SHI LING YEE v. NUMERIC CITY LTD

DCCJ 1347/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.1347 OF 2013

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DCCJ 2647/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.2647 OF 2012

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DECISIONS

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Introduction

1.  There are 3 Summonses of 2 actions heard together before this court.  Numeric City Limited (“NCL”), the plaintiff in DCCJ 2647/2012 (“the 1^st action”), has obtained judgment for vacant possession of the subject property and mesne profits against a tenant Mr. Lau Chi Wing (“Lau”) and Madam Shi Ling Yee (“Shi”), the plaintiff in DCCJ 1347/2013 (“the 2^nd action”), is seeking a declaration of possessory title of the subject property.  Shi is not a party in the 1^st action.

2.  The 3 summonses are as follows:

(a)    1^st action: Shi’s summons dated 18 April 2013 to stay/set aside the Writ of Fieri Facias and Possession Combined;

(b)   1^st action: Shi’s summons dated 30 April 2013 to join in the action as a defendant; and

(c)    2^nd action: NCL’s summons dated 6 May 2013 to strike out Shi’s Statement of Claim

3.  Parties agree that the striking out application should be dealt with first.  If Shi’s claim of adverse possession is struck out, it is no longer necessary to deal with Shi’s other 2 applications in the 1^st action.  

Background

4.  The subject property is the 5^th floor and roof of No. 16 Yin Wa Street, Hong Kong (“the Property”). 

5.  The late Madam Ko was the original owner of the Property.  She died intestate on 26 May 2003.  Madam Chan Kam Fong (“Madam Chan”) was granted letters of administration on 1 June 2011.

6.  In September or October 1999, Shi claimed that she moved in the Property and began her possession of it.  Around mid 2000 Shi permitted Lau (the defendant in the 1^st action) to use the structure erected on the roof of the Property as storage.

7.  In or about 2002, the structure erected on the roof of the Property was demolished pursuant to a building order.

8.  In or about 2003, Madam Chan on behalf of Madam Ko rented the Property to Lau under an oral tenancy.  The tenancy was terminated on 30 June 2012 by a transitional termination notice.

9.  In 2012, NCL purchased the Property from Madam Chan, who is the administratrix of the estate of Madam Ko.  The sale and purchase was completed on 16 July 2012.

10.  On 3 August 2012, NCL commenced the 1^st action against Lau to recover possession of the Property.  On 30 November 2012, NCL obtained summary judgment.  Lau filed the Notice of Appeal on 13 December 2012.  The appeal was dismissed on 8 February 2013.

11.  In March 2013 NCL sought to execute the judgment in the 1^st action by a Writ of Possession and Fieri Facias Combined.

12.  On 18 April 2013, Shi applied to set aside or stay the said Writ.  On the same day, she commenced the 2^nd action against NCL.  Her case is that she has been in adverse possession of the Property since 1999.

The Grounds of Striking Out

13.  The following are the grounds of striking out Shi’s action:

(a) Shi’s Statement of Claim discloses no reasonable cause of action:

(i) According to Shi’s pleaded case, the late Madam Ko permitted Shi to move in the Property. Shi should be regarded as a licensee whose licence was terminated upon the death of Madam Ko in May 2003.  The cause of action for recovery of the Property only started to accrue then, i.e. since May 2003.  Section 7(2) of the Limitation Ordinance is not satisfied.

(ii) It was pleaded that Madam Chan on behalf of Madam Ko made an oral promise to Shi that the Property would be given for her use and occupation if Shi caused repair and/or renovation to the Property, and that Shi in reliance on the promise expended money on repair and/or renovation.  On these pleaded facts, Shi purportedly has a right to occupy the Property based on proprietary estoppels instead of adverse possession.

(iii) Alternatively, it is submitted that by virtue of section 10(2) of the Limitation Ordinance, Cap.347, Madam Chan’s title to the Property has not been extinguished because the requisite limitation period has not expired.

(b)   Alternatively, Shi’s Statement of Claim is scandalous, frivolous or vexatious or an abuse of process. 

Scandalous, frivolous, vexatious or an abuse of process

14.  Mr Cheung for NCL referred me to the legal principle as set out in §18/19/8 of the Hong Kong White Book 2013:

“The object of the rule is to stop cases which ought not to be launched – cases which are obviously frivolous or vexatious, or obviously unsustainable.

The expression “frivolous or vexatious” includes proceedings which are an abuse of the process. A proceeding is frivolous when it is not capable of reasoned argument, without foundation or where it cannot possibly succeed. A proceeding is vexatious when it is oppressive and/or lacks bona fides. However, where the plaintiff had applied to strike out the defence on the basis that it was “wholly imaginary, a myth or not bona fide”, the Court of Appeal confirmed that there were many facts to be considered and weighed up in deciding whether a defendant’s evidence was believable and this basis alone was not enough (Viva Steamship Co. Ltd v Chow Lim Choy & Others [2003] 1 H.K.L.R.D. 663).”

15.  Mr Cheung submitted that Shi’s case lacks bona fides and her contention is not believable.  Firstly, it is unreasonable for the original owner to give a valuable property to a stranger who was willing and prepared to cause repair to the property.  Secondly, in another case DCCJ 3996/2011 where Madam Chan sued Lau for arrears of rent, Lau admitted that he was a tenant of the property and paid rent to the landlady, Madam Ko via Madam Chan by cheque without any making any reference to Shi.  Lau even paid two cheques to NCL purportedly as payment for arrears of rent. Further Lau has failed to mention Shi in the 1^st action which Lau claimed adverse possession of the Property. Shi only came out to claim at very late stage after the issue of the Writ of Possession and Fieri Facias Combined and the bailiff posted the Notice to Quit for the second time.  Mr Cheung concluded that Shi’s claim is a bogus attempt to thwart NCL’s repossession of the Property when Lau’s attempt to delay and resist has failed.

16.  On the other hand, Shi denied knowledge of the followings: tenancy agreement between Madam Chan and Lau; the claim of arrears of rent against Lau and Lau’s payment by the two cheques; and the commencement of the 1^st action.  Shi attributed her late action to her lack of notice of any judgment or order of the 1^st action until late March or early April 2013.  Then Shi only came across the Writ of Possession and the Notice to Quit when she returned to the Property after a trip.

17.  Mr Cheung drew my attention to §18/19/4 of the Hong Kong White Book 2013:

“(1) Striking out only in plain and obvious cases—It is only in plain and obvious cases that the court should exercise its summary powers to strike out the indorsement on any writ or any pleading under this rule. There should be no trial upon affidavit. Disputed facts were to be taken in favour of the party sought to be struck out. Nor should the court decide difficult points of law in striking out proceedings. The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out ( Ha Francesca v. Tsai Kut Kan (No. 1) [1982] 1 H.K.C. 382, CA). See also Hubbuck v. Wilkinson [1899] 1 Q.B. 86 at 91, CA; Mayor, etc. of the City of London v. Horner (1914) 111 L.T. 512, CA; Kemsley v. Foot [1951] 2 K.B. 34, CA, affirmed [1952] A.C. 345, HL. Where the legal viability of a cause of action is sensitive to the facts, an order to strike out should not be made (per Sir Thomas Bingham M.R. in E (A Minor) v. Dorset C. C. [1994] 3 W.L.R. 853 at 865, CA applied by Litton V.-P. in Yue Xiu Finance Co. Ltd & Another v. Dermot Agnew & Others [1996] 1 H.K.L.R. 137 at 141D–E, CA). The mere fact that the case is weak and not likely to succeed is no ground for striking it out (Brilliant Star Investment Ltd v. NZI International Acceptances Ltd [1989] 1 H.K.C. 375; [1988] H.K.L.Y. 90; Karex (H.K.) Ltd v. Fortune Talent Development Ltd [1999] 3 H.K.L.R.D. 397).”

18.  Although the circumstances of Shi’s claim are quite dubious and not much evidence in support of her claim could be seen at this stage, it could not be regarded as obviously unsustainable and such factual disputes could not be decided by affirmation evidence.  In the circumstances, even though Shi’s case may be considered as weak at this stage, I do not agree that her case is not capable of reasoned argument or without foundation.  I could not reach the conclusion that her case is oppressive and/or lacks bona fides by the evidence before me.  Therefore, I refuse to strike out Shi’s claim on the ground of scandalous, frivolous, vexatious claim or an abuse of process.

Adverse Possession or Proprietary Estoppel

19.  The circumstances of Shi’s possession of the Property were pleaded as follows.  Madam Chan represented to Shi that Madam Ko was willing to give the Property to anyone’s use and occupation if such person was willing and prepared to cause repair and/or renovation of the Property.Relying on such representation, Shi agreed to expend money on the repair and/or renovation of the Property.  Thus “Possession of the Property was given to the Plaintiff by Chan without the Plaintiff ever having made any payment to Chan or the Deceased or at all for the said purpose” (§4 of Shi’s Statement of Claim).  Then §6-9 of Shi’s Statement of Claim go on to give the particulars of dilapidated Property and the repair and/or renovation done by Shi.

20.  Mr Yu for Shi is quite right when drawing the distinction between possession with permission, which can never be adverse, and possession in which the landowner acquiesces, which may be adverse: The Law of Real Property, Megarry & Wade, 2012, at p.1464 but I cannot agree with Mr Yu’s submission that Madam Ko / Madam Chan merely raised no objection to Shi’s taking possession of the Property.  On the contrary, it is pleaded unequivocally that “the Property was given to” Shi who has acted to her detriment to spend money on repairing the Property upon Madam Chan’s representation.  According to Shi’s pleaded case, her possession of the Property is obviously possession with permission.  Therefore, her case cannot be adverse possession.

21.  Mr Cheung for the NCL, pointed out in his Supplemental Skeleton Submission that on Shi’s pleaded facts, “Shi purportedly has a right to occupy the Property based on proprietary estoppel.  As such, no question of adverse possession arise(s).”

22.  Mr Yu cited another passage in §18/19/4 of the Hong Kong White Book 2013:

“(2) Striking out or amendment — This rule also empowers the court to amend the indorsement on any writ or any pleading. If a statement of claim does not disclose the cause of action relied on, an opportunity to amend may be given, even though the formulation of the amendment is not before the court ( CBS Songs Ltd v. Amstrad [1987] R.P.C. 417 and [1988] R.P.C. 429).”

23.  I find that Shi’s case can be improved by amendment, ie by changing the cause of action from adverse possession to proprietary estoppel.  The NCL’s counsel Mr Cheung conceded that if leave be granted to Shi to amend the Statement of Claim, the court is no longer required to consider his other submissions on limitation, which I agree.

24.  In view of the above discussion, Shi’s claim shall not be struck out by this application but for the possible amendment and I grant leave to Shi to amend the Statement of Claim with costs to the NCL.

Joinder & Stay / Setting aside Applications in the 1^st Action

25.  If Shi could succeed in her claim of title by an Amended Statement of Claim in the 2^nd action eventually, the Writ of Possession and Fieri Facias Combined in the 1^st action which requires Lau to deliver up vacant possession of the Property to NCL shall not stand.  Therefore I order that the Writ of Possession and Fieri Facias Combined be stayed with liberty to restore.

26.  Mr Cheung opposed Shi’s application to join in the 1^st action as a 2^nd Defendant on the ground that there is no such need to maintain two actions at the same time and the proceedings of the 1^st action have completed.   I do not agree with Mr Cheung, as Shi is an interested party in the 1^st action and should be allowed to join in to protect her interests.

27.  The costs of these two applications shall be reserved pending the results of the 2^nd action and whether the explanation for Shi’s delay in taking legal actions in these two cases is to be accepted by the court eventually.

Conclusion & Orders

28.  In view of the above, I make the respective orders accordingly:

Re the Summons dated 6 May 2013 in the 2^nd action – DCCJ 1347/2013:

(1)   There be leave to the Plaintiff to amend the Statement of Claim filed on 18 April 2013;

(2)   Unless the Plaintiff do file and serve an Amended Statement of Claim within 14 days from the date hereof, the Statement of Claim filed on 18 April 2013 be struck out;

(3)   The Defendant be at liberty to take out a fresh application to strike out the Amended Statement of Claim if it is liable to be struck out;

(4)   There be an order nisi that the costs of this application be to the Defendant in any event with certificate for counsel, which shall be made absolute 14 days after the date hereof.

Re the Summons dated 18 April 2013 in the 1^st action – DCCJ 2647/2012:

(1)   Writ of Possession and Fieri Facias Combined issued on 22 March 2013 be stayed with liberty to restore;

(2)   The costs of this application be reserved.

Re the Summons dated 30 April 2013 in the 1^st action – DCCJ 2647/2012:

(1)   There be leave to Shi Ling Yee to join in this action as the 2^nd Defendant;

(2)   The costs of this application be reserved.