LIU KAM HOI AND OTHERS v. LIU PING KUEN

HCA 6728/1998

[2018] HKCFI 1701

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 6728 OF 1998

________________________

________________________

________________________

REVIEW OF TAXATION

________________________

Introduction

1.  This is a review of taxation.

Background

2.  For the present purpose, it suffices to know that the action was originally set down to be tried for 4 days from 13 January 2015.  However, shortly before the trial, on 23 December 2014, the defendant issued a summons seeking to, among others amend his pleadings and adduce his 2^nd supplemental witness statement.

3.  The learned Judge heard the summons on the first day of the trial.  He reserved his decision overnight.  On the second day, he allowed the summons and further awarded costs to the plaintiffs.

“8.  Costs of and occasioned by the Defendant’s Summons, including the costs of the hearing thereof, be to the Plaintiffs on an indemnity basis to be taxed if not agreed;

9.  ...

10.  Costs thrown away by the adjournment of the Trial of this Action be to the Plaintiffs on an indemnity basis to be taxed if not agreed; and

11.  The costs under paragraphs 8 and 10 above be paid forthwith with certificate for two counsel.”

4.  Pursuant to the costs order, the plaintiffs (hereinafter called “the receiving party”) sought to recover their costs.  Parties appeared before me for the substantive taxation. The defendant (hereinafter called “the paying party”) later applied for a review of 10 items. Here is my decision.

Preliminary matter

5.  At the outset of the review, Mr. Yu (LCD for the paying party) asked for leave to add an alternative ground to object quantum on 4 items out of the 10. Mr. Lee (LCD for the receiving party) objected to it.  At the moment, to save costs and time, I allowed the application on a de bene ease basis.  After thought, I have decided to refuse it.

a)  The application came very late.  No formal summons was issued, not to mention supporting affidavit to explain the reason.

b)  Quantum was fully argued at the taxation.  The paying party adduced no new evidence to contradict those having produced by the receiving party.

c)  A rehearing of the same argument having spent at the taxation did not help the paying party at all in the review.

The Review

6.  For easy reference, I will deal with the review under 3 broad grounds: (a) double counting, (b) costs of the proceedings, and (c) quantum.

Double counting – items 28 and 31

7.  Half of the items under the review (items 11a, 12a, 28, 30 and 31) complained that “[They] will be double‑counted in the final taxation of the whole case”. 

8.  When Mr. Yu came to items 11a, 12a and 30, he told me that his client had decided to withdraw them for review.  Hence, only 2 items (items 28 and 31) were left in this category.  They were fees spent by junior counsel. I allowed them as follows.  

“	28	Conference with Instructing Solicitors on 30.10.2014 (2hrs)	$9,000	($9,000 claimed)
	…
	31	Conference with Instructing Solicitors on 30.12.2014 (3.5 hrs)	$7,875	($15,750 claimed)
	...”

9.  At the taxation, I dealt with all counsel fees on preparation of the trial at one go (from items 27 to 35).  They included the fees involving both senior and junior counsel, as well as those before and after the issuing of the summons on 23 December 2014.  Mr. Lee produced to me all supporting privileged documents, including conference notes, to show how those time and costs were spent.  I allowed some in full, allowed some in half (taxed off the remaining completely or suggested that the remaining half should go to the main bill, if applicable), taxed off some completely.

10.  Briefly, I dealt with items 28 and 29 together because both were time spent by junior counsel with the instructing solicitors on general preparation of the case for trial.  I made no deduction on the former but taxed off the latter completely.  I took the view that the matters having been discussed at the 2 conferences could have been finished in one and it also fell within “costs thrown away” because the same had to be “re‑done” again when the trial would resume later.  I was not persuaded by Mr. Yu at the review to change my mind.

11.  As to item 31, it was time spent by junior counsel with the instructing solicitors after the issuance of the summons.  It touched on the summons itself as well as general preparation of the case.  I taxed it off by half because of both quantum and only part of it was covered by “costs of and occasioned by the Defendant’s Summons ...”. I further suggested that the remaining half would go to the main bill later, if applicable. I do not see how the argument of double counting can help the paying party.

Costs of the proceedings – items 16, 40, 41 and 42

12.  The remaining 5 items (items 15, 16, 40, 41 and 42) relied on “This document had been used in the trial and costs of the item shall be included in the taxation of the whole case” as ground for review.

13.  Mr. Yu told me during his submission that item 15 would be withdrawn.  As to the other 4 items, there are costs spent by the receiving party to deal with the amendment of pleadings and filing of supplemental witness statements of the paying party.

"	No.	Description	Scale Cost
	15	Supplemental Witness Statement of Liu Wai Man filed on 11.02.2015 (9 pages) Drafting (to include considering settled version from Counsel) (KMT – 3 hrs)	C	$27.00
			F	$110.00
			S	$50.00

No.	Description	Senior Counsel	Junior Counsel
40	Settling Supplemental Witness Statement of Liu Wai Man on 27.01.2015		$15,000.00
41	Settling Re-Re-Re-Amended Reply and Defence to Counterclaim on 27.01.2015		$18,500.00
41	Reviewing papers; Settling Re-Re-Re-Amended Reply and Defence to Counterclaim and Supplemental Witness Statements on 10&11.02.2015 (7 hours)	$63,000.00

.....”

14.  At the taxation, I was referred to the proposed amendments of pleadings and supplemental witness statement in the summons.  After the application was allowed, the receiving party proceeded to prepare the amendments to their pleadings and supplemental witness statement, as directed and allowed by the learned Judge.  They were therefore “costs ... occasioned by the Defendant’s Summons”.  I further went through the drafting/settling of the documents by the instructing solicitor, junior and senior counsel.  Given further that costs were awarded on indemnity basis, I allowed all of them in full.

15.  At the review, both LCDs and I were able to locate some assistance on the phase of “occasioned by”.  It meant “items of costs that were directly attributable to the [summons issued by the paying party]” and the crux lie on “whether the receiving party would have incurred the items of costs irrespective of the [summons issued by the paying party] (para 62/1/3 (13) of HKCP 2018 at p.1207).  My attention was further re-drawn to the meaning of costs awarded on indemnity basis, namely, all costs were to be allowed except those unreasonably incurred or of unreasonable amount, the receiving party being given the benefit of any doubt (para.62/App/11 of HKCP 2018 at p.1286)

16.  With these principles in mind, I consider that the total time spent by both Counsel (senior counsel – $63,000: 7 hours x $9,000 each, junior counsel – $15,000 + $18,500: about 7.5 hours x $4,500) and the instructing solicitor ($12,000: 3 hours x $4,000) on the supplemental witness statement (in Chinese) of 9 pages and the amended pleadings (about 5 pages of substantial amendment out of a document of 10 pages) could never be unreasonable.

17.  Mr. Yu tried to argue that the amendments done by the receiving party went outside the scope caused by the paying party.  It was a new point which he did not take up at the taxation.  When I tried to test it by asking him to provide particulars, there was no further submission thereof. 

18.  Hence, the paying party also fails me on these 4 items at the review.

Quantum– items 16, 40, 41 and 42

19.  As I said, the paying party only sought to challenge quantum (again) at the hearing of the review.  No new evidence or point was raised.  Such argument has to be dismissed in procedure and in substance.

Disposal of the review

20.  To conclude, the review is withdrawn and dismissed, as aforesaid. 

Costs

21.  Parties agreed that costs followed event.  I also had the benefit of their preliminary submissions on lump sum assessment of the costs of review.  In the circumstances, there will be an order nisi that the paying party shall pay the receiving party costs of the review, including costs reserved, summarily assessed at $12,100.

LCD (call‑over + hearing + preparation) $1800 x 4 hour	$7,200
Solicitor $5,800 x 0.5 hour	$2,900
Miscellaneous	$2,000
	________________
	$12,100

HCA 6728/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 6728 OF 1998

___________

___________

_______________

JUDGMENT

_______________

A. Introduction

1.  This case concerns a piece of land in the New Territories known as Lot No 285 in Demarcation District No 52, Fu Tei Au, Sheung Shui (“the Lot”).  The Lot is located in a place called Wah Shan Tsuen (華山村).

2.  The plaintiffs are all the registered owners, as tenants-in-common, of the Lot.  Some of the current plaintiffs replace some of the original plaintiffs as their personal representative or successors-in-title.

3.  It is useful to set out who are the current plaintiffs:

(1) The Lot was and is owned by members of three branches, or fongs(房), of the Liu family, each branch originating from one of three brothers.  The three branches together called themselves Gong Tak Tong (廣德堂).  The oldest brother was Liu Yiu Ting (廖耀庭).  The second was Liu Kam Kwong (廖錦光).  The youngest was Liu Kut Sui (廖吉瑞). They were all deceased by the time of the writ herein.

(2) The 1^st plaintiff, Liu Kam Hoi, is a great-grandson of Liu Yiu Ting.  He owns 1⁄12 of the Lot.

(3) Liu Ching Wan, the estate of whom is the 2^nd plaintiff, was a grandson of Liu Yiu Ting.  Liu Wing Leung is the son of Liu Ching Wan. The estate owns 1⁄12 of the Lot.

(4) The 3^rd plaintiff, Liu Ki Cheung, is the son of Liu Kam Sui (廖金水), who was a son of Liu Yiu Ting.  He owns 1⁄6 of the Lot.

(5) The 4^th plaintiff, Liu Ayako, is the daughter-in-law of Liu Cho Yau (廖祖友), who was a son of Liu Kam Kwong.  She owns 1⁄12 of the Lot.

(6) Liu Yuk Keung, Liu Law Kam Yuk and Liu Yuk Kwai, collectively the 5^th plaintiff, are the son, daughter-in-law and son respectively of Liu Cho Hing (廖祖興), who was also a son of Liu Kam Kwong.  Each of them owns 1⁄36 of the Lot.

(7) The 6^th, 7^th and 8^th plaintiffs, Liu Tsun Ka, Liu Tim Man and Liu Yat Choi, are the sons of Liu Kam Sing (廖金聲), who was also a son of Liu Kam Kwong.  Each of them owns 1⁄18 of the Lot.

(8) Liu Wai Man and Liu Kuen Hor, collectively the 9^th plaintiff, are the sons of Liu Kut Sui.  Each of them owns 1⁄6 of the Lot.

(9) Each branch therefore owns 1⁄3 of the Lot.

(10) The facts stated in the preceding paragraph and this paragraph are derived from the evidence of Liu Tsun Ka, as well as land search records, and is not disputed by the defendant.  I find them as facts.

4.  The defendant, Liu Fun Kee, passed away on 21 October 1998, shortly after this action was commenced on 29 April 1998.  His son and personal representative, Liu Ping Kuen, born in 1954, now represents his estate as the defendant.  The plaintiffs and Liu Fun Kee were not related, despite sharing the same surname.  I also find the foregoing as facts.

5.  For the purpose of these proceedings, a number of plans of the Lot have been produced by the parties from time to time.  For convenience, I shall use the version produced by Mr Chan SC, leading counsel for the defendant, which is attached to his opening submissions.  A copy of that plan is annexed to this judgment (“the Plan”).

6.  The Lot is cut into two parts by a road running from north to south (“the Road”).  The land on the east side of the Road was, but is no longer, in issue.  On the Plan, the land on the west side of the Road is divided into seven portions: 1, 1A, 1B, 1C, 1D, 2 and 3.  It is Portions 1, 1A and 1B that are in issue.  (I note that the definition of Portion 1 has changed during the course of these proceedings.  Initially the whole of Portions 1, 1A, 1B, 1C and 1D, as well the land on the east of the Road, was called Portion 1, until 2009 when the case of the defendant changed (see below).  Unless otherwise indicated, when I refer to a numbered portion, I am referring to the portion as currently defined under the Plan.)

B.   The pleadings and the injunction

7.  The plaintiffs’ case in the Amended Statement of Claim[1] is simple:

(1) In about 1967, Liu Kut Sui, one of the owners of the Lot, on behalf of himself and the other registered owners of the Lot at the time, let a portion of the Lot to Liu Fun Kee for agricultural purposes on a yearly basis.  The annual rent had since been increased to HK$500.

(2) The portion let was not identified by any plans.

(3) By a letter dated 22 March 1996 from their solicitors (“the NTQ”), the plaintiffs required Liu Fun Kee to quit and deliver up vacant possession of the property[2] to the plaintiffs on 31 December 1996.

(4) Liu Fun Kee did not do so.  (It is not in dispute that Liu Ping Kuen and his family is now still in possession of Portions 1, 1A and 1B (except a part thereof at the western side).)

(5) Further, rent had only been paid up to 31 December 1993.[3] 

(6) The plaintiffs therefore claim possession of the“suitproperty”,arrears of rent from 1 January 1994 to 31 December 1996, and mesne profits from 1 January 1997 until delivery of vacant possession.

8.  The Defence and Counterclaim is much more complicated, and has gone through a number of very substantial changes, with later versions being totally inconsistent with earlier versions in a number of important aspects (which I deal with in Sections D and E below).  It is necessary to set out each version in some detail.

9.  In the Defence and Counterclaim dated 9 July 1998, it was alleged that:

(1) In or about 1959:

“ when Liu Kut Sui and Liu Chun Sing[4] allowed the Defendant to live at the said property, there was an oral express agreement that so long as the Defendant could pay the rent in each year, he could stay at the said property as long as he wishes (the ‘Express Agreement’).”

(2) The rent was initially about HK$30 per year, and was revised to HK$300 in 1978, and to HK$500 in 1995.

(3) Liu Fun Kee built houses on “the said property” in about 1959 and 1970 with the consent of the owners.  It was said that as at the date of the Defence and Counterclaim, there were seven houses on the said property built by Liu Fun Kee, six of which were used for residential purpose.  The total value of all the structures and premises built by Liu Fun Kee on the said property was not less than HK$1,000,000.

(4) In reliance upon the Express Agreement, Liu Fun Kee commenced his business of landscape gardening on “the said property” since 1980.  For the purpose of carrying on this business on the said property and in reliance upon the Express Agreement, Liu Fun Kee invested not less than HK$300,000 on the said property “during the past ten years”.

(5) The NTQ was not valid and effective by virtue of the Express Agreement. Further, wrongfully and in breach of the Express Agreement, the owners had refused to accept rent since 1997.

(6) The counterclaim consisted of a claim for unquantified and unparticularised damages for breach of the Express Agreement.

10.  The Reply and Defence to Counterclaim dated 1 September 1998 consisted essentially of denials of the allegations made in the Defence and Counterclaim. At this stage, there was apparently no issue as to what exactly was the “said property” as the subject matter of the litigation.

11.  In the Amended Defence and Counterclaim dated 14 July 1999 (after Liu Fun Kee had passed away):

(1) A plan was annexed.  Portions 2 and 3 thereon are the same as Portions 2 and 3 on the Plan, and was said to be let to one Chu To Keung and one Chu Yun respectively (I shall call them “the Chus” collectively).  The remainder of the Lot, including the portion to the east side of the Road, was coloured yellow and described as Portion 1 and it was said that Portion 1 was let to Liu Fun Kee for him and his family to use.  It was said that the purpose of the letting was so that the Lot could be guarded from trespassers, as Liu Kut Sui was living away from the Lot.  (It should be noted that this Portion 1 is different from the Portion 1 as is now used on the Plan.)

(2) The alleged Express Agreement was amended as follows:

“ In or about 1959, when Liu Kut Sui and Liu Chung Sing allowed the Defendant and his family to live at the said propertyPortion 1, there was an oral express agreement made by both Liu Kut Sui and Liu Chung Sing to the Defendant and his family that so long as the Defendant and his family could pay the rent in each year, he could stay at the said propertyPortion 1 as long as hethey wishes (the ‘Express Agreement’).”

(3) References to “the Defendant” and the “said property” regarding the consent to build houses, and reliance on the Express Agreement in commencing the landscape business and making investments, were also changed to “the Defendant and his family” and “Portion 1” respectively.  In particular, for 1970, it was stated at §5(c):

“ In or about 1970, the ownerLiu Kut Sui and Liu Chun Sing gave consent for the Defendant and his family to build more houses on the said propertyPortion 1. The houses so built were approved by the relevant Government Departments and a licence no.38035 was assigned to the Defendant and his family.”

12.  Also on about 14 July 1999, the defendant applied for an interlocutory injunction against the plaintiffs, seeking to restrain them from interfering with “Portion 1” before any decision or judgment was made in these proceedings. It is not necessary to set out the facts leading to this application.  Liu Ping Kuen exhibited to his affirmation in support a plan marking (by yellow bordering) as “Portion 1” the entire Lot (both to the west and east of the Road) except the portions let to the Chus.  This is consistent with the plan annexed to the Amended Defence and Counterclaim.  The entire Portion 1 was said to be leased by the owners to Liu Fun Kee and his family in 1959.  

13.  In his Affirmation in response, Liu Tsun Ka produced a plan which showed that the portion of the Lot the plaintiffs said was leased to Liu Fun Kee was only the portion to the west of the Road except those portions leased to the Chus. This was the first time the plaintiffs set out what they say is the portion let to Liu Fun Kee by way of a plan.

14.  In reply, Liu Ping Kuen filed a 2^nd Affirmation disputing what Liu Tsun Ka said as to the area leased, and a person named Chee Yat On and claiming to be living in Wah Shan Tusen also filed an affirmation on behalf of the defendant saying that the whole of the “Portion 1” as was then defined by the defendant had been let to Liu Fun Kee, and Liu Fun Kee and/or Liu Ping Kuen were “the lawful tenant of the whole Portion 1 including the Site” (“the Site” being defined as the portion to the east of the Road).  In cross-examination, Liu Ping Kuen said it was he who told Chee Yat On about this.  I shall have a lot more to say about these affirmations. 

15.  The application for injunction was disposed of by way of undertakings given by the plaintiffs.

16.  In the Re-Amended Defence and Counterclaim dated 4 January 2011:

(1) A new plan was annexed which appears to be the same as the Plan.  The portion on the east side of the Road was no longer coloured and ceased to be part of Portion 1.  On the west side of the Road, the portion coloured yellow on the plan annexed to the Amended Defence and Counterclaim was divided up into Portions 1, 1A, 1B, 1C and 1D.

(2) What was pleaded regarding what happened in about 1959 remained unchanged.  The portion let was still “Portion 1” but because a new plan was annexed (with “Portion 1” differently defined) the portion said to be let in about 1959 changed as a result.

(3) It was alleged that in about 1970, Liu Kut Sui and Liu Chun Sing further let Portion 1A to Liu Fun Kee. Paragraph 5(c) was amended as follows (showing only the re-amendments made):

“ In or about 1970, Liu Kit Sui and Liu Chung Sing further let another portion of the said Land (‘hereinafter called’ Portion 1A’) to the Defendant and further represented and further represented and gave consent to for the Defendant and his family to build more houses on the Portion 1 and 1A and reassured the Express Agreement to the Defendant and his family (‘the Representation’) in Portion 1 and 1A is now coloured blue in the plan annexed hereto. The houses so built was approved by the relevant Government Departments and a licence no. 38035 was assigned to the Defendant and his family”.

(4) It was alleged that the commencing of the landscape business and investments on Portions 1 and 1A was made in reliance upon the Express Agreement and the Representation by Liu Fun Kee and his family.  It was alleged that the plaintiffs and/or their agents had knowledge (actual or constructive) about the investment and construction works carried out by Liu Fun Kee and his family on Portion 1.

(5) It was also said that in about 1970, Liu Fun Kee and his family started the exclusive use, possession and control of Portion 1B for residential purpose and cultivation.

(6) It was also said that from 1985 and 1986 respectively, Liu Fun Kee and his family had started the exclusive use, possession and control of Portions 1C and 1D for landscape gardening business.

(7) Particulars were pleaded on the use and occupation of Portions 1B, 1C and 1D by Liu Fun Kee and his family to support a claim of adverse possession.  A counterclaim for a declaration of possessory title based on adverse possession of Portion 1B was added.

(8) The counterclaim for possessory title was not made for Portions 1C and 1D, because 20 years had not elapsed when the Counterclaim was first issued.[5]

17.  In the Re-Amended Reply and Defence to Counterclaim dated 31 January 2011:

(1) The plaintiffs said that the portions let to Liu Fun Kee was the yellow part as set out on a plan annexed thereto, which was in effect the whole of Portions 1, 1A, 1B, 1C and 1D on the Plan, save a small part of on the northeast corner of Portion 1 which was included on the plaintiffs’ plan but not coloured yellow on the Plan.  (The inclusion of that small part in the plaintiffs’ plan is probably a mistake, as various plans produced by the experts of the Lot do not include this part.)

(2) The making of the Express Agreement and the Representation was denied.

(3) It was alleged that the “said property” was freely accessible to the plaintiffs and/or their predecessors in title and/or agents without any interference, disturbance and/or interruption.  Liu Fun Kee repeatedly admitted and/or acknowledged that the said property including Portions1B,1C and 1D were leased from the plaintiffs. Liu Fun Kee had all along paid rent for the said property, including Portions 1B, 1C and 1D. 

18.  By a Re-Re-Amended Defence and Counterclaim dated 20 May 2011, a claim for proprietary estoppel based on the Express Agreement and the Representation, and by investing on the land in reliance thereon, was added.

19.  In the Re-Re-Amended Reply and Defence to Counterclaim dated 11 April 2013, the plaintiffs denied Liu Fun Kee and/or his family’s reliance on the Express Agreement and the Representation (which were denied).  The use and occupation of Portion 1B was pursuant to the tenancy and the defendant was estopped from denying the plaintiffs’ title thereto.  Further, if Liu Fun Kee and/or his family did invest on the land, that was solely to the benefit and for the use of himself and/or his family and had nothing to do with the Express Agreement or the Representation (which were denied).

20.  Finally, by a Re-Re-Re-Amended Defence and Counterclaim dated 14 January 2015, just before the start of the trial of this action which was adjourned as a result, the commencing of the alleged exclusive use, possession and control of Portion 1B by Liu Fun Kee and his family was said to be 1973, instead of 1970.  It is now alleged that prior to such use, possession and control, Liu Fun Kee had on three occasions requested the owners’ representative, namely Liu Kut Sui, to let a northern portion of Portion 1B to him and his family so they could farm thereon.  Lui Kut Sui refused each time, and on the first and third occasions (in about 1970 and late 1972 respectively) Liu Kut Sui told Liu Fun Kee that the owners had other plans for that part of the land.  Liu Fun Kee and his family then in 1973 commenced taking possession and control of the whole Portion 1B, in defiance of the owners’ express refusal to let more land to them.  They used it for farming from 1973 to 1990, when the landscape gardening business started, and had so used the land since without interruption or disturbance.

21.  In the Re-Re-Re-Amended Reply and Defence to Counterclaim dated 10 February 2015:

(1) The plaintiffs denied the new allegations regarding Portion 1B.

(2) It was alleged that parts of the “said property” leased to Liu Fun Kee had been leased to other tenants from 1979 to 1993, but the area leased at the time of the NTQ was the same as that leased to Liu Fun Kee in about 1967.

(3) Use of the land for a landscape gardening business contravened the Conditions of Use imposed on the Lot, as stated in a letter dated 15 November 1995 from the Planning Department.  The defendant had not come to court with clean hands.

(4) If the demised land was only Portions 1 and 1A, the plaintiffs said that use, possession and/or occupation of Portion 1B by Liu Fun Kee and his family should be treated as annexed to the demised land, and they were estopped from asserting adverse possession.  The plaintiffs relied on the doctrine of encroachment.

(5) The defendant had accepted rental receipts which included Portions 1B, 1C and 1D, and solicitors for the defendant had in letters dated 13 December 2007 and 8 January 2008 acknowledged the plaintiffs’ title to the said property, including Portions 1B, 1C and 1D, and had submitted a cheque for payment of rent for 1997 to 2008.

C.   The issues

22.  Two witnesses give evidence on behalf of the plaintiffs: Liu Tsun Ka (the 6^th plaintiff), and Liu Wai Man (one of the 9^th plaintiff).  Liu Ping Kuen is the only witness for the defence.

23.  The following issues, or potential issues, arise from the pleadings:

(1) What was/were the part or parts of the Lot that had been leased by the owners to Liu Fun Kee originally, and on what terms.  Was it the whole of Portions 1, 1A, 1B, 1C and 1D, as the plaintiffs say, or was it just Portion 1, as the defendant now says?  In particular, was the lease subject to the alleged Express Agreement?

(2) When was Portion 1A leased to Liu Fun Kee, and on what terms?  Was it as part of the original lease, or was it in about 1970 and subject to the alleged Representation?

(3) Can the defendant establish proprietary estoppel against the plaintiffs to prevent termination of (whatever was) the tenancy?  Was there lack of clean hands by Liu Fun Kee?  Was there detrimental reliance and prejudice for Liu Fun Kee if the tenancy was to be terminated?

(4) Was Portion 1B part of the leased property and if not did Liu Fun Kee obtain possessory title thereto by way of adverse possession by 9 July 1998 (the date of the Counterclaim), or whether the doctrine of encroachment applies in favour of the owners?

(5) What remedies in terms of arrears of rent or mesne profits can the plaintiffs recover if they succeed?

24.  The plaintiffs, being the registered owners of the Lot, having demanded possession thereof from persons in occupation of the same, i.e. Liu Fun Kee and their family members, are prima facie entitled to possession and, as from 1 January 1997, mesne profits, unless the defendant establishes to the satisfaction of the court that he (and therefore his estate and successors-in-title) had and have some legal entitlement to occupy the Lot as against the plaintiffs.  In Portland Managements Ltd v Harte [1977] QB 306, Scarman LJ said:

“ … if the absolute owner is suing, and if the absolute owner has shown by his conduct an intention to recover possession, then it is not enough for the defendant merely to assert or give evidence that he is in possession: he has got to show that he is there on the basis of some title which is consistent with the ownership of the premises being vested in the plaintiff.” (314F)

“ I cite those cases in support of the proposition, which appears to me to be clear law, that when an owner of land is making a case of trespass against a person alleged to be in possession, all that the owner has to prove is his title and an intention to regain possession. If the defendant to the action either admits his ownership or is faced with evidence, which the court accepts, that the plaintiff is in fact the owner, then the burden is upon the defendant to confess and avoid: that is to say, to set up a title or right to possession consistent with the fact of ownership vested in the plaintiff.” (316D–E)

25.  Bridge LJ agreed with Scarman LJ (see 320G) and Megaw LJ was of the same view (see 320G – 321D).

26.  Thus, the burden is on the defendant to show either the portions of the Lot now being occupied by Liu Ping Kuen (or his family or businesses) were either being leased from the owners under circumstances that the owners were and are not entitled to terminate the tenancy, or where particular portion or portions were not let, they had obtained a possessory title by the date of the Counterclaim (9 July 1998) by means of adverse possession.  Relevant to the last issue is whether the doctrine of encroachment applies to defeat the claim based on adverse possession.

27.  The defendant’s current case is that in about 1959, the owners, represented by Liu Kut Sui (and Liu Chun Sing), first leased Portion 1 to Liu Fun Kee, accompanied by the Express Agreement.  Liu Ping Kuen was only about 5 years old at the time and he does not claim to be involved.  However, his current case is that in about 1970, Liu Kut Sui and Liu Chun Sing, on behalf of the owners, also let Portion 1A to Liu Fun Kee, accompanied by the Representation, which in effect renewed the Express Agreement for Portion 1A. Liu Ping Kuen claims that he was present when Liu Kut Sui agreed the leasing of Portion 1A to Liu Fun Kee, and when he made the Representation.

28.  There is no dispute that at least some part or parts of the Lot had been leased to Liu Fun Kee at some time.  The issues are which part(s), and whether, when the part(s) was/were leased, there was any promise or representation made on behalf of the owners.  The burden is on the defendant to prove that the leased areas were only Portion 1 (and later also) Portion 1A, and not Portion 1B, with the leasing accompanied by the alleged Express Agreement and the alleged Representation.  If he fails to do so, he must deliver possession of Portions 1 and 1A as there is no defence thereto. Further, if he cannot prove that Portion 1B has not been leased, it must also follow that he has simply failed to prove that Portion 1B was adversely possessed by Liu Fun Kee and his family, and the plaintiffs must succeed entirely. 

D.   The leased area

29.  I have set out above in some detail the evolvement of the case of the defendant on the pleadings.  In particular, for 11 years, up to 2009, when the defendant applied for leave to amend the Amended Defence and Counterclaim, the case of the defendant was that the whole of the Lot, apart from the portions let to the Chus, was let to Liu Fun Kee in 1959, and the Express Agreement was made at that time.  What was pleaded to have happened in about 1970 was only the giving of consent on behalf of the owners for Liu Fun Kee to build more houses on “Portion 1” (then defined to mean the whole of the Lot apart from the portions let to the Chus), and not any further letting or the renewal of the Express Agreement (see §11(3) above).

30.  That was not only the pleaded case, but was the subject of affirmation evidence from Liu Ping Kuen and another, apparently independent, witness, Chee Yat On, when an interlocutory injunction was applied for on 14 July 1999:

(1) In his Affirmation dated 14 July 1999, Liu Ping Kuen affirmed that “Portion 1” (as then defined) was leased to his father and his family with the Express Agreement, and his father and his family did pay rent for Portion 1 up to 1996.  He did not say at all how he derived knowledge of the alleged Express Agreement, nor did he say anything about 1970.

(2) As stated at §13 above, in his Affirmation dated 17 July 1999 in response, Liu Tsun Ka produced a plan which showed that the portion of the Lot the plaintiffs said had been leased to Liu Fun Kee, which was the portion to the west of the Road except those portions leased to the Chus.  At this stage, a dispute arose as to exactly what was leased to Liu Fun Kee, but the dispute centred on whether the land on the east side of the Road (called“the Site”in the affirmations) was leased.  It was, at that time, common ground that all the land on the west side, except the portions let to the Chus, had been leased to Liu Fun Kee.  There was also no dispute that whatever was let to Liu Fun Kee was let at one go (either in 1959 or 1967), and not on separate occasions.

(3) In reply, the defendant filed the Affirmation dated 16 August 1999 from Chee Yat On affirming that the whole of the Lot (except the portions let to the Chus) was, as far as he knew, let to Liu Fun Kee who was the lawful tenant thereof.  As stated above, Liu Ping Kuen admitted in cross-examination that it was he who told Chee Yat On the above.

(4) Liu Ping Kuen himself also replied to Liu Tsun Ka on, inter alia, the extent of the leased area.  He disputed that the Lot was originally divided into two parts by the Road because the Road was only built in the late 1960’s, but the lease was made in 1959.The whole of the then defined Portion 1, including the Site, he said, was leased to Liu Fun Kee.  These are what Liu Ping Kuen affirmed in his 2^nd Affirmation dated 16 August 1999:

“ The road dividing Portion 1 was built in the late 60s. In other words, only after about 10 years when the Portion 1 was leased to us did the road was built. Thus, it is untrue to say that the Lot was divided into 2 big portions and only the portion on the left of the road was leased to us. In or about 1959, there was simply no concrete road dividing portion 1”.

“ It is always our understanding that the Site has been leased to us.”

“ We certainly would not spend a substantial sum in maintaining the Site for so many years if it had never been leased to us.”

31.  Almost 10 years later, Liu Ping Kuen filed his witness statement dated 8 December 2008.  Attached to the statement was a plan which, apart from the portions let to the Chus, the entire Lot was coloured yellow (save that part of the land on the east side of the Road had not been coloured yellow as that part was supposed to represent “hillside” (山邊, in Liu Ping Kuen’s own written words on the plan)).

32.  In the witness statement, Liu Ping Kuen said:

“ 4. In view of guarding the said LOT from being trespassed, part of the said LOT was let by Liu Kui Sui, deceased and the said Liu Chun Sing on behalf of all the then owners of the LOT to My Father and my family to use (‘Portion 1’) in 1959. Subsequently, the remaining parts of the said LOT were let to one Chu To Keung (‘Portion 2’) and one Chu Yun (‘Portion 3’).

5. The said LOT was identified in the plan annexed hereto. The Portion 1 was coloured yellow, Portion 2 was coloured brown and Portion 3 was coloured purple”.

33.  This was what he said about what happened in about 1970:

“ In a social occasion in or about 1970, Liu Kut Sui, deceased and the said Liu Chun Sing further represented and gave consent to My Father and my family to build more houses on Portion 1 and they reassured the Express Agreement. I was present when Liu Kut Sui, deceased and Liu Chun Sing made such a representation to My Father and my family as they made the representation at my home in an afternoon.”

34.  Nothing was said about the subsequent failed attempts to lease Portion 1B, or the adverse possession thereof, as these were not pleaded by then.  At that time, there were no such thing as Portions 1A and 1B.  It was all one big leased area according to Liu Ping Kuen.

35.  The case that it was only what is currently defined as Portion 1, and later Portion 1A, that had been let to Liu Fun Kee (and his family) was first raised in 2009, when the defendant applied for leave to amend the Amended Defence and Counterclaim,[6] which was eventually allowed by Mr Recorder Chow SC (as Chow J then was) by an Order on 22 December 2010.  This was what Liu Ping Kuen said (in his 4^th Affirmation dated 3 December 2009) when he attempted to explain the original “mistake” on the leased area:

“ 13. The action herein was commenced on 29^th April 1998 shortly before My Father passed away. I was then responsible for handling the legal action for My Father. I had been told by Messrs. Wong & Poon, the then solicitors for My Father (‘the previous solicitor’), that the Plaintiffs claimed that they had let part of the said Lot to My Father but the Plaintiff did not identify the exact part. I told the previous solicitor that it was indeed the case that some land was let to My Father by one Liu Kut Sui and Liu Chung Sing. I also told the previous solicitor the terms of such lease. However, to my recollection, I did not then identify the exact land let to My Father with the previous solicitor. As I was only asked about the land leased to My Father, I did not mention about the land adversely possessed by My Father and me. I remembered that no site inspection was conducted by the previous solicitor.

14. The Defence and Counterclaim came to be prepared on the aforesaid mistaken basis. I was then not aware that a mistake had been made in the Defence and Counterclaim by saying the said Lot was let to My Father.

15. Subsequently, the Defence and Counterclaim was amended after the previous solicitor had engaged counsel to consider seeking injunction against the Plaintiffs from interfering with my use and enjoyment of the said Lot. The counsel had not visited the site as well and he just enquired from me details about the portion of land which was subject of the injunction and the use of the said Lot. I then told counsel that part of the said Lot had been let to My Father and part of it also let to others. I remembered having identified on a plan those parts of the said Lot let to Chu To Keung and Chu Yun. However, insofar as Icould remember I did not identify exactly which part of the said Lot let to My Father. As a result, the site plan was mistakenly coloured and attached to the Amended Defence and Counterclaim. I believe by the previous solicitor prepared the Amended Defence and Counterclaim on the basis that parts of the said Lots were let to others and not My Father.

16. In that material time, I was not aware of the mistake made in the Amended Defence and Counterclaim on the exact part of the said Lot let to My Father.

17. After the amendment of the Defence and Counterclaim in October 1999, the action became dormant. I did not take any interest in the action insofar as I had already secured an undertaking from the Plaintiffs not to interfere with my use and enjoyment of the said Lot.

18. I have been told by RY [i.e. the current solicitors for the defendant] that the Plaintiffs had back in 2002 and then 2005 filed notices of intention to proceed. It was only after the 2005 notice was filed that some steps came to be taken in the action. There was discovery done in mid 2006. Then the action went to sleep again.In December 2007, the Plaintiffs filed yet another notice of intention to proceed. The action was reactivated at long last. In December 2008, RY prepared a witness statement which I had been told was prepared on the basis of the matters said in the Amended Defence and Counterclaim. I signed it without being aware that there was a mistake in the Amended Defence and Counterclaim and hence my witness statement did not point out the exact part of the said Lot let to My Father.

19. Shortly after I had signed my witness statement in December 2008, I was told by RY that several witness statements were received from the Plaintiffs. The Plaintiffs’ witness statements are in Chinese. I was given copies of them and I was asked by RY to read them and see whether I had any comment. As the Plaintiffs’ witness statements are in Chinese, I can understand them. I came to realize that the Plaintiffs’ took the view that it was my case that besides Chu To Keung and Chu Yun, the rest of the said Lot was let to My Father. I thought that it was a wrong understanding of my case as indeed only part of the said Lot was let to My Father and a very substantial portions of it (being Portion 1B, Portion 1C and Portion 1D) were adversely possessed by My Father andme, RY realized that a mistake had been made in the Amended Defence and Counterclaim and further amendment was necessary. I changed counsel and site inspection was carried out in early 2009 by the new counsel and RY and during which I gave instructions to RY and my new counsel about the portions of land which My Father and I had adversely possessed and which portion of land was let to My Father.

22. With reference to the matters aforesaid, I verily believe that the mistake was made in the Defence and Counterclaim and the Amended Defence and Counterlcaim as well as in my witness statement on which portion of the said Lot was let to My Fsther arose out of mis‑communication between me and the previous solicitor and RY. The mistake was inadvertent and innocent.  It was corrected once I became aware of it on reading the Plaintiffs’ witness statements and having clarified the matter with my present solicitor of RY.  The amendment was only held up because of the medication process.  Indeed, I verily believe that my case on the leased portions of the said Lot as said in the New Re-AD&CC is to some extent consistent with the Plaintiffs’ case as pleaded and revealed in their witness statements that only some portion of the said Lot was let to My Father.  It means that my proposed amendments are indeed bona fide.”

36.  I am afraid I cannot accept the explanation given by Liu Ping Kuen on the change of the defence case:

(1) While his 4^th Affirmation attempted to explain the “mistake” in the Amended Defence and Counterclaim, there was no attempted explanation of why the mistakes were made in his 2^nd Affirmation as to the leased area as well.  As I said above, the dispute between the parties as to the area let to Liu Fun Kee was squarely raised by the Affirmation of Liu Tsun Ka, and not only Liu Ping Kuen filed his 2^nd Affirmation to specifically challenge that, by expressly saying that there was no division of the two sides of the Lot by the Road since it was not built until the late 1960’s and so the lease could not be only on the west but not the east side of something not in existence, he also told Chee Yat On that, and procured him to say that on affirmation.  Liu Ping Kuen in cross-examination admits thathe had been translated the Affirmation of Liu Tsun Ka, and he filed his 2^nd Affirmation, and procure Chee Yat On’s Affirmation, to counter that specifically.  While I fully appreciate that the focus of the dispute at the time was whether the land on the east side of the Road had been leased, and not whether the land on the west side of the Road (consisting of Portions 1, 1A, 1B, 1C and 1D and the case for the last three has now been changed dramatically) had been leased, detailed instructions (such as when the Road was built) as to the leased area must have been given by Liu Ping Kuen to his “previous solicitor”[7] by reference to the plan, when the 2^nd Affirmation, and the Affirmation of Chee Yat On, were being prepared.  Liu Ping Kuen even produced an aerial photo, taken on 22 February 1962, to show that the Road had not been built by then.  Any mistake made when the Amended Defence and Counterclaim and the Affirmation, and the plan annexed thereto, were prepared, must have been discovered by then.  The fact that it was not shows that there was no mistake in the first place.

(2) I simply cannot accept that, in such circumstances, the case pleaded in the Amended Defence and Counterclaim, and at the time supported by an Affirmation of Liu Ping Kuen, was not based on clear express instructions from him but was somehow the result of inadequate instructions or communications and a mistake being made by the “previous solicitor” as a result.  I do not find the explanation given in the 4^th Affirmation convincing and I decline to accept it.

(3) Further, in my judgment, that explanation is inconsistent with what Liu Ping Kuen now says in cross-examination.

(4) The explanation given in the 4^th Affirmation of Liu Ping Kuen attempts to suggest that it was a failure by Liu Ping Kuen to identifyto his previous solicitor clearly the area leased to his father, resulting in the mistake made by the solicitor in preparing the Amended Defence and Counterclaim.  It was a case of miscommunication.  That mistake was supposedly repeated when the witness statement was prepared in 2008 because RY simply prepared the same based on the Amended Defence and Counterclaim.  It was not suggested in the 4^th Affirmation that Liu Ping Kuen himself thought at the time that the leased area was on both sides of the Road (except the parts let to the Chus).  Rather, the implication that was a mistake was made by the previous solicitor, based on inadequate communication, which he did not share, just that he was not aware of the mistake that had been made.

(5) However, in cross-examination, Liu Ping Kuen accepts that he was provided with a written Chinese translated version of all his Affirmations, and his witness statement, and so it is not the case that he failed to understand what he himself had said in his 2^nd Affirmation and in his witness statement.

(6) During cross-examination, Liu Ping Kuen is referred to the plan exhibited to his Affirmation (where both sides of the Road were bordered with a yellow line save the parts leased to the Chus, as being the leased area), and he says when he gave instructions to his lawyers when applying for the injunction in 1999, which would be the same time as the preparation of the Amended Defence and Counterclaim:

「 我同律師講呢，除—即係佢呢個lot呢，喺有個plan 㗎嘛，除咗朱圖強, 朱潤呀，即係呢兩嚿呢，喺我黃色住嗰度都係我用嘅……

係我租晒其他嗰啲，係我」

This suggests that he did give express instructions to his lawyers by reference to a plan with the yellow boundary drawn, explaining to them the yellow-bordered part was the part leased, and this is at variance with what he said in his 4^th Affirmation, which suggested that he did not identify on a plan the part leased to Liu Fun Kee.

(7) Later, in his cross-examination, he is again shown the plan where the land on both sides of the Road (except the parts leased to the Chus) were bordered yellow:

「 問： ……油咗黃色嘅部分係一樣嘅。當時你嘅理解，係你同你爸爸租晒？

答： 我爸爸租嘅，嗰陣時我理解，嗰陣時我爸爸都未死……

問： 你之所謂業權就係因為你當時—爸爸話俾你聽佢租晒㗎嘛，係咪，成個第一地段，左邊，右邊？

答： 係，我理解就係全部租晒嘅。」

Referring to his witness statement, he says in cross-examination:

「 問： 係。咁而家你去到2008年，你都係油晒佢㗎喎，呢度。

答： 係呀。我主要嗰陣時係—我落嗰份誓章，我都係諗住係租你呢度㗎。

問： 係租晒嘅？

答： 係。

問： 租晒？

答： 係。

問： 所以就油晒成個黃色，係咪？

答： 係，係。

問： 當時2008年你即使寫咗“山邊”上去呢，你個諗法都係話油咗黃色嘅部分呢，係業主租晒俾你同你爸爸嘅。

答： 係，冇錯，你講得啱……

問： 當時嘅說法係啱㗎嘛。

答： 係，我諗住係啱先會咁講㗎。」

Even when he is asked why he said that the whole of the Lot (except the parts leased to the Chus) was leased when he asked for the injunction in 1999, and now that he is saying that a mistake had been made, Liu Ping Kuen still says:

「 即係當時我誤會咗全部都係我嘅，我爸爸嘅，租嘅。」

The effect of this evidence is that in 1999 he was himself under the belief or impression that the whole of the west and east sides (save for the parts leased to the Chus) were leased to Liu Fun Kee, and he said so because he thought it was correct at the time.  Thus, if that is really a mistake (as to the leased area), it was his own mistake at the time which was communicated to the solicitor who then recorded it in the Amended Defence and Counterclaim and the Affirmations correctly as he was instructed, and not that the solicitor made a mistake resulting from a miscommunication, as suggested in the 4^th Affirmation.  It is therefore not the case that it was somehow his previous solicitor who prepared the plan, or the Amended Defence and Counterclaim or the 2^nd Affirmation, mistakenly because Liu Ping Kuen failed to explain clearly, as he said in the 4^th Affirmation. It was his own thinking at the time which he communicated to the solicitor, which he said because he believed it to be correct, and elsewhere I have already said he must have given detailed instructions on the leased area to his solicitor at the time.

(8) I also cannot accept the explanation as to why the “mistake” was repeated when the witness statement was prepared in 2008.  The explanation was basically that RY prepared the witness statement based on the Amended Defence and Counterclaim.  However, apart from the inconsistencies between this explanation in the 4^th Affirmation and the testimony of Liu Ping Kuen, it is clear that the witness statement is more detailed.  For example, in the Amended Defence and Counterclaim the only reference to what happened in about 1970 was at §5(c), which I set out at §11(3) above.  What happened in about 1970 was not mentioned further in the Affirmations of Liu Ping Kuen filed before the witness statement, in which he said:

“ In a social occasion in or about 1970, Liu Kut Sui, deceased and the said Liu Chun Sing further represented and gave consent to My Father and my family to build more houses on Portion 1 and they reassured the Express Agreement. I was present when Liu Kut Sui, deceased and Liu Chun Sing made such a representation to My Father and my family as they made that representation at my home in an afternoon.” [emphasis added]

There are other matters where more details have been provided in the witness statement, for example, the extent of expenditure and investment on the land by Liu Fun Kee, Liu Ping Kuen and the family.  

(9) In the plan attached to the witness statement, there were the additional characters “山邊”, which Liu Ping Kuen admits were written by him after the colour yellow had been applied.  This suggests that he did study, and gave instructions, on the plan, which coloured the whole of the Lot, except the parts leased to the Chus and part of the land on the east side of the Road identified as hillside “山邊”.

(10) The comparison between what was pleaded, and what was said in the witness statement, about 1970 and other matters shows that RY could not have prepared the witness statement simply from the existing pleadings and affirmations, and further instructions on those matters must have been given by Liu Ping Kuen at some stage before, or when, the witness statement was prepared.  For example, the question of whether the “Express Agreement”, supposedly made in 1959, was mentioned again in 1970 was dealt with, for the first time on paper in the witness statement.  Liu Ping Kuen must have given instructions on this.  However, if, as is what the defendant says now to be the truth, the Express Agreement was repeated on the occasion of the grant of the lease of Portion 1A, it is difficult to see how this was not explained by Liu Ping Kuen to his solicitor whenever he first gave instructions on the “reassuring” of the Express Agreement in 1970, which must be at a time before the witness statement was finalised.  In giving such instructions, the leasing of a further part of the west side of the Road must have been mentioned, thereby “exposing” the “mistake”.  It is difficult to see how the “mistake” on the extent of the leased area would not have been discovered by then, but was in fact repeated. 

(11) In cross-examination, Liu Ping Kuen accepts that when the witness statement was prepared, he was still under the impression or belief that the whole Lot (except the parts leased to the Chus) was let to Liu Fun Kee, and not because of any miscommunication or misunderstanding between him and RY.  This is again inconsistent with the explanation in the 4^th Affirmation. He eventually accepts in cross-examination that the problem was with him, and not with the solicitor, or that it was because of miscommunication.

(12) The above shows that before 2009 there were quite a few occasions when Liu Ping Kuen would likely to have been consciously considering, and giving instructions, on the extent of the area leased, but each time he affirmed that the leased area was the whole Lot except the parts leased to the Chus.  Further, the fact that he did prepare his 2^nd Affirmation, and asked Chee Yat On to produce an Affirmation, to deal with the question of the leased area shows clearly that he was aware of the dispute regarding the leased area raised by Liu Tsun Ka in his Affirmation in 1999.  I cannot accept his evidence that he only knew of the “mistake” when he read the plaintiffs’ witness statements as he knew their case all along.  Further, his explanations in the 4^th Affirmation and in his oral evidence differ.  In such circumstances I cannot accept his explanation on how and why the “mistake” was made in 1999 and repeated in 2008.

37.  The fact that Liu Ping Kuen did not mention the leasing of Portion 1A in about 1970 as per his current case until 2009, when what supposed to have happened in about 1970 was referred to before then, also cast grave doubt, in my judgment, on the credibility of his current case, in particular as to what actually happened in about 1970.  It seems to me to be incredible that his current case (only Portion 1 let before 1970 but with an extension to Portion 1A and the Representation made in 1970), if true, but which is totally inconsistent with his earlier case (all of the Lot (except portions let to the Chus) leased to Liu Fun Kee already by then, and the conversation in 1970 was only to allow further houses to be built on leased land with the consent of the owners, with no mention of further leasing), would not have been brought out until more than 10 years after the commencement of the action, when events in about 1970 had indeed been referred to.  I do not accept Liu Ping Kuen’s testimony that the matter was not mentioned earlier because he was not asked: its importance must be self-evident to him at all times.  The point is that 1970 had been mentioned before, meaning that instructions must have been taken from him, but in an inconsistent manner to what he now alleges.

38.  Further, from the report of the defendant’s own expert, after studying the available aerial photographs and survey maps of the Lot, in 1963 a track was found to be running at the centre of the Lot.  In 1973, the track became wider and was believed to be used as vehicle access.  However, the actual photos showthat as the track ran north, it bent towards the northwest and took a path different from that of the Road.  This shows that the Road was in fact built sometime between 1963 and 1973 (which is not inconsistent with what Liu Ping Kuen says), and now that it is common ground that the land on the east side of the Road was never part of the leased land, as distinct from the west side, where at least some of the land was, the balance of probabilities is, and I find, that the lease was first granted after the Road was built, i.e. not before 1963 (and thus not 1959 as claimed by the defendant), by reference to the Road.  This further weakens the credibility of Liu Ping Kuen’s case.

39.  Since I, for the above reasons, do not accept the explanation given by Liu Ping Kuen as to why the case pleaded in the Amended Defence and Counterclaim, and stated in his Affirmations and witness statement, was mistaken, I cannot accept as credible his current case which is totally inconsistent with the aforesaid.  That of course, does not mean that I accept the earlier version.  The result is simply that the defendant has adduced two inconsistent versions of what had been let and what happened in about 1970, without an acceptable explanation, and thus there is no evidence before me which I find I can accept regarding the extent of the Lot leased to Liu Fun Kee at any time, or that any part thereof which Liu Fun Kee, Liu Ping Kuen or the family possessed at any time before 1 January 1997 was due to adverse possession and not under a lease under which they paid rent.  The defendant has simply failed to prove his case that the leased area is only Portions 1 and 1A, or that Portions 1B has not been leased.

40.  I should point out here that I have not been assisted by the evidence of Liu Tsun Ka and Liu Wai Man, who both confirm that they have no personal knowledge of the extent of the lease granted in terms of area, the date of the original grant, or the terms thereof (except the annual rent, which they could see from the rent receipts and records starting in the early 1980’s).  What they say in evidence about those matters was derived from word of mouth from others in the family, mainly from year-end gatherings, when they visited the Lot for grave sweeping, and casual conversations.  They are unable to say that their knowledge was derived from someone whom they could name and whom in fact had personal knowledge of those matters.  Although Liu Tsun Ka said he was also told about the lease by his father, Liu Kam Shing, as well, there is no evidence as to how his father knew, and whether personally or not.

E.   The Express Agreement and the Representation

41.  That leaves the question of the Express Agreement and the Representation.  By his own admission, Liu Ping Kuen was not present when it was first allegedly made in 1959. There is therefore no direct evidence of that.  His case is that it was repeated in 1970 when Portion 1A was further let to Liu Fun Kee in his presence.  However, for reasons stated at §37 above, I cannot accept his evidence that the same was repeated and extended to Portion 1A in 1970 in his presence, that being inconsistent with his earlier case and evidence with no proper explanation.  What I said and found at §38 above also casts doubt on what Liu Ping Kuen said about the original grant, including the question of the Express Agreement.  Even though Liu Ping Kuen also says that Liu Fun Kee also told him about the Express Agreement from time to time, given my finding that what Liu Ping Kuen said about the Express Agreement and Representation regarding 1970 cannot be accepted as credible, and the doubt referred to in the preceding sentence, I also decline to accept such evidence of Liu Ping Kuen which is on the same issue, and which is not supported by any objective evidence, and is merely his bare assertion.  

F.   Burden of proof not discharged

42.  In the light of the lack of proper and acceptable evidence before me, save that I find that on the balance of probabilities the lease was first granted to Liu Fun Kee by and on behalf of the owners sometime after 1963, I am unable tomake findings of the extent of the area leased, or whether the Express Agreement and the Representation as alleged was made.  I am further unable to make findings as to whether what the defendant has alleged to have happened in about 1970 in fact did or did not happen.  The claim of proprietary estoppel based on the Express Agreement and the Representation must fail.  Further, the claim for possessory title for Portion 1B based on adverse possession must also be rejected as no animus possidendi can be found.  It is unnecessary for me to deal with the doctrine of encroachment as a result.

43.  As the burden is on the defendant to prove the entitlement to remain on the Lot despite the NTQ, which is not discharged, I shall order the delivery of possession of Portions 1, 1A and 1B by the defendant to the plaintiffs.

44.  In deciding this matter ultimately on the burden of proof, I have considered all the arguments and evidence of both sides, including:

(1) The allegation (but with no objective evidence) that Liu Fun Kee tried to lease Portion 1B three times in the early 1970’s:

if I cannot find one way or another whether Portion 1B had been leased by 1970, then I do not see how I can make findings on these alleged attempts which are supported only by the bare assertion of Liu Ping Kuen.  Further, this was only introduced by the defendant very late in 2015 with no real explanation, and his earlier cases were different (first, Portion 1B was part of one big leased area in 1959, and then Portion 1B was first possessed by Liu Fun Kee and his family in 1970 (rather than 1973 as is now alleged)) even though the claim for adverse possession of Portion 1B was made a few years earlier.

(2) That there were other “lessees” in the 1980’s on the west side of the Road apart from the defendant and the Chus:

while this makes the case of the plaintiffs that the whole of the west side, including Portion 1B, had been leased to Liu Fun Kee (apart from the Chus) somewhat questionable, that cannot in itself prove the case of the defendant, who has the burden of proof regarding the extent of the leased area, which is not, as I held, discharged.  In particular, according to Liu Ping Kuen himself, none of these leases were in Portion 1B, and thus cannot assist the defendant regarding the status of Portion 1B (i.e. leased or otherwise).

(3) That the annual rent was so low (HK$30 initially rising to HK$500 in 1995) for such a large piece of land:

while from the evidence of the rent paid by the other tenants in the 1980’s, as well as the valuation reports adduced by both sides on market rental value of various Portions of the Lot in and since 1997, the annual rent from HK$30 to HK$500 was very low for Portion 1 only, and much more so of course if the rent was to pay for Portions 1, 1A, 1B, 1C and 1D, the plaintiffs’ case is that part of the Lot was leased to Liu Fun Kee originally so that he could keep an eye on the Lot and to protect it from being trespassed.  This was also originally the pleaded case of the defendant (see §4A(b) of the Amended Defence and Counterclaim: see §11(1) above) although that was later deleted in the Re-Re-Amended Defence and Counterclaim filed on 20 May 2011.  However, this purpose of the letting was referred to by Liu Ping Kuen in his witness statement (see §32 above), which he affirms at trial, and which has not been retracted or corrected.  On that basis, to let Liu Fun Kee to have the Lot at a much reduced rent is a probable explanation.  I do not and need not put it higher than that, and in my judgment the very low rent does not therefore point to an inference, on the balance of probabilities, that the extent of the area leased was only Portion 1 (and then Portion 1A as well).

(4) Liu Fun Kee, Liu Ping Kuen and the family had invested a lot on the land:

there is no objective evidence as to how much and in any event as Liu Ping Kuen himself argued in 1999 why would he do so if he did not have a lease (§30(4) above)?  As the alleged investments/expenses were supposedly on Portion 1B as well at a time when the supposed adverse possession was less than 20 years, those expenses could not have been made because they thought they have a possessory title, and, on their own current case, the Express Agreement and Representation even if made would not have applied to Portion 1B anyway and so the expenses on Portion 1B could not have been made in reliance of the Express Agreement and the Representation.

(5) I do not see how the rent records (which do not show the delineation,site area, of the portion let to Liu Fun Kee, or the terms thereof save the rent) and the aerial photos and survey maps (which show the various uses of the Lot at different times but cannot tell us by whom and pursuant to what (lease or adverse possession)), being the only contemporaneous documents, assist in resolving the question of the extent of the leased area or what happened in about 1970.

G.   Reliefs

45.  The parties have, in their closing submissions, based on the valuation reports and the joint statement of the valuation experts, agreed on the mesne profits to be paid by the defendant on Portions 1, 1A, 1C and 1D as follows:

(1) For Portion 1,  the sum of HK$26,187 up to 17 September 2013 and at HK$2,548.50 per annum thereafter until delivery of possession.

(2) For Portion 1A,  the sum of HK$24,589 up to 17 September 2013 and at HK$2,388.50 per annum thereafter until delivery of possession.

(3) For Portion 1C,  the sum of HK$28,662.50 up to 28 February 2013 (when possession was delivered).

(4) For Portion 1D,  the sum of HK$75,259 up to 28 February 2013 (when possession was delivered).

46.  For Portion 1B, the area of dispute is a “white hollowed out” area of about 294 square metres on the west side, which the plaintiffs say it had let out to some other tenants since 2011, whereas the defendant say that it had never been possessed by Liu Fun Kee or his family.  Since the plaintiffs have the burden of proving their case on this part of the matter, I do not believe that they have proved on the balance of probabilities as to when and for how long the defendant did possess that area, given that they have admitted that at least at some stage the defendant did not.  I would therefore award mesne profits to the plaintiffs on Portion 1B with the hollowed out area excluded.  As submitted by the defendant, the mesne profits for that portion is HK$207,665.47 up to 17 September 2013, and at HK$20,208.57 per annum thereafter delivery of possession.  I accept that calculation and order the defendant to pay those sums accordingly, as well as the sums referred to in §45 above.

47.  As for interest, I award the same on the mesne profits payable for each year for each Portion, with such interest accruing from the first day of the following year until actual payment.  For example, for the mesne profits for 1997 for Portion 1, interest accrues from 1 January 1998 until actual payment.  I believe that the parties are in a position to work out from the valuation reports and the joint statement, and my rulings above, the annual sum for each portion.  The rate is 1% above prime rate from time to time until the date of this judgment, and at the judgment rate thereafter.

48.  I order the defendant to deliver up vacant possession of Portions 1, 1A and 1B to the plaintiffs within three months of the date of this judgment, or such further time as the plaintiffs shall agree in writing or as extended by the court on application, and for this purpose liberty to apply is granted. 

49.  The Counterclaim is dismissed.

50.  I also make an order nisi that the plaintiffs are to have the costs of this action and Counterclaim to be taxed if not agreed, with certificate for two counsel.

51.  I thank both leading counsel and their respective teams for their assistance.

Annex

HCA 6728/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 6728 OF 1998

_______________

________________________

R U L I N G

________________________

1. This is a case about certain land in the New Territories, known as Lot No 285 in Demarcation District No 52, Fu Tei Au, Sheung Shui (“the Lot”).

2. By a Writ of Summons and Statement of Claim, dated 29 April 1998, the plaintiffs allege that, in about 1967, portion of the Lot was let by one Liu Kut Siu (deceased), a relative of the plaintiffs and former owner of the Lot, to the then defendant, Liu Feng Ki (who died shortly after the institution of these proceedings), and the lettingwas on a yearly basis.  By way of clarification, the carriage of the defence now is in the hands of Liu Feng Ki’s personal representative.

3. On 22 March 1996, the plaintiffs’ then solicitors served on Liu a Notice to Quit but Liu refused to quit and deliver up the Lot.

4. The plaintiffs seek an order for delivery of vacant possession of the Lot, arrears of rent and mesne profits.

5. In his Amended Defence, dated 9 July 1998, the defendant alleged that there was an oral express agreement made between Liu Kut Sui and another, on the one hand, with Liu Feng Ki and his family, on the other hand, to the effect that, so long as Liu Feng Ki and his family paid rent they could stay on the property as long as they wished.  Hence, the Notice to Quit was invalid and ineffective because it was in breach of the express agreement.  The defendant also counterclaimed damages to be assessed.

6. Also in the Amended Defence and by reference to an attached “Lot Index Plan”, the defendant alleged that part of the Lot (Portion 1) was let to Liu Feng Ki and his family and the remaining parts of the Lot (Portion 2 and Portion 3) were let to two others.

7. On 4 January 2011, the defendant was given leave to file a Re‑Amended Defence and Counterclaim, which amendments “drastically amended the Defendant’s case” as noted by Suffiad J in a Ruling, dated 26 January 2011, which ruling concerned the plaintiffs’ application to be released from a certain undertaking.

8. As a result of the amendments and by reference to an amended attached “Lot Index Plan” the defendant’s case became:

(1) In about 1959, Liu Kut Sui let a part of the Lot (Portion 1) to the defendant and his family with the oral express agreement that, so long as the defendant and his family paid rent, they could remain on the property for as long as they wished.

(2) In about 1970, Liu Kut Sui let another part of the Lot (Portion 1A) to the defendant and his family “reassuring”, it is said, the express agreement that, so long as the defendant and his family paid rent, they could remain on the property for as long as they wished.

(3) In about 1970, the defendant and his family began exclusive use, possession and control of another part of the Lot (Portion 1B), which use continued openly and uninterrupted for 20 years, giving rise to a claim for adverse possession.

9. So, whereas the defence originally was that the defendant and his family occupied the entire subject property under a tenancy agreement with an express term that they could remain for as long as they wished provided they paid rent, in 2011 the defence changed to an allegation that part of the subject property was occupied under a tenancy agreement with the express term and an adjacent part of the property was subject to the defendant’s claim for adverse possession.

10. On 20 May 2011, the defendant filed a Re‑Re‑Amended Defence and Counterclaim, raising proprietary estoppel, aside from recording this change nothing more needs to be said.

11. By a summons, dated 23 December 2014, the defendant applied for leave to re‑amend this Re‑Re‑Amended Defence and Counterclaim and leave to file and serve a second Supplemental Witness Statement.

12. Certain consequential orders were sought, including leave to the plaintiffs to file and serve a Re‑Re‑Re‑Amended Reply and Defence to Counterclaim and further Supplemental Witness Statements.

13. The amendment pleaded that, on three occasions in 1970 and 1972, Liu Feng Ki asked Liu Kut Sui to let the northern part of Portion 1B to him but Liu Kut Sui refused. Thereafter, it is alleged, in 1973, Liu Feng Ki and his family started taking possession and control of the whole of Portion 1B.

14. The second Supplemental Witness Statement deals with two topics:

(1) The three occasions in 1970 and 1972 when, it is alleged that, Liu Feng Ki asked Liu Kut Sui to let the northern part of Portion 1B to him, Liu Kut Sui’s refusal and Liu Feng Ki and his family taking possession and control of the whole of Portion 1B in 1973.

(2) The amount of money the defendant and his family allegedly spent on erecting certain structures on Portions 1, 1A and 1B.

15. The application was heard on the first day of trial, 13 January 2014, and submissions occupied the entire day.  I reserved my decision overnight.

16. I was told by Mr Chan Chi Hung SC, leading counsel for the defendant, that he was instructed somewhat late and that during conference he advised the defendant to apply to amend and file and serve a supplemental witness statement in order to deal with a perceived risk that the plaintiffs might raise the presumption of encroachment against the defendant’s claim of adverse possession.

17. Mr Chan asserted that it was by no means clear that the plaintiffs had pleaded the presumption of encroachment and that his advice had been given out of a sense of caution.  He further asserted that, in any event, the plaintiffs should not be permitted to rely on the presumption because it had not been pleaded.

18. It followed, Mr Chan submitted, that if I did not allow the plaintiffs to rely on the presumption, he would not need to pursue this application but, if I did allow the plaintiff to rely on the presumption then, of course, he would pursue the application.

19. Mr Chan submitted that the plaintiffs should have pleaded the presumption and the facts in support thereof as part of their case or, at any rate, in their Reply but have not done so; they have not put forward the factual basis for the presumption, he says.  Mr Chan also submits that the plaintiffs cannot put the defendant to the burden of proving possession of Portion 1B because in the plaintiffs’ case Portion 1B was let to the defendant.

20. Mr Chan also submits that it is not open to the plaintiffs to rely on the presumption because from the outset the plaintiffs’ case was that Portion 1B was the subject of a tenancy agreement and no issue of the presumption was raised.

21. I pause here to set out the nature of the presumption and in this regard I refer to Headnotes (1) and (2) of Secretary for Justice v Chau Ka Chik Tso (2011) 14 HKCFAR 889:

“(1) The principle of ‘encroachment’ was that if a tenant went into, and remains in, occupation of land belonging to his landlord, it was to be presumed, particularly if the encroached-upon land was adjoining the demised land, that the tenant’s encroachment was intended by him to annex the encroached-upon land to his demised land so as to enable him to occupy and use the encroached-upon land as if it were part and parcel of the demised land. The presumption was a rebuttable one and could be rebutted by evidence that the tenant intended to occupy the encroached-upon land not simply as tenant but as owner. …

(2) As the landlord was not bound by the presumption and was entitled to treat the encroacher, his tenant of the demised land, as a trespasser vis‑à‑vis the encroached‑upon land, the trespasser’s possession was “adverse” to the landlord for limitation purposes. However, the effect of the tenant’s trespass depended on the trespasser’s intentions. If the lessee’s intention, presumed and unrebutted or simply proved, was to treat the encroached‑upon land as annexed to the demised land, it was a limited adverse possession, for it did not deny, and indeed accepted, the right of the lessor to recover possession on the termination of the demise. In such a case, if the possession continued uninterrupted for the requisite limitation period, the encroacher obtained, in effect, a leasehold title to the encroached‑upon land for a period commensurate with the term for which he held the demised land. And on the expiry of that term, the lessor was entitled to recover possession of the demised as well as the encroached‑upon land. Section 9(1) of the Limitation Ordinance (Cap.347) applied. …”

22. On the other hand, Mr Ambrose Ho, the plaintiffs’ leading counsel, submits that the burden of proving adverse possession rests with the defendant to the extent of proving the elements which establish adverse possession of Portion 1B in the context of an admitted subsisting landlord and tenant relationship between the parties in respect of Portion 1 and Portion 1A.

23. Mr Ho also submits that the plaintiffs do not have to prove the presumption because if the defendant fails to prove adverse possession, then the presumption is that the defendant occupies the subject land as part of the demised premises by way of encroachment.  It is a question of legal principle and the plaintiffs are entitled to rely on the facts adduced by the defendant, he says.

24. Mr Ho argues that the defendant has to prove he is claiming the land to the exclusion of the landlord and, if the presumption is against him, it is for the defendant to deal with the question as to whether the presumption applies, especially given that an element necessary to establish the presumption is the tenant’s intention concerning whether he is occupying the land to deny the landlord’s proprietary right.

25. All that has been claimed, says Mr Ho, is exclusive use, possession and control, which does not make out a case for adverse possession in the context of landlord and tenant relationship without evidence of an intention to deny the landlord’s proprietary right.  The defendant’s pleaded case establishes only an encroachment, he says.

26. Indeed, Mr Ho says that the defendant’s pleaded facts set out in paragraphs 5(e) to (i) of the Re‑Re‑Amended Defence and Counterclaim, the pre‑existing relationship of landlord and tenant and the proximity of Portion 1B to Portion 1 and Portion 1A are facts upon which the plaintiffs can rely to say that adverse possession has not been made out.  In support of this proposition, Mr Ho relies on Drane v Evangelou & ors [1978] 1 WLR 455 at p458B–G, in particular:

“… As we said in In re Vandervell’s Trusts (No. 2) [1974] Ch. 269, 321‑322:

  ‘It is sufficient for the pleader to state material facts.  He need not state the legal result.  If, for convenience, he does so, he is not bound by, or limited to, what he has stated.  He can present, in argument, any legal consequence of which the facts permit.’”

27. I shall deal first with this pleading point.

28. I do not agree with Mr Chan’s submission that the plaintiffs should have pleaded the presumption in the Statement of Claim.  The plaintiffs’ case was simply that there was a tenancy agreement in respect of the entire subject property; the issue of the presumption arose when the defendant pleaded adverse possession.

29. Nor were the plaintiffs obliged to plead the presumption in the Reply.  If the defendant fails to prove adverse possession in the context of an existing landlord and tenant relationship in respect of the adjacent Portions 1 and 1A and encroachment on Portion 1B, it is to be presumed “that the tenant’s encroachment was intended by him to annex the encroached‑upon land to his demised land so as to enable him to occupy and use the encroached‑upon land as if it were part and parcel of the demised land.” (See Chau Ka Chik Tso, supra.)

30. In my view, the plaintiffs are entitled to rely on the presumption.

31. Mr Ho relies also on, estoppel, citing a number of authorities for the proposition that the presumption is a specie of estoppel.  See: Elements of Land Law, 5^th edn, Gray & Gray, para 9.1.61; Chau Ka Chik Tso, §§21, 31, and 36, per Ribeiro PJ.  Mr Ho says that estoppel has been pleaded in paragraph 14 of the Re‑Re‑Amended Reply and Defence to Counterclaim.

32. Mr Chan submits that the proposition that the presumption is a specie of estoppel should be treated with caution and seeks to contrast Ribeiro PJ’s judgment with Lord Scott’s judgment.  Given that I have already decided that the plaintiffs are entitled to rely on the presumption, agreeing with Mr Ho’s submissions, I do not need to resolve this point.

33. So much for the pleading point, I now turn to the application itself.

34. Mr Ho objects to the application on the basis of delay alone, referring me to Luan Gang v Simpson Marine Limited, unreported, HCAJ 171/11, 2 September 2013, for the proposition that, unless there are exceptional circumstances and there are good reasons for the delay, one should not expect the courts to grant any late applications.  He also submits there is prejudice, which I shall deal with shortly.

35. Mr Chan counters with the following arguments:

(1) that the plaintiffs have had the proposed amendments and the draft supplementary statement for four weeks and could have taken instructions;

(2) the plaintiffs have given no details of prejudice and the new evidence is a short point; and

(3) the proceedings have been delayed since 1998.

36. As to Mr Chan’s first point, in my view the plaintiffs were not obliged to take instructions before any decision by the court as to whether the application would be allowed.  To decide otherwise would mean that a party could avoid the consequences of its own delay by simply providing drafts to the other side, thereby putting the onus on the other side to deal with the matter.

37. As to the second point, Mr Ho submitted that his clients would require time to consider the amendments and new evidence.  I accept this.

38. Mr Ho does submit that prejudice arises from the fact that the new allegations concern alleged conversations with a man who is deceased (Liu Kut Sui) and which took place 40 years ago. I appreciate Mr Ho’s point but I think that questions of prejudice in respect of this application are more concerned with making the application on the first day because, given that Liu Kut Sui died in 1995 and the alleged conversations took place so long ago, this element of prejudice has not changed materially since 2011, when adverse possession was first pleaded.

39. As to Mr Chan’s third point, I do think that this is a matter of context that weighs in the defendant’s favour.  I take into account that this application has been made on the first day of trial and to allow the application will likely result in an adjournment of the trial, which will result, in turn, in the plaintiffs waiting longer for a resolution of their claim but I have heard no submissions and there is no evidence that the matter is urgent or even that the plaintiffs have some particular matter pending the resolution of this action.  Moreover, this matter has had long periods of inactivity since 1998, with neither the plaintiffs nor the defendant pursuing progress.  I am told that it was only after Mr Chan was briefed that the presumption was considered and advised on.  As to why the presumption had not been dealt with before and as to the reason for delay in making the application, the defendant, in essence, blames his legal team.  He says, in his 9^th affirmation, paragraph 3:

“… When I had my earlier statements prepared, I had not been asked to provide information on or details of these 2 areas and as a result, those statements do not contain the appropriate level of details. …”

In this regard, Mr Ho submits that the new evidence of the conversations appears to be recent invention but I cannot resolve that issue simply on affirmation.  There is, of course, disruption to the court caused by delay, but, again, the defendant places the blame for delay on his legal team.  I have kept in mind the underlying objective of Order 1A, rule 1(d).  On balance, I shall give the defendant, reluctantly, this opportunity to put his case in order and I allow the application.

40. I have tended to focus on the evidence and amendments concerning the alleged conversations in 1970 and 1972 but my reasons apply also to the new evidence concerning the costs allegedly expended on the structures.

41. I will hear counsel on the form of the Orders and costs.

HCA 6728 /1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6728 OF 1998

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

BETWEEN

__________________________

DECISION

__________________________

A. Introduction

1.  This is the hearing of two striking out Summonses taken out by the registered co-owners (“the Applicants”) of Lot No. 285 in DD 52, Fu Tei Au, Sheung Shui, NT (“the Lot”) against Mr Liu Ping Kuen (“LPK”).

2.  The Applicants are the Plaintiffs in HCA 6728/98 (“the 1998 Action) and the Defendants in HCA 73/11 (“the 2011 Action”) respectively.

3.  LPK is the Defendant in the 1998 Action and the Plaintiff in the 2011 Action. He is the son of Liu Fun Kee, now deceased (“the Deceased”).  The parties in the 2011 Action are simply the flip side of the parties in the 1998 Action.

4.  In the 1998 Action:

(1) The Applicants seek possession from the Deceased the parts of the Lot occupied by him on the basis that the lease relating to those parts of the Lot had expired by way of the service of a notice to quit. At the time of the issue of the action, the Deceased was still alive.  However, LPK took over as the Defendant in the claim after the Deceased passed away in October 1998.

(2) The Deceased (and later LPK) initially defended the claim^[1]principally on the basis that a substantial part of the Lot (identified as the “Yellow Portion” in the Amended Defence and Counterclaim) occupied by the Deceased and his family members were leased to the Deceased by way of an oral agreement (“the Oral Agreement”).  The Oral Agreement was to the effect that the Deceased and his family members could stay there as long as they paid rent each year. 

(3) However, in 2010, the defence was changed^[2] and mounted on the basis that substantial parts of the Yellow Portion (now identified as Portions 1B, 1C and 1D in the Yellow Portion) had been adversely possessed by the Deceased and his family members since 1970, 1985 and 1986 respectively. It is still part of the Re-Amended Defence that a small part of the Yellow Portion (identified as Portion 1 and Portion 1A) was subject to the Oral Agreement.  At the same time, a large part of the Yellow Portion on the right side of the road dividing the Lot into two distinct halves has also been left out of the picture in the Re-Amended Defence and Counterclaim.  I would for convenience call this left out part as Portion Z.

(4) LPK further counterclaims, inter alia, for a declaration of possessory title by adverse possession of Portion 1B only.

5.  LPK later issued the 2011 Action on 13 January 2011 against the Applicants. The Statement of Claim was dated 18 March 2011.

6.  In the 2011 Action, LPK claims a declaration of possessory title over Portions X, Y (which are the same as Portions 1C and 1D) and Z on the above mentioned basis of adverse possession commencing in 1985 and 1986. 

7.  In the present applications, the Applicants ask for:

(1) In respect of the 1998 Action:

(a)  the striking out of the references to Portions 1C and 1D in various paragraphs[3] of the Re-Re-Amended Defence and Counterclaim (“RRAD & CC”); and

(b) the entering of partial judgment against LPK for the delivery of vacant possession of Portions 1C and 1D as referred to in the RRAD&C.

(2) In the 2011 Action, the striking out of the Statement of Claim.

B.    The grounds in support of the applications

8.  For the Applicants, Mr Ambrose Ho, SC, raises three grounds in support of the applications.   I will deal with them as follows.

The first ground

9.  First, Mr Ho says it is LPK’s own pleaded case[4] that the alleged adverse possession of Portions 1C and 1D only commenced in around 1985 and 1986.  Thus, the soonest he could obtain possessory title to these portions is 2005 and 2006.   But, before the requisite 20-year period has run, the Applicants have already by the 1998 Action sought to recover these parts of the Lot.   LPK therefore can never succeed in his claim for possessory title to these portions.

10.  I think Mr Ho is clearly right in his submissions.   In this regard, it is pertinent to note that even LPK’s own counsel had previously confirmed to Suffiad J that he did not counterclaim in the Re-Amended Counterclaim in the 1998 Action for possessory title over Portions 1C and 1D because the 20 years adverse possession would only have accrued some time in or after 2006, and therefore could not have been the subject of the Re-Amended Counterclaim^[5].

11.  Mr Paul H M Leung for LPK however submits that it is unclear that the Applicants’ pleaded claim in the 1998 Action included a claim for possession of Portions 1C and 1D.  Given that striking out should only be granted in a clear and obvious case, in light of this doubt, the Applicants’ first ground should fail.

12.  With respect, I do not agree with Mr Leung.

13.  In the Amended Statement of Claim of the 1998 Action, the Applicants were seeking to recover the parts of the Lot said to have been leased to the Deceased.  It is true that in this pleading, there is no precise identification of these parts of the Lot by way of description or a plan. 

14.  But, as mentioned above, in the Amended Defence and Counterclaim (dated 14 July 1999), in his own defence, the LPK clearly regarded the Yellow Portion as the disputed parts (being subject to the Oral Agreement) of the Lot in the proceedings.  The position to regard these as the disputed parts has not changed even after the further amendments made in 2010 by introducing Portions 1B, 1C and 1D in the Yellow portion as areas occupied by way of adverse possession.   

15.  Looking at it in another way.  It is common ground that the Applicants are the registered owners of the Lot, which includes the Yellow Portion.  It is also common ground that the Deceased and his family members have been occupying various parts of the Lot.  No matter on what basis (whether because of the Oral Agreement or adverse possession) the Deceased and his family members contend that they are entitled to continue to occupy those parts of the Lot, in my view, it cannot be clearer that by the 1998 Action, the Applicants are seeking to recover those parts of the Lot that have been occupied by the Deceased and his family members under the lease alleged by the Applicants.  Those parts cover (in both sides’ case) Portions 1B, 1C and 1D in the Yellow Portion.

16.  One may also ask rhetorically, if LPK did not regard or understand that the Applicants are seeking to recover areas of the Lot that included Portions 1C and 1D, why would it be necessary for him to plead by way of defence adverse possession relating to these portions.

17.  In my view, reading the relevant pleadings realistically, pragmatically and as a whole, it is clear that the Applicants were seeking to recover in the 1998 Action those parts of the Lot which includes portions 1C and 1D.

18.  In the premises, I agree with Mr Ho that LPK’s claim of adverse possession to Portions 1C and 1D is thus plainly and obviously unsustainable for the above reasons.  

19.  I would therefore strike out the references to Portions 1C and 1D in the relevant paragraphs in the RRAD&CC and enter partial judgment in favour of the Applicants as sought.  I would also strike out the parts of the Statement of Claim in the 2011 Action which relate to the claim for possessory title over Portions 1C and 1D (identified as Portions X and Y in that Statement of Claim).

The second ground

20.  Mr Ho’s second ground^[6] for striking out is that it is an abuse of process for LPK to now seeking to claim possessory title to Portion Z by way of adverse possession in the 2011 Action, as he has elected to abandon any such claim previously.   The argument runs as follows. 

21.  Mr Ho submits that LPK has elected to abandon any claim for any interest in Portion Z in the following manner:

(1) In the Amended Defence and Counterclaim (filed in July 1999), LPK’s counterclaim related to asserting an interest by way of the Oral Agreement over the Yellow Portion, which was the whole portion of the Lot (except the portions said to be occupied by other persons) including the part on the right hand side of the road (i.e, Portion Z).

(2) At a later time, when seeking to amend his case to one of adverse possession, LPK filed two drafts of the Re-Amended Defence and Counterclaim. In neither of the drafts was an assertion or a claim of adverse possession made to Portion Z (where, in contrast, he pleaded matters of adverse possession relating to Portions 1C and 1D).

(3) Furthermore, in support of his application for leave to amend, LPK filed three affirmations.  In these affirmations, LPK again did not assert any interest in relation to Portion Z (where again in contrast, he deposed to allegations of adverse possession to Portions 1C and 1D).   

(4) At the hearing before the Master and Recorder A Chow relating to his application for amending the Amended Defence and Counterclaim, arguments were advanced on the basis without any reference to any allegations of or claim for adverse possession of Portion Z^[7]. 

22.  The above conducts amount to (Mr Ho further says) explicit election not to make any claim over Portion Z.  Thus, LPK’s present attempt to revive his claim on Portion Z in the 2011 Action is (contended Mr Ho) a clear abuse of the court’s process and should be disallowed. 

23.  Mr Leung for LPK however submits that there could not be any election to abandon the claim over Portion Z.  This is so because the counterclaim made in the 1998 Action had been launched well before 2005, and LPK could not have included such a claim under the 1998 Action.

24.  Again with respect, I disagree with Mr Leung.

25.  As I mentioned above, in the various amendments and the affirmations made in support of the amendments in 2010, LPK had expressly made references to and allegations of adverse possession over Portions 1C and 1D (where adverse possession is also said to have begun in 1985 and 1986), even though he also could not mount, and did not in fact make, any counterclaim over these portions in the 1998 Action.

26.  When the said explicit lack of references to or making of any allegations of adverse possession over Portion Z is looked at against this context, and the background that, in resisting the claim, the Deceased and LPK originally included Portion Z in the Yellow Portion where they claimed an interest by way of the Oral Agreement, I accept that LKP’s above mentioned conducts amount to clear and unequivocal election to abandon any claim over Portion Z, which has been communicated to the Applicants.  He is bound by the principle of election. See: Spencer Bower, Estoppel by Representation (4^th ed), paras XIII.3.1 – 3.3; Scarf v Jardine (1882) 7 App Cas 345 at 361-2.

27.  It is therefore an abuse of process for LPK to seek to revive the claim over Portion Z in the 2011 Action.  I would therefore also strike out the Statement of Claim of the 2011 Action relating to the claim over Portion Z on this ground.

The third ground

28.  As I have allowed the Applicants’ applications on the above two grounds, it is not necessary for me to deal with Mr Ho’s further ground, where he says there have been various recent acknowledgements of the Applicants’ title by LPK as trespassers.  Mr Ho argues that the running of time under ss 23 and 24 of Limitation Ordinance (Cap 347) is thus postponed and the Applicants’ right of action is deemed to have accrued only on the date of the acknowledgement. 

29.  Suffice for me to say that I think there are some merits in Mr Leung’s arguments (for LPK) that it is at least arguable (for the purpose of a striking out application) that there have not been any valid acknowledgments of title, as LPK has affirmed that he was laboured under a mistake when making those conducts now relied on by Mr Ho.

30.  But as I said earlier, I do not need to decide on this point.

C.  Conclusion

31.  For the above reasons, I allow the applications. 

32.  I further order that costs of the applications be to the Applicants to be taxed if not agreed.

33.  I also wish to thank Counsel for their helpful assistance. 

HCA6728/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6728 OF 1998

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

BETWEEN

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

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

RULING

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

1.  This is the plaintiffs' application seeking :

(a)   Leave to be given to the plaintiffs to be released from the undertaking given by the plaintiffs to the court on 12 October 1999; and

(b)   an inquiry as to the amount of damages suffered by the plaintiffs pursuant to the defendant’s undertaking as to damages on 12 October 1999. 

2.  There is a long history and background to this matter. 

Background

3.  The plaintiffs are the registered owners of Lot No. 258 in Demarcation District No. 52, Fu Tei Au, Sheung Shui, New Territories (“the Lot”). 

4.  This action was commenced by the plaintiffs in April 1998 to recover possession of a portion of the Lot leased to the defendant. 

5.  The claim in the original Statement of Claim was that Liu Fun Kee, the original defendant named in the Writ, (“the Deceased”) occupied a portion of the Lot as tenant.  That tenancy was granted in 1967 and ended on 31 December 1996 upon the service of a notice to quit dated 22 March 1996. 

6.  In the Defence and Counterclaim dated 9 July 1998, it was admitted that the Deceased occupied a portion of the Lot as tenant.  It was pleaded that there was an oral agreement to the effect that the Deceased and his family would be entitled to stay as long as they paid rent each year.  However, that position of the Lot occupied by the Deceased as tenant was not properly defined either in the original Statement of Claim or in the Defence and Counterclaim dated 9 July 1998.  

7.  The Deceased passed away on 21 October 1998 and his son, Liu Ping Kuen, took over the defence of the action and was substituted as the defendant in his capacity as the personal representative of the estate of the Deceased. 

8.  By summons dated 14 July 1999 application was made by the defendant to amend the Defence and Counterclaim.  In the draft Amended Defence and Counterclaim, the location of that part of the Lot which was leased to the Deceased was identified by a plan annexed thereto on which the leased portion of the Lot was coloured yellow (“the Yellow portion”).  [Annex 1 to this Ruling shows the Yellow portion alleged by the defendant in 1999 to have been leased to the Deceased.] 

9.  At the same time, the defendant applied for an interlocutory injunction to restrain the plaintiffs and their family members, employees, and agents from interfering with the Yellow portion, being that part of the Lot alleged in the Amended Defence and Counterclaim to have been leased to the Deceased. 

10.  The plaintiffs’ case however was that not all of the Yellow portion was leased to the Deceased, in particular, that part of the Yellow portion on the right side of the road. 

11.  Nevertheless, the plaintiffs were prepared to offer an undertaking not to interfere with the Yellow portion and that was recorded in the order of Deputy Judge Muttrie dated 19 July 1999. 

12.  On 12 October 1999, I granted leave to the defendant to amend the Defence and Counterclaim and at the same time the interlocutory injunction was disposed of upon the undertaking given by all the plaintiffs and their sons, grandsons, family members and their employees and agents not to interfere with the Yellow portion.  (This is the undertaking which the plaintiffs now seek to be released from.)

13.  At the same time there was a cross undertaking given by the defendant not to use the Yellow portion for purpose of open storage or other purposes in contravention of the Conditions of Use imposed by the Planning Department as a result of complaint by the Planning Department in its letter dated 15 November 1995. 

14.  Thereafter nothing much happened in the proceedings apart from some minor amendments to the pleadings and other interlocutory steps relating to lists of documents and exchange of witness statements. 

15.  By summons dated 21 October 2009, the defendant applied for leave to further amend the Amended Defence and Counterclaim. 

16.  Initially that application was refused by the master.  However, on appeal by the defendant to a judge in chambers, the defendant was given leave to re-amend the Amended Defence and Counterclaim which was filed on 4 January 2011. 

17.  Those amendments as contained in the Re-Amended Defence and Counterclaim drastically amended the defendant’s case. 

18.  The case now put forward by the defendant in the Re-Amended Defence and Counterclaim is that in the Yellow portion, only two small parts of it (Portions 1 and 1A) were leased to the Deceased in 1959 and 1970 respectively. 

19.  In respect of other parts of the Yellow portion (namely, Portions 1B, 1C and 1D) they were adversely possessed by the Deceased and his family members since 1970, 1985 and 1986 respectively such that the plaintiffs’ title to those parts have now been extinguished by operation of the Limitation Ordinance by reason of adverse possession.  [Annex 2 to this Ruling shows the position of Portions 1, 1A, 1B, 1C and 1D on the Lot.] 

20.  It should also be noted that a large part of the Yellow portion on the right side of the road dividing the Lot into two distinct halves is left out of the picture in the Re-Amended Defence and Counterclaim. 

21.  The Re-Amended Counterclaim makes a counterclaim for possessory title by adverse possession of Portion 1B only. 

Plaintiff’s application for release from undertaking

22.  This application by the plaintiffs to be released from their undertaking given to the court on 12 October 1999 is made on the basis that by the Re-Amended Defence and Counterclaim, that part of the Yellow portion on the right side of the road is now left out of the picture completely by the defendant and no claim is made thereon. 

23.  Moreover, even for the Yellow portion on the left side of the road, the defence case now is that only Portions 1 and 1A were leased to the Deceased, but not Portions 1B, 1C and 1D. 

24.  That is to be contrasted with the picture in 1999 when the undertaking was given, when the defendant’s case then was put on the footing that the whole of the Yellow portion was leased to the Deceased. 

25.  Given the present position of the defendant, the plaintiffs say that they had been misled by the defendant in 1999 (as the defendant’s case then stood) into giving that undertaking.  Alternatively, that they had labored under a mistake that the defendant’s case was that the Yellow portion on the right side of the road was part of the Lot leased to the Deceased when it is now clear that it was not. 

Stance of the defendant and the update position

26.  At the start of the hearing before me, the defendant informed me that a new claim, being HCA 73 of 2011, had been commenced by the defendant and handed up the Writ (with only an indorsement of claim) which was issued on 13 January 2011, namely, the day immediately prior to this heaing. 

27.  The parties to HCA 73 of 2011 is simply the reverse to the present case.  There, the present defendant is claiming against the present plaintiffs for :

(a)   a declaration that the present defendant has been in adverse possession of Portions 1C, 1D and a part of the Yellow portion on the right side of the road for a period in excess of 20 years;

(b)   declarations that the present plaintiffs’ title to those parts of the Lot have been extinguished by virtue of the Limitation Ordinance and that they have lost the right to bring any action to recover same; and

(c)   a declaration that the present defendant has acquired an indefeasible possessory title thereto. 

28.  I am informed by counsel for the defendant that although reference had been made to Portions 1C and 1D in the Re-Amended Defence and Counterclaim, the Re-Amended Counterclaim did not make any claim for possessory title in relation to Portions 1C and 1D because the 20 years adverse possession would only have accrued some time in or after 2006 and therefore could not have been the subject of the Re-Amended Counterclaim. 

29.  It was for that reason that HCA 73 of 2011 was taken out and the claim for possessory title by adverse possession made therein. 

30.  Counsel for the defendant further pointed out that at all times in the affidavits of the defendant, it has all along been the case of the defendant that the the Deceased and his family had occupied and taken possession and control of that part of the Yellow portion on the right side of the road and that was a position that the defendant had never resiled from despite the fact that in so far as the pleading goes, that part of the Lot on the right side of the road had been left out completely from the Re-Amended Defence and Counterclaim. 

31.  That position has now been redressed by the defendant issuing HCA 73 of 2011 in which possessory title by adverse possession is now claimed by the defendant in respect of Portions 1C, 1D and part of the Yellow portion on the right side of the road. 

32.  I am further told that it is the intention of the defendant to apply for HCA 73 of 2011 to be consolidated with the present proceedings on the basis that there will be common issues of fact and common questions of law to be decided in both cases. 

33.  It was therefore submitted by the defendant that given that such a claim has now been made by the defendant for possessory title by adverse possession, the undertaking given by the plaintiffs relating to the Yellow portion in 1999 should continue and the plaintiffs should not be released from such undertaking. 

Decision

34.  I have no doubt in my mind but that based on all the circumstances stated above, the plaintiffs ought to be released from the undertaking given by them in 1999 as a matter of principle. 

35.  That undertaking was given by the plaintiffs on the basis that the defendant claimed that the entire Yellow portion had been leased to the Deceased and his family which has now been shown to be untrue, as the case of the defendant now stands. 

36.  That “mistake” can only have come about as a result of the fault of either the defendant or his legal advisers including his former legal advisers.  The explanation given by the defendant is contained in his 4^th Affirmation in which he says that the previous pleaded case was the result of a mistake, in that when the defence was prepared for the original Defence and Counterclaim, he was told by his lawyers that the plaintiffs were seeking to recover land which had been leased to the Deceased but because there was no identification by the plaintiffs of which part of the land had been leased, the defendant simply told his lawyers that some land had been leased to the Deceased also without identifying which part of the land had been leased and without mentioning to his lawyers about the lands adversely possessed by the Deceased and his family. 

37.  When preparing the Amended Defence and Counterclaim, the defendant states that he told his lawyers that part of the Lot had been let to the Deceased and parts of it to others (i.e. Chu To Keung and Chu Yun) and did identify on a plan those parts let to Chu To Keung and Chu Yan, but as far as he could remember, did not identify exactly which part of the Lot had been let to the Deceased.  As a result, the defendant says that the plan annexed to the Amended Defence and Counterclaim was mistakenly coloured. 

38.  This mistake on the part of the defendant and/or his legal advisers have led the court and the plaintiffs into believing that the defendant’s case was that the entire Yellow portion had been leased to the Deceased but which was not factually true. 

39.  Moreover, the allegation by the defendant which led to the application for an interlocutory injunction against the plaintiffs was that the plaintiffs were sending in bulldozers to clear that part of the Yellow portion on the right side of the road thereby interfering with the leased area on the right side of the road. 

40.  There was no allegation by the defendant that the plaintiffs were doing or had done anything in 1999 to interfere with Portions 1 and 1A, those parts actually leased to the Deceased, or indeed any parts of the Yellow portion on the left side of the road. 

41.  Had the factual basis been made known to the court (and to the plaintiffs) in 1999 that the status of the defendant to the Yellow portion on the right side of the road was merely that of a trespasser, at which time the defendant could not have acquired any right due to the fact that 20 years of adverse possession had not accrued as yet, there could be no question that the defendant could have obtained an interlocutory injunction against the plaintiffs merely as a trespasser.  A fortiori therefore, there could be no question that the plaintiffs would have had to give any undertaking not to interfere with the Yellow portion as was given in the undertaking by them. 

42.  For this reason therefore, the plaintiffs must be released from that undertaking given on 12 October 1999 as a matter of principle. 

43.  In coming to this conclusion, I have also taken into account the following matters. 

44.  While it is true that the defendant’s case in so far as Portions 1 and 1A has always been on the basis that those two portions were leased to the Deceased and his family, there has never been any allegation by the defendant of any interference by the plaintiffs onto any part of Portions 1 and 1A.  That coupled with the fact that there has not been the slightest indication that since giving the undertaking in 1999, the plaintiffs or any of them have done anything in breach of that undertaking leads me to the view that by releasing the plaintiffs from that undertaking, the defendant will be put at risk, during the interim period between now and the trial of this matter, of having to suffer any kind of interference by the plaintiffs on any part of the Lot now occupied by him, whether as lessee or as trespasser albeit with a claim to possessory title by adverse possession. 

45.  After all, the initial act of interference by the plaintiffs which led to the application by the defendant for an interlocutory injunction and the undertaking given by the plaintiffs stemmed from the plaintiffs’ belief that the Yellow portion on the right side of the road were not the subject of any lease or claim by the defendant. 

46.  Given these circumstances, I feel that the defendant will still be sufficiently safeguarded without that undertaking given by the plaintiffs in 1999. 

47.  However, should I be wrong in that view, and given now that the defendant has mounted a claim for possessory title on Portion 1B in the present counterclaim, as well as claiming for possessory title to Portions 1C, 1D as well as parts of the Yellow portion on the right side of the road in HCA 73 of 2011, should it transpire that after the release of the plaintiffs from their undertaking, if anything is done by the plaintiffs to interfere with those parts the subject of claim for possessory title by the defendant, it would be open to the defendant to come back to the court to apply for an interlocutory injunction until the matter can be determined at trial.  After all it would be merely just to preserve the present status quo until this dispute between the parties can be resolved by the court. 

48.  Therefore looking at the matter from all angles, I have no hesitation in acceding to the plaintiffs’ application to be released from their undertaking given in 1999 and I so order. 

49.  As for the second part of the plaintiffs’ application, namely, for an inquiry as to damages, the parties are agreed that the normal practice would be for such inquiry to be made only after determination of all the disputes between the parties and when findings of facts can and have been made. 

50.  This is particularly so in a case such as the present where the disputed facts are numerous and far reaching. 

51.  Accordingly, any inquiry as to damages will have to be held over until final determination of all the issues between the parties in this matter and in HCA 73 of 2011. 

Costs

52.  This application for release from the undertaking came about as a result of the mistake of the defendant, the fault for which can be put squarely at the door of the defendant. 

53.  Moreover, the defendant came to court contending against the release of the undertaking but has failed in that contention. 

54.  Both these matters stated above point in the direction that costs ought really to follow the event in this case and I can see no good reason to depart from that general rule. 

55.  Accordingly, there will be a costs order nisi that the defendant pays to the plaintiffs the costs of and occasioned by the plaintiffs’ application made by summons dated 16 November 2010 including the hearing on 15 December 2010 as well as the hearing for full argument on 14 January 2011 in any event. 

Mr Tony T.F. Ng, instructed by Messrs K.M. Tang & Co., for 1^st to 9^th Plaintiffs

Mr Paul H.M. Leung, instructed by Messrs Rowdget W. Young & Co., for the Defendant

HCA 6728/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6728 OF 1998

____________

BETWEEN

______________

______________

J U D G M E N T

______________

1.  This is an appeal against the decision of Master Ho made on 29 April 2010 refusing the Defendant’s application to further amend his Amended Defence and Counterclaim made by summons taken out on 21 October 2009.

2.  This action has a rather long history, and the underlying facts have an even longer history.

3.  The action was commenced by the Plaintiffs in April 1998 to recover a portion of Lot No 258 (“the Lot”) in Demarcation District No 52, Fu Tei Au, Sheung Shui, New Territories.  The Plaintiffs are the registered owner of the Lot.  Their claim, as pleaded in the original Statement of Claim dated 28 April 1998, was that Liu Fun Kee, Deceased (“the Deceased”), being the original Defendant named in the Writ, occupied a portion of the Lot as tenant, whose tenancy, granted in or about 1967, came to an end on 31 December 1996 consequent upon a notice to quit dated 22 March 1996.  It is right to observe that in the Statement of Claim, the precise location and area of the portion of the Lot which allegedly was leased to the Deceased was not identified or stated.

4.  In the original Defence and Counterclaim dated 9 July 1998, it was accepted that the Deceased occupied a portion of the Lot as tenant, but it was contended that there was an oral agreement to the effect that the Deceased and his family would be entitled to stay as long as they wished provided that they could pay rent each year.  It would seem that the defence was based on some form of proprietary estoppel, although that was not clearly spelt out on the pleading.  At that stage, it does not appear that there was any issue regarding the location or area of the portion of the Lot which formed the subject matter of the tenancy.

5.  Apparently, the Deceased passed away on 21 October 1998.  At some point in time, his son, Liu Ping Kuen, took over the defence of the action and became substituted as the Defendant in his capacity as the personal representative of the estate of the Deceased.

6.  By a summons dated 14 July 1999, an application was made to amend the Defence and Counterclaim. In the draft Amended Defence and Counterclaim, the location of the Lot which was allegedly leased to the Deceased was identified by reference to a plan annexed to the draft.  It can be seen from the said plan that the leased portion of the Lot, coloured yellow (“the Yellow Portion”), occupied a large part of the Lot, except two smaller parts on the southern side of the Lot which were said to have been leased to two other persons.

7.  At the time when the application was made to amend the Defence and Counterclaim in July 1999, there was also an application made for an interlocutory injunction to restrain the Plaintiffs, their family members and employees and agents from interfering with the Yellow Portion.  At the first hearing of the application for interlocutory injunction, the Plaintiffs offered an undertaking, as recorded in the order of Deputy Judge Muttrie dated 19 July 1999.  Subsequently, the Defendant got leave to amend the Defence and Counterclaim, pursuant to the order of Mr Justice Suffiad dated 12 October 1999.  At the same time, the application for interlocutory injunction was disposed of on the basis of an undertaking given by the Plaintiffs and another undertaking given by the “Defendant” (although I note that in the order of Mr Justice Suffiad the title to the action had not yet been amended).

8.  Some amendments were made to the Statement of Claim and Reply and Defence to Counterclaim in 1999, but those amendments are not material to the present appeal.

9.  Nothing much happened in this action, until June 2006, when there was an order made by Mr Registrar C Chan relating to filing of lists of documents, inspection of documents, and exchange of witness statements.  The witness statements were not in fact filed or exchanged until December 2008.

10.  By a summons dated 21 October 2009, the Defendant applied for leave to further amend the Amended Defence and Counterclaim.  In short, the case now sought to be put forward by the Defendant is that, in respect of the Yellow Portion, only two small parts of it were leased by his father, in or about 1959 and 1970 respectively.  In respect of various other parts of the rest of the Yellow Portion, the Defendant’s case is that they have been adversely possessed by his father and his family members at different times such that the Plaintiffs’ title to those parts have now been extinguished by the operation of the Limitation Ordinance.  It may also be observed that a large part of the Yellow Portion, on the right side of a road dividing the Lot into two halves, is left out of the picture altogether.

11.  In the draft Re-Amended Defence and Counterclaim now before me, there is a proposed counterclaim in respect of what is described as Portion 1B of the Lot.  The Defendant’s case is that his father and his family members commenced adverse possession of Portion 1B in or about 1970, and thus the Plaintiffs’ title in respect of that portion has now been extinguished by virtue of Section 7(2) of the Limitation Ordinance.

12.  In the 4^th Affirmation of the Defendant filed on 3 December 2009, the possibility of starting a new action claiming adverse possession in respect of what are described as Portions 1C and 1D is mentioned.  The Defendant’s case is that adverse possession of Portions 1C and 1D commenced in or about 1985 and 1986 respectively.  Since the proposed new action is not before me, I say no more about the validity of the proposed claims of adverse possession in respect of Portions 1C and 1D.

13.  The Plaintiffs object to the Defendant’s application to amend on, I understand, three main grounds.  Firstly, it is said that the Defendant’s new case is not bona fide, secondly that the Plaintiff will suffer prejudice if the amendments sought are allowed, and thirdly that the proposed amendments have no merits.

14.  On the first ground, the Plaintiffs’ argument is essentially based on the fact that the Defendant’s new case of adverse possession is inconsistent with the previous case advanced in the Amended Defence and Counterclaim, which was repeated in previous affirmations and statement filed by the Defendant and in letters written by his solicitors.  The Defendant’s explanation for the inconsistent case now put forward is contained in his 4^th Affirmation, in particular paragraphs 12 to 22 thereof. In brief, the Defendant says that the previous pleaded case was the result of a mistake.  According to the Defendant, at the time of the preparation of the original Defence and Counterclaim, he had been told by his lawyers and was given to understand that the Plaintiffs were seeking to recover land which had been leased to his father (which was in fact the case), but because there was no identification of the part of the land which the Plaintiffs alleged had been leased to his father he simply told his lawyers that it was indeed the case that some land had been let to his father without identifying the exact land that was so let and without mentioning to his lawyers about the lands adversely possessed by his father and himself.

15.  In relation to the preparation of the Amended Defence and Counterclaim, the Defendant says that he told his counsel that part of the Lot had been let to his father and part of it to others (namely, Chu To Keung and Chu Yun).  He recalled having identified on a plan those parts of the Lot which had been let to the two others, but as far as he could remember he did not identify exactly which part of the Lot had been let to his father.  The Defendant says that as a result, the plan annexed to the Amended Defence and Counterclaim (as well as to the summons for interlocutory injunction) was mistakenly coloured.  Some further explanation of the “mistake” appears in the 5^th Affirmation of the Defendant filed on 17 December 2009.

16.  Mr Ho Kim Hung, a partner of Messrs Rowdget W Young & Co (formerly of Messrs Wong & Poon) was apparently the solicitor handling this case on behalf of the Defendant in relation to the injunction and amendment applications back in July 1999. He is also currently acting for the Defendant in this action.  Mr Ho has made an affirmation on 17 December 2009 confirming the 4^th and 5^th Affirmations of the Defendant so far as their contents concern Messrs Rowdget W Young & Co and him. 

17.  Mr Ng for the Plaintiff has made a number of valid forensic points about the credibility, or incredibility, of this explanation of mistake.  In view of the conclusion that I have reached, it would not be appropriate for me to deal with these points in detail, save to say that I have some considerable doubts on the credibility of the explanation of “mistake” offered by the Defendant.  However, at the end of the day, the question that I have to decide is whether I can conclude, on the basis of the existing materials, that the explanation is not bona fide.

18.  In this regard, Mr Rimsky Yuen SC for the Defendant has made the following points.  First, the Defendant’s explanation is supported, at least to an extent, by Mr Ho, an officer of the court.  Second, it is sometimes difficult to know or draw precise boundaries of lands in the New Territories.  Third, the events relevant to this action were in fact handled by what Mr Yuen describes as the “first generation”, whereas the persons giving instructions to the lawyers and having the conduct of the action are from the “second generation”.  Lastly, Mr Yuen points out that in an affirmation filed on behalf of the 6^th Plaintiff, even the Plaintiffs appear to have made some mistakes regarding the tenants who occupied various parts of the Lot between 1979 and 1993, and the date when part of the Lot was first leased to the Deceased.

19.  I have come to the conclusion that it is not appropriate for the court to undertake, effectively, a mini trial of the issue of whether the explanation of mistake is bona fide based on affirmation evidence alone, and I do not think I can reject the explanation of mistake in a summary manner.

20.  Mr Ng has referred me to various authorities regarding the principles which the court should apply when faced with an application by a party to withdraw an admission, including Ho Wai Yin and Others v Cheng Suet Yee, HCAP 18/2003, A Cheung J (unreported); Cheung Wan Hung v Fai Wong Construction (Asia) Limited, DCPI 136/2009, District Judge S T Poon (unreported); and Hong Kong Civil Procedure 2011, Vol 1, paragraph 20/8/17.  It is clear from those authorities that the question of “bad faith” is an important consideration in the court’s exercise of discretion on whether to permit a party to withdraw an admission.  Mr Yuen does not dispute those principles, but points out that the present case does not relate to a situation where a party, faced with an application for judgment based on an admission, seeks to withdraw the admission.  Be that as it may, as mentioned above, I am not able to conclude that there has been “bad faith” on the part of the Defendant on the basis of the existing materials.

21.  On the second ground, I do not consider that the Plaintiff has made out any real case of prejudice based on delay.  There is no doubt that some delay will be occasioned by the proposed amendments.  However, I am told that no trial dates have been fixed.  Also this action has been ordered to be tried together with another action, HCA 6730/1998, and I do not know the progress of that action to be able to say whether the delay caused by the proposed amendments will have a material impact on the hearing dates of the trial.  Lastly, it is apparent from the history of this action outlined above that the Plaintiffs have not proceeded with it with any degree of urgency.

22.  Mr Ng suggests that the Plaintiffs will also suffer prejudice if the proposed amendments are allowed because they will have to face new allegations or claims.  This, however, is the inevitable consequence of any substantial amendments made to any pleading.

23.  Lastly, Mr Ng submits that the Plaintiffs has suffered prejudice in the sense that had the Defendant’s true case been advanced previously, the Defendant would have no basis to apply for the interlocutory injunction mentioned above and, presumably, the Plaintiffs would not have offered the undertaking.  This would be true so far as Portion 1C and 1D are concerned, and also that part of the Yellow Portion lying on the right side of the road dividing the Lot.  However, I am told that the Plaintiffs have applied to discharge the undertaking that they previously gave.  Whether the Plaintiffs can seek damages against the Defendant based on some cross undertaking in damages is not something that I can decide in this appeal.  In any event, there is no suggestion by the Plaintiffs that their defence of the adverse possession claim by the Defendant will be hampered as a result of the late amendments now sought to be made by the Defendant.  On the other hand, to disallow the amendments will mean that the real disputes between the parties will not be tried by the court.

24.  On the third ground, it seems to me that the Plaintiffs’ complaint, ultimately, is that the new case has no merits if judged by reference to the case as pleaded in Amended Defence and Counterclaim and as advanced in the previous affirmations and witness statement filed by the Defendant.  This would be so, but the Defendant’s case must, it seems to me, be considered in the light of the new pleading, and I do not think the Defendant’s case as now advanced in the Re-Amended Defence and Counterclaim is inherently bad or inconsistent.

25.  In all, notwithstanding some doubts, I am prepared to allow the Defendant to further amend the Defence and Counterclaim as per the draft exhibited as “LPK-11” to the 4^th Affirmation of Liu Ping Kuen. I would therefore allow the appeal against the order of Master Ho. I am not minded, however, to grant the Defendant general leave to amend.  If the Defendant requires any further amendments to the pleading, he will have to make such application as may be necessary, and the merits of the application will have to be considered as and when it is made.

Mr Ng, Tony T F, instructed by Messrs K M Tang & Co., for the Plaintiffs

Mr Yuen, Rimsky K K, SC, instructed by Messrs Rowdget W Young & Co., for the Defendant