NG SEW HOI AND ANOTHER v. CHONG YIN SING AND ANOTHER

HCA 15070/1998

[2024] HKCFI 414

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 15070 OF 1998

________________________

________________________

________________________

J U D G M E N T

________________________

A. INTRODUCTION

1.  This is the trial of D1’s counterclaim against P2 over the ownership (or alternatively adverse possession)  of Flat 5, 8^th Floor, Block G, Luk Yeung Sun Chuen, Nos. 22-66 Wai Tsuen Road, Tsuen Wan, New Territories (“the Property”).

B.  CORE BACKGROUND AND PROCEDURAL HISTORY

2.  The core background of this case has been set out in D1’s Opening Submissions.  The bulk of it is not in dispute and may be briefly summarised below (with the relevant parts in dispute also identified):

(a)  The late 莊寶玉 (“the Father”)  and the late 巖和宋 (“the Mother”)  were born in Fujian Province, Mainland China. They got married in about 1930 in Mainland China.

(b)  The Father and the Mother are lawful and natural parents of (i) D1,Chong Yin Sing and (ii)the late Chong Chween Hin (莊水興)  (“CH Chong”).  D1 is the elder brother of CH Chong.

(c)  In about 1939, the Father migrated to Singapore.

(d)  In about 1957, the Mother together with CH Chong migrated to Singapore, leaving their eldest daughter莊美嬌 and D1 in Mainland China because of the then tight foreign migration policy adopted by Mainland China.

(e)  Not long after their migration to Singapore, the Father and the Mother started their business selling herbal tea and CH Chong opened a jewellery shop in Singapore.

(f)  In about 1961, D1 married his wife 莊燕嬌 in Mainland China and they gave birth to their elder daughter and three sons in Mainland China. 

(g)  In 1972, CH Chong and P1, Ng Sew Hoi (黃秀花)  (“Madam Ng”)  got married in Singapore.

(h)  In about 1978, the Mother was diagnosed with late stage colon cancer in Singapore. The Father brought the Mother back to their home village in Mainland China and then two to three months later the Mother died and was buried there.

(i)  In about 1980, D1 together with D2, being his 3^rd son 莊禮建, migrated to Hong Kong.  This was followed by his eldest daughter莊禮珠 in about 1981, his 2^nd son莊禮國in about 1991 and his wife莊燕嬌in about 2001.

(j)  Upon their arrival in Hong Kong, both D1 and the D2 were living in a wooden hut in Diamond Hill (“the Wooden Hut”). According to D1, he started working as a construction site worker earning about HK$2,000 a month, D2 then at the age of about 14 started working at an electronic factory earning about HK$2,700 a month and 莊禮珠 then at the age of about 21 started working at an electronic factory earning about HK$2,700 as well.

(k)  According to D1, in 1983, the Father was diagnosed with stomach cancer.  The timing of such diagnosis is in dispute.

(l)  It is D1’s case that, in about mid-August 1983, CH Chong made a telephone call to D1 telling D1 that the Father had a wish to be buried in the same grave with the Mother back in their home village. CH Chong also requested D1 to look after the Father in Hong Kong during the Father’s dying period. But at that time D1 and his family were living in the Wooden Hut with an area of about 300 square feet. When D1 related to CH Chong the difficulty in accommodation, CH Chong accepted D1’s request and promised to buy D1 a flat in Hong Kong in exchange for D1’s promise to look after the Father in Hong Kong during the last stage of his life and be responsible and pay for all his living and medical expenses and funeral and burial costs (“the Mutual Promise”). 

(m)  There is a factual dispute as to whether the Mutual Promise existed and, if so, the precise terms thereof.  In particular, it is P2’s case that the Property was purchased by his parents, CH Chong and Madam Ng, for investment purposes.

(n)  In about end of August 1983, D1 entered into a preliminary sale and purchase agreement for the purchase of the Property. Completion was scheduled for about 5 October 1983.

(o)  In early October 1983, CH Chong and P1 came to Hong Kong.  According to D1, both of them visited D1 at the Wooden Hut and confirmed that, after purchasing the Property, D1’s family no longer needed to live in the Wooden Hut.  There is a factual dispute as to whether there was such visit and conversation.

(p)  On 5 October 1983, CH Chong and P1 (together with D1)  went to the solicitors’ office for completion and payment of the full purchase price of the Property at the agreed sum of HK$385,440. According to D1, on such occasion, CH Chong told D1 that the Property was not acquired in D1’s name due to his concern over D1’s gambling habits, but he confirmed in the presence of Madam Ng that the Property belonged to D1, and he and Madam Ng would hold it on trust for D1.  There is a factual dispute as to whether there was such conversation.

(q)  D1 further alleges that, on 5 October 1983 and upon completing the procedure for purchasing the Property, CH Chong and Madam Ng went to the Property’s management office with D1 to deal with other moving-in procedure, where CH Chong told D1 in the presence of Madam Ng that, but for his promise to purchase the Property for D1, he would not purchase property in Hong Kong or for investment.  Thereafter, CH Chong and P1 left for Singapore the following day on 6 October 1983.  Again, there is a dispute as to whether there was such conversation.

(r)  By an Assignment dated 26 October 1983 and registered in the Land Registry by memorial number TW298347 (“the Assignment”), the Property was assigned to CH Chong and P1 as joint tenants.

(s)  It is not in dispute that CH Chong and P1 did not reside in the Property. 

(t)  It is D1’s case that he had the Property decorated and furnished and solely paid for such costs and expenses, and in late October 1983 D1 and his family moved from the Wooden Hut into the Property and have been living there since then.

(u)  On 2 July 1984, the Father came to Hong Kong from Singapore.  According to D1, Madam Ng brought the Father to Hong Kong on that occasion.  This is however in dispute.

(v)  It is D1’s case that he had been responsible and paid for all living and medical expenses of the Father in accordance with the Mutual Promise.  This is also in dispute.

(w)  On 25 July 1984, D1 and his family accompanied the Father back to his home village in Mainland China.

(x)  On 26 August 1984, the Father passed away and was buried in the same grave with the Mother.

(y)  Thereafter, D1 and his family continued to reside in the Property.

(z)  In about 1996 or 1997, CH Chong and P1 divorced each other.

(aa)  According to D1, Madam Ng came to Hong Kong and met D1 on 17 December 1997.  She requested to sell the Property, but D1 refused because the Property belonged to him.  This is however in dispute.

(bb)  In about 1998, D1 applied for public housing.

(cc)  On 4 September 1998, CH Chong and P1 as the then registered owners of the Property, issued the Writ in the present action against D1 and D2, seeking vacant possession of the Property.

(dd)  According to D1, CH Chong gave him a call on 3 January 2000 saying that he did not issue the writ or seek to recover the Property, and it was Madam Ng who commenced the proceedings in Hong Kong in his name without his consent.  Again, this is in dispute.

3.  The procedural history of these proceedings has also been set out in D1’s Opening Submissions.  It is not in dispute and may be summarised as follows:

(a)  These proceedings were commenced on 4 September 1998.

(b)  On 2 May 2022, CH Chong and Madam Ng assigned (by way of gift)  the Property to P2, being their son, Ernest Chong Kian (“Ernest”).

(c)  On 26 June 2002, CH Chong passed away.

(d)  On 29 October 2003, Master K Wong granted leave to amend the Writ and the pleadings such that Madam Ng shall be P1 and Ernest shall be joined as P2 in place of CH Chong.

(e)  On 13 June 2018, upon D1’s application, Master Hui ordered P1 to give security for costs, failing which P1’s claim against D1 be dismissed with costs with no further order and P1’s Reply and Defence to D1’s Counterclaim be struck out.  P1 failed to comply with the said order.

(f)  On 25 July 2018, P1 and P2 were absent from the Case Management Conference before Mr Registrar KW Lung, and it was ordered that Ps’ claims be provisionally struck out according to O25, r1C of the Rules of High Court (“RHC”).

(g)  According to O25, r1C(3), P1 and/or P2 had 3 months’ time from the date of the Case Management Conference (expiring on 25 October 2018)  to apply to the Court for restoration of their claim.  P1 and P2 had never made any such application for restoration at any time.  They had also never lodged an appeal against the said order.

(h)  According to O25, r1C(6)(a)  of the RHC, P1 and P2’s claim did stand dismissed upon the expiry of 3 months from the date of the Case Management Conference.

(i)  On 16 November 2020, P1 sought to appeal against the order for security for costs out of time.

(j)  On 8 March 2021, Deputy High Court Judge MK Liu refused to grant time extension and dismissed P1’s appeal.  On 18 May 2021, he dismissed P1’s claim against D1 with costs and struck out P1’s Reply and Defence to D1’s Counterclaim.

(k)  On 31 March 2022, the Honourable K Yeung J directed D1 to take out an application for leave to set down D1’s Counterclaim for trial.  On 23 June 2022, he granted leave to D1 to set down his Counterclaim for trial.  This is the trial subsequently fixed as a result.

4.  Accordingly, a peculiar feature of these proceedings is that, whilst Ps had pursued a claim to recover possession of the Property, such claim was subsequently struck out or dismissed, with the effect that this trial is concerned only with D1’s counterclaim.  Another peculiar feature is that, apart from advancing a counterclaim over the Property based on common intention constructive trust (“CICT”)  or proprietary estoppel, D1 also pursues an alternative counterclaim of adverse possession against P2.  These features give rise to interesting arguments on adverse possession which I will address at the latter part of this Judgment, after dealing with the claims of CICT and proprietary estoppel.

C.  PARTIES’ CASES

C1.  D1’s case of the Mutual Promise

5.  In a nutshell, D1’s case is that the Mutual Promise was made and pursuant to it, D1 searched for a suitable flat in the market through estate agents and in end of August 1983, D1 found and decided to buy the Property by entering into the preliminary sale and purchase agreement in his own name and paid the initial deposit of HK$6,000 by his own money.  The intention is that CH Chong would then complete the purchase of the Property in favour of D1 in consideration for the Mutual Promise.

6.  When CH Chong and P1 went with D1 to the solicitors’ office on 5 October 1983 for completion, D1 allegedly asked CH Chong there and then why the Property was not assigned to D1’s name, to which CH Chong replied that he was worrying that troubles might have been caused by the gambling habit of D1 but reassured that the Property was D1’s. 

7.  D1’s pleaded case is that it was the common intention of all parties concerned that both CH Chong and P1 purchased and held the Property as trustees for the sole benefit of D1 in accordance with the Mutual Promise.  In particular, in reliance on the Mutual Promise and as consideration, D1 was encouraged to act and indeed acted upon it, including (a)  paying the initial deposit of HK$6,000, (b)  taking vacant possession of the Property and causing it to be decorated and furnished, (c) moving into the Property with his family and abandoning the Wooden Hut, (d)  living in the Property as their home without paying any rent or licence fee, and (e)  taking good care of the Father and paying for all living and medical expenses and the funeral and burial costs of the Father since 2 July 1984.  As a result, D1 incurred monetary loss and expense in the total sum of HK$316,000 comprising (a)  initial deposit for the Property in the sum of HK$6,000, (b)  living and medical expenses of the Father in the sum of about HK$20,000, (c)  funeral and burial costs of the Father in the sum of about HK$170,000, (d)  decoration and furnishing costs of the Property in the sum of about HK$80,000; and (e)  value of the abandoned Wooden Hut in the sum of about HK$40,000.

8.  It is D1’s case that the whole course of the aforesaid dealings between the parties indicates a common intention that CH Chong and P1 (and later P2)  held or hold the Property on constructive trust for the benefit of D1 wholly and solely, i.e. the claim of CICT.

9.  Further or alternatively, D1 contends that (a)  the Mutual Promise and subsequent conducts of the parties constituted an unequivocal representation by CH Chong and P1 to D1 that the Property would be conveyed to D1 in consideration for D1’s looking after the Father during the last stage of his life and be responsible and pay for all his living and medical expenses and funeral and burial costs; (b)  D1 relied and indeed acted upon the representation; and (c)  it is inequitable for CH Chong and P1 (and P2)  to go back on the representation, i.e. the claim of proprietary estoppel.

C2.  D1’s alternative case of adverse possession

10.  It would appear that D1’s case of adverse possession was introduced by way of amendment on 5 July 2016 in D1’s Re-Amended Defence and Counterclaim (“RADC”).  This is because the RADC contains a revamped version of D1’s defence and counterclaim with green lines in the margin indicating that it was introduced by way of re-amendments on 5 July 2016.  This was almost 18 years after the commencement of these proceedings on 4 September 1998.

11.  As pleaded by D1, if, contrary to D1’s contention that he is the beneficial owner of the Property (i.e. in the event the Court rejects D1’s claims of CICT and proprietary estoppel), D1 would contend that he has exclusively possessed the Property since 5 October 1983 with the intention to so possess the Property as owner and/or under the mistaken belief that he is the owner of the Property, without the consent of CH Chong, P1 and P2 and without paying any rent or other sum for such possession or otherwise acknowledging any title of CH Chong, P1 and P2, and has dispossessed CH Chong, P1 and P2 as paper title owners for over 20 years (or 12 years as the case may be), and the right of action of CH Chong, P1 and P2 to recover possession of the Property is time-barred under s. 7(2)  of the Limitation Ordinance (Cap. 347)  (“LO”).

C3.  P2’s case

12.  As mentioned, Ps sought vacant possession of the Property but such claim was struck out or dismissed by reason of the procedural defaults on the part of Ps.  Therefore, what is left for trial is D1’s counterclaim against P2.

13.  That said, in order to understand P2’s position, it remains necessary to consider Ps’ Re-Amended Statement of Claim (“RASC”)  and Ps’ Amended Reply and Amended Defence to D1’s RADC (“AR”).

14.  In the RASC, it is pleaded that CH Chong and P1 acquired the Property by paying the entire consideration of HK$385,440; they purchased the Property for the sole purpose of investment; they entrusted the control and possession of the Property to D1 so as to facilitate the management of the Property and searching for potential tenant for CH Chong and P1 (“the Arrangement”).  Moreover, D1 was allowed as a licensee to possess and control the Property for the purposes of carrying out the Arrangement (“the 1^st Licence”). 

15.  It is further pleaded in the RASC that CH Chong and P1 subsequently were aware of and confirmed the unauthorised use of the Property by Ds and their family but they tolerated the said breach until about 12 May 1994 when they decided they would no longer tolerate and they had informed Ds of the determination of the 1^st Licence. Nevertheless, in about 1996, Ds asked for indulgence to remain in the Property on the ground that they have made an application for public housing and CH Chong and P1 agreed not to vacate Ds immediately, and this constituted a licence to Ds in that they were allowed to stay in the Property for the time being pending allocation of public housing (“the 2^nd Licence”).  To the best of Ps’ knowledge, Ds have been allocated public housing in 1998 and hence the 2^nd Licence has been determined automatically, and CH Chong and P1 had in any case instructed their solicitors to issue a letter to Ds dated 9 June 1998 to determine and withdraw the 2^nd Licence.

16.  In the AR, Ps deny the Mutual Promise and aver that, at the time of the purchase of the Property, it was not yet discovered that the Father had suffered from any form of illness which was fatal in nature.  The purchase of the Property was jointly funded by CH Chong and P1.  It was their common intention to retain half share of the Property.  As a result, the Property was registered in the joint names of CH Chong and P1.

17.  It is further denied that D1 was responsible for paying the living, medical or funeral expenses for the Mother and the Father.  Instead, they were settled partly by the savings of the Mother and partly by CH Chong who gave his parents a fair sum of money and jewellery to use in Mainland China.  In particular, CH Chong was the person responsible for paying all living and medical expenses of the Father.

18.  Ps in any event deny that the Mutual Promise or any subsequent conduct of CH Chong and/or P1 constituted an unequivocal representation that the Property would be conveyed to D1.

19.  As regards D1’s alternative case of adverse possession, Ps simply deny that any of their claim is time-barred.

20.  In P2’s Opening and Closing Submissions, P2 has advanced two main grounds as to why D1’s alternative case of adverse possession must fail.  First of all, P2 contends that there can at most be 15 years of factual possession prior to the issuance of the Writ in 1998 and D1 could not rely on post-writ cause of action.  Secondly, P2 contends that D1 did not have the requisite intention to possess.  P2 relies on (i)  the fact that D1 relied on the Mutual Promise to claim a derivative title from Ps and (ii) other statements or conduct of D1 which negated his intention to possess.

D.  RELEVANT PRINCIPLES

D1.  CICT (Common intention constructive trust)

21.  The law on common intention constructive trust is well settled.  The parties do not dispute that the relevant principles have been set out by the Court of Appeal in Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985.  I have summarised the relevant principles in another decision of mine in Tang Hin Fai & Anor v Tang Hin Lung & Anor[2023] HKCFI 2637, [94].  The relevant parts are reproduced below for ease of reference:

(a)  The starting point is that equity follows the law.  There is a presumption that the beneficial interest follows the legal interest.  Where the property is registered in a defendant’s name, the plaintiff (or the counterclaiming plaintiff, as the case may be)  bears the burden of showing, on the balance of probabilities, that the beneficial ownership differs from the legal ownership.  There are two stages of inquiry. The first is whether it was intended that the plaintiff has any beneficial interest in the property at all.  The onus is upon the plaintiff to show that he has any interest at all.  If he does, the second issue is what that interest is.

(b)  The burden may be discharged by showing that: (i)  there was a common intention held by the plaintiff and the property owner at the time of the purchase (or exceptionally, thereafter)  that the beneficial ownership was to be different to the legal ownership; (ii)  the plaintiff altered his or her position in detrimental reliance upon the common intention; and (iii)  it is unconscionable for the property owner to assert ownership in reliance on the legal title.   The constructive trust is constituted by the plaintiff’s detrimental reliance on the common intention and the unconscionability of the legal owner departing therefrom.

(c)  The court is to take a holistic approach to ascertain the parties’ objective intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it.  The relevant intention is the intention which was reasonably understood by the other party to be manifested by that party’s words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.  More factors than financial contributions may be relevant to drawing inference on such intention, and there is no exhaustive list.

(d)  Relevant circumstances include any discussion between the parties concerned at the time of the conveyancing, reasons why the property was acquired in joint names or sole name, the purpose for which the property was acquired, the nature of the parties’ relationship, how the purchase was financed initially and subsequently, how the parties arranged their finances, the outgoings on the property and other household expenses.

(e)  The doctrine is often described as having two limbs, i.e.: 

(i)  First limb, i.e. expressed intention which arises when, at any time prior to the acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially;

(ii)  Second limb: where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this situation, direct contributions to the purchase price by the party who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust.

22.  Further, it would appear that the parties are in agreement that if D1 successfully establishes CICT, it would be appropriate to grant an order that all legal and beneficial title right and interest in or over the Property shall vest in D1.

D2.  Proprietary estoppel

23.  The relevant principles on proprietary estoppel are trite.  The doctrine can generally be described as having three main elements:

(a)  a representation or assurance made to the claimant;

(b)  reliance thereon by the claimant; and

(c)  detriment to the claimant in the consequence of that reliance.

(See Cheung Lai Mui v Cheung Wai Shing (2021)  24 HKCFAR 116, [23])

24.  D1’s reliance on proprietary estoppel is based on similar factual matrix as his CICT claim, namely the Mutual Promise, i.e. an estoppel by representation.

25.  In D1’s Opening, Mr Chong contends that the modern development of the law seems to have made proprietary estoppel by representation subsumed into CICT as they both share the same elements.  He relies on the observations of Mr Recorder Coleman, SC (as he then was)  in Chum Mei Diu v Sum Fan Hung, HCA 946/2013 (unreported, 4 June 2015), [27]-[28].  This is the foundation of Mr Chong’s further argument that the relief for proprietary estoppel by representation should be similar to that of CICT, by relying on the majority opinion of UK Supreme Court in Guest v Guest [2022] UKSC 27 adopting the expectation-based model for relief, and seeking a vesting order of the Property in favour of D1.

26.  In response, Mr Poon for P2 disagrees with the above contentions.  He argues that more recent authorities have showed a clear judicial recognition that CICT and proprietary estoppel are separate equitable principles with their own distinctive practical significances.  In particular, he relies on the observations made by Lam VP (as he then was)  in Cheung Lai Mui v Cheung Wai Shing[2020] 2 HKLRD 15, [1.4], quoting Stack v Dowden[2007] 2 WLR 831, [37]:

“1.4 The difference between a claim based on a common intention constructive trust and proprietary estoppel was highlighted by Lord Walker in Stack v Dowden [2007] 2 WLR 831 at [37]:

I have to say that I am now rather less enthusiastic about the notion that proprietary estoppel and ‘common [intention]’ constructive trusts can or should be completely assimilated. Proprietary estoppel typically consists of asserting an equitable claim against the conscience of the ‘true’ owner. The claim is a ‘mere equity’. It is to be satisfied by the minimum award necessary to do justice (Crabb v Arun District Council [1976] Ch 179, 198), which may sometimes lead to no more than a monetary award. A ‘common intention’ constructive trust, by contrast, is identifying the true beneficial owner or owners, and the size of their beneficial interest.”

27.  Mr Poon submits that the Court has slightly different tasks when handling a CICT claim and proprietary estoppel claim.  In a CICT claim, the Court has to ascertain whether the whole course of conduct is capable of pointing to a common intention as to the identity of the owner, and if so the size of interest.  This includes considering any relevant representation found to be made by the promisor.  When it comes to the question of remedy the Court has little room to exercise any discretion but to award the claimant what was commonly intended.

28.  On the other hand, in a claim for proprietary estoppel, the Court’s focus would be whether the relevant representation found to be made by a promisor, if any, is clear enough to be relied upon.  When it comes to deciding the remedy the Court has to exercise discretion and order what is equitable.  This needs not be the same as the promise made in the relevant representation.  

29.  For such reason, he contends that the majority’s approach in Guest v Guestshould have no application either way, namely that (i)  if the Court finds in D1’s favour in CICT, the only appropriate remedy would be in accordance with what is found to be commonly intended (hence it is not necessary to resort to Guest v Guest); and (ii)  if D1 has established a valid claim in proprietary estoppel, this Court is bound by Cheung Lai Muito order the minimum necessary award to do justice.

30.  For present purposes, I am inclined to agree with Mr Poon’s submissions.  In particular, I agree with the observations of Lam VP (as he then was)  regarding the different nature and rationale of the claims of CICT and proprietary estoppel.  That said, it is not strictly necessary for me to express any conclusive view, unless I am satisfied that D1 has established a valid claim in proprietary estoppel but not CICT. 

D3.  Adverse Possession

31.  The relevant principles on adverse possession are also trite.  The burden is on a party claiming adverse possession to establish (a) factual possession for the requisite period of time (being 20 years or 12 years)  and (b)  the requisite intention to possess or animus possidendi.

32.  In D1’s Opening, Mr Chong refers to the summary of the relevant principles by To J in Birkenhead Properties and Investments Ltd v Lam Kai-man & Another, HCMP 1588/2012 (unreported, 12 January 2016), at [9]-[13]:

“9. Exclusive possession is the bedrock of English land law. The starting point of land law is that in the absence of evidence to the contrary, the owner of land with the paper title is deemed to be in possession of the land. He is the person with the prima facie right to possession. A person seeking to establish title to land by adverse possession has to prove he has, in respect of that land and for a period of 12 years or more: (i)  factual possession; (ii)  intention to possess or animus possidendi; and (iii)  adverse possession.

10. Factual possession signifies an appropriate degree of physical control. It must be a single and conclusive possession. What acts constitute a sufficient degree of exclusive physical control depend on the circumstances, in particular the nature of the land in question and the manner in which land of that nature is commonly used or enjoyed. Everything depends on the particular circumstances. Broadly speaking, what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no one else has done so: Powell v McFarlane.

11. Intention to possess or animus possidendi is the intention to possess the land in one’s own name and on one’s own behalf, to the exclusion of the world at large, including the owner with the paper title so far as is reasonably practicable and so far as the process of the law will allow. In the case of a paper owner, the slightest act done in manifestation of his title is sufficient evidence of that intention which may negative intention to discontinue or abandon possession. By contrast, for a squatter, he has to make it perfectly plain to the world at large by his actions or words that he is enjoying the land openly as of right as if he is the rightful owner. If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the court will treat him as not having had the requisite intention and consequently as not having dispossessed the owner: Powell v McFarlane. An intention to pay rent for the use of the land is plainly and completely inconsistent with the intention to possess. As was pointed out by Nourse LJ in Buckinghamshire County Council v Moran, adverse possession can be described as ‘possession as of wrong’. For the purpose of the Limitation Ordinance, it is the intention of the squatter that is essential. Further, it is not necessary for the squatter to establish an intention to own or even an intention to acquire ownership of the land: Buckinghamshire County Council v Moran.

12. Adverse possession means that the possession by the squatter must be adverse against the title of the paper owner. Possession is never adverse if it is enjoyed under a lawful title or with the permission of the paper owner: Buckinghamshire County Council v Moran.

13.  The burden of proof of these three requirements 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.”

33.  On behalf of P2, Mr Poon does not dispute the general principle as set out by To J in the above judgment. 

34.  In the present case, in order to succeed in adverse possession, D2 must establish over 20 years of possession (from 1983 to at least 2003), or alternatively over 12 years of possession (from 1991 to at least 2003).  As CH Chong and P1 had commenced proceedings to recover possession of the Property in 1998, ordinarily the period of limitation should have stopped from running upon the institution of such proceedings.  Therefore, if such claim for possession remains extant, D2 would have no case of adverse possession at all.  Nevertheless, after P2 substituted CH Chong as a plaintiff, the claim for possession by P1 and P2 was eventually struck out.  On behalf of D1, Mr Chong submits that such a struck-out claim would not stop the period of limitation from running.  He relies on the obiter opinion of the Court of Appeal in Grand Wayfair Investment Co Ltd v Chan Yung Kan & Others, CACV 238/2013 (unreported, 26 September 2014)  at [26]-[29] that an unenforced default judgment for possession would not break the continuity of possession or stop time from running.  As a matter of logic, I agree that a struck-out claim could do no better than an unenforced default judgment in stopping time from running.  On behalf of P2, Mr Poon does not seem to dispute that, as a result of the striking out of Ps’ claim for possession, time will continue to run notwithstanding the commencement of the present proceedings in 1998.  

35.  Notwithstanding the foregoing, Mr Poon argues that D1 cannot succeed in his claim of adverse possession on two major grounds.

36.  First of all, Mr Poon argues that D1’s claim of adverse possession would fail because, by the doctrine of relation back, D1’s claim should be adjudicated by reference to the date of the writ, i.e., 4 September 1998.  As such, D1’s claim is bound to fail because on D1’s own case he had at most stayed in the Property for only 15 years at the date of the writ, which falls short of the requisite 20 years’ limitation period (or he had at most stayed in the Property for only 7 years counting from 1991, which again falls short of 12 years’ limitation period counting from 1991).

37.  Secondly, Mr Poon argues that D1 did not have the requisite intention to possess or animus possidendi.  He contends that D1’s claim of the Mutual Promise would be incompatible with the required possession being an adverse one.  He further argues that, even if the Court rejects the Mutual Promise, D1’s adverse possession claim would still fail because of the insistence of the Mutual Promise by D1.  As D1’s intention has all long been to rightfully derive his title from CH Chong and to become the paper title owner himself, his intention has never been adverse to the paper title owner.  I should mention that Mr Poon also relies on other statements or conduct of D1 to contend that D1 has no animus possidendi.

38.  On behalf of D1, Mr Chong disagrees with the above submissions.  I will deal with these arguments as may be necessary or appropriate in the latter part of this Judgment.

D4.  Witness credibility

39.  The general principles regarding assessment of credibility are trite and have been helpfully summarised in Hui Cheung Fai v Daiwa Development Ltd, HCA 1734/2009 (unreported, 8 April 2014)  at [77]-[83].  In short:

(a)  Contemporaneous documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility.

(b)  In deciding whether to accept a witness’ account, importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events.

(c)  Regard should be had to the consistency of the witness’ evidence with the undisputed or indisputable evidence, and the internal consistency of the witness’ evidence.

(d)  Care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character.

(e)  Witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and regard should be had to their motives and to the overall probabilities.

E.  WITNESSES

40.  D1 has called two witnesses, namely D1 and D2, whilst P2 has called two witnesses, namely Madam Ng and P2 (i.e. Ernest).

41.  Among the witnesses, the evidence of D2 and Ernest are of less relevance.  D2 was a teenager at the time of the alleged Mutual Promise in 1983.  In his witness statement, he mentioned that he moved into the Property in 1983 at the arrangement of his father D1 without mentioning the Mutual Promise or the details thereof at the same juncture.  Whilst he did refer to the Mutual Promise in the subsequent part of his witness statement, it would appear that he was not privy to the making of the alleged Mutual Promise and he was merely recounting D1’s case in response to P2’s case.  I should however mention that, during cross-examination, D2 suggested that he had overheard a telephone conversation and D1 later told him that CH Chong said he would purchase a property for D1. I will deal with such evidence in the analysis below but, subject to that, D2 did not profess to have much knowledge of the Mutual Promise or its details.

42.  As regards Ernest, he was still a child at the time of the alleged Mutual Promise in 1983.  He confirmed in his witness statement that, other than the fact that the Property was assigned to him in 2002 by his late father CH Chong and his mother P1, he was not involved in any other matters relating to the Property.  All that he knew was that CH Chong and P1 had purchased the Property as an investment, and he never heard that the Property was beneficially owned by somebody including D1 and/or D2 or that it was purchased as a gift to D1 and/or D2 in exchange of anything.

43.  Indeed, the only witness who was privy to the alleged Mutual Promise is D1.  Even on D1’s case, the Mutual Promise was reached between CH Chong and D1 in the absence of Madam Ng.  Of course, this does not mean that Madam Ng’s evidence is irrelevant because, as CH Chong’s wife and the other co-owner of the Property, Madam Ng’s evidence would no doubt have implications on the credibility of D1’s case of the Mutual Promise.

44.  In terms of the demeanour of the witnesses, I do not find any of them to be particularly forthcoming or evasive in the course of giving evidence.  I also remind myself of the principles in Hui Cheung Fai, particularly that care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character.  Instead, I would place more emphasis in any contemporaneous documents, the inherent probabilities of a witness’ account, the consistency of the witness’ evidence with the undisputed or indisputable evidence, and the internal consistency of the witness’ evidence.

F.  ANALYSIS

F1.  Mutual Promise

45.  The crux of the dispute in the present case turns on whether the alleged Mutual Promise was made and, if so, the precise terms thereof.  As it is P2’s case that D1’s family resided in the Property pursuant to the Arrangement, the credibility of D1’s case also depends, to some extent, on the credibility of P2’s case.  Nevertheless, it is not necessarily the case that the truth is confined to either party’s version. In other words, even if I am not convinced that the Arrangement existed, that does not necessarily mean that the Mutual Promise must have been entered into (albeit being a relevant factor); and vice versa.  Further, if I am not satisfied that either the Mutual Promise or the Arrangement was entered into, and yet the evidence suggests that D1’s family resided in the Property with the permission of CH Chong and Madam Ng, then it may simply mean that CH Chong and Madam Ng had somehow allowed D1’s family to stay in the Property.

46.  Without prejudice to the foregoing, it would be convenient for me to deal with the Mutual Promise first. Having considered the relevant evidence and the overall probabilities, I am of the view that there are a number of factors which militate against D1’s case.

47.  First of all, on D1’s evidence, the Mutual Promise was made or confirmed on five occasions, namely:

(a)  In or about mid-August 1983, during a telephone conversation between CH Chong and D1 when the Mutual Promise was allegedly made;

(b)  In early October 1983, during a conversation when CH Chong and P1 came to Hong Kong and allegedly visited D1 at the Wooden Hut;

(c)  On 5 October 1983, in a conversation at the solicitors’ office when CH Chong and P1 (together with D1)  attended the same for completion and payment of purchase price of the Property;

(d)  On 5 October 1983, in another conversation at the Property’s management office when CH Chong and P1 (together with D1)  attended the same to deal with moving-in procedure; and

(e)  On 17 December 1997, in a meeting during Madam Ng’s visit to Hong Kong when D1 allegedly refused to sell the Property because it belonged to him.

48.  Yet, despite the above, D1 is unable to proffer any written document in support of any of the above oral exchange.  To be fair to D1, I fully acknowledge that the alleged Mutual Promise is by nature an oral agreement, and it was entered into between close family members (i.e. brothers), which may explain why the parties did not see fit to reduce things into writing.  That said, one is concerned after all with a real property of substantial value, and the Property was not purchased in the sole name of CH Chong, but in the joint names of CH Chong and P1 as joint tenants.  This means that P1 was prima facie entitled to a half interest in the Property and, in the event CH Chong passed away before her, she would acquire all interest in the Property through survivorship.  There is, however, no suggestion that D1 had a close relationship with P1 (being his sister-in-law).  As such, it seems a bit surprising that D1 did not seek to have any written record of the Mutual Promise, particularly when its terms are in conflict with the terms of written legal documents including, in particular, the Assignment.  Notably:

(a)  If, as alleged, CH Chong had assured D1 in the presence of Madam Ng when attending the solicitors’ office on 5 October 1983 that they would hold the Property on trust for D1, there is little reason why D1 did not seek any confirmation from the staff of the solicitors’ firm or otherwise seek their assistance to help prepare a written document (e.g. a declaration of trust)  to record the same.

(b)  If, as alleged, P1 did wrongly request the sale of the Property on 17 December 1997 and D1 had refuted such request as the Property belonged to him, there is little reason why D1 did not put things on record after such occasion to protect his interest.

49.  Secondly, the genesis of the Mutual Promise is that, when CH Chong requested D1 to look after the Father in Hong Kong during his dying period, D1 expressed difficulty on his part as D1’s family was living in the Wooden Hut with about 300 square feet. According to D1, CH Chong then promised to buy D1 a flat in Hong Kong in exchange for D1’s promise to look after the Father in Hong Kong during the last stage of his life and be responsible and pay for all his living and medical expenses and funeral and burial costs.  With respect, I find such allegation inherently improbable, having regard in particular to the following:

(a)  On D1’s case, the Father was diagnosed with stomach cancer and the amount of time he would spend in Hong Kong during his “dying period” would be short.  As it transpires (although for the avoidance of doubt this is merely a passing remark as one should not consider the matter with hindsight), the Father only spent less than a month in the Property (having arrived in Hong Kong on 2 July 1984 and left for his home village in Mainland China on 25 July 1984).  It seems disproportionate for CH Chong to promise to buy a brand new property for D1 which D1 and his family can enjoy permanently as their own, only in exchange for D1 taking care of the Father for a short period of time together with other incidental costs.

(b)  Moreover, on D1’s case, the Property was purchased as a gift for D1 in exchange for D1’s promise to look after the Father in Hong Kong during his last stage of life.  However, the Father emigrated from Mainland China to Singapore in 1939.  He did not have ties or attachment with Hong Kong.  Nor did D1 suggest that the Father spent any time (or any substantial time)  in Hong Kong previously.  Therefore, if the Father was to visit during his last days, it would appear that his objective was to go back to his home town in Mainland China and he would only pass by or stay in Hong Kong for a short time.  That militates against the making of the Mutual Promise. Indeed, consistent with the foregoing, it was Madam Ng’s evidence (at §14 of her witness statement)  that, in July 1984, the Father meant to go back to Mainland China as quick as possible without staying in Hong Kong for too long, and yet for reasons out of their expectation, the Father was delayed in Hong Kong for 3 weeks when he was critically sick.  Madam Ng’s evidence in this regard was not challenged. 

(c)  Even if the Father were meant to stay in Hong Kong for some time, there were other alternatives not as costly as buying a brand new flat for D1.  For instance, the Father could stay in a hotel.  Alternatively, CH Chong could rent an apartment for D1.  In the further alternative, D1 could buy a flat himself, whilst CH Chong could pay for all living and medical expenses of the Father and funeral and burial costs.  The last alternative is a realistic one because (i)  D1 claimed in cross-examination (and indeed in previous handwritten defence or counterclaim)  that he had financial means to purchase the Property on his own and (ii)  it is not in dispute that, before the Father came to Hong Kong on 2 July 1984, CH Chong and P1 lived with the Father and they had been paying for the expenses of the Father all along – as such it is not too much of a burden for them to continue paying the same during the Father’s last days.  In the light of these alternatives, it seems rather unlikely for the parties to have entered into the Mutual Promise instead.

(d)  As a filial son, D1 would have moral duty or incentives to pay for the living and medical expenses and the funeral and burial costs of the Father anyway.  D1 also accepted during cross-examination that he was a filial son; he highly regarded Chinese tradition; he was grateful to his parents; if there is a chance he would try his best to accompany his parents; and to be able to walk through his parents’ last journey is important to him.  As such, it seems a bit extraordinary for D1 to suggest that all these were openly agreed, as between the two brothers, as a consideration in exchange for a substantial monetary benefit (i.e. gift of a brand new flat).

(e)  Further, as submitted by Mr Poon, D1’s account is rather extraordinary as he confirmed during cross-examination that he did not try to find out how serious the Father’s health condition would be when he arrived in Hong Kong; he did not try to enquire as to the possible medical needs when the Father arrived at Hong Kong; nor did he find out in the first place when the Father would come to Hong Kong – instead all that D1 did was to request CH Chong to purchase the Property.

50.  Thirdly, the Property was purchased in 1983 in the joint names of CH Chong and P1.  At that time, CH Chong and P1 had been married for 11 years, and they were running the business of a jewellery shop together in Singapore.  Whilst there is no direct evidence as to how the purchase price of the Property was paid, it seems fair to say that, even assuming that the purchase money were paid by CH Chong, the source of such money would likely originate from the common pool of the family assets and/or business, and should properly be regarded as equal financial contributions by CH Chong and P1 as husband and wife and/or business partners of the jewellery shop.  On the premise that P1 did have a 50% financial contribution towards the purchase of the Property, it seems incredible to suggest that P1 would forgo such 50% financial contribution in exchange for a promise by her brother-in-law (D1)  to take care of her father-in-law during his last days, when they were not related by blood.

51.  Fourthly, D1 claims that CH Chong promises to purchase the Property for D1.  Yet, according to D1, it was not until he went to the solicitors’ office on 5 October 1983 that he realised the Property was to be purchased in the names of CH Chong and P1.  According to D1, CH Chong explained that this was due to the concern over D1’s gambling habits, but CH Chong and P1 would hold the Property on trust for him.  It seems rather incredible that D1 would readily accept such explanation (if not excuse)  from CH Chong without question or query.  Moreover, during cross-examination, D1 said that although he agreed to such trust arrangement at the time, the so-called gambling habits was only CH Chong’s own belief and D1 did not accept that there was indeed such concern or risk, as he never borrowed money from moneylenders.  If so, it is strange that D1 did not object at the time.  Further, if there were a trust arrangement, it is inexplicable why D1 never requested or demanded CH Chong and P1 to transfer the title of the Property to him at any point in time subsequently (e.g. when the gambling habits should no longer be a real concern), until well after the commencement of these proceedings by CH Chong and P1.

52.  Fifthly, D1’s case of the Mutual Promise has not been consistent in the present proceedings.  On various occasions, D1 seems to suggest that CH Chong promised to purchase the Property for D1 (and/or his family)  to live there (for life), as distinct from purchasing the Property for D1.  Without being exhaustive and by way of illustration:

(a)  In a Chinese handwritten affirmation dated 28 October 1998 by D1, D1 claimed that CH Chong and P1 promised (allegedly at the request of the Father, as opposed to D1)  to purchase the Property for D1’s family to live there for D1’s life, e.g.: “老父[i.e. the Father]提出要水興[i.e. CH Chong]在香港購房子給我家人住” (at p.1); “而水興夫婦當時購入上址單位只答應給我家人長期居住到我一輩子” (at p.1); “83年水興夫婦來港買樓，並親自到我木屋看過，並答應上址給我住一輩子” (at p.1)  – notably D1 made no mention of any gift, merely questioned why CH Chong and Madam Ng did not specify a time limit (“他夫婦83年購上址單位為什麼不提出限期給我家人住的時間，如果他當時若有提出住的期限是多少年，我們早也做好準備並提前申請公屋住” (at p.1)), alleged that he had a one-fifth interest in the Property due to decoration costs (“1983年他投資四十萬元購入上址剛入伙，對裝修他要我們住的人出錢，所以我幫他全面內裝修房子費用八萬多元，等於我佔有上址單位五分之一房產權” (at p.1)), and only sought a temporary relief for his family to live in the Property until being allotted public housing (“要求法院對下址單位判給我家人繼續居住到分配公屋為止” (at p.1));  

(b)  In a similar vein, in a Chinese handwritten affirmation dated 29 October 1998 by D2, he stated the following, e.g: “條件是他在香港購買現址單位給我們長期居住” (at p.1); “如果莊水興夫婦當時若有提出給我們住的期限是多少年，我們申請公屋早亦分配到” (at p.1); “我向法院提出請求，請求給予我一家人住到分配公屋為止” (at p.1)；

(c)  In a Chinese handwritten defence dated 27 November 1998 by D1, D1 claimed that he requested and CH Chong and P1 promised to purchase a property in Hong Kong for D1 and/or D1’s family to live there, e.g.: “ 當時我提出條件，要原告在香港買房子給予我家人住” (at p.1); “原告老婆並親口對我兒說：“禮建，叔叔嬸嬸買房子給你住”” (at p.1); “原告還親口對我說（本來不打算在香港買房子，因為答應了買給你住）” (at p.2); “原告當時買房子就是送給被告住” (at p.4); “事實上原告是在不得已情況下， 是免不了要買房子給被告住” (at p.4);

(d)  In a second Chinese handwritten defence also dated 27 November 1998 by D1 and D2, they stated the following, e.g.: “當時被告提出條件要原告在香港買房子給被告家人住” (at p.1); “原告老婆親口對我說：“禮建，叔叔嬸嬸買房子給你住”” (at p.1); “ 沒有提出該單位給被告是暫住的，所以被告始終認為該單位是給被告長期居住” (at p.1)  – and notably they sought the following relief: “維護被告的居住權” (at p.4)  and “ 最低限度要求居住至分配到公屋時或賠償被告此期間租房費用” (at p.4);

(e)  In a third Chinese handwritten defence also dated 27  November 1998 by D1 and D2, they stated the following, e.g.: “事實上由1983年原告交樓時候到1997年上半年原告從來沒有提出，該單位給我家人住的時間期限，所以被告始終認為該單位就是送於我家住” (at p.6)  – and again they sought the following relief: “維護被告的居住權” (at p.8)  and “ 最低限度要求居住至分配到公屋時或賠償被告此期間租房費用” (at p.9);

(f)  In a Chinese handwritten counterclaim dated 27 April 1999 by D1 and D2, they referred to CH Chong and PI purchasing the Property for D1 and/or D1’s family to live there: “購屋送原告居住一輩子” (at p.1); “被告說：“ 反正房子送給原告住一輩子，請放心。”所以原告信以為真，始終認為該房屋有居住權” (at p.2); “被告又親口對原告說：“本來不打算在香港購屋，因原先已答應買送給原告住。” ” (at p.2);

(g)  In an undated Chinese handwritten defence by D1, D1 stated the following: “購屋送給你住已用去一筆錢” (at p.5); “念及原告購屋送給被告住之情” (at p.5); “房子已買送給你住” (at p.6);

(h)  In a Chinese handwritten defence dated 13 November 2003 by D1 and D2, they stated the following: “ 當時我提出條件要我弟在香港買房子給我一家人住” (at p.1); “第一原告親口對我兒子說：‘禮建，叔叔嬸嬸買房子給你住’ ” (at p.1); “我弟莊先生還親口對我說：‘本來不打算在香港買·房子，因原先答應了買給你住。’ ” (at p.2); “ 為此是我念及我弟買房子送給我住之情” (at p.2); and

(i)  In a Chinese handwritten amended counterclaim dated 13 November 2003 by D1 and D2, they stated the following: “我弟說：‘反正房子送我住一輩子，請放心。’ ” (at p.3)。

53.  D1 has been cross-examined as to some of the documents above, including in particular references to CH Chong and P1 purchasing the Property for D1 to live, and he responded by saying that, in his understanding, purchasing a flat for him (買房子給我)  and purchasing a flat for him to live (買房子給我住)  are the same thing, although he now realises the difference after being questioned by Mr Poon.  D1 further claimed that he could not recall saying that the Property was for him to live there for a long term (長期居住)  due to a long lapse of time, and explained that he initially sought a relief for his family to live in the Property until being allotted public housing as he did not have lawyers then and was ignorant of the law.

54.  In my view, there is indeed inconsistency in D1’s position.  Whilst I accept that a layman may not have full or proper knowledge of the law, one cannot hide behind such pretext when it comes to what precisely was the oral agreement (if any)  allegedly entered into by the parties.  There is an obvious difference between being offered a flat for D1’s family to live in (whether for a long term or for life), and being gifted the title or ownership of a flat.  The former is a licence, whilst the latter is a gift of property.  These are concepts which a layman could fairly understand. 

55.  Importantly, in his Affirmation dated 28 October 1998, D1 surely understood such difference, because he drew a distinction between (i)  CH Chong and P1’s promise to purchase the Property for D1’s family to live in the Property for the duration of D1’s life (購入上址單位只答應給我家人長期居住到我一輩子), i.e. a claim of licence; and (ii)  D1’s claim that he had one-fifth title in the Property as a result of his contribution to decoration costs (我幫他全面內裝修房子費用八萬多元，等於我佔有上址單位五分之一房產權), i.e. a claim over part of the title or ownership of the Property.  Echoing that, it is significant that D1 did not seek any relief over the title or ownership of the Property at the time, but he only sought a temporary relief for his family to live in the Property until being allotted public housing.

56.  The reality is that, in the affirmations and defences made by D1 (and D2)  initially, D1 merely alleged to be granted a licence (albeit for a long term or for D1’s life)  to live in the Property, and it was only in subsequent documents that D1 started to claim proprietary interest in the Property.  Nevertheless, even in those subsequent instances, D1’s version is far from clear or unequivocal because, whilst D1 did refer to the concept of a gift, he mentioned at the same time that the Property was purchased for him and/or his family to live there (買給我住 / 買給我家人住).

57.  With respect, had the Mutual Promise been made and had D1 been promised a gift of the Property as alleged, he would have no difficulty putting forward such stance and refusing to vacate the Property on a permanent basis at the outset, instead of claiming a right to live in the Property on a long-term basis or for life, and merely asking for indulgence to stay until being allotted public housing.  Therefore, the inconsistency identified above militates against the credibility of D1’s case. This is not only because D1’s case is inconsistent, but also because D1’s case has evolved and changed materially over time, which suggests that D1 tends to tailor his case as time goes by to substantiate his claim over the Property.

58.  Further or alternatively, even putting aside the foregoing, the evolution of D1’s case suggests that, even assuming that an oral agreement were indeed reached as between CH Chong and D1, the terms of such oral agreement are not the same as the terms now pleaded by D1 under the Mutual Promise.  Instead, it would appear that, at the most, all that D1 was promised is that CH Chong and P1 would purchase the Property for D1’s family to live there during the duration of D1’s lifetime, i.e. a licence. The initial stance of D1 (and D2)  is critical (if not fatal)  to D1’s case.  Whilst it may be argued that D1’s subsequent stance is clearer, it appears to me that the Court should attach more weight to D1’s initial stance (right in 1998)  which is against his own interest, as opposed to D1’s subsequent stance in this litigation (which may be said to be self-serving).  The consequence is that D1 was at most given a licence; alternatively any oral agreement is not unequivocal, as it is not even D1’s initial stance that the objective effect of such oral agreement, or his subjective understanding of the same, is to confer the title or ownership of the Property on D1.  As such, D1 could hardly rely on it as the basis of his claims of CICT or proprietary estoppel.

59.  In this regard, I also take note of Mr Poon’s further submissions that, when questioned as to whether D1 thought he had the rights to let and sell the Property, D1 could not confirm positively and said it was for the Court to decide.  To some extent, this reinforces my observations above that D1 had difficulty demonstrating the objective effect or his subjective understanding of any oral agreement allegedly entered into with CH Chong, although as a matter of fairness, it may be suggested that D1’s answer is open to a different interpretation – D1 could have meant that whether he has the rights to let and sell the Property would turn on the outcome of this litigation which is for the Court to decide.

60.  Pausing here, as I would elaborate further below, the above also has a bearing on D1’s alternative case of adverse possession.  In short, D1’s stance amounts to an acknowledgment that he was granted a licence by CH Chong and P1 to live in the Property during his lifetime, which is indeed fatal to a claim of adverse possession.

61.  Sixthly, D1 claims that he incurred monetary loss and expense in the total sum of HK$316,000, comprising (a)  initial deposit for the Property in the sum of HK$6,000, (b)  living and medical expenses of the Father in the sum of about HK$20,000, (c)  funeral and burial costs of the Father in the sum of about HK$170,000, (d)  decoration and furnishing costs of the Property in the sum of about HK$80,000; and (e)  value of the abandoned Wooden Hut in the sum of about HK$40,000.  The apparent effect of such assertion is to convey the impression that D1 has incurred a very substantial amount of money, which is comparable to the full purchase price of the Property in the sum of HK$385,440, so as to answer any criticism that the terms of the alleged Mutual Promise are disproportionate.  Putting aside the fact that the Court should not consider this with the benefit of hindsight, it is again a bit surprising that D1 is unable to proffer any documentary evidence in support.  Whilst I fully appreciate that the events took place a long time ago, if as alleged D1 did promise to pay for all these expenses in exchange for ownership of the Property, one would naturally expect D1 to keep the records of payment as proof that he had duly performed the Mutual Promise, in case there may be dispute in future.

62.  The failure by D1 to produce any documentary evidence in support is exacerbated by the contrary evidence given by Madam Ng (at §15 of her witness statement)  that CH Chong and herself had prepared a sum of money which was more than $10,000 Singapore dollars for the Father’s trip from Singapore to China (via Hong Kong)  in 1984.  There is nothing concrete from D1 (other than D1’s oral evidence, which may well be self-serving)  to refute the account given by Madam Ng.  Indeed, given the fact that the Father had been living with CH Chong and Madam Ng for a long time in Singapore and they were responsible for everything for the Father, Madam Ng’s version has the ring of truth.

63.  Moreover, I note that under D1’s case, he was not supposed to pay for the initial deposit of HK$6,000.  Instead, such sum should be paid or reimbursed by CH Chong.  Whilst there is no direct evidence as to who paid the said HK$6,000, the fact that D1 claims to have paid such sum seems to militate against his case of the Mutual Promise too.

64.  Seventhly, D1 claims that CH Chong gave him a long-distance phone call on 3 January 2000, telling D1 that CH Chong did not issue the writ or seek to recover the Property, and it was Madam Ng who unilaterally commenced the present proceedings in Hong Kong in CH Chong’s name without his consent.  Moreover, D2 also made such allegation in his witness statement.  In my view, such allegation is incredible and would, in turn, undermine the credibility of D1 and D2.

(a)  It would be rather extraordinary for a solicitors’ firm to issue a Writ on behalf of both CH Chong and P1 without having obtained a retainer and instructions from both of them.

(b)  In line with the above, it is P1’s evidence that CH Chong decided to sue D1 and therefore gave her the authorization letter to instruct lawyers on his behalf.

(c)  D1’s claim was only made after CH Chong had passed away in 2002.  Caution should be exercised given that D1 is making an allegation against a person who had passed away and hence not in a position to refute or respond to the same.

(d)  Whilst it is not possible for CH Chong to respond to such allegation, there is circumstantial evidence militating against D1’s allegation.  It is an indisputable fact that, on 2 May 2002 (shortly before CH Chong passed away on 26 June 2002), CH Chong and Madam Ng assigned (by way of gift)  the Property to P2.  If, as alleged, it was never CH Chong’s intention to recover the Property from D1 because there was indeed the Mutual Promise, then CH Chong would not have taken the trouble to assign the Property (and therefore the standing to continue the present proceedings against D1)  to his son P2.

(e)  In line with the above, it is P2’s evidence that, when he was assigned the Property in 2002, CH Chong specifically told him to get the Property back from D1.

65.  Eighthly, as mentioned in Section E above, it would appear from D2’s witness statement that he was not privy to the making of the alleged Mutual Promise, and he merely sought to recount D1’s case in his witness statement.  Nevertheless, during cross-examination, D2 suggested for the first time that there was an occasion when his grandfather (i.e. the Father)  called and asked D1 for money, after which D1 called CH Chong saying that the Father asked for the money.  D2 further claimed that D1 told him afterwards that CH Chong told D1 that CH Chong would purchase a property for him.  D2 also added that during the time when he was at the Wooden Hut at the age of 16 to 17 in 1983, CH Chong and P1 also visited them and asked D2 (in the presence of D1)  if he was happy if they purchased a flat for them.  Yet, when asked why he did not mention all these in his witness statement, D2 merely said there are too many things and he omitted to mention them.  In my view, if what D2 said were the truth, it is rather extraordinary that he mentioned none of them in his witness statement.  He was unable to offer any credible explanation as to why he did not mention them in his witness statement.  It is not an excuse to suggest that there are many things and he simply omitted to mention them.  The Mutual Promise is the crux of D1’s case, and D2 ought to have realised the importance of his evidence at the outset.  His failure to mention them in his witness statement tends to undermine D2’s credibility.

66.  Ninthly, it is Madam Ng’s evidence that after the purchase of the Property and in around 1984, the Father was diagnosed with cancer in the terminal stage and, at that time, he indicated that after his death, he wished to be buried in Mainland China with the Mother and he therefore decided to go back to Mainland China.  Madam Ng is adamant that CH Chong and herself were not aware that the Father was terminally ill when the Property was purchased in 1983.  In this regard, neither side has provided any documentary evidence to demonstrate the time when the Father was diagnosed with cancer.  Nevertheless, it may be said that given that it is up to D1 to prove the Mutual Promise, the onus is on D1 to prove that the Father was already diagnosed with cancer in mid-August 1983 when the Mutual Promise was allegedly entered into.  Moreover, on D1’s case, the Mutual Promise was entered into in mid-August 1983, more than 1 year before the Father’s death on 26 August 1984.  It seems rather extraordinary that the Father would have survived over 1 year, if he was indeed diagnosed with terminal cancer by mid-August 1983.

67.  Tenthly, it is P2’s evidence (at §9 of his witness statement)  that P2 had a discussion with D1 and D2 about the Property in about May 2002 in which D1 suggested to sell the Property and share half of the proceeds.  Upon being cross-examined, D1 suggested that there was no such discussion or meeting.

68.  Although there is no documentary evidence of such meeting, it is notable that, in a Chinese handwritten defence dated 13 November 2003 by D1, it was stated by D1 (at §13)  that D1 suggested to P2 last year (i.e. in 2002)  to sell the Property and share half of the proceeds because P2 told him that CH Chong was seriously ill and needed money for medical treatment.  Such document appears to affirm P2’s version (and undermine D1’s testimony)  that there was indeed a discussion between D1 and P2 during which D1 suggested selling the Property and sharing half of the proceeds.  This also militates against the credibility of D1.

69.  All in all, the totality of evidence militates against D1’s case of the alleged Mutual Promise.

F2.  The Arrangement

70.  Having dealt with the Mutual Promise, I now turn to deal with P2’s case of the Arrangement.  In my view, having regard to the evidence, it does not appear to me that P2 can establish the Arrangement on a balance of probabilities.  For the avoidance of doubt and as explained earlier, this does not mean that the Mutual Promise must have been entered into (equally, even though I am not convinced that the Mutual Promise was entered into, that does not mean that the Arrangement must have been entered into).  Indeed, for the reasons I have set out in Section F1 above, I am of the view that the Mutual Promise was not entered into.

71.  First of all, the Arrangement was not pleaded by CH Chong and P1 at the outset.  In the original Statement of Claim dated 4 September 1998 which was included in the Writ of the same date, it was pleaded that CH Chong and P1 purchased the Property for the sole purpose of investment.  It was further pleaded that sometime in January 1984, they orally permitted D1 and D2 to occupy the Property but on 12 May 1994, they informed D1 and D2 that they would determine the said licence for the reason that they intended to sell the Property.  Other than the above, there was no plea of the Arrangement.  This casts doubt on the credibility of the alleged Arrangement.

72.  Secondly, according to the terms of the alleged Arrangement pleaded in §2 of the RASC, CH Chong and P1 entrusted the control and possession of the Property to D1 so as to facilitate the management of the Property and searching for potential tenant.  As pleaded further at §2A of the RASC, a licence was granted to D1 to possess and control the Property for carrying out the Arrangement (i.e. the 1^st Licence). However, the reality is that, ever since the Property was purchased in October 1983, it was occupied by D1’s family without any attempt to rent out or market the Property for sale.  The suggestion that CH Chong and P1 nevertheless tolerated the inaction (or indeed breach)  on the part of D1 for 15 years and only issued a Writ in 1998 is rather extraordinary and incredible.

73.  Madam Ng has not been able to provide any satisfactory explanation as to why CH Chong and herself tolerated D1’s breach for such a long period.  In §12 of her witness statement, Madam Ng attempts to explain this by reference to their busy business in Singapore, the relatively insignificant rental vale of the Property, the distance between Hong Kong and Singapore, and that in early 1980s it was not easy to keep in close touch internationally.  In my view, they are not convincing explanation of the inaction on the part of CH Chong and P1 for such a long time.

74.  Thirdly, it is P2’s case as pleaded in §3 of the RASC that, sometime in January 1984, CH Chong and P1 received an oral proposal from D1 to let D1’s family stay in the Property instead of renting out the Property for income, but they refused and insisted on the Arrangement.  It is further pleaded that no tenant has been arranged by D1 and, instead, D1 allowed himself and his family including D2 to occupy the Property for their own benefits in breach of the 1^st Licence, and yet CH Chong and P1 simply tolerated such breach for over 10 years, until they decided not to tolerate further as they intended to sell the Property and informed D1 and D2 of the determination of the 1^st Licence on 12 May 1994.  

75.  In my view, the suggestion that CH Chong and P1 tolerated the breach for 10 years is, again, rather incredible.  If CH Chong and P1 had already refused D1’s oral proposal in January 1984 and yet D1 nevertheless went ahead in breach of the Arrangement and the 1^st Licence, there is little reason why CH Chong and P1 would simply do nothing and tolerate such breach for such a long time.  Indeed, if the Arrangement was entered into and the true intent of CH Chong and P1 was to rent out the Property for income, there is little reason why they did not revoke the Arrangement, ask for return of the keys and demand D1’s family to move out in 1984, after which they can simply entrust an estate agent to rent out or market the Property for sale.

76.  Fourthly, it is Madam Ng’s evidence that CH Chong and herself intended to do investment in Hong Kong in around 1982 to 1983, and D1 introduced to them a toy factory and they went to Hong Kong to visit the same, but abandoned such idea as they felt that it would be difficult for them to maintain close management and control over a manufacturing business in Hong Kong remotely.  However, Madam Ng has not provided any documentary support of such trip to Hong Kong or the visit to the toy factory (such as name cards or photos).  Indeed, if there were concern over the difficulty of maintaining close management and control such that CH Chong and P1 decided to invest in the property market instead, it seems inexplicable why CH Chong and P1 did not see fit to maintain close management and control by entrusting estate agent to deal with the Property, or to revoke the Arrangement with D1 when they realise they could not maintain close management and control of the Property via D1.

77.  Fifthly, as submitted by Mr Chong, P1 confirmed under cross-examination that neither CH Chong nor P1 sought to have a set of spare keys to the Property, which would have facilitated their renting out or selling the same, or would have enabled them to pass such spare keys to an estate agent to follow up.  The fact that they did not do so casts doubts on the credibility of the alleged Arrangement.

78.  Sixthly, the alleged Arrangement is silent as to the arrangement on decoration and furnishing of the Property, and yet it is not disputed that D1 had incurred some costs in decorating the Property.  If the Arrangement was indeed entered into, it would be strange that the parties did not discuss or apply their mind to the arrangement of decoration and, if so, how the costs are to be paid for.

79.  In the premises, I am not satisfied, on a balance of probabilities, that the Arrangement was entered into.  Nor am I satisfied that the Mutual Promise was entered into.  The evidence does suggest, however, that CH Chong and P1 were aware of the occupation of the Property by D1’s family, and they had also allowed them to stay in the Property until shortly before the issuance of the Writ in 1998 (albeit for different reasons according to the respective cases of P2 and D1). It may well be the case that CH Chong and P1 did intend to purchase the Property for investment purpose, but they were aiming at profit at a sale and not bothering that much about rental income, and somehow allowed and tolerated D1’s stay.  It is however not necessary for me to form any conclusive view as to why CH Chong and P1 allowed D1’s family to stay in the Property.  Suffice it to say that I am not satisfied that they did so pursuant to the alleged Mutual Promise.  Alternatively, if I were wrong and an oral agreement was entered into between CH Chong and D1, it would at most be the grant of a licence along the lines of D1’s initial stance.  In any event, taking into account D1’s previous stance, the terms of any alleged Mutual Promise are far from clear or unequivocal, and it is at least open to a construction that the Property was purchased for D1 and his family to live there during D1’s lifetime.  For the avoidance of doubt, this is never D1’s pleaded case (not even by way of fallback)  and hence, once the Court is not satisfied that D1 has made out his case of the alleged Mutual Promise, that is the end of D1’s case on CICT or proprietary estoppel.

F3.  Conclusion on D1’s claims of CICT or proprietary estoppel

80.  For all these reasons, I am not satisfied that D1 could prove, on a balance of probabilities, that the Mutual Promise was entered into.  Further or alternatively, even assuming that an oral agreement were entered into, D1 was at most granted an oral licence (as suggested by D1 initially in his affirmation back in 1998).  In any case, the terms of any alleged oral agreement or representation are far from clear or unequivocal, and could not give rise to and substantiate D1’s claims of CICT or proprietary estoppel.  D1 therefore fails in such counterclaim.

F4.  D1’s alternative claim of adverse possession

81.  Based on the evidence, there is no dispute that D1 and his family have been in factual possession of the Property since late 1983 until the present.  It is also not in dispute that, notwithstanding the institution of these proceedings by CH Chong (substituted later by P2)  and P1 in 1998, the period of limitation would not stop from running as Ps’ claim was subsequently struck out.  On the face of it, it seems open to D1 to make a claim of adverse possession, subject of course to establishing the requisite intention to possess or animus possidendi.

82.  As mentioned before, P2 opposes D1’s claim of adverse possession on two major grounds.  I will deal with them in turn.

83.  In relation to the first ground, P2 contends that, by the doctrine of relation back, D1’s claim should be adjudicated by reference to the date of the writ, i.e., 4 September 1998.  As such, D1’s claim is bound to fail because the period of possession up to 1998 falls short of the requisite limitation period.  On behalf of P2, Mr Poon relies on the Court of Appeal’s decision in Wing Siu Co Ltd v Goldquest International Ltd [2003] 2 HKC 64 at [10], [17].  In essence, he argues that D1’s claim of adverse possession is incurably bad because the cause of action did not exist at the date of the original claim on 4 September 1998.

84.  On behalf of D1, Mr Chong disagrees with such submissions.  He stresses that D1’s adverse possession claim is not an action to recover land, as D1 has all along been in exclusive physical possession of the Property.  He submits that the running of limitation period does not stop so long as D1 is in continuous and exclusive physical adverse possession of the Property, and there is no basis to say that D1’s claim for a possessory title to the Property is restricted to or adjudicated at 4 September 1998 (date of the Writ), because a declaration by the Court of D1’s acquisition of a possessory title of the Property is an adjudication of the state of affairs as at the time of adjudication.  He further submits that a declaratory judgment does not provide for any enforcement or order a party to take any action or pay damages, and the rule of relation back has no direct application to a declaratory judgment; indeed the jurisdiction of the Court to make a declaration of right is wide and flexible.

85.  However, Mr Chong has not cited any direct authority in support of his proposition that the doctrine of relation back has no application to a claim for a possessory title.  With respect, I am unable to accept his submissions.  In my view, whilst D1 is seeking a declaration that he has acquired a possessory title of the Property, this remains a cause of action advanced on behalf of D1 in this litigation.  The essence of D1’s cause of action is that, as at the date of making his claim (which is deemed to be the date of the Writ in 1998 by reason of the doctrine of relation back):- (i)  the right of action of CH Chong and Ps to recover possession of the Property is time-barred under s. 7(2)  of the LO, and (ii)  the title of CH Chong and Ps to the Property shall be extinguished under s. 17 of the LO.  Therefore, the relief sought by D1 (if granted)  does carry legal consequence within the meaning of the LO.

86.  In Grand Wayfair Investment Co Ltd v Chan Yung Kan and Others,CACV 238/2013 (unreported, 26 September 2014), which Mr Chong relies on, Lam VP (as he then was)  has explained the effect of an unenforced default judgment (which should apply similarly to a struck-out claim for possession by analogy)  at [26]-[29]:

“26. On the contention that the 1993 judgment, even without any execution or actual eviction of the 2^nd Defendant from the Land, has the legal effect of breaking the continuity in possession by the latter, Mr Chan was not able to cite any authority to support such a proposition. Analysing it as a matter of principle with the limited assistance we have from counsel, we cannot agree, as presently advised, that the mere entry of judgment has such an effect as a matter of law. As highlighted by the Chief Justice in Wong Tak-yue v Kung Kwok Wai (1997-98)  1 HKCFAR at p 68, a person claiming to be in adverse possession has to establish two elements, (a)  possession; and (b)  requisite intention to possess. See also the discussions in Powell v McFarlane (1977)  38 P&CR 452 and Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5)  [2007] 5 HKC 122 at paras 60 to 92. For a squatter who remains in occupation after a judgment has been entered against him, the quality of his factual possession and his intention to possess would not change. No doubt, his possession (and thus his possessory title to the land)  is precarious and he could be evicted if the plaintiff seeks to enforce the judgment by a writ of possession. But in terms of the quality of possession, there is no material difference from his possession before the judgment, which is equally defeasible by the superior title of the registered owner. Neither can we see any difference in terms of the intention to possess on the part of the squatter stemming from the entry of the judgment.

27. The question of continuity of possession should not be confused with the question of enforceability of a judgment of possession. For the latter purpose, normally time stops to run after the writ has been issued. Thus, a plaintiff needs not worry about the accumulation of time after he has issued a writ. And that must equally be applicable to a plaintiff who has obtained a judgment for possession. The time limit for enforcement of that judgment is 12 years, see s 4(4)  of the Limitation Ordinance, Lougher v Donovan [1948] 2 All ER 11 and Re Li Man Hoo [2013] 4 HKLRD 247.

28. But this does not mean that there is a break of continuity of possession by the defendant in the absence of any actual effective enforcement of the judgment. First, in respect of people other than the plaintiff who has issued the writ (and a plaintiff who has sought to enforce a judgment obtained pursuant to that writ), the defendant is entitled to rely on his possessory title as much as before. Thus, in a case where there is a third person who (for some reason having a superior title to the plaintiff)  did not sue for possession at the same time as the plaintiff, he cannot rely on the judgment obtained by the plaintiff to break the continuity of possession by the defendant in a future claim for possession.

29.  Second, if for some reason the plaintiff could not enforce the judgment, like the present instance where there has been a lapse of more than 12 years since the date of judgment, the defendant is entitled to the accumulated period of possession in a fresh action by the same plaintiff notwithstanding the entry of the earlier judgment which has since become ineffective.  To hold otherwise would be inconsistent with the limitation on enforcement of judgment under s 4(4).” [emphasis added]

87.  Therefore, the timing of the bringing of proceedings is of critical importance.  If a paper title owner has issued a writ within time, he needs not worry about the accumulation of time after he has issued a writ, and that must equally be applicable to a plaintiff who has obtained a judgment for possession.  That is apparently the result of the application of the doctrine of relation back.  However, if for some reason, the plaintiff could not enforce the judgment, “the defendant is entitled to the accumulated period of possession in a fresh action by the same plaintiff notwithstanding the entry of the earlier judgment which has since become ineffective”.  It would appear that the same should be equally applicable to a squatter’s claim for a possessory title.  Assuming that a paper title owner has failed to enforce a judgment for possession or, like the present instance, his claim for possession is struck out, the squatter is entitled to claim a possessory title based on the accumulated period of possession in a fresh action commenced by the paper title owner.  Logically, the squatter should also be entitled to claim the same in a fresh action commenced by the squatter.  The issues as to whether the squatter is indeed entitled to the accumulated period of possession and whether the squatter has established the essential elements of adverse possession during such accumulated period are properly matters to be ventilated and determined in a fresh action brought either by the paper title owner or the squatter (or both).  Indeed, the same facts are often relied upon by a squatter, both as a defence to such action brought by the paper title owner, and as a counterclaim against the same paper title owner.

88.  Further, there are also considerations of fairness which tilt in favour of the above approach.  In a usual action where the paper title owner claims recovery of land and a squatter counterclaims a possessory title, there is no dispute that such claims are to be determined as at the date of the writ.  This would rightly be the focus of the pleadings, discovery of documents and the exchange of witness statements. If, at any stage during the proceedings, the paper title owner’s claim is struck out or dismissed, and the effect is that the squatter may rely on post-writ conduct in his counterclaim, then there is a plain risk that the relevant issue and evidence pertaining to such post-writ conduct are not properly articulated and adduced in the existing action.  To allow the squatter to pursue such an expanded scope of claim could result in unfairness. Indeed, in the present case, the latest amended pleadings were filed in 2016, and the witness statements were made between August 2017 to February 2018, prior to the dismissal or striking out of Ps’ claim (since July 2018).  Hence, the concern of unfairness is a real one.

89.  For these reasons, I accept Mr Poon’s submissions that D1’s counterclaim is bound to fail.

90.  Turning to the second ground, as mentioned above, Mr Poon submits that D1 did not have the requisite intention to possess or animus possidendi.  A crucial aspect of the argument turns on the effect or implications of D1 making a claim based on the alleged Mutual Promise.  On behalf of P2, Mr Poon submits that D1’s primary case under the alleged Mutual Promise is based on the promise or the permission of CH Chong as D1 alleges, and such possession would be incompatible with the required possession being an adverse one.  He relies on the dicta of Cheung JA in Cheung Lai Mui at [6.64]-[6.66]:

“6.64 The Judge had also made an alternative finding that the 3^rd defendant is the beneficial owner of the Disputed Land by reason of adverse possession. This is challenged by Ms Eu who submitted that it is trite law that possession cannot be adverse unless it is without the licence or consent of the registered owner: see Hong Kong Kam Lan Koon Ltd v Realray Investment Ltd (No 5)  [2007] 5 HKC 122 at [65]. Further, the burden of proving the lack of licence or consent rests with the squatter who must discharge his burden by adducing compelling evidence: Wu Yee Pak v Un Fong Leung (2004)  7 HKCFAR 498 at [5]. In the present case, a finding of adverse possession is factually inconsistent with a case based on common intention constructive trust, proprietary estoppel and estoppel by standing by where possession of land was not adverse to the registered owners but by virtue of a promise of a gift, licence and permission by the registered owners. This is factually inconsistent with the 3^rd defendant’s case as to the Common Understanding and detrimental reliance.

6.65 Mr Wong’s response is that the defendants’ claim for adverse possession is an alternative claim and the Judge’s decision is also an alternative finding only.

6.66 In my view, one may ask alternative to what? If, as the Judge had found, the Common Understanding existed, then the 3^rd defendant’s entry to the Disputed Land must be with the consent of the three brothers and not adverse to their interest. This is so notwithstanding the possibility that the defendants may not be able to establish the common intention constructive trust, proprietary estoppel and estoppel by silence. In my view the finding of adverse possession is wrong in view of the finding of the Common Understanding in the 3^rd defendant’s favour.”

91.  Mr Poon further argues that, even if the Court rejects the Mutual Promise, D1’s adverse possession claim would still fail because of the insistence of the Mutual Promise by D1, which shows that his possession was not adverse, or that there was no animus possidendi.  He argues that it does not matter that P2 denies D1’s case of the Mutual Promise, because it is the intention of the squatter (not the paper title owner)  that is essential.  As contended by Mr Poon, the title of land can either be derivative or freshly created (but not both).  In the present case, D1 is not seeking to establish a freshly created title (as in adverse possession)  in his primary case, as he has all along tried to hold CH Chong to the Mutual Promise.  As D1’s intention has all long been to rightfully derive his title from CH Chong, and to become the paper title owner himself, his intention has never been adverse to the paper title owner.

92.  On behalf of D1, Mr Chong disagrees with the above submissions.  He submits that, regardless of whether at the end of the day D1 is held to be the beneficial owner of the Property under the Mutual Promise, D1 would not be precluded from invoking adverse possession because of the simple fact that D1’s possession of the Property is “adverse” to the title and interest of the paper owners.  He relies on the dicta of Kwan JA (as she then was)  in the Court of Appeal’s decision in Cheung Kwong Yuen v Sun Hui Fang [2016] 1 HKLRD 464 at [11]-[14] that there was not a principle of law by which a person who mistakenly believes that he has good title or claims to be the lawful tenant or purchaser of property would be precluded from invoking adverse possession:

“11. Whether a squatter could establish factual possession and the requisite intention for the purpose of adverse possession is a question of fact depending on the circumstances of the case. There is no rule of law that these elements cannot be established for a person who mistakenly believes that he has good title or that he is a lawful tenant and does not realise he is trespassing on another’s land. As stated by Lord Hope in JA Pye (Oxford)  Holdings Ltd v Graham [2000] Ch 676 at §69, the use of the term “adverse” in this context is a convenient label only, in recognition simply of the fact that the possession is adverse to the interests of the paper owner. The right of action of the paper owner is treated as accruing as soon as the land is in the possession of some other person in whose favour the limitation period can run. In that sense, and for that purpose, the other person’s possession is adverse to his. But the question whether that other person is in fact in possession of the land is a separate question on which the word “adverse” casts no light.

12. Ms Pauline Leung, counsel for the registered owner, accepted on appeal that there is no principle of law by which a person who mistakenly claims to be the lawful tenant or purchaser would be precluded from invoking adverse possession and that the correct position is as stated by Saville LJ in Hughes v Cork [1994] EGCS 25:

‘The learned judge appears to have held that it is impossible for someone who believes himself to be the true owner to acquire title by adverse possession since such a person cannot, ex-hypothesi, have an intention to exclude or oust the true owner. If this were the law then only those who knew they were trespassing, that is to say doing something illegal, could acquire such a title, while those who did not realise that they were doing anything wrong would acquire no rights at all. I can see no reason why, as a matter of justice or common sense, the former but not the latter should be able to acquire title in this way. What the law requires is factual possession i.e. an exclusive dealing with the land as an occupying owner might be expected to deal with it, together with a manifested intention to treat the land as belonging to the possessor to the exclusion of everyone else.

Obviously if the possessor knows or believes someone else has the paper title to the land he must intend to exclude that person along with everyone else. But in the absence of such knowledge or belief it is in my judgment sufficient for this part of the second requirement simply to establish a manifest intention to exclude everyone.’

13. The law as stated in Hughes v Cork has been applied in a number of cases of first instance in Hong Kong (Wong Luen Chun & Anr v Secretary for Justice [1998] 4 HKC 122 at 129C to I; Tsun Wai Man, the sole executor of the estate of Tsang Kam Chuen v Cheung Yung & Ors, HCA 14202/1999, 9 August 2001, at §§38 to 39; Wong Kar Sue v Sun Hung Kai Properties Ltd & Anr, HCMP 1326/2005, 17 February 2006, at §6;Lau Kam Tai v Dao Kin Ming, HCA 913/2010, 13 March 2014, at §51 to 53; Yu Fung Co Ltd v Olympic City Properties Ltd & Anr, HCMP 1084/2008, 30 July 2015, at §§63 to 74).

14.  Insofar as Member Pang has held that there is a principle of law by which a person who mistakenly claims to be the lawful tenant or purchaser would be precluded from invoking adverse possession, he is wrong in law.”

93.  Moreover, Mr Chong seeks to distinguish Cheung Lai Mui on the basis that, in that case, there was finding that the use and occupation of the disputed land by the 3^rd defendant was with the permission of the legal owners.

94.  That said, putting aside the facts of the case, on the face of it, there is indeed apparent inconsistency in the reasoning of the two Court of Appeal’s decisions.  On the one hand, in Cheung Lai Mui, Cheung JA was of the view that a case of adverse possession is factually inconsistent with a case based on CICT and proprietary estoppel where possession of land was not adverse to the registered owners but by virtue of a promise of a gift, licence and permission by the registered owners.  On the other hand, in Cheung Kwong Yuen, Kwan JA (as she then was)  held that there is no principle of law that it is impossible for someone who believes himself to be the true owner to acquire title by adverse possession.  As a matter of logic, this would seem to apply to a person who mistakenly believes himself to be the true or beneficial owner of a property by reason of gift of property and invoking CICT or proprietary estoppel.

95.  In my view, despite the apparent inconsistency, the two decisions may be reconciled to some extent, although much would depend on the specific facts of a case.  For instance, if the thrust of a claim of CICT or proprietary estoppel is based on the promise of a licence or permission to stay in a property permanently, then this is unlikely to be compatible with an intention to possess.  In contrast, if the claim of CICT or proprietary estoppel goes so far to suggest that the paper title owner has made an outright gift and retains no beneficial interest in the property at all, there is apparently no reason why the claimant cannot make an alternative claim of adverse possession.  Since the claimant believes himself to be the true or beneficial owner to the exclusion of the paper title owner (who holds the property on trust), logically the claimant can still contend on the one hand that the title of the property should be transferred to the claimant under a claim of CICT or proprietary estoppel, whilst advancing an alternative claim of adverse possession on the basis that he has exerted factual possession of a property as an occupying owner might be expected to deal with it, together with a manifested intention to treat the land as belonging to the possessor to the exclusion of everyone else (and also the paper title owner who, on the claimant’s case, retains no beneficial interest).

96.  My view is reinforced by two other decisions relied on by Mr Chong, namely Pang Yiu Chor v Wong Wai Leung [2017] 4 HKLRD 761 and Ng Yuk Pui Kelly v Dung Wai Man[2019] HKCFI 210.  In the first case, the Government mistakenly believed itself to be the owner of land in Fanling and granted permits to occupy the land to licensees, when such land belonged to the plaintiffs.  An issue in dispute is whether the Government had defeated the plaintiffs’ title by adverse possession.  The plaintiffs contended that the Government had no intention to possess due to its belief that it was the owner of the paper title.  Such argument was rejected by Anthony Chan J who pointed to a number of Hong Kong and English authorities showing that believing oneself to be the true owner does not prevent a squatter from having the intention to possess.  In the latter case, the plaintiff relied on part performance, CICT, proprietary estoppel and adverse possession.  L Chan J held that the plaintiff’s alternative adverse possession claim also succeeded and rejected the defendant’s submissions that the plaintiff’s possession of the flats was with the continuous knowledge and consent of the defendant’s husband, because it is the plaintiff’s belief that the defendant was wrong in not transferring the title of the flats to the plaintiff, and the plaintiff did not occupy the flats under consent or licence (at [477]).

97.  Of course, depending on the facts, it may not be strictly necessary to go into the above in further details in an attempt to reconcile the two decisions of the Court of Appeal in Cheung Lai Mui and Cheung Kwong Yuen.

98.  As I have found in the present case, I am not satisfied that D1 can establish, on a balance of probabilities, that the Mutual Promise was entered into.  Importantly, I have referred to the Chinese handwritten affirmation, defence and counterclaim made by D1 (and D2), where D1 suggested that the Property was purchased for his family to live there.  In particular, in the Chinese handwritten affirmation dated 28 October 1998 by D1, D1’s case then was that CH Chong and P1 promised to purchase the Property for D1’s family to live there for D1’s lifetime:- “而水興夫婦當時購入上址單位只答應給我家人長期居住到我一輩子” (at p.1); “83年水興夫婦來港買樓，並親自到我木屋看過，並答應上址給我住一輩子” (at p.1). Consistent with the foregoing, D1 merely sought a temporary relief for his family to live in the Property until being allotted public housing:- “要求法院對下址單位判給我家人繼續居住到分配公屋為止” (at p.1).  Notably, not only did D1 make no mention of any gift of property, he contended that he had a one-fifth interest in the Property on account of his contribution towards the decoration costs:- “1983年他投資四十萬元購入上址剛入伙，對裝修他要我們住的人出錢，所以我幫他全面內裝修房子費用八萬多元，等於我佔有上址單位五分之一房產權” (at p.1).  In substance, this amounts to an acknowledgment that CH Chong and P1 were the true owner of the Property, subject only to (i)  D1’s claim of a life interest in the Property and (ii)  D1’s allegation to have a one-fifth interest on account of the decoration costs paid by him.

99.  Accordingly, based on D1’s own evidence and statement and unlike the facts in the decisions cited by Mr Chong (such as Ng Yuk Pui Kelly), D1 merely claimed a life interest in the Property, or a licence to occupy the Property during his lifetime.  Far from excluding the paper title owners, D1 was seeking to derive his interest (as a licensee for life)  from them, with their consent or licence. 

100.  Given such factual findings, it is not strictly necessary to reconcile the two Court of Appeal’s decisions in Cheung Lai Mui and Cheung Kwong Yuen.  Instead, the following principles, as authoritatively laid down by the Court of Final Appeal in Wong Tak Yue v Kung Kwok Wai (1997-98)  1 HKCFAR 55 at 69A-F per Li CJ, 70D-G per Litton PJ and 71E, are pertinent:

(a)  It is trite that the Court has to approach the self-serving statements made by the squatter with circumspection, but would give considerable weight to the statements made by him which are against his interest.

(b)  There is no better evidence of the intention of a squatter of land than his express declaration against his own interest.

(c)  For instance, a statement by the squatter that at all times he was ready willing and able to pay rent to the owners, and did not do so only because no one came along on behalf of the landlords to collect rent, is incompatible with and fatal to the squatter’s claim of adverse possession.

101.  In a similar vein, the Court should accord considerable weight to a statement made by D1 which is against his interest, namely that he regarded his occupation of the Property as being attributable to a promise or a licence by CH Chong and P1 for D1 and his family to live in the Property for D1’s lifetime, and hence not “adverse” to the interest of CH Chong and P1 as paper title owners.  It follows that D1 fails to prove his intention to possess or animus possidendi.

102.  For completeness, Mr Poon also relies on other statements and conduct of D1, namely that:

(a)  D1 repeatedly stated in his various documents filed with the Court that he entered the Property pursuant to the authorization of CH Chong and P1.  D1 even stated that he was still keeping the relevant authorization letter which was handed over to the management office for gaining access of the Property.  On such basis, Mr Poon contends that D1 cannot deny that he was authorised by CH Chong and P1 to access the Property, which negates any requisite intention to possess.

(b)  D1 agreed under re-examination that P1 brought a friend to the Property to have a look there in December 1997 and expressed her intention to sell the Property.  This incident was also mentioned in P1’s witness statement at §22.  Mr Poon contends that, if D1 had dispossessed CH Chong and P1, there would be no reason for him to allow P1 to pay a visit there.

103.  I agree with Mr Chong’s submissions that the above, on their own, do not necessarily negate any intention to possess on D1’s part.  Insofar as the authorization letter is concerned, this shows how D1 managed to enter into possession of the Property in October 1983, which is a matter of course as D1 was not the paper title owner. If, after gaining entry to the Property, D1 continued to possess the Property as his home excluding from it the whole world at large including the paper title owners, there is no reason why D1 cannot establish animus possidendi in an appropriate case.

104.  Equally, I do not think that much can be made out of the incident where D1 allowed P1 to pay a visit to the Property in 1997.  Indeed, as submitted by Mr Chong, this begs the question as to why P1 had to seek permission from D1 for paying the visit to the Property.  It does not, therefore, negate D1’s alleged intention to possess.

105.  That said, I consider the above two aspects to be consistent and compatible with my finding that D1 regarded his occupation of the Property as being attributable to a promise or a licence by CH Chong and P1 for D1 and his family to live in the Property for D1’s lifetime, and hence not “adverse” to the interest of CH Chong and P1 as paper title owners.

G.  CONCLUSION

106.  For the above reasons, I dismiss D1’s counterclaim.

107.  I also make a costs order nisi that the costs of these proceedings be paid by D1 to P2, with certificate for counsel, to be taxed if not agreed; and that P2’s own costs be taxed in accordance with Legal Aid Regulations.

108.  It remains for this Court to thank Mr Poon for P2 and Mr Chong for D1 for their submissions and assistance rendered to the Court.

Mr Kevin Poon, instructed by Tsang, Chan & Woo Solicitors & Notaries, for the 2^nd Plaintiff

Mr Matthew CS Chong, instructed by Charles Chan & Co, for the 1^st Defendant

HCA 15070/1998

[2022] HKCFI 910

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 15070 OF 1998

__________________________

BETWEEN

__________________________

__________________________

R U L I N G

__________________________

1.  For the background of the matters leading to this Ruling, I refer to the two Decisions of Deputy Judge MK Liu of 8 March 2021[1] (the “March Decision”) and 24 June 2021[2] (the “June Decision”).

2.  I summarise the core background facts as follows:

(a) This action concerns a property known as Flat 5 on the 8^th Floor of Block G, Luk Yeung Sun Chuen, Nos. 22-66 Wai Tsuen Road, Tsuen Wan, NT, Hong Kong (“the Property”);

(b) The original plaintiffs in this action were Chong Chween Hin (“Chong”) and Ng Sew Hoi (“P1”). Ernest Chong Kian (“P2”) is their son. Chong and P1 were the registered owners of the Property. In 2002, they assigned the Property to P2. After the death of Chong, and with leave, P2 became the 2^nd plaintiff in substitution of Chong;

(c) Ps’ case is that the 1^st defendant (“D1”) and his family have been in wrongful occupation of the Property. D1’s case is that he is the sole beneficial owner of the Property, and is entitled to occupy the same. Alternatively, he relies on the doctrine of adverse possession. On those bases, he has raised a counterclaim against Ps;

(d) On 13 June 2018, upon D1’s application, Master Hui ordered P1 to give security for costs, in the absence of which P1’s claim against D1 be dismissed, and her reply and defence to D1’s counterclaim be struck out (the “Security Order”);

(e) P1 failed to comply with the Security Order;

(f) On 25 July 2018, P1 and P2 failed to attend the Case Management Conference. Pursuant to Order 25 Rule 1(C), Registrar Lung ordered that the plaintiffs’ claim be provisionally struck out (the “Provisional Struck Out Order”);

(g) There has not been any application from either of the Ps to have their claim restored;

(h) P1 subsequently in November 2020 sought to appeal against the Security Order out of time;

(i) For reasons set out in the March Decision, Deputy Judge Liu refused P1 leave to appeal out of time, and also dismissed P1’s appeal. He further directed that if P2 was to act in person in these proceedings, he should file and serve a Notice to Act in Person with a Hong Kong address stated therein (“the Required NAP”) as soon as practicable;

(j) P2 has not filed the Required NAP. Nor has any solicitor been retained to act for him;

(k) On 26 April 2021, the learned Deputy Judge made an order that unless P2 do file and serve a notice to act by the solicitors retained by him and acting for him in these proceedings, or the Required NAP within 28 days, his claim in these proceedings be struck out with costs without a further order (“the Unless Order”). The learned Deputy Judge further directed that there be a hearing for directions on the further conduct of the case on 24 June 2021;

(l) P2 subsequently wrote to the learned Deputy Judge and requested that he be allowed to give his Singapore address in the notice to act in person to be filed by him;

(m) On 30 April 2021, the learned Deputy Judge directed that the Unless Order be stayed, and P2 should attend the hearing for directions on 24 June 2021;

(n) P2 subsequently on 19 May 2021 put in a Notice to Act in Person, but with a Singapore address;

(o) On 30 May 2021, P2 wrote in and sought an adjournment of the direction hearing due to take place on 24 June 2021 by reason of the COVID-19 pandemic;

(p) For reasons set out in the June Decision, the learned Deputy Judge refused P2’s application for adjournment. However, in the interest of fairness, the learned Deputy Judge gave parties an opportunity to argue the issue as to whether P2 may file and serve a notice to act in person with a foreign address. For that purpose, a 2-hour hearing was directed to take place, which was subsequently set down to be heard on 22 November 2021;

(q) On 18 August 2021, P2 wrote in and sought an adjournment of the 22 November 2021 hearing by reason of the pandemic;

(r) On 31 August 2021, I gave direction that the hearing should stand, but that it be disposed of on the papers; and

(s) Between 11 November and 1 December 2021, parties lodged their first round of written submissions.

3.  The main issue now before this Court is whether P2 may file and serve a notice to act in person with a foreign address.

4.  According to the records kept in the court file, P2 was between 18 December 2014 and 22 March 2018 granted Legal Aid. On 22 March 2018, his Legal Aid Certificate was discharged.

5.  Order 64 rules 1 and 4 stipulate that:

“1. Notice of change of solicitor (O. 67, r. 1)

(1) A party to any cause or matter who sues or defends by a solicitor may change his solicitor without an order for that purpose but, unless and until notice of the change is filed and copies of the notice are lodged and served in accordance with this rule, the former solicitor shall, subject to rules 5 and 6, be considered the solicitor of the party until the final conclusion of the cause or matter, whether in the Court of First Instance or the Court of Appeal.

(2) Notice of a change of solicitor must be filed, and a copy thereof lodged in the Registry.

(3) The party giving the notice must serve on every other party to the cause or matter (not being a party in default as to acknowledgment of service) and on the former solicitor a copy of the notice indorsed with a memorandum stating that the notice has been duly filed in the Registry.

(4) The party giving the notice may perform the duties prescribed by this rule in person or by his new solicitor.

4. Notice of intention to act in person (O. 67, r. 4)

Where a party, after having sued or defended by a solicitor, intends and is entitled to act in person, the change may be made without an order for that purpose and rule 1 shall, with the necessary modifications, apply in relation to a notice of intention to act in person as it applies in relation to a notice of change of solicitor except that the notice of intention to act in person must contain an address for service of the party giving it.”

6.  According to the Hong Kong Civil Procedure 2022, Volume 1 §67/4/1:

“The address to be given by the person intending to act in person must be within the jurisdiction; although O.67, r.4 does not explicitly state so, it appears to be [the] case given the interrelationship with this rule and the provisions in O.12, rr.3 and 4: Dianoor International Ltd v. Aiyer Vembu Subramaniam (HCA 806/2008 DHCJ L. Chan, November 19, 2010). See further Questnet Ltd v. Kurt George Rocco Rink (HCA 1475/2006, Chu J., June 15, 2007) and The Owners and/or Demise Charterers of the Ship or Vessel ‘MCC Jakarta’ v. The Owners and/or Demise Charterers of the Ship or Vessel ‘Xin Nan Tai 77’ (HCAJ 48/2011, 30 November 2017, [2017] HKEC 2604).”

7.  In that above-cited paragraph, AXA China Region Insurance Company Limited v Leong Fong Cheng, CACV 113/2016 (unrep., 28 October 2016) is not cited. Nor has Mr Chong, counsel for D1, dealt with it in his submissions.

8.  In AXA, one of the issues which the Court of Appeal considered related to the operation of Order 6 Rule 5(1)(b). That Rule stipulates that:

“(1) Before a writ is issued it must be indorsed—

…

(b) where the plaintiff sues in person, with the address of his place of residence and, if his place of residence is not within the jurisdiction or if he has no place of residence, the address of a place within the jurisdiction at or to which documents for him may be delivered or sent.”

9.  AXA concerned an appellant who had relocated to and resided in Thailand. She acted in person. She had no local address for service. In her Notice of Appeal, she failed to give an address within the jurisdiction at or to which documents for her may be delivered or sent. She failed as a result to comply with Order 6 Rule 5(1)(b)[3]. Lam VP, applying the modern pragmatic approach to service of process, made a general order for substituted service by sending documents to a local fax number provided by the appellant, deemed that as good service, and waived the non-compliance.

10.  As explained in Hong Kong Civil Procedure 2022, Volume 1 §6/5/5:

“… it is possible for the Court to waive the non-compliance of O.6 r.5(1)(b) where the Court considers an order for substituted service more appropriate (AXA China Region Insurance Co Ltd v Leong Fong Cheng [2016] 6 HKC 220, [29]). The Court in AXA China Region Insurance Co Ltd v Leong Fong Cheng [2016] 6 HKC 220 based its decision on the fact that the rationale of O.6 r.5(1)(b) was to ensure that the Court can effectively and efficiently exercise its jurisdiction (at [17]), that documents can be communicated to the party to be served (at [21]); and that the ordered mode of substituted service was not illegal in the country of service (at [25]). It should be noted that the Court in AXA China Region Insurance Co Ltd v Leong Fong Cheng [2016] 6 HKC 220, [40] emphasised that the waiver of O.6 r.5(1)(b) is fact-sensitive and it may not be appropriate in every case for the Court to make an order for substituted service.”

11.  AXA is clearly relevant to the issue which this Court is considering. I therefore directed parties to make submissions on it. On 5 January 2022, Mr Chong filed his further submissions. After some delay and extension, P2 lodged his on 2 March 2022.

12.  In his further submissions, Mr Chong fairly accepts that if this Court thinks fit to accept P2’s reasons for not complying with Order 67 Rule 4, D1 is prepared (1) to accept that the same principle as explained in AXA is equally applicable to the present case, and (2) to agree with P2 that the mode of substituted service shall be by way of facsimile transmission or email. Mr Chong also helpfully informs this Court that to his knowledge, (1) Singapore is not a country subscribing to the Hague Convention on Service Abroad 1965, (2) there is no bilateral arrangement or agreement between Hong Kong and Singapore on service of judicial documents in civil cases, and (3) substituted service of foreign judicial documents by way of facsimile transmission or email is not illegal in Singapore.

13.  In his reply, P2 also urges this Court to adopt the same approach as the Court of Appeal adopted in AXA.

14.  D2’s submissions have added nothing to the issue, as he simply says that he wishes early resolution of the case, and respects whatever decision this Court is to make.

15.  In the present case, P1 has dropped out of picture. There has been no application by P2 to restore after the Provisional Struck Out Order. What remains is D1’s Counterclaim. It is accepted that P2 is ordinarily resident in Singapore. His Legal Aid Certificate has been discharged. He chooses to act in person. That is his right. He says he has no address in Hong Kong for service. There is no reason suggesting otherwise. He has lodged a notice to act in person. He has given his Singaporean address therein. He has on a number of occasion provided an email address to Court (i.e. “sew...com”[4], the “Email Address”). Communication with P2 via that email address has been successful. In all the circumstances, I am not prepared to strictly enforce the Rules and demand P2 to provide a Hong Kong Address. To do so would be forcing him to engage a solicitor when he intends to act in person, or to provide a Hong Kong service address which he does not have. Striking out his Defence to D1’s Counterclaim upon his failure so to do would debar P2 from defending D1’s Counterclaim, and would in my view be unduly harsh. On the facts of this case, I am therefore prepared to waive the non-compliance. I note that all the initiating processes have been served. In the future, one is concerned with service of documents for the further conduct of the case. In the circumstances I am prepared to make a general order for substituted service of such further documents as necessary upon the Email Address, and deem the service good service. I will not order P2’s Rely and Defence to D1’s Counterclaim to be struck out. The Unless Order is a case management order. It has been stayed. I exercise my case management power and direct that it be discharged.

16.  In relation to the general order of substituted service I have ordered, I further note Mr Chong’s submission, with reference to §29 of AXA, that the Court can properly give effect to a mode of service agreed upon by the parties. This is in effect what this Court is seeking to achieve, upon my view that the non-compliance may be excused.

17.  For the further conduct of the matter, Mr Chong seeks, in the event of this Court refusing to strike out P2’s Reply and Defence to D1’s Counterclaim, which this Court has now refused to do, direction of the Court directing P2, D1 and D2 to attend a court hearing before the Listing Master. The purpose of that hearing is for D1 to apply for leave to set D1’s Counterclaim down for trial, so that if the Listing Master is satisfied that the parties are ready for trial, such leave may be so granted.

18.  As Deputy Judge Liu has observed, this case was commenced in 1998, and it is most unfortunate there has not been a final conclusion up till now.

19.  I direct that D1 should within 28 days upon the completion of the current General Adjournment of Proceedings (which is currently set to end on 11 April) take out an application before this Court for leave to set down D1’s Counterclaim for trial. Given the prevailing state of the pandemic, but given at the same time the Government’s ongoing endeavours to modify measures to fight the same, I give D1 liberty, depending on the state of the measures at the time when the application is taken out, to seek directions for the application to be conducted on the papers. In any event, as and when this Court receives the application, this Court will actively exercise its case management powers to decide whether the hearing should be by way of a physical hearing, by paper disposal, or otherwise.

20.  I have considered the various complaints P2 has made in his submissions of 1 December 2021, and the directions which he says as a result become necessary. They include query as to where D2’s counterclaim is (when there has been none), complaint that there was “commingling” of D2’s counterclaim in Mr Chong’s written submissions, demand for D2 to file his submissions, complaint about the state of D1’s pleadings after leave by Deputy Judge Liu for D1’s Counterclaim against P1 be withdrawn, request for leave to use his address in Singapore, and for leave to appeal against various orders. They variably lack legal basis, are misconceived, no longer necessary, or are not properly made and are seriously out of time. I refuse to make any of them.

21.  I therefore make the directions as stated above.

22.  I have considered the nature of and history leading to this Ruling. I order that the costs be in the cause, and that D1’s costs be taxed in accordance with the Legal Aid Regulations.

Written Submissions by the 2^nd Plaintiff

Written Submissions by Mr Mattew CS Chong, instructed by Charles Chan & Co, assigned by Director of Legal Aid, for the 1^st Defendant

Written Submissions by the 2^nd Defendant

HCA 15070/1998

[2021] HKCFI 1831

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 15070 OF 1998

________________________

________________________

____________________

DECISION

____________________

1.  This is a hearing for directions concerning the further conduct of these proceedings. As a result of my decision made on 8 March 2021 (“the March Decision”, [2021] HKCFI 599), the remaining parties in these proceedings are P2, D1 and D2. The background facts have been set out in the March Decision. For ease of reference, the abbreviations used in the March Decision are adopted herein.

2.  In the March Decision, I directed that P2 should file and serve a Notice to Act in Person with a Hong Kong address therein (“the Required NAP”) as soon as practicable, if he intends to act in person in these proceedings.  P2 has never indicated that he would retain Hong Kong legal practitioners to represent him in these proceedings.  He has also not filed the Required NAP.

3.  The following occurred after the March Decision:

(1)   On 26 April 2021, I made an order that unless P2 do file and serve a notice to act by the solicitors retained by him and acting for him in these proceedings, or the Required NAP within 28 days, his claim in these proceedings be struck out with costs without a further order (“the Unless Order”).  I also directed that there be a hearing for directions on 23 June 2021.

(2)   On the same date, D1’s solicitors wrote to the court and requested for rescheduling the hearing to any date in June and July 2021, except 7 and 23 June 2021.  On 27 April 2021, I directed that the hearing for directions be rescheduled to 24 June 2021.

(3)   On 29 April 2021, P2 wrote to this court and said, inter alia, that he was ordinarily resident in Singapore and could not file and serve the Required NAP.  He requested that he would be allowed to give his Singapore address in the notice to act in person to be filed by him.

(4)   On 30 April 2021, I directed that the Unless Order be stayed, and P2 should attend the hearing for directions on 24 June 2021.

(5)   On 4 May 2021, P2 wrote to the court and provided an email address for the purpose of having communication with him.

(6)   On 19 May 2021, P2 sent a Notice to Act in Person to this court.  However, the address on that notice is a Singapore address, not a Hong Kong address. 

(7)   On 30 May 2021, P2 wrote to the court and said that he could not come to Hong Kong and attend the hearing on 24 June 2021 due to COVID-19.  P2 requested for postponing the hearing.  However, P2 merely suggested that the hearing be postponed “until international travel can resume safely and health risk is at the minimal”.  On 1 June 2021, I directed that the hearing should proceed as scheduled.

(8)   On 16 June 2021, D1 provided his proposed directions (“D1’s Proposed Directions”) to the court.

4.  As I said in [39] of the March Decision, these proceedings have dragged on for more than 22 years.  All the remaining parties must take reasonable steps to bring these proceedings to a conclusion as soon as practicable.  If P2 is serious in prosecuting his claim, he would try his best to come to Hong Kong to attend the hearings in these proceedings.  On 26 April 2021, I informed the parties that there would be a hearing on 24 June 2021. There may be difficulties in travelling from Singapore to Hong Kong while the pandemic is still ongoing.  However, given that P2 would have about 2 months to prepare for the trip, I am not convinced that a trip to Hong Kong is not possible or not practicable.  For these reasons, I have refused P2’s request to have an adjournment. 

5.  P2 has chosen to act in person in these proceedings.  That is his choice.  However, having chosen to act in person, P2 must provide an address in Hong Kong for serving documents on him in these proceedings.  He has invoked the jurisdiction of the Hong Kong Court and is seeking an order against Ds from this court.  P2 has submitted to the jurisdiction of the Hong Kong Court, and he must provide an address in Hong Kong so that documents in these proceedings can be served on him effectively and efficiently.

6.  It seems that P2 is insisting that he may file and serve a notice to act in person with a foreign address therein.  On the other hand, In D1’s Proposed Directions, D1 is seeking an order which is similar to the Unless Order.  In my view, to be fair to all the parties, the court has to give an opportunity to the parties to argue the issue, ie whether P2 may file and serve a notice to act in person with a foreign address, and determine the issue after considering the submissions.

7.  I therefore make the following directions:

(1)   There be a substantive hearing before a judge in chambers (open to public) on a date to be fixed, with 2 hours reserved.

(2)   Not less than 7 days before the said hearing, the parties shall file and exchange their respective written submissions. Each party shall set out the order sought by him and his proposed directions for the further conduct of these proceedings in his written submissions.

(3)   Not less than 3 days before the said hearing, the parties shall file and exchange their respective written reply submissions.

(4)   No further written submissions be filed without leave of the court.

8.  For avoidance of doubt, the view expressed in [5] above should be regarded as preliminary view of the court, which may or may not change after considering the parties’ submissions.

9.  I direct D1 to serve a copy of this decision and the order made herein on P2 as soon as practicable.  Leave to serve these documents out of jurisdiction is given.

10.  Costs reserved.  D1’s own costs be taxed in accordance with the Legal Aid Regulations.

HCA 15070/1998

[2021] HKCFI 599

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 15070 OF 1998

________________________

________________________

________________

D E C I S I O N

________________

1.  The writ of summons of the present action was first issued on 4 September 1998. More than 22 years have elapsed, and there is not yet a final conclusion in these proceedings. This is most unfortunate.

2.  The matters before me today are as follows:

(1)  an appeal lodged by the 1^st plaintiff (“P1”) on 16 November 2020 (“the appeal”) against the Order of Master Hui dated 13 June 2018 (“the Security Order”); and

(2)  a summons taken out by the 1^st defendant (“D1”) on 2 March 2021 (“the 2021 Summons”) for a direction to restore the hearing of D1’s summons dated 16 February 2017 (“the 2017 Summons”).

3.  There is no dispute that the appeal can only be heard if leave to appeal out of time is granted to P1.  P1 is seeking such leave.

4.  By the 2017 Summons, D1 is seeking an order to strike out P1’s claim against D1.  By the Order of Master J Wong dated 4 September 2018, the 2017 Summons has been adjourned sine die with liberty to restore.  By the 2021 Summons, D1 was seeking a direction to restore the hearing of the 2017 Summons.  For the reasons set out below, I would grant leave to D1 to withdraw both the 2017 Summons and 2021 Summons, with no order as to costs.

Background

5.  At the beginning of these proceedings, the plaintiffs were Chong Chween Hin and his wife, Ng Sew Hoi.  D1 was (and still is) Chong Yin Sing.  The 2^nd defendant (“D2”) was (and still is) D1’s son, Chong Lai Kin.

6.  The disputes herein concern a property known as Flat 5 on the 8^th Floor of Block G, Luk Yeung Sun Chuen, Nos. 22-66 Wai Tsuen Road, Tsuen Wan, NT, Hong Kong (“the Property”).  At the beginning of these proceedings, the original plaintiffs were the registered joint tenants of the Property.  D1 has been in possession or occupation of the Property since its purchase on or about 26 October 1983 in the consideration of HK$385,440.

7.  The original plaintiffs were legally represented, but D1 had not been legally represented until legal aid was granted to him in 2014.  Before 2014, D1 (together with D2 who has all along been not legally represented) had filed and served various home-made Defences and Counterclaims in Chinese.

8.  On 2 May 2002, by a deed of assignment (“the 2002 Assignment”), Chong Chween Hin and Ng Sew Hoi assigned the Property to their son, Ernest Chong Kian, as a gift.  Chong Chween Hin passed away on 26 June 2002.

9.  On 29 October 2003, pursuant to the leave granted by Master K Wong, Ng Sew Hoi has been named as P1, and Ernest Chong Kian has been joined in these proceedings in substitution for the late Chong Chween Hin and named as the 2^nd plaintiff (“P2”).

10.  Insofar as P1’s case is concerned, the present states of pleadings are:

(1)  Re-Amended Statement of Claim dated 16 June 2016;

(2)  Re-Amended Defence and Counterclaim of D1 dated 5 July 2016; and

(3)  Amended Reply to Re-amended Defence and Amended Defence to Re-Amended Counterclaim of D1 dated 2 September 2016.

11.  Save and except the period between 16 March 2017 and 22 July 2019, P1 has been legally represented in these proceedings at all times.

12.  On 16 February 2017, D1 took out the 2017 Summons.

13.  After the revocation of P1’s legal aid, on 29 August 2017, D1 took out a summons for security for costs against P1.  The summons was heard by Master Hui on 13 June 2018.  P1 did not attend that hearing.  At the end of that hearing, the master allowed D1’s application for security for costs and made the Security Order.  That order provides the following:

(1)  P1 do give security for costs to D1 in the sum of HK$702,000, by way of payment into court within 28 days after the service of this order and in the meantime all further proceedings between P1 and D1 be stayed;

(2)  Should P1 fail to pay the security for costs as aforesaid, P1’s claim against D1 be dismissed with costs with no further order and P1’s reply and defence to D1’s reply and counterclaim be struck out;

(3)  D1 be at liberty to enter judgment against P1 upon D1’s counterclaim.

14.  No security for costs has ever been provided by P1.

15.  On 25 July 2018, there was a case management conference before Mr Registrar KW Lung (“the CMC”).  P1 and P2 did not attend the CMC.  The Registrar made an order under Order 25 rule 1C to strike out the plaintiffs’ case on a provisional basis (“the Registrar’s Order”).

16.  On 22 July 2019, P1 obtained legal aid again.  On 30 July 2019, the solicitors for P1 filed a Notice to Act in these proceedings.  It is P1’s case that she only discovered the Security Order and the Registrar’s Order in or about late July 2019[1].

17.  On 16 November 2020, P1 lodged the appeal.  The subject matter in P1’s notice of appeal is the Security Order.

18.  In her affirmation dated 3 November 2020, although P1 mentioned that she intended to challenge both the Security Order and the Registrar’s Order, no appeal against the Registrar’s Order has ever been lodged by P1.

19.  There is no dispute that both P1 and P2 are ordinarily resident in Singapore at all times.

P1’s claim and D1’s counterclaim

20.  P1’s case is that D1 and his family was in wrongful occupation of the Property since about 1984.  P1 claims for, inter alia, an injunction restraining the defendants from occupying the Property and for damages.  P1 says that she is no longer a registered owner of the Property after the 2002 Assignment, and hence she would not claim for an order requiring the defendants to deliver vacant possession of the Property to her.  Such a claim is now being made by P2 alone.

21.  D1’s case is that he is the sole beneficial owner of the Property and is entitled to occupy the same.  Alternatively, he has acquired a possessory title to the Property by adverse possession.  Based upon his case, he has raised a counterclaim against P1 and P2.

Leave to appeal out of time - the principles

22.  As to whether leave to appeal out of time should be granted, the court has to consider all relevant factors, including the length of the delay, the reasons for the delay, the merits of the proposed appeal and the degree of prejudice to the other party[2].

23.  The court has to look at all relevant matters and consider the overall justice of the case.  In Astro Nusantara International BV v PT Ayunda Prima Mitra[3], Ribeiro PJ said (footnotes omitted):

“53. It has often been emphasised that the discretion to extend time conferred by Order 3 r 5 is broad and unrestricted, designed to enable justice to be done between the parties. Thus, in Kwan Lee Construction Co Ltd v Elevator Parts Engineering Co Ltd, Litton VP in the Court of Appeal, stated:

‘The court's jurisdiction to extend time, as conferred by O 3 r 5, is as broad as it can come and, in the exercise of that discretion, the court would, generally speaking, have some regard to what might ultimately be in issue.’

54. In Costellow v Somerset County Council, dealing with the equivalent provision in England and Wales, Sir Thomas Bingham MR noted that the discretion involves the intersection of two principles. The first promotes the enforcement of time limits for the expeditious dispatch of litigation in the public interest and the second recognises that a plaintiff should not ordinarily be denied adjudication of his claim on the merits because of a procedural default “unless the default causes prejudice to his opponent for which an award of costs cannot compensate”. His Lordship noted that the second principle “is reflected in the general discretion to extend time conferred by Ord 3, r 5, a discretion to be exercised in accordance with the requirements of justice in the particular case.”

55. The approach advocated on First Media’s behalf as formulated by the Court of Appeal in The Decurion, is in line with the foregoing authorities. Citing Costellow, Cheung JA acknowledged the intersecting principles and stated:

‘It is clear that the applicable principle in deciding whether time should be extended is to look at all relevant matters and consider the overall justice of the case.  A rigid mechanistic approach is not appropriate...’”

Discretion against extending time

24.  I am of the view that as a result of the Registrar’s Order, it would not serve any meaningful purpose if leave to appeal out of time is granted to P1. 

25.  Order 25 rule 1C provides:

“(1)   Where the plaintiff does not appear at the case management conference or pre-trial review, the Court shall provisionally strike out the plaintiff’s claim.

……

(3)   Where the Court has provisionally struck out a claim … under paragraph (1) … the plaintiff … may, before the expiry of 3 months from the date of the case management conference or pre-trial review, as the case may be, apply to the Court for restoration of the claim or counterclaim.

(4)   The Court may restore the claim or counterclaim subject to such conditions as it thinks fit or refuse to restore it.

(5)   The Court shall not restore the claim or counterclaim unless good reasons have been shown to the satisfaction of the Court.

(6)   If the plaintiff or the defendant does not apply under paragraph (3) or his application under that paragraph is refused, then—

(a)  the plaintiff’s claim … stands dismissed upon the expiry of 3 months from the date of the case management conference or pre-trial review, as the case may be; and

(b)(i)  in the case of the plaintiff’s claim, the defendant is entitled to his costs of the claim

……”

26.  P1 and P2 have never made an application pursuant to Order 25 rule 1C(3) to restore their claim within 3 months after the CMC.  In fact, P1 and P2 have never made any application to restore their claim at any time.  They have also never lodged an appeal against the Registrar’s Order.  Accordingly, by the operation of Order 25 rule 1C(6)(a), the plaintiffs’ claim must be deemed as having already been dismissed.

27.  I further observe that:

(1)  According to P1’s own evidence, she was fully aware of the CMC before the CMC taking place.  In [13] of her affirmation dated 3 November 2020, she said that her absence in the CMC was due to her impecuniousness.  Due to her limited financial ability, she was unable to buy an air ticket to travel to Hong Kong to attend the CMC, or retain a lawyer to represent her in the CMC.  Further, she was afraid of travelling by plane.  In other words, P1 was aware of the CMC before that hearing taking place, but because of the matters as alleged in her affirmation, she was not able to attend the CMC.

(2)  As said in the above, according to her own case, P1 was aware of the Registrar’s Order in about late July 2019.  She also obtained legal representation at about the same time.

28.  In view of all these, P1’s inaction towards the Registrar’s Order is inexcusable.  There is no reason why P1 should not be bound by the Registrar’s Order.

29.  Since P1 is bound by the Registrar’s Order, by the operation of the Registrar’s Order, P1’s claim has already been struck out.  Further, P1’s claim is also her defence to D1’s counterclaim.  I am of the view that as a result of the Registrar’s Order, P1 is not allowed to pursue her defence to D1’s counterclaim in these proceedings in any event.

30.  The Security Order has the effect of, in the absence of provision of the security stipulated in the order by P1, striking out P1’s claim and debarring P1 from defending D1’s counterclaim.  For the reasons set out in [25] to [29] above, since P1 is bound by the Registrar’s Order, even if the Security Order is set aside, that would not change the fact that P1 is not entitled to pursue her claim and her defence to D1’s counterclaim in these proceedings.  Accordingly, granting leave to appeal out of time to P1 would not serve any meaningful purpose at all. 

31.  Further, the delay in bringing the appeal against the Security Order is substantial and inexcusable.

32.  There cannot be any doubt that there has been a substantial and inordinate delay in taking out the appeal.  The Security Order was made on 13 June 2018.  The time for P1 to lodge an appeal against that order expired on 27 June 2018.  However, P1 only lodged the appeal on 16 November 2020, ie more than 2 years and 4 months after the deadline stipulated in the statute.

33.  In my view, the delay is inexcusable.  I am aware of the fact that P1 did not attend the hearing on 13 June 2018.  There is no evidence before me showing when the Security Order was served on P1. However, there is evidence before me showing that the documents concerning D1’s application for security for costs had been served on P1 before the hearing on 13 June 2018.  P1 does not dispute this.  In any event, according to P1’s own evidence, she discovered the Security Order in about late July 2019.  She has been legally represented again since 30 July 2019.  Even taking P1’s case at its highest, there is no satisfactory explanation as to why an appeal against the Security Order was not lodged shortly after 30 July 2019, but was only lodged more than 1 year and 3 months later, ie on 16 November 2020.

34.  I have taken the following matters which are in P1’s favour into account.

(1)  For the sake of discussion, if the Registrar’s Order has never been made and P1’s appeal against the Security Order is lodged in time, P1 may have a reasonable prospect of success in the appeal.

(a)  P1 is ordinarily resident in Singapore.  Given the regime for reciprocal enforcement of judgments between Singapore and Hong Kong under the Foreign Judgments (Reciprocal Enforcement) Order, the court may consider that it would not be necessary to make a security for costs order against P1[4].

(b)  The Security Order has the effect of debarring P1 from defending D1’s counterclaim against her if no security is provided by P1.  Arguably, this is incorrect.  No security for costs should be ordered against a defendant[5]. P1 is a defendant in D1’s counterclaim.

(c)  It is also arguable that P1’s claim and P1’s defence to D1’s counterclaim are the two sides of the same coin.  Applying the Crabtree principle[6], P1 should be allowed to pursue her claim and her defence to counterclaim at the same time, without being required to provide any security for costs.

(2)  Although there has been substantial delay on P1’s part in these proceedings, D1 has also failed to take steps diligently to bring these proceedings to a conclusion.  An example on this point is although based upon the Security Order, D1 is entitled to apply for entering judgment against P1 upon D1’s counterclaim, D1 has never made this application.

35.  Taking all the aforesaid into account and balancing all the relevant factors, I would exercise my discretion against P1’s application for leave to appeal out of time.  The most crucial factor in my consideration is the Registrar’s Order.

Disposition

36.  I refuse to grant leave to appeal out of time to P1, and I also dismiss the appeal.  Costs should follow the event.  I order that costs of the appeal be paid by P1 to D1, to be taxed if not agreed.  Both P1’s own costs and D1’s own costs are to be taxed in accordance with the Legal Aid Regulations.

37.  I grant leave to D1 to withdraw the 2017 Summons and the 2021 Summons.  Time spent on these summonses is minimal.  I make no order as to costs on these summonses.  P1’s and D1’s own costs concerning these summonses are to be taxed in accordance with the Legal Aid Regulations.

38.  I also grant leave to D1 to withdraw his counterclaim against P1.  Since P2 is the sole registered owner of the Property after the 2002 Assignment, D1’s counterclaim should be made against P2 alone. Maintaining the counterclaim against P1 would not serve any useful purpose. Since P1’s claim is her defence to D1’s counterclaim, P1 should not have incurred any additional costs as a result of D1’s counterclaim.  There be no order as to costs on D1’s counterclaim against P1.  P1’s and D1’s own costs concerning this counterclaim be taxed in accordance with the Legal Aid Regulations.

39.  As a result of the ruling as set out in the above, everything concerning P1 in these proceedings has been concluded.  From now onwards, P1 is out of the picture.  The remaining parties are P2, D1 and D2.  These proceedings have dragged on for more than 22 years.  All the remaining parties must take reasonable steps to bring these proceedings to a conclusion as soon as practicable.

40.  In order to bring these proceedings forward, I direct that P2, D1 and D2 do file and serve their respective proposed directions for the further conduct of these proceedings within 42 days. After considering these proposed directions, I may give directions on paper, or I may direct that there be a hearing for directions.

41.  I note that P2 is residing in Singapore.  I direct D1 to serve a copy of this decision and a sealed copy of the order made by me today on P2 as soon as practicable, and leave to serve these documents out of the jurisdiction is hereby given.  P2 is not legally represented in these proceedings.  P2 may retain legal practitioners in Hong Kong to represent him, or he may choose to act in person in these proceedings.  However, if he chooses to act in person, he has to file and serve a Notice to Act in Person as soon as practicable.  The address provided in the Notice to Act in Person must be an address in Hong Kong[7]. Documents in these proceedings would be served on P2 by delivering the same to this address.

42.  Lastly, it remains for me to thank counsel for the assistance rendered to the court.

Mr Kevin Poon, instructed by Tsang, Chan & Woo Solicitors & Notaries, assigned by Director of Legal Aid, for the 1^st plaintiff

The 2^nd plaintiff was not represented and did not appear

Mr Mattew CS Chong, instructed by Charles Chan & Co, assigned by Director of Legal Aid, for the 1^st defendant

The 2^nd defendant was not represented and did not appear