Common Luck Investment Ltd. v. Cheung Siu Ming

1998, No. 16
(Civil)

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. This is an appeal from an order of H.H. Judge Whaley (sitting as a Deputy Judge of the Court of First Instance of the High Court) made on 3 December 1997, by which he declared that Cheung Siu Ming ("the defendant") had acquired a good possessory title to Lot 4170A in Demarcation District 116 Yuen Long, New Territories prior to and at the time of its resumption by the Government under the Roads (Works, Use and Compensation) Ordinance, Cap. 370 on 2 December 1991 and that the defendant was entitled to the compensation payable by the Government consequent upon such resumption.

2. Common Luck Investment Limited ("the plaintiff") now appeals, claiming that the plaintiff's title to this Lot was superior to the defendant's title.

The facts

3. On 1 December 1962 the land was assigned to the defendant, as a gift, by his father-in-law. Shortly thereafter the defendant and his family began to live on the Lot.

4. On 3 May 1963, the defendant mortgaged the Lot to the Canton Trust and Commercial Bank Limited ("the Bank") to secure a loan of $2,000 from the Bank repayable on 2 November 1963. The defendant repaid that loan and the mortgage was redeemed on 1 December 1964. On 19 May 1964, according to the records kept at the District Land Office, the defendant again mortgaged the property to the Bank, this time to secure a loan of $5,000 from the Bank repayable on 19 May 1965. (The defendant denies that he ever entered into this mortgage, but for reasons which will become apparent it is unnecessary for us to go further into this question.)

5. On 8 July 1977, the Official Receiver as the liquidator of the Bank (which had gone into liquidation) assigned the Lot to the plaintiff by a conveyance on sale. Yet, as the judge said :

"The Defendant, in the meantime, continued to live with his family on the Lot, blissfully unaware, he says, that it had been sold over his head to the Plaintiff."

6. The land having been resumed by the Government on 2 December 1991, the dispute became one as to the person entitled to the relevant compensation. This litigation was commenced by the plaintiff for the resolution of that question. The plaintiff and the defendant each claim to be so entitled.

The law

7. The question falls to be resolved by reference to section 7(2) of the Limitation Ordinance No. 31 of 1965. By section 7(2) of that Ordinance, it is provided as follows :

"7(2) No action shall be brought by any other person to recover any land after the expiration of twenty years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person."

8. In the present case, a right of action to recover the land first accrued to the Bank on 19 May 1965, the legal date for redemption of the 1964 mortgage. The Bank took no steps to recover the land before it went into liquidation and the Official Receiver sold the land to the plaintiff. What then has the plaintiff acquired? The plaintiff argues that what it has acquired was the title of the defendant to the equity of redemption. But that is simply not correct. What the plaintiff acquired was the legal estate in the land vested in the Bank by virtue of the mortgage. The Bank had a legal title to the land, and it was that legal title which it sold (through the Official Receiver) to the plaintiff. The plaintiff, as it seems to me, is plainly a person claiming through the Bank. That being so, since the right of action to recover the land from the defendant first accrued to the Bank on 19 May 1965, the title of the Bank (and of the plaintiff as a person claiming through it) was extinguished by 19 May 1985. The only title which justifies a claim to the money paid by the Government on the resumption of the land is the defendant's title.

9. The judge came to the same conclusion. The judge said :

"In my view the Defendant was in adverse possession of the Lot with effect from 19 May 1965, on which day a right of action to recover it accrued to the Bank for the purposes of s.11 of the Ordinance. From that day onwards the Defendant had no enforceable right to occupy the Lot. Time therefore started to run in terms of s.7(2) of the Ordinance with effect from 19 May 1965, at that stage as against the Bank until it sold the Lot to the Plaintiff on 7 July 1977; and since the Defendant remained continuously in adverse possession of it thereafter until the Government resumed it on 2 December 1991, time continued to run under s.7(2) of the Ordinance until the date of resumption. The sale of the Lot to the Plaintiff did not affect the running of time since it is clear that neither the Bank nor the Plaintiff at any time entered into possession of the Lot or interrupted the Defendant's continued adverse possession of it.

In those circumstances, in terms of s. 17 of the Ordinance, the Plaintiff's title to the Lot was extinguished as at 18 May 1985, since 20 years had by then expired since the date upon which the right of action to recover the land had accrued to the Plaintiff's predecessor-in-title, the Bank. The Defendant had, in other words, acquired a possessory title to the Lot with effect from 18 May 1965."

10. That passage from the judgment concisely expresses the result here in language upon which I am not able to improve .

11. Accordingly, I would dismiss this appeal.

Leong, J.A. :

12. I agree. For the reasons given by my Lord Godfrey, J.A., I agree that the appeal should be dismissed.

Rogers, J.A. :

13. I agree and I have nothing to add.