WONG LUEN CHUN AND ANOTHER v. SECRETARY FOR JUSTICE

HCMP745/95

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. On 31 December 1924 Lot 6047 in New Kowloon Survey District No. 1 was conveyed to WONG Tsun-cheung, WONG Tai-ku and WONG Luk-ku. Those three persons I will call the three purchasers. The main issue in these proceedings is whether there were three purchasers or one purchaser who had a number of aliases.

2. The 1st plaintiff, Madam WONG Luen-chun was the daughter-in-law of WONG Miu-cheung. WONG Luen-chun I will call Madam WONG. Sadly, I am afraid, Madam WONG Luen-chun, the 1st plaintiff, died in January last year. The 2nd plaintiff, Mr LEUNG Kam-tong, is the son of the 1st plaintiff and the grandson of Madam WONG.

3. It is the 2nd plaintiff's case that Madam WONG was also known by the names attributed to the three purchasers and was the sole owner of the land in question. Alternatively, the 2nd plaintiff claims a possessory title to the land. The land was in Kowloon Walled City. It was resumed by the Government in 1985 and now forms part of a park. Compensation of just over $1.3 million is payable to the owner. The Secretary for Justice as defendant in this action puts the 2nd plaintiff to proof of his claim to a title to the land and entitlement to the compensation.

4. A memorial of the conveyance to the three purchasers was registered in the district office on 2 January 1925. It records the three names as "purchasers", it is endorsed with three crosses, one over each of the three names and each described as "her mark".

5. The land was mortgaged on 10 November 1925. In the mortgage and in its memorial registered on 17 November 1925, the three purchasers are shown as mortgagors. Again there is a cross against each of the three names which is described as "her mark". The mortgage was witnessed by a solicitor.

6. In each memorial, the three purchasers have a common address. There had apparently been no further dealings with the land. At least there is no record in the Land Register.

7. Madam WONG died in 1940. On 26 February 1965, Letters of Administration to her estate were granted to her son, LEUNG Kim-wah, who was the 2nd plaintiff's father. Mr LEUNG Kim-wah, I will call Mr LEUNG.

8. In Grant of Administration, Madam WONG is described as having as aliases the three names which appear in the memorial. The Land appears in the schedule of property to that grant. Mr LEUNG died in 1967. Letters of Administration of his estate were granted to the plaintiffs on 11 November 1969. The land again appears in the schedule of property. Neither of these grants of administration were registered in the District Office or a Land Registry.

9. In 1984 the Government decided to resume Kowloon Walled City. A letter advising of this was sent in January 1985 to the three purchasers and the mortgagee at the addresses shown in the memorials.

10. On 2 August 1985 Government offered compensation of 1.3 million. There was no response to that offer. The 2nd plaintiff became aware of the resumption and obtained a copy of the Government's letter. That was in 1987. After abortive negotiations with the Government, on 28 July 1992 the plaintiffs obtained Letters of Administration de bonis non of Madam WONG's estate, limited to the land. Further attempts to obtain compensation from Government were fruitless. Government remained unconvinced that Madam WONG and the three purchasers were one and the same.

11. These proceedings then commenced in March 1995. The 2nd plaintiff gave evidence at the trial. I should say at once that I have no reason to think that he was not an honest witness. It is true that he had some trouble with dates and events. That was hardly surprising because he was trying to remember what happened between approximately 1950 and 1985.

12. The 2nd plaintiff was born in 1945. He never met Madam WONG who had died five years before. He knew, however, from family use that Madam WONG had four names. Madam WONG commonly used two of those names, WONG Miu-cheung and WONG Tsun-cheung. Of the other two names the 2nd plaintiff said that WONG Tai-ku was simply a form of address for a lady. The name Luk-ku reflected Madam WONG's husband's place as sixth in the family line.

13. Until his death in 1967 Mr LEUNG collected rent of $45 per month in respect of the land from Mr KO Cheung-Man and later from his son, KO Kwan-Kwong. KO Kwan-Kwong I will refer to as Mr KO.

14. Mr LEUNG could not afford a receipt book, he simply wrote a receipt on a piece of paper. This he either endorsed with Madam WONG's chop in the name WONG Miu-cheung or he signed his own name. The 2nd plaintiff still has and has produced Madam WONG's chop.

15. At first Mr LEUNG went to the land to collect the rent. Later the KO's business moved to Man On street in Tai Kok Tsui; rent was then collected from that address if Mr KO did not bring it to Mr LEUNG. After Mr LEUNG died the 1st plaintiff collected the rent. The 2nd plaintiff knew about the collection of rent from the occasions on which he accompanied his father or mother. He did not, however, go with them every time that rent was collected. The 2nd plaintiff also prepared rent receipts. He produced two books of stubs of rent receipts issued between 1970 and June 1974. The last two receipts for May and June have not been issued.

16. As far as the 2nd plaintiff was concerned rent was last collected in 1974 as the two books of rent stubs suggest. Thereafter Mr KO and his business disappeared. The 2nd plaintiff went to the land to locate Mr KO. He was in effect frightened off by the occupants of the land and took no further action to recover rent. This is understandable given the reputation of Kowloon Walled City and its inhabitants.

17. Mr KO was located and gave evidence. Again, I have no reason to doubt that evidence. The thrust of Mr KO's evidence was that his father had paid rent for the land until his death in 1959. Thereafter rent continued to be paid, usually by Mr KO's business accountant. Sometimes Mr KO said he paid Mr LEUNG himself. Mr KO was not sure if Mr LEUNG's family continued to collect rent after Mr LEUNG died. He could not recall seeing receipts like those which the 2nd plaintiff produced as part of the two rent books.

18. Mr KO produced various receipts and documents. These had belonged to his father. They showed that rent had been paid possibly since 1928, and certainly since 1934. The rent which was paid was paid for the land alone. Mr KO's father had earlier bought the structures which had been erected on the land and sublet part of them. Mr KO apparently has a claim for compensation for the structures, but not for the land itself.

19. Three former occupants of the land were called by the defendant. They had either erected or sublet structures on the land for which they collected or paid rent. They had no knowledge of rent being paid to the 2nd plaintiff's family. The first of these witnesses KO Po-yan however, is related to Mr KO's father.

20. The 2nd witness TO Ho-Ka acknowledged that he had a lease for his premises from Mr KO's father. So it seems likely to me that Mr KO and his father before him were effectively a head tenant paying a modest rent for the land to Madam WONG and her successors.

21. The 3rd witness was Mr SEE Kum-yun formerly known as SEE Kwan-kai. His position was more independent. He said his family had long occupied one of the structures on the land. His family had paid rent to no-one. As far as he was concerned, the KOs had never operated a factory or business on the land; the KOs had simply been allowed to live in the rear portion.

22. It is impossible to reconcile Mr SEE's evidence with the evidence of the other witnesses. I can only conclude that he was mistaken. He certainly seemed to have no clear idea and, indeed, no great interest in the overall picture in relation to the land.

23. I turn to examine the question of ownership. A number of factors, it is clear, militate against the 2nd plaintiff now having a title to the land derived from Madam WONG.

24. First the two memorials and the mortgage distinctly refer to three persons. Each of those documents contains three marks, while the mortgage itself has three separate seals.

25. Second, the mortgage was witnessed by a solicitor. It might be thought that he would hardly countenance one person signing or making a mark three times.

26. Third, the schedule to the Letters of Administration of Madam WONG's estate contains two other pieces of land owned by Madam WONG. One piece of land, Lot 1646 which Madam WONG bought in 1938 is in the single name of WONG Miu-cheung.

27. But there are also factors which point to Madam WONG and the three purchasers being one person.

28. First, there is the 2nd plaintiff's own evidence. As I have already said, he was an honest witness. His explanation about the aliases, Tai-ku and LUK-ku, certainly rings true. These names seem more likely to be forms of address or nicknames than the names of independent persons. That the three purchasers have a common address lends some support to this.

29. Second, the Letters of Administration obtained in 1965 in respect of Madam WONG's estate contained the aliases. These were accepted without query by the Probate Registrar. There was then, however, no reason for Mr LEUNG, who obtained the grant, to appreciate the sensitivity which would be attached to these aliases 20 years later.

30. Third, the other piece of land in the schedule to the grant of administration of Madam WONG's estate was Lot 977 acquired in 1939. The purchaser, as Land Registry records show, was WONG Miu-cheung alias WONG Tsun-cheung. Not only is there a mark but there is also a chop in the name WONG Tsun-cheung. This was witnessed by a solicitor. So there is compelling evidence that WONG Miu-cheung and WONG Tsun-cheung at least were one person. That also gives support to the 2nd plaintiff's evidence that those two names were most used by Madam WONG, the other two being essentially nicknames.

31. Fourth, rent was collected from the mid-1930s at the latest. No claim was made to the rent and no other claim has been made to the compensation for the land.

32. The most important of those four factors I mentioned is the 2nd plaintiff's evidence. Mr KWAN who appears on behalf of the 2nd plaintiff accepts that that evidence is essentially hearsay and rather flimsy. Without abandoning this claim, Mr KWAN in the end relied principally on the alternative claim of adverse possession. So, I turn to consider adverse possession.

33. On the evidence I have seen and heard I find that Madam WONG and her successors collected rent from 1934 at the latest until 1974. I say 1974 because I see no reason to doubt the authenticity of the rent books and rent stubs produced by the 2nd plaintiff. They support his evidence that rent was collected until about 1974.

34. As I commented during the course of the trial, a person who has not been in actual possession or occupation of the land would not seem to have a strong claim for adverse possession. Mr KWAN was able to deal with this point by relying on the case Bligh v Martin [1968] 1 WLR 804. Mr KWAN submitted that a person claiming adverse possession may do so although he has not been in actual possession or occupation, but simply in receipt of rent. I did not understand Mr Law, who appeared on behalf of the defendant, to disagree.

35. The facts in Bligh were unusual. The plaintiff who claimed adverse possession in that case was mistakenly believed by himself and the defendant to be the true owner of the land. In fact, the defendant was the owner. The plaintiff let the land to the defendant and collected rent. The decision in that case turned upon Section 10(3)(b) of the Limitation Act. That is the equivalent of section 13(3)(b) of the Limitation Ordinance which, in turn, refers to Section 12(3) of the same ordinance.

"12. Accrual of right of action in case of certain tenancies.

(3) Where any person is in possession of land by virtue of a lease in writing by which a rent of not less than $20 is reserved, and the rent is received by some person wrongfully claiming to be entitled to the land in reversion immediately expectant on the determination of the lease, and no rent is subsequently received by the person rightfully so entitled, the right of action of the last-named person to recover the land shall be deemed to have accrued at the date when the rent was first received by the person wrongfully claiming as aforesaid and not at the date of the determination of the lease.

13. Right of action not to accrue or continue unless there is adverse possession.

(3) For the purposes of this section -

(b) receipt of rent under a lease by a person wrongfully claiming, in accordance with section 12(3), the land in reversion shall be deemed to be adverse possession of the land."

The judge, Pennycuick J, at page 813 of his judgment concluded:

"It seems to me that, for the purpose of adverse possession of freehold land under the Limitation Act 1939, the land should be regarded as in the possession of one or other of the two parties concerned - that is, the landlord or the tenant. And it seems to me that subsection (3) designates the landlord as the relevant party for this purpose. On that footing, it follows that the plaintiff, having been in receipt of rent during this summer period, remained throughout the period in adverse possession of the land."

That conclusion seems to me to be unassailable. But, by virtue of the provisions of the Limitation Ordinance to which I have referred, it is confined to the position where there is a lease in writing. I, for my part, would hesitate to extend the position beyond that.

36. In our case, in my judgment, sufficient documentation has been produced which constitutes a lease in writing. Even if it does not, I am satisfied that I can properly draw the inference that originally there was such a lease. So, applying the decision in Bligh to the present case, prima facie the 2nd plaintiff's family had established a claim by adverse possession probably by 1954 and certainly by 1974.

37. On behalf of the defendant, Mr Law made two points. He said that, from 1974 to about 1987 when the 2nd plaintiff made enquiries of the government, the 2nd plaintiff had neither received rent nor occupied the land. Mr Law suggested that the 2nd plaintiff had abandoned his rights. I reject that argument.

38. By 1974, the title of the holder or holders of the paper title to the land had been extinguished by Section 17 of the Limitation Ordinance. The 2nd plaintiff then had an unassailable claim which he could assert at the appropriate time. The only danger to the 2nd plaintiff lay in someone else, particularly an occupant of the land, setting up an independent claim to adverse possession. No such independent claim has been advanced. In my judgment, therefore, there is no bar to the 2nd plaintiff asserting his claim.

39. Mr Law's second point was that the collection of rent on the basis of legal ownership is inconsistent with an intention to dispossess. He said that intention is a matter of fact, relying upon a decision of the Court of Final Appeal Wong Tak Yue v Kung Kwok Wai, David, CFA (1998) 1HKC 1.

40. Mr Law submitted that if the 2nd plaintiff acted on the assumption that he or his family owned the land he could not at the same time have had an intention to dispossess the owners. That argument was disposed of by the English Court of Appeal in Hughes v Cork unreported - on 14 February 1994. At page 7 of that decision Beldam LJ who gave the leading judgment said:

"The fallacy in Mr Downey's argument lies in the failure to distinguish between an intention to possess, which is required, and an intention to dispossess which is not."

41. Mr Law's submission, of course, was essentially the same as that of Mr Downey. The position was explained by Saville LJ in his short judgment at page 10.

"The learned Judge appears to have held that it is impossible for someone who believes himself to be the true owner to acquire title by adverse possession since such a person cannot, ex-hypothesi, have an intention to exclude or oust the true owner. If this were the law then only those who knew they were trespassing, that is to say doing something illegal, could acquire such a title, while those who did not realise that they were doing anything wrong would acquire no rights at all. I can see no reason why, as a matter of justice or common sense, the former but not the latter should be able to acquire title in this way. What the law requires is factual possession ie: an exclusive dealing with the land as an occupying owner might be expected to deal with it, together with a manifested intention to treat the land as belonging to the possessor to the exclusion of everyone else.

Obviously if the possessor knows or believes someone else has the paper title to the land he must intend to exclude that person along with everyone else. But in the absence of such knowledge or belief it is in my judgment sufficient for this part of the second requirement simply to establish a manifest intention to exclude everyone."

42. On the facts of the present case, I have no doubt that the 2nd plaintiff and his family intended to treat the land as belonging to them, to the exclusion of anyone else. I find therefore, that the 2nd plaintiff has established a title by adverse possession and is entitled to appropriate declarations.

43. In case I should be found to be wrong about that then, I have to say, that I would be prepared anyway to find that Madam WONG and the three purchasers were one and same person.

44. I view the factors which I mentioned in relation to ownership, to be rather stronger than Mr KWAN did.

COURT: So, I will hear counsel as to the appropriate declarations.

[Discussion as to appropriate declarations]