FAN CHI PING v. THE ESTATE OF LEI WING LONG also known as LEI WENG LONG, deceased

HCMP3082/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3082 OF 2013

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D E C I S I O N

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1.  By its Amended Originating Summons filed on 26 November 2013, the plaintiff seeks the following declarations against the defendant concerning the compensation arising out of the resumption of Lots 861 and 868 in DD 3, Tung Chung, New Territories (“the Land”):

1. A declaration that the defendant has no entitlement to any compensation from the Director of Lands arising out of or in connection with resumption of the Land;

2. A declaration that the plaintiff is entitled to be paid by the Director of Lands the entire compensation arising out of or in connection with the resumption of the Land, being the sum of $1,727,166.00 together with interest thereon at such rate and for such period as the Court shall deem fit, by a cheque or cheques to be issued in favour of the plaintiff’s solicitors, who shall sign receipt on behalf of the plaintiff;

3. Alternative to (2) above, a declaration that the plaintiff is entitled to be paid from the Director of Lands to the plaintiff such proportion of the compensation as determined by the Court, together with interest thereon at such rate and for such period as the court shall deem fit, by a cheque or cheques to be issued in favour of the plaintiff’s solicitors, who shall sign receipt on behalf of the plaintiff.

Background

2.  The plaintiff was born in 1945 at which time, his parents were already in possession of the Land, using it as residence and for cultivation.

3.  In fact the plaintiff’s grandfather had been in possession of the Land since the late 19^th century, ie at least more than 114 years ago. Although it is not known exactly which year the plaintiff’s grandfather came into possession of the Land, the grandfather had in his possession a mortgage in Chinese which is dated 1883 made between the defendant as the registered owner of the Land and one Fan Ah Chiu.

4.  Given the circumstances, it is more than likely that the defendant has now passed away. There was no grant of probate and no letter of administration in respect of his estate. For the purposes of these proceedings, an order was made herein directing the Official Solicitor to act for the defendant but limited only to receiving service of the court documents in these proceedings.

5.  Not surprisingly, the defendant nor anyone representing the defendant has seen fit to appear in these proceedings on his behalf.

6.  The Land was in continuous adverse possession since the late 19^th century by successive squatters, firstly, by the plaintiff’s grandfather in the late 19^th century, then by the plaintiff’s father and later by the plaintiff. The plaintiff had been in exclusive possession of the Land until it was resumed by Government. The notice of resumption was dated 21 October 1994 and the Land reverted back to Government on 28 January 1995.

7.  As a result of the resumption of the Land, the plaintiff and his family had ceased their cultivation of the Land and had moved out of the Land.

8.  In High Court Action No. 913 of 2011 brought by the plaintiff against the defendant for possessory title from adverse possession of the Land, Deputy High Court Judge Le Pichon declared inter alia that the plaintiff has acquired a good possessory title to the Land by virtue of section 7 of the Limitation Ordinance. That judgment was given on 31 July 2012.

The present proceedings

9.  The present proceedings were taken out by the plaintiff due mainly to the fact that in correspondence with the Lands Department, the Lands Department took the view that the defendant was also entitled to be apportioned a part of the resumption compensation and requested the plaintiff to liaise with the defendant to agree to the respective amounts of resumption compensation payable to each of them or alternatively, to obtain a relevant Court order in respect of the segregation of resumption compensation.

10.  In coming to court, the plaintiff is seeking an order that the plaintiff is entitled to the entirety of the resumption compensation relying on the decision of the Court of Appeal in the case of Common Luck Investment Ltd. v Cheung Siu Ming (CACV 16/1998 unreported, 28 May 1998).

Decision

11.  As stated above, the plaintiff relies on the principle of law as was stated by the Court of Appeal in the case of Common Luck Investment Ltd. (above).

12.  The facts in the case of Common Luck Investment Ltd. are as follows.

13.  In December 1962, the property, the subject matter in that case, was assigned to the defendant as a gift by his father-in-law, after which the defendant and his family began to live there. The property was mortgaged by the defendant to a bank in November 1963, which mortgage was redeemed by the defendant in December 1964. In May 1964, the defendant had again mortgaged the property to the bank to secure a loan for $5,000 from the bank repayable in May 1965.

14.  The bank went into liquidation and in July 1977, the Official Receiver as liquidator of the bank assigned the property to the plaintiff by a conveyance on sale.

15.  The defendant, however, continued to live with his family in the property unaware that the property had been sold over his head to the plaintiff.

16.  The property was resumed by the Government on 2 December 1991.

17.  In issue in that case was who was the person entitled to the relevant compensation for the resumption.

18.  The Court of Appeal (Godfrey, Leong and Rogers JJ.A) decided that question by reference to section 7(2) of the Limitation Ordinance and Godfrey J.A., in giving judgment, said as follows:

“In the present case, a right of action to recover the land first accrued to the Bank on 19 May 1965, the legal date for redemption of the 1964 mortgage. The Bank took no steps to recover the land before it went into liquidation and the Official Receiver sold the land to the plaintiff. What then has the plaintiff acquired? The plaintiff argues that what it has acquired was the title of the defendant to the equity of redemption. But that is simply not correct. What the plaintiff acquired was the legal estate in the land vested in the Bank by virtue of the mortgage. The Bank had a legal title to the land, and it was that legal title which it sold (through the Official Receiver) to the plaintiff. The plaintiff, as it seems to me, is plainly a person claiming through the Bank. That being so, since the right of action to recover the land from the defendant first accrued to the Bank on 19 May 1965, the title of the Bank (and of the plaintiff as a person claiming through it) was extinguished by 19 May 1985. The only title which justifies a claim to the money paid by the Government on the resumption of the land is the defendant’s title.”

19.  Applying the aforesaid legal principles to the present case, the defendant’s title to the Land has long been extinguished by adverse possession of the various squatters on the Land beginning with the plaintiff’s grandfather, as well as by the possessory title to the Land which has now been held by Deputy High Court Judge Le Pichon to be with the plaintiff.

20.  Accordingly, the plaintiff’s title is the only title which would justify a claim to the money paid by the Lands Department upon the Government’s resumption of the Land.

Orders

21.  For the reasons given above, I will make the following orders.

1.     A declaration that the defendant has no entitlement to any compensation from the Director of Lands arising out of or in connection with resumption of the Land; and

2.     A further declaration that the plaintiff is entitled to be paid by the Director of Lands the entire compensation arising out of or in connection with the resumption of the Land, being the sum of $1,727,166.00 together with interest thereon at such rate as the Director of Land sees fit for the period from 28 January 1995 to the date of payment of the compensation by a cheque or cheques to be issued in favour of the plaintiff’s solicitors, who shall sign receipt on behalf of the plaintiff

Costs

22.  Given that the defendant has never appeared and cannot be found, plus the fact that there was an order by consent for the Official Solicitor to represent the defendant but only limited to accepting service of these proceedings, there will be no order as to costs as between the parties including the Official Solicitor.

23.  A further matter which has an effect on costs is that the hearing was originally fixed for 10^th April 2014. However, at that hearing, there was nothing to show that there was any consensus between the plaintiff and the Director of Lands concerning interest despite the fact that the plaintiff was asking for interest from the Director of Lands upon the compensation. Nor was the Director of Lands present at the hearing.

24.  In the circumstances, I had to adjourn the hearing to allow the Director of Lands a chance to be heard on the issue of interest. The matter was accordingly adjourned to 3^rd June 2014.

25.  At the adjourned hearing, the plaintiff was able to hand up a letter from the Director of Lands to the effect that the Government is agreeable to pay interest on the resumption compensation from the date of reversion of the Land (28 January 1995) to the date of payment of the compensation and the interest shall be at such rate as shall be determined by the Director of Lands having regard to the lowest rate offered from time to time by the three note-issuing banks in Hong Kong on their 24 hours’ call deposits.

26.  That was agreeable to the plaintiff and the question of interest was thus resolved.

27.  In so far as costs of the adjourned hearing on 3^rd June 2014 was concerned, counsel for the plaintiff, after taking instructions, indicated that the plaintiff’s solicitors were prepared to give an undertaking that they will not charge the plaintiff for the adjourned hearing, including counsel’s fees.

28.  Accordingly, there will be a further order that the plaintiff’s solicitors are to personally bear the costs of the adjourned hearing including counsel’s fees.