CHAN KIT v. YAU YIK WAH AND ANOTHER

HCA 4259/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4259 OF 2000

____________

____________

_______________

J U D G M E N T

_______________

Background of the dispute

1. The Plaintiff was a graduate of Chung Shan University. He came to Hong Kong in February 1957 and worked as a clerk in Wanchai.

2. The Plaintiff started his own business in 1961. He incorporated a company by the name of K K Wanpo & Co Ltd ("Wanpo") on 2 September 1961. Wanpo sold cleaning powder, washing liquid and other chemical products. The Plaintiff was the majority shareholder and a director of Wanpo. According to the annual returns of Wanpo, the Plaintiff resided in the following addresses :

Date		Address
From (Year ending)	To (Year ending)
31.12.1970	31.12.1978	18 Kam Wing Street, 1/F, Kowloon
31.12.1979	31.12.1984	76 Po Tung Road, 3/F, Sai Kung
31.12.1986	31.12.1989	Block 10, 11/F, Flat E, Site 2, Whampoa Garden
31.12.1990	31.12.1992	2E, Block 3, Site 11, Whampoa Garden
31.12.1993	1.9.2000	10-G, Block 13, Site 11, Whampoa Garden

3. The earliest available annual return of Wanpo is one dated 31 December 1970. According to that return, the registered office of Wanpo was located at "35, 36A, Nam Wai, Sai Kung". The annual return of Wanpo for the following year gave its registered office at 35 Nam Wai. This continued to be its registered office until the annual return for the year ended 31 December 1980 when 22A Nam Wai was given as its registered office. Save for the years 1983, 1985 and 1994, Wanpo filed an annual return for each of the years between 1981 and 2000. 22A Nam Wai was stated to be the registered office of Wanpo in each of those returns.

4. It is the Plaintiff's case that 35 Nam Wai, 89 Nam Wai and 22A Nam Wai are referable to the same house in Nam Wai, Sai Kung. He went into possession of that house as a tenant of Madam Shing Yuk Ying ("Madam Shing") in 1967. By a written agreement dated 21 December 1970 and made between Madam Shing and her sons Yau Yan Fuk, Yau Ying Sau and Yau Ying Choi as vendors and the Plaintiff and his wife as purchasers, 35 Nam Wai together with the land were sold to the Plaintiff and his wife for $10,000.

5. On 20 March 1979, one Yau Koon Lin instituted High Court Action No. 1157 of 1979 ("the 1979 Action") against the Plaintiff. Yau Koon Lin's address on that writ was 90 Nam Wai Village whilst the Plaintiff's address was 89 Nam Wai Village. Yau Koon Lin pleaded in his Statement of Claim that House No. 89 Nam Wai Village was formerly known as No. 35 Nam Wai Village and that house was erected on Lot No. 286 in Demarcation District No. 214 ("Lot 286") in the New Territories. Yau Koon Lin averred that since 1967 the Plaintiff had wrongfully entered into possession of House No. 89. Yau Koon Lin claimed against the Plaintiff for possession and mesne profits from 1 January 1968. The Plaintiff filed his Defence on 30 April 1979. He relied on the sale and purchase of 21 December 1970. He denied that House No. 89 was erected on Lot 286. He pleaded in the alternative that Lot 286 was part of the estate of Yau Mo Fat who was the father of Yau Koon Lin and Yau Tin, the husband of Madam Shing. If House No. 89 was erected in whole or in part on Lot 286, the Plaintiff relied on the beneficial interests of Madam Shing and her sons in the estate of Yau Mo Fat. He also prayed in aid the Limitation Ordinance to defeat any claim for damages/mesne profits in respect of any period before 19 March 1973.H

6. The Plaintiff engaged Messrs Andrew Lau & Associates, a firm of Chartered Land Surveyors, to advise him in relation to the 1979 Action. By letter dated 15 May 1979, Messrs Andrew Lau & Associates informed the Plaintiff that a portion of his house was lying in Lot 286. The 1979 Action did not however proceed to trial. The disputes between Yau Koon Lin and the Plaintiff remain unresolved.

7. According to the Sai Kung Land Register, Yau Mo Fat was the original Crown lessee in respect of Lot 286. Yau Koon Lin succeeded to his interest by an instrument dated 3 August 1961. After the death of Yau Koon Lin, his wife Wong Lai Ching became the registered holder pursuant to instruments dated 3 March 1994 and 10 June 1994. By an assignment dated 10 December 1994, Wong Lai Ching, in consideration of $980,000, assigned Lot 286 and "the messuages erections and buildings thereon (if any)" in favour of her son, the 1st Defendant in these proceedings.

8. By letter dated 15 August 1995, the 1st Defendant applied to the District Lands Office, Sai Kung for approval to redevelop Lot 286. District Lands Office, Sai Kung posted a notice on the notice board of Nam Wai Village on 26 March 1996 to enquire if there was any objection to his application. District Lands Office, Sai Kung eventually approved the 1st Defendant's application by letter dated 25 November 1996. Such approval was conditional upon demolition by the 1st Defendant of "the extension of house No. 22A on Government Land".

9. The Plaintiff applied to Sai Kung District Office by letter dated 26 July 1996 for like approval to rebuild House 22A. Sai Kung District Office replied on 29 July 1996 and 15 August 1996 pointing out that the matter was referred to the District Lands Officer, Sai Kung.

10. It is the Plaintiff's case that he carried out various repairs to House 22A. According to a receipt dated 19 May 1995, the Plaintiff paid Shing Hing $5,000 for repair of water seepage at the rear of 22A. Shing Hing was dilatory in his work and the Plaintiff threatened Shing Hing with proceedings by letter dated 18 July 1995. The Plaintiff says that he further engaged Mr Wong Yuk Lam to undertake repairs in December 1997 and August/September 1998. Mr Wong Yuk Lam gave evidence before me. He said he had known the Plaintiff for more than ten years. He confirmed that he renovated the Plaintiff's house in Nam Wai twice. The house was about 500 to 600 square feet in area. The house was not very old nor was it on the verge of collapse when he carried out the repairs in December 1997. He refuted the 1st Defendant's suggestion that the beam of the house was broken. He said he plastered the house to prevent its collapse. He repainted the house in August/September 1998. He did not retain any receipt for the payment obtained on this latter occasion. Mr Wong Yuk Lam was a very reluctant witness. He had very little interest in the rights and wrongs between the Plaintiff and the 1st Defendant. His sole concern was to finish his evidence as soon as possible so that he could resume his livelihood. He is obviously not a sophisticated contractor and I am not impressed by the 1st Defendant's attempt to discredit him on the basis of the poor records maintained by his business. I find Mr Wong Yuk Lam to be a simple but honest witness. I accept his evidence.

11. Pursuant to the approval obtained on 25 November 1996, the 1st Defendant commenced redevelopment of Lot 286 in March 2000. He engaged the 2nd Defendant to demolish House 22A. The Plaintiff discovered the Defendants' activities in April 2000. He reported the matter to the Police on 24 April 2000. The Writ in this action was issued on 27 April 2000. The 2nd Defendant did not give any notice of intention to defend these proceedings and interlocutory judgment for damages to be assessed was entered against him on 26 April 2003.

The Parties' contentions

12. The Plaintiff says House 22A was erected on a portion of Lot 286. That portion of Lot 286 is defined by paragraph 2 of the Re-Amended Statement of Claim as "the Land" and is said to be the portion coloured pink on the plan annexed to that pleading. The plan in question is a "Lot Index Plan" produced by the Lands Department. The Plaintiff seeks a declaration that the 1st Defendant's title in the Land as so defined has been extinguished by the Limitation Ordinance.

13. The Plaintiff also seeks damages under three heads :

(a) for demolishing the House;

(b) for deprivation of use and possession from date when the House was demolished and

(c) for conversion of the properties left and stored in the House.

14. The 1st Defendant denies that 22A was erected on Lot 286. The 1st Defendant further says that the Plaintiff's claim for adverse possession has been defeated by the institution of the 1979 Action and/or by the fact that "the House together with the Land has since about 1985 been vacated and abandoned". The 1st Defendant asserts that that House had become very dilapidated in April 2000 and save for a few broken chairs and empty buckets, there was nothing of value therein.

The testimony of the Plaintiff

15. The Plaintiff told me that he rented House No. 35 from Madam Shing at several tens of dollars per month. It was an old house measuring thirteen feet wide and thirty feet deep with area of about 460 square feet and with height measuring twenty-seven feet from the ground. There was a balcony where one could gain access onto the 1/F. The house was subsequently renumbered 22A in the eighties. After his purchase from Madam Shing, Madam Shing took no step to clear his title. Yau Koon Lin adopted a very harsh stance. He tried to disrupt his possession in 1971 and 1972 when the matter was reported to Police. The business of Wanpo was steady in the eighties when it was one of the suppliers to the Hong Kong Government. For two odd years, its turnover was about $2 million. He emigrated to the United States in 1984 but he hardly stayed in that country, spending eleven months in Hong Kong and one month in the States. He moved to live in San Po Kong and the house in Nam Wai was used as his workshop and also for his company. He moved to Whampoa in 1985/1986 and lived in three different units in that estate. Although he did not reside in 22A, he regularly appeared in Nam Wai. His business was still there and he used 22A as his correspondence address. He would travel to Nam Wai at about ten in the morning and would work there till the evening. He would leave early if there was no work. Wanpo ceased production for about eight to ten years. In 1995 he still regarded 22A as his home. He paid Crown rent and rates regularly on demand. He denied having any knowledge of the Defendant's intention to rebuild Lot 286 in 1995. He observed that land in Hong Kong is expensive and no one would abandon any land in Hong Kong. He himself had undertaken a redevelopment in Nam Wai in the eighties. He said he engaged Shing Hing to do some repairs in 1996. Shing Hing did some work but there was still water seepage. He then engaged Mr Wong Yuk Lam. He refuted the 1st Defendant's suggestion that the beam of the House was then broken. He admitted that Wanpo had little business in 1997. He was confronted with an electricity bill issued on 7 April 2000 with CLP Power estimating the consumption at 22A for the months of April, May, June, July, October 1999 and February 2000 giving nil as an average daily unit. He explained that he used little electricity from June 1999 as he used LP gas for his cooking in 22A. CLP Power therefore charged him the minimum. Whilst he recognised that 22A was a pre-war village house, he would give its conditions a rating of 75%. He estimated the minimum costs for rebuilding 22A at $800,000 to $900,000. He said rebuilding with stone and wooden beam would cost even more. He supported his estimate by reference to the sale of by the 1st Defendant's mother of No. 25 at $1 million. His claim in respect of chattels falls into nine categories, namely, books, machines and tools of trade, raw materials, materials, office stationery, furniture and furnishings, cookery, clothing and others. He claims $1,000,000 for thirty-two boxes of "rare and expensive reference books on chemicals and chemistry". Those books were used by his son in gaining his B Sc degree in London in 1980. His son graduated in 1985. He gave brief descriptions in respect of several items amongst the remaining categories. Those were equipments used in the course of Wanpo's production. The destruction of his three family photo albums for the years 1940 to 1980 brought him most distress. The books and records of Wanpo and other documents are no longer available to advance his case. In re-examination, he said the 1st Defendant had leased out his premises to others at $2,000 to $4,000 per month.

The testimony of the 1st Defendant and his witness

16. The 1st Defendant told me that he was born in Nam Wai. Apart from four years between 1970 to 1974 when he was in Holland, he lived and is still living in Nam Wai. He lived in No. 30 in 1984. He moved to No. 450 in 1984 to 1985. The village entrance was at the left hand side of No. 450. He said the Plaintiff was in Nam Wai several times in 1979 but was rarely seen in 1984 and was not seen in 1985. The 1st Defendant was cross-examined as to his occupation in 1984. He was not particularly forthcoming despite pressure from Counsel for the Plaintiff. He disagreed with the suggestion that he would not know when the Plaintiff went in and out of the village. He said he went passed 22A in 1985. He saw no one inside and nothing was placed there. He said 22A was very dilapidated at the end of 1994. The windows and the beams were broken. Apart from worn out chairs and barrels there was nothing there. He said the door of 22A was not locked but he admitted that it was chained albeit with a large gap. He pointed out that the notice dated 26 March 1996 was posted in front of the village entrance near No. 450. He started developing Lot 286 in 2000 after obtaining funding for that purpose.

17. The 1st Defendant called Mr Shing Fook On. Mr Shing Fook On frankly admitted that he is not only a friend of the 1st Defendant but they grew up together in the same village. He lives on the 2nd Floor of No. 16 and from his roof he said he could see No. 15 and No. 22A. He said he had not seen the Plaintiff in Nam Wai for about twenty years. He recalled that prior to its demolition No. 22A was very dilapidated. He did not notice whether No. 22A had any lock but he admitted that there was a worn out chain. He reckoned that it made little difference whether the door was locked or not as it was titled on one side. He did not notice any machine or goods inside 22A. All he could see were metal tins and some worn out furniture and chairs. He also observed a hole three feet and five feet at the back of that house. He could recall that hole because he saw it around the time of change of sovereignty. After 1997, he hardly went passed 22A.

Limitation Ordinance (Cap. 347)

18. The following sections of the Limitation Ordinance are relevant :

(a) The former section 7(2) provided that "No action shall be brought by any other person to recover any land after the expiration of twenty years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person". This has now been changed to twelve years by section 5 of the Limitation (Amendment) Ordinance 1991 and the Plaintiff does not contend that the change is applicable to his case.

(b) Section 8(1) provides that "Where the person bringing an action to recover land, or some person through whom he claims, has been in possession thereof, and has while entitled thereto been dispossessed or discontinued his possession, the right of action shall be deemed to have accrued on the date of the dispossession or discontinuance" and

(c) Section 13(2) provides that "Where a right of action to recover land has accrued and thereafter, before the land is barred, the land ceases to be in adverse possession, the right of action shall no longer be deemed to have accrued and no fresh right of action shall be deemed to accrue unless and until the land is again taken in adverse possession".

19. As explained by Slade LJ in the leading case of Buckinghamshire County Council v Moran [1990]1 Ch 623 :

(a) The person claiming a possessory title must show either discontinuance by the paper owner followed by possession, or dispossession (ouster) of the paper owner. Dispossession is where a person comes in and drives out the other from possession. Discontinuance is where the person in possession goes out and is followed into possession by other person.

(b) The person who can establish no paper title to possession must show that he has both factual possession and the requisite intention to possess (animus possidendi). A person claiming to have dispossessed another must similarly fulfil both these requirements.

(c) Factual possession signifies an appropriate degree of physical control. It must be a single and exclusive possession. The animus possidendi involves the intention, in one's own name and on one's own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the process of the law will allow. What is required is not an intention to own or even an intention to acquire ownership but an intention to possess to the exclusion of all other person, including the owner with the paper title.

20. Buckinghamshire County Council v Moran was followed by the Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai David [1998]1 HKC1. The Court of Final Appeal (at p. 13E) rejected the contentions of the 14th defendant in that case in these terms :

"The 14th defendant's intention to pay rent if the owners had requested payment demonstrated that he was not intending to exclude the owner with the paper title but showed that he was treating himself as enjoying possession under a lawful title from the owners. His intention to possess was not 'as of wrong' but was 'as of right'. Such intention is similar to the occupier's offer to pay rent in R v Secretary of State for the Environment, exp. Davies ...... which was held inconsistent with the intention to claim possession for the purpose of adverse possession."

21. The Plaintiff went into occupation of 22A in 1967. He purchased 22A from Madam Shing by agreement dated 21 December 1970. Yau Koon Lin instituted the 1979 Action on 20 March 1979. The Plaintiff relied on his purchase to justify his possession. He did not accept the paper title of Yau Koon Lin. He set up his own title with the view of defeating Yau Koon Lin's paper title. His case was that he did not possess "as of wrong" but "as of right". On the basis of the two leading authorities which I cited above, his possession is not adverse possession for the purpose of the Limitation Ordinance.

22. Mr Kwok, Counsel for the Plaintiff, submitted that Yau Koon Lin was bound to fail in the 1979 Action as 22A rested in part on Crown land and Yau Koon Lin was not in possession of the Crown land. He further submitted that when the executrix of Yau Koon Lin assented Lot 286 to herself, the 1979 Action must be treated as an end. I regret that I do not understand these arguments. The Plaintiff is seeking a declaration that the 1st Defendant's title in the Land has been extinguished by the Limitation Ordinance. The onus is upon him to prove adverse possession for the requisite period. Yau Koon Lin instituted proceedings before the expiration of the twenty years period. The 1st Defendant acquired his title on 10 December 1994. Vis-à-vis Yau Koon Lin and the 1st Defendant, the Plaintiff is still relying on his purchase from Madam Shing. He has to make good his title from Madam Shing but such exercise is totally different from a case on the basis of adverse possession. The Plaintiff made no attempt before me to make good his title from Madam Shing. He tendered no evidence in this action to support the averments which he pleaded in the 1979 Action.

Did the Plaintiff abandon 22A in 1985

23. According to the annual returns of Wanpo, the Plaintiff had in the year ending 31 December 1970 ceased to use 22A as his residence. The Plaintiff emigrated to the States in 1984. Wanpo filed no annual return for the year ending 31 December 1985. Both the 1st Defendant and Shing Fook On say they had not seen the Plaintiff in Nam Wai for about twenty years. The electricity bill dated 7 April 2000 showed minimal consumption. The 1st Defendant says all these are indicative of the Plaintiff abandoning 22A in 1985 and did not retain sufficient factual control of 22A after 1995 as to amount to exclusive possession.

24. There are pointers in the other direction. My assessment of the Plaintiff is that he is a very shrewd businessman. He fully appreciates the value of land in Hong Kong. He resisted the 1979 Action. It is unlikely that the Plaintiff would abandon a piece of property which he struggled hard to retain. Whilst no return was filed for Wanpo in the year 1985, such omission occurred in other years (1972, 1983 and 1994). Those omissions do not reduce the overall consistency of 22A being used throughout the years as the registered office of Wanpo.

25. The 1st Defendant and Mr Shing Fook On said for the last twenty years they had not seen the Plaintiff in Nam Wai. It is not clear whether they go so far as to suggest that the Plaintiff did not visit Nam Wai at all during those years. Such suggestion would be wholly inconsistent with some of the documents before me :

(a) Demands for rates in respect of 22A were sent to the Plaintiff at that address. According to the demand notes for the year 1995, the Plaintiff paid rates on 5 May 1995, 11 August 1995 and 5 November 1995. The Plaintiff must have visited 22A on at least three occasions in that year in order to obtain those demand notes.

(b) The electricity bill dated 7 April 2000 indicated that the consumption for November 1999 was the result of "Consumer Self-Reading". That is supportive of the presence of the Plaintiff in 22A in November 1999. According to the letter from CLP Power, the electricity account for 22A was opened in the name of the Plaintiff's wife on 9 April 1973. That account was maintained right up to 16 May 2000. The Plaintiff or his wife must have attended 22A throughout these intervening years to attend to the electricity bills from CLP Power.

26. As indicated in paragraph 10 above, I accept the evidence of Mr Wong Yuk Lam. I further accept the evidence of the Plaintiff that he paid Shing Hing $5,000 for repair of 22A on 19 May 1995. The engagement of Shing Hing in May 1995 is inconsistent with the 1st Defendant's suggestion that the Plaintiff revived his interest in 22A only after he became aware of the 1st Defendant's application to redevelop Lot 286 made known by the notice dated 26 March 1996. I accept the Plaintiff's denial that he was unaware of the 1st Defendant's application. He himself applied for redevelopment on 26 July 1996.

27. The 1st Defendant and Mr Shing Fook On both accept that the door of 22A was chained. I am of the view that the Plaintiff had by such installation clearly demonstrated his intention to exclude all others. There is no evidence to suggest that the 1st Defendant or anybody else had sought to gain entry into 22A despite the presence of that chain.

28. For these reasons, I hold that the Plaintiff had possession of 22A from 1967 until its demolition in the first quarter of 2000. I reject the 1st Defendant's case that the Plaintiff had abandoned his possession in 1985 and attempted to resume possession in 1995. I further hold that 22A was erected on part of Lot 286. This was so pleaded by Yau Koon Lin in his Statement of Claim in the 1979 Action and confirmed by the report of Messrs Andrew Lau & Associates dated 15 May 1979.

Declaration sought by the Plaintiff

29. For reasons outlined in paragraphs 21 and 22 above, the Plaintiff is not entitled to the declaration sought. Furthermore whilst I have no doubt that 22A was built on part of Lot 286, there is no evidence before me to denote the precise area of the portion involved. Although the Lot Index Plan annexed to the Re-Amended Statement of Claim is a scale plan, the Plaintiff gave no explanation as to how he arrived at the portion coloured pink on that plan.

30. The power to make a binding declaration of rights is a discretionary power. Mr Siu, Counsel for the 1st Defendant, submitted that in the absence of any dimension, area and coordination of the portion involved, I should not accede to the Plaintiff's application for a declaration. I accept the submission of Mr Siu as an additional ground for refusing this relief.

Damages for the demolished house

31. Mr Siu submitted that I should make no award because 22A is part of the land on which it stands and the owner to the piece of land is the owner of the building thereon. 22A did not stand on Lot 286 alone. Part of it rested on Government land. I find the following passage in paragraph 31-27 of Clerk & Lindsell on Torts 18th edition of assistance :

"The building of a house upon a common, at all events if done by a stranger or another commoner, is on the face of it an unlawful act, and therefore a commoner may justify pulling down the house and he may lawfully do so, although the occupier be living in it at the time, provided he has previously given the occupier reasonable notice to remove it, but in the absence of such notice he cannot lawfully pull it down while the parties are in it."

32. I found the Plaintiff has no title to any portion of Lot 286. He also has no title to the Government land. I further found that the Plaintiff had not abandoned 22A. The 1st Defendant admitted that he heard about the 1979 Action when he was young. Given his admission that 22A was chained, neither her nor the Government was entitled to take the matter into their own hands without making any effort to serve notice on the occupier prior to any demolition. The absence of such notice led to the loss of various items of property which obviously are of great sentimental value to the Plaintiff. The absence of such notice does not however give the Plaintiff entitlement to damages for rebuilding 22A on Lot 286 which he has no title.

33. I would however state my views on the costs of rebuilding 22A should there be an appeal. The Plaintiff estimated the costs of rebuilding 22A at $800,000 to $900,000. He was involved in one previous redevelopment in Nam Wai. He gave me a detailed breakdown of the costs involved in the 1st Defendant's proposed construction of a three storeys village house on Lot 286. He estimated the 1st Defendant's construction costs at $1 million. He said the 1st Defendant could sell the completed development at $2,500 per square foot fetching a total of $4.1 million and yielding a gross profit of $2 to $2.1 million. I am of the view that the Plaintiff has personal knowledge on the costs involved for the reconstruction in Nam Wai. I accept his estimates and if I be wrong on my ruling in paragraph 32 above, I would have awarded $850,000 in favour of the Plaintiff for rebuilding 22A.

Damages for books, machines and tools of trade, raw materials, office stationery, furniture and furnishings, cookery, clothing and others

34. Wanpo ceased production for about eight to ten years. Although I held that the Plaintiff had not abandoned 22A, his visits to Nam Wai could not have been frequent following the decline of Wanpo's business. 22A was a pre-war building. Mr Wong Yuk Lam was engaged in December 1997 to plaster 22A to prevent its collapse. Apart from their sentimental value, the items stored there could not have been of much worth. The Plaintiff's evidence in relation to the thirty-two boxes of "rare and expensive reference books on chemicals and chemistry" shows that he had grossly inflated his claims under this head.

35. I accept the Plaintiff's evidence in relation to the lost of his family albums. I award $20,000 for each album making a total of $60,000 for the three albums. They cover a long period of the Plaintiff's life and are irreplaceable. As far as the remaining items are concerned, I award a further sum of $50,000 to reflect their residue or scrap value.

Damages for deprivation of use from March 2000 onwards

36. The Plaintiff was and still is residing in Whampoa. 22A was merely his storage for outdated materials. He has not identified any need for storage since March 2000. Apart from the hearsay (which I attach no weight) that the 1st Defendant rented out his premises at $2,000 to $3,000 per month, the Plaintiff adduced no evidence to support this head of claim. There is no basis for me to make any award.

Conclusion

37. I award in total the sum of $110,000 against both Defendants in favour of the Plaintiff. I also make an order nisi that there be no order as to costs.