WONG SHUK HAN v. SECRETARY FOR JUSTICE

DCMP 2736/2017

[2018] HKDC 1464

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2736 OF 2017

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JUDGMENT

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1.  By Originating Summons issued on 21 September 2017, the plaintiff claims adverse possession of the property situated on 1^st Floor, No 1 Yiu Tung Street, Kowloon, Hong Kong (“the Property”). 

2.  The Property is currently registered in the name of Tak Hing Land Investment and Agency Company (“the Company”), which was the developer of the building where the Property is located.  The Company had been dissolved and its name was struck off the Companies Register on 17 January 2003.

3.  Under section 292(1) of the former Companies Ordinance (Cap 32), where a company is dissolved, all property and rights vested in or held on trust for the company immediately before its dissolution shall be deemed to be bona vacantia and shall accordingly belong to the Government, and shall vest and may be dealt with in the same manner as other bona vacantia accruing to the Government.

4.  By letters dated 11 and 15 October 2018, the Government through the Secretary for Justice confirmed with the court that it will remain neutral in these proceedings.  Upon the joint application of the parties, the court excused the attendance of the defendant at the substantive hearing of these proceedings on 15 November 2018.

The plaintiff’s case

5.  The plaintiff has filed two affidavits in support of her claim.  Her case can be summarised as follows.

6.  On 9 January 1970, at the age of 22, the plaintiff married her late husband, Mr Chan Kin Kee, Deceased (“the husband”). Since then, she had moved into the Property and resided there together with the husband’s family at all material times.

7.  After she got married, she was told by the husband’s family that since the Property was built in early or mid-1950s, the husband and his late parents had already been in exclusive possession of the Property.  However, she has no actual knowledge or information as to how her in-laws first came into possession of the Property.

8.  On 5 January 1971, the plaintiff gave birth to her daughter.  On 23 September 1972, the plaintiff gave birth to her son. Since their births, her children had been living in the Property with the rest of the family.

9.  Meanwhile, the plaintiff assisted the family in discharging all outgoings of the Property including payment of crown rent, rates, utility charges and expenses, etc.

10.  At all material times since she got married, the plaintiff resided in the Property under the mistaken belief that the husband’s family owned the Property.  It was only in around 1990, when her mother-in-law said that they did not have the title deeds, did the plaintiff find out that none of the family members was the registered owner.

11.  Nonetheless, the plaintiff and her family continued to reside in the Property without paying any rent or fees to anyone.

12.  With the passage of time, the plaintiff has become the only occupier and the only person in exclusive possession of the Property:-

(1)  In late 1973, the plaintiff’s father-in-law passed away and the rest of the family remained on the Property.

(2)  In about March 1991, the plaintiff’s mother-in-law passed away and the rest of the family remained on the Property.

(3)  On 13 March 1999, the husband passed away and the plaintiff and their children continued to reside at the Property.  The plaintiff personally discharged all the Property’s outgoings since then.

(4)  Sometime afterwards, the plaintiff’s children moved out and since then the plaintiff resided alone in the Property.

13.  Thus, it is the plaintiff’s case that since her getting married in 1970, for the 47 years until these proceedings were commenced in 2017, she and her family all along treated the Property as their home without paying any rent or fees to anyone. 

14.  The plaintiff only moved out recently in 2017 as the vicinity of the Property has become unsafe due to redevelopment.  But she still regularly checks on the Property twice a week with the company of her children or her sister.

Documents disclosed by the Government

15.  After the present proceedings were commenced, the Government disclosed various documents to the plaintiff indicating that:-

(1)  On 18 December 1954, the Company issued a letter to the Land Office together with enclosures which prima facie suggests that:-

(a) The Company executed a “Debenture” and an “Indenture” as collateral to a loan to the Company, provided that upon receiving the Government’s consent, the Company would forthwith grant a lease for a term of 20 years, with an option to purchase thereafter upon payment of further sums, to the debenture holder.

(b) Under the Conditions of Sale, the Company should not within 20 years from the date of sale, except with the consent of the Government, and only in a form of Deed or Document to be approved by the Land Office, assign the lot or any part thereof or any interest therein.

(c) No other contract or sale agreement had been entered into by the Company with prospective buyers.

(d) The arrangement made it possible for a person to move in and to live at the flat and for the Company to receive certain consideration when the Government’s consent was yet to be obtained and title would be formalised subsequently.

(e) In 1954, one “Chen Shuk Hing” was occupying the Property.

(2)  On 12 June 1957, Messrs F Zimmern & Co on behalf of the Company wrote a letter to the Land Office stating that a “Chan Luen Fun” (whose name resembles the father-in-law’s name of “Chan Luen Fan” on the marriage certificate of the plaintiff and the husband, and being the same as the name of the plaintiff’s father-in-law on the grant of probate) was a purchaser of the Property and the consideration was $21,000. 

16.  According to the plaintiff, she did not have knowledge or possession of the aforesaid documents prior to the Government’s disclosure. 

Father-in-law’s will and grant of probate

17.  After the commencement of these proceedings, the plaintiff through her solicitors made certain enquiries and discovered that after her father-in-law died on 29 December 1973, a grant of probate of his estate was subsequently made to one “Chan Chor Kwan Linda” (“Madam Chan”) who is his daughter by another woman, not the mother of the husband.

18.  In his last will, the father-in-law made a global bequest of all his estate to Madam Chan as the sole executrix and beneficiary without any reference to any interest or right in the Property.

19.  However, in the Schedule of Property attached to the grant of probate, there was an item purporting to include the Property as forming part of the father-in-law’s estate. 

Assessment of the plaintiff’s evidence

20.  The plaintiff was called upon to give evidence at the substantive hearing and she confirmed the contents of her two affidavits as her evidence-in-chief in these proceedings. 

21.  Although the defendant did not appear to cross-examine the plaintiff, I asked the plaintiff a number of questions concerning the Property and her family’s relationship with Madam Chan.

22.  Due to the passage of time and her advanced age, the plaintiff does not have a clear memory of what the family members had told her about how they first came to occupy the Property.  However, the plaintiff had overheard conversations between her late mother-in-law and other family members that the family had paid certain price for the Property but somehow they were not the registered owner. 

23.  The plaintiff admitted that she knows Chan Chor Kwan Linda, the only daughter of her late father-in-law, but they are not close.  The plaintiff told the court that Madam Chan is at all material times aware that the plaintiff’s family has been residing at the Property and, although the plaintiff’s family would see Madam Chan during some family occasions (such as banquets), Madam Chan has never mentioned the Property or raised any issue in relation to the Property, nor did she evince any intention to recover the Property as her own. 

24.  The plaintiff also explained why she is now seeking declaratory relief from the court.  Over the years she has been using her savings to maintain the Property but she does not have any title to it. Therefore, she makes the present claim so that she can obtain good possessory title and be more certain about her entitlement to the Property.

25.  I have found the plaintiff honest and forthcoming, and I accept her evidence as credible. 

Limitation Ordinance

26.  The plaintiff’s present claim is primarily based on sections 7 and 17 of the Limitation Ordinance (Cap 347) (“LO”). 

27.  Section 7(2) of the LO provides:-

“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 or, if it first accrued to some person through whom he claims, to that person…”

28.  By virtue of section 38A of the LO, the time for bringing an action to recover any land which accrued before 1 July 1991 shall, if it has not then already expired, expire at the time when it would have expired apart from the provisions of the Limitation (Amendment) Ordinance 1991.  The relevant limitation period was 20 years under section 7(2) of the Limitation Ordinance as enacted in 1965 (“LO 1965”).

29.  Section 17 of the LO 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.”

30.  Section 10 concerns land held on trust.  Its provisions will be discussed in further detail below.

31.  As the plaintiff’s case is that the registered owner’s right to recover the Property accrued before 1 July 1991, the applicable limitation period is 20 years pursuant to section 7(2) of the LO 1965.

Adverse possession

32.  The principles applicable to adverse possession are well established.  The ones that are relevant to the present case are summarised as follows.

(1)  A person claiming to be in adverse possession must be shown to have both factual possession and the requisite intention to possess: Wong Tak Yue v Kung Kwok Wai David 1 HKCFAR 55 per Li CJ at 68E-F. 

(2)  Factual possession signifies an appropriate degree of physical control.  It must be a single and conclusive possession. The question as to 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: Powell v McFarlane 38 P&CR 452 per Slade J at 470-471; J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419 per Lord Browne-Wilkson at para. 41.

(3)  The question of intention to possess is one of fact which is dependent on an assessment of all the circumstances in a particular case.  This 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 is not himself the possessor, so far as it is reasonably practical and so far as the process of the law will allow: Wong Tak Yue (supra) at 68.

(4)  The ordinary way in which the relevant intention is ascertained is by inference from the actions of the adverse possessor in the light of all the circumstances affecting the land: Bolton Metropolitan Borough Council v Musa Ali Qasmi 77 P&CR D 36 per Gibson LJ at 37.

Factual possession

33.  There are a few acts which by their very nature are so drastic as to point unquestionably, in the absence of the contrary, to an intention on the part of the doer to appropriate the land concerned.  For example, if the person claiming adverse possession controls the only means of access to the disputed land by, say, keeping the door or gate to it locked and holding the key, that is strong evidence of possession and that he has the requisite intention to possess as well: Jourdan and Radley-Gardner: Adverse Possession (2nd ed, 2011) at §13-23.

34.  In the present case, the plaintiff’s control and safekeeping of the keys to the metal gate and bicycle chain lock to the front door of the Property is prima facie strong evidence of both factual possession and the requisite intention to possess. 

35.  The plaintiff’s contention that she, together with her family, has been in factual possession of the Property is also supported by the following documents:-

(1)  The Certificate of Registered Particulars of the husband issued by the Immigration Department showing the Property as his residential address since at least April 1964.

(2)  Student ID and report cards of the plaintiff’s children showing the Property as their residential address during their childhood in the 1970s.

(3)  The Certificate of Registered Particulars of the plaintiff issued by the Immigration Department showing the Property as her residential address since at least March 1985.

(4)  A Confirmation Letter from the Water Supplies Department showing that the mother-in-law was the registered consumer for the Property between 4 July 1977 and 21 November 2016.

(5)  A quotation issued by one Mr Shi on 12 March 1991, a contractor engaged by the husband and the plaintiff to carry out renovations to the Property.

(6)  Receipt for costs of repairing the main drain of the Property in September 2010 paid by the plaintiff.

(7)  Government rate and rent demand notes with respect to the Property being issued to the husband even after he passed away in 1999 but which were discharged by the plaintiff.

(8)  Water bills with respect to the Property being issued to mother-in-law even after she passed away in 1993 but which were discharged by the plaintiff. 

(9)  Bank letters and advice showing the plaintiff and the children’s use of the Property as correspondence address.

(10)  Tax return and demands issued by the Inland Revenue Department to the plaintiff showing the Property as her correspondence address.

36.  The Property is a residential flat and, based on the above evidence, the plaintiff has shown that she (together with her family) has been using the property as her residence since 1970.  I am therefore satisfied that the plaintiff has been in factual possession of the Property for a period of more than 20 years.

Requisite intention

37.  As mentioned above, I regard the plaintiff’s control and safekeeping of the keys to the metal gate and bicycle chain lock strong prima facie evidence of her intention to possess the Property. 

38.  In my view, the aforesaid contemporaneous evidence also demonstrates that the plaintiff (together with her family) has been using the Property as her residence and discharging all the expenses and outgoings related to the Property.  In other words, it can be said that the plaintiff has been dealing with the Property as an occupying owner might have been expected to deal with it, and that no one else now living has done so: Powell v McFarlane (supra) at 471.

39.  I note that prior to her discovery of the true position in around 1990, the plaintiff was occupying the Property under the mistaken belief that one of her family members was the lawful owner. 

40.  Such a mistaken belief would not defeat her claim as the requisite intention and adverse possession could be established by someone who mistakenly believed himself to be the true owner: Adverse Possession (supra) §9-38.  There is no reason why the same does not apply to a person who mistakenly thought that her family owned the property in question and she continued to possess the same on the basis of such belief.

41.  Hence, the fact that the plaintiff was mistaken as to the ownership of the Property prior to 1990 does not negate her intention to possess the same at the time. 

42.  In any event, even if time only started to run after 1990, based on the plaintiff’s conduct as discussed above, I think there is a strong inference that the plaintiff has had the requisite intention to possess the Property to the exclusion of the world at large for a continuous period of more than 20 years prior to the commencement of these proceedings in 2017. 

43.  There is no contrary evidence that the Company or anybody ever made a claim to possession or demonstrated an intention to regain possession of the Property.  There is also no evidence that the plaintiff’s family obtained possession of the Property with the consent of the Company (whether by way of a lease, licence or otherwise) such that time had stopped running.  In the premises, I am satisfied that the plaintiff has shown factual possession and the requisite intention to possess the Property since 1970. 

44.  The question that follows, however, is whether the documents disclosed by the Government and the late father-in-law’s will affect the plaintiff’s position vis-à-vis the Company and Madam Chan.

The plaintiff’s position vis-à-vis the Company and Madam Chan

45.  Based on the documents disclosed by the Government, in particular the letter from Messrs F Zimmern & Co, it appears that the late father-in-law had paid a sum of $21,000 for the purchase of the Property.  This letter is consistent with the plaintiff’s oral evidence that she had overheard conversations between her late mother-in-law and other relatives that the family had paid certain money for the purchase of the Property.

46.  On the other hand, it is noted there is no document from the Government showing its giving of consent for the Property to be leased or assigned by the Company to the father-in-law.  Nor was there any subsequent assignment of the Property to the father-in-law. 

47.  As mentioned above, there is also no document showing on what basis (if any), whether by way of a lease, licence or otherwise, the late father-in-law and his family occupied the Property prior to his death in 1973.

48.  Due to the long lapse of time and the lack of additional evidence, it is impossible to discern from the limited evidence as to what in fact had happened. 

49.  However, it is probable that the late father-in-law did pay the purchase price of $21,000 and, for some unknown reason, the sale was not completed and he never obtained the legal title of the Property.  I say this is probable because, after all, the Property was part of a new development at the time and it is highly unlikely that the Company had abandoned the Property and allowed the father-in-law’s family to stay there since the 1950s without making any payment. 

50.  Assuming that was the case, the father-in-law would have become the beneficial owner of the Property as a result of the payment.  But since there was no proper assignment of the Property, the Company continued to hold the legal title on trust for him.  The father-in-law’s beneficial interest in the Property then upon his death became vested in Madam Chan by reason of his will, but the Company remained the paper owner of the Property holding the same on trust for the father-in-law’s estate. 

51.  Section 10 of the LO provides:-

“(1) Subject to the provisions of section 20(1)^[1], the provisions of this Ordinance shall apply to equitable interests in land, including interests in the proceeds of the sale of land, held upon trust for sale, in like manner as they apply to legal estates, and accordingly a right of action to recover the land shall, for the purposes of this Ordinance but not otherwise, be deemed to accrue to a person entitled in possession to such an equitable interest in the like manner and circumstances and on the same date as it would accrue if his interest were a legal estate in the land.

(2) Where any land is held upon trust, including a trust for sale, and the period prescribed by this Ordinance has expired for the bringing of an action to recover the land by the trustees, the estate of the trustees shall not be extinguished if and so long as the right of action to recover the land of any person entitled to a beneficial interest in the landor in the proceeds of sale either has not accrued or has not been barred by this Ordinance, but if and when every such right of action has been so barred, the estate of the trustee shall be extinguished.

(3) Where land is held upon trust, including a trust for sale, an action to recover the land may be brought by the trustees on behalf of any person entitled to a beneficial interest in possession in the land or in the proceeds of sale whose right of action has not been barred by this Ordinance, notwithstanding that the right of action of the trusteeswould apart from this provision have been barred by this Ordinance.”

52.  The effect of section 10(1) of the LO is that a beneficiary entitled to an interest under a trust is treated as being in the same position as if he held a legal estate.  Time would start to run against a beneficiary’s right of action to recover the land in the same manner and on the same date as if he were holding a legal interest in the land. 

53.  Thus, if the father-in-law had beneficial interest in the Property prior to his death, upon his demise and the same devolving to his estate, the plaintiff (together with her family) would have been in adverse possession of the Property vis-à-vis Madam Chan (being the sole beneficiary and executrix under the will) as from 29 December 1973. Pursuant to section 8(2) of the LO, the right of action of Madam Chan against the plaintiff’s family as squatters would have been deemed to accrue on the date of his demise and the limitation period of 20 years would have lapsed prior to the commencement of these proceedings.

54.  With regard to the Company’s position qua trustee in this scenario, under section 10(3), an action to recover the land may be brought by the trustees on behalf of any person entitled to a beneficial interest in possession in the land whose right of action has not been barred by the LO, notwithstanding that the right of action of the trustees would otherwise have been barred by the LO.

55.  However, under section 10(2), if the right of action of every person entitled to a beneficial interest in the land has been time-barred by the LO, the estate of the trustees shall be extinguished and the trustees would likewise be debarred from bringing any action to recover the land.  For a discussion of the effect of section 10 of the LO generally, see Leung Kuen Fai v Tang Kwong Yu T’ong or Tang Kwong Yu Tso [2002] 2 HKLRD 705 per DHCJ Lam (as he then was) at paras 35 – 46.

56.  In the scenario being discussed here, by the time the present proceedings were commenced in 2017, the right of action of the father-in-law’s estate as beneficial owner would have been debarred by LO 1965 and LO.  Pursuant to sections 10(2) and (3), the right of action of the Company qua trustee for the benefit of the estate (or Madam Chan) would have been so time-barred under section 7(2) of the LO as well.

57.  Therefore, I accept the submissions of the plaintiff’s counsel that the Plaintiff’s claim vis-à-vis the Company is unaffected by the question as to whether the beneficial interest lies in the Company or Madam Chan.

Conclusion

58.  In conclusion, I am satisfied that the plaintiff has been in adverse possession of the Property for a continuous period of more than 20 years prior to the commencement of these proceedings.  Pursuant to provisions of the LO and LO 1965 as mentioned above, the Company’s title to the Property has been extinguished, and it is debarred from recovering the same from the plaintiff.

59.  As for costs, on 12 October 2018 Deputy District Judge Eugene Yim ordered that the costs of the proceedings up until and including the filing of the Consent Summons dated 11 October 2018 be to the defendant, to be taxed if not agreed.  The plaintiff has asked and I agree, that subject to that Order, there be no order as to costs. 

60.  I make the following orders:-

(1)  A declaration that the Plaintiff has acquired an indefeasible possessory title to the Property;

(2)  A declaration that the Company’s title to the Property has been extinguished;

(3)  Subject to the Order of Deputy District Judge Eugene Yim dated 12 October 2018, there be no order as to costs.

61.  It remains for me to thank Ms Law for her helpful submissions.