GLENEAGLE HOLDINGS LTD v. TSE YUE FONG AND OTHERS

HCA 2807/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO. 2807 OF 2006

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J U D G M E N T

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Introduction

1.  This is an action for re-possession of portions of land wrongfully occupied by the Defendants who are adjacent landowners.  The Defendants’ defence is based on agreement, proprietary estoppel and adverse possession.  They also counterclaim for declaratory relief in respect of their possessory title.  

2.  The Plaintiff is a company incorporated on 4 April 1991 in accordance with the Companies Ordinance, Cap 32.  Fong Chun Wing (“Fong Senior”), his wife Chan Wan Ying (“Chan”) and their son Fong So Him were the shareholders and first directors of the Plaintiff.  Fong Senior died on 20 July 1991.  On 20 August 1991, Fong Kin Him, Fong Wai Him (“Fong”) and Fong Kwok Ping were appointed as directors in place of Fong Senior.  The company documents filed with the Companies Registry were inaccurate and confusing as Fong Senior was reported as one of its directors even after his death.  It is not clear when Chan and Fong So Him ceased to be directors.  Fong Senior and his family had migrated to the United Kingdom in 1960s.  However, members of the family take turns to visit Hong Kong about once a year to attend to the Plaintiff’s business. 

3.  According to Fong, Chan is now 83 years of age.  She suffered a stroke in 1989/90 and underwent a major operation to remove a clot on her brain.  The left side of her body was paralysed.  Though substantially recovered, she could only walk with a stick and could not speak clearly because of paralysis of her facial muscle.  She is now suffering from Alzheimer’s disease. 

4.  In 1961, Chan acquired a lot of land in Lung Yeuk Tau in Fanling known as the Remaining Portion of Lot No 1517 in Demarcation District No 83, North, New Territories (“Lot 1517RP”).  The lot was enclosed by an iron fence.  On 30 May 1991, Chan transferred her interest in Lot 1517RP to the Plaintiff.  The land remains undeveloped, but now the Plaintiff has plans to redevelop it.

5.  The 1^st to 5^th Defendants, the 6^th to 9^th Defendants and the 10^th to 13^th Defendants are owners of the neighbouring lots of land, i.e. section B, section C and section D of Lot No 1522 in Demarcation District No 83, North, New Territories (respectively “Lot 1522B”, “Lot 1522C” and “Lot 1522D” and collectively “the three lots”).  A house was built on each of the lots.  Those three houses together with five other houses formed a small estate known as Wing Ning Garden.  The houses were built under the New Territories small house scheme for indigenous villagers, known as ding houses(丁屋).  A wall was built by the developers of Wing Ning Garden separating the three lots from Lot 1517RP (“Enclosing Wall”).  There is no dispute that part of the Enclosing Wall and the balconies of the house built on Lot 1522D (“Balconies”) encroached on Lot 1517RP.  As a result the 1^st to 5^th Defendants, the 6^th to 9^th Defendants and the 10^th to 13^th Defendants wrongfully trespassed and occupied an area of 0.7 square metres, 5.7 square metres and 42.5 square metres respectively of Lot 1517RP (“Wall Encroachment”).  The Balconies of the 10^th to 13^th Defendants’ house built on Lot 1522D protruded over the air space of Lot 1517RP by about 2.2 square metres (“Balcony Encroachment”).

6.  In about April 2005, Fong discovered the Defendants’ wrongful occupation of the Plaintiff’s land.  Despite repeated requests, the Defendants failed to deliver up the trespassed area to the Plaintiff.  The Plaintiff commenced action for recovery of the trespassed area and sought an injunction requiring the Defendants to remove portions of the Balconies which protruded over the air space of Lot 1517RP.

7.  Fong is the only factual witness called by the Plaintiff in this action.  The only other witness is Geoffrey Kwong of Geoffrey Kwong Land Survey Limited, a surveyor, whose evidence is not in dispute.  Fong said that in view of Chan’s old age, feeble condition and that she is suffering from Alzheimer disease, she was not called to give evidence on behalf of the Plaintiff.  However, no medical evidence was produced in support of her medical condition.  For reasons as explained in my analysis of the evidence, I consider Fong a credible witness.  I accept his evidence and explanation for not calling Chan to give evidence.

The defence

8.  The Defendants’ defence in respect of the Wall Encroachment is based on an agreement with the Plaintiff and proprietary estoppel.  The Defendants’ case is that Chan or Chan together with the Plaintiff or Chan acting on behalf of the Plaintiff had agreed with Tang Chu Tin (“Tang”), one of the developers of the Wing Ning Garden and the Defendants’ predecessors-in-title, that the Enclosing Wall should be built one and a half feet from the iron fence enclosing Lot 1517RP.  Alternatively, the Enclosing Wall was built on the party’s understanding as to the exact boundary of Lot 1517RP.  In respect of the Balcony Encroachment, the Defendants’ case is that the Balconies had been built more than twelve years prior to the commencement of these proceedings and the Defendants’ predecessor-in-title had treated the disputed area as his own and had undisturbed possession of the trespassed areas and airspace to the exclusion of the Plaintiff.  This defence was also pleaded in respect of the Wall Encroachment but was abandoned in the course of the trial when the Plaintiff’s aerial photographs conclusively proved that the Enclosing Wall could not have been built before 15 May 1996.

9.  Tang is the sole witness called by the Defendants.  He is the village representative of Lung Yeuk Tau.  He is a respected person in the community.  He was one of the developers and predecessors-in-title of the Defendants’ land.  He claimed to have no interest in this litigation as he is not one of the owners of the houses in the three lots involved.  But I think if the Defendants lose in this litigation, they might seek recourse from Tang as he was one of the developers and is a resident of Wing Ning Garden.  He was assertive in his evidence.  But when his evidence is tested against incontrovertible evidence, he was shown to be exaggerating and unreliable.  I find him incredible and do not accept his evidence where it conflicted with incontrovertible evidence and Fong’s.  I shall deal more fully with his credibility as I analyse the evidence.

The issues

10.  Counsel have no dispute about the legal principles applicable to proprietary estoppel and adverse possession.  The principles are trite principles, anyway.  The factual issues are:

(1) whether there was any oral agreement in or around 1992 between Tang and Chan that the Enclosing Wall should be built one and a half feet from the iron fence enclosing Lot 1517RP;

(2) if there was, whether Chan had authority from the Plaintiff to enter into the agreement;

(3) whether the Enclosing Wall was built on the parties’ understanding of the boundary of Lot 1517RP;

(4) if the answer to (1) or (3) is in the affirmative, did the Plaintiff have knowledge of how and when the Enclosing Wall was built and encourage or allow the Defendants or their predecessors-in-title to build the Enclosing Wall on its present location;

(5) if the answer to (1) or (3) is in the affirmative, did the Defendants or their predecessors-in-title act to their detriment in building the Enclosing Wall such that it is unconscionable for the Plaintiff to assert its legal right over the trespassed areas; and

(6) when were the Balconies built.

11.  Since there is no dispute as to the Plaintiff’s legal title to Lot 1517RP and that the Defendants are trespassing the trespassed areas, the burden of proving the agreement, estoppel and adverse possession falls upon the Defendants.  It would be convenient to start with considering the defence case.

Whether there was any agreement between Chan and Tang as to where to build the Enclosing Wall

12.  By a deed of confirmation and rectification made on 19 February 1993, Tang sub-divided Lot 1522 into ten sections including Lot 1522B, Lot 1522C and Lot 1522D in connection with the development of Wing Ning Garden.  The three lots were sold to indigenous villagers and houses were subsequently built on them.  Tang retained no interest in the three lots of land sold.

13.  Tang was very familiar with Chan and her father who also lived in Leung Yeuk Tau.  Chan’s father was Tang’s grand sworn-father.  Tang’s evidence is that on an occasion in 1992, he together with his builder had a meeting with Chan.  He told her that he and the other owners of the various sections of Lot 1522 wanted to build a wall to encircle the houses to be built for Wing Ning Garden.  Then Chan suggested that the wall should be built one and a half feet from the iron fence she had erected on Lot 1517RP.  The houses were built between 1994 and 1995, after which the Enclosing Wall was erected.  Chan and Fong Senior visited the site on five occasions between 1994 and 1996 and saw the wall having been erected but raised no complaint.  Then sometime later, Chan removed her fence or the fence rotted and collapsed, leaving only the iron pole which was about one and a half feet from the wall.  He said that Chan did not appear to be suffering from any illness and conversed normally with him.

14.  Tang’s evidence is contradicted on many counts by incontrovertible evidence.  The most obvious one is his evidence that Chan and Fong Senior visited him on five occasions between 1994 and 1996.  That is patently untrue as Fong Senior died in on 20 July 1991.  When contradicted, he changed his evidence and said that Chan visited him alone or with her daughter-in-law who was an European and put the blame on his failure in memory.  However, his evidence that the wall had been built at the time of the visits between 1994 and 1996 is also demonstrably false as the aerial photographs show that the wall could not have been built before 15 May 1996. 

15.  Tang’s explanation that he had a wrong recollection about Fong Senior’s presence at the meeting is also incredible in view of the Defendants’ answer to the Plaintiff’s request for further and better particulars of the defence and counterclaim.  The Plaintiff’s solicitors raised the question about the oral agreement and the above meeting.  The Defendants’ solicitors replied as follows:

“Before building the Enclosing Wall, there was a meeting between the builder and Chan Wan Ying together with her husband Mr Fong concerning the boundary between the Wing Ning Garden and the Plaintiff’s Lot.  The meeting was held at the site.  At that meeting Mr Tang Chu Tin, the village representative was also present.”

This answer could only have come from Tang.  In this answer, Tang confirmed that Fong Senior was at the meeting in 1992.  The answer was given pursuant to the order of Registrar Chan.  The Defendants’ solicitors must have explained to Tang the importance of telling the truth.  It is too much a coincidence for him to have made three wrong recollections about seeing Fong Senior at the meeting when the agreement was made and at various site visits after the Enclosing Wall was built and when supplying the above answers to his solicitors.

16.  In his witness statement dated 29 May 2008 which he adopted as his evidence in chief, he said that the development of Wing Ning Garden began in 1993, that the owners of Lot 1522C applied for building licence in 1993 and were granted licences in 1994.  In his supplementary witness statement dated 25 August 2008, he said that the majority of the houses and the Enclosing Wall had been built in 1994.  None of these is true.  None of the building licences for the houses were issued in 1993.  The building licence for Lot 1522C was only issued in October 1995.  The house on that lot could not have been built in 1994.  As the aerial photographs show, the Enclosing Wall could not have been built until after May 1996. 

17.  Tang’s evidence is also shown to be unreliable on some collateral issues.  In his witness statement dated 29 May 2008, he said that Chan removed the iron fence after the wall was built.  In a slightly later supplementary witness statement, he changed and said that the fence rotted and collapsed due to lack of maintenance and repairs.  Yet, in the answer to the Plaintiff’s request for further and better particulars of the defence and counterclaim, the Defendants answered that the fence was removed probably as a result of agreement between the Plaintiff and the Government to allow transport to pass through Lot 1517RP for construction purpose.  Though this evidence is neither here nor there, it shows how ready Tang was prepared to proffer explanations for himself as the developer or the Defendants.  He is not a responsible witness.

18.  Tang said that the Enclosing Wall was built one and a half feet from the fence and that after the fence was removed by Chan or collapsed the iron poles still remained.  He said that the fence was a straight fence and did not follow the boundary of Lot 1517RP.  That is said to support his case that the Enclosing Wall is a straight wall.  I find that incredible.  He was a co-owner of Lot 1522.  He must have known that his boundary with Lot 1517RP was not a straight line.  He must have also known that at least when he subdivided Lot 1522 into ten lots.  He adduced no evidence as to where the fence poles were and how the wall was built by reference to the position of the fence.  I think the wall was built as a straight wall for the purpose of giving an aesthetic appearance to the estate. It must have been built deliberately in disregard of the Plaintiff’s right or may even with a view to dispossess the Plaintiff of part of the land.  Tang was only tailoring his evidence for the interest of the Defendants.

19.  Tang’s evidence that Chan had reached agreement with him as to where to build the Enclosing Wall in 1992 is also inherently incredible.  Chan had transferred Lot 1517RP to the Plaintiff.  Her husband died a year before.  Management of the Plaintiff was mainly in the hands of her three sons.  It is not credible under those circumstances and in view of her age that she would still be interested to be involved with the matters concerning the land or the Plaintiff.

20.  The tenor of Tang’s evidence is that he had an agreement with Chan to build the Enclosing Wall and that in any event the Enclosing Wall and houses were build in 1994 with the result that the Plaintiff’s right over the trespassed areas had been extinguished by reason of adverse possession.  It is amply clear that Tang was determined to launch a case of adverse possession and to do so by concocting the evidence.  He is not a truthful witness.

21.  I now turn to examine Fong’s evidence.  The Plaintiff’s pleaded case is that Tang had a meeting with Fong and Chan in the summer of 1995 to seek their permission to use part of the land in Lot 1517RP for storage of building materials and to demolish part of the fence to facilitate access to Lot 1522 during the course of construction of the houses.  In his evidence in chief, Fong said that the meeting took place in 1993/1994 which is more in line with the building progress of the houses.  Then under cross-examination, he said that there were meetings in 1993/94 and 1995 where different matters were discussed.  But, when specifically asked which meeting it was when Tang sought his permission to use Lot 1517RP for storage and access, he replied that it was the 1995 meeting and that there was no meeting in 1993/94.  Then in re-examination, he confirmed that that discussion took place during the 1993/94 meeting.  Miss Gwilt, counsel for the Defendants, submits that such evidence was unsatisfactory.  Indeed it was, but it did little damage to Fong’s credibility.  The Plaintiff’s cause of action is not based on what happened during that meeting.  When that meeting took place is unimportant.  On the other hand, whether there was a meeting during which Chan reached agreement with Tang about building the Enclosing Wall is important.  But on the Defendants’ case and Tang’s evidence, Fong was not present at that meeting.  This further demonstrates that whether the meeting alleged by Fong took place in 1993/94 or in 1995 or at all has little bearing on the Plaintiff’s case.

22.  Miss Gwilt criticises Fong’s credibility and suggests that it begs the question as to why Tang would ask Fong rather than Chan for the permission since according to Tang, he thought Chan was still the owner of the land.  Fong’s evidence implies that somehow Tang must have knowledge that Chan had handed over the management of the family business to her sons which was why he was invited to the meeting, whereas Miss Gwilt’s criticism is that Fong was making up his evidence.  Lot 1517RP was bought by Chan more than thirty years ago.  In 1992, Chan was in her mid sixties, had suffered a stroke three or four years ago and her husband died a year ago.  Being an old family friend, Tang must have knowledge of those events.  Because of the incorporation of the Plaintiff, the appointment of her sons as directors in place of Fong Senior in 1991, I have no doubt that since 1991 Chan transferred control and management of the family land and business to her sons.  Though denied by Tang, it is credible that Tang, must have knowledge about the above transfer, though not precisely that Chan had transferred Lot 1517RP to the Plaintiff.  In that light, it is not incredible that Tang invited Fong to the meeting.  The validity of Miss Gwilt’s criticism depends on whether Tang was telling the truth.  I doubt Tang was.

23.  Miss Gwilt also criticised Fong’s indifferent attitude as to which part of Lot 1517RP the builder wished to use and how much of the fence the builder wished to demolish.  I think such criticism is unjustified.  Lot 1517RP is a huge plot of land many times bigger than Lot 1522 and had been left idling for over thirty years.  It must be understood or at least assumed by Fong that only a small portion adjacent to Lot 1522 would be used for storage of building materials.  The builder undertook to make good the fence.  There was no reason for Fong to be concerned about those trivial matters suggested by Miss Gwilt.

24.  The really more significant criticism of the Plaintiff’s case is its failure to call Chan.  Miss Gwilt referred to the maxim omnia praesumuntur contra spoliatorem.  The principle is set out in the Court of Appeal in the judgment of Le Pichon JA in Tullet & Tokyo International Securities Ltd v APC Securities CO Ltd [2001] 2 HKC 713 at 723A to F as follows:

“ In relation to the fourth point above, Mr Huggins SC prayed in aid the maxim omnia praesumuntur contra spoliatorem (the maxim) sometimes referred to as the principle in Armory v Delamirie (1722) 1 Str 505.  Excerpts expounding that principle from Wigmore on Evidence (Chadbourn Revision, 1979) Vol 2, at paras 285 and 291 were quoted in the judgment of Fuad JA in Hongkong and Shanghai Banking Corp v Chan Yiu Wah [1988] 1 HKLR 457 at 467C-H:

   285.  Failure to produce evidence, as indicating unfavourable tenor of evidence:

(1) In general. … The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so; and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party.  These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances which make some other hypothesis a more natural one than the party’s fear of exposure.  But the propriety of such an inference in general is not doubted.

The non-production of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its tenor is unfavourable to the party’s cause.  Ever since the case of Chimney Sweeper’s Jewel [Armory v Delamirie] this has been a recognised principle.”

The question is whether in all the circumstances adverse inference is to be drawn against a party for failure to produce document or witness when such production is reasonably expected.  All the circumstances, in particular the lack of explanation, must be taken into account before such adverse inference is to be drawn.

25.  The Defendants have put in issue the agreement made between Chan and Tang.  The Defendants pleaded in paragraph 2 of the Re-Amended Defence and Counterclaim that “the Plaintiff’s predecessor-in-title, namely, Chan Wan Ying (“Chan”) or as an alternative, Chan together with the Plaintiff, or still alternatively, Chan acting on behalf of the Plaintiff” agreed with the Defendants’ predecessors-in-title as to where the Enclosing Wall was to be built.  In their answer to the Plaintiff’s request for further and particulars of the defence and counterclaim, the Defendants’ solicitor answered that the meeting was held between Chan together with Fong Senior on the one part and Tang and the builder on the other.  That was how the defence case was pleaded.

26.  Fong gave the following reasons for not calling Chan to give evidence.  Chan is old, now aged 83.  She is suffering from Alzheimer’s disease and has lost her memory.  She is not in good health.  As she is now residing in the United Kingdom, it is inconvenient to fly her to Hong Kong to give evidence.  If Chan is suffering from Alzheimer’s disease, it is pointless to call her.  She will not be able to recall or accurately recall what happened over ten years ago.  The question is was she suffering from those conditions.  The Plaintiff did not tender any medical evidence in support of her mental or health conditions. 

27.  Whether such adverse inference is to be drawn against a party for failing to produce a witness or a document, depends on all the circumstances.  It is a negative inference to be raised in the light of all the circumstances.  If the opponent’s assertion is credible, the inference would add weight to that assertion.  It would be reasonable to draw the adverse inference.  If the assertion is just moonshine or incredible, the inference could not even be raised at all.  It would be unreasonable to draw an adverse inference against a party to give support to an assertion which cannot even stand on its own.  The maxim does not require a party to call each and everyone mentioned in the assertion to rebut that assertion.  Whether the adverse inference is to be drawn is a matter of common sense.  Production of document is simple.  But there are more considerations to be taken into account in the case of production of a witness.  These include the cost and inconvenience of bringing the witness to court and the credibility of the opponent’s assertion which the witness is expected to rebut.  If the opponent’s allegation is frivolous or so incredible by itself, the cost and inconvenience of bringing the witness to court is in itself a good explanation.  This involves balancing cost and inconvenience against the credibility of the opponent’s allegation.  If upon balancing a party decides not to call a witness, he assumes the risk that the adverse inference may be drawn if he turns out to be wrong.

28.  There is no dispute that Chan is 83 years of age and had suffered a stroke ten years ago.  Presumably, she is in a feeble state.  Cost aside, any son would have wished to save his mother the inconvenience of a long flight from the United Kingdom to Hong Kong.  On the other hand, the Defendants’ allegation is about a meeting which Chan attended together with Fong Senior which was an impossibility as Fong Senior had died a year before the alleged meeting.  On the face, such an allegation is moon-shine and can easily be rebutted without calling Chan.  The consequence of the Plaintiff losing the action is trivial.  On the state of the evidence in this case, I consider the cost and inconvenience of bringing this old lady to Hong Kong a sufficient explanation not to call her.  Had the Plaintiff been able to produce medical evidence that Chan was suffering from Alzheimer disease, the explanation would have been more compelling.  But even in the absence of such medical evidence, it is not reasonable to draw such adverse inference against the Plaintiff.

29.  Miss Gwilt also criticises Fong for not asking Chan about her meeting with Tang.  Fong’s answer is that had Chan made such an agreement, she would have told him at the time and that as Chan is now suffering from Alzheimer disease, it was pointless for Fong to have asked her.  I think that is a credible answer in the light of the totality of the evidence.  Miss Gwilt also criticised Fong for not calling any of his siblings to give corroboration evidence.  I think those siblings could have nothing to add to Fong’s evidence.  Their evidence would only be hearsay evidence as well. 

30.  On balance, I find Fong a credible witness and Tang incredible.  I accept Fong’s evidence that during his meeting with Tang in 1993/94, he granted permission to Tang to use Lot 1517RP for access and storage during the construction of the houses but nothing was mentioned about the common boundary between Lot 1157 RP and Lot 1522.  But that is not the issue in this case.  The issue is whether Chan had reached agreement with Tang or made representation to Tang that the Enclosing Wall should be built one and a half feet from the fence enclosing Lot 1517RP.  The burden is on the Defendants.  I find Tang’s evidence inherently incredible.  His evidence has been contradicted in many material respects.  I reject his evidence.  Accordingly, the Defendants have failed to prove the alleged agreement or representation.  There is no need to consider the second issue about Chan’s authority in making the agreement.

31.  This finding of fact is sufficient to dispose of the defence.  It must necessarily follow that the Defendants are unable to prove that the Enclosing Wall was not built on the parties’ understanding of the boundary of Lot 1157RP (issue 3).  It will also be a futile and non-sensical exercise to consider whether the Plaintiff had knowledge and encouraged the building of the Enclosing Wall (issue 4) and whether the Defendants suffered any detriment (issue 5) on the basis that my finding is otherwise.  The remaining issue is when were the Balconies built (issue 6).

When were the Balconies built

32.  The Plaintiff has no evidence when the house on Lot 1522D was built.  Tang’s evidence is that he finished building the shell of the house around mid-autumn festival of 1994 (i.e. 20 September 1994).  This is the date which the Defendants rely as the date when adverse possession began.  This action was commenced on 20 December 2006.  If Tang’s evidence is accepted, twelve years and three months have lapsed before the Plaintiff commenced the present action.

33.  On the documentary evidence, Tang applied for building licence for the house in 1993.  The building licence was issued on 13 May 1994.  The licence required the licensee to apply to the District Lands Officer for the building site to be set out on the ground before work was to commence and to complete building the house within thirty-six months.  The house, with external wall and internal finish, was completed before 24 May 1996.  This is evidenced by a toleration letter of the same date issued by the District Lands Office.  The shell of the house must have been completed well before that date.  But there is no documentary evidence as to when.  The aerial photograph taken on 14 May 1994 showed no sign of development or construction works.  That was four months before mid-autumn festival.  The aerial photograph taken on 27 October 1995 showed the shells of two houses were built on Lot 1522B and Lot 1522D.  That was a year after the mid-autumn festival of 1994.  The quality of this aerial photograph is not such as to be able to show the general appearance of the house.  These incontrovertible evidence shows the shell of the house was built between 14 May 1994 and 27 October 1995, but cannot pin point to an exact date.  Tang could have done so if he had produced evidence of the date when the District Lands Office set out the building site on the lot.  But he did not do so.  The crucial date is 20 December 1994.  Had the shell of the house been completed before that date, twelve years would have lapsed before the Plaintiff commenced action.

34.  Tang said that soon after the building licence was issued in May 1994, he commenced building the house on Lot 1522D as it was unsafe to leave the site vacant.  He said that the shell of the house was completed in about two months which was around mid-autumn festival.  It is common ground that mid-autumn festival of 1994 fell on 20 September 1994.  Thus, on the basis of Tang’s evidence, the building works commenced on about 20 July 1994.  Tang explained that it took him almost two years to complete the house because he had to wait for materials for the internal finish.  There is no evidence to contradict him.  But is he credible?

35.  If it took two months to build the shell of a house, Tang would have to start building on 20 July 1994, which was two months after issue of the building licence.  His reason for starting building works promptly was because it was unsafe to leave the site vacant.  This is not a convincing reason as the site had always been left vacant before.  If indeed the shell was completed in September 1994, twenty-one months to complete the internal finish was far too long.  His explanation that he had to wait for materials for the internal finish work is difficult to accept for a village house of little sophistication.  An allowance of twelve months for internal finish work, including sanitary and light fitting, flooring, partitions and wall finishes would have been ample for a small village house.  Working backwards, the shell would have been completed in May 1995.  That would still be five months short of the limitation period.  This is only an inference to be drawn from the date of the toleration letter.  It is not a fact proved or to be proved by the Plaintiff.  It is only an inference which suggests Tang’s evidence is not reliable.  He could have pin-pointed the date when the building works commenced with greater precision by adducing evidence of the date when the site was set out by the District Lands Office.  But he did not.  The burden remains on the Defendants to prove twelve years undisturbed possession.  In view of the state of the evidence, the inference to be drawn from the date of the toleration letter and my adverse finding of Tang’s credibility, I can only come to the conclusion that the Defendants have again failed to discharge the burden of proving when adverse possession in respect of the Balconies built.

The defence of agreement

36.  This defence is based on the oral agreement made in 1992 between Chan and Tang.  Properly understood, the agreement is not a contract supported by consideration but the parties’ understanding as to the boundaries of their respective lots of land.  On the fact, I reject Tang’s evidence that there was any meeting between him and Chan in 1992 when such an agreement was allegedly reached.  There is simply no factual basis on which this defence could be raised. 

37.  Even if there were, such agreement involves a legal estate in land which according to sections 3 and 4 of Conveyancing and Property Ordinance, Cap 219, must be evidenced in writing and that such legal estate in land may only be created, extinguished or disposed of by deed.  The Defendants could produce no written agreement or deed.  Miss Gwilt refers to Powell & Smith on Boundaries and Fences, 2^nd edn at page 7 and submits that the position of boundaries may be fixed or altered by acts of the parties.  However, the learned author’s opinion is that a deed is necessary to give effect to an agreement changing the position of a boundary where this amounts to an assurance of the land involved.  Even in a case where no assurance of land is involved as in the case of a genuine attempt to settle a doubtful boundary, the practice is to have a properly drafted memorandum of agreement incorporating a sufficient and accurate plan made after a survey of the site.  None of that applies in the present case.  Even on the Defendants’ case, there is no question of doubtful boundaries.  The boundary of Lot 1517RP had been clearly set out by the fence.  Miss Gwilt then refers to Hopgood v Brown [1955] 1 All ER 550.  But that was a case on estoppel.  The defence based on agreement must fail.

The defence of proprietary estoppel

38.  This defence is also based on the 1992 oral agreement as Chan’s representation.  Again, there is no factual basis on which this defence may be raised.

39.  Assuming there was such representation, Mr Ho, counsel for the Plaintiff, submits that Chan has no authority to make such representation binding on the Plaintiff.  According to the company’s documents filed with the Companies Registry, Chan was a director of the Plaintiff in 1991 and 1992.  Fong’s explanation is that the three directors resolved to relinquish Chan’s appointment as a director, but due the wrong forms having been used by the company secretary, Chan and Fong Senior were nevertheless recorded as directors in the annual return of the Plaintiff for 1992 filed on 25 November 1996.  He also refers to another piece of paper which appeared to be part of the annual return of a company for a certain year in which Fong and his two brothers were reported as directors of that company.  The source of that document and the name of the company concerned is unknown.  I give no weight to that document.  The company documents produced are utterly confusing.  I am bound to reject Mr Ho’s submission.

40.  If I were to find that Chan had made the agreement with Tang, I am bound to find also that she did so as a director of the Plaintiff with the necessary implied or express authority.  It matters not that Tang did not know that Chan had transferred Lot 1517RP to the Plaintiff.  If Chan had indeed made the agreement, she must realise that Tang was making the agreement with the owner of Lot 1517RP and she must also be acting as agent of the Plaintiff in entering into the agreement or in making the representation.

41.  On the issue of detriment, Mr Ho submits that no detriment has been suffered by the Defendants because according to Tang one of the purposes served by the Enclosing Wall is to protect the houses from flood, snakes, rats and other pests and the Enclosing Wall has served that purpose.  I respectfully disagree.  Had there been no representation, the Defendants would have built the Enclosing Wall along the proper boundary.  They would not have incurred expenses building the Enclosing Wall on where it now stands and to incur further expenses to demolish it and to build another one.  Whether the Defendants suffered detriment is not crucial, the question is whether it would be unconscionable to allow the Plaintiff to go back on its promise.  I think it certainly would.  But there is no factual basis for the defence of estoppel to be raised.

The defence of adverse possession in respect of the Balcony Encroachment

42.  The Defendants have failed to discharge the burden of proving exclusive possession of the airspace occupied by the Balconies for twelve years.  Accordingly, this defence fails. 

The remedy

43.  Miss Gwilt submits that the de minimus rule should apply.  She submits that the trespassed areas, in particular the Wall Encroachment and the Balcony Encroachment, are so small as to justify the Plaintiff to ask for a mandatory injunction to demolish the Enclosing Wall and Balconies causing extreme hardship to many families.  According to Tang, Lot 1517RP is on elevated land.  The Enclosing Wall protects the houses from flood, snakes, rats and other pests.  The owners will suffer financial hardship if required to demolish the Enclosing Wall and built another one.  Demolition of the Balconies will compromise the structure of the house and would be particularly harsh in light of the Plaintiff’s admission that it suffered no loss and damage.  Miss Gwilt quotes Behrens v Richards [1905] Ch 614 in support of her submission.  She submits that damages is an adequate remedy.

44.  Behrens v Richards was about the public use of way on the plaintiff’s land.  In that case, Buckley J held that inasmuch as the plaintiff was not, in the state of the neighbourhood as it was, injured by the public use of the ways in question, no injunction ought to be granted.  Behrens v Richards is an exception rather than the rule.  It was about the public use of the way in question and where the plaintiff was not injured.  Here, no such public element is involved.  The Defendants are trespassing on the Plaintiff’s land of about 50 square metres.  Though the Plaintiff suffered no actual damage at present as the land was unoccupied and undeveloped, the Plaintiff now intends to develop the land.  It will suffer actual damage and nominal damages will not be adequate.  The Plaintiff’s title to Lot 1517RP is adversely affected.  It is also inappropriate to force a sale of the trespassed area on the Plaintiff by ordering damages in lieu of injunction.

45.  On my finding of fact, the Enclosing Wall was built in 1995 or 1996 after the houses were built.  It was not built pursuant to any agreement with Chan, i.e. one and a half feet from the fence of Lot 1517RP.  Tang must have known at least when he executed the deed of confirmation and rectification for the purpose of dividing Lot 1522 into ten sections that the boundary of Lot 1522 is not a straight line.  Yet the major part of the Enclosing Wall was conveniently built as a straight line encroaching on the Plaintiff’s land.  While so doing, he fenced off part of the Defendants’ land, but the Defendants had more to gain than lose.  The Enclosing Wall must have been built deliberately in disregard of the Plaintiff’s right or may even be built with a view to dispossess the Plaintiff.  Though the houses have now been sold to subsequent owners who were not responsible for Tang’s deliberate conduct, this is not a valid ground for not granting the injunction sought.

Conclusion

46.  There is no dispute that the Defendants and their predecessors-in-title have built the Enclosing Wall and Balconies which encroached on the Plaintiff’s land.  All the defences raised by the Defendants have failed.  The Plaintiff is entitled to judgment and the Defendants’ counterclaim which is based on such defence must also be dismissed. 

47.  Accordingly, I grant the Plaintiff an order for possession of the trespassed areas and an injunction requiring the Defendants to demolish the Enclosing Wall and portions of the Balconies which trespassed on the Plaintiff’s land.  Inasmuch as the present state of affairs is concerned, the Plaintiff has suffered no actual loss as a result of the Defendants’ trespass.  I award the Plaintiff nominal damages of $10,000 for trespass and mense profit of $2,000 per year as from 10 October 1996 when the Wall Encroachment became very apparent on the aerial photograph with interest at judgment rate until the Enclosing Wall and trespassing part of the Balconies are removed.  The Defendants’ counterclaims are dismissed.  I make a costs order nisi that the Defendants shall pay the Plaintiff’s costs in this action.  Such costs are to be taxed if not agreed.