THE INCORPORATED OWNERS OF KAM LUK BUILDING v. 吳靜燕

DCCJ 1648/2016

[2020] HKDC 196

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1648 OF 2016

---------------------------

---------------------------

--------------------------

JUDGMENT

--------------------------

A.  INTRODUCTION

1.  This is a claim for the recovery of possession of a common area in a building where the defence of adverse possession has been raised.

B.  BACKGROUND

2.  In this case, the plaintiff (“P”) is claiming for the recovery of possession of a common area underneath the staircase situated on the ground floor of Kam Luk Building, Nos 61-83 Shek Yam Road, Kwai Chung, New Territories (“the Building”).

3.  P is the Incorporated Owners (“IO”) of the Building. 

4.  The defendant (“D”) is and was the occupier of the common area and space underneath staircase no 63 of the Building (“Staircase 63”), as shaded in yellow in the plan annexed to the re-amended statement of claim and delineated in pink in the plan annexed to D’s Re-re-re-re-amended defence and counterclaim (“RAD&CC”). 

5.  P’s case is that D has trespassed onto its land and therefore it seeks reliefs of, inter alia, vacant possession and demolition of the structures within Staircase 63. 

6.  As a matter of law, P says that, being the owners of the Building, P is deemed to be in possession of the common parts.  Hence:

(a)  there is not much P needs to prove other than to establish its paper title over the disputed area and that it is a common part of the Building; and

(b)  the trial is for P and the court to test D’s alleged adverse possession claim.

7.  In a nutshell, D’s case is that since 1973, D and her family have enjoyed exclusive possession of Staircase 63 for more than 20 years or 12 years (after 1991) by virtue of the fact that the family had occupied and operated a photo developing/finishing store there.  D therefore claims that D has acquired a possessory title to Staircase 63 by virtue of adverse possession. 

8.  Further and in the alternative, D claims that, due to the inaction and delay of the IO in the past 40 years, in particular, for not commencing any legal action until 2016, it is entitled to rely on the equitable doctrine of acquiescence, waiver, laches and estoppel.   

C.  DISCUSSION

C.1  Undisputed Facts

9.  It is not disputed that the area under Staircase 63 is a common part belonging collectively to the owners of the Building.

10.  Clause 2 of the Deed of Mutual Covenant of the Building (“DMC”) stipulates that:-

“2. Each of the parties hereto and his tenants servants workmen visitors licensees and all persons by him authorised shall in common with his co-owners of the whole of the said premises and persons entitled to the like right have access to and be entitled to use the entrance-hall staircases and landings the common passages of and in the said building for all purposes connected with the proper use and enjoyment of the shop flat floor or space in the said building of which he is entitled to the exclusive use occupation and enjoyment and for the purpose of ingress to and egress from such shop flat floor or space.”

[See, also Clause 12 of the DMC which provides similarly.]

11.  The DMC suggests that the “common part” falls within the category of “staircases and landings” and therefore they are part of the Building.

12.  Furthermore, section 2 of the Building Management Ordinance (Cap 344) (“BMO”) defines “common parts” to mean:-

“(a) the whole of a building, except such parts as have been specified or designated in an instrument registered in the Land Registry as being for the exclusive use, occupation or enjoyment of an owner; and

(b) unless so specified or designated, those parts specified in Schedule 1;”

13.  Under Schedule 1 to the BMO, common parts include “passageways, corridors, staircases, landings”.

14.  The area under Staircase 63 is therefore a common part of the Building of which D does not dispute.

C.2  Related Action in DCCJ 1649/2016

15.  D draws the court’s attention to a related action, namely, DCCJ 1649/2016 (“the Related Action”) that involved substantially the same issues as those in the present case.  The Related Action involved the same IO as P claiming possession of 2 other staircase shops, namely, nos 75 and 81 of the Building (“Staircase 75” & “Staircase 81”).  It had proceeded to trial and this court handed down the judgment in that case on 30 November 2018 (“Judgment in the Related Action”): See The Incorporated Owners of Kam Luk Building v Poon Mui Sang & Ors [2018] HKDC 1493.

16.  In the Judgment in the Related Action, I had, inter alia, held that:-

(1)  the 1^st defendant had established adverse possession to Staircase 75 of the Building;

(2)  due to the inaction and delay on the IO’s part for the past 40 years, both the 1^st and 4^th defendants had established the equitable defence of acquiescence and thus, the IO’s claim for recovery of possession to Staircase 75 and Staircase 81 should be dismissed.  

17.  I note that the IO did not appeal against the judgment in the Related Action.  However, I note at the same time that the factual matrix of how the occupants had come into possession of Staircase 75 and Staircase 81 in the Related Action are quite different from how D and her family (“The Ngs”) had come into occupation of Staircase 63 in our present case.  I shall discuss this matter in greater detail when I deal with D’s case below.

C.3  Legal Principles Involved  

18.  The following legal principles are well established and are not in serious dispute between the parties in this case.

19.  As a starting point, P being the legal and registered owner of the common part of the Building is deemed to be in occupation: (See Wong Tak Yue v Kung Kwok Wai & Anr (No 2) (1997-98) 1 HKCFAR 55, at p 70E; Birkenhead Properties and Investment Limited v Lam Kai Man & Anr, unrep, HCMP 1588/2012, 12 January 2016, at §9; and Powell v McFarlane (1979) 38 P&CR 452, at p 470).

20.  For the period before the incorporation of P, D has to prove adverse possession by her and/or The Ngs against each and every co-owner in the Building: (See The Incorporated Owners of Chungking Mansions v Shamdasani, Murli Pessumal [1991] 2 HKC 342 at 355E). 

21.  Hence, the burden is on D to prove by “compelling evidence” that she had entered into adverse possession with the requisite intention to possess:-

(a)  The co-owners of the Building as represented by P will be readily assumed to have the requisite intention to possess Staircase 63 (See Powell at p 472);

(b)  In Powell, Slade J held that where the trespasser’s use of land was equivocal, the onus is on him to “adduce compelling evidence” that he had the requisite intention to possess (See Powell at p 476);

(c)  The slightest acts done by or on behalf of the co-owners (or any one of them prior to the incorporation of P) or P will be found to negate the discontinuance of possession;

(d)  On the other hand, D must adduce clear and affirmative evidence to prove the unequivocal intention to possess Staircase 63 by her and her family members (See Powell, at p 472); and

(e)  The benefit of the doubt should be given to P (See Powell, at p 478). 

22.  The Court of Final Appeal in Wu Yee Pak v Un Fong Leung [2004] 7 HKCFAR 498 at §5 states that:-

“WHETHER POSSESSION WAS ADVERSE

5.         SINCE POSSESSION BY THE APPELLANT OF THE LAND THROUGH OCCUPATION IS ACCEPTED, THE KEY ISSUE IS WHETHER HIS POSSESSION WAS ADVERSE IN THAT HE WAS NEITHER A TENANT NOR A LICENSEE OF THE RESPONDENTS.  THE BURDEN OF PROOF ADMITTEDLY LIES WITH THE APPELLANT AND THE EVIDENCE HE HAS TO ADDUCE MUST BE COMPELLING. POWELL V MCFARLANE & ANOTHER (1979) 38 P & CR 452; AND WONG TAK YUE V KUNG KWOK WAI DAVID & ANOTHER (1997–98) 1 HKCFAR 55.”

23.  In Birkenhead, supra, the court held similarly that:-

“13. THE BURDEN OF PROOF OF THESE THREE REQUIREMENTS [I.E. (I) FACTUAL POSSESSION; (II) INTENTION TO POSSESS OR ANIMUS POSSIDENDI; AND (III) POSSESSION IS ADVERSE] IS ON THE SQUATTER. THE STANDARD OF PROOF IS THE CIVIL STANDARD. HOWEVER, THE BURDEN IS A HEAVY ONE. THE SQUATTER HAS TO ADDUCE OBJECTIVE AND COMPELLING EVIDENCE: POWELL V MCFARLANE. SELF SERVING EVIDENCE IS HARDLY LIKELY TO BE OF ASSISTANCE. THE COURT WILL SCRUTINIZE SUCH EVIDENCE WITH GREAT CARE. THE SQUATTER'S EVIDENCE OF HIS SUBJECTIVE INTENTION WILL INVARIABLY BE GIVEN NO WEIGHT AS BEING SELF SERVING EVIDENCE, BUT HIS STATEMENTS AGAINST HIS INTEREST WILL USUALLY BE ACCORDED CONSIDERABLE WEIGHT. OBJECTIVE EVIDENCE WILL BE GIVEN SUCH WEIGHT AS THEY DESERVE.”

24.  Thus, the court should approach with scepticism and scrutinize any self-serving statements made by D and/or The Ngs, as the squatter, whether made during the period of occupation or when challenged in legal proceedings (See Wong Tak Yue, supra at 69A-C).

25.  The rationale behind is that it cannot be lightly assumed that the paper title holder has foregone his interest in land (See Powell, at 472).  By virtue of their ownership, paper owners are entitled to and are presumed to be in occupation.

26.  Even where there is factual possession, the claimant for adverse possession has the burden to provide compelling evidence that the possession was adverse and not attributable to a license or tenancy (See: Wu Yee Pak, supra), otherwise the adverse possession is deemed to be for the benefit of the licensor (See Tsang Foo (also known as Fu) Keung and Key Kwong Development Limited v Chu Jim Mi Jimmy [2015] 6 HKC 200 (CFI)) or the landlord (See Cheung Yat Fuk v Tang Tak Hong (2004) 7 HKCFAR 70), as the case may be.  See also, Lee Siu Fong v Wong Wan Leung (unrep, HCA 122/2012, 3 January 2017, and Cedric Hervey Ong v Wong Suk Lin & Ors [2018] HKCFI 2040, 7 September 2018.

C.4  Issues in Dispute

27.  According to the “agreed statement of issues in dispute” filed by the parties on 16 January 2018, the issues that are in dispute and of which the court has to resolve in this case are as follows:-

(1)  whether D and The Ngs have been in exclusive possession of Staircase 63 for a period of exceeding 12 or 20 years before the commencement of this action in April 2016, and by so doing have acquired a possessory title thereto by way of adverse possession;

(2)  whether the alleged inaction and delay on the part of P amounts to waiver and acquiescence;

(3)  whether as alleged by D, the equitable defences of laches, estoppel and equitable forbearance can be established on the facts;

(4)  whether P is debarred from seeking vacant possession of Staircase 63 and whether P’s title is extinguished by virtue of the provisions of the Limitation Ordinance, Cap 347 (“LO”); and

(5)  in the event that D fails in her defence, whether P is entitled to recover mesne profits and other damages from D; if so, what should be the quantum of such damages.

C.5  The plaintiff’s case

28.  As mentioned, the evidence that needs to be produced from P’s side to prove its case is quite simple and straightforward.  All that it needs to establish is that they are the legal and registered owner of the staircases and that Staircase 63 formed common part of the Building.  Once that is proved, they are deemed to be in occupation: See Wong Tak Yue, supra at p 70E.

29.  I am satisfied that Mr Fung Chi Ching (“PW1”), the manager of the management company appointed by P to manage the Building, has established the above at the trial.  In any event, these are not matters disputed by D.

30.  However, beyond that, PW1 has no personal knowledge on matters in relation to D’s father occupation of Staircase 63 as he has only been employed by the management company since 1 March 2011.  This was about 3 years after the IO was first incorporated in July 2008.  In fact, PW1 has confirmed that he had had no personal knowledge of any matters in respect of Staircase 63 prior to his joining of the management company.

31.  In his evidence, PW1 was able to confirm that, besides a letter from Messrs WK To & Co dated 8 November 2010, he has not seen any pre-action letter issued by P against D or her predecessor in relation to their occupation of Staircase 63.  I take that to mean and so find that P had not taken any action against D or The Ngs in relation to their occupation or possession of Staircase 63 prior to that date.   

32.  In regard to P’s main reason of trying to recover Staircase 63 for the purpose of installing the pumps for the water sprinkling system, I find PW1’s evidence on this matter is far less than convincing.   Despite the fact that the contract with the contractor Kwok Shing Construction Limited had been signed in July 2015, the letter from the contractor to the project consultant of P dated 1 August 2017 (in reminding P that the water sprinkling system equipment must be placed underneath Staircase 63) was only produced by P on the first day of the trial.  In my judgment, these matters are clearly afterthoughts which were produced in order to justify P’s claim for the recovery of the common area under Staircase 63 when in fact there was no such need or any urgency to do so at all.  I would reject such so-called “reasons” for recovering the areas under the Staircases by P.   

C.6  The Defendant’s Case

C.6.1   In relation to entering of possession in 1973

33.  In respect of how D and her family had entered into possession or occupation of Staircase 63 in 1973, D has put forward at least 2 different accounts of how their late father Ng Ying Thong (「吳應桐」) (“Ng Senior”) and her family had done so.

34.  The first account was contained in the supplemental witness statement of DW1 Ng Tung Wai (「吳統偉」) (“DW1”), the younger brother of D, when he had a conversation with Ng Senior back in 1988:-

「4.  ...先父告訴我說他認識一位關係要好的朋友名為胡錦先生，並稱呼為「胡老頭」。

5.  先父說在大約1973年時，他在青山道經營攝影院，我哥哥吳統洲學歷不高，卻已經停學，並全職協助他營業。當時胡錦說有辦法讓先父及/或吳統洲在該爭議地經營相片沖印生意，希望可以幫助吳統洲有更好的事業發展,也讓先父有機會可以擴大我家的相片沖印業務。我父親接受了胡錦的提議後，我家便在大約1973年得到該爭議地的獨家佔用、管有和控制權，而且一直沒有也不受任何外人干涉。」

35.  In DW1’s own words, the “method” or “way” (「有辦法」) as proposed by Wu Kam (or “Old Head Wu” (「胡老頭」) as he was formerly known amongst The Ngs (“Wu Kam”) only gave the right to operate the photo finishing business at Staircase 63 but not the ownership of Staircase 63 (「讓先父及/或吳統洲在該爭議地經營相片沖印生意。」).

36.  DW1 also confirmed in his evidence in court that Ng Senior did not tell him that “he had obtained ownership of Staircase 63” from Wu Kam.   DW1 further confirmed that upon receiving such licence, Ng Senior obtained factual possession and not the ownership of Staircase 63 (「該爭議地的獨家佔用、管有和控制權」).

37.  The second account of how The Ngs had come into possession of Staircase 63 was given by D herself when she gave evidence in court.  In her oral evidence, she stated that she had a conversation with Ng Senior sometime in 2010 after receiving a letter from P’s solicitors. During this conversation, she apparently had asked Ng Senior how the shop where the photo developing and finishing business called “Silvery Photo Supplies” (“Silvery Photo”) at Staircase 63 was being operated had been obtained ( 「銀都點得來?」).  Ng Senior replied to her that it was “purchased from Wu Kam” (「同胡錦買返來」).

38.  When cross-examined what was actually bought, D confirmed what was bought was the right to operate the business.  When further cross-examined, D said Ng Senior did not say that he bought the ownership of Staircase 63.  Unsurprisingly, there is no document produced by D to show that Staircase 63 was “purchased from Wu Kam”. 

39.  I agree with Mr Dicky Cheung, counsel for P, that these 2 accounts are consistent with each other in that they both involved Wu Kam as a director and shareholder of Shun Shing Weaving Co Ltd (“Shun Shing”), giving permission, consent or licence to Ng Senior to occupy Staircase 63 and operate the photo finishing service business there.  D’s account only added one more crucial detail, namely, Staircase 63 was purchased by Ng Senior from Wu Kam.  I agree with Mr Cheung that the payment of money would turn it into a contractual licence instead of merely a bare licence.  Either way, I agree that it was a licence granted by Wu Kam according to D’s case (“the Wu Kam Licence”).

40.  I find the 2 accounts tally with D’s pleadings. In the RAD&CC, D had pleaded the following facts which in my view resonate and constitute the Woo Kam Licence:-

“(a) The co-owners of the Building ... (being privy to or subject to the BMO/DMC) i.e. the promisor, made clear and unequivocal representations to the Defendant and/or her family, i.e. the promisee, that the latter could erect the Shop on the Land, exert exclusive possession of the Land and the Shop and operate the Business thereon; and such representations were intended to affect the legal relations between them.”

41.  When asked whether the pleadings above and Wu Kam as a shareholder and director of Shun Shing had promised to let The Ngs to occupy Staircase 63 were referring to the same thing (「係唔係同一件事?」), D replied with a definite “Yes”.  By doing so, I find D had in effect admitted the existence of the Wu Kam Licence, first by pleading; later by producing DW1’s supplemental witness statement at §5; and lastly by confirming so in viva voce evidence before the court.

42.  Unsurprisingly, Mr Adrian Leung, counsel for D, tries to play down this important departure of D’s case in her evidence.  He submits that D’s recollection of the alleged conversation between herself and Ng Senior about the Wu Kam Licence would not affect the overall reliability of D’s evidence.  Despite her later retraction from the admission that Ng Senior had purchased Staircase 63 from Wu Kam, he submits that it should not affect the overall quality of her evidence and the outcome of the case. 

43.  With respect, I disagree.  I find D has inadvertently “let the cat out of the bag” and was telling the truth when she gave that important piece of evidence during the trial.  I find it has clearly contradicted the previous account given by her in her own witness statements.

44.  Further, I do not accept that D had a temporary memory lapse when she gave that important piece of evidence as suggested by D’s counsel.  In fact, D’s account that Staircase 63 was purchased by her father from Wu Kam makes perfect sense to me in the context and history of this case as compared with the Related Action.  I could understand why, in the Related Action, one of the directors or shareholders of Shun Shing (not Wu Kam in this case) would allow that particular staircase to be used by members of his former employees, family or friends so as to allow them to make a living there.  However, there is no evidence in the present case to suggest that such relationship existed between Wu Kam and Ng Senior at all.  In fact, there is no evidence to suggest that this “transaction” was anything other than a commercial one between Wu Kam and Ng Senior. I find it was purely for the purpose of “selling” the right of using Staircase 63 to Ng Senior and his family only. 

45.  I further find that both D and her younger brother DW1 knew well about this matter but were reluctant to admit it in their witness statements and in their evidence.  It was only after the skillful cross-examination by P’s counsel that the truth on this matter had come out during the trial.  In my view, this explains why D had tried to retract this crucial piece of evidence very soon after she realized that she had inadvertently made this important admission.  It also explains why D had become very emotional and could not stop crying for a long time at the beginning of the second day of the trial when she continued with her evidence.

46.  I agree with P’s counsel Mr Cheung that the fact D retracted her second account only about 10 to 15 minutes after she had given it does not distract from the following:

(a)  It was against her own interest and therefore ought to be attached with considerable weight despite her quick retraction;

(b)  The only difference D’s account would make is whether the Wu Kam Licence was one made with monetary payment.  With monetary payment, this would make it into a contractual licence.  Without monetary payment, it would still be a bare licence granted by Wu Kam to Ng Senior (and subsequently to The Ngs).        

47.  Based on the oral evidence given by D in court (which she later tried to retract), I find as a fact that Ng Senior had paid Wu Kam a sum of money (the exact sum is unknown as it was not disclosed by D and DW1) for the use of Staircase 63.  I also find as a fact that Ng Senior had entered into possession of Staircase 63 as a result of the “licence” granted by Wu Kam after payment of the unspecified sum by him for what D described as “purchase (of Staircase 63) from Wu Kam”.  I further find that The Ngs continued to occupy Staircase 63 as a result of the “purchase” made by Ng Senior from Wu Kam.          

48.  I shall discuss what I consider as the legal consequences flowing from the above factual findings under a separate heading below.

C.6.2  In relation to the occupation of Staircase 63 from 1973 onwards

49.  Judging from the indisputable of evidence produced by D and DW1 at trial, in my opinion, it can hardly be disputed that D and The Ngs have been in exclusive possession of Staircase 63 since 1973 and on a continuous basis up to today.

50.  I find as a fact that D had done so through different members of The Ngs at different time.  They include D’s elder brother Ng Tung Chau (「吳統洲」) (“Tung Chau”) which is the 2^nd child amongst the 10 siblings; D’s elder sister Ng Ching Kit, Anita (「吳靜潔」) (“Ching Kit”) who ranks 5^th; D herself who is the 6^th child; and D’s younger brother Ng Tung Wai (「吳統偉」) who is the 9^th child and DW1 in this case.

51.  Further, based on the evidence given by the 3 witnesses called by D at trial, including D herself (“DW2”), DW1 and an old neighbour Madam Cheng Suk Ho (「鄭淑荷」) (“DW3”), I make the following finding of facts in relation to the possession of Staircase 63 between 1973 and the date of trial, ie October 2019.

C.6.3  From 1973 to 1978: possession by DW1 and Tung Chau

52.  During the period between 1973 and 1978, I find Staircase 63 was first occupied by DW1 and Tung Chau for the operation of Silvery Photo.

53.  I accept DW1’s evidence in this aspect of the case, including what he has stated in his oral evidence in court and in his 2 witness statements filed in the proceedings, which can be briefly summarized below:

(a)  Prior to 1973, their late father Ng Senior had been operating a photo equipment shop at No 444 Castle Peak Road (“the Castle Peak Shop”).  The Castle Peak Shop was used partly as a shop (at the front) and partly as a residence (at the back) for The Ngs, ie the typical classic “front shop / back residence” (「前舖後居」) set up in the old days of Hong Kong.  Ng Senior effectively raised the entire large family by running the Castle Peak Shop up to then;

(b)  Since around 1973 (and up to around 2015), The Ngs had been operating Silvery Photo at Staircase 63.  At the time, the business was mainly operated by Tung Chau.  DW1 was a student then but would assist after school and during the holidays;

(c)  In the summer of 1973, DW1 quit school at the age of 14 (upon completion of Form 2).  DW1 then began running and managing Silvery Photo at Staircase 63 together with his elder brother Tung Chau on a full-time basis;

(d)  It was during this time that DW1 and The Ngs came to know DW3, who worked at the clinic of Dr Kwok Yam Tat on the 1^st Floor of the Building;

(e)  DW1 used to sleep at the Castle Peak Shop. After 1973, DW1 would also sleep in Staircase 63 at night.  He would take showers at Dr Kwok’s clinic; and

(f)  In around 1978, DW1 and Tung Chau followed Ng Senior to set up a new shop in Tsuen Wan for selling cameras and photograph accessories.  The business of Silvery Photo operating at the Staircase was then managed by D’s sister Anita thereafter.

54.  In respect of possession of Staircase 63 from 1973 to 1978, I find D’s evidence is consistent with that of DW1, namely:

(a)  Silvery Photo was managed by DW1 and Tung Chau in the beginning;

(b)  Before D took over Staircase 63 in 2000, D treated Silvery Photo as a family business;

(c)  During that time, ie 1973 to 1978, she did not work at Silvery Photo but had her own job outside (「喺出面做嘢」).

55.  DW3’s evidence is also largely corroborative of DW1’s evidence as stated above. 

56.  DW1’s possession and management of Staircase 63 is further supported by the contemporaneous photos taken in the 1970s which show DW1 standing behind the counter of Silvery Photo during different time.

57.  Given the indisputable evidence, I accept D’s case on the family’s possession of Staircase 63 during the aforementioned period.

C.6.4  From 1978 to 2000: possession by Ching Kit, followed by DW1

58.  During this period, D’s sister Ching Kit took over the running of Silvery Photo from DW1 at Staircase 63 while DW1 set up his own shop selling camera equipment and accessories at a larger premises just diagonally opposite the street at 82, Shek Yam Road.  This new business run by DW1 was called ‘Chi Tat Photo Supplies’ (「智達影音器材公司」) (“Chi Tat”).  The two businesses supported each other in that they both provided 1-hour photo developing service for their customers. 

59.  In 1994, Ching Kit emigrated to Australia to join Ng Senior.  Silvery Photo was left with DW1 and his staff to manage. It was around this time that D and other family members started to help out in the business.  During this period, Ching Kit would return to Hong Kong from time to time.  In her absence, the family members, including D, would help her to operate Silvery Photo.  The profit generated out of the business would go to Ching Kit. 

60.  The evidence given by DW1 and D corroborates D’s case for the possession of Staircase 63 during the aforesaid period.

61.  The fact that Ching Kit was running Silvery Photo at the Staircase 63 during the relevant period was further supported by a letter from the Inland Revenue Department where it stated that she was one of the partners of the business from 1 August 1986 to 15 August 1986; and from 16 August 1986 to 1 December 1994 she was the sole proprietor of the business.  From August 1998 and up to November 2000, DW1 took over Silvery Photo and operated the same as a branch of Chi Tat under the trade name of ‘Silvery Photo 1-hour Photo Develop’: see business registration records for 1999 to 2001.

62.  I accept DW1 and D’s evidence on the possession of Staircase 63 during this period.

C.6.5  From 2000 to present day: possession by D

63.  I accept D’s evidence that from 12 November 2000 onwards, Staircase 63 was exclusively occupied and possessed by D. 

64.  In respect of this part of her evidence, I believe D was telling the truth. 

65.  I accept the fact that from 12 November 2000 (the date when she registered Silvery Photo’s business under her own name) to 13 November 2015 (the date when the business ceased to operate), D was the sole person who was in possession of and running the business of Silvery Photo at Staircase 63.  She did so with very little help from her own family members. I further accept that, during this period, the only full-time job she had was to run the business.  She relied on the profits generated from the business for livelihood.   I accept that for the first few years, she was able to make a living out of the film development business. However, since digital cameras have become popular and eventually took over the traditional film camera market in the early 2000s, the business went down hill rapidly. As a result, D had to supplement her income by selling other goods at the shop.  These products included radios, bags, belts and backpacks.  She also passed all the surplus film products such as films and camera batteries to DW1 for selling at Chi Tat.

66.  I further accept D’s evidence that in or around late 2015, she had decided to retire and cease the operation of Silvery Photo at Staircase 63.  Instead, she rented out Staircase 63 to various short-term tenants at the daily rate of $450 to $500 per day for selling different products.  This is supported by the fact that D had cancelled the business registration of Silvery Photo on 13 November 2015.          

67.  D estimates that she manages to rent out Staircase 63 for an average of 230 to 240 days in a year. However, there were times when things became quiet and she could only rent out Staircase 63 on daily use for 7 to 8 days in a month only.

68.  D has produced some relevant tenancy agreements and rental receipts dated since 2015 to support her claim on this. 

69.  Based on the above evidence, I accept D had in fact given up the business of Silvery Photo in November 2015 and has been renting out Staircase 63 on a daily rental basis since that time.

70.  The evidence given by DW1 and DW3 in relation to this particular period further supports D’s case on this.  I have no reason not to accept their evidence.

71.  In summary, I accept that during this particular period, D was in factual possession of Staircase 63 and she and her family members had been dealing with Staircase 63 as if they were the true owner of it, including using it for the business of Silvery Photo and subsequently rented it out on a daily basis to different vendors.

C.7  Other Evidence supporting D’s occupation & possession

72.  In my judgment, besides the oral evidence given by D’s witnesses, there are other independent evidence that goes to support D’s case of occupation and factual possession of Staircase 63 over the years.  They include:-

(1)  Maintenance done on Staircase;

(2)  Utilities and Rates & Government Rent paid; and

(3)  Insurance cover.

C.7.1  Maintenance done on Staircase 63

73.  In my view, there are clear documentary evidence provided by D to show that over the years The Ngs had spent money over the maintenance and upkeep of Staircase 63.  Although they can by no means said to be of very substantial amount, they were not insignificant either.  I find these spending are consistent with someone who had regarded the property as his or her own.  Otherwise, they would not have spent that kind of money in maintaining and upkeeping it.

74.  The maintenance and upkeep included the replacement of the roller shutter and locks; maintenance of the damaged metal canopy in 2015; maintenance of the air-conditioner and wooden cabinet inside Staircase 63; addition of aluminum board at the ceiling of the business in 2016; and repair of the roller shutter in December 2016.

75.  As most of the above repairs and/or maintenance works are supported by receipts issued at the time, I have no reason to doubt that they actually took place as explained by D and her witnesses in their witness statements.

C.7.2  Utilities and Rates & Government Rent paid

76.  Besides paying for the maintenance and upkeep of Staircase 63, D and her family had also been paying for utilities charges like electricity and telephone throughout the periods during their occupation.

77.  It was D’s family who had applied and maintained a telephone land line first with Hong Kong Telecom in 1994 and later with PCCW in 2012.   

78.  D and her family also had installed an electricity meter for Staircase 63.   In fact, the supply of electricity to other staircase shops in the Building was done through the meter installed by D’s family at Staircase 63.  This matter was confirmed by PW1, Mr Fung, the property manager in his evidence. I shall discuss this further under the heading of “Equitable Defence” below.

C.7.3  Insurance coverage

79.  Similarly, D and her family had taken out public liability and fire insurance for the business and Staircase 63 over the years.  D was able to produce copies of the premium invoices and/or renewal notices at various years from 1994 to 2016.

80.  I find that this is consistent with the acts of a person or party who has exclusive occupation or possession of a certain premises.  Otherwise, there is absolutely no need or any point in taking out insurance to cover any risk that he or she may otherwise have to cover.

D.  INTENTION TO POSSESS

81.  It is trite that in order to establish the requisite intention to possess, the alleged possessor should be able to demonstrate that he intends, whether in his own name or on his own behalf, to exclude the world at large, so far as is reasonably practicable and so far as the processes of the law will allow.  Such intention usually can be deducted from the physical acts of possession itself: See J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419 at §§42-43, approving Slade J’ s analysis in Powell at 452.

82.  In the present case, based on the evidence presented by D at trial, I make the findings as set out below in regard to the “intention to possess” issue.

83.  I find that during the entire period from 1973 onwards, D possessed the intention to exclude the world at large from the following physical and objective acts carried out by either D herself or her family at Staircase 63.

84.  This can be demonstrated by the following objective and indisputable facts.    

D.1  Installation of the roller shutter, metal gates and other items

85.  I accept the evidence of DW1 and D that Ng Senior and Tung Chau had installed and erected the roller shutter and metal gates at Staircase 63 when Silvery Photo first went into business in 1973.  I find that the only purpose for D and her family to install the roller shutter and metal gates was to exclude all outsiders from entering Staircase 63 where they operated Silvery Photo.

86.  I further find that the sales counter built by D and her family when the shop was opened for business during the day acted as a natural barrier to fence off the public from entering Staircase 63 where they placed their goods and equipment.  This I find as yet another piece of objective evidence to show that D and her family meant to exclude the world at large from entering inside the fenced off area.

87.  Similarly, the large signboard erected by the family containing the Chinese name of 「銀都彩色黑白沖印」which had been there since 1973 until a new one in English and Chinese was put up years later, shows D and her family have demonstrated to the world at large that they were “claiming” possession of Staircase 63 for the business.   The original signboard was later replaced by a new one which included the English name of the business.  I find the purpose and effect are the same, namely, they were erected to demonstrate to any outsiders, including P and its predecessors, that D and her family had treated and regarded Staircase 63 as their own property since 1973.  Yet, for all these years, save for a half-hearted attempt by issuing a solicitor “demand letter” in 2010, P or its predecessor had done nothing to challenge D or her family’s possession of Staircase 63.

88.  Another piece of evidence that shows D and her family have been treating Staircase 63 as their own and have excluded all others from using it as the small paper bags they used for the ‘1-hour photo finishing’ services they provided for their customers. Both the name of Silvery Photo and the address of Staircase 63 had been clearly printed on the bags.  This in my view again shows that D and her family had exclusive use of Staircase 63 throughout the relevant period.

D.2  Profits generated from the business

89.  Another significant factor, which leads me to find that Staircase 63 was occupied for the exclusive use of D and her family, is the fact that the profits generated from Silvery Photo for the years when the family ran it all went to D and her family.  After the business ceased trading, the rental income generated by renting out Staircase 63 to day users.

90.  The unchallenged evidence is that D and her family had been receiving all the profits/revenue from Silvery Photo between 1973 and 2015.  The indisputable evidence further shows that the particular family member of The Ngs who happened to be operating the business at the time had received those profits or run the risk of any loss. In this regard, I accept the evidence of D and DW1 that the family did not have to be accountable to anybody for any profits or revenue generated by the business.  Their evidence is further supported by the tax returns they filed with the Inland Revenue Department over the years.  

91.  Thus, in my judgment, there is no question that the photo finishing business being operated at Staircase 63 was run exclusively on behalf of D and her family.

D.3 Conclusion of the evidence on possession

92.  Based on the evidence as analyzed above, I come to the only logical and in my view reasonable conclusion that D has shown the requisite intention to possess Staircase 63.  By carrying out the objective acts as mentioned above, I find that they had excluded the world at large from Staircase 63.

E.  ;IN COMPARSION WITH THE RELATED ACTION

E.1  D was never an owner and family members no longer owns any property in the Building

93.  I agree with D’s counsel Mr Leung that there are 2 distinguishing features that place D’s position in a stronger position than that of the defendants in the Related Action.

94.  First, D has never been an owner of the Building.  Thus, there is no issue arising from the fact that D had adversely possessed Staircase 63 as a co-owner of the Building from 2000 to 2015.  Given the fact that D had never been a registered owner of any units of the Building, D is not bound by the DMC.

95.  Second, although some of D’s family members had been owners of the Building for 2 short periods of time between 1985 and 1993, such ownership had ceased completely by July 1993. This is supported by the land search records and is not in dispute. 

96.  Hence, from 1993 onwards, D and her family’s possession of Staircase 63 cannot be consented by any co-owners of the Building.  I find this is in stark contrast to the position of the 1^st defendant and 4^th defendant in the Related Action, who were registered owner of their respective units from 1973 to 2016 and 1973 to 2006.

97.  In any event, in light of my findings on this issue in the Related Action by applying CA’s decision in Wong King Lim v The Incorporated Owners of Peony House, unrep, CACV 3/2012, 29 May 2013, I find there is no rule in preventing common areas such as staircase shops from being adversely possessed by co-owners or strangers to the DMC.  I therefore find that the issue of co-ownership raised by P is a red herring and has no bearing on D’s claim for an adverse possessory title in this case at all.

F.  LEGAL CONSEQUENCE OF THE “WU KAM LICENCE”

F.1  P’s submissions on the issue

98.  P submits that if the court finds in favour of its version of events on this issue, ie that there was a licence created by Wu Kam to Ng Senior, then the legal consequence must be that it operates throughout to negate and defeat the adversity in the possession.

99.  P’s arguments can be briefly summarised below.

100.  Mr Cheung for P submits that where a squatter took possession pursuant to a licence, it defeats 2 fundamental elements in the claim for adverse possession: firstly, the possession is not as of wrong, but as of right, that is under the licence; and secondly, on the subjective mind of the squatter, he would not have the requisite intention to possess in one’s own name and on one’s own behalf.

101.  In this regard, P relies on the following passage in Wu Yee Pak, supra :

“WHETHER POSSESSION WAS ADVERSE

5.  SINCE POSSESSION BY THE APPELLANT OF THE LAND THROUGH OCCUPATION IS ACCEPTED, THE KEY ISSUE IS WHETHER HIS POSSESSION WAS ADVERSE IN THAT HE WAS NEITHER A TENANT NOR A LICENSEE OF THE RESPONDENTS.  THE BURDEN OF PROOF ADMITTEDLY LIES WITH THE APPELLANT AND THE EVIDENCE HE HAS TO ADDUCE MUST BE COMPELLING. POWELL V MCFARLANE & ANOTHER (1979) 38 P & CR 452; AND WONG TAK YUE V KUNG KWOK WAI & ANOTHER (1997–98) 1 HKCFAR 55.”

102.  Mr Cheung further submits that where the occupation took place pursuant to a licence, the adverse possession is deemed to be for the benefit of the licensor: See Tsang Foo (also known as Fu) Keung, supra at §22(6).

103.  Mr Cheung also relies on the following passage in Lee Siu Fong, supra at §20:

“20. It is also trite law that occupation under a licence or otherwise with the permission of the legal or paper owner does not amount to possession for the purpose of adverse possession as the occupation is enjoyed under lawful title. In Tsang Foo Keung v Chu Jim Mi Jimmy,it was held that occupation of a hawking stall on a private land under a hawking licence granted by the Government pursuant to the Hawker (Urban Council) By-laws was not possession for limitation purpose. The finding was made following Pang Yiu Chor v Wong Wai Leung and Sze To Chun Keung v Kung Kwok Wai David. These cases have established the principle that there is no adverse possession where the occupation was one by licensee as this will not be possession in his own right. It matters not whether the licence was granted by the paper owner or by someone else. Even if the licence was granted by someone else, the possession will be by the licensor and not by the occupier.” (emphasis added.)

104.  Finally, Mr Cheung relies on the following passage in Cedric Hervey Ong, supra at §§53 to 54:-

“53. In addition, possession must be “adverse”, ie without the owner’s consent: Shine Empire Ltd v Incorporated Owners of San Po Kong Mansion [2006] 4 HKLRD 1 at 8E–F.

54. Thus, possession under a licence is not adverse.  The possession of a licensee is treated as being on behalf of the licensor.  In the words of Slade LJ in Powell v McFarlane (1979) 38 P&CR 452 at 469:

“... time can never run in favour of a person who occupies or uses land by licence of the owner with the paper title and whose licence has not been duly determined, because no right of action to recover the land has ever accrued against the owner; consequently such a person has no ‘adverse possession’ however long his occupation or use may have lasted.”” (emphasis added)

105.  In the aforestated premises, P submits that Wu Kam or Shun Shing may be taken to be in possession of Staircase 63 and as the licensor to Ng Senior.  As such, Ng Senior was his/their licencee.

106.  P further submits that the licence would have been terminated upon the death of either the licensee or licensor. While we know that Ng Senior had passed away in 2017, we do not know when Wu Kam had passed away.  P relies on an answer given by DW1 in his evidence when he said “to my knowledge, he (Wu Kam) had passed away several years ago” (「據我所知，他已在數年前離世」).     Thus, P speculated that the licence could have been terminated by reason of death of Wu Kam at its earliest in 2009, being 9 years before 2018.  I would like to note here that this is nothing but a speculation as there is no direct evidence on when Wu Kam had passed away.

107.  Based on the above, P says that Wu Kam’s licence operated throughout to negate and defeat the adversity in the possession as the possession would be, according to P, as of right and the subjective intention to possess Staircase 63 in one’s own name and one’s own behalf.  Thus, P says that the adverse possession claim of D must fail on this point as a matter of “pleadings, law and facts”.

F.2  The court’s findings on the Wu Kam Licence Issue

108.  With respect to Mr Cheung, I am of the view that P’s way of looking at this matter is over simplistic. I do not find it to be convincing for the following reasons.

109.  First, in my judgment, the argument of consent / licence from Wu Kam is really the same as the one advanced by the plaintiff’s counsel in the Related Action[1].  The plaintiff in that case argued that because another director of Shun Shing, namely Wu Bing, had given permission to the 1^st defendant in that case, or his father, to use another staircase shop, the occupation therefore was of “right” and not “wrong”. I found, inter alia, in that case that although Wu Bing or his company might had been the original owner / developer of the Building, he or his company did not exclusively “owned” the common parts of the Building, including the staircase shops in question[2], hence he could not give such “consent” or licence to the 1^st defendant or his father to occupy.  In my view, once the units of the Building had been sold, Shun Shing  (or any of its directors or shareholders) had no right to give any consent or licence to anybody to occupy any of the common area.  A fortiori, Wu Kam, who is not disputed as one of the 5 shareholders and directors of Shun Shing at the time when the Building was first completed in 1973, could not have given any “consent” or “licence” to Ng Senior.

110.  This is because, in my judgment, Staircase 63 in question formed part of the common part of the Building and was not something capable for Wu Kam, being merely one of the directors and/or shareholders, without the authority or approval of the company, to sell or to give away.  As I have found above, despite the dramatic change in D’s evidence, it was most likely that Ng Senior had paid a sum of money to Wu Kam to “purchase” the use of Staircase 63.  However, in my view, such act did not make it into something lawful, something “right”, as Wu Kam neither had the power nor the right to grant such a “licence” to anybody, including Ng Senior. 

111.  Further, I find that, since the coming into operation of the DMC on 2 April 1973, neither Wu Kam (as a director and/shareholder of Shun Shing) nor Shun Shing (as the first owner of developer) could have granted the “consent” or “right” to anybody, including D or her late father Ng Senior in this case, to exclusively use or occupy any common part of the Building.  The reason of this in my view is simple: all common parts of the Building, including Staircase 63, are co-owned and commonly belonged to all the owners of the Building under clauses 2 & 3 of the DMC. Nobody, including one of the directors of the first owner or developer, could have validly granted such a licence to anybody to use Staircase 63, whether on a temporary or permanent basis.  Even if Wu Kam had “sold” Staircase 63 to Ng Senior, this, in my judgment, would not have turned an unlawful or unauthorized act into something “right” or lawful.

112.  Moreover, following the sale of all other units to individual owners of the Building coming into effect of the DMC in 1973, Shun Shing or any of its directors or shareholders no longer had any stake or role in the Building.  The co-owners of the Building would become the “paper owner” of the common part of the Building from that point in time onwards.  Thereafter, when P was incorporated in 2008, the common parts of the Building would vest in P.       

113.  Based on the above, I find that the alleged or purported consent or permission given by Wu Kam, whether in his own capacity as a director/shareholder or on behalf of Shun Shing (of which there is no evidence), has no bearing on the nature of adverse possession of Staircase 63 by D or The Ngs.  As Wu Kam or Shun Shing was no longer the paper owner of the common part of the Building, I find that whatever “licence” granted, whether it was contractual or otherwise, could not have made Ng Senior, D or her family members, come into possession of Staircase 63 “with the consent of the paper owner”.

114.  In addition, I accept D’s submission that when a person mistakenly thought that he had rightfully bought the land or acquired the land from the paper owner, when in fact he had not, there is no bar to his claim for adverse possession: See Pang Yiu Chor v Wong Wai Leung [2017] at p 773 §§53 & 54.

F.3  Was D’s possession as “licensee” of Ng Senior?

115.  In P’s closing submissions, it tries to run a “new case” that the possession of Staircase 63 by D’s family members was “possession on behalf of D’s late father, ie Ng Senior and as his licensee.  P basically is now saying that Ng Senior, “being the head of the family and family business at Staircase 63 was the occupier in the Land and his children occupied the Land as his licensees on behalf of them” (see P’s closing submissions §1(a)).  I say this is a new case because it was not one that had been pleaded nor opened at the beginning of the trial based on such propositions. It was conveniently added on at the closing submissions stage after the evidence given by DW1 and D seems to have supported such a case.     

116.  I would reject P’s submissions on this issue based on the following matters submitted by D:

(a)  It is D’s case and evidence that it was D herself and/or “D’s family” and/or her “family members” who were in exclusive possession of Staircase 63: See RAD&CC at §§5(2), 5(3), 5(4A)(g), 5(5), 5(6) and 6;

(b)  D’s evidence in her witness statement remains the same. D said it was “our family”, “my family members” and “me and my family” who have been in adverse possession of Staircase 63: See D’s 1^st witness statement at §§13 to 18;

(c)  Accordingly, it is against logic and misconceived for P to artificially differentiate and separate the possession by D and D’s late father, ie Ng Senior, contrary to D’s case and evidence given at trial which is that the exclusive possession of the Staircase 63 was enjoyed by “D” and/or “her family”;

(d)  In any event, the oral testimony and evidence given by DW1 and D in court during the trial will further show that the former did not (as suggested by P) merely possess and occupy Staircase 63 at the relevant time as “licensee” of Ng Senior, the father alone;

(e)  It is clear from the evidence that Ng Senior had relocated to Australia in as early as 1988.[3] Thereafter, there is no evidence that Ng Senior was involved in the possession or operation of Staircase 63 and Silvery Photo in any way;

(f)  DW1’s evidence is that Staircase 63’s possession belonged to whichever family member in possession, e.g. from 1978 to 1998, the possession belonged to Ching Kit. In 1998, the possession was transferred to DW1 when he took over Silvery Photo;

(g)  Importantly, it is the undisputable evidence from DW1 that, during each period of possession of Staircase 63, Silvery Photo was operated on the basis of self-financing (「自負盈虧」). During Ching Kit’s possession from 1976 to 1998, the profit of Silvery Photo would be pocketed by Ching Kit alone. After DW1 took over in 1998, the profit of Silvery Photo (serving as a branch of Chi Tat) was retained by DW1 alone from 1998 to 2000;

(h) The above evidence of D and DW1 is fatal to P’s contention that at all times, it was Ng Senior who remained in possession of Staircase 63 as licensor to his children. For example, from 1998 to 2000, Silvery Photo at Staircase 63 was actually a branch of Chi Tat, the business and shop of DW1 at 82 Shek Yam Road. It is thus undeniable that DW1 and his staff were in possession of Staircase 63 at all material times. If the possession of Staircase 63 by the children was merely as ‘licensees’ of Ng Senior as suggested by P (which was denied by D), and that Ng Senior merely transferred the “duties” (「職權」) to Ching Kit as alleged by P (which was also denied by D), it is inconceivable that the profit of Silvery Photo since 1978 would not be given and accounted for to Ng Senior by the children, including DW1, Ching Kit and D who all operated Silvery Photo on a self-financing (「自負盈虧」) basis;

(i)  Further, the documentary evidence also contradicts P’s case. It is telling that Ching Kit in her letter dated 25 June 1991 stated that 「我在4月1日89年，入紙將銀都物業轉了我自己個名」. Ng Senior in his own letter dated 3 July 1991 about 「樓梯位轉名事」 also stated that 「現本人吳應桐移居澳洲故自1989年4月1日起將樓梯位職權轉交小女吳靜潔負職已後一切由吳靜潔自理」;

(j)  It is clear that, at least by the time of Ching Kit’s possession, Ng Senior had nothing to do with Staircase 63 already. It is also misconceived for P to pick on the word 「職權」: first, construing the above letters and Inland Revenue Department’s letter at together, it is clear that the subject matter of the letters concern 「物業轉名」; second, in any event the requisite intention is to possess not to own. P’s complaint in this regard is misconceived;

(k)  The undeniable evidence is that, since 1989 at least, Ng Senior on his own statement had passed the possession of Staircase 63 onto Ching Kit (who ultimately passed the possession to D). Given the emigration of Ng Senior to Australia in 1988, it is absurd for P to now suggest that the possession of Staircase 63 was by Ng Senior alone and that his children (DW1, Ching Kit and D) were merely “licensees” of Ng Senior during the family’s exclusive possession of Staircase 63.

117.  While the children, like most who come from a traditional family as The Ngs do, where the patriarch’s words are like commands, would try to do whatever their father told them in order to please him, to say that they were occupying Staircase 63 as a licencee(s) of the father, in my view, simply does not tally with the evidence on the actual occupation or possession by different siblings at different time in this case.  In my judgment, if the children, at different stages of the family’s occupation of Staircase 63, did so as the father’s licencee(s), it cannot explain why they would need to change the business registration, pay tax and/or operating the business in a self-financing basis under their own name on each occasion when the business “changed hands” within the family. In my view, with greatest respect, P’s proposition simply does not make sense at all.

118.  I therefore would reject P’s case on this issue.

G.  ADVERSE INFERENCES

G.1  Should adverse inference be made against D?

119.  P’s counsel had devoted a large passage in his opening of why this court should draw adverse inferences against D’s case for not calling D’s father Ng Senior, D’s 2^nd elder brother Tung Chau; and D’s sister Ching Kit.

120.  Mr Cheung for P had cited the long passage of the now well known passage in Pacific Eletric Wire & Cable Company Limited v Texan Management Limited & Ors (2013), unreported, CACV 90-91, 93-96 / 2012, HCCL 16/2009 (17 September 2013;) at §§ 106-107.

121.  P attacked D for the fact of not calling any of those 3 witnesses.

122.  To give Mr Cheung credit, he did acknowledge the fact that Ng Senior had passed away by the time of the trial.  According to the evidence, he died in December 2017 at the age of 93.  However, he submits there was no reason why a statement could not have taken from him when D gave made her first statement, which was in November 2017. 

123.  As for Tung Chau and Ching Kit, P submits there was no reason why they could not provide witness statements and give evidence at the trial.

124.  In my judgment, there is no real substance on such complaints.

125.  First, Ng Senior did pass away about 1 month after D had made her first and main witness statement in November 2017.  A death certificate was produced.  There is no reason to doubt the fact that Ng Senior had in fact passed away in December 2017. Given the proximity of D’s witness statement and the time of his passing (about 6 weeks in between), I also have no doubt what D had stated in her witness statement about her father’s then condition who was suffering from dementia and immobilization was true also. 

126.  For Tung Chau, since he and DW1 had operated Silvery Photo together at its early years, I do not see how his failure in giving evidence will affect the overall credibility of D’s witnesses.  In my view, litigation is not a game of how may witnesses one side can offer to testify on the same story.  It is more about the quality of the evidence which the witness(es) a party produces.  I do not see how Tung Chau, even if he was willing and available to give evidence, which he was not as explained quite clearly by D and DW1 in their evidence, would add to DW1’s evidence: See for example Wu Ho Yan v Chan Lai Yung Yvonne, unreported, DCPI 1861/2011 (20 March 2013; HH Judge Alex Lee (as he then was) at §11.

127.  For Ching Kit, it is clear that she had suffered from some serious psychological / psychiatric problems over the years.  In this regard, I accept D’s evidence that she was suffering from such condition for a long period of time.  An appointment slip of Ching Kit with the Clinical Psychology Wing of Castle Peak Hospital in November 2019 had been produced by D at the trial.  I have no reason to doubt that this is anything but genuine.  This provides a totally plausible expalantion why Ching Kit was not called.

128.  In the circumstances, I am satisfied that there are good reasons why Ng Senior, Tung Chau and Ching Kit were not called to give evidence in this case.  Hence, I would not draw any adverse inference against D on this: See Pacific Electric Wire & Cable Co Ltd v Texan Management Ltd, supra, at §106 (4).

H.   Conclusion on D’s exclusive possession issue

129.  Based on the aforestated analysis, I find D and her family have been in exclusive possession of Staircase 63 for a period exceeding at least 12 years before the commencement of this action by writ in April 2016.  By so doing, I find that D has acquired a possessory title to Staircase 63 by way of adverse possession.

I.  EQUTIABLE DEFENCE

I.1  P’s delay and inaction: did it amount to waiver and acquiescence?

130.  I find P’s inaction in this case was exactly the same as I had found in the judgment in the Related Action: See §§73 to 77 of the Judgment in the Related Action.

131.  Based on the evidence revealed in the present case, I find there was “an assent or lying in relation to the acts of another person” and that it is “unjust in all the circumstances” to grant the relief in question: See The Incorporated Owners of Freder Centre v Gringo Ltd & Anr [2016] 2 HKLRD 190 at §§25-26.

132.  First, it is not disputed by P that since its incorporation in July 2008, no legal actions had been taken against D until the writ in this action was issued on 11 April 2016.  This means P had just stood by and did nothing for 8 years while D was in exclusive possession of Staircase 63.   This delay is more stark when one takes into consideration of the fact that P did instruct a firm of solicitors to issue a demand letter dated 8 November 2010 to D to move out of Staircase 63.  D’s then solicitors responded to this letter on 3 December 2010 where they had asserted D’s possessory title on her behalf.  Thereafter, as admitted by PW1 when giving evidence, nothing was done for 8 years until the writ was issued.

133.  In other words, since 1973 when The Ngs first went into occupation in 1973, P and/or its predecessors had not taken any legal actions against D or her family until 2016. An astonishing gap of 43 years.  As in the case of Staircase 75 and Staircase 81, P had just lying by and let things slip.  

134.  In the aforesaid premises, I find there was inaction and lying by of P in the past 8 years without commencing any legal action could reasonably led to D and her family to believe that their occupation and possession of Staircase 63 would be tolerated by P.

135.  Second, in my judgment, D is in a much stronger position to say P has had acquiesced the situation than the defendants in the Related Action.  During the years from 1973 to 2011, there was no electricity supply to the common staircases of the Building.  It was only through D and her family’s application to the utility company that a meter was installed at Staircase 63.  Furthermore, it was through this meter that provided the lighting for the rest of the staircases in the Building.  All the other owners of the Building were fully aware of this matter as each of them have to make a monthly contribution of up to HK$10 for the electricity bill.  

136.  By the same token, P must have been fully aware of this matter as well through the management company it has employed since 2011.  This is confirmed by a notice issued by the management company, ie PW1’s employer, on 12 May 2011 to all the owners of the Building.  In the notice, it had been acknowledged by the management company that it had been “borrowing” electricity from Silvery Photo and requested funding to instruct a contractor to install am electricity meter. This matter has been confirmed by PW1 in his evidence.  

137.  There was also a cheque in the sum of $280 and the bank deposit slip payable by the management company to D for the payment of electricity bills in June and July 2011.  Hence, there is no reason to suggest why P, through the management company, did not know about D’s occupation and the important role it played in the Building.

138.  In the aforestated circumstances, I find that there was acquiescence on the part of P and its predecessors on D and her family’s occupation since 1973.  In my judgment, it will be unjust in all the circumstances of the case to now grant the injunctive relief sought by P.

I.2  Estoppels

139.  I do not propose to recite the trite principles on estoppel as they have been set out in both sides’ counsel opening submissions.  They are not in dispute.  

140.  D relies on the same factual matters she relies on in the above defence of acquiescence. In particular, it is D’s case that both (i) the 40 plus years of inaction and lying by on the part of P and its predecessors without commencing any enforcement action; and (ii) P and its predecessors’ use of the electricity meter of Staircase 63 and payment to Silvery Photo for the use of the same could reasonably have been considered by D and The Ngs as a representation that their possession of Staircase 63 would be tolerated by P.

141.  I accept and find that in reliance of the above representations, D and The Ngs have spent substantial costs and resources in maintaining and upkeeping the premises at Staircase 63.

142.  For the same reasons stated under the above heading, I find that it will be unconscionable for P to now deny D’s possession of Staircase 63.

I.3  Laches

143.  Based on the evidence set out above, I further find that there were laches on the part of P.

144.  The evidence on this issue is rather clear:

(1)  there has been unreasonable delay of over 40 years on the part of P and its predecessors before they took any concrete action against D and her family;

(2)  it was not until 8 November 2010 that P first instructed its solicitors to issue a demand letter to D;

(3)  after D’s solicitors wrote back on 3 December 2010, and asserted D’s possessory title;

(4)  thereafter P kept quiet for another 6 years until it issued the writ in the present proceedings on 11 April 2016.

145.  In the circumstances, I have no hesitation to find there was laches on the part of P and it will be unjust in all the circumstances to grant the equitable reliefs that P is seeking for.

J.  Alleged Trespassing and Mesne Profit

146.  Based on my above findings and conclusions made on the various issues above, it is clear that the issue of trespass on the part of D has not been established and the issue of mesne profit on the part of P does not need to be considered.

K.  CONCLUSION

147.  In conclusion, based on the aforementioned matters, I shall dismiss P’s claim against D with costs, such costs to be taxed if not agreed, including certificate for counsel.  D’s own costs to be taxed in accordance with the legal aid regulations. 

148.  I would also enter judgment in favour of D for her counter-claim.  I shall make an order in respect of her counterclaim, namely:

(1)  D has established adverse possession to Staircase 63 for more than 20 years and/or 12 years before the commencement of the present action; and

(2)  D has thus acquired an adverse possessory title to Staircase 63.

149.  I further make a declaration and order that the tile of P and/or its predecessors to Staircase 63 has been extinguished by reason of sections 7 & 17 of LO and that the action of P is statute-barred by reasons of the provisions laid down in the said Ordinance.

150.  In the circumstances, D will be entitled to the costs of the counterclaim, such costs to be taxed if not agreed, with certificate for counsel. D’s own costs will be taxed in accordance with the legal aid regulations.

151.  Lastly, I would like to thank counsel on both sides for their very thorough research on the law and meticulous analysis of the evidence in this case which have greatly assisted the court.