclusion on D2’s alternative case

164.  For the reasons above, even if I had allowed D2 to advance his alternative case, I cannot be satisfied that D2 tacked onto Choi Wai’s sole possession after his death without any gaps in possession, and indeed cannot find that D2 was in legal possession of the Disputed Lots.

165.  As a result, Ps’ title to the Disputed Lots would not be extinguished vis-à-vis D2 by the operation of section 17 LO, even if Choi Wai himself had been in adverse possession for more than 20 years.

I. ISSUES OF CHOI WAN’S FACTUAL POSSESSION AND ANIMUS POSSIDENDI

166.  During trial and in the parties’ submissions, the issue of whether Choi Wai satisfied the requirements of factual possession and animus possidendi starting from 1977 was touched upon. Mr Siu in particular disputed the same by raising, inter alia, the following matters:-

(a) Whether there were additional gates and pathways as points of entry into the Occupied Lots;

(b) Whether there was sufficient fencing around the Occupied Lots for enclosure purposes;

(c) Whether a Mr Ng who used to reside in Unit 305 in in Pai Tau village, which was adjacent to Unit 306, could freely access the Occupied Lots;

(d) The presence of other persons, such as the coach Mr Wong, who planted trees in the valley until 1983, and a Mr Chan whom D2 acknowledged resided in the valley.

167.  In light of my conclusions above, though the points raised by Mr Siu seem to me to have force, it is unnecessary to consider these matters in detail. Even if I resolve all of these issues in D2’s favour, D2’s case would still fail both on his pleaded case of joint possession, and his alternative case of tacking onto Choi Wai’s sole possession.

J. QUANTUM OF MESNE PROFITS

168.  As D2 failed in his case on adverse possession, it is trite that he would have to pay mesne profits for his wrongful occupation of the Disputed Lots. Ps rightly claim mesne profits only from 24 August 2010 onwards, taking into account the 6 years’ limitation period. The next question is one of quantum.

169.  The only valuation evidence in this case came from D2, who instructed a valuation report to be prepared by RHL Appraisal Limited. Since Ps are content to accept the valuation for the purpose of assessing the mesne profits payable by reference to RHL Appraisal Limited’s report, which assesses the total rental value from 24 August 2010 to 23 November 2021 at $312,660. Although the report only produces valuations of monthly rental up to 23 November 2021, Ps in submissions are also willing to accept the last monthly rental rate at $2,900 per month as applicable from 24 November 2021 onwards.

170.  Ps, in their amended Statement of Claim, claimed pre-judgment interest on mesne profits pursuant to section 49 of the District Court Ordinance (Cap 336) and, in closing submissions, suggested that such interest should be at 1% p a above the prime rate.

171.  There seem to be two lines of authorities as to whether pre-judgment interest can be awarded on mesne profits.

172.  Authorities against the award of interests on mesne profits originate from Chitty J’s observation in Whitwham v Westminster Brymbo Coal and Coke Company [1896] 1 Ch 894 that such interest would overcompensate a plaintiff. The CA in Persaud v Glenealy Mansion Limited [1987] 1 HKC 112 (CA) at §§51, 58 endorsed Whitwham and held that interest should not be awarded on mesne profits, and this approach has been followed in some subsequent cases: see Cheung Soon Chung v Occupant(s) of Lot No 452 in DD 87 [2022] HKDC 46 at §71 and Million Add Development Ltd v Nok Wah Logistic (Hong Kong) Co Ltd [2018] 1 HKLRD 636 at §§83-84.

173.  On the other hand, in Incorporated Owners of Kam Luk Building v 吳靜燕 [2023] 1 HKC 683, the CA awarded pre-judgment interest on mesne profits at the rate of 1% above prime rate (§89). Pre-judgment interest on mesne profits was also allowed in Ho Yat Wah v Chung Hang Him, The Sole Executor Named in the Will of Madam Chan Yuk Mui, Deceased [2024] HKCA 378. At §§61-69, the CA distinguished Whitwham (where the entire period of wrongful occupation was assessed at the monthly rent as of the date of judgment) and Trafigura Beheer BV v Mediterranean Shipping Co SA [2008] 1 All ER (Comm) 385 (where although the claimants did not have the money when they expected to have it, they were compensated for that by the increase in the value of the cargo) on the basis that it was because of these special facts that the award of pre-judgment interest would result in overcompensation.

174.  In the present case, mesne profits are not calculated by reference to rent at the date of judgment; rather, the valuation report prepared by RHL Appraisal Limited sets out the estimated rent at the relevant times in the past. Thus, following Ho Yat Wah by which I am bound, the award of pre-judgment interest would not overcompensate Ps.

175.  Therefore, I would award pre-judgment interest at 1% p a above the prime rate on the mesne profits as suggested by Ps, noting that D2 has not made any submissions in this regard.

K. DISPOSAL

176.  For the above reasons, I reject D2’s case of adverse possession. I grant judgment in favour of Ps against D2, and order that:-

(a) D1 and D2 do deliver up vacant possession of Unit 306 of Pai Tau Village and the porch/canopy, as well as the Disputed Lots;

(b) Mesne profit shall be payable by D2 to Ps in the sum of $312,660 from 24 August 2010 to 23 November 2021, and at the rate of $2,900 per month from 24 November 2021 until vacant possession is delivered to Ps;

(c) Interest on mesne profits shall accrue at the rate of 1% p a above the prime rate up to the date of this judgment, and at judgment rate thereafter;

(d) The counterclaim of D2 against Ps be dismissed;

(e) There be a costs order nisi that the costs of this action be payable by D2 to Ps with Certificate for Counsel, to be taxed if not agreed. Unless any of the parties apply by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days; and

(f) The parties shall have liberty to apply.