NG FUK SHING v. NG FUK NAM AND ANOTHER

HCA 611/2015

[2018] HKCFI 2528

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 611 OF 2015

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DECISION

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I. INTRODUCTION

1.  The plaintiff (“P”) was the daughter-in-law of the late Ng Wai Fat (吳維發) also known as Ng Fat (吳發) (“Ng Fat”). Ng Fat had 2 sons, P’s husband Ng Chi Keung (吳志强) (“Ng Chi Keung”) who passed away on 19 October 1978 and Ng To Bo (吳土保) (“Ng To Bo”) who passed away on 21 June 2010. The 1^st defendant (“D1”) is one of the sons of Ng To Bo, and the 2^nd defendant (“D2”) is D1’s wife.

2.  P’s 4^th son Ng Fuk Shing (吳福勝) (“Ng Fuk Shing”) had been assisting P in dealing with the present action and liaising with P’s solicitors on her behalf. P passed away on 7 May 2017. On 10 May 2017, I granted an order appointing Ng Fuk Shing as personal representative to represent the estate of P for the purpose of the present action, and directing that the proceedings be carried on against D1 and D2 (collectively, “Ds”) by Ng Fuk Shing as personal representative of the estate of P.

3.  For the purpose of the Application before me (see paragraph 27(a) below), there was no dispute as to the following matters:

(a)	Ng Fat was the sole registered and beneficial owner of a rectangular-shaped piece of land on a slope identified/registered at the Land Registry as Lot No 642 (“Lot642”) in Demarcation District 332 (“DD332”), Cheung Sha Ha, Lantau Island. Lot642 was marked in pink and yellow (“Pink Portion” and “Yellow Portion”) on the Demarcation District survey plan (“Plan”) annexed to the Amended Defence and Counterclaim (“AD&C”).
(b)	Adjacent to Lot642 was a piece of rectangular-shaped government land marked in green (“Green Portion”) on the Plan (“Government Land”).
(c)	A 2-storey village house commonly described and known as House No 7, Cheung Sha Ha Chuen (長沙下村), Lantau Island (“House7”) was built and/or rebuilt by Ng To Bo (according to Ds) or by Ng Fat and/or Ng Liu Yung Kiu (吳廖容嬌) (“Ng Liu Yung Kiu”) who was the wife of Ng Fat and mother of Ng Chi Keung and Ng To Bo (according to P) on the Green Portion / Government Land (collectively, “Green Land”) and Yellow Portion / part of Lot642 (collectively, “Yellow Land”) (ie partly within the boundary of Lot642 and mostly outside Lot642 on the adjacent Green Land).
(d)	Ng Chi Keung acquired Lot No 660 (“Lot660”) in DD332 that was adjacent to the Government Land and marked in orange on the Plan.
(e)	D1 was born in 1961 and married D2 in 1987, and their 3 children were born in 1987, 1991 and 1994 respectively.
(f)	After Ng Fat passed away in/about 1954, Ng Chi Keung and Ng To Bo respectively succeeded to half-share interest in Lot642. By a Succession dated 11 May 1971 registered in the Land Registry, Ng Chi Keung and Ng To Bo became co-owners of Lot642 as tenants-in-common in equal shares.
(g)	Ng Chi Keung passed away.
(h)	By way of a Deed of Assent dated 28 August 2009, the estate of Ng Chi Keung (including Lot660 and half-share interest in Lot642) was vested unto his widow P.
(i)	P then became the registered/beneficial owner of half-share interest in Lot642.
(j)	Ng To Bo died in 2010.
(k)	By the Grant of Probate dated 5 October 2010 registered at the Land Registry, D1 and D2 were respectively appointed (pursuant to the last testamentary will of Ng To Bo) as executor and executrix of the estate of Ng To Bo that included half-share interest in Lot642.

4.  P claimed that in/about 1938 Ng Fat erected 2 temporary straw sheds (“Straw Sheds”) on the Green/Yellow Lands. On/about 20 May 1947, with a view to acquire the Green/Yellow Lands from the Government, Ng Fat leased Lot642 from the Government under New Grant No 2683 (“Lot642 Lease”). In 1948, Ng Fat on his own initiative/ effort demolished the Straw Sheds and built a single-storey building structure with half being a pitched roof house (金字頂屋) made of stones/ tiles for his own and his family’s (collectively, “NF Family’s”) accommodation (“Pitched Roof House”), and other half being a hut made of stones, mud and/or wood for use as pigsty/kitchen (“Hut”). From 1976 to 1979, Ng Liu Yung Kiu (NF Family’s then most senior member) initiated, decided and caused the Hut and later the Pitched Roof House to be rebuilt into House7 on the same site (ie Green/Yellow Lands) as explained in paragraph 3(c) above.

5.  P claimed (a) House7 that encroached upon the Government Land was presumed to be an addition to Lot642 under the Lot642 Lease, so (b) House7 was built notionally on Lot642 and (c) was wholly subjected to the Lot642 Lease with its title/interest derived from or formed part of that of Lot642. After Ng Fat passed away, Ng Chi Keung and Ng To Bo respectively succeeded to half-share interest in Lot642. After Ng Chi Keung passed away, P succeeded to half-share interest in Lot642. P claimed Ng Chi Keung (and later P herself) and Ng To Bo (and later his estate by Ds) became co-owners of Lot642 and also House7 in equal shares.

6.  But Ds disagreed Ng Chi Keung and/or P had any interest in House7, and averred House7 initially consisted of a single-storey mud house (“Mud House”) and single-storey wood house (“Wood House”) erected on the Government Land by Ng To Bo at his own cost, but in/about early 1970s Ng To Bo at his own cost demolished the Mud House and rebuilt a 2-storey Chinese-style tiled-roof house that was named after him as “保園” (“Tiled House”) meaning “吳土保家園”, and before/in 1976 Ng To Bo demolished the Wood House and rebuilt a concrete 2-storey building (“Concrete House”) which had since been extended to include the Yellow Land on Lot642. Ds further averred that in the 1980s Ng To Bo demolished the Tiled House to rebuild a new structure to merge and join with the Concrete House into a single 2-storey house that was the present House7.

7.  Ds claimed that since about 1947 Ng To Bo and his family members (collectively, “NTB Family”)[1] had been in sole and continuous occupation of House7 situated on the Green/Yellow Lands to the exclusion of P and her family members.

8.  But P disagreed the NTB Family ever had possession of House7 to the exclusion of P or her family members. P claimed that since building the Straw Sheds in/about 1938 and the Pitched Roof House and Hut in 1948 which were eventually rebuilt to became House7, the NF Family[2] resided at House7. After Ng Fat died in/about 1954, the NF Family[3] continued to reside at House7. P further claimed that in/about 1972, Ng Chi Keung, P and their children (collectively, “NCK Family”) moved away from House7 to live at House No 6 erected on Lot660 but they never discontinued possession of House7:

(a)	when the NCK Family was not residing at House7, they (together with Ng To Bo) continued to regard House7 as Ng Fat’s ancestral home that housed their ancestral tablets, and to have free access to House7;
(b)	at all material times until the death of Ng Liu Yung Kiu in/about 1998, both the NCK Family and Ng To Bo mutually agreed, arranged and/or permitted Ng Liu Yung Kiu to continue to reside at House7 or to stay there during daytime;
(c)	at all material times, the NCK Family (particularly P) of their own free will made frequent visits to House7 for inter alia worshipping ancestors, and visiting and caring for Ng Liu Yung Kiu;
(d)	in/about 1986, upon marriage of Ng Chi Keung’s son Ng Fook Hing (吳福興), Ng Fook Hing and P moved back to reside at House7 for about a year;
(e)	at all material times until Ng To Bo passed away, the NCK Family maintained good/harmonious relationship with Ng To Bo, and the NCK Family impliedly permitted the NTB Family to have exclusive possession or sole occupation of House7 (if any which P denied), and entrusted/permitted Ng To Bo to manage and deal with all matters about House7 on the behalf of the NCK Family;
(f)	on/about 22 March 2009, P exercised her right as an executrix of the estate of Ng Chi Keung to enter into the 1st Agreement with Ng To Bo (see paragraph 9 below) concerning joint redevelopment of House7.

9.  P claimed that by a Chinese written agreement dated 22 March 2009 (“1^st Agreement”) signed/executed by Ng To Bo (as owner of half-share interest in Lot642 and House7) and P (as administrator of the estate of Ng Chi Keung that held the other half-share interest in Lot642 and House7), both sides agreed to jointly redevelop and rebuild the existing House7 (2-storey village house) into a new 3-storey village house. P further claimed the 1^st Agreement expressly provided inter alia that (a) House7 was or was equivalent to Lot642, and (b) both parties shall jointly pay the premium for rebuilding House7 into a new 3-storey village house.

10.  Ds disagreed, and averred that Ng To Bo entered into the 1^st Agreement with P by mistake because (a) House7 was not and was not equivalent to Lot642, and (b) co-development could not be carried out on the Green Land being Government land. Ds further alleged P was barred from bringing any action in relation to the 1^st Agreement by virtue of section 4 of the Limitation Ordinance Cap 347 (“LO”).

11.  But P denied the 1^st Agreement was entered into by mistake:

(a)	although House7 was erected mostly outside the boundary of Lot 642, House7 in its entirety was subject to the Lot642 Lease, and its title/interest was derived from or formed part of that of Lot642;
(b)	at all material times, it was mutually understood amongst inter alia Ng To Bo, Ds and the NCK Family that House7 was, was equivalent to and/or formed part of Lot642;
(c)	since an unknown date in/about June 1979, the Government had agreed to rectify the fact House7 was erected mostly outside the boundary of Lot642 and encroached upon the Government Land by way of “Surrender and Re-grant”;
(d)	so the co-redevelopment referred to in the 1st Agreement was feasible, and the parties could carry out the same by surrendering Lot642 and having re-grant of the Green/Yellow Lands being the land for House7.

12.  P also denied she was time-barred from bringing legal action relating to the 1^st Agreement, and averred her cause of action herein in relation thereto did not accrue until about 15 December 2014 when Ds as executor, executrix and/or trustee of the estate of Ng To Bo evinced an intention not to perform the 1^st Agreement.

13.  P claimed that after the Assent dated 28 August 2009 (see paragraph 3(h)) she in her personal capacity owned half-share interest/right in Lot642 and House7, and was therefore entitled to possession of House7 as co-owner thereof.

14.  Ds disagreed and averred that all along P and her family members lived at Lot660, and even if P had any interest in House7 (which Ds denied), they had dispossessed her and her predecessor-in-title of such interest within the meaning of section 8 of the LO on the basis that they had been in adverse possession of House7 for over 12 years, so by virtue of section 17 of the LO P’s title to House7 (if any) and to the Yellow Land had been extinguished and any right to claim for possession thereof was time-barred.

15.  P disagreed, and further denied Ng To Bo or Ds ever had animus possidendi over the Green/Yellow Lands being land on which House7 was situated. Instead, by reason of P’s case outlined above and/or mutual understanding at all material times that House7 was, was equivalent to and/or formed part of Lot642, Ng Chi Keung (and after his death P) succeeded to half-share interest in Lot642 as well as in House7.

16.  P claimed that by a Chinese written Declaration of Agreement dated 26 December 2011 (“2^nd Agreement”) signed/executed by (i) Ds (as executor, executrix and/or trustee of the estate of Ng To Bo consisting of half-share interest in Lot642 and House7) and (ii) P with her son Ng Fook Hing (吳福興) (as and/or acting on behalf of the owner of the other half-share interest in Lot642 and House7), it was agreed, acknowledged and/or declared by the parties thereto inter alia as follows:

(a)	both parties shall make a joint application for payment of premium for the purpose of rebuilding House7 (then a 2-storey village house) into a new 3-storey village house (with a roof) having floor area of 500 sq ft on each level at its original site;
(b)	both parties shall respectively pay 50% of the premium payable and building costs for rebuilding House7.

17.  Ds claimed they entered into and signed the 2^nd Agreement (which did not mention Lot642) by mistake since (a) House7 could not be rebuilt into a new 3-storey building (with a roof) having a floor area of 500 sq ft on each level at its original site on the Green Land being Government land, and (b) all clauses of the 2^nd Agreement including clause 5 thereof (“Clause 5”)[4] could not be carried out by reason of (a) above. Ds claimed that Clause 5 (which could not be carried out) was a pre-condition for the alleged redevelopment, so even if the 2^nd Agreement was valid (which Ds denied), they were not obliged to perform such agreement, or alternatively such agreement was liable to be terminated by reason of the fact the development fee for one party exceeded $2,000,000.

18.  P disagreed (a) the 2^nd Agreement was entered into by mistake, (b) Clause 5 constituted/imposed a pre-condition for the redevelopment of House7 and/or (c) the building costs payable by one party ever exceeded $2,000,000. P further averred the 1^st/2^nd Agreements were binding on him, the estate of Ng To Bo and Ds (as executor, executrix and/or trustee of the estate of Ng To Bo), and claimed Ds in such capacity were in breach of the 1^st/2^nd Agreements in failing/refusing to take any step to proceed with joint redevelopment of House7 or to make joint application for payment of premium for such purpose.

19.  Ds denied P’s aforesaid claims, and averred the 1^st/2^nd Agreements were void, liable to be terminated, not enforceable or binding against them. Without prejudice to Ds’ defences outlined above, Ds’ solicitors Hau, Lau, Li & Yeung (“HLLY”) wrote to P’s solicitors Simon C W Yung & Co (“SCWY”) to give notice of termination of the 2^nd Agreement on the ground that the development fee for one party exceeded $2,000,000.

20.  P disagreed the 1^st/2^nd Agreements were void, liable to be terminated or unenforceable against Ds, and averred the building costs of House7 payable by one party would not exceed $2,000,000, so no party, including inter alia Ds, was entitled to terminate the 2^nd Agreement on such alleged ground or at all. By a letter dated 10 June 2016 from SCWY to HLLY, P rejected Ds’ purported termination of the 2^nd Agreement or the building plan.

21.  By a letter dated 15 December 2014 by HLLY to P’s then solicitors Messrs KC Ho & Fong (“KCHF”), Ds (as executor, executrix and/or trustee of the estate of Ng To Bo and/or in their personal capacity) alleged (a) Ds and their family members had resided at House7 for more than 60 years and had acquired a possessory title to the same, and (b) P had no interest in House7.

22.  But in a further letter dated 2 February 2015 by SCWY to HLLY, P complained Ds failed/refused to acknowledge the 1^st/2^nd Agreements, to cooperate with P to proceed with redevelopment of House7 and/or to vacate any one of the 2 storeys at House7 (“Storeys”) and deliver the same for P’s use, occupation or enjoyment. Ds claimed that HLLY’s letter to KCHF dated 15 December 2014 already evidenced their denial of such allegations.

II.  PROCEEDINGS

23.  On 24 March 2015, P commenced the present action against Ds as executor and executrix of the estate of Ng Bo To and in their personal capacities. P claimed (but Ds denied) that unless restrained by court order Ds evinced an intention (a) not to perform the 1^st/2^nd Agreement(s) or to proceed with redevelopment of House7, and (b) to continue to reside at both of the 2 Storeys of House7 and to refuse to vacate either of the 2 Storeys (ie about half part of House7) for P’s use, occupation or enjoyment, and that (as Ds in their personal capacities wrongfully failed/refused to vacate either of the 2 Storeys and wrongfully deprived P of her enjoyment of such Storey or half part of House7) they were liable to P for loss/damages being mesne profits at such rate to be assessed from 30 January 2015 to date of delivery of possession of one of the 2 Storeys or half part of House7 for P’s use, occupation or enjoyment. P therefore asked for the following reliefs:

(a)	a declaration that her estate had half-share interest in House7 and was entitled to possession of the same;
(b)	specific performance of the 1st/2nd Agreements;
(c)	further or alternatively, an order and/or mandatory injunction that Ds were to carry out all necessary acts, make all necessary payments and execute all necessary documents for the purpose of redeveloping and rebuilding House7 into a new 3-storey village house (with a roof) having a floor area of 500 sq ft on each level at the original site;
(d)	damages to be assessed together with interest and costs.

24.  On 28 July 2016, Ds filed their AD&C without prejudice to their right to strike out all/part of any of P’s pleaded claims. Ds counterclaimed on the basis that if P had any interest in House7 (which they denied), they had dispossessed her of such interest and also her interest in the Yellow Land (being part of Lot642) as they had been in adverse possession thereof for over 12 years. Ds asked for (a) a declaration that they had acquired possessory title to House7 and the Yellow Land such that P’s right to bring action in relation thereto had become statutorily barred and P’s title in relation thereto (if any) had been extinguished, and (b) possession of House7 and the Yellow Land.

25.  On 15 August 2016, P filed her Amended Reply and Defence to Counterclaim to deny (a) Ds’ counterclaim and/or (b) Ds had been in adverse possession of the Yellow Land for a period of no less than 12 years before the commencement of the present action.

III.  SUMMONS

26.  On 20 December 2016, Ds filed a summons (“Summons”) to seek the following reliefs:

(a)	an order that the question of law set out in the schedule to the Summons (“Schedule”) be tried as preliminary point of law before trial of the present action, and that until such preliminary point of law has been determined, all further proceedings in the present action (save for the determination of the question of law) be stayed (“Application”);
(b)	the hearing on 17 January 2017 before Master J Wong in respect of the summons dated 20 May 2016 on expert evidence be adjourned sine die with liberty to restore.

27.  The questions of law set out in the Schedule were as follows:

“1. Given the undisputed facts that:

(1) the land delineated on the [Plan] is a land owned by the government (the ‘Government Land’);

(2) DD 332 Lot no 642 is the land as delineated in yellow and pink on the Plan; and

(3) [House7] situated on the lands as delineated in green and yellow on the Plan,

whether [House7] is part and parcel of the Government Land or owned by the government? [“1^st Question”]

2. if yes, whether [House7] can be subject to the interests claimed by [P] against [Ds] in this action? [“2^nd Question”]”

In a nutshell, the proposed questions of law to be tried as preliminary points of law before trial could be summarised as follows: (a) whether House7 was part and parcel of the Green Land on which it was situated and/or which was owned by the Government, and (b) if so, whether House7 could be made subject to the interests that P claimed against Ds in the present action. Mr Khaw SC (and Mr Koo and Mr Chan with him), senior counsel for P, confirmed that subject to disagreement over the precise demarcation of the boundary of Lot642 P had no quarrel with the 3 facts posed in the 1^st Question (“3 Facts”). It was also accepted that House7 was situated mostly on the Green Land, and only a small part of House7 was situated on the Yellow Land.

28.  On 20 December 2016, Ds filed D1’s 3^rd affirmation (“D1 3^rd Aff”) in support of the Application. On 28 December 2016, P filed Ng Fuk Shing’s 2^nd affirmation (“NFS 2^nd Aff”) in opposition.

29.  By the order of Master J Wong dated 4 January 2017, the Application was adjourned for argument with costs reserved. On 10 May 2017, I further adjourned the Application for further directions hearing and made ancillary case management directions. Such directions hearing was scheduled to be heard on 19 July 2017. On 21 June 2017, I made an order by consent to vacate such directions hearing, and adjourned the Application for argument before this court with ancillary case management directions. Such hearing for argument came before me on 13 February 2018 (“Hearing”).

IV.  AFFIRMATION EVIDENCE

30.  Ds  The D1 3^rd Aff claimed P’s estimation of the length of trial in P’s Timetabling Questionnaire dated 14 April 2016 was about 5-6 days involving 8 witnesses (ie 6 from P and 2 from Ds). But D1 claimed the proposed trial of preliminary issues based on uncontroverted evidence and involving only legal arguments would at most require a half-day hearing and would effectively dispose of the present action thus obviating a full trial.

31.  D1 reiterated/verified Ds’ case as outlined above, and added there were no title deeds for House7, including any Building Licence, Letter of Compliance, Consent to Occupy or Occupation Permit, that permitted House7 to be built on the Green/Yellow Lands (“Title Deeds”). D1 believed there was need to determine the 1^st/2^nd Questions, but since the 3 Facts were proved by uncontroversial documents, the questions of law in the Schedule were suitable for determination without full trial, so if the 1^st/2^nd Questions were determined in Ds’ favour, it would follow the 1^st/ 2^nd Agreements that P relied on could not be carried out.

32.  So by a letter dated 31 October 2016, HLLY proposed to SCWY to dispose of the present action by trial of preliminary issue of law under Order 33 of the Rules of the High Court (“RHC”), but by their reply letter dated 4 November 2016 SCWY declined such proposal saying that notwithstanding House7 was mostly built on the Green Land, there were questions inter alia as to whether or not (a) House7 indeed formed part of Lot642 and/or its title/interest was derived from Lot642, (b) the Government would agree to (a) above and to rectify the situation by way of “surrender and re-grant”, and (c) at all material times the parties mutually accepted House7 as Lot642.

33.  P  The NFS 2^nd Aff reiterated and verified P’s case as outlined above. It also exhibited (a) copy letter dated 6 December 2013 from the District Lands Office, Islands (“DLO”) to P whereby it was said the Government acknowledged House7 was covered (涵蓋) by Lot642, and (b) 2 letters dated 6 July 1984 by the DLO and dated 28 May 2008 by the District Survey Office (“DSO”) whereby it said the Government was prepared and agreed to rectify the situation by way of “surrender and re-grant” since 1979.

34.  Ng Fuk Shing claimed he was advised that the Application had no merit, and he believed the Summons was filed shortly before the hearing of the summons on expert evidence to further delay the present action. Ng Fuk Shing added that the 1^st/2^nd Questions were not true questions of law, but were fact-sensitive questions that would involve finding of facts and complicated legal arguments (see paragraph 32(a)-(c) above).

V.  LEGAL PRINCIPLES

35.  Preliminary issue Order 33 of the RHC provides that:

“3. The Court may order any question or issue arising in a cause or matter, whether of fact or law or partly of fact and partly of law, and whether raised by the pleadings or otherwise, to be tried before, at or after the trial of the cause or matter, and may give directions as to the manner in which the question or issue shall be stated.

……

7. If it appears to the Court that the decision of any question or issue arising in a cause or matter and tried separately from the cause or matter substantially disposes of the cause or matter or renders the trial of the cause or matter unnecessary, it may dismiss the cause or matter or make such other order or give such judgment therein as may be just.”

36.  The general rule is that all disputes should be tried together, and generally speaking an order for separate trial for separate issues should only be made in exceptional circumstances or on special grounds.[5] The Court of Appeal in Lee Yiu Kwan v Ting Yin Wah[6] set out a convenient summary of some of the principles relevant to the exercise of the court’s discretion to deal with preliminary issues of law as referred to in Hong Kong Civil Procedure 2004:

“(i) The question of law or construction to be determined by the court under the Order should be stated or formulated in clear, careful and precise terms, so that there should be no difficulty or obscurity, still less any ambiguity, about what is the question that has to be determined.

(ii) Where the issues of fact are interwoven with the legal issues raised, it will be undesirable for the court to split the legal and factual determination, for to do so would in effect be to give legal rulings in vacuo or on a hypothetical ruling, which the court will not do.

(iii) An order for the separate trial of separate issues is a departure from the general rule that all disputes should be tried together, and therefore generally speaking, such an order should only be made in exceptional circumstances or on special grounds.

(iv) Where costs can be saved by obtaining a ruling on a point of law which requires serious argument and consideration being disposed of before trial, the point should be raised in the pleading and application should be made under O.33, rr.3 and 4(2) for the trial of this point as a preliminary issue.

(v) The order, as a rule, will only be made if the objection raises a serious question of law, which, if decided in favour of the party objecting, would dispense with any further trial, or at any rate with the trial of some substantial issue in the action. The order should not be made in respect of matters which by reason of the obscurity either of the facts or the law ought to be decided at the trial.[7]

(vi) The order for the trial of a preliminary point of law should not be made where there are facts in dispute, and if made may be set aside at the hearing.[8]

(vii) A point of law may in special circumstances be ordered to be set down and argued before the trial, although it is not raised on the pleadings.

(viii) The order should make clear what is the precise point of law to be decided.

(ix) Only such questions of law can properly be raised as preliminary issues as must necessarily arise in the action and the court will not decide fictitious questions or questions in which those who are interested, or are likely to be, are not present or are not in esse.

(x) The House of Lords has strongly protested against the practice of the Court of First Instance allowing preliminary points of law to be tried before and instead of first finding the facts, since this course frequently adds to the difficulties of the Courts of Appeal and tends to increase the cost and time of legal proceedings.[9]

(xi) Where for the purposes of deciding questions of law it is necessary or desirable to ascertain the facts beyond those that appear in the pleadings, the court should not order the trial of those questions as a preliminary point of law, especially where the law is itself unsettled or obscure.

(xii) An ‘issue’ which involves dealing with the whole subject matter of the action without any evidence is not a preliminary point and should not be ordered to be tried as such.”

37.  Land  For the purpose of the Application, Mr Khaw SC had no quarrel with the legal principles set out in paragraph 19-25 of the written submissions dated 4 May 2017 by senior counsel for Ds Mr Cooney SC (and Ms Shek with him), and accepted that House7 was affixed to the land (ie Green/Yellow Lands) and became part and parcel of such land itself. Given Mr Khaw SC’s confirmation, I do not propose to set out the legal principles helpfully summarised in Mr Cooney SC’s written submissions. But in light of the development of Mr Cooney SC’s oral submissions at the Hearing, it is useful to highlight the point that “[the] subjective intention of the parties cannot affect the question whether the chattel has, in law, become part of the freehold”,[10] and “…… the object or purpose of annexation …… is not assessed by the subjective intent of the person who brought or built the structure there ……”.[11]

38.  Encroachment There is a rebuttable presumption that a tenant acquires possessory title for his landlord provided that the relevant land is close to and occupied with the land demised under the tenancy, which presumption applies during the term of the tenancy and not just following its determination.[12] The applicable legal principles have been definitively stated by the Court of Final Appeal in Secretary for Justice v Chau Ka Chik Tso.[13] Lord Scott of Foscote NPJ explained the encroachment presumption as follows:

“108. … 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, 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.”

At pages 930-931, he further explained that where the encroachment presumption cannot be or has not been rebutted, the consequences will depend upon what, if any, action is taken by the owner of the encroached-upon land in response to the encroachment:

“(1) If the owner of the encroached‑upon land has adopted the presumption, or has through conduct or knowing acquiescence become barred from denying it, both parties, tenant and landlord, will be bound to treat the encroached-upon land as annexed to the demised land and held by the tenant on the terms of the demise.

(2) If the owner of the encroached‑upon land has done nothing and the relevant limitation period barring an action to recover possession of the encroached-upon land has expired, the owner will be unable to recover possession of that land until the termination of the demise. But the tenant, still bound by the unrebutted presumption, will be bound on the termination of the demise to deliver up possession both of the demised land and of the encroached-upon land to his landlord, the owner of both.

(3) But if the owner of the encroached‑upon land, having done nothing to adopt the presumption, remains not bound by it, then, if the relevant limitation period has not yet expired, the owner can, by action, pursue the remedies available against trespassers and, accordingly, recover possession of the land.”

VI.  DISCUSSION

39.  Mr Cooney SC submitted since House7 was a fixture and part and parcel of the land on which it was situated, then under common law whoever owned such land should also own House 7. It was said that since (a) House7 was situated mostly on the Green Land and only a small part of House7 was situated on the Yellow Land, and (b) the Green Land was unleased and unallocated Government land with no Title Deeds, Government lease and/or “surrender and re-grant” by the Government to transfer ownership of such land with House7 to any party, the Government as the owner of the Green Land was also the owner of House7 situated on and being part and parcel of such land. On such basis, Mr Cooney SC argued it was unnecessary to resolve the factual dispute as to who actually built or rebuilt House7 as such determination would not change the fact House7 became part and parcel of inter alia the Green Land once it was built or rebuilt, which matter had to be viewed objectively and would not turn on the subjective intention of the builder.

40.  For the first part of the 1^st Question, ie whether House7 was part and parcel of the Government Land, Mr Khaw SC had little quarrel with the legal analysis in the above paragraph (see also paragraph 27 above). Thus, insofar as House7 was situated on the Green Land, it was annexed to and became part and parcel of such land. But as conceded by Mr Conney SC in his written submissions dated 29 January 2018, part of House7 (albeit a small part) stood on the Yellow Land which was co-owned by P and Ds as tenants-in-common under the Lot642 Lease, and the Government’s reversionary interests would only fall in upon expiry or termination of such lease. Thus, adopting the logic of Mr Cooney SC’s arguments in the above paragraph, it was at the very least arguable that part of House7 (albeit a small part) situated on the Yellow Land was annexed to and became part and parcel of such land that belonged to P and Ds as tenants-in-common and not to the Government such that even for the 1^st part of the 1^st Question House7 would not necessarily be entirely part and parcel of the Green Land.

41.  Based on analysis in the above paragraph, it was also not easy to see how the 2^nd part of the 1^st Question, ie whether House7 was owned by the Government, could be crisply answered in the affirmative. It was common ground that House7 was a single building structure with no suggestion by either party that it could or should be physically severed/partitioned into separate portions on the Green Land and Yellow Land. Subject to Ds’ averment of adverse possession by them against P in their counterclaim, Ds also did not suggest that as between P and Ds part of House7 that stood on the Yellow Land was in any way objectionable. Ds had no or no adequate answer to such observations save to say that resolution of the 1^st/2^nd Questions in relation to the Green Land would resolve a substantial part of the present action. I am not persuaded this was any sufficient answer since the court would have to resolve the proprietary and/or possessory status of the Yellow Land and part of House7 that stood thereon. Bearing in mind the indivisibility of House7 and the disputed history in relation to the erection/occupation of House7 and the previous structures, I am unconvinced a full trial on such broad range of matters would be obviated by trial of preliminary issues premised on the 1^st/2^nd Questions.

42.  Subject to the discussion in paragraphs 40-41 above, I now turn to deal with the Green Land which was the focus of Mr Cooney SC’s submissions in relation to the 2^nd part of the 1^st Question. The essential thrust of Ds’ arguments was that since House7 was situated mostly on the Green Land and was thereby annexed to and became part and parcel of such land, House7 (or at least the bulk of it) was therefore also owned by the Government, and P fell into error in pursuing her claims in the present action against Ds when she did not assert squatter rights over such land by way of adverse possession and/or encroachment presumption. It was said the court could only decide whether P had a right in respect of the Green Land if she raised a proper claim against the Government (and not against Ds), and as neither P nor Ds (a) were the owner of the Green Land or (b) made any claim for adverse possession against the Government in relation to such land, P’s claims against Ds were misconceived.

43.  In light of such arguments, it would be necessary to revisit P’s pleaded claims. As Mr Cooney SC in his oral submissions recognised, there were 2 strands to P’s case, ie the contractual strand and proprietary strand. For the former contractual strand, P’s claims against Ds were essentially based on Ng To Bo’s alleged breach of the 1^st/2^nd Agreements in relation to the intended redevelopment of House7, and P sought inter alia specific performance of such agreements. I will return to this in paragraphs 74-80 below as it is more useful to address the proprietary strand first. Having carefully considered P’s pleadings, I find it incorrect to say P did not rely on adverse possession and/or encroachment presumption. In my view, P’s pleas summarised in paragraphs 5(a)-(c), 11(a) and 15 above (see also paragraph 32 above) squarely raised the encroachment presumption, ie whether P/Ds and their predecessors by their continuous and exclusive possession, use and occupation of House7 (that partly stood on the Yellow Land and partly encroached upon the Green Land that was adjacent to Lot642) for more than 60 years would cause the encroached-upon Green Land on which the bulk of House7 stood to become an addition to Lot642 coterminous with the Lot642 Lease (that would expire only in 2047) such that House7 in its entirety (situated on the Green/Yellow Lands) was subjected to such lease for the benefit of the Government qua landlord.[14]

44.  Mr Cooney SC thought P’s pleas summarised in paragraphs 5(a)-(c), 11(a) and 15 above merely asserted the subjective intention of the person (Ng To Bo according to Ds or Ng Fat and/or Ng Liu Yung Kiu according to Ps) who built the house (House7) on another’s land (Green Land owned by the Government) and who made unilateral claim that he built such house notionally on his own land (Yellow Land), which was said to be irrelevant to the issue of ownership of House7 and contrary to established principle (see paragraph 37 above), so P’s claims against Ds were bound to fail.

45.  Mr Cooney SC further submitted that likewise P’s allegation that she and Ds mutually understood House7 was equivalent to and/or formed part of Lot642 could not bring the matter further because (a) House7 was clearly not Lot642, and (b) even though Ng Fat and Ds entered into the 1^st/ 2^nd Agreements one of which explicitly stated P and Ng Fat agreed that House7 was Lot642, such mutual understanding would not provide any legal basis for claiming (and/or were irrelevant for determining) ownership of House7 on the Green Land. On such basis, Mr Cooney SC argued it would be unnecessary for the court to make findings as to whether the parties had such mutual understanding. Mr Cooney SC went on to say for the same reasons explained above, P’s pleas summarised in paragraphs 5(a)-(c), 11(a) and 15 above did not give rise to any presumption that the Green Land was an addition to Lot642 under the Lot642 Lease or that House7 in its entirety was “subjected to the [Lot642 Lease] and/or its title and interest derive from, or form part of, that of [Lot642]”, which was merely P’s subjective/unilateral belief when (i) there were no Title Deeds for House7 and (ii) the Government never made such presumption.

46.  Whilst I agree P’s reliance on the adverse possession which underlined the encroachment presumption summarised in paragraphs 5(a)-(c), 11(a) and 15 above could have been pleaded with more elegance, there was nothing unclear in P’s pleadings about her reliance on such matters as explained in paragraph 43 above. Unfortunately, Ds by their monocular focus on the principles for excluding subjective intent/understanding of the propose of annexation of the chattel / fixture to the land (see paragraph 37 above) misunderstood P was not relying on squatter rights when in fact P essentially asserted she and Ds together had squatter rights over House7 on the Green Land that were good against all save and except that such encroachment was coterminous with the Lot642 Lease for the benefit of the Government qua landlord in respect of Lot642.

47.  This immediately raised query as to whether the 2^nd part of the 1^st Question, ie whether House7 was owned by the Government, could be easily answered in the affirmative when (a) part of House7 was on the Yellow Land that belonged to P/Ds and not to the Government who only had reversionary interests in such land (see paragraphs 40-41 above), and (b) part of House7 was on the Green Land that was unleased and unallocated Government land but that (on P’s case) might arguably be subject to potential claim of possessory interests by P and Ds at the same time as a result of the encroachment presumption (see paragraphs 43 and 46 above).

48.  In my view, the fact House7 (which had no Title Deeds) was situated mostly on the Green Land and became part and parcel of such land would not offer any absolute answer for such fact of itself would not prevent squatter rights from accruing over the Green Land and House7 on which it stood. Lee Bing Cheung v Secretary for Justice also concerned a piece of unleased and allocated Government land that adjoined a leased lot. It was held that the squatter owned the house units that straddled the leased lot and Government land as (a) he and his family moved into and occupied/used the house that stood over the Government land more than 60 years ago, and (b) they had continuous/exclusive possession of the leased lot and Government land which was encroached upon for over 60 years for the benefit of the Government qua landlord.[15]

49.  I further find there was nothing in Ds’ complaint that the Government never asserted the encroachment presumption. Here, on P’s case (as in Lee Bing Cheung), the Government was the owner of the unleased and unallocated Government land, but it was said P and Ds as co-squatters and their predecessors (but the plaintiff in Lee Bing Cheung was a sole squatter) by encroaching upon the Government land adjacent to the leased lot dispossessed the Government as owner of the adjacent Government land.[16] In my view, such encroachment claim is necessarily made by the squatter rather than by the dispossessed owner. Indeed, Lord Scott of Foscote NPJ at pages 930-931 in Chau Ka Chik Tso explained it was for the squatter to raise the encroachment presumption and the consequences would depend upon what, if any, action was taken by the owner of the encroached-upon land in response to the encroachment. If the owner did nothing even up to the expiry of the limitation period, the owner would simply be unable to recover possession of that land until termination of the demise whereupon the squatter/tenant would be bound by the unrebutted presumption to deliver both the leased lot and encroached-upon land to the owner (see paragraph 38 above).

50.  In coming to the above views, I have carefully considered 2 further matters, one of which was raised by Mr Cooney SC and the other was not (which I will deal with briefly for completeness).

51.  In relation to the latter matter, P claimed she and Ds were co-owners of House7 and as such co-squattors (in contra-distinction to the plaintiff in Lee Bing Cheung being a sole squatter) they had squatter/possessory rights over the Green Land on which the bulk of House7 stood pursuant to the encroachment presumption. P’s such case was premised on her factual contentions that (a) Ng Fat built the Straw Sheds and later replaced them with the Pitched Rood House and Hut, (b) Ng Liu Yung Kiu caused such structures to be rebuilt into House7, and (c) Ng Chi Keung / Ng To Bo and later she / Ds were all successive squatters of House7 (or the bulk thereof) on the Green Land.

52.  As explained in Jourdan QC and Radley-Gardner, Adverse Possession, “[possession] of land – the effective control of the land – can be exercised jointly by two or more persons” but it cannot be exercised severally,[17] and where more than one squatter has possession at the same time, the possessory title they acquired is held as joint tenants in the absence of evidence of a contrary intention.[18] On P’s case that P and Ds together and their predecessors encroached upon the Green Land and had continuous/exclusive occupation, use and enjoyment of the bulk of House7 that stood on such land pursuant to the encroachment presumption for the benefit of the Government qua landlord of Lot642 as explained in the above paragraph, there appeared to be basis on P’s case to say the prima facie view that P and Ds did so as joint tenants was subject to “contrary intention” that they did so as tenants-in-common sharing unity of possession (since the encroachment was subject to the Lot642 Lease). It is unnecessary for me to come to any definitive view, but this demonstrated there was arguable basis on P’s case (subject to eventual findings of fact for establishing the encroachment presumption) to say P and Ds were co-owner squatters over the Green Land and the bulk of House7 that stood thereon.

53.  For the other matter raised by Mr Cooney SC, he argued that P could/should direct her complaints/contentions in relation to squatter rights and encroachment presumption towards the Government and not Ds. Ds claimed it was sufficient for them to show House7 was part and parcel of Green Land which meant it belonged to the Government. I reiterate paragraphs 40-41 above in relation to the Yellow Land. But even if I were to focus on the Green Land, I am not persuaded by Ds’ contentions.

54.  To put P’s case/contentions in context, it is necessary to return to the fundamental concept of “title” or estate ownership (ie an estate in land of some particular duration) in land law. I have set out the basic principles in Nam Ching Wun a mentally incapacitated person by her next friend and daughter Lo Suet Yung Conny v Tsun Un Pawn Shop also known as Tsun Un Pawn Shop with Tang Yam Wan as trustee by Yeung Fook Mui and Tang Ying Ip (or Yip) as administrators of the estate of Tang Pui King alias Tang Yum (or Yam) Wan alias Tang Kin Cheung, deceased as follows:[19]

“162. …… A person has ‘title’ to an estate in land when he is entitled to possession of the land, subject to any rights of a third party affecting the land. This gives rise to several trite principles:

(a) in respect of ‘possessory ownership’, possession is a substantive root of title, and there is no abstract ownership as opposed to the right to recover possession;

(b) ‘title’ is relative and not absolute, and questions of title to land concern relative strengths of titles proved by rival claimants;

(c) normally (but not invariably) ‘title’ to an estate in land at common law is derivative;

(d) but it is possible for an entirely fresh title to be created, conferring a new fee simple estate where land is acquired by adverse possession under the LO.

Thus in Minister of State for the Army v Dalziel, Williams J said:

‘…… To have good title to land is to have the essential part of ownership, namely, the right to maintain or recover possession of the land as against all others. In English law all title is founded on possession. Thus a person, who is in possession of land, although wrongfully, has a title to the land, which is good against all except those who can show a better title; that is, can prove that they or their predecessors had earlier possession, of which they were wrongfully deprived. ……’

163. Hence, when one talks of ‘title’ and ‘estate ownership’ one is concerned with rights between competing claimants and rights against strangers. …….” (my emphasis)

55.  In my view, if (as P alleged on her case) P/Ds were in continuous and exclusive possession of House7 and also the Yellow Land (in their capacity as registered/beneficial co-owners) and Green Land (in their capacity as co-squatters by way of encroachment) on which House7 was situated for over 60 years, P and Ds would have possessory title to House7 and the Yellow/Green Lands coterminous with the Lot642 Lease that would be good against all except those who could show a better title, and they would be able to evict any trespasser/stranger into House7 and/or even exclude the Government qua landlord who only had reversionary interests upon expiry/termination of the Lot642 Lease (see the explanation by Lord Scott of Foscote NPJ in paragraph 121(1)-(2) at pages 930-931 of Chau Ka Chik Tso – see paragraph 38 above). Whilst this was something that could be raised with Government if P wish to assert possessory title against the Government and to exclude the Government qua landlord, on P’s case, each of P and Ds as a co-owner having unity of possession was entitled to evict trespassers/strangers without the necessary concurrence of each other.[20] In my view, since “title” is relative between competing claimants and is good against all except one with a better title or, to put in another way, a better right to possession, P was not confined to directing her contentions against the Government and no other.

56.  This is echoed and explained in Megarry & Wade, The Law of Real Property as follows:[21]

“(a) Relativity of titles. ‘At common law … there is no such concept as an ‘absolute’ title. Where questions of title to land arise in litigation the court is concerned only with the relative strengths of titles proved by the rival claimants. If party A can prove a better title than party B he is entitled to succeed notwithstanding that C may have a better title than A, if C is neither a party to the action nor a person by whose authority B is in possession or occupation of the land.’

Some examples will illustrate this fundamental doctrine and the right and wrong occasions for the plea of jus tertii. If last year S dispossessed O of land which had hitherto belonged to O, and O is taking no action, there are now two incompatible titles to the land. As between O and S. O is the owner, because he can recover the land by bringing an action. However, as between S and the rest of the world (except O and persons claiming through him) S is owner, for he is in possession and that is equivalent to ownership as against all persons who have no better right. Thus S can sue strangers for trespass or nuisance, just as O could before. Furthermore, S can convey the land, or make any other disposition which an owner can make. …… But all such rights derived through S are subject to O’s (or his successor in title’s) paramount right to recover the land. S’s possession at once gives him all the rights and powers of ownership, at least for the purposes of the civil law. S has, in fact, a legal estate, a fee simple absolute in possession. But so also has O, until such time as his title is extinguished by limitation.” (my emphasis)

57.  On the basis of P’s case, if she failed to prove the necessary factual elements for the encroachment presumption to bite in respect of the Green Land and part of House7 situated thereon,[22] the Government (if she wished) might be entitled to take action (if not time-barred) to recover possession of the Green Land against P and Ds, but on the principle of relativity of title between rival claimants as explained above, P and Ds as co-owners in actual possession of House7 situated on the Green Land could rely on the fact they were in possession (which was equivalent to ownership as against all persons who had no better right – see paragraph 56 above) to either jointly or singly evict trespassers/strangers[23] without need to involve the Government.

58.  But if P was able to prove all necessary requirements for the presumption of encroachment in favour of P and Ds to bite, then until the Government’s reversionary interests fall in upon expiry/termination of the Lot642 Lease, there would be good arguable basis for P to contend the Government did not own House7. The nature of a squatter’s “possessory title” has been explained in Nam Ching Wun as follows:

“172. …… The squatter’s ‘possessory title’ is an independent title that stems from his possession of the land. On the principle of ‘property ownership’ and relativity of title discussed in paragraph 162 above, possession by itself gives good title against the world except someone having a better legal right to possession. Such ‘possessory title’ becomes impregnable after lapse of time because (a) as against the dispossessed owner, the dispossessed owner’s right/title is extinguished by virtue of the LO, and (b) as against strangers having no title to the land, the squatter’s possession is itself ‘title’. Thus, the operation of the LO in giving ‘possessory title’ is merely negative by extinguishing the right/title of the dispossessed owner, and leaving the squatter with a title gained by the fact of possession and resting on the infirmity of the right of others to eject him.[24] ……”

But irrespective of the encroachment presumption, if P’s and Ds’ possession were disturbed by a stranger (eg another occupier), they could sue on the strength of their possession. It was only when such stranger laid claim to the Green Land and the bulk of the House that stood thereon by a title of his own or by title in a third party through whom he claimed that he could put P’s and Ds’ possession in issue.[25]

59.  Mr Cooney SC sought to distinguish Nam Ching Wun as a claim by third party squatter over land owned by co-owners, which issue did not arise in the present action. But I referred both parties to such authority for the legal principles discussed therein (see paragraphs 54 and 57 and footnote 20 above) and not for its case-specific factual matrix, and Mr Cooney SC did not say whether and/or how the legal principles outlined in the Nam Ching Wun fell into error.

60.  In light of the aforesaid analysis, the crux of the matter turned not so much as who was the paper-title owner of the Green Land and the owner of the bulk of House7 thereon, but who was in actual possession thereof. P’s case was that both P and Ds were co-squatters in actual possession of such land/structure, and such possession would give them rights to evict third party trespassers/strangers, and also to exclude the Government until expiry/termination of the Lot642 Lease if (as P alleged) the encroachment presumption was established and not rebutted. There would not be a simple answer to the issue of P’s and Ds’ adverse possession as alleged under P’s case, and such issue raised a whole bevy of factual questions that could not be resolved by answering the 1^st Question, eg the precise boundary of Lot642, the precise location of House7 within and outside Lot642, factual possession of House7 and relevant lands by P and Ds and their predecessors, intention to possess by P and Ds and their predecessors, etc (see also paragraph 65 below for discussion on burden and standard of proof). Such factual issues were compounded by Ds’ denial that P had possession of the Green Land and House7, and it is appropriate that I now turn to the relationship between P and Ds inter se which is linked to the 2^nd Question.

61.  Turning first to the Yellow Land and part of House7 thereon, Mr Cooney SC submitted that co-ownership of the Yellow Land pursuant to the Lot642 Lease was irrelevant to encroachment upon the Green Land by erection/occupation of House7,[26] so there was no need to go into any factual issues, eg who built House7, who lived at House7 for how long, what was the nature of such occupation etc. But in my view P’s and Ds’ co-ownership of the Yellow Land and part of House7 that stood thereon could not be irrelevant for it raised disputed issues in relation to such land/structure themselves (see paragraphs 40-41 above), and it was not simply a matter of impact on the Green Land. Indeed, Mr Cooney SC in his oral submissions conceded that answers to the 1^st/2^nd Questions would not resolve the situation with the Yellow Land, and there would still be outstanding issues to be resolved in the present action.

62.  Turning to the Green Land, as explained above, the legal analysis was much more nuanced than the attractive simplicity of Mr Cooney SC’s contention that House7 was necessarily owned by the Government because a significant part of such structure was a fixture that became part and parcel of the Green Land. I have viewed the matter from the prism of P’s case, and have come to the view that I cannot be confident that the 2^nd part of the 1^st Question could be answered with such clarity that it would obviate the need for a full trial. As alluded to above, it would be useful to also consider the matter from the prism of Ds’ case, which would tie in with the 2^nd Question, ie whether House7 could be subjected to the interests claimed by P against Ds in this action.

63.  I should point out at the outset that given the way the 2^nd Question was framed, it would be unnecessary to address such question unless the answer to the 1^st Question was in the affirmative in Ds’ favour. In light of my conclusions over the 1^st Question, consideration of the 2^nd Question should fall away, but for completeness I still proceed to consider Ds’ contentions as follows:

(a)

As explained in paragraph 40-41 above, since Ds admitted P and Ds were tenants-in-common who co-owned the Yellow Land, it followed on Ds’ arguments that they also co-owned such part of House7 situated on the Yellow Land which became part and parcel of such land. But Ds averred and counterclaimed they had dispossessed P of her interest as tenant-in-common in respect of the Yellow Land and part of House7 that stood on such land.

(b)

Turning to the Green Land, Ds claimed P had no interest in such land and/or House 7 (or bulk thereof) that stood thereon, but if P had any interest in such land/structure (which Ds denied), Ds averred and counterclaimed they had dispossessed her of such alleged interest.

64.  In respect of Ds’ allegations in paragraph 63(a) above, I note Ds’ alleged dispossession was not against a stranger but against P as co-owner / tenant-in-common. Unity of possession is an essential feature of co-ownership that governs the rights inter se between the co-tenants that distinguished them from joint or separate ownership.[27] The relevant issue here was whether one tenant-in-common could dispossess another tenant-in-common over land in which they co-own and share unity of possession. According to The Law of Real Property,[28]

“(a) Ouster. At common law, the unity of possession between co-owners meant that one joint tenant or tenant in common occupied the whole of the land …… this by itself was not adverse possession which would start the time running. Some further act, such as ouster of the co-owners was needed. However, a presumption of ouster might arise from long exclusive enjoyment by one co-owner. ……”

This was applied in Hong Kong in Tang Tak Sum v Tang Kai Fong[29] in which DHCJ Linda Chan SC accepted as a matter of law that a co-owner can establish adverse possession against his co-owner by proving ouster. For the purpose of establishing adverse possession, “[both] the fact of possession[30] and the intention to possess[31] are questions of fact, and in determining these matters the court has to assess all the circumstances. Further, the burden of proof is on the party claiming adverse possession, and the evidence he has to adduce must be compelling”.[32] But a co-owner (Ds) would have to go on to prove as a matter of fact some further act such as ouster to support his claim that he had dispossessed the other co-owner (P) of the co-owned land (Yellow Land) on which part of House7 stood. At this stage, material facts as to such act of ouster were not evident in the AD&C, but in any event these considerations would not be mere questions of law, and they would not lend happily to any straightforward answer to the 2^nd Question that would obviate the need for a full trial.

65.  Mr Cooney SC tried to downplay the impact of unity of possession by saying P did not assert any squatter rights in the present action, so whether P and Ds had unity of possession to maintain an adverse possession claim against the Government was neither here nor there. I reiterate the above discussions that showed P did assert squatter rights and encroachment presumption over the Green Land and the bulk of House7 that stood thereon. But it was Ds rather than P who claimed they had dispossessed P from the Yellow Land, and the unity of possession between P and Ds was relevant not just to the Green Land but also to the Yellow Land (held by P and Ds as tenants-in-common) and part of House7 that stood thereon to which, I am afraid, Ds had no or no adequate answer.

66.  Turning to the debate on the Green Land and the bulk of House7 that stood thereon, Ds’ counterclaim when critically analysed boiled down to this:

(a)	the Green Land was unleased and unallocated government land over which neither P nor Ds had any estate ownership;
(b)	House7 (or the bulk thereof) that stood thereon became part and parcel of such land and belonged to the Government;
(c)	P had no title or rights better than the Government’s estate ownership but if she thought she did she should raise it with the Government and not with Ds;
(d)	if P had any rights/interests in the Green Land and bulk of House7 situated thereon (eg squatter rights), which Ds denied, Ds had dispossessed her as they had been in adverse possession for over 12 years.

67.  I have considered Ds’ contentions in paragraph 66(a)-(b) above, and I have found they did not offer crisp answers to the 1^st/2^nd Questions. In my view, under Ds’ counterclaim on the basis that P had interest in House7 (presumably squatter’s rights since neither P nor Ds were the paper-title owner of the Green Land) which Ds denied in their primary case, Ds’ contentions in paragraph 66(c) above was essentially a plea of jus tertii, ie Ds (stranger with no title to the Green Land or the bulk of House7 thereon) alleged to have taken possession of the Green Land and the bulk of House7 thereon from P (party alleging squatter rights over such land/structure) by asserting the Green Land and House7 thereon were not P’s but the Government’s. I doubt whether a plea of jus tertii could be raised in such manner. At the Hearing, I drew senior counsel’s attention to the following succinct explanation in Megarry and Wade, The Law of Real Property:[33]

“(c) Jus tertii. It has been explained that third parties who have themselves no title cannot exploit the relative weakness of S’s title by pleading jus tertii. If X (a stranger) takes possession of the land from S, S or his successors can recover it within the limitation period and X cannot plead that the land is not in fact S’s but O’s. This is self-evident, for otherwise anyone could help himself to the land. If X claims the land, he must do so on the strength of some title of his own, and not on the weakness of S’s.

On the other hand, suppose that, while S is still in undisturbed possession, O dies and by his will leaves all his land to X. If X acts in time he can obtain the land by asserting O’s superior title. But here S, who is in possession, can compel X to prove his title, and if X’s title, as derived from O, is subject to a jus tertii then S can plead it. If, for example, S can prove that O revoked the will in favour of X by a later will in favour of Y, S can plead that the land is not X’s but Y’s; and therefore, since Y’s title shows X to be a mere stranger, S’s possession is a good title against X. This is again self-evident, for otherwise S would have no protection against anyone purporting to claim through O. S can plead jus tertii against O himself if O has conveyed or demised the land to Z, for then the right to possession can be shown to be in Z, not in O. It is only the title behind O’s original possession that S is not allowed to dispute.” (my emphasis)

From the above, it appeared that the fact the squatter S (ie P) having no claim against the owner O (ie the Government) was neither here nor there because a stranger X (ie Ds) had to rely on some title of his own over the land (ie the Green Land)[34] or title through the owner (ie the Government),[35] and could not simply plead the land (ie the Green Land and the bulk of House7 thereon) was not S’s (P’s) but O’s (Government’s) for S’s (P’s) squatter rights were good against all other trespassers/strangers regardless of the position of O (Government).

68.  If Ds on their alternative case wished to make good their plea of jus tertii, it was for Ds to join the Government (O) (whom Ds claimed to have better title than P) in the present action to feed such plea, failing which Ds might have difficulty as outlined above in making such plea. In such circumstances, I do not even need to consider Mr Khaw SC’s more general submissions that the Government should be joined as a party in the present action on the basis she “clearly has an interest in the determination of this issue and [her] presence in this action will ensure that the issue will be effectually and completely adjudicated upon”.[36] But I will return to this point in paragraph 82 below.

69.  Under Ds’ counterclaim premised on P having interest in House7 (presumably squatter’s rights) which D denied in their primary case, there would be factual dispute as to whether (a) Ds had dispossessed P of such interest by having been in occupation of the Green Land and bulk of House7 thereon for over 12 years (see paragraph 24 above) or (b) P had never discontinued possession of such land/structure (see paragraph 8 above), and such factual dispute would require resolution by findings of fact at a full trial.

70.  Further, even under Ds’ counterclaim premised on P having interest in House7 (presumably squatter’s rights) which D denied in their primary case, the declaratory relief and order for possession sought under such counterclaim in relation to the Green Land and bulk of House7 thereon (see paragraph 24(a)-(b) above) by barring P’s “title” in relation thereto was not easy to understand.

71.  Neither P nor Ds were paper-title owners of the Green Land. It was P’s case that P and Ds together (not P to the exclusion of Ds) had squatter rights over the Green Land for over 60 years that barred the Government’s rights until reversion of the Lot642 Lease pursuant to the encroachment presumption, but as between P and Ds as co-squatters (see paragraphs 51-52 above), Ds in claiming to have dispossessed P would have to demonstrate act of ouster and not just mere dispossession (which also applied to the Yellow Land and part of House7 thereon).

72.  On Ds’ pleaded counterclaim as aforesaid on the basis of dispossession of P’s interest (presumably squatter’s rights since P was not the paper-title owner) by their adverse possession of the Green Land and the bulk of House7 thereon for over 12 years without express plea/averment of adverse possession of 60 years against the Government being the paper-title owner of the Green Land, it is not easy to see the basis for granting declaration that Ds had acquired possessory title over the Green Land and the bulk of House7 thereon. At the Hearing, Mr Cooney SC argued that Ds could raise different arguments against different parties, ie it was open to Ds (a) to raise against P the contention that the Green Land and House7 thereon belonged to the Government, and (b) to raise adverse possession against the Government. Whilst I could see Ds under their counterclaim might argue that they as successive squatter dispossessed P’s squatter rights after being in possession for 12 years[37] (subject to relevant findings of fact), the uneasy segregation and contradiction between (a) and (b) above was not understood given that Ds’ counterclaim was against P and not against the Government for declaration of possessory title over inter alia the Green Land and House 7 thereon.[38] In my view, it is of fundamental importance for the claimant to establish the requisite animius possidendi to establish a claim for possessory title by adverse possession. The Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai & anor (No 2)[39] cited the useful guidance in Powell v McFarlane as follows:[40]

“…… 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 process of the law will allow.” (my emphasis)

Unless Ds had the intention or animus possidendi to exclude the world at large (including the Government) and not just P (with squatter rights under Ds’ counterclaim on their alternative case), the basis for seeking declaration of possessory title over the Green Land (in contra-distinction to an order for possession against P) left much room for argument and, in my view, could only be resolved upon relevant findings of fact. But at the very least, the mere fact Ds were counterclaiming for declaration of possessory title over the Green Land appeared to contradict their claim that the Green Land belonged to the Government (see Mr Cooney SC’s written submissions dated 4 May 2017 which suggested that Ds themselves acknowledged the Government was the owner of House7, so “neither [P] nor [Ds] have any claim of possession or to a declaration of a half share interest in [House7]”). It was stranger still since it appeared Ds were still in occupation of House7.

73.  In all the circumstances, I do not agree the disputes or cause/matter in the present action (including the counterclaim) could be disposed of by saying P could not claim against Ds who were not the owner of the Green Land and House7 thereon, or by answering the simple question of whether House7 (and the Green Land) could be subject to the interests claimed by P and Ds against each other in the present action without going into factual matters.

74.  In relation to the contractual strand of P’s claim, Ds raised the primary defence of mistake in relation to the 1^st/2^nd Agreements for the reason that the Green Land belonged to the Government. Given the above analysis which showed there was no clear answer to the 1^st/2^nd Questions before full trial, it is not necessary to consider this aspect of P’s claim, but I will deal with the same briefly for completeness. Mr Khaw SC complained that Ds’ pleadings were silent on the nature of the mistake, ie whether it was common/mutual mistake or unilateral mistake. As Mr Khaw SC reminded, the Court of Final Appeal in Kowloon Development Finance Ltd v Pendex Industries Ltd explained as follows:[41]

“19. …… In the case of mutual or common mistake – the adjectives are in this context interchangeable – the mistake is about whether a written document correctly reflects what the parties had, on an objective assessment, agreed it should contain. …… if parties have agreed to execute a document in certain terms and by mistake it contains different terms, the court can specifically perform the prior agreement by rectifying the document. …… it is true to say that the concept of rectification for common mistake involves carrying into effect what the parties appear to have actually agreed that the document should say. And in deciding what the parties have agreed, the common law adopts its usual objective stance, looking at what a reasonable observer would have understood the parties to mean and not concerning itself with their uncommunicated states of mind: Chartbrook Ltd and Another v Persimmon Homes Ltd and Another [2009] AC 1101.

20.  Rectification for unilateral mistake, on the other hand, is very much concerned with the subjective states of mind of the parties.  If the contract contains a provision which one party knows that the other party thinks is not there, or knows that the other party is mistaken about its meaning, the court may, as a matter of discretion, either refuse to allow him to enforce the contract as it would ordinarily be construed (Hartog v Colin and Shields [1939] 3 All ER 566) or go further and rectify the written agreement to give effect to what the mistaken party thought had been agreed (A Roberts & Co. Ltd and Another v Leicestershire County Council [1961] Ch 555).  A civilian system of law would deal with such a case as a breach of the principle of good faith in contractual negotiations.  To claim to enforce a contract in terms to which you know the other party never meant to agree is a breach of good faith.  The common law has no such general doctrine of good faith in negotiation but a number of individual rules which provide remedies against specific forms of bad faith.  Rectification for unilateral mistake is one of these: compare Bingham LJ in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433.”

75.  Mr Cooney SC submitted that as far as Ds were concerned this was a case of mutual mistake. Still, the doctrine of mistake required an account of the factual circumstances in which the contract was made and a determination as to whether the parties had positive belief that the mistaken matter was the case when it was not.[42] Thus, the court would have to consider the position not just as between P and Ds but also the situation between Ng Chi Keung / P and Ng To Bo (whose estate is now represented by Ds), which could not be resolved by answering the 1^st and 2^nd Questions.

76.  But even assuming the Green Land belonged to the Government, Mr Khaw SC submitted still there would be debate as to whether the intended redevelopment under the 1^st/2^nd Agreements could or could not be carried out on the Green Land. Ds’ stance was that it could not since such land was unleased and unallocated Government land. P’s position was that the Green Land and House7 thereon were encroachment subject to the Lot642 Lease for the benefit of the Government qua landlord of Lot642, and that the Government by the DLO’s letter dated 6 July 1984 had indicated she would be prepared to surrender and re-grant the relevant lot on which House7 was located.

77.  Mr Cooney SC submitted it was clear that P/Ds could not rebuild House7 at the original site on the Green Land which was Government land, so P’s claims for specific performance of or mandatory injunction to carry out the 1^st/2^nd Agreements must be dismissed. He argued that although the DLO by its letter dated 6 July 1984 recommended proposed exchange of Lot642 and the Green Land by way of “surrender and re-grant”, the Government did not commit on such proposal which could be withdrawn, and even if such proposal was approved it would be subject to such terms and conditions to be laid down in the Conditions of Exchange. Further, it was said that the subsequent letter dated 28 May 2009 by the DSO suggested the occupational boundary of House7 was different from the boundary of Lot642 shown in the Demarcation District control sheet. But such letter went on to say as follows:

“…… To rectify the situation, a proposal of rectification by way of Surrender and Regrant was discussed and approved by the District Lands Conference in a meeting held in June 1979. Despite the rectification has yet to be executed, the decision in the meeting shall remain valid.” (my emphasis)

78.  The letter dated 24 October 2013 by the DLO made clear that if the owners of Lot642 wished to rebuild House7 into a 3-storey village house that conformed to the boundary of Lot642 upon Government approval and payment of premium, House7 outside such boundary must be demolished. On 2 November 2013, P replied to the DLO reminding that in the 1980s Ng To Bo had raised the matter of non-alignment of House7 with the boundary of Lot642 and at that time the DLO made the aforesaid offer of “surrender and re-grant”, so P thought Ng To Bo had resolved the matter and asked the DLO to clarify whether House7 was an illegal structure. On 6 December 2013, DLO replied merely to state that according to their records House7 was located outside the proposed reconstruction site but was covered (涵蓋) by Lot642.

79.  Whilst it was true the correspondence with the DLO/DSO showed the Government made no firm commitment on the proposed “surrender and re-grant”, it was evident such proposal was offered in 1984 and re-affirmed in 2008, and as recent as in late 2013 the DLO accepted House7 was covered (涵蓋) by Lot642. It must be matter of debate (a) whether the Government’s proposal for “surrender and re-grant” was still an open and viable offer, (b) if so, whether specific enforcement of the 1^st/2^nd Agreement could be made subject to the vitality or otherwise of the Government’s proposal, and (c) what was the true meaning of the DLO’s acknowledgment that House7 was covered (涵蓋) by Lot642. These were factual issues and could not be answered by saying there was no allegation of adverse possession or encroachment presumption made by P in the present action. Further, I agree with Mr Khaw SC that Ds’ allegation that the 2^nd Agreement was liable to terminated by the alleged fact that the development fee for 1 party would exceed $2,000,000 was a purely contractual and not proprietary matter, ie it had nothing to do with ownership of the Green Land and P’s interest in the same being the subject matter of the 1^st/2^nd Questions.

80.  The above analysis clearly showed there would not be any crisp answer to the 2^nd Question that would obviate the need for a full trial, and there would still be significant disputes that would have to be disposed of at trial even after answering the 1^st/2^nd Questions, which questions I am afraid were not pure legal matters. I am not persuaded that a trial of preliminary issues as proposed by Ds would be necessary or appropriate.

VII.  CONCLUSION

81.  For all of the above reasons, the Summons is dismissed. There is no reason why costs should not follow event. I therefore grant a costs order nisi that Ds should pay P costs of and occasioned by the Summons (with all costs reserved, if any) to be taxed if not agreed with certificate for two counsel.

82.  I take this opportunity to urge the parties to carefully consider whether the Government should be joined in the present action, so that (a) any cause of action or defence that required their presence could be perfected, (b) any order made would also be binding on the Government, (c) there could be finality in resolving all relevant disputed issues, and (d) the Government’s stance as to the proposal on “surrender and re-grant”, encroachment presumption and/or adverse possession could be properly elicited, and the parties’ respective case properly determined in light of the same. It is pertinent at this stage to take note of Mr Khaw SC’s submissions in paragraph 68 and footnote 37 above. Given the interlocutory nature of the Summons, it was sufficient for this court to highlight certain aspects of perceived concerns if the Government was not involved such that there would not be procedural benefit/savings in proceeding with a trial of preliminary issues, and it was unnecessary for this court to come to any definitive view at this stage as to whether or not the Government ought to be brought into the present action. But this consideration should exercise not just the parties but also the court case manager as the present action moves inexorably on towards trial.