CHAN TIN SHI v. LI TIN SUNG AND OTHERS

HCMP 4191/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 4191 OF 1998

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J U D G M E N T

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Parties

1. In this action, the Plaintiff claims title to a piece of land based on adverse possession. The land is known as Lot No. 525RP in DD No. 26 in Tai Po. It is registered in the name of Li Wing Fu also known as Li Koon Shing, deceased ("Mr Li"), whose estate is sued by the Plaintiff as the 4th named Defendant and is represented by Mr Li's eldest (adopted) son, the 1st named Defendant ("the 1st Defendant") in this action. The other two Defendants ("the 2nd Defendant" and "the 3rd Defendant" respectively) are the other two sons of Mr Li.

Confusion of titles

2. The history of land ownership of the subject lot is rather complicated. The claim of the Plaintiff also concerns several other adjacent pieces of land. Ownership of these pieces of land is to some extent relevant to the issues between the parties. Mr Mak, counsel for the Plaintiff, has in his very detailed written opening set out the devolution in title of the various pieces of land in question by way of an Annex A. For all practical purposes (and save where otherwise indicated), the information set out in Annex A accurately summarises the devolution in title of each of the pieces of land concerned.

3. For the purpose of this judgment, I need only give a brief summary. Five adjacent pieces of land are involved, i.e. Lot No. 520, Lot No. 522, Lot No. 523, Lot No. 524 and Lot No. 525. The first four lots used to be registered in the name of a Li Sam Shing Tong ("the Tong") pursuant to a Block Crown lease. Lot No. 525 used to be registered in the name of a Li Yi Mui Tso ("the Tso") pursuant to the same Block Crown lease. Right from the beginning, there seems to have been some confusion between the Tso and the Tong regarding the ownership of the five pieces of land. In 1947, the Tong appointed Mr Li as its manager and the appointment was somehow registered against Lot No. 525 thereby treating Lot No. 525 as a piece of property belonging to the Tong. Then came 17 January 1954. By an agreement in Chinese ("the Chinese Agreement"), Mr Li as manager of the Tong agreed to sell to a Mr Chan Mau Wo ("Mr Chan") - the late father of the Plaintiff - the five plots of land in question including Lot No. 525 for a total consideration of $500.00. Pausing here, it should be remembered that Lot No. 525 which is the subject property in dispute, actually belonged to the Tso; but as explained above, it ended up being included in the Chinese Agreement as part of the subject matter of sale between the Tong and Mr Chan.

4. Then in October 1954, to add to the confusion, the Government obtained the surrender of a portion of Lot No. 525 from Mr Li as the manager of the Tong. Mr Li was paid $65.90 as compensation, notwithstanding that Mr Li had in such capacity already agreed with Mr Chan to sell Lot No. 525 to Mr Chan earlier the same year. Moreover, it should be added that notwithstanding the signing of the Chinese Agreement, title to the five plots of land in question including Lot No. 525 was not transferred by the Tong (or for that matter, the Tso - the true owner of Lot No. 525) to Mr Chan.

5. The confusion compounded when in May 1955, there was an appointment of new managers by the Tso. The instrument of appointment was registered against Lot No. 525. That notwithstanding, the Tso apparently either did not notice or chose not to take any action against the earlier inconsistent registration of the appointment of Mr Li as manager of the Tong against Lot No. 525 or the subsequent surrender of land between the Government and Mr Li representing the Tong.

6. In July 1963, the Government again procured the surrender of a further portion of Lot No. 525 of about 100 sq ft in area, and likewise compensation was paid to Mr Li as manager of the Tong, which was apparently still regarded by the Government as the lawful owner of the remaining portion of Lot No. 525 since the last surrender. After this second surrender, the remaining portion of the former Lot No. 525 was renamed Lot No. 525RP. Again at that stage, neither the Tso - the true owner of Lot No. 525 nor Mr Chan who had contracted to purchase Lot No. 525 from Mr Li under the Chinese Agreement of 1954, featured in the second surrender.

7. In fact, these two surrenders involved not only Lot No. 525 but Lot No. 524 as well which was also included in the Chinese Agreement as part of the subject matter of sale. Unlike Lot No. 525, Lot No. 524 indeed belonged to the Tong, and therefore for that reason, the Government was quite correct in dealing with Mr Li as manager of the Tong on each occasion regarding the surrender of a portion of Lot No. 524 in favour of the Government, to whom the Government paid compensation for the two surrenders. But Mr Chan, the purchaser of Lot 524 under the Chinese Agreement, did not feature in any of the two surrenders.

8. The confusion over the title to Lot No. 525 eventually came to light in early 1968. On 12 March 1968, the Government entered into two new surrenders with the Tso, the rightful owner of Lot No. 525, in relation to the two portions of Lot 525, the surrender of which the Government had previously sought to obtain from Mr Li as the manager of the Tong. The compensation monies due to the Tso were regarded as having been paid on account of the compensation monies already paid by the Government to Mr Li previously. In effect, the previous surrenders were ratified by the Tso.

9. Moreover, on that day by a conveyance on sale, the Tso sold Lot No. 525RP to Mr Li in his personal capacity for $350.00. In other words, more than 14 years after Mr Li in his capacity as manager of the Tong purported to deal with Lot No. 525 by entering into the Chinese Agreement selling Lot No. 525 to Mr Chan, Mr Li eventually obtained title to the lot in question, albeit in his personal capacity. As I said, Lot No. 525 remains registered in Mr Li's name up to this day. Mr Li passed away intestate on 8 February 1993; the 1st, 2nd and 3rd Defendants are his only surviving sons and but for the claim of a possessary title by the Plaintiff to the subject lot, the three sons would be entitled to succeed to the subject lot in accordance with the provisions in the New Territories Ordinance (Cap. 97). That is why they are joined as defendants in their personal capacity in this action.

10. Returning to 1968, in August of that year, all the beneficiaries of the Tong resolved to dissolve the Tong, and title to Lot No. 522, Lot No. 523 and Lot No. 524RP became vested in Mr Li and another person beneficially. The three lots were then respectively carved up, and to cut a long story short, eventually on 12 December 1968, a Section D of each of the three lots, i.e. Lot No. 522, Lot No. 523 and Lot No. 524 were respectively assigned by Mr Li and his co-owner to Mr Chan for a total sum of $300.00. Unlike the Chinese Agreement made in 1954, this time the assignment was duly registered with the District Land Registry and Mr Chan eventually became the registered owner of Lot No. 522D, Lot No. 523D and Lot No. 524D, more than 14 years after he first contracted to purchase the three whole lots under the Chinese Agreement. In 1974, Mr Chan, for personal reasons, decided to transfer his title to the three lots to his only son, the Plaintiff who therefore became and is still the registered owner of Lot No. 522D, Lot No. 523D and Lot No. 524D.

11. What about Lot No. 520 which was also included as part of the subject matter of sale under the Chinese Agreement? The confusion is even more amazing. As I said, according to the Block Crown lease, Lot No. 520 belonged to the Tong but since as early as 1911, the Tso seems to have included Lot No. 520 as one of its properties. But in Mr Li's instrument of appointment as manager of the Tong in April 1947, Lot No. 520 was regarded quite correctly by the Tong as one of its properties and the appointment was indeed registered against Lot No. 520. As I said, in 1954 Lot No. 520 was included in the Chinese Agreement for sale in favour of Mr Chan. In the first surrender in October 1954, the whole of Lot No. 520 was surrendered by Mr Li as manager of the Tong in favour of the Government together with portions of Lot No. 524 and Lot No. 525 as mentioned above. But then in May 1955, when the Tso appointed new managers, the instrument of appointment was again registered against Lot No. 520; and in November 1967, when one of the managers of the Tso retired, the instrument was again registered against Lot No. 520. Then came 12 March 1968 on which date a number of instruments were executed as mentioned above. On that day, a conveyance on sale of Lot No. 520 was executed by the Tso in favour of Mr Li for a consideration of $350.00. Thereafter nothing happened in relation to this particular lot, so apparently, the lot is still registered in the name of Mr Li. In other words, despite the inclusion of the lot in the Chinese Agreement, the lot was never assigned to Mr Chan; and despite the 1954 first surrender, it is still registered in the name of Mr Li.

12. So in short, despite the Chinese Agreement made in 1954 in which Mr Li as manager of the Tong purported to sell the five lots to Mr Chan, eventually Mr Chan only obtained title to portions of three lots, namely Lot No. 522D, Lot No. 523D and Lot No. 524D. Mr Chan did not obtain title to Lot No. 520, nor is it claimed by his son, the Plaintiff, that he ever obtained possession of Lot No. 520 after the making of the Chinese Agreement in 1954.

13. As regards Lot No. 525, after the two surrenders in favour of the Government, only Lot No. 525RP is left. Like Lot No. 520, Mr Chan never obtained title to Lot No. 525RP from either the Tso, the Tong or Mr Li personally. However, unlike Lot No. 520, the Plaintiff claims that at all material times since the signing of the Chinese Agreement in 1954, Mr Chan and his family were and still are in continuous and exclusive possession of Lot No. 525 and subsequently Lot No. 525RP. This forms the basis of the Plaintiff's claim for a possessary title to Lot No. 525RP in the present action against the Defendants.

The Plaintiff's evidence

14. The case of the Plaintiff who gave evidence at trial is essentially as follows. Mr Chan, the Plaintiff's father, was a native resident of Chan Uk Village in Tai Po; he used to work as a fisherman and owned several pieces of land in Tai Po. In 1954, when the Plaintiff was only 11 years old, Mr Chan agreed with Mr Li representing the Tong to acquire the five lots in question, i.e. Lot No. 520, Lot No. 522, Lot No. 523, Lot No. 524 and Lot No. 525 for the construction of buildings on the land for residential purpose. The Plaintiff said he was present on the occasion when the written agreement was signed and actually witnessed the making of the Chinese agreement. He was old enough to realise what was happening and actually witnessed the making of payment by his father of $500.00 to Mr Li in the presence of witnesses and others concerned. His case is that after the acquisition of the lots in question, his father erected two village type town houses on part of the land which subsequently became Lot No. 522D, Lot No. 523D and Lot No. 524D as explained above. Besides, his father also managed to obtain a short-term licence from the Government in respect of a piece of land at the rear of the lots in question, on which his father erected a small house. The short-term licence has since been renewed many times up to the present. All this was accomplished in the year of 1954 and upon the completion of the construction of the twin town houses, the Plaintiff's family, comprising the Plaintiff's parents, the Plaintiff and his sisters, began to reside there as their new home.

15. Mr Chan was a fisherman but subsequently became an employee of China Light & Power. Mrs Chan, the mother of the Plaintiff, was a farmer. She was assisted by her daughters before they got married. She farmed land owned by Mr Chan, and she used the small house for storage purpose in relation to her farming activities. Moreover, according to the Plaintiff's evidence, at the time when the houses were constructed, Lot No. 525 which like the other lots used to be paddy fields was flattened and became an open ground with a slope near its edge facing the main road (Ting Kok Road). Mrs Chan used Lot No. 525RP for rearing poultry, and a septic tank was also constructed in Lot No. 525RP to serve the pig rearing activities carried on by Mrs Chan inside the small house. The pig manure was used by Mrs Chan for farming purpose. A wooden fence was erected to enclose Lot No. 525 by the parents of the Plaintiff. Fruit trees were planted by the family on the land and an ox used by Mrs Chan for farming was kept there at night. Subsequently, according to the Plaintiff, a small pond was constructed on the land for the purpose of rearing ducks and for that purpose, water pipes were laid across the land. All these activities, according to the Plaintiff, were carried on by the Plaintiff's family in Lot No. 525RP because the same, like the other lots in question, had been purchased by Mr Chan from Mr Li. They regarded the land as belonging to them and used it to the exclusion of all others including Mr Li or the Tong he represented, as well as the Tso - the true owner of the land until 1968.

16. According to the Plaintiff, after the making of the Chinese Agreement in 1954, his father had, on various occasions, asked Mr Li to formally transfer the title to the lots to him, in accordance with the provisions in the Chinese Agreement which provided for the transfer of title after one month's public notification of the sale and purchase, a requisite procedure for the sale of Tong land. However, according to the little information that the Plaintiff had obtained from his father, Mr Li had been refusing to do so on various excuses. Something relating to payment or receipt of compensation was mentioned but no details were known. Apparently since the Plaintiff's family had been using the land so purchased without encountering any particular problem, Mr Chan did not really take any concrete action to follow up the matter. Rather, after the Plaintiff went to the United Kingdom for work in 1963, Mr Chan mailed the Chinese Agreement to his son in the United Kingdom for safekeeping.

17. According to the Plaintiff, since 1963 until 1997 when he retired and returned from the United Kingdom to Hong Kong for good, he visited his family in Tai Po annually; each time he would spend several weeks to a month with his family. According to his observation, his family continued to occupy and use exclusively Lot No. 525RP as before, and there was never any objection from anybody. According to the Plaintiff, in 1968 his father eventually managed to obtain the transfer of title to land from Mr Li. But he was not involved in the transfer and knew nothing about its details including why title to three lots only was transferred by Mr Li to his father and why only a Section D of each of the three lots were transferred. But it was the Plaintiff's evidence that whether before 1968 or after 1968, his family continued to use Lot No. 525 (or the remainder thereof after the Government resumptions) to the exclusion of everybody including in particular, Mr Li and his family. The Plaintiff was not aware of the change in title to Lot No. 525RP in 1968 as described above.

18. According to the Plaintiff, in 1974 his father transferred to him various plots of land including Lot No. 522D, Lot No. 523D and Lot No. 524D on which the family houses had been erected. At that time he was focusing on his restaurant business in the United Kingdom and thought nothing about the title to Lot No. 525RP which his family had been using since 1954. The Plaintiff said that throughout this period of time, his family's relationship with the Defendants' family was acceptable even though Mr Li had, despite Mr Chan's requests, failed to effect the transfer of title as described before. In 1968, the Defendants' family erected three town houses next to the twin houses of the Plaintiff's; as a matter of fact, the Plaintiff's houses stand between the Defendants' houses built in 1968 and Lot No. 525RP. According to the Plaintiff, so far as he could tell the neighbours were on reasonable or speaking terms. During cross-examination, the Plaintiff said he had no knowledge of his father's alleged objection to Mr Li's intended construction of houses on his land in 1968.

19. The Plaintiff said that his parents throughout lived at the twin houses erected in Lot No. 522D to Lot No. 524D, and moreover, his mother continued to use Lot No. 525RP for various purposes as described above. Her mother only ceased her farming activities in early 1980s when she grew old and developed an eyesight problem. The Plaintiff said that the poultry and pig rearing activities stopped eventually and Lot No. 525RP was subsequently used by his mother and family members for miscellaneous gardening and storage purposes. What is important is that the Plaintiff claimed that the family continued to occupy Lot No. 525RP exclusively as before.

20. The Plaintiff maintained that his mother used to live in the twin houses in question since their construction in 1954 until her death in 1990, whereas he accepted that his father had during different periods of time resided at his ancestral home in Chan Uk Village; but he denied that the relationship of his parents in their later years was less than good.

21. The Plaintiff said his mother passed away in 1990 and his father passed away in 1993. His wife together with his eldest son returned to live in Hong Kong in 1992 when he expended some money in renovating the twin houses. Amongst other things, he filled up the former septic tank for pig rearing purpose constructed in Lot No. 525RP. He repaired the wooden fence erected by his father many years before and built a new septic tank to serve the twin houses which his wife and his eldest son resided in. He said that none of these activities was objected to by the Defendants' family.

22. As mentioned before, the Plaintiff retired in 1997 and returned to live in Hong Kong for good in the same year. He and his family lived in the twin houses and continued to occupy exclusively Lot No. 525RP which he used as a garden to grow flowers, fruit trees, bamboos and vegetables as well as for storage purposes.

23. Dispute between the two families arose in mid 1998 when the Plaintiff began to construct a new septic tank in Lot No. 525RP. The 1st Defendant and his family members claimed that the land belonged to their family and that the Plaintiff was trespassing on their land. This led to several confrontations between the two families, the calling of the police, the alleged demolition of the wooden fence previously erected by the Plaintiff's family along the boundaries and the erection of a new wire mesh fence along the boundaries of Lot No. 525RP by the Defendants. In the same year, the present action was commenced by the Plaintiff against the Defendants.

Aerial photographs and the surveyor's evidence

24. Apart from the oral evidence of the Plaintiff, many photographs including Government aerial photographs were adduced before me at trial. Whilst I have borne in mind all of these photographs, I need only mention several specifically. In an aerial photograph taken in 1963 of the area in question, besides the twin village houses and the small house erected by the Plaintiff's father, the photograph depicts quite clearly a flattened and more or less vacant piece of land next to the houses where Lot No. 525RP lies. It seems quite clear to me that somebody must have carried out work on the land in question to flatten it and turn it into an open ground. This is quite consistent with the Plaintiff's story that the land in question was converted from sloping paddy fields into a piece of vacant land in 1954 after it was acquired by his father pursuant to the Chinese Agreement. Another aerial photograph taken ten years later in 1973 still shows the same piece of land, but by then trees had grown and tree tops simply prevented a clear view of the land in question from being photographed from the sky. The Plaintiff was able to pinpoint a particular tree shown in the photograph which he claimed was planted by him on the boundary of the land when it was first acquired by his father. Subsequent aerial photographs are less helpful for our purposes because much of the land in question was covered by tree tops. The Plaintiff accepted that in the 1963 photograph, neither the septic tank for pig rearing purpose nor the small pond for duck rearing could be seen, but he said they were relatively speaking too small to be seen clearly or at all in the aerial photograph.

25. The surveyor who was called by the Plaintiff to give evidence also confirmed in his evidence that the 1963 aerial photograph clearly shows that Lot No. 525RP had by then been flattened substantially and there were activities being carried on there. But understandably the surveyor was unable to tell what these activities were from the aerial photograph. The surveyor said that by the time he conducted his survey on site in 1998, there were no obvious landmarks on the site to indicate the boundaries of the subject lot. He prepared his survey plan based on on-site measurements as well as the available pre-existing plans. According to his measurement, Lot No. 525RP measures 81.8 m2.

PW3's evidence

26. The Plaintiff's case as described above was substantially corroborated and supplemented by the evidence of other witnesses called by him. Mr Chan Yung Sing ("PW3") was born in 1936. He was 18 when Mr Chan purchased the lots in question from Mr Li under the Chinese Agreement. He heard about it at the time. Apart from generally corroborating the evidence given by the Plaintiff, PW3 said that after the acquisition by Mr Chan of the lots, he constructed the twin village houses and the small house and flattened the piece of land in front of the small house (i.e. Lot No. 525RP) and turned it into an open ground whereas previously the lots comprised paddy fields. Despite suggestions to the contrary put to him during cross-examination, PW3 maintained that this work was done by Mr Chan after his acquisition of the various pieces of land and thereafter, his wife and his family used the piece of open ground for rearing poultry, keeping an ox, planting fruit trees and general storage purposes. PW3 said he had known Mr Chan and his family since he was 7 years old and he was also well acquainted with Mr Li. PW3 confirmed on oath the existence of the pig septic tank and a small pond constructed by the Plaintiff's family in Lot No. 525RP. He said for poultry rearing purposes, a fence had been erected by the Plaintiff's family within Lot No. 525RP up to the edge of a slope within the land on the side of the bicycle lane and main road (Ting Kok Road). PW3, a fellow villager of Mr Chan until he and his family moved to live in the new village houses he erected in 1954, used to pay frequent visits to Mr Chan's family until 1961 when he went abroad to work in the United Kingdom. He did not return to Hong Kong until 1977, he kept in contact with Mr Chan's family after his return and visited the village houses from time to time. He said in evidence that by that time pig rearing had stopped but Mr Chan's family continued to rear chicken at the open ground, i.e. Lot No. 525RP. PW3 left for the United Kingdom in 1979 again and in the 80s, he returned to Hong Kong from time to time.

27. In 1992, he assisted the Plaintiff in renovating the twin village houses. He said that for that purpose the Plaintiff arranged for the felling of many fruit trees previously planted in the flattened portion of Lot No. 525RP in order that building and construction materials could be temporarily stored at Lot No. 525RP. He said that on that occasion, the Defendants' family which lived at the town houses nearby did not raise any objection at all. He denied the suggestion that originally the Plaintiff had planned to construct a septic tank in Lot No. 525RP to serve his twin village houses but the plan was aborted because of objection from the Defendants' family. PW3 said that that never happened. As I said, by and large the evidence of PW3 supported and supplemented the case and evidence of the Plaintiff and I need not repeat further his evidence here.

PW4's evidence

28. As mentioned above, both the Plaintiff and PW3 left for the United Kingdom in the early 1960s. PW3 did not return to Hong Kong until 1977 whereas the Plaintiff managed to visit Hong Kong annually. The evidential gap since 1963 relating to what happened to Mr Chan's family's alleged use and occupation of Lot No. 525RP was filled by the evidence of Mr Ng Sing Ming ("PW4"). PW4 was able to give very useful evidence on the user of the land in question during the "missing years".

29. PW4 is the son of the eldest daughter of Mr Chan and the nephew of the Plaintiff, he was born in 1958 and was brought up by his grandparents at the twin houses since the age of one. PW4 was able to recollect at trial the user of the subject lot in question since the early 1960s. His evidence substantially supported the evidence given by his uncle, the Plaintiff, as well as that given by PW3 whom he did not know well. PW4 confirmed in evidence about the rearing of chicken and ducks by his grandmother and aunts (i.e. Mrs Chan and her unmarried daughters) on the open ground outside the small house, i.e. Lot No. 525RP. A fence of 3-4 feet in height had been erected there on the ground enclosing the area where the poultry was reared since his earliest recollection. Within that enclosed area was a septic tank constructed for rearing pigs inside the small house. Further, there was a small and shallow pond constructed next to the septic tank for the purpose of rearing ducks. A fruit tree had been planted by his uncle, i.e. the Plaintiff, so he was told by his grandmother, in the flattened portion of Lot No. 525RP (which was substantially enclosed by the fence for poultry rearing), and there were other trees planted by Mr Chan's family on the slope facing Ting Kok Road also within the boundary of Lot No. 525RP. PW4 was able to clarify that, in fact, the ox used by Mrs Chan for farming purpose was not kept within Lot No. 525RP but kept at an area on the other side of the twin village houses. According to PW4, the farming activities stopped before 1970 and the ox was no more kept by the family. The pig rearing activities had stopped earlier in 1967 and thereafter the small house was used mainly for storage purposes. The pig septic tank was continued to be used as the small house also served as a toilet for those living in the twin village houses. There was apparently a problem with the water supply in 1977 and at around that time, duck rearing stopped; but the elderly Mrs Chan and her daughters continued to rear chicken on the open ground within the enclosed portion of Lot No. 525RP for self-consumption, and that continued until around 1988 as Mrs Chan grew older. According to PW4, the fence enclosing the poultry rearing area was still there in the 1980s and lasted until early 1990s. He moved out of the premises in early 1992 after his uncle, i.e. the Plaintiff, had indicated to him his intention to renovate the twin village houses.

30. According to PW4, there was another fence erected at the slope facing Ting Kok Road, it had fallen into disrepair in the 1970s and little if any traces could be found of the former fence in the subsequent years. He also said that in the later years, the open ground was used mainly for storage purposes. He confirmed that the ground in question had always been used by his grandparents' family as its own and he had never seen anybody objecting to their use of the land. He also said firmly despite suggestions to the contrary that were put to him during cross-examination that apart from his grandparents' family, nobody had used Lot No. 525RP during his time there. In particular, he denied that the Defendants' family had ever used the land for any purpose at any time.

31. Like the other factual witnesses of the Plaintiff, PW4 was cross-examined at great length relating to his years spent at the premises in question. I need not repeat the details of his evidence here; suffice it to say that he maintained that the land in question had been used exclusively by his grandparents' family as its own at all material times.

The 1st Defendant's evidence

32. The 1st Defendant who has also been appointed to represent the estate of the late Mr Li gave evidence at trial. The 1st Defendant was born in November 1958. Although he was only formally adopted by Mr Li and his wife in 1977, he was actually raised by the couple since birth, and was throughout regarded by the couple as their own son. In fact, the 1st Defendant's natural father was one of the managers of the Tso. Mr Li and his wife had four daughters but no son and that was why the 1st Defendant was adopted. After his adoption (which was subsequently formalised in 1977), two sons were born to the couple and they are respectively the 2nd and 3rd Defendants in this action.

33. According to the 1st Defendant, even prior to 1968 when his family moved to live next door to Mr Chan's family, his parents had made use of Lot No. 525 RP by keeping an ox and farming equipment there at night. This was because his parents owned and farmed various pieces of land at the opposite side of Ting Kok Road roughly facing Lot No. 525 RP. It was therefore convenient to keep the ox as well as the farming tools at the subject lot. He said in 1968, his parents erected three adjourning houses on land owned by Mr Li and moved to live there from Lee Uk Village where they used to reside. The houses were just next door to the twin houses of the Chan family. As mentioned above, the twin houses of the Chan family situate, roughly speaking, in between the houses of the Li family and the suit property, i.e. Lot No. 525RP.

34. According to the 1st Defendant, he learned from Mr Li that by then the relationship between the two families had turned sour because Mr Chan had objected to Mr Li's intended erection of the houses on the ground of "fung shui". Indeed, according to the 1st Defendant, his father was angry with Mr Chan and had quarrelled with him after they had moved to live in the new houses in the summer of 1968. By that time, Mr Li had formally acquired the title to Lot No. 525RP from the Tso; and according to the 1st Defendant, on one occasion, his father went over to Lot No. 525RP to clear the weeds and bushes that had overgrown on the land, in order to "demonstrate his ownership" of the land to Mr Chan. His father also told Mr Chan on that occasion that the lot (i.e. Lot No. 525RP) belonged to him and warned Mr Chan and his family not to trespass on it. It was also on that occasion, according to the 1st Defendant, that Mr Li quarrelled with Mr Chan about the latter's objection to his erection of the houses. According to the 1st Defendant, since that occasion, the two families were on poor terms and apparently had little contact with each other.

35. According to the 1st Defendant, he could tell from his own observation that since then (as before) nobody ever (and in particular the Chan family never) made use of Lot No. 525RP for any purpose. Instead it was his family which had from time to time gone over to Lot No. 525RP to cut and collect the weeds and bushes as miscellaneous burning fuel. The 1st Defendant said that from his first floor room in the houses, he could see 80% of the subject lot and he confirmed in evidence that none of the activities alleged to have been carried on in the subject lot by the Chan family was in fact carried on at any material time. Moreover, he said that in fact since 1968, at most of the time the twin houses of the adjacent family were occupied by Mrs Chan and a young kid (i.e. PW4 - the nephew of the Plaintiff) only. Mr Chan was seldom seen there and the 1st Defendant had never met or seen the daughters of Mr Chan or indeed the Plaintiff until the late 1990s when dispute arose relating to the ownership of the subject lot.

36. According to the 1st Defendant, in 1977, the source of water supply to the twin houses of the Chan family had been contaminated and his mother (Mrs Li) agreed to let the elderly Mrs Chan obtain water supply from her houses instead and that situation continued until the death of Mrs Chan in 1990.

37. The 1st Defendant started working for the Government in 1978, and his job related to land resumption and compensation in the New Territories. In 1979, he advised his father to plant some fruit trees in the subject lot so that in case the lot was resumed by the Government, higher compensation could be claimed from the Government. His father followed his advice and planted two fruit trees in the subject lot which, according to the evidence, were depicted in some of the photographs taken after the dispute between the parties arose.

38. According to the 1st Defendant, the Plaintiff or his family had trespassed or attempted to trespass on Lot No. 525RP by trying to lay water pipes on the ground as well as by attempting to construct a septic tank in the lot in 1991 and 1993 respectively. On each occasion, after his intervention, the trespass or attempted trespass came to a halt.

39. In 1998, there was yet again an attempt by the Plaintiff to build a septic tank in Lot No. 525RP. This time it led to several confrontations between the two sides, police was summoned and surveyors were engaged. Eventually, the 1st Defendant managed to erect a wire mesh fence to enclose the subject lot, and the present action was commenced by the Plaintiff in 1998.

40. The 1st Defendant also gave evidence (by adoption of one of his two witness statements) on the confusion relating to the title of the various lots of land in question. He said he had heard from his father that there was confusion of titles between the Tso and the Tong chiefly because of the Japanese occupation during the Second World War and the consequential loss of title documents, and the matter was eventually rectified in 1968. The 1st Defendant claimed no knowledge of the Chinese Agreement which he said he had never seen prior to the present litigation. As regards the flattening of the subject lot, he said this was done by his father on behalf of the Tong in 1954 in order to obtain a general building licence covering the five lots in question. There can be no denial that all this was based on hearsay.

41. As regards the 1968 transfer of Lot No. 522D, Lot No. 523D and Lot No. 524D by Mr Li (and his co-owner) to Mr Chan, whilst the 1st Defendant did not claim any specific knowledge or information (from his father or otherwise) relating to the deal, he emphasized in evidence that according to the conveyance, his father only sold the three lots to Mr Chan for the total sum of $300.00, and there was a plan annexed to the conveyance which was signed by Mr Chan, demarcating the boundaries of the three lots which, of course, did not cover the subject lot in dispute. The 1st Defendant also said that after 1968 when his father formally became the registered owner of the subject lot, his father and subsequently he himself have been paying continuously the Crown/Government rent.

42. The 1st Defendant emphasized in his evidence that since the two families lived next door to each other at all material times and the subject lot is no more than a minute's walk from his own houses, there was no way the Chan family could have trespassed into the subject lot without his and his family's knowledge. According to the 1st Defendant, apart from the incidents in the 1990s, the last of which led to the present litigation, and apart from a track which Mr Chan used to use to reach the small house erected at the rear of the twin houses, a corner of which might have cut into the boundary of the subject lot, the Chan family had never carried on any activities of any sort in the subject lot; and in relation to the track, it in fact led to the warning given by Mr Li on the occasion in 1968 when he went over to clear the overgrowth in the subject lot mentioned above. The Plaintiff's claim of a possessary title to the subject lot was therefore strongly denied by the 1st Defendant.

DW2's evidence

43. The Defendants called a Mr Cheung Kam Moon (DW2), a salesman, to give evidence. DW2 was born and raised in a nearby village in October 1965, he had his primary school education at a village primary school situated (uphill) at the back of the twin houses of the Plaintiff and the subject lot since the age of 6. There were two routes to the primary school, both used by DW2, one of which would lead him past the twin houses of the Plaintiff and the subject lot. According to DW2, he was rather familiar with the subject area in question and on many occasions, he played with his friends and schoolmates at the hillside at the rear of the subject lot. Moreover, he was acquainted with the Plaintiff's mother due to his frequent presence in the area. The 3rd Defendant, on the other hand, was his primary school classmate whom he came to know in around 1975 to 1976.

44. In 1977, DW2 started studying in a secondary school in Yuen Long. On a daily basis he had to take a bus to Yung Long at a bus stop in Ting Kok Road immediately outside the twin houses of the Plaintiff and the town houses of the Defendants. Whilst waiting at the bus stop, he continued to have the occasions to chat with the Plaintiff's mother. After Form 5 education, DW2 started working and he continued to use the bus stop as before until 1988 when he moved to live elsewhere. Thereafter he used to visit his home village once a week.

45. According to the evidence of DW2, there were never any activities being carried on in the area outside the small house of the Plaintiff (i.e. the subject lot and its immediate surrounding area). Throughout these various periods of time, the area was simply a piece of abandoned land overgrown with weeds. From time to time somebody would cut the weeds for burning but he did not know who did it. He saw no poultry rearing, pig rearing or septic tank, there was no fruit tree and there was no fence of whatever sort (until late 1990s when the dispute between the parties to this action arose and he was requested by the 3rd Defendant to act as a witness in the present case).

46. According to DW2, only the Plaintiff's mother and a youth (i.e. PW4) used to reside in the Plaintiff's twin houses and apparently his other family members did not reside there. Occasionally, he would see the Plaintiff's father but he had never seen the Plaintiff. He was not acquainted with the youth residing together with the Plaintiff's mother who was apparently not particularly friendly or sociable. From time to time, the Plaintiff's mother would complain to him about her poor eyesight and after her death in 1990, he saw the youth no more. According to DW2, the Plaintiff's father moved to reside at Chan Uk Village in about 1977, and he resided there until he passed away in about 1993. DW2 did not know who owned the subject land and he was not aware of any dispute over the ownership of the same until dispute arose in late 1990s as described above.

47. DW2 said that of the 1st to 3rd Defendants, he knew the 3rd Defendant best, and they would chat with each other every time they met. He was not related to the Defendants.

DW3's evidence

48. The Defendants also called a former neighbour of the Plaintiff's father in Chan Uk Village since 1981 (DW3). DW3 moved to live in Chan Uk Village in 1981 and the Plaintiff's father lived next door to him. All that he was able to say was that the Plaintiff's father had another house (i.e. the twin village houses), but according to what he had learned from the Plaintiff's father, the Plaintiff's father was not on good terms with his wife and therefore he alone moved to reside at Chan Uk Village.

Findings of fact

49. The Plaintiff obviously bears the burden of proof in relation to the alleged adverse possession of the subject lot. In deciding the factual disputes, particularly that in relation to the user of the subject lot, I have borne in mind not only the burden and standard of proof, but also the content of the evidence of the various factual witnesses who have given evidence at trial, their demeanour in court, the documentary evidence, the undisputed objective facts and the general circumstances surrounding the case. Where relevant, I have also borne in mind the evidence of the surveyor (PW2).

50. At the end of the day, I have come to the conclusion and I make as a finding of fact that the dispossession of Mr Li, as well as the exclusive user of the land by the Plaintiff's family have been established together with the necessary intention to possess. In general, I prefer the evidence of the Plaintiff and his witnesses to that of the 1st Defendant. In particular, I prefer the evidence of PW4 to the evidence of the 1st Defendant relating to the user of the land.

51. I have no doubt that the Chinese Agreement was signed in 1954, it was a genuine document and it represented a genuine attempt by Mr Chan to purchase the five lots from the Tong as represented by Mr Li, its registered manager. I have no doubt that the consideration was duly paid pursuant to the Chinese Agreement. About the execution of the Chinese Agreement, I have the evidence of the Plaintiff. In 1954, the Plaintiff was only 11 years old but I take the view that he was old enough to have some recollection of this event which cannot be described as an ordinary or everyday occurrence and which must have been rather exciting to him as a boy. After all, his father was buying land for the erection of a new family residence.

52. That this was not a paper transaction which was never carried through or performed (at least substantially) is clearly evidenced by the fact that the twin houses were soon afterwards erected in portions of Lot No. 522, Lot No. 523 and Lot No. 524 by Mr Chan who has since made the twin houses his new residence, quite obviously without any objection from anybody. Moreover, a short-term licence was obtained from the Government to erect the small house immediately next to the new twin houses and the subject lot, for use in conjunction with the twin houses, and so I find, the subject lot.

53. It is true that title to the five lots of land covered by the Chinese Agreement was never transferred to Mr Chan pursuant to the Chinese Agreement, and apparently the same never received the blessing of the District Land Officer whose consent must be obtained to comply with section 15 of the New Territories Ordinance. It is also true that the Chinese Agreement was never registered against any of the five lots of land in question. All this, in my judgment, would only suggest that after the signing of the Chinese Agreement, some problems arose in relation to the proper and formal implementation of the same and in this regard, as I mentioned earlier on, there were Government resumptions of some of the land in question to complicate matters. In particular in 1954, apparently the whole of Lot No. 520 was resumed by the Government. All these complications could well explain the absence of any formal implementation of the Chinese Agreement after it was signed. But looking at the case as a whole, I have no doubt that pursuant to the Chinese Agreement, the twin houses were erected and the Chan family occupied and used the subject lot in question in conjunction with the adjourning twin houses and small house erected on Government land, after the same was flattened by Mr Chan. I accept the Plaintiff's evidence that he learned from his father that Mr Li had since the making of the Chinese Agreement refused or failed to formalise the transaction on various excuses.

54. As for Lot No. 520, it was never used by the Plaintiff's family. One possible and indeed likely explanation for this is that as explained above, in October 1954, i.e. soon after the making of the Chinese Agreement, the whole lot was surrendered to the Government. Very likely because of this, Mr Chan never really enjoyed any real use or occupation of Lot No. 520. It is also likely that some agreement was reached between Mr Li and Mr Chan relating to this lot; but unfortunately, there is no direct evidence on this. Be that as it may, whilst I have borne in mind the fact that Lot No. 520 which was included in the Chinese Agreement was never made use of by the Plaintiff family in evaluating the inherent possibilities and probabilities of the competing stories, as I said, on the evidence as a whole, I am satisfied that pursuant to the Chinese Agreement, the Plaintiff family did occupy and make use of the subject lot in question in conjunction with the twin houses (and the small house).

55. The Plaintiff's family's use of the land since 1954 is to some extent corroborated by the aerial photographs. Particularly, the photographs taken in the earlier years quite clearly suggest that some human activities must have been carried on in the subject lot. This is much more consistent with the story of the Plaintiff and his witnesses than the story of the 1st Defendant. Two aerial photographs taken in 1977 also tend to corroborate the Plaintiff's case in that they suggest that the subject lot was still a piece of vacant and open ground (instead of an abandoned lot) very much like before. This is more consistent with the Plaintiff's case than the story of the 1st Defendant.

56. As regards what took place in 1968, whilst I tend to accept that the two families were not on very good terms, I am not sure about the reason why. The 1st Defendant said it was because of Mr Chan's objection to Mr Li's building houses on the adjacent land based on "fung shui". The relevant District Land Office file has not been obtained or disclosed. Whilst there might have been an objection, I am not satisfied about the alleged reason. But in any event, this does not necessarily support the Defendants' argument that because of the bad relationship between the two and because of the fact that since the two sides had become neighbours in that year, any trespassing by the Plaintiff's family must have been vigorously objected to by the Defendants' side.

57. I do not accept the 1st Defendant's evidence. Apart from my general rejection of his evidence where it conflicted with the evidence given by the Plaintiff and his witnesses, what he said does not quite accord with what I have found to have been the situation. According to my finding as mentioned above, pursuant to the Chinese Agreement, the Chan family had erected the twin houses and had been making good use of the subject lot which was after all just next to the twin houses and in front of the small house erected on Government land obtained by Mr Chan under a short-term licence. The occupation and use of the subject lot was obviously based on everybody's then assumption that in 1954 when the same was "sold" by the Tong through Mr Li to Mr Chan, Mr Chan had thereby acquired a good title to the subject lot. From the subsequent history relating to the subject lot, it would appear that until 1968, not even Mr Li himself realised that the Tong did not own the subject lot and there was no reason why Mr Chan would have known better in this regard.

58. This being the background as I find it, when the mistake or confusion was apparently discovered in 1968 and the situation changed by the transfer of title to the subject lot by the Tso to Mr Li personally (who could, if he had so wished, have "rectified" the matter by transferring the same to Mr Chan), this would not, in my judgment, as a matter of fairness and common-sense, give Mr Li a good reason to evict Mr Chan and his family from the subject lot. Nor would it give Mr Li a good argument to assert his newly acquired title to the subject lot against Mr Chan and his family, who until 1968 had occupied and used the subject lot as their own, under the belief that Mr Li had, on behalf of the Tong, lawfully sold the subject lot to Mr Chan back in 1954.

59. Put simply, vis-à-vis Mr Chan, Mr Li had no good reason to assert his newly acquired title to the subject lot in 1968; it would have been a very odd if not outrageous thing for him to do. Indeed it would have been an even odder thing for Mr Chan to remain silent if he was in fact faced with an assertion of title to the subject lot by its new registered owner, namely Mr Li. As a matter of common-sense, I would have thought that his immediate reaction would have been to cry foul and demand Mr Li to immediately transfer to him the title to the subject lot and make good the situation pursuant to the Chinese Agreement.

60. In my judgment, none of this happened because Mr Li, after personally obtaining the title to the subject lot from the Tso, never asserted his title against Mr Chan. I accept the Plaintiff's evidence that on their side they never knew that there was this transfer of title between the Tso and Mr Li personally in relation to the subject lot in 1968. So far as their side was concerned, life carried on as before with the exception that in 1968 they had a new neighbour. As I said, I reject specifically the evidence of the 1st Defendant in this regard.

61. Question marks still hang in relation to what actually happened between the Tso and Mr Li relating to the subject lot in 1968. It is possible and likely that in that year the two sides reached some sort of an agreement to resolve all confusion of titles relating to land (not restricted to the subject lot). As to whether the stated consideration of $350.00 for the transfer of the subject lot by the Tso to Mr Li personally was actually paid, there is no reliable evidence (apart from the memorial and the one page assignment itself). But none of this is crucial to the Plaintiff's case although the Plaintiff bears the burden of proof in relation to adverse possession. The more important thing is that in my judgment, and so I find as a fact that, in 1968 and thereafter, Mr Chan and his family continued to regard and use the subject lot as their own land as before.

62. In this regard, I have the very useful and helpful evidence of PW4 relating to the user of the lot. I accept his evidence and in fact, in so far as his evidence differed from that given by the Plaintiff and PW3, I prefer his evidence to that of the Plaintiff and PW3, basically for the reason that whereas PW4 called the twin houses his home since birth until early 1990s, the Plaintiff and PW3 had spent much of their time during the relevant period in the UK. The differences in their evidence were, in my judgment, due to innocent lapses in memory. As regards the differences in evidence between that given by PW4 and the 1st Defendant, both of whom are of the same age and were neighbours with little contact at the material time, bearing everything in mind including the content of their evidence and their demeanour in Court, I have little difficulty in preferring, as I said, the evidence of PW4 to the evidence of the 1st Defendant, particularly relating to the user of the subject lot from 1968 onwards. I totally disagree with counsel's submission that the 1st Defendant was a straightforward witness. In fact, I find him to have been most argumentative and defensive in the box. In any event, in view of his age and where he used to live, I find that he could say very little that was useful about the user of the land prior to 1968.

63. In this regard, I should say that I have fully borne in mind the evidence of DW2 who was apparently more independent as a witness than the Plaintiff, PW3, PW4 and for that matter, the 1st Defendant. However, given his age, his knowledge of the user of the subject lot related more to the 1970s and thereafter. Of course by then, even on the Plaintiff's case and particularly based on the evidence of PW4 which I accept, the activities being carried on in the subject lot had greatly diminished as compared with the earlier years. Several factors contributed to this, such as the ageing of Mrs Chan, the marriage of the daughters, the cessation of farming due to changes in economic conditions in Hong Kong, and perhaps the less than prefect marital relationship between Mr Chan and his wife resulting in the former spending more and more time in Chan Uk Village. Moreover, it must be remembered that the boundaries of the subject lot were not apparent on the ground and the user of the subject lot by then (as per the Plaintiff's case) only covered part of the subject lot. To an uninformed outsider like DW2, he might well have got the impression that the area in question was an abandoned area with no human activities. In any event, bearing in mind the respective qualities of their knowledge about the user of the land, I prefer the evidence of PW4 to the evidence of DW2 where there was any conflict.

64. As to why in 1968 only title to Lot No. 522D, Lot No. 523D and Lot No. 524D was transferred to Mr Chan but not also title to Lot No. 525RP, there is no direct evidence. I accept, particularly bearing in mind the burden of proof, that this is an objective fact against the case of the Plaintiff. This fact would seem to suggest that the subject lot was either by agreement between Mr Chan and Mr Li or otherwise not intended to be given to Mr Chan for his use and all that he was entitled to was the three partial lots. I wish to say specifically that I have fully borne this fact and its possible implications in mind, and given the same their due weight in my deliberation process, in coming to my factual findings.

65. Likewise, I wish to say that I have not overlooked the fact that throughout the years, it was Mr Li and his son who have been paying the Crown/Government rent in relation to the subject lot. This would tend to suggest that at least on their side, they did not treat the land as belonging to Mr Chan and his family. But in this regard, I must note that Mr Li did have a history of dealing with land as its owner even though he had sold or agreed to sell it to someone else. His behaviour between 1954 and 1968 relating to the surrenders of land and the receipt of compensation monies, which land was covered by the Chinese Agreement, would tend to support my comment. It is possible that he held out the hope that by holding onto the title to the subject lot and making payment of the Crown rent notwithstanding the loss of possession of the same to Mr Chan and his family pursuant to the earlier Chinese Agreement, one day when the Government again resumed the land (or a portion thereof), he could once again had a share in it. This is of course speculation but is indeed a possible explanation for what happened. I have borne in mind the burden of proof as well as the standard of proof, and I have fully kept this fact and its possible implications in mind in my deliberation process.

66. In final submission, both counsel urged upon me a number of factual matters, possibilities, discrepancies and arguments relating to whose version was more credible and so forth. I wish to say that I have taken into account all these points and accorded them their due weight in my deliberation process. I have no intention to lengthen this judgment by referring to these matters one by one, apart from those that I have already mentioned or discussed in the previous paragraphs.

Law

67. In short, I have reached the conclusion that the Plaintiff has made out a case on adverse possession, bearing in mind the law's requirement in this area of dispossession of the true owner, and both factual possession and the requisite intention to possess by the squatter. For authorities, see Wong Tak Yue v. Kung Kwok Wai David [1998] 1 HKLRD 241; and Powell v. McFarlane (1979) 38 P & CR 452, 470-472. For the requisite intention to possess in the case of a trespasser who (mistakenly) believed himself to be the owner of land, see Tsun Wai Man v. Cheung Yung HCA 14202/1999, Cheung J (9 August 2001), paras. 36 to 39; Hughes v. Cork [1994] EGCS 25; Viva Steamship Co. Ltd v. Chow Lim Choy HCA 1722/2001, Kwan J (7 May 2002), paras. 23 and 24.

68. On the evidence before me, I have no doubt that Mr Chan and his family genuinely thought that they had purchased and become the owner of the subject lot in question pursuant to the 1954 Agreement and in that (mistaken) belief they had been in possession and making use of the subject lot since 1954 with the intention to exclude the whole world generally from the land. Of course, Mr Chan and his family would not have realised (and did not realise) that the Tso (prior to 1968) and Mr Li (as from 1968) were respectively the true owners of the land, but the intention to exclude them from the land must have been there given their mistaken belief that Mr Chan was the owner of the land. Such an intention is, according to the above authorities, sufficient to constitute the necessary intention to possess.

69. I have borne in mind the point urged forcefully upon me by counsel for the Defendants during submission that compelling evidence is required to prove the necessary intention to possess and that the burden on the trespasser to establish a case of adverse possession is heavy. I accept all that and in fact I have borne all that in mind in my evaluation of the evidence before me. But at the end of day, I have come to the conclusion that a case of adverse possession comprising the necessary factual possession as well as the requisite intention to possess has been made out.

When did time begin to run?

70. Given my findings, i.e. since 1954, Mr Chan and his family have been in continuous adverse possession of the subject lot with the requisite intention to possess, I need not deal with the rather interesting question of when time should begin to run in this case. Both sides are in agreement that the requisite period is 20 years whether under the relevant provisions of the Limitation Ordinance (Cap. 347) at the material times or under the Real Property Limitation Act 1833 which applied to Hong Kong prior to the enactment of the Limitation Ordinance in 1965: See the recent judgment of Deputy High Court Judge Lam in Leung Kuen Fai v. Tang Kwong Yu (or U) Tong [2002] 2 HKLRD 705. Of course, if one simply counts 20 years from 1954, the relevant period would expire in 1974. But the possible complication is this: Between 1954 and 1968, the Tso was the true owner of the land in question. According to Lam DJ's recent judgment, given the peculiar nature of a tso or tong as a trust, one cannot simply focus on the limitation period applicable to the registered manager of the tso or tong; one must take into account all its living members (if not those yet unborn) and see whether their causes of action against the trespasser have also become time-barred, before one can say whether a case of adverse possession has been made out against a tso or tong and its title to the land in question has become time-barred and extinguished.

71. Since the Tso was the owner of the subject lot in the present case between 1954 and 1968, the question that arises in the present case is this: In seeking to make out a case of adverse possession not as against the Tso but as against Mr Li (the true owner since 1968), whether the Plaintiff can resort to the period of adverse possession prior to 1968 (i.e. starting from 1954) in counting the 20 years period or whether he must only start counting his years from 1968. Even based on Lam DJ's judgment, the answer must to some extent depend on the membership of the Tso between 1954 and 1968, as to which there is not much evidence.

72. But I need not express any definite view on the matter, nor need I go any further into this very interesting question. This is because on the facts as found by me, there has been continuous adverse possession since 1954 right up to the time in mid 1990s when the two families started having serious confrontations, resulting eventually in the commencement of the present litigation. In other words, whether one starts counting the 20 years from 1954 or from 1968, it does not really matter. In my judgment, subject to one important matter which I will shortly deal with, whether by 1974 or by 1988, Mr Li's cause of action to recover possession of the subject lot has become time-barred and his title to the same extinguished.

Alternative argument based on the Chinese Agreement

73. I should mention, for the sake of completeness, that on the pleading, the Plaintiff also runs an alternative case of an equitable or beneficial interest in the subject lot arising from the Chinese Agreement itself. But Mr Mak, counsel for the Plaintiff, told the Court in no uncertain terms, both during his opening and during his final submission, that the Plaintiff is not pursuing this argument. In any event, it is difficult to see how this argument could lead the Plaintiff anywhere. The 1954 Chinese Agreement dealt or purported to deal with land owned by the Tong (or, in truth, so far as the subject lot was concerned, the Tso), the consent of the District Land Officer to which was required as mentioned above. Moreover, there was a mutual mistake amongst the vendor and the purchaser in that both apparently thought that the subject lot belonged to the Tong. This was a most fundamental mistake and rendered the Chinese Agreement void in relation to the subject lot. The acquisition of the title to the subject lot by Mr Li in his personal capacity, 14 years after the signing of the Chinese Agreement, would not help to feed the title. So in my judgment, this alternative argument based on the Chinese Agreement itself is a dead end.

Result but...

74. But for one matter, the upshot of all this is that I would be prepared to make a declaration that by 12 March 1988 (the 20th anniversary of Mr Li's acquisition of title to the subject lot) at the latest, Mr Chan has acquired a possessary title to the subject lot and Mr Li's title to the same has been extinguished, by reason of Mr Chan's adverse possession of the same for a continuous period of no less than 20 years. I would not be minded to make any declaration in relation to the Plaintiff's title to the land. For this would depend on his succession to his late father's intestate estate, and the claim, if any, of any other possible beneficiaries (like his sisters).

The New Territories Leases (Extension) Ordinance (Cap. 150) ("The Extension Ordinance")

75. The one very important matter that I referred to above is this: It is common ground that the Block Crown lease in question was for a term of 75 years from 1 July 1898 with an option to renew for a further term of 24 years less 3 days. Pursuant to the New Territories (Renewable Government Leases) Ordinance (Cap. 152) ("the Renewal Ordinance"), the option was deemed to have been exercised and a new Government lease granted immediately upon the expiration of the Block Crown lease on 30 June 1973, for a new term of 24 years less 3 days, expiring on 27 June 1997: sections 3 and 4 of the Renewal Ordinance.

76. According to the Privy Council decision in Chung Ping Kwan v. Lam Island Development Co. Ltd [1997] AC 38, the Renewal Ordinance did not have the effect of giving a leaseholder under a Crown lease a fresh cause of action to evict a squatter, who had been in adverse possession for over 20 years prior to 1 July 1973, by virtue of the renewal and grant of a new lease on that day pursuant to the provisions in the Renewal Ordinance. On its true construction, the Renewal Ordinance was essentially administrative machinery designed to facilitate the implementation of existing rights and obligations under Crown leases, with a rent alteration in favour of lessees; the Ordinance should be approached on the footing that, save as otherwise provided, the Ordinance was intended to achieve the same result as would have occurred if a new lease had been granted pursuant to the right of renewal. In those circumstances, the deemed new lease was to be regarded as having the like consequences in law as would have followed from an actual exercise of the renewal option and an actual grant of a new lease: p. 50E-F.

77. According to the Privy Council, if there were an actual exercise of the renewal option and an actual grant of a new lease, the lessee would be obtaining and holding the new lease pursuant to the exercise of an option which was granted by the Government under the original Crown lease. The new lease was not obtained by virtue of any new right unconnected with the lessee's prior interest, but by the maturing of a right which had its inception in the original Crown lease. Prior to the grant of the new lease, the lessee under his current lease (the leasehold estate under which is the subject of extinguishment under the squatter's adverse possession) already got a specifically enforceable right to a new lease against the Government. His new lease stemmed from his original lease. According to the Privy Council,

"The lessee's claim in right of the new lease is not a claim to an estate or interest in reversion within the meaning of section 9⁽¹⁾ [of the Limitation Ordinance]1, because the lessee's right to the new lease, subject to satisfying any prescribed conditions, was a right he already had as lessee."

78. In other words, the lessee was not in the same position of a person claiming through the reversionary interest of the Government as landlord, which in the absence of an option to renew (or the exercise thereof) would fall into possession upon the expiry of the term of the original Government lease, and thus a person who could exercise the Government's fresh cause of action to evict the trespasser upon the falling into possession of the Government's reversionary interest pursuant to section 9⁽¹⁾. Rather, the lessee was a person obtaining and holding the newly granted lease pursuant to the exercise of an option to renew that was contained in the original Government lease in his favour. As between him and the trespasser, that option had been defeated and indeed extinguished pursuant to section 17 just as much as the lessee's other rights under the original Government lease: pp. 48F-G, and 49G-H. Therefore, there was no accrual of a fresh cause of action to evict the trespasser pursuant to section 9⁽¹⁾ of the Limitation Ordinance.

79. Whereas the Renewal Ordinance did not, in substance, create any new right or obligation as between the Government and the lessee, save that there was a mandatory statutory exercise of the option to renew, the same cannot be said in relation to the Extension Ordinance, which had its origin in the Joint Declaration dated 19 December 1984. Annex III para. 2 of the Joint Declaration provided that all leases of land granted by the British Hong Kong Government not containing a right of renewal that expired before 30 June 1997, with some (irrelevant) exceptions, might be extended if the lessee should so wish for a period expiring not later than 30 June 2047 without payment of an additional premium.

80. This part of the Joint Declaration was carried into effect domestically by the enactment of the Extension Ordinance in 1988: see the short title and the preamble of the Ordinance. A Government lessee could opt out of the extension provisions in the Ordinance by a prescribed procedure that had to be completed prior to the coming into effect of Part II of the Ordinance on 25 April 1988 which contained the necessary extension provisions: see section 5 in Part I of the Extension Ordinance which came into operation earlier on 26 February 1988.

81. Section 6 in Part II of the Extension Ordinance reads in English and Chinese as follows:

"6. The term of a lease to which this Ordinance applies is extended, from the date on which it would, apart from this Ordinance, expire, until the expiry of 30 June 2047, without payment of any additional premium.

本條例所適用契約的年期現予續期，由契約若非因本條例便會屆滿的日期起，續期至2047年6月30日完結時止，無須補繳地價。"

82. Section 7 contains provisions dealing with the burdens and covenants affecting the land during the period of "extension" under section 6, as well as the preservation of rights and obligations concerning the land during the same period.

83. In short, whereas under the Renewal Ordinance, the renewed Government leases were to expire by effluxion of time on 27 June 1997, by virtue of the Extension Ordinance, the leases have been "extended" for 50 years and 3 days to 30 June 2047.

84. The Extension Ordinance was adopted as the laws of the Hong Kong Special Administrative Region by the Provisional Legislative Council on 1 July 1997 under section 7 of the Hong Kong Reunification Ordinance. Furthermore, articles 120 and 121 of the Basic Law confirm the "extension" of these leases. The relevant provisions in both English and Chinese are as follows:

"Article 120

All leases of land granted, decided upon or renewed before the establishment of the Hong Kong Special Administrative Region which extend beyond 30 June 1997, and all rights in relation to such leases, shall continue to be recognized and protected under the law of the Region.

Article 121

As regards all leases of land granted or renewed where the original leases contain no right of renewal, during the period from 27 May 1985 to 30 June 1997, which extend beyond 30 June 1997 and expire not later than 30 June 2047, the lessee is not required to pay an additional premium as from 1 July 1997, but an annual rent equivalent to 3 per cent of the rateable value of the property at that date, adjusted in step with any changes in the rateable value thereafter, shall be charged.

第一百二十條

香港特別行政區成立以前已批出、決定、或續期的超越一九九七年六月三十日年期的所有土地契約和與土地契約有關的一切權利，均按香港特別行政區的法律繼續予以承認和保護。

第一百二十一條

從一九八五年五月二十七日至一九九七年六月三十日期間批出的，或原沒有續期權利而獲得續期的，超出一九九七年六月三十日年期而不超過二零四七年六月三十日的一切土地契約，承租人從一九九七年七月一日起不補地價，但需每年繳納相當於當日該土地應課差餉租值百分之三的租金。此後，隨應課差餉租值的改變而調整租金。"

85. In those circumstances, can a Government lessee who has been dispossessed by a squatter for the requisite period of adverse possession prior to the "extension" of his Government lease (as renewed pursuant to the Renewal Ordinance) claim that he has thereby obtained a fresh cause of action based on the extended lease to evict the squatter, pursuant to section 9(1) of the Ordinance, so that time should begin to run again upon the "extension"? Depending on when the squatter completed his requisite period of adverse possession, and depending on the actual meaning and legal effect of an "extension" of the lease, the above question may have to be further modified or fine-tuned. But for the time being, this sufficiently highlights the question faced by the Plaintiff in the present action.

86. In Unijet Ltd v. Yiu Kwai Hoi HCA 13637/1998 (21 June 2002), Sakhrani J held that the Extension Ordinance must be construed according to common law principles. Under common law principles, there can be no "extension" of the term of a lease even by mutual agreement between landlord and tenant. That can only be achieved by a surrender and re-grant, or a "reversionary lease". In a surrender and re-grant situation, the unexpired term of the original lease is there and then surrendered by the tenant to the landlord in exchange for the re-grant of a new tenancy. In a reversionary lease situation, otherwise known as a "concurrent lease" (see Halsbury's Laws of England (4th ed. reissue) Vol. 27(1) para. 81 and particularly footnote 1 and para. 83), for the type of concurrent leases one is concerned with here, the term of the concurrent/reversionary lease will begin immediately upon the expiration of the earlier lease and end on a future day.

87. Sakhrani J therefore held that the "extension" in the Extension Ordinance was achieved by means of either an immediate surrender and re-grant which therefore would have taken place on 25 April 1988, or a reversionary lease the term of which would have commenced on 28 June 1997 immediately after the expiry of the renewed term of 24 years and 3 days pursuant to the Renewal Ordinance. His lordship did not find it necessary to decide this point on the facts of that case: see para. 81 of the learned judge's judgment.

88. In those circumstances, the learned judge further concluded that in either case, this was a completely different situation from that obtaining in the Renewal Ordinance and the Privy Council decision in Chung Ping Kwan. Neither the surrender and re-grant nor the reversionary interest was premised on a pre-existing option to renew under the original lease, or the new lease renewed pursuant to the Renewal Ordinance. The lessee under the re-grant or under the reversionary lease took the lease in question as the new lessee of the Government landlord. He was someone claiming through the Government's reversionary interest whether under the re-grant or under the reversionary lease. There was therefore an accrual of a fresh cause of action pursuant to section 9(1) of the Limitation Ordinance upon the re-grant or upon the taking effect of the reversionary lease. In those circumstances, notwithstanding the possessary title vis-à-vis the original lease (as renewed) obtained by a squatter prior to April 1988 or June 1997 when the re-grant or alternatively the reversionary lease took effect, time began to run again upon the re-grant or the reversionary lease taking effect.

89. If that is correct, and if time really began to run again under such a new cause of action either in April 1988 or in June 1997, given that the present counterclaim by the Defendants for eviction was commenced in September 1998, the result must be that the Plaintiff cannot now claim a good possessary title against the Defendants, regardless of what the true position was prior to the "extension".

90. However, in Mutual Luck Investment Ltd v. Yeung Chi Kuen HCMP 6047/1998 (25 November 2002), Lam DJ in his judgment (Part II) came to an opposite conclusion relating to the Extension Ordinance. In the learned judge's view, the Extension Ordinance is covered by the true principle behind the Privy Council decision in Chung Ping Kwan. According to the learned judge (in paras 48-50), first, the "extension" took place in April 1988, because section 6 of the Extension Ordinance in both English and Chinese refers to a present extension. He also drew support from articles 120 and 121 of the Basic Law which have been extracted above. (But the past tense used in these two articles of the Basic Law would equally support Sakhrani J's construction of the Extension Ordinance because whether by means of a surrender and re-grant or a reversionary lease, the "extension", according to Sakhrani J, was achieved before 1 July 1997 when the Basic Law came into effect.)

91. In any event, Lam DJ was of the view that the material question according to the Privy Council's decision is as follows (at paras. 63 and 64):

"63. It seems to me on proper reading of the judgment of Lord Nicholls, the material question is not whether the right of the lessee to the new legal estate stemmed from an option to renew or other right inherently built into the old lease or right bestowed on the lessee when the old lease was granted. The material question is whether there was a specifically enforceable right in the lessee to call for the new legal estate by reason of his interest under the old lease when he was already lawfully in possession. If he had such a right, Section 9(1) would operate in favour of the lessor and conversely, if such a lessee had slept on his rights, the fact that he acquired a new legal estate could not assist him. That is precisely why Lord Nicholls said that the legal source of the lessee's entitlement to his new legal estate could not be ignored.

64. Applying such a test, the answer is obvious. The right of the Plaintiff's predecessor in title under Section 6 of the New Territories Leases (Extension) Ordinance Cap. 150 is a specifically enforceable right. Such a right was conferred upon Fung Lok Kung Sze when, as between it as lessee and the Government as lessor, it was lawfully in possession. Hence, at all material time, the Government could rely on Section 9(1) to maintain that time has not started to run against it. As regards the squatter, on the assumption that I were incorrect in all my above findings as to the boundary of the First Tau Shui Mun and the status of Hon Kun and the 39th Defendant, Fund Lok Kung Sze slept on its rights by failing to commence proceedings against the 39th Defendant to recover possession. The right of Fund Lok Kung Sze to obtain the new legal estate pursuant to the extension was not by virtue of any new right unconnected with its prior interest (see paragraph 58 above). Hence, the rationale in Chung Ping Kwan applies to the new estate obtained by a Government lessee pursuant to the New Territories Leases (Extension) Ordinance Cap. 150 as much as it applied to the new estate pursuant to the deemed renewal in 1973."

92. In other words, Lam DJ held that since the right to an "extension" had its origin in the lessee's status as a Government lessee in lawful possession under the original Government lease (as renewed by the Renewal Ordinance), he did not derive his new title under the re-granted lease in 1988 from the Government's reversionary interest under the original lease (as renewed), but rather pursuant to his statutory right in section 6 of the Extension Ordinance by virtue of his status as a Government lessee under a Government lease that had been renewed pursuant to the Renewal Ordinance.

93. I have carefully considered the reasonings in both judgments, as well as the very interesting arguments mounted by counsel on both sides. With the greatest respect to the two learned judges (and counsel), I prefer the decision of Lam DJ. I will not further lengthen this judgment by a detailed analysis of the situation. That has been done twice by two learned judges. This point, of potentially great importance, obviously requires appellate clarification, particularly in the light of the conflicting first instance decisions. I hope that whatever that I may try to say on this issue in this judgment will not add to the present confusion on the proper construction of the Extension Ordinance.

94. For what it is worth, I would like to simply add a few observations of my own. First, insofar as Unijet decided that the extension was achieved by a surrender and re-grant in April 1988 and the effect of that was that a fresh cause of action accrued in April 1988, I cannot agree with it. This would effectively mean that a squatter who had obtained a good possessary title prior to April 1988 was, by a side-wind under the Extension Ordinance, deprived of his possessary title to the land in question for the remainder of the term of the renewed lease (pursuant to the Renewal Ordinance) of more than 9 years, before it was due to expire on 27 June 1997. An interest in land for 9 years is a very valuable interest indeed. The Extension Ordinance should not be construed, unless for compelling reasons, to have such a draconian effect on a person's accrued interest in land, even though that accrued interest was in the nature of a possessary title, which was good only for the remaining term of the leasehold estate of the dispossessed leaseholder. See Bennion, Statutory Construction (4th ed.) sections 269 and 278.

95. Secondly, of course, insofar as Unijet decided that the "extension" was only achieved by means of a reversionary lease taking effect in June 1997, the above startling result would not arise. However, this alternative construction does not sit well with the actual wording of section 6 of the Extension Ordinance, whether in English or Chinese, as has been pointed out by Lam DJ in para. 48 of his judgment.

96. Thirdly, one must not only focus on what happened on 25 April 1988 when Part II (and in particular section 6) of the Extension Ordinance came into operation. One should bear in mind and analyse the position between 26 February 1988 when Part I and section 5 came into operation and 25 April 1998. Granted that common law does not allow the extension of the term of a lease by mutual agreement, or, for that matter, the insertion of an option to renew into a lease that did not contain such an option (Baker v. Merckel [1960] 1 QB 657), it does not follow that the legislature cannot force upon the parties a statutory option to "extend" (via a surrender and re-grant), which it obviously did, when Part I of the Extension Ordinance came into operation on 26 February 1988. Part I section 5 contains the opt-out provisions. If the lessee opted out before the deadline (i.e. 25 April 1988 when Part II came into operation), there would be no "extension" and his pre-existing lease would be left to run its course. This was, in substance, an option given to the lessee by legislation. This statutory option therefore did not, unlike the common law, by itself cause a (deemed) surrender and regrant. But if the lessee did not opt out before the deadline, when Part II came into operation, an "extension" via a surrender and regrant would then take place. To this extent, on this analysis, the common law as represented by Baker v. Merckel was departed from by the legislative.

97. I call it an "option" to surrender and re-grant because the lessee was indeed given an option under section 5 of the Extension Ordinance, or more correctly, a "negative" option to opt out of the surrender and re-grant, which option to opt out must be exercised within a period of time, i.e. between 26 February 1988 (when section 5 came into effect) and 25 April 1988 (when section 6 came into effect). This was, like an option to renew, a unilateral option on the part of the lessee. The Government had no choice. The lessee had a specifically enforceable right to surrender and obtain a re-grant, provided that he did not choose to opt out within the short period of time. This right was given to him by legislation.

98. Thus analysed, I can see no material distinction between a lessee who was given this option by section 5 during the period of time between 26 February 1988 and 25 April 1988, and a lessee who had an option to renew the Government lease for another term of 24 years less 3 days prior to the expiration of his lease on 30 June 1973. The latter had a right under the original Government lease. The former had a right pursuant to the Extension Ordinance. They both had their respective rights because they were the lessees of the Government, and their rights were specifically enforceable against the Government in their capacity as lessee. In other words, the reversionary interest of the Government to the land was (made) subject to those rights. Put yet another way, in between the squatter and the Government, there stood the Government lease plus those rights respectively. When the two lessees in my example respectively exercised the options against the Government and respectively obtained a new leasehold interest in the land, they were not obtaining the new leasehold estate pursuant to the reversionary interest that the Government had in the land prior to the exercise of the option, which fell into possession upon the expiry of the existing lease - it did not; rather they were obtaining the new leasehold interest pursuant to their own respective rights against the Government prior to the exercise of the options. The Government's reversionary interest under the current lease in each case never fell into possession; no fresh cause of action therefore accrued under section 9(1).

99. To be more specific, between 26 February and 25 April 1988, the Government lessee had an option (or negative option). If he opted out, there would be no surrender and re-grant. If he did nothing, then on 25 April 1988, there would be a surrender and re-grant. The Ordinance gave him an option or a right to a re-grant upon surrender on 25 April 1988. That right was specifically enforceable against the Government. That right also stood between the Government and the squatter. Section 9⁽¹⁾ of the Limitation Ordinance therefore did not apply, in the sense that the Government's reversionary interest never fell into possession on 25 April 1988. The situation is therefore indistinguishable from the Privy Council decision in Chung Ping Kwan.

100. Fourthly, in fact, the same analysis would mean that even if the "extension" in the Extension Ordinance was achieved not by a surrender and re-grant, but by a reversionary lease, there would be no accrual of a fresh cause of action under section 9⁽¹⁾ when the reversionary lease came into effect on 27 June 1997. Just like the right/option to surrender and re-grant in the previous analysis, the right to the reversionary lease originated from an option conferred under section 5 which lasted for two months in 1988. After the lapse of the two months, the option turned into a right which was specifically enforceable against the Government between April 1988 and 27 June 1997. The reversionary lease only came into maturity on 27 June 1997. The analysis in Chung Ping Kwan therefore applies equally to a reversionary lease situation. No accrual of a fresh cause of action under section 9⁽¹⁾ would be involved. As between the squatter and the Government, there would be this right to a reversionary lease standing between them, preventing the application and operation of section 9⁽¹⁾.

101. Finally, the assumption that the Extension Ordinance should not be construed against established common law principles, particularly in relation to how an "extension" of the term of a lease can be achieved at law, must, where necessary, give way to practical considerations. After all, the legislature is not bound by any common law technicalities or disability. If it so wishes, it can legislate on something new or contrary to common law principles. If on any fine and technical analysis of the law, one is driven to the conclusion that an accrued possessary title acquired by the time the Extension Ordinance was enacted would be disturbed fatally by the Ordinance as from April 1988, in my judgment, the Ordinance should be construed free from the common law restrictions, and if necessary, one could construe the "extension" as meaning simply what it says, i.e. that the renewed term of the Government lease pursuant to the Renewal Ordinance is extended for 50 years and 3 days.

102. Admittedly, the need to adopt such a bold construction of the Ordinance would be lessened if the alternative basis of a reversionary lease in Unijet is preferred. But in my judgment, even in that case, looking at the spirit, intention and wording of the Joint Declaration and the Extension Ordinance as a whole, I would still lean in favour of a construction which would preserve the status quo for 50 years, and that would include preserving the status quo of squatters who had acquired a possessary title for 50 years. After all, it should be remembered that the Extension Ordinance was enacted to give effect to the Joint Declaration, and the Joint Declaration is a treaty between the United Kingdom which of course follows the common law and the People's Republic of China which does not use common law. One should therefore be slow to assume that in agreeing to the extension of leases in Annex III of the Joint Declaration, the PRC Government did not intend the "extension" to mean what it says, i.e. simply an extension, and that rather, the PRC Government intended to follow the technical common law position prevailing in the United Kingdom - its treaty counterpart, in achieving the extension of the lease. Since the Extension Ordinance specifically refers to the Joint Declaration and the expressed object of the Extension Ordinance is to give effect to the Joint Declaration, I see no objection whatsoever in looking at the Joint Declaration for reference in seeking to properly construe the Extension Ordinance: See Bennion, op. cit., section 221.

103. So for all these reasons, I hold that the Extension Ordinance does not stand in the path of the Plaintiff in the present case.

Outcome

104. I make a declaration that by 12 March 1988 at the latest, Mr Chan has acquired a possessary title to Lot No. 525RP and Mr Li's title to the same has been extinguished, by reason of Mr Chan's adverse possession of the same for a continuous period of no less than 20 years; and that since 12 March 1988 at the latest, the aforesaid possessary title was and is good against the Defendants.

105. As regards costs, costs should follow the event. I order that the Defendants pay to the Plaintiff the costs of the action including all costs reserved previously, such costs to be taxed if not agreed.

106. The Plaintiff has indicated to me that he is not pursuing any claim for damages arising from the confrontations between the two families in 1998. I make no order in relation to the claim for damages.

107. It must follow from the above that I dismiss the counterclaim of the 4th Defendant for damages based on trespass. I also order that the 4th Defendant pay to the Plaintiff the costs of the counterclaim, such costs to be taxed if not agreed.

108. I would like to thank counsel for their helpful assistance

1 Section 9⁽¹⁾ reads: "Subject as hereafter provided in this section the right of action to recover any land shall, in a case where the estate or interest claimed was an estate or interest in reversion or remainder or any other future estate or interest and no person has taken possession of the land by virtue of the estate or interest claimed, be deemed to have accrued on the date on which the estate or interest fell into possession by the determination of the preceding estate or interest."