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DCCJ2576/2013
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 2576 OF 2013
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BETWEEN
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LUNG CHEUNG DEVELOPMENT COMPANY LIMITED |
Plaintiff |
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and
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CHAN YIP SANG |
1st Defendant |
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CHAN WAI MING |
2nd Defendant |
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| Before : Deputy District Judge Anthony Chow in Chambers (Open to public) |
| Dates of Hearing : 6 March 2014 |
| Date of Reasons for Decision : 17 March 2014 |
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REASONS FOR DECISION
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1. This is an application by the plaintiff for summary judgment under Order 14 and to strike out the defence and counter-claim under Order 18 rule 19, the Rules of District Court.
2. After hearing submissions from both parties, I granted the plaintiff’s applications. These are my reasons.
Background
3. The plaintiff is the registered owner of a number of lots in D D 12, Yuen Long, New Territories (the “Lots”).
4. The 1st defendant was the tenant and the 2nd defendant the occupier of part of the Lots.
5. After expiration of the last lease agreement between the plaintiff and the 1st defendant, the defendants refused to give up possession to the plaintiff.
6. The plaintiff filed this claim for return of possession, mesne profit against the 1st defendant and damages to be assessed against the 2nd defendant.
7. Default judgment was entered against the 1st defendant on 23 October 2013, leaving the 2nd defendant as the only defendant in this matter.
8. The 2nd defendant counterclaimed against the plaintiff for a declaration that he has occupied the property for a continuous period of 12 years and the plaintiff’s right has expired under the Limitation Ordinance.
The plaintiff’s case
9. The plaintiff alleged by a tenancy agreement dated 30 July 1993, the plaintiff leased part of the Lots to Mr Chan Man Chung (the “Deceased”).
10. By other tenancy agreements on various dates, the plaintiff leased other parts of the Lots to廖瑞通 and others. Thereafter, 廖瑞通 and others surrendered their leases to the plaintiff, part of the Lots was resumed by the government and parts of the Lots were further subdivided by deed poll.
11. Since about 1 October 2001, the Deceased had occupied part of the Lots originally leased to 廖瑞通.
12. On or about 25 July 2003, before the Deceased passed away sometime in 2004, the plaintiff alleged they entered into another tenancy agreement with the Deceased for what was left of the Lots.
13. After the Deceased passed away, the plaintiff alleged it entered into various further tenancy agreements with the 1st defendant, the son of the Deceased. There were subsequent changes to the lease terms and to the leased land, but because this application was solely determined on whether the 2nd defendant had the required intention to possess, these changes and which part of the Lots were leased are not relevant.
14. Unbeknown to the plaintiff, the Deceased during his life time and the 1st defendant thereafter, had contrary to the terms of the various tenancy agreements, sublet part of the Lots to the 2nd defendant. For ease of reference I will refer to the sublet part as the “Land”.
15. The defendants refused to deliver possession of the Land after notice and the plaintiff brought this suit.
The 2nd defendant’s case
16. The 2nd defendant alleged that since 1999, he and the Deceased had adversely possessed the Land.
17. The 2nd defendant alleged that in 1999, the Deceased told him there was a lease agreement with the plaintiff for about half of the Lots and the rest, the Deceased had adversely occupied them against the other tenants.
18. Due to his advanced age, the Deceased did not want to continue cultivating the Land, therefore he asked the 2nd defendant to enter into a cooperative arrangement and an agreement dated 1 April 2002 (the “2002 Agreement”) was signed. In this agreement, the 2nd defendant agreed to pay the Deceased a sum of $12,000 per year, $6,000 payable on 1 April and 1 September respectively.
19. The 2nd defendant further stated he started to receive profits from the flower cultivating business; hence from 17 February 2004, he increased the payments to the Deceased to $16,000 per year, $8,000 payable on 1 April and 1 September respectively.
20. The 2nd defendant questioned the authenticity of the various leases and rental receipts signed by the Deceased and the other tenants adduced as evidence by the plaintiff.
The law
21. The laws in an Order 14 application are well known and I will not repeat all of them here. Suffice to say Lord Lindley’s statement:-
“Unless it is obvious that the defence put forward by the defendant is frivolous and practically moonshine, O.14 ought not to be applied”
is still applicable today (Codd v Delap (1905) 92 LT 510).
22. Also, in Man Earn Ltd v Wing Ting Fong [1990] 1 HKC 225 the court held:-
“…… Order 14 proceedings for summary judgment when there is no defence to a claim are an important feature of the legal process. It enables plaintiffs in cases where there is no defence to obtain expeditious summary judgment to avoid unnecessary delay. When applied for, it is for the defendant to show that there is a triable issue or an arguable defence if he is to be allowed his day in court…”
23. The law on adverse possession has been clearly established in Powell v McFarlane (1979) PCR 452 and in the Hong Kong case of Tang Tak Hong and others v Cheung Yat Fuk CVCA 203/2002, Yuen JA explained the principal as follows:-
“It is well-established law that to succeed on such a claim, a squatter has to prove (a) that the paper title owner has been dispossessed and (b) that he (the squatter) has taken adverse possession, i.e. that factually, he has taken a “factum possessionis”, with the intention (“animus possessendi”) to treat the land as his own and to exclude all others, including the true owner, from entering onto it…”
The issues
24. When reduced to its essence, the 2nd defendant’s defence is: he has been in continues adverse possession of the Land since 1999; as a co-adverse possessor, with the Deceased before his death in 2004; and thereafter, on his own until today.
25. Before I embark on discussing the issues in this matter, one thing must be made clear: the 2nd defendant must establish he, not the Deceased, had the requisite actual possession and the intention to possess continuously for a 12 years period. Since the authenticity of the various leases and rental receipts signed by the Deceased and the other tenants only goes to prove the Deceased’s adverse possession, they are not relevant in the 2nd defendant’s defence. If the 2nd defendant failed to establish his own actual possession and the intention to possess for a continuous 12 years period, the defence must fail.
26. I have also carefully considered the problems of the actual area of the alleged adverse possession. There were lots of confusion about the 50,000 square feet property, the green property, the pink property, the original property leased to the Deceased, the property leased to廖瑞通, the property leased to the Deceased in 2003, the property resumed by the government, the property leased to the 1st defendant in various leases, but none of that matters.
27. The 2nd defendant’s case has always been he was a co-adverse possessor together with the Deceased before his death in 2004.
28. The plaintiff’s contention is not whether the 2nd defendant had actual possession of the Land or any part of it, but that he was in possession as the Deceased subtenant and did not have the requisite intention to possess, or put it in the words of Yuen JA in Tang Tak Hong and others:-
“…take the land as his own and to exclude all others, including the true owner, from entering onto it …”.
29. It is trite that an adverse possessor can claim continues possession of the land through his tenant. In Tang Tak Hong and others, Yuen JA quoted with approval the following passage in Megarry & Wade (para 21-017):-
“The adverse possessor need not himself be in physical possession of the land. If he grants a tenancy or licence, the tenant or licensee possesses on his behalf…”
30. A tenant however, cannot assume his landlord’s adverse possession. As a matter of law, a tenant cannot obtain adverse possession during his term of tenancy. In the same decision, Yuen JA quoted with approval, another passage from Megarry & Wade (para 21-027):-
“Consistently with this, it is well-established that where a tenant encroaches on the land of a third party during the term of his tenancy, such an encroachment enures to the benefit of the landlord.”
31. The issue is therefore not what property was possessed by the 2nd defendant and the Deceased, but: Is there an arguable case that the relationship between the 2nd defendant and the Deceased was one of co-adverse possessors? If I find the relationship between the Deceased and the 2nd defendant was one of landlord and tenant, the 2nd defendant has no arguable case and which parts of the Lots were possessed by whom, at what period of time no longer matters.
The analysis
32. So how does one prove intention? It is often very difficult to deduce the intention of someone contemporaneous in time, let alone a number of years later. The only sensible way is to reduce that intention into some physical form, usually in writing. That is the reason in modern society, considerable time, affords and money are expended into drafting agreements.
33. Accordingly, to deduce the 2nd defendant’s intention, I must look to contemporaneous agreements signed by the 2nd defendant and the Deceased.
34. Mr Luk, for the plaintiff, pointed to the 2002 Agreement and a second agreement dated 17 February 2004 (the “2004 Agreement” and collectively with the 2002 Agreement as the “Agreements”), made between the Deceased and the 2nd defendant, as proof that the 2nd defendant took possession as tenant and not as co-adverse possessor.
35. The 2nd defendant did not dispute the existence or content of the Agreements. Mr Jim, for the 2nd defendant however, contented that the Agreements were not lease agreements but cooperative agreements to cultivate the Land. The payments specified in the Agreements were not rents, but only a token of appreciation to the Deceased.
The 2002 Agreement
36. Mr Luk argued that on the 2002 Agreement, the Deceased and the 2nd defendant used words: “租金” and “交租日”, which are terms that denotes a tenancy relationship.
37. Mr Jim, on the other hand, argued that the words “合作耕種” as their intention to cooperate in a venture that required adverse possession of the Land.
38. I have carefully examined the 2002 Agreement and the full sentence referred by Mr Jim actually reads: “本人願意與姪兒陳偉明合作耕種, 將部份土地讓他種花耕作,…”. When read in whole, the Deceased and the 2nd defendant’s intention were clearly not to cooperate in a venture of adverse possession, but to cooperate in their cultivation activities and allow the 2nd defendant to cultivate flower on part of the Land.
39. I agree with Mr Luk’s submissions that the words “租金” and “交租日”, clearly denoted the 2nd defendant intended to enter into a tenancy relationship with the Deceased.
40. The fact that the 2nd defendant admits the Deceased received payments in accordance with the “租金” specified on the 2002 Agreement further reinforces my conviction that this was a tenancy relationship.
41. Accordingly, taken to its highest, even if the 2nd defendant did occupy the Land from 1999, with the requisite intention to possess together with the Deceased; from 1 September 2002, (the date of the 2002 Agreement) the 2nd defendant entered into a tenancy relationship with the Deceased and the intention to possess was broken before the 12 years limitation period. The 2nd defendant’s defence cannot stand.
The 2004 Agreement
42. Mr Luk argued that the 2004 Agreement used even more specific and clearly defined words to denote the 2nd defendant’s intention to enter into a tenancy relationship with the Deceased.
43. Mr Jim argued that on the last sentence of the remark column of the 2004 Agreement, the Deceased and the 2nd defendant did not make provision for the possibility of the Deceased dying first, therefore this was not a tenancy agreement.
44. The 2004 Agreement, in part, states as follows:-
(a) the Deceased sublet (“轉租”) a part of the land to the 2nd defendant;
(b) if the government or a developer resumed the land for redevelopment, compensation for the leased property (“所租之土地”) will belong to the 2nd defendant;
(c) the address of the property was termed leased property (“租約地址”);
(d) payment was expressed as real property rent (“土地租金”);
(e) payment date expressed as rental payment date (“交租日期”);
(f) on the execution lines, the Deceased was described as the head tenant (“轉租人”); and the 2nd defendant was described as the tenant (“承租人”);
(g) this agreement was a continues agreement, if the tenant of the farm (“租田者”) being the Deceased, retires or passes, the lease agreement (“租約”) is still effective, the Deceased successor must honour this lease agreement (“租約”); and
(h) if the 2nd defendant no longer personally requires the land to cultivate flowers, the same must be returned to the Deceased “陳偉明本人不再種植花場,要將花場歸還陳文忠.”
45. I agree with Mr Luk that these are words that clearly described a relationship between a sub-landlord and a subtenant and not between co-adverse possessors.
46. Accordingly, even if I was wrong in my analysis of the 2002 agreement and even if, as alleged by the 2nd defendant, he did occupy the Land in 1999 with the requisite intention to possess, together with the Deceased; from 17 February 2004 (the date of the 2004 Agreement) the 2nd defendant entered into a tenancy relationship with the Deceased and the intention to possess was broken before the 12 years limitation period. Again, the 2nd defendant’s defence cannot stand.
47. As to Mr Jim’s argument, by agreeing to return possession of the Land to the Deceased when he no longer requires it to cultivate flowers, the 2nd defendant created a reversionary interest to the benefit of the Deceased.
48. Therefore even if I am wrong in my analysis of the Agreements, by creating a reversionary in the 2004 Agreement, the 2nd defendant had clearly manifested he did not have any intention “to treat the land as his own and to exclude all others, including the true owner, from entering onto it” and again, the defence cannot stand.
Conclusions
49. Having considered all of the pleadings, the witnesses’ statements, the evidence submitted and the submissions of Mr Luk and Mr Jim, I find the relationship between the Deceased and the 2nd defendant was one of landlord and tenant, the 2nd defendant has no arguable case. The defence put forward by the 2nd defendant is “frivolous and practically moonshine” and Order 14 application should be granted.
50. Prior to the commencement of this hearing, Mr Luk and Mr Jim agreed that the Order 18 rule 19 application to strike out the counterclaim is in essence the flip side of the Order 14 application. If I grant the Order 14 application I must also grant the application to strike out the counterclaim.
51. Finally, after I granted the plaintiff’s Order 14 and Order 18 rule 19 applications, I commented that the plaintiff failed to plead damages to be assessed in their pleadings against the 2nd defendant and damages to be assessed should not be granted. On further examination of the Statement of Claim, I was clearly wrong.
52. On paragraph 16 of the Statement of Claim, the plaintiff had clearly pleaded it has been deprived of the use and enjoyment of the Land and has suffered loss and damages. The plaintiff is therefore entitled to claim damages to be assessed.
53. My comment on damages to be assessed did not constitute a final decision on the matter, as I have clearly reserved my reason for granting the plaintiff’s applications.
Order
54. Order in terms of paragraphs (2) and (3) of the amended summons filed on 7 February 2014.
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( Anthony Chow )
Deputy District Judge
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Mr Luk Hok Hing Samuel, of LCP, for the plaintiff
Mr Jerry Jim, of Raymond Chan, Kenneth Yuen & Co, for the 2nd defendant
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