TANG SHU TIN AND OTHERS v. TANG KIN KWOK AND OTHERS

(A Crown lessee's right to possession under a new lease deemed, by virtue of the New Territories (Renewable Crown Leases) Ordinance, Cap. 152, to have been granted to him for a term of 24 years (less 3 days) from 1st July 1973 will not be extinguished, in favour of a squatter then in possession, until 30th June 1993. The fact that the squatter may in fact have been in possession from a date before 1st July 1973 is irrelevant, even if he had been in possession long enough to extinguish the Crown lessee's right to recover possession under the original lease]

1991, No.A1021

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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J U D G M E N T

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1. This is an ejectment action. It concerns some land at Yuen Long, in the New Territories. The issue is whether it is the plaintiffs or the defendants who have the better right to possession of this land.

2. The defendants are presently in possession of the land and it is agreed that, for present purposes, I may assume that the defendants or those through whom they claim took possession of the land, adverse to the interests of the person then entitled to possession, on some date in 1959.

3. The plaintiffs put their case in this way.

4. On 24th June 1905, they say, the Crown granted to the original lessee a lease of this and other land for a term of 75 years commencing on 1st July 1898 with a right to renewal for a further term of 24 years (less 3 days). The term created by the lease accordingly expired on 30th June 1973. Immediately before that day what was left of the term was vested in one Tung Chuk Pang. By virtue of the New Territories (Renewable Crown Leases) ordinance, Cap.152, the right of renewal conferred by the original lease is to be deemed to have been exercised by Tang Chuk Pang on 30th June 1973, and there is to be deemed to have been granted to him a new lease of the land accordingly. The term created, or deemed to have been created, by that new lease is now vested in the plaintiffs, and they base their claim to possession as against the defendants on the rights granted to Tang Chuk Pang by the new lease. His right to possession under the new lease accrued to him on 1st July 1973. The defendants or those through whom they claim were on that date in adverse possession of the land, so the rights of the plaintiffs under the new lease as against the defendants would have been extinguished on 30th June 1993 (20 years later) if no action had been brought against the defendants for recovery of possession of the land before that date. But in fact  this action was so brought before that date and so the plaintiffs' rights have not been extinguished.

5. This approach of the plaintiffs to the matter is supported by four local authorities, all unreported. These are (1) Cheuk Chau Company Limited v. Chau Kwan Nam and Others, 6th July 1983 (Mantell J.); (2) First Base Development Limited v. Or Hau Chun, 9th December 1991 (Keith J.); (3) Lam Kee On v. Lam Hing, 15th April 1992 (a decision of my own); and (4) Chui Shui On v. Tang Kwon Yung and Another, 7th October 1992 (Mayo J.).

6. As to the first two of these cases, the views expressed in the judgments, although supportive of the plaintiffs' case, were not necessary to the decisions and I shall not consider these two cases further.

7. As to my own case, it is directly in point, and the defendants accept that in order to succeed in this case (at any rate at first instance) they have to persuade me that my decision in that case was wrong. The facts of that case (as narrated them) were as follows:

"The disputed land is comprised in a block Crown lease dated 27th March 1905. This was a lease for a term of 75 years commencing on lst July 1898 (and thus expiring on 30th June 1973) with a right of renewal for a further term of 24 years (less 3 days). Under a division of property dated 21st September 1949, one Lam Lam Shi (holding on trust for the benefit of the plaintiff) became entitled to possession of the disputed land; but in fact possession of the land was assumed by one Lam Hung Chi. On 6th November 1962 Lam Lam Shi's trusteeship terminated, and on that day the plaintiff became entitled in his own right to bring an action to recover possession of the disputed land. On 9th May 1969 the New Territories (Renewable Crown Leases) Ordinance, Cap. 152, took effect. By virtue of s.4(2), the right of renewal contained in the original lease in relation to the disputed land is to be deemed to have been exercised by the plaintiff and there is to be deemed to have been granted to the plaintiff on 1st July 1973 a new Crown lease of the disputed land. By virtue of s.4(4), the disputed land is to be deemed to be subject (among other things) to any mortgage, whether legal or equitable, to any public rights, and to any other rights, easements, tenancies or other burdens of whatsoever kind or nature to which it was subject immediately before 1st July 1973. On 11th November 1981 Lam Hung Chi assigned all his title to and interest in the disputed land to the defendant, who took and remains in possession of the disputed land."

8. On those facts, I held that the plaintiff's action was not time-barred. In coming to this conclusion. I reasoned as follows:

"But for the statutory exercise of the option to renew contained in the original lease, and the statutory grant of a new lease for a term commencing immediately after the expiration of the term created by the original lease, the plaintiff would not, on 23rd July 1991, have had any cause of action against the defendant; not because of any limitation point, but because the plaintiff's own title to and interest in the disputed land would have come to an end on 30th June 1973, when the term created by the original lease came to an end by effluxion of time. No question arises of the extinguishment by virtue of the Limitation Ordinance of the plaintiff's title under the original lease. That title, and so the plaintiff's interest, terminated on 30th June 1973 anyway. The only question which now arises is whether the plaintiff's claim to recover possession of the disputed land, a new lease of which was granted to him for a term of 24 years (less 3 days) from 1st July 1973 by virtue of the operation of the New Territories (Renewable Crown Leases) Ordinance, is barred by virtue of s.7(2) of the Limitation ordinance. The answer is that it is not; because the new lease did not commence until 1st July 1973 and the plaintiff issued his writ on 23rd July 1991, which is within the period of the 20 years commencing on 1st July 1973, and thus less than 20 years before action brought.

The plaintiff's present right to possession under the new lease first accrued with the commencement of the term created by that new lease, with the defendant then in possession, and in possession adverse to the plaintiff, of the disputed land. The position of the defendant is exactly the same, no better and no worse, than it would have been if the Crown on 1st July 1973 had granted a new lease of the disputed land, not to the plaintiff, but to somebody else altogether.

……

In coming to this conclusion, I have not forgotten the provisions of s.4(4) of the New Territories (Renewable Crown Leases) Ordinance. I appreciate that the renewal of the plaintiff's lease of the disputed land took effect subject to rights affecting the disputed land when held under the original Crown lease. But, as it seems to me, the 'rights' of a squatter against a tenant do not survive the end of the term created by the tenant's lease. When that term comes to an end, whether by effluxion of time (as in fact happened here).or in any other way, e.g. surrender, compare Fairweather v. St. Marylebone Property Company Co. Ltd. [1963] AC 510, that marks the end of the squatter's title. I know that the case cited, much' discussed in the argument before me, has been criticised, on the ground that a surrender ought not to operate in favour of the landlord and that the landlord should have to wait until the expiration of the term by effluxion of time before recovering possession; but that criticism, whether justified or not, is irrelevant to anything I have to decide in the present case, where the original lease was not brought to a premature end by surrender but ran its full course. In my judgment, the present right of the plaintiff to sue for recovery of possession here first accrued on 1st July 1973, not on any earlier date. The earlier history of the matter has no more to do with the case than the flowers that bloom in the spring (compare 'The Mikado' (1885) Gilbert, per Ko-Ko, LHE, Act II)."

9. As to the last of the four local cases, Mayo J., after reviewing the other three cases, rejected an argument that they had been wrongly decided and accepted the "analysis of the position" (as he termed it) which I had offered in my own case.

10. A judge does not, perhaps, embrace an argument which relies on proving that a decision of his own was wrong with quite the same enthusiasm as he might exhibit were the decision in question that of one of his brethren. Nevertheless, the argument for the defendants in the present case was politely and persuasively advanced and I hope that in what follows I shall do justice to it.

11. The defendants say that the plaintiffs' argument, and the local decisions which support it, are all vitiated by a failure correctly to understand and construe the relevant provisions of the Limitation ordinance, Cap. 347.

12. In particular, the defendants point to the provisions of s.7(2), 8(1), 9(l), and 17.

S.7(2) provides (so far as material) as follows:

"7.(2) No action shall be brought by any ...... person to recover any land after the expiration of 20 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that other person."

S.8(1) provides as follows:

"8.(1) Where the person bringing an action to recover land, or some person through whom he claims, has been in possession thereof, and has while entitled thereto been dispossessed or discontinued his possession, the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance."

S.9(1) provides as follows:

"9.(1) Subject as hereafter provided in this section the right of action to recover any land shall, in a case where the estate or interest claimed was a estate or interest in reversion or remainder or any other future estate or interest and no person has taken possession of the land by virtue of the estate or interest claimed, be deemed to have accrued on the date on which the estate or interest fell into possession by the determination of the preceding estate or interest."

S.17 provides as follows:

"17. Subject to the provisions of s.10 (for present purposes, immaterial], at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land ... the title of that person to the land shall be extinguished."

13. On the basis of these statutory provisons, the defendants have framed an ingenious argument. It is not necessary in considering it, to distinguish between the person in possession in 1959, and his successors the present plaintiffs. Nor is it necessary to distinguish between the person who originally dispossessed him and his successors the present defendants. For convenience, I propose to refer to those on the plaintiffs' side of the argument by the singular "P" and those on the defendants' side of the argument by the singular "D".

14. If I have correctly understood the defendants' argument it runs as follows:

1. D dispossessed P in 1959.

2. P then became entitled to a right of action for the recovery of possession against D.

3. P had two grounds for claiming as against D that he, P, had the better right to possession of the land; (1) because he had himself been in posssession before he was dispossessed; (2) because he had a right to possession under the terms of the Crown lease under which he was the lessee.

4. P's right to possession under the Crown lease came to an end on 30th June 1973, when the term thereby created expired.

5. But P's right to recover possession because he had himself been in possession  before he was dispossessed survived the expiry of the term created by the Crown lease.

6. P's right to recover possession because he had himself been in possession before he was dispossessed came to an end in 1979, 20 years after he was dispossessed.

7. When P's right to recover possession because he was himself in possession before he was dispossessed came to an end in 1979, all P's rights to recover possession were extinguished. P could no longer rely on his rights to recover possession under the Crown lease (which had expired in 1973); nor on his right to recover possession because he was himself in possession before he was dispossessed (since this right had now become barred by limitation).

8. P had, between 1973 and 1979; a further right to recover possession under the new Crown lease, for 24 years from lst July 1993, deemed to have been granted to him. But that right to recover possession, like his right to recover possession because he had himself been in possession before he was dispossessed, came to an end in 1979, because the Crown's interest in the reversion immediately expectant on the determination of the term created by the original Crown lease never "fell into possession" as required by s.9(1) of the Limitation Ordinance; from 1959 to 1979 there had never been one moment (not even at midnight on 30th June 1973) when the Crown's interest "fell into possession".

15. I am prepared to assume without deciding that the first seven of these eight propositions are correct. But, in my judgment, D falls at the last hurdle.

16. On 1st July 1973, P became entitled to possession of the land under a new title, i.e. the Crown lease deemed to have been granted to him for a term of 24 years from 1st July 1973. I can discern nothing in the provisions of the Limitation Ordinance which I have quoted which would operate to extinguish that title before 30th June 1993. But for the statutory renewal it would, of course, have been possible, in theory, after the expiration of the term created by the original Crown lease on 30th June 1973, for the Crown to have granted a lease of the land to someone other than P. It is not I think suggested that any person other than P to whom the Crown might have granted a new lease would have been barred from seeking to recover possession against D before 30th June 1993. In fact, by virtue of the statutory provisions to which I have referred, a new lease is deemed to have been granted to P. But why P should be in any worse position than any other person to whom the Crown might have granted a new lease for a term commencing on 1st July 1973, I am entirely unable to follow. Accepting that, by 1979, P had lost his rights to recover possession of the land by virtue of the original Crown lease or by virtue of the fact that he had been in possession before he was dispossessed, the fact remains that the title on which P now depends for his right of action is a different title altogether; it is the title under the new lease deemed to have been granted to him by the Crown as owner for a term commencing on 1st July 1973. That title confers on him a better right to possession than the title claimed by D, which is a title adverse to P's new title but which has not subsisted for long enough to extinguish that new title. Nothing in s.9(1) of the Limitation Ordinance operates, in my judgment, to defeat this reasoning. The argument that no right of action accrued to the Crown on 1st July 1973 for want of a moment of time between the termination of the term created by the original lease and the commencement of the term created by the new lease cannot in my judment stand with Ecclesiastical Commissioners of England and Wales v. Rowe (1880) 5 App. Cas.736. The decision in that case was explained as follows by Holroyd Pearce L.J. in the St. Marvlebone case (in the Court of Appeal) [1962] 1QB 498 at p.514 :-

"There the question was when time started to run against the lessors. There had been a fresh grant, and a surrender was thereby implied. It was held that there was thus a moment of time when the lessors came into possession for the purpose of the statute. Yet although the squatter had in that case been in adverse possession for some years with which the lessee was bound to credit him towards the necessary 12 years, the lessor did not have to give him any such credit, and the time against the lessors started to run de novo from the date of the notional surrender."

17. In my judgment, in our case there was "a moment of time" when for the purposes of the ordinance the Crown "came into possession" and eo instanti granted the new lease. In our case the original term came to an end by effuxion of time rather than by surrender: but this is a distinction without a difference.

18. So I conclude that the point at issue here falls to be decided in favour of the plaintiffs.

19. I must now say something about the way in which this point has been raised for determination in the present proceedings before me.

20. On 6th October 1992, the plaintiff issued a summons to strike out those parts of the defendants' defence and counterclaim which set up a limitation plea. In the alternative, the summons asked for the point at issue to be tried as a preliminary issue before the trial. On 6th November 1992, the master dismissed the plaintiffs' summons (which had been amended in certain immaterial respects on 4th November 1992) with costs and with a certificate for counsel. The plaintiffs appealed, and it is this appeal which is before me, the plaintiffs asking again for the alternative orders to which I have referred. When the appeal was called on, I suggested that it might be convenient if the parties agreed that I should take the opportunity afforded by the appeal to proceed to decide the substantive issue, i.e., whether the plaintiffs' claim to recover possession of the land from the defendants was or was not in fact barred by limitation. The parties, very sensibly, agreed that I should do so. Since I have decided the issue in favour of the plaintiffs, there is nothing of substance left in the action. Under the provisions of Order 33, rule 7 I may in these circumstances make such order or give such judgment in this case as may be just. I propose to do so, but not before first hearing counsel, at a date and time to be appointed for the purpose, as to what order I ought to make. In the statement of claim, the plaintiffs ask not only for an order of possession but also for orders that the defendants do forthwith remove or dismantle two stone houses erected on part of the land and damages for trespass. I have not heard argument on and cannot deal with these matters at this stage.

21. As to the costs, I consider that the costs of the hearing before me should follow the event. Accordingly I propose to order that the costs of the plaintiffs of this appeal are to be taxed and paid by the defendants to the plaintiffs. As to the hearing before the master, the position was that the defendants invited the plaintiffs beforehand to agree to an order by consent under which the point at issue would be dealt with as a preliminary issue; but the plaintiffs (in my view unreasonably) insisted on going on to invite the master to strike out the relevant parts of the defendants' defence and counterclaim. In these circumstances, I propose to order that the costs of the defendants of the hearing before the master be taxed if not agreed and paid by the plaintiffs to the defendants. The order to be drawn up disposing of these proceedings should provide for an appropriate set-off as to these two sets of costs, i.e. the smaller to be set off against the larger.