HILDER CO LTD v. OCCUPIER(S) OF PREMISES AND ANOTHER

HCMP1853/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.1853 OF 2003

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J U D G M E N T

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1.  The plaintiff is appealing against the order of the Registrar in: (1) adjourning the summons taken out by the applicant to be joined as a defendant in the action and to set aside the order of possession made by Master Shieh in respect of the portion of Lot 844 in DD95, Kwu Tung, New Territories, occupied by the applicant; and (2) staying the execution of the order for possession made by Master Shieh until the disposal of the summons.

Background

2.   The plaintiff is the registered owner of Lot 844.  The land was held under a Government Lease granted on 1 July 1898 for 75 years renewable for 24 years.  On 13 May 1993 the plaintiff became the owner by assignment. 

3.  The plaintiff took out an Originating Summons for possession against every person in occupation of Lot 844.  On 30 April 2003 Master Shieh ordered that the plaintiff do recover possession of the lot.  The order for possession, according to the plaintiff, has been fully executed.  All the occupiers and trespassers were ousted and the plaintiff had taken possession of the lot.

4.   The applicant said that since about 1960, his grandfather had occupied lots neighbouring Lot 844 which included part of Lot 844.  They have never been requested to leave the disputed land or to pay any rent until the end of year 2000.  The applicant said he was first aware of the present dispute in mid-2003.  He discovered two Final Notices to Occupiers affixed to their banana trees.  However, he was not sure whether the land he occupied was subject to the land dispute.  He was not sure of the position and he applied for legal aid.  Legal aid was originally refused and later representation was assigned by the Director of Legal Aid.  In January 2004, some bailiffs and solicitors came to recover possession of the lot.  The applicant then realised part of his land was subject to the land dispute. 

5.  Mr Chan for the plaintiff indicated that he was not relying on any argument on delay but submitted that execution was completed in 2004 and there is no question of any interim stay.  He submitted that the plaintiff’s position is simply that the applicant has no defence by reason of the decision of the Court of Appeal in Chan Tin-shi v. Li Tin-sung & Ors (CACV 71/2003, 19 November 2002). 

6.  In the Chan Tin-shi case, the Court of Appeal ( by a majority of Rogers VP and Le Pichon JA) held that on the proper construction of section 6 of the New Territories Lease Extension Ordinance, Cap. 150, (“Extension Ordinance”), the Extension Ordinance created a new estate in a leaseholder who did not opt out of the provision under section 5 of the Extention Ordinance.  The creation of a new lease or at the very least a new right would give rise to a term beyond that originally contracted for, and time would begin to run again as against the squatter.  The legal effect of adverse possession was merely negative and should not be treated as if it gave title.  Although the title of the leaseholder might be extinguished as against the squatter the leaseholder’s title remained as against the landlord, the squatter would have no right once the leaseholder’s right had ceased.  Therefore the squatter could have no expectation of any rights after the expiry of the leaseholder’s original lease or earlier if the lease had terminated for any reason.  Since the Government had good title as against the squatter if it granted a new estate, whether it be to the original leaseholder or anyone else, the new estate would be good as against the squatter.

7.   Mr Shum for the applicant submitted that Chan Tin-shi case is currently on appeal to the Court of Final Appeal and due to be heard in October this year.  I note that Madam Justice Yuen JA has given a dissenting judgment in that the Extension Ordinance did not confer a single term from 25 April 1988 to 30 June 2047.  Instead section 6 provided that the term was extended from the date on which it would apart from this ordinance expire, thus acknowledging the continuous existence of the original lease.  Accordingly, the Extension Ordinance did not operate as a surrender in a ground, and the Extension Ordinance did not operate as a ground of a reversal release by the lessor to the lessee.  The Extension Ordinance did not affect the squatter’s right as against the lessee whose title had been extinguished under section 17 of the Limitation Ordinance, Cap. 347.

8.   Mr Shum submitted that this case is different from the other cases in that the applicant is applying for a joinder.  Before a joinder he cannot be heard or to apply for interim measures to have his interest protected. 

9.  Mr Shum submitted that the application of the Extension Ordinance is subject to section 2:

“This Ordinance applies to every New Territories lease that exists as to the commencement of this section and that, but for this Ordinance, would expire before 30 June 1997, not being –

(a) a short term tenancy;

(b) a lease for special purposes; or

(c) a lease in respect of which the lessee registers a memorandum under section 5.”

Commencement of the relevant part of the Ordinance was on 26 February 1988. 

10. Under section 3(2) of the Extension Ordinance:

“	The lease description referred to in the definition of “lease for special purposes” in subsection (1) is that the lease –
	(d)	contains a prohibition, expressed or intended by the parties to ensure for the full term of the lease, against the assignment of the land that is the subject of the lease for any interest therein; and
	(e)	contains no provision whereby the land that is the subject of the lease, and every interest therein, could be assigned by the lessee upon the occurrence of any event or contingency, or upon compliance with any condition,
	whether or not the express provisions of the lease, permit the land that is the subject of the lease or any interest therein, to be assigned with the consent of the lessor or any government authority, or to be charged, mortgaged or sublet.”

11. Mr Shum submitted that since no lease had been exhibited, the mere assignment to the plaintiff could not indicate either the lease was not one for special purposes, or whether simply consent had been given for the assignment. 

12. As to stay of execution, Mr Shum disagreed with the completion of execution but agreed that there is no satisfactory evidence to that effect. 

13. Mr Shum referred to a similar situation in Hong Kong Ferry (Holdings) Company Limited v. Chan Kwai-fat & Ors (CACV94/1994, 5 January 1995).  That case was concerned with the effect of the New Territories Renewable Crown Lease Ordinance, Cap. 152, where the binding decision on the effect of the Ordinance has been given by the Court of Appeal in Chung Ping-kwan & Ors v. Lam Island Development Co. Ltd., (Civil Appeal Nos. 66 and 67 of 1994, 26 October 1994) was under an application for leave to appeal to the Privy Council.  There Mr Justice Godfrey JA (as he then was) said:

“In my judgment, the correct course is for this court to dismiss this appeal; but to stay execution of the order for possession made below until after the determination of the application presently pending before the Court of Appeal in Chung Ping-kwan’s case for leave to appeal to the Privy Council and if leave granted further stay such execution.”

Mr Shum submitted that it was important to preserve the right of the squatter. 

14. Mr Chan replied that the assignment plus the plaintiff being still the owner, which fact was not challenged, is best evidence and conclusive for an extension of the lease under the Extension Ordinance beyond 30 June 1997.  Hence there is nothing in the lease for special purposes point. 

15. Mr Chan submitted that the court could either dismiss the whole summons and the applicant be at liberty to take out an action for re-entering into possession in the event the Court of Final Appeal reversed the Court of Appeal in the Chan Tin-shi case, or alternatively allow the joinder but dismiss the application to set aside the order for possession with interim stay. 

16. I agree with Mr Chan’s submission on the lease for special purposes and as to the applicability of the Extension Ordinance.  I shall allow the joinder by the applicant.  The substantive application to set aside the order for possession as against the applicant defendant must be dismissed.  So is the interim stay of execution.   The applicant defendant is at liberty to lodge an appeal and to seek stay of execution pending appeal, if so advised, I shall order the costs here and before the Registrar be to the plaintiff.