TANG MAN KIT AND FOO TAK CHING suing as MANAGERS OF WAH YAN MO FAN HEUNG v. YAULEY TIMBER CO LTD

HCMP589/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 589 OF 2007

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J U D G M E N T

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1. This is an appeal by the defendant against the Order of Master Kwang given on 4 December 2007 granting to the plaintiff the order for possession sought by the plaintiff under Order 113 of the RHC in respect of land claimed by the plaintiff by its Originating Summons herein as well as giving costs of the action to the plaintiff.  The defendant seeks to set aside those orders of the master in this appeal.

2. The present proceedings were commenced by the plaintiff by Originating Summons for recovery of land alleged by the plaintiff to have been occupied by the defendant since some time not later than 22 February 2007 without the consent or authority of the plaintiff, being the managers of the registered owner of such land.

3. The land, the subject matter of this claim is described in the Originating Summons as being all those pieces or parcels of grounds situate lying and being at Yuen Long, New Territories, Hong Kong known and registered in the Land Registry as Lots Nos. 147, 148, 149,150,151, 505B, 317D, 318, 319, 321, 322A, 322B, 325B, 326, 327, 330, 331, 332, 335, 336, 337, 338, 152, 320, 33 and 334 all in Demarcation District No. 107 (hereinafter called “the Land”).

4. The one defence seemingly raised by the defendant (and understood by all concerned) was that it was not in occupation of the Land, and therefore the plaintiff is not entitled to the order for possession sought.

5. In fact, that defence put forward was the only issue before the master when this matter was heard below, and now in this appeal, the only issue before me for decision in this judgment.

Background and History

6. There is a history relating to the Land and the plaintiff’s attempt to recover possession of it.

7. In the seventies, the Land was leased by the plaintiff to one Hip Hing Co. Ltd by the plaintiffs by a yearly tenancy.

8. Hip Hing Co. Ltd was incorporated in 1974 and took over the business of Hip Hing Timber Co. which was founded in 1965 by one Chong Shui Kit (“Chong”), being the sole proprietor of Hip Hing Timber Co.

9. When Hip Hing Co. Ltd was incorporated, Chong became its director and major shareholder, and the person running Hip Hing Co. Ltd.

10. At the end of 1986, the plaintiff gave Notice to Quit to Hip Hing Co. Ltd to terminate the yearly tenancy in respect of the Land.

11. Despite such Notice to Quit, Hip Hing Co. Ltd did not vacate the Land but continued in occupation thereof.

12. As a result, the plaintiff issued a writ in HCA8000/1990 in an attempt to recover possession of the Land.  Hip Hing Co. Ltd was the defendant in HCA8000/1990.

13. The defence raised by Hip Hing Co. Ltd in HCA8000/1990 was that there was an oral agreement made between Chong and one Wong Tat To of the plaintiff to the effect that Hip Hing should be entitled to remain in possession of the Land until the government resumed the Land.  However, that alleged oral agreement was not evidenced by any memorandum in writing.

14. In March 1998, just when HCA8000/1990 was about to be set down for trial, Hip Hing Co. Ltd applied to challenge the capacity of Wah Yan Mo Fan Heung (“the Heung”) to hold the Land.  That application was dismissed after hearing and the plaintiff given leave to amend the writ.

15. Thereafter, Hip Hing Co. Ltd, by another application, challenged the manager’s capacity and authority to sue it. In March 1999 that application was also dismissed.

16. By yet a further application, Hip Hing Co. Ltd challenged that the writ in HCA8000/1990 was issued without authority.  This application was upheld by the judge at first instance, but on appeal by the plaintiff, the appeal was allowed by two judges sitting in the Court of Appeal.

17. On appeal by Hip Hing Co. Ltd to the Court of Final Appeal, the CFA held that the order appealed from was a final order and therefore the judgment by only two judges in the Court of Appeal was a nullity and had to be set aside.  The matter was remitted back to the Court of Appeal.  In May 2005, the Court of Appeal, comprising of three judges, allowed the plaintiff’s appeal from the first instance judge.

18. In the process, seven years had elapsed (from 1998 to 2005) and the matter was still not tried on its merits at trial.

19. In March 2006, Hip Hing Co. Ltd applied to re-amend its defence in an attempt to re-open the issue of the Heung’s status.  However, before that application could be heard, an order for winding-up was made against Hip Hing Co. Ltd on 12 July 2006 pursuant to an amended petition presented by the plaintiff for $1,458,582.69 being the outstanding legal costs owed by Hip Hing Co. Ltd to the plaintiff in CACV137/2002.

20. The present proceedings commenced when the plaintiff claims to have discovered some time around 22 February 2007 that the present defendant, Yauley Timber Co. Ltd had occupied the Land hitherto occupied by Hip Hing Co. Ltd up to the time of the winding up order made against Hip Hing Co. Ltd.

Plaintiff’s evidence

21. The one piece of direct evidence relied on by the plaintiff comes from Chan Wai Ying Percy, a female clerk engaged by the managers of the Heung.

22. She was instructed by the managers of the Heung to go to inspect the Land on 21 September 2007. She found the two main entrances, being Gates Nos. 1 and 2 (in the same manner referred to by the defendant’s surveyor Cheung Yue Yan) to be blocked with corrugated metal plates and that Gate No. 2 had been painted the business name of Yauley Timber.  She pressed the bell at Gate No. 2 but nobody answered (paragraph 2 of her affirmation refers).

23. She then went to the rear where Gates Nos. 5 and 6 were located.  When she pressed the bell there, a man opened the gate slightly for her but refused to let her in as requested by her and refused to give his name, but told her that he had been working for more than 30 years for Hip Hing and that he was now doing some decoration works for the office of Yauley.  She asked the man why were the Chinese characters of Hip Hing painted on Gates Nos. 5 and 6 and the man told her that those Chinese characters had been painted there for a long time in the past but should have been changed to Yauley and that the area was occupied by Yauley now.

24. The plaintiff also relies on other circumstantial evidence in the case as well as the background and history stated above.

25. The circumstantial evidence relied on by the plaintiff can be summarized as follows :

(a)	the evidence of the defendant’s surveyor that upon inspection of the site by him, he found that there was no fence or other clear demarcation between the Land and STT-YL358;
(b)	a plan prepared by the defendant’s surveyor (Exhibit “CYY-5”) which shows the Land as well as STT-YL358;
(c)	the fact that the Land, STT-YL358 and a further strip of government land adjacent to STT-YL358 together form one single enclosed area;
(d)	the fact that the plan Exhibit “CYY-5” prepared by the defendant’s surveyor shows a factory building and another structure both of which span both the Land and STT-YL358; and
(e)	that Chong Shui Kit is the major shareholder holding 380,000 out of 560,000 shares in the defendant and the fact that the defendant commenced its timber business (referred to as Wood Works) in or about 29 March 2006 as shown by the particulars in its Business Registration.

The defendant’s evidence

26. Evidence in the form of affirmations was filed on behalf of the defendant from its surveyor, Cheung Yue Yan and also from a warehouse keeper, Wong Po Yuk.

27. The affirmation of Cheung Yue Yan states that he was instructed by the defendant to ascertain whether the defendant did occupy any of the lots comprising the Land.

28. In that respect, he was shown a copy tenancy agreement dated 3 February 1978 entered into between the government and Chong Shui Kit as tenant under Short Term Tenancy No. YL358 in respect of a strip of land in Demarcation District 107.  That strip of land has been and will be referred to in this judgment as “STT-YL358”.  That tenancy agreement has been exhibited as “CYY-1”.

29. Cheung Yue Yan also produced and exhibited an agreement in Chinese made between Chong Shui Kit and the defendant dated 1 January 2005 whereby Chong Shui Kit allowed the defendant to use STT-YL358 for storing construction material.

30. Cheung Yue Yan continued to state in his affirmation that he carried out an inspection of the site on 27 June 2007 with a Madam Wong Po Yuk, the warehouse keeper of the defendant.  During that inspection he found no fence or other clear demarcation between the Land and STT-YL358.

31. He was told by Wong Po Yuk six properties identified by her as belonging to the defendant.  These six properties comprised Gates Nos. 1 and 2, two containers, a guard post and a one-storey concrete building.

32. There are at least four other entrances being Gates Nos. 3, 4, 5 and 6 all of which give access to the Land but he was told by Wong Po Yuk that those four gates did not belong to the defendant.

33. As for Gates Nos. 1 and 2, they were situated neither on the Land nor on STT-YL358, and he was told by Wong Po Yuk that Gates Nos. 1 and 2 were necessary in order to protect the construction material and the containers of the defendant stored on STT-YL358.

34. From the inspection and from the evidence gathered, he believed that the six properties identified by Wong Po Yuk as belonging to the defendant were not situated on the Land.

35. Wong Po Yuk made two affirmations effectively confirming that what was stated by Cheung Yue Yan in his affirmation as being told to him by Wong Po Yuk was indeed what she had told him during the inspection.

Decision

36. For the sake of convenience and to better appreciate the physical relationship of the Land, STT-YL358 and the government land referred to in the evidence adduced, I have annexed to this judgment Annex A which comes from the plan produced by Cheung Yue Yan as “CYY-5” but to which has been added on colour to differentiate the areas which comprised the Land, STT-YL358 and the government land and also showing those six properties and the various gates mentioned in the evidence (Annex A was originally appended to the written submission of Mr Koo, counsel for the plaintiff and was extensively referred to by both parties in the hearing of this appeal).

37. The green coloured boundary on Annex A denotes the entire enclosed area which is fenced off throughout that green boundary and which includes therein the Land, STT-YL358 and the government land.

38. The area whose boundary has been coloured blue is STT-YL358.

39. The government land is shown as all that strip east and southeast of STT-YL358 and is denoted on the plan with the words “GL” denoting that it is government land.

40. The rest of the area within the boundary coloured green minus STT-YL358 and the government land (i.e. all the area north and northwest of STT-YL358 forms the Land).

41. The pink colour on the government land denotes where the two containers, Gates Nos. 1 and 2, the guardpost and the one-storey concrete building are situated as referred to by Cheung Yue Yan in his affirmation.

42. This is an application under Order 113 being summary proceedings for possession of land.

43. As such, the usual procedure is that if there is some issue or question which requires to be tried, or that for some other reason there ought to be a trial, directions will be given for the further conduct of the proceedings. Usually those directions will be that the proceedings to continue as if begun by writ and for the parties to file pleadings as to facts.

44. In the present case therefore, what has to be decided on this appeal is whether, on that one disputed issue as to occupation of the Land by thedefendant, the defendant’s denial of occupation is believable, since the onus is on the defendant to show a triable issue.

45. No issue has been raised as to the plaintiff’s entitlement to the Land.

46. The only one issue in dispute between the parties is whether or not there is evidence to show that the defendant is in occupation of the Land.

47. It was submitted by the defendant that firstly, the name of Yauley painted on Gates Nos. 1 and 2 cannot be evidence to show that the defendant was in occupation of the Land since on the plan (Annex A to this judgment) it can readily be seen that Gates Nos. 1 and 2 does not give access directly to the Land, but rather to the government land.  Admittedly that must be right.

48. It was also submitted by the defendant that the direct evidence relied on by the plaintiff, namely what Chan Wai Ying Percy was told by the man at either Gates Nos. 5 or 6 that the area was being occupied by Yauley, no weight could be attached to those words since that man has not even been identified and that hearsay evidence from an unidentified person should carry no weight.

49. In so far as this second submission is concerned, if that evidence had stood alone, that submission of the defendant may well be correct.

50. However, in the present case, that evidence does not stand alone.  There are other circumstantial evidence relied on by the plaintiff and which must be looked at together.

51. The other circumstantial evidence comes from the defendant, in particular the plan prepared by the surveyor, Cheung Yue Yan.  That plan and Cheung’s evidence shows two facts which in my view are of the utmost importance in this case.

52. Firstly, Cheung’s evidence shows that there is no fence or other clear demarcation between the Land and STT-YL358.  Instead, the three areas which is made up of the Land, STT-YL358 and the government land is fenced off as a whole by a fence marked along the green boundary on the plan being Annex A to this judgment.

53. Secondly, the plan prepared by Cheung Yue Yan shows that there is a factory building and another structure both of which stands partly on the Land and partly on STT-YL358.

54. It has never been explained at all by the defendant how it could be in occupation of those parts of the factory and the other structure which stands on STT-YL358 without being in occupation of the other parts of the same factory and the other structure which stands on the Land.  Indeed this was one of the points made by counsel for the plaintiff in his submission but was never dealt with by counsel for the defendant in his reply.

55. It was stated in the affidavit of Cheung Yue Yan that he was told by Wong Po Yuk that Gates Nos. 1 and 2 were necessary to protect the construction material or containers stored on STT-YL358.  But if there is no fence or other demarcation between the Land and STT-YL358, that stated purpose of Gates Nos. 1 and 2 would be self-defeating if the defendant was not in occupation of the Land since there will be nothing to stop people from crossing over to STT-YL358 from the Land.

56. Finally, there is nothing contained in the affidavit of Cheung Yue Yan to the effect that he was told by Wong Po Yuk that the defendant was not in occupation of the Land.  All that was said by Wong Po Yuk to Cheung was telling him of the six properties which belonged to the defendant, that the purpose of Gates Nos. 1 and 2 and that Gates Nos. 3,4, 5 and 6 did not belong to the defendant.

57. Nor did Wong Po Yuk say in her own two affidavits that the defendant was not in occupation of the Land.

58. Given the above, and also that there is a common link between Hip Hing Co. Ltd and the defendant, that link being Chong Shui Kit, as well as the history and background relating to the plaintiff’s attempt to recover possession of the Land from Hip Hing Co. Ltd, I find it wholly unbelievable that the defendant was not in occupation of the Land.

59. In reaching this conclusion, I can only assume that the master also arrived at the same conclusion as I did and for the same reasons when he made the order that he did, being the order now appealed from.

60. Accordingly this appeal is dismissed with costs to the plaintiff (being a cost order nisi). The orders made by the master below is to stand in its entirety.