PANG YIU CHOR AND OTHERS v. WONG WAI LEUNG AND OTHERS

HCMP 3972/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO3972 OF 2000

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D E C I S I O N

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1. This is the plaintiffs’ application for leave to appeal against this court’s grant of unconditional leave to defend.

Leave to appeal

2. Leave to appeal will only be granted if the applicant can show that there is reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard.  Reasonable prospects of success involve the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’: SMSE v KL [2009] 4 HKLRD 125, para 17.

3. The principles for granting leave to appeal against an order giving unconditional leave to appeal have been set out in Hong Kong Civil Procedure 2014, Vol 1, para 14/4/44, at page 272. Where the order below was on the basis that there were triable issues of facts, it had to be an exceptional case before an appellate court would disturb the order: Treewell Development Ltd v Tsang Chun Wah [2003] 4 HKC 401, Ma JA (as he then was).  On the other hand, where the Court of Appeal determines, as a matter of law, that there is no issue or question in dispute which ought to be tried and that there is no other reason for which there ought to be a trial of the action or any part of it, it will substitute its own view for that of the judge who gave the defendants unconditional leave to appeal and will give judgment for the plaintiffs: European Asian Bank AG v Punjab and Sind Bank (No.2) [1983] 1 WLR 642.

4. It is fair to say that the grounds of appeal advanced by the plaintiffs are based on issues of law rather than disputed facts.

Background

5. The matter arose out of an application by the plaintiff for summary judgment under Order 14.  The reasons for decision have been set out in my Decision dated 17 September 2013 which I shall not repeat.  In summary,  I have found 3 out of 4 issues arguable, namely,

A. Whether the defendants have acquired possessory right by virtue of their unbroken occupation since 1961-1965 as licensees of the government;

B. Whether the government has acknowledged the plaintiffs’ title; and

C. Whether the plaintiffs’ title has been extinguished as a matter of law and there was no more title to acknowledge.

6. The effect of the Decision was not just about the application of Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232, relied on heavily by the plaintiffs, in finding that the defendants were not in possession of the subject land, but that the government licensor was.  The Decision also found it arguable that by the time of commencement of this action, the plaintiffs’ title and hence right of action would have been extinguished after 20 years of continuous possession by the government, the defendants’ licensor.

The grounds for leave to appeal

7. In the grounds set out in the summons and the skeleton submissions, the main thrust of the plaintiffs’ argument in this leave application is as follows.  Even if the government had a valid claim of adverse possession against the plaintiffs, the plaintiffs would still not be deprived of the right to expel a third party (the defendants) after the termination of the licenses. The plaintiffs rely on the case of Fairweather v St Marylebone Property Co Ltd [1963] AC 510, 544.

8. In the Fairweather case, a shed stood on 2 pieces of land nos. 311 and 315.  The head-lessee of no. 311 occupied the shed for 22 years without interruption.  He sub-leased the shed as part of his own house for the remainder of the lease.  He later bought the freehold of no. 311.  It was not in dispute that he also had a squatter’s title over part of no. 315 by virtue of the occupation of the shed.  The appellant (A) later took up assignment of the outstanding term of the sub-lease.  The respondents (R) bought the freehold interest in no. 315 subject to a 99 year lease.  Shortly afterwards, the lease was surrendered to R, making him a freeholder in possession.  R sued A for possession of part of R’s land on which the shed stood. A relied on adverse possession. The House of Lords dismissed the appeal, holding that the lessee’s right and title as against the squatter was destroyed but not the landlord’s right.

9. The effect of that case has been explained in Jourdan & Radley-Garner, Adverse Possession (2^nd ed) at paras 20-12 and 20-13:

“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 v St Marylebone Property Co Ltd, the House of Lords held that the extinction of a tenant’s title to a lease by adverse possession did not destroy the lease itself, but only prevented the tenant from claiming possession against the squatter. As against the landlord, and against any third party not taking through the squatter, the lease remained in existence…

20-13 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.” (underline added)

10. The factual scenario in the Fairweather case was entirely different from here.  The underlined words in the preceding paragraph affirm (at least arguably) the position that the defendants claiming under the government could rely on the same defence of extinguishment of the plaintiffs’ title open to the government squatter.  The Fairweather case does not assist the plaintiffs.

11. This is sufficient to show that the leave application lacks merits in relation to Issues (A) and (C).  The rest of the grounds raised will not change the big picture.  I will just deal with them briefly.

12. The plaintiffs contend that the defendants have never claimed their rights or defended the action on the basis of the rights arising from the licenses; their case was solely premised on their possession of the land during the period of the licenses.  With respect, the defendants were entitled to show cause to the Order 14 application by affidavit or otherwise.  The licenses deposed to in their affidavits were directly related to their defence premised on adverse possession and the defendants were entitled to rely on any legal points (pleaded or in the affidavit) arising from the existence of those licenses to show cause.

13. The issue of acknowledgement of title has been dealt with under Issue (B) in the Decision.  Even if this court has been wrong in not treating the government’s letter dated 31 August 2000 as an acknowledgement of title, it did not alter the fact that at the time of commencement of the present action, arguably the plaintiff’s title had already been extinguished (para 36 of the Decision) before that acknowledgement came into existence.

14. It is contended by the plaintiffs that as this court considered that Issue (D) was not arguable, it ought to have struck out the counterclaim of the defendant, which was solely premised on adverse possession but not otherwise.

15. Issue (D) dealt with the flawed argument of the defendants that upon death of the licensors, the licenses were terminated such that the defendants became in possession in their own right.  I have pointed out that the persons who died were the original permittees, not the licensor government.  I fail to see how the counterclaim could be struck out without reference to the effect of the Decision stated in paragraph 6 above.

16. In the light of the above matters, the plaintiffs fail to meet the threshold in showing grounds of appeal with reasonable prospect of success. The application is thus dismissed with costs.

17. On a nisi basis, I assess the costs summarily at $60,000 to be borne by the plaintiffs.

18. I thank counsel for their assistance.