CHEUNG PAK CHEONG AND ANOTHER v. TONG KENG alias TONG KENG SUM

DCMP 1706/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1706 OF 2012

--------------------------------

---------------------------

JUDGMENT

---------------------------

1.  This is the trial of the plaintiffs’ claim for adverse possession of the landed property known as Factory E, 20^th Floor, Block 3, Golden Dragon Industrial Centre, Nos 172-180, Tai Lin Pai Road, Kwai Chung, New Territories (“the property”) for a period exceeding 12 years prior to the commencement of this action.

2.  The defendant did not attend today’s trial and he all along fails to response the present proceedings, such as filing the acknowledgement of service in Form No.15. 

3.  The originating summons and the relevant supporting affirmation were served upon the defendant on 20 July 2012 by inserting the same through the letterbox of his last known address. 

4.  The 2^nd plaintiff explained in her testimony at the trial that she was told by the defendant about the defendant’s last-known address which was purchased by him in about 1990 or 1991.  She was also invited by the defendant to visit such address.

5.  On 29 August 2012, the court directed the plaintiffs to apply for service of the originating summons by way of substituted service.  Pursuant to the order of Master D Ho dated 2 November 2012,  substituted service of the originating summons shall be effected by inserting an advertisement of a Chinese notice of these proceedings once in a local Chinese newspaper.

6.  On 7 November 2012, the order for substituted service of the originating summons was duly complied with and an affirmation of service was filed by the plaintiffs on 12 November 2012.

7.  In the circumstances, I am satisfied that the service of the originating summons was duly made.

8.  Thereafter, the defendant did not make any response.

9.  On 26 November 2012, the court set down this case for trial on 31 December 2012, so that the plaintiffs can prove the case.

10.  The plaintiffs have two witnesses, namely themselves, to give evidence at the trial.  At the trial, they both adopt their respective affirmations in support of this application filed earlier as part of their evidence in chief.

11.  Mr Wong, counsel for the plaintiffs, put some questions to the plaintiffs and I also asked the plaintiffs some of the questions for clarification, and Mr Wong did a very short re-examination afterwards.

The plaintiffs’ case

12.  As evidenced by the assignment dated 5 April 1979, the defendant purchased the property at the consideration of HK$246,500.  Although the defendant paid for the whole consideration, he registered himself and a Ms Cheung Kwok Mei as joint owners of the property in joint tenancy.

13.  In 1979, the 1st plaintiff and the defendant commenced business of manufacturing metal products by way of a partnership called “Luen Fat Metal Products Factory” at the property (“Luen Fat”). 

14.  According to the 1^st plaintiff’s affirmation, he decided to purchase 50 per cent interests in the property in 1980.

15.  Upon discussion with the defendant, the 1^st plaintiff purchased the 50 per cent interest from the said Miss Cheung Kwok Mei at a price of HK$185,000.

16.  However, the 1^st plaintiff was not registered himself as the new co-owner.  Instead, the 1^st plaintiff’s wife, namely the 2^nd plaintiff, became the new co-owner because the 2^nd plaintiff wished to hold more family assets under her own name.

17.  The aforesaid transaction was duly effected by the assignment dated 24 October 1980.

18.  The 2^nd plaintiff and the defendant were and still are the registered owners of the property in tenant in common as of today, as shown in the land search record.

19.  In 1983, the defendant decided to withdraw from the partnership of Luen Fat.

20.  By a letter dated 19 December 1983 sent by the defendant’s then-solicitors, Messrs Ho & Wong, to the 1^st plaintiff, the defendant offered to sell his shares in Luen Fat to the 1^st plaintiff at the consideration of HK$90,000 and the defendant also offered to sell his shares in the property at HK$100,000.

21.  According to the evidence of the 2^nd plaintiff given at the trial, she said she did pay some money to the defendant for purchase of his shares in Luen Fat, but not HK$90,000.  The exact amount cannot be recalled.

22.  Subsequently, another law firm was engaged by her to complete the sale of the shares transaction and, accordingly, the partnership of Luen Fat was changed into a sole proprietorship in the name of the 1^st plaintiff in the Business Registry. 

23.  Then, the 1^st plaintiff ran Luen Fat on his own account as a sole trader at the property.

24.  The 2^nd plaintiff and the defendant as landlord entered into a lease agreement of a two years’ term with the 1^st plaintiff as tenant dated 16 April 1984, whereby the 1^st plaintiff did pay rent in the sum of HK$2,800 per month for using of the property. 

25.  In fact, the 1^st plaintiff only paid HK$1,400 to the defendant for use of the property every month, since the 2^nd plaintiff is the wife of the 1^st plaintiff, who is holding the 50 per cent ownership of the property as tenant-in-common.

26.  The said lease agreement expired in 1986, but the 1^st plaintiff kept on using the property and paying the same rent until November 1998. 

27.  Since then, the 1^st plaintiff paid nothing.  The last rent payment was made on or about 4 January 1999 in the sum of HK$4,200 in respect of the rental for the months of September, October and November 1998.

28.  For the purpose of these proceedings, the plaintiffs agreed to adopt January 1999 as the starting time to run under the Limitation Ordinance.

29.  The 2^nd plaintiff and the defendant met in early 1990 at a Chinese restaurant to discuss the outstanding rent issue and have a casual chat.

30.  The 2^nd plaintiff at such meeting told the defendant that the 1^st plaintiff would not pay rent as the plaintiffs had already regarded the property as being owned by them.

31.  After this meeting, the plaintiffs said they were given to understand that the defendant had actually abandoned the property with his carefree attitude.

32.  This is also the last occasion that the defendant was successfully contacted.  The plaintiffs also said in their affirmation that they had tried to contact the defendant, but in vain.  The defendant’s mobile phone was found out of service.

33.  The plaintiffs kept on using the property exclusively as their own property from January 1999, without paying any rent to the defendant up till now.

34.  Various documentary exhibits, such as business registration, management fee and utility charges receipts, were produced to show they are using the property all along.

35.  The plaintiffs also said in their affirmation that no people were allowed to access the property since early 1999.

36.  At the trial, they further testified that the 2^nd plaintiff has all along been in possession of all the relevant title deeds of the property and only the two plaintiffs have the keys of the property.

37.  On the other hand, the defendant never asked the plaintiffs for outstanding rent, possession of the property, return of those title deeds or keys.

38.  Upon the expiry of the said lease agreement in 1986, the defendant did not even demand an increase of rent, even though the Hong Kong property market was once growing upward.

39.  Further, the defendant did not claim rent from 1999 or take any action to recover the land so far.

40.  The plaintiffs testified at the trial that the defendant had not enter into the property for whatever purpose since 1984, after the sale of his shares in Luen Fat to the 1st plaintiff.

41.  Mr Wong, counsel for the plaintiffs, submitted that the evidence sufficiently showed that the defendant did take a carefree attitude towards the property and had abandoned the property since January 1999.

42.  Mr Wong also submitted that, taking advantage of the defendant’s abandonment, the plaintiffs regarded and did use the property as their own sensibly.

The law on adverse possession

43.  Under section 7(2) of the Limitation Ordinance,

“No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him”.

44.  Under section 13(1) thereof,

“no right of action to recover land shall be deemed to accrue ... The right of action shall not be deemed to accrue unless and until adverse possession is taken of the land”.

45.  Under section 17 thereof,

“at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished”.

46.  Mr Wong, counsel for the plaintiffs, also rightly cited me the most relevant authority in this area, namely the CFA case in IO of San Po Kong Mansion v Shine Empire Limited. The principle of adverse possession set out by CFA is as follows:

“(2) he” [the plaintiff] must be shown to have both factual possession and the requisite intention to possess (‘animus possidendi’).

(3) Factual possession signifies an appropriate degree of physical control. ... The question of what acts constitute a sufficient degree of exclusive control depends on the circumstances.

(4) ... the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title”.

47.  Besides, Mr Wong also submitted that if a tenant used a land with the permission of the landlord, the tenant must not have the requisite animus possidendi unless he deliberately defaulted in paying rent and treated the concerned property as his own.

48.  However, if the tenant does any act to acknowledge the title of the land, such as resuming to pay rent again, the landlord’s right to recover the land shall be deemed to have accrued on the date of such acknowledgement.

49.  Mr Wong also quoted me a passage from the judgment of DHCJ To (as he then was), in Tsang Wing Kit v The Occupiers, as follows:

“in the case of land subject to a tenancy, no matter when dispossession occurred, time does not run against the landowner until the tenancy is terminated”.

Discussion

50.  In the present case, the defendant did not appear at the trial.  I accept that the plaintiffs are both credible witnesses who have shown both factual possession and the requisite intention to possess.

51.  Based on the evidence given by the plaintiffs, I find the plaintiffs did not acknowledge the title of the defendant after January 1999. 

52.  By that time, I accept that there was no tenancy whatsoever because the 2^nd plaintiff expressed her intention not to pay rent to the defendant and also to exclude the defendant from use of the property at the meeting in early 1999.  The fact that the plaintiffs possessed all the relevant title deeds and keys of the property at all material times support the requisite intention to possess.

53.  Mr Wong reminded the court that the 2^nd plaintiff was and still is a co-owner of the property as tenant in common.  Under the common law, a co-owner enjoys unity of possession.  The 2^nd plaintiff is entitled to use any part of the property as qua a co-owner.

54.  He submitted that the law does not prevent the 2^nd plaintiff from adversely possessing the property against the defendant.

55.  I also agree with his submission.

56.  First of all, the Limitation Ordinance does not exclude adverse possession among co-owners.  Therefore, whenever a co-owner has the necessary physical control over the concerned property with the animus possidendi to the exclusion of the whole world, including the other co-owners, the principles of adverse possession is equally applicable to extinguish all titles of the other co-owners.

57.  Secondly, paragraph 250.849 of Halsbury’s Laws of Hong Kong, volume 16, which, inter alia, stated as follows:

“Co-owners at Common Law possession by one co-owner of the whole land was not adverse against the other co-owners. Under the Limitation Ordinance, the possession of the one co-owner can be adverse to the title of the other co-owners, where the co-owner in possession has the necessary animus possidendi. That is, the intention to possess the whole of the land, to the exclusion of the other co-owners, for the period.”

58.  As said before, the plaintiffs, including the 2^nd plaintiff, had already proved they have such requisite intention to possess the property to the exclusion of the defendant.

59.  Therefore, I accept that the 2^nd plaintiff is also entitled to make this claim of adverse possession against the defendant.

Conclusion

60.  In the circumstances, I now make an order in terms of paragraph 1, 2 and 3 of the prayer of the originating summons filed herein on 19 July 2012.

61.  Mr Wong, counsel for the plaintiffs, confirmed that the plaintiffs are not asking for costs. 

62.  Hence, I make no order as to costs of these proceedings.