HILDER CO LTD v. CHAN CHEUNG KWAI AND OTHERS

HCA 1326/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1326 OF 2006

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J U D G M E N T

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1.  In this action the Plaintiff (“Hilder”) sues the Defendants for trespass to its land.  The land in question is known as Section A of Lot No. 858 in Demarcation District No. 95 (“DD 95”), Kwu Tung, New Territories, Hong Kong (“the Land”).  The Land is situated in Kwu Tung Village.  Before I identify the issue in this action, I should set out the background of this case.

Background

2.  I first set out the uncontroversial background leading up to the events of the 19^th February 2004 (the date when the 1^st Defendant (“D1”) signed a Licence Agreement with Hilder). 

3.  The Land was acquired by Hilder on 26^th November 1992 (date of the Formal Sale and Purchase Agreement) in conjunction with a number of other pieces of land in DD 95 (a total of 11 lots were involved).  Those pieces of land were acquired at the price of HK$10,977,120.

4.  I have no evidence as to what, if anything, was done with those pieces of land after they were acquired by Hilder.  However, according to the Hilder’s first witness (“Leung”) who has been managing Hilder’s land at DD 95 since 2000, Hilder began to take action to recover possession in respect of those land in 2000 (I infer that there were occupants on some, if not all, of Hilder’s land in question.).  Such action involved at least three sets of proceedings, namely, HCMP 1868/2000, HCMP 1851/2003 and HCMP 1853/2003.  HCMP 1851/2003 (“the Proceedings”) concerns the Land[1].

5.  Under the aforesaid proceedings, Orders for Possession were obtained by Hilder.  To enforce the Orders, Writs of Possession were issued.  In respect of the Proceedings, an Order for Possession pursuant to O.113 of the Rules of the High Court (“the Order”) was obtained on 20^th June 2003.  The Writ of Possession was issued on 14^th July 2003.  What then follows is not free from controversy. 

6.  Moving to the Defendants’ case, D1 is a 55 years old man who came to Hong Kong from the Mainland.  The 2^nd and 3^rd Defendants (“D2” and “D3”) are respectively his wife and son.  D1 and D2 were married in the Mainland in December 1975.  D1 came to Hong Kong in 1977.  It appears that he either came with D2 or she joined him in Hong Kong soon after his arrival.  After he arrived, D1 lived with D2 and his father-in-law at a place known as “Tung Fong” in Kwu Tung.  D1’s father-in-law also came from the Mainland.  He did so in about June 1960 and had been living at Tung Fong ever since.  He occupied himself by cultivating the land and raising chicken there.  After D1 arrived, he helped his father-in-law to cultivate more land.  It is the Defendants’ case that they have obtained adverse possessory title to the Land.  For reasons which will become apparent, this part of the Defendants’ case has not been tested by Hilder.  However, it is uncontroversial that D1 and his family have been occupying the Land.  In addition to the Land, they have been occupying other pieces of land at DD 95 which were acquired by Hilder as aforesaid, namely, part of Lot 844 and Lot 860.  There are photographs showing that various structures have been built on the Land.  They appear to have been built with metal sheets.

7.  According to Leung, on the 3^rd September 2003, he went with the Bailiff to the Land and Notices were posted up by the Bailiff at various conspicuous places.  Those Notices were meant to inform the occupants about the impending re-possession and they were described by Leung as “standard notices”.  The same exercise was carried out on 31^st December 2003.  Leung said that it was the normal practice of the Bailiff to post up notices twice before taking possession of the land.  Despite the disagreement of D1, I see no reason to doubt this part of Leung’s evidence and I accept the same.

8.  Leung also said that he first saw D1 in about October 2003 when he was in the course of recovering possession of a piece of land nearby.  He saw D2 on 31^st December 2003 when he visited the Land with the Bailiff.  On that occasion, the Bailiff explained to D2 that he was there to recover possession of the Land according to the Order and that if she had any question she could ring a number to find out about the situation.  D2 did not say anything in response.  I also accept this part of Leung’s evidence.  The encounter with D2 is not disputed by her.

9.  In January 2004, D3 applied for legal aid and to be joined as a party in HCMP 1868/2000.  I have been told that D3 has obtained legal aid and become a party in both HCMP 1868/2000 and HCMP 1853/2003. 

10.  On the 19^th February 2004, Leung went with, inter alia, the Bailiff to the Land to take possession thereof.  What happened on that day is highly controversial and I shall deal with the evidence in more detail.  What lies at the heart of the factual controversy is the Licence Agreement which D1 had signed on that day with Hilder (“the Agreement”) (D2 and D3 are not party to the Agreement).  It is the Defendants’ case that the Agreement was signed under duress.  The Agreement had expired on the 21^st February 2006 and the Defendants have refused to leave the Land.

The Agreement

11.  The important terms of the Agreement are as follows:

“Clause 1

准用人承認、同意及確認本公司為該物業的擁有人，並擁有該物業的所有權利及權益。在不影響本公司作為有關部分之擁有人的任何權利或權益及在本准用約之條款限制內，本准用約各方同意准用人可於准用期內按本准用約內之條款使用有關部分。

Clause 8(a)

除根據下列第8(b)或(c)或(d)條款外，本准用約將於二零零六年二月二十一日終止。

Clause 10

准用人須於本准用約終止時即時遷離及將有關部分在空置情況下之管有權交予本公司，若在本准用約終止時，准用人若有任何物品遺留在有關部分上，該等物品會被視為已被棄置，而本公司有權自行拆卸及清理該等物品。准用人在任何情況下無權向本公司追討任何由於本公司拆卸及清理該等物品所引致之任何損失。

Clause 13

准用人承諾其會促使其家人遵守及履行准用人於本准用約下的責任及義務，猶如准用人的家人亦是本准用約的其中一方。”

12.  At this juncture, I shall try to identify the issue.

The Issue

13.  Mr Li, who appears for Hilder, submits that this court is not concerned with the Defendants’ claim of adverse possession over the Land.  He says that Hilder is entitled to the possession of the Land under the Order and there is no application by any of the Defendants to set aside the Order.  Therefore, the only issue is whether D1 was coerced into signing the Agreement by the duress exercised on behalf of Hilder.

14.  I agree with Mr Li that unless and until the Order is set aside, Hilder is entitled to the possession of the Land (see Daiwa Bank Ltd v Shek Chiu & Anr [2005] 1 HKC 243 at 248B-D).  There is no attempt made by any of the Defendants to set aside the Order.  Accordingly, the question of any adverse possession over the Land is not a live issue before this court.

15.  As regards the Agreement, it is plainly a bare licence and it was expired on 21^st February 2006.  On one view, it is somewhat academic whether it was signed by D1 under duress.  Further, it appears to me that given (a) the existence of the Order and (b) the expiration of the Agreement, none of the Defendants has any real defence to this action.

16.  However, I have been told by D3 that he is going to apply to set aside the Order.  He said that he has not done so thus far because he was not clear about the legal process.  I am sceptical about D3’s assertion of ignorance of the law.  He agreed in cross-examination that he has been assisted by a firm of solicitors in his litigations since 2003.  When he was specifically asked whether he has been consulting that firm about these proceedings, D3 became evasive and said that he does not remember.  Be that as it may, I believe that the issue concerning the Agreement is not entirely academic and ought to be adjudicated in these proceedings.  I believe that there is a real likelihood that the Order will be challenged and the validity of the Agreement, wherein D1 has acknowledged Hilder’s title to the Land, may well have an impact on that challenge.  Indeed, Mr Li submits that the Agreement is a conclusive piece of evidence against any adverse possession claim over the Land by D1.

The events of the 19^th February 2004

Hilder’s version

17.  Leung is the main witness for Hilder.  His evidence is that on the 19^th February 2004, he went to the Land to complete the recovery procedure together with six other people, namely, a colleague (“Lau”), the Bailiff, a surveyor (“Ms Chan”), and three workers from a building contractor.  Upon arrival, they met D1 who became agitated.  Fearing for their personal safety, Leung caused the police to be called.  At the same time, D1 contacted the Representative of Kwu Tung Village (“Yiu”) for assistance.

18.  Shortly thereafter, about 6 to 7 police officers arrived at the scene and so did Yiu who came with a friend.  After some explanation of the situation by Leung’s party to the police and Yiu, the police and Yiu then explained to D1 that Hilder was entitled to recover the possession of the Land pursuant to the Order.  However, D1 did not want to leave the Land.  Leung and Lau then proposed to D1 that if he co-operated with Hilder and allowed the Bailiff to carry out the recovery procedure, Hilder would not demolish anything on the Land or put up any fence around it.  Further, D1 would be granted a licence to use the Land.  D1 agreed to the proposal and the recovery procedure by the Bailiff was eventually completed.

19.  After such completion, the Bailiff, the police officers, Ms Chan and the three workers then left.  At Yiu’s suggestion, Leung and D1 went with Yiu to the village office at Sheung Shui to discuss the terms of the licence.  Lau and Yiu’s friend left at that point. 

20.  At the village office, Leung produced the Agreement which was then read by both D1 and Yiu.  After consulting Yiu, D1 requested various amendments to be made to the Agreement.  Leung consented to such amendments after speaking to his superior over the phone.  With the amendments made, the Agreement was then signed by D1 in the presence of Yiu who also signed the Agreement as a witness.  There was a plan attached to the Agreement which identified the licence area and D1 also signed on it.  A photocopy of the Agreement was then made and it was given to by D1.  The Agreement was signed on the next day, 20^th February 2004, on behalf of Hilder. 

21.  It is noteworthy that, amongst the amendments made to the Agreement, the reference in the Recital to Lot 844 and Lot 860 was deleted.  In other words, the Agreement was meant to deal with all the land which was occupied by D1 and his family, but upon his request, the Agreement was amended to cover only the Land.  Further, under Clause 3 of the Agreement, the sentence which set out a promise by the licensee not to request any compensation from Hilder in the future was deleted. 

22.  Leung explained that he brought along the Agreement, which was prepared by Hilder’s solicitors, on the 19th February 2004 because it was a common practice for Hilder to grant licences to occupants so as to facilitate the recovery process and to avoid argument and confrontation with them. 

23.  There are photographs produced by Hilder.  They were taken on 19th February 2004 and show, inter alia, the presence of the Bailiff on the Land carrying out his duties (p.109 of the trial bundle) and the presence of more than one police officer on the Land in close proximity to D1 (p.110).  

D1’s version

24.  D1 gave evidence before this court.  He said that he was alone at home on the 19^th February 2004 when he saw three people inside the boundary of his property without his permission.  They were Leung, a contractor and a Bailiff.  D1 went outside to ask them why they were there and received no reply.  D1 then went back to his house to put on his shoes with the intention of getting someone to help him.  When he went out again, he was intercepted by Leung and Lau at a footpath which was only a few paces from his property (D1 also said that Lau was standing at a distance of about 10 feet from him and Leung).  Leung gave him the Agreement and said to him that if he did not sign the Agreement he would demolish his house.  D1 said that he saw one of his houses being demolished when he was intercepted at the footpath.  The demolition only ceased upon the arrival of the police.  I should mention that in the cross-examination of Leung, D1 has put to him that he came to his house with eight other people, namely, Lau, a female surveyor, an unknown man, a Bailiff and four contractors (including a female general worker).

25.  D1 said that he asked Leung to make amendments to the Agreement and Leung refused to do so.  Suddenly, Yiu appeared.  Leung and Lau became frightened, whereas D1 felt assured with the presence of Yiu.  Leung then allowed D1 to make amendments to the Agreement.  The amendments were made and initialled at the footpath.  D1 said that after he signed the Agreement, which he did not do out of his own free will, he went to the village office with Yiu and Leung.  Not much discussion took place at the village office.  Yiu was asked there to sign the Agreement as a witness by Leung.  A photocopy of the Agreement (without the plan) was made at the office and given to D1 by Leung.  D1 said that he did not see the plan on that day.  D1 left the office after being given a copy of the Agreement. 

26.  In cross-examination, D1 said that he was the one who called the police, but they left after standing around for about 15 to 20 minutes as they did not notice anything unusual.  He did not speak to the police after their arrival.  Neither did he talk to Yiu after he arrived at the scene and before D1 signed the Agreement.  Yiu was just waiting there and did nothing.  In answer to questions from this court, D1 said that he called the police before he went out to confront the unwelcomed visitors.  Further, D1 said that although he knew on that day that a Bailiff was there, he was unable to tell who was the Bailiff.

27.  D2 did not give evidence.  D3 gave evidence, but given his absence on the 19^th February 2004, the only relevant evidence elicited from him is that his father did not mention to him about any duress or the signing of the Agreement until 2006.

Assessment

28.  With respect, I find that D1’s evidence does not sit with plain common sense and is not believable.  In assessing his evidence, I bear in mind that he is not a sophisticated person and his recollection may well be eroded by the passage of time.

29.  Plainly, if any undue pressure was exercised on D1 on the 19^th February 2004, common sense dictates that he would have complained to the police officers who, on his version, were summoned by him.  Further, he would have complained to Yiu who, as the village representative, would have helped him.  Equally incredible is the fact that D1 did not tell D3 about the event, which was very distressing according to him. 

30.  Simply looking at the amendments made on the Agreement throws grave doubt on D1’s credibility.  It is obvious that the deletions were made with the use of a ruler and it was not something done by standing on a footpath as described by D1.  One should not overlook the fact that the amendments themselves do not support the suggestion that D1 was under duress.  Quite the contrary, they show that D1 was driving a hard bargain for his own benefit.  Further, D1 has no explanation on why his signature would appear on the plan if he did not see it on the 19^th February 2004.

31.  Furthermore, there are serious inconsistencies between D1’s evidence, the Defence and D1’s witness statement.  The allegation made in the Defence about his personal safety being threatened is not backed up by D1’s testimony.  In his witness statement, D1 alleged that he was surrounded and threatened by a number of men.  However, his evidence is that it was only Leung who exercised duress on him.

32.  For completeness, I should say that I accept the evidence of Leung and Lau concerning the events of the 19^th February 2004.  I have paid careful attention to Leung’s evidence.  I see no reason to doubt the same.  The only question in my mind concerning his credibility is that when he was cross-examined about why he took along the Agreement, he gave me the impression that he was repeating a rehearsed answer.  I have no doubt that he was alive to the fact that it was a great advantage to his employer if the Agreement, containing an acknowledgement of Hilder’s title to the land in question, was signed and perhaps that caused him to be defensive over the matter.  However, notwithstanding this question mark, I accept that Leung is an honest witness.

Conclusions

33.  As I have pointed out above, in light of the Order and the expiration of the Agreement, I see no real defence to this action by any of the Defendants.

34.  In respect of the relief, I see no reason to grant another order for possession in respect of the Land.  I had some doubt whether I should grant the injunction sought in paragraph (2) of the prayer to the Statement of Claim in light of the intention, at least on the part of D3, to challenge the Order.  I have decided to grant the injunction for two main reasons – (a) Mr Li has conceded that the injunction would not prejudice an application to set aside the Order and (b) the Defendants have had ample notice about the Order and yet did nothing to have it set aside.  Should any of them decide to apply to set aside the Order, he will have to apply for a stay of the injunction.

35.  As to damages, Mr Li is only seeking nominal damages and I award against each of the Defendants damages in the sum of HK$10 in favour of Hilder for his trespass.  I further award to Hilder another sum of HK$10 to be paid by D1 as damages for breach of Clauses 10 and 13 of the Agreement.  I make no award of interest.

36.  Finally, I make an order nisi that the costs of these proceedings be to Hilder to be taxed if not agreed.

[1]  To be precise, the Proceedings concern a portion of Lot No. 858 and the Land was subsequently carved out of that portion by a Deed Poll dated 30^th December 2004.