FASTWAY (HK) INVESTMENT LTD v. WING BO MOTOR CO(a firm)

DCCJ3507/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3507 OF 2008

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REASONS FOR DECISION

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Application for leave to appeal and stay of execution

1.  On 22 March 2013 the judgment in this action was delivered in which I found for the plaintiff and ordered the defendant to deliver vacant possession of the subject premises to the plaintiff and to pay mesne profits.  The defendant has by 2 summonses dated 17 April 2013 applied for leave to appeal to the Court of Appeal and for a stay of execution pending the determination of the application for leave.  The applications were heard on 11 June 2013.  At the end of the hearing I dismissed both summonses and I now give my reasons for doing so.

Grounds of appeal

2.  In this action the plaintiff, the registered owner of the premises, sues the defendant for vacant possession, claiming that the oral tenancy made in 2002 between the plaintiff’s predecessors-in-title and the defendant whose original term had expired and which had continued as a monthly tenancy had been terminated by notice.  The defendant admits that there was an oral tenancy but alleges that it was a 10-year fixed tenancy which covered only Houses 45 and 46 and a small strip of land adjacent to House 45, and that in respect of an area called “Area A” in these proceedings, which included Houses 47 and 48 and much of the land currently occupied by the defendant, the defendant has been in adverse possession since at least 1993.  In my judgment (“the Judgment”), I found that the 2002 oral tenancy covered all the houses and land occupied by the defendant, and therefore the defendant’s claim of adverse possession failed.

3.  Mr Osmond Lam, counsel for the defendant, took Grounds 1 and 2 together in his oral submissions as his main ground of appeal.  The gist of the complaint is that I have not given sufficient regard to the documentary evidence of the rental receipts, and that I should have come to the conclusion that the 2002 oral tenancy covered only Houses 45 and 46 and did not cover all the houses and land occupied by the defendant as I found.  He relies on the rental receipt for House 46, the authenticity of which was not challenged.  It covered a period of 8 months at $2,000 per month, when over the same period there were separate rental receipts for House 45 for a monthly rent of $9,000.  The rental receipt stubs, on the other hand, showed the description of the property as House 45, with the exception of two of them (for June and July 2006) which included other houses but which I already found were uncharacteristic and provided little if any support for the plaintiff’s case that the tenancy covered all the houses and land occupied by the defendant.

4.  Idealt with the evidence of the rental receipts and stubs produced in this case in my Judgment, and considered that the evidence was equivocal and unsatisfactory.  It is true that the authenticity of the House 46 rental receipt was not challenged, but nor was the authenticity of the receipt stubs challenged.  I considered that on the one hand, the June and July receipt stubs were uncharacteristic and added little to the plaintiff’s case, but on the other hand, there was only a single House 46 receipt produced by the defendant, and if there had genuinely been 2 tenancies (or two parts to the tenancy) – one for House 45 for $9,000 per month and one for House 46 for $2000 per month, one would expect the rent to be collected at the same time and receipts issued in the same way, but the single rental receipt for House 46 was given for a period of 8 months, unlike those for House 45 which were issued every month.  The best person to explain the conundrum created by the rental receipts and stubs would have been Lee Sun, but he was not called by the defendant, and the decision not to call him was announced only on the first day of trial.  In the absence of Lee Sun’s evidence, the documentary evidence of the receipts and stubs remained highly unsatisfactory andI did not find that it gave me much assistance in resolving the scope of the 2002 tenancy.

5.  Therefore, the documentary evidence which Mr Lam relies on in this ground of appeal and his submissions thereon (which had also been made by trial counsel for the defendant) were matters which I fully considered in reaching my decision.  Nor could it be said that such a decision was plainly wrong as a finding of primary fact.

6.  One other matter raised in Ground 1 which was not dealt with by Mr Lam in his oral submissions is the support of the defendant’s case by Lee Sun in his affirmation and witness statement filed in this case.  Given the history of Lee Sun’s involvement with these proceedings as a potential witness, the many pertinent and crucial questions which would have been asked of him whether in examination-in-chief or cross-examination, and the fact that he was in the end not called by the defendant, it could hardly be suggested that it was wrong not to place any weight at all on his assertions in his affirmation and witness statement.

7.  The gist of Ground 2 is that in disbelieving Lee and consequently finding for the plaintiff, I effectively reversed the burden of proof on the issue whether the 2002 tenancy covered all the houses and land occupied by the defendant.  Mr Lam accepts in his written submissions, as did defence counsel at the trial, that the burden was on the defendant to establish adverse possession, ie that the possession was adverse in that the defendant was neither a tenant nor a licensee.  I asked Mr Lam during his oral submissions to clarify his position, and he submitted that the legal burden was with the plaintiff to prove that the 2002 tenancy covered all the houses and land occupied by the defendant.

8.  The plaintiff was the registered owner of the premises.  That was not in dispute.  The plaintiff claims that its interest in the premises was subject to an oral tenancy which it had terminated by notice.  The defendant alleges, in its Re-Amended Defence and Counterclaim, that there was tenancy but the defendant was a tenant only of Houses 45 and 46 (and a small strip of land adjacent to House 45), but in respect of most of the remaining land (Area A), it had been in adverse possession for a sufficiently long time to bar the plaintiff’s cause of action.  The burden was on the defendant to prove that it was not a tenant of Area A which included Houses 47 and 48 and much of the land the defendant was occupying.  It must follow therefore that the burden was on the defendant to show that the 2002 tenancy did not cover Area A.

9.  In any event, the decision in this case in favour of the plaintiff was not made on the narrow ground that the onus of proof fell on the defendant.  I have evaluated all the evidence available in this case, including the documentary evidence of the rental receipts and stubs, the evidence of the plaintiff’s witnesses, and the evidence of Lee.  As Lee was the only witness called who was able to give direct evidence on the tenancy and the history of his occupation, it was naturally important to analyse his evidence at some length.  I have explained in the Judgment why I considered that the version of events given by him, that the 2002 tenancy covered only Houses 45 and 46, was inherently improbable.  But the matter did not rest with the rejection of his version of events.  I further found that some of his conduct since the plaintiff took over the premises as owner was that of a person who believed that he was a tenant of the plaintiff in respect of the land he was occupying and who acted accordingly: see eg paragraphs 120 and 121 of the Judgment.  On the totality of the evidence, unsatisfactory as it was, with the limitations I have outlined in the Judgment, I found that it was more likely that the 2002 tenancy covered all the houses and land occupied by the defendant: see paragraph 124 of the Judgment.  Therefore irrespective of who had the legal burden of proof on this issue, I would have come to the same conclusion.

10.  Ground 3 relates to a passage in paragraph 116 of the Judgment in which I expressed the view that I was not prepared to accept a certain part of the defendant’s evidence in the absence of more compelling evidence.  It is said that I have applied a standard of proof higher than was necessary, which is to require “compelling evidence”, not “more compelling evidence”.  The context of the quoted passage was Lee’s assertion in evidence that although on the aerial photos for some of the relevant years much of Area A appeared to be covered by trees, as put to him in cross-examination (see paragraph 76 of the Judgment), there were garage activities under the canopy of trees, which activities were hidden from view in the aerial photos.  So the evidence adduced on behalf of the defendant in support of the allegation of the fact of physical possession consisted of the aerial photos and Lee’s oral evidence.  The aerial photos were equivocal, and as I was not prepared, given my view of the credibility of Lee, to accept his assertion in evidence, there was no other evidence ofsufficient quality to support a finding of physical possession of the whole of Area A for the requisite period of time.  Hence the reference to “the absence of more compelling evidence”.  It was not a reference to a standard of proof, but a reference to the lack of other evidence of the required quality.

11.  Ground 4 concerns the “internal arrangement” hypothesis urged upon me by trial counsel, ie that I should not have completely disregarded the defence arguments based thereon.  The case based on the said hypothesis was never pleaded and never raised in the defendant’s opening or during any part of the evidence.  I could not have fairly ruled upon the subsidiary issues raised by this hypothesis without those issues having been fully explored in the evidence, not only by having the witnesses cross-examined on those issues, but also by allowing the plaintiff an opportunity to adduce other evidence which might be relevant to the hypothesis.  In any event, I did deal with this hypothesis, and explained how it gave rise to other problems or doubts for the defence case which I pointed out in paragraphs 82 and 87 of the Judgment. There is nothing in this ground.

12.  Finally, Ground 5 states that while I considered it strictly speaking not necessary to make a finding as to what area the 1984 tenancy covered, I did go on to state in the Judgment that I would be inclined to think that the 1984 tenancy included all the land that Lee was occupying, but in doing so failed to give adequate reasons for such inclination.  The complaint, as was clarified with counsel at the hearing, is that such inclination might have affected my decision in relation to the 2002 tenancy.  My analysis of the evidence on the 1984 tenancy can be found inparagraphs 79 to 83 of the Judgment, which I did not find necessary to repeat at paragraph 115 of the Judgment.

13.  For the reasons above, none of the grounds of appeal have a reasonable prospect of success or are arguable, and I dismiss the application for leave to appeal.

Stay of execution

14.  As to the application for a stay of execution pending the disposal of the application for leave before this court, I accept Mr Lam’s submission on the applicable principle, that while normally a stay of execution of a judgment would require a strong ground of appeal, the court has a discretion to grant a stay where a refusal could render an appeal nugatory, if there is an arguable ground of appeal.  However, as I have come to the conclusion that none of the grounds of appeal are arguable or have any reasonable prospect of success, I do not consider it appropriate to grant a stay of execution.  I also dismiss the application for a stay of execution.

Summary assessment of costs

15.  At Miss Lan’s invitation I agreed to make a summary assessment of the costs for the applications, and to include my assessment in the present Reasons for Decision.  I would only refer to the items, in the Statement of Costs for Summary Assessment prepared by solicitors for the plaintiff, which I have allowed only in part.  I would only allow ½ hour to each of items C1 and C3, 1½ hours to items D2 and D3 altogether, and ¾ hour for item D4.  I have allowed the remaining items.  The costs allowed amounted to $66,519.00.

Orders

16.  The orders I make are therefore that the defendant’s 2 summonses dated 17 April 2013 be dismissed with costs, with certificate for counsel, summarily assessed at $66,519.00, and that the defendant’s own costs be taxed in accordance with the Legal Aid Regulations.