KAM SHAN MING DEVELOPMENT ENGINEERING LTD v. CHAN CHUNG CHAU AND OTHERS

DCMP 746/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 746 OF 2013

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DCCJ 877/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 877 OF 2013

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(Consolidated by order of Master J Chow dated 31 July 2013)

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JUDGMENT

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THIS ACTION

1.  On 13 March 2013, the plaintiff (“Company”) commenced action DCCJ 877/2013 and action DCMP 746/ 2013 to recover four lots of land and mesne profits from the 1^st defendant, (“Father”).

2.  The Father resisted and counterclaimed for declaration of his rights over the land by virtue of adverse possession under section 7 of the Limitation Ordinance (Cap 347). He also sought to invalidate a Chinese tenancy agreement signed on 5 January 2004 (“Tenancy Agreement”).

3.  On 10 May 2013, the 3^rd defendant, the Father’s wife (“Mother”), and the 4^th defendant, their youngest daughter, (“Daughter”) joined in these proceedings. (the three defendants collectively “Family”)

4.  By order dated 31 July 2013, the said two actions were consolidated and proceed as one action.

BACKGROUND

5.  All four lots of land are in Demarcation District No 105 (“DD105”), Yuen Long, New Territories, Hong Kong, namely:-

(a)  lot 767 and lot 768 ( “Lot A” and “Lot B” respectively and collectively “Lots AB ”).  They are connected to each other;  

(b)  lot 785 and lot 786 (collectively “Lots CD ”). They are connected to each other.

(the four lots collectively “Four Lots”).

6.  There are, in between Lots AB and Lots CD, some government land (“Government Land”) and lot 787 and lot 789 (the two lots are connected to each other and collectively “Leased Land”).  The Leased Land was surrounded by the Government Land which separated it from Lots AB and Lots CD.

7.  Wing Kee Land Investment Company Limited (“Wing Kee”) was the registered owner of the Four Lots from 5 February 1998 to 14 March 2012. 

8.  On 5 January 2004, the Tenancy Agreement was signed between the Father and Mr Wong Kong Wah (“Mr Wah”)whereby it was agreed that Lots CD were leased tothe Fatherfrom 5 January 2004 to 4 January 2009, at a rent of HK$800 per annum.  Fok Hei Management Limited (“Fok Hei”) was named as the landlord therein.  The Tenancy Agreement expired on 4 January 2009 without extension or renewal.

9.  By 2 April 2012, the Company became the registered owner of the Four Lots.  In or around June 2012, the Company suspected that part of some long pipes which were placed on the Government Land encroached upon part of Lot B.  It then posted notices on those pipes as well as on and around a public lamp post demanding the removal of the pipes from Lot B. 

10.  On or around 29 August 2012, the Company cleared up Lots AB with a bulldozer.  The work was interrupted by the Family who summoned the police accusing the Company to have trespassed their land.  The Family then fenced off part of Lots AB with iron plates.

11.  All the Company’s demands for delivery of vacant possession of the Four Lots met with no success.  It commenced the present proceedings.

12.  By a letter dated 30 April 2013, the Father, through his solicitors, notified the Company of his intention to rescind the Tenancy Agreement on the ground of fraudulent misrepresentation.

THE DEFENCE CASE

13.  The defence case is that in about November 1976, the Father  andthe Mother (“Couple”) came to know a Mrs Ho.  Mrs Ho, together with her husband, had run a chicken farm named as “勒園” (the “Lik Farm”) at No 2 Shek Wu Wai, Yuen Long, New Territories since 1947.  The Lik Farm occupied the Four Lots, the Leased Land and the Government Land (the “Whole Area”).  It has been fenced off by wire mesh of about 5 feet in height for rearing chicken and planting since 1947.  There were a farm house, various chicken sheds and feed stores on it.

14.  The Couple were informed by Mrs Ho that the Leased Land was rented from a Man’s family known as “文珠水堂” (“Tong”) whereas the owner of the other land of the farm was unknown.

15.  Being involved in a criminal case, Mr Ho had absconded.  Mrs Ho sold the Lik Farm to the Couple for HK$48,000 at the end of 1976.  In December 1976, the Father was granted a six-year lease by the Tong for the continuous use of the Leased Land.  The lease has been renewed from time to time since then.

16.  On 1 January 1977, the Family moved into the Lik Farm and continued to run the business of rearing chicken and planting.  They changed the name of the farm to “陳興洲農場”.  In early 1993, they ceased rearing livestock but kept on planting fruit trees up to present.

17.  The Family aver that they have occupied the Whole Area for their exclusive use since 1 January 1977 and claim to have acquired the adverse title to the Four Lots on 1 January 1997.

18.  As to the Tenancy Agreement, the Father admits to have signed it but challenges the validity of it.  He says that he would not have signed it but for the threat from Mr Wah, at the time when he was seriously sick.  He denies ever paying rent under it.

19.  In his pleadings, the Father sought a declaration for invalidity of the Tenancy Agreement on further ground of misrepresentation.  It was pleaded that he was induced to enter into the Tenancy Agreement by Mr Wah’s misrepresentation that Fok Hei was the landlord of Lots CD.

THE PLAINTIFF’S CASE

20.  The Company denies the Family’s case.  It avers that the Family had never occupied Lots AB for the period concerned. 

21.  As to Lots CD, the Family’s possession of them since 1 January 1977 does not attract much dispute.  The challenge goes to the Family’s intention to possess as required for adverse possession purpose.  It is contended that the Father’s signing of the Tenancy Agreement and his payment of rent has negated the Family’s intention to possess.

THE LAW

Adverse possession

22.  The general principle relating to adverse possession was elaborated in Powell v McFarlane [1979] 38 P & CR 452:-

(1)     in the absence of evidence to the contrary, the paper title owner is deemed to be in possession of the land, as being the person with the prima facie right to possession;

(2)     in order to establish adverse possession, one must be shown to have both factual possession and the requisite intention to possess (‘animus possidendi’);

(3)     factual possession requires an appropriate degree of physical control;

(4)     intention to possess involves the intention in one’s own name and on one’s own behalf, to exclude the world at large, including the paper owner so far as is reasonably practicable and so far as the law will allow;

(5)     the courts will require clear and affirmative evidence that the squatter, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world.  If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or works that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisite intention and consequently as not having dispossessed the owner.

23.  Powell v McFarlane was cited with approval by the Hong Kong Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai David [1998] 1 HKLRD 241.  The principle was further elaborated as:-

(1)     intention to possess may be inferred or presumed from the fact of exclusive possession and unequivocal acts of the squatter.

(2)     where the squatter has made self-serving statements as to what was his intention, the courts should approach them with some skepticism.  The courts would scrutinize the circumstances in which they were made and would give them such weight if any as they may deserve.  Conversely, where the squatter has made statements as to what was his intention and such statements are against his interest, the courts would usually accord to them considerable weight;

(3)     adverse possession can be described as “possession as of wrong”.  Thus, a squatter’s intention to pay rent if the owners had requested payment demonstrated that he was not intending to exclude the owner with the paper title but showed that he was treating himself as enjoying possession under a lawful title from the owners.  His intention to possess was not “as of wrong” but was “as of right;

ISSUES IN DISPUTE

24.  The issues in dispute are:-

(a)  have the Family been in factual possession of the Four Lots for 20 years or more before the commencement of the present proceedings?

(b)  did the Family have the requisiteintention to possess during the period of possession?

(c)  in relation to Lots CD, what is the effect and implication of the  Tenancy Agreement?

(d)  Whether the Father was induced to enter into the Tenancy Agreement by misrepresentation or for any reasons given bythe Fatherthat the Tenancy Agreement shall be rescinded?

BURDEN OF PROOF

25.  Being the registered owner of the Four Lots, the Company is prima facie entitled to possession of them.  The burden of proof is on the Family to prove that they have acquired the titles to them by means of adverse possession.

26.  At trial, Mr Wong, counsel for the Family, confirmed that for the purpose of establishing adverse possession, the Family solely relies on 1 January 1977 as commencement day, conceding that they have no evidence to support any earlier occupation of the Four Lots.  The period as required for adverse possession purpose is therefore 20 years.

27.  The witnesses for the Company are:-

(a)  Mr Wah, a former staff of Fok Hei. His evidence focused on his negotiation with the Father leading to the signing of the Tenancy Agreement;

(b)  Mr Man Lien Tai (“Mr Man”), an indigenous inhabitant of a village nearby the Four Lots.  He gave evidence mainly on witnessing the signing of the Tenancy Agreement and Lots AB have been laid waste;

(c)  Mr Chong King Kung (“Mr Chong”) was engaged by the Company to supervise the clear-up work of Lots AB in 2012. He gave evidence about his clear-up work being interrupted by the Father on 29 August 2012;

(d)  Mr Lau Siu On (“Mr Lau”), an indigenous inhabitant of a village nearby the Four Lots,  gave evidence that Lots AB had been left unoccupied for decades until recently.

28.  For the defence case,

(a)  the Father gave evidence mainly on his signing of the Tenancy Agreement;

(b)  the Mother gave evidence about the transfer of the Whole Area from Mrs Ho to the Family, the occupation and use of it since 1 January 1977;

(c)  the Daughter’s evidence concentrated on her applications for the livestock licenses in 1997 and 2000 (“2000 Licence”) respectively (collectively “Two Licences”) and the lease agreements with the Tong.

(d)  Mr Wai Yi Mau (“Wai”), a friend of the Father, gave evidence about storing some long pipes on the farm of the Family since 1977.

29.  The boundaries of the Four Lots are not in dispute.  As to the occupation history of the Four Lots, the expert reports respectively prepared by Mr Tang Wing Lun (“Mr Tang”) for the Company and Mr Raymond John King (“Mr King”) for the Family, together with a joint expert statement, were adduced without calling the makers.  Mr Tang’s opinion was limited to Lots AB.

THE TRANSFER OF THE FARM FROM MRS HO

30.  The starting point of the defence case is that the Family gained possession of the Whole Area through the purchase of the Lik Farm which had occupied the Whole Area since 1947.  I however find this allegation untrue.

31.  The allegation that Mr and Mrs Ho had begun to occupy the Whole Area for living and chicken rearing (with a number of structures built thereon including living house and chicken sheds) since 1947  is undermined by the aerial photos produced by the parties (which were taken in 1945, 1956, 1963, 1964, 1977, 1984, 1990, 2000, 2003, 2004, 2005, 2010 and 2012.)  The first photo that shows some structures on the land was taken in 1963.  They were all built on Lots CD and the Leased Land. 

32.  No structure has ever been built on Lot B.  As to Lot A, there had been no structure on it until 1984 when a very small part of a structure (“Structure”) which was built on the Government Land encroached upon a small part of Lot A (“Small Area”).  The Structure disappeared in the photo taken in 2000. 

33.  Apparently, Mr and Mrs Ho could not have run a chicken farm on the Whole Area since 1947. 

34.  I also find the allegation of Mrs Ho having sold her farm to the Couple unbelievable.  In my view, the alleged purchase price of HK$48,000 is unrealistic and apparently untrue.  It is the Family’s own evidence that in 1976, the annual rent for the Leased Landwas HK$1,200 only, the price for a 6-person residential flat in Kowloon City was around HK$10,000.

35.  The amount involved was so substantial that the Father was alleged to have sold his grocery shop to fund the transaction while the Mother had to exhaust all her assets to finance the operation of the farm.  Coupled with the fact that the Couple were only introduced to Mrs Ho shortly before the alleged transaction which was completed without the consent of Mr Ho, it is far from convincing that the Family would have completed the transaction by oral agreement without any documentary proof of payment or ownership.  

36.  Further, the first lease for the Leased Land between the Tong andthe Fatherwas for 6 years only.  It expressly provided that renewal of the lease had to be negotiated.  Given the uncertainty of the Leased Land which was in the centre of the Whole Area, it is highly unlikely that the Family would have paid for such a substantial amount for the use and occupation of the Whole Area which might be torn apart sooner or later.

37.  For reason of matters set out above and in the absence of any documents proving the existence of Mrs Ho or the transaction, the Family’s allegation that they gained possession of the Whole Area through the transaction with Mrs Ho at the end of 1976 is unbelievable.  

LOTS AB

38.  I will now turn to consider the dispute relating to Lots AB.

39.  It is the Family’s case that the Whole Area had been fenced off with wire mesh of about 5 ft in height to form one undivided farm by Mr and Mrs Ho since 1947.

40.  To this, the Company denies.  It says that Lots AB had been left unoccupied long before 1977 save that only the Small Area was encroached upon by a small part of the Structure from 1983 to 1993. It avers that Lots AB had never been fenced off by the Family until 2012. There was only a few historical wire meshes of about 2 feet in height remained on a small part of two sides of Lots AB.  They were unconnected and fallen disrepair.  They were not erected or used by the Family.

The Small Area on Lot A

41.  In my judgment, the Family’s case is bound to fail for various reasons.  There is no aerial photo showing Lots AB having been occupied or used after 1977.  It is clear that Lots AB have all along been overgrown with weeds with no structure built thereon except part of the Structure was built on the Small Area in 1984.  In the aerial photo taken in 2000, the Structure no longer existed and the Small Area was covered by trees. 

42.  The Mother said that the Structure was a pen built by the Family for keeping livestock from 1983 until early 1993. The cessation of livestock-rearing in early 1993 has led to the demolishment of the Structure.  Thereafter, they have planted fruit trees on the Small Area regulatedly until now.

43.  Absent the aerial photos for the period between 1991 and 1999 and given that the trees on the Small Area as shown in the aerial photos taken in and after 2004 could not be regarded as regulatedly planted, the fact that there were some trees on the Small Area appeared to be regulatedly planted in the photos taken in 2000 and 2003 does not provide the basis for a conclusion that the Family have planted fruit trees on the Small Area throughout the years, indicating continuous use of the land as suggested by the Family and Mr King.

44.  During cross examination, the Mother alleged that the bulldozer fell some fruit trees and saplings of fruit trees on 29 August 2012.  However, I share the view of Mr Lo, counsel for the Company, that had the fruit trees and the pipes been knocked down by the bulldozer, such facts would have been pleaded in the pleadings (it was only pleaded that the wire mesh was removed by the bulldozer) and covered by those photos taken by the Family on that occasion.

45.  Suffice it to say that, even if the Family had continuously planted some fruit trees on the Small Area, which I do not so find, planting of trees do not amount to sufficient control and exclusive possession of the land, let alone the Small Area only took a very small part of Lot A.

The pipes on Lot B

46.  The Family also allege that they have allowed Mr Wai to store some long pipes on part of Lot B continuously since 1977 to support their case.  Both the Mother and Mr Wai referred to some pictures taken in 2012 depicting some pipes being placed behind some wire mesh as evidence. 

47.  However, during cross-examination, Mr Wai admitted that he actually did not know whether the pipes were placed on Lot B or the Government Land connected to it.  He offered no reason why they would have chosen to place the 20 feet long pipes on Lot B instead of the Government Land which was closer to the road and more convenient for transportation. 

48.  I could not afford to ignore the fact that the location of the pipes as illustrated in Mr Wai’s drawing exhibited to his witness statement was in fact on the Government Land between the Leased Land and Lot B as well as another part of the Government Land between Lot B and the road, which was adjacent to the fencing and the structures on the neighbouring land.

49.  Likewise, the Mother gave evidence that the pipes were in fact stored at the unoccupied land near the wire mesh, somewhere between the Leased Land and Lot B.  Indisputably, that was the Government Land.  In the premises, the Family fail to prove that the pipes had been placed on Lot B but not the Government Land. 

50.  In fact, the Mother and Mr Wai’s evidence on this aspect together with the circumstantial evidence corroborates Mr Chong’s evidence.  Mr Chong said that in June and August 2012, he and the other workers found some long pipes on the Government Land.  As they suspected that part of them might have encroached upon Lot B, they therefore posted notices on the pipes and the public lamppost nearby to demand the owners of the pipes to remove the pipes away.  His evidence is supported by the photos taken by the Family in June and August 2012.

51.  I virtually do not accept Mr Wai’s evidence that he had continuously stored the pipes on Lot B for decades because the storage was rent free.  He failed to give a valid explanation on his ever-changing of evidence : from storing the pipes on the Family’s farm rent-free to his supply of free materials to the Family in return for the storage.  It is also unconvincing that he was allowed to store piles of 20 feet long pipes on Lots B rent free but made annual payment of HK$20,000 for storage of some materials in a shed of just 500 to 600 square feet on the Lease Land. 

52.  At any rates, regular storing of pipes on Lot B did not amount to clear and unequivocal acts of exclusive possession.

53.  The Family produced some other documents including photographs, utility bills, school handbook, delivery notes to support their case.  They nevertheless do not add much value to the Family’s case for lack of relevancy to Lots AB.   

Fencing

54.  The allegation that the Whole Area had been fenced off by wire mesh of 5 feet in height by Mrs Ho since 1947, is bound to fail, consequent upon my rejection of the Family’s evidence relating to Mrs Ho as elaborated above. 

55.  I do not ignore the fact that the Family gave no solid evidence on their own efforts on erection or repairing of any fencings on the boundary of Lots AB until recent years.   

56.  In any event, for the reasons set out below, on the issue of fencing, I reject the evidence of the Family.  None of the photos shows that Lots AB had been fenced off or formed a single unit together with the Leased Land, Lots CD and the Government Land (“Three Lots”). 

57.  Mr Wong seeks to argue that the aerial photos could not show small objects as a fence.  He invites this court to draw an inference that the boundary of the Whole Area was fenced off on the ground that the use of the Whole Area was apparently different from the neighbouring lands.  With due respect to Mr Wong, I see no logic in this argument.  Using different lands in different ways by different parties does not necessarily give rise to erection of fence between the lands.

58.  Indeed, the problem of Mr Wong’s argument also lies in the fact that the use of Lots AB was sharply different from the use of the Three Lots as shown in the aerials photos: Lots AB were apparently undeveloped (except the Small Area) whereas the Three Lots were occupied with many houses and sheds.  In the normal course of events, it is unlikely that Lots AB had been fenced off to form part of the farm but left unoccupied for decades.  The Family gave no credible explanation on this.

59.  The Mother tried to justify her case by saying that the Family needed wire meshes of 5 feet in height to prevent the chicken from running out of the farm.  Her evidence however did not sit well with the evidence of the Daughter.  The Daughter said that the chicks were only allowed to run free for a month before being put into cages and that wire mesh of 2 feet in height would be sufficient for their protection.  Conjoined with the fact that the chicken sheds were far away from the boundary of Lots AB and the chicks of one month old would unlikely take such a long run to reach there, I am not persuaded that the Family had any need to fence off Lots AB with wire mesh, still less of wire mesh of 5 feet in height.

60.  Even if Lots AB had been fenced off with wire mesh for protection of livestock, which I do not so find, the need for maintaining the wire mesh had gone with the cessation of livestock-rearing in early 1993. 

61.  In the end, Mr Wong resorted to the construction of some fencings and structures on the neighbouring land next to Lots AB from 1990, which ended up to be one single large structure surrounded by fencing in 2000, to argue that it formed a “natural” boundary and effective fencing for Lots AB.  I however fail to see how some structures and fencings which were built by third parties could lend any support to the Family’s claim for adverse possession.

62.  Likewise, I do not find the existence of a few short fencings on a small part of the two sides of Lots AB as shown in the aerial photos in recent years (the builders and the location of them were unknown) or the fencing off of Lots AB in 2012 as reported by Mr King could take the Family’s case any further.  They cannot satisfy the time and size requirement for adverse possession.

63.  For reasons aforesaid, the Family fail to prove that Mrs Ho or the Family had ever fenced off Lots AB for the period of time required.  At any rates, even taking the Family’s case to the highest, erecting some wire mesh on part of the boundary of Lots AB was obviously insufficient to secure exclusive possession of Lots AB.

64.  On balance, I find the Company’s case relating to Lots AB more believable.  The four witnesses of the Company gave consistent evidence (which covered different period of time) that Lots AB had been left unoccupied and covered by long weeds for decades until August 2012.  Some of them further realized that there were a few historical wire-meshes with more or less 2 feet in height, which were broken, unconnected and fallen disrepair, remained on or near part of one side of Lots AB.  Their evidence sits comfortably well with the aerial photos. 

65.  Further, Mr Chong was the one who posted up notices in June 2012 and cleared up Lots AB in August 2012.  His evidence that he and his workers could not have gained access to the pipes or cleared off Lots AB with one bulldozer if the wire mesh was of 5 feet in height and undivided is convincing.  The other two witnesses are indigenous inhabitants who had ample opportunities to observe the land for decades. 

66.  In my view, the fact that some of them had not actually entered into Lots AB does not prevent them from observing the situation of the land.  Instead, it goes along with their evidence that Lots AB were covered with long weeds and it served them no purpose to enter into them.  It also explains why some of them had not realized the existence of a few broken, divided historical short wire-meshes underneath the long weeds.

67.  I should add that I am not convinced by Mr King’s opinion that the Whole Area had formed a single farm long before 2012.  Not only that the basis upon which his opinion was formed is missing from the expert reports, such opinion runs counter to the evidence before me.

68.  By reason of matters set out above, I do not find that Lots AB had ever been fenced off together with the Three Lots to form one single undivided farm between 1977 and 1997 or any time before August 2012.  Nor do I believe that the Family had occupied or used Lots AB in the period concerned save the Small Area for a short period of time.

69.  In any event, in view of the location and nature of Lots AB, even if the Family’s allegations of their use of Lots AB is proved, which I do not so find, the combined effect of regular placing of some pipes on a small part of Lot B, construction of a structure and trees-planting on a small part of Lot A for a few years, fencing off both sides of the boundary of Lots AB are not capable of amounting to factual possession of Lots AB for adverse possession purpose, still less of satisfying the 20 years requirement.

ANIMUS POSSIDENDI

70.  I also find the Family fail to prove their intention to possess Lots AB as required for proving adverse possession.  It is the defence case that upon the acquisition of the farm from Mrs Ho, the Father has continued to run the farm over the Whole Area but changed the name of the farm from “勒園” to “陳興洲農場”. He also put a big signage “陳興洲農場” at the entrance of the farm.

71.  However, there is no corroborative evidence to justify such allegation.  On the contrary, in the first 3 leases relating to the Leased Land between the Father and the Tong, the farm was referred to as “勒園農場” and in many of the rental receipts as “力園”.  The name of “陳興洲農場” has never been referred to.  The Family gave no explanation on their silence on the name of their farm which alleged to have occupied the Whole Area to the Tong.

72.  Moreover, Mr Wai’s ignorance about “陳興洲農場” notwithstanding his alleged frequent visits to the farm of the Family since 1977 further undermines the Family’s case. 

73.  More importantly, the 2000 License did not cover Lots AB.  It specifically limited the Daughter to keep livestock at Lots CD and the Leased Land only. The Daughter offered no convincing explanation on not reporting Lots AB as part of their farm when she made application for the 2000 licence.  Such facts add further damage to the Family’s case. It is noteworthy that no livestock has actually been raised by the Family after mid-1993 notwithstanding the grant of the Two Licenses.

74.  The Family seeks to rely on the plans of a farm attached to the Two Licenses granted to the Daughter upon her application in 1997 and 2000 respectively to argue that Lots AB have all along been part of their farm.  I am not convinced.  In court, the Daughter admitted that she could not say for sure that the lines on those plans were to delineate the boundary of the farm.  Further, there is no evidence to suggest that they were accurate and updated plans. The fact that those two plans were similar to each other notwithstanding the passage of time raised doubt on their accuracies. By comparing the plan attached to the 2000 Licence to the aerial photo taken in 2000, it is safe to regard the plan as not accurate illustration of the farm as it stood by 2000.   

75.  Significantly, the Family offered no explanation on the different treatments for Lots AB and Lots CD by Mr Wah and the Father further destroys the Family’s case.  Given that Mr Wah was so eager to discharge his duty to lease the land entrusted with him in 2004 as contended by the Family, I  accept Mr Wah’s evidence that he had no reason not to include Lots AB into the Tenancy Agreement if Lots AB had all along been occupied by the Family for decades, bearing in mind that Mr Wah only asked for a nominal rent and in fact did not ask for actual payment as averred by the Father. I accept Mr Wah’s evidence on this particular matter.  I believe the Father had declined Mr Wah’s offer to lease Lots AB to him by reason of his lack of intention and financial means to occupy Lots AB.  

76.  Adopting the approach as elaborated in Wong Tak Yue v Kung Kwok Wai David, I am bound to give considerable weight to such statements which go to the Family’s intention and are against their interest.

77.  By reason of matters set out above, the Family fail to discharge the burden of proving their possession of Lots AB or the requisite intention to possess them in the period concerned.  I do not find that they have adversely possessed Lots AB.

MESNE PROFITS

78.  In the premises, the Company is entitled to mesne profits for the Family’s trespass to Lots AB.  Absent any evidence to show that the trespass took place before the Family interrupted the clear-up work of the Company on 29 August 2012, the mesne profits should be calculated from that day.  The parties agreed to adopt the nominal rent of HK$800 for Lots CD under the Tenancy Agreement as the basis for calculation of the mesne profits for Lots AB.  I award mesne profits at HK$800 per year since 29 August 2012.

LOTS CD

79.  As to Lots CD, the Family’s possession of them since 1977 is consistent with the aerial photos (evidencing a considerable amount of structures together with some fencings have been built and maintained thereon since 1977), the background facts as well as the evidence of the witnesses of both parties.

80.  As confirmed by Mr Lo, the Company has mounted no real challenge to the Family’s factual possession of Lots CD. The attack goes to the issue of their intention to possess.  It argues that the Tenancy Agreement and payment of rent under it has negated the Family’s intention to possess Lots CD.

Extinguishment of title

81.  In my judgment, the Tenancy Agreement or payment of rent, if any, lends no support to the Company’s argument.  I agree with Mr Wong’s submission that an acknowledgement of the title made after the expiry of the limitation period will not revive the title owner’s title. See Sanders v Sanders [1881] 19 ChD 373 (CA); para [230.856] Vol 35 Halsbury Laws of Hong Kong 2^nd Edition 2013.

82.  Given that the requisite intention to possess is usually a matter of inference and to be deducted from the physical acts themselves, even though there must be two separate but conjunctive elements to constitute legal possession,  I have no difficulty, on the evidence before me, in concluding that the physical acts of the Family since 1977 are compelling evidence to find that the Family had the requisite intention to possess Lots CD.  The case for adverse possession of Lots CD for more than 20 years has been made out.  The title of the owner was extinguished in 1997, prior to the signing of the Tenancy Agreement.  Accordingly, the Father’s signing of the Tenancy Agreement and payment of rent, if any, cannot assist the title owner (or its successor-in-title) whose title had already extinguished. 

83.  Mr Ho seeks to rely on section 23(1) of the Limitation Ordinance to argue that the title owner’s right of action shall be deemed to have accrued on and not before the date of the Tenancy Agreement.  He resorts to the case of Shun Kai Finance Company Limited v Wong Shun, unreported HCB 1166/2006, 6 October 2006 for assistance.  I am not impressed.  I agree with Mr Wong’s submission that that case concerned a debt due by a director and the combined effect of sections 23(3), 25(5) and (6) of the Limitation Ordinance which specifically provide for the rights of the parties after the expiration of the limitation period and has no application in adverse possession case. 

84.  In my view, in the absence of clear wordings in the statutory provision, I am unable to give section 23(1) the meaning that ignores or runs counter to any rule of common law.  The common law rule in Sanders v Sanders still applies.

85.  It follows that the extinguishment of the title owner’s title to Lots CD in 1997 extinguished also its rights to claim for rent and mesne profits payable during the period of adverse possession.  

86.  On my ruling that the limitation period had already expired before the Tenancy Agreement and that the owner’s title could not be revived after extinguishment, it is strictly not necessary for me to determine the effect of the Tenancy Agreement and the payment of rent, if any.  In any event, even if I were wrong in drawing such conclusion, I do not find the Tenancy Agreement can advance the position of the Company any further.

Tenancy Agreement

87.  I should start with the Father’s explanation on his signing of the Tenancy Agreement.  He said that he had been threatened by Mr Wah, who claimed to represent the landlord,  that the Family would be in troubles and be evicted from Lots CD if he refused to sign the Tenancy Agreement.  In fear of being wrongfully evicted and causing possible harm to the Family, at the time he was seriously sick and could not stand for long, he signed the Tenancy Agreement to prevent any of Mr Wah’s farther importunities and threat.  He denied of ever paying rent or meeting Mr Man.

88.  To this, the Company denies.  It says that, in the presence of Mr Man, the Father told Mr Wah about his occupation of Lots CD rent free for decades because the landlord had never shown up. He was nevertheless willing to pay rent for his continuous use of Lots CD but requested to pay a nominal rent due to his financial difficulty.  On the other hand, he declined Mr Wah’s offer to lease Lots AB to him due to his lack of intention and financial means to run them. The Father paid the first annual rent to Mr Wah on that occasion and paid the second annual rent to Mr Man in the following year.  Since then, he has refused to make further payment.

89.  On the argument in relation to Lots CD, I prefer the Father’s evidence. Mr Wah and Mr Man gave conflicting evidence on material issues.   While Mr Wah averred that Mr Man had tried hard to convince the Father to sign the Tenancy Agreement, Mr Man stressed that he had remained silence throughout the meeting.  Likewise, Mr Wah said that he had mentioned about Wing Kee during the meeting.  To this, Mr Man firmly denied.  Illogically, Mr Man was unable to account for the content of the rental receipt allegedly to have issued to the Father by Mr Wah in his presence. The inconsistencies of their evidence are unexplainable.  

90.  I do not believe that the Father had ever paid any rent under the Tenancy Agreement.  Not only because of the unreliability of Mr Wah and Mr Man’s evidence on this aspect as elaborated above, it is illogical that Mr Man would have collected the rent from the Father in subsequent years and reported the payment status to Mr Wah, at a time when Mr Wah had already ceased to be responsible for the matter immediately after signing of the Tenancy Agreement and shortly after, resigned from Fok Hei, not to mention Mr Man has never been an employee of Fok Hei, Wing Kee or Mr Wah.

91.  I prefer the Father’s evidence in this regard.   I believe the Father would not have signed the Tenancy Agreement but for the threat from Mr Wah and his poor health.  By that time, the Father was aged 69.  His poor health was recorded by the medical reports resulting from the medical treatments he received on the day immediately before and after the signing of the Tenancy Agreement.  Further, in consideration of his possession of Lots CD for more than decades, there existed no incentive for him to enter into a tenancy agreement with or to pay rent to a stranger who all of a sudden claimed to represent the landlord without any proof of authority.  It is highly unlikely that he would have entered into the Tenancy Agreement voluntarily without pressure.

92.  On the other hand, Mr Wah was duty-bound to lease the Four Lots.  There was strong reason for him to try every possible way to discharge his duty.  Putting the Father under pressure is apparently a possible mean for him under such situation.

93.  On balance, I accept the Father’s explanation on his signing of the Tenancy Agreement.  The fact that he had no intention to give up the possession of Lots CD was demonstrated by his subsequent acts : non-payment of rent, no application for renewal or extension of the Tenancy Agreement, no delivery of the vacant possession of Lots CD upon expiration of the Tenancy Agreement, claim for possessory title of Lots CD in the present proceedings.

94.  For reasons aforesaid, I come to the conclusion that the Father would not have entered into the Tenancy Agreement but for the threat from Mr Wah and his poor health.  His intention was not to acknowledge the title of the landlord but to prevent any of Mr Wah’s farther importunities and threat.  I do not find that the Father’s signing of the Tenancy Agreement in a moment of weakness in 2004 had an effect of negating the Family’s intention to possess Lots CD from 1977 to 1997.  

95.  I should add that, even if Mr Wah’s evidence is true, the Father had voluntarily entered into the Tenancy Agreement in the absence of threat, which I do not so find, the Father’s intention in 2004 did not have an effect of overturning or replacing his intention to possess  tens or seven years ago.  In view of the senior age and the poor health of the Father, change of circumstances in this case is material. 

96.  I should supplement that given the title owner’s title to Lots CD extinguished in 1997, neither Wing Kee nor Fok Hei had any rights in leasing Lots CD to the Father.  Besides, the fact that Mr Wah and the Father had not discussed about the contact of the landlord, the arrangement for performance of the Tenancy Agreement and neither party had taken any step to perform or enforce the Tenancy Agreement further supported the Family’s argument that none of the signing parties had any intention to create a legally binding agreement through the Tenancy Agreement and all Mr Wah intended was to obtain a purported tenancy agreement signed by the Father only. 

97.  In the premises,  even though the Family, due to lack of actual evidence from the Father in his witness statement and in court,  failed to substantiate their another pleaded case that the Father had been induced into signing the Tenancy Agreement by the misrepresentation of Mr Wah that the landlord was Fok Hei, I do not find the Tenancy Agreement would have an effect of negating the Family’s intention to possess for reasons set out above.

Invalidity of the Tenancy Agreement

98.  The argument does not end here.  This court is invited by the Family to declare the Tenancy Agreement invalid or that it has been validly rescinded. 

99.  In my judgment, there is strictly no basis to entertain the Family’s request.  I could not neglect the fact that neither Wing Kee nor Fok Hei is a party to the present proceedings.  On the other hand, the Company was not a party to the Tenancy Agreement.  The reality is the Tenancy Agreement expired in 2009, long before the Company became the owner of Lots CD.  There was no legal relationship between the Company and the Father arisen from the Tenancy Agreement.  They have no legal right to enforce against each other under it.  The relevancy of the Tenancy Agreement in these proceedings goes to the intention to possess only.  

100.  After all, any right to sue on the Tenancy Agreement has been extinguished.   A declaratory relief will serve no practical purpose here and shall not be granted.

101.  In all, for the present purpose, the Family do not need a declaration for the invalidity of the Tenancy Agreement so as to succeed its claim for Lots CD.  On my ruling that the Tenancy Agreement did not have the effect of negating the Family’s intention to possess as elaborated above, the requisite intention to possess for the purpose of adverse possession has been satisfied.

ENCROACHMENT

102.  Mr Lo submits that in the event this court finds in favour of the Family that they have established adverse possession for any lot of the land, this court should refuse to make a declaration of possessory titles to the Family under the principle of encroachment.  He argues that where a tenant has encroached upon adjoining or adjacent land (belonging to a third party) beyond the boundaries of the land demised to him under his lease, a presumption arises that the encroached upon land has been occupied as an addition to the landlord’s land and the right to possession vests in the landlord at the end of the tenancy.

103.  I am slow to accede to such request.  This action has proceeded without joining the Tong as a party.  My finding of facts solely affects the parties to this action.  The issue of encroachment should not be an issue which calls for adjudication in this action. 

104.  At any rates, the law on encroachment only operates on presumption.  In other words, where the Family can adduce credible evidence to rebut the presumption, the court may refuse to apply this presumption.

105.  There is simply no evidence to challenge the Family’s case that the Tong was aware of their occupation of Lots CD and had no claim for the land.  Further, in the first four leases between the Father and the Tong which covered the period from 1 January 1977 to 31 December 1997, the leased land was “a big piece of land in Lik Farm together with a stone house and several chicken sheds erected thereon”.  In the lease between the Tong and the Daughter in 2012, the leased land was confined to the Leased Land only.  There is objective evidence to show that the Tong has limited its tenancy to the Leased Land only even though it should have been aware of the Family’s occupation of Lots CD since 1977.

106.  The new lease between the Daughter and the Tong will only expire in 2022.  Lots CD were separated from the Leased Land by the Government Land to which the Family had no claim.  There is actually no evidence to contradict the Family’s case on this matter. I find no room for an argument on the issue of encroachment in these proceedings.

CONCLUSION

107.  Having considered all the evidence, legal authorities as well as the submissions of both parties, I am satisfied that the Family have proved their claim for Lots CD and have acquired possessory titles to them by adverse possession. 

108.  On the other hand, the Family have failed to discharge their burden of proof on their claim for Lots AB.  The Company is entitled to recover vacant possession of them by virtue of the Company being the registered owner of them. 

109.  At the start of the trial, the Company confirmed that it sought to discontinue its claim against the 2^nd defendant.

ORDER

110.  For Lots AB, I give judgment in favour of the Company and dismiss the Family’s counterclaim.

111.  For Lots CD, I dismiss the Company’s claim against the Family and allow the Family’s counterclaim for adverse possession.

112.  I make an order that: -

(a)  the Family do deliver vacant possession of Lots AB to the Company forthwith;

(b)  the Family do pay mesne profits at HK$800 per annum to the Company for the occupation of Lots AB from 29 August 2012 to the date hereof, in the sum of HK$3,024;

(c)  the Family do pay the Company mesne profit at HK$800 per annum after delivery of this judgment until delivery of vacant possession of Lots AB to the Company;  

(d)  a declaration that the title of the Company to Lots CD have been extinguished by virtue of sections 7 and 17 of the Limitation Ordinance and the Company has lost its rights to bring any action to recover Lots CD;

(e)  a declaration that the Family have acquired a good possessory title to Lots CD;

(f)  leave granted to the Company to discontinue its claim against the 2^nd defendant.

COSTS

113.  As neither party has been completely successful, I make an order nisi that each party shall bear its own costs of the action (including the counterclaim and all costs reserved).

114.  The order nisi shall become absolute in the absence of any application to vary the same by way of Summons within 14 days from the date hereof.

115.  Lastly, I thank both counsel for their assistance.