WAI HA KAN v. HO TZE LEUNG AND OTHERS

HCMP 1203/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1203 OF 2006

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J U D G M E N T

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1.  The plaintiff’s claim is for a declaration of adverse possession.  The property in question was known as House No. 53 of Ho Ka Yuen in Kowloon, (hereinafter called “House 53”).  It used to stand on the Remaining Portion of section D of lot 577 in Survey District No. 1 registered in the Sai Kung Land Registry.  The defendants were the registered owners of this lot. 

2.  Ho Ka Yuen was close to the Hau Wong Temple on Junction Road, Kowloon City.  It was resumed by the government on 17 March 2000.  The resumption compensation for this lot, including House 53, had been paid to the defendants.  The plaintiff therefore also claims an account and payment by the defendants of the compensation attributable to House 53.

The Change of the Plaintiff

3.  This trial started on 29 January 2008.  The plaintiff then was Ng Kwok Wah suing as the administrator of his deceased father, Ng Mun Tong.  The claim was based on the adverse possession by Ng Mun Tong of the piece of land on which House 53 stood for over 20 years.  This piece of land used to be leased out by some of the defendants and the predecessors of the other defendants, who were the then registered owners, to one Unilight Company Limited, a film studio. 

4.  Ng Mun Tong had purportedly acquired in December 1960 the structure standing on this land from two persons who were working for another studio called Great Wall Studio.  Great Wall Studio also operated inside the premises leased to Unilight. 

5.  Unilight had by a consent judgment dated 3 October 1974 acknowledged that the then registered owners were its landlords in respect of lands in Ho Ka Yuen, including the land in question.  Execution of the judgment for possession was stayed until 30 April 1976.

6.  So even if Ng Mun Tong was an adverse occupier of the land since 1960, he was until 30 April 1976 only occupying the same against the interests of Unilight, but not that of the registered owners.  The reason being that it was Unilight as the tenant that was entitled to possession of the land before 1 May 1976 (see Fairweather v St Marylebone Property Company Limited [1963] AC 510).

7.  The then plaintiff tried to argue that Ng Mun Tong’s adverse occupation of the land against the registered owners had indeed started in 1960 by submitting that the tenancy from the then registered owners to Unilight was somehow defective.  But that was purely based on guesswork and could not defeat the force and effect of the consent judgment.  This judgment in fact covered a very large piece of land in Ho Ka Yuen.  It also required the film studio to pay the then owners mesne profits at $9,000 per annum from 1 November 1994 to 30 April 1996 plus arrears of mesne profits totalling $12,750. 

8.  The then plaintiff eventually accepted that adverse possession by Ng Mun Tong of the land in question as against the registered owners only started on 1 May 1976.  But Ng Mun Tong passed away on 12 May 1991 and did not complete the 20-year occupation required for adverse possession at that time. 

9.  On the third day of the trial, the present plaintiff, being the surviving wife of Ng Mun Tong and had continued with the possession of the land in question after her husband’s death, applied and was allowed to be made the plaintiff in substitution of her deceased husband.

Location of House 53

10.  The trial was then adjourned for the defendants to adduce evidence, if any, to challenge the continuation of occupation of House 53 by the present plaintiff.  The trial resumed on 7 May 2009. 

11.  During the first part of the trial, there was no dispute regarding the location of House 53.  The parties were also contented to have the witness statements from both sides admitted without cross-examination.  However, when the trial resumed on 7 May, both counsel informed me that there was disagreement as to the location of House 53.

12.  The defendants had previously produced a DVD which was not relied on on the last occasion, but it was referred to when the trial resumed.  The DVD purportedly designated a structure of a different as House 53.  It was alleged to be at a location adjacent to that asserted by the plaintiff.  Evidence was then called by both sides on the location of this house. 

13.  The plaintiff called her son, Mr Ng Kwok Wah.  He referred to his visit to the Lands Department and how he was told by one Miss Pang there that House 53 was within the Remaining Portion of section D of lot 577.  He was also given by Miss Pang a survey map of Ho Ka Yuen.  He enlarged the map and plotted House 53 on it.  In carrying out the plotting exercise, he relied on his memory of the points of contact between House 53 and the neighbouring houses and structures.  He referred to the access way to the house which was an inclined path.  On the south-western side of the path was a structure with a front arch bearing at the top the Chinese characters “大新善月”.  House 53 was at the end of this path.  The north-western side of House 53 leaned against the long wall of the film studio. 

14.  There were also a few steps leading up to a corridor inside House 53.  This corridor was also the access way to the film studio behind the house.  This corridor was enclosed within the house and situated along its south-western side.  The door of the house opened to the middle of the corridor.  On the other side of the corridor were two kitchens, a toilet and some areas for storage of wood materials.

15.  Mr Ng Kwok Wah had also been to the Rating and Valuation Department to enquire on the value of House 53 for the purpose of assessing the value of his father’s estate.  He was advised by one Mr Leung there that the ground covered by the structure of House 53 was some 350 square metres, and the total built-up area of the house, which was a two-and-a-half-storey structure, was at 5,500 square feet (or 510.97 square metres).  The witness statement of his elder brother, Ng Wah Leung, Peter, which was unchallenged, also referred to a store operated by one 蓮姑 at the back of House 53.

16.  The defendants called a Mr Cheung to testify to the location of House 53.  He had been living in House No. 6 of Ho Ka Yuen from about 1950 to about 1988.  He was acquainted with the defendants.  He also knew Ng Mun Tong, the deceased, who was operating a factory making chests with camphor wood in House 53.  He confirmed that the inclined path adjacent to 大新善月 was the access way to House 53.  He said House 53 was at the end but on one side of the path.  He confirmed that one side of the house leaned against the long wall of the film studio.  He also confirmed that there was a Kwan Kee Store 坤記士多 operated by 蓮姑 which was next to House 53. 

17.  Mr Cheung differed from Ng Kwok Wah on the location of the corridor leading to the film studio.  He said the corridor was underneath a structure occupied by the security staff of the studio, and the structure was inside the wall of the studio.  He also said the steps leading up to the entrance of this corridor were right outside House 53.  He also said that the area of House 53 was only about 1,000 square feet (or about 93 square metres).

18.  So both Mr Ng and Mr Cheung said that House 53 was at the end of the inclined path leading to the film studio.  The differences between them were on the area of the house and on whether the corridor leading to the studio was inside the house.  Mr Ng said it was within and situated to the south-western side of the house.  Mr Cheung said that it was not within the house but the steps leading to its opening were at the south-west of the house.  However, both of them said that the house leaned against the wall of the studio and there was the store operated by 蓮姑 on another side of it.

19.  From the evidence, it is clear that both Mr Ng and Mr Cheung referred to the same location for House 53 though they differed on its exact boundaries and whether the corridor to the studio was inside the house.  The defendants have also produced a plan drawn by one of the defendants from memory.  This plan, although not to scale, also shows House 53 as against the long wall of the studio.  The steps leading to the access to the studio are drawn outside House 53.  To this extent, the plan confirms the evidence of Mr Cheung.

20.  I should also point out that the house as identified by Mr Ng on a photograph as being House 53 was disputed by Mr Cheung who said that it was the structure occupied by the security staff of the studio.  However, this dispute does not really matter as there is no indication on the photograph of whether this house was inside or outside the wall of the studio.  It is only at the end of the inclined path.  I am also not concerned with the exact boundary or configuration of the house at this stage. 

21.  Bearing in mind that the house had been burnt down in about year 2000, this difference of evidence now does not impinge on the credibility of Mr Ng or Mr Cheung. 

22.  The defendants also agree that House 53 used to stand on a part of the Remaining Portion of section D of lot 577.  On the basis of the evidence led by both sides, I am satisfied that House 53 was within this lot in Survey District No. 1 and it leaned against the wall of the film studio.  I reject the suggestion made in the defendants’ DVD that it was on the outside of the inclined access path to the studio which was adjacent to the location referred to by both Mr Ng and Mr Cheung.  In fact, as pointed out by Mr Cheung, there was a path separating House 53 from the house referred to in the DVD.  This path led to the store of 蓮姑 at the back.

The Law on Adverse Possession

23.  There is no dispute on the elements that constitute a successful claim of adverse possession.  The first element is an open, single and effective exclusive occupation and control of the land in question.  The occupier should also have the necessary animus possidendi, i.e. it should have the subjective intent to so occupy, which intent is objectively manifested.  The occupation is also as of wrong.  If such occupation has continued for 20 years (which was amended to 12 years in 1991), the title of the registered owner to the land would be extinguished (see Wong Tak Yue v Kung Kwok Wai & Another Final Appeal No. 1 of 1997).

The Possession of House 53

24.  On the evidence of Mr Ng Kwok Wah, his father operated a Mau Sing Company manufacturing wooden furniture there.  Initially, the company operated on Fuk Lo Tsun Road of Kowloon City.  His father, Ng Mun Tong, had a friend called Sa Lin Ching, who was a carpenter of Great Wall Studio.  Sa together with a colleague, Tsui Po Chuen, had acquired from Great Wall Studio the structure known as House 53.  They then sold it to Ng Mun Tong for $10,000 in December 1960.  Ng Mun Tong then pulled it down and spent a year to rebuild it into a two-and-a-half-storey structure with timber covering.  He then moved his business into the new structure in July 1962. 

25.  Ng Kwok Wah also produced various documents issued by the Business Registration Office, the Inland Revenue Department and the Commerce and Industry Department to prove the operation of his father’s factory inside House 53 from July 1962 to 1982.  Ng Mun Tong retired in 1983.  He then used the house to store his unsold furniture, unused materials and machinery.  In 1987, he let out the ground floor to one Mr Ng for three years at $5,000 per month.  At the expiration of that tenancy in 1990, he let the same to two brothers surnamed Chan for use as a workshop for their decoration business.

26.  Ng Mun Tong passed away on 12 May 1991 because of a traffic accident.  The premises were finally let to one Kam Yu Yee trading as Dong Yung Furniture Company.  After the death of Ng Mun Tong, the rentals derived from the premises were collected by his surviving wife, the present plaintiff.

27.  Save the letting of the premises, this evidence on possession was not challenged by the defendants.  Their evidence as referred to below makes it clear that they have no ground of challenge. 

28.  Mr Ng Kwok Wah further produced a letter dated 13 December 1979 from the solicitors of two of the defendants to Ng Mun Tong.  The letter asserted that Ng Mun Tong had been possessing House 53 as a trespasser since before April 1969.  The letter demanded possession with a threat of litigation. 

29.  There was a further letter dated 26 November 1982 from another firm of solicitors for the defendants.  It was not produced.  However, its contents can be gleaned from a counsel’s opinion given to Ng Mun Tong.  The solicitors were asserting something new in the letter, namely, that there was a gratuitous licence given by the registered owners to Ng Mun Tong to occupy House 53.  These solicitors also purported to demand possession possibly by revoking the alleged licence.  Ng Mun Tong’s solicitors replied on 26 November 1982 by asserting that the title of the defendants had been extinguished by Ng’s adverse possession since 1960. 

30.  The inconsistent attitude adopted by the defendants in their two letters show that they did not know where to anchor their case at that time. 

31.  If Ng Mun Tong should have operated his factory inside House 53 to the exclusion of others, he was prima facie having an open and exclusive occupation and control of the same.  His exclusive occupation was also objectively manifested.  Regarding whether his occupation was as of right or as of wrong, I would refer to the other evidence of the defendants. 

32.  The third-named defendant, Ho Kam Chuen (who did not attend the second part of the trial for health reasons), said in his witness statement that Unilight had leased a piece of land in Ho Ka Yuen for movie making.  Great Wall Studio also operated therefrom.  The land on which House 53 stood had also been let to Unilight.  He himself had also worked for Unilight and knew Tsui Po Chuen as the head of the carpenters there, but he had not heard that Tsui had purchased House 53. 

33.  It was one Mr Leung Wai Chee of Unilight who had paid rent to the landlords.  He was a director of Unilight (the records of Unilight filed with the Companies Registry show that Leung Wai Chee had passed away on 26 June 1969).  However, in about 1973, Unilight defaulted in rental.  Legal proceedings were then instituted which led to the consent judgment abovementioned. 

34.  Ho Kam Cheung and his wife originally thought that Ng Mun Tong was working for Unilight in House 53 or Ng was allowed to occupy the house by Unilight.  However, Ng was still operating in that house after the consent judgment.  Ho and his wife then sought payment of rent from Ng, but Ng refused to pay any.  Ng told them that he had paid the rent to Leung Wai Chee and that Leung Wai Chee owed him a lot of money.  He told them to approach Leung for payment of rent.  He maintained his refusal from 1975 to 1979.  Every time when he was asked to pay rent, he would ask the defendants to approach Leung Wai Chee. 

35.  Between 1983 and 1990, Ho Kam Cheung and his wife found an occupant on the second floor of House 53.  They managed to collect $40 per month from this person for a few months as part of the monthly rent for occupying the land on which House 53 stood, but later the occupant refused to pay as Ng Mun Tong told him not to.

36.  There were other occupants afterwards, but they all refused to pay any rent.  They instead asked the owners to seek payment from Ng Mun Tong.  This evidence was repeated by Ho’s wife, Madam Lo Yuen Shuk.  She said no legal action was taken against Ng Mun Tong because the rental was only $100 per month. 

37.  The defence witness, Mr Cheung, also confirmed in the witness-box that after the closure of the movie studio, Madam Lo had complained for many years that she could not obtain any rental from Ng Mun Tong.  He never heard that Madam Lo had collected any rental from Ng.

38.  I would not regard the suggestion by Ng Mun Tong to Ho Kam Cheung that he could collect rental from Leung Wai Chee as an indication of Ng’s willingness to pay rent.  Leung had already died on 26 June 1969.  If Ng was willing to pay rent, he would have paid it by himself.  If Leung should owe Ng money, it was just a matter between Ng and Leung and had nothing to do with the defendants.  Ng had no right to require the defendants to collect the debt due from Leung for him.  He was a businessman and should not be mistaken about this.  I think when he asked the defendants to collect rent from Leung, he merely said it as a way of refusing to pay rent to the defendants. 

39.  Regarding the collection of money from an occupant sometime between 1983 to 1990, those few payments of $40 each were obviously made by the occupant without the knowledge or consent of Ng Mun Tong as Ng later directed the occupant not to pay any more.  His later tenants also refused to pay any rent.  In the premises, it is clear that Ng Mun Tong was occupying House 53 as of wrong since 1 May 1976.  His adverse occupation was continued by his wife who kept the structure there and collected rental from the tenants.

40.  The defendants also argued that there was no business registered as Dong Yung Furniture Company and the government had also confirmed that no compensation had been paid to such company in respect of the resumption of House 53.  I do not think such evidence can assist the defendants.  Mr Kam might have used another business name or the name of a limited company for the letting and occupation of House 53.  The fact that the defence witnesses did not know and had not heard about Mr Kam is again neither here nor there.  Any compensation might have been paid to Mr Kam’s other entity which was used for the letting of the house.

41.  Counsel for the defendants also challenged the lack of utility receipts produced by the plaintiff and submitted that Ng Mun Tong had no intention to possess the house, but that submission disregarded the defendants’ own evidence on the occupation of the premises by Ng Mun Tong and his tenants, the defendants’ attempt to collect rental, and Ng’s refusal to pay.  Furthermore, there is the clear case that the defendants have never recovered possession of House 53.  If they should have done so, they would have said so. 

42.  The premises had also not been disposed of by the plaintiff as suggested by Madam Lo.  This was merely Madam Lo’s guess without any foundation.  There is the evidence of the plaintiff’s son that the premises had been let out to tenants, which I accept.  If the plaintiff should have disposed of House 53, the new owner would also claim the compensation from the government or from the defendants.  

43.  Counsel for the defendants further attacked the plaintiff for her failure to produce documentary evidence to prove her lettings.  However, even if there was no letting, House 53 was still in the exclusive possession and control of the plaintiff, and the defendants were unable to obtain any rental from her or from her tenants for the occupation.

44.  Furthermore, the premises were suitable for use as a furniture factory.  It would have been a waste if it was not let out, and I would not believe that the plaintiff or her sons would have been contented to leave the premises vacant. 

45.  I also find Mr Ng Kwok Wah an honest witness.  He has been straightforward in his evidence.  He was unshaken despite challenges.  I accept his evidence that the premises had been let out from 1987.  I also find that the plaintiff had no reason whatsoever to abandon House 53. 

Decision

46.  I therefore declare that the defendants’ title to House 53 had been extinguished, and the plaintiff had acquired a possessory title of the same prior to 17 March 2000 when the land was resumed by the government. 

47.  I also order the defendants to pay the plaintiff the resumption compensation for House 53 of which they had received from the government, with the amount to be assessed.  If there should be any dispute on the amount, the matter can be listed before me for assessment.

48.  I also make an order nisi that the defendants do pay the plaintiff the costs of this action.