CHEUNG CHI KUI v. LI SIU KWONG

HCMP 2990/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2990 OF 2014

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REASONS FOR JUDGMENT

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1.  These proceedings concern a piece of land known Lot no 955 in DD369, Pak Tam Road, Tsak Yue Wu, Sai Kung, New Territories (“Property”). The defendant is an indigenous villager.

2.  According to the Land Registry’s records, the registered owner was/is the defendant.  By a New Grant No 7718 dated 24 May 1990 (“New Grant”), the government granted inter alia the Property to the defendant under the Small House Policy allowing him to build and erect a village-type house on the Property.

3.  The plaintiff claims that at some stage the defendant assigned the Property to a property development company Well Hint Investment Limited (“Well Hint”) for construction of the village-type house under the New Grant.  The annual return of Well Hint made up to 30 June 1993 shows that Leung Pok Heng and Chan Vai Leng were its only shareholders and directors.  It appears that the defendant was not a member of Well Hint at the material time.

4.  The plaintiff further claims that Well Hint appeared to have made plans to develop village-type houses for the Property and also for the adjacent Lot nos 954 and 956 in DD369, Pak Tam Road, Tsak Yue Wu, Sai Kung, New Territories as evident from correspondence from the Buildings and Lands Department in 1991.  Such correspondence shows that Well Hint had applied to such department for approval of proposals in respect of site formation in respect of “Pak Tam Road, Tsak Yue Wu, Sai Kung – D D 369 Lots 954 & 955 & 956”, and consent was given on terms set out therein.

5.  The plaintiff claimed that subsequently a village-type house comprising 3 floors (ie G/F, 1/F and 2/F) of 700 sq ft each in size was constructed (“House”).

6.  In 1994, the plaintiff through Fameman Ltd (“Fameman”) (now known as Media Online Ltd of which he was a director and 51% shareholder) intended to purchase the Property.  By a provisional agreement for sale and purchase dated 9 February 1994 and a supplemental provisional agreement for sale and purchase dated 25 February 1994, Well Hint agreed to sell and Fameman agreed to buy the Property and the House erected thereon for the price of $4,950,000 (collectively, “Agreements”). 

7.  Pursuant to the Agreements, the plaintiff through Fameman paid the initial deposit of $742,500 and further deposit of $742,500 totalling $1,485,000 by 15 March 1994.  The plaintiff was given the keys to the House, and he moved into the House with his family comprising his two elder daughters, his eldest son and a domestic helper to reside thereat.  In 1995, the plaintiff married his wife, and she and her daughter also moved into the House.  They carried out interior decoration/renovation and extensive works for the garden.  The plaintiff claims he had spent about $600,000 for such works.

8.  The plaintiff’s son Cheung Wai Lun also signed an undertaking dated 7 April 1994 in respect of the House in favour of the Water Authority.  In 1998, the plaintiff applied for Sai Kung Country Park (Pak Tam Chung Barrier) Permits for vehicular access, and such permits were granted for G/F and 2/F of the House on 24 April 1998.  In his application form, the plaintiff stated he expected to sign the formal agreement for sale and purchase for the Property shortly.

9.  Well Hint did not pay the government premium in accordance with the lease conditions attached to the New Grant and/or pursuant to the Agreements.  In 1995 and later in 2000 respectively, the District Lands Office issued first and second final warning letters to the defendant as registered owner of the Property to comply with the lease conditions, failing which the government would re-enter upon the Property.  Still Well Hint failed to obtain the certificate of compliance from the government in relation to the Property, sign the formal agreement for sale and purchase with the plaintiff, or arrange to grant legal title over the Property in favour of the plaintiff.

10.  On 30 June 2000, Fameman (then known as Hertz Communications Limited) commenced HCA6566/2000 against Well Hint for breach of the Agreements, for return of the deposits paid and for damages (ie property agency fees of $99,000 and decoration costs of $600,000).  In the Statement of Claim, it was averred that the defendant had evinced an intention no longer to be bound by the Agreements, and had thereby wrongfully repudiated the same. 

11.  Well Hint did not file any Defence, and on 28 July 2000 final and interlocutory judgment was entered in favour of Fameman against Well Hint.  The defendant was not a party to such legal proceedings.  But the plaintiff claims that up to 2000 the defendant being the indigenous t’ing had not taken any steps to secure the Property.

12.  The plaintiff claims that in January 2001 he decided to take effective and exclusive control of the Property and the House against the defendant as paper owner.  Since 21 February 2002 until 5 September 2007, the plaintiff let the Property to third party tenants as evidenced by various tenancy agreements.  The plaintiff claims he continued to carry out renovation, decoration, maintenance and gardening work at the Property and the House as evidenced by various invoices/receipts of 2008/2009 for such works.  He also paid the government rates/rent and surcharge (which was imposed due to the defendant’s failure to pay the same).

13.  On 19 May 2006, Well Hint was struck off the register pursuant to section 291 of the Companies Ordinance Cap 32, and was subsequently dissolved.

14.  In early 2009, the plaintiff together with his wife and her daughter moved back to live at the House, and he leased out his home at Yau Yat Tsuen, Kowloon.  Since then they have resided undisturbed at the House.  In 2011, the plaintiff sold his property at Yau Yat Tsuen, Kowloon.

15.  The plaintiff claims he never had any communication with the defendant who was/is the paper owner of the Property, and he had been in possession of the Property/House since 1994 for over 20 years.  He claims that the defendant had never exercised any control of the Property or any right of ownership over those 20 years, and had never visited the Property or written to him.  The plaintiff further claims he had exclusive use, possession and control of the Property/House openly and without interruption for a continuous period of more than 12 years.

16.  On 14 November 2014, the plaintiff commenced the present proceedings against the defendant for the following declarations and filed his own supporting affirmation:

(a) that the defendant’s title to the Property had been extinguished pursuant to section 17 of the Limitation Ordinance Cap 347 (“Ordinance”) ; and

(b) that the plaintiff had acquired all the right, title and interest, including the ownership and the right to exclusive physical occupation of the Property.

17.  The plaintiff attempted to serve the Originating Summons on the defendant by registered post addressed to No 6 Tsak Yue Wu Village, Sai Kung, New Territories (“Address”) being his usual or last known address shown in the New Grant.  A copy of the Originating Summons and a copy of the supporting affirmation of the plaintiff filed on 14 November 2014 were posted at a conspicuous place at the Property.  No acknowledgement of service was filed, and the plaintiff attempted to serve on the defendant a Notice of Appointment to Hear Originating Summons (“Notice of Appointment”) on 20 April 2015 by ordinary and registered post addressed to the Address and by posting the same at a conspicuous place at the Property.  On 28 April 2015, the plaintiff’s solicitors sent a letter to the defendant at the Address by ordinary and registered post to remind him of the hearing of the Notice of Appointment before this court on 13 May 2015.

18.  On 5 May 2015, the plaintiff filed the supporting affirmation of his solicitor Cheung Ping Kwan Timothy (“Cheung”). Cheung deposed that on 30 April 2015 there was a missed call for him by an individual who quoted his firm’s reference for the present proceedings.  Upon returning call, he spoke with a man who identified himself as a Mr Yung, a partner of the solicitors’ firm Messrs John Ho & Tsui.  Mr Yung told Cheung he acted for the defendant in other legal matters, but had no instructions to raise any defence on behalf of the defendant in the present proceedings.  Mr Yung said he telephoned to pass some information from the defendant and his family to Cheung as the plaintiff’s solicitor:

(a) the defendant had moved to live and work in the United Kingdom;

(b) the defendant had received notice of the present proceedings as some court documents and correspondence had been forwarded to him;

(c) the defendant was aware of the plaintiff’s claim in respect of the Property;

(d) the defendant had no intention to raise any defence to the plaintiff’s claim;

(e) the defendant would not instruct any representative to attend the hearing on 13 May 2015 and would abide by any judgment given by the court.

19.  On 5 May 2015, the plaintiff attempted to serve Cheung’s affirmation on the defendant by sending the same to the Address by ordinary and registered post.  On 6 May 2015, the plaintiff posted a copy of Cheung’s affirmation at a conspicuous place at the Property.

20.  On the basis of the unchallenged evidence before me, I am satisfied that the plaintiff has been in adverse possession of the Property (and the House) for upwards of 12 years and has thereby acquired possessory title to the Property.

21.  I am satisfied that all appropriate steps had been taken to notify the defendant of the present proceedings and of the hearing on 13 May 2015.  Although there is suggestion that the defendant was/is residing overseas, there is clear information that he has actual notice of the Originating Summons and present proceedings and also of the hearing on 13 May 2015.  I am satisfied that there has been valid and sufficient service of the court documents on the defendant.[1]

22.  The starting point is sections 7(2), 8(1) and 13(1) of the Ordinance which provides as follows:

“7(2) No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him. …

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

13(1) No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as adverse possession) and where under the foregoing provisions of this Ordinance any such right of action is deemed to accrue on a certain date and no person is in adverse possession on that date, the right of action shall not be deemed to accrue unless and until adverse possession is taken of the land.”

23.  Section 17 of the Ordinance provides:

“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.”

24.  To establish possessory title based on adverse possession, the squatter must be shown to have both factual possession of the suit land and the requisite intention to possess (animus possidendi) for the whole of the 12-year limitation period.

25.  In order to qualify for a claim in adverse possession, the relevant possession must be adverse (in the sense that the occupier has dispossessed the paper owner and has entered into possession without the consent of the paper owner) and continuous.  It is also possible to aggregate the period of the plaintiff occupier and the period of possession by him through his tenants.[2]

26.  In Powell v McFarlane & Anor,[3] Slade J said this:

“(3) Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. … 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.”

27.  As to the requisite intention to possess, the principles can be found in Wong Tak Yue v Kung Kwok Wai & Another (No 2):[4]

“The requisite intention to possess had been referred 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 & Anor (1979) 38 P & CR 452 at pp 471‑472, the intention to possess requisite for adverse possession:

…involves the intention to 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 far as the process of the law will allow.”

28.  This has several consequences.  First, although the squatter 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 squatter 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 allow”.  Secondly, an intention to own the land or even an intention to acquire ownership is not required for establishing the animus possidendi.  Thirdly, the animus possidendi can be established even if the squatter mistakenly believes himself to be the owner of the land.

29.  The burden of proof is on the party claiming adverse possession, and the evidence he has to adduce must be compelling.  However, 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.

30.  Here, the defendant has not given any notice of intention to defend or adduced any affidavit evidence.  On the evidence before the court, it is plain that the plaintiff through his tenants and later through the plaintiff himself and his family have been in continuous and uninterrupted possession of the Property including the House since 2002.  There is also no claim to title by the defendant or third party as known to the plaintiff since March 2002.

31.  In the circumstances, I am satisfied the plaintiff has established factual possession over the Property for over 12 years before November 2014.  I am also persuaded that the plaintiff by commencing HCA6566/2000 and obtaining judgment had an intention to put an end to the Agreements whereunder he enjoyed possession of the Property with the consent of Well Hint and/or the defendant.  The plaintiff’s possession of the Property thereafter with knowledge that any consent on the part of the defendant had already come to an end, and the acts he carried out vis‑à-vis the Property, ie leasing it out to tenants and later occupying it as his home with his family exclusively, demonstrated the requisite intention to possess the Property. 

32.  In the circumstances the plaintiff has established a possessory title over the Property as against the paper owner, ie the defendant.  Accordingly, at the hearing on 13 May 2015, I granted the following order:

(a) a declaration that the defendant’s title, interest and/or rights in and/or over the Property has been absolutely extinguished by virtue of section 17 of the Ordinance;

(b) a declaration that the plaintiff has been in adverse possession of the Property for a period of no less than 12 years prior to the commencement of the present proceedings, and has thereby acquired and is entitled to the possessory title, interest and/or rights on and/or over the Property;[5]

(c) the defendant do pay costs of the present proceedings to the plaintiff (including all costs reserved, if any) to be taxed if not agreed.

33.  For the avoidance of doubt, the plaintiff should apply to the master for leave to serve on the defendant sealed copy of the order made on 13 May 2015 out of jurisdiction in addition effecting service within the local jurisdiction within 14 days after the sealing of such order.