HSBC PRIVATE TRUST (HONG KONG) LTD v. AU YEUNG CHUNG

CACV 69/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 69 OF 2008

(ON APPEAL FROM HCA NO. 1662 OF 2001)

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J U D G M E N T

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Hon Rogers VP:

1.  This was an appeal from the judgment of Deputy High Court Judge Carlson given on 4 January 2008.  The matter before the judge was a claim for possession of land in the New Territories.  The judge gave judgment for the plaintiff.  At the conclusion of the hearing of this appeal judgment was reserved which we now give.

Background

2.  The property in question comprises of Lot Nos. 501, 502, 503RP, 504RP, 506 RP, 507RP, 508, 510 RP, 511, 513RP and 514RP in DD No. 379.  These are all located near Siu Lam in a portion of land between the Tuen Mun Highway and the seashore.  So far as this case is concerned Lot Nos. 501, 502 and 503RP do not feature.

3.  It would seem that in about 1953 Mr Lau Hak first occupied the relevant land and used it for market gardening, growing vegetables and later livestock.  The produce was sold in the Cheung Sha Wan Market.  Mr Lau married the defendant in June 1956.

4.  In September 1959 the late Mr George Zee purchased the land from a Mr Davis.  The judge accepted that in about 1966 Mr George Zee visited Mr Lau Hak at the relevant Lots.  Mr Albert Zee, who at the time was about 15 years old, said that his father agreed to let Mr Lau Hak use the land for the time being.  Mr George Zee died in 1967.  The plaintiff, under its former name, was granted letters of administration over his estate on 19 June 1967.   The judge also accepted that Mr George Zee’s widow also went to the land in about 1968.  It was said that she had extended the courtesy of allowing Mr Lau Hak to cultivate the land.

5.  There is no doubt that up until at least 1988 Mr Lau Hak did cultivate the land and use it not only for growing vegetables but also for rearing livestock.  The judge found as a fact that from 1988 through to 1997 a company by the name of Barichon Ltd. (“Barichon”) used the land for pipe production and primarily for pipe storage.  During that time the plaintiff had granted tenancies to Barichon and its associate company Rights Protection Ltd.  That latter company wrote to the plaintiff on 6 March 1989 offering to rent the land from the plaintiff; it said that it had compensated the farmers, who included Mr Lau Hak, for the crops and cultivation fees and it had spent a great deal of money in laying down the drain pipes and levelling the site.  The judge held in paragraph 73 of the judgment:

“.. that after 1988, Mr Lau Hak retreated from the land, although he may have maintained some structures on part of it, his days of actively using it were over by mid-1988 when the Government prohibited the keeping of livestock.  Physically at all events he and his family withdrew from the land, occupying the original Government land upon which he had built his home.  By 1988 the Plaintiff, through its tenant Barichon was well and truly in occupation of the disputed land.  Mr Lau Hak and his family had withdrawn to the area immediately around their residence on Government land.  Any suggestion by Mr Lau Wing Kam of his father running some kind of business on the land for the storage of containers and the parking of tractor units is to be rejected in the face of Barichon’s full use of the land.  Barichon simply would not have tolerated that sort of rival concurrent activity on land that they were renting at what would appear to have been commercial rates.”

6.  There was a series of tenancy agreements between the plaintiff and Barichon which ended in December 1998.  After that Mr Lau Hak did make some use of the land, possibly by trying to rent it out.  Mr Lau Hak died in 2005.  Once the association with Barichon ended, the plaintiff fenced off the land, but it had drawn to its attention the continued presence of the Lau family over parts of the land by virtue of structures that they had built on some of the Lots as well as a banana plantation.  The judge summarised Mr Lau Hak’s connection with the land in paragraph 21 when he said:

“21.  By way of summary, there can be no doubt that at least since 1956, the Defendant says 1953, when Mr Lau Hak first occupied the land and started to cultivate it, until the present day, Mr Lau Hak (until his death in 2005) together with his family have had a presence on the land whilst always remembering that their home and most of the agricultural structures, such as storage sheds, had been erected on Government land by virtue of licences granted to them for that purpose.  They have also put up structures on parts of the disputed lots.  From 1956 until 1988 large portions, if not all, of the disputed lots had been commercially cultivated by Mr Lau.  Since 1988, Mr Lau stopped his agricultural activities and according to the defendant’s case earned his income by allowing persons to park containers on the land as well as tractor units that transported the containers.  He purported to create leases on part of the land for brief periods principally to a Mr Chung for which he was paid $3,000 a month.”

7.  The plaintiff’s solicitors wrote to “The occupiers” of the Lots on 27 July 1999 requesting them to leave the land.  There was a response some 6 months later on 17 January 2000.  That was written by Miss Kim Lau, Mr Lau Hak’s and the defendant’s daughter.  The material part read:

“Re : Clarification on the use of land (your Ref. CDC:PK:986929)

This is in response to your letter dated 27 July 1999 regarding the use of land in Inland Lots 501, 502, 503RP, 504RP, 506RP, 507RP, 508, 510RP, 511, 513RP & 514 in D.D.379.  I would like to clarify on behalf of my father — Mr. Lau Hak that your claim of our unauthorized use to the aforesaid land is totally mistaken.

In fact, long before your client–   Mr George Zee’s purchase of the aforesaid land in D.D.379, my father had been farming there.  In addition, even after Mr. Zee’s purchase of land in D.D.379, Mr. Zee had asked my father to exchange part of his purchased land in D.D.379 for part of my father’s farmland in early 1960’s.

In accordance with the mutual agreement between Mr. Zee and my father in 1966, the aforesaid land would be continually used and supervised by my father.  This has been no change even after the decease of Mr. Zee and Mrs Zee– wife of Mr. George Zee knew about this fact as well.

My father has totally the true authority in using the aforesaid land and been granted the registered lot numbers by the HKSAR land department.  I would be appreciated if you could make this case clear and withdraw the claim of unauthorized use of the land in D.D.379 to my father as soon as possible.

Looking forward to your favourable reply at your earliest convenience.”

8.  A number of points may be said to emerge from that letter.  In the first place not only was Mr Lau Hak still alive when the letter was written but it would appear that the letter was written with his knowledge and on his instructions.  In the second place, it would appear that there was an admission that there had at least been a meeting with Mr George Zee at about the time that Mr Zee’s son said there had been one.  The reference to Mrs Zee is also, perhaps, indicative that Mrs Zee also had contact with Mr Lau Hak.  Another point, also commented on by the judge, was the fact that by all accounts Mr Lau Hak had no land which could have been the subject of a swap.

9.  The judge identified a number of issues that arose in the case.  The first was whether the plaintiff had authority to bring the action.  Then there was the question as to whether the defendant’s family had possession of the disputed land for 20 years prior to the commencement of the action in 2001.  In relation to that, the plaintiff had argued that, as a matter of law, time stopped on Mr George Zee’s death in 1967 and started to run again thereafter.  Importantly, the question then arose as to whether the possession of the land had been adverse, as the judge put it, whether Mr Lau Hak and his family had the necessary animus possidendi in respect of the land or, whether they remained in possession as bare licensees or otherwise pursuant to an implied licence or permission of Mr Zee and/or the plaintiff.

10.  The judge reached the conclusion that the plaintiff did have the authority to sue.  Although the judge came to the conclusion that Mr Lau Hak had been in possession of the land whilst he was cultivating it for at least 20 years he went on to hold that the beneficial interests of Mr Zee’s sons did not accrue until after Mrs Zee’s death in 2000 and that the limitation period ceased to run on Mr Zee’s death in 1967.  It was said that Mr Lau Hak and his family were subject to the future right of action by the beneficiaries once the beneficial interests had accrued.

11.  In paragraph 64 of the judgment the judge dealt with the question he had posed namely “Did Mr Lau Hak and his family have an animus possidendi in their occupation of the land?”  That question echoed what had already been said in paragraph 41.  Specifically the judge addressed the question as to whether Mr Lau Hak had had some sort of licence from Mr Zee.  The judge referred to the lack of detailed evidence.  He referred to Mr Albert Zee’s recollection of what had happened some 40 years earlier and went on to say that, although that might be fallible, the defendant’s evidence from Mr Lau Wing Kam as to what happened when he was 9 years old was even less reliable.  Although the judge found Mr Albert Zee to be an impressive witness, he said that he did not feel sufficiently confident in reaching his judgment based on that.

12.  The judge gave careful consideration to the letter from Miss Kim Lau and, for what would appear to be sound reasons, rejected the suggestion that there had been an agreement for exchange of the land as set out in that letter.  The judge’s conclusion on this aspect of the case was set out in paragraphs 68-70 as follows:

“68.  Doing my best on the evidence, I am persuaded that Mr Lau Hak knew very well that this land belonged to the deceased and subsequently his family and that he occupied it and cultivated it, free of charge at the deceased’s and his family’s pleasure and that this continued throughout Mr Lau Hak’s lifetime quite irrespective of the situation after cultivation stopped in 1988.  This being my view, Mr Lau Hak lacked the necessary animus to possess the land as against the deceased’s legal title and thereafter his widow and after her death against her family.

69.   It is very unfortunate that after the deceased’s passing the Plaintiff, and I have to say his family as well, played a very passive role in relation to their ownership of this land, certainly until 1988, but I have no doubt whatsoever that they never intended to abandon it and crucially, that Mr Lau Hak and his family well knew that.  Unfortunately, after a very long period of inactivity by the Plaintiff and much hard work by Mr Lau Hak from 1956 to 1988 at the very least, his widow and his heirs and he before his death whilst he was the Defendant, perhaps understandably, refused to give up the fruits of his hard work on land that had provided him with a living and on which he had brought up his family.  All of this being said, the overall thrust of the evidence is that Mr Lau Hak well knew that he and his family were living on a borrowed place and on borrowed time.

70.   This being my view of the evidence, the Defendant has failed to show, the burden being on her, that she and her late husband had the required animus possidendi to exclude, by their physical occupation and cultivation of the land, the deceased and subsequently his family as represented by the Plaintiff.  In such circumstances, this provides an additional ground for the defence and counterclaim to be dismissed and for the Plaintiff to prevail and obtain its order for possession of the land.”

13.  As a final matter the judge dealt with the period starting in early 1988 and held that Mr Lau Hak and his family had retreated from the land and it would appear that the judge considered that they had abandoned it at that stage.

This appeal

14.  The judge’s findings were challenged on this appeal.  I consider that Miss Li QC, who appeared for the defendant on this appeal, is correct in saying that section 10(2) of the Limitation Ordinance Cap. 347 (“the Ordinance”) has no operation as regards the facts of this case.  That is primarily because it would appear that title to the Lots in question had accrued to Mr Zee’s sons on their father’s death, albeit their interest was subject to a life interest in favour of their mother Mrs Zee.  Thus, whenever the 20-year period of Mr Lau Hak’s occupation expired, whether it be in 1973, 1976 or 1979, the plaintiff’s right of action would have ceased and, under section 17 of the Ordinance, the sons’ title to the land would have been extinguished.

15.  It was said on behalf of the defendant on this appeal that the judge had confused and failed to distinguish between the issue of whether the Lots had been held by Mr Lau Hak as a licensee with the issue of whether he had the requisite intention to possess.  It was said that the judge had relied upon there being an implied licence and that approach had been disapproved in a number of cases starting with the case of Buckinghamshire County Council v Moran [1990] 1 Ch. 623.  That case had been cited with approval in a number of cases including Wong Tak Yue v Kung Kwok Wai David [1998] 1 HKC 1.  What is important to note, however, is that what was said in the first case was that there was no doctrine of implication of a licence, “without any specific factual basis for such implication.”  In the latter case, reference was made to the distinction between the occupant having an intention to possess “as of wrong” and “as of right”.

16.  In this case it appears to me that the judge did carefully examine such evidence as he had before him.  In my view, he was entitled to draw the inference which he did from that evidence that Mr George Zee had granted a licence to Mr Lau Hak and that that licence had been continued by Mrs Zee.  One matter which cannot go unobserved is that once the judge formed such a conclusion on the evidence, having tried the case, this court will not interfere with that finding except in circumstances where it is clear that it should do so.  It is not for this court to draw its own inferences unless it considers that the judge has been in error.

17.  In this case, moreover, the defendant, who was Mr Lau Hak’s widow, chose not to give evidence.  Witness statements in respect of evidence which she could have given were filed.  There was no explanation given as to why she did not give evidence and it is not for this court to speculate as to that.  It is, however, a matter of fact that the defendant herself did make affirmations on the applications for stay following the judgment.  Given the defendant’s position as Mr Lau Hak’s widow, she had been married to him before even Mr George Zee had purchased the land in question, it could only be anticipated that such evidence as she could provide might have been very relevant.  In these circumstances, I do not consider that this court is in a position to overrule the finding by the judge.

18.  In my view, this appeal should be dismissed with an order of costs nisi in favour of the plaintiff, with legal aid taxation for the defendant’s costs.

Hon Le Pichon JA:

19.  I agree.

Hon Stone J:

20.  I respectfully agree with the judgment of the Vice President.

21.  In my view, in the particular circumstances of this case the die effectively was cast when the defendant chose not to give evidence in the court below.

22.  Whilst, as the Vice President has observed, it is not for this court to speculate upon her reason for not so doing, the hard fact remains that in the context of animus possidendi, the one person who could have shed the greatest light upon the situation was available, yet pointedly was not called; accordingly, the learned judge below, who in my view has written a clear and eminently sensible judgment, was left in the unenviable position of having relatively little hard evidence to work with, and of having to draw an inference from such evidence as was available as to the implication of a licence given by Mr Zee to Mr Lau Hak.

23.  Notwithstanding the considerable skill with which Ms Li SC invested her argument, against the background wherein the one person who could be relied upon to know and to give the ‘best evidence’ as to the contemporaneous situation deliberately chooses not to testify, it seems to me that counsel is in difficulty in asking this court now to interpret such evidence as was before the judge in a manner advantageous to her client’s case.

24.  In fact, it seems to me that the position is to the contrary – if, as here was the case, the defendant widow specifically elected to deprive the court below of the best available evidence as to the relevant intention to possess, then any doubt in the evidence as was before the learned judge falls to be resolved against and not in favour of the defendant, who – by analogy with the position of a party responsible for material non-disclosure upon any issue – thereafter cannot be heard to complain if, as a consequence, an unfavourable inference then is drawn by the trial court against that defendant’s interest.

25.  In my judgment the learned judge below reached the correct conclusion on the available evidence in this case.