WELLGEM ASIA LTD v. HONG KONG CITY PARKING LTD AND ANOTHER

HCA 216/2021

[2022] HKCFI 314

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 216 OF 2021

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J U D G M E N T

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A. INTRODUCTION

1.  The Plaintiff seeks to recover possession of Nos.28-30 Kai Tak Road, Kowloon City, Kowloon (“the Premises”) and other related relief.  The Plaintiff seeks:

(a)  by a summons of 30 September 2021, summary judgment against the 2^nd Defendant (“Ms To”), who is the only defendant to have acknowledged service of the Plaintiff’s writ and to have filed a Defence and Counterclaim, and striking out of the 2^nd Defendant’s counterclaim;

(b)  by the same summons, default judgment against the 1^st Defendant, 3^rd Defendant and 4^th Defendants (“D1”, “D3” and “D4”);

(c)  by a separate summons of 30 September 2021, an injunction against Ms To.  At the hearing, counsel for the Plaintiff, Mr Johnny Ma, indicated that this was being pursued in the event that the claim for summary judgment failed.

B.  THE BACKGROUND

2.  The Plaintiff is the registered owner of the Premises.

3.  There is no dispute that the Premises have been used to operate a car park.

4.  It would appear from website searches carried out by the Plaintiff that D1 operated a car park business at the Premises until around August 2020, under the name “Hong Kong City Parking”.  According to a business registration search, D1 held a registration for a car park business at the Premises between August 2008 and August 2012 under the name “Hong Kong City Parking”, and D3 has been holding a registration for a car park business at the Premises since 11 January 2016 under the name “Kai Tak Road Parking”.

5.  The Plaintiff says that company search records for D1 show that it was owned by Hackleton Limited (a BVI company) or one KK Wong (“Wong”) from about 2006 to about July 2012.[1]  Wong was also the director of D1 during some part of 2006 to 2008, and then from 14 May 2014 onwards.  A person with D2’s name was the company secretary of D1 between 8 August 2016 and 1 September 2020 (Ms To denies that it was her).  D3 was appointed as company secretary from 21 May 2021.

6.  The Plaintiff says that company search records for D3 show that it was owned by Hackleton Limited from about 2006 to 2020,[2] and that Wong was the company secretary of D3 from about 2006 to 2012, and director of D3 from 15 May 2014.  A person with D2’s name was the company secretary of D3 from 18 October 2013 to 31 October 2020 (Ms To denies that it was her).  D1 was appointed as company secretary from 20 May 2021.

7.  On 26 April 2007, the Plaintiff had entered into an agreement with a Bondwell Management Limited (“Bondwell”), granting Bondwell a licence to occupy the Premises for a term of two years and thereafter on a month-to-month basis, on payment of a licence fee.  According to the Plaintiff, the agreement was signed by Wong on behalf of Bondwell, and thereafter, Wong operated a car park business at the Premises through one or more of Bondwell, D1 or D3.  The Plaintiff has produced evidence of various payments made by D3 to the Plaintiff during the period from February 2015 to March 2019, which were apparently to pay arrears of licence fees.  Ms To does not dispute that such payments were made.

8.  Ms To says that it is she who has been operating a car parking business at the Premises since about August 2008.  She claims that she has had the continuous and exclusive use, occupation, possession and control of the Premises, with the intention of excluding all others, since then.

9.  Unbeknown to the Plaintiff, Bondwell was deregistered in 2008.

10.  Given the non-payment of licence fees since March 2019, and a notice from the Urban Renewal Authority in February 2020 that it intended to acquire the Premises, the Plaintiff took action to recover possession of the Premises in August 2020.

C.  SUMMARY JUDGMENT AGAINST MS TO

11.  Plaintiff has produced a number of emails sent to Wong between August 2011 and January 2021, chasing for payment of licence fees (sometimes described as “car parking rental fee for 28-30 Kai Tak Road”) for the period up to January 2021.  The emails were addressed to Wong at an email address with the domain name “hkcityparking.com”; the statements of account described the licensee as Bondwell but itemised the monthly fees as “Inter-con…rental”.  Wong’s responses were to apologise for the delay in payment, and to make payments from time to time from an account in the name of D3.  He did not suggest that payment was not due, or that he or D3 were not occupying the Premises.

12.  When the Plaintiff’s solicitors’ clerk visited the Premises on 7 August 2020, he observed a notice printed on a piece of yellow A4 paper displayed at the security guard’s booth, bearing the names “Basset Parking” and “東西停車場”, which were names previously used by D3 in operating a car park business at another location and which was also used on Wong’s business card, and “九龍城啟德道停車場” and telephone numbers, all of which corresponded to those on D1’s website.

13.  The Plaintiff’s evidence, not disputed by Ms To, is that its solicitors made calls to one of the aforesaid telephone numbers on numerous occasions in the period between August 2020 and May 2021, and a recorded voice message would be heard, stating that monthly parking services were offered at various locations,[3] and stating that payments for monthly fees should be made by cheque, drawn in favour of “Hong Kong City Parking Limited”.

14.  As mentioned above, D1 held a registration for a car park business at the Premises between August 2008 and August 2012 under the name “Hong Kong City Parking”, and D3 has been holding a registration for a car park business at the Premises since 11 January 2016 under the name “Kai Tak Road Parking”.

15.  It would therefore appear on the face of this evidence that the Premises were being occupied by Wong, Bondwell, D1 and/or D3 with the permission of the Plaintiff.

16.  Ms To’s defence to the application for summary judgment is that she has acquired a possessory title to the Premises through adverse possession.  The primary issue I have to consider is whether this defence is reasonably capable of belief.

17.  Counsel for Ms To, Mr Tim Wong, confirmed at the hearing that the arguments advanced to resist the application for summary judgment were that:

(a)  Ms To did not know Bondwell, Wong, Hackleton, D1 or D3, and did not sign any of the documents relating to her position as company secretary of D1 and D3.

(b)  Bondwell had been dissolved back in 2008 and it was the only party which had been granted the right to occupy the Premises;

(c)  there are various invoices, receipts, deposit slips and photos which show that Ms To was in factual possession of the Premises;

(d)  there was no factual possession by any person other than Ms To during the material period.

C1.  Ms To’s disavowal of knowledge of Bondwell, Wong, Hackleton, D1 or D3 

18.  Ms To says that she does not know Bondwell, Wong, Hackleton, D1 or D3, so that her occupation of the Premises is not by virtue of any permission granted by them.

19.  However, a notice of change of company secretary of D1 was filed with the Companies Registry, appointing Ms To as D1’s company secretary from 8 August 2016.  Ms To does not deny that her name and ID card number were correctly stated on the form, but denies that she was the person who signed the document.  She says that her signature was forged.

20.  In response to Ms To’s evidence, the Plaintiff produced:

(a)  D3’s annual return dated 19 October 2014, which was also signed by a “To Chui Lan”;

(b)  other documents filed with the Companies Registry for D1[4] and D3[5] which were signed electronically by a “To Chui Lan Christine” “by PIN”.  The guidance pamphlets from the Companies Registry indicate that electronic forms submitted to the Registry can be signed by using a password or digital certificate registered with the e-Registry, and that authentication, approval or certification of documents delivered in electronic form to the Registry has to be carried out by a person who has registered with the Companies
e-Registry.  In other words, there should be procedures for verification of the identity of a person who electronically signs documents submitted to the Companies Registry;

(c)  the Plaintiff has also produced the 2020 annual return of a JE Aladdin Limited, a company of which Wong is a founder member, and of which a To Chui Lan Christine is named as the company secretary.  The document was also signed “by PIN” by To Chui Lan Christine.

21.  Ms To did not seek file any further evidence in relation to these additional documents, or to explain her earlier evidence that she had been advised by her solicitors that there is no other document in the Companies Registry which purports to bear her signature.

22.  Mr Wong submits that the two manuscript signatures appearing on D1’s notice of change of company secretary and D3’s annual return did not resemble Ms To’s signature as appearing on certain other documents.  Be that as it may, it is not credible that by some unexplained coincidence, Ms To’s name and HK ID card number, and the electronic signature of someone with Ms To’s name (the use of which would have required registration with the Companies Registry), just happened to appear on the documents filed in the Companies Registry by D1 and D3, which companies just happen to be the ones which the Plaintiff has been dealing with regarding payment for the right to occupy the Premises.

23.  In this regard, Ms To’s reaction to the discovery of the alleged forgery is telling.  She does not appear to have been sufficiently concerned by the repeated unauthorised use of her identity to make a report to the police, or to take any steps either to investigate who may have been behind such unauthorised use, or to prevent further unauthorised use.

24.  I do not find Ms To’s claim not to know Wong, D1 or D3 to be credible.

C2.  Dissolution of Bondwell

25.  Mr Wong’s submission was that as Bondwell was the only entity to whom a licence had been granted, and as Bondwell had been dissolved, any payments made by any of Wong, D1 or D3 were “not valid payments in law”; Wong, D1 and D3 could not be licensees, and the Plaintiff therefore could not rely on their occupation of the Premises to contradict Ms To’s occupation of the Premises.

26.  However, a “licence” does not have to be a written document.  If the Plaintiff permitted Wong, D1 and D3 to occupy the Premises upon payment, the fact that it had signed a formal licence agreement with Bondwell did not render payments by Wong, D1 or D3 “invalid”.  Thus the Plaintiff is not precluded from relying on the status of Wong, D1 and/or D3 as licensees.  Whether or not this avails the Plaintiff is a matter I return to below.

C3.  Ms To’s claim to factual possession of the Premises

27.  Ms To produced a number of invoices and receipts which, she said, showed that she paid for the cost of improvements and maintenance of the Premises over the years since 2009. However, these documents did not on their face indicate that Ms To was the person in possession of the Premises.  In some cases they did not even refer to Ms To, or the Premises.  Nor did they show that payment had been made by Ms To out of her own funds, save that one receipt did state that $800 had been received from Ms To for emergency repairs at the Premises.

28.  Of course, a summary judgment application is not a mini-trial on affidavit.  However, the production of these documents is, in my view, insufficient to raise a credible case that Ms To was in possession of the Premises.

29.  Furthermore, Ms To suggested that she had other documents supporting her possession of the Premises, but that most of them were lost during a decoration of her flat in 2015.  However, even taking this at face value, it would not explain why she has not produced documents from after 2015 showing that she ran the car park operation as alleged, such as electricity bills (since she claimed to have been the one arranging for the supply of electricity to the Premises) or salary receipts (since she claimed to have replaced all staff and hired her own).  Nor would it explain why she has not produced evidence from persons such as the staff she says she hired, who could have corroborated her claim to be the operator of the car park.

30.  Ms To’s evidence also has to be considered against the background that payments were being made to the Plaintiff for the period from February 2015 to March 2019, which according to the Plaintiff’s statement of account issued to Bondwell would have been in settlement of several years’ worth of licence fees, albeit in arrears.  During this period, the Plaintiff continued to demand licence fees for ongoing usage of the Premises.  No suggestion has been advanced as to why such fees would have been paid by D3, or why Wong or Bondwell did not object to the ongoing charging of fees, if D3 or Bondwell had not been using the Premises.

31.  I therefore do not consider Ms To’s claim to have been in possession of the Premises since 2008 as the operator of the car park thereon to be a credible one.

32.  Mr Ma submitted that in any event, even if Ms To had been in some sort of occupation of the Premises, it did not constitute adverse possession against the Plaintiff in law, since it would not have been single and exclusive possession.  The argument was that:

(a)  the general rule is that only one person can be in possession at any one time, exclusivity being the essence of possession: see JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at [70];

(b)  if a person takes possession of land by virtue of a licence granted by another, it is the licensor who is treated as being in possession, citing Jourdan and Radley-Gardner, Adverse Possession, 2^nd ed., para 7-127;

(c)  where two persons both exercise control over the land, the one with title is treated as being in possession: Jourdan and Radley-Gardner, paras 7-99 to 7-100;

(d)  given that the Premises were in the possession of Wong via one or more of his companies during the period of possession claimed by Ms To, Ms To’s possession could not have been single and exclusive in any event.

33.  However, this argument is based on the premise that both the licensee (whether Wong, D1 and/or D3) and Ms To could be considered as “exercising control” over the Premises, which is the very point disputed by Ms To.  The argument is also based on the premise that Wong, D1 and/or D3 remained in possession of the Premises throughout (or at least up to twelve years prior to the Plaintiff’s writ) and that they did not (for example) lose possession, with Ms To taking over possession from 2008 (as she claimed).  Possession can be lost when it is given up or discontinued, and acquired by another: JA Pye (Oxford) Ltd, supra, at [70].  The argument is therefore not an additional, free-standing one in the Plaintiff’s favour.

C4.  Ms To’s claim that there was no factual possession by any other person during the material period

34.  Mr Wong submitted that even if D1 (and/or D3) had set up a website for a car park business on the Premises, held business registrations for the same, and displayed notices at the Premises with telephone numbers for the car park business, this did not amount to physical occupation.  Accordingly, Ms To was the only person in factual possession of the Premises.

35.  Given that I do not find Ms To’s claim to have been in factual possession of the Premises to be a credible one, this argument does not take Ms To’s case further.

D.  DEFAULT JUDGMENT

36.  None of the defendants other than D2 has given notice of intention to defend the proceedings or filed a defence.

37.  In the circumstances, I grant default judgment against D1, D3 and D4 pursuant to O.19 r.7.

E.  DISPOSITION OF THE APPLICATIONS

38.  I therefore accede to the Plaintiff’s application for summary judgment as against Ms To, and for judgment in default of defenceas against D1, D3 and D4.

39.  There are a number of ancillary issues arising from the relief sought in the Plaintiff’s applications.

E1.     Writ of possession

40.  I will grant an order as sought by the Plaintiff’s summons for possession of the Premises.

41.  In addition, Mr Ma’s skeleton argument sought a further order for leave to issue a writ of possession under O.45 r.3 (to enforce the judgment for giving of possession) in the event that Ms To fails to vacate the Premises within 7 days of the court’s order.  However, O.45 r.3(3) requires an applicant to first establish that every person in actual possession of the whole or part of the land has received sufficient notice of the proceedings to enable him to apply to the court for any relief to which he may be entitled.  I note that under Practice Direction 16.4, notice of proceedings to any person in actual possession is normally given by posting such a notice on three successive days at the entrance to the premises, and that four clear days should have elapsed between the giving of such notice and the making of the application for leave.  Whilst this is not the only way of demonstrating that sufficient notice has been given, in the present case, where the point was not addressed in oral argument and where no evidence has been filed which directly addresses O.45 r.3(3), I decline to grant leave at this stage.

E2.  Mesne profits

42.  The Plaintiff has also claimed mesne profits against D1, D3 and Ms To, and damages suffered as a result of the difficulties it has experienced in not so far having been able to accept the Urban Renewal Authority’s offer to acquire the Premises by reason of the claim of adverse possession.  The claim for mesne profits runs from 8 August 2020, after a formal demand was issued to the occupiers of the Premises asking for vacant possession of the Premises.

43.  Mr Wong has not advanced any arguments against these claims, on the basis that any amounts due under these items of relief are to be assessed.  I therefore make an order in favour of the Plaintiff for mesne profits from 8 August 2020 and damages, and interest on both, to be assessed.

E3.  Injunction to demolish guard booth

44.  The Plaintiff sought an order for a mandatory injunction that D1, D3 and/or Ms To should demolish the security guard’s booth on the Premises; alternatively, that the Plaintiff be at liberty to remove any illegal or unauthorised structures on the Premises at the cost of D1, D3 and/or Ms To.

45.  Mr Ma confirmed that he was not pursuing either limb of the order against Ms To, there being no evidence that she had installed the booth.  He also confirmed that he was not pursuing the second limb of the injunction against either D1 or D3, as it was essentially declaratory relief and this was not normally ordered by way of default judgment.

46.  In other words, the Plaintiff only sought the first limb of the order against D1 and D3.  However, there was no evidence that either D1 or D3 had installed the booth.  Nor was it explained how such an order might be enforced in practice, particularly if the Plaintiff was to recover possession of the Premises to the exclusion of others. In the circumstances, I decline to grant any injunctive relief.

E4.  Striking out of counterclaim

47.  Ms To’s counterclaim is founded on the same basis as her defence to the Plaintiff’s claim.  I therefore accede to the Plaintiff’s application to strike out the counterclaim.

E5.  Interlocutory injunction against Ms To

48.  The Plaintiff issued a separate summons on 30 September 2021, seeking an injunction against Ms To for delivery up of vacant possession by 30 October 2021, so as to enable the Plaintiff to accept the offer made by the Urban Renewal Authority to acquire the Premises.  The Authority required the Premises to be assigned free from encumbrances, on a vacant possession basis.  On 7 September 2021, it imposed a deadline of 31 December 2021 for the signing of certain agreements to give effect to the offer.  As events turned out, it was not possible for the Plaintiff’s application for an injunction to be heard before the original deadline expired.

49.  Mr Ma indicated that he would pursue the application only in the event that the application for summary judgment fails.  It is therefore not necessary for me to make any order for injunctive relief.

50.  However, Mr Ma asks for costs of the application.  Whilst I have not granted any injunction, it seems to me that it was justified for the Plaintiff to have taken out the application for the same in the circumstances then prevailing.  I therefore make an order nisi that Ms To pays the costs of and occasioned by the summons of 30 September 2021 issued against Ms To, to be taxed if not agreed.

E6.  Costs of the action and the summons for summary judgment and default judgment

51.  I make an order nisi that the Plaintiff is to have the costs of the action, including the costs of and occasioned by the summons of 30 September 2021 (seeking summary judgment and default judgment),[6] to be taxed if not agreed, with all defendants being jointly liable for the costs common to all, and each defendant severally liable for the additional costs attributable to that defendant: see Dansk Rekylriffel Syndikat etc. v. Snell [1908] 2 Ch 127 at 138.