CHENG OI HAN AND ANOTHER v. WONG KUK LAU

DCMP 3196/2016

[2018] HKDC 1512

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 3196 OF 2016

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JUDGMENT

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Application

1.  This is an application by way of originating summons for declaratory relief for the plaintiffs’ adverse possession claim against the defendant (“Mr Wong”) in respect of 4 adjoining pieces of land located in Yuen Long, New Territories.  They are:-

(i) Section A of Lot 240 in DD 107, Yuen Long, New Territories (“Lot 240A”);

(ii) Section C of Lot 241 in DD 107, Yuen Long, New Territories (“Lot 241C”);

(iii) Section D of Lot 242 in DD 107, Yuen Long, New Territories (“Lot 242D”); and

(iv) Section B of Lot 346 in D.D. 107, Yuen Long, New Territories (“Lot 346B”),

together, the “Lots”.

2.  According to the land search records, the current registered owner of the Lots is Mr Wong.

3.  The plaintiffs’ case is that they, through themselves and their predecessors in title, have been in continuous, undisturbed and uninterrupted possession of the Lots.

Service

4.  Mr Wong had not filed any acknowledgment of service nor had he participated or responded to any part of the proceedings and was absent on the day of the hearing.

5.  Having gone through the previous Orders for substituted service as well as affirmations of service, I was satisfied that service of these proceedings complied with the various orders, and that notice of today’s hearing had been served. 

Summary determination

6.  Generally speaking, a declaration cannot be obtained by default and can only be granted by the Court in the exercise of its jurisdiction on the merits of the case.  (See Order 15 rule 16, Rules of District Court).

7.  However, as Deputy High Court Judge A Cheung (as he then was) held in Wong Kum Chi v Lee Tit Ying [2003] 1 HKLRD 594, when proceedings are commenced by way of originating summons, Order 28 applies.  Order 28 rule 1 provides, amongst other things, that Order 32 rule 5 shall apply in relation to originating summonses as they apply in relation to other summonses.  Order 32 rule 5 provides that where any party to a summons fails to attend on the first or any resumed hearing thereof, the court may proceed in his absence if, having regard to the nature of the application, it thinks it expedient so to do.

8.  Under Order 28 rule 4, matters of an originating summons can be dealt with at the first hearing if the facts are sufficiently clear and liability is established: See Titan Limited v Deng Zhishun (unrep, HCMP 4804/1999).

9.  I was satisfied that the Court could proceed to deal with the originating summons in the absence of a defendant and proceeded to hear the originating summons in Mr Wong’s absence.  Wong Kam Chi v Lee Tit Ying [2003] 1 HKLRD 594.

History

10.  The 1^st plaintiff (“Madam Cheng”) is the mother of the 2^nd plaintiff (“Madam Wan”).  Madam Cheng filed 2 affirmations with exhibits in support of the present application.  Madam Wan confirmed and adopted Madam Cheng’s evidence.

11.  The uncontested evidence relied upon by Madam Cheng and Madam Wan are as follows. 

12.  Madam Cheng was told by her late husband that in around 1949, her father-in-law (“Mr Wan”) entered into an oral tenancy agreement with Mr Wong in relation to the Lots.  Mr Wong would visit the Lots to collect rent every month from Mr Wan.  Madam Cheng did not know what the monthly rent was as she was not yet married to her husband at the time.

13.  Mr Wan then built a residential home for himself and his family (including Madam Cheng’s husband) on the Lots (the “Ancestral Home”).  Mr Wan also raised livestock and built a small warehouse on the Lots.  Between 1949 and 1975, the Ancestral Home and the Warehouse were occupied and used by Mr. Wan’s family.

14.  However from 1975 onwards, Mr Wong had stopped collecting rent from Mr Wan and had not been seen afterwards.  Mr Wan’s family members had initially tried to locate Mr Wong but in vain.  Accordingly from then on they had continued to occupy the Lots exclusively without paying any rent.  No one else had tried to collect rent from Mr Wan’s family on Mr Wong’s behalf for the use of the Lots.

15.  Madam Cheng married her husband in 1978 and began living in the Ancestral Home and the Lots.  By that time, Mr Wan had already occupied several other adjoining lots of lands and had fenced off the whole area with a 10 feet high barbed wire fence.  The fenced off area included: the Lots, Lot 240B (owned by Madam Cheng and her husband), Lot 231A, the remaining portion of Lot 231D, the remaining portion of Lot 232, the remaining portion of Lot 239A, Lot 241A, Lot 241B, Lot 242B, Lot 242C, Lot 242E, Lot 242F, Lot 243A, Lot 243C, Lot 343D, Lot 344B, Lot 345B, Lot 345D, Lot 346A, 346C, in DD 107 Yuen Long, New Territories (together, the “23 Lots”).

16.  The 23 Lots were initially a vast farming area for Mr Wan’s family.  In 1972 they changed the farm to a wood factory and named it Sun Tai Lee Lorry (新大利木園).  The whole business of Sun Tai Lee Lorry (新大利木園) operated within the 23 Lots and the Ancestral Home remained throughout on the Lots. Madam Cheng’s evidence was that she was told by her husband that it was in 1972 that the fence was put up.

17.  Madam Cheng gave birth to Madam Wan in 1981, who had since then lived in the Ancestral Home in the Lots until her marriage in 2009.  (Upon the Court’s query of Madam Wan’s entitlement to the claim as someone who no longer resides at the Lots, Ms Chan confirmed that they would no longer be proceeding with Madam Wan’s claim, but only with Madam Cheng’s claim.)

18.  Mr Wan passed away in 1982 and Madam Cheng’s husband took over the family business of Sun Tai Lee Lorry (新大利木園).

19.  From 1994 onwards, the business was changed to selling forage for livestock under the new name of Tai Ping Hong (太平行).  Madam Cheng was the one who applied for the business registration of Tai Ping Hong at that time.

20.  Madam Cheng’s husband passed away in October 2015 and Madam Cheng has been running the business by herself which is still ongoing today.  Madam Cheng continues to live in the Lots with her son, the elder brother of Madam Wan.

21.  Madam Cheng had exhibited various utility bills to her affirmation, showing payment of utility bills for the Lots since 1972.

22.  Madam Cheng relies on the above facts to assert that she had had continuous and exclusive occupation of the Lots for more than 20 years.

The Law

23.  Section 7(1) of the Limitation Ordinance, Cap 347, provides for a limitation period of 12 years in an action to recover land. Under the transitional provision i.e. section 38A, a limitation period of 20 years applies to causes of action which accrued before 1 July 1991: Tsang Wing Kit Eric & Another v Occupiers & Others [2009] 3 HKC 496.

24.  Since Madam Cheng’s case is that adverse possession occurred some time in 1975 by her predecessors, the relevant limitation period in the present case is thus 20 years.  However, as discussed below, the limitation period of 12 years is also relevant.

25.  The principles concerning adverse possession are well known and have recently been summarized by the Court of Appeal in Tsang Foo Keung v Chu Jim Mi Jimmy [2017] 3 HKC 527:-

(1) In order to succeed in claiming possessory title by adverse possession, the claimant must show that he has both the factual possession during the relevant period and the requisite intention to possess.

(2) The requisite factual possession is a sufficient degree of exclusive physical control, and what is sufficient depends on the circumstances of the case and, in particular, the nature of the land and the manner in which land of that nature is commonly enjoyed. What must be shown is that the alleged possessor has been dealing with the land as an occupying owner might expect to deal with it.

(3) The requisite intention is to exclude the world at large, including the owner, from the land so far as is reasonably practicable and so far as the law allows.

(4) The person claiming adverse possession has the burden of proving both exclusive physical control and the requisite intention by compelling evidence.  It cannot be lightly assumed that the paper title holder has foregone his interest in land.

(5) Evidence of subjective intent should be approached with caution. Intention is normally better assessed by inference drawn from the acts of the possessor in the light of nature of the land and its use.

(6) If a person takes possession by virtue of a licence granted by another, it is the licensor who is treated as being in possession.

26.  The English Court of Appeal case of Williams v Jones and Anor [2002] 3 EGLR 69 held that there is a distinction between a “trespasser” case and a “former tenant” case.  In the former case, animus possidendi would be required in order to establish that the paper owner was dispossessed; whereas that was not necessary in a “former tenant” case.  The rationale is that in a “former tenant” case, the freeholder had allowed the tenant into possession and the tenant would normally continue in possession.

27.  However, the position in Hong Kong seems to be different.  In the case of Wong Shing Chai Jimmy v Good Allied Investment Ltd. Unrep 7 December 2017, DCCJ 4472/2014, HH Judge Liu rejected the suggestion that there could be any presumption of exclusive continuous possession of the land:-

“79. Mr. Chan SC submits that there is no presumption of continuous possession in favour of a squatter who is a former tenant. He refers me to On Yip Property Development Co Ltd v Kwok Tai Kuen Alan (HCMP 3192/2013, 15 April 2014) in which Cheung CJHC said at §8:-

8. "In our view, the judge was correct in rejecting the contention of a presumption of continued possession in favour of the defendant's family after the commencement of adverse possession back in the 1950s. Whether, at any material time, there was adverse possession, and whether any such adverse possession once begun continued unbroken for 20 years, are questions of fact to be established by evidence, the burden being on the squatter. He has to discharge the burden of proof by cogent and sufficient evidence. Whilst such evidence can take many forms, including direct oral evidence, documentary evidence and inferential evidence, and the parties' cases must be considered in light of inherent probabilities and common sense, there is no place for any presumption, whether legal or evidential, in favour of the squatter. Everything must naturally depend on the facts of each case. The situation of a squatter who has enclosed the land in question and that of one who seeks to establish a case of continuous adverse possession of open land must, by the nature of things, be rather different."

80.  I agree with Mr Chan SC. In light of the Court of Appeal's decision in On Yip, clearly there cannot be a presumption in favour of a squatter in an adverse possession case. Whether the squatter claiming adverse possession has both the requisite possession and the requisite intention to possess is a matter to be proved by the squatter by compelling evidence. In my view, what has been said by the English Court of Appeal in Williams v Jones is that if the squatter who had exclusive possession of the land while he was a tenant, he would be treated as still in exclusive possession of the same after the termination of tenancy if there has not been any change of circumstances. In my view, the squatter still bears the burden to prove that there has not been any change of circumstances and he still remains in exclusive possession of the land after termination of the tenancy.”

28.  Thus, as accepted by Ms Chan, even though Madam Cheng was a former tenant, she still bears the burden of proving exclusive and continuous possession.

The Evidence

29.  As the evidence is unchallenged, the Court could only look at the evidence put forward by Madam Cheng and decide whether a case of adverse possession had been made out.

30.  Madam Cheng had given her account of events in terms of the history set out above.  In terms of contemporaneous documents, Madam Cheng had put forward the following documents as evidence:-

(a) Utility bills – these run to some 300 pages which include telephone bills, electricity bills, water bills and demand for rates and government rent from 1978 onwards.

(b) Business registration of Tai Ping Hong – which shows that as at 2 July 1994, Tai Ping Hong’s address of business is at no. 50 Fung Kat Heung, Yuen Long, New Territories.

(c) Lot index plans and aerial photos from 1972 through to 2015 (included in the surveyor’s report).

31.  In terms of the utility bills, most of them do not assist Madam Cheng’s claim as they do not show that they relate to the Lots.  The address of the Lots is, as shown from the results of the land search, 49, Mo Fan Heung, Yuen Long, New Territories.  Most of the utility bills only show the address as “Box 2 or Box 4, Fung Kat Heung, Yuen Long, New Territories”.  As Ms Chan for the plaintiffs accepted, there is simply no evidence to suggest that Box 2 or Box 4 exclusively receive mail for the Lots.  What is clear is only that Madam Cheng uses Box 2 or Box 4 to receive mail for all 23 Lots. 

32.  Some utility bills even show the address as Lot 231A, Lot 241A, or No 41H or 41K, Fung Kat Heung, Kam Tin, Yuen Long, New Territories.  As Ms Chan accepted, these clearly relate to the other lots and do not assist Madam Cheng in the present application in relation to the Lots. 

33.  The only bills which relate to the Lots are demands for rates and government rent.  The address or description of the tenement of these demands clearly relate to the Lots as well as No 49, Mo Fan Heung, Yuen Long.  However, such demands for rates only date back to October 2007.

34.  Likewise, the business registration of Tai Ping Hong refers to an address at 50, Fung Kat Heung, Yuen Long; not the address of the Lot.

35.  As such, it seems that from these contemporaneous documents the earliest evidence of Madam Cheng’s exclusive possession goes back only to October 2007, from the demands for rates and government rent.

36.  Despite the flaws of these contemporaneous documents, Ms Chan urged the Court to consider the totality of the evidence as a whole when considering whether there had in fact been exclusive possession by Madam Cheng before 1998.

37.  Firstly, Ms Chan said that Madam Cheng’s unchallenged account of the history and the development of the Lots, as part of the 23 Lots, tally with the findings of the surveyor’s report:-

“From the year 1972 to 1979, the Lots were situated in an area … surrounded by temporary structures and hoardings. The Lots were mainly an open space and a portion of Lot 346B was covered with vegetation. In the year of 1976, two temporary structures were constructed on the Lots. One straddled on Lot 241C and 346B and the other one was constructed on Lot 240B and a portion of Lot 346B.

Starting from the year of 1980 and up to 2015, the Lots were occupied by temporary structures.  The temporary structures were constructed and extended from time to time in the year of 1980, 1981, 1992, 1996, 1997, 1999 and 2000.  In the year 2003, the temporary structures were entirely re-constructed and extended to lot 346B.  After the reconstruction in 2003, the Lots were totally occupied by the temporary structures.”

38.  It is clear from the aerial photos, the lot index plans and the old survey sheets, that ever since the Late Mr Wan started occupation of the Lots in 1972, he had continuously expanded into the neighbouring lots and that eventually resulted in the family and the business situating inside the 23 Lots up until the present day. 

39.  I agree that Madam Cheng’s unchallenged evidence of the development of the Lots as part of the 23 Lots and the evolution of the family business tally with the findings of the surveyor report. I am satisfied that quite apart from Mr. Wan’s occupation of the Lots since some time in 1976, Madam Cheng herself had been in continuous possession of the Lots at least since 1994, when she took up and changed the business to one of selling forage under the name of Tai Ping Hong (太平行) and applied for the business registration in her own name.   For Madam Cheng’s occupation of the Lots in her own right, since the cause of action accrued after 1 July 1991, the limitation period of 12 years applies.

40.  As to the requisite animus possidendi, Madam Cheng must show she had an intention for the time being to possess the land to the exclusion of all other persons, including the owner with the paper title.

41.  From her affirmation evidence, it was said that after Mr Wong had stopped collecting rent from Mr Wan in 1975, Mr Wan’s family had initially tried to locate Mr Wong but did not manage to find him.  The Court queried whether this showed a willingness to pay rent, which may point to the lack of an intention to exclude the paper title owner and is inconsistent with the intention to claim possession for the purposes of adverse possession. Wong Tak Yue v Kung Kwok Wai & Anor (No.2) (1997-98 1 HKCFAR 55 at 69F).

42.  Ms Chan relied on the case of Ho Hang Wan v Ma Ting Cheung as Personal Representative of Ma Sz Tsang, deceased [1990] 1 HKLR 649 for the proposition that the necessary intent can be established by unequivocal evidence of exclusive physical possession.

43.  However, Li CJ had distinguished Ho Hang Wan in the case of Wong Tak Yue and held that intention is a question of fact.  The decision in Ho Hang Wan needs to be regarded as one on its own special facts where a presumption on the requisite intention was made fromtheoccupier’s exclusive possession after the termination of the licence by the death of the licensor although the licensee did not receive notice of death.  Also, unlike the case of Wong Tak Yue, nothing in Ho Hang Wan pointed to an intention to pay rent.

44.  Thus, the Court ought to look at the facts to determine if Madam Cheng has the requisite intention despite the reference in her affirmation.  I am satisfied that Madam Cheng does have the requisite intention.  This is because the reference in the affirmation referred only to the willingness of Mr Wan’s family, including Madam Cheng’s husband and his siblings, to find Mr Wong during the initial period in 1975 after Mr Wong had stopped collecting rent. 

45.  There is no reference to a willingness to pay rent afterwards by anyone and there is certainly no reference to Madam Cheng’s willingness to pay rent ever, as she was not even part of the family at 1975. 

46.  I am satisfied that Madam Cheng has established the requisite animus possidendi of her predecessors to possess and to own the Lots to the exclusion of others for a period in excess of 20 years before the commencement of these proceedings, or alternatively for a period in excess of 12 years from 1994 onwards in her own right.

47.  I bear in mind the fact that Madam Cheng was not cross-examined and no full trial took place under the originating summons procedure.  I also bear in mind the fact that the declarations sought have serious repercussions, affecting title to land, a valuable commodity in Hong Kong.  However, based on the strength of the available evidence, including documentary evidence as well as independent contemporaneous evidence, I am satisfied that it is appropriate to grant the declarations sought.

Conclusion

48.  I am satisfied that on the evidence, Madam Cheng, the 1^st plaintiff, has established the necessary elements for adverse possession of the Lots.

49.  I will thus make the following orders:

(a) declarations to the effect that:-

i) The title of the defendant in respect of Lot 240A, Lot 241C, Lot 242D and Lot 346B in DD 107, Yuen Long, New Territories has been extinguished by virtues of sections 7 and 17 of the Limitation Ordinance;

ii) The 1^st plaintiff, having been in adverse possession for a period in excess of 20 years (or alternatively for a period in excess of 12 years from 1994) before the commencement of these proceedings, have acquired good possessory title to Lot 240A, Lot 241C, Lot 242D and Lot 346B in DD 107, Yuen Long, New Territories;

(b) There be a costs order nisi that there will be no order as to costs.  Unless any party applies to vary the costs order nisi within 14 days hereof, the costs order shall become an order absolute.

(c) Service of the Judgment, together with a copy of the sealed Order be effected by registered mail to the last known address of the Defendant. 

(d) A copy of the Order be inserted as an advertisement in one local Chinese newspaper published and circulating in Hong Kong.