THE INCORPORATED OWNERS OF CHEONG FAT FACTORY BUILDING (FLATS A, B, E & F) AND ANOTHER v. WONG YUET HAN黃月嫻trading as MAN LEE HONG民利行, being THE OCCUPIER OF A STRUCTURE ERECTED UNDER THE ESCAPE STAIRCASE LEADING TO NO. 265 UN CHAU STREET ON GROUND FLOOR AND OTHERS

DCCJ 4219/2018

[2024] HKDC 1484

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4219OF 2018

------------------------------------

------------------------------------

---------------------------

JUDGMENT

---------------------------

Introduction

1.  This is a case for recovery of possession of common parts in Cheong Fat Factory Building (“the Building”).

2.  The present proceedings have been commenced by the Incorporated Owners of Cheong Fat Factory Building (Flats A, B, E and F) (“P1”) and Incorporated Owners of Cheong Fat Factory Building (Flats C and D) (“P2”) (collectively referred to as “Ps”) claiming possession of 5 staircases on the Ground Floor of the Building against the current occupiers of the same (collectively referred to as “Ds”) who are counterclaiming for adverse possession of the disputed premises.

3.  By way of Consent Order approved on 26 February 2024, this action taken by Ps against Madam Cheng Choi Ngor (“D3”) and the counterclaim raised by D3 against Ps was withdrawn and discontinued (“D3’s Consent Order”).

4.  By way of Consent Order dated 27 February 2024, this action taken by Ps against Madaam Poon Sui Li (“D2”) and the counterclaim raised by D2 against Ps was withdrawn and discontinued on the first day of the trial (“D2’s Consent Order”).

5.  Thus, the trial now is between Ps and Wong Yuet Han (“D1”), Poon Shun Ping (“D4”) and Wong Suk Mei (“D5”) only.

Background

6.  Ps were incorporated on 29 February 1988.

7.  D1 is running a shop民利行erected under the escape staircase on the Ground Floor of the Building, leading to No 265 Un Chau Street (“the Occupied Staircase 265”).

8.  D2 is carrying a business named Chi Wing Realty Co under the escape staircase on the Ground Floor of the Building, leading to No. 344 Fuk Wing Street (“the Occupied Staircase 344”).

9.  D3 is running a store in the name of成記士多erected under the escape staircase on the Ground Floor of the Building, leading to No 271 Wing Lung Street (“the Occupied Staircase 271”).

10.  D4 is running a shop named Fashion Point時裝點erected under the escape staircase on the Ground Floor of the Building, leading to No 269 Un Chau Street (“the Occupied Staircase 269”).

11.  D5 is occupying the escape staircase on the Ground Floor of the Building, leading to No 348 Fuk Wing Street (“the Occupied Staircase 348”).

12.  The above-mentioned premises occupied by Ds are collectively referred to as the Disputed Premises (“the Disputed Premises”) which are common parts of the Building. And, according to Section 18(2)(g) of Building Management Ord, Cap 344, Ps have power to act on behalf of the owners of the Building in matters in which the owners have a common interest.

13.  On or about 24 May 2017, Ps received a series of building orders issued by the Building Authority concerning, inter alia, the Disputed Premises and certain structures erected thereon. In order to comply with the said building orders, Ps demanded possession of the Disputed Premises and Ds refused to vacate the Disputed Premises.

Ps’ Case

14.  On an unknown date prior to January 2004, the Owners’ Association of the Building大廈業主聯誼會 (“the Owners’ Association”) and/or Ps, out of generosity, allowed Ds and/or their predecessors on the basis of a series of licences to operate their respective business on the Disputed Premises, which are common parts of the Building. In return, the Owners' Association and/or Ps received nominal fees as licence fees from each of Ds’ predecessors and/or Ds.

15.  Anyone seeking to occupy or use the Ground Floor staircase areas of the Building is required to obtain prior approval from the Owners’ Association and to make a regular monthly payment. After the incorporation of Ps, Ps or later Ps’ management company MVO has been collecting the licence fees from Ds’ predecessors and/or Ds on basis of the licences.

16.  Ds were not, and have never been, entitled to exclusive possession of the Disputed Premises, and licence fees have all along been paid by Ds and/or their predecessors on a monthly basis.

17.  By reason of the aforesaid, Ps are entitled to vacant possession and therefore mesne profits of the Disputed Premises. Ps claim the mesne profits of the Disputed Premises in the sum of HK$700 or $800 as the nominal fees for the claimed period till the date of judgment.

D1’s Case

18.  D1 is currently the occupier of the Occupied Staircase 265. D1 has been operating a shop in the name of民利行in selling charcoal wholesale and running retail business.

19.  Since 1960s, D1’s predecessors, her father-in-law and her husband’s great-aunt had been operating民利行at the Occupied Staircase 265.

20.  D1 and her husband got married in 1975. 民利行was enclosed by a metal gate and was locked, separating it from the rest of the Building and preventing non-occupant from entering it.

21.  In around 1982, D1 and her husband have succeeded her father-in-law and her husband’s great-aunt in possession of the Occupied Staircase 265 and has been operating it for charcoal wholesale and retail business.

22.  D1 and her predecessors have been in exclusive possession of the Occupied Staircase 265 since the 1960s without any interference by enclosing and locking up the said premises by a sliding gate with lock.

23.  D1 has all along been paying management fees in relation to the Occupied Staircase 265 to the Owners’ Association and MVO, the management company of the Building but denied that the said management fees are “licence fees” as alleged by Ps.

D4’s Case

24.  D4 is and was at all material times carrying on business in and/or occupying the Occupied Staircase 269 and the area adjacent to it where a small metal cabinet was placed (“the Small Cabinet Area”) and an area at the landing of the Occupied Staircase 269 leading from the Ground Floor to the First Floor where a metal cabinet was placed thereon (“the Big Cabinet Area”) (collectively “the Cabinet Areas”).

25.  In 1971, D4’s father-in-law purchased the Occupied Staircase 269 and operated a business therein in the name of泉利士多.

26.  In 1978, D4 joined in operating泉利士多after her marriage in 1976.

27.  From 1985 to September 2003, the Occupied Staircase 269 was used by daughters of D4’s father-in-law in running their businesses.

28.  Later in October 2003, D4 operated her business in the name of Fashion Point時裝點up till now.

D5’s Case

29.  D5 is currently the occupier of a shop erected at the Occupied Staircase 348. D5 initially operated the business of water and electrical repair at the shop but later leased it out to SF Express (Hong Kong) Limited (“the SF Express”) to generate rental income.

30.  Since 1966, D5’s predecessor, one陳繼有and Madam吳碧珍 (“Madam Ng”) had been in possession of the Occupied Staircase 348 operating a store.

31.  In 2002, D5, by a transfer agreement, purchased the Occupied Staircase 348 from Madam Ng. Since then, D5 has been in exclusive possession of the Occupied Staircase 348 without any interference by enclosing and locking up the said premises by a sliding gate.

32.  During the period from 29 October 2010 to 9 October 2018, D5 leased the Occupied Staircase 348 to SF Express at a monthly rent. D5 also later leased the said premises to another courier company named Fu La La for a yearly rent.

33.  D5 has all along been paying management fees in relation to the Occupied Staircase 348 to the Owners’ Association and MVO but denied that the said management fees are “licence fees” as alleged by Ps.

Issues in Dispute

34.  Parties have filed the Agreed Statement of Issues in Dispute dated 2 August 2022 which sets out 15 issues. They could be summarised as follows:-

(a)  whether Ds have been in adverse possession of the Disputed Premises occupied by them respectively (for a period of no less than 12 or 20 years), and have thereby acquired a possessory title thereto (“the Adverse Possession Issue”);

(b)  whether Ps are time-barred from bringing the present action against Ds under Section 7(2) of the Limitation Ordinance (Cap 374) and whether Ps’ title, interest and/or rights over the Disputed Premises have been extinguished under Section 17 of the Limitation Ordinance (Cap 374) (“the Limitation Issue”); and

(c)  whether Ps are entitled to an order for vacant possession of the Disputed Premises and thereby mesne profits and/or damages for the period from 1 May 2018 to the date of vacant possession (“the Title Issue”).

Legal Principles on Adverse Possession

35.  There is no serious dispute amongst the parties regarding the legal principles on adverse possession which were precisely and concisely summarised in Lee Siu Fong v Wong Wan Leung (unreported, HCA 122/2012, 3 January 2017, §19) and are now shown as follows:-

“19. The following legal principles applicable to a claim for adverse possession are now well settled:

(i) To succeed in a claim for adverse possession, the adverse possessor must prove: (i) a sufficient degree of factual possession; and (ii) animus possidendi (i.e. an intention to possess);

(ii) The elements required of factual possession are: (i) there must be an appropriate degree of physical control; (ii) possession must be single and conclusive, though there can be single possession exercised by or on behalf of several persons jointly; (iii) factual possession must be exclusive, continuous, open, visible and notorious, and it must not be equivocal, occasional, or for a special or temporary purpose; and (iv) the question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances having regard to the nature of the land and the manner of possession;

(iii) Unless there is contrary evidence the registered owner of the land is presumed to be in occupation, and the party claiming adverse possession has the burden of proving otherwise;

(iv) Intention to possess is the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with paper title so far as is reasonably practicable and so far as the processes of law will allow;

(v) In ascertaining the adverse possessor’s intention to possess, little regard should be given to self-serving statement of subjective intention, rather the court would make inference from the actions of the adverse possessor in the light of all the circumstances; and

(vi) The burden is on the adverse possessor to prove both factual possession and the intention to possess, and the evidence adduced must be compelling although the standard of proof is still the normal civil standard based on the balance of probabilities.”

  (Approved in Poon Chi Hang v Lai Ho Sun [2019] CA 734 at §7, Barma JA)

36.  In order to establish the requisite intention to possess, the possessor has to demonstrate that he intends, whether in his own name or on his own behalf, to exclude the world at large, so far as is reasonably practicable and so far as the processes of the law will allow. (See J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at §§42-43)

37.  The question of intention to possess is one of fact. Whether it can be established depends on an assessment of all the circumstances in a particular case. (See Wong Tak Yue v Kong Kwok Wai & Anor (No2) [1997-98] 1 HKCFAR 55 at p 69A)

38.  Moreover, the Court of Final Appeal in Wong Tak Yue, supra, at p.69B-C continued to explain the approach to evidence as follows:-

“Where the occupier has made self-serving statements as to what was his intention, whether during the period of occupation or when challenged in legal proceedings, the courts should approach them with some scepticism. The courts would scrutinize the circumstances in which they were made and would give them such weight if any as they may deserve. Conversely, where the occupier has made statements as to what was his intention and such statements are against his interest, the courts would usually accord to them considerable weight.”

39.  In Wong Tak Yue, supra, plaintiffs were the owners of land who sought possession of the land from defendant who had been in possession of the land since 1957. Defendant had originally come into possession under a lease which expired in 1963. After the expiry of the lease, defendant was not asked for rent and he did not pay it. Defendant’s affirmation established as a matter of fact that since the expiry of the lease, his intention had been that he was willing to pay rent to the owners if they had requested payment and that he was ready and able to do so. The Court of Final Appeal held that the statements on affirmation were against interest and the Court would give them considerable weight. Such an intention is plainly and completely inconsistent with the intention to possess which was requisite for establishing adverse possession 

40.  Where there is evidence pointing to a contrary conclusion or the acts of the possessor are equivocal and capable of more than one interpretation, the intention to possess is not established. (See Tsang Foo Keung v Chu Jim Mi Jimmy [2017] 3 HKC 527 at 530H)

41.  The Court of Appeal in Tsang Foo Keung further stated at 539E-F that evidence of subjective intent should be approached with caution. And, if a person takes possession by virtue of a licence granted by another, it is the licensor who is treated as being in possession.

42.  Concerning Ds’ burden to prove that they entered into adverse possession with the requisite intention to possess, compelling evidence is required. The Court in Incorporated Owners of Kam Luk Building v 吳靜燕, [2020] HKDC 196 said at paras 21 and 26 that:

“21.  Hence, the burden is on D to prove by “compelling evidence” that she had entered into adverse possession with the requisite intention to possess:-

(a)  The co-owners of the Building as represented by P will be readily assumed to have the requisite intention to possess Staircase 63 (See Powell at p 472);

(b)  In Powell, Slade J held that where the trespasser’s use of land was equivocal, the onus is on him to “adduce compelling evidence” that he had the requisite intention to possess (See Powell at p 476);

(c)  The slightest acts done by or on behalf of the co-owners (or any one of them prior to the incorporation of P) or P will be found to negate the discontinuance of possession;

(d)  On the other hand, D must adduce clear and affirmative evidence to prove the unequivocal intention to possess Staircase 63 by her and her family members (See Powell, at p 472); and

(e)  The benefit of the doubt should be given to P (See Powell, at p 478).

…

26.  Even where there is factual possession, the claimant for adverse possession has the burden to provide compelling evidence that the possession was adverse and not attributable to a license or tenancy (See: Wu Yee Pak, supra), otherwise the adverse possession is deemed to be for the benefit of the licensor (See Tsang Foo (also known as Fu) Keung and Key Kwong Development Limited v Chu Jim Mi Jimmy [2015] 6 HKC 200 (CFI)) or the landlord (See Cheung Yat Fuk v Tang Tak Hong (2004) 7 HKCFAR 70), as the case may be. See also, Lee Siu Fong v Wong Wan Leung (unrep, HCA 122/2012, 3 January 2017, and Cedric Hervey Ong v Wong Suk Lin & Ors [2018] HKCFI 2040, 7 September 2018.”

43.  As explained in paragraph 25 in this case, “the rationale behind is that it cannot be lightly assumed that the paper title holder has foregone his interest in land (See Powell, at 472).”

44.  In Birkenhead Properties and Investment Limited v Lam Kai Man & Anr, (unrep, HCMP 1588/2012, 12 January 2016, at §23), the court held that:

“The burden of proof of these three requirements [ie (i) factual possession; (ii) intention to possess or animus possidendi; and (iii) possession is adverse] is on the squatter. The standard of proof is the civil standard. However, the burden is a heavy one. The squatter has to adduce objective and compelling evidence: Powell v McFarlane. Self serving evidence is hardly likely to be of assistance. The court will scrutinize such evidence with great care. The squatter’s evidence of his subjective intention will invariably be given no weight as being self serving evidence, but his statements against his interest will usually be accorded considerable weight. Objective evidence will be given such weight as they deserve.”

45.  As the legal and registered owners of the common part of the Building, Ps are deemed to be in occupation: (See Wong Tak Yue v Kung Kwok Wai & Anr (No 2) (1997-98) 1 HKCFAR 55, at p 70E; Birkenhead Properties and Investment Limited v Lam Kai Man & Anr, unrep, HCMP 1588/2012, 12 January 2016, at §9; and Powell v McFarlane (1979) 38 P&CR 452, at p 470)

46.  In order to run an adverse possession claim over common parts in respect of any period prior to the incorporation of the owners of the Building, one has to prove adverse possession by himself and/or his predecessors against each and every co-owner in the Building: (See The Incorporated Owners of Chungking Mansions v Shamdasani, Murli Pessumal [1991] 2 HKC 342 at 355E).

Legal Principles on Licence

47.  The issue of licence raised by the owners to resist the claim for adverse possession was considered in Chow Chi Yuen v Incorporated Owners of Wing Shun Building [2020] HKCFI 3085 at paras 15-18 as follows:-

“15. Possession under a license is not adverse because, unless and until the license is terminated, no right of action to recover the land has ever accrued to the paper owner: Lee Siu Fong at §20; Sarah Sally Chan-Kent at §25; Lau Kwai Ping at §16.

16. Permission may be given unilaterally and does not require acceptance by the licensee. Permission may be given orally or in writing (express license) or by conduct (implied license): Sarah Sally Chan-Kent at §§26 to 27.

17. Passive acquiescence is not sufficient to establish an implied license. Rather, there must be some overt act(s) on the part of the licensor referable to the license having been granted to give rise to an implication by conduct: Sarah Sally Chan-Kent at §§28 to 29; Poon Chi Hang at §§24 and 31.

18. A revocable license is automatically terminated by the death of the licensor, and it is not necessary for the licensee to have received notice of the death: Sarah Sally Chan-Kentat §30.”

48.  Also, in Wu Yee Pak v Un Fong Leung [2004] 7 HKCFAR 498, the Court of Final Appeal said at §5 that:

“5. Since possession by the appellant of the land through occupation is accepted, the key issue is whether his possession was adverse in that he was neither a tenant nor a licensee of the respondents. The burden of proof admittedly lies with the appellant and the evidence he has to adduce must be compelling. Powell v. McFarlane & another (1977) 38 P & CR 452; and Wong Tak Yue v. Kung Kwok Wai David & another [1998] 1 HKC 1.”

49.  In Lee Siu Fong, supra at §20, the Court said that:

“20. It is also trite law that occupation under a licence or otherwise with the permission of the legal or paper owner does not amount to possession for the purpose of adverse possession as the occupation is enjoyed under lawful title. In Tsang Foo Keung v Chu Jim Mi Jimmy, it was held that occupation of a hawking stall on a private land under a hawking licence granted by the Government pursuant to the Hawker (Urban Council) By-laws was not possession for limitation purpose. The finding was made following Pang Yiu Chor v Wong Wai Leung and Sze To Chun Keung v Kung Kwok Wai David. These cases have established the principle that there is no adverse possession where the occupation was one by licensee as this will not be possession in his own right. It matters not whether the licence was granted by the paper owner or by someone else. Even if the licence was granted by someone else, the possession will be by the licensor and not by the occupier.”

50.  This Court has the power to make a specific finding of fact of a permission was impliedly granted by the registered owner to the squatter if the circumstances and the facts of the case so warranted. (see Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5) [2007] 5 HKC 122 at para 75).

51.  On the principles of implied licence applied by Madam Justice B Chu in Chan Wing Tong v The Incorporated Owners of Kam Chung Building (Jaffe Road) and Ors [2024] HKCFI 508 at paragraph 123:

“…… in order to establish a licence, there must be communication, in writing, by spoken words or by overt and unequivocal conduct, that was intended to be understood, and was understood, as a permission to do something that would otherwise be an act of trespass …… it is important to distinguish between acquiescence and express/implied permission, and that silent passive inactivity on the part of the landowner amounting merely to acquiescence is not enough to stop the limitation period from running.”

52.  An implied licence can be inferred based on facts and evidence and from circumstances (see Yu Kit Chiu & another v Chan Shek Woo, unreported, CACV 137/2010, 18 February 2011 and Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5) [2007] 5 HKC 122).

53.  In Tsang Woon Ming v Tsan Hing Fat Heidi [2023] HKCA 1322, the Court of Appeal has considered the issue of overt act at paragraph 22:

22. A person in possession with the permission by way of implied licence of the paper title is not in adverse possession. Megarry & Wade, The Law of Real Property (9^th Ed) summarised the position as follows :

‘7-029 ...... If a person is in possession of land with the permission of its owner, his possession cannot be adverse. That permission may be expressly given or it may be implied. The circumstances in which it will be implied have not yet been finally determined. There is a line of authority in which it has been held that:

(i) For there to be such an implication, there had to be some overt act by the landowner or some demonstrable circumstance from which it can be inferred that permission was given.

(ii) It was immaterial whether the squatter was aware of these matters but they must be probative of and not merely consistent with the giving of permission.

(iii) They had also to be such that a reasonable person would have appreciated that the user was with the permission of the landowner.

However, these cases rested upon a dictum in a decision on a prescriptive claim which had equated passive acquiescence with permission, and was subsequently discredited on appeal to the House of Lords. Accordingly, it has been contended (but not decided) that permission in the context of adverse possession requires a communication to the licensee, whether by writing, spoken words or conduct, that was intended to be and was understood as permission to do what would otherwise be trespass. Nevertheless, the propositions set out above in relation to the possibility of implied consent have been accepted as a correct statement of the law. The Privy Council [Smith v. Molyneaux [2016] UKPC 35] has held that permission can be implied, but need not be acknowledged by S; it is doubtful whether it has to be shown that S understood the relevant words or conduct to amount to permission.

Possession with permission, which can never be adverse, is quite different from possession in which the landowner acquiesces, which may be adverse. Whether or not permission once given has been revoked is a factual question. If a licence is given for a fixed period or until the occurrence of an event, possession may become adverse after that period has passed or the event has occurred. If permission is given indefinitely, but subject to conditions, possession remains permissive while those conditions continue to be met. Where the terms of the licence have to be implied, it may be an implied term that the licence continues until one party gives notice of its termination.’

54.  Even in the absence of a direct contractual relationship between the landowner and the occupier, the latter could nevertheless be a licensee in occupation of the land of the landowner. This concept of licence implied from the conducts of the parties was adopted by Etherton J in London Borough of Lambeth v Rumbelow (unrep Ch. D., 25 January 2001)

“…… in order to establish permission in the circumstances of any case two matters must be established. Firstly, there must be some overt act by the land owner or some demonstrable circumstances from which the inference can be drawn that permission was in fact given. It is, however, irrelevant whether the users were aware of those matters. …… Secondly, a reasonable person would have appreciated that the user was with the permission of the land owner.”

Analysis and Findings

Commons Parts

55.  Clause 4(b) of the DMC for Flats A, B, E and F of the Building and Clause 5(b) of the DMC for Flats C and D of the Building refer to the burden of the party to clean, repair, and maintain structures intended for the general service of the Building and such parts of the interior as are used in common by the parties.

56.  The DMCs suggest that the structures intended for the general service of the Building and the interior parts used in common by parties fall within the category of common parts.

57.  Moreover, Section 2 of the Building Management Ordinance, Cap 344 (“BMO”) defines “common parts” as:

(a)  the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and

(b)  unless so specified or designated, those parts specified in Schedule 1;

58.  Under Schedule 1 to the BMO, common parts include “passageways, corridor, staircases, landings” and the “walls enclosing passageways, corridors and staircases”. (see paragraphs 2 and 8 of Schedule 1, BMO)

59.  The Disputed Premises as staircases, landings and the walls enclosing staircases are therefore common parts of the Building. As such, Ps, as the incorporated owners of the Building, are the legal and registered owners of the Disputed Premises. Further, prior to the incorporation of Ps, the Disputed Premises was jointly owned by the owners of the Building.

Adverse Possession

60.  Ds have the legal burden to prove factual possession with the intention to possess and Ps carry the evidential burden that the occupation is with his permission and consent. (see Alston & Sons Ltd v BOCM Pauls Ltd [2009] 1 EGLR 93)

Factual Possession

61.  To succeed in claims for adverse possession, each of Ds must prove a sufficient degree of factual possession of the respective premises they are now occupying. As to what acts constitute a sufficient degree of factual possession must depend on the circumstances having regard to the nature of the land and the manner of possession.

62.  There is no dispute that Ds are currently occupying the Disputed Premises. But, Ds still have to prove the history in relation to the factual possession of D1 and her predecessors which eventually led to the current occupation.

(a) D1’s adverse possession defence

Possession in 1960s

63.  It is D1’s case that her father-in-law and great-aunt transferred the Occupied Staircase 265 to her husband and her in 1982. Then, the first question would be how her father-in-law and great-aunt possessed the Occupied Staircase 265 in 1960s and the manner of their possession. This relies very much on D1’s evidence. And whether her evidence would be accepted relies very much on her credibility.

64.  According to D1’s witness statement, she learnt from her husband that D1’s predecessors, ie her father-in-law and her husband’s great-aunt started running a store and then businesses of selling charcoal and retail business in the name of民利行at the Occupied Staircase 265 since 1960s. D1 also said that she very often helped her father-in-law and her husband managing the business after her marriage. She however did not tell precisely how the father-in-law and great-aunt started occupying the Occupied Staircase 265 and in what manner they possessed the said premises.

65.  At trial, D1 confirmed that the history of how the Occupied Staircase 265 was initially occupied by her father-in-law and great-aunt came from what she heard from her belated husband. That means she had no personal knowledge of the same. But she also said she understood more about the history after her marriage in 1975 when she had more contact with father-in-law and great-aunt who according to D1 had passed away more than 20 years. She however did not continue to say what her increased understanding was or how her increased understanding helped telling how her father-in-law and great-aunt started occupying the Occupied Staircase the Occupied Staircase 265 and the nature of the said possession.

66.  Under cross-examination as to how her father-in-law came to occupy the Occupied Staircase 265, D1 replied that nobody was managing the Building ( 冇人管 ) at that time and anyone might use any vacant space and it was not necessary to ask anybody ( 隨便有個空位就用咗佢，唔需要問任何人 ). D1 further said that she learnt about this from her husband in 1982 when her father-in-law and great-aunt allegedly transferred the Occupied Staircase 265 and the business to her and her husband. Under further cross-examination, D1 agreed that the heart of her case was that her father-in-law adversely possessed a piece of vacant land (空地).

67.  According to D1’s new evidence under cross-examination which was not disclosed in her pleadings or witness statement, the Occupied Staircase 265 was a piece of vacant land which was managed by nobody and it was therefore not necessary to ask anybody, ie no need to seek permission from anybody to possess the land. That means nobody owned the land. If it was nobody’s land and required no permission, why did D1 repeatedly describe her father-in-law as having adversely possessed (強佔) the premises under cross-examination? Adversely possessed whose land? Based on D1’s new evidence, the logic must be D1’s predecessors had possessed the Occupied Staircase 265 naturally (since nobody owned it) but not adversely.

68.  In spite of D1’s new evidence describing the Occupied Staircase 265 as a piece of vacant land, it is as clear as daylight that the Occupied Staircase 265 is a designated staircase area on the Ground Floor of the Building. It is beyond my understanding how one could possibly describe the said premises as a piece of vacant land.

69.  All the above-mentioned evidence given under cross-examination was new evidence which was not contained in D1’s witness statement nor her evidence in chief. When being asked why the said new evidence was not included in her pleadings or witness statement, D1 simply said it was a slip. She forgot to tell her lawyer. But, the allegation that the Occupied Staircase 265 was in fact a piece of vacant land when it was occupied by her predecessors was such an important information that it is beyond my understanding and even belief that one could have forgotten to tell her lawyer about this when this was the very issue in the present proceedings.

70.  Last but not least, when it was put to D1 that she in fact could not remember clearly the incidents occurred prior to 1982, she agreed to it. This may somehow explain why her new evidence lacked logic and/or hard to understand and also why she forgot to tell her lawyer. It was because she simply could not remember clearly what happened before 1982. This has placed the Court in a very difficult position to rely on her evidence which was, as shown hereinabove, based on hearsay and blurred if not poor memory to establish the possession of D1’s predecessors.

71.  By reason of the above analysis, this Court finds that there is no compelling evidence proving factual possession by D1’s predecessors since 1960s.

Factual Possession in 1982

72.  It is pleaded by D1 that there was a transfer of “equitable interest” of the Occupied Staircase 265 together with the business. According to D1’s witness statement, in one sentence, D1’s father-in-law and her husband’s great-aunt transferred the Occupied Staircase 265 and 民利行to her husband and her (“the 1982 Transfer”). Since then, she has been running business at the said premises. No particular was provided in both D1’s witness statement or her pleadings as to how her predecessors transferred the Occupied Staircase 265 and民利行to her husband and her.

73.  Under cross-examination, when Ps’ Counsel said to D1 that her husband only bought the business, she replied that they of course also purchased the shop and “Otherwise, how could they operate the business?” With respect, Ds could of course operate the business in the Occupied Staircase 265 without having purchased it if they occupied the premises as a licensee which was exactly the case of Ps.

74.  Also under cross-examination, D1 said that it came to the point that the民利行business needed to be passed down to the next generation as her father-in-law and great-aunt were approaching their retirement age. She confirmed that “transfer” meant passing down the business to D1’s husband and her to continue to run. That means the “transfer” was related merely to the business of民利行and not the premises. It could well be so if D1’s father-in-law had in fact no factual possession of premises which could be passed down to his son and his daughter-in-law.

75.  There is obviously a difference between民利行and the Occupied Staircase 265, the business and the premises. D1’s father-in-law could just transfer to D1’s husband and her the business but not the premises. When being pressed on the difference between民利行and the Occupied Staircase 265, D1 said that she was not aware of any difference. She confirmed that she only thought about the business and she thought the shop and business were consistent or the same. It follows that she would not have known it if her father-in-law only passed to them the business. Or, at least, she could not tell since she was not aware of the difference and she did not ask when her father-in-law said he would like to pass down “the business” to them. From the literally meaning of the term “the business”, D1’s father-in-law only transferred the business of 民利行to them. But, at the end of the day, D1 simply could not tell whether her father-in-law meant only the business or as she said the business plus the premises because she did not clarify it or she simply was not aware of the difference which is something carrying profound significance in Court’s consideration of the issue in dispute.

76.  Apart from the ambiguity concerning the 1982 Transfer per se, the substance of the said transfer is also a factor this Court has to consider. Logically, if one cannot ascertain what D1’s father-in-law and great-aunt had possessed, one cannot tell what had in fact been transferred to D1 and her husband.

77.  Although there is no reliable and sufficient evidence to prove how D1’s father-in-law and great-aunt had occupied the Occupied Staircase 265 since 1960s, the fact that D1 and her husband started to occupy in the premises since early 1980s was not seriously disputed. And, Ps, based on the business registration certificate of民利行of 1983, accepted that民利行have been using the premises since 1983. Moreover, in view of the receipts of management fees, business registration fees, telephone fees and electricity bills of the premises produced by D1, this Court finds that D1 and her husband was in factual possession of the Occupied Staircase 265 for running their business of民利行since 1983.

Intention to Possess

78.  Apart from factual possession, the adverse possessors must also prove an intention to possess, ie an intention to exclude the world at large. (See J A Pye (Oxford) Ltd v Graham, supra)

79.  Moreover, the possession must be “adverse” in nature. Ds have to prove that they have the requisite intention to possess the Disputed Premises adversely to the interest of title owners.

Intention in 1960s

80.  In order to establish the requisite intention to possess, D1 has to demonstrate that her father-in-law and great-aunt intended to exclude the world at large.

81.  On one hand, D1 repeatedly described her father-in-law as having adversely possessed (強佔) the Occupied Staircase 265 under cross-examination. This is obviously a self-serving statement which according to Wong Tak Yue, supra should be approached with scepticism.

82.  On the other hand, D1 also said under cross-examination that when her predecessors possessed the Occupied Staircase 265, it was nobody’s land and no permission was needed. If no permission was needed, it logically follows that D1’s predecessors would not have any intention to dispossess the premises or exclude the world at large. These statements made by D1 related to what was her father-in-law’s intention and such statements are against her interest and this Court, again according to Wong Tak Yue, should accord to them considerable weight.

83.  Furthermore, as mentioned in the analysis hereinabove, D1 under cross-examination said her father-in-law and great-aunt passed down the business of the民利行in 1982. She also confirmed that “transfer” meant passing down the business to D1’s husband and her to continue to run. As analysed in the above, the term “transfer” was literally related to the business of民利行only and had nothing to do with the premises. It could be so if, from possession point of view, D1’s father-in-law did not have the possession of the Occupied Staircase 265 himself; or from intention point of view, father-in-law simply did not think he had the possession of the Occupied Staircase 265 which he could pass down to his own son and D1. If he himself did not think he had any possession in relation to the Occupied Staircase 265 to pass down, it is not possible to argue that he had the intention to dispossess the premises then.

84.  This Court, therefore, finds that D1 has not discharged her burden to prove that her predecessors, ie her father-in-law and great-aunt, had the requisite intention to possess the Occupied Staircase 265 adversely to the interest of title owners.

Intention in 1982

85.  Regarding the 1982 Transfer, D1’s subjective understanding of what her predecessors possessed in 1982 was material. D1 agreed under cross-examination that she could not remember clearly what happened before 1982 which included the circumstances under which her father-in-law and great-aunt occupied the Occupied Staircase 265 in 1960s. This would inevitably affect her subjective understanding of what she was given by her predecessors in the 1982 Transfer.

86.  Further, in the light of D1’s unawareness of the difference between the business and the premises as well as her evidence that she thought the business and the premises were consistent or the same, she could not have had the requisite intention to dispossess the Occupied Staircase 265 which she thought was passed down to her and her husband by her father-in-law in the 1982 Transfer.

87.  D1 produced some photos showing that the Occupied Staircase 265 was enclosed and locked up by a sliding gate. According to her evidence, the gate was not installed by her and she did not know actually who did it. She confirmed that the gate was primarily to protect the products and business-related items in民利行.

88.  I accept D1’s evidence that there was a gate at the shop at the Occupied Staircase 265. But, the presence of a gate enclosure of a shop is not a particular feature indicating the shop area had been adversely possessed. The presence of the gate definitely has more than one interpretation since a gate enclosure in a shop is a common feature of, I think, almost all the ordinary shops in Hong Kong. I cannot see how it could be used to prove adverse possession of the premises.

89.  D1 submitted that D1 and her predecessors paid all expenses relating to the Occupied Staircase 265 including management fees, business registration fees, telephone fees and electricity bills as if they were the true owners of the premises.

90.  As shown in the above, I have found that D1 and her husband have since 1983 started to occupy the Occupied Staircase 265 for running 民利行, the payments of business registration fees, telephone fees and electricity bills were consistent with that finding that D1 and her husband were occupying the premises for running the business. The evidence in relation to the payment of the said business-related fees were not sufficient to prove that the premises were adversely possessed for running the business. It could be just an equivocal conduct in the sense that the premises were occupied under a licence.

91.  The acts of paying the management fees were largely not in dispute but the implication and/or meaning of such payment was in much dispute amongst the parties.

92.  D1 said in her witness statement that she has been paying the management fees since 1982. The documents produced by D1 showed that D1 was paying management fees to Ps from 1990 to 1999 and to MVO from 2000 to 2018. The said fees was HK$500 in 1990 and later increased to HK$550 and then to HK$620 and to HK$720 in 2018.

93.  At trial, D1 was asked what she had to do if she thought she was an owner. She replied that she had to pay management fees. She further said that “He/She gave to me so I have to pay. As an owner, I of course have to pay management fees.” D1’s counsel submitted that the reason why D1 paid the management fees was that she treated herself as the owner of the Occupied Staircase 265.

94.  On the issue of management fees payment, Madam Wong Wai Fong (“Madam Wong”) of Ps gave evidence regarding the formation of a licence arrangement between Ds’ predecessors and the Owners’ Association (to be shown below) in that the Owners’ Association gave consent to Ds’ predecessors to occupy the Disputed Premises and Ds’ predecessors paid monthly fees to the Owners’ Association in return. She further explained that the monthly fees paid by Ds were applied to reduce the management expenses of the Building, so it was called “management fees”.

95.  Apart from Madam Wong, this Court also considered the evidence of Mr Tang Hoi Tung (“Mr Tang”) who is the Senior Building Manager of MVO. He said there were three types of income source for the Building: management fees from owners, rental generated from car parking spaces and monthly fees from all the shops at the staircases. Both the rental from car parking spaces and monthly fees from all the shops at the staircases are received in the name of management fees. And these two types of income were applied to reduce the management expenses of the Building.

96.  At trial, Mr Tang said there was no need to amend the naming of these fees at any stage because everyone knew the substance of what these fees meant. He just adopted the terms all along used by Miss Chan. Mr Tang knew that the shop owners at the staircases were not owners of the Building and therefore no request was made to them (as well as the users of car parking spaces) to contribute to the maintenance fees of the Building. This point of D1’s not contributing to maintenance fee of the Building was corroborated by what D1 said in her witness statement.

97.  The undisputed fact that the term “management fees” was also used in the invoices for car parking spaces rental may shed light on the issue. Since it is also no dispute that the car parking space rental is the rent given by the users in return for Ps’ consent for them to use the car parking spaces, it is likely that the term “management fees” was loosely used, probably due to the fact that they were applied to reduce the management expenses of the Building. This term “management fees” cannot be taken literally and those who had been paying this “management fees” as non-owners could not possibly have construed themselves as landlords simply because of this naming.

98.  Apart from the terminology of “management fees”, the evidence of Mr Surtani Sunil Vashdey (“Sunil”), the treasurer of Ps, has lent a fresh perspective to the issue. His evidence has taken the Court to examine the reasonableness of “management fees” from a financial point of view. Under cross-examination on the value of the management fees (ie HK$620) for the Disputed Premises of around 100 square feet, he responded that the said management fees would then be around HK$6.2 per square feet and it was very expensive as the management fee for the Building was only HK$0.8 per square feet. In response to the fact that the amount of “management fees” paid by Ds was HK$620, his final remarks was it did not really make sense.

99.  D1 has been running a small business, ie selling charcoal and doing retail business, at the Occupied Staircase 265, ie a small staircase area of the Building. As an occupier on the Ground Floor of the Building, D1 would not need to use the lifts of the Building. She did not have to use the common area in order to get access to her shop. According to her evidence, she even had her own electricity meter in the said premises. But on evidence, she has been paying the “management fees” (ie HK$6.2 per square feet) about 8 times more than those owning a proper unit of the Building HK$0.8 per square feet).

100.  Further, D1 said she has been paying this “management fees” since 1982. According to the documents produced by her, she was already paying HK$500 in 1990, ie HK$5 per square feet in 1990, which was not a small amount as management fees of an industrial building. All along, D1 has been paying the “management fees” starting from HK$500 and gradually rising to HK$720 without any complaints. It is simply senseless.

101.  The monthly payments made by Ds and/or their predecessors were in fact the monthly fees under the Licence Arrangement (to be discussed below). The naming of “management fees” could not defect the genuine substance in relation to the true nature of the payment. The absence of sense in paying HK$6.2/sq ft as “management fees” for the Disputed Premises while that for industrial premises was only HK$0.8/sq ft also drove the Court to doubt D1’s case that the monthly payment she has been making for years or even decades was genuine management fees. This Court finds that it was but the monthly fees for the consent to occupy the Occupied Staircase 265.

102.  Last but not the least, D1’s credibility was greatly eroded when it comes to her evidence in relation to her pleadings. She admitted in court that her original unamended defence and counterclaim dated 24 January 2019, which contained a statement of truth signed by D1 personally, did not reflect her “true” knowledge of events as that was allegedly the product of her daughter. When being asked about her daughter’s participation in, D1 said her daughter knew little about how the Occupied Staircase 265 was occupied by her or her predecessors since D1 said under cross-examination that she had never told her daughter that D1’s father-in-law had adversely possessed the said premises. If it is the case, I cannot see the reason why she let her daughter to draft the original unamended defence and confirmed its contents by affixing her signature on it.

103.  D1’s counsel submitted that the Court should not put any weight as to the deleted contents of her original Defence. Although this Court would not consider the deleted contents of her original Defence in determining the issues in the present proceedings, the very fact that D1 knew that the original unamended defence and counterclaim was largely made up by her daughter, but still affixed her own signature to the Statement of Truth on the same page sharply raised much concern of this Court, in particular on the D1’s credibility. This accordingly and inevitably drove this Court to the conclusion that D1 was not a credible witness.

104.  In the light of the above analysis, I, on balance of probabilities, find that D1 has not discharged her legal burden to prove that she had the necessary animus possidendi in possessing the Occupied Staircase 265 adversely against the legal owners.

(b) D4’s adverse possession defence

Chronology of events

105.  There is no much dispute regarding who was in occupation of the Occupied Staircase 269 from 1971 till now. A chronology of events in relation to D4’s case helped determine her defence of adverse possession (as analysed below).

106.  By an agreement dated 25 March 1971 (“the 1971 Agreement”), Mr Wong Hon (“D4’s father-in-law”) purchased from a Mr Cheng鄭基照 (“Mr Cheng”) a shop at the Occupier Staircase 269. Since then, D4’s father-in-law and his family had been operating a shop in the name of泉利士多 (“泉利士多”) by occupying the said premises till 1985.

107.  Apart from the Occupied Staircase 269, D4’s father-in-law and his family also occupied the Cabinet Areas as their own and operated together with泉利士多.

108.  In 1978, D4 joined in operating泉利士多after her marriage with her husband in 1976.

109.  In 1985, the operation of泉利士多came to an end. The Occupied Staircase 269 was used to operate a shop in the name of海浜水族selling aquarium tools (“the Aquarium Shop”) by Miss Wong Lai Ching, one of D4’s sisters-in-law, under the consent of D4’s father-in-law.

110.  In 1996, the operation of the Aquarium Shop also came to an end. The Occupied Staircase 269 was used to operate a small office in the name of好時貿易 (“the Trading Office”) by another D4’s sister-in-law Miss Wong Shui Ching (“D4’s sister-in-law”) under the consent of D4’s father-in-law.

111.  In October 2003, the Trading Office moved and D4 took over the occupation of the Occupied Staircase 269 and operated her business in the name of Fashion Point時裝點 (“Fashion Point”) up till now.

112.  In 2018, D4’s father-in-law passed away.

Factual Possession

113.  Concerning the Occupied Staircase 269, Counsel for D4 submitted that D4 and her predecessors have occupied and used the premises for over 50 years since about 1971. Ps did not dispute that D4 is currently carrying on business in the name of Fashion Point at the Occupied Staircase 269 but disputed when D4 and/or her predecessors allegedly started to occupy the premises.

114.  Concerning the Cabinet Areas, Counsel for Ps conceded on the first day of the trial that Ps were not claiming for possession of the Cabinet Areas. Then, the only issue left would be costs which will be dealt with at the end of this judgement.

115.  D4 averred in her pleadings that the owners of the Building and/or Ps were dispossessed of the Occupied Staircase 269 by D4 and/or her predecessors in or about March 1971. She further pleaded that her father-in-law purchased the Occupied Staircase 269 together with tools and it was supported by the 1971 Agreement. Under cross-examination, D4 denied that it was only a sale of business or a purchase of tools of trade but a sale of the Occupied Staircase 269 by pointing out that the 1971 Agreement expressly referred to “shop” (鋪位) and “the said shop” (該鋪位).

116.  The above pleaded case and D4’s evidence argued that the Occupied Staircase 269 had been purchased by D4’s father-in-law in March 1971. If he had already purchased the premises and thereby became the owner of the premises, how could he adversely possess his own premises? How could the owners of the Building be dispossessed of the Occupied Staircase 269 which had been purchased by D4’s father-in-law? D4’s averment simply does not make any senses.

117.  Besides, as shown in the above, the occupation of D4’s father-in-law in the Occupied Staircase 269 was stemmed from the purchase contained in the 1971 Agreement which however sits uneasily, to say the least, with D4’s case that her father-in-law had acquired the title of the Occupied Staircase 269 from Mr Cheng. On the face of the 1971 Agreement, its literal meaning was to transfer the staircase area, the shop and the tools to D4’s father-in-law. Nonetheless, this same document also contained a controversial clause near the end of it which stipulated that “after completion, … if the owners in the Owners’ Association demanded any rental and fees, it would be borne by Wong Hon (ie D4’s father-in-law) and had nothing to do with Mr Cheng Kei Chui (ie Mr Cheng).” (成交以後, … 大厦聯誼會業主如要收租以及有其他費用概由黄漢自理與鄭基照無涉) (“the Rental Provision”). The intention of the parties clearly stipulated in the 1971 Agreement, ie any rental and fees demanded by the owners in the Owners’ Association would be borne by D4’s father-in-law after completion of the transfer signified in the said agreement. If D4’s father-in-law pursuant to the 1971 Agreement had already acquired the ownership of the Occupied Staircase 269, it could not be possible for parties to insert the Rental Provision therein.

118.  Under cross-examination, D4 initially asserted that her father-in-law did not pay rent to the Owners’ Association. She later made concession that she did not ask her father-in-law about this and it was her conjecture that he did not pay any rent. She finally agreed that she would not have known it even if her father-in-law paid the Owners’ Association.

119.  Moreover, according to the wordings of the 1971 Agreement, it was more than likely that Mr Cheng was required to pay rental and other fees to the Owners’ Association prior to the execution of the agreement. In order to protect himself from any future financial trouble, Mr Cheng put down unambiguous wordings in the Rental Provision that the rental and fees demanded by the Owners’ Association would be borne by D4’s father-in-law but not him after completion. In general, only owner could demand rent or fee from the occupier. As a result, the more probable and sensible construction of the 1971 Agreement was that Mr Cheng was selling and at the same time D4’s father-in-law was buying a possession right of the Occupied Staircase 269.

120.  Under cross-examination, D4 admitted that her knowledge about her father-in-law’s occupation and allegedly ownership of the Occupied Staircase 269 in 1970s was told by her husband, ie the son of her father-in-law who accompanied D4 to attend court hearing but without coming up as a witness. Apart from her husband, D4’s sister-in-law also accompanied D4 to attend court hearing but not giving evidence.

121.  Later in 1978, D4 joined in operating泉利士多. It is obvious that the Occupied Staircase 269 was still in the possession of her father-in-law but not D4.

122.  Later in 1985, according to D4’s evidence, the operation of泉利士多came to an end. D4’s husband changed to work as a truck driver and D4 became a housewife.

123.  From 1985 to 1996, D4 pleaded that the Occupied Staircase 269 was used by Miss Wong Lai Ching to operate the Aquarium Shop under the consent of D4’s father-in-law.

124.  And then, from 1996 to September 2003, D4 pleaded that the Occupied Staircase 269 was used to operate the Trading Office by D4’s sister-in-law again under the consent of D4’s father-in-law.

125.  In around October 2003, D4’s evidence showed that she operated Fashion Point in the Occupied Staircase 269 also under the consent of D4’s father-in-law. Thus, it is clear that for the period from 1985 to Sept 2003, D4 was not in possession of the Occupied Staircase 269.

126.  Even if it is accepted that D4 has been operating Fashion Point since October 2003 till now, her factual possession alone is not sufficient to establish adverse possession.

Intention to possess

127.  As analysed in the above, it was revealed by the 1971 Agreement that the intention of both D4’s father-in-law and Mr Cheng were crystal clear that D4’s father-in-law would be responsible for the rental and fees demanded by the Owners’ Association after completion. It follows that on balance of probabilities, D4’s father-in-law would not have had the intention to possess adversely to the legal owner of the premises.

128.  In any event, there simply is no evidence proving that D4’s father-in-law had the intention to adversely possess the Occupied Staircase 269.

129.  Regarding D4’s occupation of the premises for operating Fashion Point, D4 openly admitted and insisted under cross-examination that the Occupied Staircase 269 all along belonged to her father-in-law even after his death in 2018. She confirmed under cross-examination that all business conducted in the Occupied Staircase 269 was operated under the consent of D4’s father-in-law. She said they including D4 had to ask for the permission of her father-in-law.

130.  Although D4 started to occupy the Occupied Staircase 269 in October 2003, her occupation was subject to the consent of her father-in-law since she confirmed at trial that all the businesses carried in the shop at the Occupied Staircase 269 including those businesses run by her and her sisters-in-law were only allowed to be conducted therein under the consent by her father-in-law. She insisted that they had to ask for the permission of her father-in-law. She therefore could not be regarded as having the intention to exclude the whole world at large.

131.  Thus, subject to evidence, D4 could only be possibly regarded as having the intention to possess adversely of the premises until 2018 when her father-in-law passed away. Nevertheless, during cross-examination, D4, quite surprisingly, openly admitted that since 1971, the ownership of the Occupied Staircase 269 all along belonged to her father-in-law and it was still so even after his death! Thus, even after the death of her father-in-law, D4 was still in the view that the Occupied Staircase 269 belonged to him. It is therefore hard to infer that she had the intention to possess the premises adversely. She simply did not have such intention in her mind since she, according to her own oral evidence, still thought the premises belonged to her father-in-law.

132.  And, even this Court accepts that D4 had the requisite intention to possess in 2018, the requisite time limitation simply had not expired.

133.  The Occupied Staircase 269 has all along been enclosed by gates with locks, the keys to which had been held by the family of D4’s father-in-law and is now held by D4. On this, D4 gave evidence that the premises was enclosed by gate when her father-in-law allegedly purchased the premises. A new gate was installed to replace the old one by D4’s sister-in-law in 1985. Regarding the purpose of installing the gate, D4 admitted under cross-examination that the gate or enclosure for the premises was primarily for security reason. She further agreed to Ps’ Counsel that the sole reason of the gate/enclosure was to protect the stuff and valuable items in the premises. It is crystal clear that the gate or enclosure was and is for security reason but not for excluding the whole world including the Owners’ Association or Ps.

134.  D4 has been paying management fees to MVO since her occupation of the Occupied Staircase 269. It was her understanding that management fees ought to be paid by a landlord. When being asked the management fees were actually a licence or consent fees in substance, D4 oddly asserted that she was only paying it because it was called management fee.

135.  In the light of the above analysis, I, on balance of probabilities, find that D4 has not discharged her legal burden to prove that she had the necessary animus possidendi in possessing the Occupied Staircase 269 adversely against the legal owners.

(c) D5’s adverse possession defence

Factual Possession

136.  D5 is currently occupying the Occupied Staircase 348 and there is no dispute to it.

137.  In her witness statement, D5 has constructed a historic narrative as to how she came to possess the Occupied Staircase 348. She stated that the Big Landlord (大業主) of the Building (“the Big Landlord”) sold to his relatives the Disputed Premises at the price of HK$3,000 (for Block A, B, E and F) and HK$6,000 (for Block C and D) in 1960s (“the first set of sales”). Later, the said relatives of the Big Landlord sold their respective premises to other purchasers.

138.  D5 further stated that in around 1966, a couple Mr 陳繼有 and Madam Ng were operating a store at the Occupied Staircase 348. The husband has retired since 1980s and Madam Ng continued to operate the store.

139.  By a transfer agreement dated 20 September 2002 (“the 2002 Agreement”), D5 has purchased the Occupied Staircase 348 from Madam Ng. D5 initially ran her own business of water and electrical repair with her husband in the premises.

140.  From 2010 to 2018, D5 leased the Occupied Staircase 348 to SF Express at a monthly rent. D5 later leased the premises to another courier company named “Fun La La” for a yearly rent.

141.  Under cross-examination, when D5 was being asked whether the knowledge of the first set of sales by the Big Landlord was a well-known fact amongst those occupying the Disputed Premises, she said that those who have been there for long would likely have known this. And her source of this well-known fact was from the “three heads” of the management office (Mr Lam, Mr Chan and Mr Cheung), Madam Ng, her own father and Mr Chan Bing Kin who sold her the Occupied Staircase 344. And the information about the specific prices at which the Disputed Premises were sold was told by her own father who told her that he heard of it from Mr Cheng.

142.  Regrettably, no evidence given and/or produced by D1 to D4 could remotely be corroborated with D5’s historic narrative. According to D1’s evidence under cross-examination, D1’s father-in-law had in 1960s adversely possessed (強佔) the Occupied Staircase 265 without making any payment. According to D4’s evidence, Mr Cheng, the predecessor of D4’s father-in-law, had purchased the Occupied Staircase 269 from a caretaker of the Building without any further evidence suggesting that this caretaker had any relationship with the Big Landlord of the Building.

143.  Besides, under cross-examination in relation to 2002 Agreement, quite surprisingly, D5 shifted her case by giving strikingly new evidence that the Disputed Premises were in fact given as gifts to his relatives who gave the Big Landlord in return nominal fees (象徵式費用). But, during her preparation of this trial, ie making her witness statement for the trial, she said that the Big Landlord sold to his relatives the Disputed Premises at the price of HK$3,000 or HK$6,000. Now at the trial, she said those were gifts. Later, D5 in her re-examination confirmed that the said nominal fees were in fact the sum of HK$3,000 or HK$6,000 mentioned in her witness statement. Let alone the irreconcilability of sales and gifts of the Disputed Premises, the amount of either HK$3,000 or HK$6,000 in 1960s could hardly be regarded as nominal! Worse still, the source of this new evidence was also a new one other than those mentioned in the above. D5 testified that she was told of this by an old caretaker who had already retired.

144.  According to D5’s case and her evidence both written and verbal, her factual possession in the Occupied Staircase 348 was rested upon the transfer of ownership evidenced in the 2002 Agreement. There was however no mention of it in her first version of Defence, ie the unamended Defence.

145.  Notwithstanding this, D5 also did not deploy the 2002 Agreement to reply the letter issued by Ps’ solicitors in April 2018. She also did not rely on this document to explain her circumstances to the Buildings Department. When being asked the reason why she has never deployed the 2002 Agreement in the above-mentioned circumstances, her response was evasive.

146.  Ps submitted that D5 was the most elusive of all the witnesses. Rather than admitting contradictions or making any concession (howsoever obvious or glaring), D5 would lead new evidence to explain how her previous answers, or written documents, were still correct or authentic. The frequent leading of new evidence eventually exposed her inconsistencies. In view of her evidence given in particular those under cross-examination and her demeanour at trial, I find that D5 is not an honest and reliable witness. Despite so, in view of the documentary evidence produced by D5, I, on balance, hold that D5 has been in factual possession of the Occupied Staircase 348 since 2002 till now.

Intention to possess

147.  D5’s Counsel submitted that D5’s position is that she began her adverse possession by Madam Ng as early as in the 1960s. If her hearsay evidence regarding possession of the Occupied Staircase 348 is excluded, Counsel for D5 submitted that D5’s direct evidence was strong and clear to establish her claim of adverse possession starting on 1 October 2002, ie the date she allegedly purchased the ownership of the Occupied Staircase 348 from Madam Ng.

148.  There is simply no evidence at all regarding the nature of the right/possession Madam Ng has transferred to D5 in 2002, let alone the issue whether it was of any adverse nature. It is possible that Madam Ng might just transfer her right under a licence to occupy the Occupied Staircase 348 to D5.

149.  Regarding the 2002 Agreement, D5 said that a Mr Chan, a manager of MVO, upon her request drafted the document for her. Counsel for D5 then submitted that this was equivalent to telling the management office that she was the new owner of the Occupied Staircase 348. With respect, I do not think this submission as it is could stand. Even taking D5’s case to the highest that the 2002 Agreement was drafted by Mr Chan who acceded to D5’s request to do so. There is no evidence to suggest that the MVO, as a result of an act of his staff, has come to know the existence of the 2002 Agreement.

150.  Concerning D5’s claim of adverse possession starting on 1 October 2002, ie the alleged transfer of ownership of the Occupied Staircase 348, if D5 was of the view that she was the owner of the premises, she would not have had any intention to adversely possess the premises she thought she had bought.

151.  Regarding the gate installed at the Occupied Staircase 348, D5 said that she did not know who installed the gate, she thought it should be the relatives of the Big Landlord. She eventually admitted that she did not know why the gate was installed.

152.  D5 installed a new gate replacing the old one in 2010 when renewing the tenancy agreement with SF Express which wished to instal a CCTV camera near the gate. She then changed the lock for the newest tenant “Funlala”. In general, she agreed that the purpose of the gate was primarily for business purpose, to prevent theft, similar to that of other stores.

153.  In order to prove her intention to possess, D5 produced various tenancy agreement entered into between D5 and SF Express in which she executed as “landlord” and the termination of tenancy entered into between D5 and SF Express in which she signed as “landlord.”

154.  When it was put to D5 whether she was directly asked whether she was the owner, she said “this place was mine, no need to say.” In fact, she did not answer the question. Further, when she was being questioned that she never outright said to SF Express in clear and uncertain terms that she was the landlord, she evasively said that they only knew the place belonged to her and she all along was there and paid the management fees. It is obvious that D5’s attitude was very evasive when the questions touched upon her assertion as the owner of the premises or whether she in fact did make such assertion. It seems not the usual attitude of an owner.

155.  When the cross-examination moved on to what D5 showed to SF Express for demonstrating that she was the owner of the Occupied Staircase 348, she said the management fees receipts. When being asked why she did not show other documents which might prove her ownership, she replied that owners have to pay management fees. She admitted that she owned other properties for which she has paid property tax.

156.  D5 was then being asked whether she paid property tax in relation to the rental arrangement of the Occupied Staircase 348. She is an owner of more than one property and she is aware of a landlord’s duty to pay property tax. During the cross-examination on her paying property tax for the Occupied Staircase 348, she initially said that she included the Occupied Staircase 348 in the tax returns of her other properties and she did not specify the shop on this property. Upon further cross-examination, she said she did not file tax returns for the Occupied Staircase 348. Upon further cross-examination, she revised her answer that she did pay tax for the rental arrangement to SF Express by including it in an aggregate sum. She then said that she had written down the address of the Occupied Staircase 348 but there was no title deed for shop under the staircase. When being further pressed on how she paid the property tax, she said she paid this property together with other properties and reported an aggregate sum. She further revealed that she did not provide IRD with details such as the amount of rent and the fact that the rent was related to the Occupied Staircase 348. And she was not able to locate the tax returns for the Occupied Staircase 348.

157.  I find it difficult if not impossible to follow D5’s logic in her dealing with the property tax matter on the Occupied Staircase 348 of which she claimed to be the owner since 2002. She was not able to tell the Court in sufficient details how she filed the tax returns for the Occupied Staircase 348. Filing tax returns for the property should not be a very difficult matter for an owner, like D5, having more than one property. In the light of the above, I must say that D5 is all but evasive and therefore her evidence of animus possidendi should be treated with significant scepticism.

158.  Moreover, D5’s documentary evidence showed that she has been paying the management fees in relation to the Occupied Staircase 348 to Ps and MVO.

159.  As an occupier on the Ground Floor of the Building, D5 would not need to use the lifts of the Building. She did not have to use the common area in order to get access to her shop. As mentioned earlier, she has been paying the “management fees” about 8 times more than those owning a proper unit of the Building.

160.  According to her evidence, she has been paying this “management fees” since 2002. Her documents showed that she was paying HK$550 in 2002, ie HK$5.5 per square feet, which was not a small amount as management fees of an industrial building. D5 has been paying the “management fees” starting from HK$550 and gradually rising to HK$730 in 2016. It just does not make sense when one scrutinizes the issue against D5’s background. D5 gave evidence that she was living in the Building when she was only 9 years old. She knew many “kai fong” there. She also knew the staff of the management office. According to her evidence under cross-examination, apart from the Occupied Staircase 348, she also owns other properties for which she paid property tax. Therefore, she must have known that the “management fees” she has been paying for the Occupied Staircase 348 is inexplicably expensive as “management fees” of an industrial building. She also must have known that the “management fees” that she has been paying is not ordinary management fees but the monthly fees for the consent to occupy the Occupied Staircase 348.

161.  In the light of the above analysis, I, on balance of probabilities, find that D5 has not discharged her legal burden to prove that she had the necessary animus possidendi in possessing the Occupied Staircase 348 adversely against the legal owners.

A Series of Licences

162.  Even if I am wrong in the above findings in relation to Ds’ defences of adverse possession, I am of the view that the factual possession by Ds or their predecessors was in fact pursuant to a licence arrangement granted by the Owners’ Association and/or Ps.

163.  If this Court finds in favour of Ps’ version of events on this issue, ie that there were a series of licences created by Owners’ Association and/or Ps to Ds and/or their predecessors, the legal consequence must be that they operate throughout to negate and defeat the adversity in Ds’ possession.

164.  Ps submitted that it is their evidential burden to prove that they have allowed Ds to occupy the Disputed Premises. In this regard, Ps have to prove that there was some overt act by the land owner or some demonstrable circumstances from which an inference can be drawn that the permission was in fact given. It is, however, irrelevant whether the users were aware of those matters; and that a reasonable person would have appreciated that the user was with the permission of the land owner.

165.  Ps called 3 witnesses to prove their case on licence: Madam Wong, Mr Tang and Sunil.

Chow’s Family and The Building

166.  At trial, Madam Wong gave evidence on the genesis of the management of the Building and the grant of the licences.

167.  Madam Wong’s father-in-law 周疇 (“Chow Senior”) founded Australia Knitting Factory Limited (“Australia Knitting”) which owned 10 units in the Building. In 1960s, Chow Senior ran his business in one of the 10 units owned by Australia Knitting.

168.  Chow Senior was a respected person who actively took part in the management of the Building since 1960s. He often discussed matters related to the Building with other owners and also commanded respect from others in the Building.

169.  In 1975, Madam Wong started working for Australia Knitting. In 1984 she was married to the son of Chow Senior. Since then, her main role was to assist Chow Senior and her husband in all matters of Australia Knitting, one of which was to assist Chow Senior in managing the Building. She is now the director of Australia Knitting.

170.  Madam Wong gave evidence that Chow Senior actively participated in the management of the Building with other owners. He was appointed as the chairman of P1 at the end of 1980s till 2003 when he passed away.

171.  Chow Senior arranged a staff of Australian Knitting Miss Chan Yim Lan Anita, also called “Ta Sister” (“Miss Chan”) to help managing the Building. She helped keeping the clerical and financial records of the Building under the supervision of Madam Wong. After the death of Chow Senior, Miss Chan took over his duties and continued to help with the management of the Building. Since 2009, Miss Chan has been the treasurer of Ps until her retirement in late 2014.

172.  In 2011, Senior Chow’s granddaughter Miss Chow Hoi Yu (“Miss Chow”) was elected to be the vice chairman of P2 and started to participate in the management of the Building. Miss Chow was elected to be the vice chairman of Ps in 2016. Sunil, used to be a finance and account manager and now the executive assistant of Miss Chow, has been assigned to assist in dealing with the financial issues of Ps. He is currently the treasurer of P1. Both Miss Chow and Sunil would consult Madam Wong in attending to the management issues of Ps.

The Benevolent Measure (德政)

173.  Ps submitted that out of generosity to Ds and/or their predecessors whom the owners considered to be their friends and neighbours, the owners of the Building allowed Ds and/or their predecessors to operate their respective businesses at the Disputed Premises. A “nominal fee” was then given by Ds and/or their predecessors in return.

174.  Madam Wong gave evidence that in 1975 there was a shop in every staircase selling mainly food and drinks or other necessities for the people living there. This is consistent with the evidence of D1, D4 and D5 whose predecessors were running stores and/or selling charcoals at the Disputed Premises since 1970s.

175.  According to Madam Wong’s evidence, Chow Senior told her that each shop owner at the staircases of the Building had to seek consent of the Owners’ Association for running business thereat. The shop owners at the staircases were required to pay monthly nominal fees (“the monthly fees”) to the Owners’ Association which would apply the monthly fees towards the management expenses of the Building (“the Licence Arrangement”). The monthly fees were collected by a man called “Tall Man” who was responsible for collecting management fees from owners and the monthly fees from shop owners at the staircases.

176.  Chow Senior described the Licence Arrangement as a benevolent measure (德政) because (i) the monthly fees could apply to reduce the management expenses of the Building; (ii) it helped fellow villagers earn a living; (iii) it helped the security/safety issue of the Building by discouraging thieves; and (iv) it was convenient for the workers in the Building to buy cheaper food.

177.  Ps submitted that the security/safety issue of the Building was corroborated with Ds’ evidence that gates/enclosures were installed to prevent theft in their shops at the Disputed Premises. And having people occupying the staircases (including the Disputed Premises) would help with the safety of the Building. Thus, to arrange for a nominal fee to be applied towards the management expenses of the Building is plausible given the circumstances of the time.

178.  Madam Wong gave evidence that Chow Senior frequently told her that each shop owner at the staircases of the Building had to seek consent of the Owners’ Association for running businesses thereat. Thus, the shop owners at the staircases were willing to pay the monthly fees to the Owners’ Association for obtaining the said consent. Under cross-examination, she confirmed this evidence and supplemented that those shop owners at the staircases knew that they had to seek the consent of the Owners’ Association before they could do business at the staircases. Madam Wong also personally heard Chow Senior’s conversation with Miss Chan and Tall Man on matters in relation to the rent of the staircases.

179.  Regarding her evidence that the Owners’ Association had managed the Building properly, Madam Wong further said in re-examination that recruitment of staff were needed to help with the daily operation of the Building, for example, lift controller, security guard, cleaner, somebody to pay the bills of the Building and someone must come forward to handle all these. And, the members in the Owners’ Association were working hand in hand in managing the Building.

180.  After the incorporation of Ps in 1988, Senior Chow was the chairman of P1. He in fact acted as the chairman of P1 till his death in 2003. Madam Wong and Miss Chan have been helping with the management of Ps. She gave evidence that Ds and/or their predecessors did not stop paying the monthly fees to Ps.

181.  In 2000, Australian Knitting moved out of the Building. During the process of moving the company, many old documents including the old records of the Owners’ Association and Ps were destroyed. At the same time, MVO was retained as the management company for Ps.

Ds’ Arguments on Licence

182.  Citing Chan Wing Tong, supra, Counsel for D1 and D5 submitted that Ps failed to show there was any communication, either in writing, by spoken words or by overt and unequivocal conduct, that was intended to be understood and was understood by Ds that their occupation of their respective shop was “consented”, “permitted” and/or “licensed” by Ps and/or their predecessors. With respect, I do not agree with this submission and the reasons are shown below.

183.  Concerning the consent given by the Owners' Association, Counsel for D1 and D5 submitted in essence that there was no evidence that the Owners' Association exclusively owned the Disputed Premises which are co-owned by all owners of the Building. Also, there was no evidence showing that every owner of the Building participated in the Owners' Association. They doubted the capacity of Owners' Association in representing all owners to give consent.

184.  Prior to the incorporation of Ps, there is no dispute that the Disputed Premises were owned by all owners of the Building and also that it was the Owners' Association which took care of the management of the Building. There is also no dispute that a monthly “fee” (no matter it was “management fee” or “license fee”) was paid by Ds’ predecessors or Ds to the Owners' Association.

185.  In my view, the very act of making the monthly fee per se was an iron proof that those who made such monthly payment have acknowledged the capacity of the Owners' Association to receive the said payment month after month, year after year and even decade after decade. It is largely undisputed that the Owners' Association applied the management fees received from unit owners, car parking spaces tenants and staircases occupiers including Ds to the daily operation of the Building. In other words, the Owners' Association were empowered to receive money for and apply the money received on the Building. Empowered by whom? The answer is obvious. The Owners' Association must have been empowered by the owners of the Building to do the above. By the same token, it could well be inferred that the Owners' Association were empowered by the owners of the Building to give consent on behalf of the owners to any parties for the purpose of managing the whole of the Building, including all the staircases.

186.  Apart from this, according to the evidence of Madam Wong, the Owners' Association was formed by her father-in-law who owned 10 units of the Building and some other big landlords (by this term I understand as having owned a number of units like Chow Senior) who were big entrepreneurs working in the garment industry. This group of big entrepreneurs as well as owners of the Building in fact fortified the representativeness of the Owners' Association. Besides, the evidence from Ps’ witnesses clearly showed that prior to the incorporation of Ps in 1988, the owners formed the Owners’ Association, which assumed a role in the management of the whole of the Building. As what Madam Wong said, someone must come forward to handle the daily operation of the Building. There is no evidence whether all the owners of the Building had joined the Owners’ Association but Madam Wong said many of the owners were there and the Owners’ Association represented the owners of the Building. Further, there must have been a collective decision amongst the owners of the Building to receive the monthly payment, probably via the Owners' Association. I am therefore satisfied that the Owners’ Association had assumed the role of managing the Building prior to the incorporation of Ps and was acting on behalf of all the owners of the Building to manage the Building including giving consent to Ds to occupy the Disputed Premises.

187.  Concerning the fees paid by Ds, Counsel for D1 and D5 submitted that the fees were charged as “management fees” at all material times, even after 30 April 2018 when Ps’ solicitors issued their letters to Ds. The term “management fees” also appeared on the demand notes issued by MVO. Moreover, even MVO had changed the name of fees from management fee to income in their budget 2015, they did not show Ds of the same and the wordings on demand notes and receipts remained unchanged. And, despite Mr Tang’s proposal to correct the description in the 2008 budget in the owners’ meeting, the meeting still approved the use of the term “management fees”. In addition, regarding the fact that both the rental for the car parking spaces and the monthly fees for the staircases are named as management fees, Counsel for D1 and D5 queried why the word “rent” appeared in one tender document for car parking spaces (2019-2021). Counsel for D1 and D5 further submitted that when Mr Tang was questioned why no step was taken to correct the description, the only answer for the inaction was “to follow the practice from Anita.”

188.  Counsel for D1 and D5’s query regarding the above inaction could probably be answered by Mr Tang’s answer, ie “to follow the practice from Anita (ie Miss Chan).” As mentioned in the above, Miss Chan was arranged by Chow Senior to work voluntarily in Owners' Association and Ps. Her task was to manage the Building, in particular keeping financial records. When MVO came into picture, as what Mr Tang’s evidence, he just followed the practice from Miss Chan by adopting the terms all along used by her. After the death of Chow Senior, Miss Chan took over his duties and continued to help managing the Building. And she became Ps’ treasurer in 2009 until late 2014 when she retired. According to Sunil, after Miss Chan’s retirement in late 2014, her duty was taken over by a staff in Miss Chow’s company and later by Sunil. That probably is the reason why the description in Ps’ budget was changed in 2015 from management fee to income by Miss Chan’s successor who probably aimed at reflecting more appropriately the true nature of that sum. In view of the management history of the Building and the fact that Miss Chan had been helping to manage the Building for decades, it is not difficult to understand why the description used or adopted by her since 60s or 70s had all along been used by MOV.

189.  Besides, according to the evidence of Madam Wong, the “management fees” received from the staircase occupiers were applied to reduce the management expenses of the Building, so it was called “management fees”. This description has been adopted and put it more accurately, loosely adopted since the days of Chow Senior. Thus, this term “management fees” cannot be taken merely literally and as submitted by Ps those who had been paying this “management fees” as non-owners could not possibly have construed themselves as landlords simply because of this naming.

190.  Regarding the 23 May 2014 Minutes, Counsel for D1 and D5 submitted that it does not support Ps’ case since the wordings of the minutes suggests that the owners of the Building did not treat Ds as mere licence and there might be complication in Ds’ title/interest in the staircase shops. With respect, the meaning of the wordings was that some owners doubted whether the staircases positions needed to contribute to the maintenance costs. Since some complicated issues of ownership and law were involved, owners viewed that it was necessary to first consult legal advice before dealing with it. It did not mention what complicated issues of ownership and law were and there is no evidence concerning how the matter was dealt with at the end. But, one thing for sure, there is no evidence showing that Ds have contributed the said maintenance costs or they were asked to contributed to it. That means the proposition of Ps still stands.

191.  Counsel for D1 and D5 also submitted that Ps failed to show any overt and unequivocal act or conduct telling Ds that the fee payable by them were in fact “licence fees/rent” instead of management fees. On this, Ps submitted that the payment of “management fees” by Ds was such overt act.

192.  Concerning the management fees paid by Ds and/or the predecessors, Ds did not dispute that they have all along made monthly payment to Ps, ie from the time prior to the incorporation till the commencement of the present proceedings, but argued that such payments were not monthly fees for occupying the Disputed Premises because it was named “management fees”.

193.  On this, Madam Wong explained that the monthly fees were applied to reduce the management expenses of the Building, so it was called “management fees”.

194.  Mr Tang’s evidence may shed light on this issue. Mr Tang is the Senior Building Manager of MVO. According to the information passed down by Miss Chan to MVO, there were three types of income source for the Building: management fees from owners, rental generated from car parking spaces and monthly fees from all the shops at the staircases. Both the rental from car parking spaces and monthly fees from all the shops at the staircases are received in form of management fees. And these two types of income were applied to reduce the management expenses of the Building.

195.  At trial, Mr Tang said there was no need to amend the naming of these fees at any stage because everyone knew the substance of what these fees meant. He just adopted the terms all along used by Miss Chan. Mr Tang knew that the shop owners at the staircases were not owners of the Building and therefore no request was made to them (as well as the users of car parking spaces) to contribute to the maintenance fees of the Building in 2014.

196.  By reason of the aforesaid, in particular the use of “management fees” also in the car parking spaces rental, it is apparent that the term “management fees” was loosely used, probably due to the fact that they were applied to reduce the management expenses of the Building. This term “management fees” cannot be taken merely literally and those who had been paying this “management fees” as non-owners could not possibly have construed themselves as landlords simply because of this naming.

197.  Moreover, the evidence of Mr Sunil has taken this Court to examine whether this “management fees” was genuine management fees from another perspective, ie “substance over form”. Mr Sunil is the treasurer of Ps. In his witness statement, he said that he noted that the income from the car parking spaces and Staircase Space were being billed in the name of management fees. Under cross-examination at trial, regarding the value of the management fees (ie HK$620) for the Disputed Premises of around 100 square feet, he responded that the said management fees would then be around HK$6.2 per square feet and it was very expensive as the management fee for the Building was only HK$0.8 per square feet. In relation to the amount of “management fees” paid by Ds, ie HK$620, his final remarks was it did not really make sense.

198.  In the light of the above analysis, I am, on balance of probabilities, inclined to think that the payment of “management fees” could be regarded as an overt act for an implied licence between the Owners' Association and/or Ps and Ds and/or their predecessors.

199.  In relation to the quality of evidence, Counsel for D1 and D5 questioned the reliability and credibility of Ps’ witnesses. Regarding Madam Wong, it is submitted that large part of her evidence came from someone else’s knowledge. Who was this someone else? Her father-in-law Chow Senior. He was one of the founders of the Owners' Association, the chairman of Ps and the one who not only contributed his own time and energy but also his own resources, ie his own staff, into the management of the Building. Besides, Madam Wong’s knowledge was not merely hearsay. She gave evidence that she supervised Miss Chan in the management of the Building. On balance, I accept that after Madam Wong married the son of Chow Senior, she worked in Australia Knitting and came to know the involvement of Chow Senior in the management of the Building and the daily operation of the Building. She also took part in the management of the Building by supervising Miss Chan. In my view, such familial detail lends credence to Madam Wong’s hearsay knowledge as being derived from Chow Senior and her husband, which I find reliable.

200.  Counsel for D4 submitted that Ps have failed to properly plead licence and therefore there is a need for this Court to carefully scrutinize Ps’ plea and evidence to consider whether Ps have discharged the evidential burden of proof.

201.  Ps has pleaded the issue of licence and licence fees in Paragraph 5.1 of the Amended Statement of Claim which reads:

“On an unknown date prior to January 2004, out of generosity to the Defendants and/or their predecessors whom the owners considered to be their friends and neighbours, the owners of the Building allowed the Defendants and/or their predecessors on the basis of a series of licences (“the Licences”) to operated their respective businesses at the Respective Premises. In return, the Plaintiffs received a nominal fee from each of the Defendants and/or their predecessors as a license fee”

202.  It is submitted by Counsel for D4 that “licence” and “licence fee” were vaguely pleaded. It does not plead (1) when the alleged licence was granted; (2) who granted the alleged licence; and (3) how much the alleged licence fee was.

203.  Citing Chan Wing Tong, supra, in which the court has set out the facts and circumstances required by law to support a finding of licence, Counsel for D4 then submitted that Ps failed to plead a number of things, such as communication in writing and spoken words which are corresponding to the legal requirements for proving a licence set out in Chan Wing Tong.

204.  Every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits (See Order 18, rule 7(1) of Rules of District Court, Cap. 336H (“RDC”))

205.  According to Order 18, rule 7(1) of RDC, every pleading must contain only a statement of the material facts on which the party pleading relies, and not the evidence by which they are to be proved (per Farwell L.J. in N.W. Salt Co. Ltd v. Electrolytic Alkali Co. Ltd [1913] 3 K.B. 422 at 425). All facts which tend to prove the fact in issue will be relevant at the trial, but they are not “material facts” for pleading purposes. (See Hong Kong Civil Procedure 2024, 18/7/5)

206.  In the present case, I consider that Ps have contained in the Amended Statement of Claim a summary form of the material facts on which they rely for their claims. What D4 is asking for are evidence in which they have disclosed in either their witness statements or documentary evidence.

207.  The legal requirements of proving a licence set out in Chan Wing Tong need to be met by adducing evidence at trial, but not by Ps’ pleadings.

The Conclusion on Licence

208.  Apart from the above analysis, this Court would like to refer to the 1971 Agreement produced by D4. According to D4’s case, the possession of D4’s predecessor, her father-in-law, was derived from the 1971 Agreement in which D4’s father-in-law had purchased the store at Occupied Staircase 269 from Mr Cheng. However, the Rental Provision in the 1971 Agreement provided that that if the Owners’ Association demanded rental or any other fees, it would be responsible by D4’s father-in-law as the purchaser.

209.  The Rental Provision in the 1971 Agreement was echoing Ps’ case that there existed the Licence Arrangement between the Owners’ Association and the shop owners at the Staircases of the Building and that they had to pay the monthly fees for the consent of the Owners’ Association.

210.  Having considered all the evidence, I accept Ps’ case on licence. I find as a fact that the Disputed Premises were occupied by Ds’ predecessors and/or Ds under the Licence Arrangement, with an essential feature of paying the monthly fees to the Owners’ Association or Ps.

211.  My principal reasons are as follows:-

(1)  The 1971 Agreement sits poorly with Ds’ case that they and/or their predecessors adversely possessed the Disputed Premises. The document clearly shows even in layman’s eyes that they may have to pay the monthly fees or rental in order to occupy the Disputed Premises.

(2)  The monthly payments made by Ds and/or their predecessors were in fact the monthly fees under the Licence Arrangement. The naming of “management fees” could not defect the genuine substance in relation to the true nature of the payments. The absence of sense in paying HK$6.2/sq ft as “management fees” for the Disputed Premises while that for industrial premises was only HK$0.8/sq ft also drove the Court to doubt Ds’ case that the monthly payments they have been making for years or even decades were genuine management fees but not monthly fees for the consent to occupy the Disputed Premises.

(3)  I consider Ps’ version of events leading to the Licence Arrangement to be inherently more likely than Ds’. It is uncontroversial that Ds and their predecessors have been paying the “management fees” for years or decades. And, this is the very overt conduct required to prove the existence of a licence.

212.  I am satisfied that there was Licence Arrangement between Ds and/or their predecessors and the Owners’ Association and/or Ps. Ds’ predecessors or Ds had to seek consent from the Owners’ Association and/or Ps to occupy the Disputed Premises. I am also satisfied that the “management fees” paid by Ds and their predecessors was in fact the monthly fees for the consent of Ps and/or the Owners’ Association to occupy the Disputed Premises.

Conclusion and Disposition

213.  For the above reasons, the adverse possession claims on the Disputed Premises by D1, D4 and D5 are dismissed.

214.  Ps are entitled to an order for vacant possession of the Disputed Premises.

Costs

215.  Costs will follow the event.

216.  According to D2’s Consent Order, there would be no order as to costs in respect of this action as between Ps and D2.

217.  According to the D3’s Consent Order, there would be no order as to costs in respect of this action as between Ps and D3.

218.  Regarding the costs order in relation to D4, there arises a costs apportionment issue since each party has been partially successful. On the first day of trial, Ps decided not to contest D4’s counterclaim with respect to the Cabinet Areas. After trial, this Court ruled in Ps’ favour in respect of their claim for recovering the possession of the Occupied Staircase 269 and dismissed D4’s counterclaim for it.

219.  D4 submits that Ps’ concession was only made after D4 has devoted considerable time in preparing her Opening Submissions which covered her counterclaim for adverse possession of the Cabinet Areas. In this regard, D4’s Opening Submissions contain 20 pages and 41 paragraphs in total. Out of 41 paragraphs, 9 paragraphs are submissions relating to the Cabinet Areas (ie paragraphs 8,11, 30 to 36) which represents around 7 pages out of 20 pages of the entire Opening submissions.

220.  D4 submits in the case that she succeeds in her claim for the Cabinet Areas, and succeeds in proving factual possession with intention to possess the Shop Area (ie the Occupied Staircase 269), but Ps succeed in proving that D4’s occupation and use of the Shop Area was by the Licence or permission of Ps, D4 asks for 50% of her costs of the action incurred prior to 29 April 2022 on which date D4’s claim for the Big Cabinet Areas was added by way of amendment; and 75% her costs incurred after 29 April 2022 (including all costs previously reserved) to be taxed if not agreed with certificate of counsel.

221.  On the other hand, Ps, considering the comparatively small size of the Cabinet Areas sought out of D4’s overall counterclaim, agrees to pay 15% of D4’s costs before the first day of trial (being the date on which Ps decided not to dispute D4’s counterclaim on the Cabinet Areas) as costs necessary for the Cabinet Areas claim. Regarding any costs reserved or in the cause in relation to D4’s amendment of pleadings/counterclaims pertaining to the Cabinet Areas, Ps further agrees to pay also those costs (there being no overlap with the proposed settlement of 15% of D4’s counterclaim costs).

222.  Both Ps and D4 have referred this Court to Tang Sau Lin v Youngfield Limited & Ors [2018] HKCFI 1040 in which it was ruled an apportionment of 50% of costs before the amendment of the Statement of Claim as costs necessary for the Cabinet Areas claim and 50% of the costs incurred after the said amendment as referable to the Cabinet Areas claim. (see paragraph 50(d) of the case)

223.  In Tang Sau Lin, supra, plaintiff’s claim was for the whole of the Disputed Area until amendment of the Statement of Claim to add an alternative partial case. But it was revealed that a substantial part of the costs incurred before the said amendment were incurred in respect of preparation which was required to address the Cabinet Areas claim eg the plaintiff’s witness statement, the expert report, and the amendment to plead the Cabinet Areas claim therein.

224.  In the present proceedings, Ps submits that D4 has dedicated only limited resources, time, and preparation to the Cabinet Areas in her counterclaim and that majority of her case is on the Occupied Staircase 269. It is submitted, inter alia, that:

(i)  the Cabinet Areas were merely a throwaway comment at paragraph 7 of D4’s witness statement. There were wrapped within a broader definition of “該佔用部份” and little attention was paid to the Cabinet Areas in the rest of the witness statement.

(ii)  the Cabinet areas were always part of the original claim, and further clarified by way of the further amendments. These amendments, however, were merely done in response to the expert report which D1, D2 and D5 had also done in relation to their Disputed Premises. There is no suggestion that any substantive fees were dedicated to the Cabinet Areas.

(iii)  it appears from D4’s own expert analysis that little time was spent on analyzing the Cabinet Area, given it is considerably smaller area. According to the expert report, the Cabinet Areas altogether only amount to about 3 square metres, out of a total of 17.82 square metres sought in D4’s adverse possession claim.

(iv)  it is not fair to grant D4 the proposed 50% apportionment of its costs when it is clear that the heart of D4’s claim has always been the majority of the about 14.82 square metres dedicated to the Occupied Staircase 269.

(v)  Tang Sau Lin, supra, should be distinguished on the ground that the court therein after making an assessment of the seriousness, substance, and the proportionality of the Cabinet Areas claim compared to the Disputed Area claim concluded that “a substantial part of the costs incurred before [the date of amendment] were incurred in respect of preparation .... to address the Cabinet Areas claim”. This conclusion suggested the plaintiff therein had showed the court what costs were incurred specific to the Cabinet Areas claim.

(vi)  there is no such evidence in the present case provided by D4 for the Court’s assessment. There is no breakdown or any evidence to clarify whether any such substantial costs were in incurred in relation to the Cabinet Areas claim in this case.

225.  In the present case, this Court holds that D4 did not establish her adverse possession in respect of the Occupied Staircase 269 and D4’s occupation thereat was with the licence has been granted by Ps. In the light of submissions from both parties, the legal analysis on Tang Sau Lin case and much consideration, I ,in assessing D4’s costs, adopt a board bush approach and make a costs order nisi that (i) Ps has to pay 25% of D4’s costs incurred prior to 29 April 2022 and 35% of D4’s costs incurred after 29 April 2022 and prior to 27 February 2024 which is the first day of the trial and regarding all costs previously reserved or in the cause in relation to D4’s amendment of pleadings/counterclaims pertaining to the Cabinet Areas be paid by Ps to D4, to be taxed if not agreed on the District Court scale with Certificate of Counsel; (ii) D4 has to pay 75% of Ps’ costs incurred prior to 29 April 2022 and 65% of Ps’ costs incurred after 29 April 2022 and prior to 27 February 2024, and 100% of Ps’ costs from 27 February 2024 to the end of the present proceedings, to be taxed if not agreed on the District Court scale with the Certificate of Counsel. D4’s own costs to be taxed in accordance with the Legal Aids Regulations. In absence of any application to vary, the above costs orders within 14 days after the handing down of the judgment, the above order nisi will become absolute.

226.  In respect of D1 and D5, I also make costs orders nisi that they shall pay the costs of this action in favour of Ps. Such costs to be taxed if not agreed on the District Court scale, with certificate of counsel. And, in the absence of any application to vary the above costs orders within 14 days after the handing down of the judgment, the above orders nisi will become absolute.

Order

227.  By the reasons aforesaid, I make the following orders:-

(1)  The 1^st Defendant do deliver to the 1^st Plaintiff the vacant possession of the structure under the escape staircase leading to No 265 Un Chau Street on the Ground Floor of the Building (“the Occupied Staircase 265”);

(2)  The 1^st Defendant do pay the mesne profits of HK$700 per month to the 1^st Plaintiff from 1 May 2018 to such date when vacant possession of the Occupied Staircase 265 is delivered and/or caused to be delivered to 1^st Plaintiff;

(3)  The Counterclaim of the 1^st Defendant against the Plaintiffs be dismissed;

(4)  A Costs order nisi that the costs of the Plaintiffs in the present action be paid by the 1^st Defendant (including the costs reserved), to be taxed if not agreed on the District court scale, with Certificate of Counsel. In the absence of any application to vary the same within 14 days after the handing down of the judgment, the order nisi will become absolute;

(5)  The 5^th Defendant do deliver to the 2^nd Plaintiff the vacant possession of the structure under the escape staircase leading to No 348 Fuk Wing Street on the Ground Floor of the Building (“the Occupied Staircase 348”);

(6)  The 5^th Defendant do pay the mesne profits of HK$700 per month to the 2^nd Plaintiff from 1 May 2018 to such date when vacant possession of the Occupied Staircase 348 is delivered and/or caused to be delivered to 2^nd Plaintiff;

(7)  The Counterclaims of the 5^nd Defendant against the Plaintiffs be dismissed;

(8)  A Costs order nisi that the costs of the Plaintiffs in the present action be paid by the 5^nd Defendant (including the costs reserved), to be taxed if not agreed on the District court scale, with Certificate of Counsel. In the absence of any application to vary the same within 14 days after the handing down of the judgment, the order nisi will become absolute;

(9)  The 4^th Defendant do deliver to the 2^nd Plaintiff the vacant possession of the structure under the escape staircase leading to No 269 Un Chau Street on the Ground Floor of the Building (“the Occupied Staircase 269”);

(10)  The 4^th Defendant do pay the mesne profits of HK$700 per month to the 2^nd Plaintiff from 1 May 2018 to such date when vacant possession of the Occupied Staircase 269 is delivered and/or caused to be delivered to the 2^nd Plaintiff;

(11)  It is declared that the 2^nd Plaintiff’s title to, interest, and/or rights in and over an area at the landing of the staircase leading from the Ground Floor to the First Floor where a metal cabinet was placed thereon (the “Big Cabinet Area”) near the structure erected under the Occupied Staircase 269 together with the basement thereunder (the “Shop Area”) and an area adjacent to the Shop Area where a metal cabinet was placed thereon (the “Small Cabinet Area”) (collectively, the “Cabinet Areas”), is extinguished by virtue of section 17 of the Limitation Ordinance, Cap 347;

(12)  It is further declared that the 4^th Defendant has acquired possessory title, interest and rights in and over the Cabinet Areas; and

(13)  A costs order nisi that the Plaintiffs have to pay 25% of the 4^th Defendant’s costs of the counterclaims incurred prior to 29 April 2022 and 35% of the 4^th Defendant’s costs incurred after 29 April 2022 and prior to 27 February 2024, the 1^st day of the trial hearing, and regarding all costs previously reserved or in the cause in relation to D4’s amendment of pleadings/counterclaims pertaining to the Cabinet Areas be paid by Ps to D4, to be taxed if not agreed on the District Court scale with Certificate of Counsel. And, the 4^th Defendant has to pay 75% of the Plaintiffs’ costs in the present action incurred prior to 29 April 2022 and 65% of the Plaintiffs’ costs incurred after 29 April 2022 and prior to 27 February 2024, and 100% of the Plaintiffs’ costs from 27 February 2024 to the end of the proceedings to be taxed if not agreed on the District Court scale with the Certificate of Counsel. The 4^th Defendant’s own costs to be taxed in accordance with the Legal Aids Regulations. In absence of any application to vary, the above costs orders within 14 days after the handing down of the judgment, the above order nisi will become absolute.

228.  Lastly, I am grateful to Mr Jacky Lam, Counsel for the Ps, Mr Ian Chu, Counsel for D1 and D5 and Mr Lawrence Ng, Counsel for D4 and their instructing solicitors for their helpful assistance rendered to me in these proceedings.

For the hearing on 27 February 2024:

For the hearing on 28 to 29 February 2024, 1, 4, 5 & 7 March 2024: