YU KIT CHIU AND ANOTHER v. CHAN SHEK WOO t/a "陳潮昌士多"

CACV 129/2006 and CACV 159/2006
(Heard together) 

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 129 AND 159 OF 2006

(ON APPEAL FROM DCCJ 5488 OF 2003)

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J U D G M E N T

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Hon Cheung JA :

Background

1. The plaintiffs are the owners of the property known as the Remaining Portion of Lot No. 994 in D.D. 115, Yuen Long, New Territories, Hong Kong (‘the property’).  They claimed that the defendant had trespassed on the property and sought to recover possession of the property from the defendant. 

2. The defendant claimed that he and his family have been in occupation of the property since 1962 and as a result acquired a possessory title to the property by reason of adverse possession.  He lodged a counterclaim for a declaration that he is entitled to a possessory title of the property. 

3. The plaintiffs applied before H H Judge C B Chan on 9 August 2005 for final judgment against the defendant for possession of the property and to strike out the counterclaim.  The application was based on the following Rules of the District Court (‘DC Rules’), namely Order 14, Order 18 Rule 19(1) and Order 14A. 

4. The questions of law to be determined under Order 14A were stated to be :

‘(1)   whether the plaintiffs have been re-granted a new lease in respect of the property by the government on 1 July 1997 by virtue of the New Territories Leases (Extension) Ordinance (Cap. 150) (‘NTL(E)O’) whereby a new estate and interest of or in the property was created and granted to the plaintiffs;

(2)   whether as at the date of issue of the writ, the plaintiffs’ title to the property has been extinguished by virtue of sections 7 and 17 of the Limitation Ordinance (Cap. 347) and the defendant is entitled to a possessory title to the said land lot deriving from the adverse possession of the property.’

5. On the day of the hearing before the judge on 9 August 2005 the position concerning the first question of law was governed by a decision of this Court (Rogers VP, Le Pichon and Yuen JJA) in Chan Tin Shi v. Li Tin Sung and others, CACV 71 of 2003 where it was held that the effect of the NTL(E)O was that a new estate was created in respect of land in the New Territories, and for the purpose of limitation of actions, time should begin to run again from the date of the creation of the new estate.  By then leave to appeal to the Court of Final Appeal was granted to the defendants on 27 January 2005 in Chan Tin Shi.

6. Based on the Chan Tin Shi decision the defendant could not acquire any adverse title against the plaintiff.  As recorded in the judgment of Judge Chan the defendant’s counsel stated that she conceded the point of law but as the Court of Appeal decision would be heard on appeal in the Court of Final Appeal, she wished to reserve the right to argue it should the decision be reversed in the Court of Final Appeal. 

The Orders

7. On the basis of the concession the judge struck out the defence and counterclaim and gave judgment for possession of the property against the defendant.  She also ordered judgment be granted for the plaintiffs for damages for trespass to be assessed.  The costs of the action together with the costs of the application was granted to the plaintiffs together with a certificate for counsel (‘the 1^st Order’).

8. On the day when the 1^st Order was entered against the defendant, the defendant applied for a stay of execution of the judgment.  Judge Chan adjourned the hearing of the application to 12 December 2005.  On that day another judge, namely, Deputy Judge E. Yip (‘Judge Yip’) heard the application.  He dismissed the application on 19 December 2005 and ordered costs of the application against the defendant (‘the 2^nd Order’).

9. On 29 December 2005 the defendant in person applied for leave to appeal against the 2^nd Order.  The matter was adjourned due to his application for legal aid. 

10. On 5 January 2006 the Court of Final Appeal reversed the decision of Chan Tin Shi. 

11. On 14 February 2006 legal aid was granted to the defendant to appeal against the judgment of Judge Chan. 

12. The defendant issued a summons dated 22 February 2006 for leave to appeal out of time against the 1^st Order and for a stay of execution of the 1^st Order pending appeal.  On 17 March 2006 Judge Chan heard this application.  She granted the defendant leave to appeal out of time.  She further granted leave to the plaintiff to appeal against her decision of granting leave to appeal out of time to the defendant. 

13. The defendant, through counsel, agreed to withdraw the summons to stay the execution of the 1^st Order.  Judge Chan made the following orders of costs :

(1)     in relation to the defendant’s application for leave to appeal out of time and the costs of the defendant’s application to stay execution of the 1^st Order she ordered the costs to the plaintiff (‘the 3^rd Order’).

(2)     in relation of the plaintiff’s application for leave to appeal against her decision of granting leave to appeal to the defendant, she ordered the costs to be in the cause of the appeal. 

14. On 7 April 2006 Judge Yip heard the application for leave to appeal against the 2^nd Order.  On 12 April 2006 he refused the application and ordered costs of the application to the plaintiff (‘the 4^th Order’). 

15. Leave to appeal against Judge Yip’s 2^nd Order was granted by a single judge of this Court. 

The appeal

16. The following matters came before this Court :

(1)    the appeal by the defendant against the 1^st Order.  This is the subject matter of the defendant’s appeal in CACV 129 of 2006.  By a respondent’s notice of 6 April 2006 the plaintiffs sought to affirm the 1^st Order on other grounds.

(2)    the appeal by the defendant against the 2^nd Order.  This is the subject matter of the defendant’s appeal under CACV 159 of 2006.

(3)    the appeal by the defendant against the 3^rd Order.  This is done by way of an amendment on 15 November 2006 of the notice of appeal in CACV 129/2006.

(4)    the appeal by the defendant against the 4^th Order.  This is done again by way of amendment of the notice of appeal in CACV 159/2006.

17. The defendant had further on 22 November 2006 issued a summons seeking leave to amend the two notices of appeal to deal with the 3^rd Order and 4^th Order respectively.

The concession

18. The plaintiffs conceded that the appeal of the 1^st Order and 2^nd Order should be allowed. 

The 3rd Order

19. They, however, opposed the appeal in relation to the 3^rd Order and the 4^th Order.  Although Mr. K. M. Chong and Ms Emma Wong, counsel for the plaintiffs, in their written submission opposed the appeal of the 3^rd Order and the 4^th Order on the ground that the defendant had not obtained leave to appeal, Mr. Chong at the appeal addressed us solely on the merits of these two appeals. 

20. The requirement in relation to appeal from the District Court is that under Section 63 of the District Court Ordinance an appeal can with leave be made to the Court of Appeal from every judgment of the District Court in any civil cause or matter.  There are exceptions provided in Section 63(3) which are not relevant for the purpose of this appeal. 

21. Further under Order 58 Rule 2(3) of the DC Rules an appeal from any judgment of the District Court shall lie only with the leave of the District Court or the Court of Appeal (there are again exceptions which are not relevant for this appeal). 

22. In this case time for leave to appeal had long expired : see Order 58 Rule 2(4).

23. One can immediately see the ramification of the leave requirement in relation to costs orders.  Reference may be made to the position in the High Court where leave to appeal is required in a case of appeal on costs only : section 14(3)(e) of the High Court Ordinance, Cap. 4.  This requirement, however, does not preclude the Court of Appeal from hearing and determining an appeal as to the costs without leave where it is part of a larger appeal based on grounds of substance, even if all those other grounds fail.  But those grounds must be genuine and not ‘put in ..... as a kind of smoke screen’ to conceal the true object of the appeal (Wheeler v. Summerfield [1966] 2 Q.B. 94 at 106, 107, CA) : see para. 59/1/39 of the Hong Kong Civil Procedure 2006.  In such a case the appeal is not on costs only. 

24. The wording in the two sets of ordinances is of course different but if the costs order is part and parcel of an order of which leave to appeal is given, I do not see the need to apply and obtain leave to appeal on the costs order as well.      

25. In so far as leave to appeal is granted in respect of the 1^st Order which included the costs orders as well, no difficulty arises because eventually when this Court deals with the 1^st Order in relation to the final judgment it will also deal with the costs aspects of the 1^st Order.  The costs aspect is clearly part of the larger question that this Court has to consider in the appeal. 

26. Normally when a judge grants leave to appeal the costs of the application would be costs in the cause of the appeal.  Again no difficulty will arise in relation to the costs of such an order because ultimately who is entitled to the costs of the application for leave to appeal will depend on the outcome of the appeal. 

27. However the difficulties with the 3^rd Order is that the judge did not order costs to be in the cause of the appeal in relation to the defendant’s application for leave to appeal out of time.  Instead she ordered the costs to be made against the defendant.  Unless the costs order is to be treated as part and parcel of the larger question of the appeal, otherwise the defendant has to obtain leave to appeal against that costs order before he can properly lodge an appeal against it.  One can see the cumbersome process involved if leave to appeal is required in respect of the costs order when a party in fact has obtained the main relief he had applied for in the first place. 

28. However a further problem arises because an order granting or refusing leave is not subject to appeal : see the House of Lords’ decision of Lane v. Esdaile [1891] A.C. 210 and applied by the Court of Final Appeal in HLF and MTC and LHN [2004] 3 HKLRD 241 and also the English Court of Appeal decision of Foenander v. Bond Lewis & Co. (a firm) [2002] 1 WLR 525.  If the costs order is part and parcel of the order granting leave and if there is no right of appeal against the ‘leave order’, is the defendant entitled to apply for leave to appeal against the costs order only? 

29. However, it is not necessary for this Court to form any view on the matter because, in my view, Judge Chan had properly ordered costs against the defendant.  The notes of Judge Chan recorded the following exchange that took place before her : Mr. Chong argued that in the normal event costs should follow the costs of the appeal but he asked for costs of the application for leave to appeal out of time be given to the plaintiffs.  Counsel for the defendant (not Mr. Andy Hung who only appeared at this appeal) informed the judge that she had nothing to say in relation to the costs of the leave to appeal out of time.  The only meaning I could put place on counsel’s statement is that she conceded that the costs of the application for leave to appeal out of time should be paid to the plaintiffs.  On that basis Judge Chan had no alternative but to grant costs in favour of the plaintiffs.  Likewise I do not think I should disturb this costs order at all in view of the stand taken by the counsel for the defendant.  This being the case the appeal against the 3^rd Order must be dismissed.

The 4th Order

30. Turning to the 4^th Order Judge Yip refused the defendant’s application for leave to appeal against the 2^nd Order, namely, his earlier refusal to stay the execution of Judge Chan’s 1^st Order.  As a result he ordered costs of the application for leave to appeal to be made against the defendant.  The refusal to grant leave is clearly not appealable.  The costs made thereof is part and parcel of that order.  I do not consider that the defendant must obtain leave before he can appeal against the costs order contained in the 4^th Order.  Since the Court has granted leave to appeal in respect of the 2^nd Order, the costs in relation to the leave application in the 4^th Order is obviously part of a larger question to be considered by the Court.  In any event under Order 59 Rule 14(4) of the High Court Rules this Court has jurisdiction to grant leave to appeal notwithstanding no application was made to the District Court.

31. Mr. Chong argued that when Judge Yip made the 2^nd Order there was not yet any application for leave to appeal against the 1^st Order, hence his refusal to grant stay of execution must be correct and this follows that his refusal to grant leave to appeal must also be correct. 

32. On the face of it this argument appears to be correct but in my view it does not assist Mr. Chong in the context of this case.  This is because Mr. Chong had conceded the appeal on the 2^nd Order.  The concession means that Judge Yip should not have refused the application to stay the execution of the 1^st Order.  The concession might be made for reasons of practicality, however, at the same time it undermines the submission of Mr. Chong as to the correctness of the costs order made under the 4^th Order.  Based on the concession, in my view, the costs of the application for leave to appeal should be made against the plaintiffs. 

33. In any event in the light of the development of this case, I am not prepared to say that the refusal to stay the execution of the 1^st Order must necessarily be correct.  After the summons for final judgment was taken out by the plaintiffs but before it was heard, this Court granted leave to appeal to the Court of Final Appeal in Chan Tin Shi.  The defendant then invited the plaintiffs to withdraw the summons because of the pending Chan Tin Shi appeal.  In this context justice of the case may well require the 1^st Order to be stayed pending the final resolution of the Chan Tin Shi appeal.  It is, however, not necessary for me to go further because, as I have said earlier, a concession has been made in respect of the appeal of the 2^nd Order. 

Conclusion

34. I will accordingly allow the appeal in respect of the 1^st Order, 2^nd Order and 4^th Order.  The 1^st Order and the 2^nd Order will be set aside.  The question of stay of execution under the 4^th Order is now academic.  There is no need to make any further order on the stay.  The costs of and occasioned by the Summons dated 22 November 2006 relating to the application to stay the execution of the 1^st Order and the application for leave to appeal on the refusal to stay execution be to the defendant.

35. I will dismiss the appeal in relation to the 3^rd Order.

Costs of the appeal

36. In relation to the costs of the appeal of the 1^st Order and 2^nd Order the defendant is entitled to the costs (other than the costs of the hearing on 7 December 2006).  In relation to the costs of the hearing on 7 December 2006, the time was taken up on arguments in relation to the 3^rd Order and 4^th Order.  In my view the appropriate order is to make no order in respect of the appeal of the 3^rd Order and 4^th Order together with the costs of the hearing.  The defendant who is legally aided is to have his own costs to be taxed in accordance with legal aid regulations. 

Hon Yeung JA :

37. I agree.

Hon Yam J :

38. I also agree.