THE INCORPORATED OWNERS OF PAK TAT MANSION v. TANG KEE TONG trading as CHILI KING

LDBM 114/2023

[2026] HKLdT 26

IN THE LANDS TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

BUILDING MANAGEMENT APPLICATION NO 114 OF 2023

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J U D G M E N T

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THE APPLICATION

1.  The Applicant is the Incorporated Owners of Pak Tat Mansion (“IO”), a building located at Nos. 86-90 Parkes Street and Nos. 6, 6A, 65B and 6C Nanking Street, Kowloon, Hong Kong (“Building”), which comprises a basement, ground floor shops and units from 1^st to 9^th floors. There is a space located at the ground floor of the Building, referred to in the building plan as loading and unloading area, with the address No. 90, Parkes Street, Jordon, Kowloon, Hong Kong (“the Space”).

2.  The Respondent Tang Kee Tong (“Tang”) trading as Chili King is registered as an unincorporated business and operates a food stall/restaurant. The business is a partnership referred to as “Chili King”. The Respondent is the occupier of the Space, from where he operates the restaurant known as Chili King.

3.  This is an application by the IO for vacant possession of the Space, from the Respondent, and other relief.

4.  The IO is represented by Mr Billy Poon and Mr Adrian Chung. The Respondent is represented by Mr Kelvin Wong and Mr Allen Tze.

CLAIM AND DEFENCE AND COUNTERCLAIM

IO’s case

5.  The IO’s case is that the Space is part of the common area of the building. Pursuant to a licence agreement dated 30 December 2020 (“2020 Licence Agreement”) made between the IO and Man Shek On (“Man”) as licencee, the IO granted a license to Man as licencee to use the Space for a term of 2 years from 1 January 2021 to 31 December 2022 at a monthly license fee of HK$15,600.00. The IO had granted a licence to Man, at least since 2011. Without the consent of the IO, Man granted a sub-license/tenancy of the Space to the Respondent. The Respondent was apparently the former sub-licensee, since 2007, but the Respondent became a trespasser of the Space since 1 January 2023. The 2020 Licence Agreement expired by effluxion of time on 31 December 2022 and the sub-license automatically expired/terminated on 31 December 2022.

6.  Due to the long lapse of time, the documents from 2007 cannot be located by the IO. Prior to the 2020 Licence Agreement, there was an earlier written licence agreement dated 8 June 2011 (“2011 Licence Agreement”) granted by the IO to Man for the use of the Space for a term of 18 months from 1 May 2011 to 31 October 2012, at a monthly licence fee of HK$13,000.00. After the expiration of that term the IO continued to licence the Space to Man without written agreements, until the 2020 Licence Agreement.

7.  Since 1 January 2023, without the consent of the IO, the Respondent wrongfully used, occupied and possessed the Space as a trespasser. Despite repeated demands and requests, the Respondent failed and/or refused to vacate the Space and deliver vacant possession to the IO, and thus the IO commenced the proceedings by a Notice of Application (Form 29) dated 15 September 2023 (“NOA”).

Relief sought by the IO

8.  The relief sought by the IO in the NOA is:

(a)  A declaration that the Space is the common part of the Building; (which is now unnecessary and no longer sought.)

(b)  Vacant possession of the Space;

(c)  Further and/or alternatively, a mandatory injunction that the Respondent do forthwith demolish and remove all the existing structures and objects erected and placed at the Space and vacate and reinstate the same to its original state and condition;

(d)  An injunction restraining the Respondent whether by himself, his servants or agents or employees or otherwise howsoever from converting the Space to his own use and from using or permitting to be used the Space in such a manner as to interfere with the use and enjoyment of the Space by the IO and other owners and occupiers of the Building;

(e)  Damages for trespass and/or breach of provisions of the Building Management Ordinance, Cap.344 (“BMO”):

(i)  Damages for trespass of the Space from 1 January 2023 to 31 August 2023 at the rate of HK$20,000.00 per month (being the market rent of the Space); and

(ii)  Further damages for trespass of the Space from 1 September 2023 to the date of delivery of vacant possession of the Space at the rate of HK$20,000.00 per month (being the market rent of the Space).

Respondent’s case

9.  The Respondent filed a Notice of Opposition (Form 7) on 13 November 2023 (“NOO”) and an Amended Notice of Opposition on 9 April 2025 (“ANOO”). In the original NOO, the Respondent alleged that the Space does not form part of the common parts of the Building, and has been vested in the Hong Kong Government as bona vacantia. The Respondent also claimed that it was the property of Man, and the Respondent holds the land as tenant of Man pursuant to a tenancy agreement dated 30 March 2021. In the ANOO, the Respondent redacted the tenancy agreement plea and instead relied on adverse possession and equitable defences of estoppel/laches/acquiescence/delay by way of defence and counterclaim. Tang signed both the NOO and the ANOO.

Relief sought by the Respondent

10.  The ANOO denies that the IO is entitled to any relief and the Respondent counterclaims seeking:

(1)  A declaration that:

(a)  The Respondent has been in continuous adverse possession of the Space for a period of no less than 12 years prior to the commencement of the action, and had thereby acquired and was entitled to possessory title, interest and/or rights in/or over the Space.

(b)  The IO’s title, interest and/or rights in and/or over any part(s) of the Space (if any) had been absolutely extinguished by virtue of section 17 of the Limitation Ordinance, Cap. 347 in favour of the Respondent.

(c)  The IO is time-barred from bringing any action against the Respondent to recover the Space or any part(s) thereof by virtue of section 7(2) of the Limitation Ordinance, Cap. 347.

(2)  An injunction to restrain the IO from:

(a)  Entering and/or trespassing on the Space or any part thereof; and/or

(b)  Interfering with the use and enjoyment of the Space by the Respondent.

(3)  Costs.

11.  The Respondent relies upon the equitable principles of acquiescence, proprietary estoppel and laches.

ISSUES

12.  The Agreed List of Issues is dated 8 October 2025.

The Space is a common part of the Building

13.  The IO had sought a declaration that the Space is a common part of the Building, which the Respondent denied. The first three Issues were, Issue 1 whether the loading and unloading space on the ground floor of the building (the Space) is a common part of the Building, Issue 2, whether the use right in respect of the Space was retained by the Developer, which was dissolved on 29 September 2000 and Issue 3, whether the IO has standing to commence the present action based on the findings on Issues 1 and 2. However, at the commencement of the trial the Respondent agreed that the Space is a common part of the Building and did not pursue the related defence. The Respondent’s position is that the Space reverted to the Building’s common part when the Developer sold all its undivided shares by 10 October 1998. As it is now the position of both parties that the Space forms the common part of the Building, the IO no longer seeks a Declaration that is so.

14.  The remaining agreed issues (renumbered) are:

(1)  Whether and when the Respondent has trespassed on the Space (Issue 1).

(2)  Whether the Respondent has continuous exclusive possession of the Space, with the intention to exclude the owner(s) for more than 12 years prior to the commencement of the present action (Issue 2).

(3)  Whether the IO is estopped from bringing the present action on the ground of laches and delay (Issue 3).

(4)  Whether the IO is entitled to the remedies and relief that it sought in the NOA including (i) an injunction that the Respondent shall demolish and remove all existing structures at the Space and to vacate the Space, and (ii) damages based on market rent (Issue 4).

(5)  Alternatively, whether the IO is time barred from bringing the present action against the Respondent pursuant to section 7(2) of the Limitation Ordinance Cap. 347; and thus the IOs title, interest and/or rights in and /or over any part(s) of the Space has absolutely been extinguished pursuant to section 17 of the Limitation Ordinance, Cap.347 (Issue 5).

LEGAL PRINCIPLES

15.  The IO’s right to bring proceedings on matters in respect of any of the common parts of the Building is prescribed by section 16 of the BMO:

“16 … When the owners of a building have been incorporated under section 8, the rights, powers, privileges and duties of the owners in relation to the common parts of the building shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, subject to the provisions of this Ordinance, be enforceable against, the corporation to the exclusion of the owners, and accordingly—

(a) ....

(b) any proceedings in the tribunal in respect of any of the common parts of the building may be brought and pursued by or against the corporation.”

Adverse possession

16.  The Limitation Ordinance, Cap. 347 sections 7, 8, 13 and 17 materially provide:

“7(2) No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person …

8(1) Where the person bringing an action to recover land, or some person through whom he claims, has been in possession thereof, and has while entitled thereto been dispossessed or discontinued his possession, the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance.

13(1) No right of action to recover land shall be deemed to accrue unless the land is in the possession of some person in whose favour the period of limitation can run (hereafter in this section referred to as adverse possession) and where under the foregoing provisions of this Ordinance any such right of action is deemed to accrue on a certain date and no person is in adverse possession on that date, the right of action shall not be deemed to accrue unless and until adverse possession is taken of the land.

17 Subject to the provisions of section 10, at the expiration of the period prescribed by [the Limitation] Ordinance for any person to bring an action to recover land …, the title of that person to the land shall be extinguished.”

17.  The legal principles for adverse possession are set out in Wong Tak Yue v Kung Kwok Wai David & Anor (No 2) (1997-1998) 1 HKCFAR 55, at §§68E-F and Powell v McFarlane (1979) 38 P&CR 452. A person claiming to be in adverse possession must be shown to have both factual possession and the requisite intention to possess, animus possidendi. The burden of proof is on the party claiming adverse possession. The Respondent must establish both factual possession and intention to possess in order to succeed in the adverse possession claim.

18.  For factual possession in Powell at §§470-471 Slade J held:

“Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed… It is impossible to generalise with any precision as to what acts will or will not suffice to evidence factual possession… Everything must depend on the particular circumstances, but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.”

19.  In Wong Tak Yue at §§68I-J Li CJ cited Powell at §§471-472 holding the intention to possess required for adverse possession:

“… involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title, so far as is reasonably practicable and so far as the process of the law will allow”

20.  In Wong Tak Yue at §§69B-C Li CJ also held that:

“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 scrutinise 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.”

21.  Ching PJ at 71E added “that there can be no better evidence of the intention of an occupier of land than his express declaration against his own interest”. Litton PJ at 70E reiterated that the burden is upon the trespasser to establish his intention to exclude the whole world: including the owner of the land. The appellant unequivocally declared that at all times he was ready and willing and able to pay rent to the owners, and did not only because no one came for the landlords to collect rent. He had no intention to exclude the owners and could not establish adverse possession.

22.  In Powell at §472 Slade J held if a person has not made it perfectly plain to the world at large, by his actions or words, that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisite animus possidendi and as consequently, not having dispossessed the owner.

23.  In Lau Kwai Ping Joyce, the Executrix of the Estate of Tsang Fung Ying (deceased) v Fulland International Limited [2020] HKCFI 1501 M Ng J at §19 held that where the squatter occupied the land and made full use of it in the way in which an owner would, there is no need for him to adduce additional evidence to establish the intention to possess after he has established occupation, use of the land in the manner as an owner would and the exclusion of the owner. However, this does not mean that there is any presumption of animus possidendi from the exclusive physical possession. The burden of proof remains on the squatter to establish the same. But where the acts in relation to the land of a person claiming title by adverse possession are equivocal and are open to more than one interpretation, those acts will not, of themselves, be sufficient to establish the intention to possess. The evidence adduced must be of such a quality or nature that, if accepted on the balance of probabilities, it is sufficient to establish both factual possession and intention to possess.

24.  The IO relies upon The Incorporated Owners of Kam Luk Building v 吳靜燕, [2022] HKCA 1896 at §34, where Au JA held:

“It is trite that if a person takes possession by virtue of a licence granted by another, it is the licensor who is treated as being in possession. In Sze To Chun Keung v Kung Kwok Wai David & Anor [1997] 1 WLR 1232 (PC), a squatter in possession was, albeit mistakenly, granted a Crown permit to occupy the land, which had always been in private ownership held under a Crown lease. The Privy Council held that the effect of the permit was to make the squatter’s possession that of the Crown, and that for the purposes of limitation, the Crown had been possessing the land through its licensee, the squatter. This principle equally applies even when the licensor (ie, the Crown in that case) was not the legal and paper owner as the squatter was estopped from denying that the licensor had the right to allow him to occupy: Sze To Chun Keung per Lord Hoffmann at 1234H-1235H.”

25.  The Respondent submits that where a squatter occupies the land and makes full use of it in the way in which any owner would, he need not adduce additional evidence to establish the intention to possess after he has established occupation and use in such a way that the owner is excluded: J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419, 447 at §§75-76. The answer to a question such as “if the Applicant agrees to rent the Space at a reasonable rent, would you agree?” carries little or no weight. The relevance of an answer of this kind was rejected in J A Pye at 438, §46 by Lord Browne-Wilkinson explaining Lord Diplock in Ocean Estates Ltd v Pinder [1969] 2 AC 19, 24, observing that such an admission is one which “any candid squatter” would be almost bound to make, and does not constitute evidence of an absence of intention to possess.

26.  In reply Mr Poon refers to Tsui Kwong On v Koo Ling Sung DCCJ 4550/2009, which applied Wong Tak Yue and expressly rejected the approach in J A Pye. The Court of Appeal in Yu Kit Chiu v Chan Shek Woo CACV 137 of 2010 (unrep. 18 February 2011) revisited the principles for adverse possession as affirmed by the Court of Final Appeal in Wong Tak Yue. Cheung JA noted the difference in approach between Wong Tak Yue and JA Pye when dealing with a statement of the squatter that he was willing to pay rent to the owners if they had requested payment and that he was ready and willing to do so: Yu Kit Chiu at §§23-24. The Court of Final Appeal held that this was inconsistent with the intention to possess. Whereas the House of Lords in JA Pye held that there is no inconsistency between the squatter being willing to pay the paper owner if asked and his being in the meantime in possession. The difference was not germane to the appeal in Yu Kit Chiu. Deputy District Judge Rebecca Lee in Tsui Kwong On at §§75-77 held:

“75. Unlike the Court of Appeal in Yu Kit Chiu, this court has to decide which approach to follow.

76. Mr Lau urged me to follow the House of Lords in JA Pye which is highly persuasive authority.

77. However, I am bound by the Court of Final Appeal’s decision in Wong Tak Yue”

27.  Wong Tak Yue is the binding authority, which I shall apply.

EVIDENCE

Witnesses

28.  Two witnesses of fact testified at the trial, namely:

(a)  Wu Chau Leung (“Wu”), Chairman of the IO, for the IO. Wu adduced 2 witness statements, the first is dated 18 July 2025 (“1^st Wu) and the second is dated 28 August 2025 (“2^nd Wu”). Each is signed and accompanied by his duly signed Statement of Truth; and

(b)  Tang Kee Tong, for the Respondent. Tang adduced 2 witness statements, his first is dated 18 July 2025 (“1^st Tang) and his second is dated 14 August 2025 (“2^nd Tang”). Each is signed and accompanied by his duly signed Statement of Truth.

29.  Mr Wong says that Man was the channel of communication between the IO and the Respondent. Man was not a witness but the Respondent had tried to locate him, therefore the Tribunal has to determine Man’s role based on evidence of the two witnesses at trial. Given that their credibility is a key factor to the Tribunal’s fact-finding it is important to consider the detail of each witnesses’ account.

30.  I have considered the evidence of the witnesses bearing in mind the principles to assist in assessing witness evidence: Lee Fu Wing & Anor v Yan Po Ting Paul & Anor [2009] 5 HKLRD 513, §5. The Tribunal should consider the following matters:

(1)  whether the party’s case is inherently plausible or implausible;

(2)  whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3)  where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests, this is relevant to the assessment of his overall credibility; and

(4)  the demeanour of the witnesses.

31.  Of particular concern is Tang’s evidence. Wu’s evidence is less problematical.

WU’S EVIDENCE

Wu’s witness statements

32.  Wu had been the treasurer of the Management Committee (“MC”) of the IO from 2010 to 2024, when he became the Chairman. His evidence is as follows.

33.  The Space is a common part of the Building. When the Space ceased to be used as a temporary parking space for vehicles the IO licensed out the Space to generate income for the IO. Wu sets out the particulars of the licence granted by the IO to Man and documentary evidence in support. Due to the long lapse of time the documents from 2007, and for other periods over the years, cannot be located.

34.  Wu believes that there was no laches, acquiescence, delay and waiver of DMC rights by the IO. The Respondent has all along been in occupation of the Space as a sub-licensee and/or with the authority or consent of Man who in turn has been a licensee of the IO pursuant to the oral licences, the 2011 Licence Agreement and the 2020 Licence Agreement, on payment of a licence fee to the IO.

35.  1^st Wu and 2^nd Wu state that Man had represented to the IO that he was running Chili King with another person. It was not until about October 2022 when the 2020 Licence Agreement was about to expire did Man say to the IO that he had ceased to be the partner of Chili King for a long time.

36.  Wu also gave evidence on (a) the IO paying for fire services facilities and installation works (“sprinkler system”) at the Space, (b) the Respondent’s usage of the common water supply and payment to the IO, and (c) payment of property tax to the Inland Revenue Department.

37.  The Respondent knew that the IO had decided to recover possession of the Space. In a letter dated 13 March 2023 to the IO the Respondent stated, inter alia, that their company and Man had signed a Tenancy Agreement which shall expire at the end of March 2031.

38.  In reply to Tang’s witness statements, 2^nd Wu addresses allegations about Man. Wu states, inter alia, that Man acted like an ordinary person and signed various licence agreements with the IO and paid monthly licence fees, at the rate of $8,000 per month in 2011, $13,000 per month from 2011 and $15,600 per month since 2021, in accordance with the various licence agreements without default.

39.  Man attended a telephone conference with the MC of the IO during a meeting on 24 August 2015 to make arrangement for the installation of the sprinkler system in the Space and subsequently coordinated with the IO and the Respondent for the installation between 2015 and 2019. As Treasurer of the MC Wu had met and seen Man during several MC meetings. Man was just an ordinary old man aged 70s. Man had never claimed to Wu or other MC members to be a triad member.

40.  In about October 2022, the IO decided not to renew the 2020 licence with Man upon expiry on 31 December 2022. Notice by letter dated 7 November 2022 was sent to Man. The IO later learned that Man entered a tenancy agreement with the Respondent on 30 March 2021 for a term of 10 years from 1 April 2021 to 31 March 2031, that was stamped.

Cross-examination of Wu

41.  Wu was asked whether a sauna in the Building basement was a vice establishment and he said he was not clear about that. Wu agreed that the IO decided not to renew the licence with Man because Man was no longer an owner and he sublet without consent.

42.  Wu thought Man was the boss of Chili King or an owner, that it was a partnership and Man one of the partners. It was mentioned by Man during an IO meeting that he was running the Chili King business with a friend of his. At the time Man made representation to the IO Wu’s father was treasurer and he mentioned it to Wu. Wu agreed that he did not know if what his father said was correct. At the time Man signed the 2011 Licence Agreement the IO asked him and he said it was operated by him and a friend of his. Man told them the business was a partnership. They were not clear about who was in the partnership because the rent was paid by Man and on all matters they contacted Man.

43.  In 2011 Man requested them to lend their water supply to him because it was very expensive for them to install their own water meter, that the water bill could be sent to Chili King and he would be responsible for payment of the water bill. All matters were communicated with Man, not other persons. Wu disagreed that Chili King was occupying the Space from 2007 or 2011 without consent of the IO. There was no arrears of rent all along. There was an agreement signed with Man, so of course they had to let him carry out the business. It was a partnership.

Documentary evidence

44.  The IO had granted a licence to Man, at least as early as 2011. While not all documents are available due to long lapse of time, the IO relies upon the following:

(a)  A minute dated 25 February 2011 records a licence was granted by the IO to Man for use of the Space for HK$15,000 per month (with a separate fee for use of a conference room). It stated that the fee for the ‘Loading/Unloading Zone’, namely the Space and conference room had not been adjusted “for many years”. The IO requested Alico Management Ltd to notify the user Man Kee that the current monthly rent of HK$8,000 would become the new monthly fee of HK$15,000 and that the effective date of the new fee would be decided at the next meeting.

(b)  A Licence Agreement dated 8 June 2011 and subsequent oral licence, granted by the IO to Man for use of the Space for HK$13,000 per month from 1 May 2011 to 31 October 2012.

(c)  After expiration of the 2011 Licence Agreement on 31 October 2012, the IO continued to grant the licence to Man without signing any further written agreement.

(d)  By the written 2020 Licence Agreement the IO granted the licence to Man for use of the Space for HK$15,600 per month from 1 January 2021 to 31 December 2022.

45.  Other documents evidencing that the IO had granted a license for use of the Space and received payment include for some cheques from Man for payment of the license fee for use of the space and receipts issued to Man. There are also audit reports of the IO for the years 2020, 2021 and 2022 showing the IO having received licence fees from 2019 to 2022. Most of the licence fees shown in the reports were received from Man.

Wu credibility

46.  Mr Poon submits that Wu’s oral evidence remains unshaken, consistent throughout cross-examination and supported by contemporaneous documentary evidence.

47.  Whereas, the Respondent alleges that Wu’s evidence was, inter alia, inconsistent, evasive and unreliable. For example, despite Wu’s disagreement under cross-examination, the IO was fully aware that Man and Chili King were in fact 2 distinct entities:

(a)  Wu admitted that the licence agreements were entered into with Man, not Chili King, as evidenced by the 2 written agreements and the minutes of the MC relating to the increase in the licence fee in February 2011.

(b)  The IO was aware they were different entities:

(i)  The cheques for the licence fee were drawn by Man and the receipts for the licence fees were issued to Man Kee, instead of Chili King;

(ii)  The cheques for the water charges were drawn by Chili King and the receipts for the water charges were issued to Chili King, not Man or Man Kee.

(c)  When the IO decided not to renew the licence agreement with Man in 2022, it sent a letter to Man and then a separate copy was sent to the Respondent;

(d)  It is inherently improbable that Man had represented to Wu or the MC of the IO to be an owner or otherwise operating Chili King. The claim that Man was an owner or partner of Chili King is merely a bare assertion and not supported by any evidence. Man was merely a channel of communications between the IO and the Respondent;

(e)  Even if Man really claimed to be an owner or a partner, the IO never took steps to ascertain whether he was actually an owner or a partner. Wu admitted that the IO never asked for information about the ownership of Chili King and identity of the other partners. The IO was turning a blind eye as to the true owner of Chilli King since the IO were able to receive regular rental payments from Man anyway; and

(f)  In any event, the Respondent submits that the Tribunal should not accept Wu’s testimony in this regard as his evidence is inconsistent, evasive and unreliable when compared with the contemporaneous documents, as his version of events shifted materially. He did not give a truthful account of why the IO considered Man and Chili King as one business unit.

48.  The IO would know that Man, the individual, is not the same as the business Chili King, but it does not follow that Man was not an owner, operator or partner of the business. The distinction does not undermine Wu’s evidence or the IOs case. The above matters do not cause me to doubt Wu’s veracity. It is not inherently improbable that Man would have represented to the IO, MC or Wu that he was an owner, operator or partner of the Chili King business. To the contrary, it is highly likely Man would have made such representation so that the IO was willing to licence the Space to him and deal with him in respect of Chili King’s use of the Space. The relationship operated smoothly, the licence fee was paid and Man duly liaised with the MC and IO in respect of the Space, so there was no reason for the IO to investigate the particulars of ownership.

49.  The Respondent continues that Wu was not a credible or reliable witness, being evasive and inconsistent regarding Man’s involvement in Chili King and his relationship with the IO. In particular:

(a)  Wu admits living at the Building since 1985 but said he was not clear about the sauna operating at the basement in 2007 as he was young, only 10ish to 20ish years old at that time (implying that Wu was 30ish to 40ish at the time of trial);

(b)  When it was pointed out that he would not have known to whom Man had told matters regarding the business owner of Chili King when it began occupying the Space, Wu initially said he was told by his father an ex-Treasurer. He later changed his account saying Man told the IO at a MC meeting in relation to the entering the 2011 Licence Agreement. However, no minutes of the MC meeting were produced. Wu was making up different versions of answers; and

(c)  Man was not a member of the MC but merely a “merchant” and/or “licensee”. Wu’s testimony that Man attended meetings of the MC from time to time is improbable and not believable in the absence of other undisclosed or special relationship between Man and the IO.

50.  I find Wu’s account of Man’s relationship with the IO and Chili King credible. I cannot accept the Respondent’s assessment of Wu’s evidence. The matters relied upon do not undermine his credibility. Being unclear about the sauna business in the Building in 2007 is of no consequence. Wu’s account of how he knew of and the absence of minutes to support Man’s claim regarding the business owner of Chili King, does not suggest he was making it up. Man must have made some such representation for the IO and MC to be willing to grant the licence and deal with him in relation to Chili King’s occupation of the Space. Given that Man was dealing with the MC on matters of substance, including the installation of a sprinkler system at the Space, it is believable that the MC may have required he attend by telephone or before them in person from time to time, to deal with matters directly. Overall I found Wu to be a straight forward witness. His account was entirely plausible and consistent with the documentary evidence, as more particularly addressed herein. I accept Wu’s evidence.

TANG’S EVIDENCE

51.  The Respondent’s Closing Submission sets out the Respondent’s evidence, relying heavily on the witness statements of Tang. I have to say from the outset Tang was not actually able to give evidence in anywhere near the detail set out in his witness statements, much less in the same terms. Therefore, I must consider his evidence in some detail.

Tang’s witness statements

52.  Tang signed two witness statements, each confirming that the content was true, each accompanied by his duly signed Statement of Truth and he reconfirmed the truth of each in chief.

53.  His account set out in 1^st Tang includes the following. The Respondent was the business operator of the food business trading as “Chili King”. In 2007 Tang “learned from an acquaintance” named Man Shek On, namely Man that there was an area in the Building that was vacant. Therefore, he set up Chili King in the Space “together with his business partner Ho Kwong Chung” (“Ho”). Ho and Tang shared the responsibility of operating the business. Tang was the chef and the mastermind in marketing the business. Ho was responsible for applying for electricity supply from China Light and Power. On 1 April 2011 the business of Chili King was registered. Tang managed the business, sometimes with the help of casual staff and Ho. Only Tang, Ho and authorised staff have a key to access the shop. Over the years Tang carried out refurbishment works to the shop at the Space.  

54.  2^nd Tang states that around 2007 Tang approached his father for advice and investment on starting a food business, who introduced him to his friend Ho. They agreed to open a shop selling food, believing it would be profitable. They looked for a suitable location in Jordan, where they thought “the rent would be reasonable”. Tang “met [Man] through Ho in early 2007 at a tea gathering”. Ho described Man as simply a friend of a friend and privately mentioned he had triad connections. During their meeting Man showed them several sites in Jordan, although some were “out of their budget”. Eventually they were introduced to the Space that was vacant. They understood that the Space was not owned by Man or the IO. He did not find the arrangement illogical given Man’s background. After Tang and Ho decided to take the Space. Man never asked for an introduction fee. Instead when he, or those with him, visited the shop they would “let him eat for free”, which was a token of gratitude for his help “and for acting as our agent in communicating with the IO and the Building’s management office…”.

55.  Simply on that account, and if all that Man did was “introduce”, show or tell the Respondent about the Space, it may be believable that in return he was content to eat for free when he visited the shop. However, the Respondent’s case is that Man then continued for years to act as their agent in communicating with the Building’s management for Chili King. Further, the IO’s case is that Man also paid a licence fee for use of the Space occupied by Chili King every month for years, but according to the Respondent’s case without being reimbursed by way of licence fee or rent for the Respondent’s use of the Space to run the Chili King business. 1^st Tang states that from August 2007 to 31 March 2021, neither Ho nor Tang have paid Man or the IO “any rent or similar payments for use of the Space”. This must be contrasted with the evidence of Tang in cross-examination.

56.  2^nd Tang also claims that the role of Man was that of their agent regarding all matters related to the Space. Ho and Tang were largely exempt from dealing directly with the Building’s management company or the IO as Man would handle such matters on their behalf, he took on the role and kept them informed consulting them periodically. This seemed logical to Tang given Man introduced them to the Space and was reputed to have triad connections in the area. Also, Ho and Tang appreciated the opportunity to focus on growing the business.

57.  2^nd Tang states that at no time has Man been a business partner of Chili King. If he had any involvement, it was solely as an agent communicating with the management company and the IO on their behalf.

58.  2^nd Tang claims that although Ho remains a partner in the Chili King business, his involvement has diminished since around 2020 due to advancing age, health concerns and family advice: “He has, in effect, become a silent partner and is no longer actively engaged in daily operations. I am aware that he spends much of his time outside Hong Kong, residing with his family in Mainland China and abroad”.

59.  Tang’s witness statements and oral evidence give differing versions of entering the Tenancy Agreement with Man. 1^st Tang stated that in or about early 2021 “Mr Man reached out to me and insisted that I should sign a tenancy agreement regarding the space with him and pay rent to him accordingly. He reached out to me a few times personally and also via those who claimed to be acting under the authority and/or instructions of Mr Man”. Although Tang and Man “have been acquainted for some years”, he had always known Man “has a complex background and had some connections with the triad”. Tang did not want to risk his safety and possession of the Space and Chili King business he therefore “entered into a tenancy agreement with Man on 30 March 2021”. That explains why he pleaded in the NOO and ANOO that he entered the Space with the authority of Man. When he entered the Space in 2007 he was under the belief that the land was not owned by anyone. Tang also states that “When I entered into the 2021 Tenancy Agreement, I merely thought that Man could be the true owner of the Space given that he insisted on signing the 2021 Tenancy Agreement, which was later found to be factually inaccurate”.

60.  2^nd Tang describes events as follows. Man approached Tang directly, insisting he sign a tenancy agreement relating to the Space “and begin remitting rent to him”. By this time Ho no longer took an active role in the business, leaving Tang to handle these dealings on his own. Tang was apprehensive about dealing with Man directly, without Ho. Wishing to avoid conflict he reluctantly agreed to Man’s requests, even though it was contrary to his own inclination. 2^nd Tang states, inter alia, “I recall, in particular, that Man made veiled comments suggesting I must sign the 2021 Tenancy Agreement and treat the payments as a ‘protection fee’”. Others also made intimidating statements to Tang. Tang suspects the Tenancy Agreement was to legitimise Man’s receipt of protection fee under the guise of rent. Under the threat of harm he signed the Tenancy Agreement with Man and began paying the monthly payments of $19,500 as “protection fee”.

61.  1^st Tang and 2^nd Tang state that in any event his intention to possess the space for a period of at least 12 years has been established by his continuous and exclusive possession of the same by the latest August 2019, “despite the Tenancy Agreement I entered with Mr Man”. He states that Ho and he spent substantial efforts to establish Chili King as owner of the Space, and incurred expenses of refurbishment works.  

62.  In around December 2022 Tang and his partner Ho commissioned a surveyor’s report to determine ownership of the Space. The surveyor reported that the Space was not a common part. However, they were willing to pay $14,500 to the IO as management fee.

63.  A fair reading of 1^st and 2^nd Tang would be that Tang entered into business with Ho, who was Tang’s only partner. Ho ceased involvement in 2020 and spent time out of Hong Kong. Further, Tang’s statements make it clear that Tang first met Man in 2007 and Tang had to deal with Man personally when he entered into the Tenancy Agreement and made payments.

64.  1^st Tang also set out details of the water supply from the IO to Chili King and installation of a sprinkler system by the IO at the space.

Cross-examination of Tang

65.  Set out below are some of the questions (“Q”) of counsel and answers (“A”) given by Tang, that were not consistent with his witness statements or the Respondent’s pleaded case.

66.  Tang was asked about the water supply. Q: Starting from 2007 the IO was supplying water for use of Chili King? A: This I am not clear about it. The arrangement was made by my partner Mr Ho. A friend of my father. Q: You know Ho Kwang Chong? A; Probably. Q: But this is in your witness statement? A: Yes. Tang knew Chili King made payment to the management office for the water bill. Chili King was still running the business to date.

67.  Tang said he generally understood the IO’s claim. After counsel explained the IO’s case Tang said that in the past matters were handled by his partner and so he did not really know what was going on.

68.  Tang’s witness statements only refer to Ho as his partner. Q: Who are your partners? A: Mainly Mr Ho, but in between there were other partners, but they had a smaller share. I do not really know. Q: You do not know every partner to the business of Chili King? A: I was acquainted with them but I do not know their full name and shares because they were partners with my late father. Tang said that the Business Registration application for Chili King was applied for under his name.

69.  Tang was never responsible for the accounts or financial aspects of the business. Tang did not explain who has been dealing with the accounts and out goings since Ho stepped back in 2020, if not him. Q: You were not the one who deal with the IO? A: Correct. Q: What is your responsibility in Chili King business or partnership? A: Probably the aspect of marketing. Also the way the food prepared. Q: You were never responsible for accounts, expenses, outgoings of the business? A: Basically that is the case.

70.  Tang gave evidence that contradicted his witness statements in respect of knowing and personally dealing with Man. Q: When did you first know Mr Man Shek Ho? A: I do not know him personally, but I was told by my partner, he mentioned him. Q: Who is your partner? A: Mainly Mr Ho. Q: Was you late father one of the ones dealing with Mr Man? A: I believe he was not the one. Q: You do not know Mr Man and you personally did not have dealings with him? A: Correct.

71.  Tang did not dispute much of the IO’s case, nor the documents in support, he was simply unclear or did not know about matters. He was not clear about business dealings between Man and the IO but perhaps Ho had some occasion touched on this issue.

72.  Tang personally did not know of the 2011 Licencing Agreement between the IO and Man at monthly rent of $13,000, because his partners were dealing with Man or the IO, but he was not clear whether they knew about it.

73.  Tang did not have first-hand knowledge to be able to answer questions about regular payments by Chili King for use of the Space. Q: Did you make regular payment at times? A: I really not clear about it.

74.  Documents evidencing payments by Man for use of the Space were put to Tang. They included cheques drawn by Man with the IO as payee, the 2011 Licence Agreement and a May 2019 receipt of Alico Management Ltd, for $16,500, $13,000 was for the Space and $3,500 for the conference room. Q: Do you know that Man was paying a licence fee to the IO in relation to this area? A: I only knew it at the commencement of these proceedings. Q: The regular payment to reimburse Mr Man licence fee? A: Are you asking me if I know? I knew only after commencement of proceedings.

75.  Counsel put the IO’s case. Q: Mr Man was all along paying licence fee to the IO until expiry of the 2020 Licence on 31 December 2022? A: I would say I not in a position to answer. Q: Do you know Mr Man paying licence fee to the IO until 2022? A: I not clear about it.

76.  Tang confirmed that Ho had made payment and, since the payment was made, the Space could be used. Q: … Mr Man was paying all the years a licence fee until 2022. It would be unreasonable, extraordinary if Man was not reimbursed for those licence fees? A: So if assumption money not given, since I do not know the relationship in between partners of my shop. Mr Ho had made payment, so whenever payment was made, it was regarded as it really made. Since the payment was made the place could be used. So I not bother to make clear the relationship in between.

77.  There were stark differences between, Tang’s accounts of the Tenancy Agreement in his witness statements on the one hand, where he stated that Man asked him personally to enter the Tenancy Agreement and pay rent, which he did, and on the other, Tang’s oral evidence, that included the following. Q: In the Notice of Opposition before amendment, you referred to this Tenancy Agreement? A: Probably. The Original NOO §7 you said that the Respondent holds the land as tenant of Man Shek On under a Tenancy Agreement dated 30 March 2021. The Amended Notice of Opposition §7(b) Tenancy Agreement 30 March 2021, term 10 years, rent $19,500? A: Yes. Q: You signed and confirmed the NOO and also the ANOO Statements of Truth? A: Yes. … Q: The Landlord is Man Shek On and Tenant Chile King? Who signed this document? A: Probably Mr Ho, but I do not know if indeed. Q: When did you first know of this document? A: I do not know actual date, but I know of the existence of this document when these proceedings initiated.

78.  Tang was questioned about these proceedings. Q: Who for Chili King is responsible for preparing for these proceedings? A: At the beginning it was Mr Ho. Q: The letter by Chili King to IO on 13 March 2023? A: Yes. Q: When did you know of this letter? A: At initial stage I had not participated in these matters. Q: Paragraph of letter “Our company signed a tenancy agreement with Mr Man Shek On that expires March 2031”? A: Yes. Q: It signed by Mr Ho and sent to the IO? A: Yes. Q: You were not involved in preparation of these proceedings at the stage? A: True. Q: No record you approve the letter before signed and sent? A: Why should I be the one to approve. No I did not.

79.  Tang did not deny that Chili King was paying rent in terms of the Tenancy Agreement, while 2^nd Tang stated it was being paid. Q: Referring to the Tenancy Agreement, do you know if Chili King was paying rent of $19,500 according to the Tenancy Agreement to Mr Man? A: I not clear about it. … Q: Do you know Mr Man paying the IO under the last written Licence Agreement that expired in 2022? A: I not clear.

80.  Tang admitted that he was aware that money had to be paid for use of the Space. Q: Do you know Chili King has to pay someone, Mr Man or IO some licence fee for use of space? A: Mr Ho did mention that money had to be paid to … or Mr Man. I not know which one we had to pay to.

81.  Tang was questioned about installation of the sprinkler system in the Space between 2015-2019? His understanding was based on the information provided during the proceedings. Q: You did not know whole installation fee, including sprinkler, paid by the IO and Chili King never contributed to any part of cost? A: Not clear.

82.  The IO’s case was put and Tang, including that Man had been a licensee of loading/unloading area Chili King now situated on at a monthly fee, but Tang did not know. He was not clear that as early as 2007 or the 2011 Licence Agreement Man paid a licence fee to IO to use the Space until 2021. He did not know that pursuant to the 2020 Licence Agreement Man had paid the monthly fee. Q: When Mr Man and Chili King entered into the Tenancy Agreement Chili King is liable to pay Mr Man the monthly rent? A: Agree. Q: Chili King has actually paid the rent under the Tenancy Agreement? A: This I am not clear about it.

83.  Tang’s evidence about signing the Tenancy Agreement under coercion was challenged. Q: You did not sign the Tenancy Agreement? A: Correct. Q: Agree that Chili King signed the Tenancy Agreement with Mr Man not out of any threats or coercion of Mr Man. Chili King sign the Tenancy Agreement not because Mr Man coerced Chili King to sign Agreement? A: I not clear about that. Q: This Tenancy Agreement entered by free will of parties not because triad society background of Mr Man: A: Disagree.

84.  Tang was asked whether he was willing to pay for use of the Space if the IO agrees a Licence Agreement with Chili King at a reasonable price, from Chili King commenced business in 2008, but Tang could not answer about the past and other partners were involved. Q: If IO agree reasonable rent to Chili King would you agree to such? A: I have no way to provide answer. Although Chili King not wholly owned by me, other partners involved in the business.

85.  Tang was asked about the Chili King partners, but gave contradictory evidence Q: How many partners? A: At least 4. Q: Is Mr Man one of them? A: It’s impossible, because I do not know him.

Re-examination of Tang

86.  In re-examination Mr Wong endeavoured to have Tang attribute the money paid for use of the Space to being “protection money”. While eventually Tang said the words, he then qualified it by claiming it was just what Ho had mentioned, so his answer was equivocal hearsay and thereafter Tang repeated that he was not sure about this issue. Counsel recited Tang’s evidence about the 2011 Licence Agreement between Mr Man and IO in 2011, of which he was “not clear”. He had said he did not know of the existence of the agreement because his company “has to make regular payment”. Asked what regular payment, he answered he was “not clear”. Mr Wong then asked the question. Q: Do you know the nature of the regular payments? A: Well the partners did touch on this issue vaguely, “but I am not sure about the issue”. Q: What do you mean by the issue? A: Touched on that such payment was made to somebody “but not explicitly said what kind of money it was”.

87.  Counsel persevered. Q: … Mr Ho has mentioned that money has to be paid to Mr Man or Man Kee but you do not know which has to pay to? What is the nature of such money? A: If it was told by Mr Ho then the money be somewhat form of “protection money, but I not clear about it”. Q: What protection money? A: I have no way to provide you with explanation “because Mr Ho did not directly tell me such thing, just he did mention such thing to me at the time”.

Tang credibility

88.  Mr Wong invites the Tribunal to find Tang a credible witness, to accept his evidence in full and to prefer his evidence to that of Wu, where their evidence conflicts. I am unable to do so. Tang was not a credible witness. In my view he gave inconsistent evidence in an effort to support an account that was simply implausible.

89.  I have no hesitation in finding that Tang was an unreliable witness. The Tribunal cannot rely on what is set out in his witness statements because he showed himself to be completely unable to address those matters from the witness box. His witness statements presented a largely consistent account in writing, but with more detail in 2^nd Tang. It was apparent that Tang had no first-hand knowledge or was unable to give evidence on material matters that he had stated as fact in his witness statements. He expressly contradicted his written statements. He repeatedly answered “I am not clear” and readily admitted that he only became aware of numerous matters once these proceedings commenced, including matters he had stated unequivocally in his statements.   

90.  Whereas Mr Wong asserts that Tang gave direct, cogent and credible replies. For example, he was adamant that Man was never a partner of Chili King. However, Tang did not really know how many partners he had and did not even know the full names of his partners. He also said there were others, so apparently, they changed over the years. His evidence was said to be clear and consistent. It was not. He frequently contradicted himself. 1^st Tang and 2^nd Tang gave details of meeting and knowing Man since 2007, and dealing with him directly, but in the witness box Tang said he did not know Man and personally had no dealings with him.

91.  Mr Wong says that in cases where the Respondent was not involved, Tang tells the truth, saying he was not clear, rather than making up a response, which is a mark of honesty. Tang said he was not clear about the dealings between Man and the IO and that he was not the person responsible for the accounts and expenses of Chili King. The difficulty for the Respondent is that there is then no evidence from Tang to substantiate essential parts of the defence to the claim and to be considered against the evidence adduced by the IO, that a witness for the Respondent ought to have addressed. And Ho did not give evidence.

92.  Mr Wong relies on Tang saying that he was told by Ho that he made regular payments to Man, as some kind of “protection fees”, which aligns with his understanding that the Tenancy Agreement insisted upon by Man was intended for that very purpose. Tang’s evidence to that effect was hearsay, qualified and cannot be relied on.

Adverse inferences to be drawn against the Respondent

93.  In cross-examination Tang said that he was not responsible for the accounting and financial matters of the business. All matters in relation to accounts and expenses were not handled by him, but either by Man or Ho, of which Tang himself has no personal knowledge. Ho used to deal with matters related to the occupation of the Space by Chili King, and dealt with Man on these matters. Tang also said that it was Ho who was responsible for preparing these legal proceedings. Mr Poon acknowledges that in re-examination Tang eventually said that the payment made to Man was protection money, but this was hearsay, from Ho. It thus begs the question why Ho did not give evidence to support the Respondent’s allegations?

94.  In Shun Hing Electronic Trading Co Ltd v Sunrise Air-Conditioning Co Ltd & others [2021] HKCFI 1190 at §27 DHCJ To held:

“it is a well-established principle that in the absence of explanation, a party’s failure to call a witness who is expected to have evidence in support of his case or to contradict the opponent’s case, would entitle adverse inference to be drawn against that party. The general and usual inference is that the party knows that the evidence that witness will give will be adverse to his case or supportive of the opponent’s case. The effect of silence in the face of the opponent’s evidence may convert that evidence into proof in relation to matters which are, or likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence.”

95.  Mr Poon invites the Tribunal to draw an inference that the Respondent was unwilling to call the other partners of Chili King, or at least Ho as a witness, because the Respondent knows that the evidence that they will give will be adverse to the Respondent’s case or supportive of the IO’s case. The silence, of Ho in particular, should convert the IO’s evidence into proof in relation to matters which are, or likely to be, within the knowledge of these silent parties and about which they could be expected to give evidence.

96.  Ho was the person who knew about the accounts and expenses of Chili King and, in particular, the payments made to Man. No explanation was given as to why Ho was not called as a witness. While Tang stated that since 2020 Ho had become a silent partner and spent time out of Hong Kong, he also said that Ho was the one who likely signed the Tenancy Agreement in 2021, Ho signed the Chili King letter dated 13 March 2023 to the IO and was dealing with these proceedings at the beginning, which commenced with filing of the NOA on 15 September 2023. He was actively engaged and available to assist the Respondent with the proceedings. Clearly Ho is the person who could give evidence on the most material facts in this case for the Respondent. The Respondent did not call him.  I readily infer that was because had he given evidence his evidence would be adverse to the Respondent’s case and supportive of the IO’s case.

97.  For the reasons set out herein I cannot rely on Tang’s evidence. Where it differs from that of Wu, I prefer and accept the evidence of Wu.

ADVERSE POSSESSION

Has the Respondent obtained title through adverse possession?

98.  The Respondent relies upon the following as undisputed facts, which I find proved:

(1)  The Respondent has operated a Sichuan food snack shop at the Space under the name, Chili King since August 2007.

(2)  Prior to August 2007, Man had business dealings with the IO, as a merchant in the Building in relation to a sauna business.

(3)  Ho arranged an independent electricity supply for the Respondent in the Space, maintained since August 2007.  

(4)  The Respondent obtained water supply through the water metre of the Building and has paid the IO for the related water usage charges since 2011.

(5)  When the Fire Department required the installation of the sprinkler system at the Building, including at the ceiling over the Space, the IO carried out the works between 2012 and 2019. They were installed in the Space at the IO’s cost, with the Respondent’s cooperation.

99.  Mr Wong submits that the IO did not dispute the exclusive possession of the Space by the Respondent since August 2007. The Space has always been enclosed as the shop, with its own entrance and gate, locked when unattended. No one is allowed to enter the shop premises without permission of the Respondent, the staff or Ho. I find that the Respondent was in occupation with factual possession from August 2007 and continuously until commencement of these proceedings, so for more than 12 years.

100.  The issue is then whether the occupation of the Space by the Respondent since 2007 was animus possidendi, in other words with an intention to possess the land to the exclusion of all other persons, including the paper owner.

Intention of the Respondent

101.  The IO submits that undisputed documentary evidence shows that the Respondent had no intention to adversely possess the Space. I accept the documentary evidence and find the following proved.

102.  Pursuant to the 2011 Licence Agreement, the IO granted to Man a licence of the Space for 18 months from 1 May 2011 to 31 October 2012 at a monthly licence fee of HK$13,000.00. Before the 2011 Licence Agreement Man had been paying a licence fee of $8,000 for the Space for a long time, according to Minutes of the MC. After the expiration of the 2011 Licence Agreement term on 31 October 2012, the IO and Man did not sign a written agreement. The IO continued to grant a licence for the Space and the conference room to Man until December 2020. This is evidenced by Man’s payment of the licence fees for the Space for the months of May, June, September, October, November and December of 2018 and January 2019 of HK$13,000, shown on receipts issued by the IO’s management company to Man. Further evidence includes cheques drawn by Man in favour of the IO for payment of the licence fees in July, September and November 2018 and January, February and June 2019 of HK$16,500 per month, of which HKS13,000 was the monthly licence fee for the Space. By the 2020 Licence Agreement dated between the IO and Man, the IO granted to Man a licence of the Space for 2 years from 1 January 2021 to 31 December 2022 at a monthly licence fee of HK$15,600. There is also the evidence of audited reports of the IO for the years of 2020, 2021 and 2022 showing that the IO received licence fees from 2019 to 2022.

103.  Mr Wong maintains that the IO would have been aware that Man and Chili King were in fact 2 distinct entities. The IO would know that Man, the individual, is not the same as the business Chili King, but it does not follow that Man was not a partner of the business.

104.  Man had represented to the IO that he was running Chili King with his friend or another person and a partner. Although Man the individual is separate from the Chili King partnership, Man was one of the partners of the Respondent. To the IO, licensing the Space to Man was the same as licensing it to the Respondent.

105.  The IO submits that, from the perspective of the Respondent, it can only be either (a) the IO was the licensor and the Chili King partnership the licensee, through the licensee status of Man, or (b) Man sub-licensed the Space to the Respondent. In both of these cases it is the licensor who is treated as being in possession, and the Respondent can only be a licensee and so lacks intention to possess. Applying the principle in IO of Kam Luk Building, Mr Poon submits that if the Respondent takes possession of the Space by virtue of a licence granted by Man, it is Man who is treated as being in possession. Therefore, the Respondent has not taken exclusive possession of the Space during the period when Man had been paying the IO a monthly licence fee for the use of the Space.

106.  The Respondent considers IO of Kam Luk Building and Sze To Chun Keung are of no assistance to the IO as the facts are distinguishable. The Respondent did not start to occupy the Space in 2007 as a squatter by way of sub-license and the IO had never recognised the Respondent as a “sub-licensee” at the Space. The IO’s evidence is that Man represented to the IO that he was running Chili King.

107.  In October 2022 Man told the IO that he was no longer a partner or part of the Chili King business and that he had ceased to be a partner for a long time. Tang did not give particulars of payments and denied Man was a partner, so there is no evidence of exactly when Man became or ceased to be a partner. Ho would have been able to give details of the partnership, including if, and when, Man became and ceased to be a partner. Man was making the payments to the IO for the Respondent’s use of the space from the outset in 2007. Man did not enter into a Tenancy Agreement with the Respondent until 2021. I infer that Man was likely a partner of the Respondent from that early stage or 2007. I am satisfied that Man was previously a partner but was no longer a partner by the time he entered the Tenancy Agreement dated 30 March 2021 with Chili King. When Man ceased being a partner he entered into a sub-licence with the Respondent for the rest of the period of the Respondent’s occupation of the Space.

108.  The IO’s case, substantiated by Wu and supported by some documentary evidence, is that the IO had been receiving license fees throughout the period of Chili King’s occupation, up until 2023. There is ample evidence to show that the IO licensed the use of the Space and that Man made payment for the use pursuant to a licence. I find that that Man paid the IO a monthly licence fee throughout the years that Chili King occupied the Space until 2022. Mr Poon submitted that, it defies commercial sense for Man to pay the license fee for so many years, without receiving reimbursement from the Respondent, if not a partner. Otherwise, Man must have been a partner of the Chili King partnership who shared in the profits, which was always the IO’s case. In my view the other explanation proffered by Tang is not believable. Namely, Man in return for introducing the Space, acting as agent, liaising with the IO and MC for the Respondent continuously and also paying thousands of dollars to the IO every month for many years was content with the odd free bowl of noodles, or as Tang put it to “eat for free” from time to time.

109.  Tang says he did not know about the licence arrangements between Man and the IO. Mr Wong submits that the Respondent was not privy to the arrangements. I am not convinced that Tang did not know. I cannot rely on his evidence at all. Man obviously knew the precise details at any given time, so the Respondent was privy to the details when he was a partner. I infer that Ho or other partners certainly knew about the licence arrangement with the IO. Once the Respondent was the licencee of Man at least Ho, if not also other partners, including Tang, would well know that Man had a licence from the IO, even if they did not know the precise terms. Man may not, for example have revealed how much he was paying the IO.

110.  1^st and 2^nd Tang stated that he had never paid rent or licence fees to anyone from August 2007 to 2021. The Respondent’s Closing account of Tang’s oral evidence is that prior to 2021, the Respondent did not make any form of rental payment in order to occupy the Space. That is not actually how Tang put it at trial. In any event Tang’s oral evidence was so at odds with his witness statements that the Tribunal cannot rely on either, unless supported by other indisputable evidence.

111.  The IO relies upon Tang’s evidence in cross examination that “the company [i.e. Chili King] had to make regular payments” to either the IO or Man. He also said, “the partner or the partners of my shop, Mr. Ho, had made a payment. Whenever a payment was made, it would be really made. Since the payment was made it would follow that the place could be used So I do not care to make clear the relationship in between.” I find that evidence proves an intention to pay for the use of the Space. Tang’s position was essentially since Chili King had paid it was allowed to use the Space. Effectively, that the shop can only use the Space when and because a payment was made for the use. Mr Poon submitted that clearly, neither Tang nor Chili King (including partners of Tang) had an intention to possess the space as an adverse possessor. I accept that submission.

112.  I do not accept the assertion that the Respondent has never paid rent, license fees, or other charges to the IO or Man for use of the Space prior to 2021.

113.  Further, the Respondent entered into a “Tenancy Agreement” as a “tenant” with Man as the “landlord” for the Space on 30 March 2021. Tang agreed to the statement that “when Mr. Man and Chili King entered into the tenancy agreement, Chili King was liable to pay Man”. Mr Poon submits that the intention of the Respondent was clear when it executed that document, objectively and to the world at large, that it has no exclusive possession of the Space. Applying Tsui Kwong On, the Respondent has shown that he was ready and willing to pay rent after it occupied the Space. This was inconsistent with the intention to possess.

114.  The Respondent’s answer is that time had run before the Respondent entered into the Tenancy Agreement with Man. That 2021 Tenancy Agreement is said to be irrelevant to the Tribunal’s determination of the issue of adverse possession, because the Respondent would have acquired possessory title to the Space, 12 years from August 2007, so after July 2019. Given that the Respondent’s intent was unchanged from 2007, when the period of occupation is considered from the beginning, the Tenancy Agreement showing the Respondent was willing to pay in 2021 is some evidence from which it may be inferred that an intent to pay had continued from previous years, so is not totally irrelevant. However, even without the Tenancy Agreement the other evidence shows the Respondent had a clear intent from 2007 to July 2019 to pay for use of the Space.

115.  There was a period of overlap, on the documentary evidence, when both the 2020 Licence Agreement between Man and the IO and also the Tenancy Agreement between Man and the Respondent were in place. At that time Man was paying the IO $15,600 per month, while the Respondent was paying Man $19,500. The 2021 Tenancy Agreement is the first written agreement between Man and the Respondent. It would appear that when the IO required a written licence agreement in 2020 and Man was no longer a partner of Chili King he required a written agreement with the Respondent. The Tenancy Agreement lengthy term of 10 years suggests that Man and Ho also sought to secure the Respondent’s occupation well into the future and Man a stream of income. This is entirely consistent with the licencee Man sub-licencing the premises and taking a spread. Tang refers to Man as their “agent”, but Man was dealing with the IO because he was the IO’s licensee. Man was then the licensor of the sub-licence, receiving the difference between the two licence fees. That is an unexceptional arrangement, to cover Man’s costs and doubtless an element of profit.

116.  The IO relies on the undisputed fact that the Respondent used the Building’s water supply and by agreement paid 90% of the water charge according to the common meter. Also the Fire Services Department documents dated 16 January 2012 and 10 August 2019 evidencing the sprinkler system works had been carried out in the common parts of the Building during this period, which includes the Space. Minutes of MC meetings dated 20 July and 24 August 2015 show communications between the IO and Man for the fire services contractors to install sprinklers within the Space. The IO submitted that by allowing the IO’s contractors to install sprinklers in the Space, the Respondent’s intention was to acknowledge that the Space was still a common part that belongs to the IO. The minutes show that owners were to agree the quotation and apportionment of the sprinkler works costs to be paid by owners, whereas Chili King merely had to agree times for the works to be carried out. While that does show a distinction between owners and the Respondent, it is indicative of the IO’s intent rather than that of the Respondent.

117.  The Respondent contends that payment to the IO for water billed on the Building meter and that the IO installed sprinklers in the Space is neither here nor there and cannot be evidence of an acknowledgment of the IO’s ownership. Rather, the Respondent was only practically dealing with building management matters, which directly affected the Respondent’s operation, including water supply and fire safety. I agree that payment for water from the Building supply does not necessarily evince a particular intention regarding possession of the Space. Although the fact that the IO was responsible for and incurred the cost of the sprinklers within the Space for the Respondent’s restaurant business would tend to take away from the intention to possess to the exclusion of the IO and to support the IO’s case. However, these factors are not weighty, and certainly not determinative.

118.  Mr Wong disputes any suggestion that Tang was willing to pay the owner for use of the Space by reason of answers to questions in cross-examination, claiming that the answer to a question such as “if the Applicant agrees to rent the Space at a reasonable rent, would you agree?” carries little or no weight. J A Pye at 438, §46 found that this kind of answer does not constitute evidence of an absence of intention to possess. I am bound by Wong Tak Yue to the contrary. In any event, the IO does not simply rely on Tang’s answers to questions on willingness to pay the IO if it was a reasonable sum, that Tang could not really answer.

119.  Mr Wong further submits that the IO’s contention that the Respondent was occupying the Space with its implied consent is untenable and no particulars were pleaded in the NOA or the Amended Reply and Defence to Counterclaim. It is the duty of the IO to plead expressly the identity and plead the spoken words or overt acts relied upon: Poon Chi Hang v Lai Ho Sun [2021] HKCA 1611, at §§14 & 15.  The lack of any pleaded particulars is therefore fatal to the IO’s case, insofar as it is founded upon implied consent. In my view no pleading point assists the Respondent. The IO understood that Man was a partner, allowed Chili King’s occupation and the IO was actually paid a licence fee.

120.  Whereas, the IO relies on the fact that the pleaded case of the Respondent changed so significantly. The Respondent disavowed its first defences and came up with the additional defences by way of amendment, which is further support that Tang lacks credibility and why the inconsistent cases advanced by the Respondent should not be accepted.

121.  The Respondent alleges that any “sub-license” or occupation with Man’s consent or permission, prior to 31 December 2022, was unlawful as Man never had the right to sub-licence (so had no right to lease or sub-lease) the Space to anyone in the absence of the IO’s consent according to Wu. The IO is not seeking vacant possession from Man on the basis of unauthorised subletting. The claim is for vacant possession after expiry of the 2020 Licence Agreement term.

122.  I find that the Respondent from the outset, and throughout, showed the intention and willingness to pay rent or a licence fee. In 2007 Ho and Tang searched for premises in Jordan because they thought the rent would be reasonable and, after seeing some that were out of their budget, settled on the Space. They were willing and did in fact pay to occupy the Space from 2007 and throughout the years. Ho was responsible for the accounts and expenses. There has been no explanation as to why Ho did not give evidence. I draw the inference that if he had, his evidence would have been against or adverse to the Respondent’s case. Had Ho given evidence I infer he would certainly confirm that the Respondent had been willing to pay, had in fact paid for the use of the Space from 2007 and been able to give particulars of the payments the Respondent made to occupy the Space.

123.  Ho was also dealing with these proceedings for the Respondent at the start. The NOA was filed on 15 September 2023. Tang did not state when he became involved in the litigation. However, given that it was Tang who signed the NOO dated 13 November 2023, it would appear that they were both involved at the same time. The 13 March 2023 letter sent by Ho to the IO and 2^nd Tang, stated that the Respondent was willing to pay the IO $14,400 per month, which he described as a “management fee”. Ho said the Space was not owned by the IO so Chili King could not enter into a Tenancy Agreement with the IO. The offer was lower than the “rent” stated in the Tenancy Agreement with Man, but would accord with the sort of licence fee paid to the IO in the past. I appreciate the offer was after July 2019 but it evidences Ho’s intent as a partner to continue to pay for occupation of the Space.

124.  Even without drawing adverse inferences, Tang gave direct evidence of payment. He said that they paid so could use the space. As Ching PJ held in Wong Tak Yui at 71E, there can be no better evidence of the intention of an occupier of land than his express declaration against his own interest. The burden is on the trespasser to establish his intention to exclude the whole world including the owner. The Respondent has not discharged that burden.

Protection money

125.  Mr Wong relies on 1^st and 2^nd Tang, and a qualified answer extracted in re-examination, to submit that instead, the Respondent understood that Ho would pay Man “protection fees”. And “when Ho ceased to be involved” in Chili King’s business in around 2020, Man insisted the Respondent enter into a tenancy agreement in 2021. Due to concerns over Man’s suspected triad background, the Respondent agreed to the Tenancy Agreement dated 30 March 2021, regarding payment thereunder as “protection fees”. Whereas of course, in oral evidence Tang said that he did not know Man and that it was not him who signed the Tenancy Agreement. Apparently, it was Ho who signed, but Tang also said that Ho had not been involved with the Chili King daily business since 2020, had spent time out of Hong Kong, was a silent partner and that is why Tang was dealing with Man himself directly. Although, Tang also said that Ho signed the letter dated 13 March 2023 relying on the Tenancy Agreement and it was Ho who had dealt with the present case initially. Contrary to Mr Wong’s submission, Ho did not “cease to be involved”. Had Ho ceased to be involved and no longer dealing with the accounts and business since 2020, Tang ought to have been able to explain what he was paying, to whom, for what and the accounts of the business, at least since 2020. He would not explain and no accounts or books were produced.

126.  Having acknowledged there was in fact a Tenancy Agreement that provided for payment of rent by Chili King, Tang claimed he “suspected” it was to legitimise collection of an unlawful fee under the guise of rent. The way Tang put it was that he agreed to the Tenancy Agreement even though it was “contrary to his own inclination”. The Respondent seeks to explain away that they were paying for use of the Space, by characterising the payments as “protection money”, to negate any intent to pay to occupy the Space, thus opening the way to claim adverse possession with the requisite intent. The Respondent’s case is not that the money paid to Man under the guise of a Tenancy Agreement or before, was in addition to the rent for the Space, and therefore must be for another purpose, namely a “protection fee”. The evidence of payment to occupy and use the space both before and after the Tenancy Agreement cannot be explained away as being protection money instead.

127.  1^st Tang and 2^nd Tang cannot be relied upon because they are so materially different from Tang’s oral evidence. Tang was not clear if Man coerced Chili King to sign the Tenancy Agreement but he disagreed it was entered by the free will of the parties. What the Respondent is then left with is Tang saying in re-examination that if told by Ho then the money was a form of protection money “but I am not clear about it” Asked “what protection money” he could not explain “because Mr Ho did not directly tell me such thing, just he did mention such thing to me at the time”. The quality of the evidence being inconsistent, uncertain hearsay and coming in re-examination is woefully inadequate to establish on the balance of probabilities money paid was protection money.

128.  Mr Poon adds that Tang failed to provide an explanation of what Ho meant by protection money, or himself to explain that hearsay statement allegedly made by Ho. The Tribunal is invited to find that the first version of Tang’s oral evidence in cross-examination is more accurate and probable. There is no reliable evidence that Man was related to triads and would take protection money for himself. Mr Poon concludes that the documentary evidence of Man paying the IO fees for occupation of the Space, when examined together with Tang’s oral evidence that the Respondent can only use the Space when a payment was made for its use, fit well together to show a simple commercial deal of license or sub-license, and is thus the most probable explanation of what actually happened between the IO, Man, and the Respondent. I accept that conclusion.

129.  The Respondent failed to adduce reliable evidence to establish the protection money allegation. Tang’s evidence was inadequate and Ho was not called. The Respondent has not proved the claim that Man was extorting protection money, rather than the payments being for the use and occupation of the Space.

130.  I also reject the claim that Man was assisting the Respondent for all those years, in return for the odd free meal at Chili King.

131.  I am satisfied that the Respondent was making regular payments for use of the Space. The Respondent intended to pay to occupy and did not have the requisite intent for adverse possession. When Man was no longer a partner the money paid by the Respondent to Man would be a “sub-licence fee”. The label is not significant under this defence. It is the licensor who is regarded as being in possession and the Respondent can only be a licensee, lacking the intention to possess and did not have exclusive possession during the period that Man paid the IO the monthly licence fee. I do not accept that the intention of the Respondent was adverse or “as of wrong” and consistent with the intention to claim possession for the purpose of adverse possession.

132.  The Respondent’s Closing re-defines this defence issue as, whether the Respondent was in continuous occupation and possession of the Space, a common part of the Building, since August 2007, without any interference or disturbance from the IO for more than 12 years, and that the Respondent’s occupation was adverse to the IO from the outset, and by the time this action was commenced in 2023, the IO’s title and right to possession of the Space had been extinguished by operation of law. I answer the issue in the negative. The Respondent’s occupation was not adverse to the IO from the outset. The IO’s title and right to possession of the Space had not been extinguished.

133.  The Respondent has not discharged the burden to show the necessary intention to possess to the exclusion of all others, including the owner to establish the defence of adverse possession. I find that the Respondent has failed to prove the claim that by the commencement of the present action in September 2023, the Respondent had occupied the Space for over 12 years without interference from the IO.

134.  Mr Poon found it unnecessary to address whether the Tribunal can grant the Respondent declaratory relief by adverse possession. In my view there would be no jurisdiction issue.

135.  The Respondent has not established adverse possession. I dismiss that defence and Counterclaim.

EQUITABLE DEFENCES

136.  The Respondent relies on the equitable defences of acquiescence, proprietary estoppel, and/or laches to preclude the IO from asserting any rights over the Space inconsistent with the Respondent’s long and uninterrupted occupation. The Respondent seeks an injunction restraining the IO from entering and/or trespassing on the Space or otherwise interfering with its quiet enjoyment of the Space.

137.  If the Tribunal finds there was a sub-license between Man and Chili King starting from 2007, the Respondent contends that the IO should be estopped from enforcing its rights over the Space under the equitable doctrines. Mr Wong submits that the view of the IO has to be that the Respondent was in unlawful occupation of the Space since 2007 because Wu affirmed that any sub-license was without consent and not allowed under the IO license agreement with Man and the never obtained any consent from the IO.

138.  However, I have accepted Wu’s evidence and that Man was a partner of the business. Tang did not know who his partners were and confirmed that they had changed over time. Ho was not called. Ho would have been able to give evidence about the partnership. I infer Man was a partner from 2007. Ho would know when Man ceased being a partner. In October 2022 Man told the IO he had stopped being part of the business for a long time. That would have been before Man entered the Tenancy Agreement dated 30 March 2021 with the Respondent. There was no unlawful occupation or sub-letting from 2007. A premise of the Respondent’s equitable defences, that the Respondent was in unlawful occupation from 2007, is contrary to the facts. A further obstacle is that the Respondent was paying for use of the Space. The Respondent’s submissions cannot be reconciled with the facts.  

139.  I must consider what it is that the IO is said to have acquiesced in, and the “promise” or representation. The IO submits that it is not enough for the Respondent to merely show that the IO acquiesced in occupation or promised that Chili King or Tang could “occupy” the Space. Instead, it is necessary for the Respondent to establish that this is the case even when Chili King or Tang were (a) unwilling to pay for the occupation of the Space, and (b) that Chili King or Tang can continue to occupy the Space without a licence or contractual relationship with the IO, or without one of the partners of Chili King being a licensee of the Space.

LEGAL PRINCIPLES

140.  The legal principles for the 3 equitable defences acquiescence, proprietary estoppel and laches are not in dispute and summarised below.

Acquiescence

141.  Acquiescence arises if:

(a)  There is an assent or lying by to the acts of another person; and

(b)  In view of the assent or lying by and consequential acts, it is unjust in all the circumstances to grant the relief in question.

142.  The party in the position of the IO, against whom acquiescence is contended should also have knowledge of the other person’s acts: 

(a)  The degree of knowledge required depends on the circumstances.

(b)  It is sufficient that at the relevant time the party concerned knew of the facts or matters that gave rise to his right to equitable relief, even although he may not have fully understood, as a question of law, the rights that he possessed.

(c)  It is sufficient that the party has been put on suspicion, that is, that he is aware of sufficient matters to raise in his mind a doubt whether an infringement of his rights has taken place.

Acquiescence – Respondent’s case

143.  The Respondent addressed whether the IO can acquiesce in a breach of DMC by the Respondent. However, the DMC is an agreement between co-owners of the Building and the Respondent is not a party to it. There could not have been any breaches of DMC by the Respondent.

144.  Acquiescence may be a defence to a claim for breach of mutual covenants if the breach in question is within the power of IO to acquiesce in: Hollywood Shopping Centre Owners Committee Ltd v The Incorporated Owners Of Wing Wah Building Mongkok Kowloon (unrep., HCA 1582/2007, 16 August 2010) at §§62-65. The Respondent submits that, the breach in question is within the power of IO to acquiesce in, by virtue of clause 16 of the DMC which allows the co-owners “to let or demise any floor to which such party is entitled hereunder to any tenant or lessee … ”. Although the Space is a common part, the IO had power to rent the Space, which the IO had been doing for years. The Respondent says the breach is within the power of the IO to acquiesce. In my view there is no issue of any breach.

145.  The Respondent summarises the elements of acquiescence and the facts he relies upon in support as follows.

146.  First, there is an assent or lying by to the acts of the Respondent:

(a)  The Respondent has been doing business and occupying the Space since July 2007.

(b)  The IO did not interfere, disturb or otherwise complain or object to the Respondent’s occupation until the pre-action communications in 2023.

(c)  The IO allowed the Respondent to use the Building water supply since 2011, on payment of 90% of the bills of the metre.

(d)  The IO arranged the sprinkler system installation to be carried out accommodating the business hours of the Respondent.

147.  Secondly, the IO has knowledge of such acts of the Respondent. It is sufficient that the IO has been put on suspicion / having doubt that its right may have been infringed.

(a)  At least from 2011 to 2019 the Building was professionally managed by Alico Management Limited. The IO may be expected to be aware that the Space was a common part of the Building and its related rights and duties

(b)  The Respondent has been in occupation of the Space since August 2007.

(c)  Man had never sought the IO’s consent to sub-license the Space to the Respondent. Accordingly, the IO had, at all material times, known that the Respondent was occupying the Space without permission and right.

148.  Thirdly, lapse of time:

(a)  The Respondent had been occupying the Space for nearly 16 years at the time the NOA was served.

(b)  16 years of occupation is a substantial time, during which the IO had all along known that the Respondent had no authority to occupy the Space, even as a “sub-licensee”. The IO decided to turn a blind eye and not to exercise its right.

149.  Fourthly, it is unjust in all the circumstances to grant the relief sought. Over the years, the Respondent had invested into the shop, including renovation and a number of refurbishments. Such investments constitute irreversible detriment to the Respondent, if now prevented from continuing the business at the Space as a result of the IO’s departure from its long-standing acquiescence.

150.  Fifthly, the IO has the authority to permit the Respondent’s the occupation and use of the Space. The Space is a common part of the Building and Clause 16 of the DMC allows the IO to let or otherwise demise the Space. The IO had the authority to grant the licences and right to consent to any occupation of the Space and thus acquiesce in the breach.

151.  Mr Wong submits that with full knowledge of the Respondent’s occupation, the IO chose not to act until falling out with Man in 2022–2023, rendering it unconscionable to enforce its rights now. The Respondent has not proved a falling out. Man was no longer a co-owner. The IO gave Man notice in terms of the 2020 Licence Agreement, but a longer period than required. The IO’s knowledge included that it had licenced the Space to Man a partner of Chili King and was being paid for Chili King’s occupation and use of the Space.

No acquiescence – IO’s case

152.  Mr Poon submits that the evidence shows that the IO had not acquiesced. The IO as the rightful owner of the Space licensed it to Man, a partner of the Chili King business. Documents, such as the license agreements and copies of cheques and receipts for license fees establish the intention of the IO that it remain the rightful owner and the licensor of the Space for a license fee, and never did it believe or act otherwise. Where the IO had been collecting license fees for the Space from Man, there could be no suspicion that the IO had to deal with another partner of Chili King for the licence relationship or the payment of license fees to be valid.

153.  During the period of sprinkler works the documents show that the IO tended to the common parts of the Building, and specifically to the Space, as the rightful owner of all common parts. Communication was with Man, as a partner of Chili King. Correspondence between the IO and Man/Chilli King also shows that the IO dealt with licensing matters of the Space promptly, even before the 2020 License Agreement expired, as the rightful owner and licensor of the Space.

154.  The IO maintains that it did not assent or lie by as Chili King occupied the Space without paying any license fee. The IO has caused no unfairness because it did not acquiesce in such occupation.

155.  The IO believed that licensing the Space to Man a partner of Chili King, is the same as granting a license to the occupant Chili King paying a monthly license fee. I have accepted Wu’s evidence that Man did not tell the IO that he had ceased to be a partner of Chili King until October 2022. Moreover, Wu said that, “The Space was lent to him. Mr. Man had been paying for the fee in relation to the renting of the Space to carry out the Space as Chili King, and there were no arrear of fees.” Mr Poon submits that the Respondent never had the intention to occupy the Space without paying a fee, so plainly, neither the IO, nor Wu, had any knowledge that Chili King or Tang could have had any such intent or acted to occupy the Space without paying a fee for occupation to the IO.

Acquiescence determination

156.  The burden is on the Respondent to prove acquiescence. I find on all the evidence that the Respondent has failed to discharge that burden. The IO did not have knowledge and was not even put on suspicion that the IO’s rights may have been infringed. The IO did not assent to the Respondent occupying the Space without permission or payment. Contrary to the Respondent’s assertion, the IO did not know that the Respondent was occupying the Space without permission or right or know for 16 years that the Respondent had no authority to occupy as sub-tenant. The IO allowed Man a partner of Chili King to occupy the Space for payment of a fee. There could be no assent or lying by. The IO did not turn a blind eye and fail to exercise its rights.

157.  Further, there was no lapse of time. Man ceased being a partner before October 2022. Man would have ceased being a partner before the Tenancy Agreement dated 30 March 2021. Ho could have given evidence of precisely when that was. This is a matter within the Respondent’s knowledge. The silence of Ho would suggest that it was more recently than what would be required to establish lapse of time for the equitable defences or to assist the Respondent’s case. I infer Ho’s evidence would not support the Respondent’s case that there had been unlawful subletting from 2007 because Man was not a partner. The evidence only shows Man would have ceased being a partner by 2021. The Respondent has not established a material lapse of time.  

158.  In my view it is not unjust in all the circumstances to grant the IO relief. The Respondent has not proved any sums it invested, although detriment is not to be considered narrowly, nor need be financial. The Respondent has been operating the business since 2007. If it had not covered its costs and expenses, including any investment, renovation or refurbishment or been unprofitable the business would be unlikely to have continued. Tang’s evidence did not substantiate detriment. Ho could have addressed the financial aspects of the business and given particulars of any detriment. He was not called. I do not accept that any investment in the Space constitutes material detriment, if Chili King were not permitted to continue to occupy the Space as claimed.

159.  There was no assent or lying by and it is not unjust in all the circumstances to grant the relief sought by the IO. The Respondent has not established a defence of acquiescence.

Proprietary Estoppel

160.  Proprietary estoppel consists of the following elements:

(a)  A representation or assurance which is sufficiently clear and unequivocal is made to the representee;

(b)  Reasonable reliance by the representee;

(c)  Detriment to the representee which is sufficiently substantial in consequence of his/her reasonable reliance

161.  Silence or acquiescence would give rise to proprietary estoppel if:

(a)  The representee adopts a particular course of conduct in reliance on a mistaken belief as to his concurrent rights;

(b)  The owner, knowing both of the representee’s belief and the existence of his own right, fails to assert the right against the representee; and

(c)  The representee would suffer a detriment if the owner would be free to enforce the rights.

162.  Proprietary estoppel may arise through encouragement or unilateral mistake. Both may be based on the representor’s silence. It is possible by words or conduct to encourage another to believe or assume that he has a right or interest over property when what is encouraged is only consistent with him having some such right. Thus, overt acts by the representee, coupled with silence on the part of the representor, could amount to encouragement to the representee to hold the belief which it did.

163.  For the element of detriment:

(a)  Detriment must be judged at the moment when the person who has given the assurance seeks to go back on it;

(b)  Detriment is not a narrow or technical concept. It need not consist of the expenditure of money or other quantifiable financial detriment and may consist of manual labour;

(c)  The court would look at the matter in the round and undertake a broad inquiry as to whether repudiation of an assurance is unconscionable in all the circumstances; and

(d)  There need not be a relationship of proportionality between the level of detriment and relief awarded.

164.  For proprietary estoppel by acquiescence or standing by, the test is whether it will be unconscionable for the IO to deny that which it has allowed or encouraged the Respondent to assume to its detriment rather than whether the circumstances can be fitted within some preconceived formula or  universal yardstick for every form of unconscionable behaviour.

165.  The landowner must have knowledge of the mistaken belief of the person claiming proprietary estoppel. In addition, it must also be established that the landowner was aware of (a) his own proprietary rights, and (b) the claimant’s expenditure or other detriment.

Proprietary estoppel – Respondent’s case

166.  The Respondent summarises the elements of proprietary estoppel and the evidence he relies upon as follows.

167.  First, the IO made a representation or assurance which is sufficiently clear and unequivocal to the Respondent; and silence or acquiescence of the IO may amount to a representation or passive encouragement:

(a)  The IO did not prior to 2023 raise any complaint or objection to the Respondent’s continued occupation of the Space.

(b)  At no time before the proceedings did the IO demand or request the Respondent pay any rent or licence fee.

(c)  The IO did not interfere with or disturb the Respondent’s occupation and possession of the Space.

(d)  Since at least 2011, the IO had permitted the Respondent to use the Building’s water supply on the express understanding that it would bear 90% of the water metre charges.

(e)  When the Fire Services Department required installation of sprinklers in the Building, the IO sought the Respondent’s cooperation to facilitate the works above the Space, including accommodating the Respondent’s business hours.

168.  Secondly, the Respondent relied on such representation and assurance; or that based on the silence or acquiescence of the IO, the Respondent adopted a particular course of conduct in reliance on a mistaken belief as to his rights:

(a)  The Respondent had carried out business in the Space for nearly 16 years when the Applicant served and filed the NOA in September 2023.

(b)  Over the years, the Respondent invested in the shop, including renovation, refurbishments and installing a pull-down gate, believing that he had the right to occupy the Space as a shop for Chili King’s business without any interference or disturbance from the IO.

169.  Thirdly, the IO knew of the Respondent’s mistaken belief and its own right but failed to assert its right:

(a)  The Respondent repeats the above matters under the acquiescence defence.

(b)  The IO deliberately stood by and chose not to exercise its right to ask for rental, licence or other occupation fees; or to demand vacant possession for almost 16 years

170.  Fourthly, the Respondent suffered detriment as a result of its reliance. The Respondent repeats and relies on the above evidence.

171.  The Respondent contends that relying on the IO’s prolonged silence, acquiescence, and consistent conduct over the years, it developed a reasonable and legitimate belief that he was entitled to continue occupying and carrying on the business in the Space without objection. On the evidence the Respondent is unable to add that any such belief included that was without payment for use and occupation of the Space.

172.  Mr Wong submits that it would be inequitable and unconscionable for the IO now to assert its proprietary rights to the detriment of the Respondent; the IO is accordingly estopped from denying or interfering with the Respondent’s continued occupation of the Space.

No estoppel – IO’s case

173.  To establish proprietary estoppel the IO must be shown to have made a representation to the Respondent, that is sufficiently clear and unequivocal. The IO maintains that it has never promised the Respondent that it could occupy the Space without a licence or contractual relationship with the IO, or without paying some fee for the occupation of the Space. The IO submits first, it has never expressly or actively made such a representation or promise, nor is that the case argued by the Respondent.

174.  Although it may suffice that the representee adopted a particular course of conduct in reliance on a mistaken belief as to his rights (where there is none), the cross-examination of Tang shows that there is no such mistaken belief here. He said that “the company [i.e. Chili King] had to make regular payments” to either the IO or Man. He also said, “the partner or the partners of my shop, Mr. Ho, had made a payment. Whenever a payment was made, it would be really made. Since the payment was made it would follow that the place could be used, and I do not care the relationship in between.” Moreover, Tang agreed to the statement that “when Mr. Man and Chili King entered into the tenancy agreement, Chili King was liable to pay Man”. I have found that the understanding of the Respondent was that Chili King can only use the Space when a payment was made for that use. There was no mistaken belief that the IO had made any such representation, that the Respondent relied upon.

175.  The Respondent only dealt with the IO or the building manager regarding water bills. Man dealt with all matters related to occupation and payment for the Space. The Respondent never dealt with the IO on these issues before the expiration of the 2020 License Agreement. Mr Poon points out that the Respondent could not have acquired any mistaken belief from an entity it had never met or communicated with. The Respondent derived a right to occupy the Space from Man, who it knew was not an agent of the IO, claiming Man was the Respondent’s agent. If the Respondent had any mistaken belief about the occupation of, or the fee for the Space, it would have been caused by Man, not the IO.

176.  The IO’s knowledge and understanding before 2022 had always been that Man, a partner of Chili King, had been paying for occupation of the Space to operate Chili King’s business. I accept that the evidence does not suggest that the IO had any knowledge of any mistaken belief of the Respondent.

177.  The IO also submitted that there is no evidence to show any detriment suffered by the Respondent, because of a promise or representation related to the occupation and without payment.

Estoppel determination

178.  I find that the Respondent has not established the elements of estoppel. There was no clear representation or assurance made by the IO to the Respondent, that it relied on and it did not in consequence of any reliance suffer detriment. The Respondent did not adopt a course of conduct in reliance on any mistaken belief as to his rights. Tang believed the Respondent had to pay to use the Space and did in fact pay. The Respondent was not under a mistaken belief that Chili King could occupy and use the Space to operate the business without a licence or payment. The IO did not know of any such mistaken belief of the Respondent, as there was none. The IO did not fail to assert its rights knowing of any such belief.

179.  Detriment need not be quantifiable financial detriment. There need not be a relationship of proportionality between the level of detriment and the relief awarded. Still, the Respondent should adduce evidence to establish it would suffer detriment if the IO was able to enforce its rights. Tang’s evidence was inadequate. Ho did not give evidence. I infer his evidence would show the contrary, but it is unnecessary to draw adverse inferences because the Respondent has not adduced evidence to discharge the burden. In all the circumstances I find that it would not be unconscionable to allow the IO to enforce its rights.

Laches

180.  Laches consists of a substantial lapse of time coupled with the existence of circumstances which make it inequitable to enforce the claim. Such inequity may arise where, due to the party’s conduct and neglect it has put the other party in a situation which would not be reasonable to place it in if the remedy were afterwards to be asserted.

Laches – Respondent’s case

181.  The Respondent submits that once the equitable defences of acquiescence and proprietary estoppel are established, the test for laches is also satisfied, namely, whether, in all the circumstances, (i) the balance of justice lies against the IO, and (ii) it would be unconscionable to permit the IO to assert its rights over the Space. He relies on the following.

182.  First, there is a substantial lapse of time, not merely a delay:

(a)  The Respondent had carried on business at the Space openly and continuously for almost 15 years before the IO sought to repossess the Space in 2023.

(b)  The IO’s argument that it only sought repossession after expiry of the last licence agreement with Man on 31 December 2022 is inconsistent with Wu’s oral evidence that the IO had never consented to the sub-licence. On the IO’s case, therefore, the trespass must have commenced as early as August 2007, not on 1 January 2023.

183.  Secondly, it would be inequitable or unconscionable to enforce the claim/rights:

(a) Over the years, the IO took no steps to interfere with or disturb the Respondent’s occupation, until early 2023.

(b) The IO never approached the Respondent to pay rent or licence fee prior to the commencement of the action.

(c) The Respondent had suffered detriment.  The Respondent repeats the above matters under the acquiescence defence.

184.  Mr Wong concludes that the IO, having been aware of the Respondent’s occupation of the Space since 2007 and yet taking no action, while the Respondent openly conducted the business there, is now precluded from asserting its rights. Thus, the elements of laches and the equitable defences are accordingly satisfied.

No laches – IO’s case

185.  The IO denies that there was any substantial lapse of time by the IO. The IO and Man were parties to the 2020 Licence Agreement. When it was the appropriate time, the IO commenced correspondence with Man seeking vacant possession. The IO then corresponded with the Respondent and receiving the letter dated 13 March 2023, commenced the proceedings shortly thereafter, in September 2023.

Laches determination

186.  I find that on the evidence the Respondent has failed to establish a defence of laches. There was no lapse of time making it inequitable for the IO to enforce its rights, for the reasons set out above under the other equitable defences. The IO acted promptly to enforce its rights. There was no conduct of the IO that would make it inequitable to assert the right to vacant possession. In all the circumstances the balance of justice does not lie against the IO. It would not be unconscionable to permit the IO to assert its rights over the Space.

Equitable defences issues

187.  The Respondent’s Closing re-defines these defence issues as, whether the Respondent occupied the Space as a “sub-licensee” or otherwise with the IO’s consent prior to 1 January 2023. And further whether the IO is nonetheless barred from bringing the present proceedings by reason of the equitable defences of acquiescence, proprietary estoppel, and/or laches. The Respondent has failed to establish any of these equitable defences. I find that the IO is not barred from bringing the action by reason of the said equitable defences.

188.  For the reasons above the Respondent has not established its counterclaim. I dismiss the Respondent’s counterclaim.

TRESSPASS

189.  The IO seeks vacant possession of the Space and a mandatory injunction requiring the Respondent to demolish and remove all structures and objects erected and placed in the Space, vacate and reinstate the Space to its original state and condition, to pay damages for trespass and/breach of provision of the BMO, and other remedies and relief sought in the NOA.

190.  Whereas the Respondent asks that the IO’s claim be dismissed and submits that no order for vacant possession should be granted, yet the Respondent has failed to establish any defence to the claim.

191.  The IO had entered into licence agreements with Man to use the Space, the last of which was the 2020 Licence Agreement between the IO and Man that ended on 31 December 2022. I find that that the Respondent’s continued occupation thereafter constitutes trespass. The IO is therefore entitled to an order for vacant possession.

192.  The quantum of the claim for damages for trespass or mesne profits will depend on the facts and evidence:

“The amount of the mesne profits for which the trespasser is liable is an amount equivalent to the ordinary letting value of the property in question. This is so even if the landlord would not have let the property in question during the period of trespass. Where the rent payable under the former lease is the fair letting value of the property, mesne profits are awarded at the rate of the rent; but if the rent is less than the true letting value of the premises, the mesne profits may be awarded at a rate exceeding the rent” (Woodfall on Landlord and Tenant. Vol.1, para. 19.013)

193.  The Respondent also says that no mesne profits should be awarded: the Respondent has, over the years, made regular payments to Man by way of “protection fees”. In the circumstances, it would be wholly inequitable to order the Respondent to make any further payment to the IO as mesne profits.

194.  The IO is not seeking to recover mesne profits for the entire period of the Respondent’s occupation of the Space. The IO only seeks mesne profits from after expiry of the 2020 Licence Agreement term.

195.  The rate of mesne profits has been agreed. 1^st Wu confirmed that the quantum of damages for the loss of the IO by virtue of the Respondent’s trespass is measured by reference to the market rent of the Space. Pursuant to the Order of Deputy District Judge M Lam (as she then was), the parties agreed the market rent at $19,500 per month. From January 2023 to the date of delivery up of vacant possession of the Space the IO claims $19,500 per month.

196.  I find that the IO is entitled to mesne profits at the agreed monthly rate of $19,500 from January 2023 to the date of delivery up of vacant possession of the Space to the IO and so order.

DETERMINATION

197.  In answer to the Agreed List of Issues:

(1)  The Respondent has trespassed on the Space since 1 January 2023.

(2)  The Respondent has not been in continuous exclusive possession of the Space, with the intention to exclude the owner(s) for more than 12 years prior to the commencement of the present action.

(3)  The IO is not prevented or estopped from bringing the present action on the ground of acquiescence, estoppel, laches and delay.

(4)  The IO is entitled to the remedies and relief sought in the NOA including (i) an injunction that the Respondent shall demolish and remove all existing structures at the Space and order to vacate the Space, and (ii) mesne profits based on the agreed market rent.

(5)  The IO is not time barred from bringing the present action against the Respondent pursuant to section 7(2) of the Limitation Ordinance, Cap. 347; and thus the IO’s title, interest and/or rights in and /or over any part(s) of the Space has not been extinguished pursuant to section 17 of the Limitation Ordinance, Cap.347.

ORDER

198.  I grant the following relief and orders:

(1)  The Respondent do deliver vacant possession of the suit premises, namely the Space to the Applicant;

(2)  The Respondent do forthwith demolish and remove all the existing structures and objects erected and placed at the Space and vacate the same and reinstate the same to its original state and condition;

(3)  The Respondent be restrained whether by himself, his servants or agents or employees or otherwise howsoever from converting the Space to his own use and from using or permitting to be used the Space in such a manner as to interfere with the use and enjoyment of the Space by the Applicant and other owners and occupiers of the Building;

(4)  The Respondent do pay the Applicant damages for trespass and/or breach of provisions of the Building Management Ordinance, Cap. 344 and/or mesne profits as follows:

(i)  From 1 January 2023 to 31 August 2023 at the rate of HK$19,500.00 per month; and

(ii)  From 1 September 2023 to the date of delivery of vacant possession of the Space at the rate of HK$19,500.00 per month.

(5)  The Respondent do pay the Applicant interest on mesne profits from the date of judgment until payment at judgment rate.

(6)  The Respondent’s counterclaim is dismissed.

COSTS

199.  Both parties agreed that costs should follow event, including reserved costs (if any), with counsel certificate. I can see no reason to depart from that usual starting position here. Therefore, I make a costs order nisi that the Respondent do pay the costs of the IO of the claim and counterclaim (including any reserved costs) on the District Court scale with certificate for counsel. Unless either party applies to vary the costs order nisi within 14 days hereof, the nisi order shall become absolute.