THE INCORPORATED OWNERS OF KAM LUK BUILDING v. 吳靜燕

DCCJ 1648/2016

[2020] HKDC 492

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1648 OF 2016

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DECISION

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1.  This is the plaintiff’s application by way of summons to seek leave to appeal against the judgment handed down by me on 9 April 2020 (“the Judgment”) on the grounds that:-

(i)     as per the grounds set out in the draft notice of appeal (“Draft Notice of Appeal”), it has a reasonable prospect of success; and

(ii)    further or in the alternative, there is some other reason(s) in the interests of justice that this appeal should be heard.

BACKGROUND

2.  The facts of this case appear in the Judgment and I do not propose to repeat them here.

3.  In the Judgment, I have found in favour of the defendant and dismissed the plaintiff’s claim with costs.  In particular, I found:-

(i)     the defendant has established adverse possession to Staircase 63 for more than 20 and/or 12 years prior to the commencement of the plaintiff’s action[1]; and

(ii)    the defendant has thus acquired an adverse possessory title to Staircase 63[2].

4.  A declaration was made under the Judgment that the title of the plaintiff and/or its predecessors to Staircase 63 has been extinguished by reason of sections 7 & 17 of the Limitation Ordinance and that the action of the plaintiff is statute-barred by reason of the provisions of the said Ordinance.  

DISCUSSION

Applicable principles for leave to appeal

5.  As rightly pointed out by Mr Cheung for the plaintiff, under section 63A (2) of the District Court Ordinance (“DCO”), Cap 336, leave to appeal should not be granted unless the court is satisfied that:

(i)     the appeal has a reasonable prospect of success; or

(ii)    there is some other reason in the interests of justice why the appeal should be heard.

6.  As stated by Le Pichon JA in SMSE v KL [2009] 4 HKLRD 125 at §17, 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””.

Grounds relied on by the plaintiff

7.  In the Draft Notice of Appeal, the plaintiff relies on 5 different grounds for the appeal. 

8.  I shall discuss them in turn below.

Ground 1

9.  Under Ground 1, the plaintiff submits that I had erred in law in holding that the defendant and the defendant’s family were in adverse possession of Staircase 63 despite finding as a fact that Ng Senior had entered into possession as a result of a licence granted by Wu Kam and that the defendant and the defendant’s family continued to occupy Staircase 63 as a result of the Wu Kam Licence.

10.  In particular, the plaintiff submits that I had erred in law in holding that the Wu Kam Licence has to be granted by a lawful owner of Staircase 63 who has the power and right to validly grant the Wu Kam Licence and that the Wu Kam Licence has no bearing on the nature of adverse possession of Staircase 63 of the defendant and/or the defendant’s family.  Further, the plaintiff submits that I had erred in law in finding that the requisite intention to possess Staircase 63 in one’s own name and on one’s own behalf on the part of the defendant and/or the defendant’s family was not defeated by Wu Kam’s Licence.

11.  In both Mr Cheung’s written and oral submissions, he has repeatedly emphasized the fact that Ground 1 of the appeal is not an attempt to overturn the court’s findings of facts on the issue.  To the contrary, the plaintiff claims that the proposed ground is firmly premised on the finding of fact that the Wu Kam Licence existed.  In this regard, Mr Cheung has cited §§33, 39, 40 and 41 of the Judgment which led to my finding in §47 that Ng Senior had entered into possession of Staircase 63 as a result of the “licence” granted by Wu Kam.     

12.  Mr Cheung then cited my findings on the legal consequence rising out of granting such a “licence” by Wu Kam which are contained in §§109-113 of the Judgment.  In those passages, I held that the alleged or purported consent or permission given by Wu Kam has no bearing on the nature of possession of Staircase 63 by the defendant or her family.

13.  The plaintiff by relying on the decisions of Lee Siu Fong v Wong Wan Leung & Ors, unrep, HCA 122/2012 (3 January 2017; Lok J); Sze To Chun Keung v Kung Kwok Wai David & Anor [1997] 1 WLR 1232 and Pang Yiu Chor v Wong Wai Leung [2014] HKLRD 761, pointed out why it thought I was wrong in making the finding that Wu Kam could not have provided a valid licence to Ng Senior.        

14.  By applying the principles laid down in those cases, Mr Cheung concluded that I was wrong, on one hand found that as a matter of fact there existed a Wu Kam Licence, and on the other hand to grant a declaration that the defendant acquired possessory title to Staircase 63.

15.  I must say at first glance the plaintiff’s arguments under Ground 1 look much stronger and more attractive than they actually are.   

16.  A closer scrutiny of that leads me to conclude that while this ground may be arguable on appeal, the chance of success is still slim.

17.  My reasons are as follows.

18.  First, with respect to Mr Cheung, I think what the plaintiff has quoted from the Judgment to say that I held Wu Kam Licence was a “licence” in the ordinary sense of being able to be granted by a paper owner is not entirely correct.    

19.  In fact, I had at pain tried to put the word “licence” in quotation in various places in the Judgment in order to distinguish it from an ordinary licence as we know it in law.  For example, in §47 of the Judgment, I found Ng Senior had entered into possession “as a result of the “licence” granted by Wu Kam after payment by him for what the defendant described as “purchase (of Staircase 63) from Wu Kam”.  Hence, I found the defendant’s family “continued to occupy Staircase 63 as a result of the “purchase” made by Ng Senior from Wu Kam”[3].

20.  I further found in the Judgment that the “licence” was no more that “a commercial transaction” between Wu Kam and Ng Senior “purely for the purpose of selling the right of using Staircase 63 to Ng Senior and his family only.[4]”

21.  When analysing what would be the legal consequence of such “purchase” and/or “licence”, I had in §110 of the Judgment concluded that “it was most likely that Ng Senior had paid a sum of money to Wu Kam to “purchase” the use of Staircase 63”.

22.  By relying on the case of Pang Yiu Chor, supra, at §§53-54, I found that “when a person mistakenly thought that he had rightfully bought the land or acquired the land from the paper owner, when in fact he had not, there is no bar for adverse possession.” [5]

23.  Thus, I think the Judgment should be read as a whole rather than simply taking certain passages out of context.  In particular, I consider it is important to pay attention to the findings I made under the section F and the heading of “LEGAL CONSEQUENCE OF THE “WU KAM LICENCE”, especially §§108-114 thereof.

24.  Second, I do not agree with Mr Cheung’s submission that there is no difference factually between the present case and one of the main cases relied on by him in the current application, namely, Sze To Chun Keung, supra.

25.  In this case, what is clear is that, at least according to my findings, the defendant and her family had subjectively believed that Wu Kam was in a position to grant a “licence” or to “sell” to them the right to use Staircase 63 at the time, when, objectively speaking, Wu Kam was never in the position to do so.  Being only one of the directors and shareholders of the original developer whose company had already sold off the units to other owners in the Building, he was never in the position in granting such a “licence” and/or to “sell” Staircase 63 to Ng Senior and/or the Ng family.            

26.  In my view, Wu Kam’s position cannot be compared with the Crown’s position in Sze To Chun Keung where the Privy Council held, on the facts of that case that, as the Crown land permit was not granted by the true and registered owners who could validly grant a licence, “the effect of the permit was that he[6] possessed on behalf of the Crown”[7].  In other words, when the purported licensor could not grant such a licence, then the default position is that the Government (or the Crown) would fill in that position.  However, our present case does not involve with the Government (or the Crown before 1997).   It only involved a private owner of a residential building and a director/shareholder of the original developer who had tried to grant a “licence” or “sell” off something that he was not in a position to do.  

27.  Third, in my view, even if there was a valid “licence” granted by Wu Kam, that “licence” must have come to an end when both the licensor (Wu Kam) and the licencee (Ng Senior) had passed away.  Once the licence was terminated by death, then the defendant and her family would be adversely possessing Staircase 63 against the true owner, which is the plaintiff or its predecessor, as it was at all time a common part of the Building.

28.  Last but not the least, I agree with Mr Leung for the defendant that, at the end of the day, it does not matter what licensing arrangements had been made between Wu Kam and Ng Senior, what we have to look at factually is whether the paper owners of the staircase had been adversely dispossessed.  If they were, so long as the occupation was not broken and the possession was continuous (as it were in the case of the defendant and her family), then the defendant would take the possessory title.

Grounds 2 & 3

29.  Grounds 2 & 3 are linked and therefore will be considered together.

30.  Under Ground 2, the plaintiff claims that I was “plainly wrong” in making a factual finding that the possession of the defendant and/or the defendant’s family was not on behalf of Ng Senior and as his licensees contrary to, inter alia, the admissions made during the oral evidence of the defendant and her brother DW1.

31.  Following the above, under Ground 3, it has been alleged that I had erred in law in holding that there is no rule in preventing common area such as staircase shops from being adversely possessed by co-owners to a deed of mutual covenant.

32.  Ground 3 is premised on the finding of facts I made on Ground 2.  Under Ground 2, the plaintiff alleges that I should have made certain factual findings in their favour instead of those I made in the Judgment. 

33.  Without repeating the specific allegations made by Mr Cheung in his written submissions,[8] I would like to say the proposition that the defendant and her family was possessing the staircase on behalf of Ng Senior was never part of the cases run by the plaintiff at the trial.  It was not pleaded as such; not opened as such; and not run as such.  It was like an “added on” item which was conveniently picked up by the plaintiff in its closing submissions.  On this alone, I think it would be sufficient for me to reject Ground 2 as a ground which may give rise to any reasonable prospects of success.

34.  However, more importantly, I do not consider, on the totality of the evidence presented at the trial, it was not opened for me to make the findings as I did in the Judgment on this issue.  This is in particular in view of the fact that since 1988, Ng Senior had already migrated to Australia and was neither in possession of Staircase 63 nor involved in the business of Silvery Photo in any way.  The plaintiff’s preferred version of facts which it says I should have found in their favour also has ignored the indisputable evidence – both oral and documentary – that the individual family member who was running the business on a “self-financing” basis at different time happened also to be in physical possession of Staircase 63.  In my judgment, the evidence was clear that they were not running on behalf or as licensees of their father.

35.  Hence, I do not consider that my finding on facts on this issue is “plainly wrong” as claimed by the plaintiff.    

36.  As Mr Cheung conceded at the hearing of the leave application, Ground 3 is based on the premise that my finding of facts on Ground 2 is “plainly wrong”.  In other words, only if I found in the plaintiff’s favour as a matter of facts on Ground 2, then Ground 3 will become arguable.

37.  Again, with respect to Mr Cheung, I do not consider I was wrong in my interpretation and finding on Ground 3.

38.  The plaintiff submits that I was wrong in my interpretation of the findings in Wong King Lim v The Incorporated Owners of Peony House, unrep., CACV 3/2012, 29 May 2013; [2013] HKC 295 and therefore leave should be given for this point “to be clarified by the Court of Appeal”.

39.  I am afraid I do not share that view with the plaintiff. 

40.  In §§93-97 of the Judgment, I was referring to the Related Action and highlighting the fact that, unlike the 1^st and 4^th defendants in the Related Action, the defendant in this case had never been a registered owner and/or co-owner of the Building.  Hence, there is no issue arising from the fact that the defendant had adversely possessed Staircase 63 as a co-owner of the Building from 2000 to 2015: See §§ 93-94 of the Judgment. 

41.  In §97 of the Judgment, which the plaintiff relies on to say that I was wrong in holding “there is no rule in preventing common areas such as staircase shops from being adversely possessed by co-owners or strangers to the DMC”, I was merely following and applying the Court of Appeal’s decision in Wong King Lim, supra.  Given the fact that I was bound by this decision from a superior court, I do not see how I can give leave to the plaintiff on this issue.

42.  The plaintiff says that this “legal proposition is an error of law which ought to be clarified by the Court of appeal” and that it would be in the public interests for leave to be given. 

43.  I do not share this view also.  On the facts of this case, the defendant was never a co-owner of the Building and, in any event, by 1993, the defendant family’s ownership in the Building had completely ceased, hence the possession of Staircase 63 by the defendant and her family cannot be consented by any co-owners of the Building.  That was the reason why I said the co-ownership issue raised by the plaintiff was a red herring on the facts of this case: see §97 of the Judgment.

44.  This in my view will make the arguments of the plaintiff on whether the ratio in Wong King Lim, supra should be clarified by the Court of Appeal purely academic.

Ground 4

45.  The plaintiff says that I had erred in finding in favour of the equitable defences of waiver, acquiescence and laches by relying on mere delay alone.

46.  I do not agree with the plaintiff’s submissions based on this ground.

47.  When dealing with the equitable defences, besides taking into account of the substantial period of delay and inaction on the part of the plaintiff, I had also considered all other factual circumstances of the case and why I thought it was unjust and unconscionable to grant the injunctive relief sought by the plaintiff: See §138 of the Judgment.

48.  In respect of the defence of acquiescence, apart from finding that there was “lying by and inaction” on the part of the plaintiff for “an astonishing gap of 43 years”, I also found that the plaintiff had clear knowledge and had acquiesced of the defendant’s possession: See §§135-137 of the Judgment.

49.  I also do not agree that when dealing with the equitable defence of estoppel, I had only rely on “mere delay alone”.

50.  Besides the “40 plus years of inaction and lying by on the part of P and its predecessors without commencing any enforcement action”, I also found that the plaintiff and its predecessors had made use of the electricity meter of Staircase 63 for the common area and paid for the electricity as representation that their possession of Staircase 63 would be tolerated by them.  I further found that in reliance of the representations the defendant had spent substantial cost and expenses in maintaining and upkeeping of Staircase 63: See §§140-142 of the Judgment.

51.  On laches, the plaintiff referred to §144 of the Judgment and says that I had only relied on the mere delay of the plaintiff and jumped to the conclusion (but without analysis) that “in all the circumstances” it was unjust to grant the equitable reliefs in §145.

52.  With respect, while I might not have spelt out what are “all the circumstances” under §145, I have considered all the relevant evidence and factual matters pertaining to the equitable defences in §§130-140.  In my view, those matters must be parts of the overall circumstances of why there was laches on the part of the plaintiff in this case.

53.  Hence, I do not consider Ground 4 is reasonably arguable also.

Ground 5

54.  Under Ground 5, the plaintiff claims that I had erred in law in failing to consider the profits reaped by the defendant from the use of Staircase 63 which would have negated any detriment, unjust circumstances and unconscionability for the equitable defence of waiver, acquiescence, estoppel and laches.

55.  Again, with respect to the plaintiff’s counsel, I think I had already taken into account of all relevant evidence and factual issues when conserving the equitable defences.  The rent, income and profits generated from the possession of Staircase 63 might be one of the factors, but by no means the most important factor.  The evidence revealed during the trial is that the defendant made about $100,000 per annum from renting out Staircase 63.  It is by no means a substantial sum.  When comparing this to other “circumstances” that I have mentioned in the Judgment when dealing with the equitable defence, I do not think I was so wrong in law that I could not have reached the conclusions as I did in the Judgment on these issues.      

CONCLUSION

56.  In conclusion, while I consider that some of the points raised by the plaintiff in the notice of appeal may be arguable, I do not think that they have reasonable prospects of success.

57.  Further, I do not consider there are some other reasons in the interests of justice under the second limb of section 63A(2) of the DCO why the appeal should be heard.

58.  Therefore, I would dismiss the plaintiff’s application for leave to appeal with costs in favour of the defendant, such costs should be taxed if not agreed, on a party and party basis, with certificate for counsel. The defendant’s own costs to be taxed in accordance with the legal aid regulations.