CHAN SUK YIN AND ANOTHER v. HARVEST GOOD DEVELOPMENT LTD

cacv 101/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 101 of 2004

(on appeal from HCA NO. 477 OF 2000)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  In this appeal the defendant sought to set aside an order of Deputy High Court Judge Muttrie given on 25 February 2004 whereby the judge declared that the defendant was debarred from bringing any action to recover the Remaining Portion of Section A of Lot No. 6, the Remaining Portion of Lot No. 7, Lots Nos. 8, 9, and 10 all in Demarcation District No. 32 (collectively hereinafter referred to as “the Lots”) from the plaintiffs and that the defendant’s title to the Lots had been extinguished.  At the conclusion of the hearing this appeal was allowed with reasons to be given in writing.  This we now do.

Background

2.  The second named plaintiff is now aged 82 or thereabouts.  The second named plaintiff had married Tam Sun (“Tam”) in 1948 and had had a son Tam Khoo Hoi in 1948 and two daughters, Tam Kit Ying and Tam Kit Kwan and another son Tam Ku Chau.  Tam died in November 1961 and the second named plaintiff married Chan Hon Piu in 1964.

3.  The first named plaintiff was born on 8 April 1965 and there was also a son, Chan Cheong Yin, by the marriage to Chan Hon Piu.  It seems that the sons of the marriage with Tam left Hong Kong for Sweden in the late 1970s although the elder boy returned to Hong Kong in 1980 and died the same year.  One of the daughters married in 1971 whereas the other married in 1979 and left for England in 1980.  The son of the marriage with Chan Hon Piu has lived in England since 1984.  Thus it is only the first named plaintiff that still remains with her mother and they live in a house on Lot 8.

4.  The Lots are in the hills near Tai Po very close to the old Tai Po Road.  In 1951 the second named plaintiff’s first husband, Tam, leased the Lots for a period of 10 years from Chu Shuk Han (“Chu”).  The judge held that since 1951 the second named plaintiff had always lived on Lots 7 RP and 8.  There is no dispute between the parties that the original lease expired by effluxion of time in 1961.  On 9 May 1961 the title to the Lots was assigned to three persons namely Lee Shau Kee, Fung King Hei and Wong Shiu Kin.  They have been referred to in one of the documents and during the trial as “the three friends”.

5.  It is the defendant’s pleaded case that both before and subsequent to that assignment the three friends visited the Lots together with Chu and spoke to Tam and the second named plaintiff.  It is said that the three friends gave Tam and the second named plaintiff a licence to remain on the premises and that Tam and the plaintiffs had remained on the Lots as licensees of the three friends.  Only the first named of the three friends is still alive; in September 1997 an assignment was executed in respect of the Lots in favour of the defendant.

6.  The judge heard evidence not only from the plaintiffs and two other witnesses, one of whom lived close by, but also from a Mr Mok, who in 1992 was a property officer working for one of the companies in the same group as the defendant, in its agricultural land section and also from one of his colleagues.  The judge also had the benefit of having a view of the Lots and he was able to describe them in some detail in paragraphs 10 to 14 of his judgment.

7.  The defendant’s evidence as to the existence of the licence that was said to have been granted by the three friends in 1961 was founded upon a memorandum which had been kept by Mr Mok.  The memorandum was kept on a standard form which Mr Mok had designed with a colleague.  It had entries dating from 27 November 1992.  In the judgment the judge scrutinised the entries with some degree of care.  The first entry showed that Lots 7 and 8 were being used for residential purposes and there were sundry articles that had been placed on part of Lot 9 adjacent to Lot 8.  There were signs of agriculture on Lot 6A but it was said to be frail.  Lots 6A RP, 10 and the majority part of Lot 9 were said to be deserted.  The next entry shows that when inspection took place in May 1993 there were no material changes but the attitude of the persons who claimed that they were farming and living on the Lots was “very hostile”.  During an inspection on 29 June that year a notice to quit was served which apparently was followed up by a telephone call from the first named plaintiff in which she indicated that she might be prepared to move provided she was paid compensation.  An alternative of renting the property at $400 per month was also mentioned.  The following day the first named plaintiff said that she did not want to rent the land but requested compensation if she were to move out.

8.  The memorandum also shows that on 9 July 1993 Mr Mok returned to the Lots and saw the first named plaintiff.  The entry for that visit shows that the first named plaintiff requested $600,000 to deliver vacant possession but also indicates that she said that when the three friends had purchased the land they inspected it personally and told her family members that they could continue to use the land and that the family had never paid rent.  It is that entry which in effect founds the first part of the defendant’s case on this appeal.

9.  The plaintiffs asserted that they had always farmed the land.  Whereas there was no real dispute that the plaintiffs had remained in possession of Lots 7 RP, 8 and the enclosed area of 9, the real dispute as regards actual possession turned on whether the plaintiffs had retained possession of Lots 6A RP, 9 (other than the enclosed area within it) and 10.  Whilst the judge was healthily sceptical of the plaintiffs’ evidence and disregarded a great deal of it on the basis that it was exaggerated, he came to the conclusion that the plaintiffs had used the whole area in the past and that that the second named plaintiff must have derived some income from what was grown on the land even if it were meagre.  His conclusion was summarised in paragraphs 56 and 57 of his judgment where he said:

“	56.	Whether or not they have continued to use the whole of the farm up to the present day or even up to 1992 or 1993 does not matter, in my view.  As indicated above, the limitation period would run from, at the latest, early 1962 to early 1982.  There is absolutely nothing to contradict the plaintiffs’ assertion that they were farming the whole of the lots for that period.  Their evidence on this is not incredible given that the 1st named plaintiff and the youngest son were still at home up to that time.
	57.	In any event, once a squatter takes over land and establishes possession by actively farming it, it seems to me that he need not necessarily show that active farming continued on the whole of the farm he has established for the whole of the limitation period.  Possession does not leech away with lack of use; it depends on there being some element of control.  It is only if control is lost, for example where the land is taken over by another squatter or by the paper owner, that possession is lost.  If the squatter remains on the farm, in a position to keep others off it, he remains in control.  What is required is that he deal with the land as an occupying owner might have been expected to deal with it, and that no one else has so dealt with it.  An occupying owner does not have to farm every square foot of his land and I do not see that a squatter, once he has established possession need do so either.”

10.  In respect of the defendant’s case that there had been a licence granted to the plaintiffs’ family, the judge accepted that the memorandum was genuine.  He did not accept the first named plaintiff’s evidence where she denied saying anything to the effect recorded in the memorandum.  The judge indicated that he could not be entirely satisfied as to the accuracy of the record saying that he accepted it “as far as it goes”.  He pointed out that it was not a verbatim recording: each entry could have been made a day after the incident and so one could only accept it as showing the gist of what was said. 

11.  Importantly, the judge also pointed out that because the first named plaintiff was not even born at the time when the licence was said to have been given, whatever she had said could not be taken as a statement relating to the first named plaintiff’s intentions but was a statement of fact.  As such she could only be recounting what she had been told and there was clearly a difficulty in determining who had told the first named plaintiff anything about the dealings with the three friends. 

12.  The judge also pointed out that since the licence had been given to Tam it would have died with him.  If it were given to Tam’s family it would not necessarily have continued after the members of his family became members of Chan patriarchal family.  Finally on this aspect, the judge referred to the record in the memorandum of the first named plaintiff saying “the owner said we could stay here” in the context of not rendering possession of the premises unless the owner paid compensation.  As the judge indicated, that could hardly demonstrate any lack of intention to exclude the owner.  In those circumstances the judge found that the plaintiffs’ claim succeeded and the defendant’s counterclaim failed.

13.  Since the judge gave judgment in this case this court has given judgment in the case of Chan Tin Shi v Li Tin Sung and Others CACV 71 of 2003, judgment dated 19 November 2004.  In that case this Court held that the effect of the New Territories Leases (Extension) Ordinance, Cap. 150 was that a new estate was created in respect of land in the New Territories and that for the purposes of the limitation of actions, time would begin to run again from the date of the creation of the new estate.  That judgment is on appeal to the Court of Final Appeal.  Mr Chan, who appeared for the defendant on this appeal, raised points in his skeleton argument directed to showing that that decision was not correct, but indicated at the opening of the hearing of this appeal that he did so in order to keep the argument alive and to preserve his client’s position, but that he did not consider that he could persuade this court to reverse its own decision on this appeal. 

14.  In those circumstances this appeal inevitably fell to be allowed.  Nevertheless, there remained the argument on behalf of the defendant that the judge below was incorrect on the facts in failing to hold that there had been a licence granted to Tam and the second named plaintiff on behalf of all the second named plaintiff’s family and, in the alternative, that many of the Lots had been abandoned by the plaintiffs.  Mr Neoh SC, who appeared on behalf of the defendant, sought to argue that the judge should have found for the defendant in respect of the factual issues of licence and abandonment.

15.  The first difficulty which faced with the defendant in contesting the judge’s finding regarding the absence of any licence was that the defendant had failed to call evidence from that the sole surviving member of the three friends.  Albeit it was said by Mr Mok that the surviving member could not remember anything relevant, but the fact remains that if the defendant wished to put forward a case that a licence had been granted by the three friends when they visited the Lots it was necessary for them to call the best evidence which they could in respect of that, and that must have been the sole surviving person of the three friends.  He is said to have been there and to have granted the licence.  He was clearly in a position to give evidence on behalf of the defendant since it is common knowledge that he is the founder and guiding light of the group of companies to which the defendant belongs. 

16.  One matter, to which not a great deal of attention was paid during the course of argument, is, perhaps, of interest.  On 30 June 1993, the surviving member of the three friends commenced HCA No. 5763 of 1993.  In that action recovery of the remaining portion of Lot No. 7, Lot No. 8 and Lot No. 9 had been sought.  Interestingly, it was pleaded that on a date or dates unknown to the plaintiff in that action and his predecessors in title, and without their knowledge and consent, the plaintiffs in this action had wrongfully entered into and taken possession of those three Lots.  The plaintiffs in this action had defended that action, which had been one of a number of similar actions taken not only by the surviving member of the three friends but also, apparently by a number of other property owners in various parts of the New Territories.  That action had been discontinued in June 1999.  The point which emerges is that there was, apparently, no allegation of licence at that time. 

17.  Quite apart from that, it seems to me that the judge was entirely justified in the way that he dealt with the evidence and the argument based upon the memorandum.  The record in the memorandum does not inspire confidence that a licence must have been granted.  It was by no means the first thing that the first named plaintiff said and, given the circumstances in which it was apparently said, it would not be surprising if loose expressions were used and things were said on the spur of the moment without regard to its accuracy.  Furthermore, as the judge pointed out the first named plaintiff was only born in 1965 and so by 1982, when the period of limitation would have expired, she was still only 17.  Her intentions up to that time are irrelevant and her evidence as to what happened factually can only be dubious in the extreme.

18.  The argument in respect of the abandonment seems to me to have been even more difficult.  The judge had the advantage of having visited and seen the Lots.  Even though the Lots which are relevant to this argument are now admittedly uncultivated, the judge could no doubt tell for himself whether they had the appearance of having been cultivated in the past.  What is also pertinent is that for the most part these lots were behind the Lots which were used for accommodation.  Access to the Lots in issue in respect of abandonment could, for the most part, only be obtained by going past the Lots which were still occupied. 

19.  It is also pertinent to note that, as the judge recorded, one of the witnesses called by the plaintiffs was Lai Shu Kun.  His evidence, apart from other matters, was that the plaintiffs had grown bananas and guavas on Lot 6A RP.  Furthermore, as the judge recorded, on the western slopes above and around Lot 10 there is an area of Government land which originally was licensed by the second named plaintiff’s son Tam Khoo Hoi, and in respect of which the plaintiffs are still paying the licence fees.  This, too, was another factor which the judge was entitled to take into account in deciding whether the plaintiffs intended to retain the Lots.  It would be hardly likely that they would pay licence fees to Government for land which was in the same condition as land which they had abandoned.

20.  In those circumstances, whilst allowing the appeal on the basis of the effect of the New Territories Leases (Extension) Ordinance, this court indicated that it would not disturb the judge’s findings in respect of the factual issues.  As a consequence, costs were awarded to the defendant in respect of this appeal, but the order of costs in the court below was left undisturbed.

Hon Le Pichon JA:

21.  I agree.

Hon Stone J:

22.  I agree.