WONG KOON WAH v. ALL PERSONS IN OCCUPATION OF LOT NO. 775 IN DEMARCATION DISTRICT 216 AND ANOTHER

CACV 12/2021, [2023] HKCA 1279

On Appeal From [2020] HKCFI 3094

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 12 OF 2021

(ON APPEAL FROM HCMP NO. 1716 OF 2012)

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JUDGMENT

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Hon Cheung JA (giving the Judgment of the Court) :

I.  The appeal

1.  This is the plaintiff’s appeal against the judgment of B Chu J who dismissed his claim for possession of the land known as Lot No. 775 in Demarcation District 216 (‘the Land’).

2.  The Land, together with 11 other lots, namely Lots 769, 770‑776 (including 775), 778, 780-782 in DD 216 (collectively ‘12 Lots’) form an area (‘Area’) and a ‘small house’ of three storeys high and approximately 700 sq. ft. per floor (‘Small House’) had been built respectively on each of the 12 Lots. The Area and the houses built on it are currently known as ‘Greenery Vista’. The Small House built on the plaintiff’s land i.e. the Land is known as ‘House 8’.

3.  The Judge further granted a declaration that the 2^nd defendant is the beneficial owner of the Land and that the Land do vest in the 2^nd defendant for the residue of the lease term of the Land expiring on 30 June 2047, subject to such rights of Edico Development Limited (‘Edico’) as it may be entitled to as the 2^nd defendant’s partner under a Joint Venture Agreement dated 23 September 1995.

4.  Alternatively, the Judge granted a declaration that 1) the plaintiff’s right to bring an action to recover the Land has become statute‑barred; 2) the plaintiff’s title to the Land has been extinguished; and 3) the 2^nd defendant has acquired a possessory title to the Land for the residue of the lease term expiring on 30 June 2047.

5.  The 1^st defendant did not appear below.

II.  Background

6.  The background of the case is summarised by the Judge which we are happy to adopt and is supplemented by other matters referred to in the judgment below.

7.  The plaintiff was born in July 1956 in Hong Kong. His family members, consisting of his parents and his four surviving siblings were/are all indigenous villagers of the Tai Wan Village in Sai Kung in the New Territories. In 1977, he was about 20 years old. His father and his other siblings have all emigrated to London in the United Kingdom. He was then living with his grandmother in one of the small houses owned by his father in the village. In May 1977, the plaintiff also emigrated to the United Kingdom.

8.  It was the plaintiff’s case that prior to his emigration, one day in or about 1974 or 1975, his cousin Wong Si Man (王 思 民) (‘Wong’) suggested to him that he could make an application for a grant to build a Small House under the Government’s Small House Policy (‘Small House Application’). He told Wong that he was unable to pay for a premium to obtain the grant, and Wong told him that Ho, who was Wong’s father‑in‑law, could lend him a personal loan (‘Loan’) and that he could repay Ho the Loan later and that, in future, if he were to sell his interest in the grant/land, he would first approach Wong and Ho as prospective purchasers, to which he indicated that he had no objection in principle.

9.  On 7 April 1976, a letter sent by the plaintiff to the Sai Kung District Office (‘District Office’) to seek approval to build a Small House in the vicinity of the Village and to seek directions as to how to proceed (‘1^st Application Letter’). He accepted that his signature on the 1^st Application Letter was genuine.

10.  As seen in the record of the Companies Registry, as at 11 January 1978, Ho and another person Ho Chi Shing were the two directors and shareholders, each holding one issued share, of a company called Honoo Limited (‘Honoo’).

11.  It was the plaintiff’s case that the offer of the Loan by Wong and Ho to pay for the premium and to proceed with the Small House Application and to obtain a new grant was for their own secret purpose of furthering a fraud against him to deprive him of the Land.

12.  On 19 October 1977, the plaintiff was in England and he signed a Power of Attorney in favour of Wong in the Hong Kong Government Office in London (‘the 1977 London P/A’). The plaintiff did so because Wong wrote to him that the Government would only issue a grant for a Small House if the applicant, or his authorized person, could sign on the grant and Wong could be his authorized person. After he mailed back the 1977 London P/A, the Land was granted to the plaintiff by the District Office pursuant to the New Grant on 25 October 1977. A premium of $1,760 was paid to obtain the New Grant. The Land is situated in the vicinity of the Tai Wan Village.

13.  As seen in the New Grant, under General Condition 4(a), the grantee was to develop the Land by the erection thereon of a Small House in compliance with the Special Conditions before the expiration of 30 months from the date of grant (‘Deadline’).

14.  It was the plaintiff’s pleaded case that he never proceeded with the development of the Land or building the Small House thereon, and he thought that the Land must have reverted back to the Government due to the long lapse of time and that he thought the Land was granted to another grantee.

15.  The documents obtained by the plaintiff from the District Office and the Land Registry showed that the 12 Lots including the Land formed one single development and that the plaintiff had purportedly entered into a power of attorney on 18 December 1979 appointing Ho as his attorney to deal with the Land (‘the 1979 P/A’), and Ho, as the plaintiff’s attorney, entered into a development agreement on 19 December 1979, signed by Ho on behalf of the plaintiff, with Honoo (signed by one Mr. Lock Kwan Bui (‘KB Lock’) on behalf of Honoo) as the developer (‘1979 Development Agreement’). Ho and the other director later ceased to be directors and shareholders of Honoo on 5 May 1978. The Lock family, of which KB Lock was a member, had taken over Honoo.

16.  Subsequently on 28 June 1980, Ho entered into a Deed of Substitution whereby KB Lock was appointed Ho’s substitute attorney under the 1979 P/A (‘1980 Substitute P/A’).

17.  The proposed development on the 12 Lots took a very long time, due to various problems including lack of access road and rejections of the developer’s proposed site formation plans and also lack of water supply. Due to the delay, there had been one extension after another by the District Office or the Sai Kung District Lands Office (‘District Lands Office’) of the Deadline on payment of a fine (‘Extension’).

18.  By a deed dated 28 April 1989, Edico became the substitute developer of the Land in place of Honoo (‘28 April 1989 Deed’). Edico was incorporated under the laws of Hong Kong on 10 March 1989 and as at April 1989, there were three directors, namely Madam Lai Oi Ye (黎 愛 兒) (‘Ms Lai’) and a Lee Shiu Wan (李 笑 雲) (‘Lee’) and a Mr. Lau Wan Hei (劉 運 喜) (‘Mr. Lau’), but only Ms Lai and Lee were shareholders of Edico.

19.  Thereafter, it would then appear that Edico was in need of funds and on 7 February 1994, a loan agreement was entered into by a company called Lion Team Investments Limited (‘Lion Team’) as the ‘Lender’ and Ms Lai and Lee as ‘First Borrower’ and Edico ‘Second Borrower’ (‘Loan Agreement’). The Loan Agreement was signed by its Company Director Mr. Anthony Chan Wai Lun (‘Mr. WL Chan’) and pursuant to which a credit facility to be provided in three tranches totalling $25.2 million was extended to the borrowers for the development of 12 Small Houses, one on each of the 12 Lots (‘Tai Wan Project’). The credit facility was to be secured by 1) a charge, debenture and assignment by Edico of the sale proceeds of the Small Houses on the 12 Lots and 2) a legal charge by Lee over a property in Admiralty Centre.

20.  Lion Team is an associate company of the 2^nd defendant which belongs to the Shun Tak Group of companies.

21.  Subsequently, on 23 September 1995, a joint venture agreement was entered between the 2^nd defendant and Edico and its shareholders Ms Lai and Lee (‘JV Agreement’), pursuant to which the 2^nd defendant and Edico agreed to jointly develop the Tai Wan Project upon the terms and conditions therein.

22.  One of the terms was for the 2^nd defendant to advance a sum of $14 million to Edico and its two shareholders to enable them to finance or refinance all acquisition or other costs incurred by Edico in connection with the Tai Wan Project. This sum was in fact used to repay to Lion Team on behalf of Ms Lai and Lee in order for Edico to be released from the debenture/charge/assignment of the sale proceeds, namely one of the securities in the Loan Agreement for the credit facility. It would appear that on the same day of the release, i.e. 2 October 1995, as seen in the record of the Companies Registry, a further debenture was then created by Edico in favour of the 2^nd defendant to secure the loan of $14 million.

23.  Although the debenture referred to the $14 million as a loan, the 2^nd defendant and Edico maintained that they entered into a joint venture pursuant to the JV Agreement. It was the 2^nd defendant’s case that pursuant to the JV Agreement, the 2^nd defendant took over the development as the new developer and exclusive possession of the Area from Edico together with the minor site works which had by then been done by Edico.

24.  It was not until 25 November 1998, some 21 years after the issue of the New Grant that a Certificate of Compliance was issued by the District Lands Office in relation to the Small Houses built on the 12 Lots, including House No. 8 on the Land.

25.  In 2007 or early 2008, the plaintiff was thinking about his retirement, and he and his wife were then considering relocating to Hong Kong. They visited the District Office on 4 January 2008, to enquire about the necessary procedures for applying for a grant of a Small House. It was during the course of the enquiry that the plaintiff knew there was a charging order absolute registered in respect of the small house and the Land on 22 February 1990 (‘Charging Order Absolute’). He was very shocked but as they had to return to London the following day, they had to stop investigating into the matter themselves and through a relative, they immediately instructed a firm of solicitors Steven HS Tang & Co who wrote to the Secretary for Justice and the District Lands Office between 23 September 2008 and 16 October 2008 for copies of documents in relation to the Land for investigation purposes.

26.  It was the plaintiff’s case that through the investigation by his solicitors, he discovered two false powers of attorney, and that when he and his wife visited Hong Kong on holiday in 2009, he made a report to the police on 31 December 2009 (‘1^st Police Report’). The two false powers of attorney according to the plaintiff were the 1979 P/A and the 1980 Substitute P/A. The plaintiff claimed he had no idea who KB Lock was.

27.  During the course of the investigations by the plaintiff’s solicitors, numerous documents were obtained by them from the District Lands Office, the Land Registry and/or the Companies Registry. The only documents which the plaintiff admitted to have borne his genuine signature were 1) the 1^st Application Letter and 2) the 1977 London P/A. In particular he alleged there were four forged documents namely, 1) a letter dated 27 January 1977 in which the plaintiff purportedly applied for a different piece of land from that in his 1^st Application Letter (‘2^nd Application Letter’); 2) an undertaking dated 22 August 1977 purportedly signed by the plaintiff in front of an officer of the District Office (‘Undertaking’); 3) a Chinese letter dated 18 October 1989 to the District Office purporting to bear the Chinese signature of the plaintiff but in simplified Chinese and requesting the District Office to send an officer to set the boundary of the Land (‘1989 Boundary Setting Letter’); and 4) an application form dated 20 August 1990 to the Building Authority (under section 4(1) of the Buildings Ordinance, Cap. 123), for approval of plans of building works and/or street works and notice of appointment of authorized person and notice of appointment of registered structural engineer as consultant to appointed authorized person (‘1990 Form 9’) (‘the 4 Forged Documents’).

28.  As for the Charging Order Absolute, this turned out to be made by mistake by the Hong Kong Housing Authority in an action against an unrelated judgment debtor with the same English spelling of the name as the plaintiff’s, and the Charging Order Absolute was later discharged on 10 March 2010.

29.  On 16 August 2012, the plaintiff commenced the present proceedings for possession of the Land by issuing an originating summons for possession of the Land under Order 113, rule 2 of the Rules of the High Court. The action was ordered on 10 May 2013 to proceed as if commenced by writ and the plaintiff’s cause of action as pleaded in the statement of claim was then based on trespass.

30.  The 2^nd defendant applied to join in this action and filed a defence and counterclaim. The 2^nd defendant counterclaimed, amongst other things, for the declarations as granted by the Judge.

31.  In the plaintiff’s re-re-amended reply and defence to counterclaim he pleaded, amongst other things, a number of persons, including Wong, Ho, Lock and Edico and/or their agents and a number of persons unknown to the plaintiff combined and conspired together to defraud him of the Land and to injure him and to cause him loss of the Land by unlawful means. The plaintiff further made a counterclaim to the 2^nd defendant’s counterclaim (‘Counterclaim to Counterclaim’) for, amongst other things, a tracing enquiry and an account of the 2^nd defendant for all profits or fruits of such development on the land, an order for payment of such, and a charge on the development on the Land and the Land to secure such payment by the 2^nd defendant.

III.  The issues

32.  The parties agreed that the following eight issues were to be decided by the Judge :

1)  Whether the 1979 P/A was a genuine document (‘Issue 1 – The 1979 P/A Issue’);

2)  If genuine, whether the 1979 P/A had the effect (in law and in fact) of divesting the plaintiff of his beneficial interest in the Land, and/or whether a resulting or common intention constructive trust had been established (‘Issue 2 – The Trust Issue’);

3)  Whether the 2^nd defendant had acquired a beneficial interest in the Land (‘Issue 3 – The Beneficial Interest Issue’);

4)  Whether the 2^nd defendant had established its alternative case based on waiver/acquiescence (‘Issue 4 – The Waiver/Acquiescence Issue’);

5)  Whether the 2^nd defendant had proved the elements of adverse possession for the requisite period (‘Issue 5 – The Adverse Possession Issue’);

6)  Whether the doctrine of illegality precluded the 2^nd defendant from asserting its adverse possession claim (‘Issue 6 – The Illegality Issue’);

7)  Whether the limitation period should be postponed due to the deliberate concealment of facts relevant to the plaintiff’s cause of action (‘Issue 7 – The Limitation Period Issue’); and

8)  Under the plaintiff’s Counterclaim to Counterclaim, whether the 2^nd defendant was liable as a constructive trustee in respect of the fruits and proceeds of the fraudulent use of the Land (‘Issue 8 – The Counterclaim to Counterclaim Issue’).

IV.  Factual findings by the Judge

33.  The Judge made the following factual findings :

1)  The plaintiff’s own evidence was generally evasive and was full of inconsistencies and inherent improbabilities.

2)  By the time the 1^st Application Letter was submitted, the plaintiff had already entrusted all matters concerning his Small House Application to Wong and Ho. This is because he knew at that time he would be moving to London in a year’s time.

3)  The plaintiff was trying to play down his knowledge of the proposed development of the Area. The plaintiff was aware of the Area being the proposed development site, and secondly, the plaintiff should be aware that in addition to himself, at least five or six of his cousins in the Village had applied, namely three cousins named Wong Kwong Ming, Wong Chi Ho and Wong Soo Kau (‘3 Cousins’), Wong and probably also Wong Chi Leung who was of the same address as Wong, and also Wong Kwok Man. Wong had pointed out to the plaintiff and the 3 Cousins the site where the Small Houses were to be developed. The plaintiff had heard from a fellow villager and he was aware that a sum of money would be required to be paid to obtain a new grant under the Small House Application.

4)  The first application was rejected by the District Office by letter dated 23 September 1976 because the site chosen was unsuitable. The plaintiff was aware of this letter. The 2^nd Application Letter was then lodged. The signature of the plaintiff on the second application was his genuine signature.

34.  The Undertaking was an undertaking by the plaintiff that he and his ancestors were indigenous villagers. The plaintiff admitted that the information contained in the Undertaking was correct. There was a statement on the Undertaking that the relevant persons must sign the document before the District Officer. The Judge held :

‘ 117. In any event, having considered all the above, even if [the plaintiff] did not actually sign on the 2^nd Application Letter or personally appear before the District Office to sign the Undertaking, I find it more probable than not that he was fully aware of the necessary procedures for the Small House Application, and had authorised or consented to either Wong or Ho or someone to sign in his name and he must have had knowledge to the Undertaking being signed in his name.’

35.  The Judge rejected the plaintiff’s contention that he did not know the content of the 1977 London P/A and that it would be valid for one year and could be used only once. She held :

‘ Again, I do not find [the plaintiff]’s evidence in relation to the 1977 London P/A credible or inherently probable.’

36.  The premium for the new grant was $1,760. The plaintiff’s evidence was that at the time he was not aware that the offer of the Loan by Wong and Ho was for their own secret purpose of furthering the fraud against him, and that he did not actually know who arranged the papers for the Small House Application and who paid the premium. The Judge rejected the plaintiff’s case on the Loan. She held that :

‘The plaintiff was not able to satisfy this Court that there was the Loan in the first place, or that the premium was paid from the Loan or any loan. I find there was no sufficient evidence of the Loan or any loan. In any event, I do not find it inherently probable that Ho would have agreed to make a loan to [the plaintiff] to pay for the premium, on an interest‑free basis, without any repayment terms, security, or any written acknowledgment and would further agree to pay for the construction costs for some unknown benefit.’

37.  The Judge accepted the 2^nd defendant’s evidence that in the New Territories, the transaction for the transfer of Ding’s rights in Land and the Small House on the Land was by way of a power of attorney and a building development agreement and that the attorney had the power to sell the Land, and that this was the mode of transfer adopted in the entire New Territories.

38.  The plaintiff claimed that the 1979 P/A purportedly granted by him to Ho was a forgery. The document was attested by Mr. John Li of Foo and Li Solicitors. The Judge accepted Mr. Li’s evidence that in either April or June 1979 six land owners including the plaintiff attended his office and signed the 1979 P/A in favour of Ho. The 1979 P/A was signed in escrow and later dated in December 1979 instead of May or June 1979 like the other five probably because the money for the plaintiff’s Land only arrived on 19 December 1979 when Ho would have signed the 1979 Development Agreement.

39.  The Judge did not accept the evidence of Mr. Sperry, a handwriting expert that the plaintiff’s signature on the 1979 P/A was forged. She held that Mr. Sperry’s opinion was far from cogent.

40.  The Judge rejected the plaintiff’s contention that he believed the Land had already been resumed by the Government. The Judge held that the plaintiff admitted that he knew the Land was still registered in his name in 1989. He had received an offer to buy the Land in May 1989 from another cousin that a Mr. Lau would pay him $20,000. An offer he refused. Despite this and his regular visits to Hong Kong to visit his relatives in the village, he took no steps to find out what happened to the Land until 2008. The Judge held that the plaintiff’s belief was incredible.

41.  The Judge held that the plaintiff must be aware of the completion of the development in 1998 when he returned to Hong Kong that year. The certificate of compliance in respect of the development of the Land was issued on 25 November 1998. He had actually seen a row of new small houses.

V.  The Judge’s decision of the eight issues

1)  Issue 1 – The 1979 P/A Issue

42.  As indicated above, the Judge held that the 1979 P/A was a genuine document signed by the plaintiff.

2)  Issue 2 – The Trust Issue

43.  Having rejected the plaintiff’s case that the $1,760 was a loan by Ho, the Judge held the presumption of resulting trust did arise, and that the plaintiff had not been able to rebut the presumption of resulting trust in favour of Ho. The Judge noted that notwithstanding the 2^nd defendant’s plea on common intention constructive trust, the 2^nd defendant’s case is based essentially on the presumption of resulting trust.

3)  Issue 3 – The Beneficial Interest Issue

44.  The issue here is whether the beneficial interest in the Land devolved successively from the plaintiff to Ho, Ho to Honoo, Honoo to Edico and then Edico to the 2^nd defendant, and whether the 2^nd defendant had acquired a beneficial interest in the Land.

45.  The Judge held that even though there was no express reference in any of those documents to a transfer or sale/purchase of beneficial interest in the Land, having considered the surrounding circumstances of the documents, a reasonable inference is that such beneficial interest was transferred from the plaintiff to Ho, and then from Ho to Honoo, and Honoo to Edico, and then under the JV Agreement to the 2^nd defendant.

4)  Issue 4 – The Waiver/Acquiescence Issue

46.  The Judge held that the plaintiff having had an opportunity to assert his rights and interests in the Land, had failed to do so, it was unconscionable for the plaintiff then to exert his right as a legal owner and he was then estopped from asserting his right as legal owner, if any, by proprietary estoppel.

5)  Issue 5 – The Adverse Possession Issue

47.  The requisite period to extinguish an owner’s right of action to recover land under section 7(2) of the Limitation Ordinance, Cap. 347, is 20 years for rights of action accrued before 1 July 1991 and 12 years thereafter. Further, section 8(1) of the Limitation Ordinance provides that the right of action of a person bringing an action to recover land shall be deemed to have accrued on the date of the dispossession or discontinuance.

48.  The Judge held that :

‘ 279. .... In any event, as found by this Court earlier, Edico’s physical possession of the Land started latest by 14 February 1990 and that 20 years would have expired in around February 2010. Then, it is this Court’s finding that [the 2^nd defendant] succeeded in possession of the Land from Edico from about 22 November 1995, or latest in 1996, and that since then, [the 2^nd defendant] had been in exclusive possession of the Land and the development (subject to any rights of Edico under the JV Agreement.

280. In light of all above said, I am satisfied that [the 2^nd defendant] had entered into possession in 1996, and that the requisite period of 12 years would have expired by 2008.’

49.  The Judge held that even if the 2^nd defendant did not acquire the beneficial ownership of the Land, and had taken over possession of the Land (and later the Small House thereon) under the mistaken belief that Edico held the beneficial ownership, the 2^nd defendant had the intention to possess and had established the elements of adverse possession for the requisite period.

6)  Issue 6 – The Illegality Issue

50.  The plaintiff’s case was that the Court should not give effect to the 2^nd defendant’s alleged possessory right which relied upon and stemmed from the forged 1979 P/A and the false representations made by person(s) to the Government impersonating the plaintiff. Further, allowing the 2^nd defendant to acquire beneficial ownership of the Land by the ‘backdoor’ using the so‑called development agreements and powers of attorney undermines the Small House Policy which confers a right to build Small Houses on indigenous villagers and requires the payment of a premium for alienation of the completed building.

51.  The Judge held that the 2^nd defendant was not barred from seeking relief. This was on the basis that the 1979 P/A was a genuine and valid document. Even if the Undertaking, the 18 October 1989 Boundary Setting Letter and the 1990 Form were forged, the 2^nd defendant can still in law rely on resulting trust, proprietary estoppel and adverse possession. Further, there was no evidence that the 2^nd defendant took part in the alleged illegal acts. Furthermore, the New Grant only restricts alienations for five years after the issue of the Certificate of Compliance.

7)  Issue 7 – The Limitation Period Issue

52.  The plaintiff relied on section 26(1) of the Limitation Ordinance to contend that the limitation period should only run after the plaintiff discovered the alleged fraud since it was concealed from him.

53.  The Judge held that there was no sufficient evidence of the fraud alleged by the plaintiff and in any event the burden was on the plaintiff to show that he could not with reasonable diligence have discovered the fraud sooner. Having considered the evidence, the plaintiff was not able to discharge the burden on him.

8)  Issue 8 – The Counterclaim to Counterclaim Issue

54.  The Judge held that it was not necessary to consider this issue in view of her findings.

VI.  Grounds of Appeal

55.  Mr. Chan Chi Hung SC together with Mr. Derek Chan for the plaintiff challenged the Judge’s finding on Issues 1 to 5. The challenge on the rest of the issues was not pursued. We will address their arguments and express our views on these issues.

1)  Issue 1 – The 1979 P/A Issue

(1)  The plaintiff’s arguments

56.  The plaintiff challenged the Judge’s finding that the 1979 P/A was signed in escrow between April and June 1979. The arguments are as follows :

i)  The 2^nd defendant’s pleaded case was that the document was personally executed by the plaintiff on or about 18 December 1979 and the document itself expressly stated that it was executed on that date. Mr. Li had no independent recollection of the event of execution before him. He inferred that was what happened by reference to the documents and when the plaintiff had already disclosed his details of his travel between Hong Kong and London. Mr. Li conveniently chose a time when the plaintiff was in Hong Kong. Despite Mr. Li’s evidence, the 2^nd defendant chose not to amend its pleaded case on the date of execution of the document. The parties are bound by the pleadings which defined the evidence and it was unfair to depart from the pleaded case.

ii)  The Judge failed to give any reasons for disregarding the undisputed fact that the Undertaking, the 1989 Boundary Setting Letter and the 1990 Form 9 were all signed when the plaintiff was not in Hong Kong, meaning the plaintiff’s purported signatures must have been forged. In particular, the Undertaking was purportedly signed by the plaintiff in front of an officer of the District Office (「在地政主任面前簽署」) on 22 August 1977, three months after the plaintiff already left Hong Kong, meaning an imposter had the audacity to forge the plaintiff’s signature in front of the District Officer.

iii)  The Judge was wrong to conclude that even if the plaintiff’s signatures were forged, the forger had authority from the plaintiff to do so when there was no evidence who the forger was and if so whether he was the plaintiff’s lawful attorney. In any event, a lawful attorney should sign in his own name as attorney for the plaintiff. The Judge failed to take these forged documents into account in assessing the 1979 P/A.

iv)  The Judge was wrong to reject Mr. Sperry’s evidence.

v)  The Judge had ignored the significant flaws and improbability of Mr. Li’s evidence in respect of events that happened 40 years ago. Although Mr. Li was adamant that he had obtained a copy of the plaintiff’s HKID card, birth certificate and passport, he could not explain why these documents were not retained together with the other documents in the plaintiff’s files but somehow went missing. Mr. Li also could not explain why he asked the plaintiff to sign the Cancellation Letter which was totally unnecessary. The Judge failed to take into account that there was no explanation as to why the 19 December 1979 Development Agreement and the 1979 P/A dated 18 December 1979 purportedly signed by the plaintiff was singled out from the rest of the documents signed by the Landowners one day before either 26 May or 26 June 1979. Mr. Li’s explanation was speculative.

(2)  Our view

57.  This is a challenge against a finding of fact by the Judge. The well‑established threshold is that the Judge must be plainly wrong before this Court will overturn the finding and substitute a finding of our own. The plaintiff is not able to cross this threshold.

58.  First, having considered all the evidence, the Judge was of the view that the plaintiff was not a credible witness.

59.  Second, the plaintiff’s argument that the 2^nd defendant is bound by its pleaded case on the date of execution of the 1979 P/A should be considered in the context of what had actually happened in the trial below. Mr. Li had explained why he only managed to retrieve the documents from the storage and this was accepted by the Judge. His evidence together with the new documents was disclosed in sufficient time before the trial. The plaintiff was clearly aware of the nature of the 2^nd defendant’s case on the timing of the execution and Mr. Li was specifically asked by the plaintiff in cross‑examination whether the document was executed later. The precise issue was clearly known to the parties at the trial.

60.  Third, as to the ‘4 Forged Documents’, the plaintiff called a handwriting expert Dr. Wong to examine the first three of the 4 Forged Documents. He was supplied with only two known genuine signatures of the plaintiff, namely the one on the 1^st Application Letter and the old passport of the plaintiff issued to him when he was 15 years old. He was also provided with 40 samples of the plaintiff’s signature which the plaintiff admitted were written by him after he had seen his signature on the 1^st Application Letter. Dr. Wong was of the view that it was ‘highly probable’ that the plaintiff’s signature on the 2^nd Application Letter did not share a common authorship with the two known genuine signatures of the plaintiff and the 40 requested Chinese signatures of the plaintiff. As for the Undertaking and the 1989 Boundary Setting Letter, Dr. Wong’s opinion was that it was ‘probable’ that the plaintiff’s signatures thereon did not share a common authorship with the two known genuine signatures of the plaintiff and the 40 requested samples of Chinese signatures of the plaintiff. The Judge held that Dr. Wong’s view might not be reliable in the light of the lack of contemporary genuine signatures and the plaintiff’s admission. In our view, it is within the province of the Judge to make such a finding.

61.  We are of the view that the argument by the plaintiff on the 2^nd Application Letter and 22 August 1977 Undertaking is misplaced. The 2^nd Application Letter was issued for the purpose of obtaining a land grant after the failure of the first application. The plaintiff confirmed the details that the plaintiff and his ancestors were indigenous villagers in the Undertaking were correct. This document was likely to be one of the documents required for an indigenous villager to apply to build a Ding house and the plaintiff did manage to obtain the New Grant. Irrespective of who signed the 2^nd Application Letter and Undertaking for the plaintiff, he had certainly not disavowed the New Grant on the basis that it was obtained by forged documents. The Judge was clearly entitled to her view as set out in [33] above. The reliance on the other two documents is likewise misplaced. We do not regard the plaintiff’s arguments on the 4 Forged Documents cast any doubt on the soundness of the Judge’s finding on the 1979 P/A.

62.  Fourth, as to the rejection of Mr. Sperry’s evidence, who examined the plaintiff’s signatures and initials on the 1979 P/A, the Judge held that there was a paucity of contemporary genuine signatures supplied to Mr. Sperry. The control samples were not physically sent to him but were by way of email attachments and downloads from a shared Drop Box Folder. She held that Mr. Sperry’s opinion was far from cogent evidence that the plaintiff’s signature of the 1979 P/A was not genuine. The Judge was clearly entitled to reject his evidence.

63.  Fifth, as to the criticism of Mr. Li’s evidence, while Mr. Li had no recollection of such an old event and his evidence was in a large part based on the inference and recollection drawn from the documents, the Judge had observed him giving evidence and accepted his evidence. This is within the province of the Judge. The significance of Mr. Li’s evidence is that the files he finally retrieved consisted not only of the plaintiff’s file but also of the five other landowners who had agreed to have their own land being developed. Mr. Li’s instructions were to prepare a set of four documents for each of the six landowners, namely :

i)  A letter to the District Office for cancellation of trusteeship of Wong for each of the six landowners concerned (‘the Cancellation Letter’);

ii)  A deed of revocation of power of attorney previously given by the respective Landowners to the four companies of one Tam Chak Lam (‘Tam Companies’);

iii)  An irrevocable power of attorney given by each of the six landowners to Ho; and

iv)  A development agreement between each of the six Landowners and the new developer Honoo.

64.  The plaintiff’s file consisted of :

i)  The New Grant No. 6201;

ii)  A letter (undated) in duplicate to the District Office signed by the plaintiff and Wong for cancellation of trusteeship letter to the District Office (‘Cancellation Letter’);

iii)  The 1979 P/A;

iv)  The 1979 Development Agreement;

v)  The 1980 Substitute P/A; and

vi)  A letter dated 29 October 1986 from Messrs Foo & Li transferring, amongst others, the plaintiff’s case to another firm of solicitors Messrs Maurice Lee & Co.

65.  Three of these five landowners were the plaintiff’s three cousins and the plaintiff did not allege they were parties to the fraud. The Judge observed :

‘ 188. ....There was simply no reason, or any reasonable explanation, as to why [the plaintiff] would have been singled out and that he did not go with the 3 Cousins to Mr Li’s office between April and June 1979, and that the Conspirators would choose to arrange an imposter to go to Mr Li’s office in December 1979, ie about 6 weeks after [the plaintiff] had left Hong Kong, to sign.’

66.  The Judge was clearly aware of the lack of the identification chop and the absence of the identification documents being kept in the file. She held :

‘ 150. Mr Li had also said that it was the common practice at that time to put a chop under the signature of the party signing bearing the words “Holder of Hong Kong Identity Card No ______” (“Identification Chop”) or to write the words “Holder of ______ Passport No ________”. He said he must have left it to his conveyancing clerk to put an Identification Chop and/or to enter [the plaintiff]’s identity card or passport details and that his clerk had forgotten to do so.

.....

152. Mr Li also explained that although the Cancellation Letter was prepared for [the plaintiff] and was signed by both [the plaintiff] and Wong in duplicate, as Lot 775 (ie the Land) was registered in [the plaintiff]’s own name and there was no trusteeship for [the plaintiff], there was no need for the original signed Cancellation Letter to be despatched so both the signed original and the signed carbon/duplicate copy were left undated and kept in [the plaintiff]’s File. Further, as seen in the contents of the Cancellation Letter, Mr Li believed that at the time he must have obtained from [the plaintiff] a copy of his birth certificate and also his HKID card to be enclosed with the Cancellation Letter for dispatch therewith.

153. Mr Li said he also believed that he may have seen a copy of [the plaintiff]’s then passport and that he had asked [the plaintiff] to sign the 1979 P/A and the Cancellation Letter with the same English signature as the one on his passport, and that he might also have made a copy of [the plaintiff]’s passport for [the plaintiff]’s File at the time.’

67.  She concluded :

‘ 177. I have to say, notwithstanding Mr Li’s age, his evidence under cross examination was succinct and direct. The fact that he was willing to go to his firm’s godown to personally look for the box of documents also showed that he is a responsible and a cautious solicitor. Having heard Mr Li’s explanation, I accept that the omission of the Identification Chop or the identification document on the 1979 P/A was more probable than not an inadvertent omission of his clerk.’

68.  The Judge was clearly entitled to accept Mr. Li’s evidence on the execution of the 1979 P/A.

69.  There was disagreement by the plaintiff and the 2^nd defendant represented by Mr. Andrew Mak and Mr. Albert Chan as to the meaning of section 6(1) of the Powers of Attorney Ordinance (Cap. 31) and the interpretation of the case of Au Wai Ming v. Kam Tze Ming Alfred [2010] 1 HKLRD 198 on the form of execution by an agent. It is not necessary to discuss this topic as it is not germane to the question whether the 1979 P/A was a genuine document. The Judge could clearly rely on the 1979 P/A to come to the view that the plaintiff had agreed to the development of his Land which demolishes the basis of the plaintiff’s claim that he was defrauded.

2)  Issue 2 – the Trust Issue

(1)  The plaintiff’s arguments

70.  The plaintiff challenged the Judge’s finding on the resulting trust. It was argued that it can easily be rebutted by contrary evidence. First, the plaintiff’s claim that the $1,760 premium was advanced as a personal loan was not challenged in evidence. Second, the Judge was plainly wrong to reject the plaintiff’s case on the Loan when she gave no reasons for disregarding the inherent improbability that the plaintiff would effectively give away his ‘Ding’ right for no benefit to himself at all. The Judge was wrong to hold that Ho had no benefit in giving the Loan by ignoring the fact that Ho as a builder had an interest in the construction of the Small Houses by encouraging the plaintiff to apply for the grant. Since the small amount involved and Ho being the father‑in‑law of Wong, the Judge should not reject the plaintiff’s case simply because the Loan was interest free and made informally. Third, even if the plaintiff’s case was rejected, the 2^nd defendant had adduced no evidence that the premium was paid by Ho. Fourth, the Judge erred in law by taking into account the future commitment to meet the Conditions of the New Grant as part of the ‘purchase price’, in that a ‘purchase price’ resulting trust arises at the time of acquisition on the payment of the purchase price. The Judge wrongly conflated the principles on constructive trust, whereby subsequent direct or indirect contributions can be taken into account to infer the common intention of the parties. Fifth, the Judge erred in regarding the concessionary premium of $1,760 as the entire ‘purchase price’ of the Land, in that she failed to take into account the fact that the premium was concessionary due to the plaintiff’s ‘Ding’ right which enabled the application for the New Grant to be made. The bare site value of the Land less the concessionary premium of $1,760 was $143,000, which represents the value of the ‘Ding’ right contributed by the plaintiff for the ‘purchase’ of the New Grant. The plaintiff’s contribution thus constitutes 98.78% (i.e. $143,000 out of $144,760) of the ‘purchase price’ of the Land if a resulting trust analysis is applied even if (which is denied) $1,760 is treated as Ho’s contribution.

(2)  Our view

71.  The trust issue arises after the Judge rejected the plaintiff’s argument that the $1,760 was a loan. Again, the Judge’s rejection of the plaintiff’s case on the Loan was a factual finding. The arguments now advanced on this factual finding were argued before the Judge which she considered and rejected with reasons. As to the argument that the plaintiff’s evidence on the Loan was not challenged in cross‑examination there was already a joinder of issues on the pleadings that the premium of $1,760 for the grant of the Land was paid by Ho. It is not necessary to put to the plaintiff that the money was paid as the premium. The plaintiff did not dispute the money was paid by Ho/Wong. The Judge was clearly entitled to infer that Ho paid the premium on the facts of this case. What is to be decided is whether a resulting trust arose by the payment of $1,760. The Judge referred to the 2^nd defendant’s pleading :

‘ 194 It was pleaded by [the 2^nd defendant] that (1) [the plaintiff’s] application for the New Grant was made by him as trustee for Ho as agreed by the plaintiff and Ho and (2) the premium of HK$1,760 for the grant of the Land was paid by Ho. Hence, [the plaintiff] held the Land on resulting trust and/or constructive trust by common intention and/or understanding of the parties for Ho as the sole beneficial owner.’

72.  The Judge addressed the plaintiff’s arguments that it was fanciful to regard the premium of $1,760 as the purchase price of the Land and whether the plaintiff would give up his Ding right in exchange for Ho’s payment of $1,760 premium :

‘ 201. As said, the market value of the Land as a bare site less the premium payable set out in the Valuation Report was in the sum of HKD 143,000 as at 18 December 1979. It was not disputed that the sum of HKD 1,760 was a concessionary premium.

202. As explained in paragraph (II) (a) of the “Explanatory Notes” of the Small House Policy, the policy has been implemented since December 1972 and is formulated to allow an indigenous villager, or a “Ding”, to apply for permission to erect, for once in his lifetime, a small house on a suitable site within his own village. The application is not simply for a grant of a piece of bare land for the indigenous villager to do whatever he wanted with it. As seen earlier, the Deadline in the New Grant was 30 months from the grant for the erection of the Small House. The grant of the Land to [the plaintiff] was clearly subject to all those General and Special Conditions in the New Grant and all [the plaintiff]’s obligations as a “Ding” thereunder, and by accepting the New Grant, [the plaintiff] had agreed to be bound by those Conditions or obligations in the New Grant.

203. Firstly, there had to be the acceptance of all the Conditions in the New Grant before payment of the premium for the Land. In my view, the “purchase price” was not simply payment of HKD 1,760 but also included a commitment to meet all the Conditions, and the obligations and payments on behalf of the “Ding” under the New Grant, including, amongst other things, to pay the Government rent by equal yearly payments, to apply to set the boundary of the lot granted to the grantee, to develop the Land by the erection thereof of a Small House and for the Small House to be completed and fit for occupation before the Deadline, to expend not less than HKD 15,000 on the erection of the Small House, excluding moneys spent on site formation, foundation, access roads and other ancillary works, and to pay to the Government on demand all necessary costs and expenses.

204. As seen subsequently, the erection of the Small House on the Land involved instructing not only builders but various professionals and the work involved included seeking all necessary approvals from the Government for commencement of construction, and in the meantime, there were the annual rental payable to the Government and fines for the numerous Extensions over the years, and then upon completion of the Small house, rates, utilities and premium for removal of non-alienation restrictions.

....

206. In any event, in the present case, whether the “purchase price” was simply HKD 1,760 or not, first, [the plaintiff] admitted that he did not in fact have any idea or knowledge of the amount at the time, and second, it was not disputed that [the plaintiff] did not pay for or meet any part of the “purchase price” nor met any of the Conditions or his obligations as a “Ding” for payments, nor did he ever pay any of the costs/sums which he was obliged to expend or pay under the Conditions, and that at the time of the acceptance of the New Grant, it was Ho (or Wong) who paid and who agreed to take up all obligations under the Conditions on behalf of [the plaintiff].

207. Having considered the evidence, I find the presumption of resulting trust did arise, and that [the plaintiff] has not been able to rebut the presumption of resulting trust in favour of Ho.’

73.  We disagree with the Judge on this issue. Reading these passages together, the Judge found the resulting trust arose at the time of the acceptance of the New Grant, namely, 25 October 1977. At that time, the plaintiff had only executed the 1977 London P/A in favour of Wong. The power granted to Wong was in general terms. This is to be contrasted with the 1979 P/A which is irrevocable in nature and which specifically conferred powers on Ho on matters concerning the development of the Land.

74.  The 2^nd defendant submitted that the natural inference to be drawn from the fact that the plaintiff had never expended any money to obtain the New Grant and/or the Land and/or to build the Small House, nor had the plaintiff ever occupied the Land or sought possession from his attorney Wong (under the 1977 London P/A after the New Grant was issued and the Land granted to the plaintiff), and the fact that money had been expended upon the Land by the 2^nd defendant and its predecessors would be that the plaintiff had divested all his interests; and, ultimately, that the plaintiff has not been able to rebut the presumption of resulting trust in favour of Ho. We disagree. If the proper focus is on the resulting trust which arose in 1977 on the payment of the premium of $1,760, then clearly the 2^nd defendant’s argument lost much of its force particularly in light of its reliance on the ‘common device’ referred to by the Judge of getting around the restriction on transferring the Ding right by securing an irrevocable power of attorney from the indigenous villager with the Ding right and a development agreement. Neither of these documents was present in 1977. The payment of premium by Ho at that stage would not necessarily lead to the presumption that the plaintiff had already given up his beneficial interest in the Land and was merely holding it as trust for Ho. It will stray beyond the widest possible perimeter for the creation of a resulting trust if one is to approach the matter as suggested by the 2^nd defendant. We agree with the plaintiff’s submission on this issue and we are unable to accept that by the payment of the premium there is a presumption of resulting trust.

75.  The 2^nd defendant further relied on common intention constructive trust in support of the Judge’s decision. Common intention constructive trust was not dealt with by the Judge in view of the approach of the 2^nd defendant in the trial. We are most reluctant to decide on this issue afresh without any input from the Judge on this important topic. In any event, we are not satisfied with the 2^nd defendant’s case on this issue.

76.  The 2^nd defendant submitted that the trust arose by the following matters : 1) the application for the New Grant was made by the plaintiff as trustee for Ho as agreed by the plaintiff and Ho, 2) the premium of $1,760 for the grant of the Land was paid by Ho and 3) it would be inequitable/unconscionable for the plaintiff to retain any beneficial interest in the Land since the plaintiff had never expended any money to obtain the New Grant and the Land and build the Small House; he had never occupied the Land or sought possession from his attorney Wong under the 1977 London P/A after the New Grant was issued and the Land was granted; and money had been expended upon the Land by the 2^nd defendant and its predecessors. This argument presupposes that the plaintiff was a trustee for Ho at the time of the application of the New Grant which we have already found not to be the case. Further the 2^nd defendant’s argument went beyond its pleaded case. It is clear from the 2^nd defendant’s pleading that its case is based on the relationship between the plaintiff and Ho. However, what is clear is that apart from Ho, there were other parties that came into the picture namely, Honoo, Edico and the 2^nd defendant with different involvements in the development project. It is not possible to decide at what stage the common intention was formed. In our view the situation is too nebulous to support a case based on common intention constructive trust.

77.  However, as will be discussed in the next topic, even if the trust issue is found in favour of the 2^nd defendant, it will not advance its case that it acquired the equitable interest by devolution.

3)  Issue 3 - The Beneficial Interest Issue

(1)  The plaintiff’s arguments

78.  The plaintiff argued that even if a resulting trust is established as between the plaintiff and Ho, the Judge fundamentally erred in law in finding that Ho’s equitable interest (if any) was somehow transferred successively to Honoo, Edico and the 2^nd defendant. First, the Judge failed to take into account, consider, apply or analyse the legal means by which beneficial interest in property can be transferred as laid down in Timpson’s Executors v. Yerbury (Inspector of Taxes) [1936] 1 KB 645 at 664. Timpson’s Executors held that the equitable interest in property in the hands of a trustee can be disposed of by the equitable owner in favour of a third party in one of the following ways: he can (i) assign it to a third party directly; (ii) direct the trustees to hold the property in trust for the third party; (iii) contract for valuable consideration to assign the equitable interest to the third party; or (iv) declare himself to be a trustee for the third party of such interest. Second, none of the ‘transaction’ documents relied upon by the 2^nd defendant could possibly be construed as an assignment of the equitable interest in the Land. The Judge was wrong to draw parallels with her own decision in Angel Fund Co Ltd v Chan Yau Kwong [2019] HKCFI 1821 at [84(1)] in that unlike the present case, the parties there gave evidence on an express agreement to sell the subject land and the issue was whether the circumstances justified the finding of a common intention constructive trust. The plaintiff further argued the Judge erred in failing to address his submission that equitable interest in land can only be disposed of by writing under section 5(1) of the Conveyancing and Property Ordinance (Cap. 219) (‘CPO’) and that every such disposition produces an instrument chargeable with stamp duty, and that none of the subject documents were stamped. Section 5(1) of CPO expressly requires the disposition of equitable interest to be made by writing, not just evidenced in writing. This is in contrast with section 5(2) (declarations of trust have to be ‘manifested and proved in writing’) and section 3 (a contract for the sale or disposition of land must be in writing or contained in a memorandum or note). Hence, it is not enough for an intention to transfer beneficial interest to be ‘inferred’. There must be an instrument in writing which effects the disposition of beneficial interest in one of the legally recognised means identified in Timpson’s Executors. The purpose is to prevent hidden transactions in equitable interests, making it difficult, if not impossible, for the trustee to ascertain who are his beneficiaries: Vandervell v. IRC [1967] 2 AC 291 at 311B. This also means that every disposition of equitable interest in land produces a written instrument which is chargeable with stamp duty, and an unstamped instrument is inadmissible in these proceedings: section 15 of Stamp Duty Ordinance (Cap. 117). Hence, the unstamped documents analysed above either did not constitute instruments for the transfer of equitable interest at all, or were inadmissible. The 2^nd defendant does not have a substantive answer to the section 5(1) point. Instead, in its Amended Respondent’s Notice, the 2^nd defendant argued that the Court should reject this argument because section 5 of the CPO had not been pleaded, the plaintiff’s argument on section 5 was only raised for the first time in the plaintiff’s closing submission below, and the 2^nd defendant was precluded from pleading further, including reliance on section 7 of the CPO and the doctrine of part performance.

(2)  The Judge’s approach

79.  The Judge did not state which method was used to transfer the plaintiff’s equitable interest in the present case. Her approach was to adopt the 2^nd defendant’s evidence that in 1979, the irrevocable power of attorney and a building development agreement was ‘common device’ used to achieve the sale of land held under a Small House grant which could only be sold after completion of the development and payment of premium to Government. She held that the documents prepared by Mr. Li also supported this evidence. She held that :

‘ 217. .... I am of the view that the 1979 P/A was used as a “device” and/or part of a “device” or a transactional document to transfer the beneficial ownership of the Land, and that pursuant to the 1979 P/A, the beneficial interest in the Land and the New Grant was transferred by [the plaintiff] to Ho and thereafter vested in Ho, namely that upon the execution of the 1979 P/A, [the plaintiff] became a mere trustee holding only the legal title of the Land for Ho and this would also explain why [the plaintiff] took no part in the subsequent development of the Land.’

80.  The Judge then proceeded to analyse the devolution of this beneficial interest from Ho to Honoo, Honoo to Edico and Edico to the 2^nd defendant. We will refer to her reasons and the plaintiff’s criticism of the reasons :

i)  From the plaintiff to Ho

(i)  The Judge’s reasons

81.  First, the 1979 P/A expressly stated that the 1979 P/A was given by the plaintiff to Ho for valuable consideration and was irrevocable. Although there was no evidence as to what valuable consideration was given to the plaintiff pursuant to the 1979 P/A, the fact was that the plaintiff had never expended any money to obtain the New Grant and/or the Land and/or to build the Small House, nor had the plaintiff ever occupied the Land or sought possession from his attorney Wong (under the 1977 London P/A) after the New Grant was issued and the Land granted to the plaintiff. In fact, even on the plaintiff’s own case of the Loan (which the Judge had found there was no sufficient evidence of), the plaintiff frankly admitted that he had never repaid the same to Ho at the time of the 1979 P/A, and notwithstanding he was in Hong Kong in 1979 for about seven to eight months.

(ii)  The plaintiff’s argument

82.  The Judge was wrong to find that the 1979 P/A transferred the plaintiff’s beneficial ownership of the Land to Ho. The Judge’s focus on the ‘wide’ powers conferred under the 1979 P/A shows that she conflated the nature of a power of attorney, which purpose is to invest an attorney with the power to act for the donor (and which can be cast in very wide terms) over asset(s) which remains in donor’s ownership, with that of a trust, which has the essential purpose of divesting beneficial ownership of the subject matter of the trust. There is nothing in the terms of the 1979 P/A to suggest the divesting of beneficial interest.

ii)  From Ho to Honoo

(i)  The Judge’s reasons

a)  Ho was authorized under the 1979 P/A, amongst other things, to act for the plaintiff in his name or in the name of Ho as the plaintiff’s attorney and in particular under Clause 16 thereof, to execute and sign any agreements, assignment etc. and under Clause 18, to enter upon and take possession of the Land and any building erected thereon. Ho, as the plaintiff’s attorney, executed the 1979 Development Agreement with Honoo pursuant to which Honoo then became the developer of the Land. Further, on 28 June 1980, pursuant to the 1980 Substitute P/A, KB Lock became the plaintiff’s substituted attorney and was conferred full power and authority as Ho under the 1979 P/A, and was thus likewise authorized to act for the plaintiff in his name or as the plaintiff’s attorney.

b)  Under Clause 2 of the 1979 Development Agreement, the ‘Developer’ (Honoo) had on or before the execution of the agreement paid to the ‘Owner’ (with the plaintiff named as the ‘Owner’) a security deposit of $195,000 for the due performance by Honoo of the terms and conditions under the agreement (‘Security Deposit’).

c)  Under Clause 16 the ‘Owner’ was to pay to the ‘Developer’ (Honoo) $350,000 for the development costs and to refund to Honoo the Security Deposit within seven days from the issuance of the Certificate of Compliance, provided that if the Owner failed to pay the said development costs of $350,000 as stated, then the ‘Owner’ or his attorney was to execute an assignment or a conveyance on sale free from incumbrances to the ‘Developer’ or the Developer’s nominee of the Land together with the building erected thereon free from encumbrances in lieu of payment (‘the Proviso’). Clause 17 provides that the ‘Owner’ agreed to secure the development costs of $350,000 and the ‘Security Deposit’ by way of a building mortgage in favour of the ‘Developer’ (Honoo) and Clause 18 provides that the ‘Owner’ had to execute an irrevocable power of attorney in favour of Honoo as such person as appointed by the ‘Developer’. There was further a receipt clause signed by Ho as attorney for the ‘Owner’ for Security Deposit of $195,000 by Ho as attorney for the ‘Owner’. The 1980 Substitute P/A was thus executed pursuant to Clause 18.

83.  The Proviso in the 1979 Development Agreement which the plaintiff submitted was an option to the plaintiff to either pay the total sum of $545,000 to Honoo up to seven days after the issue of the Certificate of Compliance, or to formally assign the Land and the Small House to Honoo or its nominee (‘Option’), did not mean that Ho had not divested his beneficial interest in the Land by the 1979 Development Agreement and the 1980 Substitute P/A, as the Option would also be consistent with a mutual agreement between Ho and Honoo for Ho to either pay Honoo the sum of $545,000 to ‘buy back’ the beneficial interest in the Land, the New Grant and the completed Small House, or to transfer the legal title in the Land to Honoo.

84.  The Judge accepted Mr. Li’s evidence that Ho would not have signed the 1979 Development Agreement with KB Lock if he had not received the sum of $195,000, and that it was only when the money had been received by Ho then there was ‘Completion’ of the transfer. Further, as seen in the 1980 Substitute P/A, that irrevocable power of attorney was for Ho to appoint KB Lock as his substitute with full powers under the 1979 P/A, and Ho had declared that the 1980 Substitute P/A was given for valuable consideration. This confirms the finding that by conferring KB Lock with all the full powers under the 1979 P/A, Ho had transferred the beneficial interest in the Land and the New Grant and the development to KB Lock/Honoo. The solicitors had regarded the 1979 P/A with the Memorial 97045, the 19 December 1979 Development Agreement and the 1980 Substitution P/A as part of the ‘title deeds’ of the land. The transaction was again the common device to transfer beneficial interest.

(ii)  The plaintiff’s argument

85.  The Judge erred in finding that the Option was consistent with an agreement between Ho and Honoo for Ho to pay Honoo the sum of $545,000 to ‘buy back’ the beneficial interest in the Land when there was no evidence (let alone proper plea) to support such agreement, and the 1979 Development Agreement did not provide for the transfer of beneficial interest to Honoo in the first place. Clause 19 provides that ‘the Developer shall not be entitled to assign or transfer the benefit and obligations of this Agreement prior to the Developer’s obligations hereunder having been fully and completely observed performed and complied with.’ Honoo’s obligations must include its duty under Clause 1 to construct the Small House at its own cost. Hence, Honoo was not entitled to assign or transfer the building agreement to any other developer or financier until the completion of the Small House.

iii)  From Honoo to Edico

(i)  The Judge’s reasons

86.  The Judge held the 28 April 1989 Deed, the 20 January 1990 Acknowledgment, the Deed of Revocation executed on 20 January 1990 between Ho and KB Lock, and the 24 January 1990 Supplemental Deed were all or part of the transactional documents for the transfer of the beneficial interest in the Land and the New Grant and the development from Honoo to Edico.

(ii)  The plaintiff’s argument

87.  The Judge was wrong because the 28 April 1989 Deed and the Supplemental Deed were concerned with the release of Honoo from its obligations owed to the plaintiff under the 1979 Development Agreement to finance and build the small house. The 28 April 1989 Deed stipulated that Edico, as substitute developer, intended to perform some of Honoo’s obligations, but with variations (Recital (6)). Both documents referred to the plaintiff as the owner of the Land and did not suggest that Honoo held any beneficial interest. Clause 2 of the 28 April 1989 Deed provided that it was conditional upon the plaintiff signing the Building Agreement and Cancellation Deed within two months (i.e. by 28 June 1989). This deadline was extended by the Supplemental Deed to 10 May 1990. The plaintiff never signed either the Building Agreement or the Cancellation Deed, whether by the original or extended deadline. The condition precedent of the 28 April 1989 Deed was never fulfilled. In such context, the 20 January 1990 Acknowledgement and the Deed of Revocation were simply signed by Ho with a view to facilitate Edico to enter into a fresh set of Building Agreement and Cancellation Deed in the event that they were signed by the plaintiff. They do not constitute an agreement to transfer beneficial interest in the Land at all. The plaintiff did not sign the fresh set of documents.

iv)  From Edico to the 2^nd defendant

(i)  The Judge’s reasons

88.  Edico entered into the JV Agreement with the 2^nd defendant on 23 September 1995. It stated that upon execution of the agreement, the 2^nd defendant was to advance a sum (by way of loan) of $14 million to Edico and the shareholders of Edico (namely Ms Lai and Lee) to enable them to finance or refinance all acquisition or other costs incurred prior to the date of the JV Agreement by Edico in connection with the 12 Lots defined as the ‘Tai Wan Property’ in the agreement.

89.  Pursuant to the JV Agreement, the shareholders and Edico jointly and severally undertook with the 2^nd defendant the amount of the revenue and expenditure of Edico in respect of the development and the net profits for the 2^nd defendant as set out therein, and that any shortfall was to be recoverable by the 2^nd defendant from the shareholders and Edico as a debt. Further, the 2^nd defendant was to be responsible for all development costs which were expressed not to exceed $23 million, and that the parties further agreed as to the order of priority of how the income arising from the sale of the ‘Tai Wan Property’ (excluding deposit and part payments of purchase price already received by Edico) was to be applied.

90.  The 2^nd defendant was said to enter into possession of the Land in 1996. No repayment was ever made by Edico to the 2^nd defendant within the 30‑month period under Clause 12 of the Agreement or up till now. Edico has confirmed the 2^nd defendant has the sole right of possession of the Land and Edico only has the remaining right to share profits as per the JV Agreement.

(ii)  The plaintiff’s argument

91.  The JV Agreement did not transfer beneficial interest in the Land, if any, from Edico to the 2^nd defendant. The JV Agreement was in respect of not only the Land but an entire project named the ‘Tai Wan Property’ consisting of 12 lots including the Land (Lot 775) (see Clause 1.1). There is no recital or warranty stating that Edico owned or was assigning any beneficial interest in the ‘Tai Wan Property’. The JV Agreement was no more than a further iteration of the previous arrangement between Lion Team and Edico whereby Lion Team was lender funding Edico’s development. Clause 7 expressly provides that the 2^nd defendant ‘shall be responsible for the payment of all development costs of the Tai Wan Property (in the form of loans and advances to the Company)...’. In return for such loan financing to Edico, the 2^nd defendant negotiated a profit‑sharing arrangement whereby after repayment of the capital investment of $14,000,000 and a guaranteed profit of $22,000,000, the balance shall be shared equally between Rich Trend and Edico (Clause 8). Notwithstanding the provision (Clause 11) for security to be granted to the 2^nd defendant, no charge was executed in respect of the Land.

(3)  Our view

92.  We agree with the plaintiff’s analysis that the documents did not have the effect of transferring the beneficial interest of the plaintiff in the Land to Ho and eventually to the 2^nd defendant. This is a point recognized by the Judge but she accepted that the ‘common device’ by way of irrevocable power of attorney and development agreement effected the transfer of the equitable interest. We disagree. If the ‘common device’ was nothing but an attempt to disguise the real nature of the transaction in order to avoid the non‑alienation provision of the New Grant, then clearly there is no provision for the transfer of beneficial interest from the plaintiff to another even if a wide interpretation is given to the word ‘disposition’. In our view there is every reason not to uphold this approach to effect a transfer of the beneficial interest. Although the issue of illegality is no longer pursued in this Court, we would like to state that we do not wish to give the impression that we have accepted the concession.

93.  As to the plaintiff’s argument on section 5(1) of CPO, the 2^nd defendant submitted that section 5(1) of CPO should be pleaded, the word ‘disposed’ in section 5(1) should be given a wide interpretation : Hudson v Hathway [2023] 2 WLR 1227, [51]. Snell’s Equity 34^th Ed at [22‑040] stated that the disposition may be in two or more interconnected documents, one of which is signed. The 1979 P/A and the 1979 Development Agreement are in writing. The former signed by the plaintiff personally and the latter by Ho as the attorney for the plaintiff. The formality required by section 5(1) of CPO was satisfied.

94.  We are of the view that in general, section 5(1) must be specifically pleaded in order for the other party to properly respond to it. However, in this case, the 2^nd defendant did not object to the lack of pleadings and instead had faced the issue head‑on by relying on part performance. In the circumstances, in the context of this case, the lack of pleadings does not preclude the plaintiff from relying on section 5(1). We further disagree with the 2^nd defendant that the requirement of section 5(1) is satisfied. In Hudson, Lewison LJ referred to the speech of Viscount Simonds in Grey v. Inland Revenue Comrs [1960] AC 1 [12‑13] that ‘a direction given by [a beneficial owner] whereby the beneficial interest in the shares theretofore vested in him became vested in another or others, is a disposition’. In this case, there is no such direction at all. On the contrary, since the purpose of the documents was to mask the real nature of the transaction, namely, to transfer the beneficial interest from the plaintiff to others, then plainly there is no disposition of such interest. We are further of the view that despite the plaintiff’s success on Issue 3, he still faces hurdles in respect of the remaining two issues.

4)  Issue 4 – The Waiver/Acquiescence Issue

(1)  The plaintiff’s arguments

95.  The plaintiff challenged the Judge’s finding on proprietary estoppel on the ground that it was not pleaded and the 2^nd defendant’s only defence was a bare assertion of waiver by acquiescence and laches. Mere inaction cannot give rise to an equitable bar, for otherwise it would negate the purpose of statutory limitation: Archbold v Scully (1861) 9 HLC 360 at 383, 388.

96.  One of the requirements to establish proprietary estoppel is that it is unconscionable that a landowner should knowingly stand by while a stranger incur a detriment or disadvantage acting upon some misapprehension of his legal position with regard to the land: Li Kwok Ching v Secretary for Justice, HCA 1303/2010 (unrep., 31 Mar 2015) at [95] per G. Lam J (as he then was), citing Willmott v Barber (1880) 15 Ch D 96 which referred to the five probandas for proprietary estoppel. The plaintiff argued that in the absence of any proper pleading of plaintiff’s knowledge as to the 2^nd defendant’s expenditure and 2^nd defendant’s alleged misapprehension of its legal position or 2^nd defendant’s detrimental reliance on such misapprehension, the 2^nd defendant’s bare assertion of waiver or acquiescence does not get off the ground. The Judge plainly erred in making findings as to the plaintiff’s alleged knowledge of 1) where the Land was, 2) the exact lot numbers and that the title to the Land was still held by him in 1989, 3) building works which the plaintiff allegedly knew and saw by December 1998/January 1999 and 4) the alleged detriment suffered by the 2^nd defendant by incurring costs on the development, when these material facts were not pleaded and the plaintiff had no fair opportunity to address them. These findings are particularly unfair when the Judge in the Decision dated 22 June 2020 had rejected on the ground of lateness the 2^nd defendant’s application to amend its Amended Defence to the plaintiff’s Counterclaim to Counterclaim to add a plea of detriment, reliance and additional particulars of the plaintiff’s knowledge. The plaintiff legitimately expected that the disallowed averments would not be allowed at trial. The Judge was wrong to make findings on the evidence ‘even if not pleaded properly’.

97.  The plaintiff further argued that despite referring to the correct legal principles, the Judge failed to apply those principles to the facts. As to the first probanda, the Judge did not even find that the 2^nd defendant was under any misapprehension as to its legal rights, an essential element of proprietary estoppel: [99] Li Kwok Ching. In any case, the Judge had no evidential basis to make such a finding. The 2^nd defendant/Edico knew all along that it had to seek the plaintiff’s consent through Mr. Lau. Clause 1 of the 28 April 1989 Deed expressly provides that Edico shall ‘use its best endeavours…to obtain [the plaintiff’s] consent’. The 2^nd defendant/Edico simply made a calculated business decision to develop all 12 houses in the project (one of which was on the Land) in the hopes that the landowners’ cooperation could be secured by Mr. Lau in due course. It follows that the second probanda (the 2^nd defendant expended money or did some act on the faith of his mistaken belief) and the fourth probanda (the plaintiff had knowledge of the 2^nd defendant’s mistaken belief) cannot be established. Finally, the Judge’s finding that the plaintiff ‘chose to do nothing and let other persons to proceed to incur building costs’ is unsustainable. There is no dispute that the plaintiff was in the United Kingdom from 1987 to 1998 (save for a 12‑day stay in December 1993). The Judge found that the plaintiff should have seen the house latest by December 1998, but by that time, the house on the Land had already been completed, with no evidence that the 2^nd defendant incurred further expenditure thereafter. From the JV Agreement dated 3 September 1995 to the completion of the house in 1998, the plaintiff was not in Hong Kong at all and could not have found out about the 2^nd defendant’s expenditure on the Land. In short, there was nothing unconscionable about the plaintiff’s conduct, and the Judge’s finding cannot be supported.

(2)  Our view

98.  The five probandas referred to by Fry J in Willmott are as follows :

1)  The plaintiff must have made a mistake as to his legal rights;

2)  The plaintiff must have expended some money or must have done some act (not necessarily upon the defendant’s land) on the faith of his mistaken belief;

3)  The defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of his legal rights;

4)  The defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights; and

5)  The defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right.

99.  In Blue Haven Enterprises Limited v Dulcie Ermine Tully & Anor [2006] UKPC 17, Lord Scott of Foscote of the Judicial Committee of the Privy Council approved of the earlier decision of Oliver J in Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd (Note) [1982] QB 133 and held that unconscionable behaviour is the key that unlocks the door to the equitable remedies. Oliver J in Taylor Fashions Ltd at 151‑152 held :

‘ the more recent cases indicate, in my judgment, that the application of the Ramsden v Dyson ^x principle -whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial - requires a very much broader approach which is directed at ascertaining whether, in particular circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour.’

100.  Lord Scott dealt with Willmott as follows :

‘ 23. ..... Fry J’s five probanda[s] remain a highly convenient and authoritative yardstick for identifying the presence, or absence, of unconscionable behaviour on the part of a defendant sufficient to require an equitable remedy, but they are not necessarily determinative.’

101.  In Cheung Lai Mui v Cheung Wai Shing (2021) HKCFAR 116, Ribeiro PJ and Gummow NPJ of the Court of Final Appeal dealt with the requirement of proprietary estoppel :

‘ 23. Put shortly, the requirements of equity to recognise and give relief based on proprietary estoppel are: (a) a representation or assurance made to the claimant; (b) reliance thereon by the claimant; and (c) detriment to the claimant in the consequence of that reliance.’

102.  They emphasised that the prevention of unconscionable conduct is the overarching principle in the equitable doctrine of proprietary estoppel, the elements of which are often intertwined.

‘ 24. More specifically, in Gillett v Holt [2001] Ch 210 at 225, 232, Robert Walker LJ (as Lord Walker then was) emphasised that (i) “the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments”, (ii) “the quality of the relevant assurances may influence the issue of reliance”, (iii) “reliance and detriment are often intertwined”, (iv) “the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all elements of the [proprietary estoppel] doctrine” and (v) detriment is “not a narrow or technical concept”; it need not consist of expenditure of money or other quantifiable financial detriment and may consist of manual labour. His Lordship added “In the end the Court must look at the matter in the round”; there is “a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.” ’

103.  How did the 2^nd defendant plead proprietary estoppel? In the Re‑Amended Defence and Counterclaim, it pleaded :

‘ 5. Alternatively, the Plaintiff is estopped from recovering possession of the Land from the 2^nd defendant by reason of the Plaintiff’s representation by conduct in having executed the Irrevocable P/A and parted with possession of the Land with the intention that Ho and other persons who would have the occasion of dealing with the Land would rely thereon to their detriment. The 2^nd defendant had relied on such representations, entered into and performed its obligations under the JV Agreement as hereinafter pleaded. Paragraph 3 is denied.’

104.  The part of the pleadings in the Re‑Amended Defence to the plaintiff’s Counterclaim which was disallowed by the Judge was in respect of sub‑paragraphs (a)‑(h) of [19]. But [19] itself was allowed and the 2^nd defendant pleaded :

‘ 19. Further or alternatively, the 2^nd Defendant avers that the Plaintiff had never intended to have any beneficial interest in or possession of the Land. Since he was contented in letting the Land revert to Government for breach of the building covenant, if (which is denied) he had had any residual right or interest in the Land, he must have by conduct waived or abandoned the same by acquiescence and laches for over 30 years.’

105.  In our view, proprietary estoppel had been properly pleaded. The three elements of representation, reliance and detriment had all been pleaded.

106.  The next question is whether the 2^nd defendant had established the case on proprietary estoppel? We agree with the Judge that the elements of proprietary estoppel were established. The 2^nd defendant summarised the position which accorded with the finding by the Judge as follows. When the plaintiff executed the 1977 London P/A, he had the exact Lot and DD numbers of the Land; and knew he had to build a Small House by the deadline. The plaintiff then obtained the New Grant and he knew the legal title was in his name, but he never took possession of the Land, nor proceeded with its development. The plaintiff then executed the 1979 P/A, which was registered in the Land Registry. The powers in the 1979 P/A were very wide and included a power to sell and to absolutely dispose of the Land and the Small House built on it for such price Ho thinks proper, and to receive such purchase money. The 1979 Development Agreement was then executed. On 23 September 1995, the 2^nd defendant in reliance upon the above matters entered into the JV Agreement to jointly develop the project. In 1996, the 2^nd defendant entered into possession of the Land and on 25 November 1998, upon completion of the development by the 2^nd defendant, the Certificate of Compliance regarding the Small Houses on the 12 Lots was issued. The plaintiff did nothing for over 30 years and let other persons proceed to incur building costs to build Small Houses in the Area which he knew and saw by (the latest) December 1998/January 1999, and yet he still did nothing. In our view the Judge was entitled to make such findings.

107.  The plaintiff raised the point that looking at the matter objectively, the 2^nd defendant might well have regarded the documents to be genuine development agreements and there is no room for the 2^nd defendant to say that it relied on the plaintiff’s representation that he had chosen to give up his rights in the Land. We disagree. Mr. WL Chan of the 2^nd defendant referred to the documents and stated, amongst other things, that the plaintiff had been fully paid by Ho, the 1979 P/A was to clothe Ho with all the powers of the owner and it was the 2^nd defendant’s view that Ho rather than the plaintiff was the beneficial owner of Lot 775. His evidence was accepted by the Judge. In our view, there clearly was reliance by the 2^nd defendant on this representation. Further, one should look at the whole circumstance of the case on the issues of representation, reliance and detriment. In our view, there can only be one conclusion on these facts and it is that it is unconscionable for the plaintiff to assert his interest in the Land. It is sufficient to refer to the following passage in the judgment below :

‘ 256. In my view, [the plaintiff], knowing where the Land was, or at least knew that the Land was within or around the Area, and knowing the exact lot and DD numbers of the Land and that the title of the Land was still held by him in 1989, he chose to do nothing and let other persons to proceed to incur building costs to build Small Houses in the Area which he knew and saw latest by December 1998/January 1999, and even then, yet again he chose to do nothing. Even if not pleaded properly, from the evidence, [the 2^nd defendant] had clearly suffered detriments as a result of [the plaintiff]’s inaction from taking any action in relation to the Land for over 30 years by incurring costs in the development.’

5)  Issue 5 – The Adverse Possession Issue

(1)  The plaintiff’s arguments

108.  The plaintiff challenged the Judge’s finding on adverse possession. First, he challenged the factual finding of exclusive physical possession. He argued that the finding that Honoo, Edico and the 2^nd defendant commenced exclusive physical possession from 1980, 1990 and 1996 respectively is without proper evidential basis. The 2^nd defendant did not adduce any objective evidence (e.g. aerial photographs, survey sheets or expert evidence) to show the status of the Land since 1980. Indeed, there is no evidence (objective or otherwise) that Honoo exercised physical control of the Land at all. The 2^nd defendant did not adduce any evidence as to when building works actually commenced on the Land, and more importantly how building works were an effective exercise of physical control (e.g. by enclosure). The Judge’s assumption that Edico ‘should be in possession of the site’ by 14 February 1990 by virtue of a letter from the architect to the District Lands Office is unsustainable as the letter makes it clear that no building works had commenced and only ‘shrubs and vegetation’ had been removed. The Judge also contradicts her own finding that Edico had only done some minor (unidentified) site works by 1996. The 2^nd defendant’s assertion that it ‘took over’ the site from 1996 onwards is uncorroborated by any objective evidence and in any case, no findings were made by the Judge as to exactly what steps the 2^nd defendant took to exercise physical control. This is a far cry from the compelling evidence necessary to establish exclusive physical control for the purpose of adverse possession.

109.  The plaintiff further challenged the Judge’s finding on the intention to possess. The Judge failed to consider the evidence showing that Edico/the 2^nd defendant repeatedly acknowledged the plaintiff’s title and purported to act with the plaintiff’s permission, which is fatal to the 2^nd defendant’s case on intention. To constitute possession, the claimant must show that he took possession of the land in his own right and not as licensee or representative of another: Tsang Foo (aka Fu) Keung v Chu Jim Mi Jimmy (CFI) [2015] 6 HKC 200 at [48-50] per Chow J (as he then was). There are two aspects to the intention to possess, i) there must be an actual, subjective intention to possess; and ii) the intention must be manifested by unequivocal actions: Lee Siu Fong v Wong Wan Leung, HCA 122/2012 (unrep., 3 January 2017) at [22] per Lok J. Where there is an objective recognition of the owner’s rights, this is incompatible with the necessary intention to possess: Lee Siu Fong at [54, 60]; Yu Kit Chiu v Chan Sek Woo, CACV 137/2010 (unrep., 18 February 2011). The act of constructing a building on the Land was equivocal in that it may be done with the permission of the owner : Tsang Foo Keung v Chu Jim Mi Jimmy [CA] [2017] 3 HKC 527 at [2.6-2.9, 2.15]. In this case, Edico/the 2^nd defendant (or their agents) in fact purported to correspond with the Government on the plaintiff’s behalf as the grantee from at least 1992 to 2002, and the Government in turn treated Edico/the 2^nd defendant (or their agents) as acting on the plaintiff’s behalf. In doing so, the 2^nd defendant/Edico objectively recognised that the plaintiff was the true owner. This is fatal to the 2^nd defendant’s claim of adverse possession. The plaintiff complained that the Judge had failed to address the relevant legal principles and a full list of correspondence which Edico/the 2^nd defendant carried out in the plaintiff’s name was submitted to her at the trial.

(2)  Our view

110.  The plaintiff’s arguments on possession were again considered by the Judge. Irrespective of the earlier position of Honoo, the Judge found that by February 1990 Edico had taken over the possession of the 12 Lots. In our view, this is a finding that the Judge was entitled to make.

111.  By 1995, the 2^nd defendant had entered into the JV Agreement with Edico. The slope of the site had already been flattened and Edico had carried out the site formulation work. From 1996 to 1998, the 2^nd defendant had carried out and completed the 12 Small Houses on the 12 Lots. The Judge held :

‘ 277. It would appear that [the 2^nd defendant] continued to enjoy undisturbed possession of the Land until events in early 2014, notwithstanding the issue of these proceedings by [the plaintiff] in August 2012, and that [the 2^nd defendant] had openly exercised all rights of ownership over the Land and the Small House thereon without consent of the plaintiff and without making any payments to any persons other than rates and property taxes to the Government.’

112.  On the facts of the case, the construction of the 12 Small Houses on the site is the best evidence that Edico and the 2^nd defendant had physical possession of the site. It beggars belief that during the construction, Edico and the 2^nd defendant would not have been exercising physical control of the site at all.

113.  As to the issue of intention to possess, the plaintiff’s reliance on this Court’s judgment in Tsang Foo Keung in which it was held that the act of constructing a building on the land was equivocal in that it may be done with the permission of the owner, is misplaced because the context of each case is different. As observed by this Court in that case, there was no direct evidence on the intention of the occupiers who did not give evidence during their long occupation of the land. The present case is different. The plaintiff lays great reliance on the fact that the correspondence between Edico and the 2^nd defendant and the Government show that Edico, the 2^nd defendant and their agents still recognised the plaintiff as the grantee of the Land. But the fact is the plaintiff relies on the use of the ‘common device’ of the irrevocable power of attorney and the development agreement which on the face of the documents showed that the plaintiff was the registered owner of the Land. Once it is recognised the context in which term of ‘principal and agent’ was being used in the correspondence, then the plaintiff’s argument that Edico and the 2^nd defendant objectively recognized the plaintiff was the owner falls away. In our view, the plaintiff has failed to show that the Judge was plainly wrong on her findings.

114.  In so far as may be necessary, we further agree with the 2^nd defendant’s argument that the 2^nd defendant at the latest entered into possession by 25 November 1998 (i.e. the date on which the Certificate of Compliance in respect of the Small House built by the 2^nd defendant on the Land was issued); and that the requisite period of 12 years would have expired by November 2010.

VII.  Conclusion

115.  Accordingly, the appeal is dismissed.

VIII.  Costs

116.  The 2^nd defendant was not successful in resisting two of the issues in the appeal which are substantive in nature. There will be an order nisi that the 2^nd defendant is to have two‑thirds of the costs of the appeal with certificate for two counsel.

117.  The costs below are varied to the extent that the 2^nd defendant is to have two‑thirds of its costs with certificate for two counsel.