TRENDY PROPERTY INVESTMENT LTD v. THE OCCUPIER(S) OF THE REMAINING PORTION OF LOT NO.619 IN DEMARCATION DISTRICT NO.2 SITUATE LYING AND BEING AT MUI WO, LANTAU ISLAND, NEW TERRITORIES, HONG KONG AND ANOTHER

HCMP 1455/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1455 OF 2008

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REASONS  FOR  DECISION

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1.  I have granted leave to the 2nd defendant on his summons to amend his defence and counterclaim and dismissed the plaintiff’s application for summary judgment.  These are my reasons. 

2.  The plaintiff is the registered owner of Lot 619 RP in DD 2 in Mui Wo, Lantau Island, the New Territories.  It issued these proceedings under Order 113 of the Rules of High Court on 1 August 2008.  The proceedings are to recover part of this lot as covered by some temporary structures. 

3.  The 2nd defendant applied on 8 September 2008 to be joined as a defendant herein.  He was joined as the 2nd defendant on 10 September 2008.  He filed a defence and counterclaim on 21 October 2008.  His ground of defence is that he had been in adverse possession of the parts of the lot as covered by the temporary structures which he built since 1989.  He has therefore had 12 years of adverse occupation of those parts of the lot.  He counterclaims for a declaration that the plaintiff’s title for those parts has been defeated under section 17 of the Limitation Ordinance, Cap.347.

4.  The plaintiff then issued an application for summary judgment on the ground that the 2nd defendant has not defeated the plaintiff’s title.  The plaintiff’s reason is that since the 2nd defendant’s occupation commenced before 1 July 1991, he can only defeat the plaintiff’s title after adverse occupation for 20 years.

5.  Section 7(2) of the Limitation Ordinance now provides:

“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 or, if it first accrued to some person through whom he claims, to that person:  …  (Amended 31 of 1991 s. 5)”

However, before this section was amended on 1 July 1991, the period required was 20 years.  Section 38A of the Ordinance provides for the transition as follows:

“(1) The time for bringing proceedings in respect of a cause of action –

(a)  to recover any land;

(b) to redeem mortgaged land;

(c)  to recover any principal sum of money secured by a mortgage or other charge on property, or to recover proceeds of the sale of land; or

(d) to foreclose on mortgaged personal property,

which accrued before 1 July 1991 shall, if it has not then already expired, expire at the time when it would have expired apart from the provisions of the Limitation (Amendment) Ordinance 1991 (31 of 1991).”

6.  The plaintiff thus argued that since the 2nd defendant commenced occupation before 1 July 1991, the 20-year period of adverse occupation before the amendment still applied to him by virtue of section 38A.  Since these proceedings were brought on 1 August 2008, the 20-year period has not expired then and the 2nd defendant has no defence. 

7.  For the purpose of this application, the 2nd defendant accepted the plaintiff’s reading of section 38A.  The defendant has not sought to argue in this application that section 38A should produce no difference between a squatter who commenced adverse occupation in the late evening of 30 June 1991 and a squatter who commenced adverse occupation a few hours later in the early morning of 1 July 1991.  But the 2nd defendant sought to amend his defence and counterclaim to say that he actually commenced occupation of the parts of the lot on 18 November 1987.  

8.  The 2nd defendant said in his affirmation that he commenced occupation of the parts of the lot on 18 November 1987 when he started his business of Kan Tacd Decoration Company in the said temporary structures.  He had also applied to the China Light and Power Company Limited for supply of electricity to the temporary structures in 1989. 

9.  He also referred to the Business Registration Record (“BR record”) for his business.  The record states that he commenced business on 18 November 1987.  The original principal place of business was at No. 24A Chung Hau Road, Silver Mine Bay, Lantau.  There was an amendment which deleted this address and substituted it with No. 25A Chung Hau Tsuen, Mui Wo, Lantau, which is the address of the lot in question.

10.  The plaintiff then applied interrogatory and asked the 2nd defendant to state on oath the date when the BR record was amended.  The 2nd defendant said in his 3rd affirmation that it was done in 1987 at the Business Registration Office. 

11.  The 2nd defendant also adduced an affirmation by one Madam Chan Ng of No. 25 Chung Hau Tsuen saying that the 2nd defendant had operated his business on the lot in 1987 and she at that time allowed the 2nd defendant to obtain electricity from her meter for his business in the temporary structures until he obtained his own meter in 1989.  Madam Chan also purported to corroborate the 2nd defendant that she had lent the 2nd defendant $6,000 to $7,000 in 1987 for him to build the temporary structures on the lot.

12.  A careful scrutiny of the BR record shows that the amendment in question was probably made sometime in August 1990.  This was confirmed by a letter dated 12 December 2008 from the Business Registration Officer.  The plaintiff thus argued that the 2nd defendant was lying when he said that his BR record was amended in 1987. 

13.  The plaintiff also referred to the 1st affirmation of the 2nd defendant for joinder in which the 2nd defendant repeatedly gave 1989 as the date of commencement of occupation.  The BR record was already available then and exhibited by the 2nd defendant in this 1st affirmation.  But the 2nd defendant still gave 1989 as the year of commencement of occupation.  The plaintiff therefore argued that leave should not be given for the 2nd defendant to amend his defence and counterclaim by pushing back the date of commencement of occupation to 18 November 1987 as the 2nd defendant has not given any proper explanation to support this crucial amendment.

14.  I agree that purely on the affirmation evidence of the 2nd defendant and Madam Chan, the 2nd defendant’s case for amendment is not very strong.  However, the amendment to the BR record does not say whether the change of address was a correction of an error ab initio or to reflect a removal of place of business which took place at or about the date of amendment.  Since no new date of occupation was recorded in the BR record for the new address, the amendment prima facie appears to be a correction of an error ab initio from 18 November 1987.  I therefore take the view that the amendment is made bona fide with a view for the dispute between the parties to be properly ventilated.  I therefore grant leave to the 2nd defendant to amend his defence and counterclaim as sought in his summons.  I also order the 2nd defendant to pay the plaintiff the costs of and occasioned by his summons to amend. 

15.  In the light of the leave for amendment which has given the 2nd defendant a ground of defence, I have to dismiss the plaintiff’s application for summary judgment.  However, I would order the 2nd defendant to pay the plaintiff the costs of this application.  This application was made only because of the poor presentation by the 2nd defendant of his case.  He could and should have set forth a case of commencement of adverse occupation from 18 November 1987 when he applied for joinder.