CHAN WING GO v. THE INCORPORATED OWNERS OF WING HONG FACTORY BUILDING

DCCJ1736/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1736 OF 2014

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REASONS FOR DECISION

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1.  This is an application made by the plaintiff pursuant to Order 13 rule 6 and Order 19 rule 7 of the Rules of the District Court for default judgment against the defendant.

2.  The plaintiff claims for a declaratory relief of possessory title to two parts of the common area of Wing Hong Factory Building, Nos 777-783 Yu Chau West Street, Kowloon, Hong Kong (“the Building”).  The two parts are shaded yellow and pink (“the Shaded Portions”) on the plan (“the Plan”) annexed in the summons dated  11 August 2014. 

3.  According to the affidavit of service filed on behalf of the plaintiff, the Writ of Summons and the Statement of Claim were served on the defendant on 9 May 2014 by registered post to its registered address obtained from the Index of Owners’ Corporation of Land Registry.  The Amended Statement of Claim was served by hand on the defendant on 8 August 2014.

4.  The registered post has not been returned.  The defendant has neither filed notice of intention to defend nor defence.

The Applicable Law

5.  The law on adverse possession is well established.  The burden is on the squatter to prove that he has both factual possession of the land and the requisite intention to possess, and that the possession was adverse to the owner: Wong Tak Yue v Kung Kwok Wai & Another [1998] 1 HKLRD 241. 

6.  The squatter is required to prove that he has had exclusive possession of the land for the requisite period of time.  The period of adverse possession as required by sections 7 and 17 of the Limitation Ordinance (Cap 347) is 20 years if the right of action accrued before 1 July 1991.  It is 12 years if the right of action accrued on or after 1 July 1991.

7.  The fact that the Shaded Portions are common parts of the Building will not prevent the plaintiff from claiming possessory title. The Court of Appeal held that the it did not matter what were the restrictions imposed on the use of the common part by the owners under the express provisions in a deed of mutal covenant, or by the IO under the incorporated provisions of s.34I of the Building Management Ordinance (Cap. 344). Once the title to the common part was extinguished, the owners and the IO no longer had any right to it which they could enforce against the plaintiff: see Wong King Lim v The Incorporated Owners of Peony House, CACV3/2012 per Yuen JA at §34 and per Lam JA at §§43-45.

8.  The above principle was endorsed in Yeung Mau Cheung v The Incorporated Owners of Ka Ming Court, Castle Peak Road (IO), [2013] 4 HKLRD 211.

The plaintiff’s pleaded case

9.  It is pleaded in the Amended Statement of Claim that the plaintiff’s predecessor took possession of the Shaded Portions in or about 1961.  Then the plaintiff purchased the Shaded Portions from his predecessor in 1999 and  he leased out since 1998.  Hence, the defendant’s right to recover possession was time-barred at the time of issue of the Writ in these proceedings in May 2014.

10.  I have difficulties with the plaintiff’s pleaded case.  First, the fact that the plaintiff managed to lease out the Shaded Portions before he purchased the same defies common sense.  Secondly, it is unclear from the pleaded facts if the plaintiff had been in adverse possession of the Shaded Portions with the requisite intention.

11.  Mr Leung for the plaintiff confirms that it is a typographical error on the year of purchase of the Shaded Portions. It should be 1998 instead of 1999. 

12.  As regards to the intention to possess, Mr Lee elaborates that the Shaded Portions was enclosed by shutter gates and locked up. The keys were kept by the plaintiff and his tenants. Neither rent nor management fees were ever paid by the plaintiff or his predecessors.  

13.  The above material facts have not been specifically pleaded in the Amended Statement of Claim.

14.  The court’s power to grant judgment under Order 19 rule 7 is discretionary.  The court’s task is to see whether the plaintiff appears to be entitled to judgment on his statement of claim: Hong Kong Civil Procedure at 19/7/14. 

15.  Besides, it is not the practice of the court to make a declaration of right in default of defence without a trial. However, this is only a rule of practice and should only be followed when the plaintiff can obtain the fullest justice to which it is entitled without the declaration he seeks (Lam Shing Shou v Lam Hon Man & Ors [2002] 1 HKLRD D3; Lai Wai Kuen v Wong Shau Kwong, unreported, HCA 3424/2003(12.11.2004): Hong Kong Civil Procedure at 19/7/20. 

16.  The Amended Statement of Claim does not show a case for the order the plaintiff seeks to obtain. I therefore give direction to the plaintiff to make amendment.

17.  On 18 September 2014, the plaintiff applies to re-amend the Amended Statement of Claim and the same is served on the defendant by hand on 19 September 2014.

18.  In the premises, I am satisfied that the defendant has had notice of this action as well as this summons.  I proceed to deal with the plaintiff’s application on the pleaded case on the Re-amended Statement of Claim.

Analysis

19.  The Re-amended Statement of Claim is pleaded as follows:-

(i) In or about 1961, the plaintiff’s predecessor named Wong Hin Leung who is and was at all material times neither an owner nor a tenant of the Building, without the consent, approval and/or authority of the defendant’s predecessor, enclosed the common areas at the other end of shop A and shop D respectively on the ground floor of the Building, ie the Pink Area and the Yellow Area, with shutter gates to form two fully enclosed stores (“the Stores”), each of about 500 square feet in area for personal use.  The Stores were kept under locks at all times and the keys were kept by the plaintiff’s predecessor.

(ii) On 10 August 1998, the plaintiff purchased the Stores together with all the possessory rights of the Yellow Area and the Pink Area from his predecessors for the consideration of $300,000.

(iii) Since or about August 1998, the Stores has been leased out by the plaintiff continuously, without interruption of or interference by the defendant.  The plaintiff and his predecessor have neither paid any rent nor management fee to the defendant, and no attempt has ever been made by the defendant or its predecessor to repossess the Stores from the plaintiff or his predecessor.

(iv) Since or about August 1998, the plaintiff has been occupying the Yellow Area and the Pink Area exclusively and continuously, through his tenant, without the consent, approval and/or authority of the defendant and/or its agent.  The Stores were kept locked at all times and the keys were kept by the plaintiff and his tenants.

(v) In the premises, the plaintiff has been in adverse possession of the Stores and the Pink Area and the Yellow Area for a period in excess of 12 years (or 20 years in aggregation with the period of adverse possession by the plaintiff’s predecessor) next before the commencement of this action.

20.  A default judgment seeking declaratory relief would have to be scrutinized carefully.  Based on the above pleaded case, I am satisfied that the plaintiff had acquired a possessory title of the Shaded Portions.  He had proved both factual possession of and the requisite intention to possess the Shaded Portions since 1961 for more than 20 years before the commencement of this action. Even if I do not take into account the successive possession by the predecessors,  the time of the plaintiff’s own possession since 1998 is more than 12 years.  It would suffice to extinguish the title of the defendant.

21.  I am satisfied that the plaintiff will not obtain the fullest justice to which he is entitled without the declarations he seeks.

Conclusion

22.  Therefore I make the following declarations:-

(i)   the defendant has lost its right to bring any action to recover the land shaded yellow and the land shaded pink on the Plan annexed, or any part thereof by virtue of section 7(2) of the Limitation Ordinance, Cap 347; and

(ii)   by virtue of section 17 of the Ordinance, the title of the defendant has been extinguished in favour of the plaintiff and the plaintiff has acquired all the rights, title and interest including the ownership and right to exclusive possession and occupation of and in the land shaded yellow and pink on the Plan annexed;

Costs

23.  As the hearings on 8 and 18 September 2014 were adjourned to allow the plaintiff to amend his Amended Statement of Claim, I make no order as to the costs of those hearings. 

24.  There is no reason why costs should not follow the event.  I therefore make an order of costs of this action be to the plaintiff, such costs to be taxed if not agreed.