PESTON INVESTMENT LTD v. TSEUNG DING MAN

HCA 1221/2023

[2025] HKCFI 1245

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1221 OF 2023

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BETWEEN

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REASONS FOR JUDGMENT

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1.  This is the application of Peston Investment Limited (the “Plaintiff”) by Summons dated 5 November 2024 for default judgment against Tseung Ding Man (the “Defendant”) pursuant to RHC Order 19, rule 7. This application relates to a piece of land shown on the Lot Index Plan (the “Plan[1]”) annexed to the Plaintiff’s Statement of Claim (“SOC”) and coloured pink (the “Pink Area) over which the Plaintiff claims to have been in adverse possession for more than 20 years since about 1990. The Defendant did not file a defence nor any acknowledgement of service.

2.  At the hearing, the Plaintiff provided the Court with the 5^th affirmation of Li Sun Sing filed on 24 March 2025 confirming that the letters re Writ and Summons served by way of substituted service have not been returned and the Submissions and LOA as well as the hearing bundles with covering letters were sent by ordinary post to the Defendant on 20 and 21 March 2025.

Relevant background

3.  By New Grant No 492 (the “New Grant”) dated 28 March 1957, the Government agreed to grant and the Defendant agreed to take Lot No. 951 in DD 381 (“Lot 951”) on terms set out in the conditions of the New Grant. Lot 951 was delineated in red by dotted lines on the plan attached to the New Grant which is exhibited as Plan ‘A’[2] to the statement of claim in proceedings described in §11 below.

4.  From the date of the New Grant to early 1959, the Government approved various site formation plans and building plans submitted for the development at Lot 951. The boundaries of Lot 951 as shown on those plans deviated from those shown on the plan to the New Grant.

5.  In October/November 1958, the Defendant and the Government exchanged correspondence concerning the division of Lot 951 into 16 building plots and an access road. The boundaries of the Lot 951 as shown on the plan attached to such correspondence were consistent with those previously submitted and approved by the Government.

6.  Lot 951 was subdivided into 16 sections, namely, Sections A to P. The area of Lot 951 not subdivided became RP of Lot 951, the Defendant being its registered owner.

7.  As each house was completed and sold, a portion of Lot 951 was carved out by way of partition on sale. Section L (“Section L”) of Lot 951 was one of the 16 sections.

8.  By operation of section 14 Conveyancing and Property Ordinance, Cap 219 (“CPO”) which took effect on 1 November 1984, the conditions contained in the New Grant were deemed to have been complied with and a Government lease for the New Grant had also been deemed issued. The boundaries of Lot 951 were fixed to those boundaries set out in the plan attached to the New Grant which corresponds to the Plan.

9.  While General Condition 3 of the New Grant permitted the Director of Public Works to determine the exact boundaries of the Lot before the issue of a Crown Lease, no such determination had been made for the Government Lease deemed issued in November 1984.

10.  The Plaintiff became the registered owner of Section L on 8 January 1990 and since then, the Plaintiff has been enjoying uninterrupted and exclusive possession and occupation of Section L, together with the Pink Area.

11.  On 20 February 2017, the Secretary for Justice (on behalf of the Director of Lands) (the “Government”) issued a writ against the Plaintiff in HCA 410/2017 (“HCA 410”). Suffice it to say that the Government’s case is that the Pink Area had at all material times been and remains unleased Government land and disputes the boundary of RP of Lot 951.

12.  HCA 410 was stayed by consent on 12 December 2019.

13.  The writ herein was issued on 3 August 2023. The Plaintiff obtained an order for substituted service on 22 April 2024. It effected service of the writ (with the SOC annexed thereto) by sending 4 letters to the Defendant’s 4 addresses. The Plaintiff also effected service by placing an advertisement in the Hong Kong Economic Journal.

14.  The Summons was filed on 5 November 2024 and served by way of pre-paid ordinary post on 6 January 2025.

15.  The Government was informed of the present proceedings as well as the Summons for default judgment on 8 January 2025. In the Government’s reply of 7 March 2025, it did not consider it appropriate to express a view on whether the Government will join in and object, opining that it was unable to see how any judgment obtained by the Plaintiff against the Defendant over the Pink Area could affect the position of the Government.

The Plaintiff’s case against the Defendant

16.  As no defence has been filed, the Court will proceed on the basis that the averments made in the SOC have been impliedly admitted: Wu Ka v Wu Kwok Cheng [2003] 3 HKLRD 658 at §6.

17.  The Plaintiff’s pleaded case in support of its claim to adverse possession is as follows:

(a) The Plaintiff became the registered owner of Section L of Lot 951 by an assignment dated 8 January 1990. Section L consists of, inter alia, a house (coloured yellow on the Plan) known as House No 9, Barbecue Gardens, 9 Lok To Street (“House 9”).

(b) At all material times, the Defendant was/is the registered owner of RP of Lot 951 a portion of which is the Pink Area shown on the Plan consisting of (i) and open area (“Open Area”); a beach and/or seaside area adjacent to the Open Area (“Beach Area”); and an area of the foreshore adjacent to both the Open Area and the Beach Area.

(c) The only access to the Pink Area is through Section L.

(d) The Plaintiff’s pleaded case is that it (and/or its agents) has been enjoying uninterrupted and exclusive possession and occupation of section L together with the Pink Area of RP of Lot 951 since about 1990:

(i) Since that date, the Plaintiff has been maintaining the fences and/or boundary walls around Section L along with a padlocked gate which allowed access to the Pink Area. The key was/is held by the Plaintiff who thereby controlled access to the Pink Area;

(ii) The Plaintiff has maintained the Pink Area since about 1990 having installed water pipes and sink within the Pink Area. Those facilities are connected with the water supply serving Section L and/or House 9. The Plaintiff has also planted trees within the Peak Area which it has maintained at all material times;

(iii) In 2002, the Plaintiff erected additional fences and a padlocked gate within the Pink Area to enclose the Open Area and the Beach Area, and engaging contractors to repair and renovate the Area including the erection of new staircases with in the Open Area.

(e) The Plaintiff has never received any notice from the Defendant demanding that the Plaintiff to stop using and/or occupy the Pink Area.

18.  The basic principles of adverse possession can be found in the Court of Appeal’s judgment in Tsang Foo Keung v Chu Jim Mi Jimmy [2017] 3 HKC 527 at §22. Applying those principles to the matters set out in §16 above, the Plaintiff has demonstrated its factual possession of the Pink Area since about 1990 as well as its intention to possess the Pink Area by making use of the Pink Area in the way an owner would. Relevantly, the Plaintiff controlled access to the Pink Area.

19.  In ascertaining the applicable limitation period under the Limitation Ordinance (“LO”), the date when the cause of action accrued must first be determined. As explained by the Court of Appeal in Tang Moon Lam v Tam Ying Yeung [2019] 5 HKLRD 556 (at §§30 and 34), whether the relevant period is 20 years or 12 years, the pivotal point is the date when the cause of action accrued. Under section 8 of the LO, the right of action is treated as having accrued on the date of dispossession or discontinuance. If it accrued before 1 July 1991, it is 20 years.

20.  Since the Defendant’s cause of action against the Plaintiff accrued in early 1990, the Defendant’s title against the Plaintiff was extinguished in about 2010 pursuant to section 17 of the Limitation Ordinance (“LO”). Even if the Defendant’s cause of action had only accrued after 1 July 1991, the applicable limitation period is 12 years. It would mean that the Defendant’s title was extinguished by 2014.

21.  There is no dispute as to the boundary of RP of Lot 951 vis-a-vis the Defendant.

22.  I am therefore of the view that the Plaintiff has satisfied the requirements for its claim to adverse possession of the Pink Area against the Defendant.

HCA 410/2017

23.  As earlier mentioned in §11 above, the Government maintains that the Pink Area (which forms part of RP of Lot 951) remains unleased Government land based on its view of the boundary of RP of Lot 951.

24.  Any judgment entered against the Defendant is a judgment in personam, binding only upon the parties to the proceedings: see Linfield Limited v Yaoho Design Architects Ltd [2002] 2 HKC 204 at §16.

25.  Since the position of the Government cannot be affected any judgment made in this application which is confined to and only affects the Defendant, it is not a matter that should or would affect the exercise of the Court’s discretion. Nor is it necessary to consider the merits of the Government’s claim.

Disposition

26.  The Plaintiff seeks the following relief:

(1) A declaration that the Plaintiff has been in adverse possession of the Pink Area as shown on the Lot Index Plan[3] for more than 20 years since about 1990, and has thereby acquired and is entitled to a possessory title in and/or over the Pink Area.

(2) A declaration that the Defendant is barred from claiming possession and/or the recovery of the Pink Area, and the Defendant’s title, interest and/or rights in and/or over the Pink Area as against the Plaintiff has been extinguished, by virtue of sections 7 and 17 of the LO.

27.  The terms of the declarations sought make it crystal clear that they only bind the Defendant and not anyone else. The nature, scope, and effect of the declarations sought do not impinge at all on the Government’s position in HCA 410.

28.  As the Court of Final Appeal explained in Chan Tin Shi v Li Tin Sung (2006) 9 HKCFAR 29 (at §§17, 19 and 20), title is extinguished only as against the squatter (i.e the Plaintiff). As against the landlord (i.e. the Government) it remains in existence: time could not commence to run while the leasehold interests subsisted.

29.  Kiuwide Company Limited v SJ, HCMP 253/2015, unrep., 24 March 2017 concerned Section J of Lot 951. The plaintiff in that case (“KCL”) had obtained title to an area (“the purple area”) within RP of Lot 951 premised on adverse possession against the Defendant by an order made by DHCJ Marlene Ng on 19 December 2013. As in the present case the Government did not consider it appropriate to participate in the adverse possession proceedings.

30.  In relation to KCL’s criticism of the Government’s decision not to participate in the adverse possession proceedings, DHCJ Yip SC[4] accepted the Government’s submissions[5] based on Lord Ratcliffe’s statement in Fairweather v St Marylebone Property Co Ltd [1963] AC 510 at 536 that “no one supposes that adverse possession against a lessee during his term is itself adverse possession against his landlord”, a principle reflected in Chan Tin Shi (at §19). Thus, any declaration obtained by KCL against the Defendant would only be binding on the Defendant and those claiming through her and cannot affect the Government.

31.  The Plaintiff submitted that it has a genuine need for declaratory relief as against the Defendant. Its use of the Pink Area is integral to its enjoyment of Section L and House 9. Declaratory relief would (i) reduce the Plaintiff’s exposure to litigation risk from the Defendant, and (ii) provide the Plaintiff with a greater degree of certainty and assurance in deciding the best course of action to take in HCA 410. From a commercial and/or strategic perspective, the outcome of these proceedings necessarily impacts upon the Plaintiff’s decision in that regard.

32.  For the reasons stated above, I considered the present application to be a proper case to grant declaratory relief. Accordingly, at the conclusion of the hearing, I made an order in terms of §§1 and 2 of the draft submitted and ordered that there be no order as to costs.