CHAN WING TONG v. THE INCORPORATED OWNERS OF KAM CHUNG BUILDING (JAFFE ROAD) AND OTHERS

HCA 1581/2017

[2023] HKCFI 1434

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1581 OF 2017

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D E C I S I O N

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Introduction

1.  The present application before this Court is a summons issued by the plaintiff (“P”) to join the majority owners of Kam Chung Building (Jaffe Road) (“Joinder Summons”) and to seek, amongst other things, a declaration that in the event an order for sale is made in the proceedings in the Lands Tribunal (“Tribunal”) sought by the majority owners under the Land (Compulsory Sale for Redevelopment) Ordinance, (“Cap 545”), such an order is not binding on P.

2.  The main action, commenced about 6 years ago, concerns an adverse possession claim by P against the defendant, namely the Incorporated Owners of Kam Chung Building (Jaffe Road) (“IO”). Kam Chung Building (“Building”) is situate on a piece of land known as Remaining Portion of Section C of the Inland Lot 2821 (“Lot”). The Building is bounded on its immediate southern side by a scavenging lane (“Lane”). Part of the Lane falls on the Lot, with the remaining part falls on the adjacent government lot. It is P’s case that he and his family have been operating a stall on the Lane and occupying the relevant part of the Lot (“Relevant Part”) since no later than 1974. P claims against the IO, amongst other things, a declaration that P has obtained a good possessory title to the Relevant Part.

3.  The trial of the main action has been fixed for 8 days commencing from 18 July 2023 (“Trial”).

4.  It is not in dispute that:

(1)  the Relevant Part is a common part of the Lot and the Building; and

(2)  no undivided share is allocated to the Relevant Part (or for any common parts of the Lot and the Building)

5.  One of the main matters relied by the IO in their defence is the doctrine of illegality.

6.  On 10 May 2022, the majority owners of the Building (respectively “D2”, “D3”, and “D4”, and collectively “MOs”) issued an application in Tribunal under Cap 545 for an order for sale (LDCS7000/22) (“LT Proceedings”).

7.  P’s solicitors had written to the MOs’ solicitors to enquire as to whether they will bring to the Tribunal’s attention P’s present action, to which the MOs indicated that they will do so in due course by a witness statement and will keep P informed. Subsequently, by a letter dated 5 December 2022, P’s solicitors wrote again to enquire whether the MOs agree that an order for sale under Cap 545 will not bind P in the event P’s claims in this action were to succeed. MOs’ solicitors replied that P’s alleged interests are irrelevant to the MOs’ application under the LT Proceedings. P followed up with another letter dated 6 December 2022 and sought confirmation from the MOs that they take no issue with P’s contention that an order for sale in the LT Proceedings will not affect P’s position (“Confirmation”).

8.  In their reply dated 8 December 2022, the MOs indicated that they made no representation as to whether their application in the LT Proceedings would affect P’s interests and that it was open to the Tribunal to make the orders sought. As P did not obtain the Confirmation from the MOs, on 16 February 2023, P issued the present Joinder Summons.

9.  On the same day, P’s solicitors sent a further letter to the MOs’ solicitors seeking the Confirmation. No response was received.

10.  In the 1^st affirmation filed by Mr Chan Tak Kim Sylvester, a legal executive of P’s solicitors, he deposed that he had attended a call over hearing on 29 March 2023 in respect of the LT Proceedings in the Tribunal on instructions of P. During the call over hearing, one of the minority owners of the Building had applied for a stay of the LT Proceedings in light of the present action, but the MOs’ representative submitted that even if P’s claim in the present action were to be successful, it would be at most only be an incumbrance and that this could be left to be dealt with by the trustees appointed in the event an order for sale made in the LT Proceedings.

11.  To summarise, the legal issue raised was whether P’s claim herein, even if successful, is at most only an incumbrance (“Legal Issue”). It is P’s submission and the proposed claim against the MOs that in the event P’s claim succeeds, he has the “best” title to the Relevant Part, ie that of an “absolute legal owner” in the sense that no one in the world (in Hong Kong, except the government as freeholder) has a better title to that portion relative to him, and no one can lawfully dispossess him. It is P’s case that the Legal Issue is of general and public importance, and the purpose of the Joinder Summons is for the Legal Issue to be canvassed during the Trial at the same time, in the event that P succeeds with his claim for possessory title.

Decision and reasons

12.  Having considered the parties’ respective submissions, I am prepared to grant leave to P to join the MOs as defendants and to file and serve the draft re-amended statement of claim (“RASOC”) for reasons including those set out hereinafter.

13.  First, the amended statement of claim has not pleaded the Legal Issue and has not included the declaratory relief, namely that in the event of an order for sale is made in the LT Proceedings, such order is not binding on P and that in the event that P’s claim for possessory title is successful (“Declaration”). In light of this, P will need to seek leave to re-amend its amended statement of claim to properly plead the Legal Issue and to seek the Declaration, and to put forward the arguments at the Trial.

14.  Second, having considered the Legal Issue, I am of the view that it is at least arguable, and that P should not be deprived of the opportunity of putting forward its arguments in the event that P succeeds in his adverse possession claim.

15.  Third, if P is allowed to re-amend his amended statement of claim and to seek the Declaration, in my view, the MOs are the necessary parties to be joined.

16.  Fourth, as to lateness, both IO and MOs have complained of “inexcusable lateness” on the part of P. There was no sufficient evidence that when P commenced the present action in 2017, he already knew of the MOs’ intention to commence the LT Proceedings, which were in fact only commenced in May 2022. P’s solicitors had written to the MOs’ solicitors in June 2022, but I accept that it was only in December 2022 that the Legal Issue was clearly raised. However, P’s evidence showed that D2 has been the majority owner since March 2005and it was D2 who took step to have the IO formed on 14 September 2005. D3 and D4 are companies within the same group as D2. In light of this, although P could have issued the Joinder Summons earlier, the MOs must have already been aware of the present action at the time when they were acquiring the other units in the Building in 2018. Further, the MOs should be fully aware of the ongoing progress of the present action and the present disputed factual and legal issues between P and the IO. The MOs have been fully aware of the Legal Issue since latest in December 2022.

17.  Even though there was lateness on the part of P, the Legal Issue is a distinct legal issue which should not give rise to any new factual disputes, save that as accepted by P, the MOs would be entitled to cross examine P. In any event, I am of the view that the tight timetable to be set out later should not derail the Trial even though the attitude of the minority owners was not yet known at the hearing before this Court. Any prejudice suffered by the IO and MOs can be addressed by costs. The IO and MOs have not really identified any other prejudice.

18.  Fifth, it has been suggested by the IO and the MOs that as the Legal Issue only arises if and when P succeeds in establishing his possessory title over the Relevant Part, and also if and when the MOs succeed in obtaining an order for sale in the LT Proceedings, it is not necessary and pre-mature to determine the Legal Issue at the Trial. It has been suggested that P can commence a fresh action after, and in the event, P has been granted a possessory tile to the Relevant Part and to seek an order for a determination on the Legal Issue under the Order 14A procedure, or to bring an appropriate application in the Tribunal upon P being granted a possessory title.

19.  It was pointed out on behalf of IO and/or MOs that in Group Leader Ltd v Hui Sun Fat [2016] 2 HKLRD 625, as Lam VP (as he then was) had only said that prima facie, persons who are not majority owners or minority owners do not have any locus in the first two of the four phases of an application under Cap 545, it would be open for P to argue that he has locus in the last two of the four phase. The four phases referred to by Lam VP in the Group Leader case are those identified by Riberio PJ in Capital Well Ltd v Bond Star Development Ltd (2005) 8 HKCFAR, namely (i) the application for an order for compulsory sale; (ii) the determination by the Tribunal; (iii) sale and (iv) apportionment and application of proceeds of sale. As at the moment, there has been no determination by the Tribunal yet, the Joinder Summons should thus be dismissed.

20.  I understand no stay has been granted in the LT Proceedings and the hearing is now fixed in December 2023 before the Tribunal for the order for sale, which is only about 5 months after the Trial. Notwithstanding the submissions from IO and the MOs, and to avoid multiple applications and having considered the underlying objectives in Order 1A of the Rules of the High Court, I am of the view that to give effect to the underlying objectives, and to secure the just resolution of all the disputes in accordance with the substantive rights of the parties and to be cost-effective, the Legal Issue should be canvassed at the Trial in the event P’s claim for possessory title is to succeed.

Order

21.  In light of the above and having considered all the circumstances of this case, I am prepared to grant an order in terms of paragraphs 1 and 2 of the Joinder Summons.

22.  As for costs of the Joinder Summons, I order P to pay the IO and the MOs their costs, to be taxed if not agreed, on party and party basis. This is an order nisi which shall be made final within 21 days.

23.  To ensure the Trial will not be derailed, I made the following directions:

(1)  Leave to P to file and serve the Amended Writ and RASOC on or before 30 May 2023;

(2)  Leave to the IO to file and serve any re-re-re-re-amended defence and counterclaim, if any, on or before 12 June 2023;

(3)  Leave to the MOs to file and serve their defence and counterclaim, if any, on or before 12 June 2023;

(4)  Leave to P to file and serve any re-re-re-re-re-amended reply and defence to counterclaim, if any, on or before 15 June 2023;

(5)  Leave to P and IO to serve any supplementary list of documents limited to P’s new claim on or before 21 June 2023; Leave to MOs to serve any list of documents on or before 21 June 2023;

(6)  Inspection of documents to take place on or before 26 June 2023;

(7)  P and MOs to exchange witness statements, if any, on or before 3 July 2023;

(8)  In relation to the PTR order made on 20 April 2023:

(a)  the time for lodging the trial bundles, agreed list of disputed issues, agreed chronology and agreed trial template in paragraph 4 be amended to on or before 7 July 2023;

(b)  the time for P to lodge opening submissions in paragraph 5 be amended to 7 July 2023;

(c)  the time for IO to lodge opening submissions in paragraph 5 be amended to 13 July 2023

(9)  The MOs to lodge opening submissions on or before 13 July 2023;

(10)  Liberty to apply;

(11)  Costs of these directions be costs in the cause.