FONG PING KIT v. TSANG HIN WAI, THE ADMINISTRATOR OF THE ESTATE OF LEE CHIU TAI, DECEASED AND ANOTHER

HCA 2200/2017

[2024] HKCFI 3585

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2200 OF 2017

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JUDGMENT

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Introduction

1.  This action concerns 5 plots of land in the New Territories known as Lot Nos. 1384, 1487, 1488 and 1489 and Section E of Lot No. 1606 of Demarcation District No.114 (“D.D. 114”) in San Tsuen, Kam Sheung Road, Pat Heung, New Territories (collectively “the Disputed Lands”).

2.  Mr Fong, the Plaintiff herein, brought this action to set aside two orders made in two separate sets of legal proceedings in the District Court on the ground that they were obtained by fraud and/or mistake of fact. Those two sets of proceedings related to the Disputed Lands or some parts thereof.

3.  The first order under attack is an order made by HH Judge Mimmie Chan (as she then was) (“the Judge”) dated 7 September 2007 (“the 2007 Order”) in a District Court action under DCMP 3485/2000 (“the DCMP Proceedings”) commenced by one late Madam Lee Chiu Tai (“Madam Lee”) in respect of the Disputed Lands.

4.  By the 2007 Order, Mr Tsang Hin Wai (“D1”), the 1^st Defendant herein, being the administrator of the estate of Madam Lee, obtained a declaration to the effect that Madam Lee acquired a possessory title to the Disputed Lands whereas the legal title of the estate of Tsang Loi Ki, Deceased (“D2”), the 2^nd Defendant herein, to the Disputed Lands was extinguished pursuant to section 17 of the Limitation Ordinance, Cap.347 (“the LO”).

5.  The second order under attack (“the 2009 Order”) is an order purportedly made pursuant to a consent summons signed by Mr Fong and D1 (“the Consent Summons”) to settle a District Court action commenced by D1 as the administer of the estate of Madam Lee against Mr Fong under DCCJ 1670/2009 (“the DCCJ Action”). By the DCCJ Action, D1 sued Mr Fong for, among other things, arrears of rent for his occupation of Lot Nos. 1384, 1488 and portion of 1489 (collectively “the Alleged Rented Lands”) from 1 January 2006 to 31 December 2009.

6.  Mr Fong says that both the 2007 Order and the 2009 Order were obtained by fraud and/or mistake of fact. His primary position is that he, and not Madam Lee, has since about 1981 at the latest been in adverse possession of Lot Nos. 1384, 1487 and portion of 1488 in D.D. 114 (“the Lands”), which form the bulk of the Disputed Lands, and so the 2007 Order was obtained by false evidence adduced by Madam Lee and must be set aside.

7.  For the DCCJ Action, Mr Fong says that D1 made fraudulent misrepresentations based on the 2007 Order and the Consent Summons signed by him under a mistake and the 2009 Order made therefrom must be set aside. Mr Fong also asks for the refund of HK$20,000 paid to D1 pursuant to the Consent Summons.

8.  It transpired at the trial that no order has actually been made on the Consent Summons and the 2009 Order is not in existence.

9.  D1 denies the allegation of fraud and/or mistake in his procurement of the 2007 Order and the Consent Summons. D1 denies Mr Fong’s claim of adverse possession of the Lands and D1 counterclaims for a declaration to the effect that P was his tenant in respect of the Alleged Rented Lands and hence is estopped from denying his possessory title thereto. D1 further counterclaims for a sum of HK$5,000 being the arrears for rent for the year of 2010 and/or the arrears of rent in respect of the portion of 1489 at the rate of HK$200 per annum from 1 January 2010 up to the date of the trial.

10.  At the trial, Mr Chong, together with Mr Tai, appeared for Mr Fong and Ms Wong SC, leading Mr Cheung and Ms Lee, appeared for D1. D2 has not responded to these proceedings and did not take any part in the trial.

Undisputed background facts

11.  I shall first outline the undisputed background facts. They are mostly taken from the Agreed Chronology helpfully prepared by the parties.

12.  Mr Tsang Loi Ki a.k.a. Tsang Loi Kee (“Mr LK Tsang”) became the registered owner of the Disputed Lands on or about 4 November 1910 and there is no information about his assumed death.

13.  One Madam So Yuen and Mr Fong allegedly entered into a rental agreement dated 26 July 1970 (“the Rental Agreement”) for a ten-year tenancy till July 1980 in respect of Lot No. 1384 and portion of 1488 (“the Rented Lots”) being part of the Lands. The Rental Agreement was recorded in a booklet (“the Rent Book”), I should make it clear that the Rental Agreement and the authenticity of the Rent Book are in dispute.

14.  On or about 14 August 1976, Madam So Yuen passed away. In her death certificate dated 15 August 1976, Mr Tsang Kwai Chuen (“Mr KC Tsang”) was stated to be the applicant of the death certificate and was described to be the brother-in-law of Madam So Yuen residing in Shui Tsan Tin Village (“STT Village”).

15.  Mr KC Tsang was the husband of Madam Lee and the father of D1. In the Rent Book, there are purported signatures of Mr KC Tsang to acknowledge receipts of rent collected from Mr Fong for the period from 15 August 1976 to 1980.

16.  On 1 December 2000, Madam Lee commenced the DCMP Proceedings against Mr LK Tsang for adverse possession of the Disputed Lands by an originating summons dated 1 December 2000 (“the OS”).

17.  On 17 May 2005, Mr KC Tsang passed away. On 22 March 2006, Madam Lee passed away.

18.  On 23 May 2006, D1, being the natural and lawful son of Madam Lee, was granted leave to represent the estate of Madam Lee to carry on the DCMP Proceedings upon his application.

19.  On 7 September 2007, the hearing of the OS took place before the Judge in the absence of Mr LK Tsang. The 2007 Order was made in the result.

20.  On 21 February 2008, the letters of administration of the estate of Madam Lee were granted to D1.

21.  On 24 February 2009, Messrs Simon C.W. Yung & Co. (“SYC”), then acting for D1 as the administrator of the estate of Madam Lee, sent Mr Fong a demand letter alleging arrears of rent arising from a lease granted by Mr KC Tsang to Mr Fong for many years at an annual rent of HK$5,000 from January 2006 onwards (“the Demand Letter”). By the Demand Letter, SYC demanded Mr Fong to pay the arrears of 4 years’ rent in the sum of HK$20,000 from 1 January 2006 to 31 December 2009.

22.  On 31 March 2009, D1 commenced the DCCJ Action against Mr Fong. In the Statement of Claim, it was pleaded that since about 1979, Mr KC Tsang as landlord let to Mr Fong as tenant the Alleged Rented Lands for agricultural purpose and by effluxion of time, the lease expired and the Alleged Rented Lands were continuously let to Mr Fong on a yearly basis.

23.  In around April 2009, SYC, on behalf of D1, contacted Mr Fong for the purpose of the DCCJ Action. Eventually, on or about 14 April 2009, Mr Fong went to the office of SYC in person and had a meeting with Mr Tam Wai Leung (“Ricky Tam”), a legal executive of SYC (“the 2009 Meeting”). Mr Fong at last signed the Consent Summons there. Mr Fong paid D1 through SYC a sum of HK$20,000 being the alleged arrears of rent and a Chinese receipt was issued to Mr Fong for this payment (“the Receipt”). Mr Fong signed the Receipt to confirm his payment and to acknowledge his receipt of the Receipt.

24.  SYC issued another English receipt to Mr Fong at the same time.

25.  On 11 April 2011, D1 as vendor and Goodlink Limited (“Goodlink”) as purchaser executed an assignment in respect of Lot Nos. 1384, 1487 and 1488 in D.D. 114 in consideration of HK$13,250,952 (“the Goodlink Assignment”).

26.  On 29 June 2012, D1 as vendor and Goodlink as purchaser executed another assignment in respect of the Remaining Portion of Lot No. 1489 in D.D. 114 in consideration of HK$2,784,210.

27.  On 6 April 2016, through his former solicitors, Mr Fong took out a summons for his joinder application in the DCMP Proceedings to join as the 2^nd defendant therein (“the Joinder Summons”).

28.  His Honour Judge M.K. Liu dismissed the Joinder Summons on 26 July 2017. The learned judge in his written decision held that to set aside the 2007 Order, Mr Fong had to start a new action by writ.

29.  On 21 September 2017, Mr Fong issued the Writ of Summons herein against D1 as the administrator of the estate of Madam Lee and D2.

30.  On 18 November 2019, Goodlink applied to join as a party to these proceedings and its application was dismissed on 9 July 2020.

Parties’ respective factual allegations

31.  Both parties have filed their respective lists of facts to be found by this court. These lists serve as a good summary of their respective factual allegations. The following is a summary of their lists.

Mr Fong’s factual allegations

32.  Mr Fong makes the following factual allegations. Before 1970, Madam So Yuen was in occupation of the Disputed Lands. Madam Lee and her family including D1 had not ever occupied or resided in any part of the Disputed Lands. They were just villagers of STT Village. Mr Fong refers to the birth certificate of D1 to show his actual place of residence.

33.  On or about 26 July 1970, Madam So Yuen and Mr Fong entitled to the Rental Agreement. Madam So Yuen was the wife of Mr LK Tsang.

34.  The Rent Book contained the terms of the Rental Agreement and some rental receipts signed by Madam So Yuen until the latter half of 1976. Thereafter Mr KC Tsang signed the rental receipts. The Rented Lots were described as “八鄉青板龍田地” of a stated area of “四斗半” totalling “拾板” (10 pieces of land) for a term of 10 years from 1 August 1970 to the end of July 1980 at a yearly rental of HK$480 payable half yearly in advance.

35.  Madam So Yuen retained a small part of Lot No.1488 for her own use (“the Retained Part”).

36.  There were actually two identical rent books. Each of Madam So Yuen and Mr Fong kept a copy. Only the Rent Book kept by Mr Fong was available in this action.

37.  Pursuant to the Rental Agreement, Mr Fong occupied the Rental Lots and operated his farm business there from 26 July 1970 till 2007. In 1970 and 1971, Mr Fong applied to the District Land Office (“the DLO”) for permission to build some structures on the Rented Lots for his residence and his farm business. His applications were supported by Mr LK Tsang by way of a handwritten note dated 8 October 1970 (“the 1970 Consent Letter”) and one So Lin being described as “the rental collector”. Mr Fong explained that So Lin was actually an error and it should read So Yuen.

38.  On 24 August 1972, the DLO granted a modification of tenancy (“the 1972 Modification of Tenancy”) to Mr Fong for his construction of a private residential structure and some agricultural structures including chicken sheds and duck sheds on a certain part of the Rented Lots, i.e. Lot No. 1488. A copy of the documents issued by the DLO was also sent to Mr LK Tsang.

39.  After the demise of Madam So Yuen in August 1976, Mr Fong took over the Retained Part and, in addition, Lot No. 1487 and thereafter Mr Fong had been in continuous occupation of the Lands. He operated a pig farm on the Lands under the trade name of [惠園] from about 1975 to 2007. Until the end of 1974, Mr Fong ran a duck farm on the Rented Lots.

40.  After the closure of the pig farm in 2007, Mr Fong rented out different parts of the Lands to different tenants for storage use. His son Mr Fong Chi Yuen (“Mr CY Fong”) took care of the rental business of the Lands.

41.  From around 1976 onwards, Mr KC Tsang started collecting rent from Mr Fong pursuant to the Rental Agreement on behalf of Madam So Yuen until 1980 and he signed the Rent Book and the rental receipts as the agent.

42.  In a handwritten letter dated 3 November 1997 issued by Mr KC Tsang (“the 1997 Consent Letter”), he wrote to give his consent to Mr Fong’s intended construction of a structure for environment protection for the pig farm in the Rented Lots. Mr KC Tsang signed the 1997 Consent Letter and described himself as “property agent”.

43.  On 11 December 1998, Mr KC Tsang and Mr Tsang Hin Man (“Mr HM Tsang”), the elder brother of D1, together with other persons, commenced a High Court action under HCA 21228/1998 (“the HCA Action”) to claim against one Mr Tsang Kwok Kay. In the Statement of Claim filed therein, it was pleaded that Mr KC Tsang and Mr HM Tsang were villagers of STT Village continually using and enjoying an access road linking STT Village and Kam Sheung Road.

44.  From 1981 onwards, Mr Fong treated the Lands as his own property.

45.  Mr Fong denies having seen any documents of the DCMP Proceedings on the Lands until 2014 and was unaware of the hearing of the OS of Madam Lee let alone the 2007 Order.

46.  In the circumstances, Mr Fong’s case is that the 2007 Order was obtained by fraud with false evidence in the affirmations of Madam Lee and D1 to the effect that they had been in continuous occupation of the Disputed Lands covering the Lands since 1950s and in the affirmations filed by his former solicitors to the effect that the legal documents relating to the DCMP Proceedings were affixed at a conspicuous place on the Disputed Lands.

47.  Mr Fong denies that there was ever any tenancy agreement between Madam Lee, Mr KC Tsang and/or D1 on one part and him on the other part in respect of the Disputed Lands including the Alleged Rented Lands or any part thereof.

48.  For the Consent Summons, Mr Fong says that a fraud was perpetrated on him and SYC misrepresented to him that D1 was then the registered owner of the Lands and he was liable to pay rent to D1. Mr Fong signed the Consent Summons under a mistake and the Consent Summons is liable to be set aside.

D1’s factual allegations

49.  D1 accepts that Mr Fong occupied the Alleged Rented Lands but only as D1’s family tenant. There was a verbal agreement made between Mr KC Tsang on behalf of Madam Lee and Mr Fong in or about 1979 for a lease of the Alleged Rented Lands and the rent in 2005 was HK$5,000 per annum (“the Purported Lease”).

50.  Mr Fong signed the Receipt and paid HK$20,000 as arrears of rent from 2006 to 2009 for his occupation of the Alleged Rented Lands.

51.  The Purported Lease is further evidenced by the 1997 Consent Letter. Mr Fong sought the 1997 Consent Letter from Mr KC Tsang for submissions to the Government to support his application and in doing so Mr Fong held out to the world at large that he was a tenant only.

52.  D1 denies that Mr KC Tsang ever collected rent from Mr Fong as the agent of Madam So Yuen. He points out that Mr KC Tsang collected rent only after the death of Madam So Yuen in 1976.

53.  D1 goes on to say that the purported signatures of Mr KC Tsang in the Rent Book look different from the signatures in the 1997 Consent Letter and his handwriting in his telephone book (“the Phone Book”).

54.  Lastly, D1 says that there is no evidence showing that Madam So Yuen was the wife of Mr KL Tsang and there is no evidence to indicate the relationship between Mr KL Tsang and Mr KC Tsang.

55.  For the Consent Summons, D1 says that Mr Fong attended the 2009 Meeting on his own volition and was ready and willing to pay the sum of HK$20,000 in cash. The Receipt was written in the Chinese language and Mr Fong signed it with full knowledge and acceptance of its content. Ricky Tam never exerted any pressure on Mr Fong.

56.  Lastly, D1 complains about the delay on the part of Mr Fong in bringing the present action even though he felt unhappy with the 2009 Meeting and was allegedly advised by his friend in 2009 or 2010 that he could make a claim for adverse possession of the Lands. It took 6 years for Mr Fong to take out the Joinder Summons.

Two preliminary issues

57.  Before my analysis of the evidence, there are two preliminary issues calling for my consideration. First, I should identify the focus of the disputes in the present action. Second, I should deal with the challenge of D1 about the locus standi of Mr Fong in the present action.

58.  The very first averment in the Statement of Claim is about the alleged adverse possession of the Lands by Mr Fong since at least 1981. Mr Fong has adduced a great deal of evidence of his occupation of the Land since 1970s and adverse possession of the Lands since 1981. Both Mr Fong and Mr CY Fong were cross-examined intensively by Ms Wong on their alleged adverse possession of the Lands. Submissions have been made on why no adverse possession on the part of Mr Fong of the Lands is made out on the evidence.

59.  Mr Chong draws my attention to the fact that Mr Fong does not ask any relief arising from his alleged adverse possession of the Lands. He stresses that this is a fraud action and this court should not be concerned about Mr Fong’s intended claim of adverse possession of the Lands to be made in the DCMP Proceedings should he succeed in setting aside the 2007 Order.

60.  Mr Chong refers to Tinkler v Esken Ltd (formerly Stobart Group Ltd) [2023] Ch 451. There, Sir Geoffrey Vos MR, by way of an explanation of the nature of an action to set aside a judgment for fraud, had this to say:

“12. In modern terms, we can perhaps regard the action to set aside a judgment for fraud as akin to an action for deceit. The only significant differences are that the court, rather than the opposing party to the first action, has to be shown to have been deceived, deliberate dishonesty is required, and materiality rather than simple reliance must be shown. If the elements are made out (misrepresentation or misleading conduct, made or undertaken fraudulently, with reliance for deceit and materiality for an action to set aside a judgment), the contract or the judgment can be rescinded or set aside.

14. The judgments in Flower v Lloyd show, as Lord Sumption in Takhar also made clear, that it is the fraud and the materiality that need to be proved (see also Lord Buckmaster in Jonesco v Beard [1930] AC 298, 300–301 ). It must be shown that the judgment was obtained by the fraud, and that the court was induced to make a potentially wrong judgment by the fraud. The party that lost as a result of the fraud must prove the fraud “wholly free from … any of the matters originally tried”.

38. As I have already said and these passages demonstrate, the questions of (a) establishing whether there was a fraud, and (b) materiality, are inter-related. I would endorse the description of the position in Grant and Mumford, Civil Fraud: Law, Practice & Procedure (2018), para 38-017 as follows:

‘However, the requirement of materiality does not extend to the second court having to retry the question of the liability of the parties or to see whether the fresh evidence or new facts are material to the final result in the sense of influencing what the decision would be if the matter were to be retried with honest evidence; indeed the second court should not undertake such an exercise. The purpose of a second action to set aside an earlier judgment is to take the parties back to the position as it was before the trial so that a new trial on honest evidence can then take place. Nonetheless, in practice it will be difficult for a judge in deciding the question of materiality not to trespass at least to some extent on to such matters.”’

61.  Applying these principles to the present case, this court should refrain from embarking on an investigation as to which party should be entitled to a possessory title to the Lands with the honest evidence which should have been placed before the Judge. In considering whether to set aside the 2007 Order by reason of fraud, this court should focus on the two requirements (fraud and materiality) only and the legal principles relating to the two requirements will be elaborated below.

62.  The next question is about the locus standi of Mr Fong to institute these proceedings. Ms Wong points out that Mr Fong was not a party to the DCMP Proceedings and the 2007 Order, not being a judgment in rem, does not bind Mr Fong. She places emphasis on the fact that Mr Fong does not ask for any declaratory relief against D2 in respect of his alleged possessory title to the Lands in the present action. By reason of these matters, Ms Wong submits that Mr Fong has no locus standi to bring this action to set aside the 2007 Order.

63.  I note that this challenge was only made for the first time by way of Ms Wong’s closing submission though it was forewarned in her opening submission.

64.  Ms Wong relies on 佛山市宏達發展公司清算組 v East Legend Investment Ltd (unreported, HCA581/2002, 7.6.2007) at §9 where DHCJ To held that the issue of the plaintiff’s locus standi can be raised at any stage in the course of the proceedings provided that there is no prejudice to the plaintiff which may not be compensated for by costs though a late challenge may have costs consequences.

65.  This was actually disapproved by Cheung JA in Liquidation Committee of Foshan Hongda Development Ltd v East Legend Investment Ltd [2009] 1 HKLRD 169 in which the Court of Appeal dealt with the appeal from the judgment of DHCJ To though the appeal was dismissed on other grounds. At §18, Cheung JA summarized the principles concerning the challenge on the lack of standing by the plaintiff to commence an action as follows:

(1)  The challenge cannot be raised by way of defence.

(2)  It must be raised at the outset or when it comes to the attention of the court or of the defence in the course of the proceedings.

(3)  Once the issue has been raised it must be decided.

(4)  It would be wrong to allow the action to go on without deciding the issue of standing: this is because the defendant will not have a further chance to challenge the issue.

(5)  Once it is clear that the action was improperly constituted, it must be brought to an end either by way of dismissal, striking out or stay.

66.  Cheung JA went on to say this at §21:

“The crux of the principles on the challenge of the plaintiff’s standing to sue is the requirement of an early determination of the issue. This makes perfect sense because otherwise the plaintiff would be incurring substantial costs in the preparation of the case for trial which may be totally wasted if the issue was decided against him. If, as in this case, the contest is to be decided only at the beginning of the trial the rationale behind these principles would be defeated. In my view, the importance of the rationale had not been properly recognized in the present case when the Judge decided to deal with the issue at the trial.”

67.  There were ample opportunities for D1 to challenge the standing of Mr Fong and it is far too late to mount the challenge by way of closing submissions. Mr Fong has no chance to show any prejudice at all. I should not allow the defence to raise this challenge at this late stage on the established principles.

68.  In any event, I find no merit in this challenge. I accept Mr Chong’s submission that it is not necessary for Mr Fong to establish his adverse possession claim to have the standing to apply for an order to set aside the 2007 Order. For the following reasons, I am of the view that Mr Fong has the locus standi to challenge the validity of the 2007 Order.

69.  To begin with, contrary to the contention of D1, non-parties can be allowed, in appropriate circumstances, to apply to set aside an order which does not bind them: see Bandon v Becher (1835) 3 CL & FIN 479, Mullins v Townsend [1831] 11 Dow & Clark 430 and Bowen v Evans 9 ER 1090.

70.  Mr Fong is seeking to show his possessory interest in the Lands in these proceedings. Regardless of whether he could succeed in establishing his possessory title against D2 in the DCMP Proceedings eventually, with his possessory interest, he should be entitled to set aside the 2007 Order.

71.  It is obvious that Mr Fong wants to make his adverse possession claim against D2 in the DCMP Proceedings after the 2007 Order is set aside. It is in the interest of justice and procedural economy that both his claim and the competing claim of Madam Lee should be determined together by the same judge. Thus, Mr Fong must be allowed to apply to set aside the 2007 Order.

72.  Further, paragraph 2 of the 2007 Order contains a declaration to the effect that Madam Lee has established a possessory title to the Disputed Lands and is accordingly entitled to be registered as the holder of the Disputed Lands in Yuen Long New Territories Land Registry. Such registrations would certainly harm the possessory interest of Mr Fong and they could be a bolt in Mr Fong’s possessory title to the Lands if established. Mr Fong must be allowed to protect his interest by removing the 2007 Order.

73.  Lastly, Mr Chong relies on Sihombing & Wilkinson: Hong Kong Conveyancing 2 – Cases and Materials, Vol.2(F), Chapter X, para 551 in his submission that even before the completion of the limitation period and the possessory title of Mr Fong is not yet matured, Mr Fong may still sell and assign his inchoate interests to date. Thus, the 2007 Order having been registered would affect such interest as an adverse possessor and Mr Fong has valid grounds to seek for the removal of the registration.

Relevant legal principles on fraud and materiality

74.  For the two requirements or tests for fraud and materiality, Sir Geoffrey Vos MR in Tinkler actually referred extensively to the requirements outlined by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners LP [2013] 1 CLC 596, which was cited with approval by Kwan JA in Mayer Corporation Development International Ltd v Alliance Financial Intelligence Ltd and Ors. [2019] HKCA 777 at §72:

“The two remaining issues are largely factual. There is no dispute as to the legal principles as set out by Aikens LJ in the Highland case at §106, which have been approved by the Supreme Court in Takhar v Gracefield at §§57 and 67 and are as follows:

(1) there must be “conscious and deliberate dishonesty” in relation to the relevant evidence given;

(2) the fresh evidence must be “material”, in that it demonstrates that the previous relevant evidence, action, statement or concealment was an operative cause of the court’s decision to give judgment in the way it did, or that it would have entirely changed the way in which the first court approached and came to its decision; and thus the conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was; and

(3) the question of “materiality” of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence.”

75.  For the requirement of dishonesty, Lam VP (as he then was) in Iu Po Cheung v The Commissioner for Census and Statistics (unreported, CACV 87/2013, 10.9.2015) after referring to the speech of Lord Simon in The Ampthill Peerage [1977] AC 547 said this at §18(b),

“In respect of the exception, a party who wishes to impeach a previous judgment must prove that the court was deceived into giving that judgment by means of a false case known by the other party to be false or not believed to be true or made recklessly without any knowledge on the subject. For present purposes, it should be noted that there are two essential elements:

(i) The party alleged to have committed the fraud must have the requisite intent to deceive the court. It is not enough to show that he or she made an inaccurate statement without showing that he or she did not believe in (or was reckless as to) the truth of that statement; and

(ii) The deception has caused the court to make the impeached judgment.”

76.  Mr Chong draws my attention to the following dicta of Andrews LJ in John Andrew Park v CNH Industrial Capital Europe Ltd [2022] WLR 860 at §§51-52:

“… once a judgment is tainted by deceit it is fatally flawed … [i]t is therefore no answer to a claim to set aside a judgment which has been procured by a dishonest representation relating to the claimant’s primary case, that he also had an alternative cause of action on which he might have entered judgment without relying on the dishonest representation.”

77.  Mr Chong then submits that it does not matter whether D1 had a viable alternative cause of action.

78.  With these principles in mind, I consider the validity and sustainability of the 2007 Order.

79.  In the OS, as the first ground for the application of Madam Lee, it is claimed that Madam Lee has been continuously in adverse possession of the Disputed Lands since 1950.

80.  The OS was supported by affirmation evidence only. There was no affirmation in opposition filed. The 2007 Order was made on the basis of those affirmations filed on behalf of Madam Lee and D1 only.

81.  In the Statement of Claim herein, it is pleaded that the false evidence placed before the Judge was contained in two groups of affirmations. The first group of affirmations (“the First Group of Affirmations”) consists of the 1^st Affirmation of Madam Lee filed on 1 December 2000, the 1^st Affirmation of D1 filed on 15 May 2006 (“D1’s First DCMP Affirmation”) and the 2^nd Affirmation of D1 filed on 16 July 2008 (“D1’s Second DCMP Affirmation”) relating to the allegations of adverse possession of the Disputed Lands. The second group of affirmations (“the Second Group of Affirmations”) includes the 2^nd, 3^rd and 4^th Affirmations of Chan Wing Hung respectively dated 23 November 2001, 3 July 2002 and 24 October 2002, the 2^nd Affirmation of Ricky Tam dated 27 May 2006 and the 2^nd Affirmation of Tam Wing Kit dated 8 August 2007. Mr Chan worked for Messrs Ken Chiu & Co., the former solicitors acting for Madam Lee in the DCMP Proceedings. Ricky Tam previously worked for Messrs Ng & Co. and currently works for SYC. He performed the service duties in the DCMP Proceedings for D1. The Second Group of Affirmations dealt with the purported service of the court documents including the Notice of the Hearing of the OS on D1 in the DCMP Proceedings by affixing them at a conspicuous place of the Disputed Lands.

82.  The pleaded case of Mr Fong on falsity in the First Group of Affirmations is that, contrary to the averments therein, Madam Lee and her family members had never been in possession of or in any way occupied the Lands since at least 26 July 1970. After August 1976, the Retained Part was not possessed or occupied by Madam Lee and her family members. They had never used the Lands for agricultural purposes and never fenced off the Lands.

83.  For the Second Group of Affirmations, Mr Fong pleads that no legal documents relating to the DCMP Proceedings was ever affixed at a conspicuous place of the Lands at all. This explains his ignorance of and hence his inaction in the DCMP Proceedings.

84.  I shall first deal with the First Group of Affirmations. I need to examine them closely and the relevant evidence is set out as follows.

(1)  In the 1^st Affirmation of Madam Lee,

(a)  At §2: “In or about 1950… I noticed several pieces of land which are subsequently known to me as Lot Nos. 1384, 1487, 1488, 1489 and 1606E… were vacant and abandoned. As the said premises was abandoned, I then decided to take possession of the said premises as trespasser…”.

(b)  At §3: “Since entered into possession of the said premises, I have used the said premises as if I were the owner. I also built fences surrounding the boundary of the said premises in order to prevent any wild animal from entering the said premises. Thereafter I continue to use the said premises as agricultural land”.

(c)  At §4: “During the past 50 years when I have been in occupation of the said premises, I have never paid any rent to any person and no one has ever demanded me to pay any rent to him”.

(d)  At §6: “I have been in possession of the said premises for 50 years since 1950 during which I have never suffered any interference of possession and quiet enjoyment of the same…”.

(2)  In the 1^st Affirmation of D1,

(a)  At §10: “I, together with other family members of [Madam Lee], have always been in occupation and quiet enjoyment of the Premises since my birth until now without obstruction or interference by others”.

(3)  In the 2^nd Affirmation of D1,

(a)  At §4:“The Deceased, as a trespasser, has been continuously in uninterrupted and exclusive physical possession of the Premises since 1950 onwards. The Deceased had at her own expenses improved the condition of the Premises for growing vegetables and rearing pigs and poultry”.

85.  The overall picture painted by the foregoing evidence is that Madam Lee and her family including D1 after his birth in 1966 were in actual physical and continuous occupation of the Disputed Lands since 1950. This formed the bedrock of her claim of adverse possession, which was accepted by the Judge resulting in the grant of the 2007 Order.

86.  Mr Chong submits that the evidence adduced by Mr Fong and indeed those by D1 in this action shows that the evidence placed before the Judge in DCMP Proceedings was false and not just inaccurate.

87.  Mr Fong has adduced a wealth of documentary evidence in addition to his oral evidence to prove his actual physical occupation of the Rented Lots commencing in or about 1970 pursuant to the Rental Agreement.

88.  First and foremost, the Rent Book is one of the most telling documents in these proceedings. In view of D1’s non-admission of its authenticity, I have inspected the Rent Book closely. I have no doubt at all that it is a genuine document.

89.  It appears to me to be an ancient document. It has a paper cover and the handwritten contents were written with different pens. There are 7 stickers stuck on 2 pages of the Rent Book and each of them denoted payment of 15 cents of stamp duty. Such stickers were apparently provided by the Stamp Duty Office. Each of the 7 stickers was struck through by a cross seemingly drawn by a shaky hand.

90.  On the paper cover, I can see the halves of two Chinese characters [合約]. This tallies perfectly with the explanation of Mr Fong that there are in fact two identical rent books and the other half was kept by Madam So Yuen and the two Chinese characters were indented across the margin of the covers of the two rent books.

91.  The Rent Book is far too complicated to be a fabrication in my view. I do not think that Mr Fong was such a dishonest person and went to such lengths to make up this document of such unnecessary complexity and had the audacity to let it be subjected to scrutiny of the court.

92.  I also find Mr Fong’s evidence relating to the Rent Book and its contents to be credible and reliable. His evidence was not shaken under cross-examination. There is simply no contrary evidence, either.

93.  The Rented Lots are not identified by their specific lot numbers in the Rent Book. Nevertheless, there cannot be any dispute that the subject premises of the Rental Agreement are the Rented Lots as shown by a number of other documents generated after the commencement of the tenancy.

94.  I am aware of the complaint of the defence about the belated production of the original copy of the Rent Book for his inspection. This is unsatisfactory but the defence has not changed its position after inspecting the original copy anyway. The belated production can cause me little concern about its authenticity.

95.  Secondly, there are several documents relating to the applications of Mr Fong for a permit to construct structures on Lot No. 1488 for the purpose of his farm business in the early 1970s.

96.  There is a document entitled “Application For Permit On Private Land” dated 9 October 1970 signed by Mr Fong (“the 9/10/1970 Application Form”). It relates to the application of Mr Fong to the DLO for a permit to erect certain structures including a residential house and some structures for ducks, chicken and pigs on the Rented Lots.

97.  In the 9/10/1970 Application Form, Section IV is marked “Owner Consent” and it is printed “You may attach a separate letter” and the Chinese sentence printed underneath indicated that the written consent of the owner might be attached to the application form for submission.

98.  There was indeed a letter dated 8 October 1970 (“the 1970 English Consent Letter”) written in the English language in support of Mr Fong’s application. It reads,

“Consent is hereby given for Fong Ping-kit to erect T/SS for agricultural purpose.
Tsang Loi Kee
(Mark of) So Lin, rental collector”

99.  There was another application form submitted to the DLO by Mr Fong dated 10 May 1971. Mr Fong applied for construction of a residential unit and a storeroom for agricultural purposes.

100.  Again, there is a letter dated 7 May 1971 (“the 1971 English Consent Letter”) written in the English language in support of this application. It reads,

“Consent is hereby given for Fong Ping-kit to erect P.R. and agri S.R. at Ching Pan Lung, Sheung Tsuen, DD.114
So Yuen
Landowner”

101.  There is another letter of the same date written in the Chinese language in support of Mr Fong’s application (“the 1971 Chinese Consent Letter”). Its contents were almost identical to the 1971 English Consent Letter and it was apparently issued by Madam So Yuen as the landowner. It was specifically stated that she did not know the lot number of the land concerned. D1 has issued a notice of non-admission of the authenticity of this letter.

102.  The application was granted by the 1972 Modification of Tenancy. It allowed part of Mr Fong’s applications and certain structures were allowed to be constructed on Lot No. 1488. Mr Fong’s photo was affixed to this document and was stamped with the chop of the DLO. Mr Fong signed as the permittee. The owner name was stated to be Mr LK Tsang.

103.  There is another undated Chinese letter issued by the DLO to Mr LK Tsang relating to the same authorization in the 1970s.

104.  The following three documents are of particular importance. First, by a letter dated 29 January 1997, Mr Fong applied to the DLO for permission to construct a cover for its septic tank used in his farm on the Rented Lots.

105.  The DLO issued a letter dated 14 October 1997 (“the 1997 DLO Letter”) to Mr Fong advising him that according to government policy, permission for construction of structures for agricultural use would only be granted to landowners and he should submit the written consent of the landowner for his application.

106.  Then there came the 1997 Consent Letter. Mr Fong was cross-examined at length on this letter and D1 relies heavily on it. It is reproduced as follows:

“本人租于方炳傑地段114約1384 1488 地段本人同意其在該地 段內關于政府環保有用之建設豬舍用途
希祈批准為荷此致
台安
物業代理人
曾桂全謹
一九九七年十一月三日”

107.  Thirdly, the farm business of Mr Fong carried on in the Rented Lots is evidenced by a number of documents originating from the government. These documents, as identified by Mr Chong in his closing submissions, include:

(1)  The two letters respectively dated 20 March 1996 and 21 February 1997 issued by the Agricultural & Fisheries Department (“the AFD”) which shared almost the same contents. The latter read as follows:

“This is to certify that Mr Fong Ping-kit (方炳傑), holder of Hong Kong Identity Card No. … is a genuine and an experienced farmer. He has operated a livestock farm at Sheung Tsuen, Yuen Long, N.T. for more than 26 years and is currently raising about 3000 pigs.”

(2)  The two Livestock Keeping Licence issued to Mr Fong by the AFD respectively dated 13 September 1999 and 26 March 2004 whereby Mr Fong was allowed to keep 3,500 pigs at Kam Shuen Road Sheung Tsuen, Yuen Long. Lot 1488 can be found in the plans attached to these licences.

(3)  The three written confirmations of the number of pigs issued by the AFD after those staff had taken stock of the pigs at the farm of Mr Fong from 2005 to 2007.

(4)  The letter issued by the AFD dated 28 December 2007 to Mr Fong regarding the special allowance payable upon the voluntary surrender of Livestock Keeping Licence. By the said letter, the AFD confirmed that their staff had inspected the pig farm of Mr Fong on 28 December 2007 and found that it was vacated and cleaned.

108.  Fourthly, Mr Fong is able to produce plenty of documents generated in the course of his pig farm business over the years. Such documents include the sales records of the pig farm.

109.  Lastly, Mr Fong has disclosed some rental agreements signed between him and his tenants for the lease of part of the Lands from 2007 to 2014. Some of them were not stamped and two of them were stamped.

110.  I accept all this documentary evidence including the Rent Book and the 1971 Chinese Consent Letter, the authenticity of which is not doubted by this court. These documents are indeed indisputable.

111.  Apart from the documentary evidence adduced by Mr Fong, he struck me to be a forthcoming and reliable witness as far as his evidence of his activities on the Lands is concerned..

The Purported Lease

112.  In fact, D1 does not deny that Mr Fong operated his pig farm on the Rented Lots and later the Lands from the 1970s to 2007. D1 merely claims that Mr Fong occupied the Alleged Rented Lands pursuant to the Purported Lease.

113.  The undisputed occupation of Mr Fong of the Rented Lots (and after 1976, the Lands) being part of the Disputed Lands from the 1970s onwards is actually sufficient for the present purposes. As submitted by Mr Chong, to set aside the 2007 Order, Mr Fong only needs to show that the representation that Madam Lee and her family were in actual and continuous occupation of the Disputed Lands including the Lands in the evidence presented to the Judge is false and was made dishonestly by Madam Lee and D1. The issue at this trial is not whether Mr Fong or Madam Lee was in adverse possession of the Lands sufficiently to obtain a possessory title.

114.  I also accept the submission of Mr Chong that it is futile to say that Madam Lee could still have established her adverse possession claim in the DCMP Proceedings on the basis that she was in possession of the Lands with Mr Fong being her tenant in occupation of the Alleged Rented Lands. Whether she had an alternative basis to make good her claim is neither here nor there: see John Andrew Park, supra at §§51-52.

115.  Whether the Purported Lease ever existed is still a matter of importance in particular to the enforceability of the Consent Summons and the Counterclaim. I should proceed to examine the relevant evidence.

116.  The pleaded case of D1 about the Purported Lease is that since about 1979, by an oral agreement made between Mr KC Tsang for and on behalf of Madam Lee as landlord of the one part and Mr Fong as tenant of the other part in respect of the Alleged Rented Lands. The letting of the Alleged Rented Lands by Mr KC Tsang to Mr Fong was authorised, consented or permitted by Madam Lee.

117.  The tenancy consisted of an express term that Mr Fong was required to pay the annual rent in advance per year. By effluxion of time, the tenancy had already expired and the Alleged Rented Lands had been continuously let to Mr Fong on a yearly basis and the annual rent payable in 2005 was HK$5,000. Thus, Mr Fong was and has been in occupation of the Alleged Rented Lands merely as a tenant under the tenancy with Madam Lee and/or her estate and/or D1.

118.  In his witness statement, D1 did not say much about the Purported Lease. He first stated that his parents told him that since 1979 his late father had leased the Alleged Rented Lands to Mr Fong on a yearly basis and the rent for the year of 2005 was HK$5,000. Because of the lapse of time, D1 had not kept any rental receipts signed by his late father. He further pointed out that his late father as the landlord assisted Mr Fong in his various applications to the governmental bodies for licenses and permissions pertaining to his farm business.

119.  D1 then averred that Mr Fong was the tenant of his late father and/or Madam Lee.

120.  In his supplemental witness statement, D1 stated that his late parents told him that since 1979, they as landlords had made an oral agreement with Mr Fong to lease the Alleged Rented Lands to him on an annual basis for agricultural use. He alleged that Mr Fong knew that his late parents had passed away and hence since 2006 he had stopped paying rent to him.

121.  The only live evidence to prove the Purported Lease emanated from D1. I paid close attention to D1’s oral evidence under cross-examination in this regard. He was asked to set out everything he knew about the Purported Lease. His oral evidence consists of matters which have not been disclosed before. It can be summarised as follows.

122.  First, in the 1980s when D1 was a secondary school student, he saw Mr Fong visiting his home in STT Village with some fruits from time to time. He once thought Mr Fong was his relative. His late father later told him that Mr Fong operated a pig farm on the Lands and Mr Fong came to their home to pay rent. He then did not know anything about the Purported Lease.

123.  A few months before the death of his late father in May 2005, D1 had tea with his late father near the Lands and after they had finished, his late father suggested to him that they should pay a visit to the Lands. Then D1 drove him to the Lands and from a height he pointed at those parts of the Lands leased to Mr Fong. He told him that in or about 1979, he orally leased the Alleged Rented Lands to Mr Fong. The yearly rent was HK$5,000.

124.  I should first point out that all the evidence of D1, both in the witness statements and given orally, does not support the pleaded terms of the Purported Lease. There is no evidence when the oral lease made in 1979 expired by effluxion of time. There is no evidence what the rent at the very beginning was and how it was varied to be HK$5,000 per month in 2005.

125.  I do not find D1’s evidence to be credible and reliable. When D1 claimed that his parents told him about the details of the Purported Lease in his witness statements, he did not give a good narrative of his late father’s explanation of the terms of the Purported Lease. All of a sudden, in cross-examination, he could tell that it was his late father alone who disclosed to him the details of the Purported Lease on a specific occasion at a specific location.

126.  Plainly, the Purported Lease is the lynchpin of the defence and it is most controversial. If D1 had such a clear memory of how and what his late father purportedly told him about the Purported Lease, no doubt he should have given full or at least some particulars in his pleadings and a detailed account in his witness statements in this action. He should not have waited until cross-examination to give this relevant evidence for the first time to support his defence.

127.  I also find it concerning that D1 did not say anything about the disclosure of the details of the Purported Lease by his late father in his affirmations made in the DCMP Proceedings. D1’s First DCMP Affirmation was made on 15 May 2006, around one year after the death of his late father. His memory about the alleged disclosure of the Purported Lease to him should still be good at that time. There is no reason why D1 did not mention the Purported Lease to support Madam Lee’s claim for adverse possession of the Disputed Lands in the DCMP Proceedings. If Madam Lee or Mr KC Tsang had granted the Purported Lease to Mr Fong, it would have been a piece of cogent evidence of their dealing with the Disputed Lands as if they were the owners.

128.  Instead, D1 gave an untruthful statement that he, together with other family members of Madam Lee, had always been in occupation and quiet enjoyment of the Disputed Lands since his birth until then without obstruction or interference by others in the DCMP Proceedings. The statement is inconsistent with his present case that Mr Fong in fact had rented a large part of the Disputed Lands from his late parents and occupied the same since 1979.

129.  When D1 was asked to explain why he did not mention the Purported Lease in D1’s First DCMP Affirmation, he first said that the DCMP Proceedings were handled by his elder brother. This explanation is unacceptable. After the death of Madam Lee, it was D1 and not his elder brother who took out the Joinder Summons with D1’s First DCMP Affirmation.

130.  D1 then explained that he did not know the law and he did not know that the Purported Lease was relevant to the DCMP Proceedings. Therefore, he did not tell his solicitors about the Purported Lease.

131.  I am not convinced by his explanation at all. It was his application to join as a party to the DCMP Proceedings and it is only reasonable to expect him to have told his solicitors everything he knew about the use of the Disputed Lands over the requisite period for the preparation of his supporting affirmation. I do not believe that D1 would have withheld from his solicitors this detailed account of his late father’s full disclosure of the Purported Lease to him had it ever taken place.

132.  Even if D1 did not appreciate the relevance of the Purported Lease, there is no reason why he would opt not to mention it but instead gave a false account of his continuous use and occupation of the Lands since his birth.

133.  In the premises, I am unable to accept D1’s evidence relating to the Purported Lease. I conclude that it did not exist and D1 only came up with idea of the Purported Lease after the grant of the 2007 Order. It featured in the Demand Letter and later the DCCJ Action for the first time.

134.  On the contrary, Mr Fong’s evidence relating to his dealings with Mr KC Tsang is far more convincing and was not shaken under cross-examination.

135.  His evidence is that in about 1976, Madam So Yuen passed away. In or about late 1976, Mr KC Tsang approached him to collect rent from him. Mr KC Tsang claimed to be a distant relative of Mr LK Tsang and he was in the course of applying for administration of the estate of Mr LK Tsang. He asked to collect rent from Mr Fong as the agent of Madam So Yuen. He signed the rental receipts in the Rent Book from 1976 to the end of 1980.

136.  Then in or about 1980, Mr KC Tsang told Mr Fong that he failed to obtain the grant to administer the estate of Mr LK Tsang. Thereafter, Mr KC Tsang ceased to collect rent from Mr Fong.

137.  This account is supported by the Rent Book, which contained the written rental receipts signed by Mr KC Tsang for the period from late 1976 to 1980. Such rental receipts are markedly different from the previous ones signed by Madam So Yuen. In one of such rental receipts, Mr KC Tsang was described as the agent.

138.  The defence is unable to adduce an iota of contrary documentary evidence and I have no difficulties in accepting Mr Fong’s evidence.

139.  D1 now seeks to argue that the purported signatures of Mr KC Tsang appearing in the Rent Book are forgeries. On the genuineness of such signatures, D1 did not adduce any expert evidence. He relies on his personal knowledge of the signatures of his late father.

140.  D1’s evidence is that Mr KC Tsang enjoyed writing and sometimes he wrote on newspapers to practise his writing. D1 then had ample opportunities to see the handwriting of his late father.

141.  D1 produced the Phone Book and referred to the 1997 Consent Letter to show that the purported signatures of his late father in the Rent Book and the signature in the 1997 Consent Letter and his handwriting in the Phone Book appeared to be very different.

142.  D1 lastly pointed out that his late father always signed his full 3-character Chinese name and never omitted the middle character [桂] in his signatures. Therefore, the signature for the acknowledgement of receipt of the annual rent for the year of 1979 in the form of [曾全] looks suspect.

143.  Ms Wong impresses upon this court that given D1’s knowledge of his late father’s handwriting, D1’s opinion evidence is admissible despite the fact that he is only a factual witness: Doe d Mudd v Suckermore (1836) 111 ER 1331 and section 17 of the Evidence Ordinance, Cap. 8.

144.  Though admissible, D1’s evidence in this respect is not convincing and carries little weight to my mind.

145.  First and foremost, I accept the evidence of Mr Fong to be credible and reliable. He saw Mr KC Tsang making the rental receipts and signing such receipts in the Rent Book. With my acceptance of this direct evidence, the alleged differences are of little significance.

146.  On the other hand, I actually find that the signatures of Mr KC Tsang in the Rent Book to be relatable to the one appearing in the 1997 Consent Letter. Of course there are notable differences but after all the latter signature only came into being almost two decades later. Such differences are perfectly natural and understandable.

147.  As regards the Phone Book, there is no direct evidence who actually made the entries and when the entries were made. The 8-digit telephone numbers including mobile phone numbers recorded suggest that they were written in the Phone Book in the mid-90s. I am unable to place any weight on any purported handwriting of Mr KC Tsang in the Phone Book at all.

148.  As rightly pointed out by Mr Chong, whilst Mr Fong said positively that the rental receipts immediately before the impugned signatures were written by Mr KC Tsang, he was not cross-examined on this. D1 merely challenged the authenticity of such signatures. This makes little sense to me. The three characters [曾桂全] written in the rental receipts look very similar to the impugned signatures. They clearly had the same origin and were made at the same time.

149.  The rental receipts issued by Mr KC Tsang from 1976 to 1980 effectively negate the existence of the Purported Lease. Any dealings between Mr Fong and Mr KC Tsang relating to the Rented Lots could only be based on the Rental Agreement as recorded in the Rent Book. Mr KC Tsang could not possibly have collected rent from Mr Fong in 1979 in a different capacity pursuant to the Purported Lease. If the Purported Lease had ever come into being in 1979, Mr KC Tsang should not have used the same Rent Book to issue rental receipts and even if he, for unknown reason, had chosen to do so, he should have at least mentioned the Purported Lease and its terms in the Rent Book.

150.  Further, I accept the evidence of Mr Fong that the last time he paid to Mr KC Tsang pursuant to the Rental Agreement was in 1980 and upon being notified by Mr KC Tsang that he failed to obtain permission to administer the estate of Mr LK Tsang, Mr Fong ceased paying any rent for his use of the Rented Lots and Mr KC Tsang stopped collecting rent from Mr Fong in 1981.

151.  D1 in his evidence alleged that Mr Fong kept paying rent to his late father until the death of his late father in 2005. He was unable to produce any documentary evidence to support this allegation. I do not accept his explanation that those rental receipts issued after 1980 were lost due to the lapse of time. If the last rental receipt had been issued in 2005, when the DCCJ Action was commenced in 2009, D1 should have provided such a receipt to his former solicitors to support his allegation of the Purported Lease.

152.  I also note that Mr KC Tsang passed away 4.5 years after the commencement of the DCMP Proceedings. There is no reason why he himself did not claim possessory title to the Disputed Lands and instead allowed Madam Lee to be the sole plaintiff in the DCMP Proceedings. This is particularly so when Mr KC Tsang was no stranger to litigation and he was one of the plaintiffs in the High Court Action commenced in 1998. Moreover, given his dealings with the Rented Lots and the Purported Lease, it is only inexplicable that he did not even make an affirmation to give a full account of the Purported Lease in support of Madam Lee’s claim in the DCMP Proceedings in his lifetime.

153.  Now I should render my analysis on the 1997 Consent Letter. In my view, it could not possibly assist D1 to establish the Purported Lease.

154.  The 1997 Consent Letter was created in compliance with the requirement stated in the 1997 DLO Letter. A written consent of the landowner was necessary for Mr Fong’s application. Mr LK Tsang was the registered owner of the Lands.

155.  In his previous similar applications to the DLO in the early years of the Rental Agreement, Mr Fong secured the written consents of the landowner by way of the 1970 English Consent Letter, the 1971 English Consent Letter and the 1971 Chinese Consent Letter issued by Mr LK Tsang and/or Madam So Yuen. Such consent letters were accepted by the DLO and in the approval documents including the 1972 Modification of Tenancy, there were references to Mr LK Tsang as the landowner.

156.  And Mr KC Tsang was seemingly related to Mr LK Tsang and Mr KC Tsang had tried to administer the estate of Mr LK Tsang. In those circumstances, it is understandable that when Mr Fong made a similar application in 1997 and was required to submit a written consent of the landowner, Mr Fong turned to Mr KC Tsang for assistance to issue the 1997 Consent Letter purportedly on behalf of the landowner whom he believed to have passed away. It cannot be taken to be Mr Fong’s admission that Mr KC Tsang or Madam Lee was his landlord or that they had any interest in the Lands.

157.  In cross-examination, Mr Fong explained that he asked Mr KC Tsang to issue the 1997 Consent Letter because he had collected rent on behalf of Madam So Yuen previously. Mr Fong never agreed that Mr KC Tsang issued the 1997 Consent Letter as the agent of Madam Lee on the basis of the Purported Lease.

158.  Indeed the contents of the 1997 Consent Letter do not support the case of D1. Madam Lee was not mentioned at all and it was not suggested that she had any interest in the Disputed Lands or she was the landlord of Mr Fong. And it is noteworthy that Mr KC Tsang signed the 1997 Consent Letter as the agent in respect of the Lands only. If he had granted the Purported Lease to Mr Fong, there is no reason why he would have described himself as a mere agent.

159.  Mr Chong submits that the 1997 Consent Letter contradicts D1’s adverse possession claim in that Mr KC Tsang considered himself to be an agent of the landowner and hence there could not be any animus possidendi on his part. There is some force in this submission but the adverse possession claim of the defence needs no deliberation in this action and I should not form any definitive view on this matter.

160.  In a similar vein, Ms Wong submits that the 1997 Consent Letter shows that there was a lack of animus possidendi since Mr Fong acknowledged that he was in occupation of the Lands as a tenant only. She further relies on an answer of Mr Fong in cross-examination to the effect that Mr Fong thought it was necessary to seek the consent of the landowner in 1997 because he did not regard himself being in adverse possession of the Lands at that time. Again, I should not assess the merit of Mr Fong’s intended adverse possession claim in this action despite the attraction of this submission.

161.  To sum up, I accept Mr Fong’s evidence relating to the Rental Agreement and that from 1970 to 1980 he occupied the Rented Lots, he was the tenant of Madam So Yuen being the wife of Mr LK Tsang. Mr Fong operated his pig farm business on the Lands until 2007. This evidence was completely concealed from the Judge and was at odds with the supporting evidence adduced by Madam Lee and D1 in the DCMP Proceedings. The Judge would no doubt have approached the application of Madam Lee differently if she had been made aware of the Rental Agreement. The Judge would have raised requisitions to ensure that Madam Lee was indeed in exclusive possession of the Disputed Lands since 1950s.

162.  In granting the application by the OS, the Judge accepted the false picture painted by Madam Lee and D1. In my view, both Madam Lee and D1 must have known the falsity of their evidence filed in the DCMP Proceedings.

163.  Mr Fong’s use of, initially, the Rented Lots and, subsequently, the Lands for his farm business had all along been open and lasted more than three decades before the DCMP Proceedings. These could not have escaped the attention of Madam Lee and D1.

164.  Mr KC Tsang starting collecting rent from Mr Fong in 1976 on behalf of Madam So Yuen. He assisted Mr Fong’s application to the DLO in 1997. Mr KC Tsang was the brother-in-law of Madam So Yuen. Mr LK Tsang was the husband of Madam So Yuen. It is highly unlikely that Mr KC Tsang did not disclose all these dealings to his wife and his son especially when Madam Lee started the DCMP Proceedings in her sole name.

165.  On the evidence of D1 and in his pleaded case, the Purported Lease was granted by Mr KC Tsang on behalf of Madam Lee. It cannot be possibly argued that Madam Lee did not know Mr Fong’s occupation of the Rented Lots and the Lands.

166.  In any event, the evidence of D1 is that Mr KC Tsang brought him to the Lands and told him about the details of the Purported Lease at the end of 2004 before he filed his affirmations in the DCMP Proceedings. His non-disclosure of the occupation of Mr Fong of the Rented Lots and/or the Lands on whatever basis in the DCMP Proceedings was intentional and inexcusable.

167.  Instead, in D1’s First DCMP Affirmation (§10), he stated that since birth he had always been in occupation of the Disputed Lands with his family until the date of the affirmation. This is demonstrably false. D1 readily agreed at trial that he moved to live in STT Village when he was at most 7 to 8 years old. In cross-examination, he could only say that he had told the solicitors that he had previously lived on the Disputed Lands in his early childhood and sometimes his brother would take him to the Lands to play around and stay overnight. But this was not the evidence D1 chose to place before the Judge despite legal advice.

168.  In the premises, I cannot accept that Madam Lee and D1 had an honest belief in their repeated allegations of their continuous occupation of the Lands for decades in their affirmations.

169.  Now I turn to the Second Group of Affirmations. They were made by three service processors and among them, only Ricky Tam was available to testify for D1.

170.  By the Second Group of Affirmations, Madam Lee proved service of several legal documents on Mr LK Tsang in the DCMP Proceedings. In these affirmations, the service processors affirmed that they had served the documents in question in a similar manner. First, they affixed a copy of the documents at a conspicuous place of the Disputed Lands. Then they served another copy of the documents by leaving the same at Kap Lung House, which was the last known address of Mr LK Tsang. Lastly, they posted a copy of the documents in advertisements in a popular Chinese newspaper.

171.  In the DCMP Proceedings, there were some orders for substituted service. First of all, Acting Registrar S. Kwang (as he then was) made a substituted service order dated 13 September 2001 to allow Mr Fong to serve the OS and the supporting affirmation of Madam Lee by affixing a copy of the said documents at a conspicuous place of the Disputed Lands and leaving at the last known address of Mr LK Tsang at Kap Lung House. By the 2^nd Affirmation of Chan Wing Hung dated 23 November 2001, it was deposed that service of the OS and the supporting affirmation was effected pursuant to the said order.

172.  Apparently all the three service processors completed the service of the relevant legal documents pursuant to the substituted service orders obtained by Madam Lee in the DCMP Proceedings.

173.  Mr Fong has to prove his pleaded case that their affirmations contain false evidence in that such documents were not actually affixed at a conspicuous place of the Disputed Lands. His evidence is that he did not see any such documents on the Lands.

174.  I cannot accept that his evidence could show a prima facie case that the service processors made a false statement in their affirmations. They could have affixed such documents at a conspicuous place of the Disputed Lands and yet such documents could still escape the attention of Mr Fong.

175.  To start with, the open area of the Disputed Lands was large and there are some areas such as section A of Lot No. 1489 and Lot No. 1606E not occupied by Mr Fong. The service processors did not state clearly at which specific locations they had affixed such documents. Unfortunately, none of them took any photo showing where and how such documents were affixed at a conspicuous place on the Disputed Lands.

176.  Further, such documents could have been removed before they caught Mr Fong’s attention.

177.  On the evidence, I am unable to accept the very serious allegation that the service processors falsely represented that they had carried out the service in their affirmations merely because Mr Fong did not see such documents at his place.

178.  Ricky Tam was cross-examined about the service he alleged to have effected as narrated in his affirmation dated 27 May 2006 and Mr Chong by his forensic analysis on his evidence attacks his credibility.

179.  Ricky Tam himself did not know the exact location of the Disputed Lands and their lot numbers. On 25 March 2006, D1 drove him to the Disputed Lands and asked him to get off his car to serve the document. There is no evidence from D1 as to where he dropped off Ricky Tam. I am not sufficiently convinced that Ricky Tam properly served the document by affixing the same at a conspicuous place of the Disputed Lands without D1’s evidence as to where he dropped off Ricky Tam.

180.  More importantly, Ms Wong made a valid point that Ricky Tam only served a Notice of Appointment of the postponement of the hearing of the OS on 1 June 2006. His affirmation was not even included in the preamble of the 2007 Order. The Notice has nothing to do with the hearing of the OS on 7 September 2007 and thus the 2007 Order.

181.  I am not convinced that Ricky Tam falsely represented that he effectively served the Notice on 25 March 2006 in the first place. In any event, whether Ricky Tam did serve the Notice effectively has no bearing on the making of the 2007 Order.

182.  All in all, I am not satisfied that there is any falsity in the Second Group of Affirmations.

183.  Though there was seemingly no service issue in the DCMP Proceedings, in my view, Madam Lee was less than frank in her approach in securing the 2007 Order. It must be apparent to her that Mr LK Tsang had passed away long before the commencement of the DCMP Proceedings. Mr LK Tsang became the registered owner of the Disputed Lands in 1910. I do not think that Madam Lee could have genuinely believed that Mr LK Tsang remained alive, residing on the Disputed Lands or at his last known address and reading local newspapers in Hong Kong.

184.  Moreover, Mr KC Tsang was related to the wife of Mr LK Tsang and he even applied for her death certificate. They should be close and Mr KC Tsang should have some idea of the whereabouts or the status of Mr LK Tsang when the DCMP Proceedings were commenced. I do not believe that Madam Lee instituted a legal action concerning the Disputed Lands without any involvement of and discussion with Mr KC Tsang beforehand.

185.  I have made the factual findings as a result of my acceptance of the evidence of Mr Fong that there was not any tenancy between Mr Fong and Madam Lee or Mr KC Tsang in or about 1979 and Mr KC Tsang ceased collecting rent from Mr Fong on behalf of Madam So Yuen in 1980 because of his failure to apply for administration of the estate of Mr LK Tsang. Given their full knowledge of Mr Fong’s occupation of the Lands throughout the years, when Madam Lee decided to commence the DCMP Proceedings with legal advice, Madam Lee and Mr KC Tsang should know that Mr Fong might stake a claim for an interest in the Lands, which should be adverse to their claim.

186.  Against this background, there is no good reason why Madam Lee sued Mr LK Tsang as the sole defendant and represented to the court that service of documents pursuant to the substituted service orders could bring the DCMP Proceedings to the attention of Mr LK Tsang. Madam Lee and her legal advisors should know very well Mr LK Tsang could not possibly respond to the DCMP Proceedings. The Judge could have their evidence only and a fortiori, they should fully disclose to the Judge all the relevant matters with full candour. Obviously, Madam Lee and D1 did not so and they opted to cut corners. Regrettably the 2007 Order was obtained on false premises.

The Consent Summons

187.  In the Statement of Claim, Mr Fong asks for an order against D1 that the 2009 Order be set aside and the repayment of the sum of HK$20,000.00 and interest thereon.

188.  The 2009 Order is never in existence and cannot be set aside. The sum of HK$20,000 was paid pursuant to the Consent Summons and it is pleaded that the Consent Summons was obtained by fraud and/or mistake of fact. The pleaded false representations include the representation made by D1 through his solicitors SYC that D1 was the registered owner of the Alleged Rented Lands and Mr Fong was liable to pay rents to D1 as pleaded in the Statement of Claim filed in the DCCJ Action, and/or orally in a phone conversation between an unidentified staff member of SYC and Mr Fong and/or orally in the 2009 Meeting between an unidentified staff member of SYC and Mr Fong.

189.  D1 denies any false representations and fraud. His pleaded case is that Madam Lee, the estate of Madam Lee and then he himself became the landlord of Mr Fong in respect of the Alleged Rented Lands and Mr Fong as tenant under a tenancy. Mr Fong only paid rent up to 2005 and since 1 January 2006, he refused to pay rent to D1.

190.  Hence, D1 as the administrator of the estate of Madam Lee commenced the DCCJ Action claiming vacant possession of the Alleged Rented Lands and the arrears of rent of HK$5,000 per annum until delivery up of vacant possession.

191.  D1 says that Mr Fong went to the office of SYC on 14 April 2009 and on his free will and voluntarily signed the Consent Summons after its contents had been interpreted to him. Mr Fong then paid HK$20,000 pursuant the Consent Summons and the Receipt was issued to him.

192.  D1 then avers that Mr Fong is estopped from denying that he was and is a tenant of Mr KC Tsang, Madam Lee and/or the estate of Madam Lee and/or D1 and/or Goodlink.

193.  By his counterclaim, D1 seeks a declaration to such an effect and that Mr Fong shall have no locus standi to claim possessory title to the Alleged Rented Lands.

194.  The Consent Summons is an agreement binding on the parties. I shall now examined whether the agreement should be vitiated on the pleaded grounds. On this issue, I have heard the conflicting evidence of Mr Fong and Ricky Tam.

195.  Mr Fong was noticeably uptight about this matter. He received the Demand Letter and he received a call from SYC afterwards. He went to the office of SYC for discussion having been threatened that he and his family would be expelled from the Lands if he did not pay rent. He alleged that he did not know that D1 was chasing him for the exact amount of HK$20,000 and it just happened that he had collected some rent from his tenants in cash and he had such an amount in his pocket when he went to the office of SYC. He alleged that a staff threatened him that if he did not pay the amount, his family would be kicked out from the Lands. He denied having been explained the contents of the Consent Summons by a lady solicitor of SYC before he signed it without legal advice.

196.  I prefer the evidence of Ricky Tam concerning the Demand Letter, the telephone call and what transpired at the 2009 Meeting. His account was supported by an attendance note which appears to be a contemporaneous record. I do not accept Mr Chong’s submission that the attendance note is a recent fabrication. Nor do I believe that Ricky Tam used threats to pressurise Mr Fong into paying the amount of HK$20,000 and signing the Consent Summons. He simply did not need to do so. Mr Fong was clearly prepared to pay the demanded amount for the purpose of a settlement of the DCCJ Action.

197.  Mr Fong must be under a lot of pressure when he received the Demand Letter and faced the DCCJ Action. He did not seek legal advice. Nor did he ask for Mr YC Fong’s assistance. He dealt with the difficult situation on his own. It is understandable that he readily succumbed to such pressure and was willing to pay the amount to get rid of the legal problems besetting him. It was, after all, not a huge sum in comparison with the rental income the Lands yielded. He was probably embarrassed to admit his weakness. And I believe that he did not know the legal implication of his acceptance that D1 was his landlord in the Consent Summons and the Receipt.

198.  Nevertheless, I am positive that the agreement embodied in the Consent Summons must be set aside on the ground that it was procured by fraud and that Mr Fong agreed to sign the Consent Summons and perform his obligations therein under a mistake.

199.  Mr Chong pertinently refers me to the following passage in the judgment of the House of Lords in Bowen v Evans 9 ER 1090 at 1099,

“It is true, that if a case of fraud be established, Equity will set aside all transactions founded upon it, by whatever machinery they may have been effected, and notwithstanding any contrivances by which it may have been attempted to protect them. It is immaterial, therefore, whether such machinery and contrivances consisted of a decree of a Court of Equity, and a purchase under it, or of a judgment at law or of other transactions between the actors in the fraud …”

200.  In the present case, I have come to the conclusion that the 2007 Order was obtained by fraud. D1 relied on the 2007 Order to make his demand by the Demand Letter and later to form the basis of the DCCJ Action. I have also concluded that there was never any tenancy agreement between Mr Fong and Madam Lee and/or Mr KC Tsang and/or D1. The Purported Lease is a sheer fabrication. There is simply no basis for D1 to make any demand for rent.

201.  D1 made a false representation to Mr Fong that he had an interest in the Lands by virtue of the 2007 Order and D1 as the administrator of the estate of Madam Lee became the registered owner of the Lands. On that basis, D1 represented to Mr Fong that he was liable to pay to D1 for his occupation of the Lands. I am satisfied that on balance of probabilities, when Ricky Tam made demands for the alleged arrears of rent, he too made the similar representations to Mr Fong.

202.  The allegations in the Statement of Claim in the DCCJ Action and the alleged tenancy are fictions. Mr Fong should know very well that he had never occupied any portion of Lot No. 1489. D1 himself commenced another action in the District Court under DCCJ 379/2010 against one Mr Mak Fai claiming that Mr KC Tsang leased a portion of Lot No. 1489 to Mr Mak Fai in or about 1979.

203.  Mr Fong clearly relied on the false representations based on and arising from the 2007 Order and signed the Consent Summons. I do not believe that Mr Fong genuinely accepted that he was a tenant of the estate of Madam Lee and/or D1 and he owed them any arrears of rent. He could not have not paid due attention or any at all to the Consent Summons. The Consent Summons in fact could not serve the purpose of Mr Fong. It even did not provide that D1 would discontinue the DCCJ Action upon receipt of the payment of HK$20,000 by Mr Fong. Nor did it contain any agreement to allow the Purported Lease to be continued and so Mr Fong could remain on the Alleged Rented Lands.

204.  I am aware that the DCCJ Action was subsequently discontinued on 15 April 2009. Curiously enough, after the Consent Summons was signed, D1 made no further demand of any rent from Mr Fong until he filed his Counterclaim in this action and D1 did not find it necessary to reduce the Purported Lease into writing. The Goodlink Assignment made no reference to the Purported Lease or any tenancy agreement with Mr Fong at all. Any tenancy alleged by D1 is illusory.

205.  In the premises, the Consent Summons can have no legal effect and Mr Fong must be entitled to rescission and hence D1’s refund of HK$20,000. D1 cannot legitimately hold on to the said sum. D1 is unable to show any basis on which he could ask for any rent from Mr Fong, quite apart from the intractable limitation issue duly pleaded by Mr Fong. There should be a refund of the sum with interest thereon to Mr Fong by way of restitution.

206.  For completeness, I should make it clear that D1 cannot in any event be entitled to the declaration sought in his Counterclaim to the effect that by paying the rent to D1 at the 2009 Meeting, Mr Fong is estopped from denying the possessory title of the estate of Madam Lee and/or D1. The following passage in Spencer Bower: Reliance-Based Estoppel (5^th Ed) helpfully cited to me by Mr Chong at §9.21 is apposite.

“Where the person receiving the payment was not the person who let the payer into possession, but someone who is claiming title as the latter’s assign, or successor, or otherwise, the mere act of paying the money as and for rent, without more is not conclusive, and does not estop the payer from afterwards disputing the payee’s title, if he can explain away the payment by showing that he made it in mistake, misapprehension, ignorance or incomplete knowledge of the circumstances of the payee’s title, or of other material facts. Still less can he be denied the right and opportunity of showing that any such misapprehension or ignorance was brought about or fostered or encouraged by fraudulent misrepresentation or fraudulent concealment of material facts on the part of the person receiving the payment, and founding thereon his claim to the benefit of an estoppel”.

207.  In the present case, it should be noted that Mr Fong was first let into possession of the Rented Lots by Madam So Yuen pursuant to the Rental Agreement and then the Lands. Neither Madam Lee nor Mr KC Tsang let Mr Fong into possession of the Lands or the Alleged Rented Lands. D1 did not adduce any contrary evidence. He has no allegation about Mr Fong’s occupation of the Lands prior to the Purported Lease. I accept that Mr Fong made the payment of HK$20,000 under a mistake and the payment was induced by fraud. Mr Fong is not estopped from challenging the possessory title of the estate of Madam Lee and/or D1 in the circumstances.

208.  I have reached the conclusions on the two major issues without any reference to the expert evidence by way of the single joint expert report compiled by Dr Tang. The expert evidence is of limited assistance indeed and I am not troubled by its apparent contradiction to the evidence of Mr Fong in some respects. I do not expect from Mr Fong an immaculate account or description of his occupation of a particular part of the Lands and his farming activities at any particular point of time from 1970 onwards. His inability to give all the minute details does not cause me any concern. Nor can it alter in any way the overall picture well supported by contemporaneous documents.

Limitation and delay

209.  In the Re-Amended Defence and Counterclaim, D1 pleads that Mr Fong was made cognisant of his right to claim adverse possession by Mr Mak Fai in 2010 and/or the Goodlink Assignment in 2011 yet he had taken no action to safeguard his legal interest in respect of the Lands until the commencement of this action in 2016. Due to his laches, acquiescence and/or delay, Mr Fong should be estopped and/or barred from pursuing his claim against D1.

210.  I note that the goalposts are shifted in the closing submissions in that it is submitted that Mr Fong should take action after the 2009 Meeting.

211.  This plea can be disposed of briefly. First of all, I accept Mr Fong’s evidence that he first saw the legal documents generated in the DCMP Proceedings when Goodlink posted the same on the Lands in 2014. Mr Mak Fai was just his neighbour and did not profess to be equipped with any legal knowledge.

212.  Mr Fong did not enforce his legal right and claim adverse possession with promptitude admittedly. However, I cannot accept that there were inexcusable laches, acquiescence and delay which can justifiably deprive him of the equitable relief sought in these proceeding.

213.  In certain cases, delay defeats equities. Yet, the doctrine of laches is not based on the mere fact of delay and something more even than extremely lengthy delay is required before any denial of equitable rights. The question is whether the lapse of time has given rise to circumstances that now mean it would not be inequitable to deny equitable relief: Snell’s Equity (34^th Ed), §5-011.

214.  Mr Fong was not a party to the DCMP Proceedings. He had no access to the supporting evidence and the pleadings filed therein. He could only discover the fraud at a late stage through investigation with legal assistance. In the particular circumstances of the present case, I find no culpable delay on his part.

215.  Mr Chong further relies on the following passage in Bowen, supra at [282],

“…upon fraud clearly established, no lapse of time will protect the parties to it, or those who claim through them, against the jurisdiction of Equity depriving them of the effects of their plunder”.

216.  It must be borne in mind that the present action is based on fraud. Mr Fong is seeking to set aside the 2007 Order and the Consent Summons because they were procured by fraud. The sale to Goodlink was completed in 2011. It was already a fait accompli to Mr Fong. D1 could hardly be heard to complain about any prejudice or injustice if he is to be deprived of any fruits yielded by the fraud perpetrated by Madam Lee and him.

217.  Ms Wong seeks to argue that the 6-year time-limit for tort and contract in section 4(1)(a) of the LO should apply to the primary case of fraud and the alternative case of quasi-contract respectively.

218.  Limitation issues must always be raised by an express plea: see Hong Kong Civil Procedure 2025 Vol.1 at §18/8/26 and Lee Man Fai v Yip Pak Keung [2021] HKCFI 2264 at §13. I refuse to deal with any defence based on the LO whether by direct application or application by analogy without proper pleading.

219.  I do not attempt to deal with all the arguments advanced by the parties with impressive diligence in this Judgment. Nor is it appropriate for me to determine the respective claims of adverse possession of Mr Fong and D1. I do not start to decide on the genuineness of the Goodlink Assignment despite the vigorous attacks by Mr Chong. Mr Fong’s pleadings have not made this an issue. I believe I have sufficiently dealt with all the key issues in the pleadings to determine the claim of Mr Fong and D1’s counterclaim.

Conclusion and Order

220.  In light of the foregoing analysis, I conclude that Mr Fong should be entitled to judgment against Ds. I so order. First, I set aside the 2007 Order. I further order that D1 do make repayment of the sum of HK$20,000 with interest at prime rate plus 1% thereon from 14 April 2009 until the date of this Judgment and thereafter at judgment rate until full payment.

221.  I dismiss D1’s counterclaim in its entirety.

222.  Costs should follow the event and I cannot see any justification for a departure from this general principle. Indemnity costs seem appropriate to me taking into account the circumstances of the disputes between the parties and the conduct of D1.

223.  D1 was all along aware of Mr Fong’s decades-long occupation and use of the Lands. D1 should know very well that the First Group of Affirmations did not tell the Judge the true story and that Madam Lee and he did not act honestly. D1 has the audacity to insist on the validity of the 2007 Order and the Consent Summons procured by fraud despite the challenge mounted by Mr Fong. In my view, D1 should long have given up the 2007 Order and returned the sum of HK$20,000 to Mr Fong. At the very least, D1 should have consented to Mr Fong’s application by the Joinder Summons so that Mr Fong could have the chance to prove his allegations in the DCMP Proceedings. This action or at least this trial could have been avoided. It is unreasonable for D1 to resist the claim of Mr Fong to the bitter end.

224.  In the circumstances, I make an order nisi that costs of and occasioned by this action including all costs reserved be paid by D1 to Mr Fong on an indemnity basis, to be taxed if not agreed. I make no costs order as between Mr Fong and D2.

225.  Last but not least, I thank Ms Wong, Mr Cheung, Ms Lee, Mr Chong and Mr Tai for their comprehensive and helpful submissions.