FUNG SHEK WA v. CHANG LAI YUE

HCA 2258/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2258 OF 2013

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BETWEEN

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J U D G M E N T

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Introduction

1.  This is the plaintiff’s appeal from the decision of Mr Registrar K W Lung, whereby the Learned Registrar had refused the plaintiff’s application for default judgment against the defendant for declarations including that he had acquired an indefeasible possessory title to certain pieces of land by way of adverse possession for a period exceeding 12 years prior to the commencement of this action (“Decision”).

Background

2.  According to the Land Registry Records, the defendant (“D”) became the sole registered owner of certain pieces of land situate at Section C of Lot No 433 in D D No 107 (“Lot 433”), Section C of Lot No 1736 in D D No 107 (“Lot 1736”), Lot No 1738 in D D No 107 (“Lot 1738”) in Yuen Long, New Territories (collectively referred to as  “Lots”) on 17 March 1960 under a sale by the previous registered owner, with no consideration registered[1].

3.  The plaintiff (“P”) issued the writ herein with the statement of claim on 21 November 2013 (“Issue Date”).

4.  According to what was pleaded by P in his amended statement of claim (“ASOC”), in about 1996, the Lots which were adjacent to other grounds and lands that P was then occupying, were deserted and that P had since then been occupying the Lots as a garage and storage for his recycled autoparts business.  Further, according to P, he had, among other things, erected metal panels to surround the outer boundary of the Lots, he had performed grading works and applied for power supplies on the Lots, and in around 2000, P had performed further grading works on the Lots for the storage of container trucks and trailers.

5.  P pleaded in the ASOC that since he occupied the Lots in 1996 until now, he had, at his own costs and expenses improved, maintained and repaired the condition of the Lots, and that since his occupation, no one had queried P on his right or title to use and occupy the Lots.

6.  P’s claim is thus based on his adverse possession of the Lots since 1996, which is about 17 or 18 years ago, and according to P, D is barred from bringing any action at law to recover the Lots, pursuant to section 7(2) of the Limitation Ordinance Cap 347.  As such, P claims for a declaration that any title of D to the Lots has been extinguished by virtue of section 17 of the Ordinance, and that D has acquired an indefeasible possessory title to the Lots.

7.  There was no acknowledgment of service filed by D to the writ and the statement of claim.

8.  P issued a summons on 20 January 2014 for declarations as sought in the ASOC under Order 19 rule 7 of the RHC (“P’s Summons”). The ASOC was filed on 4 March 2014.  The hearing of P’s Summons took place before Master Lung on 29 April 2014.  D was absent, and the Decision was delivered on the same day.

9.  P issued a Notice of Appeal to appeal against the Decision on 5 May 2014, and the hearing took place before this court on 8 July 2014.  D was again absent.

The Decision

10.  In the Decision, the Learned Registrar had accepted that service of the ASOC was proved, but pointed out that as P was claiming possessory title of the Lots, the court would be reluctant to grant the order without hearing evidence from P to prove its case, referring to what had been said by Fok J, as he then was, in Top One International (China) Property Group Company Limited & Another v Top One Property Group Limited & Others HCA 1244 of 2009, 9 December 2010.

11.  Further, the Learned Registrar had also pointed out that there was evidence to show that D had shown interest in the Lots in 2010, in that D had obtained permission from the Planning Department of the Government for the development of temporary open storage of motorcycles for sale for one year, and thus there was simply no reason that D would suddenly abandon the entitlement to the Lots by her absence before the Registrar, and thus the Registrar considered that P should prove his case in the usual way, and refused to grant the declarations sought in P’s Summons.

Legal Principles  

12.  Under Order 58 of the Rules of High Court, an appeal from a master’s decision to a judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before the Court for the first time[2].

13.  P is relying on section 7(2) of the Limitation Ordinance Cap 347 (“Ordinance”), which  states:

“(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:

Provided that, if the right of action first accrued to the Crown through whom the person bringing the action claims, the action may be brought at any time before the expiration of the period during which the action could have been brought by the Crown, or of 12 years from the date on which the right of action accrued to some person other than the Crown, whichever period first expires.”

14.  P’s Counsel Mr Chan also referred to sections 8(1), 13(1), and 17 of the Ordinance which state as follows:

“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 this Ordinance for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished”

15.  In light of the above provisions in the Ordinance, Mr Chan submitted that the right of action should be deemed to have accrued on the date of adverse possession of the land by P against the original title owner.  In addition, section 17 of the Ordinance provides that the title of the original owner of the land shall be extinguished at the expiration of the applicable limitation period prescribed by the Ordinance, and thus the original owner shall be time barred to bring an action to recover his title on the land.

16.  Mr Chan further referred this court to Wong Tak Yue vKung Kwok Wai David & Another [1998] 1 HKC 1 where the Court of Final Appeal stated the relevant principles on adverse possession as follows:

(a) The owner of the land with the paper title was deemed in possession of the land.  If the law was to attribute possession to a person who could establish no paper title to possession but claimed to be a mere trespasser, the burden was upon him to establish his intention to exclude the whole world from the land, including the owner of the land.  Only in this way could be established “adverse possession” in terms of section 13(1) of the Ordinance[3] ;

(b) A person claiming to be in adverse possession must have both possession and the requisite intention to possess.  The question of intention to possess, as with any other question of intention, was one of fact.  Whether the intention could be established depended on an assessment of all the circumstances in a particular case[4].

17.  With the above principles in mind, I turn to the present application.

Discussion

Service

18.  Mr Chan accepted that as the hearing before this court was a re-hearing, this court could re-open the matter of service, if this court were to be not satisfied.  I would thus first consider the question of service.

19.  There had been altogether a total of 3 affirmations of service filed by the P’s service clerk Mr Lee Ka Hing (“Lee”).

20.  On the writ, D’s address was given to be at 3^rd floor, No 5, Yuen Ngai Street, Kowloon, Hong Kong (“Yuen Ngai Street Address”). 

21.  Upon perusal of the Land Registry Records against the Lots dated 10 and 13 January 2014, there had been various incumbrances registered against D’s title of the Lots. 

22.  In respect of Lot 433, among other incumbrances, there were the following registrations:

(i) There was a mortgage registered on 22 June 1959 in favour of a Cheng Kwai Sheng for a consideration of HK$32,000 (pt) (“1959 Mortgage”) and later on 17 June 1988 there was a statutory declaration registered by a Cheng Kwei Sheng (“1988 Statutory Declaration”).  It is not clear to this court whether Cheng Kwai Sheng and Cheng Kwei Sheng referred to the same person or not.

(ii) There was a copy of an enforcement notice on unauthorised development registered on 21 June 1993 under section 23(1) of the Town Planning Ordinance (“Enforcement Notice”), a 2^nd one of such Enforcement Notices registered on 25 August 2006, and a 3^rd one  registered on  2 December 2009.

(iii) Then there was a certified true copy of a letter dated 1 April 2010 addressed to D from the Central Enforcement and Prosecution Section of the Planning Department and registered on 8 April 2010 (“Town Planning Letter”).  The Town Planning Letter had referred to the 3^rd Enforcement Notice and had stated that the relevant matters described in Schedule 2 of the 3^rd Enforcement Notice no longer constituted unauthorized development with effect from 5 March 2010[5].

23.  In respect of Lot 1736, there were two earlier mortgages registered respectively in 1957 and 1958 but these two earlier mortgages had been redeemed prior to the 1959 Mortgage which was also registered against Lot 1736.  The 1988 Statutory Declaration was also registered, but only the 2^nd of the Enforcement Notices referred above in respect of Lot 433 was also registered against Lot 1736.  So far as I can see, the Town Planning Letter did not seem to have been registered against Lot 1736.

24.  There were also two earlier mortgages registered in respect of Lot 1738, but again they had been redeemed prior to the 1959 Mortgage which was also registered against Lot 1738. What was interesting was that on 25 November 1982, there was a statutory declaration by Cheng Kwei Sheng as to loss of the title deeds (“1982 Statutory Declaration”).  The other incumbrances registered against Lot 433 referred to above were also registered against Lot 1738.

25.  In the Town Planning Letter, D’s address was stated that of the Yuen Ngai Street Address, and further, it was stated therein, permission was given for the development of temporary open storage of motorcycles for sale for a period of one year on the land under section 16 of the Town Planning Ordinance on 5 March 2010 (“Permit”).   

26.  Lee had produced in his 1^st affirmation a copy of the Town Planning Letter as evidence of D’s address at which service was effected.

27.  The Town Planning Letter was also what Registrar Lung was referring to when he said there was no reason why D should show no interest in the Lots whilst she had obtained  the Permit[6].

28.  All the documents which were required to be served on D were served by insertion into the letter box at the Yuen Ngai Street Address, and the notice of the date of the hearing of P’s Summons before the Learned Registrar was sent by pre-paid ordinary post to the Yuen Ngai Street Address.  

29.  As to the hearing before this court, a copy of P’s Notice of Appeal with a covering letter addressed to D was also effected by way of insertion at the Yuen Ngai Street Address on 12 May 2014, so was the letter to D to attend before the Listing Office for fixing date, together with the notice of the hearing before this court. 

30.  I have pointed out to Mr Chan at the hearing that it appeared that D had applied for and obtained the Permit, which would only expire on about 5 March 2011, and this was only about 2½ years prior to the Issue Date.  Mr Chan responded to say it was not clear who had made the application.

31.  If the application had not been made by D, but by someone in D’s name, then the Yuen Ngai Street Address would not have been D’s last known address.  This would call into question the service.  Although the Learned Registrar accepted that service of the ASOC had been proved, this was only on the basis of the Yuen Ngai Street Address being stated as the address of the applicant D and the grantee of the Permit in the Town Planning Letter, and on the basis it was indeed D who made the application.

32.  I accept that at this stage, there was no evidence as to who had in fact made the application, whether it was D or some one else, or even P.  None of the Enforcement Notices had been produced to this court.  A copy of the 1959 Mortgage had not been produced to this court.  Although the 1959 Mortgage was entered into a year prior to D acquiring ownership to the Lots, no redemption of the 1959 Mortgage had ever been registered up to the hearing before this court.  D’s acquisition of ownership would thus seem to be subject to the 1959 Mortgage.  The 1982 Statutory Declaration had not been produced to this court either, nor had the 1988 Statutory Declaration.  These declarations were both made after D had acquired title to the Lots, but before P’s alleged adverse possession.  However, if the 1959 Mortgage had not been redeemed, then one would have thought notice should be given to the mortgagee, being a possibly interested party in this action.  There was no evidence that notice had been given to the mortgagee Cheng Kwai Sheng or Cheng Kwei Shing.  Although the 1^st Enforcement Notice was issued and registered in 1993 before P’s alleged adverse possession, the 2^nd Enforcement Notice was issued and registered in 2007 and the 3^rd one in 2009, both after P’s alleged adverse possession.  It was not clear to whom and at what addresses were these Enforcement Notices issued.

33.  Having considered the Land Search Records of the Lots, and the incumbrances registered, in my view copies of the 1959 Mortgage, the 1982 Statutory declaration, the 1988 Statutory Declaration and all the registered Enforcement Notices and other notices registered in the Land Registry should be produced by P by way of an affirmation and P should also satisfy the court as to why notice of these proceedings need not be given to Chan Kwai Sheng and/or Chan Kwei Sheng, and why Chan Kwai Sheng and/or Chan Kwei Sheng need not be joined as an interested party in these proceedings.

Default Judgment 

34.  I accept that by now, the date for D to file her defence is long overdue and D has not filed any defence or responded to this action in any way.  I further accept that as submitted by Mr Chan, since D has not filed any notice of intention to defend the proceedings, the “2 clear days rule” prescribed under Order 19 rule 8A of RHC would not be applicable in this case.

35.  Mr Chan submitted that for an application for default judgment under RHC Order 19 rule 7, the court is to decide on the case according to the statement of claim, or in the present case, the ASOC alone, unless the claim is one mentioned in rules 2 to 5[7].    

36.  Mr Chan had also referred to what was said by Ma J (as he then was) in Lam Chi Fat v Liberty International Insurance [2002] 3 HKLRD 480 as follows[8] : “judgment will only be given on the plaintiff’s claim provided the pleaded facts give rise to the relief sought.  Where, however, the facts do not give rise to the relief sought, then unless the Writ or Statement of Claim is amended, no judgment will be given.  In default judgment situations, the court looks to the pleaded facts alone and no other evidence will be permitted…”

37.  However, what P is now seeking are declaratory reliefs from this court.

38.  Mr Chan accepted that it would not a normal practice of the Court to make a declaration without a trial and he had referred to what was stated in Top One and also relied on by the Learned Registrar in his Decision, but submitted that it was not an inflexible rule.  Mr Chan submitted that it was merely a rule of practice and not of law and should give way to the paramount duty of the court to do the fullest justice to the plaintiff to which he was entitled[9], and that the court should grant the declaration sought by a plaintiff when the plaintiff could only obtain the fullest justice to which he was entitled with the declaration sought[10].

39.  It was Mr Chan’s submission that based on the ASOC, P had proven that he had been in adverse possession of the Lots dating back not less than 12 years from the Issue Date.  It was also Mr Chan’s submission that the Learned Registrar should not have considered other evidence such as the Town Planning Letter.

40.  Mr Chan accepted that this court’s granting of a declaration at the interlocutory stage before trial would be purely discretionary and exceptional.  I do not see why the Learned Registrar could not consider other evidence such as the Town Planning Letter.

41.  If the application to the Town Planning Department had indeed been made by D, then as pointed out by the Learned Registrar, there was no reason for D to show no interest in the Lots since she had obtained the Permit 4 years ago and the Permit expired only 3 years ago. Indeed, if D had applied and obtained the Permit to use the Lots as open storage of motocycles for sale, this would seem to be contrary to P’s evidence of it being the sole occupier of the Lots.

42.  In fact, even without considering the Town Planning Letter, or the Land Search Records of the Lots, or any other evidence, I agree with what Fok J had said in Top One, and although it is not an inflexible rule, I am of the view that it would not be appropriate in the present case to grant the declaratory reliefs sought in the ASOC by way of default judgment, and on unproved allegations.

Conclusion

43.  In light of what I have said above, I am not prepared to exercise my discretion to grant the declarations sought in P’s Summons.  In the circumstances, I will dismiss P’s Notice of Appeal.

44.  Mr Chan has sought, in the alternative, for an order that the pleadings of this action have been closed, such that P could proceed to other procedures in order to list this action for trial.  I have indicated earlier in paragraph 35 that P should file a further affirmation containing the information stated in that paragraph, and the Master would need to be satisfied with those matters at or before the Case Management Conference.   In such circumstances, it is more appropriate for the directions sought by P to be dealt with by a Master.

45.  As for the costs of the Notice of Appeal, as D was absent at the hearing before this court, I will make no order as to costs.

[1] B:51-62

[2] Para 58/1/2, Hong Kong Civil Procedure 2014, Vol 1

[3] At 14E

[4] At 12E

[5] B:47-48

[6] See paras 6 and 7, B:90-91

[7] Para 19/7/11, Hong Kong Civil Procedure 2014 Vol 1

[8] At para 27

[9] Para 19/7/14, Hong Kong Civil Procedure 2014 Vol 1

[10]Lai Wai Kuen v Wong Shau Kwong (HCA 3424/2003, unreported, 12 November 2004); see also paras 19/7, 19/7/2, 19/7/8, 19/7/14 & 19/7/20