GRINGO INVESTMENT LTD v. PANG CHI WAI AND ANOTHER

HCMP 2199/2017

[2019] HKCFI 555

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2199 OF 2017

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REASONS FOR JUDGMENT

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Introduction

1.  The plaintiff (“P”) was/is the registered owner of All That the Remaining Portion of Lot 377 (“Lot377”) in Demarcation District No 131, Tuen Mun, New Territories, Hong Kong (“Property”).

2.  There was no dispute that (a) by way of a conveyance on sale dated 14 February 1980 registered in the Land Registry P became the registered owner of the Property, and (b) since 14 February 1980 P did not let out the Property or grant to any party licence to occupy the Property.

3.  On 11 October 2017, P commenced the present proceedings by issuing originating summons (“OS”) against the occupants of the Property (“D2”) for an order that P do recover possession of the Property on the ground that (a) P was entitled to possession and (b) D2 was in occupation thereof without licence or consent. On the same day, P filed the affirmation of its director Cheung Fai Tong Philip (“Cheung”) in support of the OS (“Cheung Aff”). The OS was scheduled to be heard by Master J Wong on 21 March 2017.

4.  On 1 March 2018, solicitors for Pang Chi Wai (“D1”) filed Notice to Act. On the same day, D1 applied by summons inter alia for leave (a) to add D1 as the 2^nd defendant and to name D2 as the 1^st defendant, (b) to continue the OS proceedings as if they were begun by writ, and (c) to file/serve pleadings (“Joinder Summons”). On 5 March 2018, Master K W Wong granted directions for filing/serving affirmations to support and to oppose the Joinder Summons, and adjourned such summons for argument with 3 hours reserved.

5.  On 6 April 2018, Master K W Wong granted extension of time of 28 days for D1 to file/serve affirmation to support the Joinder Summons. On 4 May 2018, D1 filed his affirmation in support (“Pang Aff”). On 29 June 2018, Master K W Wong inter alia granted leave for D1 to join as the 1^st defendant and D2 be renamed as the 2^nd defendant save that “other than [D1]” be inserted after its description, directed that the OS proceedings be continued as if they were begun by writ, and gave directions for filing/serving pleadings and lists of documents.

6.  On 13 July 2018, P filed its Statement of Claim (“SoC”). On 8 August 2018, D1 filed his Defence and Counterclaim (“D&C”). By a consent order filed on 10 September 2018, P was given leave to file/serve its Reply to D1’s Defence and Defence to D1’s Counterclaim out of time on/before 3 October 2018. To date, P had not filed such pleading.

7.  By a consent summons filed on 22 January 2019 (“Consent Summons”), P and D1 sought the following reliefs:

(a)   a declaration that the title of P or his successors-in-title or any persons deriving title from him to the Property had been extinguished under sections 7 and 17 of the Limitation Ordinance Cap 347 (“LO”);

(b)   a declaration that D1 was entitled to enter, remain in, use and possess the Property by reason of adverse possession;

(c)   a declaration that D1 had acquired a possessory title to the Property by virtue of his adverse possession of the Property;

(d)   costs of the present proceedings and such joint application be paid by P to D1 to be taxed if not agreed; and

(e)   D1’s own costs be taxed in accordance with Legal Aid Regulations.

8.  On 12 February 2019, the parties jointly wrote to this court and proposed that (a) the joint application by the Consent Summons be adjourned to a date to be fixed with 30 minutes reserved, and (b) P be excused from attending such adjourned hearing.

9.  By the joint letter referred to in paragraph 8 above, P also proposed that its claim/action against D2 be dismissed with no order as to costs.

10.  By written directions dated 14 February 2019, I adjourned the Consent Summons to be heard on 26 February 2019 (“Hearing”) and excused P from attending the Hearing, and I further adjourned the application in paragraph 9 above for consideration and/or determination at the Hearing.

11.  Recently, D1 lodged with this court the original affirmation of D1’s solicitors Kam Kai Cheong dated 22 February 2019 (“Kam Aff”) that essentially exhibited a surveyor’s report dated 28 July 2018 by Leung Chi Yan George. Upon enquiry with the court registry, the Kam Aff had not been formally filed with the court registry (although a copy was included in the hearing bundle). At the Hearing, I declined to allow D1 to rely on the Kam Aff: (a) as Mr Wong, counsel for D1, recognised at the Hearing, the Kam Aff was made without leave of the court, (b) in any event it was not formally filed with the court registry, (c) at the Hearing Mr Wong confirmed that the Kam Aff had not been served on P’s solicitors (and inclusion of a copy of the Kam Aff in the hearing bundle was irrelevant since P was excused from attending the Hearing), (d) the Kam Aff was made after the Consent Summons was filed such that P did not have the opportunity to consider the Kam Aff when it consented to the terms of the Consent Summons, and (e) in light of the proposed provision for costs in the Consent Summons (see paragraph 7(d) above), it would be unfair for P to bear costs in relation to the Kam Aff made after the filing of the Consent Summons and after P was excused from attending the Hearing.

12.  D2 never appeared in the present proceedings.

P’s claim

13.  By the SoC and Cheung Aff, P claimed the Property was occupied by an unknown third party without P’s or anyone’s consent.  On 25 September 2017, Cheung attended the Property with Szeto Tak Lok (surveyor of Harvest Surveyors Limited, “Szeto”) to make enquiry with the occupants, but was unsuccessful. On 25 September 2017, P’s solicitors wrote to demand the occupants of the Property to deliver up vacant possession to P within 14 days. With Szeto’s assistance, such demand letter was posted at various conspicuous places of the Property. P claimed the occupants of the Property failed to comply with such demand. It was said D1/D2 wrongfully entered and took possession of the Property, and they trespassed and were still trespassing thereon, hence P was deprived of the use/enjoyment of the Property and suffered loss and damage. P therefore claimed for possession of the Property and damages or mesne profits to be assessed up until delivery up of vacant possession of the Property.

D1’s defence and counterclaim

14.  D1 denied P (who was mere paper owner of the Property) was entitled to possession of the Property, and claimed P was barred from taking action against D1 for recovery of the Property pursuant to section 7 of the LO.

15.  By the D&C and Pang Aff, D1 claimed that at all material times he was the lawful owner and/or person in lawful possession of the Property. D1 claimed his father Pang Yee (“Father”) and mother Ho Kan Nui (“Mother”) used to live in a wooden hut at Au Chai near the current SKH St Peter’s Church Kindergarten (Castle Peak), 22 Tsing Wun Road, Tuen Mun, New Territories, Hong Kong, which was about 100m away from the Property. In/about 1966, the wooden hut was demolished and the Father’s family (including D1) moved to San Shek Wan near the current Light Rail Depot, 55-56 Lung Mun Road, Tuen Mun, New Territories, Hong Kong, which was about 20 minutes’ walking distance away from the Property. In/about 1977, the government offered to allow Father’s family (including D1) to move to Tai Hing Estate, but the Father refused and instead built a wooden hut near the current ECO Gas Station, 7 Yip Wong Road, Tuen Mun, New Territories, Hong Kong, which was about 100m from the Property.

16.  D1 claimed that before/in the early 1960s, the Father dispossessed P’s predecessors of the Property, and exclusively possessed the Property (previously a deserted brick factory with a well) for agriculture and cultivation of crops. The Father also possessed nearby lots for cultivation and pig-raising. The Father employed labourers at daily wage of $3 to remove bricks from the Property, and then ploughed the land, installed water channels/basins, planted hedges, sowed seeds, used irrigation, applied fertilisers and generally used the Property for growing banana trees and vegetables. The Mother assisted the Father in cultivating the Property until she passed away on 31 October 1989.

17.  D1 claimed that in the 1970s the Father sold vegetables grown on the Property at the former San Hui Market and to the Tuen Mun Vegetable Marketing Cooperative Society of which he was a member.[1] In/about the 1970s, D1 (who was then about 6 years old) started to assist the Father in cultivating the land at the Property. D1’s younger sister Pang Ho (but not his younger brother Pang Chi Yau who was 7 years younger than D1) also helped. About this time, the Father dug a second well at the Property to facilitate irrigation/cleaning. Since then, before D1 and his younger sister went to school, the Father and Mother would take them to cultivate the land (including the Property), to rear pigs at the pig-farm, and to go to the former San Hui Market to sell vegetables. In/about 1976 when D1 was about 12 years old, the Father mainly grew banana trees rather than vegetables due to labour shortage. From 1980s to about 2000s, the Father grew ginger liles on the Property, but thereafter re-focused on growing banana trees.

18.  As explained in paragraph 15 above, D1 claimed that at all material times his family lived in close proximity to the Property, and they went to the Property for cultivation/other purpose. The Father also possessed other nearby lots. In 1983, the government resumed some part of Lot377 (excluding the Property), and the Father received an ex gratia payment whereupon the family moved to live at Butterfly Estate, 1 Wu Chui Road, Tuen Mun, New Territories, Hong Kong, which was about 30 minutes’ walking distance away from the Property. As a result, the Father’s family (including D1) brought their dogs previously kept at the pig-farm to the Property. In/about 1985, the Mother was prosecuted at Tsuen Wan Magistrate’s Court for not having dog licence after one such dog bit a passerby.

19.  D1 further claimed that later in the same year a fence and a gate were erected to enclose the Property except for one side that was the wall of Luen Cheong Can Centre (“Wall”). The Father would lock the gate and totally fence off the Property such that other people could not access the Property. The Father would reinforce the fence whenever he found useful scrap materials. In 1990, the Father with the assistance of the then Tuen Mun District Councillor successfully sought compensation from Luen Cheong Can Centre on the adjoining lot after scaffolding on the Wall fell onto and destroyed crops on the Property.[2] In the 2000s, 2 sheds were erected on the Lot for storage of various items and to serve as shaded area for resting. D1 claimed they were still used for resting in the shade during family gatherings/barbecues.

20.  The Father passed away on 16 August 2007 when he was 97 years old. After the Father passed away, D1 continued to exclusively possess the Property, and he took over cultivation thereon. D1 still grew banana trees and some vegetables/herbs on the Property.[3]

21.  D1 claimed the Father and later D1 were in successive continuous and exclusive possession of the Property for over 50 years before the commencement of the present proceedings, and P had discontinued possession of the Property or alternatively it was successively dispossessed by the Father and D1, so pursuant to section 7 of the LO P was barred from recovering the Property from D1, and its title to the Property (if any) had been extinguished before the commencement of the present proceedings by virtue of the provisions in the LO, so at all material times D1 was/is the lawful owner and/or person in lawful possession of the Property.

22.  D1 denied he was trespassing on the Property, and claimed P was not entitled to recover possession of the Property and/or loss and damages allegedly suffered. By his counterclaim, D1 counterclaimed for the reliefs in paragraph 7 above.

Declaratory relief

23.  According to Hong Kong Civil Procedure 2019, “[the] power to make a binding declaration of right is a discretionary power …… If relief is to be granted without trial or evidence, the right course for the court is not to make a declaration but to state on what footing the relief is to be granted …… A declaration can only be made after proper argument and cannot be made merely on admissions by the parties whether in pleadings or otherwise …… nor in default of compliance with rules of court. On the other hand, the rule of the court that a declaration will not be granted when giving judgment by consent or in default without a trial is a rule of practice and not of law and will give way to the paramount duty of the court to do the fullest justice to the plaintiff to which he is entitled; …… A declaration can also be granted without trial …… if the plaintiff has a genuine need for such relief and the court could properly grant it based on the merits of the case ……”[4]

24.  Hong Kong Civil Procedure 2019 went on to say that (a) a declaration may be made on interlocutory application but not as against the government, (b) it is not made by consent, at all events where the rights of any persons other than the parties may be involved, and (c) a declaration can only be made after proper argument and cannot be made merely on admissions by the parties whether in pleadings or otherwise.[5]

25.  I also rely on but will not repeat here the legal principles set out in paragraphs 13-20 in my judgment in Law Yuk Fong v Man Chung Wai & anor.[6]

26.  Here, D1 claimed to be the adverse possessor in occupation of the Property, and the reliefs sought in the counterclaim were declaratory reliefs. D2 had not participated in the proceedings, and P had consented to the declaratory reliefs sought by way of the Consent Summons. By reason of the discussion on the merits of D1’s counterclaim below, I am satisfied that justice could not be done if D1 was to be denied the declaratory reliefs sought.

Legal principles on adverse possession

27.  I rely on but will not repeat here the principles set out in paragraphs 22-29 and 32-34 of Law Yuk Fong.

28.  In relation to successive squatters, Megarry & Wade, The Law of Real Property, states that “...... a squatter has a title based on his own possession, and this title is good against everyone except the true owner. Accordingly, if a squatter who has not barred the true owner sells the land he can give the purchaser a right to the land which is as good as his own. The same applies to devises, gifts or other dispositions by the squatter, and to devolution on his intestacy; in each case the person taking the squatter’s interest can add the squatter’s period of possession to his own”. [7]

Discussion

29.  On the materials before the court, particularly the Pang Aff that verified D1’s averments in the D&C, it was plain that the Father and D1 had been in continuous and uninterrupted occupation of the Property since the 1960s, and there was no evidence of any claim to title by P or any person since then until the present proceedings.

30.  Since the 1960s, the Father and his family (including D1) had been in occupation of the Property treating it as their farm land. They cultivated the land, grew vegetables/flowers/herbs and planted fruit trees at the Property, dug a second well, kept dogs at the Property, erected fence/gate that enclosed the Property to keep out others, and erected sheds on the Property for storage and for use as shaded resting area. The Father and his family (including D1) had always lived close to the Property to facilitate ready use and occupation of the Property. It was clear that throughout the period from the 1960s to the commencement of the present proceedings the Father and D1 were successive adverse possessors of the Property.

31.  In the circumstances, I am satisfied that D1 had established factual possession over the Property for over 20 years before the commencement of the present proceedings, and that the nature of the use and occupation of the Property by the Father and D1 reflected an intention to exclusively occupy the Property against P and the world at large. I find D1 had established possessory title over the Property against the paper owner, ie P.

Conclusion

32.  Accordingly, at the Hearing, I granted the following order:

(a) a declaration that P’s title, interest and/or rights in and/or over the Property and/or those of P’s successors-in-title or any persons deriving title from P had been absolutely extinguished by virtue of section 17 of the LO;

(b) a declaration that D1 and his predecessor(s) in possession had been in continuous adverse possession of the Property for a period of no less than 20 years prior to the commencement of the present action, and D1 had thereby acquired and was entitled to possessory title, interest and/or rights in and/or over the Property;

(c) P’s claim against D2 in this action be dismissed;

(d) there be no order as to (i) costs of and occasioned by preparing the Kam Aff and lodging it with the court, (ii) two-thirds of the photocopying costs in respect of the hearing bundle, and (iii) one-fifth of the costs of Mr Wong’s written submissions;

(e) save as provided in (d) above, costs of this action as between P and D1 (including D1’s counterclaim and the Consent Summons) be paid by P to D1 to be taxed if not agreed, and D1’s own costs be taxed in accordance with Legal Aid Regulations;

(f) there be no order as to costs between P and D2 in the present action.

(g) D1 shall forthwith notify P in writing of the terms of this order.