CHEUNG KWONG YUEN v. SUN HUI FANG

CAMP 64/2017

[2019] HKCA 225

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 64 OF 2017

(ON AN INTENDED APPEAL FROM DCCJ 743 OF 2016)

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J U D G M E N T

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Hon Yuen JA (giving the Judgment of the Court):

1.  This is an application by the plaintiff in DCCJ743/2016 for leave to appeal the Judgment of DJ MK Liu given on 6 September 2017 (“the Judgment”). The plaintiff’s application for leave to appeal was refused by the judge on 22 November 2017. The plaintiff then filed a summons to this court on 6 December 2017 for leave to appeal. Directions were given by this court for written submissions which were duly provided. We have considered these written submissions.

Background

2.1  The proceedings concern a structure (“Flat A” or “the flat”) on the roof of a building at 107 Tai Nan Street, Kowloon.  The plaintiff Cheung Kwong Yuen became the registered owner of the 9^th floor and the roof on 31 October 2013.  Prior to his purchase, he had visited the roof with an estate agent who told him Flat A was tenanted under an oral tenancy.  However he did not have any communication with the occupier.

2.2  After the plaintiff purchased the 9^th floor and roof, he did not receive any rent for Flat A.  He issued legal proceedings in the Lands Tribunal in 2014 against the occupier Sun Hui Fang the defendant in these proceedings.  He was initially successful, but on appeal in CACV112/2015 the court made an order for retrial in DCCJ743/2016.  The re-trial was heard by the judge in August 2017.

DCCJ743/2016

3.  The plaintiff sought an order for vacant possession from the defendant who counterclaimed for a declaration that she has acquired a possessory title to the flat by adverse possession. 

4.  Essentially the defendant’s case was that one of her brothers Suen Chor Ming (alias Suen Ming Fai) (“SMF”) had purchased the flat in 1992.  There was a document written in Chinese and signed by the then registered owner of the 9^th floor and roof, one Cheung Kai Kwong (“CKK”), acknowledging receipt of the purchase money of $23,000, but this document was not registered in the Land Office.   The defendant’s case was that since then, the flat had throughout been occupied by members of the family, viz. SMF until 1994, another brother Suen Hai Yang (“SHY”) who moved into the flat in 1994 and was later joined by his wife Li Lin Hei (called “Lee” in the Judgment) until 2001, and the defendant who moved into the flat in 2001 and has since remained there.

5.  It was common ground that CKK sold the 9^th floor and roof in 1995, which went through seven owners before the plaintiff purchased it in 2013.

The pleaded case

6.  For the purposes of determining this application, it is important to note the following passages in para. 4 of the Amended Defence and Counterclaim (“AmDCC”):

“(1) The Defendant’s ... brother [SMF] purportedly purchased Flat A in 1992 and thereafter [SMF] allowed members of his family including the Defendant to live in Flat A;

… …

(5) Since late 1992, [SHY] and his wife [Lee] lived in Flat A until the Defendant moved into it in 2001. Since 2001, the Defendant herself alone lived in Flat A;

… …

(7) The Defendant avers that adverse possession can be acquired by [SMF] who mistakenly believed himself to be the true owner. [SHY] and [Lee], Defendant can also acquire adverse possession since she is and was a stranger and squatter to all registered owners;

(8) [SMF], [SHY], [Lee] and the Defendant had factual possession and had intention to exclusively possess Flat A at all material times;

… …

(11) [SMF], [SHY], [Lee] and the Defendant as successive squatters had been in exclusive possession of Flat A for more than 21 years and the Defendant herself had been in exclusive possession of Flat A for more than 12 years before 6^th August 2014;

(12) the Plaintiff’s title to Flat A has been extinguished and that the Plaintiff is statute-barred from recovering Flat A from the Defendant by virtue of the Limitation Ordinance (Cap.347); and

(13) the Defendant herself and as a successive squatter of [SMF], [SHY] and/or [Lee] has acquired possessory title to Flat A and that the Defendant is accordingly entitled to be registered as the owner of Flat A”.

7.  It is thus clear that the defendant’s case was that SMF had paid for the flat in 1992 and that various members of his family had been successively living there, denying the title and right to possession of the series of registered owners coming after CKK.

8.  The plaintiff’s Reply and Defence to Counterclaim (“RDCC”) is significant to the determination of the present application.  Para. 4(1) of the AmDCC set out above was simply “not admitted” without more.  As for the other sub-paragraphs pleaded in the AmDCC, it is clear from the RDCC that the plaintiff treated SMF, SHY, Lee and the defendant as one unit.  In the RDCC, the plaintiff alleged that they had been occupying the flat under the oral tenancy; that they had acknowledged the registered owners’ title by an arrangement whereby they paid electricity and water charges to the registered owners and by their failure to pay government rent and rates; and that accordingly they had been “treating themselves as enjoying possession of Flat A (if any) under a lawful title and/or a consent and/or a licence from the Previous Owners and/or the Plaintiff”. (Emphasis added).  Accordingly the plaintiff’s case was that SMF, SHY, Lee and the defendant had been possessing the flat under licence from the registered owners, not that the defendant had been possessing the flat under licence from SMF.

The judge’s Judgment

9.  That was the state of the pleadings at the trial.  The plaintiff gave evidence, as did the defendant and SMF.  

10.1  The judge accepted the evidence of the defendant whom he described as honest and reliable.  He dealt with the criticisms made by the plaintiff’s counsel of the defendant’s evidence[1].   The judge also accepted the evidence of SMF whom he also described as honest and reliable.  He dealt with the criticisms made by the plaintiff’s counsel of SMF’s evidence[2].

10.2  The judge found that the flat was in SMF’s exclusive possession after he purchased it in 1992, and in 2001, he transferred the possessory right to the defendant[3]. 

11.  In final submissions, counsel for the plaintiff had sought to contend that the defendant was merely possessing the flat as a licensee of SMF, and thus she did not have the requisite animus possidendi for adverse possession (“the licensee point”).  However the judge ruled that the argument was not open to the plaintiff for (as his counsel admitted) it had not been pleaded, and it could not be “slipped in” simply on the basis that there was some evidence on it[4].  As the point had not been pleaded, the legal rights and obligations between the defendant and SMF vis-a-vis the flat had not been explored in evidence[5].

12.  The judge dismissed the plaintiff’s claim and gave judgment to the defendant on her counterclaim.

Application for leave to appeal

13.  As mentioned earlier, the plaintiff was not granted leave to appeal from the judge; hence the present application to this court.  The plaintiff relied on three grounds:

(1)  it was not possible and not necessary for the plaintiff to plead the licensee point as the burden of proof was on the defendant to prove factual possession and animus possidendi;

(2)  the judge should have drawn an adverse inference against Lee (who did not attend court) on the basis of an Immigration Department document in which she had given her address as “Room 2, 9/F, 108 Tai Nam Street”;

(3)  the inconsistencies in the evidence of the defendant and SMF were such that the judge should not have relied on their evidence.

Legal principles

14.  Section 63A of the District Court Ordinance, Cap.336 provides that leave to appeal shall not be granted unless the court is satisfied that the proposed appeal has a reasonable prospect of success.

Discussion

15.  In relation to ground (1), we respectfully agree with the judge that the licensee point should have been pleaded.  As to whether it had been “possible” to plead it, para. 4(1) of the AmDCC was clear, and it was repeated in the defendant’s witness statement⁶.   Clearly it was not new to the plaintiff’s team.

16.1  The plaintiff also submitted that it was not “necessary” to plead it because the burden of proving adverse possession was on the defendant.  He relied on O.18 r.7(3) RDC which provides:

“A party need not plead any fact if it is presumed by law to be true or the burden of disproving it lies on the other party, unless the other party has specifically denied it in his pleading”.

16.2  With respect, we do not see the relevance of this rule to the licensee point, as there is no fact that the defendant needed to disprove.  What the defendant needed to prove affirmatively was factual possession and animus possidendi as a defence and for her counterclaim.  And what the plaintiff needed to do was to plead the grounds by which he seeks to overcome the defendant’s case.   Order 18 r.13(4)(a) RDC provides:

“Where an allegation made in a ... counterclaim is traversed by a denial, the party who denies the allegation shall in his ... defence to counterclaim –

(a) state his reasons for doing so ...”.

Thus, the plaintiff should have stated in his defence to counterclaim that the defendant’s allegation of adverse possession is denied for the reason that the defendant herself was merely a licensee of SMF.

16.3  In any event, the fact that one party has the burden of proving his case does not relieve the other party of the duty to draw the attention of the opponent and the court by way of pleadings to the specific issues he wishes to raise which the court has to resolve in order to arrive at a judgment in the proceedings. 

17.  However the plaintiff did not plead the point that the defendant was only the licensee of her brother SMF.  It is clear from the RDCC that the plaintiff regarded the defendant and her family members as one unit who had successively occupied the flat, without drawing any distinctions between them vis-a-vis one another.  And it is important to note that one of the specific reasons stated by the plaintiff for denying the counterclaim was that they were licensees - but only of the registered owners, not of another member of the family.

18.  If the plaintiff had raised the point in his RDCC that the defendant was only a licensee of SMF and thus she could not have been in adverse possession, it would have had a significant impact on the way the case developed.  

-  It may well have resulted in SMF (who was an ally of the defendant) applying to be joined as a party, to plead as an alternative scenario that he had been possessing the flat through his licensees viz. SHY and Lee and the defendant.  

-  At the very least, there would have been more evidence on how the family treated the flat vis-a-vis one another.  As SMF had paid for the flat, one can understand why the defendant admitted in cross-examination that she had been permitted by him to live there, but there was no development of evidence as to how possession was transferred from one member of the family to another, because the licensee point had not been pleaded.  It is well established that one of the functions of pleadings is to enable the other side (in this case, the defendant) to know what evidence she should prepare for trial, so that the court could resolve the issue with the full benefit of all available evidence and properly prepared submissions.

19.  For these reasons, we do not think there is a reasonable prospect of the plaintiff succeeding in appeal on the argument that the licensee point did not have to be pleaded, and that the judge should have ruled in his favour on it.

20.  In relation to ground (2), the defendant’s evidence[7] was that:

-  in 1992, SMF moved into the flat after “buying” it from CKK;

-  in 1994, her other brother SHY moved into the flat;

-  in 1996, SHY’s wife Lee moved into the flat with SHY when she arrived from the mainland; and

-  in 2001, SHY and Lee moved out, and she (the defendant) moved in.

21.1  Lee had made a witness statement in which she referred to a document from the Immigration Department which stated that on 11 October 1996 when she applied for an identity card, she had given her address as “Room 2, 9/F, 108 Tai Nam Street”.  However Lee did not attend the court and the judge was told that she had health issues.

21.2  In closing submissions, the plaintiff’s counsel submitted that, on the basis of that document, an adverse inference should be drawn against Lee that she had never lived at the flat from 1994 to 2001.

21.3  The judge declined to do so.  He noted that the plaintiff’s counsel did not cross-examine the defendant as to whether Lee really had health issues and thus could not come to court.  And he declined to draw the adverse inference as there was no evidence suggesting that Lee had never lived in the flat.

22.1  With respect to the judge, we agree that it was not for the plaintiff’s counsel to test the veracity of the reason for Lee’s non-attendance by cross-examining the defendant, who might or might not have any personal knowledge about Lee’s condition.

22.2  However, that does not mean that the judge was bound to make the adverse inference which the plaintiff sought.  The Immigration Department document only recorded that on a particular day in 1996 Lee, who had just arrived in Hong Kong, had given an address which was not identical to the address of the flat.  The street number she gave was no.108 instead of no.107, and the unit she gave was Room 2 instead of Flat A. However the name of the street, and the floor, were the same as that of the flat.  It is not for the court to speculate as to why there were discrepancies in the street number and the description of the unit, but it is a quantum leap to say that the court should therefore have drawn the adverse inference that she had never lived there, when the clear evidence of SMF (who owned the flat) was that Lee did live there after she arrived in Hong Kong, and the clear evidence of the defendant was that Lee and her husband SHY moved out when she moved into the flat in 2011.  SMF and the defendant are siblings of Lee’s husband SHY, so in the ordinary course one would expect them to know where SHY and his wife Lee were living.

23.  Accordingly we do not think there is any reasonable prospect of success in relation to ground (2) either.

24.1  Finally, ground (3) is no more than an attempt to overturn a trial judge’s findings of fact on the basis of inconsistencies in a witness’s evidence.  It has been said many times by the appellate courts that a trial judge’s advantage in the fact-finding exercise lies in his being able to see and hear the witnesses give evidence and to see the evidence unfold in its living state.  The judge was clearly aware of these inconsistencies and he had dealt with criticisms made by the plaintiff’s counsel of the defence witnesses’ evidence in §§37 and 38 of his Judgment.

24.2  There is therefore also no reasonable prospect of success in relation to ground (3) either.

Order

25.  For the reasons set out above, we refuse leave to appeal with costs.  On 19 December 2017 the defendant has submitted her statement of costs for summary assessment.  No objection has been received from the plaintiff and the total sum of $65,524 is reasonable.  We would therefore order that the plaintiff pay this sum to the defendant.