CIVIC LTD v. 余綺妙 AND OTHERS

HCA 225/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 225 OF 2011

________________________

________________________

I.  LAND

1. Since May 2008, the plaintiff was/is the registered owner of the land situated at and known as ALL THAT piece or parcel of ground known and registered at the Land Registry as Lot No 2061 in Demarcation District No 104 (“DD104”) Together with the messuages erections and buildings thereon (“Land”).  The Land was an Old Schedule Agricultural Lot registered with an area of 0.09ac under the relevant Block Crown Lease.

2. At all material times, a two-storey brick house[1] (“Hon House”) was erected on the Land with an open area in front of the house.  Its address used to be House No 60, Fuk Tin Lane, San Tin Road, San Wai Tsuen (“Village”), Yuen Long, New Territories, but since the end of 1961 it was changed to House No 61.  There was also a smaller one-storey building with an open-sided structure erected between such building and Hon House. There was dense vegetation on the eastern and southern side.

II.  PARTIES

3. The present action concerned two families, ie the 黃/謝 (Wong/ Dare) family and the 謝 (Tse) family, going back to the 1930s.  The Wong/Dare family tree started with黃禮漢 (Wong Lai Hon) also known as 謝滿 (Moon Dare) (“Wong Snr”) and his wife 謝余娣 (Yee Hai Dare or Yee Dare or Yee Shee Dare) (“Yee”).  Their son was 黃啓明 (Wong Kai Ming) also known as 謝黃啓明 (Kai Ming Wong Dare) or 謝啓明 (Kai Ming Dare) (“Wong Jnr”).  In 1946, Wong Jnr married李金英 (Rose Lee Dare or Rose Dare) (“Rose”) in the United States.  They have a daughter Yolanda Wong Lum also known as Yolanda Wong Dare (“Yolanda”) and a son Earnest Wong Dare (“Earnest”).  Wong Snr, Yee and Wong Jnr had passed away.

4. The Tse family tree started with the 1^st defendant 余綺妙 (Yu Yee Miu or Yu Yi Miu) (“Madam Yu”) and her husband 謝福祿 (Tse Fuk Luk or Tse Fook Lok) (“Mr Tse”).  Madam Yu revealed under cross- examination that Mr Tse was also known as 黃國強 (Wong Kwok Keung). Mr Tse told the villagers at the Village (“Villagers”) he had two names, so some Villagers called him Wong Kwok Keung and some called him Tse Fuk Luk.  Likewise, some Villagers addressed Madam Yu as Mrs Tse and others called her Mrs Wong or 強嫂 (Auntie Keung). Mr Tse and Madam Yu have six sons, the 4^th defendant 謝民富 (Tse Man Fu) (“1^st Son”), 謝民兆 (“2^nd Son”), 謝民康 (“3^rd Son”), 謝民健 (“4^th Son”), 謝民偉 (“5^th Son”) and the 3^rd defendant 謝民裕 (Tse Man Yu) (“6^th Son”). Madam Yu’s third sister 余綺夢 (“Yu Sister”) was married to 黃進 (“Mr Wong”).  Mr Tse, Yu Sister and Mr Wong had passed away.

III. PAPER TITLE

5. The original owner of the Land was Tang Lai Pan as trustee for Tang Kwong U Tong.  In 1917, Tang Yuan Hing and Tang Tim Hing were appointed as trustees for Tang Kwong U Tong in place of Tang Lai Pan deceased.  On 22 March 1922, further trustees were appointed for Tang Kwong U Tong in place of Tang Yuan Hing deceased.  On 16 September 1927, further trustees were appointed for Tang Kwong U Tong in place of Tang Tim Hing deceased.

6. On 22 November 1930, Tang Kwong U Tong sold the Land and various other lots in DD104 to Wong Tsun Tsoi.  On/about 25 September 1931, Wong Tsun Tsoi sold the Land and Lot 2061 of DD 104 to Wong Snr, 周道輝 (Chau To Fai or Chow To Fai) also known as 周金悅 (Chow Kam Yut), and 林祝平 (Lam Chuk Ping or Chuk Ping Lam or Den Lim or Lim Den or Den Lim Chok Ping) in joint names.  The various aliases of the three co-owners of the legal title to the Land and their descendants[2] can be found in various title documents registered at the Land Registry.

7. In 1956, Wong Snr passed away in San Francisco, United States.  On/about 1 May 1990, ⅓ of the legal title of the Land registered in the name of Lam Chuk Ping passed to and was registered in the name of William Yeung Wo Lim (or William Lim) as executor of the estate of Lam Chuk Ping deceased.  On/about 7 June 1990, ⅓ of the legal title of the Land registered in the name of Chau To Fai passed to and was registered in the name of Kenneth Kwok Sui Leung as the executor of the estate of Chau To Fai deceased.  On/about 21 September 1992, Rose was granted letters of administration to administer the estate of Wong Snr deceased (“Wong Snr LA”), and ⅓ of the legal title of the Land registered in the name of Wong Snr passed to and was registered in her name as administratrix of the estate of Wong Snr deceased.  On/about 20 January 1993, ⅓ of the legal title of the Land was vested in Wong Jnr.

8. In 1997 and 1998, Wong Jnr and Yee respectively passed away in San Francisco.  On/about 27 May 1999, Rose was granted letters of administration to administer the estate of Wong Jnr deceased (“Wong Jnr LA”), and ⅓ of the legal title of the Land registered in the name of Wong Jnr passed to and was registered in the name of Rose as administratrix of the estate of Wong Jnr deceased.  On/about 17 November 2000, she assigned ⅓ of the legal title of the Land registered in the name of Wong Jnr deceased to Yolanda and Earnest as tenants-in-common in equal shares.

9. On/about 6 March 2003, ⅓ of the legal title of the Land registered in the name of William Yeung Wo Lim as executor of the estate of Lam Chuk Ping deceased was assented to and registered in the name of Mar Se Lim (or Mah Shee Lim).  On/about 6 March 2003, ⅓ of the legal title of the Land registered in the name of Mar Se Lim was assigned to William Yeung Wo Lim, Jason Thomas Lim and Jeanette Diane Lim as joint tenants.

10. By an agreement for sale and purchase dated 10 February 2008 (“SP Agreement”), (a) Kenneth Kwok Sui Leung as executor of the estate of Kam Yut Chow (or To Fai Chow or To Fai Chau) deceased, (b) Yolanda and Earnest, and (c) William Lim (or William Yeung Wo Lim), Jason Thomas Lim and Jeanette Diane Lim (collectively, “Vendors”) sold the Land to the plaintiff for the price of $2,000,000.  By an assignment dated 9 May 2008 (“Assignment”), the Vendors assigned the legal and beneficial interest ofthe Land to the plaintiff.

IV. PROCEDURAL HISTORY

11. The plaintiff claimed that at about the time when they purchased the Land they came to know a 强嫂/張嬸 (Auntie Keung) (later identified to be Madam Yu) was residing at Hon House and occupying the Land.  At/about the end of 2010, the plaintiff further discovered that other people were also occupying the Land and residing at Hon House.  On 8 November 2010, the plaintiff’s solicitors wrote to demand such occupiers to deliver vacant possession of the Land within 30 days (“Demand Letter”), but they failed to do so.

12. On 7 February 2011, the plaintiff commenced the present action against Madam Yu (as the 1^st defendant) and all occupiers of the Land (as the 2^nd defendant) for vacant possession of Hon House and the Land, damages for trespass, interest and costs.  On 7 June 2011, the plaintiff joined the 6^th and 1^st Sons respectively as the 3^rd and 4^th defendants in the present action.  In their pleadings, the plaintiff claimed that Madam Yu, the 2^nd defendant, and the 6^th and 1^st Sons wrongfully occupied and trespassed upon Hon House and the Land, and they thereby suffered loss and damages.

13. On 8 April 2011, Madam Yu and the 6^th and 1^st Sons (collectively, “Relevant Defendants”) filed their respective home-made Defence claiming that from the time their family moved to Hon House at the end of 1961 until the Demand Letter in November 2010, no one (a) claimed to be the owner of the Land, (b) tried to collect licence fee from them and/or (c) demanded them to vacate the Land, hence they had been in adverse possession of Hon House and the Land for over 20 years.

14. The Relevant Defendants were subsequently granted legal aid. On 26 June 2013, they amended their pleadings to add a counterclaim for inter alia (a) a declaration they had been in adverse possession of the Land for not less than 20 years (before 1 July 1991) or 12 years (on/after 1 July 1991), (b) a declaration that the plaintiff’s title in/over the Land had been extinguished by virtue of sections 7 and 17 of the Limitation Ordinance Cap 347 (“LO”), and (c) costs.

15. On 19 July 2013 just shortly before trial, Suffiad J granted leave for Rose to give evidence by video-link from San Francisco.  The Relevant Defendants also gave evidence.  By the order of Master R Lai dated 20 April 2012 (“20/4/12 Order”), the signed witness statements shall stand as evidence-in-chief of the witnesses.  The 6^th and 1^st Sons by their witness statements also adopted Madam Yu’s witness statement dated 6 September 2012 (“Yu 1^st Statement”).

V.  ISSUES

16. There is no dispute the Relevant Defendants had been in factual possession of the Land and Hon House for over 20 years.  They claimed to be in adverse possession on the basis set out in paragraph 13 above.  On the other hand, the plaintiff claimed their occupation was permissive and therefore not adverse.  But the Relevant Defendants denied they occupied the Land and Hon House pursuant to any licence/consent.

17. In the Relevant Defendants’ pleadings, there was no alternative plea and/or “confession and avoidance” defence that (contrary to their primary case) had the landowner granted or purported to grant them any licence to occupy the Land and Hon House, such licence or purported licence (a) not being jointly granted by all three co-owners was invalid or ineffective (“1^st Contention”) and/or (b) had been terminated upon death of the licensor or upon conveyance/assignment without any re-grant (“2^nd Contention”), and hence any vicarious possession of the Land had ceased and adverse possession arose for sufficient time under the LO before the commencement of the present action.  But in view of the closing submissions by Mr Lam, counsel for the Relevant Defendants, I will return to discuss more on this below.  Suffice to state here that on the Relevant Defendants’ existing pleadings (which Mr Lam chose not to further amend) the main issue was whether the Relevant Defendants had animus possidendi to establish adverse possession.

VI.  LEGAL PRINCIPLES: ADVERSE POSSESSION

18. The starting point is sections 7 and 17 of the LO:

“Section 7(2)

No action shall be brought by any person to recover any land after the expiration of 20 [12][3] 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 person. …….

Section 17

Subject to the provisions of section 10, at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished.”

19. To establish possessory title based on adverse possession, the squatter must be shown to have both factual possession of the suit lot and the requisite intention to possess (animus possendendi) for the whole of the relevant period.[4]

20. In Powell v McFarlane & anor, Slade J said as follows in respect of the matter of factual possession:[5]

“(3) Factual possession signified 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. … The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed. … Everything must depend on the particular circumstances, but broadly, 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.”

21. As to the requisite intention to possess, the principles can be found in Wong Tak Yue v Kung Kwok Wai & anor (No 2):[6]

“The requisite intention to possess has been referred to in various authorities under its Latin tag “animus possidendi”. I shall refer to it simply as the intention to possess. As Slade J observed in Powell v McFarlane (1979) 38 P & CR 452 at pp 471-471, the intention to possess requisite for adverse possession:

… 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 so gar as the process of the law will allow.”

22. This has several consequences.  First, although the occupier must intend to exercise exclusive control for his own benefit, he need not have a conscious intention to exclude the true owner.  It is enough that the occupier intends to exclude the owner “as best as he can” or “so far as reasonably practicable and so far as the process of the law allows”.[7]  Secondly, an intention to own the land or even an intention to acquire ownership is not required for establishing animus possidendi.[8]  Thirdly, the animus possidendi can be established even if the occupier mistakenly believes himself to be the owner of the land.[9]

VII.  BURDEN OF PROOF

23. Mr Lam in his written opening submissions argued that since the burden was on the plaintiff to prove that “the Relevant Defendants possess the [Land] pursuant to licence granted by the landowner and thus there is no intention to possess, the legal burden lies squarely on the plaintiff to adduce sufficient evidence to satisfy the Court that as a matter of law and fact, there is indeed no sufficient intention to possess for a sufficient period of time.  No legal burden lies on the Relevant Defendants to prove anything.  Even if the Relevant Defendants’ case is not accepted, the burden still lies on the Plaintiff to prove its case”.

24. Mr Lam in his oral opening submissions accepted that usually the burden of proof is on the occupier to establish adverse possession, but he argued that here the burden fell on the plaintiff to show no sufficient intention to possess for a sufficient period of time because the Relevant Defendants’ factual possession of the Land and Hon House was not disputed.  Mr Lam’s written closing submissions reiterated that the burden lied on the plaintiff to prove their pleaded case, ie the Relevant Defendants occupied the Land (a) pursuant to valid licences or (b) without any such valid licence(s) for less than 20 or 12 years, and the plaintiff’s claim would fail if they failed to prove that (i) each of Wong Snr, Wong Jnr and Yolanda/Earnest was respectively the sole beneficial owner of the Land at the relevant time, and (ii) from 1960s until 2008 permission/licence for Madam Yu and her family to stay on the Land upon conditions was granted on each occasion Yee, Rose and/or Wong Jnr visited the Land.

25. I disagree with Mr Lam’s submissions.  Based on archeology of the Land’s paper ownership in Part III above, the plaintiff is undoubtedly the legal and beneficial owner of the Land, and hence prima facie entitled to possession. This is borne out by Powell as follows:[10]

“ (1) In the absence of evidence to the contrary, the owner of the land with the paper title is deemed to be in possession of the land, as being the person with the prima facie right to possession. The law will thus, without reluctance, ascribe possession either to the paper owner or to the persons who can establish a title as claiming through the paper owner. ……”

26. Both factual possession and intention to possess are questions of fact, and the burden is on the squatter claiming adverse possession to prove both elements.[11]  It has been said in Powell as follows:[12]

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

……

   The question of animus possidendi is, in my judgment, one of crucial importance in the present case. An owner or other person with the right to possession of land will readily be assumed to have the requisite intention to possess, unless the contrary is clearly proved. …… where the question is whether a trespasser has acquired possession …… the courts will, in my judgment, 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. ……” (my emphasis)

27. There is, therefore, no legal burden on the plaintiff as paper owner to prove there was “no sufficient intention to possess” on the part of the Relevant Defendants (ie to disprove animus possidendi).  Since the legal burden of establishing both factual possession and animus possidendi fell on the Relevant Defendants, the fact that factual possession had been admitted would not absolve them of their responsibility to prove the requisite intention to possess.  After all, as explained in Powell, the paper owner will readily be assumed to have the requisite intention to possess unless the contrary is clearly proved.

28. Such legal burden to establish animus possidendi would not shift even though the plaintiff had the evidential burden of showing the Relevant Defendants were in possession of the Land with permission, licence or consent.  Such evidential burden is no more than one to adduce evidence of what is asserted that is sufficient to go to the jury, ie that it is on its face believable,[13] which is not the same as saying the plaintiff would bear the legal burden of disproving intention to possess on the balance of probabilities.  Such evidential burden must not be conflated (as Mr Lam did in his submissions) with the legal burden that always rested on the Relevant Defendants to establish animus possidendi.

29. In Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd,[14]Nazareth NPJ in giving the Court of Final Appeal’s reasons for decision said as follows:

“26. …… this novel submission does not displace Slade J’s principles in Powell v McFarlane. To dispossess the respondent the owners would have to establish possession by an appropriate degree of physical control and the requisite intention to possess ie an “intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner”: per Slade J approved by Lord Browne-Wilkinson in JA Pye (Oxford) Ltd v Graham. If they were to succeed in doing so, then they would establish possession for themselves and not for the corporation.

27. What clearly show that the appeal must fail are the alleged acts of possession relied upon. It can be seen from the judgment of Yuen JA that these plainly do not constitute or demonstrate the necessary factual possession or requisite intention to possess. The result is fatal however creative or inspired associated legal submissions may be.”

It is therefore plain the squatter carried the legal burden to establish that the alleged acts of possession demonstrate both the necessary factual possession and the requisite animus possidendi. It is only when the acts of possession are shown to be so certain and unequivocal as to “constitute or demonstrate the …… requisite intention to possess” that the occupier discharges his burden of proof.

30. This was made abundantly clear in the Court of Final Appeal decision in Wu Yee Pak v Un Fong Leung & ors,[15] a case not cited by counsel.  In that case, the appellant claimed he and his family had been in continuous possession of the land as trespassers since 1934 until its resumption in 1997.  He sought a declaration that the paper owner’s title to the land had been extinguished and that he had acquired a possessory title by reason of his adverse possession.  His possession of the land through occupation was accepted, and Chan PJ (with whom other members of the Court of Final Appeal concurred) said as follows on the burden of proof:

“5. Since possession by the appellant of the land through occupation is accepted, the key issue is whether his possession was adverse in that he was neither a tenant nor a licensee of the respondents. The burden of proof admittedly lies with the appellant and the evidence he has to adduce must be compelling. Powell v McFarlane & another (1977) 38 P &CR 452; and Wong Tak Yue v Kung Kwok Wai David & another [1998] 1 HKC 1.” (my emphasis)

31. But in his closing submissions Mr Lam drew my attention to Ho Hang-wan v Ma Ting-cheung as Personal Representative of Ma Sz-tsang, deceased.[16]  In that case, the plaintiff was allowed into possession as a licensee and occupied the land continuously.  When she applied to the court to seek a declaration that she had acquired possessory title to the land, the personal representative of the registered proprietor served notice to terminate her licence.  The court rejected the plaintiff’s contention that she entered as an adverse possessor, however she argued “in the alternative” that she had entered into possession as a licensee but such licence was automatically terminated by operation of law upon the death of the registered proprietor and thereafter her possession being no longer referable to the licence was exclusive and adverse, thereby giving rise to a cause of action for adverse possession.

32. Hunter JA (with whom other members of the Court of Appeal agreed) accepted it was “too late to return to the simplicity of the last century and confine the relevance of animus possidendi to cases of equivocal conduct”,[17] and he went on to hold that in cases of unequivocal exclusive physical possession such intent was to be presumed. In that case, unequivocal exclusive physical possession plainly did not mean mere factual occupation of the land but “the plaintiff’s possession after 1964 [when the registered proprietor died] [that] was certain and unequivocal, and attributable to no continuing licence” (my emphasis).[18]

33. In my view, Ho Hang-wan is consistent with Wu Yee Pak in that it is the occupier who carries the legal burden of establishing that possession was (a) certain and unequivocal and (b) “attributable to no continuing licence” before it is possible to infer animus possidendi from such certain and unequivocal physical possession.[19]  Indeed, similar argument raised by the squatter was rejected by HH Judge Mimmie Chan (as she then was) in Yu Kit Chiu and Yu Hon Chiu the executors of Yu Ki Cheung alias Yu Sui, alias Yu Sui Tong, alias Yu Wing Luk, alias Yu Kee Cheung, alias U Kay Cheung, alias Yee Yau Non, deceased v Chan Shek Woo (陳錫湖) trading as “陳潮昌士多” by Chan Wai Chung his guardian ad litem, a case not cited by counsel:[20]

“58. Counsel for [the occupier] argued that animus possidendi should be presumed …… He relies on the case of [Ho Hang-wan], to make the proposition that it is only when the squatter’s use of the land is equivocal that he has to adduce compelling evidence of the requisite intention.

59.  I do not agree that Ho Hang-wan can be extended beyond the facts and circumstances of its own case to mean that in every instance where the squatter has enclosed the land, he must be presumed to have the necessary animus. That will mean that the presumption of animus can apply to almost all cases of squatters who can establish the act of exclusive possession, without having to prove more.”

In my view, Ho Hang-wan does not aid any suggestion that the legal burden of proof would shift to the plaintiff.

34. Mr Lam also referred to J Alston & Sons Ltd v BOCM Pauls Ltd.[21]  In that case, the claimant purchased a farm.  Together with its own land, it cultivated an “orange area” not within its title pursuant to a licence granted by the mill owner who owned that land.  Both parties agreed the licence was terminated by operation of law in 1977 when the defendant purchased the orange area.  So if the claimant could demonstrate factual possession and intention to possess from 1977 onwards and repel the defendant’s claim of there having been some form of implied permission, the defendant’s title to the orange area would have been extinguished by 1989. If the claimant failed on any of these three points, their adverse possession claim would fail and any right to occupy would have ended by 2007 pursuant to the defendant’s termination notice.  On the issue of intention to possess, the learned judge said as follows:[22]

“[105] I have found that Mr Alston intended to possess the [orange area] and to farm it for his own benefit for as long as he could and, if possible, indefinitely. At the same time, he accepted that if he was asked to go, he would have to do so, since he believed that he would have no answer to that demand for possession. He had, however, no positive intention not to use the property if Pauls “needed” it. Even if it did, he would have gone on using it until it asked him to go. The recognition that he might have to go is therefore no different from that of the “candid squatter” and did not, in my judgment, render his intentions insufficient to support legal possession of the property. Once that possession became, in law, possession absent the permission of the paper owner in 1977, it was “adverse” for the purpose of the Limitation Acts.” (my emphasis)

35. In my judgment, the crucial factors in J Alston & Sons Ltd in relation to the burden of proof were (a) the termination of the licence and (b) the subsequent certain and unequivocal acts of possession, which again are not inconsistent with Wu Yee Pak in that the burden of proof falls on the occupier to establish these matters.  Each case is fact-dependant, and it so happened that termination of the licence was admitted in J Alston & Sons Ltd.  But Jourdan and Radley-Gardner, Adverse Possession [23] in discussing this case says it is necessary to first resolve whether or not there has been any owner’s permission to occupy the land:

“…… The fact that [the occupier] believes that he has the owner’s permission, when in reality he does not have such permission, does not prevent him from being in possession. If he did, in reality, have such permission, then the permission would have the effect of making his possession vicarious, on behalf of the true owner …… However, if there is no such permission, then there is no basis for treating the possession as vicarious. ……” (my emphasis)

In my view, J Alston & Sons Ltd does not assist Mr Lam’s argument that the burden of disproving animus possidendi shifted to the plaintiff.

36. In any event, it is not easy to understand the relevance of Ho Hang-wan and J Alston & Sons Ltd in the present context since it is not part of the Relevant Defendants’ pleaded or factual case that (a) permission/ licence had been granted by or on behalf of the paper owner for them to occupy the Land and Hon House, which permission/licence was subsequently terminated, (b) after such termination, the paper owner merely let the previous situation continue without any implied permission to occupy the Land, and (c) they intended to stay on the Land until the paper owner would recover the Land from them.  In short, there was no alternative “confession and avoidance” plea based on the 2^nd Contention. But as said, I will return to discuss this below.

37. For completeness, I should mention that in determining whether or not the legal burden of proof has been discharged the court has to assess all the circumstances, and the evidence the occupier has to adduce must be compelling.  But this does not alter the standard of proof, which remains the balance of probabilities.  All it means is that the evidence adduced must be of such a quality and nature that, if accepted on the balance of probabilities, it is sufficient to establish both factual possession as well as an intention to possess.  I also repeat Li CJ’s observations in Wong Tak Yue in relation to self-serving statements made by an occupier during his occupation or when challenged in legal proceedings, which serves to emphasise the nature of the burden that an occupier carries:[24]

“Where the occupier has made self-serving statements as to what was his intention, whether during the period of occupation or when challenged in legal proceedings, the courts should approach them with some skepticism. The courts would scrutinise the circumstances in which they were made and would give them such weight if any as they may deserve. Conversely, where the occupier has made statements as to what was his intention and such statements are against his interest, the courts would usually accord to them considerable weight.”

VIII. EVIDENCE

38. The issue in this case turns very much on the facts, so I remind myself of the warning by Litton NPJ in Tradepower (Holdings) Ltd v Tradepower (Hong Kong) Ltd [25]against trial judges placing undue reliance upon demeanour and resolving factual issues by using witnesses’ demeanour isolated from the inherent probabilities of the case.  I also bear in mind the need to weigh the intrinsic value of witnesses’ evidence against documentary evidence, inferences based on inherent probabilities and/or undisputed facts, history of events and pleadings,[26] and the observations in paragraph 37 above.

39. Born in 1926, Rose was 86 years old when she gave evidence. Although Madam Yu claimed to be in her eighties, she was born in 1936 and was therefore 77 years old when she gave evidence. Rose is older by almost a decade, but I bear in mind both of them are elderly and the events canvassed in their evidence spanned several decades.

40. Rose was born, raised and educated (up to high school level) in San Francisco.  She had some difficulty in hearing/understanding some of Mr Lam’s questions, but when she understood the question she was quite forthcoming and articulate in her reply.  She was firm on most of the material matters.  She could not remember some matters and there were some discrepancies over some dates/events, but given her advanced age, her limitation in hearing and her slowness at times in understanding some of the questions put to her, they do not detract from the reliability and truthfulness of her other evidence that I accept, and in particular I accept her evidence as to the consent/permission given to Madam Yu and her family to occupy the Land and Hon House.

41. I have carefully considered the factors in section 49 of the Evidence Ordinance Cap 8 in assessing the weight of certain hearsay evidence being information given to Rose by Wong Snr, Yee and Wong Jnr deceased, but there is no sufficient reason to reject the same.  Mr Lam suggested that since Rose did not know the legal requirements of or how to arrange a licence, her allusion to licences in her evidence might be (a) mere passive acquiesence for Madam Yu and her family to stay on the Land or (b) mere wishful thinking as a layman. I disagree. As seen in the analysis below, Rose’s evidence was clear that Madam Yu and her family were actually permitted to occupy the Land and reside at Hon House free of charge upon certain conditions; it was not wishful thinking on her part.

42. I also do not accept Mr Lam’s suggestion that Rose was a partial witness because “if the Plaintiff lost the present case, [they] may claim compensation from [Rose] or her children” as vendors.  When Rose gave evidence, she confirmed (and on balance I accept) no one ever told her that if the plaintiff failed in the present action they would look towards her and/or the Vendors for compensation. Further, the SP Agreement provides inter alia that:

“4. Vacant possession of the Property will not be delivered to the Purchaser by the Vendor on completion, The Purchaser shall take the Property subject to the existing right of occupiers ……

10. The Purchaser hereby expressly declares that he has duly inspected the Property prior to the signing of this Agreement and is fully aware that he is purchasing the Property in their present state …… and on an “as is” basis and shall not make any objection or requisition thereto or in connection therewith.”

In light of such provisions and given that the plaintiff’s pleadings admitted they came to know that Auntie Keung resided at Hon House and occupied the Land “[at] around the time that [they] purchased the Land”, I am unable to see how the plaintiff would be able to maintain any claim for compensation against Rose or Yolanda/Earnest even if their claim in the present action failed.

43. As for Madam Yu, she was born in Taishan, Manland China. She received education up to primary three but was practically illiterate. She got married after coming to Hong Kong, and was a housewife engaged in farming and animal husbandry until 1973 when she became a factory worker for Tai Hing Cotton Mill (“Mill”) and a part-time  cleaning worker for chicken farms. She retired in 1996.

44. Mr Lam placed strong emphasis on Madam Yu’s personal knowledge which he contrasted with Rose’s hearsay knowledge obtained from Wong Snr, Yee and Wong Jnr deceased.  But as Mr Yip rightly pointed out, Rose’s knowledge was not merely hearsay.  She gave evidence that she herself accompanied Yee and Wong Jnr to Hong Kong in 1967 and 1969 respectively to visit Auntie Keung, and she also returned in subsequent years to visit Auntie Keung herself.  Further, she handled matters in relation to the Land on behalf of the successive beneficial owners and their estates.  But more on this will be discussed below.  In my view, whilst Madam Yu’s personal knowledge is a relevant consideration in the weighing exercise, it is not necessarily determinative.  The reliability and quality of witness evidence do not turn solely on the fortuity of having a witness who is still alive and available after a long interval of time.  Rose’s lack of personal knowledge over certain matters must be balanced against the quality of Madam Yu’s evidence as well as other available evidence. It does not lead the court to take any other course than to decide what is the most probable finding or inference to make on the evidence that is available.

45. Madam Yu was somewhat emotional and garrulous in her oral evidence, which I accept was partly contributed to by the following matters:

(a) she is an elderly lady albeit younger than Rose;

(b) she could not hear very well unless spoken to in a loud voice;

(c) she spoke the punti language with a Taishan accent that at times was not easy to follow;

(d) she lacked sophistication and did not articulate well (which I believe was partly caused by her minimal formal education and the hard life she lived);

(e) she sometimes did not understand or was slow in understanding the questions put to her by Mr Yip.

I remind myself that in assessing Madam Yu’s evidence she must not be criticised for her personal circumstances and misfortunes in life.  But that said and upon giving full recognition for the above matters, I find on balance that she had an elevated degree of wariness and/or shrewdness and was not above sidestepping matters that she perceived might not be of advantage to her case.  I am not persuaded she was a credible or reliable witness.  Her professed lack of understanding of certain crucial matters, and the inherent inconsistencies in her own evidence and as against the evidence of the 6^th and 1^st Sons are improbable and unconvincing.  Her overall evidence was unsatisfactory, and except for the matters which I accept in the analysis below, I reject her evidence on the core matters.

46. Mr Lam submitted that even though Madam Yu’s evidence might not be perfect, she was unshakable in asserting that (a) no one ever granted any licence for her to stay on the Land and (b) it was she who paid the Crown rent, rates and property tax.  But the Court of Final Appeal had reminded that self-serving statements should be viewed with healthy skepticism,[27] and it remained necessary to scrutinise the circumstances in which they were made to give such weight (if any) as they might deserve.

47. The evidence of the 6^th and 1^st Sons was of less significance since Madam Yu was their source of knowledge as to how and why their family came into possession of the Land and Hon House and much depended on her credibility.  It cannot be said, as Mr Lam suggested, they were honest witnesses simply because they confessed not to have personal knowledge over such matters.  As seen below, some of their assertions were unreliable, and I am skeptical about their elaboration in evidence over certain crucial matters not found in their witness statements.

48. But before I turn to the facts of this case, I should add a caveat that neither Rose nor Madam Yu gave satisfactory account over the issue of payment of rates for the Land that satisfies the requisite standard of proof on the balance of probabilities.  It is a pity to leave a void in the findings of fact, but it cannot be helped given the state of the evidence.

IX. BENEFICIAL OWNERSHIP OF THE LAND

49. On balance, I accept that after Rose married Wong Jnr, she came to know his family owned plots of land in the Village, including the Land. Wong Snr, Lam Chuk Ping and Chau To Fai, whose wives were sisters, bought the Land together with other land on 25 September 1931.  In my view, such familial detail lends credence to Rose’s hearsay knowledge as being derived from Wong Snr, Yee and Wong Jnr, which I find reliable.

50. Wong Snr and Yee told Rose that after the purchase of the Land Wong Snr built Hon House and inscribed the name “漢盧” and the year of its erection (ie 1931) on the wall above the entrance.  The character “漢” came from Wong Snr’s own name and “漢盧” literally meant the house of Hon, ie the house that belonged to him. In my view, this detail adds weight to Rose’s evidence that Wong Snr was the beneficial owner of the Land.

51. Rose explained that although the Land and other land were bought in the joint names of Wong Snr, Lam Chuk Ping and Chau To Fai, they decided amongst themselves without any formal division who should own which plot of land and they decided the Land belonged to Wong Snr.  Since then the three families treated the Land as belonging to Wong Snr and his family, and the other two families never claimed ownership of the Land.  The plaintiff therefore claimed that Chau To Fai and Lam Chuk Ping held their shares of the legal title of the Land as trustees for Wong Snr who dealt with all matters relating to the Land.  In 1993 the beneficial ownership of the Land passed from Wong Snr to Wong Jnr, and since 2000 until the sale of the Land to the plaintiff Yolanda/Earnest owned the entire beneficial interest of the Land (and Rose dealt with the Land on their behalf).

52. Mr Lam drew my attention to the following:

(a) Schedule 3 of the SP Agreement stated “Vendor’s capacity: (unless otherwise stated) as beneficial owner”, and the recitals of the Assignment stated the Vendors “as beneficial owners have agreed with the Purchaser for the sale of [the Land] to the Purchaser ……”;

(b) the respective schedule of property attached to the Wong Snr LA and Wong Jnr LA referred to “⅓ share of [inter alia the Land]”,

and suggested that the Vendors (including the descendants of Chau To Fai and Lam Chuk Ping) were all beneficial co-owners of the Land. He argued that since the other co-owners did not jointly give consent for the Relevant Defendants to stay on the Land, there was no valid/effective licence (ie the 1^st Contention).[28]

53. Such arguments raised two issues: (a) whether at the relevant times Wong Snr, Wong Jnr and Yolanda/Earnest were actually the sole beneficial owner of the Land, and (b) whether the Relevant Defendants were entitled to raise the 1^st Contention without pleading the same.

54. In my view, the matters in paragraph 52(a) above do not aid the Relevant Defendants. Whether or not beneficial ownership of the Land was held by some or all of the Vendors, they as a whole assigned the legal as well as beneficial interest in the Land to the plaintiff.  The plaintiff was not concerned with the apportionment (if any) of the beneficial interest amongst the Vendors, so it was quite unnecessary to spell out the same in the conveyancing documents so long as the Vendors agreed to assign and eventually assigned the entire legal and beneficial interest to the plaintiff.

55. Mr Lam suggested that because Rose must have known that “beneficial ownership” of properties should be declared in the schedule of properties to the Wong Snr LA and Wong Jnr LA, the reference in such schedules to “⅓ share” of the Land demonstrated the other co-owners were also beneficial owners.  In my view, whether rightly or wrongly, the schedules merely reflected legal title to inter alia the Land.  Although Mr Lam made much effort to cross-examine Rose on the “beneficial ownership” of the Land, she confirmed in re-examination she did not really appreciate the full meaning of such legal term.  But she was actually able to articulate the concept in her own words from a layman’s perspective.  She said (a) the Land was originally bought by three owners or “partners” but it was Wong Snr who built Hon House that bore his own name on the Land, (b) of the various plots of land purchased the other co-owners “have their own plot” and Wong Snr owned the Land, and (c) Yolanda/Earnest received the entire sale proceeds of $2,000,000 paid by the plaintiff for the Land.  In my view, the above amounts to a clear statement that Wong Snr (and later his descendants) held the entire beneficial interest in the Land.

56. Mr Lam said if Yolanda/Earnest were the sole beneficial owner of the Land, Rose would not have to (as she claimed) resign herself to a sale of the Land, ie “the other co-partners wanted to sell, so we have to sell, so we sold to [the plaintiff]”.  But such evidence must be placed in its proper context:

(a) The Wong/Dare family owned various plots of land in the Village some of which were bought in joint names with others,[29]eg the Land and Lot 2061 of DD104 bought by Wong Snr, Lam Chuk Ping and Chau To Fai in 1931, and the ⅓ or ¼ shares of various lots in DD104 in the schedules of properties to the Wong Snr LA and the Wong Jnr LA.

(b) Rose clarified that even though there was no formal division of land, Wong Snr beneficially owned the Land whilst the Lam Chuk Ping and Chau To Fai “have their own plot” near to the Land.

(c) Rose said that in the 1990s (probably after the death of Wong Jnr), the Lam/Chau families were thinking of selling the Land, and she represented the Wong/Dare family to liaise with them. Kenneth Kwok Siu Leung of the Chau family looked for a buyer, and in 2008 he found the plaintiff “to buy the whole property”.

(d) Rose confirmed that it was decided in early 2008 “to sell the lands in [the Village] including [the Land]”.[30] She gave evidence that since “she was only one part”, “there was nothing she could do except to agree”.

In my view, the above showed that the Lam/Chau families were keen to sell, and in 2008 the Wong/Dare, Lam and Chau families divested their landed interests in the Village (including the Land) after Kenneth Kwok Siu Leung found a buyer (ie the plaintiff). Plainly the sale of the Land to the plaintiff was part of a larger exercise, and Rose’s evidence that she could not say no when the Lam/Chau families wanted to sell the lands (including the Land) was therefore readily understandable.  In my view, there is no inconsistency.  This is sufficient to dispose of the 1^st Contention, but in case I am wrong I will deal with the matter of pleadings in Part XIV below.  But it suffices to state here the Relevant Defendants could not raise the 1^st Contention without proper pleading.

X. LICENCE

(a) Rose’s evidence

57. Rose said that in the 1950s Wong Snr and Yee moved to live with her and Wong Jnr in San Francisco.  Wong Snr told her before he emigrated he allowed/permitted a relative Auntie Keung (later identified as Madam Yu) and her family to occupy Hon House and the Land as licensee free of charge on condition that she and her family would (a) look after Hon House and the Land so that no unauthorised person would enter, occupy or remain there and (b) leave and vacate upon demand (“Conditions”).  Yee told Rose that since Auntie Keung (whose husband was the son of Wong Snr’s brother and whose family were not well-off) was “…… all cooped up in one place, so Yee asked them to come live at Hon House, and said “you come live in this house and take care of it and don’t let anybody else come in, but will be free of charge, you don’t have to pay rent or anything””.  In 1956, Wong Snr passed away in San Francisco.

(b) Relevant Defendants’ evidence

58. Madam Yu denied that Wong Snr and Yee (whom she did not know at all) permitted her and her family to occupy Hon House as licensee. She claimed she and Mr Tse came to Hong Kong in 1957 and got married the following year. Mr Tse worked as an employed tailor in Shaukeiwan, Hong Kong, and she was a full-time housewife.  Through Yu Sister and Mr Wong, they rented a wooden hut on the hillside near Tai Ning Shing Street, Shaukeiwan, and Yu Sister’s family also lived in a rented wooden hut nearby.  The 1^st, 2^nd and 3^rd Sons were born in hospitals or mid-wife clinics respectively on 17 October 1958 (Eastern Maternity Hospital), 9 March 1960 and 30 October 1961(1^st floor, No 288 Shau Kei Wan Road).

59. Madam Yu said that in early 1961 Mr Wong told her and Mr Tse there were empty houses in the Village which he thought belonged to indigenous Villagers who had emigrated/fled overseas during the Second World War.  Madam Yu guessed Mr Wong (a woodwork subcontractor) found out about this either from his inspection of construction sites in the course of his work or from the Taishan Villagers he knew who lived there.  But Madam Yu did not further discuss this with Mr Wong at that time.  After the birth of the 3^rd Son, their wooden hut was overcrowded and the living/hygiene condition worsened.  Mr Wong mentioned to her and Mr Tse again the empty houses in the Village and suggested their two families should move to live at an empty house there which he had already selected. After discussion, Madam Yu and Mr Tse agreed to (and by the end of 1961 together with Mr Wong’s family did) move to Hon House.

60. When Madam Yu first moved to Hon House, many of the Villagers hailed from Taishan.  She said Mr Tse, Mr Wong, Yu Sister and herself did not have any other relative living in the Village, but the Villagers were not curious about them and few bothered to ask who she was and/or why she moved there.

61. The 1^st and 6^th Sons claimed they did not know who owned Hon House or who built it. The 6^th Son said even though he spent more time with Mr Tse in the few years before his death, he never heard Mr Tse mention the owner of Hon House.

(c) Discussion

62. On balance, I do not believe the Relevant Defendants.  In my view, their evidence reflects unconvincing/unreliable attempts to distance themselves from connection with the owner of the Land and Hon House.

63. In the 1950s/1960s, the Village was a close knit New Territories village populated by Villagers from Taishan many of whom were surnamed Wong.  I do not think such Villagers would be indifferent if two “outsider” families entered upon the Land and occupied Hon House, which land and property the Villagers must have known belonged to an ex-Villager (ie Wong Snr) who still owned lands in the Village. In my view, the Villagers were not curious about Madam Yu because they knew she had the owner’s permission to occupy the Land and Hon House.

64. Likewise, I do not believe Madam Yu when she said she did not bother to find out who owned Hon House.  I find it strange even on her own case, especially when she claimed they moved to Hon House as their permanent home.  It would not have escaped her attention that Hon House (though vacant) was a readily habitable brick house with intact doors/ windows and open land in front fenced by brick walls.  Her plan for a permanent abode would be upset should the owner return in near future. Madam Yu tried to justify her lack of inquiry by her illiteracy and hence inability to read the inscription on Hon House, but the Yu 1^st Statement clearly stated Mr Wong had explained the inscription to her.  Further, the Yu 1^st Statement (which stated that Mr Wong told Madam Yu about the empty houses in the Village and suggested moving to one that he had already selected) and Madam Yu’s oral evidence (that on being told of the empty houses in the Village she herself went looking for a suitable empty house, found Hon House and chose to live there because she liked it) were inherently inconsistent.

65. More significantly, I do not believe Madam Yu’s denial of the familial relationship between Mr Tse and the Wong/Dare family.  Under cross-examination, Madam Yu admitted Mr Tse had an alias 黃國強 (Wong Kwok Keung) which he used in his daily life.  He told the Villagers his two names, so they sometimes addressed him as Wong Kwok Keung and called her 強嫂 (Auntie Keung).  Although she claimed to have no idea why Mr Tse had two surnames (ie 謝 (Tse) and 黃 (Wong)), Mr Tse once told her the elders in the family gave him his names.

66. Such evidence must be placed in context. It had always been the plaintiff’s case as evident from Rose’s evidence (including her witness statement dated 14 May 2012 (“Rose 1^st Statement”)) and the title documents in respect of the Land that (a) Wong Snr had two names (ie 黃禮漢 (Wong Lai Hon) and 謝滿 (Moon Dare)) each with a different surname (ie謝 (Dare) and 黃 (Wong)), and Wong Jnr had three names (ie 黃啓明 (Wong Kai Ming), 謝黃啓明 (Kai Ming Wong Dare) and 謝啓明 (Kai Ming Dare)) with the same two surnames as his father and a third surname being a combination of the two surnames (ie 謝黃 (Wong Dare)), and (b) Wong Snr and Yee allowed a relative called Auntie Keung (whose full name Rose did not then know) and her family to live at Hon House on the Land as licensees.

67. Yet in the Relevant Defendants’ pleadings and witness statements they never alluded to the fact (which they all along knew) that (a) Mr Tse had another name黃國強 (Wong Kwok Keung) with a different surname黃 (Wong) and/or (b) Madam Yu was also known as強嫂 (Auntie Keung).  In my view, their reticence until cross-examination reflected wary but unreliable concealment of connection between Mr Tse and the Wong/ Dare family. Likewise, the 6^th and 1^st Sons did not refer to this until they were constrained to confess knowledge of their father’s two names after Madam Yu’s revelations in her evidence. Indeed, even though the 6^th Son did not know how Mr Tse came by his alias, he agreed the Villagers would greet Madam Yu as Auntie Keung.  But he tried to diminish its effect by claiming he did not have to ask his father because it was not unusual for refugees fleeing to Hong Kong to have two surnames.

68. I do not accept it was coincidence that Wong Snr, Wong Jnr and Mr Tse all hailing from Taishan had two surnames and indeed the very same two surnames, and that they ended up occupying the same Land and same Hon House with Mr Tse’s family entering into possession on the heels of Wong Snr and Yee departing for the United States.  I am also not convinced that Mr Tse having two surnames (ie 謝 (Tse) and 黃 (Wong)) had anything to do with being a refugee.  After all, Wong Snr with two surnames had been in Hong Kong well before the influx of refugees due to the Second World War.

69. When the 1^st Son gave evidence, he sought to embellish this even further by suggesting that in the 1980s he was told by Mr Tse that Mr Tse was (a) an orphan who did not know his native village, and (b) brought to Hong Kong as a refugee when he was then four years old. The 1^st Son (who knew the plaintiff had pleaded that Mr Tse was Wong Snr’s relative) did not explain why he did not say so in his witness statement.  Moreover, this evidence was contradicted by the Yu 1^st Statement that Mr Tse was born in Taishan, came to Hong Kong in 1957, and married Madam Yu in 1958.  If Mr Tse came to Hong Kong when he was four years old, he would have arrived in/about 1936[31] instead of 1957 as Madam Yu claimed.  Such fundamental inconsistencies undermined both Madam Yu’s and the 1^st Son’s overall evidence.

70. On balance, I accept Rose’s evidence that (a) Mr Tse was Wong Jnr’s 堂細佬 (cousin) and Madam Yu was her 堂阿嫂 (cousin’s wife), (b) Madam Yu was introduced to her (and had always been known to her) as Auntie Keung, (c) she and Auntie Keung communicated with each other in Taishan dialect, and (d) Madam Yu addressed her as 大嫂 (elder sister-in-law). There was no logical or persuasive reason why Rose would have known Madam Yu was called Auntie Keung if (as Madam Yu claimed) she had never even spoken to Rose at all (notwithstanding they took pictures together in October 2004 (“Photos”) as discussed below).

71. On balance, I further find Madam Yu’s evidence that she and Mr Tse came to Hong Kong in 1957 (and hence they moved to Hon House in 1961) unreliable. I find they were already in Hong Kong and were together (whether married or not) earlier than she alleged. In coming to this view, I bear in mind the 1^st Son was born in 1958. I further find on balance that before moving to San Francisco in the 1950s Wong Snr and Yee granted a licence for Mr Tse and Madam Yu to occupy Hon House and the Land free of charge upon the Conditions.  In my view, there is insufficient reliable evidence upon which to make a finding of fact on the balance of probabilities as to exactly when Madam Yu moved to Hon House.  The Rose 1^st Statement did not state so, and it served no purpose to speculate whether or not Wong Snr and Yee knew (and/or told Rose) when exactly Madam Yu moved in after they left for the United States.  But such uncertainty does not detract from the reliability of Rose’s evidence that Wong Snr and Yee did grant a licence for Madam Yu and her family to occupy the Land and Hon House before they left Hong Kong.

72. Mr Lam suggested it made no sense for Madam Yu to occupy the Land and reside at Hon House as licensee in the 1950s but give birth to the 1^st and 3^rd Sons far away from the Land on Hong Kong Island. But the above analysis shows the Relevant Defendants’ overall evidence (especially in relation to when Madam Yu and Mr Tse came to Hong Kong which in turn would impact on the timeline for Madam Yu’s version of events) to be unreliable, and it is fruitless to speculate when precisely Madam Yu moved to Hon House and why she gave birth on Hong Kong Island in 1958 and 1961.  Even though Mr Tse continued to work/live in Shaukeiwan after moving to Hon House, it would be inappropriate to speculate whether or not Madam Yu wished for her husband’s close support when she gave birth to her first and third sons on Hong Kong Island.  In any event, on the Relevant Defendants’ own admission, by the end of 1961 Madam Yu and her family were already occupying the Land and Hon House.

XI. OCCUPATION OF THE LAND

73. Madam Yu claimed that after they moved to Hon House, the then Village head 洪垣 (Hung Woon) applied for an electricity meter on their behalf. Mr Tse and Mr Wong continued to live/work on Hong Kong Island, and returned to Hon House when they were free. In the meantime, Madam Yu (with her sons’ help) farmed the open area in front of Hon House. She grew vegetables and fruit trees, and raised chickens (until 2003) and pigs (until the 1970s).

74. The 4^th, 5^th and 6^th Sons were born on 30 December 1963, 16 October 1965 and 19 March 1970 respectively at Pok Oi Hospital. Madam Yu’s sons grew up at Hon House and studied at a primary school in the Village.  In October 1973, Mr Tse arranged for the installation of a water meter.  After the 1^st Son started to work,[32] his tax-related documents in the early 1980s gave Hon House as his address, and he also received other correspondence sent to him at Hon House. In 1978 the 2^nd Son moved out of Hon House for university studies, and in 1989-1990 he left for Singapore.  The 1^st Son applied for a telephone line for Hon House in 1980.

75. In the early 1980s, Mr Wong and his family moved out of Hon House. In 1983-1984, Hon House underwent major renovation.  The 1^st Son who was in the construction industry took care of the works, and Madam Yu believed he spent $20,000 on materials with his friends offering their labour for free.  In 1985, the 1^st Son got married. He and his wife lived at the HOS Flat referred to in paragraph 149 below, but he still handled repair and maintenance for Hon House.  In 1999, he was diagnosed to suffer from a serious illness, and returned to live at Hon House for convalescence.

76. In 1984 and 1994 Madam Yu and the 1^st Son opened two bank accounts, and in 1985 the 6^th Son opened a bank account.  The bank statements were sent to Hon House.  Mr Tse passed away in 1989. In/about 1990, the 5^th Son moved to live in Fanling Wai.  In 1991, the 6^th Son went to live with the 5^th Son. In 1999, the 6^th Son got married and moved to live in Sheung Shui.  Both before and after his marriage, the 6^th Son’s tax-related documents still gave Hon House as his address.  He frequently visited Madam Yu and even stayed at Hon House a few days a month, so he still kept his personal items there.  Madam Yu said the 3^rd and 4^th Sons still lived at Hon House.

XII. 1967 VISIT

77. Rose said that in/about 1967 she and Yee came to Hong Kong, and she visited the Land for the first time.  They stayed at Hon House, and Yee introduced her to Auntie Keung who was living there.  Yee was not happy about Yu Sister’s family living with Auntie Keung, but decided to let it be on condition they would all leave and vacate Hon House and the Land upon demand.  Rose stayed at Hon House for a few days and returned to the United States, but Yee stayed on for a couple of months.  But Madam Yu denied such visit, and claimed no one would be at home because she had to work and her children were at school.  There were three dogs, so no one would dare enter upon the Land.

78. On balance, I prefer Rose’s evidence.  This visit must not be looked at in isolation for Rose gave evidence that she also visited the Land in 1969, in 2004 and from time to time until 2008.  This is borne out by the entries in her available passports which showed that she returned to Hong Kong at least in 1969, 1976, 1999, 2000, 2001, 2002 (twice), 2004 and 2005.  Rose said (and I accept) that the sole purpose of her visits to Hong Kong was to visit and deal with matters concerning the Land that belonged to the Wong/Dare family.  Further, despite Madam Yu’s denial of having met Rose (or other members of the Wong/Dare family), the Photos taken in 2004 plainly showed Rose/Yolanda did visit/meet her at Hon House on that occasion.  On balance, I find that in 1967 Yee and Rose visited Auntie Keung and granted a licence for her and her family to occupy the Land and reside at Hon House on condition they would vacate and leave upon demand.

79. Mr Lam criticised the Rose 1^st Statement for saying at that time Yee told Rose Auntie Keung’s husband had long passed away when in fact he only passed away in 1989.  I note Rose only spent a few days at Hon House in 1967, so it was unsurprising that she did not meet Mr Tse who lived/worked in Shaukeiwan.  Since Yee had passed away, it is impossible now to fathom whether and if so why she so told Rose and/or why she was so mistaken.  I do not believe Rose tailored her evidence in this respect.  There was no point for her to do so since when Mr Tse died was immaterial to the present dispute, and the 6^th Son’s Defence filed on 11 April 2011 had already disclosed that Mr Tse died in 1989.

80. However, the same could not be said for Madam Yu.  She was well aware that she started working at the Mill in 1973 when Mr Tse fell ill.  Yet she tried to explain away why she had not met Yee and Rose in 1967 by saying inter alia she was at work and not at home.  In my view, this demonstrated an unreliable attempt by Madam Yu to put a wary distance between herself and the Wong/Dare family to stave off any suggestion of her occupying the Land under consent.

XIII. SUBSEQUENT VISITS

(a) Rose’s evidence

81. In the Rose 1^st Statement, Rose said that in/about 1969 she and Wong Jnr came to Hong Kong to visit Madam Yu at Hon House. Madam Yu passed to Wong Jnr a demand note for rates and asked them to make payment.  They went to the Government Rating Office in Wanchai to make payment and to change the address so all future demand notes would be sent directly to their address in San Francisco.

82. Mr Lam submitted that Rose changed her evidence by agreeing that the change of address was made in 1996 and later saying it was done in 1969.  In fact, Rose’s oral evidence was that she did not quite remember when they changed the address for payment of rates.  She did not volunteer 1996 as the year when the address was changed.  Rather, it was put to her by Mr Lam, and upon further clarification by using Wong Jnr’s death in 1997 as a reference point she clarified that the change of address took place some years before Wong Jnr passed away and it was probably around 1969/1970.  Upon careful consideration of the whole tenor of Rose’s evidence in light of her age and understanding, I do not believe her evidence was undermined by Mr Lam’s criticism although, as seen below, I have other reservations about her evidence in this respect.

83. Rose said that after the change of address she and Wong Jnr were responsible for paying rates for the Land up to 2008.  They sent money directly from the United States for such purpose, and sometimes on her visits she would make payment in Hong Kong.  It was a lot of trouble to buy HK$ cheques in San Francisco, so Rose eventually (but she could not remember when) opened a bank account (and deposited some money) in Hong Kong and thereafter rates for the Land were paid by autopay debits. After the Land was vested in Yolanda/Earnest in November 2000, Yolanda’s name was added to such bank account.

84. When Rose gave evidence, she was not sure and could not remember whether she received demand notes for rates in the United States, but thought she did after the change of address to their home in San Francisco.  Anyway, Rose was clear the relevant authority sent her receipts to confirm her payment of rates for the Land by bank autopay, but she had no recollection of the relevant dates.

85. Rose said she returned to Hong Kong from time to time to visit Auntie Keung at Hon House as borne out by her passport entries.  She gave Auntie Keung gift and pocket money (eg US$100) on each visit. Rose did not notice remodelling work had been done at Hon House, but “[Auntie Keung] said she put in a bathroom, a lavatory there. I said, “That’s fine,” because for her own use”.

86. Since 2000, Yolanda/Earnest agreed to let Rose deal with all matters relating to the Land, and Yolanda accompanied Rose to visit the Land on two occasions.  In 2004, Rose and Yolanda visited Auntie Keung at Hon House, and they took the Photos.

(b) Madam Yu’s evidence

87. Madam Yu claimed Rose lied to the court.  Neither Rose nor other members of the Wong/Dare family visited her at Hon House between 1969 and 2008, and she never agreed with Wong Jnr, Rose or anyone to occupy the Land and Hon House as licensee.  Although she was one of the persons shown in the Photos, she had no recollection why and under what circumstances they were taken.  In short, she claimed she had never met Wong Jnr and had no recollection of having met Rose and Yolanda, but even if she had met Rose/Yolanda on the occasion when the Photos were taken, Rose did not visit her with gifts over the years since “they were so rich and she was so poor”.

88. Madam Yu claimed that since moving to Hon House, Mr Tse paid the Crown rent and rates for the Land. She gave oral evidence that between 1973 when Mr Tse fell ill and ceased to work and 1983/1984 when the 1^st Son started to help pay rates for the Land,[33] she was the breadwinner who paid rates and property tax from her earnings.  She was a factory worker at the Mill in Tuen Mun from 1973 until her retirement in 1996, and she also engaged in other part-time work as discussed below.  In 1996, she stopped farming the open area in front of Hon House due to age/mobility problems.

89. Madam Yu claimed that in 1996 the then Village head黃國祺 (Wong Kwok Yee) personally came to ask her for that year’s demand note for rates in respect of the Land (“1996 Demand Note”) for record purpose because (as he told her) indigenous Villagers did not have to pay rates. Madam Yu claimed she believed him and gave him the 1996 Demand Note. After that, she did not receive any further demand note for rates, and she did not pay rates for the Land any more.

(c) Visits to Hon House

90. The factual evidence by Rose and Madam Yu is diametrically different.  But there is support for Rose’s evidence that she, Wong Jnr and Yolanda did visit Auntie Keung and Hon House.  First, Rose’s passport entries clearly showed she returned to Hong Kong in 1969 (when Rose said she and Wong Jnr visited Auntie Keung on that occasion) and 2004 (when Rose said she and Yolanda visited Auntie Keung and took the Photos), and time and again over the years until 2008 (which Rose confirmed in her evidence and as corroborated by her passport entries).  Secondly, the Photos showed Rose, Yolanda, Auntie Keung, Tam See On (whom Rose called阿廣 in her evidence, “Tam”), Tam’s wife and Tam’s brother at Hon House, which corroborated Rose’s evidence that she did visit Hon House in 2004 with Yolanda.  Rose explained that throughout the years it was Tam and his brother who brought her to Hon House by bus because she did not know how to get there.

91. Madam Yu agreed she was seen in the Photos, but said in her supplemental witness statement dated 30 July 2013 (“Yu 2^nd Statement”) she had no recollection of the Photos and why and under what circumstances the Photos were taken.  She had no impression of and/or interest in the persons shown in the Photos except for the shorter man (whom she identified as a neighbor called 表叔and whom Rose identified as Tam’s brother).  Madam Yu had known 表叔 who lived at No 38A at the Village since the 1980s. She was not sure about and had never met the man Rose identified as Tam, but thought he might be the brother of表叔.  表叔 refused to assist her or to accept service of witness subpoena to attend trial.  In the Yu 2^nd Statement, Madam Yu suggested that tourists used to come and see Hon House and the buildings nearby for their architectural features, and they would take pictures inside/outside Hon House with her consent.

92. Mr Lam urged me to give little weight to the Photos because Madam Yu did not remember what happened and the Relevant Defendants did not have time to gather evidence as to the circumstances in which the Photos were taken.  He submitted that at most the court could only find Madam Yu took the Photos with Rose and Yolanda, but the Photos would not show they had known each other for many years.  In his written closing submissions, Mr Lam relied on observations by Le Pichon JA in Telings International Hong Kong Limited v John Ho & ors [34] to urge me to draw adverse inference against the plaintiff for not calling Tam to give evidence.

93. Taking the last point first, the passage from the judgment of Fuad JA in Hong Kong and Shanghai Banking Corporation v Chan Yiu Wah [35] cited in Telings International Hong Kong Limited made clear that an adverse inference “cannot be made except upon certain conditions”. Mr Recorder HC Wong SC in Lai Cheong Ming v Chung Yu Eric trading as Hui Fung Metal Work Factory & anor [36] said as follows:

“…… I would follow the principles set out by Brooke LJ in the case of Winniewski v Central Manchester Health Authority [1998] PIQR 324, at 340, as follows:

……

(3) there must, however, have been some evidence, however weak, adduced by [the other party] on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue”;

(4) if the reason for the witness’s absence …… satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, eve if it is not wholly satisfactory, the potentially detrimental effect of his/her absence ….. may be reduced or nullified.”

Mr Lam did not say what the desired adverse inference to be drawn should be for not calling Tam to give evidence when Madam Yu herself admitted she was the person shown in the Photos, which together with Rose’s passport entries clearly showed that, contrary to Madam Yu’s blanket denial, Rose did visit Auntie Keung at Hon House.  Further, Rose was not cross-examined on the reason for Tam’s absence as a witness, and it was never suggested to her that Tam should or could have been called to give evidence.  There is no merit to this argument.

94. At first, when Madam Yu was cross-examined on whether some of the Photos were taken inside Hon House, she claimed to have no impression of the Photos and said she was very ill at that time. She also said that being over 80 years old she could not recognise whether or not the Photos were taken inside Hon House.  But, contrary to such assertions, she in fact had recollection of the visit by Rose and Yolanda in 2004. In the Yu 2^nd Statement, Madam Yu said she thought 表叔 brought the persons shown in the Photos “to come to my house and have [the Photos] taken” (my emphasis), which is consistent with Rose’s evidence that it was Tam and his brother who brought her to the Land as she did not know the way.  At a later stage in her oral evidence, Madam Yu admitted that one of the Photos was taken at her home.  She even remembered on that occasion the two women shown in the Photos did not identify themselves, greet her or say anything, but merely wanted to come into the house to take photographs and she agreed to such request without saying anything.  She said there was no conversation and they left after taking the Photos, and she did not see them again.

95. On balance, I reject Madam Yu’s evidence.  It strained common sense for Rose who was bringing her daughter (who by then was a beneficial co-owner of the Land with her brother) to visit her ancestral home not to say a word at Hon House and not to speak with the occupant Madam Yu at all, especially when Rose by that time (a) knew Yee had previously granted a licence for Auntie Keung and her family to occupy the Land and to reside at Hon House, (b) had already informed the authorities the Land was occupied by “cousin wife” as “house sitter”,[37] and (c) was paying rates for the Land.[38] I therefore find that Rose/Yolanda as owner purposely went to Hon House in 2004 to visit Auntie Keung, and there were communications between them (owner and occupier) during such visit.

96. The above conclusion sat well with Rose’s evidence (which I accept) that even though the Wong/Dare family owned other lands around the Village she just visited “Auntie Keung’s house, visit our own house” whenever she came to Hong Kong.  I also find that Rose (who dealt with the Land for Wong Jnr and later for Yolanda/Earnest) liaised with Auntie Keung over the years and checked on the Land, and I reject Madam Yu’s claim that she did not know who the owner was.  On balance I accept Rose’s evidence that “[she] visited [the Land] and Auntie Keung so many times because Auntie Keung and [Rose] knew very well that [the Land] belonged to [Rose’s] family”, and that Madam Yu and her family stayed on the Land and resided at Hon House with permission as “licensees only on condition that [they] had to leave and vacate Hon House and [the Land] upon demand”.[39]Indeed, when Mr Lam suggested to Rose there was never any licence/permission granted for Auntie Keung and her family to stay on the Land, Rose clearly said “I would say, yes, until we give her notice to move”.

(d) Relevant Defendants’ case on payment of rates

97. Madam Yu claimed that after moving to Hon House, Mr Tse paid the Crown rent and rates.  Between 1973 (when Mr Tse stopped working due to ill health) and 1983/1984 (when the 1^st Son started to help pay rates), she paid Crown rent, rates and property tax for the Land. Although the Yu 1^st Statement and the 1^st Son’s witness statement dated 11 April 2011 stated the 1^st Son started to work in 1976, Madam Yu confirmed under cross-examination that despite financial hardships she was the breadwinner who paid rates and property tax between 1973 and 1983.  I note the employer’s return for 1981/1982 dated 24 April 1982 showed the 1^st Son only worked for seven months, but his employer’s return for 1983/1984 dated 21 April 1984 showed that by then he was in steady full-time employment for the year.  Taking into account all the circumstances, I am not persuaded the 1^st Son started to help pay rates since 1976.  Since Madam Yu was at pains to explain how she could afford to pay rates and property tax for the Land out of her own earnings between 1973 and 1983/1984, I find that the 1^st Son only contributed to such payment in/about 1983/1984.

98. In the Yu 1^st Statement, Madam Yu claimed she worked the 12-hour morning shift at the Mill from 3:00am to 3:00pm.  Her available bi-monthly wage slips and year-end bonus slips (“Income Slips”) showed that her monthly income, which initially was modest but slowly increased over the years until her retirement, fluctuated according to the number of workdays. To supplement her income, she worked part-time from 5pm to 7-8pm clearing chicken droppings for two nearby farms, ie 新園and another farm with no name owned by 黃明, but she did not have other jobs (eg domestic helper).  Under cross-examination, Madam Yu said that when she started to work she already earned total income of a few thousand dollars a month (“有幾仟鈫一個月”) (which she clarified to mean a total monthly income of about $4,000 to $5,000), hence she claimed she could afford to pay rates and property tax as well as defray household expenses for her large family.

99. In assessing Madam Yu’s credibility, the starting point is the available Income Slips (with some missing ones), which confirmed that Madam Yu’s initial income from the Mill was quite modest despite her long working hours. In 1975, her monthly income from the Mill for July, August, September, October (first half) and November (second half) were $825, $519, $569, $308 and $352 respectively and her year-end bonus was $518.10, hence her average monthly income based on the available documents was ($2,573.00 ÷ 4 months) + ($518.10 ÷ 12 months) = $686.43. The more complete set of Income Slips for 1976 and 1983 (ie when the 1^st Son started to help pay rates and property tax) showed that Madam Yu’s average monthly income from the Mill was respectively $749.47 and $1,861.93:

Month	Year 1976 ($)	Year 1983 ($)
Jan		785 + 938 = 1723
Feb (second half)	243
Feb		707 + 744 = 1451
Mar	277 + 276 = 553	741 + 1019 = 1760
Apr	329 + 331 = 660	1021 + 973 = 1994
May	351 + 378 = 729	972 + 1044 = 2016
Jun	405 + 377 = 782	1055 + 947 = 2002
Jul (first half)	380
Jul		867 + 926 = 1793
Aug		876 + 917 = 1793
Sep (second half)	368
Sep		679 + 799 = 1478
Oct	365 + 394 = 759	916 + 926 = 1842
Nov	375 + 389 = 764	895 + 903 = 1798
Dec	367 + 390 = 757	802 + 1006 = 1808
Total	5,995	21,458
Average per month	5,995 ÷ 8.5 months = 705.29	21,458 ÷ 12 months = 1,788.17
Year-end bonus	530.10	885.10
Average bonus per month	530.10 ÷ 12 months = 44.18	885.10 ÷ 12 months = 73.76
Average total monthly income	705.29 + 44.18 = 749.47	1,788.17 + 73.76 = 1,861.93

100. Madam Yu explained she was paid $40 for each cleaning session she performed at the chicken farms five days a week (ie $40 x 5 days x 4 weeks x 2 farms = $1,600).  Hence, her initial monthly income was nowhere near $4,000 to $5,000 as suggested. But as Mr Yip pointed out, rates and property tax paid in 1979 for the Land added up to $4,185 (or on average $348.75 a month),[40] out of which $2,403 was paid within three weeks from 28 March to 17 April 1979. I find on balance that with eight mouths to feed Madam Yu could not have afforded to pay rates and property tax during the period from 1973 to 1983.

101. When confronted by the above matters, Madam Yu claimed under cross-examination that out of her monthly income of $4,000 to $5,000 a sum of $3,000 to $4,000 came from her part-time cleaning work for five (and not two) chicken farms. At $40 per cleaning session for five days a week for two chicken farms and for two days a week for three chicken farms, her monthly income from such part-time work would be ($40 x 2 farms x 5 days x 4 weeks) + ($40 x 3 farms x 2 days x 4 weeks) = $2,560, which was nowhere near $3,000 to $4,000 as Madam Yu alleged.

102. On balance, I find Madam Yu’s evidence to be an unreliable exaggeration of her income to justify her alleged ability to pay rates and property tax for the Land.  There is also sparsity of detail concerning the five chicken farms, and all she was able to say was one far away at 牛頭尾 and one right up from where she lived, but the owners later ceased to raised chicken.[41]

103. But Madam Yu went even further in her oral evidence in saying that by doing cottage handicraft (ie making gloves and sewing sequined garments, and arranging for her children to assemble plastic flowers) she earned $1,000 odd to $2,000 a month (eg sewing one sequined garment in a week for $350), which she claimed would boost her total monthly earnings from the Mill, the chicken farms and cottage handicraft to about $4,000 to $6,000. But the Yu 1^st Statement never even hinted any cottage handicraft (that earned even more than Madam Yu’s work at the Mill in the early years), and Madam Yu did not explain her reticence.  In my view, Madam Yu made up her case as she went along with a view to bolster her claim that she could afford to pay rates and property tax from 1973 to 1983/1984.  I reject her evidence as unreliable.

104. But there is still more.  Initially Madam Yu denied she ever borrowed from others, but later she claimed she would turn to her colleagues (工友) at the Mill for financial help.  “我揾錢同埋問啲工友借多 – 呢個時間唔夠交呢，我就會揾啲工友嚟幫手借，借啲嚟交，我而家重爭啲工友啲錢架”. When questioned as to why the loan(s) had not been repaid after 30 years, she said “冇，幾多我就唔會講你聽呀 – 唔係，冇爭咁多，我個仔出嚟做嘢就唔使借喇麻”.  But, again, none of this can be found in the Yu 1^st Statement, and I do not believe her.  In my view, Madam Yu shrewdly embellished her evidence (which I reject as unreliable) to give the impression that she was able to support her large family as well as pay rates and property tax. I seriously doubt whether she could afford to pay rates and property tax for the Land out of her earnings in the early years from 1973 to 1983 as she alleged, which also puts into question her allegation that she and her family paid rates for the Land throughout the years.

105. Further concerns arose from Madam Yu’s allegations that she and her family paid rates for the Land until 1996 when she gave the 1996 Demand Note to the Village head黃國祺 (Wong Kwok Yee). According to Madam Yu, neither she nor Mr Tse was an indigenous Villager. In my view, she had no sensible reason to believe the Village head’s explanation of “…… 佢話原居民就唔使交差餉，佢同我哋交咁樣講，……” in asking for the 1996 Demand Note, or not to ask the Village head why the rates exemption would apply to her as a non-indigenous Villager. I think she made this up to explain why the plaintiff was able to produce documents showing Rose’s payment of rates from 1996 until 2008. Madam Yu went on to say that she later asked the Village head to return the 1996 Demand Note so she could make payment. But if she believed the Village head, she would not have asked him to return the 1996 Demand Note. Her explanation is untrustworthy.

(e) Rose’s case on payment of rates

106. As Mr Yip rightly pointed out, all documents concerning the payment of rates for the Land in/after 1996 showed that such payments were made by Rose.[42]  Mr Lam argued they demonstrated the change of name and address could not have occurred in 1969 as Rose alleged.  In my view, there can be no doubt that a change of name and address did take place since the demand notes for rates were previously addressed to Wong Snr at Hon House[43] but were later addressed to Wong Jnr or Rose at their United States address.  But I doubt whether such change took place in 1969, and subject to my observations in paragraphs 107-111 below, I cannot rely on Rose’s evidence in this respect.

107. First, when Rose was questioned about, say, the demand notes for rates for 1978/1979 and for the quarter ending 31 December 1995 which on their face were addressed to Wong Snr at Hon House, she did not make up any story to explain away such demand notes. Rather, she said she did not know why but she had been getting bills through the rating authority, and she would send cheques and get receipts. It sounded like Rose might have been mistaken over the timing of certain events, but be that as it may, her evidence over the change of name and address for the payment of rates is unreliable.

108. Secondly, Madam Yu all along claimed she only gave the 1996 Demand Note and not any other demand note for rates to the Village head.  Yet the plaintiff was able to and did produce by way of discovery a copy of the receipted demand note for rates for the 4^th quarter of 1994 (“Copy 1994 Demand Note”), which must have been in the possession of the Wong/Dare family since the plaintiff did not come into the picture until 2008.  Neither Rose nor Madam Yu offered any explanation.  Plainly, there must be more than meets the eye (which would not preclude the possibility of communications between Madam Yu and the Wong/Dare family) on the matter of payment of rates for the Land from 1969 to 1996.

109. But since I am unable to rely on Rose’s allegation that the change of name and address for the payment of rates for the Land took place in 1969 and I have rejected Madam Yu’s account of her financial ability to pay rates for the Land in the 1970s, it is inappropriate for me to speculate on the true arrangements for payment of rates over the years.

110. Thirdly, on 2 October and 12 September 2000, Rose (as administrator of the estate of Wong Jnr) completed/signed the property tax returns for the Land for 1996/1997 and 1999/2000 respectively.  In the 1996/1997 return, she declared the Land was wholly used during the year rent-free by “cousin wife” as “house sitter”.  In the 1999/2000 return, she declared that the Land was wholly used during the year rent-free by “sister-in-law” as “house sitter”.  Such information was entirely consistent with Rose’s evidence that Madam Yu (being Rose’s堂阿嫂) and her family were permitted under licence to occupy the Land and reside at Hon House free of charge and to vacate and leave on demand.

111. The Relevant Defendants did not dispute the authenticity of such property tax returns. Mr Lam chose not to cross-examine Rose on these property tax returns, which also did not feature in his closing submissions. It was never suggested to Rose that the contents of such property tax returns were untrue or that she made them up. Bearing in mind that these property tax returns were completed and submitted long before the sale to the Land to the plaintiff in 2008 and before the present litigation commenced in 2011, I find they correctly reflected the actual situation and Rose’s understanding at the time.

112. Even though the court is unable to place weight on either Rose’s or Madam Yu’s evidence over the matter of payment of rates, it does not hinder the court in making the following findings of fact on the balance of probabilities (in addition to the findings already made above):

(a) Rose and Wong Jnr came to Hong Kong in 1969 and visited Madam Yu at Hon House on the Land.

(b) Rose came to Hong Kong to visit Madam Yu at Hon House and the Land from time to time during the period from 1969 to 2008.

(c) After 2000, Rose and Yolanda visited Madam Yu at Hon House on the Land twice, including the occasion in 2004 when the Photos were taken.

(d) Rose’s purpose in coming to Hong Kong from time to time was to visit Madam Yu and Hon House which she regarded as “our house”.

(e) Rose would give money and gift to Madam Yu on each visit, and ever since Yee was alive the Wong/Dare family also sent money to Madam Yu at the end of the year.

(f) At some stage between 1969 and 1996 inclusive, the name and address for the demand notes on rates in respect of the Land was changed from Wong Snr at Hon House to Wong Jnr (and later Rose) at their United States address.

(g) From 1996 to 2008 inclusive, all rates and property tax for the Land were paid by Rose.

(h) Wong Jnr and/or Rose effected the change of name and address for the payment of rates and property tax for the owner of the Land.

(i) Rose paid rates and property tax for the Land for the owner and not as gift or pocket money for Madam Yu.

(j) At all times since the 1950s, Madam Yu knew the Land and Hon House belonged to Wong Snr and/or the Wong/Dare family. That was why Madam Yu told Rose that they had put in a bathroom/lavatory during renovation of Hon House,[44]  and Rose agreed to this as it was for Madam Yu’s own use.

Based on the above discussion and findings, I will go on to consider the nature of the occupation of the Land and Hon House by Madam Yu and her family.  But before I do so, I will deal with the 1^st and 2^nd Contentions raised by Mr Lam.

XIV. PLEADINGS

113. As I have already alluded to above, Mr Lam in his closing submissions raised the 1^st and 2^nd Contentions that had not been pleaded or set out in his written or oral opening submissions.  Even though (as seen below) these contentions could have been pleaded or put forward before trial, the Relevant Defendants did not raise them when they amended their pleadings just before trial.  Mr Lam in his closing submissions also confirmed the Relevant Defendants would not seek to re-amend their existing pleadings.

114. By the 1^st Contention, Mr Lam argued that the initial licence Wong Snr and Yee granted to Madam Yu and her family in the 1950s (and also the licence Yee granted to Madam Yu in 1967 and all subsequent licence(s) if any) were invalid and ineffective because they were granted without the concurrence of all three co-owners.  He submitted that unity of interest requires joint owners to act together for any legal act, and such point of law did not have to be pleaded.  In view of my earlier finding that Wong Snr was the sole beneficial owner of the Land, this point falls away.  But in case I am wrong, I proceed to consider the pleading issue in relation to the 1^st Contention.

115. It is necessary to start with some trite principles.  Pleadings are to ensure that the real issues in dispute between the parties can be defined in advance of trial, and this remains important throughout the litigation process.[45]  In Wing Hang Bank Ltd v Crystal Jet International Ltd & ors,[46] Ma CJHC (as he then was) emphasised the importance of pleadings.  The object of pleadings is to fairly inform the other side and the court of a party’s case, identifying the issues and the true extent of the dispute.  Where issues are sought to be introduced that had not been adequately or properly pleaded, amendments must be sought unless the consent of the other party(ies) has been obtained. It would simply not do for the unpleaded issues to be “slipped in” when evidence was being given in the hope that the other side was not sufficiently alert to object. Ultimately the court will be guided by what is fair and just in the circumstances.

116. This is echoed in Order 18 rule 8 of the Rules of the High Court (“RHC”) which provides that:

“(1) A party must in any pleadings subsequent to a statement of claim plead specifically any matter …… –

(a) which he alleges makes any claim …… of the opposite party not maintainable; or

(b) which, if not specifically pleaded, might take the opposite party by surprise; or

……

(2) Without prejudice to paragraph (1), a defendant to an action for recovery of land must plead specifically every ground of defence on which he relies ……” (my emphasis)

These requirements operate to compel the defendant who intends to raise a special ground of defence or to raise an affirmative case to destroy any claim of the plaintiff to plead specifically the matters he relies on for such purpose, and such defences must not be insinuated under an apparent traverse.  Accordingly, the defendant has a duty to state any special defence or any new fact on which he will rely at trial as otherwise the plaintiff may legitimately complain he has been taken by surprise. [47]  This is especially so for a defendant disputing a claim for recovery of land for he is statutorily required to specifically plead “every ground of defence” in his pleadings.

117. Further guidance albeit trite has recently fallen from the Court of Final Appeal on the importance of pleadings. I refer to Sinoearn International Limited v Hyundai-CCECC Joint Venture (a firm)[48] and Kwok Chin Wing v 21 Holdings Limited (formerly known as GFT Holdings Limited, Capital Prosper Limited and Rockapetta Holdings Limited) & anor.[49]

118. In the former case, Ribeiro PJ noted the extraordinary situation of a plaintiff being allowed at trial to run two alternative unpleaded cases without being required even to formulate a proposed amendment setting out what exactly those alternatives are, and the even more extraordinary situation of the plaintiff proceeding on appeal on the basis of the alternatives still not pleaded by way of amendment – and succeeding on one of those alternatives. The learned judge (with whom Chan Acting CJ, Tang PJ, Mortimer NPJ and Gault NPJ agreed) said:

“27. …… This has given rise to confusion and a real likelihood of procedural unfairness.

……

30. …… A party must raise all the issues he wishes to raise to be dealt with at the trial. Parties are not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide whether particulars should be sought; how he should plead in response; what discovery he is entitled to; what evidence he should adduce to meet it; and what points of law should be taken. ……

31. Where a late attempt is made to introduce a new case, it is doubly important that the other side should have a clearly pleaded draft amendment so that proper consideration can be given as to whether objections should properly be made to such amendment and whether an adjournment should be sought.

32. Au J stated that counsel for the defendant had not “clearly identified any specific prejudice that would have [been] caused to the defendant if [the alternative cases] are so allowed to be run” or shown “what evidence the defendant would have adduced had these alternative cases ... been specifically pleaded...” With respect, without having seen even a draft amendment such inability is not surprising. Indeed, the inability to be specific as to those matters itself constitutes prejudice.

33. When the case came on appeal before this Court, argument was frequently bedevilled by confusion as to the nature of the alternative cases contended for. There were times when the plaintiff’s argument drifted uncertainly, oscillating between what the Court had endeavoured to understand the two alternatives to be. There were gaps in the evidence that would no doubt have been considered if the case had been properly constituted. The response of counsel for the plaintiff that such gaps could be approached on the basis that “the point was not disputed” could not be accepted: How could one expect the other side to dispute, or to come ready with evidence to refute, a point that has not been pleaded or even formulated in draft?

34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly. “

Mortimer NPJ at paragraph 84 of the judgment summed it all in saying that “[claims] must be made and answered in pleadings or injustice may be the result”.

119. In the latter case, the plaintiff raised a case of joint and several liability as a point of law without pleading it, but the Court of Final Appeal held that an agreement to establish a case on the basis of joint and several liability must be properly pleaded. Ma CJ in the Reasons for Judgment said as follows:

“21. It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings. The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues:- Wing Hang Bank Limited v Crystal Jet International Limited. It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced. As the Court of Appeal remarked in Wing Hang Bank Limited v Crystal Jet International Limited:-

“(2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues. Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained. It will simply not do for unpleaded issues to be ‘slipped in’ when evidence is being given in the hope that the other side is not sufficiently alert to object.”

22. In the present case, much reliance was placed on the Plaintiff’s testimony given in cross examination to evidence the assertion made before us to the effect that the Rockapetta Group companies accepted a joint and several liability in respect of the Plaintiff’s loans. It is simply not permissible for an issue to be raised in this way: one does not sift through the evidence adduced in a trial in the hope that something was said that can conceivably found a cause of action. Issues, I would reiterate, must be properly pleaded unless for some reason the pleadings have assumed a less significant role in the proceedings. I would perhaps also observe here that in any event the said passage from the Plaintiff’s testimony at best indicates only a subjective intention on his part. This is not admissible to establish the terms (or even the existence) of an agreement.

23. The purpose of pleadings, in clearly and unambiguously setting out the true extent and nature of a dispute not just for the benefit of the parties but also for the Court in managing and trying cases, remains important under our system of civil justice. The retention of the old rules as to pleading as well as the introduction of new provisions over four years ago under the Civil Justice Reform, reinforce this.

24. One of the new provisions introduced under the Reform was RHC o.18 r.12A which reads:

“ A party may in any pleading make an allegation of fact which is inconsistent with another allegation of fact in the same pleading if–

(a) the party has reasonable grounds for so doing; and

(b) the allegations are made in the alternative.”

If the Plaintiff had, as he ought to have done, sought leave to plead a case on joint and several liability, questions would inevitably have been raised as to whether the Plaintiff could in the first place properly plead such a cause of action, which would have been (at least at first blush) quite inconsistent with his pleaded case based on the Initial Agreement and the Subsequent Agreement. The cause of action based on these Agreements assumed that there was no pre-existing liability as far as RHL was concerned, hence the need to enter into agreements which made RHL liable for the repayment of the loans to the Plaintiff.  In these circumstances, it would therefore have been quite difficult to see how a pre-existing liability jointly and severally assumed with others, fitted in.  Before us, the Plaintiff did not provide any enlightenment on this.  To me, this only served to highlight even more the insuperable weaknesses in the Plaintiff’s case made on this new basis.

……

26. This appeal is the second case in which this Court has recently had occasion to comment on pleadings (or rather, the lack thereof).  In Sinoearn International Limited v Hyundai-CCECC Joint Venture, Ribeiro PJ referred to the “extraordinary” position of a party being permitted to run at trial an unpleaded case.  I associate myself with the sentiments expressed in that judgment.  As stated by Ribeiro PJ:-

“34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly.”

27. The failure properly to raise a cause of action based on joint and several liability would have been enough to dispose of this appeal. ……”

120. Before applying the above principles, it is necessary to place the 1^st Contention in context. First, the plaintiff’s pleadings clearly averred there were three co-owners holding the legal title to the Land, and Wong Snr was the sole beneficial owner.  Nowhere in the plaintiff’s pleadings or in Rose’s witness statements (which according to 20/4/12 Order were to stand as her evidence-in-chief) was it averred or stated that the licence(s) granted to Madam Yu and her family had the concurrence of the other two legal title co-owners.  The plaintiff had made known their case/evidence on the subject from the beginning, and the Relevant Defendants could have raised the 1^st Contention well before trial had they wished to do so.  I note Mr Lam did cross-examine Rose on the issue of beneficial ownership of the Land, but the 1^st Contention had not been pleaded.

121. Secondly, the Relevant Defendants’ pleadings ran essentially a single defence by asserting adverse possession and denying permissive occupation.  In short, the defence was a traverse by denial, and it operated to contradict what was alleged by the plaintiff and to put it in issue. The object of a traverse denial defence does not seek to set up some other ground for avoiding/escaping legal liability or to dispute the sufficiency of the plaintiff’s allegations in point of law.[50]  It must be distinguished from a special defence which “confesses and avoids”, ie a defence plea which, while confessing or assuming the truth of material facts alleged by the plaintiff, seeks at the same time to avoid and destroy the legal consequences of those facts.[51]  A useful illustration is given in Jacob and Goldrein, Pleadings: Principles and Practice as follows:[52]

“It is one thing for a defendant to deny that he entered into the contract alleged in the statement of claim; it is another thing for him to admit that he did so contract and then plead new matters to show that the contract was void from its inception or that it has been subsequently rescinded or performed.”

122. Plainly, the 1^st Contention was a special defence that “confesses and avoids”, and hence “must be clearly and distinctly pleaded …… and must not be mixed up with traverses or insinuated into pleas of which deny the facts alleged by the plaintiff”.[53] The Relevant Defendants’ primary defence was to deny the existence of any licence, but the 1^st Contention went further by saying that if a licence had been granted as alleged (which the Relevant Defendants denied), then such licence would be invalid and ineffective without the concurrence of the other two co-owners.  Such special defence would be premised on the assumed material fact of the existence of the licence and the further material fact of lack of concurrence by the other co-owners in granting any licence, which must be separately and specifically pleaded otherwise it would have taken the plaintiff by surprise.  Indeed, Mr Yip confessed he had been surprised by the 1^st Contention newly raised in Mr Lam’s closing submissions. Had this been raised earlier, the plaintiff would have had the opportunity to address this point by, say, amending their pleadings to plead their response and/or calling upon the other legal title co-owners to give evidence or to ratify the acts done by members of the Wong/Dare family.

123. Mr Lam submitted that the plaintiff could have adduced witness evidence from the other two co-owners had they wished to do since the matter of beneficial ownership had been raised in the plaintiff’s existing pleadings and in the Rose 1^st Statement. I fear such submissions reflect misunderstanding of the function of pleadings discussed above which is to identify the issues and the scope of the dispute to enable the other side to know the case they have to meet.  The other side should not be left to speculate what points may be taken beyond the parameters of the pleaded defence.  Here, even though the plaintiff might have been satisfied in meeting the existing defence on Rose’s evidence, there is no telling whether (if they were informed that the Relevant Defendants would rely on the 1^st Contention) they would wish to adduce further evidence. I agree that the plaintiff had been surprised and forensically prejudiced by the late revelation of the 1^st Contention.

124. Mr Lam next argued that Order 18 rule 7 of the RHC provides that only material facts and not law should be pleaded, so it is unnecessary to plead the 1^st Contention.  In his oral closing submissions and in his supplemental written closing submissions submitted after trial without leave, he argued that the material facts had been pleaded in the plaintiff’s Amended Reply and Defence to Counterclaim, and since the point of law in the 1^st Contention was premised on material facts found in the plaintiff’s pleadings he was entitled to raise the same.

125. Mr Lam cited Suen Shu Tai v Tam Fung Tai [54] in support, but I am afraid such case does not assist him. In that case, the plaintiff claimed inter alia for a declaration that the assignments of two properties be set aside as having been procured by the defendant’s undue influence over and/or fraud on and/or misrepresentation to the plaintiff, a declaration that the defendant held the properties as constructive trustee, and an order that the properties be conveyed to him.  The defendant complained that the plaintiff never expressly pleaded a case of resulting trust.  The learned judge found that although the term “resulting trust” did not appear, all material facts sufficient to give rise to a resulting trust had been set out in the plaintiff’s pleadings,  hence it was open to the plaintiff to present in argument the legal result which those facts permitted.

126. Here, the situation is wholly different.  Unlike the plaintiff in Suen Shu Tai, the Relevant Defendants were not relying on material facts which they had already pleaded in their own pleadings.  Rather, they relied on averments in the plaintiff’s pleadings which they had never “confessed and avoided”. “Confession and avoidance” is a special defence that must be specifically pleaded otherwise the other party may be taken by surprise. Plainly, the Relevant Defendants had to “confess” (ie to plead the assumed fact (which was denied) that licence(s) had been granted) and “avoid” (ie to aver that (a) the other two co-owners did not concur in the grant of such licence(s), and (b) such licence(s) were therefore invalid and ineffective).

127. This, in my view, is not pleading law (ie unity of interest amongst co-owners) but pleading material facts and a point of law which is necessary.  As regards the need to plead the material facts, Jacob and Goldrein, Pleadings: Principles and Practice states that “[the] defendant must plead all the material facts relied on as constituting an “avoidance” of what he otherwise confesses ……”[55]  As regards the point of law, Order 18 rule 11 of the RHC provides that a party may by his pleading raise any point of law.  As explained in Hong Kong Civil Procedure 2014,

“There is a vital distinction between pleading law, which is not permitted, and raising a point of law in a pleading, which is both permitted under r.11, and is frequently necessary. Pleadings law tends to complicate the pleading and obscure the facts giving rise to the case being advanced; raising a point of law may define or isolate an issue or question arising from the facts as pleaded, and indeed be essential if the case is to be advanced properly ……” (my emphasis)[56]

“An objection in point of law must always be taken clearly and explicitly ……”[57]

128. No plaintiff on reading the Relevant Defendants’ pleadings that merely focused on traverse by denial would have been able to anticipate a “confession and avoidance” defence.  I echo the salutary guidance by the Court of Final Appeal referred to above.  The plaintiff was entitled to know from a clear pleading what was the entire case they had to meet so that they could decide how to respond, what evidence to adduce to meet it, and what points of law to take. In my view, it is not open for the Relevant Defendants to raise the 1^st Contention against the plaintiff’s claim.

129. But Mr Lam had other arguments up his sleeve.  He relied on the 2^nd Contention as follows:

(a) The Amended Reply and Defence to Counterclaim averred that in/about 1967 Yee/Rose granted a licence to Madam Yu and her family to occupy the Land and to reside at Hon House free of charge upon the Conditions, and since 1969 and from time to time until 2008 Rose would return to Hong Kong to visit Madam Yu and on each occasion she would grant a similar licence for them to occupy the Land and to reside at Hon House.

(b) But the Rose 1^st Statement fell short by stating it was Yee who granted the licence in 1967 without mention of further express grant of licence on/after 1969 for Madam Yu and her family to occupy the Land and to reside at Hon House.

(c) ⅓ of the legal title of the Land was vested in Wong Jnr by a vesting assignment in 1993. Yee died in 1998.

(d) A revocable licence is automatically terminated by death of the licensor or assignment of the land.[58]

(e) Given the state of the evidence set out in (b)-(c) above, the licence granted to Madam Yu and her family in 1967 was terminated as a matter of law in 1993 when the Land was assigned or at the latest in 1998 when Yee as the last licensor died, and there was no valid licence continuing thereafter.

(f) The 12-year limitation period running from either 1993 or 1998 expired by 2005 or 2010.

130. None of the matters set out in the above paragraph had been pleaded in the Relevant Defendants’ pleadings.  But had they wished to raise the 2^nd Contention, they could have done so long before trial.  The material facts drawn from the plaintiff’s pleadings and evidence being the Rose 1^st Statement (which statement was to stand as Rose’s evidence-in-chief pursuant to the 20/4/12 Order) served a long time ago were there to be pleaded, but the 2^nd Contention was not mentioned in either the Relevant Defendants’ pleadings or Mr Lam’s opening submissions.  Mr Yip submitted he was surprised by the 2^nd Contention raised only in Mr Lam’s closing submissions.

131. As explained above, the Relevant Defendants’ pleadings raised traverse by denial. But it is abundantly clear from paragraph 129 above and also from paragraph 15 of Mr Lam’s written closing submissions (which states that “even accepting the entirety of the Plaintiff’s evidence, his claim must fail”) that the Relevant Defendants were raising another “confession and avoidance” defence, which being a special defence must be separately and specifically pleaded.  In my view, failure to plead the 2^nd Contention unfairly takes the plaintiff by surprise.  From a mere denial of the existence of any licence/permission for occupation, one can hardly envisage that the Relevant Defendants would run a line of defence on the contrary premise that had there been such licence/permission it had been terminated without any re-grant.  To avoid surprise and, more importantly, to enable the plaintiff to properly frame their response (which might include adducing further witness evidence from Rose or other evidence) this must be specifically pleaded. All the above observations in relation to the 1^st Contention apply mutatis mutandis.

132. In his written supplemental closing submissions lodged after the trial without leave, Mr Lam submitted that since the material facts had been pleaded in the plaintiff’s Amended Reply and Defence to Counterclaim, there was no need to plead the termination of the licence(s) by operation of law.  He said the previous grant of licence(s) by Wong Snr and/or Yee in 1950s and in 1967 were not material allegations that the plaintiff had to prove. Instead, the material allegation was the grant of licence on each occasion of Rose’s visits to Madam Yu from 1969 to 2008 and the failure of the plaintiff’s evidence (ie the Rose 1^st Statement which was to stand as Rose’s evidence-in-chief pursuant to the 20/4/12 Order) to support this.

133. I have explained why a defendant cannot point to the plaintiff’s pleadings to raise a “confession and avoidance” defence.  It is not for the plaintiff to speculate which factual matter in his own pleadings that a defendant will pick and choose to make up a defence.  Worse still, here the Relevant Defendants did not simply point to facts pleaded in the Amended Reply and Defence to Counterclaim.  The material facts for raising the 2^nd Contention were a combination of (a) facts selected from the plaintiff’s pleadings and (b) perceived evidential insufficiencies elicited from the Rose 1^st Statement.  But as explained in paragraphs 121-122 above, the defendant must plead all the material facts including the facts relied on as constituting an “avoidance” of what he otherwise confesses. Had the 2^nd Contention been properly constituted in the Relevant Defendants’ pleadings, the plaintiff would have been afforded the opportunity to respond by way of pleadings and to re-consider the sufficiency of the evidence they wanted to adduce.  As Ribeiro PJ rhetorically asked in Sinoearn Interanational Limited, “[how] could one expect the other side to dispute, or to come ready with evidence to refute, a point that has not been pleaded or even formulated in draft?”[59]

134. I respectfully agree with Ma CJ in Kwok Chin Wing that the Relevant Defendants had to make quite clear what line of defence they were adopting and to properly plead any alternative defence. I refer to Order 18 rule 13(5) of the RHC introduced by the Civil Justice Reform which provides that:

“Where an allegation made in a statement of claim …… is traversed by a denial, the party who denies the allegation shall in his defence …… –

(a) state his reasons for doing so; and

(b) if he intends to put forward a different version of events from that given by the claimant, state his own version.”

The main object of this rule is to bring the parties by their pleadings to an issue, and indeed to narrow them down to definite issues, and so diminish expense and delay, especially as regards the amount of testimony required on either side at the hearing.[60]

135. Significantly, in the case of Ho Hang-wan cited by Mr Lam, the plaintiff’s primary case which failed was that she entered into possession as an adverse possessor.  It was contended “in the alternative” that she entered into possession as a licensee but such licence was automatically terminated by operation of law upon the death of the registered proprietor.[61]  In my view, such contention being undoubtedly an “alternative contention” must be properly pleaded.  I therefore find there was no proper pleading of the 2^nd Contention and it is not open for the Relevant Defendants to raise the same.

136. Given my findings of fact and my conclusion that the Relevant Defendants could not raise the 1^st and 2^nd Contentions, there is no basis for them to argue that any licence granted by Wong Snr and Rose in the 1950s and by Yee in 1967 for Madam Yu to occupy the Land and to reside at Hon House was terminated on/before 2008 when (as I accept) Rose telephoned to tell Auntie Keung to move out soon because the Land had been sold.  That being the case, since possession under licence is not adverse against the paper owner, there was insufficient period of continuous uninterrupted adverse possession of the Land and Hon House by the Relevant Defendants under the LO be it 12 years or 20 years.

137. But if I am wrong and the Relevant Defendants are entitled to raise the 2^nd Contention on the basis (as suggested by Mr Lam in his written closing submissions) of “accepting the Plaintiff’s all evidence (as opposed to its pleadings ……)”, I will proceed to consider the 2^nd Contention on the basis of the evidence before the court. On this basis, it would be inappropriate to constrain the parties by their existing pleadings since (a) the Relevant Defendants did not plead the 2^nd Contention, (b) the plaintiff therefore did not have the opportunity to respond to the 2^nd Contention on their pleadings, and (c) the Relevant Defendants also relied on perceived insufficiencies of the plaintiff’s evidence to establish the 2^nd Contention.[62]

XV.  2^ND CONTENTION ON THE EVIDENCE

138. Relying heavily on J Alston & Sons Ltd, Mr Lam argued that a person who intends to exercise exclusive control over property, for his own benefit, for the time being, does have the intention to possess, and is in possession.  He submitted the fact that the occupier believes he has the owner’s permission, when in reality he does not have such permission, does not prevent him from being in possession.  If there is no such permission, then there is no basis for treating the possession as vicarious. On such basis, it was said that even accepting all of the plaintiff’s evidence (as opposed to their pleadings), the original licence granted to Madam Yu and her family in 1950s by Wong Snr and Yee and the further licence granted in 1967 by Yee terminated as a matter of law in 1993 (when the Land was assigned/vested in Wong Jnr) or in 1998 (when Yee as the last licensor passed away), and the limitation period therefore expired in 2005 or 2010.

139. As explained above, since Mr Lam premised the 2^nd Contention on the plaintiff’s evidence as opposed to their pleadings, I shall consider the totality of the evidence before me to see whether or not the Relevant Defendants’ occupation was adverse.  If it can be shown on the evidence that their occupation of the Land and Hon House (especially after 1993 or 1998) was permissive (whether express or implied), then their occupation could not be adverse and time would not run in their favour.

140. On that note, I turn to the general principles on occupation under permission/licence.  As explained above, the starting premise is that a person’s occupation of land with the licence/permission of the true owner cannot be adverse.  It is said in Jourdan and Radley-Gardner, Adverse Possession,[63] that such principle applies even if the person taking possession is ignorant of his right to the land[64] or would prefer to hold independently of it.[65] Whether or not permission for the occupation of the land that stops the limitation period from running has been granted is a question of fact. It may be express or it may be implied.[66]

141. Jerome Chan J in Incorporated Owners of Chungking Mansions v Shamdasani [67] citing Wallis’s Cayton Bay Holiday Camp Ltd v Shell-Mex & BP Ltd [68]said it is trite law that a person who enters upon the land under a licence cannot claim to be in adverse possession, and “[it] is not necessary for such licence to be in writing to operate to defeat limitation”.  However, the decision in Wallis’s Cayton Bay Holiday Camp Ltd (which apparently established a doctrine of implied licence from the true owner to the would-be adverse possessor without any factual basis for such implication)[69] was reversed in England by the Limitation Act 1980, schedule 1, paragraph 8(4).  There is no equivalent statutory provision in Hong Kong, but in Man Kam-tong v Man Lin-tai,[70] Hunter J distinguished Wallis’s Cayton Bay Holiday Camp Ltd and followed the traditional approach,[71] which means a licence will not be inferred simply because the owner of the land acquiesces in the occupation of it by someone with no right to be there. In the absence of definitive local authority, I shall assume (without decision) the higher threshold advocated in Man Kam-tong that is consistent with the English position. That being the case, an implied permission must be actual permission; and such actual permission must be found as a fact.[72]

142. Two tests have been propounded for implied permission in England. The first was formulated by Smith J in Regina (Beresford) v Sunderland City Council,[73] but her decision was reversed by the House of Lords.[74]  Nevertheless, Smith J’s formulation was adopted in a number of subsequent cases, but the courts in those cases were not informed that her decision had been overruled.[75]  The oft-cited formulation of this test is the one adopted by Etherton J in London Borough of Lambeth v Rumbelow:[76]

“…… in order to establish permission in the circumstances of any case two matters must be established. Firstly, there must be some overt act by the land owner or some demonstrable circumstances from which the inference can be drawn that permission was in fact given. It is, however, irrelevant whether the users were aware of those matters. …… Secondly, a reasonable person would have appreciated that the user was with the permission of the land owner.”[77]

Further evolution of this test made clear that if permission is to be implied, it must be a necessary implication, ie an implication which arises necessarily on the particular facts of the case.  In Hicks Development Ltd v Chaplain & anor,[78] Briggs J approved the test by Smith J and explained that “[as] with other cases where the question is whether something should be implied, it is not enough that the overt acts or demonstrable circumstances are consistent with there having been permission.  They must be probative of it”.

143. The second test was derived from the speech of Lord Walker in the appeal decision in Regina (Beresford),[79] ie that in order to establish a licence, there must be communication, in writing, by spoken words or by overt and unequivocal conduct, that was intended to be understood, and was understood, as a permission to do something that would otherwise be an act of trespass.

144. Although there is no final determination as yet on the applicable test for implied permission, learned textbooks have leaned in favour of the formulation by Lord Walker.[80]  Indeed, although HH Judge Marshall QC in J Alston & Sons Ltd did not have to consider the two tests, she “would have preferred” the test propounded by Lord Walker “because, in my judgment, even if I apply the test as set out in Batsford, I should do so with due regard to the warnings of Briggs J in Hicks, and on that basis, I can find no evidence sufficient to support a finding that there was an implied permission in fact”.[81]

145. Neither counsel has referred me to any definitive judicial guidance in Hong Kong on the issue of implied licence in the context of limitation claims.  Although the Court of Appeal in Yu Kit Chiu and Yu Hon Chiu the executors of Yu Ki Cheung alias Yu Sui, alias Yu Siu Tong, alias Yu Wing Lik, alias Yu Kee Cheung alias U Kay Cheung, alias Yee Yau Nin, deceased v Chan Shek Woo & anor [82] referred to the two tests, it refrained from expressing a view on the issue.  That being the case, I shall assume (again without decision) that the second test by Lord Walker (which appears to set a tighter threshold and which is in line with the obiterview in J Alston & Sons Ltd, a case strongly relied by Mr Lam)is applicable. However, as seen below, it does not matter whether the first or second test is applied in the present context.

146. Under the test propounded by Lord Walker, it is important to distinguish between acquiescence and express/implied permission.  Silent passive inactivity on the part of the landowner amounting merely to acquiescence is not enough to stop the limitation period from running. For example, in J Alston & Sons Ltd it was said as follows:[83]

“[133] …… I can find no evidence sufficient to support a finding that there was an implied or any permission in fact. To do so, I would have to be satisfied that there was evidence suggesting that such a permission was actually given, by implication after 25 March 1977, and that Alstons’ occupation was then pursuant to it.

……

[136] …… I am unable to find that there was, as a matter of fact, an implied permission to Mr Alston to continue his farming activities after 1977, when Pauls became the paper owner of the orange land, as opposed to mere acquiescence or non-objection by it.

……

[138] …… Plainly, the mere fact that Mr Alston continued to farm without objection or comment from Pauls is nothing but acquiescence by it. To find that gave rise to an implied licence is to fly in the face of the basic proposition that, at law, the actual permission granted in 1974 terminated.

[139] …… The evidence is simply insufficient to be probative of [an implied permission]. It may be consistent with such a possibility, but that is not enough.”

147. A classic case where permission is often implied[84] is where (a) the parties are negotiating for the grant of an interest in land and the squatter occupied land pending such negotiations,[85] or (b) an owner threatens to take action to eject an occupier and then reconsiders and changes his stance.[86]  But as explained by Neuberger LJ in Tower Hamletts LBC v Barratt,[87] each case is fact dependent.

148. Upon the above legal principles, I turn to circumstances of present case. I rely on the above findings of fact (especially those in paragraph 129 above) and also the findings in paragraphs 149-153 below.

149. I accept on balance that on 15 October 1984 Madam Yu and the 1^st Son purchased a Home Ownership Scheme flat in Tuen Mun, New Territories, Hong Kong (“HOS Flat”).  Madam Yu claimed that at that time it was required that a Home Ownership Scheme flat be purchased in the joint names of two persons, so she became a co-purchaser at 1^st Son’s request.  But all purchase monies and mortgage payments were paid for by the 1^st Son, and she had no interest in the HOS Flat.  Madam Yu continued to live at Hon House.  In 1985, the 1^st Son got married, and he and his wife lived at the HOS Flat.

150. I also accept Rose’s evidence that she dealt with the Land even before Wong Jnr passed away in 1997.  I find on balance that in the past ten odd years (probably after Wong Jnr passed away and/or after the Land was vested in her children) Rose mentioned to Auntie Keung on two occasions when she visited the Land that she and the other two co-owner families were thinking of selling the plots of land they owned in the Village including the Land, and Auntie Keung should make ready for moving out. I also accept that Auntie Keung replied by saying she was waiting for a public housing unit (廉租屋/廉價屋) and she would move out then.

151. Mr Lam argued that since it was not known when Madam Yu would obtain a public housing unit, the situation was like J Alston & Sons Ltd in that she “would like to possess [the Land] as long as she could”. Mr Lam claimed that Madam Yu’s assertion was inconsistent with any purported licence that was revocable on notice, and it was not enough for the plaintiff to simply say Madam Yu knew the Land belonged to the Wong/Dare family.

152. I find on balance that Madam Yu had not been truthful when she told Rose she was waiting for a public housing unit and she would move out then.  First, apart from her bare assertion there is simply no evidence that Madam Yu had ever applied for a public housing unit. Secondly, it was improbable that Madam Yu as a legal title co-owner of the HOS Flat with the 1^st Son would have been waiting for a public housing unit.  It is common knowledge that applicants for public rental housing must not own domestic property in Hong Kong.  I find on balance that Madam Yu upon being alerted by Rose that she would soon be required to move out of the Land and Hon House made up the excuse of waiting for a public housing unit as a stalling tactic to postpone her inevitable departure from the Land upon sale, but she well knew (as she had been expressly told so by Rose) that in due course she would have to leave and vacate upon sale of the Land.

153. I have found that in 2008 Rose made a telephone call to Auntie Keung from the United States and told her the Land would be sold and asked her to move out soon. I accept on balance that upon hearing that Auntie Keung became very angry and scolded Rose for bullying her because she was poor (欺負佢窮).  Rose was very angry on hearing this as their family had been treating her so well and allowing her and her family to live at Hon House without any payment.  Rose hanged up and did not talk to Auntie Keung any more.  I find Madam Yu’s denial of such telephone call unreliable, and on balance I do not accept her allegations that (a) in/about April/May 2008 the Village head came to tell her Hon House had been sold and gave her two months’ notice to move out, (b) she refused and told him she was the owner of Hon House, and (c) despite her enquiries the Village head refused to tell her whom he represented. Since then, Madam Yu and her family refused to move out from the Land despite demands.

154. In my view, the above situation is wholly different from that in J Alston & Sons Ltd. In that case, the mill owner allowed the claimant to possess the orange land as a “mere licensee, paying no rent” who would have to give up possession whenever required to do so.  The mill was sold in 1977.  The claimant learned of the sale through local knowledge but was never approached by the new owner, so he simply carried on farming the orange land in the same way.  Over the next 20 years, ownership of the mill passed through various hands and ended up with the defendant.  In 1994, construction of a highway led to gravel extraction agreements with the mill owner and the claimant over their land.  When the extraction was completed, without enquiry or ceremony the orange land was given back to the claimant for farming.  First registration of the land took place in 1999. But none of the above developments prompted the mill owner to clarify with the claimant the nature of its farming arrangement on the orange land. In 2006, the claimant requested the defendant to recognise it as the owner of the orange land pursuant to adverse possession, and one of the defendant’s arguments was the claimant had occupied the orange land under some form of implied licence.  It was in those circumstances that HH Judge Marshall QC found as a fact that the defendant did not give any permission for the claimant’s occupation of the orange land.

155. According to Mr Lam’s closing submissions, the critical period here would be (a) between 1993 (when Rose as administrator of the estate of Wong Jnr assigned/vested ⅓ of the legal title of the Land to Yolanda/Earnest) and 2005 (12 years later) or (b) between 1998 (when Yee as the last licensor passed away) and 2010 (12 years later).  I shall therefore focus my discussion on such periods.

156. In my view, on the plaintiff’s evidence and my findings of fact, plainly this was not a case of silent passive inactivity or acquiescence on the part of the owner.  As I have found, all along Madam Yu and her family well knew that the Land and Hon House were owned by Wong Snr and later by his descendants as represented by Yee and/or Rose, and that they occupied the Land and Hon House with permission until they had to leave and vacate the Land upon demand.

157. But unlike the defendant in J Alston & Sons Ltd who never approached the occupier, here there was a good deal of communications going on between the parties throughout the years, including the period from 1993 to 2008.  From the entries in Rose’s available passports, even after 1993/1998, she came to Hong Kong at least seven times in 1999, 2000, 2001, 2002 (twice), 2004 and 2005. I have found that the essential purpose of her visits to Hong Kong was to visit Madam Yu and “our house” ie Hon House. In 2000, Rose as administratrix of the estate of Wong Jnr vested ⅓ of the legal title of the Land in Yolanda/Earnest.  After 2000, Rose brought Yolanda being a beneficial co-owner of the Land to twice visit Madam Yu and Hon House being the ancestral home of the Wong/Dare family (and the Photos were taken during the visit in 2004).

158. In my view, the whole tenor of the evidence was that (a) the Wong/Dare family was anxious about their legal and beneficial ownership rights in the Land by ensuring the legal title was properly vested and by purposely and regularly returning to Hong Kong as landowner to check on Madam Yu and the Land, and (b) Madam Yu knew this from the visits by Rose and later by Rose with Yolanda over the years.  This is consistent with Rose’s evidence that since the late 1990s the three legal title co-owner families were attending to the title formalities over their respective share of the legal title of the Land before contemplation of sale of the Land.

159. In my view, this is not a case of a landowner passively standing by. The above analysis lends credence to the plaintiff’s suggestion that throughout the years it was intended and also understood that Madam Yu and her family would be permitted/allowed to occupy the Land and Hon House.  An illustration of such understanding is Madam Yu taking the initiative to inform Rose of the remodelling of the bathroom at Hon House, and Rose endorsing it as being for Madam Yu’s own use.  Had Madam Yu intended to exclude the owner as best as she could or had her occupation not been under permission, there would not have been any need for her to inform Rose of the remodelling or for Rose to endorse it.  This is overt conduct by the owner and not silent inactivity. I also refer to my findings in paragraph 96 above.

160. Even more significantly, Rose personally told Madam Yu twice during the relevant period (ie after 1997 and before 2008) that she and the other two co-owner families were thinking of selling the plots of land they owned in the Village including the Land, and Madam Yu should make ready for moving out. In notifying Madam Yu of the owner’s intention to sell the Land and asking her to be ready to move out (instead of demanding their immediate departure), Rose must have been tacitly agreeing that Madam Yu and her family could remain in occupation, at least pending the intended sale of the Land.  In my view, this is overt act by spoken communication that unequivocally demonstrated (or from which natural and/or necessary inference could be drawn in all the circumstances surrounding the possession at that time) that permission was in fact given to Madam Yu and her family to occupy the Land and reside at Hon House. I find that such spoken words were intended to be understood and were understood by Madam Yu as permission to remain on the Land until the sale of the Land. Plainly, Rose intended Madam Yu and her family as licensee, and Madam Yu and her family thought that they were. The fact that Madam Yu in her reply adopted a stalling tactic did not alter the reality that Rose did intend and Madam Yu well understood that she and her family could remain in permissive occupation pending the sale of the Land.

161. In my view, there was reason why Rose would wish the Land to continue to be occupied by Madam Yu and her family under permission. Pending the sale of the Land, the Wong/Dare family had no immediate need for possession of it, and it served no practical advantage for Rose to evict Madam Yu prior to a sale of the Land. Indeed, it would have been the wish of the Wong/Dare family to avoid having looking after the Land and Hon House themselves since they lived faraway in San Francisco.  All along Madam Yu had looked after the Land and Hon House on their behalf. All Rose did was to forewarn Madam Yu of an impending sale of the Land and that her permissive occupation would cease when such sale materialised.

162. I also take comfort from the fact that during this period Rose by the 1996/1997 and 1999/2000 property tax returns confirmed that the Land was occupied rent-free by “cousin wife” as “house sitter”, which is entirely consistent with the aforesaid tacit or implied permission for Madam Yu to continue to occupy and look after the Land and Hon House, at least pending the sale of the Land. As discussed above, Rose was not cross-examined at all on such property tax returns, and Mr Lam in his closing submissions did not suggest that such documents were unreliable.

163. I find by obvious and necessary inference from all the facts and matters in evidence before me that after 1997 and before 2008 possession of the Land and Hon House by Madam Yu and her family was with permission as opposed to mere acquiescence or non-objection, and hence they were not in adverse possession of the Land.  Rose made an express decision to permit occupation by Madam Yu pending sale of the Land, and the occupation continued to be permissive for that reason until 2008 when Rose told Madam Yu it was not and asked her to leave and vacate the Land. In my view, the evidence is plainly probative of this.  Such occupation was permissive and not as of right, and I so find on the basis of the test by Lord Walker, but the same result would also be achieved on the Rumbelow test. Such conclusion is determinative of this case because the Relevant Defendants have failed to establish continuous and uninterrupted adverse possession for 12 years (let alone 20 years) as required by the LO in order to extinguish the plaintiff’s title to the Land and Hon House and to bar the cause of action for possession.

164. It is unnecessary for me to go further, but in my view the totality of the evidence before this court is sufficient for me to find as a fact by inference on the balance of probabilities that during Rose’s visits to the Land throughout the years she intended and Madam Yu understood that Madam Yu and her family could remain on Land until they were required to leave. I also refer to my findings in paragraph 96 above.

165. There has been some debate between counsel as to whether the relevant limitation period should be 20 or 12 years.  Mr Yip suggested that the pre-1991 law was applicable since the amending legislation in 1991 did not affect pre-existing rights, so the relevant period should be 20 years. Mr Lam suggested it should be 12 years.  On the above analysis such difference between counsel is immaterial, and the Relevant Defendants failed to establish adverse possession irrespective whether the applicable limitation period is 12 years or 20 years.

XVI.  CONCLUSION

166. The Relevant Defendants’ plea of adverse possession fails. I therefore order that the 1^st, 2^nd, 3^rd and 4^th defendants to deliver vacant possession of the Land and Hon House to the plaintiff, and dismiss the Relevant Defendants’ counterclaim. Although the plaintiff claimed damages for trespass, they have not led any evidence as to the damages they suffered as a result of the defendants’ wrongful trespass nor the value of mesne profits for their occupation of the Land and Hon House since 2008. In the circumstances, the plaintiff’s claim for damages for trespass is dismissed.

167. There is no reason why costs should not follow event. I therefore grant a costs order nisi that the 1^st, 2^nd, 3^rd and 4^th defendants shall pay to the plaintiff costs of this action (including costs of the 1^st, 3^rd and 4^th defendants’ counterclaims and all costs reserved, if any) to be taxed if not agreed, and the 1^st, 3^rd and 4^th defendants’ own costs be taxed in accordance with Legal Aid Regulations.