KUNG WONG SAU HIN AND ANOTHER v. WONG TAK YUE

IN THE COURT OF APPEAL

1996, No. 62
(Civil)

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REASONS FOR JUDGMENT

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Nazareth V-P:

1. The appellant, Wong Tak-yue, sought leave to appeal to the Privy Council and an extension of time to make his application. Having heard counsel, we granted both applications and costs to the respondents. We now give our reasons.

2. The appellant was the 14th of about 22 defendants in the substantive proceedings below and consequently came to be referred to as D14, which it is convenient to continue. The plaintiff is the registered owner of the Block Crown Lease under which the land was held, and the several defendants occupiers of parts of the land. The plaintiff commenced the proceedings below by originating summons under O113 on 31st May 1990. On 18th August 1995 the plaintiffs took out a number of summonses against the defendants. The summonses were identical and sought first, to strike out the defences filed by the defendants pursuant to O18 r19 and/or the inherent jurisdiction of the court; and, second, that final judgment be entered for the plaintiff for possession of the land pursuant to O14 r1.

3. The summonses came before Master Jennings on 2nd October 1995, and he dismissed all of them as the plaintiffs had not served any notice under O3 r6. The plaintiffs appealed and the appeals came before Le Pichon J in January 1996. She granted the plaintiff's application for summary judgment against D14. D14 thereupon appealed to the Court of Appeal which dismissed his appeal on 4th July 1996.

4. As mentioned, the land concerned was held under a Block Crown Lease and was expressly demised as agricultural or garden ground. Building or any use other than for agricultural or garden purposes was prohibited. The land was acquired by Kwan Mui and Lam Chak-man, the predecessors-in-title of the plaintiffs, as tenants in common in 1960. By virtue of the New Territories (Renewable Crown Leases) Ordinance, Cap. 152, there was a deemed re-grant of the land from 1st July 1973.

D14's factual assertions

5. According to D14, his uncle Wong Wan-po, as agent for the family, entered into a tenancy agreement with Wong Sai-man on 9th April 1957 for a term of 7 years at an annual rent of $325. The lease itself is not available because it is said to have been lost by D14's former solicitors. D14 alleged that Wong Sai-man was in fact a son of Wong Ng-shi, one of the registered owners. In his affirmation he deposed that he and his family moved into the premises together with his uncle in 1957 and occupied the same partly for domestic purposes and partly for use as a farm. Later the uncle moved out and D14 remained in occupation. No rent was paid to Wong Sai-man or anyone else by D14 since about 1960. The lease expired in 1963 and D14 has remained in possession ever since.

D14's defences

6. D14 relied originally upon two defences, i.e. first, under Part V of the Landlord and Tenant (Consolidation) Ordinance, Cap. 7, and second, adverse possession. However, on 29th December 1995 he took out a summons to amend his defence by deleting the existing defences and replacing them by a defence based upon Part II of Cap. 7. Le Pichon J in her judgment carefully examined the proposed defence under Part II. The factual basis was provided by an affirmation of D14's daughter that since the late 1960s the premises had not been used for the breeding of livestock and that the chicken sheds and pigsty were rebuilt as a dwelling house. It was contended that the tenancy had been converted into a domestic tenancy which attracted the protection of Part II of Cap.7. Le Pichon J found there was no legal basis upon which D14 could claim there was a tenancy to which Part II could apply, and accordingly dismissed the application to amend the defence. She then turned to the Part V defence and held that it ought to be struck out as no reasonable defence was disclosed. As regards the defence of adverse possession, she observed rightly that such claim could only be entertained if the tenancy defence was abandoned. She added that even on that assumption, in view of Lai Moon-hung v Lam Island Development Co Ltd [1994]2 HKC 11 and Hong Kong Ferry (Holdings) Co Ltd v Chan Kwan-fat[1995]1 HKC 542, the claim must fail. The effect of those decisions was that the New Territories (Renewal Crown Leases) Ordinance interrupted adverse possession upon the re-grant of Crown Leases. Nevertheless, no doubt having regard to the pending decisions of the Privy Council on the Lam Island appeal, she assumed an election for adverse possession in D14's favour and, although granting the plaintiff's application for summary judgment, stayed the execution thereof pending the determination of the Lam Island appeal. As indicated, the Privy Council in their judgment dated the 8th July 1996 reversed the Court of Appeal decision and held that Cap. 152 did not interrupt adverse possession.

The other defendants

7. Three of the other defendants were allowed to bring appeals to the Court of Appeal out of time and as a result of those appeals, they have been given unconditional leave to defend on the ground of adverse possession. In respect of a further 5 other defendants consent orders were eventually made to allow them to appeal to the Court of Appeal out of time and subsequently their appeals were allowed by consent. One other defendant who like the present defendant pursued an appeal to the Court of Appeal, prior to the Lam Island decision, has an appeal pending in the Privy Council.

The applicant's case

8. Having regard to this Court's long established view of what constitutes a final judgment, Mr Eric Shum who appears before us for D14 relies not upon paragraph (a) of rule 2 of the Order-in-Council regulating appeals from this Court to the Privy Council, but upon paragraph (b), contending that the question involved is one which, not by reason of its great, general or public importance, but "otherwise" ought to be submitted to Her Majesty-in-Council for decision. He says that plainly upon the position before them, the applicant's solicitors ought not to have sought to abandon the adverse possession ground. There was clearly a possibility that the Privy Council might allow the appeal in the Lam Island case. Had D14 waited until after the Privy Council decision the defence of adverse possession would have been open to D14 subject to the point relating to inconsistent pleas. In those circumstances, on the face of the matter, the Court of Appeal would thus almost certainly have allowed an appeal on that ground had the point been taken. It was not necessary to abandon it. It could have been reserved. Alternatively, the solicitors could have applied for the hearing to be adjourned to after the Privy Council had given their judgment. We doubt whether the attempt to impugn the conduct of the solicitors could avail the applicant. However, where the points made do seem to weigh in favour of the applicant, is that his election, if as such it can be regarded, should have been made upon an informed basis. Even a lay client, we think, would not have unnecessarily abandoned a ground upon which he would have a real possibility of succeeding.

9. Alternatively, Mr Shum submits, if D14 is held to have abandoned the ground of adverse possession, then he submits that the position is that described by the Privy Council in Attorney General v Cheng Yick-chiPC Appeal No. 32 of 1982 unreported at p.2:

"Before this Board the appellants sought leave to re-open argument on the grounds which had been abandoned before the Court of Appeal. The application was opposed by Counsel for the respondents. It is a well-established rule that the Board is very unwilling to entertain any point not duly raised and considered in the Court below. In Ahamath v Sariffa Umma [1931] AC 799, 803 Lord Blanesburgh said this:

'It must only be under very exceptional circumstances that an issue dropped in the intermediate Court of Appeal, and for that reason not dealt with or referred to by that Court, can be revived before this Board.'

Their Lordships are respectfully in full agreement with that statement. Nevertheless they are of opinion that in the present case there is a very exceptional circumstance which calls for a departure from the general rule."

That circumstance was that their Lordships could not effectively address two of the grounds of appeal raised before them if they could not also consider two other grounds which had been abandoned. While that is not the case here, two of three other factors, which, although not very exceptional, weighed with their Lordships and are relevant here:

(i) At this stage of the proceedings, the matters sought to be re-opened raise pure questions of law, and the facts were not in dispute; and

(ii) due notice was given by the appellant of his intention to seek to re-open the issue, and there was no question of the respondents having been taken by surprise.

10. Mr Shum submits, rightly, that it is plain that Le Pichon J rejected the defence of adverse possession on the basis of the view subsequently rejected by the Privy Council. He submits also that it was only in the very exceptional and near unique short period between the Court of Appeal decision in the Lam Island case and it being overruled by the Privy Council, that placed the applicant and his advisers in their predicament. There would have been no difficulty if the matter had been adjourned or the defence of adverse possession reserved. Clearly, the judge contemplated D14 being able to proceed upon a favourable decision by the Privy Council, in granting a stay, which otherwise would serve no useful purpose. Finally, upon the legal position clarified by the Privy Council in Lam Island, the justice of the situation clearly lies with the applicant. These are plainly submissions that must succeed unless effectively countered by the respondents' submissions.

The respondents' submissions

11. For the respondents, Miss Gladys Li QC, who appeared with Mr Nelson Miu, submitted that if adverse possession is relied upon, it must be sufficiently pleaded. I would accept that adverse possession was not satisfactorily pleaded on D14's behalf; however, we have no doubt that it was adequately pleaded and suffices to enable D14 to rely upon it, notwithstanding that the respondents could have and may yet be able to secure particulars if it comes to that.

12. Miss Li also submitted that the applicant clearly elected to abandon adverse possession and that he ought not to be permitted to resile from his election. Again, we are prepared to assume that, effectively, the applicant, D14, must be regarded as having elected to abandon the claim of adverse possession. Nevertheless, as we have already indicated, it seems to us that the circumstances here are very exceptional and that D14 ought to be permitted to rely upon adverse possession. Miss Li also complained, not altogether without reason, that the respondents were prejudiced by not having had the opportunity to address the facts underlying the issue of adverse possession before the Court of Appeal. However, if that matter comes to be regarded as material, it could be remedied by the issue being remitted for trial. It was also said that the respondents' costs have been increased by the manner in which D14's defence has been conducted and that part of those costs can never be recovered. That may be so; it is also a matter that the courts concerned might be able to mitigate if requested. However those matters may be, they are not, in our view, such as should be permitted to preclude D14 from pursuing further the potential justice of his case.

13. By allowing D14 to appeal at this stage, we are giving him a chance to be able to have the merits his case tested at trial rather than to be determined by summary process on a legal basis which has now been overruled. It is also to be observed that the defence which will be argued should the appeal be successful is one which on the little evidence that is before the Court would appear to have a semblance of merit. That might be contrasted with the arguments founded on the Landlord and Tenant (Consolidation) Ordinance which clearly had none.

Conclusion

14. For the reasons indicated, it seemed to us to be right that the extension of time sought should be granted and likewise leave to appeal to the Privy Council.