THE HONG KONG BUDDHIST ASSOCIATION v. THE OCCUPIERS AND ANOTHER

cacv 358/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 358 of 2006

(on appeal from HCMP NO. 4108 of 2003)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  This was an appeal from a judgment of Deputy High Court Judge Saunders (as he then was) given on 8 September 2006.  The matter before the judge was a claim for vacant possession of a flat in Wan Chai and the defence had been that the action was statute barred on the basis that the second defendant had been in adverse possession of the flat since 28 August 1991.  The judge gave judgment for possession in favour of the plaintiff and the defendant has brought this appeal.  At the conclusion of the hearing, this court dismissed this appeal with reasons to be given in writing.

Background

2.  The second defendant’s father (“Mr Cheng senior”) had been the tenant of a Madam Lo Wai who had been the owner of the flat.  In about 1989 Mr Cheng senior had purchased a property in Tai Po with a view to his family moving and living there.  In consequence he gave notice to Madam Lo informing her that the tenancy of the property would terminate on 31 August 1991.  By the middle of August 1991 the whole family had moved out of the flat.  Thereafter Mr Cheng senior met Madam Lo and returned the key to her in order that she could allow prospective tenants to inspect the property.

3.  Unfortunately Madam Lo died unexpectedly on 26 August 1991.  As the judge recorded, the Cheng family learned of that death the following day.  Madam Lo had left the flat to the Buddhist Hospital which is a wholly-owned subsidiary of the plaintiff.

4.  On the finding of the judge it would seem that the second defendant wasted no time in returning to the flat.  Apparently because he worked in Chai Wan he found the journey from Tai Po inconvenient and preferred to live near Causeway Bay.  He gained access to the flat via the back door, which he knew had not been properly locked.  Afterwards he found a set of keys to the flat inside the door.  He had the locks changed.  It would seem that Mr Cheng senior also moved back and lived in the property thereafter.

5.  The judge had no difficulty in finding that the second defendant had been in physical possession of the flat.  He also found that in April 1996, after application had been made by Mr Cheng senior, the Rating and Valuation Department issued an acknowledgement of the change in the ratepayer’s name recording that future demands for rates were to be sent to Mr Cheng senior.  In so doing the judge observed that this had occurred nearly 5 years after the initial wrongful occupation by the second defendant and that the name of the ratepayer was not given as the second defendant but as Mr Cheng senior.

6.  In respect of other matters, for example utilities accounts from the Water Supplies Department and Hong Kong Electric Co. Ltd., those remained in Madam Lo’s late husband’s name.  In paragraphs 46 and 47 the judge considered the evidence of the second defendant and his father in relation to what their attitude would have been had they been asked to pay rent.  They had said that they would have refused to do so because Madam Lo had died without children or any other relatives.  The judge concluded that both the second defendant and his father had formed the view that because of those circumstances nobody could possibly have a right to claim the property.  In that, of course, they were mistaken.  The judge held at paragraph 47:

“Neither have contemplated the possibility that an institution such as the Hong Kong Buddhist Association might be lawfully entitled to the property.  Mr Cheng Snr, when cross-examined on this aspect said first that he did not pay rent because there was no one collecting rent.  The inference arises from that answer they had someone come to collect rent he would have paid it, notwithstanding his assertion to the contrary in evidence.”

7.  The judge carefully examined the facts of the case and he bore in mind the importance of the change of the locks.  Nevertheless he came to the conclusion that the second defendant had not had the sufficient intention to “exclude the world at large” which would be sufficient in order for the operation of the provisions of section 7 of the Limitation Ordinance to come into operation.

8.  The judge then considered the validity of the provisions of the Limitation Ordinance Cap. 347 and in particular section 7.  After considering the provisions of Articles 6 and 105 of the Basic Law and various decisions notably J. A. Pye v The United Kingdom E Ct HR Aplic. number 44302/02, a judgment delivered on 15 November 2005 in the European Court of Human Rights and Stubbings and others v The United Kingdom, a judgment delivered in the same court on 22 October 1996, he came to the conclusion that section 7 of the Limitation Ordinance, as it presently stands, is inconsistent with the Basic Law.

This appeal

9.  On this appeal Mr Lau, who appeared on behalf of the second defendant, sought to argue that the judge reached the wrong conclusion and had not placed sufficient weight on matters such as the actual occupation of the premises and the change of locks.  He went on to rely heavily on a passage in the speech of Lord Hutton in J. A. Pye (Oxford) Limited v Graham [2003] 1 AC 419 at p 479 Lord Hutton had said:

“75       In the present case from August 1984 onwards the Grahams made full use of the disputed land as if they were the owners-they did everything which an owner of the land would have done and when an experienced chartered surveyor, called on behalf of the plaintiffs, was asked in cross-examination what an occupying owner of the disputed land might have done over and above what was done by the Grahams between 1984 and 1997, he was unable to think of anything.

76        I consider that such use of land by a person who is occupying it will normally make it clear that he has the requisite intention to possess and that such conduct should be viewed by a court as establishing that intention, unless the claimant with the paper title can adduce other evidence which points to a contrary conclusion.  Where the evidence establishes that the person claiming title under the Limitation Act 1980 has occupied the land and made full use of it in the way in which an owner would, I consider that in the normal case you will not have to adduce additional evidence to establish that he had the intention to possess.  It is in cases where the acts in relation to the land of a person claiming title by adverse possession are equivocal and are open to more than one interpretation that those acts will be insufficient to establish the intention to possess.  But it is different if the actions of the occupier make it clear that he is using the land in the way in which a full owner would and in such a way that the owner is excluded.”

10.  In my view this passage has to be read not only in the context of the case but also with attention to the particular approach of the judge.  It will be noticed that he referred to the “normal case” and in that he was repeating the word which he used previously.  Lord Hutton also specifically referred to cases where the acts of the person claiming title by adverse possession were equivocal.

11.  In my view the judge’s approach in this case cannot be faulted.  He clearly stated the law and no fault can be found in that.  There was no challenge as to any specific finding of fact.  It was the inferences from the facts found that were challenged.  Quite apart from the fact that the judge had the advantage of seeing and hearing the witnesses, I see no grounds for interfering with the judge’s conclusion, which was, in effect, that the second defendant and his father used the opportunity to move back in the flat knowing full well that Madam Lo had died.  His conclusion that they would have paid rent or otherwise acknowledged the superior title of anybody who claimed to have that title at the time cannot, in my view, be faulted.

12.  Having come to that conclusion, it is unnecessary to consider whether sections 7 and 17 of the Limitation Ordinance are invalid in the light of Articles 6 and 105 of the Basic Law.  I would simply say at this stage that I see considerable force in the conclusion reached by the judge.  On this appeal, the matter was argued by Miss Wong SC, on behalf of the plaintiff.  She endeavoured to put both sides of the argument and present a fair picture.  Nevertheless, given the importance of the matter as to whether sections 7 and 17 of the Limitation Ordinance is inconsistent with the Basic Law, I consider that it would be inadvisable to decide the matter now without full argument on both sides, particularly as the matter may involve questions of proportionality.

13.  It is for these reasons that I considered that the appeal should be dismissed.

Hon Le Pichon JA:

14.  I agree.

Hon Suffiad J:

15.  I agree.