CHAN WING GO v. THE INCORPORATED OWNERS OF WING HONG FACTORY BUILDING

DCCJ1736/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1736 OF 2014

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DECISION

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1.  This is the defendant’s application under Order 13 rule 9 of the Rules of District Court to set aside the judgment (“the Default Judgment”) dated 6 October 2014 entered against it. The grounds that the defendant relies on are that (a) it was an irregular judgment as the Writ of Summons was not properly served on it and (b) it has a meritorious defence.

BACKGROUND

2.  In order to understand the defendant’s grounds, it is necessary to set out the background leading to the Default Judgment.

3.  By the present action, the plaintiff claims a declaratory relief of possessory title to two parts of common area of Wing Hong Factory Building, Nos 777-783 Yu Chau West Street, Kowloon, Hong Kong (“the Building”).  The two parts were/are enclosed with roller shutter gates to form two fully enclosed stores (‘the Stores”) by the plaintiff’s predecessor in or about 1961.

4.  The plaintiff has been in adverse possession of the Stores since or about August 1998.  He has been occupying the Stores exclusively and continuously, through his tenant, without the consent, approval and/or authority of the defendant and/or its agent.  The Stores were kept locked at all times and the keys were kept by the plaintiff and his tenants. The plaintiff has never paid any rent nor management fee to the defendant.

5.  In the proceedings, the defendant did not give the notice of intention to defend nor file the defence. The plaintiff proceeded to obtain the Default Judgment.

6.  On 6 October 2014, I granted the declaration sought by the plaintiff in the Re-amended Statement of Claim in the Default Judgment.

7.  After hearing counsel, I dismiss the setting aside application with costs.  These are my reasons.

REGULAR JUDGMENT

8.  According to the evidence filed by the plaintiff, the service of the writ and all the related legal documents was performed by Lam Lai Kim (“Lam”), a clerk of the solicitors for the plaintiff.  It can be summarized as follows:-

No.	Date	Document	Mode
1	9/5/14	Writ of summons	By registered post
2	23/7/14	Summons to amend SOC	By hand / chopped by caretaker
3	8/8/14	Amended SOC	Ditto
4	12/8/14	Summons to enter judgment	Ditto
5	13/9/14	Summons to re-amend SOC	Ditto
6	19/9/14	Re-amended SOC	Ditto
7	29/9/14	Sealed order of 18/9/14	By ordinary post

9.  Lam deposed that the Writ of Summons together with the Statement of Claim and Acknowledgement of service were sent by registered post in a sealed envelope duly prepaid and addressed at “Nos 777-783 Yu Chao West Street, Kowloon, Hong Kong” (“Registered Office”).  The Registered Office is shown on the Index of the Owners’ Corporations kept by the Land Registry under Building and Management Ordinance (“BMO”)  (Cap 344) s. 12. 

10.  The registered post has not been returned to the plaintiff undelivered.

11.  For the subsequent legal documents including the Re-amended Statement of Claim, Lam deposed that those had been brought to the Registered Office on the dates as indicated in paragraph 8 above under service no 2 - 6.  He said there are two management offices (“the Office”) in the Building.  One is situated at the lift lobby in Block A and B.  The other one is at  Block C and D.  The name of the defendant in Chinese which reads “永康工業大廈 業主立案法團” is written at the top part of the Office.  Lam approached the Office and physically handed the legal documents to a caretaker therein. The caretaker received the legal documents on behalf of the defendant.  He put a chop on a duplicate cover letter acting as a receipt and returned it to Lam.  

12.  On the other hand, the defendant relies on the affirmation of Chau Chi Wai (“Chau”), who is the chairman of the Management Committee of the defendant, to contend that the default judgment was irregular. Chau deposed that the defendant had not received the registered post of 9 May 2014 and all the legal documents were not duly served.

13.  In his affirmation dated 19 December 2014, Chau accepted that there is Chinese name of the defendant at the top part of the Office.  However, it is not the office of the defendant. Chau claimed that the defendant does not have a physical office for carrying out its function.  The Management Committee of the defendant usually has its meetings in the offices of his company in Workshop D on the 3^rd floor of the Building when he was/is the chairman since 2011. The address for the defendant is given as the entire building during its incorporation and registration with the Home Affairs Department as it was custom.  There has never been a physical and separate office for the defendant.

14.  Chau deposed that the office is operated by Sky Pacific Property Consultant Limited (“Sky Pacific”) appointed by the defendant. Sky Pacific has been operating as the building manager of the Building since or about August 2000. Caretakers are employed by Sky Pacific in the daily running and management of the Building. 

15.  Chau further stated that the caretakers would assist the tenants and owners in the Building to receive letters or small parcels for them if the delivery men or the postman cannot deliver the same to the individual addresses. The caretaker would stamp on the receipt a chop bearing the wordings of “Wing Hong Factory Building Management Offices, Sky Pacific Property Consultants Limited”.  As a matter of practice, the caretakers would leave those letters on the glass panel or on the desks inside the Office so that the addressees, tenants or owners may pick them up or by reaching through the small window located next to the door of the Office. If a letter intended for the defendant remains uncollected for a few days, an arrangement will be made to forward the letter to the head office of Sky Pacific in Hung Hom for further handling.

16.  In the present case, Chau claimed that he has no knowledge as to why the registered post under service no. 1 (see para. 8 above) was not received by the defendant.  Likewise, the legal documents delivered by hand on service no. 2 to 6 above did not come into the possession and knowledge of the defendant. He believes that these were either taken away by parties mistakenly or were wrongly delivered between the Building and the head office of Sky Pacific.

17.  Chau deposed that the defendant was not aware of the present proceedings against it until in an Extraordinary General Meeting of the defendant held on 15 October 2014. The representative of Urban Renewal Authority (“URA”), which has purchased several units in the Building, questioned about a judgment against the defendant regarding title of certain parts of the common areas of the Building has been extinguished in favour of the plaintiff.  Then the defendant took prompt action to engage lawyers for the present setting aside application.

The Writ

18.  Parties are in agreement that an owners’ incorporation is in law a body corporate (See Building Management Ordinance, Cap 344, s.8 (2) (a)). 

19.  A writ for service on a defendant within the jurisdiction may be served on him by sending a copy of the writ by registered post to the defendant at his usual or last known address: O.10 r.1(2). 

20.  Where a writ is served on a body corporate in accordance with Order 10, rule 1(2), that rule shall have effect as if for the reference to the usual or last known address of the defendant there were substituted a reference to the registered or principal office of the body corporate: O.65 r. 3(2).

21.  The real question is therefore whether the Registered Office is the usual or last known address of the defendant under O. 65 r 3.

22.  Under BMO s.13, a certificate of registration issued by the Land Registry is conclusive evidence of the incorporation.  There is no reason why the address and information as registered on the Index are not afforded similar treatment because had there been any change of the address it must have been reported to the Land Registry: BMO, s.12(3).  No such change of address has been effected at the time of service.

23.  Similarly where service is effected against a limited company under Companies Ordinance (Cap 622) (“CO”) s.827, the address as reported in the Companies Registry is to be regarded as the effective address: CO, section 658(1) and changes must be reported to the Companies Registry: CO, s.658(3).

24.  In any event, in ordinary circumstances, a plaintiff is entitled to acquire knowledge of a defendant’s address by any reasonable means known to him: Law Kwok Hung v Tse Ping Man [1999] 4 HKC 397, 404B-C.  Reliance on the Land Registry must be one of the reasonable means.

25.  The plaintiff is entitled to ascertain from whatever available source that address can be found and delivered: see The Hong Kong Mortgage Corporation Ltd v. Ching Kit Yu & anor HCMP2226/2002 (unreported, 15.4.2003) at §§10-13.

26.  In my view, it is reasonable for the plaintiff or his solicitors to regard the Registered Office as the defendant's usual and last known address.

27.  Under Interpretation and General Clauses Ordinance (Cap 1) (“IGCO”)section 8 reads:-

“Where any Ordinance authorizes or requires any documents to be served or any notice to be given […] by registered post […] the service or notice shall be deemed to be effected by properly addressing, pre-paying the postage thereon and dispatching it by post or by registered post, as the case may be, to the last known postal address of the person to be served or given notice, and, unless the contrary is proved, such service or notice shall be deemed to have been effected at the time at which the document or notice would be delivered in the ordinary course of post.” (emphasis added)

28.  As mentioned above, Lam sent a sealed copy of the Writ of Summons by registered post to the Registered Office and that had never been returned.  I have no difficulty in accepting this part of Lam’s evidence.  It was supported by a posting certificate issued by the Post Office dated 9 May 2014.  Relying on s. 8 of IGCO, I find that the plaintiff has shown that the writ was prima facie served on the defendant’s usual or last known address in accordance with Order 10 rule 1(2)(b).

29.  Mr Wong, counsel for the defendant, refers to Wei Bingqing v Xie Diangrong HCA 2653/2003 in which Chung J said that when a defendant deposes that he has not received the writ through the post, the court has little option but to believe this, save when there is sufficient material to cast doubt upon the defendant’s credibility to enable the court to disbelieve him.  This is a matter of evidence dependent on the circumstances of the case.

30.  The words “unless the contrary is shown” in Order 10 rule 1(3)(a) of the RDC show that it is open to a defendant to demonstrate that he did not have actual notice of the writ: Chu Kam Lun v Yap Lisa Susanto [1999] 3 HKC 378, Kwan Kam Wah v Chan Wai Ming [2000] 2 HKC 378, Cosec Nominees Ltd and anor v Lau Hon Ming Alan [2001] 2 HKLRD 581.

31.  In  Cheng Chi Lun v Ng Lai Ming Juliana HCA1611/2006, (unreported, 14/2/ 2007)  Mr Recorder Fok SCheld that:-

“The Court of Appeal has, however, made clear that this does not mean that the court must accept a defendant’s assertion no matter how improbable: Bank of China (Hong Kong) Lts v Cheung King Fung, Francis and Anor, unrep, CACV 66 of 2005, 5 July 2005 at § 33 per Tang JA. A defendant is required to provide convincing evidence; how much evidence is required must depend on the circumstances of the particular case” ibid. §34. The relevant question is whether there is sufficient evidence to cast doubt on the Defendant’s credibility such that the court should not accept the bare allegation that she has not received the writ.”

32.  It is for the defendant to explain by “convincing evidence” why the Writ of Summons was not brought to his knowledge.  The court is not bound to accept a bare assertion of no knowledge. The court need to look at the evidence of the defendant if its allegation is probable.

33.  Chau deposed that he has no knowledge as to why the registered post was not received by the defendant.  Similar situations arise for all the legal documents delivered by hand. The defendant seeks to blame that the documents served on it were either taken away by parties mistakenly or otherwise or were wrongly delivered between the building and the head office of Sky Pacific.

34.  Obviously, the above allegations are all Chau’s own speculation.  There is no evidence before the court that he had caused an investigation into the matters.  The defendant has not advanced any explanation as to why the caretaker or any of the representatives from Sky Pacific did not make an affirmation explaining what happened after the service of no 1 to 7 above. Without which, the court has no idea of how the caretaker handled those legal documents after receipt.  The court is also kept in the dark as to how the staffs in Sky Pacific dealt with the unclaimed mails after they were forwarded to them.  I find that the defendant’s assertion is unsubstantiated.  It is no defence to barely say that the defendant had not received the writ against the fact that registered post was properly sent.

35.  Further, I note that Sky Pacific has been serving the defendant since or about 2000.  It would appear that the performance must have been to the satisfaction of the defendant or it would not have been engaging Sky Pacific’s service for the past 15 years.  Chau’s allegation of non-receipt of the Writ of Summons and all the other legal documents despite their apparent delivery to the Registered Office does not sit well with this background. Indeed, careful reading of Chau’s affirmation shows that he was silent as to whether he had made enquiry with the caretaker and the representative from Sky Pacific.

36.  In the present proceedings, the plaintiff had on seven occasions served the documents including the Writ of Summons to the defendant supported with proof of service.  In my view, it is inconceivable that the defendant did not receive any of these legal documents on all seven occasions. I find it to be too coincidental to be true and reasonably possible. It casts doubts on Chau’s credibility.

37.  Chau deposed that it has instructed solicitors to apply to set aside the Default Judgment shortly after having knowledge from URA.  Mr Wong for the defendant submits that its assertions are to be believed.  Being the incorporated owners, the defendant is not a commercial entity with a profit orientation.  It would not do things to evade its liabilities or maximize its earnings.  Actually the defendant would stand to lose by not making an acknowledgement of service.  There is no benefit in not facing the suit and filing a defence.

38.  I am not persuaded by this submission that this amounts to convincing evidence of proof of no knowledge of the Writ.    I do not wish to speculate why the defendant chose not to appear as there may well be many reasons.  For the present purpose, I do not find the defendant had adduced cogent and convincing evidence to establish that it had not received the writ.

39.  For these reasons aforesaid, I find the service of the writ and legal documents including the Re-Amended Statement of Claim are brought to the defendant’s notice.  I find that the Default Judgment was a regular judgment.

All the Other Legal Documents not duly served

40.  It is undisputed and non-disputable that all the other legal documents for service number 2 to 6 had been physically handed by Lam to the Office. Lam physically handed these documents to the Office.  The caretaker therein acknowledged receipt of the same by putting a chop of the management office on the cover letter.  Lam took back each and every time and produced them as evidence.

41.  The defendant contends that all the other legal documents including the Re-amended Statement of Claim were not duly served by the plaintiff.

42.  Mr Wong, counsel for the defendant, relies on P& L Concepts Limited v Planners & Designers and Associates Limited DCCJ 2310/2002 (17.10.2002), where DDJ Wilson Chan (as he then was) held at §§ 9 to 16 that giving the documents to a person at the registered office without being able to provide the name of the person or the position that person occupies, it cannot be equated to leaving the same at the registered office.  Therefore there has not been any proper service under s.356 (then) of the Companies Ordinance.

43.  Mr Ng, counsel for the plaintiff, replies that reliance on this case is misplaced both in law and facts. In the instant case, there is evidence from the defendant suggesting that any documents delivered to the mail receipt system would remain in the premises for a few days.  This is in stark contrast with P&L Concepts wherein there was no evidence at all as to what happened after the stranger took away the writ.

44.  Mr Ng emphasizes that the case of P&L Concepts concerns the service of a writ under the Companies Ordinance. The court in that case held that giving the writ to a person in and of itself would not constitute “leaving at” under the relevant statute. Mr Ng contends that the test is different in relation to service of document in the present case. 

45.  O. 65 r .3(1) of RDC reads: -

“Personal service of a document on a body corporate may, in cases for which provision is not otherwise made by any written law, be effected by serving it in accordance with rule 2 on the chairman or president of the body, or the clerk, secretary, treasurer or other similar officer thereof.” (emphasis added)

46.  Mr Ng submits that O.65 r.3(1) is superseded by BMO  s.16(a) which provides that :-

“any notice, order or other document which relates to any of the common parts of the building may be served upon the corporation at its registered office”. (emphasis added).

47.  Mr Ng submits, which I accept, that the requirement that the document be served to certain officers has been replaced with a requirement that it be served to its office. It is the location that matters.

48.  Mr Ng submits correctly that personal service in respect of an owners’ incorporation is effected by leaving a copy of the document “upon the corporation at its registered office”. All the other legal documents had been brought to the Registered Office of the defendant. Therefore they had been duly served.

49.  Chau says the address for the defendant is given as the entire building and not the Office situated at the lobby of the Building. 

50.  It is Chau’s evidence that he knew and accepted that the received documents would be left within the Office for collection.  In my view, the defendant has told the world its Registered Office and installed a mail receipt system in the Office.  There is even a plate bearing the Chinese name of the defendant as “永康工業大廈 業主立案法團” outside the Office to confirm this postion. It would defy logic to hold the Office not being office for the defendant.  It should not be permitted now to deny the arrangement. 

51.  Mr Wong for the defendant submits that even taking Lam’s evidence to the highest, the service of the Re-amended Statement of Claim was on an agent of the defendant in the management office.  He refers to  Cosec Nominees Ltd (supra) to argue that even solicitors for the defendant there had knowledge of the writ, it could not be imputed to the defendant that he must have knowledge when his solicitors wrote to the plaintiff that they did not have instruction to accept service (p 589 D to 590 A).

52.  Mr Wong further submits that the caretakers are employees of Sky Pacific and both are external to the defendant. The chop stamped on the legal documents made no reference to the defendant at all.

53.  The real issue of  Cosec Nominees Ltd (at 589 G- J) stemmed from the fact that the defendant was out of Hong Kong when the writ was served.  The solicitors acting for that defendant failed to advise the latter of the issue of a writ and to obtain instruction.  Poon J found that the defendant had not been made aware of the existence of the writ by his solicitors.  The default judgment was so irregular.

54.  I find that the case of Cosec Nominees Ltd can be distinguished.  In the instant case, I find the service was effective. I do not accept that the defendant had no knowledge of the writ and the other legal documents.  I refer to the analysis in paragraphs 34-39 above.   I find the surrounding circumstances were not sufficient to establish the bona fides of the defendant’s assertion that it had not received any of the legal documents including the writ.   

55.  In my view, the chop by the caretaker signifies that the documents were served “upon the Registered Office” of the defendant as part of a standing measures implemented or caused to be implemented by the defendant itself.  It provides the evidence of serving upon the corporation at its registered office under s.16 of the BMO.

56.  As such, I find all the legal documents were duly served.  I find that the legal documents were brought to the defendant’s notice.

NO MERITS SHOWN

57.  In order to successfully set aside the default judgment, the defendant has burden to demonstrate that it had a defence on the merits which has a real prospect of success or carries with it some degree of conviction: Young Bing Ching (deceased) v Chow Yung Fong & Another [2002] 3 HKLRD 394 at  398G-402A.

58.  Chau deposed that he had caused investigations including a site inspection. The Stores are originally part of the lift lobbies of the Building and a wall was built in the middle of the lobby as seen from the building plans.  The Stores were indeed enclosed with metal roller shutters in the places where the wall ends. They are the common parts of the Building. The roller shutters of the Stores are usually closed and they appear to be used as storage space.

59.  Chau urged in his affirmation to set aside the Default Judgement so that the defendant can further investigate, to request for further and better particulars, to file a defence and for the plaintiff to prove its case.

Common ground that there is no defence at all

60.  The defendant has neither pleaded a positive defence nor exhibited any draft defence to that effect. 

61.  Chau even confirmed and supported the plaintiff’s case that the Stores were/are enclosed with metal roller shutters. He did not make any denial of the plaintiff’s continuous exclusive possession of the Stores with intention to possess since 1998. 

62.  In my view, the defendant obviously failed to discharge the burden as laid down in Young Bing Ching (supra).  There is simply no point for the court in the exercise of its discretion under O.13 r.9 to set aside the judgment.

63.  This should put the matters to an end.  It is not necessary for the court to consider other arguments put forward by the defendant that the judgment should be set aside.   However, given that the issues have been fully argued before me, I go on to consider the same for completeness.

(i) Identity of the Plaintiff’s Tenant(s) not Pleaded

64.  The plaintiff has pleaded that his predecessor is/was at all material times neither an owner nor a tenant of the Building.

65.  As reflected in the land search record obtained by the plaintiff’s solicitor, the plaintiff has never been a co-owner  of the Building.   Therefore the plaintiff is not a party to the DMC and hence not bound by the covenants relating to the common parts of the Building.

66.  Mr Wong for the defendant accepts that a squatter could dispossess against the IO for the common parts of the building for the requisite time and intention to possess.  He refers to Wong King Lim v IO of Peony House [2013] 4 HKC 295 where  Lam JA held (at p. 309G) held that :

“36. …I confine my analysis to a squatter who has never been an owner or tenant of a unit in the building. In other words, the squatter is a complete stranger and does not derive his title from a co-owner of the building.[…]”

67.  However, Mr Wong points out that the identity of the purported tenant(s) is not pleaded in the Re-amended Statement of Claim. The omission to plead the material facts relating to the identity of the tenants and their relevant time periods, as submitted by Mr Wong, is fatal to the plaintiff’s case. As explained in Wong King Lim (supra), Mr Wong emphasizes that aco-owner cannot establish adverse possession of a common part of building governed by the DMC.  He argues that adverse possession of the Stores is possible only when both the squatter-landlord and the squatter-tenants are strangers, not being a party to the DMC.  He submits that why it would be legal that the co-owner by hiding behind a stranger and claiming to be a tenant of that stranger achieve what he would otherwise be unable to achieve. Mr Wong argues that the tenants, who possessed the Stores for the plaintiff, could be an owner, tenant of an owner or a licensee of the Building.  There is a possibility that the tenants were not strangers or squatters.  Therefore their possession, even if exclusive, may not be adverse. 

68.  However, Mr Wong is not able to cite any authority to support such a proposition.

69.  It is trite that adverse possession can be made through agents including tenants. In Cheung Yat Fuk v Tang Tak Hong (2004) 7 HKCFAR 70, Bokhary PJ held at §19 that:

“When a squatter grants a tenancy and receives rent, he is acting inconsistently with the title of the paper owner, and that puts the squatter in adverse possession of the land through his tenant. The squatter can in that way acquire a possessory title to the land through his tenant’s occupation of the land.”

70.  Mr Ng, counsel for the plaintiff, refers to  Tang Kwan Tai  v Tang Koon Lam & ors [2002] 3 HKLRD 762 where the Court of Appeal held that:-

“14. While in the context of a tenancy, the squatter “tenant” may have exclusive possession, it does not mean the squatter “landlord” does not have possession for the purposes of the Limitation Ordinance. This is because the squatter “landlord’s” possession can be by way of his receipt of rent. In A. G. Securities v. Vaughan and Others[1990] 1 A.C. 417, Lord Templeman expressed the view that exclusive possession means either exclusive occupation or receipt of rents and profits. In my view, while the plaintiff's tenant during the validity of the tenancy has exclusive occupation of the land, nonetheless, the plaintiff still exercises dominion over the land by the receipt of rent. The possession of the plaintiff is through his tenant. In fact in Hayward v. Chaloner [1968] 1 Q.B. 107, Lord Denning MR (expressing a dissenting opinion on the facts that the squatters had not acquired a possessory title) had alluded to this when he said :

“ In my opinion "possession" there means actual possession of the land itself by the person, or his servants or agents. If a man lets the land, he ceases to be in possession, and his tenant takes possession. In such case "possession" by the lessor means actual receipt by him of the rents payable out of the land: see section 31(1) and (5) of the Act of 1939. If he does not receive the rents, he is not in possession."”(emphasis added)

71.  Relying on the above principles laid down in Cheung Yat Fuk  and Tang Kwan Tai (above), Mr Ng submits that whatever capacity that a tenant may have had before becoming a tenant of the plaintiff, he or she would only be dispossessing the defendant’s title for and on behalf of the plaintiff.  As held in Opanubi v Daley [2002] EWHC 1596 (Ch) at §15, there is a general principle that a tenant’s possession of land is treated for limitation purposes as that of the landlord. 

72.  Mr Ng submits that the defendant has been arguing on a wrong footing to look at the ‘adverse possession’ solely from the perspective of the tenant.  The defendant focuses narrowly on the tenant but ignores the fact that it is the leasing of the land by the plaintiff as the landlord and receipt of rent by the landlord that is material here. 

73.  I agree with Mr Ng’s submission in its entirety.  I believe that the defendant has missed the point that the plaintiff as a squatter was in possession although the Stores were let by him to his tenant. The rationale of the rule is that the adverse possessor, the squatter landlord, obtain factual possession by dealing with the land inconsistent with the title of the paper owner including by way of receipt of rent.  The possession here is by the squatter landlord, the plaintiff. The plaintiff can acquire a possessory title to the Stores through his tenants’ occupation. The grant of a tenancy over the Stores is just as much an act of ownership of the land.  I find that the omission to plead the identity and the occupancy time periods of the tenants is irrelevant.

74.  Analyzing the case law as presented by the plaintiff, I reject the arguments raised by the defendant. I find that the “pleading point” is without merit.

75.  Even if I were wrong on the above ruling and that the status of the tenants is relevant,  this ground would also be failed in any event.  The defendant would be expected at the minimal to provide some evidence as to the status of the tenants of the plaintiff. However, Chau’s affirmation are lacking in particulars and unsubstantiated by any independent evidence.  As such, the court cannot form a provisional view as to the probable outcome of the action as required for setting aside: see Hong Kong Civil Procedure 2015 at §13/9/14. I find that this shows that the defendant has utterly failed its duty to show a meritorious defence.

(ii) Doctrine of Encroachment

76.  The doctrine of encroachment has been succinctly defined in Adverse Possession (2^nd  ed., 2011) at §25-01 as follows: -

“Sometimes the tenant under a lease take possession of land belonging to the landlord, but not included in the demise, by virtue of his possession of the demised premises. If the tenant does this, that land is presumed to be an addition to the land demised to the tenant, so that it become subject to the terms of the lease and must therefore be given up to the landlord when it ends, unless the tenant’s conduct shows that he occupied the land for his own benefits and not as part of the demised premises.”

77.  When the presumption applies, then as between landlord and tenant, the land encroached on by the tenant is treated as part of the demised premises of the landlord for all purposes: see Adverse Possession  at §25-03.

78.  In relation to the doctrine of encroachment, Mr Ho for the defendant submits that a tenant (of a co-owner in the Building) even if he is successful in encroaching land of a third person (not his landlord’s), the benefit may accrue to the landlord.

79.  Mr Ho submits that the Stores located in the ground floor lift lobbies are storage facilities which could make the most economic sense to an existing co-owner or tenant in the Building.  The likelihood of a concurrent co-owner/tenant situation may therefore not be low.

80.  I do not find the doctrine of encroachment can assist the defendant.  The plaintiff has all along been exercising dominion over the Stores by receipt of rent from his tenants.  Here I repeat my findings at paragraphs 69-73 above.  I find that the defendant has overlooked the fact of who is in possession for the purposes of adverse possession: see Tang Kwan Tai (supra) where Cheung JA held that:-  

“22. I do not need to go into a detailed discussion of the principle. This is a principle which is aimed at avoiding questions of dispute which the tenant may raise when he had encroached on other's land. It does not specifically analyze who is in possession for the purposes of adverse possession.”(emphasis added)

(iii) No Delay

81.  Mr Ho for the defendant submits that there was no delay on the part of the defendant to apply for the setting aside.  The time lapsed between coming into knowledge and the application is about 1 month and 4 days.  From the default judgment to the present application is 2 months and 13 days.

82.  In Shocked v Goldschmidt [1998] 1 All ER 372, the English Court of Appeal emphasized that the approach in default judgment is to focus primarily on the merits of the defence.  At p.379, Leggatt LJ said :-

“These cases relating to default judgments are authority for the proposition that when considering whether to set aside a default judgment, the question of whether there is a defence on the merits is the dominant feature to be weighed against the applicant’s explanation both for the default and for any delay, as well as against prejudice to the other party.” (emphasis added)

83.  The defendant has failed to demonstrate it had a meritorious defence with real prospect of success.  It will be determinative of the application to set aside.   Under such circumstances, the ground of delay plays an insignificant part in the weighing process.

(iv)Time of Enclosure by Plaintiff’s Predecessor Being Inaccurate

84.  Mr Wong for the defendant submits that it is pleaded under para. 2.4 of the Re-amended Statement of Claim that the plaintiff’s predecessor enclosed the Stores in or about 1961.  However the date of the DMC was 3 September1962 and the first sale of a unit in the building was on 4 September 1963.  It would appear that the enclosure by the predecessor took place while the building was being built.  At that time, there was only the developer Lin Hing Estate Limited in ownership of the building.

85.  Mr Ng for the plaintiff replies that the difference is immaterial since limitation period applicable at best is 20 years. The minute difference between the pleadings and the DMC/date of sale has no bearing to any meritorious defence as the evidence stands.

86.  I agree with the plaintiff’s submission.  In any event, even ignoring the successive possession by the predecessor, the continuous exclusive possession by the plaintiff since 1998 would suffice to extinguish the title of the defendant.

CONCLUSION

87.  For the reasons aforesaid, the defendant fails to establish that the Default Judgment was an irregular one and that there is any meritorious defence.  I dismiss the summons with costs.

88.  I make an order nisi that the defendant shall pay the plaintiff’s costs of this application, to be taxed if not agreed, with certificate for counsel.  The order will be made absolute 14 days from the date of this decision.