HSIEH HAW SHANE GARY v. THE ESTATE OF CHANG HO YING deceased

HCA 691/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 691 OF 2016

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JUDGMENT

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Introduction

1. This matter, an application for a declaration that the title of the registered proprietor of a property was extinguished by adverse possession, came before me on 24 May 2017, as an application for judgment in default of defence, pursuant to Order 19, rule 7.  On that day I declined to enter judgment for the plaintiff, first because I was not satisfied that the plaintiff was in adverse possession, and second, because trustees holding the proceeds of the sale of the property were not parties to the proceedings.  I accordingly adjourned the proceedings sine die.

2. The matter is now before me again for further consideration.

The proceedings

3. The plaintiff’s (“Gary’s”) claim is for declarations under the Limitation Ordinance, Cap 347, that he has obtained possessory title by virtue of his adverse possession of a property known as 4^th Floor of House No 10, Block B, 8 Wan Fuk St, Hok Yuen, Kowloon, (“the property”).  From 3 November 1965, legal title to the property was held by Madam Chang Ho Yin, and from her death on 16 August 1966, by her Administrator, the defendant.

The genealogy

4. In order to understand how the claim arises it is necessary to examine the genealogy of the various parties.

5. Gary is one of the children of a marriage between Hsieh Tze Ping and Madam Lee Tit Lan, (“Madam Lee”).  His evidence is that that marriage subsisted between about 1942 and 1965.

6. Mr Chang Hsien Tuck was married to the deceased, Madam Chang Ho Ying, (“Madam Chang”).  There were four children of that marriage.  In 1966, Madam Chang died intestate.  She had purchased the property in November 1965.  Letters of Administration were granted to Mr Chang on 4 April 1967. 

7. At that time, under an intestacy, Mr Chang was the sole beneficiary of Madam Chang’s estate.  In 1966, prior to the passing of the Intestates’ Estates Ordinance, Cap 73, in 1971, an intestacy in Hong Kong was governed by the law of England as it was on 5 April 1843: see The Law Reform Commission of Hong Kong, Report on the Law of Wills, Intestate Succession and Provision for Deceased Persons’ Families and Dependents. 

8. However, Mr Chang did not transfer title to the property into his own name as beneficiary, but simply remained on the title as the Administrator of the estate.  His legal interest in the property was a chose in action for the proper administration of the estate: see The Law and Practice of Intestate Succession, Sherrin & Bonehill, 3^rd ed, §§5-017 – 5-020.

9. On 2 December 1970, Mr Chang and Madam Lee married, Gary thereby becoming the stepson of Mr Chang. 

10. Mr Chang died intestate on 11 February 1984, and Letters of Administration of his estate were granted to Madam Lee, Gary’s mother, on 14 November 1986.  After the death of Mr Chang, Madam Lee took possession of the property which was rented out. 

11. At the date of his death, Mr Chang had not completed the administration of Madam Chang’s estate.  Despite Madam Lee obtaining Letters of Administration in respect of Mr Chang’s estate, she did not seek or obtain Letters of Administration de bonis non in respect of Madam Chang’s estate.

12. Where Letters of Administration de bonis non are not sought in an intestacy, the chain of representation is broken: see Probate and Administration Ordinance, Cap 10, section 34(4)(a); Probate Practice in Hong Kong, Sherrin, 3^rd ed, §§6.097 – 6.098 and Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 20^th ed, §8-39.

13. In around 1998, Madam Lee moved to Malaysia and handed over the keys of the property to Gary.  Thereafter he paid the government rates and government rent for the property, and collected rent from the property.  In addition, in 2003, Gary engaged a decoration company to conduct maintenance on the property and he paid the associated expenses.  In 2011, Gary paid the apportioned cost for drainage repairs for the property to the Buildings Department.

14. On 4 March 2002, Madam Lee had died in Malaysia.  Gary duly obtained Letters of Administration in respect of Madam Lee’s estate.

The Lands Tribunal involvement

15. The evidence establishes that on 19 December 2013, pursuant to an order made by the Lands Tribunal, Nos 7 & 9, Wan Shun Street, and Nos 8 & 10 Wan Fuk Street Kowloon were acquired by Eversound Investments Ltd.  The evidence establishes that the Lands Tribunal had been satisfied that Eversound had acquired in excess of 90% of the titles to the whole of the property, and that accordingly it should be sold by way of public auction for the purposes of redevelopment under section 4(1)(b) of the Land (Compulsory Sale for Redevelopment) Ordinance, Cap 545.

16. The proceeds of sale, duly paid by Eversound, are held by trustees.  Mr Hu has put before me a letter from the trustees establishing that they have made a diligent search for beneficiaries to whom they might pay the proceeds of sale, but that they have been unable to locate any beneficiaries. 

The issue of the writ

17. The writ was issued on 16 March 2016, but could not be served as the registered proprietor Madam Chang Ho Ying had passed away on 16 August 1966, and the administrator of her estate, her husband at the time of her death, had also passed away.  Pursuant to an order, the writ was served on the Official Solicitor on 15 December 2016. 

18. No defence has been filed, and the Official Solicitor is functus officio following service.  Pursuant to an order of the Master the action proceeds in the absence of any person representing the deceased’s estate.

The evidence to establish adverse possession

19. As no Letters of Administration de bonis non in the estate of Madam Chang were issued following the death of Mr Chang who held Letters of Administration in her estate, there has been no one who might grant permission to Gary or any other person to occupy the property.

20. Any permission that might be thought to flow from Mr Chang permitting his second wife, Madam Lee to occupy the property, automatically terminated on the death of Mr Chang: see Ho Hang Wan v Ma Ting Cheung, as Personal Representative of Ma Sz Tsang, deceased [1990] 1 HKLR 649, CA.  Consequently from the death of Mr Chang on 11 February 1984, any occupation of the property by Madam Lee became adverse possession.  This decision was followed by Mr Recorder Edward Chan SC in Lau Siu Kwong & Ors v The Personal Representatives of Lee On Yuen, Deceased (unreported, HCA 10001/2000, 9 April 2001).

21. As Madam Lee had no authority to grant any licence or permission for any other person to occupy the property subsequent to the death of Mr Chang, her act of handing the keys to Gary, thereby allowing him to occupy the property, cannot constitute permission.  Gary’s occupation of the property from 1998, accordingly constituted adverse possession.

22. Gary’s adverse possession was not interrupted by his letting the property to a tenant: see Adverse Possession, Jourdan & Radley-Gardner, 2^nd ed, §§13-03 – 13-08.

23. I am accordingly satisfied that Gary’s occupation of the property since 1998, until the sale of the property to Eversound in December 2013, a period in excess of the required 12 years, is sufficient adverse possession to extinguish the title of the estate of Madam Chang Ho Ying, the registered proprietor of the property.

The sale of the property

24. Subsequent to Gary achieving sufficient adverse possession to extinguish the title of both Madam Chang and Mr Chang, the property has been sold and the net proceeds of sale are held by trustees pursuant to an order of the Lands Tribunal.  Mr Hu has established my satisfaction that the trustees of the proceeds of sale of the property have been notified of these proceedings, that they do not wish to take part in the proceedings, and are content to abide any order of the court that may be made in the proceedings.

25. It necessarily follows from the finding that Gary was entitled to a declaration that his adverse possession had extinguished the title of Madam Chang or Mr Chang to the property, that he is entitled to the net proceeds of sale.

Conclusion

26. There will accordingly be declarations:

(i)  that the defendant is debarred by virtue of section 7(1) Limitation Ordinance, Cap 347 (“the Ordinance”), from bringing any action to recover the property known as “4^th Floor of House No 10, Block B, No 8 Wan Fuk Street, Kowloon, Hong Kong (“the property”);

(ii)  that any title of the defendant to the property has been extinguished by virtue of section 17 of the Ordinance; and

(iii)  that the plaintiff is entitled to the proceeds of the sale of the property arising out of the sale pursuant to the orders of the Lands Tribunal in LDCS 37000/2012, held by the sale trustees.

Costs

27. I am of the view that it is not appropriate in the circumstances of this case that there should be any order for costs.  Gary must bear his own costs.

28. I am especially grateful to Mr Hu whose industrious research and comprehensive skeleton has enabled this matter to be satisfactorily resolved.