GOTLAND ENTERPRISES LTD v. KWOK CHI YAU AND OTHERS

HCMP 4550/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4550 OF 2003

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D E C I S I O N

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1.  This is the application of Mr Chan Kwok Chu trading as Ho Kee Motors Service (Chan) by Summons dated 4 May 2016 (Summons) to: (1) join as the 6^th Defendant in these proceedings; and (2) to set aside:

(a)  an Order of this court dated 26 September 2014 (Order) to the extent that it relates to the north eastern part of Section G of Lot No 76 in Demarcation District 101 (Land);

(b)  the Writ of Possession dated 27 October 2014 (Writ) insofar as it relates to the Land[1].

2.  Chan’s application is made under O 113, r 8; O 15, r 10 and O 45, r 3[2] of the RHC, Cap 4A.

Background

3.  This action was tried before this court in October 2014, and Judgment was given on 25 November 2014.  In addition to the Judgment, there is a summary of the background to this action in a Decision of G Lam J in HCA 282/2015 (Chan’s Action) dated 6 January 2016, at §§2-15. Chan’s Action was brought seeking, inter alia, a declaration that he had acquired possessory title to the Land by virtue of adverse possession.  It was struck out by G Lam J pursuant to the said Decision. 

4.  Essentially, this action was started in October 2003 by way of Originating Summons under O 113 (OS) by the Plaintiff (Gotland), as the paper title holder, to recover possession of a large tract of land in Yuen Long.  In August 2014, Gotland reached a settlement with the 1^st to 3^rd Defendants and sold part of land, which was under dispute, to them leaving the undisputed portion (including the Land) to itself.  The action was then continued between the 1^st to 3^rd Defendants and a corporate vehicle of the 1^st Defendant (Chief Maker), which purchased the disputed land, on one side and the 5^th Defendant on the other.  Meanwhile, a Consent Judgment dated 19 August 2014 (Consent Judgment) was entered between Gotland and the 1^st to 3^rd Defendants for possession of the undisputed land in favour of the former.

5.  Subsequently, and pursuant to an Order dated 12 September 2014, Gotland was substituted by Chief Maker as the Plaintiff in this action.  By the Order, Gotland was granted leave to cease to be a party in these proceedings, save for, inter alia, executing the Consent Judgment.  The Writ was taken out for that execution. 

6.  Despite the fact that this action took 11 years to conclude, Chan has not taken any part in it, claiming that he had no notice of this action until December 2014 when he learned about it from his brother, Mr Chan Ho Chu (Ho). 

7.  In support of this application, Chan claims that since August 1991 the Land was exclusively occupied for his garage business (Garage), which he acquired from one Mr Lok.  The Garage was situated partly on Lot No 1889 of DD105 and partly on the Land.  It is common ground that in order to make good his case of possessory title, Chan had to be in occupation of the Land from 15 October 1991.

8.  According to Ho, the Garage was originally situated on Lot 1889.  Due to the need for additional space, the Garage was extended over the Land, and fences were erected by Chan along the boundary of the Garage.  No one had ever demanded any rent from or made any claim over the Land to him, says Chan.  The Land had been exclusively used, possessed and controlled by Chan for the Garage until 28 January 2015, when he was excluded therefrom pursuant to the execution of the Writ by Gotland. 

9.  Chan’s Action was struck out on the ground that he should have applied to join in this action and set aside the Consent Judgment and Writ as against him.  Hence this application. 

Issues

10.  O 113, r 8 provides that: “The judge may, on such terms as he thinks just, set aside or vary any order made in proceedings under this Order.” 

11.  It is not in dispute that in deciding whether to set aside the Writ, the considerations for the court are similar to those for an application to set aside a default judgment pursuant to O 13, r 9 (see Hong Kong Civil Procedure 2017, vol 1 (HKCP), rubric 113/8/12). 

12.  It is common ground that the issues in this application are: (1) whether it is appropriate to join Chan as a party; (2) whether the service of the OS was irregular; and (3) whether Chan’s claim of adverse possession has a real prospect of success.

13.  Normally, the court will consider issue (2) first because if the service was irregular, the Writ (see further discussion below), insofar as it affects the Land, should be set aside as of right (see HKCP 13/9/4).  However, even if the service was regular, the court retains a discretionary power to set aside the Writ in order to avoid any injustice: see HKCP 13/9/12.  For that matter, the court will have to consider the merits of Chan’s case (issue (3)).  As for issue (1), Mr Hu, appearing for Gotland, accepted that the joinder of Chan as a party to these proceedings hinges on the merits of his case.

Service of the OS

14.  It must be said that it is quite unusual for Chan not to have known about these proceedings over the years.  Naturally, an adverse possessor would be looking out for any claim by the owner.  Even if the service of various documents by Gotland over the years (see below) had failed to alert him, one would expect that Chan would have learned from informal sources that his neighbour(s) were being sued by Gotland, eg, casual conversations with his neighbours.

15.  However, the court must be guided by the evidence before it, which will have to be examined with common sense and bearing in mind the inherent probabilities. 

16.  The evidence is as follows.  On 3 March 2003, Gotland’s solicitors (KLY) posted up 25 copies of a demand letter (with Chinese translation) on its land, including the Land.  The letters were addressed to the occupiers, demanding their vacation from the land.  They were posted up “at various conspicuous parts of the [land], including on the structures, electricity poles and on leaves of scrubs of notable sizes situated inside the boundary of the [land]”.  A number of photographs were taken to show that the letters had been posted up.

17.  It is not clear from the evidence, including the photographs, whether any of the letters was posted up at or near the Land.  It should be said that the Land was situated at a corner of the large tract of land claimed by Gotland (with a total area of about 760,000 sq ft).  Further, the undisputed evidence is that the Garage was fenced off, and there is no evidence that any of the letters was posted up inside or at a fenced off area.

18.  On 15 October 2003, the OS was issued.  In respect of service of the OS on unnamed persons, O 113, r 4(2) provides as follows :

“The summons shall, in addition to being served on the named defendants (if any) in accordance with paragraph (1), be served, unless the Court otherwise directs, by–

(a)  affixing a copy of the summons and a copy of the affidavit to the main door or other conspicuous part of the premises and,

(b)  if practicable, inserting through the letter-box at the premises a copy of the summons and a copy of the affidavit enclosed in a sealed envelope addressed to ‘the occupiers’.”

19.  Service of the OS was effected on 17 October 2003 by affixing the relevant documents “at various conspicuous parts of the [land], including on the fences, structures and electricity poles within the boundary of the [land]”, as well as inserting the same “into the letter box of a hut on the [land]”.  There is no photograph of the locations where the documents were affixed.

20.  The observations made in para 17 above apply equally to the service of the OS.  In addition, there is no evidence of the location of the hut.

21.  In around August 2012, Gotland discovered that “some vehicles were placed near or on the north eastern part of [Section G]” (where the Land is situated).  A staff of KLY and representatives of Gotland’s surveyors attended the area on 4 October 2012 to, firstly, identify the boundary of Section G and then post up a demand letter and a copy of the OS at various conspicuous parts thereof, including “on the broken fences near the main entrance thereto”.  There are photographs of the posted up documents, and a plan to indicate where they were. 

22.  There is also evidence from the staff of KLY (Mr Chung) that whilst he was serving the documents, a man who claimed to be the responsible person of the place appeared.  This man refused to disclose his name but the documents were served on him personally.  

23.  It is reasonably clear from the plan and the photographs that the documents were posted up outside but in close proximity to the Garage, save that 2 sets of documents were posted up at the fence of Garage.

24.  In his evidence, Chan denied that the documents were posted up within the Land, and maintained that he had never gone out of the Garage to check for notices.  He also said that neither he nor his brother had ever received any documents, and they were the only people working at the Garage. 

25.  Before coming to my conclusion, I should mention 2 further matters.  Firstly, Gotland seeks to rely on the proposition that the 1^st Defendant is a well-known person and Chan must have known that this neighbour was in dispute with the owner over the land he was occupying. There is no evident that the dispute was well-publicised, and therefore I can attach no weight to the point.

26.  Secondly, there are disputes over what was allegedly said by Chan and one of Gotland’s witnesses (Mr Paul Chan).  It is not possible to resolve such disputes on affirmations.  In any case, they are untested allegations of interested parties, and no weight can be placed on them either. 

27.  By reason of the observations made in paras 17 and 20 above, I am unable to accept that the exercise carried out in March or October 2003 had brought to Chan’s notice Gotland’s claim over the Land.

28.  The exercise carried out in October 2012 was certainly an improvement over the previous attempts.  However, apart from the 2 set of papers affixed to the fence, the others were not affixed to any part of the Land.  Chan’s evidence suggests that the fence was located at the back of the Garage, which is consistent with what is depicted in the photographs. As pointed out by Ms Tsang, who appeared for Chan, the documents affixed to the fence were blocked by a lorry parked in front of it.  It appears from the photograph that the lorry might not be in use or in frequent use because there were waste material and a broken vehicle placed on it.

29.  The court has to take into account the denial by Chan of any knowledge of this action until December 2014.  Notwithstanding the observations made in para 14 above, and with reluctance, I find that the OS has not been properly served as far as Chan is concerned.  Therefore, at least the Writ (insofar as it affects the Land) should be set aside.

30.  For completeness, I should mention 2 points. Firstly, in 1 of the authorities cited by Ms Tsang, Hilder Co Ltd v Persons Unknown, unrep, HCMP 1868 of 2000 (29 January 2007), the parties therein agreed that regardless of the regularity of service, the court had a discretion to set aside the order for possession if the contention of adverse possession had a real prospect of success.  This is inconsistent with the view that the court merely retains a residual discretion in setting aside an irregular judgment, and it is not concerned with the merits of the applicant’s case: see HKCP, 13/9/2 to 13/9/4 and 13/9/10. 

31.  However, the parties here have made no suggestion that where the service of the OS was irregular, the merits of Chan’s case remain relevant. 

32.  Secondly, this court has not been asked to exercise its residual discretion to impose any condition in setting aside the Writ, despite finding that the service of the OS was irregular. 

Merits of Chan’s case

33.  Out of deference to counsel, I should explain briefly that I am satisfied that Chan’s case has a real prospect of success. In cases of adverse possession, the court often find the aerial photographs to be of considerable assistance, not least because they are objective evidence of the occupation of the land in dispute.

34.  There are aerial photographs in this case. Notwithstanding the lack of expert evidence to interpret them, taken in conjunction with the evidence adduced by Chan, they constitute objective and material evidence in support his claim.   

Joinder

35.  Relying on O 113, r 5 and O 15, r 6 and 10, Ms Tsang submitted that Chan ought to be joined in these proceedings.  This court was also referred to Minet v Johnson (1886-90) All ER 586 for the proposition that even after the writ of possession has been executed, a dispossessed occupier may still apply to join in the action for possession.

36.  I agree that it is plainly appropriate for Chan to be joined in this action.

Conclusions

37.  I grant the order for joinder pursuant to para 1 of the Summons. 

38.  It is not clear to me why the Order should be set aside.  I believe that in addition to the Writ, the Consent Judgment, pursuant to which the Writ was issued, should be set aside.  The setting aside only affects the Writ and the Consent Judgment to the extent that they relate to the Land, and I so order. 

39.  I make an order nisi that the costs of and occasioned by the Summons be to Chan, to be taxed if not agreed.

40.  Last but not least, I am grateful to counsel for their assistance.