THE SHEK O DEVELOPMENT CO, LTD v. CHAN KWOK TUNG AND ANOTHER

HCMP 101/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 101 OF 2015

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AND

HCMP 102/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 102 OF 2015

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AND

HCMP 103/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 103 OF 2015

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AND

HCMP 106/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 106 OF 2015

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AND

HCMP 109/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 109 OF 2015

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____________

AND

HCMP 111/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 111 OF 2015

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D E C I S I O N

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Introduction

1.  There are altogether 6 summonses separately issued in 6 actions (collectively “the Actions”) calling for this court’s determination. All of the Actions were commenced by the same plaintiff, namely, The Shek O Development Company Limited (“SODC”), first by way of originating summons under O.113 of the Rules of the High Court (“OS”) and subsequently turned into writ actions. By the 6 summonses, SODC applies to join the Secretary for Justice (“SJ”) as one of the defendants in each of the Actions pursuant to O.15 r.4 and O.20 rr.5 & 7 for the consequential amendments to be made to the OS and the existing pleadings.

2.  The Actions relate to the same piece of land known as Garden Lot No. 68, Shek O, Hong Kong (“the Lot”) and SODC is the registered owner of the Lot. By a Crown lease dated 9 May 1934, SODC was demised the Lot for a term of 75 years from 9 October 1924 with a right of renewal for another 75 years. The Crown lease was subsequently renewed and SODC remains to be the registered owner of the Lot. SODC brought the Actions to evict the defendants in occupation of different houses erected on the Lot without its consent and approval. In short, SODC sues the existing defendants for trespass and seeks vacant possession of the Lot.

3.  Each of the defendants has filed his respective defence and counterclaim and relies on the plea of adverse possession raising an allegation of undisturbed possession of the Lot to the exclusion of SODC for a period long enough to extinguish the title of SODC to the Lot. The table below is modeled on the one included in the skeleton argument of Mr Bernard Man SC and Mr James Man lodged on behalf of SODC and it gives a summary of the defendants’ alleged commencement years of their adverse possession of the Lot.

Action	Alleged year of commencement of adverse possession by the defendants or those defendants tacked on	House numbers assigned by the Government to those structures occupied by the defendants on the Lot
HCMP 101/2015	1949	House 709 (part)
HCMP 102/2015	Mid-1960s to 1970s	House 711
HCMP 103/2015	Mid-1960s to 1970s	House 712 (part)
HCMP 106/2015	1982	House 723
HCMP 109/2015	1997	House 935
HCMP 111/2015	1966	House 936

4.  In view of such allegations, SODC contends that any adverse possession of the defendants has been undertaken on behalf of SJ only. SODC further contends that SJ has twice acknowledged its title to the Lot and hence there is no limitation issue. For this reason, SODC claims that SJ is a necessary party to the Actions. SJ disagrees and opposes all these applications while all the defendants adopt a neutral stance.

These applications

5.  In addition to the foregoing matters, the case of SODC in respect of SJ is premised on the following allegations largely evidenced by documents and derived from the pleadings of the defendants.

6.  On or about 15 June 1976, the Squatter Control Unit of the Housing Department (“the SCU”) conducted a survey on those structures erected on the Lot including the defendants’ structures. Each of the defendants’ structures was assigned a squatter structure number and a house number. The SCU kept a record of all such structures with reference to their squatter structure numbers.

7.  In or about January 1983, the SCU undertook another survey and the records in relation to the defendants’ structures were updated as a result. In the case of the defendant in HCMP 106 of 2015, he avers that one more survey was conducted on his structure in or about June 1984.

8.  The District Lands Office (Hong Kong South) sent a letter dated 18 July 1994 to SODC referring to a domestic structure known as House 832, Shek O Village, Hong Kong (“the 1994 Letter”). The DLO complained that the said house was erected within the Lot, which was for garden use only according to the Crown lease and requested SODC to rectify the situation, failing which the Government would consider taking enforcement actions against SODC under the Crown Lease. There is no suggestion that any of the defendants has ever occupied House 832.

9.  The DLO (Hong Kong West & South) sent another letter dated 16 February 2006 to SODC (“the 2006 Letter”) referring to a new structure found in the Lot (“the New Structure”). The DLO reiterated the permitted use of the Lot in the lease conditions. The DLO demanded removal of the New Structure within 30 days from the date of the February Letter failing which the DLO would take such enforcement actions as it deemed fit.

10.  The case of SODC in respect of the plea of adverse possession of the defendants is that the surveys and registrations done in respect of the defendants’ houses in 1976, 1983 and 1984 constituted a consent or licence by the Government granted to the defendants to occupy their respective houses on the Lot. The Government had no right to grant such consents and licences and both the Government and the defendants had no right to occupy the Lot without the licence or consent of SODC. By reason of the consent or licence wrongfully granted by the Government, the defendants unlawfully possessed the houses on behalf of the Government.

11.  On the other hand, SODC says that the 1994 Letter and the 2006 Letter were written acknowledgments of its title to the Lot on the part of the Government. Hence, by virtue of sections 23 and 24 of the Limitation Ordinance, Cap. 347 (“LO”), the time for the purpose of extinguishing SODC’s title to the Lot started to run afresh first from 1994 and later again in 2006. As a result, none of the adverse possession of the Government and now claimed by the defendants can suffice to defeat the possession claim of SODC.

12.  Mr Mok, for SJ, points out that the undisputed evidence is that both House 832 and the New Structure have already been removed from the Lot.

13.  Mr Man refers to this court to the Privy Council’s decision in Sze To Chun Keung v Kung Kwok Wai David & Anor. [1997] HKLRD 885, which, in his submission, lends support to the case of SODC. There, in 1944,  the squatter started his occupation in the land registered in the name of the plaintiff pursuant to a Crown lease and in 1961 he was granted a Crown Land Permit whereby he was permitted to occupy the land for a temporary period and to erect certain structures thereon. In fact the Government had no right to grant any such permission since the Land had already been demised to the plaintiff by the Crown lease.  In 1990, the plaintiff brought an action for possession against the defendant. The plaintiff applied to strike out the original defence where the defendant prayed in aid the Crown Land Permit. The defendant did not resist but put forth his proposed amendments to raise a limitation defence based on the allegation that the grant of the Crown Land Permit transferred possession to the Crown but did not stop the running of the limitation period. The Crown was therefore in adverse possession of the land through the defendant as its licensee. The defendant’s application to make such amendments was refused by a judge in the first instance and the Court of Appeal upheld the refusal. The defendant then appealed to the Privy Council.

14.  The following matters in the advice of Lord Hoffmann given for the Privy Council are of particular relevance to the present case:

(1) For the purpose of deciding whether leave to amend should be given, the facts alleged in the proposed amended defence must be regarded as true. If those facts would disclose a reasonably arguable defence, the investigation of whether they are true or not would be a matter for the trial judge.

(2) For the purposes of limitation, possession from 1961 must be regarded as having been in the Crown, which possessed through its licensee, the defendant.

(3) The fact that the Crown was also the grantor of the lease under which the plaintiffs were entitled to the land is irrelevant. The grant of the Crown Land Permit transferred possession to the Crown but did not stop the running of the limitation period.

(4) The land has been continuously in adverse possession since 1955 and that the plaintiffs’ title was extinguished in about 1975. The fact that the defendant had been in possession on his own account for only two years when the proceedings were commenced does not matter. The LO is not concerned with whether the defendant has acquired a title but with whether the plaintiffs’ right of action has been barred.

15.  Mr Man submits that the Sze To Chun Keung case is analogous to the present case in that the Government being the grantor of the Crown lease had been in adverse possession of the Lot through the defendants by giving them its consent or licence consequential upon the surveys and registrations first in 1976. He reminds this court that a bare licence can also suffice for the purpose of adverse possession: Jourdan: Adverse Possession (2^nd edn, 2011) at §7-129.  He further draws to my attention that indeed the Government itself relies on the squatter control survey to support its allegation of a licence granted to a squatter in another High Court action under HCA 1509/2012. The Government’s adverse possession, however, fails to extinguish the title of SODC on account of the 1994 Letter and the 2006 Letter.

16.  For the joinder applications, Mr Man relies on O.15 rr.4(1) and 6(2)(b) and fairly points out the latter rule was not specified in the margins of the summonses. He nevertheless submits that this does not prevent the SODC from arguing for its applications on that basis in the absence of prejudice caused to SJ. Mr Mok does not take issue with this.

17.  Mr Man submits that if the foregoing undisputed facts give rise to an arguable case of the Government’s adverse possession and its termination by way of its written acknowledgements of the title of SODC to the Lot, it would be just and necessary to join SJ in each of the Actions as an interested party so that the Government would be bound by the court’s findings on the entitlement of SODC to the Lot and that all the issues can be conveniently determined in the same action.

18.  Mr Mok opposes this joinder application. He highlights the position of the Government as the starting point that it has never adversely possessed the Lot, either through the defendants or by itself and has never claimed any possessory title to the Lot. It is thus unnecessary to join SJ to be a defendant in any one of the Actions.

19.  Mr Mok also takes this court through the evidence adduced on behalf of SODC and that on behalf of SJ in detail and submits that the alleged case of adverse possession of SJ as reflected in the proposed amendments can never get off the ground and should be struck out. He thus submits joining SJ to the Actions serves no meaningful purpose and this court should refuse the joinder applications and hence the consequential amendment applications.  

Analysis

20.  Both Mr Man and Mr Mok make submissions on the merit of the respective case of parties. It is necessary for me to go back to the legal principles governing joinder applications to remind myself of the extent to and the purpose of which I should examine the evidence in the context of a joinder application.

21.  O.15 rr.4(1) and 6(2)(b) provide as follows:

“O.15 r.4(1): Subject to rule 5(1), two or more persons may be joined together in one action as plaintiffs or as defendants with the leave of the Court or where-

▪(a) if separate actions were brought by or against each of them, as the case may be, some common question of law or fact would arise in all the actions, and

▪(b) all rights to relief claimed in the action (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions.

O.15r.6(2): Subject to the provision of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application-

▪

▪(a) …

▪(b) order any of the following persons to be added as a party, namely-

▪

▪(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

▪(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

22.  In Man Whi Chung v Man Ping Nam [2003] 1 HKC 549, DHCJ A Cheung (as the Chief Judge then was) reviewed a few English and local authorities to look for guidance in respect of joinder applications. The learned judge first pointed out that it is essential for an intending defendant to show that he is sufficiently interested in the proceedings to which he or she wishes to be joined as an additional party.

23.  Then the learned judge reviewed the English Court of Appeal case of Gurtner v Circuit [1968] 2 QB 587, wherein the English Court of Appeal overruled Davlin J the narrow interpretation of limb (i) in O15 r.6(2)(b)(i) in the Amon case.

24.  In regard to limb (ii), the learned judge referred to Wong Chun Loong v Ada Ltd [1991] 1 HKC 86 at §22 where the dictum of Kerr LJ in Sanders Lead Co Inc v Entores Metal Brokers Ltd [1984] 1 WLR 452 was cited with approval as presenting a correct interpretation of limb (ii). For present purposes, only this part is relevant:

“In my view, the rule requires some interest in the would-be intervener which is in some way directly related to the subject matter of the action. … It may well be impossible, and would in any event be undesirable, to attempt to categorize the situation in which the interests of would-be interveners are sufficient to satisfy the requirements of the rule. The authorities show that the existence of a cause of action between the intervener and one of the parties is not a necessary prerequisite for this purpose. But they also go on further than to show that there must be some direct interest in the subject matter, such as an alleged infringement of a patent, trademark or copyright with which the intervener is concerned.”

25.  Clough JA went on to say this,

“For the purposes of b (ii) there must exist between the 5th defendant (as the person seeking to intervene) and "... any party to the cause or matter ... a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter...." which the court considers ...."it would be just and convenient to determine as between" the 5th defendant "... and that party as well as between the parties to the cause or matter". Thus if the court is to have jurisdiction under (b)(ii) it is initially necessary that the question or issue mentioned in (b)(ii) should be common to (1) the intervener and a party to the cause or matter and (2) the parties to the cause or matter.”

26.  The learned judge then proceeded to review another local authority. At §23, the learned judge referred to Yu Cho Wah v Ho Chi Kwong Michael [1999] 3 HKC 68 and made a summary of the decision. I can do no better than citing the entire paragraph below:

“In Yu Cho Wah v Ho Chi Kwong Michael [1999] 3 HKC 68, four daughters successfully applied to be joined as defendants in an action involving a property in Lamma Island belonging to their deceased father’s estate, in which the administrator was sued as defendant, on the ground that they had an interest in the property in that under Chinese customary law, they were entitled to dowry before their respective marriages. The court had evidence before it that a claim to dowry under Chinese customary law could only be made before a daughter’s marriage, which was not the case of the four daughters in that case; yet the court allowed the joinder application on the ground that the four daughters might have a claim to an interest in the property in question and what, if any, claim they might have on their deceased father’s estate was a matter to be decided by the court at trial, after the joinder (see p. 71 E-G). In other words, a person with a doubtful interest in the subject matter of the litigation was allowed to be joined, so that the doubt over his interest could be resolved at trial together with the relevant issues between the original parties.

27.  It can be seen that even where the interest in the subject matter of the litigation alleged by the intervener is doubtful, the court is nevertheless prepared to exercise its discretion to allow the joinder so that the alleged interest could be properly tested at trial.

28.  At the end, the learned judge said that all that it required the intervener to possess is ‘some interest’ which is in some way directly related to the subject matter of the action.

29.  I need not go further than the Man Whi Chung case for the general principles. In Wong Shan Shan v The Incorporated Owners of Yue Wah Mansion, unreported, HCA 1086/2013, 28.1.2015, this court referred to the Man Whi Chung case as well. In light of the principles stated therein, this court allowed the intervention of Urban Renewal Authority on the basis that I was satisfied that it has a legal and proprietary interest in the subject matter of those proceedings, i.e. a property to which the plaintiffs claimed a possessory title. Having concluded that there was a question and issue between the plaintiffs and Urban Renewal Authority relating to the relief sought in that action and its intended involvement in the action was necessary to ensure that all matters in dispute might be effectually and completely determined and adjudicated upon, this court refused to examine the merit of any defence of Urban Renewal Authority to the claim of the plaintiffs. This court opined that a necessary party should be joined irrespective of the apparent strength of his case shown at the stage of his joinder application.  

30.  O.15 rr.4(1) and 6(2)(b) do not stipulate any requirement for the intervener to show merit of his case in the event that his intervention is allowed. All he needs to prove with credible evidence is his locus standi or his interest in the proceedings. As can be seen in the Yu Cho Wah case, the court might even exercise its discretion to allow intervention of an intervener who could only show doubtful interest in the proceedings in the joinder application.

31.  Nor was there any mention in the Man Whi Chung of the merit of the substantive case of the party to be joined. The focus of O.15 rr.4(1) and 6(2)(b) is in my judgment more on the necessity of the joinder of such a party.

32.  It may appear to be an attractive proposition that a party should not be allowed to join if his case is obviously and plainly unmeritorious. However my view is that so long as a party can fulfill the requirements under O.15 rr.4(1) and 6(2)(b) thereby showing his locus or interest, the joinder application should be granted regardless of the strength of his case. The merit of the applicant’s case against such a party is best left to be decided either summarily or at trial after the joinder. The fact that one has a poor case does not mean that he should not even be joined as a party.

33.  It should be noted that the applicant in a joinder application may not even have a cause of action against the additional party at all. 

34.  Another reason why I do not believe merit of the case, apart from the question of locus, is a material consideration is that it cannot be right to require a necessary party who has been, deliberately or otherwise, omitted by the plaintiff to show merit of his case first in order that he can take part in the proceedings which would directly affect his legal interest.

35.  With these principles in mind, I turn to the particular facts of these applications.

36.  SODC has to deal with the plea of adverse possession of the defendants, both in their defence and in their counterclaims. To defeat their claims for possessory title, SODC seeks to establish that they have adversely possessed the Lot in their respective houses merely on behalf of the Government. It further seeks to prove that the Government by the squatter control survey first in 1976 gave its licence to the defendants to occupy the Lot. It lastly has to prove that the 1994 Letter and/or the 2006 Letter constituted written acknowledgements of the title of SODC to the Lot within the meaning of sections 23 and 24 of the LO. These are clearly the issues in the Actions. Even if SODC does not apply to amend its pleadings to include all these contentions, it must be entitled to include them in its reply and defence to counterclaim to deal with the defendants’ plea of adverse possession.      

37.  All these issues arise out of, relate to and connected with the relief claimed in the pleadings of both SODC and the defendants. They are common to SODC and the Government as well. I am aware of the position of the Government that it never wants a possessory title to the Lot but this is beside the point. These issues are still alive given its denial of any adverse possession of the Lot through the defendants on the strength of its consent or licence.

38.  I opine that these issues can be more effectively determined if the Government is joined as a party and not just called to be a witness of either party. I cannot accept the submission of Mr Mok that these issues could be resolved without the participation of SJ. It is both just and convenient to determine these issues as between SODC and the Government as well as between SODC and the defendants. I am satisfied that the threshold of limb (ii) of O15 r6(2) is met.

39.  Given my view that merit plays little part in this joinder application, I come to this conclusion despite the serious challenge to the evidence of SODC by Mr Mok. In any event, I have considered all his arguments and I do not think they suffice to convince me that the allegations of SODC against the Government can be rejected at this stage. In deference to the industry of Mr Mok, I should briefly deal with his arguments concerning the key issues in the Actions identified in paragraph 36 hereof.

40.  First, Mr Mok submits that the surveys and registrations of the defendants’ houses could not amount to a licence granted by the Government to occupy the Lot. He refers to the Squatter Control Policy (“SCP”) and points out that it applied to surveyed structures in unleased Government land and private agricultural land only and not the Lot. In any event, under the SCP, the Government only refrained from exercising its power under the Land (Miscellaneous Provisions) Ordinance, Cap. 28. It was only toleration in a negative manner in nature and could not amount to a licence give to the squatter for his control or possession over the land upon which his structure is erected. Mr Mok then submits that those survey numbers inadvertently given could not possibly trigger the application of the SCP at all and the SCP in any event could not assist SODC to prove the alleged licence.

41.  I agree with Mr Man that the issue is whether objectively speaking the surveys and registrations amounted to a representation that the defendants were given a licence or permission to remain in the houses on the Lot by the Government. To say the least, whatever the SCP actually covered or did not cover and its true nature, which itself may not be determined on paper, this key issue cannot be resolved at this stage.

42.  On the issue of acknowledgement of title, Mr Mok points out that the 1994 Letter actually referred to House 832, which did not belong to any of the defendants. This is immaterial. The 1994 Letter was issued to SODC in its capacity of the registered owner of the Lot and at the very least it is arguable that the Government acknowledged the title of SODC to the Lot by the 1994 Letter. The same applies to the 2006 Letter too.

43.  Lastly Mr Mok argues with force that there could be no adverse possession on the part of the Government for want of animus possidendi by reference to the affirmation evidence filed by SJ. I am of the view that this matter can only be resolved at trial.

44.  The case of SODC is not entirely free from doubt to me though. For example, the defendants in HCMP 101,102 and 103 of 2015 allege that their adverse possession started before the 1970s. Assuming their adverse possession was transferred to the Government by reason of the survey and registration first done in 1976, it should suffice to extinguish the title of SODC well before the alleged acknowledgement of title by way of the 1994 Letter. Once the limitation has expired, no written acknowledgement can have any effect on the running of time: see Jourdan: Adverse Possession (2^nd edn, 2011) at §16-54 and Limitation Act 1980, s29(7). Though we do not have the equivalent provision in the LO, it is very much arguable, to say the least, that the operation of section 17 of LO should render any acknowledgment of title after extinguishment of the same nugatory.

45.  That said, this should be a matter to be determined in the course of the proceedings rather than in these joinder applications.

46.  It follows that the proposed amendments should also be allowed. The proposed amendments to the OS are for the joinder of SJ. The factual allegations in the proposed amendments to the pleadings should be deemed to be true at this stage and they do form an integral part of the case of SODC against the plea of adverse possession of the defendants. I have no difficulty with them at all. 

Conclusion and order

47.  In conclusion, I accede to all the joinder and amendment applications of SODC and I make an order in terms of each of the 6 summonses.

48.  As regards costs of these summonses, I understand from Mr Lui, for the defendants, that they asks for no order as to costs irrespective of the outcome, save that the 2^nd defendant in HCMP 109/2015 seeks legal aid taxation. I agree that there should be no order as to costs for the defendants and that I would allow legal aid taxation for the said defendant.

49.  In regard to the question of costs as between SODC and SJ, I take into account the fact that SODC has all along been aware of the SCU’s communications with the defendants over the years. I opine that it is fair and just in the circumstances to make an order nisi that costs of and occasioned by these 6 summonses be in the cause with certificate for two counsel.

50.  Lastly, I thank all counsel for their assistance in this matter.