LAM SAI WAN v. MINLOY LTD

HCA 31/2014

[2018] HKCFI 1710

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 31 OF 2014

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JUDGMENT

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The plaintiff and the land

1.  The plaintiff, Mr Lam, who is 90 years old, brings these proceedings asserting that he has, by way of adverse possession, extinguished the paper title to 46 lots in DD 331 at Cheung Sha, Lantau Island.  Mr Lam says he has been occupying the 46 lots as his own since about 1959.  In his statement of claim, Mr Lam identified the 46 lots by attaching a plan showing the specific lots over which he claimed to have extinguished the title by adverse possession.

2.  The land in question is at the eastern end of Upper Cheung Sha Beach, and runs in a generally northerly direction from the beach to South Lantau Road.  At its south-eastern corner is an outcrop of forested rock which separates Upper Cheung Sha Beach from Lower Cheung Sha Beach.  The outcrop is generally known as Kam Dun Hill. 

Identification of the 46 lots

3.  One of the lots contained in the plan attached to the statement of claim is Lot 160 DD 331.  The title documents to 45 of the 46 lots were in evidence.  The title documents to Lot 160 were not in evidence, however it is clear from a Sale & Purchase Agreement (“SPA”) dated 19 December 1991, between Minloy, as purchaser by way of a mortgagee sale from Barclays Bank plc, that Lot 160 was included in the sale.

4.  A separate plan identifying the 46 lots was prepared by the surveyor for Mr Lam.  The lots are shown in the plan attached to this judgment [1].  All 46 lots are contained within an area of land which was known in the trial as the “Occupied Area”.  It should be noted that the existence of the boundaries of the Occupied Area are disputed.  The area within the Occupied Area, other than the defined 46 lots, and 4 lots referred to in §§7, 8 and 9, below are, I understand, unregistered Government land.

5.  The location of the 46 lots within the Occupied Area, and the structures on those lots are not in dispute.  For convenience of reference I have used the central area of the Occupied Area, and Lot 130, as a demarcation line between the area to the north of Lot 130, which I have called “the upper area” and the area to the south of, and including Lot 130, which I have called “the lower area”.  Lot 130 and the lots to the south and south east of that lot constitute the lower area.  The lots to the north and north west of Lot 30, (not including Lot 130), constitute the upper area. 

6.  The upper area contains 28 lots.  All 28 are owned by Minloy.

7.  The lower area contains 24 identifiable lots.  They are Lots 127, 128, 130, 131, 134, 135, 137 – 142, 144 – 145, 154, 159, 160 – 163, 165 and 166. 

8.  Lot 132 was purchased by Mr Lam in May 1964 and on which he built a house. 

9.  Lots 128 and 131 are contained within the area shaded on the attached plan, and marked Yue Nam Villa, (嶼南小築).  They are in a separate ownership and do not form part of this litigation.  

10.  Also within the lower area, on its western side (although not delineated on the attached plan, but on other plans in the evidence) are lots numbered 127, 134, and 135.

11.  There was no evidence as to who held the paper title to lots 127 and 134, but they are within the Occupied Area.  Those two lots are contained within the area Mr Lam claims to have farmed.  As the paper title holders to those two lots were not before the court, I am not able to make any declaration in Mr Lam’s favour, or against him.

12.  Of the remainder, Minloy now owns 18 lots including Lot 135. 

13.  In 1993, Minloy specifically asserted its title against Mr Lam over17 of the lots in the lower area.  They comprise lots 130, 137 – 142, 144 – 145, 154, 159 – 163, 165 and 166.  The lots over which Minloy asserted its title in 1993 did not include Lot 135 and the 28 lots in the upper area. 

14.  There is no evidence or explanation as to why Minloy did not assert paper title to the 28 lots in the upper area, or in respect of Lot 135, against Mr Lam, in 1993.  The 28 lots in the upper area and Lot 135 are all included within the lots to which Mr Lam asserts extinguishment of title by adverse possession.

The history of the paper titles

15.  An examination of the evidence of the titles to the 45 lots now with paper title in Minloy (the paper title to Lot 160 was not in evidence) reveals the following facts:

(1)   Title to 28 of the lots [2] were acquired by Mr Shen Pei Min (“Mr Shen”) in February 1957, from a number of different owners.  

(2)   Title to 17 of the lots [3] were acquired by a person named Zung Sui Shen (“Mr Zung”) in either 1955 or 1956 from a person named Fung Shu Lan.

(3)   All 45 lots were sold by Shen and Zung in either September or October 1978 to Hsu Huang Chung Ying (“Hsu”) (as to 70/100) and Yien Pao Ming (“Yien”) (as to 30/100).

(4)   Virtually immediately, on 18 October 1978, the 46 lots were soldby Hsu and Yien, variously to 8 people Leung Lai Chun, Lee Lan, Lee Kam Hin, Shin Cham Sun, Shin Wing, Lam Mei Lin, Lam Yuk Chun, and Lam Lai Ha.

(5)   On 20 October 1978, each of those owners, by separate conveyances in respect of the lots individually owned, but registered on the same day, transferred all 46 lots to Golden Day Investment Limited (“Golden Day”).

(6)   On 7 August 1979, Golden Day transferred all 45 lots to Caborca Investments Limited (“Caborca”) who gave a mortgage to Barclays Bank plc.

(7)   It may reasonably be inferred that Lot 160 passed through a similar chain as described above, ultimately falling into the ownership of Caborca, subject to a mortgage to Barclays Bank plc.

(8)   On 19 December 1992, all 46 lots owned by Caborca were sold, by way of a mortgagee sale, by Barclays Bank plc to Minloy.

16.  On 5 May 1964, Mr Lam acquired, from Lo Chun Wing and Fung Shu Lan, Lot 132 DD 331, a lot within the Occupied Area.  Mr Lam built a house on that lot in which he lived with his family. 

17.  It will be noted that Fung Shu Lan was the vendor of 17 of the lots to Mr Zung, (see §15(2) above).  Lo Chun Wing was not otherwise named in any of the titles to the 46 lots, either as a vendor to Mr Lam or Mr Zung, or as a purchaser from Hsu or Yien. 

18.  Neither Lo Chun Wing nor Fung Shu Lan gave evidence. 

19.  There was no evidence from either Mr Shen or Mr Zung, nor was there evidence from any of those to whom either Mr Shen or Mr Zung sold the 46 lots in 1978 (see §15(3) above). 

20.  There was no evidence from any representative of Golden Day.

21.  It was not suggested to Mr Lam that any of the registered owners of the titles within the Occupied Area made any contact with Mr Lam nor in any way challenged Mr Lam’s adverse possession of the titles prior to August 1979, when the land was purchased by Caborca.  I will deal with Caborca’s position in respect of asserting its paper title against Mr Lam separately.

22.  In the course of the trial while Mr Lam was being cross-examined I selected at random several of the names referred to in §15(3) and (4) above, and asked Mr Lam if he knew any of those persons.  He said that he did not.

The basis of Mr Lam’s claim

23.  It must be noted that as Mr Lam claims adverse possession since 1959, the relevant period required to extinguish the paper title is 20 years.  Consequently, he must establish adverse possession up until 1979/1980.  It was not until 1991 that the required period was reduced to 12 years.  In fact, on the evidence, Mr Lam asserts adverse possession for a period of 34 years, until June 1993.

24.  In circumstances that will become apparent, an argument was made that Minloy asserted its rights against Mr Lam in respect of part of the land in June 1993.  Notwithstanding that assertion of title against him, Mr Lam remained on the land and continues to farm it right up until the present time. 

The basic principles

25.  The relevant statutory provisions are contained in the Limitation Ordinance, Cap 347 (“LO”), sections 7, 13 and 17 as follows:

“ 7. (2) No action shall be brought by any other person to recover any land after the expiration of [20] years from the date on which the right of action accrued to him ….”

13. (1) No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as adverse possession) ….

17. … 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.”

26.  The principles to be applied when determining whether adverse possession has been established in Hong Kong are found in Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd (2007) 10 HKCFAR 588, where, at 592–3 the Court of Final Appeal had this to say:

“ The principles for the application of ss.7(2), 17 and the associated provisions of the Limitation Ordinance are well settled. They were formulated and set out by Slade J in Powell v McFarlane (1979) 38 P & CR 452, approved by the House of Lords in JA Pye (Oxford)Ltd v Graham [2003] 1 AC 419, and adopted by this Court in Wong Tak Yue v Kung Kwok Wai(1997–98) 1 HKCFAR 55. … Of particular relevance to dispossession are the following passages from Slade J’s judgment in Powell v McFarlane:

…

(2) If the law is to attribute possession of land to a person who canestablish no paper title to possession, he must be shown to have both factual possession and the requisite intention to possess (animus possidendi).

(3) Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question of what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances … acts of possession done on parts of land to which a possessory title is sought may be evidence of possession of the whole. Whether or not acts of possession done on parts of an area established title to the wholearea must, however, be a matter of degree … I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.

(4) … the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and as far as the processes of the law will allow.

…

An owner or other person with the right to possession of land will be readily assumed to have the requisite intention to possess,unless the contrary is clearly proved.  This is why the slightest acts done by or on behalf of an owner in possession will be found to negative discontinuance of possession.  The position,however, is quite different from the case where the question is whether a trespasser has acquired possession.  In such a situation the courts will require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world.  If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having the requisite animus possidendi and consequently as not having dispossessed the owner.  (pp.470–472.)”

27.  In Yu Siu Cheuk v Realray Investments Ltd (unreported, CACV 181/2009, 10 November 2009), at §17 the Court of Appeal said:

“ For the purpose of deciding whether the defendant’s title has been defeated by limitation the Court does not need to decide the precise point of time when the plaintiff entered the property so long as it is satisfied that the plaintiff has proved that he has been there for twenty years with the necessary intention to possess.”

28.  The notion that a squatter need not actively farm the whole of the land for the whole of the limitation period (see Powell v McFarlane at 470 – 471) was applied in Hong Kong in Chan Suk Yin & Anor v Harvest Good Development Ltd (unreported, HCA 477/2000, 25 February 2004), where, at §57, Deputy Judge Muttrie said:

“ … once a squatter takes over land and establishes possession by actively farming it, it seems to me that he need not necessarily show that active farming continued on the whole of the farm he hasestablished for the whole of the limitation period. Possession does not leach away with lack of use; it depends on there being some element of control. It is only if control is lost, for example where land is taken over by another squatter or by the paper owner, that possession is lost. If the squatter remains on the farm, in a position to keep others off it, he remains in control. What is required is that he deal with the land as an occupying owner might have been expected to deal with it, and that no one else has so dealt with it. An occupying owner does not have to farm every square foot of his land and I do not see that a squatter, once he has established possession need do so either.”

29.  Evidence that part of the disputed land has been used to grow vegetables and other produce, and ploughed up for that purpose, may be relied upon to establish the intention of the squatter to treat the land as his own.  In Seddon v Smith (1877) 36 LT 168 Cockburn CJ said that the property had:

“ … been acquired by an adverse possession of 20 years and upwards by a man who, having only a right-of-way over any road, has used it exactly as he would any other land on his own farm. I care not what he grew, he used it in all respects as if it were his own …. To my mind it makes no difference whether there be enclosure or not. Enclosure is the strongest possible evidence of adverse possession, but it is not indispensable.”

30.  In the seminal case of Powell v McFarlane, at 477 – 478 Slade J said:

“ There are a few acts which by their nature are so drastic as to point unquestionably, in the absence of evidence to the contrary, to an intention on the part of the doer to appropriate the land concerned. The ploughing up and cultivation of agricultural land is one such act: compare Seddon v. Smith.”

31.  The requirement to “exclude the world at large” does not mean that it is necessary to have the land securely fenced.  By way of example, in Stanley v White (1811) 14 East 332, oak and ash trees in a belt of wood-land was found to be sufficiently defined by its physical structure without the need to be fenced.  The decision of the Privy Council in Higgs & Anor v NassauvianLtd [1975] 1 All ER 95, at 101, confirmed that proposition. 

32.  The formulation of the concept ofanimus possidendi by Slade J in Powell (see (4) quoted in §26 above) was approved by the House of Lords in JA Pye (Oxford) Ltd v Graham [2002] UKHL 30, [2002] 3 WLR 221.  That case makes it clear that the requirement to exercise exclusive control of the land does not include a requirement for a conscious intention to own the land. Rather, the intention that must be established is to possess, and not to disposesthe land: see Adverse Possession, Jourdan & Radley-Gardner, 2^nd Edn, 9 – 11. 

33.  In Pye, at §71 Lord Hope of Craighead described the required intention this way:

“ The important point for present purposes is that it is not necessary to show that there was a deliberate intention to exclude the paper owner or the registered proprietor. The word ‘adverse’ in the context of section 15(1) of the Limitation Act 1980 [4] does not carry this implication. The only intention which has to be demonstrated is the intention to occupy and use the land is one’s own. …. So I would hold that, if the evidence shows that the person was using the land in the way one would expect him to use it if he were the true owner, that is enough.”

34.  A similar statement was made by Lord Hutton at §§75 – 76:

“ 75 In the present case from August 1984 onwards the Grahams made full use of the disputed land as if they were the owners— they did everything which an owner of the land would have done and when an experienced chartered surveyor, called on behalf of the plaintiffs, was asked in cross-examination what an occupying owner of the disputed land might have done over and above what was done by the Grahams between 1984 and 1997, he was unable to think of anything.

76 I consider that such use of land by a person who is occupying it will normally make it clear that he has the requisite intention to possess and that such conduct should be viewed by a court as establishing that intention, unless the claimant with the paper title can adduce other evidence which points to a contrary conclusion.”

35.  The effect of section 17 LO was dealt with in Hounslow London Borough Council v Minchinton(1997) 74 P & CR 221.  At 226, Millett LJ [5] (as he then was) said:

“ It is sufficient for a claim to title by adverse possession that the defendant or his predecessors in title should have been in adverse possession of the land for 12 years, whereupon the title of the true owner is extinguished. It is not necessary that the period of 12 yearsshould continue right up until the commencement of the proceedings.”

36.  Jourdan & Radley-Gardner, citing that passage from Hounslow Borough Council v Minchinton note that once the limitation of period has expired, the (limitation) clock no longer needs to tick [6].  It will not matter if the true owner does re-enter; the adverse possessor will be entitled to recover the land from him.  The extinction of the true owner’s title deprives him of all his rights against the squatter in respect of the squatter’s possession of the land in question: see Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 1 WLR 1078 at 1089B.

37.  It is not necessary for the squatter to bring his actions to the attention of the owner: see Purbrick v London Borough of Hackney [2004] 1 P & CR 34 at §§25 – 26 per Neuberger J (as he then was). 

38.  These are the principles and statements of law that I apply to the facts found in this case.

Mr Lam’s use of the land

39.  Mr Lam had limited education and other than being able to sign his name, could not read or write.  At age 90, Mr Lam was unable to recall his witness statement being read to him, although he identified his signature on that witness statement.  In those circumstances his evidence was lead from him and his witness statements could not stand as evidence in chief. 

40.  Mr Lam’s oral evidence was that after he came to Hong Kong in 1951, he worked first as a construction worker.  In 1957, Mr Lam was employed to work by Mr Shen, on a farm contained within the Occupied Area.  The farm was known as Man Yuen Farm.  One of the first jobs he was engaged in was establishing a form of enclosure around the farm.  This was achieved by planting Pandanus tectorius, a form of thorny pandanus, and using rocks, wood, bamboo and old electrical wire to create a form of barrier.

41.  The effectiveness of the thorny pandanus in creating a barrier to persons trying to enter the property was demonstrated in a video clip taken from the South Lantau Road showing a person trying to enter the property east of the metal gate that now stands on South Lantau Road. After getting about 20 m from the road the person shrugged his shoulders and gave up, unable to find a way through the thorny pandanus.

42.  There was no evidence to challenge Mr Lam’s assertion that when Mr Shen emigrated to Brazil in 1959, Mr Lam was told by the chairman of the Mui Wo vegetable cooperative that he should take over the running of Man Yuen Farm.  Mr Lam’s evidence was that, with some assistance from workers in the early days, but later with assistance from his family, he continued to grow vegetables and fruit, built fishponds, and generally farmed the 46 lots within the Occupied Area in order to provide a living for himself and his family.  Mr Lam said that since that Mr Shen’s emigration to Brazil, he had treated the land within the Occupied Area as his own.

43.  It is not clear from the evidence precisely when South Lantau Road was built.  In the aerial photographs it does not appear in 1956, but is present in the next photograph which was taken in 1962.  Mr Lam said a gate was built near South Lantau Road, and a wooden gate near the beach.  Initially, the gate at South Lantau Road was a wooden gate, but it was replaced with a metal gate in 1981.

44.  The evidence of Mr Lam, unchallenged by any other evidence, was he, assisted by other workers working for Mr Shen, farmed the land growing fruit and vegetables which they took to a cooperative market at Mui Wo.  This was at a time prior to the building of the South Lantau Road.  In order to get the vegetables to the market at Mui Wo the workers would row a boat from the beach at Cheung Sha to a vegetable cooperative market at Mui Wo.  Later, those workers assisted Mr Lam until such time as his family was able to provide the necessary assistance.

45.  As I have said, in May 1964, Mr Lam purchased Lot 132, within the Occupied Area, (see §16 above).  Mr Lam built a house, described on the plan as House 4, for his family to live in.  In an aerial photograph taken in January 1963, House 4 is plainly seen approximately in the location of Lot 132.  There was no explanation as to why it was built prior to Mr Lam’s acquisition of Lot 132.

46.  Over the years, Mr Lam built a number of structures on the land including three structures and a toilet block.  The three structures, marked onthe diagram as Houses 1, 2, and 3, were used as residential structures, initiallyfor his family, and subsequently, two being used for shelter for livestock, but later being let for holiday homes.  Mr Lam applied for an electricity service to the property which was installed.

47.  Later, when the market at Mui Wo ceased to operate Mr Lam rented a stall in the market at Cheung Chau, and took his produce there to sell. The documentation in relation to the rented stall was duly produced in evidence.

48.  It was not suggested to Mr Lam at all that between 1957, when he took over the farm for his own benefit, and December 1992, when Minloy acquired the 46 lots, that any person at all approached him and suggested to him that they were the holders of the paper title.  No steps against Mr Lam were taken by anyone at all during that period.  Mr Lam was simply left to his own devices to farm the land as he wished from 1957 until August 1979.

49.  Mr Lam’s evidence as to the use of the land was corroborated by his son Mr S C Lam, who was born in 1958.  Over the years, Mr S C Lam had worked with his father on the land, initially as a child, and subsequently as young man.  In about 1975, when he was about 17, Mr S C Lam left the property following the completion of his education.  Although he had moved out he went back from time to time to help his father on the farm.  He returned to live there permanently and work on the farm in April 2011.

50.  Mr S C Lam gave evidence, unchallenged, that there were two entrances for access to the farm, one, a wooden gate on South Lantau Road, the other a “door” to the beach.  Mr S C Lam assisted his father in planting thorny pandanus, which was planted to make it difficult for outsiders to enter the property.  The thorny pandanus was planted on each side of the two gates and in areas on the perimeter.  There were numerous photographs illustrating those plants.  Although they were not completely effective in keeping stock out of the property, they would have provided a form of barrier which a human being would find very difficult to cross.

51.  Mr S C Lam’s evidence, unchallenged, was that in 1981 a neighbour purchased the lot now comprised in Yue Nam Villa, shown on the attached diagram as (嶼南小築), and built a house there.  This property was also referred to in the evidence as “South Lantau Villa”.  After a discussion between the neighbour and Mr Lam, it was agreed that Mr Lam would widen the concrete path from the front of that house to the gate next to the road, and the neighbour would be responsible for rebuilding the metal gate and the signs.

52.  Mr S C Lam said that in 1981 the South Lantau Road gate was replaced with a metal gate, paid for by a neighbour from Yue Nam Villa.  Mr Lam himself widened the concrete path from the front of the house to the gate next to the road.

53.  Mr S C Lam said that on both the gates there were signs with the words “private property no trespassing”.  A photograph of an old wooden gate at the beach entrance has three signs, one to the left of the gate and two to the right of the gate.  The lower right sign says (in Chinese characters):

“ NOTICE

Private land

No trespass

Fierce dog(s) inside

Trespasser shall bear his own consequence”

54.  Mr S C Lam assisted his father in constructing the fishponds to the front of the house.  The ponds may be seen on the attached diagram as ponds 2, 3, 4, and 5.  He said that carp and grass carp were raised in the fishponds for sale and for consumption by the Lam family. Pigs were raised and chickens were raised both for eggs and for poultry.  He recalled an official application being made for a telephone in 1976, and electricity in 1981.

55.  Mr Lam said that the gates to South Lantau Road and the beach were kept locked.  Other than the evidence of a witness called by Minloy as to the period after 1979, there was no evidence to contradict Mr Lam.  There is no reason why I should not except his evidence to that effect during the period from 1959 to 1979.  There was evidence from a Ms Jane Lee, who for a time after 2013 occupied Yue Nam Villa, which established that at that time the gates were not kept locked.

56.  It was not suggested to Mr S C Lam at all that it any time between his birth in 1958 and December 1991, when Minloy acquired the 46 lots, that any person approached either him or his father to assert ownership rights over the land.  Mr S C Lam had no reason other than to believe during that period that he lived on land which belonged to his father.

Victor Lee Shui Kwai of Caborca

57.  Mr Lee was a Director of Caborca which acquired the 46 lots on 7 August 1979.  His evidence was that he knew Mr Daniel Lam Wai Keung (“Daniel Lam”), a resident of Peng Chau, and a vice-chairman of the Heung Yee Kuk, who introduced him to the land now claimed by Mr Lam.

58.  Mr Lee said that in 1979, he was taken by Daniel Lam to Lantau.  There, he discovered that Cheung Sha was a very popular white sand beach that could be accessed from South Lantau Road.  He believed the property had potential investment value.

59.  Mr Lee said he was shown the Occupied Area.  He said that he did not see any fence or structure indicating any boundary and that he was not asked to leave the land nor was he informed that it was occupied.  He noted that there was an old decrepit gate giving access from the road, but that was unlocked.

60.  Mr Lee said that before he purchased the land he “would have” instructed his solicitor to investigate personally and ensure that the lots had no adverse possession before he made the purchase.  He said further:

“ In any event, as part of the due diligence when purchasing the disputed lands, my solicitor had made enquiries to make sure the lands were not adversely possessed. At the time, there was no indication that the said disputed lands were occupied by anyone.”

61.  There was no evidence from the solicitor as to any steps he might have taken either to assess whether or not someone might be in adverse possession of the property or whether or not the solicitor took any steps to assert the paper title against the occupier.

62.  I am unable to place any weight on Mr Lee’s evidence of the instructions he gave to his solicitor as constituting evidence either that Mr Lam was not in adverse possession of the Occupied Area in 1979, or that Caborca in any way asserted its rights as holding paper title against Mr Lam.

63.  First, Mr Lee’s use of the expression “would have” falls a long way short of being evidence that any investigation was made by the solicitor.  That expression, together with the assertion that the solicitor:

“… made enquiries to make sure the lands were not adversely possessed …”

is, first, in the light of the expression “would have” merely a presumption, and secondly, hearsay.  There is no evidential value in a presumption, unless it can be supported by admissible evidence. 

64.  Hearsay is of course admissible in certain circumstances in civil proceedings.  There was no hearsay notice.  There was nothing in Mr Lee’s evidence to indicate the nature of the enquiries allegedly made, by the solicitor, or that any advice was given to the company as a result of those enquiries.  The solicitor himself was not called to give evidence.  There was no explanation why the solicitor was not called.

65.  Most significantly, Mr Lee himself did not assert to any steps he personally took to ascertain whether there was any adverse possession or to assert the paper title against Mr Lam.  His evidence that:

“ there was no indication that the said disputed lands were occupied by anyone”

is entirely inconsistent with the fact that he never visited the disputed lands.  It is entirely inconsistent with the uncontested existence of residential properties on the Occupied Area.  It is entirely inconsistent with the incontrovertible evidence of the aerial photographs as to the use of the property for cultivation, to be discussed below.

66.  It was not suggested to Mr Lam or Mr S C Lam that at any stage duringCaborca’s ownership of the titles in the Occupied Area, from August 1979 until December 1991, any person from Caborca took any steps at all to challenge Mr Lam’s adverse possession of those titles.

67.  It was suggested by Mr Lee, in oral evidence, but not in his witness statement, that the Rural Committee would have licensed Mr Lam to use the property after Mr Shu went to Brazil.  I place no weight at all upon that evidence.

68.  First, no document was produced in the nature of a license or of a record of the granting of a license.  I have no doubt at all that, if such a licensing system was carried out by the Rural Committee, records would have been maintained.

69.  Second, it was far too late to make such an assertion. Mr Lam’s case had been closed.  It gave Mr Lam no opportunity at all to answer the proposition. It was not put either to Mr Lam or his son.  They had no opportunity to reply, to check records, or to make any enquiry in respect of the assertion.  I reject the assertion that Mr Lam occupied Man Yuen Farm by virtue of a license granted by the Rural Committee, or any other authority.

70.  I am satisfied that during the time Caborca held the paper title no attempt was made by the company to assert its rights against Mr Lam.  No attempt was made to remove him by any legal proceedings.  No approach was made to Mr Lam to insist upon a lease or a license.  He was simply left to continue farming the land as though it were his own.

The aerial photographs

71.  A series of aerial photographs commencing on 11 November 1945, running through to January 2015 were produced.  They were not in dispute. 

72.  In December 1956, before South Lantau Road was developed, the upper area shows a number of paddy fields which appear to conform generally with the boundaries of the lots in that area.  Those paddy fields are plainly in cultivation.  The lower area also shows paddy fields some of which are plainly in cultivation.  Between the two areas is an area which does not appear to be in cultivation.  That is the area that divides the upper area and the lower area of the Occupied area, just above Lot 130.

73.  The next aerial photograph and the sequence was taken in January 1962. The early formation of South Lantau Road is clearly seen together with the residence known as “House 4” which was occupied by Mr Lam. 

74.  In January 1963, the upper area paddy fields and the lower area paddy fields are clearly under extensive cultivation.  By July 1973, the cultivation in the upper area has reduced, but the dwelling constructed as “House 1” is clearly identified.

75.  In August 1976, the extent of the cultivation in the upper paddy fields has reduced.  The construction of “Houses 1 – 4” and the “Toilet” are clearly seen.  In the upper area, the first, of five fishponds established by Mr Lam may be seen.

76.  In July 1978, cultivation of the upper paddy fields is more extensive and the lower paddy fields are fully cultivated.

77.  In September 1979, the upper paddy fields do not appear to be in as extensive cultivation as the lower paddy fields, and by November 1980, the upper paddy fields appear quite overgrown.  However by July 1982, some other form of cultivation appears to be taking place.  It appears that in the area to the west of the feature known as “Pond 1”, broadly in the area of Lots 115 – 120 and to the east and above the pond in part of Lot 102, it appearsthat trees have been planted.  The planting of trees is consistent with Mr Lam’s evidence that he planted fruit trees. 

78.  By December 1986, that cultivation is no longer apparent.  Instead, from October 1985 until December 1991, former paddy fields, roughlyin the area of Lot 103 and unregistered government land to the south of that lot, cultivation in the form of rows of vegetables is seen.  In May 1993, that cultivation is seen extending west of the Pond.

Discussion

79.  On the evidence, Mr Lam began occupying the Occupied Area for his own benefit during 1959, when it was suggested to him that he should take over the running of Man Yuen farm.  To extinguish the paper title by adverse possession at that time there must be 20 years’ occupation. So Mr Lam must establish that between at least 1959 until about 1980, he was in adverse possession, as that expression is known to the law, of the land.

Factual possession

80.  The extent of the cultivation of the land is such that I am left in no doubt at all that Mr Lam was in factual possession of the 46 lots in the Occupied Area.  Not all of the lots, defined by the boundaries of the paddy fields, were in use all of the time.  That is to be expected of a farmer who would practice crop rotation and allow some fields to lie fallow from time to time.  That practice adequately and sufficiently explains why the upper area was not always in full cultivation.  The aerial photographs establish that the lots in the lower area was consistently in cultivation.

81.  From 1959 until 1980, and beyond, until June 1993, (when he was approached by Helen Law with the acknowledgement, see §§93-100 below), Mr Lam occupied the land and dealt with it as though it were his own without any challenge at all from the paper owner for the time being.  Mr Lam farmed the land by the cultivation of the greater proportion of the area.  He operated from the farm for his own personal benefit and retained the income he earned from the produce that he sold to support his family. 

82.  Mr Lam built structures in the nature of houses, a toilet block, installed gates, and a path.  He had electricity and a telephone installed for the use of the dwellings.  From the income from the farming operation he provided for his family.  He dealt with the land in all ways which the true owner could have dealt with the land.

83.  In simple terms he treated the land as his own.

The mental element

84.  Mr Lam treated the land as his own, excluding the world at large so far as was reasonably practicable and as far as the processes of the law would allow.  He put up signs to exclude trespassers.  He developed the land to his own will and design.  He dealt with the land as an occupying owner might have been expected to deal with it, and no one else dealt with it in that way. 

85.  These acts, I am satisfied, demonstrated an intention on the part of Mr Lam to dispossess the owner with the paper title, and to treat the land as his own. 

86.  No one went to him and asserted their title over the land.  No one took steps to remove him from the land.  No one asserted a need for Mr Lam to have a lease or licence over the land.  Mr Lam simply used the land as his own as he wished.

87.  The conclusions reached in §§48, 56, 66 and 70 above all go to establish the foregoing factual and mental elements of adverse possession.

Conclusion

88.  Applying the principles set out in §§25 – 37 above I am satisfied that at least for 20 years from 1957, until 1977, and at best continuing from after 1957 until June 1993, for 36 years, after Mr Lam first took over Man Yuen Farm, Mr Lam occupied the 46 lots by way of adverse possession.

89.  It is important to note that the effect of section 17 LO, is that Mr Lam’s adverse possession had the effect of extinguishing Caborca’s title.  The inevitable consequence of the finding in §88 above is that in December 1991, when Minloy purported to acquire the 46 lots from Caborca by way of the mortgagee sale by Barclays Bank plc, the title had already been extinguished and Caborca in fact had nothing to sell (see §§35 – 36 above).

The situation after December 1991

90.  I have already recorded the evidence that establishes that neitherGolden Day nor Caborca took any steps to assert the paper title against Mr Lam.  Minloy entered into the SPA with Barclays Bank plc in December 1991. 

91.  Other than an assertion by Helen Law, a director of Minloy, that “in late 1991 to early 1992” she and another director, Denis Kwok (who did not give evidence), “discovered an opportunity to invest in land holdings on Lantau Island” and that Minloy subsequently purchased 46 lots, there was no evidence at all as to any steps taken by Minloy prior to the acquisition to ascertain whether or not anybody occupied the land.  Even then, there was no evidence that any approach had been made to Mr Lam to assert Minloy’s title against him.

92.  The SPA by which Minloy acquired the land was dated 19 December 1991.  It is apparent that Ms Law acknowledged that Minloy was aware of §10 of the SPA which provided:

“ [Barclays Bank plc] does not covenant to deliver vacant possession of the Land to [Minloy] on completion.”

That is a usual provision in an SPA arising from a mortgagee sale,and it is a clear warranty by the mortgagee that it is not responsible in respect of any adverse possession.  A provision such as that in an SPA is a plain signal to a purchaser that it is necessary for the purchaser to take careful precautions in respect of the occupation of the property.

93.  In fact, the evidence of another director, Albert Poon, indicates it was not until after the purchase was complete in December 1991, that in early 1992 that the directors of Minloy found that part of the lots in DD 331 were being used for an agricultural purpose by a farm in the name of Man Yuen. That evidence was confirmed by Helen Law who said that on two occasions in early 1992 when she took investors to inspect Minloy’s land holdings on Lantau they:

“ noticed that there was a farm in Cheung Sha DD 331 where Minloy held some land lots”.

94.  I am accordingly satisfied, that prior to its acquisition of the 46 lots Minloy had taken no steps at all to ascertain who was using the land, or for how long they had been using the land.  The evidence establishes that even after discovering the existence of Man Yuen Farm in early 1992, Minloy took no steps to exercise their rights against Mr Lam until June 1993.

The acknowledgement in respect of 17 lots

95.  The unchallenged evidence was that Helen Law and Denis Kwok met Mr Lam on Man Yuen farm on 24 June 1993.  Ms Law said that at first Mr Lam denied that he was using the lots, and that he was then given a letter from the company’s solicitor.  The letter was addressed to Mr Lam, and was in the following terms:

“ We act for Minloy Company Ltd, the registered owner of [Lots 130, 137 – 145, 154, 159 – 163, 165 and 166 in DD 331].

We are instructed that you have been occupying and using the [17 lots] without our client’s consent or permission. Your so doing constitutes trespass to our client’s land.

We are instructed to give you notice that unless you will within 3 days vacate and move away from the said land, our client will apply to court for an Order for possession against you without further notice and for damages.  You may also be liable to pay our client for the costs and legal proceedings.  In the meantime, our client reserves all his rights and remedies.”

96.  Helen Law said that after he was shown the letter Mr Lam was shown a copy of the SPA and that he then admitted that he was aware that the lots belonged to a third party.  A document in Chinese was then given to Mr Lam.  Mr Lam’s son was present time, and was able to read it to Mr Lam. Helen Law’s evidence was that Mr Lam then signed the document.  The document (“the acknowledgement”) was in the following terms:

“ To Minloy Ltd

I, Lam Sai Wan and my family now admit that we have been using 17 lots of agriculture land at Chang Sha, Lantau Island, Hong Kong (DD 331) of the Minloy Ltd (Lot Nos 130, 137, 138, 139, 140, 141, 142, 144, 145, 154, 159, 160, 161, 162, 163, 165, 166) for agriculture purposes since January 1992 till present (24^th June 1993). The aforesaid lots are all owned by Minloy Ltd.

I representing my whole family am now discussing with Minloy Ltd (which is the landlord of the aforesaid 17 lots of agriculture land) regarding the terms of renting these agriculture lands and will sign to confirm upon reaching any agreement.”

The document was signed by Mr Lam, contained his identity card number, and witnessed by his son S C Lam, and contained his identity card number.

97.  It is important to note that both the solicitor’s letter, and the document signed by Mr Lam and S C Lam referred not to 46 lots, but to 17 lots, specifically the 17 lots comprised in the lower area of the Occupied Area.

98.  Mr Lam said that Mr Kwok did not point out to him the 17 lots referred to in the acknowledgement.  He said that in 1993 he did not know the exact lot numbers of the various lots.  Mr Lam initially denied being given the letter or seeing the SPA.  He asserted that he did not know the content of the document and a copy was not left for him.  However Mr S C Lam identified Mr Lam’s signature and his own signature on the document.

99.  Mr S C Lam said that Mr Kwok said that if they did not sign the document legal action would be taken against them.  He said that he signed the document without reading the contents in detail because he was afraid.  He said that Mr Kwok took the document with them and said he would send an official tenancy agreement.

100.  I am satisfied that on 24 June 1993,  Mr Lam was given the letter and was shown those documents, and that he understood the content of the acknowledgement.

101.  The effect of an acknowledgement of the title to any land is that the limitation period starts to run afresh from the date of the acknowledgement:see section 23(1) LO which (so far as is relevant) provides:

“ Where there has accrued any right of action … to recover [any] land …, and—

(a) the person in possession of the land … acknowledges the title of the person to whom the right of action has accrued, …

the right shall be deemed to have accrued on and not before the date of the acknowledgement ….”

102.  Were it not for the fact that by virtue of his adverse possession commencing about 1959, the title to the 46 lots, held in 1991 by Caborca, when the 20 year limitation period had long expired, and Caborca’s title was extinguished, the acknowledgement would have required Mr Lam to establish 12 years adverse possession commencing in June 1993.

103.  Because the title had been extinguished the acknowledgement was meaningless, and of no value at all to Minloy.

The proposed lease arrangement in respect of 17 lots

104.  Helen Law said that on the day the acknowledgement was signed there was a discussion about a lease of the premises and that during the discussion Mr Lam gave the measurements of two buildings on the property.  She said that the board of Minloy had no immediate plans to develop the 17 lots and so long as Mr Lam acknowledged the company’s ownership of the title they were content for him to continue his farming business.

105.  Helen Law said that in July 1993, the next month, they went to Mr Lam to negotiate a lease for two years.  The dimensions of the buildings were required in order that the lease could provide for ex gratia compensation if the lease was terminated.  Helen Law then drafted a lease agreement for a period of two years at a rent of $3,000 per month in respect of the 17 lots. The document provided that a party could terminate the lease on three months’notice, and if the termination was within two years of the commencement of thelease, Mr Lam would receive compensation of $80,000 for the two buildings.

106.  Helen Law said that between July 1993 and sometime in 1998, she made three trips to see Mr Lam to get the lease signed but on each occasionMr Lam asserted that he did not have cash to pay the rent and asked to postpone signing the lease. 

107.  Helen Law said that because they did not wish to put Mr Lam under severe financial pressure or to make money from the lease they did not exert more pressure on him.  She said that they believed that since Mr Lam hadalready signed the acknowledgement, Minloy’s interest in the land was protected.

108.  She said that in subsequent visits to the property, after 1998, because they did not wish to put Mr Lam under pressure, the matter of the lease was not further mentioned.  The end result was that although I am satisfied that there were discussions concerning the lease, no lease was signed.

109.  By virtue of section 24(1) LO any acknowledgement of title must be in writing and signed by the person making the acknowledgement.  The lease not having been signed by Mr Lam, the discussions concerning the lease have no effect at all.

The 28 lots in the upper area, and Lot 160

110.  As I have set out, Minloy omitted to include Lot 160 and the 28 lots in the upper area in the acknowledgement signed by Mr Lam in July 1993.  There is no evidence at all from Minloy that in the discussions with Mr Lam these lots were ever mentioned.

111.  The evidence of Mr Albert Poon, a director of Minloy, was that in late 1992 he and other shareholders inspected the lots and met and discussed them with Mr Lam and his wife.  However in cross-examination by Mr Tsui he said:

“ Q You were aware that Man Yuen Farm occupied some lots after your purchase?

A I must declare that I am a passive investor. I don’t have any spare time, so I didn’t commit time to the project, I learn from others.

Q Mr Kwok and Ms Law repeat that to you?

A Just talk together.

Q They were managers?

A Yes. They have time.

Q Important things concerning the land were discussed?

A Yes, in board meetings.

Q You discovered that lots were occupied after the purchase?

A Yes; I was told.

Q Told by Ms law and Mr Kwok?

A Yes.”

112.  Having regard to that evidence I am unable to place any weight at all upon Mr Poon’s suggestion that he personally inspected the lots and met and discussed them with Mr Lam and his wife.  The evidence of Helen Law and Mr Kwok was confined to the 17 lots referred to in the acknowledgement.

113.  On the evidence, it was not until about August or September 2013, that any approach was made to Mr Lam in which an assertion of title was madeby Minloy in respect of the 28 lots in the upper area and Lot 160.  At that time Mr Yip Wai Man, a consultant appointed by Minloy approached Mr Lam and told him of Minloy’s intention to develop the lands located at Man Yuen Farm.  That approach and subsequent contacts with Mr Lam through December 2013 resulted in the issue of the writ by Mr Lam on 7 January 2014.

114.  However, the title to the whole 46 lots having been extinguished by Mr Lam’s continued adverse possession, at the earliest by 1980, and at the latest prior to June 1993, before the acknowledgement was signed, any steps taken by Mr Yip in relation to the 28 lots in the upper area and Lot 160 were simply of no effect at all.

Disposal

115.  For the foregoing reasons I am satisfied that, at the latest, by December 1991, and probably as early as 1980, Mr Lam had been in adverse possession of the lots within the occupied area for in excess of 20 years, and that accordingly the paper title to those lots was extinguished.

116.  In those circumstances Mr Lam is entitled to the following declarations and orders:

(a)   Lam Sai Wan has been in adverse possession of Lots 86RP, 87, 88, 90, 92, 94, 95, 96, 97, 98, 99, 101, 102, 103, 105, 106, 109, 110, 111, 112, 115, 116, 117, 118, 119, 120, 123, 124, 130, 135, 137, 138, 139, 140, 141, 142, 145, 154, 160, 161, 162, 163, 165, and 166 in DD 331 (“the said lots”) for a continuous period of over 20 years immediately prior to June 1993.

(b)   That by virtue of the provisions of the Limitation Ordinance Cap 347, any rights or interests of Minloy, or of its successor in title or any person deriving title to the said lots from Minloy or itssuccessor in title in respect of the said lots have been extinguished.

(c)   That Lam Sai Wan has acquired possessory title of the said lots and that he is entitled to be registered as owner of the said lots in the land registry.

(d)   The injunction sought by Minloy by way of counterclaim is refused.

(e)   Minloy’s counterclaim for rent in arrears in the sum of $3,000 per annum is dismissed.

(f)   Minloy’s counterclaim for rent and/or mesne profits is dismissed.

(g)   Minloy’s counterclaim for damages for trespass is dismissed.

Costs

117.  There will be an order nisi, to be made absolute at the expiration of 14 days that Mr Lam will have the costs of the claim and counterclaim, to be taxed if not agreed.

Annexure