LI KWOK CHING v. SECRETARY FOR JUSTICE

HCA 1303/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1303 OF 2010

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J U D G M E N T
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Introduction

1. This is an action by the plaintiff for a declaration that the Government is barred from recovering certain land in the New Territories, which is prima facie unleased Government land, by reason of the doctrines of encroachment or proprietary estoppel.  The main issues concern whether, on the facts, the elements of encroachment and proprietary estoppel have been made out.  There is a also a question of law raised as to whether, for the purpose of encroachment (or, for that matter, adverse possession), the limitation period for the Government to bring an action to recover land in the New Territories started afresh upon the establishment of the Hong Kong Special Administrative Region in July 1997.

Background

2. The plaintiff is the registered Government lessee of a piece of land in Sheung Shui, namely, Tsiu Kang Hang Tau Lot No 1 in Demarcation District 100 (“Lot 1”).  An adjoining piece of land, namely, Lot No 2, is held by Mr Lee Tim-choi as Government lessee (“Lot 2”).  Lee Tim-choi is the plaintiff’s nephew although he is older than the plaintiff. 

3. The relevant block Government lease was dated 27 March 1905 by which the British Crown granted a lease of 75 years from 1 July 1898 renewable for another 24 years less the last 3 days in respect of each of the lots set out in the schedule to the lease.  In the case of Lot 1 the original lessee was Li Loi Wan, the plaintiff’s grandfather, and, in the case of Lot 2, Li Ting Shou, who was the brother of Li Loi Wan and the great-grandfather of Lee Tim-choi.

4. The plaintiff was born in 1952 and inherited Lot 1 from his grandfather when he was still a minor.  For many years, extending back at least to the 1930s, a house had been standing on Lot 1 and Lot 2 and inhabited by the extended Li/Lee family.  The house was apparently in two parts each of which had an external door, with a door in the common partition wall between them. This house was demolished and rebuilt in 1995 and 1996.  To the west of the house, in front of its main entrances, and lying immediately between the two Lots and Hang Tau Road, is a square-shaped piece of land with an area of 70 sq m (753 sq ft), now enclosed by walls and the house.  It is this piece of land that is the subject matter of this action and I shall call it the “disputed land”.  In January 2009 the Government issued a notice under s 6 of the Land (Miscellaneous Provisions) Ordinance (Cap 28) stating that the disputed land is unleased land and requiring the occupiers to cease occupation of it.  The plaintiff felt aggrieved by this decision and eventually issued the writ of summons in this action on 26 August 2010.

5. The plaintiff’s case is that this area has since time immemorial, and at least for 60 years prior to the date of the writ in this action, been exclusively used by the family as the front yard of the house.  The plaintiff contends that as a result of the doctrine of encroachment, the disputed land has become an accretion to Lot 1 and is now held on the same terms as the Government lease in respect of Lot 1.

6. The defendant, as representative of the Government, denies the plaintiff’s case and also raises the argument that for the purpose of limitation, the 60-year period prescribed in s 7(1) of the Limitation Ordinance (Cap 347) runs afresh from July 1997 after the colonial government’s title to land in the New Territories under the Peking Convention of 1898 ended.

7. Alternatively, the plaintiff contends that since the defendant had acquiesced in the plaintiff’s and his predecessors-in-title’s expending labour and money on the disputed land and, in particular, the rebuilding of a wall enclosing the disputed land in around 1995, it is estopped from asserting its full title.

8. Initially in these proceedings the plaintiff further alleged that the disputed land was in fact part of Lot 1 and Lot 2, and that the Lot Index Plan produced by the Lands Department was inaccurate in failing to include the disputed land as part of the two Lots.  He sought rectification of the plan.  There was also an alternative prayer for a right of way through the disputed land.  These pleas were abandoned in the opening submissions of the plaintiff.  At trial the plaintiff relied solely on encroachment and proprietary estoppel as the legal bases for declaratory relief to the effect that the Government is barred from recovering immediate possession of the disputed land.

9. The defendant counterclaims against the plaintiff for vacant possession of the disputed land and damages and mesne profits for trespass.

Encroachment

10. The doctrine of encroachment has been described in Secretary for Justice v Chau Ka Chik Tso (2011) 14 HKCFAR 889 by Lord Scott of Foscote NPJ, in a judgment concurred in by Bokhary PJ and Litton NPJ, as follows:

“108. The principle of ‘encroachment’ is that if a tenant goes into, and remains in, occupation of land belonging to his landlord, it is to be presumed, particularly if the encroached-upon land is adjoining the demised land, that the tenant’s encroachment is intended by him to annex the encroached-upon land to his demised land so as to enable him to occupy and use the encroached-upon land as if it were part and parcel of the demised land (see Kingsmill v. Millard (1855) 11 Exch 313 at 318). The presumption, although imposed by judge-made law, is a rebuttable one and can be rebutted by evidence that the tenant intended to occupy the encroached-upon land not simply as tenant but as owner.

…

111. It seems to me to follow, also, that so long as the landlord, the owner of the encroached-upon land, remains entitled to treat the encroacher, his tenant of the demised land, as a trespasser vis-a-vis the encroached-upon land, it cannot be denied that the trespasser’s possession of the encroached-upon land is “adverse” to the landlord for limitation purposes. And it follows from this that if the owner of the encroached-upon land does nothing, whether through inertia or through ignorance of the encroachment is immaterial, time for limitation purposes may run and if the limitation period expires the landlord will lose the right to treat the encroacher as a trespasser and will no longer be able to seek an order ejecting the trespasser from the encroached-upon land. On the expiry of the limitation period the encroacher will no longer be a trespasser and will be able, for the time being at least, to resist an order for possession sought by the landlord.

112. But the effect of the encroaching trespasser’s adverse possession is, as it seems to me, necessarily limited by the unrebutted presumption. The encroacher’s presumed intention is to occupy the land in question as an annex to his or her demised land. The encroacher will, therefore, on the termination of the demise of the demised land, be under an obligation to deliver up to the landlord not only the demised land but also the encroached-upon land held as an annex to the demised land. To that extent, therefore, the encroacher’s possession of the encroached-upon land has not been “adverse” to the landlord. It seems to me, as a matter of principle, that the effect of a trespasser’s possession must depend upon the trespasser’s intentions. If the trespasser’s intentions are to take possession of the land in a capacity not that of full ownership but limited in some way, then it seems to me that the consequences of that possession, if it has continued for the requisite limitation period, should, in principle, be limited accordingly. It should be no part of the function of statutes of limitation to give long enjoyed possession of land a consequence never intended by the possessor. I know of no authority to the contrary.”

11. The relevant statutory provisions are found in the Limitation Ordinance (Cap 347).  S 7(1) of that Ordinance provides:

“No action shall be brought by the Crown to recover any land after the expiration of 60 years from the date on which the right of action accrued to the Crown or, if it first accrued to some person through whom the Crown claims, to that person.”

12. S 17 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.”

13. In Chau Ka Chik Tso, Lord Scott, at §123, held that in the case of encroachment by the tenant upon the landlord’s unleased land, so that the land adversely possessed by the tenant is annexed to the properly demised land, s 17 is to be construed to mean that the landlord’s right to possession of the unleased land during the term of the demise is extinguished and his title becomes a reversionary interest.

14. While in that case Ribeiro and Chan PJJ differed from Lord Scott on the juridical basis of the doctrine of encroachment, preferring instead an analysis based on both the presumption referred to above and an estoppel (see §§3, 64-70), this difference is not material in the present action.  It is common ground here that, effectively, the plaintiff has to establish adverse possession of the disputed land as against the Government for the requisite period of 60 years.

15. It is also common ground that, for that purpose, the plaintiff has to demonstrate factual possession of the disputed land and the requisite intention to possess (ie animus possidendi) for the whole period.

16. Factual possession has been described by Slade J in Powell v McFarlane (1979) 38 P & CR 452 at 470-471 as follows:

“Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question 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. In the case of open land, absolute physical control is normally impracticable, if only because it is generally impossible to secure every part of a boundary so as to prevent intrusion. ‘What is a sufficient degree of sole possession and user must be measured according to an objective standard, related no doubt to the nature and situation of the land involved but not subject to variation according to the resources or status of the claimants’: West Bank Estates Ltd v Arthur [1967] AC 665 at 678-9 per Lord Wilberforce. … It is impossible to generalise with any precision as to what acts will or will not suffice to evidence factual possession. … 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.”

17. On the question of intention to possess, Slade J stated as follows:

“The animus possidendi, which is also necessary to constitute possession, was defined by Lindley M.R., in Littledale v. Liverpool College (a case involving an alleged adverse possession) as ‘the intention of excluding the owner as well as other people.’ ... What is really meant, in my judgment, is that the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow.

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

18. Counsel are agreed that I should proceed in accordance with these statements of principle which have been adopted as representing the law in Hong Kong: Wong Tak Yue v Kung Kwok Wai (1997-98) 1 HKCFAR 55; The Incorporated Owners of San Po Kong Mansion v Shine Empire Ltd (2007) 10 HKCFAR 588 at §7.

The plaintiff’s case on encroachment

19. The plaintiff’s case of factual possession consists of the following alleged matters:

(1) A short wall 2 to 3 feet tall was erected along the northern and western boundaries of the disputed land.  That wall was later raised to about 6 feet tall (a photograph of this version of the wall was attached to the statement of claim).  The wall was rebuilt together with the house in around 1995 (though the new wall was built further out to the west by about 2 metres).  At all material times the disputed land abutted a house on the south and abutted another house along half of its northern boundary.  The wall in question therefore has the effect of enclosing the disputed land.

(2) In the 1950s, another nephew of the plaintiff’s, Li Tim-hei, erected two structures on the disputed land.

(3) The disputed land was used by the family for various purposes including rearing poultry and drying grains.

20. On this basis, the plaintiff contends that there had been adverse possession by him and his predecessors-in-title as against the Government.  The plaintiff accepts that the presumption in the doctrine of encroachment applies so that the encroachment on the disputed land is presumed to have been intended to annex it to Lot 1 so as to enable the lessee of Lot 1 to occupy and use the disputed land as if it were part and parcel of Lot 1.  It is also accepted that since the wall was extended to the west by about 2 metres only in 1995, no accretion to the lease by encroachment could apply to the extended area.

The walls

21. It is not seriously disputed by the defendant that the erection of a wall is a highly significant matter by which exclusive factual possession as well as the necessary intention to possess may well be established.  As Robert Walker LJ (as Lord Walker of Gestingthorpe NPJ then was) said in Simpson v Fergus (1999) 79 P & CR 398, 402:

“Actual occupation and enclosure by fencing is the clearest, and perhaps the most classic, way of establishing exclusive possession (though even enclosure is not invariably enough: see Marsden v. Miller (1992) 64 P & CR 239).”

22. It is common ground that a wall had been in place along the northern and western boundaries of the disputed land since a point in time between 1965 and 1969.  However, 60 years before the writ is August 1950.  The critical issue is therefore whether a wall existed during the period of time from 1950 to late 1960s. 

23. On the documents in this case, there was some uncertainty as to the plaintiff’s precise case about the wall during that period. 

(1) As regards the material it was stated originally in the statement of claim to be a “short concrete fence”.  In the reply the wall was said to have been originally constructed of mud bricks of the same or similar colour compared to the surrounding grounds.  In the further and better particulars of the statement of claim dated May 2011, it is stated that the short wall was built with mud bricks and that when it was increased in height, “normal bricks” were used.

(2) As regards its height, the reply stated it was approximately 1 foot tall but “increased in height over the years”.  The further and better particulars of the statement of claim dated May 2011 stated that it was “about 2–3 feet tall”.  Lee Cheung Kan’s witness statement stated that the wall was about 3 feet tall.

(3) There are also discrepancies about when the wall was increased in height, to which I refer in paragraph 47 below.

24. The plaintiff’s case was presented at trial on the basis of an original 2–3 feet tall wall made of yellow mud bricks.  I shall examine the evidence that has been adduced by the parties on this issue under three main heads: (i) aerial photographs and expert evidence, (ii) survey sheets, and (iii) evidence of the plaintiff’s witnesses.

Aerial photographs and expert evidence

25. Aerial photographs of the relevant area have been produced in evidence.  The important ones are the earlier photographs, all black and white, taken in 1945, 1956, 1963, 1964 and 1969 respectively.  The plaintiff’s expert (Mr CHAN Hon Kwan Henry) and the defendant’s expert (Mr CHAN Chi Wa) gave evidence offering their analyses and interpretation of the photographs.

26. In their joint report, the experts agreed that the aerial photograph of 1969 showed an “L” shaped fence or wall-like structure which could also be seen in the photographs of later years.  There is therefore no question but that the wall had already come into existence by 1969.  In the photographs before 1969, the experts were agreed that the same wall could not be seen; hence the conclusion that that wall was put in place between 1965 and 1969. 

27. The plaintiff’s case is that there was initially a short wall of 2–3 feet tall, which was later increased in height.  The experts agreed that it might be difficult to identify a short wall of about 2–3 feet tall in the earliest two aerial photographs of 1945 and 1956 because of the limitation in image quality, given that they were taken from a considerable height (1945 – 20,000 feet; 1956 – 16,700 feet).

28. The photographs taken in 1963 and 1964 (a pair of photographs for each of these years) are in my view important.  The image quality was good.  They were taken from a lower height, namely, 3,900 feet.  In the 1963 pair of photographs, the sun was shining from the southeast.  The walls at some nearby lots such as Lots 10 and 11 and Lot 28 could be clearly seen in the photographs.  Yet no wall or shadow of a wall could be detected at the disputed land.  The plaintiff’s expert accepted that no wall was shown in those photographs.

29. In the 1964 pair of photographs, the sun was low in the southeast, casting long shadows of objects on the ground.  There were dark lines on the western and northern boundaries of the disputed land but they were thin lines.  The plaintiff’s expert said that the lines were shadows of some objects which “might not be wall with certain thickness” but could be “thin objects such as chain-linked fence or wire fence”.  This however would not be consistent with the plaintiff’s case which alleged a mud brick wall, not a wire fence.

30. Furthermore, the defendant’s expert had performed analysis using stereo models.  This is a computer modelling technique using stereo pairs of aerial photographs for object reconstruction.  The photographs were digitalised using a calibrated high-precision scanner, and the digitalised images were processed in a photogrammetric workstation, producing stereo models.  He produced two separate stereo models using the 1963 pair of photographs and the 1964 pair respectively.  The model identified a 0.5 metre high wall in Lots 10 and 11 and a 2 metre high wall in Lot 28 but no wall at the disputed land.  The defendant’s expert took the view that if there was a wall of 2–3 feet on the disputed land it could and should have been identified.  He opined that the dark images were grass and vegetation, not a wall or shadow of a wall.

31. The plaintiff’s expert had not performed a similar exercise apparently because the kind of equipment was not available to him.  He did not dispute the usefulness of the method as such.  Although he said the outcome could depend on certain subjective input by the surveyor using the equipment, he added that he did not challenge the ability of the defendant’s expert in performing the analysis.  I am satisfied with the defendant’s expert’s explanation of the methodology and I accept his evidence in this respect, which shows that with a margin of error of below 0.1 metre, the area covered by the images and their surrounding areas had a uniform height. 

32. The evidence based on the 1963 and 1964 aerial photographs therefore suggests that there was no wall, short or tall, as alleged by the plaintiff, in the period between the dates of the two pairs of photographs, ie February 1963 to December 1964.

33. While the 1956 aerial photograph had a low resolution, the experts were agreed that it showed there was no such wall like structure around disputed land as shown in the 1969 photograph.  They were also agreed however that it would be difficult to identify a low wall 2–3 feet tall.  They both found a dark image along the northern end of the disputed land but not along the western boundary.  A regular wall-like structure could be identified in a neighbouring lot, namely, Lot 28.

34. The absence of a dark image on the west side is not conclusive against the existence of a low boundary wall, since it seems the sun was shining from the south-southwest, at a very small angle to the western boundary of the disputed land.  The plaintiff’s expert opined that the dark image on the north side was the shadow of an elevated object such as a ledge that formed the border of the disputed land.  In his first report he said, based on a more blurred version of the 1956 photograph, that it appeared that “the wall completely enclosing the Disputed Land had not existed in this year”, probably because there was no dark image on the west side.  On that version of the photograph, the northern dark linear image extended westwards beyond the limit of the alleged wall (before it was rebuilt and repositioned in around 1995).  It is also apparent, on the better version of the 1956 photograph exhibited to the defendant’s expert’s report, that the dark image on the northern boundary of the disputed land appeared to extend westwards beyond the disputed land.  So that image was not probative of a low wall at the northern boundary of the disputed land.

35. The plaintiff’s expert also accepted, based on the better version of the 1956 photograph, that the darker part to the west of the disputed land was not a linear image but a large patch of dark image that extended right up to the paddy field. 

36. The defendant’s expert pointed out that the dark image to the north of the disputed land was irregular in shape, and could be caused by grass or vegetation or simply dirt on the ground.  He said the object could not exactly be identified, but opined that it was not a wall-like structure since the wall around Lot 28 could in comparison be seen relatively clearly from this photograph.

37. In the end, I think that the 1956 aerial photograph is of little probative value either for or against the existence of a low wall.

38. The experts were agreed that the 1945 aerial photograph also had a low resolution.  The disputed land displayed a lighter tone than the land on the west of it.  It would be difficult to identify a wall of 2–3 feet’s height having regard to the image quality.  The same regular wall-like structure in Lot 28 as seen in the 1956 photograph could be identified.  There was a dark image on the western side of the disputed land. 

39. The plaintiff’s expert said there was also a dark image on the northern side but it seems to me to be only a very slightly darker shade of grey.  He took the view that the dark images were the “shadows of some sort of elevated objects such as ledges that formed the border of the Disputed Land”.  He accepted in cross-examination that the darker tone north of the disputed land was in fact part of an “L”-shaped parcel of land around the neighbouring Lot 28, and that the reason for the darker tone could have been that the land was covered by grass.

40. The defendant’s expert, on the other hand, said only there was a darker image on the western side which was irregular in shape.  He considered that it might have been caused by grass or vegetation or dirt on the ground.  Comparing the image with the wall at Lot 28, he opined that the image at the disputed land was not a wall-like structure or fixture enclosing the disputed land.

41. On balance it seems to me that the 1945 aerial photograph is again of little probative value either for or against the existence of a wall on the western boundary of the disputed land, but that it is evidence tending to show there was no wall on the northern boundary.

Survey sheets

42. The survey sheets were relied upon principally by the defendant as evidence against the existence of the alleged wall before the late 1960s.  In particular, Mr Y C Mok, who appeared for the defendant, pointed to two of the earliest survey sheets, dated December 1966 and April 1976 respectively, which did not show the wall.  In contrast, the 1994 survey sheet did show the wall that existed from 1969 onwards.

43. I find the survey sheets to be of little probative value.  The 6‑foot tall wall was clearly in place by 1969 and yet the 1976 survey sheet failed to map it.  The evidence shows that the survey sheets were produced after and with reference to the information obtained from the corresponding aerial photographs.  There is a time lapse between the aerial photographs and the survey sheets, but no way of ascertaining the exact time elapsed between the two.  Mr Mok accepted that the gap could be “quite big” (eg 30 years). 

44. While the wall at Lot 28 was mapped in the 1966 survey sheet, it is not possible to know whether no wall was mapped in the disputed land because there was no wall there, or because there was a wall there but it was deemed insignificant by the surveyor or was simply neglected.  I note that the wall at Lot 28 was, but the wall which (on the defendant’s own case) had existed on the disputed land by 1969 was equally not mapped on the 1976 survey sheet.

Evidence of plaintiff’s witnesses

45. The persons called to give evidence in support of the plaintiff’s case are the plaintiff himself and a fellow villager Mr Lee Cheung Kan.  Lee Tim-choi, registered owner of Lot 2, was not called to give evidence, the significance of which I shall discuss later.

46. The plaintiff was born in 1952.  He could not therefore give evidence from personal knowledge as to the situation in the first few years of the 1950s.  He stated in his statement that “[a]ccording to … what I have also been previously told by my Father and Grandfather”, the disputed land, ie the front yard, had always “formed part of the House”.  Two things are of note here.  First, the plaintiff did not say that his father or grandfather told him there was a mud brick short wall enclosing the front yard or when it was built.  Further, the plaintiff later told the court that his grandfather had died when he was born so that he had never seen him.  How he could have said in his statement that he had been told something by his grandfather was not explained.

47. The plaintiff stated that there was a short wall, made of yellow mud brick, enclosing the disputed land, which was used as the front yard of the house.  There are, however, some major discrepancies in the plaintiff’s case concerning the dates.  In the further and better particulars of his statement of claim, filed in May 2011 with a statement of truth, it was stated that the short wall was erected by the plaintiff’s grandfather Li Loi Wan and that it was increased in height in around 1960 and again in the 1970s by Lee Tim-hei.  In his statement dated December 2012, he said the short wall was increased in height to 5–6 feet in the 1950s, and also that, in the 1950s, his nephew, Lee Tim-hei, erected two small structures, ie a bedroom and a kitchen respectively, in the front yard. In his oral evidence in chief, he said the increase in height in fact occurred in the 1960s and the two structures were in fact built in the 1970s.  He could not satisfactorily explain in his evidence why he made the errors in the statement and why he felt he was able to correct them and remember the accurate years when he gave oral evidence.

48. He said the short wall was already there when he was a small boy, but this is a vague statement and, even if accepted, extended at most back to the late 1950s.

49. The evidence of the other villager, Lee Cheung Kan, was even more muddled.  He is a cousin of the plaintiff and when he was young, he would often go over to the house in Lots 1 and 2 to play.  In his statement he said initially, the front yard was surrounded by a short wall made of mud bricks about 3 feet tall, and that the wall was increased in height in the 1950s to 5–6 feet tall.  When he was examined in chief with a view to making the same correction of this date of 1950s, he said he was not clear.  In cross-examination he said he knew about the original short wall, and that it had been there ever since he was 16 or 17 years old.  When he was re-examined in relation to the time before his teens, he said he could not recall.

50. Since Lee Cheung Kan was born in 1939, the year would be 1955 or 1956 when he was 16 or 17 years old.  So even if his evidence is taken at face value, it does not prove the existence of the short wall before mid 1950s.  But more fundamentally, I have grave doubt about the reliability of his recollection regarding dates.  The witness himself said that because of his age, he could not remember the timing of events clearly.

51. The plaintiff admitted in his evidence that the use of the disputed land for the drying of crop did not require any short walls to enclose the land.  Nor did the rearing of poultry require a wall because, as the plaintiff accepted in cross-examination, the poultry was allowed to roam free during the day time and was put back into cages for the night.  There was therefore no inherent invariable need for a short wall enclosing the front yard for the purposes for which it was said to have been used.

52. Lee Tim-choi is a descendant of Lee Ting Shou and has since 1982 been the sole registered owner of Lot 2.  He was also the trustee holding Lot 1 for the plaintiff during and beyond his minority.  He is not a party to the action and was not called by the plaintiff to give evidence, even though a witness statement signed by him had earlier been filed and served.  The plaintiff said that he did not call Lee Tim-choi to testify at trial because he did not wish to take part or to give evidence. This is unsatisfactory.  The house was built on both Lot 1 and Lot 2.  Lee Tim-choi would have had personal knowledge of the conditions on the disputed land.  He is older than the plaintiff and therefore likely to be better able to give evidence about the state of affairs in the early 1950s.  It is however unnecessary to rely on any adverse inference because on the state of the oral evidence, as discussed above, there is simply no evidence from the factual witnesses that the alleged short wall existed before the mid 1950s. 

53. Taking into account all the evidence, I find, on the balance of probabilities, that (1) the 6-foot wall on the northern and western borders of the disputed land, which existed by 1969, was built at a time between 1965 and 1969; (2) there was no mud brick wall of 2–3 feet’s height on those borders during the period from 1950 to 1964.

Structures built by Lee Tim-hei

54. Since the plaintiff’s evidence is that the two structures built by Lee Tim-hei were only built on the disputed land in the 1970s, there could have been no 60-year encroachment before the writ by virtue of these structures.  I do not propose therefore to discuss the details of these structures.

Use of the land

55. The plaintiff gave evidence that the disputed land was used by the family for farming purposes such as drying grains and rearing poultry.  The grain drying was a significant event in the village that occurred at least twice a year, each time for around 7 days.  The villagers all did it at the same time and so every piece of vacant land in the village would be used by the villagers to dry their harvest.  The ground in front of each house would be used by the inhabitants of that house to dry their crop.  There was some suggestion by Lee Cheung Kan that in the village, the poultry would be reared by each family in the front yard of their house.  In the plaintiff’s own evidence, however, he accepted that the poultry would be kept in a cage in the kitchen during the night and let loose outdoor during daytime and left free to roam about in the village.

56. What is important is not whether the acts done were useful to the trespasser or amounted to a normal use of the land, but possession to the exclusion of the true owner.  As Lord Wilberforce said in West Bank Estates Ltd v Arthur [1967] 1 AC 665 at 677:

“The learned judge, as their Lordships read his judgment, applied his mind correctly to the question whether the respondents had proved ‘sole and undisturbed possession user and enjoyment’ of the disputed strip. As the Federal Supreme Court itself stated, these words convey the same meaning as possession to the exclusion of the true owner. The learned judge gave recognition to the fact that what constitutes possession, adequate to establish a prescriptive claim, may depend upon the physical characteristics of the land. On the other hand, he was, in their Lordships’ view, correct in regarding such acts as cutting timber and grass from time to time as not sufficient to prove the sole possession which is required … The acts were, as he put it, not inconsistent with the enjoyment of the land by the person entitled.

  The Federal Supreme Court derived a different conclusion from the evidence: they held that woodlands and rough country can be useful to a farmer if they afford natural products which he wishes to take from time to time, leaving it to nature to replenish her own supplies.  The respondents had, in their view, proved that they had made what was for persons of their means and class normal user of the land up to the line of the southern ditch.  This does not appear to be a correct approach to the evidence.  Admitting the utility of the respondents’ operations, and that they did what was normal for small peasant farmers, this still does not establish a sufficient degree of sole possession and user to satisfy the Ordinance, or carry the matter beyond a user which remains consistent with the possession of the true owner.  What is a sufficient degree of sole possession and user must be measured according to an objective standard, related no doubt to the nature and situation of the land involved but not subject to variation according to the resources or status of the claimants.”

57. The alleged activities on the disputed land in this case are in my view plainly insufficient by themselves to establish possession.  They are no more than acts of farmers making some use of outdoor open space in a rural area.  Grain drying was done on the disputed land only a couple of weeks at most each year.  Poultry was reared by villagers generally during the day in the grounds of the village as a whole.  These acts are not inconsistent with the Government’s continued possession of the disputed land.  In my view, they do not show sole possession of the land on the part of the plaintiff or his predecessors, to the exclusion of the Government as the owner.

Conclusion on possession

58. For the reasons stated above, I find the plaintiff has not proved factual possession of the disputed land by himself or his predecessors for 60 years before the writ.  It seems to me that, on the facts as I have found them, the requisite intention to possess only arose at the earliest when a wall was built, and that was long after 1950.  It follows that the plaintiff’s case of encroachment fails on the facts.

Whether time runs afresh from July 1997

59. The defendant pleads that the title of the colonial Hong Kong Government over the disputed land, and indeed over all land in the New Territories generally, was only for a 99-year term under the Peking Convention (from 1 July 1898 to 30 June 1997) and that any possession adverse to that title came to an end upon expiry of that term.  The defendant contends that, therefore, the 60-year limitation period in s 7(1) of the Limitation Ordinance started to run afresh on 1 July 1997.

60. It is unnecessary to decide this point but in case I am wrong in my decision on the facts, I shall briefly express my view on this argument.

61. The lynchpin of the defendant’s argument is the rule that dispossession of a lessee by a squatter for the prescribed number of years may extinguish the lessee’s title, but does not set time running against the lessee’s landlord, and that time only starts to run against the landlord when his estate falls into possession: Chung Ping Kwan v Lam Island Co Ltd [1997] AC 38, 46; Fairweatherv St. Marylebone Property Co. Ltd. [1963] AC 510.

62. The House of Lords’ decision in Fairweather, that a lessor can eject a squatter if the lessee surrenders the lease to the lessor even after the limitation period has expired as against the lessee, is controversial.  A majority of the House held that the expiration of time did not destroy the lessee’s estate as between himself and the lessor, which could be determined, as against the lessor, by surrender, forfeiture and re-entry, or effluxion of time.  Because the lessor’s right to possession only accrued when the lease was thus determined, he was entitled to recover the land against the squatter, even if the latter had been in adverse possession for a sufficient period of time to have acquired a possessory title.  The Privy Council in Chung Ping Kwan, supra, has left open the correctness of this decision.  For present purposes, however, the proposition of law set out in the preceding paragraph is not disputed.

63. The logic of the rule is in part based on the statutory provision that the cause of action on the part of the landlord only accrues when his reversionary estate falls into possession.  In Hong Kong, this is stipulated in s 9(1) of the Limitation Ordinance, which provides:

“Subject as hereafter provided in this section the right of action to recover any land shall, in a case where the estate or interest claimed was an estate or interest in reversion or remainder or any other future estate or interest and no person has taken possession of the land by virtue of the estate or interest claimed, be deemed to have accrued on the date on which the estate or interest fell into possession by the determination of the preceding estate or interest.”

64. The defendant’s argument, as I understand it, is that the British Hong Kong Government was a lessee for 99 years under the Peking Convention, and that the reversionary interest of the Government of the Hong Kong Special Administrative Region, in right of the Chinese state, did not fall into possession until 1 July 1997.  Applying the aforesaid rule to this set up, the defendant contends that time did not begin to run again against the post-1997 Government until 1 July 1997.  Since 60 years had not expired by the time of the writ, the Government’s title was not extinguished.

65. In response, Mr Derek Hu, who appeared for the plaintiff, relies inter alia on Chan Tin Shi v Li Tin Sung (2006) 9 HKCFAR 29.  But that was a case concerning whether Government lessees against whom time had run in favour of squatters could rely on the New Territories Leases (Extension) Ordinance (Cap 150) to argue that their title was not time-barred.  In particular the questions were whether the effect of s 6 of that Ordinance was to grant the lessees a new leasehold estate and whether the rights during the extended period of the lease were not derived from anything in the old leases.  In contrast, the argument here concerns the running of time against the Government itself, not against Government leaseholders.  I do not therefore think that the passages relied upon by Mr Hu are relevant to the present case. 

66. The argument run by the defendant in the present case was also raised by Mr Mok, on behalf of the Government, before Deputy Judge L Chan (as he then was) in Chau Ka Chik Tso v Secretary for Justice, at first instance.  The argument found favour with his Lordship: see HCA 10670/2000, 30 December 2009, at §§226-249.

67. In that case each of the 15 plaintiffs was a Government lessee of land in Yuen Long, New Territories.  The original lease was granted in 1916 in respect of a lot of some 18 acres.  The term was for 75 years from 1 July 1898 with a right of renewal for a further 24 years less the last 3 days.  Subsequently, but prior to 1924, the lot was divided and embankments were built by the lessees to enclose an additional adjoining 6.67 acres.  The entire land was used as fish ponds.  At first instance the plaintiffs claimed that (1) the additional 6.67 acres were in fact part of the original grant but mistakenly omitted; (2) the additional land had been encroached upon by the plaintiffs for their own benefit; (3) the additional land had been encroached upon by the plaintiffs and annexed to the Government lease for the benefit of the Government as landlord; and (4) the Government was barred by the plaintiffs’ adverse possession of the additional land.

68. The learned Deputy Judge ruled against the plaintiffs’ case of encroachment on the ground that there had been no annexation of the additional land by 30 June 1973 and so the lease as renewed in 1973 did not encompass the inchoate rights under the encroachment accrued as at 1973 (see §199).  He accepted, however, that the plaintiffs’ predecessors-in-title had occupied the land in question with the intention of ousting the world at large including the Government (§224).  The plaintiffs would apparently have succeeded but for the Deputy Judge’s decision that the limitation period started to run afresh on 1 July 1997 (§§226-249).

69. The Court of Appeal reversed the trial judge on the question of encroachment, holding that the inchoate rights accrued by 1973 did not cease in 1973 and that the plaintiffs were entitled to rely on the period of encroachment after 1973 as well as before (see §§38-39, 53-54).

70. In the Court of Appeal, the Government filed a respondent’s notice.  It is not clear what the argument in the notice exactly was.  Rogers VP described it as follows (see [2011] 2 HKLRD 387):

“10. … On the respondent’s notice, the Government further contends that even if the plaintiffs were entitled to rely upon encroachment in respect of the discrepant area prior to 1 July 1997, the discrepant area ceased to be the subject of encroachment after 30 June 1997.”

“42. On the respondent’s notice the Government sought to raise the question as to whether, on the basis that it should be presumed that the plaintiffs’ encroachment should prior to 1997 be regarded in law as having had the result that the discrepant area should be treated as part of the leased premises, the same situation would prevail after 30 June 1997 or whether the effect of the Extension Ordinance [i.e. the New Territories Leases (Extension) Ordinance, Cap. 150] was that the period following 30 June 1997 should be treated as being a new lease. The argument was put on a number of bases. …”

71. On this argument, Rogers VP continued to say in §42:

“In my view it is untenable in view of the decision of the Court of Final Appeal in the case of Chan Tin Shi and others vLi Tin Sung and others (2006) 9 HKCFAR 29. The basis of the argument that had succeeded in the Court of Appeal, namely, that there was a new grant was held to be inapplicable in the Court of Final Appeal. The Court of Final Appeal made it quite clear that the Extension Ordinance provided the original lease was simply extended, the lease after 30 June 1997 was the same lease as that before 1 July 1997. The Ordinance provided that there was a continuation of the existing state of affairs and not the creation of a new one. In those circumstances the argument sought to be raised on the respondent’s notice cannot succeed, it was the argument that succeeded in the Court of Appeal and the losing argument in the Court of Final Appeal. …”

Rogers VP’s decision was concurred in by Le Pichon and Kwan JJA. 

72. It appears that the argument was not run by the Government at all in the Court of Final Appeal whose judgment did not deal with this point.

73.  Since there would in that case have been encroachment of the land concerned for 60 years by 1984, it would appear that the Government was, in the Court of Appeal, advancing an alternative argument that even if the plaintiffs there had established encroachment against the British Hong Kong Government by 1997, it would not avail the plaintiffs as against the HKSAR Government after 1997.  It is not clear whether the contention comprised, inter alia, the argument run before me based on the decision in Fairweather v St. Marylebone Property Co. Ltd., supra, but given the reliance of that argument by the Deputy Judge it would be surprising if it did not.

74.  Mr Mok however submitted, correctly, in my view, that the Court of Appeal’s decision is distinguishable because it dealt with a situation where the period of 60 years’ encroachment had been completed before 1997 (albeit after 1973), whereas here, even assuming the wall existed in the 1940s, the 60-year period would only be complete after 1997.  He conceded that if the period of 60 years of encroachment had expired before 1 July 1997, the disputed land would have become annexed to and formed part of the Government lease of Lot 1 which, by virtue of the New Territories Leases (Extension) Ordinance (Cap 150), was extended to 2047.

75. Accepting that I am not bound by any direct authority to reject Mr Mok’s argument, with great respect I am nevertheless unable to subscribe to it.  The fundamental problem with it, in my view, is the inherent attempt to apply a rule of common law found in the land tenure system of Hong Kong (and in English land law) to the position of the British Hong Kong Government under the Peking Convention and the position of the HKSAR Government after 1997.  The common law did not apply to the New Territories prior to the Peking Convention.  The British Crown did not take possession of the New Territories from the Chinese state pursuant a lease under the common law land tenure system as applied to the New Territories.  The transfer of the New Territories was a cession, not a demise.  The British Crown took the New Territories, for 99 years, under the Peking Convention, and then imposed the common law land tenure system on the New Territories (see the New Territories Order in Council 1898) and, within that system, declared all land in the New Territories to be the property of the Crown (see s 17 of the New Territories Land Court Ordinance 1900, s 14 of the New Territories Regulation Ordinance 1910 and now s 8 of the New Territories Ordinance (Cap 97)).  Whatever its effects might have been, the Peking Convention operated on an international level and did not create any leasehold estate in favour of the British Crown or any reversionary estate in favour of the Chinese state that is justiciable in domestic courts.  It is well established that the Peking Convention did not give rise to rights enforceable in the municipal courts of Hong Kong: Winfat Enterprises (HK) Ltd v Attorney General of Hong Kong [1985] 1 AC 733, 746.

76. If the decision in Fairweather v St. Marylebone Property Co. Ltd. is put aside for present purposes, what principles govern the rights and obligations of an “inchoate encroacher” (inchoate in the sense that he had not completed the 60-year period by 30 June 1997) vis-à-vis the HKSAR Government?  In my judgment, the HKSAR Government is to be regarded for these purposes as simply having stepped into the shoes of the British Hong Kong Government as owner of the land, rather than as a reversioner who came into possession upon expiry of the 99-year lease upon 30 June 1997.  This in my view is the effect of s 30(1) of the Hong Kong Reunification Ordinance (Cap 2601) and Article 120 of the Basic Law. 

77. S 30(1) of the Hong Kong Reunification Ordinance provides:

“For the avoidance of doubt, it is declared that all property, rights and liabilities vested in or belonging to the Crown or the Government of Hong Kong immediately before 1 July 1997 have been on and from that date, subject to the Basic Law, vested in or transferred to the Government of the HKSAR.”

78. Plainly the purpose of s 30(1) was to ensure a seamless transition involving the transfer to and vesting in the HKSAR Government all property, rights and liabilities vested in or belonging to the Crown or the British Hong Kong Government.  The reference to liabilities makes clear, in my view, that any property is transferred and vested subject to encumbrances. 

79. Article 7 of the Basic Law declares all land within Hong Kong to be State property.  Article 120 of the Basic Law provides:

“All leases of land granted, decided upon or renewed before the establishment of the Hong Kong Special Administrative Region which extend beyond 30 June 1997, and all rights in relation to such leases, shall continue to be recognized and protected under the law of the Region.”

80. Article 120 makes clear that title to land is vested in the HKSAR Government in right of the State subject not only to existing leases as at 1997 but also to “all rights in relation to such leases”.  In my view, a Government lessee in the New Territories who, as at 1997, had already (albeit for less than 60 years) encroached upon land adjacent to that demised to him under the Government lease had “rights” in relation to that lease and in relation to the land encroached upon.  He was on course for acquiring a right to have such land annexed to the Government lease.  It is true that until the encroachment has reached 60 years, the Government can recover the land at will, but this does not prevent the lessee from being recognised to have some “rights”. 

81. In Chung Ping Kwan v Lam Island Co Ltd, supra, the issue was whether, upon the expiry of the Crown lease on 30 June 1973, time ran afresh against a squatter who had been in adverse possession against a Crown lessee for less than 20 years.  This turned on whether such a squatter had a “right” within the meaning of s 4(4)(c) of the New Territories (Renewable Government Leases) Ordinance (Cap 152), which reads:

“Every new Government lease and the land thereby deemed to be demised shall be deemed to be subject to such of the following encumbrances and interests as the land and the existing Government lease relating thereto were subject to immediately before the 1st day of July 1973…(c) any other rights, easements, tenancies or other burdens or encumbrances of whatsoever kind or nature, except such as were created by an instrument and were not thereby expressed to continue after the 30th day of June 1973.”

82. The Privy Council held that a post-1953 squatter (who had not adversely possessed the land in question for 20 years by 1973) did have such rights.  In the words of Lord Nicholls (at 52D):

“By 1973 [the squatter] had not barred the title of the lessee to the original lease. But to some extent the Limitation Ordinance had already started to operate in favour of a squatter on 30 June 1973. Under the Limitation Ordinance the lessee’s right of action had deemed to accrue on the date when the squatter moved in … Their Lordships incline to the view that these potential benefits can be regarded as a right within paragraph (c).”

83. This reasoning was applied by the Court of Appeal in Chau Ka Chik Tso, supra.  As stated above, one of the questions there was whether, upon the expiry of the original term in the Crown lease on 30 June 1973, time ran afresh against a Government lessee who had encroached upon unleased Government land for less than 60 years by 1973.  The Court of Appeal answered No.  Rogers VP, after quoting Lord Nicholls’ remarks above, said this (§39):

“… if the matter had to be looked at on the basis that the lessee of Government land is entitled to the protection of s.7 after 60 years’ encroachment onto adjacent Government land, just as an adverse possessor, so an encroacher acquires inchoate rights. Whereas the adverse possessor acquires those rights against the lessee, the encroacher acquires those inchoate rights against his landlord, the Government. In view of the fact that the lessee has a specifically enforceable right against the Government to require the grant of the further lease of 24 years, those inchoate rights, which the lessee has built up, would be acquired in respect of the right under the original lease to have a renewal of that.”

84. In a similar vein, Kwan JA said (at §54):

“… where the encroachment right had matured, the new lease granted would not have affected the pre-existing right of renewal under the old lease, which precludes the landlord from ejecting the lessee. I fail to see why the grant of a new lease should affect such a pre-existing right in the situation where the potential benefits of encroachment right were inchoate, not having yet matured. I am not persuaded the inchoate rights of an encroacher should be treated differently from the inchoate rights of an adverse possessor.”

85. In Lee Bing Cheung v Secretary for Justice [2013] 3 HKC 511[1] at §§134-182, Deputy Judge Marlene Ng also held, in relation to certain land on Hong Kong Island in Shaukeiwan, that the rights of the Chinese State and the HKSAR Government in relation to Government land were the same as those held by the British Hong Kong Government in right of the British Crown, and that a squatter who had occupied Government land for a period of 60 years straddling 1997 could establish adverse possession against the Government.  For the reasons I have given above, I do not think that the fact that the New Territories were taken for 99 years under the Peking Convention should make any difference to this outcome.

86. In my view, therefore, contrary to the defendant’s contention, the 60-year period under s 7(1) of the Limitation Ordinance did not start to run afresh on 1 July 1997 for land in the New Territories.  If I had come to the conclusion that there had been encroachment of the disputed land for 60 years by the date of the writ, albeit not by 30 June 1997, I would have held in favour of the plaintiff on the claim for encroachment.

The plaintiff’s case of proprietary estoppel

87. The plaintiff’s case of proprietary estoppel arose out of the redevelopment of the house on the two Lots in the mid 1990s.  The relevant facts are not in dispute.  The plaintiff and Lee Tim-choi decided to redevelop the house standing on Lots 1 and 2.  The plaintiff resided in Shenzhen at the time and relied on Lee Tim-choi to take the necessary steps.  In June 1993, Lee Tim-choi wrote to District Lands Office, North (“DLON”), informing DLON of their intention to redevelop the Lots.  DLON carried out a site inspection in October 1993.  It is accepted by the defendant that as a result of this inspection the Government must be taken to have knowledge of the existence of the walls enclosing the disputed land.  A sketch of the proposed new house was submitted to DLON. 

88. On 6 September 1994, the two owners were invited to an interview with the DLON.  They were told that the proposed house as shown in the sketch they had submitted exceeded 65.03 sq m, the general limit of the site coverage of a small village house, but that they could instead build two semi-detached houses there with a floor area of 39.5 sq m and 34.7 sq m respectively.  In about November 1994, Lee Tim-choi submitted a revised sketch to DLON accordingly, which was found to be acceptable.  In December 1994, DLON gave permission for the redevelopment of the two Lots based on the revised sketch.

89. Demolition and construction began in 1995.  The new house was completed in mid 1995.  In October 1995, the owners applied to DLON for a certificate of compliance.  By August 1995, January 1996 and March 1996, when DLON inspected the site, although the new house had been rebuilt, the wall on the western and northern boundaries of the disputed land had only been demolished but not yet rebuilt.  The aerial photographs showed that the new wall must have been built at some time between 15 May 1996 and 23 July 1997.

90. On 23 May 1996, DLON refused to issue a certificate of compliance because a single house was built instead of two houses, and the building height was 8.4m. exceeding the approved height of 8.23m. These discrepancies are immaterial in this action.  What is important for present purposes is that when the Lots were redeveloped, the wall was also demolished and rebuilt (with the western wall rebuilt further out to the west by about 2 metres), and enclosed area was tiled over.  The crux of the plaintiff’s case on proprietary estoppel is that the wall was rebuilt with the Government’s knowledge and permission, and that given the Government’s acquiescence in the plaintiff’s expenditure of money on the disputed land, it is estopped from asserting its title without recognising the plaintiff’s interest.

91. Proprietary estoppel is a legal concept that is notoriously difficult to define.  At its heart the doctrine operates to prevent unconscionable dealing in relation to land.  As Oliver J said in Taylors Fashions Ltd v Liverpool Trustees Co [1982] 1 QB 133n, at 151:

“… the application of the Ramsden v. Dyson, L.R. 1 H.L. 129 principle – whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial – requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour.”

92. Because it has been applied to a wide variety of factual situations, any comprehensive statement of the doctrine is bound to be expressed in such broad terms as to offer little guidance for its application in individual cases.  In practice it has been recognised that cases of proprietary estoppel fall into different strands or categories.  In Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752, at §48 and §63, Lord Walker used the classification suggested in Gray & Gray, Elements of Land Law:

“The concatenation of ideas underlying proprietary estoppel emerges from three broad, and not entirely distinct, categories of circumstance. These categories comprise (1) the ‘imperfect gift’ cases, (2) the ‘common expectation’ cases, and (3) the ‘unilateral mistake’ cases. These cases alike present the essential characteristics of proprietary estoppel, but each class of case in its turn gives a heightened emphasis to one or other of the constituent elements of representation, reliance and unconscionable disadvantage. The tendency in the modern case law is to synthesise the jurisprudence of proprietary estoppel in a more unified doctrine of ‘detrimental reliance’ ”.

93. Another scheme of taxonomy is to divide proprietary estoppel into two species: “proprietary estoppel by encouragement” and “proprietary estoppel by standing by”: see Handley, Estoppel by Conduct and Election (2006), §11-001 (the latter was referred to as “proprietary estoppel by representation” in Best Star Holdings Ltd v Lam Chun Hing, HCA 409/2008, 22 February 2012, at §134).

94. The plaintiff contended that the facts of this case raise a “proprietary estoppel by standing by”.  This latter species seems to me to be akin to the “unilateral mistake” cases referred to by Lord Walker.  In Ramsden v Dyson and Thornton (1866) LR 1 HL 129, 140, Lord Cranworth LC (who saw the case as one of unilateral mistake, unlike Lord Kingsdown who saw the case of one of common expectation: see Cobbe v Yeoman’s Row Management Ltd, supra, at §52), explained the basis of the doctrine as follows:

“If a stranger begins to build on my land, supposing it to be his own, and I, perceiving his mistake abstain from setting him right, and leave him to persevere in his error, a Court of Equity will not allow me afterwards to assert my title to the land on which he had expended money on the supposition that the land was his own. It considers that, when I saw the mistake into which he had fallen, it was my duty to be active and to state my adverse title; and that it would be dishonest in me to remain willfully passive on such an occasion, in order afterwards to profit by the mistake which I might have prevented”.

95. In this case, both parties referred me to the five probanda enunciated by Fry J in Willmott v Barber (1880) 15 Ch D 96, 105 in the following passage:

“A man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights. What, then, are the elements or requisites necessary to constitute fraud of that description? In the first place the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done some act (not necessarily upon the defendant's land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly, the defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right. Where all these elements exist, there is fraud of such a nature as will entitle the court to restrain the possessor of the legal right from exercising it, but, in my judgment, nothing short of this will do.”

96. Although the five probanda have been described as “something of a stumbling-block in the development of equitable estoppel” more generally, they have also been said to be appropriate to a case of unilateral mistake (per Lord Walker at Cobbe v Yeoman’s Row Management Ltd, supra, at §56 & §63). 

97. The underlying view seems to be that it is unconscionable, and therefore unacceptable to a court of equity, that a landowner should knowingly stand by while a stranger incur a detriment or disadvantage acting upon some misapprehension of his legal position with regard to the land.

98. On the facts of this case, I have come to the view that, whichever way one looks at it, whether by reference to the five probanda or through a broad conception of unconscionability, the plaintiff’s case of proprietary estoppel must fail.

99. First, as Mr Mok submitted, there is no evidence that Lee Tim-choi, the person to whom the plaintiff had entirely left the responsibilities for taking the necessary steps for the redevelopment, caused the wall to be rebuilt and the disputed land to be tiled over because of some mistake that the disputed land belonged to him or to the plaintiff.  The facts surrounding the demolition and re-construction of the wall show an unusual gap in time.  The wall had been demolished by August 1995, but it was not rebuilt until some time between May 1996 and July 1997.  There is no explanation why the wall was not rebuilt together with the house and, indeed, was not rebuilt until after the letter of compliance was refused.  The plaintiff has failed to call Lee Tim-choi to testify and there is no basis on which to infer any mistake on his part.

100. Secondly, there is no evidence that the Government was aware that the new wall was being built and was watching idly by.  As stated above, the new wall was not built together with the house.  In fact it was not built until after three inspections by the Government between August 1995 and March 1996.

101. Thirdly, and this is connected with the second point above, there is no evidence that the new wall was built or the disputed land paved in reliance on any building permission given by the Government.  The redevelopment sketches submitted to the Government did not include the wall or the disputed land, and showed only the house.  Quite why the disputed land was left out in the application as such was wholly unexplained, and unknown even to the plaintiff.  There is nothing to indicate that the Government knew or expected that a new wall would be put up or tiles would be put on the disputed land as part of the redevelopment.

102. Finally, the new wall as built was re-positioned westwards by about 2 metres, thus expanding the area enclosed.  It is most unlikely that the building of the wall in the place where it is now found was based on any belief that the owners had a right to do so.  No factual or legal basis has been suggested by the plaintiff in this action for encroaching and annexing further Government land in that manner.

103. For these reasons, I am not satisfied that the first, fourth and fifth probanda set out by Fry J in Willmott v Barber are satisfied in this case.  Nor do I think that the redevelopment renders it in any way unconscionable for the Government to assert its title to the disputed land.  The alternative claim based on proprietary estoppel must therefore likewise be rejected.

Overall conclusion

104. For the aforesaid reasons the plaintiff’s action is dismissed.  There is no dispute that if the plaintiff’s action wholly fails, the defendant’s counterclaim must succeed.  There will therefore be judgment in favour of the defendant on his counterclaim for an order of possession and mesne profits at the agreed rate of HK$8,330 per annum for the agreed period until vacant possession is delivered up.

105. I make an order nisi that the plaintiff do pay the defendant his costs of the action and counterclaim, but with a certificate only for one counsel.