NG TUNG v. GRAND WAYFAIR INVESTMENT CO LTD

HCA 1682/2017

[2019] HKCFI 431

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1682 OF 2017

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HCA 2531/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2531 OF 2017

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(Heard Together)

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J U D G M E N T

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Introduction

1.  Ng Tung (“P”) is the plaintiff in the present two actions HCA 1682/2017 (“1^st 2017 Action”) and HCA 2531/2017 (“2^nd 2017 Action”), and the two actions have been ordered to be heard together.  In the 1^st 2017 Action, P claims adverse possession of 2 lots, namely Lot 76 and Lot 77 in DD133 New Territories against the registered owner or the 2 lots, namely Grand Wayfair Investment Company Limited (“GWIC”) and in the 2^nd 2017 Action, P claims adverse possession of 2 lots, namely Lot 66 and Lot 95 in DD 133, New Territories against the registered owner of those two lots, namely Fulland International Limited (“FIL”).  FIL is a related company of GWIC.

2.  GWIC and FIL (collectively “Ds”) now apply to strike out the actions respectively against them on the grounds that the two actions are an abuse of the process of the court.

3.  Counsel Ms Angela Gwilt and Ms Vivian Lam appeared for P and Counsel Mr Kenneth CL Chan and Mr Ross Yuen appeared for Ds at the hearing.

Background

4.  GWIC is the registered owner of a total of 3 lots, namely Lot 76, Lot 77 and Lot 78 in DD 133 (“3 GWIC Lots”) and FIL is the registered owner of Lot 66 and Lot 95 in DD 133 (“2 FIL Lots”).  The 5 lots are 5 adjoining pieces of land in Ha Pak Nai Village in Lau Fau Shan in New Territories as seen in a plan[1]. GWIC and FIL share common directors.  The shareholders of GWIC were Mr Lau Wong Fat and his mother Madam Ng Ying, both now deceased.  The director who has made affirmations in support of Ds’ present applications, Lau Lai Fan Beatrix (“Ms Lau”) was the daughter of Mr Lau Wong Fat and Madam Ying was her grandmother.  As for FIL, the shareholders are Ms Lau and her family members and also friends/companies owned by friends of Mr Lau Wong Fat.  The two companies hared the same office and were operated by the same group of staff.

5.  Prior to the present two actions, there had already been previous actions issued by GWIC concerning the 3 GWIC Lots as follows:

(i)  GWIC issued an originating summons on 23 June 1993, under HCMP 1942/1993, for vacant possession of the 3 GWIL Lots against all persons in occupation of the lots (“1993 Action”);

(ii)  GWIC issued a writ in 2007, under HCA 558/2007, initially against only one defendant and later amended to include two further defendants, one of whom was P and the other one was called Wong Kin Man (“Wong”) for an injunction to restrain the defendants to trespass on the land in question which is situate in Lot 768, and for vacant possession of the land in question (“2007 Action”).

6.  I will set out the relevant details of the above two actions later.  Suffice to say at this stage, GWIC obtained vacant possession of the 3 GWIC Lots in the 1993 Action.  Subsequently in the 2007 Action, by a judgment dated 18 October 2013, GWIC’s claim in respect of possession of Lot 78 was dismissed and a declaration was granted by DHCJ Seagroatt, as he then was (“Judge”), in favour of P in respect of his title as adverse possessor (“Seagroatt Judgment”).  GWIC appealed against the Seagroatt Judgment under CACV 238/2013, and pursuant to the judgment of the Court of Appeal dated 26 September 2014, the dismissal of GWIC’s claim by the Judge was upheld but the declaration in favour of P was set aside.

7.  4 years later, after the Court of Appeal judgment, P issued the present two actions to claim adverse possession against Ds of Lots 76 and 77 or portions thereof (against GWIC) and of Lots 66 and 95 or portions (against FIL), the 4 lots in the present two actions are referred to collectively as “4 Other Lots”.

8.  Ds complained that the present actions are an abuse of process on the part of P and that Ds are seriously prejudiced in not being able to properly prepare for their case due to P’s deliberate decision not to raise his adverse possession of the 4 Other Lots at the time as Lot 78 in the 2007 Action.

9.  The relevant details of the 1993 Action and the 2007 Action are set out hereinbelow.

1993 Action  

10.  In the 1993 Action, on 25 October 1993, Master Woolley ordered that GWIC should recover possession of the 3 GWIC Lots against all persons in occupation thereof (“1993 Possession Order”).  P’s father Ng Kwing (“Father”) issued a summons on 29 October 1993 to set aside the 1993 Possession Order.  P had made an affirmation on 1 November 1993[2] to support Father’s case and in this affirmation, P had said that Father was entitled to possession of the 3 GWIC Lots by way of two agreements dated respectively 15 January 1959 and 17 November 1960 and that, alternatively, Father was entitled to claim adverse possession of the 3 GWIC Lots should the New Territories (Renewable Crown Leases) Ordinance, Cap 152 be not applicable[3].  Father was in Halifax, Nova Scotia, in Canada at the time visiting one of this sons and Father had made a statutory declaration to state that he had used the 3 GWIC Lots “open and notoriously” (sic) since 1960 and he claimed a possessory title to those lots[4].

11.  For reasons unknown, Father later withdrew his above mentioned setting aside application on 5 November 1993, but 3 days later, on 8 November 1993, Father took out a fresh summons to set aside the 1993 Possession Order.  P made another affirmation in support in which he largely adopted what was said in his earlier affirmation. 

12.  By a decision handed down on 31 January 1994 by Mayo J, as he then was, Father’s application for setting aside the 1993 Possession Order was dismissed (“Mayo Decision”)[5].  There were two main reasons set out in the Mayo Decision for dismissing Father’s setting aside application,  namely (1) the 1993 Action was commenced a few days prior to the expiration of 20 years from 27 June 1973, the date when the New Territories (Renewable Government Leases) Ordinance, Cap 152[6] came into effect, and thus the Father was unable to argue adverse possession[7]; and (2) neither of the two agreements he signed in 1959 and 1960 could assist the Father as at the time of the agreements, the land in question within the 3 GWIC Lots was part of the Li Tun Yau Tong, and there was no evidence at the time that the purported assignors of the 3 GWIC Lots had any authority to represent the Li Tun Yau Tong.

The 2007 Action 

13.  It would appear that in about August 2006, GWIC discovered that part of Lot 78 was at the time wrongfully trespassed and GWIC then issued the 2007 Action for vacant possession of the land in question against one Chan Yung Kan trading as Luk Yau Yau Organic Vegetable (“Chan”) and alleged that Chan’s act of trespass commenced in August 2006 or thereabout.

14.  Chan’s case was that he was granted a licence under an agreement dated 1 May 2006 by P to cultivate the land in question for organic agricultural products at an annual fee.  Subsequently, under an order dated 3 July 2009, Madam Registrar Queeny Au-Yeung, as she then was, ordered P to be joined as the 2^nd defendant in the 2007 Action and Wong was also joined, although it would appear Wong did not later appear at the trial of the 2007 Action (“Trial”).

15.  P had raised the defence of adverse possession to GWIC’s claim in the 2007 Action, but at the time there was no counterclaim by P.  During the Trial, P gave evidence of his family’s occupation of Lot 78 and parts of the nearby lots, namely the 4 Other Lots.  A copy of the transcript of the Trial has been produced by Ds in the present action[8] (“Transcript”).

16.  After the Trial, as mentioned earlier, the Judge dismissed GWIC’s claim in the 2007 Action and found that P’s family had established unbroken adverse possession to Lot 78 for almost 47 years from 1960 to 2007, and further that P had established 12 years of adverse possession since the 1993 Possession Order.  The Judge had found that after the 1993 Possession Order, GWIC had not taken any enforcement action in re-occupying the 3 GWIC Lots, which led to the 2007 Action.  The Judge then also made a declaration in favour of P in respect of his title as adverse possessor of Lot 78.

17.  As seen earlier, GWIC then appealed to the Court of Appeal and the Court of Appeal set aside the declaratory relief as there was no counterclaim by P and also the wording of the declaration was too imprecise. The Court of Appeal had however commented that there was nothing to stop P from registering a copy of the Seagroatt Judgment at the Lands Registry and such a registering would probably as good as a registration of a declaration given by the court.  

Ds’ grounds for the striking out  

18.  Essentially, Ds’ application to strike out is based on the principle of the res judicata in the wider sense and Mr Chan has referred to the principle enunciated in Henderson v Henderson (1843) 3 Hare 100. 

19.  It was submitted on behalf of Ds that the present actions, namely the 1^st 2017 Action and the 2^nd 2017 Action, are abuse of process in that :

(i)  P could have claimed in the 2007 Action for adverse possession of the 4 Other Lots which are now subject matters in the present actions;

(ii)  P should have raised in the 2007 Action his claim for the 4 Other Lots;

(iii)  There was a change in P’s case in respect of Lot 76 and Lot 77;

(iv)  Demise of main factual witnesses for Ds.

20.  In relation to (iii), it was also submitted on behalf of Ds that the case of the Father in the 2007 Action was that he and his family cultivated on the 3 GWIC Lots since November 1960 and that it was P’s then evidence that they first cultivated Lot 78 in 1960 and within 2 to 3 years, they then also cultivated Lot 76 and Lot 77.  However, in the 1^st 2017 Action, originally it was pleaded that P’s family started to occupy a portion of Lot  76 and Lot 77 since around 1960, but later in the amended statement of claim (“ASOC”) that it was amended to since around 1974[9].

21.  In relation to (iv), Ds’ case is also that P’s abuse of process will cause grave prejudice to Ds, in that two main factual witnesses of GWIC had passed away, namely (1) Mr Kwok Tak-woo who had been living in Ha Pak Nai Village since 1967 and had been its Village Head for over 20 years; and (2) Mr Cheng Zhing-zhou who had been living in Ha Pak Nai Village since 1970, and there have been no suitable witnesses who can give evidence for Ds, and further Mr Lau Wong Fat who had been managing GWIC had also passed away in July 2017. 

The legal principles 

22.  There is no real dispute between Ms Gwilt and Mr Chan over the legal principles as set out in their skeleton submissions and I will not set them out in detail here.

23.  Suffice to say, the burden is on Ds to establish abuse of process on the part of P.

Discussion

Whether P’s claims for the 4 Other Lots could have and should have been raised in the 2007 Action

24.  Mr Chan submitted that the issue of the intention to possess all 5 lots, and not only Lot 78 in the 1960s goes to the very root of P’s claim for adverse possession.  Thus, the issue should have been raised in the 2007 Action and should not be left to be decided in a piece meal fashion as the Court is now invited to do and risks of multiplicity of findings may arise.

25.  Mr Chan argues that in the Seagroatt Judgment, it was found that P and his family had the intention to possess in respect of Lot 78 since 1960 and that this finding was made with reference to Lot 78 only, without the chance to explore the manner of occupation of the 4 Other Lots, and that had the Judge had the chance to consider such additional evidence, he might or might not come to a different conclusion in respect of the issue of intention to possess.  In other words, by a deliberate decision of P in not claiming adverse possession of the 4 Other Lots in the 2007 Action, P could make use of the finding in the 2007 Action to his advantage.  GWIC is now vexed for the second time.

26.  As seen in the Transcript, during the examination in chief at the trial of the 2007 Action[10], P’s evidence was initially his parents started to occupy Lot 78 first and then within two or three years P’s family cultivated on the other lots and he had mentioned part of Lot 66, Lot 77 and a small area adjacent to Lot 76, and a part of Lot 95, and that he and his family lived in Lot 67 and that he had produced electricity bills from one account which he said covered all the lots occupied by him and that it was in the year 1970 that the electricity account started, and that water account started in 1995, but P had said that the water supply to Lots 67, 77, 76 was not covered under the water account.  Then there was a pump house installed in 1973.  It was also P’s evidence that his agreement with Chan covered not only Lot 78 but the 4 Other lots.  Under cross examination, it was P’s then evidence that another family, namely the parents of Wong (who was named as the 3^rd defendant in the 2007 Action) joined with P’s family in cultivating Lot 78, and that they had built a house sometime in 1966 on Lot 79[11].

27.  The Transcript also showed that even though P had made reference to some effort by an investment company to recover the land in his witness statement, GWIC had at no time disclosed the 1993 Action and in fact the counsel who appeared for GWIC was not even aware of it.  It was only when Ms Gwilt, who had appeared for P at the Trial, met with P that she was alerted and had asked P to find all relevant documents.  The Judge had set this out in his judgment and, the Judge was not impressed by, and in fact was critical of, GWIC’s failure to disclose the 1993 Action, in particular when GWIC’s solicitors in the 1993 Action were initially acting for GWIC in commencing the 2007 Action (although later GWIC changed to its present solicitors).   The Judge had referred to the Mayo Judgement and had said with the benefit of hindsight and all the evidence that he had heard during the Trial, he said P ought to have been able to establish a good strong prima facie defence and have the Mayo Judgment set aside[12]. The Judge had also noted that GWIC had never sought to enforce the Mayo Judgment which it was “fortunate” to obtain and that GWIC made no reference to it in the pleadings in the Trial and had failed to give a credible explanation for its failure[13]. The Judge had observed that even when GWIC’s witness Mr Lau Cheung-lun was alerted to the possible existence of the Mayo Judgment by a village elder and informed GWIC’s current solicitors, nothing was done and that the Judge had described it as a “bizarre state of affairs” none of which assisted GWIC[14].

28.  It is quite clear that as seen in the 1993 Action that GWIC should be well aware of P’s case that his family had occupied not only Lot 78 but at least the other 2 of the 3 GWIC Lots, if not all the 4 Other Lots (or a part thereof) for some period of time.  Yet, GWIC chose to confine its claim in the 2007 Action to Lot 78 only and in fact did not even sue P in the first place, and only sued Chan.  As pointed out by Ms Gwilt, the principle of res judicata can also be said to apply to GWIC and FIL in that GWIC as well as FIL could have claimed and should have claimed vacant possession of all 5 lots, namely the 3 GWIC Lots and the 2 FIL Lots, in the 2007 Action, rather than selecting to claim possession of only Lot 78. GWIC never sought leave to amend its claim to include the 4 Other Lots even when the 1993 Action and the Mayo Judgment were revealed and P had mentioned in the Trial his family’s occupation of not only Lot 78 but the 4 Other Lots.

29.  In consequence, the only subject matter in the 2007 Action was Lot 78, and that it was clear that P only defended the claim against his occupation in Lot 78 by way of adverse possession, and the particulars pleaded in the Amended Defence in the 2007 Action were very specific regarding to Lot 78[15]. There was no counterclaim on P’s part regarding Lot 78, let alone any other lots and the declaratory relief in respect of Lot 78 was not a relief sought by P and this was one of the reasons why the declaration was subsequently set aside by the Court of Appeal.

30.  As seen from the Transcript, Ms Gwilt’s cross examination of all of GWIC’s witnesses was confirmed to Lot 78 only.  The mentioning of P of his family occupation in relation to the 4 Other Lots (or parts thereof) was only as part of P’s family occupation history.  As pointed out by Ms Gwilt, despite P’s evidence, the Judge only assessed the aerial photographs of Lot 78 only[16]. In fact, the identification plan attached to the Seagroatt Judgment only indicated Lot 78[17].

31.  Having read the Transcript, the only lot which was the subject matter of the 2007 Action and which was subject to adjudication at the trial was clearly only Lot 78.  The Seagroatt Judgment was a final determination of the occupation of Lot 78 as claimed by GWIC in the 2007 Action and, it was quite apparent also from the Court of Appeal judgment that all along, the Court has been dealing with Lot 78 only. 

32.  The finding of P having possessory title of Lot 78 would not in my view negate P’s burden to prove his and/or his family’s occupation and animus possidendi to so occupy the 4 Other Lots (or parts thereof) as he now claims.  Mr Chan had submitted that it was not a case that P entered into possession of different lots at different location at different times in which case the issue of factual possession and animus possidendi for each lots are different[18].  However, as seen in the Transcript, P’s then evidence was in fact his family occupied the lots from different times, namely that initially his family occupied Lot 78 only and that the other lots referred to by him were occupied within two or three years[19].  As seen in the Transcript, P’s evidence was also that his family lived in a house on Lot 67 (which does not appear to be one of the 4 Other Lots now being claimed by P against Ds).    

33.  As stated earlier, one of Mr Chan’s complaints in his Skeleton Submissions was that there has been a change in P’s case, in that P’s present case in the 1^st 2017 Action against GWIC is that it was since around 1974 or thereabouts that P and his parents started to occupy a portion of Lot 76 and Lot 77. 

34.  As seen later, I do not think P’s present pleaded case is necessarily a change in his case but this will be a matter for the trial.  It would appear that he and his family had occupied the 3 GWIC Lots at different times, and in the eventual trial of the present two actions, the Court may well find that P has failed to show animus possidendi in the other lots, when all the aerial photographs and plans of the 4 Other Lots become available before the Court.

35.  Even though the Henderson principle is not necessarily confined only to repeated claims between the same parties, there was no evidence that during the trial of the 2007 Action, P was aware that the 2 FIL Lots belonged to a company which was connected or related to GWIC.    Anyway, FIL was never involved in the 2007 Action, nor were the 2 FIL Lots the subject matter of that action. 

36.  In any event, I accept Ms Gwilt’s submission that the finding of P’s family had the animus possidendi by cultivation in Lot 78 in the 2007 Action should not bar the Court to find otherwise in the 4 Other Lots if there is insufficient evidence of P’s family had the animus possidendi to possess the 4 Other Lots.

37.  As further pointed out by Ms Gwilt, P was defending alongside with two co-defendants in the 2007 Action.  Although Wong did not turn up, Chan did and gave evidence during the Trial and he confirmed that he and P entered into an agreement pursuant to which Chan was to manage the land for P in 2006, and that the piece of farmland was quite large.  Chan then managed Lots 65, 79, 77 and 95 in addition to Lot 78.  Lot 65 and Lot 79 are not within the 4 Other Lots now being claimed by P against Ds.  Ms Gwilt argued that, the other two co-defendants in the 2007 Action were not adverse possessors of the 4 Other Lots and there was no reason for P to bring in the 4 Other Lots in the 2007 Action which were irrelevant to his co-defendants. I agree.

38.  Ms Gwilt submitted that P is a squatter and adverse possessor and he needs not bring any action against any registered owner if he is not being evicted and/or if his occupation is not being threatened as long as the time runs.  P only brings the present two actions as according to him, on 25 May 2017, GWIC attempted to cause portions of Lot 76 and Lot 77 to be enclosed with concrete nails, iron spike and borders[20], and P brings the claim against GWIC as GWIC’s entitlement to reclaim Lot 76 and Lot 77 had been time barred by operation of Limitation Ordinance.  It was under such circumstances that P commenced the present two actions.

39.  Having considered all the circumstances of this case, and based on the present evidence before the Court, I see no reason why P could or should have brought his present claims in the 2007 Action.

Change in P’s case in respect of Lot 76 and Lot 77

40.  I have considered this earlier, but will just add that in the Transcript, P had also stated that Wong’s family had joined them in cultivating lot 78 and other Lots in 1964 and that by 1973, Wong’s parents had passed away and Wong did not participate in the cultivation any more[21].  It would appear what P was saying that his family and Wong’s family had both cultivated in the 3 GWIC Lots but by 1973, it was only P’s family.  In any event, as said earlier, I do not see P’s present pleaded case in the 1^st 2017 Action is necessarily a change in P’s case.  There was no finding of facts in the Seagroatt Judgment in relation to the occupation of Lot 76 and Lot 77. Any inconsistency will be a matter for the trial.

Demise of main factual witnesses for Ds

41.  As seen in the Transcript and the Seagroatt Judgment, Mr Kwok Tak-woo and Mr Cheng Zhing-zhou gave evidence on behalf of GWIC during the Trial.  The Judge had however commented that although both of them were doing their best to assist, their memories were suspect and they could not be expected to have significant extensive or reliable knowledge[22].  In other words, the Judge did not find their evidence helpful.

42.  As for Mr Lau Wong Fat, there was no evidence that he had any personal knowledge or was in any position to give direct evidence regarding the physical occupation of the lots in question.  Mr Lau never provided a witness statement in the 2007 Action, nor was he called as a witness in the Trial.  There was also no evidence that Mr Lau had personally filed any affirmation in the 1993 Action.

43.  As pointed out by Ms Gwilt, the burden will be on P to prove his case of adverse possession in relation to the 4 Other Lots, and with or without any evidence from Ds, P will still have to prove his case.

Conclusion

44.  Having considered the present evidence, I am not satisfied that the present two actions are an abuse of the process of the Court on the part of P.  I therefore dismiss Ds’ respective summons for striking out P’s claims under Order 18 rule 19 of the Rules of the High Court.  I order costs in favour of P, against the defendant in each of the actions.  Such costs to be summarily assessed and be paid within 7 days upon summary assessment.  P is to lodge his statement of costs within 7 days, and Ds to lodge their respective lists of objection within 7 days thereafter.