RICAS PROPERTIES LTD v.ARMED FORCES TRADING CO LTD AND OTHERS

DCMP 75/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 75 OF 2008

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J U D G M E N T

1.  As the registered owner, Ricas Properties, the Plaintiff, commenced the present proceedings to recover from the Defendants possession of the land in question, namely, Lot No.1347 of DD No.107 situated at Fung Kat Heung, Yuen Long, New Territories (“the Land”). The Land is defined and delineated in the plan marked as “Annexure 1” to the originating summons.

2.  Armed Forces Trading, the 1^st Defendant, says that it did not and does not occupy the Land; and the same was and is occupied by Fairwise, the 3^rd Defendant, as the tenant of Hui, the 4^th Defendant.  Hui alleges adverse possession of the Land. Where appropriate, the above 3 defendants are collectively referred to below as the Defendants.

3.  Ricas Properties attempted summary procedure for an order for possession of the Land pursuant to O.113 of the Rules of the District Court; but failed.  The court handed down its written decision on 29 August 2008; and directed the case to proceed as if the same had been commenced by way of writ.  The parties were also directed to file pleadings.

The Defendants’ case

4.  The case of the Defendants is that since 1960s, the Land had been cultivated by one Hui Mau Tung, who was the grandfather of Hui (“the Grandfather”).  In 1985, Hui emigrated to Hong Kong and joined the Grandfather in cultivating the Land.  The Grandfather passed away in December 1987.  Hui succeeded the Land.  Mr Wong made clear that his client is not contending succession in the probate sense. What is being contended is that his client succeeded the Grandfather as the squatter of the Land until 1999.

5.  The Grandfather and Hui have allegedly been in continuous and exclusive possession of the Land adverse to the interest of the predecessor in title of Rica Properties.  In 1999, Hui entered into a tenancy agreement with Fairwise in respect of the Land. Fairwise has since then been operating an outbound or more specifically a war game site there.

6.  In the circumstances, Ricas Properties is said to have been dispossessed of the Land and its right of action extinguished by virtue of the Limitation Ordinance, Cap.347 (“the Ordinance”).

7.  Notwithstanding its contention that it is never an occupier of the Land, Armed Forces somehow joins Fairwise and Hui in claiming for a series of declaration, including that Ricas Properties be barred from taking action against them to recover the Land; and that Fairwise and Hui are entitled to remain in possession of the Land.  The Defendants go further to seek a declaration that Hui be entitled to be registered as the owner of the Land.

Ricas Properties’ case

8.  Ricas Properties became the registered owner of the Land in October 1980.  It denies the alleged adverse possession of the Land by the Grandfather or Hui.  It was in February 2007 when Ricas Properties first discovered signs of the Land being trespassed by third party, namely, “三軍外展中心“ (Armed Forces Outbound).  Ricas Properties claims for, amongst others, vacant possession of the Land, damages for trespass and injunctive relief.

Adverse possession

9.  Ricas Properties entered into agreement to purchase the Land in July 1980.  By a Conveyance on Sale dated 8 October 1980 and registered in the District Land Offices, Yuen Long, by Memorial No. 238582, Ricas Properties became the registered owner of the Land.  The paper title of Ricas Properties is beyond dispute.

10.  The question is whether the right of Ricas properties to recover possession of the Land is extinguished as a result of the adverse possession by the Grandfather and Hui since 1960s as alleged.  The alleged adverse possession commenced prior to the amendment to the Ordinance in 1991.  In view of that, it is common ground that the relevant period for adverse possession was 20 years, instead of 12 years under the present statutory provision.

11.  It is the Defendants’ burden of proving the alleged adverse possession.  Mr Szeto for Ricas Properties emphasized that the evidence required must be compelling and self-serving statements should be approached with scepticism: see Wong Tak Yue v Kung Kwok Wai David [1998] 1 HKC 1 at 13A-C; Wu Yee Pak v Un Fong Leung & Ors [2005] 2 HKLRD 169 at 171F-G.

12.  Mr Wong for the Defendants pointed out that what the final court said in the above cases relates to the consideration of the issue of the intention of the adverse possession, not the issue of factual possession.  If the suggestion is that the cogency of evidence required for proving factual possession and the intention varies, I cannot agree.  The party alleging adverse possession has the burden to prove both the fact and the intention of the adverse possession by cogent evidence on the balance of probabilities.

13.  The periods of alleged adverse possession of the Land were as follows:

(1) the alleged possession by the Grandfather and Hui between 1960s and 1999; and

(2) the alleged possession of the Land by Hui through Armed Forces and/or Fairwise as his tenant since 1999.

14.  It is common ground that it is possible for a person to acquire the interest as an adverse possessor himself by way of succeeding the previous adverse possessor as a squatter in the land: see Ng Lai Sim v Lam Yip Shing & Anor, HCA 2963/1998 (22 November 1999).  The court in the O.113 decision in the present case in August 2008 came to a similar tentative conclusion on the applicable law: see paras.16-26 thereof.  However, it goes without saying that the court’s comments there on the affidavit evidence were never findings; and the evidence was first tested in the trial.

1960s to 1999

The Defendants’ evidence

15.  According to Hui, from 1960s to 1975, the Grandfather had used the Land to cultivate vegetables.  In about 1975, the Grandfather began to grow ginger flowers on the Land.  The Grandfather had hired plumber to install long pipes leading water from the hill to the Land for irrigation.

16.  Upon his emigration to Hong Kong in 1985, Hui joined the Grandfather in growing ginger flowers on the Land for sale.  The harvested flowers were bundled up for the flower merchandiser called “森記“.  The Grandfather and Hui lived at an unnumbered house which Hui identified on the plan as straddling between Lots Nos.1313 and 1314, i.e., not on the Land.  Upon the death of the Grandfather in December 1987, Hui succeeded as the squatter of the Land.

17.  The documents show that Hui came from the Mainland to settle in Hong Kong in 1985.  What he said in relation to the Grandfather’s alleged possession of the Land since 1960s up to that time is hearsay.  Such evidence has to be considered carefully in the light of the other evidence.

18.  In his declaration for the purpose of applying for the emigration of his family members, including Hui, from the Mainland to Hong Kong in 1984, the Grandfather reported his residential address to be “新界逢吉鄉第二菜站東記農場”, a vegetable farm in Fung Kat Heung.

19.  According to Hui, the Grandfather had been in continuous possession of the Land undisturbed for nearly 2 decades by the time when the Grandfather sought to apply for his family members to come to join him here.  In his declaration for the purpose of such application, the Grandfather mentioned his assets but not the Land.  Mr Szeto suggested that this should not have been the case, if the Grandfather had in fact considered the Land to be his property.

20.  The declaration was apparently prepared as a guarantee by the Grandfather to facilitate the intended application for his family to come to Hong Kong.  He referred to his cash in bank and gold that he would be prepared to give to his family as support to their livelihood after coming to Hong Kong.  The Land perhaps did not fall into this category of assets for such purpose.  I would not read too much out of this document.

21.  To support his evidence as to the state of the Land in the past, Hui produced various photographs. There are a couple of photographs depicting allegedly part of the ginger flower field on the Land.  Hui said he took them on the first day of the Chinese New Year in 1987.

22.  Some other photographs depict certain section of a water pipe; but the location on the Land where the photographs were allegedly taken is unclear.  One also cannot make out the routing of the pipe from the photographs.  According to Hui, the water pipe was installed by the Grandfather at the cost of HK$10,000 to divert water from the hillside via their house to the fields for irrigating the Land.  This is again hearsay without documentary support.

23.  The Defendants called Sze Yat Ming (“Sze”) as witness.  Sze is the majority shareholder and director of Armed Forces Trading as well as 50% shareholder and director of Fairwise.  Together with his two companies, Sze entered into the picture only in 1999.  He has no personal knowledge about the history of the Land.  It should also be noted that Hui confirmed in court that he had never recounted the history of the Land to Sze.

24.  Sze somehow suggested that one could see from the aerial photographs exhibited to his affirmation that the Land was cultivated with ginger flowers.  When it was pointed to him that this is virtually impossible, he sought to explain that what he referred to was not the exhibited photographs.

25.  Sze is not able to tell from his personal knowledge the history of the Land.  No weight could really be placed on his evidence in this respect.  As to his credibility, much will be said further below.

26.  The Defendants called Lam Chiu Yuen (“Lam”) as witness.  Lam claims to be the only witness with personal knowledge about the Grandfather’s occupation of the Land before Hui came to Hong Kong in 1985.

27.  Lam was born in 1967. According to him, his family then lived in 3 houses which were a minute’s walk from the Land.  He said he started to play around in the vicinity at the age of 5 to 6.  He said he witnessed the Grandfather growing vegetables on the Land. The vegetables harvested were taken to Market No.2 (or “第二菜站“) for sale.  This lasted until 1975 when the Grandfather approached Lam’s family for seeds for growing ginger flowers.  That was thought to be more profitable than growing vegetables.

28.  Mr Szeto submitted this court should be on guard about the evidence of Lam because he is not really an independent witness.  There is indeed basis for Mr Szeto’s scepticism.  The other 50% shareholdings in Fairwise were in fact vested in the 2 brothers of Lam and the wife of Lam.  It is indeed the Defendants’ case that the Lam brothers arranged the alleged tenancy to be entered into between Hui and Fairwise.

Ricas Properties’ evidence

29.  Ricas Properties called its director, Madam Poon Mui (“Poon”) as witness.  Poon is 82 years old.  According to her statement, her company came to purchase the Land through a middleman acting on behalf of the predecessor in title.  Her company had planned to develop the Land for business.

30.  According to her statement, she was brought to visit the Land several times to inspect the condition and the boundary of the Land prior to the purchase in 1980.  She was allegedly told that the predecessor in title had cultivated ginger flowers on the Land.  The sale and purchase agreement provided that vacant possession was to be delivered upon completion.  The predecessor in title undertook that all the ginger flowers on the Land would be removed by completion.  This, if accepted, would be evidence of the representation by the predecessor in title.

31.  Poon stated that after the completion, she had visited the Land and found that the ginger flowers had been harvested.  Since then, she had often visited the Land but did not notice any cultivation or any water pipe installations there.  Nor did she notice any occupation by person or change, except for abundance of weeds there.  She had visited the Land more than 5 times without obstruction since March 2007.  Sze confirmed that it was only after the commencement of these proceedings when Armed Forces Outbound erected a gate at the access to the Land.

32.  In court, it became apparent that Poon had difficulty in verifying what she stated above.  Her company owns about 10 pieces of land and she could not distinguish one from another without the assistance of her children.  She admitted that she did not personally inspect the Land after the purchase.  She was brought there but only to wait at a nearby restaurant for her children.  From there, she could not see her children enter the Land.  None of her children was called as a witness.

The aerial photographs

33.  There are various aerial photographs depicting Kam Tin area of Yuen Long including the Land.  The aerial photographs were analysed by Henry Chan Surveyors Ltd (“HCS”), the surveyor engaged on behalf of Ricas Properties and Eric Tang & Associates Ltd (“ETA”), the surveyor engaged on behalf of the Defendants.  As directed by the court, the surveyors issued their joint statement in September 2009.

34.  The aerial photographs were taken from 1980 onwards.  In other words, they do not cast any light on the alleged occupation and cultivation of the Land by the Grandfather prior to 1980.  At the beginning of the trial, Mr Wong sought to adduce into evidence aerial photographs taken from 1960 to 1979.  After hearing the parties, I ruled that it would take the opposite party by surprise.  Further, the surveyors also have had no opportunity to examine those photographs.  There is simply no justification for the late discovery of and reliance on those photographs.

35.  Nevertheless, the aerial photograph taken in November 1980 (i.e., one month after the completion of sale and purchase of the Land) shows that the Land was still under cultivation.  This is the joint observation of the surveyors.  To be fair, I should add that it is unclear whether the observation may still be consistent with the Land having just been harvested prior to the completion as Poon said.

36.  However, the surveyors also observed that aerial photographs show cultivation activities on the Land until 1987.  However no mention or complaint was made about any such cultivation activities since the acquisition of the Land in 1980.  This sounds unlikely, if Poon or her children had in fact visited or inspected the Land as often as she stated.  In view of the considerable scale and appearance of the cultivation, I have difficulty in accepting that they could be described as weeds, as Poon suggested.

37.  Further, the aerial photograph taken in 2003 shows that certain structures had already been erected on the Land.  More could be seen at various locations within the Land from the photograph taken in the subsequent years, presumably erected in connection with the war game site there.  If Poon or her children first came to know the existence of the war game site operation in 2007, this would mean they had not visited the Land in the past 4 years; otherwise they should have discovered these structures.

38.  Mr Szeto submitted that Poon was a truthful witness.  But the question is whether her evidence in respect of the inspection of the Land after its acquisition is reliable.  The fact, I find, is that the Land had not really been attended to by Ricas Properties since 1980, notwithstanding its acquisition allegedly for investment purpose.  Ricas Properties had not even erected any fence to demarcate the boundary of the Land acquired.

39.  According to their joint statement in respect of the aerial photographs taken from 1980 to 1998, the surveyors agree as follows:

(1) From 1980 to 1998, a structure was erected on Lot No.1345 adjoining the Land.

(2) From 1980 to 1987, fences were erected in the southern side of the Land. Some parts of the fences still existed during ETA’s site visit. HCS however pointed out that the fences were erected to envelope the neighbouring land and not the Land.

(3) In 1980 and 1981, the Land was under cultivation.

(4) In 1982 to 1987, the southern portion of the Land was under cultivation. In 1987, there was also cultivation in the north western and north eastern portions of the Land.

(5) In 1988 to 1990, no cultivation existed in the northern portion of the Land. Vegetation in the southern portion of the Land became dense.

(6) In 1991 and in 1994 to 1998, there was no cultivation on the Land at all.

40.  The surveyors differ in the following respects:

(1) HCS observed that cultivation activities in the northern portion of the Land had ceased since 1984. No significant change in the appearance of the vegetation covering the Land was observed in the following years. ETA observed that the planting beds were not obvious but could still be identified. They also inferred from the lack of overgrowth there since 1982 that that portion of the Land must have been under management.

(2) HCS observed that cultivation activities on the whole of the Land had ceased from 1988 to 1998, in view of the similar appearance of vegetation covering during that period. ETA found the texture and pattern of the vegetation on the southern portion of the Land were mostly the same as that on the adjoining Lot No.1345 from 1988 to 1993. Planting beds were obvious in most of the land parcels, indicating that cultivation existed.

41.  Except in respect of any technical methodology, the court is as good as the surveyors in observing what the aerial photographs depict.  Looking at the photographs, I agree with HCS that the Land was on the whole not cultivated after 1988.

Conclusion

42.  Unless the hearsay evidence of Hui is accepted in its entirety, there is certain vagueness in respect of whether and, if yes, exactly when in the 1960s the Grandfather started the alleged adverse possession of the Land.  Even assuming that Lam’s evidence is accepted, he could only tell the situation of the Land since 1972 to 1973.

43.  The objective evidence supports that the Land was on the whole under cultivation in 1980 and 1981. From 1982 to 1987, part of the Land was under cultivation.  Cultivation of the Land had ceased since 1988.  The Defendants’ case that Hui possessed the Land by cultivation all the way from 1987 to 1999 is contradicted even by the surveyors’ joint observation of the aerial photographs since 1988.

44.  In the circumstances, whilst I find Poon’s evidence in respect of her alleged observation of the Land in the past, I also have serious doubt as to whether Hui has continued to possess the Land by way of cultivation after the death of the Grandfather as he alleges.  According to Hui, he also moved to live in Tin Shui Wai in 2001.

The alleged tenancy in 1999

45.  In February 2007, Ricas Properties, through its former solicitors, Messrs Kitty So & Tong (“KST”), issued a letter of demand to Armed Forces Outbound.  A reply was received from Armed Forces Outbound under the letterhead of, among others, both Armed Forces Trading and Armed Forces Outbound.

46.  In the reply, Armed Forces Outbound suggested that it had been using the Land for over 15 years. So far it had never been approached by any owner of the Land and had never paid any rent.  It invited Ricas Properties to make proposal for resolving the matter.

47.  In March 2007, Ricas Properties, through KST, offered to sell the Land to Armed Forces Outbound at HK$500 per square feet.  If not accepted, Armed Forces Outbound would be required to vacate from the Land in 2 weeks.

48.  Armed Forces Outbound replied on the same day.  It suggested that the former occupier (or “舊有使用者”) of the Land had used the Land for horticulture and farming for about 20 years until he entered into co-operation with Armed Forces Outbound.  It had abundant evidence in support.  Armed Forces Outbound reiterated that so far no owner of the Land had approach it; and it had never paid any rent.  The person in charge (or “場主”) and Armed Forces Outbound considered the sale price offered by Ricas Properties was unreasonable.  It stated that it would stay at the Land.

49.  The dispute then went silent for half a year.  In September 2007, Ricas Properties, through its current solicitors, Messrs P C Woo & Co (“PCW”) renewed the complaint to Armed Forces Outbound about its trespass in the Land.  PCW received a reply from Messrs Francis Kong & Co (“FK”).

50.  FK suggested that they act for Armed Forces Trading which is allegedly the tenant of the Land.  Their client has been running Armed Forces Outbound on the Land for nearly 10 years. Millions of dollars were said to have been invested.   Their client pays monthly rent to the “landowner” and their client is entitled to carry on with its operation there.  Upon being shown PCW’s letter, the “landowner” denied any knowledge about Ricas Properties or its interest in the Land.

51.  PCW wrote back and asked FK to clarify the relationship between Armed Forces Trading and Armed Forces Outbound; and whether besides Armed Forces Trading, FK act for the latter as well.  They also asked FK to provide a copy of the alleged tenancy agreement in respect of the Land between Armed Forces and the person in charge or “landowner”.

52.  One week later, FK wrote back and stated that they were instructed to reply as follows:

(1) Their client was not obliged to answer any further question, including that regarding the relationship between Armed Forces and Armed Forces Outbound or the tenancy agreement between the “landowner” and their client.

(2) Their client was not obliged to answer or assist Ricas Properties to frame its case.

(3) Ricas Properties should contact the “landowner” directly and their client or they would not entertain any further enquiries in respect of the Land.

53.  In January 2008, Ricas Properties commenced originating proceedings, naming Armed Forces Trading and all persons in occupation of the Land as the defendants.  In view of the last unhelpful reply from FK on behalf of Armed Forces Trading, Ricas Properties’ decision to name Armed Forces Trading as a defendant is in my view understandable.

54.  After the commencement of legal proceedings, in February 2008, FK wrote to PCW clarifying that the tenant and occupier of the Land was and is Fairwise instead of Armed Forces Trading. This was also what Sze said in his evidence.  He explained that due to miscommunication, he mistakenly stated to the handling solicitor of FK that the solicitors act for Armed Forces Trading and that Armed Forces Trading is the tenant of the Land.

55.  The fact is that Armed Forces was incorporated in Hong Kong in May 1997.  In 1999, Fairwise was incorporated with the same registered office as Armed Forces Trading. According to Sze, Armed Forces used to a shareholder of Fairwise until he personally became the 50% shareholder in 2007.  He is also a director of Fairwise.  Fairwise registered a branch operating Armed Forces Outbound at Fung Kat Heung.  It address was Lots Nos.1305-1308 of DD No.107, not the Land.  Lot No.1305 is where Lam lives.

56.  According to Sze, he was and is the decision maker of Armed Forces Trading.  He was and is formally the decision maker of Fairwise; but if he was not around, Maggie Ho (“Ho”), the manager, would be in charge of the daily affairs.  The letters of reply on behalf of Armed Forces Outbound to KST in February and March 2007 mentioned above were indeed issued and signed by Ho.

57.  In court, Sze added that it is Armed Forces Trading at its business address at Kwong Wah Street, Kowloon, that receives customers who intend to hire the war game site at the Land and Armed Forces Trading would charge a fee for that.

58.  Considering all the circumstances, whilst Armed Forces Trading is strictly a separate entity from Fairwise, it is in reality artificial to suggest that the war game site operation is the business of Fairwise and distinct from that of Armed Forces Trading.

59.  Regarding FK’s letter in September 2007, the alleged mistake of Sze in giving instruction in respect of which company has been the alleged tenant of the Land since 1999 and hence which company was FK’s client is difficult to understand.  If there was a genuine mistake, it could have been explained particularly when PCW specifically asked for clarification.  As mentioned above, this met with FK’s utterly unhelpful refusal to entertain any further correspondence. From the correspondence, it can be seen that the handling solicitor of FK is apparently the same solicitor of the current solicitors acting for the Defendants.

60.  FK’s letter in September 2007 also contradicted the replies by Ho on behalf of Armed Forces Outbound in February and March 2007.  Ho made clear that they had never been approached by the owner or anyone in connection with the owner of the Land. They had also never paid any rent for the use of the Land.

61.  There used to be contention that the above replies by Ho for and on behalf of Armed Forces Outbound amounted to acknowledgement of title; and therefore the time limitation should run since then pursuant to section 23 of the Ordinance.  In the trial, Mr Szeto made clear that this contention is no longer pursued.

62.  In the O.113 decision in August 2008, the court suggested that these replies were given without legal advice.  In my view, legal advice would have been immaterial.  Ho made clear in her replies that those were the instructions of the persons in charge of the war game site operation (or “本中心負責人”).  The persons in charge of the war game site operation could only be Sze or the Lam family. These are clearly matters of fact that Ho was capable of knowing, in her position as manager, according to Sze, since 2004 or 2005.

63.  The stance expressed by Ho in her replies was also in line with the evidence of Poon as to what happened at about that time.  According to Poon, she once filed a report to the police then about trespass of the Land.  During the police investigation, one Mr Lam came to suggest that Armed Forces Outbound was the lawful tenant of the Land.  Sze was said to be the person operating the war game sites.  Lam asked Poon to talk directly with Sze on the telephone as Sze was said to be willing to rent the Land at the annual rent of HK$10,000.  Poon did that on the following day.  But Poon was not prepared to grant a lease for the requested term of 5 years.  When cross-examined in this respect, Sze merely claimed no impression or certain recollection about such conversation with Poon at that time.

64.  Even with legal advice, FK’s letter in September 2007 still contradicts the Defendants’ case that the rent under the alleged tenancy agreement was payable yearly, instead of monthly as FK’s letter suggested.

65.  In court, Sze denied any knowledge about these replies by Ho until after 2008.  Surprisingly, he went so far as denying knowledge about instructing FK in 2007.  He suggested that the manager might have instructed FK without his prior approval.  But as to whether he had issued the cheque for putting FK with costs on account, he offered no credible explanation.  As to why he stated in his affirmation about the alleged mistake in his own instruction to FK in September 2007, if he had not even approved instructing the solicitors, he offered no credible explanation either.

66.  I have no reservation in concluding that Sze is not a credible witness.  I reject his evidence.  Is there other objective evidence in support of the alleged tenancy agreement between Fairwise and Hui?  In my view, the answer is in the negative.

67.  The Defendants’ witnesses seem to suggest that it is common practice to conclude tenancy agreement in respect of rural land in the area verbally.  Yet at the same time, Sze said in court that various plots of land adjacent to the Land were rented pursuant to written tenancy agreement with the relevant tso.

68.  Such a tenancy agreement, and its contracting parties, could have been easily proved by documents evidencing the payment of the annual rent as alleged.  According to Sze, the rent was paid by cash or cheque.  Insofar as cheque is concerned, Sze is in fact one of the signatories.  Even assuming that the rent was paid by cash, there should be business records.  After all, operating the war game site on the Land was the primary business activity of Fairwise.  However none of the relevant documents has been disclosed.

69.  Considering all the evidence, I have no doubt that the Land came to be used as a war game site because of the involvement of the Lam family.  As Sze said in court, he chose to co-operate with them because they were residents there.  Lam was also the village representative.  The Lam family was supposed to contribute towards 50% shareholding of Fairwise.  Yet they have yet to pay up the capital.  What did the Lam family offer as investment?  All these could be telling features.

Conclusion

70.  Mr Szeto submitted that Sze, Lam and Hui run a concerted defence and the credibility of their evidence should be scrutinised together.  I agree.  Considering all the evidence, I am not satisfied that the Grandfather had possessed the Land by way of cultivation in the 1960s as alleged.  Even taking his evidence at its highest, which I am not prepared to, Lam could only tell what happened in 1972-1973 onwards.  Even assuming that the Grandfather had continuously possessed the Land since then until 1985 and together with Hui until 1987, I find that possession by such cultivation ceased afterwards.

71.  It was years later when that the Land fell into the use as the war game site.  Both Armed Forces Trading and Fairwise (as Armed Forced Outbound) exert control over the use of the Land.  This certainly involved the Lam family but no tenancy agreement with Hui as alleged.  There is no possession of the Land by Hui through Armed Forces Trading or Fairwise as its tenant as alleged.

72.  Adverse possession for the required period is not proved.  I find that Ricas Properties is entitled to recover possession of the Land.  Since no evidence is adduced in support of the claim for damages, I make no award of damages for trespass.

Order

73.  In line with the prayer, I give the following orders against all the Defendants:

(1) Order that all the Defendants deliver up vacant possession of the Land (as defined and delineated in the plan marked as “Annexure 1” to the Re-amended Originating Summons herein) to Ricas Properties within 60 days;

(2) Injunction that all the Defendants do remove at its own cost all the structures and cease all matters of trespass on and over the Land;

(3) Injunction restraining all the Defendants, whether by themselves or agents or servants or otherwise, directly or indirectly or howsoever, trespass on or over the Land;

(4) Order that the counterclaim be dismissed.

74.  I make a nisi order that all the Defendants do pay Ricas Properties' costs of this action, including any costs reserved.  Costs shall be taxed, if not agreed, with certificate for counsel.  In the absence of application in 14 days to vary, the costs order shall become absolute.

DCMP 75/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 75 OF 2008

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Dates of Hearing:  17 July & 4 August 2008

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DECISION

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1.  This is an application by the Plaintiff to recover possession of the land registered in the Yuen Long New Territories Land Registry as Lot No. 1347 in Demarcation District No. 107 (“the Land”) pursuant to O. 113 of the Rules of the District Court, Cap. 336.

Background of the application

2.  There is no dispute that the Plaintiff purchased the Land in 1980 and is now the registered owner of the same.  It claims that the Land is now wrongfully occupied by the 1^st and the 2^nd Defendants, the latter being persons unknown, and as a result it brought the present application against them to recover possession of the Land.

(i)      The 3^rd Defendant’s case

3.  The 3^rd Defendant, on the other hand, claims that it is the only occupier of the Land.  After applying to intervene as an additional defendant, the 3^rd Defendant opposes the Plaintiff’s claim on the ground that the adverse possessor of the Land had validity granted a tenancy to it in respect of the Land, and as a result the Plaintiff is not entitled to any possession order.

4.  It is the 3^rd Defendant’s case that one Mr. Hui Mau Tung (“the Grandfather”) had since 1960s cultivated on the Land.  At around 1985, his grandson, Mr. Hui Cho Shan (“the Grandson”), emigrated to Hong Kong and had cultivated on the Land with the Grandfather.  The Grandfather died on 13 December 1987.  Since the Grandfather and the Grandson had been continuously and exclusively in possession of the Land since 1960s, the Grandson had successfully dispossessed the Plaintiff by way of adverse possession.  In the opposing affirmations, the 3^rd Defendant also mentions that the Grandson had acquired the right of the Grandfather in respect of the Land by way of succession.

5.  In about 1999, the 3^rd Defendant had entered into a tenancy agreement with the Grandson for the lease of the Land.  As the 3^rd Defendant is now a lawfultenant, it contends that the Plaintiff is not entitled to any possession order.  Further, O. 113 application is only intended for a landowner to claim for possession of his land from squatter in a plain and obvious case.  As there is dispute about various issues of fact and law in the present case, it is not appropriate for the court to entertain the Plaintiff’s claim under such procedure.

(ii)     The Plaintiff’s reply

6.  In reply to the 3^rd Defendant’s contention, the Plaintiff alleges that he had purchased the Land in 1980 for investment purposes.  Since the Plaintiff’s acquisition, Mr. Poon Mui, a director of the Plaintiff, had visited the Land on many occasions, in particular in the early days after the acquisition.  During these visits, he did not find that there was any person occupying the Land, and he was only aware of the 3^rd Defendant’s occupation of the Land in 2007.

7.  Obviously, there is a genuine factual dispute between the parties about the occupation of the Land by the Grandfather and the Grandson from 1960s to 2007, and the aerial photos produced by the parties cannot conclusively resolve this issue one way or another.  For the purpose of this summary application, I have to accept the 3^rd Defendant’s factual allegations about the occupation by the Grandfather and the Grandson as the truth.

8.  However, even accepting the 3^rd Defendant’s factual allegations in this regard, the Plaintiff argues that as the Grandfather had been in occupation of the Land for over 20 years, his right of adverse possession was crystallised before his death.  As there is no evidence about any proper administration of the Grandfather’s estate, the Grandfather’s interest in the Land had not passed to the Grandson by way of succession.  In such circumstances, the Grandson simply had no interest in the Land to pass to the 3^rd Defendant.  As I see it, this part of the arguments mainly focuses on the right of the Grandson.

9.  Further, just like a defendant in an O. 14 application, the 3^rd Defendant has the duty to establish a meritorious defence in this O. 113 application, and in so doing, the 3^rd Defendant must show that it is a valid tenant of the Land.  However, the 3^rd Defendant’s allegation about the tenancy is contradicted by its own version of events as contained in the letters dated 12 February and 13 March 2007.  The Plaintiff also says that the tenancy agreement, if it existed, may be unenforceable as it was not in writing.

10.  Without proving a valid tenancy agreement, the Plaintiff contends that the 3^rd Defendant may just be a licensee.  As licence is only a personal right without any interest in the Land, the 3^rd Defendant cannot rely on the licence to defeat a claim for possession by the true owner.  In this regard, the Plaintiff has repeatedly requested the 3^rd Defendant to provide further particulars about the alleged tenancy agreement with the Grandson.  As the 3^rd Defendant has failed to supply any of these particulars in the affirmations in opposition or the previous correspondence, the Plaintiff says that the 3^rd Defendant has failed to discharge its duty in proving a valid tenancy in the present case.  To me, this part of the arguments relates to the relationship between the Grandson and the 3^rd Defendant.

Proper approach in dealing with O. 113 application

11.  I will therefore deal with the Plaintiff’s arguments in two parts: the first part on the right of the Grandson and second one on the relationship between the Grandson and the 3^rd Defendant.   But before I do so, I should perhaps set out the proper approach for the court in dealing with O. 113 application.

12.  The approach had been considered by the Court of Appeal in Direk Mahadumrongkul v Lau Chun Keung & Ors., unreported, CACV No. 133 of 1998 (decision on  16 October 1998), in which Nazareth VP said the following in his judgement:

“ 24.    [O. 113] provides a summary procedure which enables the court in a proper case to deal more quickly with a claim for possession than it would otherwise be able to do.

25.             In earlier editions of the annual practice it was stated that this summary procedure was intended for uncontested and clear cases.  The latter statement has been omitted from the latest two editions.  However, that is said to have been the result of the increased material that has had to be included in the White Book rather than because of any authority to the contrary.  Certainly, counsel has not been able to find such authority.  In that context Godfrey J (as he then was) in Vipac Engineers & Scientists Ltd v Karpovich & anor [1989] 2 HKC 358 at 359H said this:

“I have to say that this goes further than the judgments themselves and somewhat overstates the matter.  If the case is a clear one, it cannot matter that the defendant has contested it.  The right test, in my view, is whether the issue between the parties is one which the defendant is entitled to have sent to a trial – whether it be an issue of fact or of law.  If the issue is seen on analysis to be capable of determination in only one way, in favour of the plaintiff, then, as it seems to me, it is proper to the court to exercise the power conferred on it by O. 113 and determine the matter, however vigorous the contest may have been.”

That seems to me to be obviously right and not to be significantly different from the approach under O. 14.”

13.   It is clear from such dicta that O. 113 provides a summary procedure to enable an owner to recover possession of his land from squatter in a speedy manner.  By reason of its summary nature, such kind of application is intended for clear and obvious case where there is no issue or question to be tried.  However, if the alleged squatter cannot raise any issue should be determined in a proper trial, there is no reason why the court should not grant a possession order in favour of the owner.  Hence according to the aforesaid dicta in Direk Mahadumrongkul, the approach of the court in dealing with O. 113 application is very similar to that of an O. 14 application.

14.  I agree with such approach.  However, O. 113 application is, in substance, a different procedure as compared with O. 14 application.  As I see it, if there is some degree of truth in the defendant’s allegation, or that the defendant has raised an issue which should be further investigated at the trial, then the court should not dispose of the case by way of O. 113 procedure.

The right of the Grandson

15.  With these principles in mind, I turn to the first part of the Plaintiff’s arguments.  In order for the defence to succeed, the 3^rd Defendant must be able to show that the Grandson had acquired an interest in the Land by way of adverse possession so that he would have been able to lease the Land to the 3^rd Defendant.  In the affirmations in opposition, the 3^rd Defendant contends that the Grandson had acquired such interest by way of succession.  However, there is no evidence before the court to show that the Grandson is a beneficiary of the Grandfather’s estate.  Even assuming that the Grandson is indeed such a beneficiary, the Grandfather’s right as an adverse possessor still belongs to the Grandfather’s estate.  Unless the 3^rd Defendant can show that the Grandfather’s interest in the Land had passed to the Grandson after proper administration of the Grandfather’s estate, there is simply no room for the argument that the Grandson had acquired the Grandfather’s interest in the Land by way of succession.

16.  However, it is still possible for the Grandson to have acquired the interest as an adverse possessor himself by succeeding the Grandfather as a squatter in the Land.  According to the evidence of the Grandson, he came to Hong Kong and started to cultivate on the Land together with the Grandfather in 1985, and he continued to occupy the Land after the death of the Grandfather in December 1987.  As the occupation commenced before the amendment of Limitation Ordinance, Cap. 347 in 1991, the parties accept that the relevant period for adverse possession by that time was one of 20 years instead of 12 years under the existing statutory regime.  Hence, the Grandson had acquired an interest in the Land by way of adverse possession in December 2007, ie. 20 years after the death of the Grandfather, by the latest.

17.  As the Grandson granted the alleged tenancy to the 3^rd Defendant in 1999, the next issue is, therefore, whether the Grandson had acquired the interest by that time so as to enable him to grant the tenancy to the 3^rd Defendant.  This issue, in my judgment, depends on the question as to whether the Grandson can rely on the period of occupation by the previous squatter, ie. the Grandfather, in dispossessing the Plaintiff.

18.  In this regard, it is trite law that a second squatter can add the period of possession of the first squatter to his own period of possession in order to complete the period of adverse possession (see: Ng Lai Sim v Lam Yip Shing & anor., unreported, HCA No. 2963 of 1998, decision of P. Cheung J., as he then was, on 22 November 1999).  However in the present case, the Grandfather had acquired the right of an adverse possessor of the Land for a continuous period of 20 years prior to his death, and the Grandson himself had occupied the Land for a period less than 20 years when he granted the tenancy to the 3^rd Defendant in 1999.  In such case, can the Grandson still rely on the period of possession by the Grandfather in defeating the Plaintiff’s title?

19.  Mr. Szeto, counsel for the Plaintiff, argues in the negative.  According to him, the right of the Grandfather had already crystallized at the time when he possessed the Land for 20 years.  This was a right accrued to him personally, and so the subsequent squatter cannot rely on the period of his occupation with a view to defeat the Plaintiff’s title.  However, Mr. Szeto frankly admits that there is no legal authority to support his proposition in this regard.

20.  Despite his able submissions, I cannot accept Mr. Szeto’s argument.  In my judgment, there is no reason why the Grandson cannot rely on the period of the prior occupation by the Grandfather in asserting the right vis-à-vis the Plaintiff.   Assuming squatter A occupied the land for over 20 years and then squatter B occupied the land for, say, another 2 years, squatter B should then be able to rely on the period of previous occupation by squatter A in asserting his right vis-à-vis the paper owner.  Squatter B, however, cannot assert the right vis-à-vis squatter A, unless squatter B occupies the land himself for a period of 20 years for the purpose of this case or 12 years under the existing statutory regime.  As I see it, time started to run against the paper owner from the time when the adverse possession began.

21.  Support for this proposition of the law can be found in the Privy Council’s decision in SzeTo Chun Keung v Kung Kwok Wai David [1997] 2 HKC 231.  In that case, the plaintiff, the registered owner was seeking possession of various lots of land in the New Territories against various occupiers.  For our present purpose, we only need to focus on the claim against the 1^st defendant.  In 1961, the Crown granted a permit to the 1^st defendant to maintain various structures in the land occupied by him.  The permit was for a period of 12 months but it was renewed every year until 1988.  The permit was cancelled by the District Lands Officer in 1988 on the ground that the licence given was in fact on private property.  In the original pleading, the 1^st Defendant was seeking to rely on, inter alia, the permit to resist the claim for possession.  In the application by the plaintiff to strike out the defence, Le Pichon J, as she then was, held that such defence was unarguable.

22.  There was also an application before the learned judge to amend the Defence, averring that the 1^st defendant had been in occupation of the land in question since 1953.  As he was in occupation of the land for 20 years prior to the coming into force on 1 July 1973 of the New Territories (Renewable Crown Leases) Ordinance, the 1^st defendant was seeking to rely on the defence of adverse possession.  However, the learned judge held that the 1^st defendant’s occupation of the land until 1988 was not qua squatter but as licensee of the Crown under a Crown Land Permit.  Accordingly, the 1^st defendant could not have had any intention to dispossess the true owner.  As such intention was an essential ingredient in establishing adverse possession, such defence was bound to fail.  The learned judge therefore granted judgment in favour of the plaintiff, a decision which was upheld by the Court of Appeal.

23.  Upon the further appeal by the 1^st defendant, the Privy Council held that from 1961 to 1988, the Crown was in adverse possession of the land through its licensee, the 1^st defendant.  The licensing arrangement between the 1^st defendant and the Crown did not affect the adverse nature of the possession as against the registered owner.  According to the Law Lords, the Limitation Ordinance was concerned with whether the plaintiff’s right of action had been barred.  On the facts as pleaded in that case, the land had been continuously in adverse possession since 1955 and the plaintiff’s title had been extinguished in about 1975.  The proposed defence thus disclosed an arguable defence and should have been allowed to proceed.

24.  This case clearly shows that squatter B, though in possession of the land for a short period of time, can rely on the occupation of the land by the previous squatter, squatter A, in dispossessing the paper owner.  This is the case even if squatter A had occupied the land for more than 20 years.  In the judgment of the Privy Council, Lord Hoffmann had expressly pointed out that at the time when the proceedings were commenced, the 1^st defendant had been in possession on his own account for only 2 years.  Prior to that, the Crown had been in adverse possession of the land for over 20 years, and yet the 1^st defendant was able to rely on the previous occupation by the Crown in defeating a claim for possession by the paper owner.  In fact, Lord Hoffmann said the following in the judgment:

“At the time when proceedings were commenced, the defendant had been in possession on his own account for only two years.  But this does not matter: the Limitation Ordinance is not concerned with whether the defendant has acquired a title but with whether the plaintiff’s right of action has been barred.  For this purpose, all that matters is that there should have been continuous adverse possession for the period of limitation.  The right inter se of the successive persons who may have been in possession adversely to the plaintiff since he was dispossessed are for this purpose irrelevant.” (at p. 235A-C)

Hence, the key is that the paper owner had already lost his right vis-à-vis  all the squatters of the land in question after he was dispossessed for 20 years.

25.  Further support for my reasoning can be found in the following passage in Megarry & Wade on the Law of Real Property, 6 ed.,at para. 21-022:

“(b) Squatter dispossessed by squatter.  If a squatter is himself dispossessed the second squatter can add the former period of occupation to his own as against the true owner.   This is because time runs against the true owner from the time when adverse possession began, and so long as adverse possession continues unbroken it makes no difference who continues it.  But as against the first squatter, the second squatter must himself occupy for the full period before his title becomes unassailable.  This has already been explained, but a simple example may be useful here.  If land owned by A has been occupied by X for eight years and Y dispossesses X, A will be barred when 12 years have elapsed from X first taking possession.  But although at the end of that time A is barred, X will not be barred until 12 years from Y’s first taking possession; for Y cannot claim to be absolutely entitled until he can show that everybody with any claim to the land has been barred by the lapse of the full period.”

26.  In my judgment, the same principle should apply in the present case.  Time should have started to run against the Plaintiff when the Grandfather began the adverse possession of the Land in 1960’s.  So long as the Grandson occupied the Land immediately after the death of the Grandfather, the Grandson can rely on the period of the previous occupation by the Grandfather in asserting the right of an adverse possessor against the Plaintiff.  Whether the right of the Grandfather had crystallized would only be a matter between the Grandfather’s estate and the Grandson.  By reason of such analysis, it is certainly very arguable that the Grandson had acquired the right of an adverse possessor against the Plaintiff when he occupied the Land after the death of his Grandfather in 1987, and vis-à-vis the Plaintiff, the Grandson was then able to grant a lease to other persons to occupy the Land.

The relationship between the Grandson and the 3^rd Defendant

27.  I then turn to the second part of the Plaintiff’s arguments which mainly focuses on the relationship between the Grandson and the 3^rd Defendant.  According to the Plaintiff, even assuming that the Grandson had acquired the right of an adverse possessor, the Plaintiff is still able to obtain a possession order against the 3^rd Defendant by reason of the following grounds:

(i)  the 3^rd Defendant has failed to produce any evidence to substantiate that a lease had been granted by the Grandson to it, whether in 1999 or at any time, and the alleged tenancy agreement, if it was made orally, may be unenforceable under ss. 3 to 6 of the Conveyancing and Property Ordinance, Cap. 219;

(ii)  the 3^rd Defendant’s claim that it is a lessee of the Land is contradicted by its own version of events as contained in the letters dated 12 February and 13 March 2007; and

(iii)  at most, the 3^rd Defendant is only occupying the Land as a licensee, as it is trite law that licence is only a personal right without any interest in the land, the 3^rd Defendant cannot rely on the right of a licensee to oppose a claim for possession of the Land by the registered owner.

(i)      Lack of particulars to support a lease

28.  In respect of the first ground, it is true that the Plaintiff’s solicitors did write to the 3^rd Defendant’s solicitors requesting for the particulars of the lease.  In the letter dated 17 September 2007, the 3^rd Defendant’s solicitors simply replied that their client was not obliged to provide such information to the Plaintiff.  Neither did the 3^rd Defendant supply any of these particulars in the affirmations in opposition.  In such case, is the absence of particulars fatal to the defence case?

29.  In my judgment, the answer is no.  Obviously, it is necessary for a defendant in an O. 14 application to provide particulars to substantiate his defence.  However, whether the particulars are sufficient  depends very much of the nature of the defence to be run in a particular case, and the ultimate question is, based on the existing evidence, whether there is some degree of truth in the defendant’s allegation.

30.  In the present case, it is clear from the evidence of the Grandson and the 3^rd Defendant that the latter is occupying the Land under some sort of arrangement between the parties.  The only thing that is perhaps uncertain at this stage is that whether it is a tenancy or a licence, and in the case of the former, what kind of tenancy is governing the relationship between the parties.  If the 3^rd Defendant is a tenant, it would have an interest in the Land no matter what is the type of tenancy between the parties, and that is perhaps the reason why the 3^rd Defendant has not bothered to supply the particulars.  On the other hand, the main difference between a tenancy and a licence is whether the occupier is granted exclusive possession of the land.  If exclusive possession has been granted, the occupier would probably be a tenant and vice versa.  In an application of this sort, one would not expect the occupier to deal with the question of exclusive possession in great detail at this stage, and the 3^rd Defendant may not even have contemplated that the Plaintiff would take up this particular issue in the O. 113 application.  In my judgment, so long as the 3^rd Defendant and the Grandson both claim that there was a tenancy agreement and that the 3^rd Defendant has in fact been occupying the Land under some sort of arrangement between the said parties, there is then a triable issue as to whether there was a tenancy granted by the Grandson in respect of the Land.  Hence, it is not appropriate for the court to dispose of this case by way of summary procedure.

31.  Mr. Szeto also argues that the tenancy agreement, if made orally, would be unenforceable under ss. 3 to 6 of the Conveyancing and Property Ordinance, which require all leases exceeding 3 years to be in writing.  As no particulars has been supplied by the 3^rd Defendant about the tenancy agreement, Mr. Szeto submits that it is open to the court to conclude that the tenancy agreement was in fact an oral one and is therefore unenforceable.

32.  However, there might be a lot of different types of tenancy governing the relationship between the parties.  It might be a yearly or a monthly tenancy, both of which do not require the tenancy agreement to be in writing.  Indeed, as the tenancy agreement in the present case was made some time ago in 1999, it was unlikely that the tenancy was for a fixed term lasting for such a long period of time or exceeding 3 years.  At this stage, I would only say that the 3^rd Defendant has managed to raise a triable issue that it is a valid tenant occupying the Land, and the court should not deprive the 3^rd Defendant of the opportunity of putting forward its defence at a proper trial.

(ii)     The version of events contained in the previous letters by the 3^rd Defendant

33.  It is also true that the 3^rd Defendant wrote a letter to the Plaintiff’s then solicitors dated 12 February 2007, claiming that the 3^rd Defendant had been using the Land for over 15 years.  However in the subsequent letter by the 3^rd Defendant dated 13 March 2007, the 3^rd Defendant then wrote that, according to the information provided by the previous occupier of the Land whom I suppose was the Grandson, such previous occupier had been occupying the Land for about 20 years.  As the previous occupier and the 3^rd Defendant had been using the land for about 20 years, they would continue to occupy the Land.

34.  Apparently there is some inconsistency in the two versions of event, but in my judgment, the court should not simply find that the 3^rd Defendant’s case is incredible at this stage.  At least, the following facts are clear from the evidence.  Firstly, the Plaintiff has not exercised any control over the Land after its purchase in 1980.  Secondly, the 3^rd Defendant has been occupying the Land for quite some time.  Thirdly, there was some sort of arrangement between the 3^rd Defendant and the Grandson about the occupation of the Land.  Based on these undisputed facts, there is some degree of truth in the 3^rd Defendant’s allegation that he is a valid tenant of the Land.

35.  Obviously, these two letters had been sent by the 3^rd Defendant without the benefit of obtaining legal advice.  Further, the first letter was sent by the 3^rd Defendant without the opportunity of consulting the Grandson, and it was only after obtaining the necessary information from the Grandson that the 3^rd Defendant was able to provide a more accurate account of the events in the second letter.  The period of occupation mentioned in the first letter might also refer to the occupation of the Grandson partly through the lease granted to the 3^rd Defendant.  Hence, I do not find that these two letters in any way undermine the creditability of the defence case.

(iii)    The 3^rd Defendant’s right if it is only a licensee

36.  I then turn to the Plaintiff’s last argument.  According to Mr. Szeto, as the 3^rd Defendant has failed to discharge its duty in establishing a valid tenancy agreement, the 3^rd Defendant is at most a licensee of the Land.  As licence is only a personal right without any estate in the land, the 3^rd Defendant cannot rely on the same to defend a claim for possession by the true owner.

37.  The main differences between a lease and a licence are best summarised in the following passage in Woodfall’s Law of Landlord and  Tenant, 2008 ed., vol. 1, para. 1.020:

“Essential differences between lease and licence

A lease or tenancy confers on the grantee an interest in the land demised but a licence confers no such interest.  It is a mere personal privilege; it merely makes lawful that which would otherwise be unlawful. ‘The tenant possessing exclusive possession is able to exercise the rights of an owner of land, which is in a real sense his land albeit temporarily and subject to certain restrictions.  A tenant armed with exclusive possession can keep out strangers and keep out the landlord unless the landlord is exercising limited rights reserved to him by the tenancy agreement to enter and view and repair.  A licensee lacking exclusive possession can in no sense call the land his own and cannot be said to own any estate in the land.  The licence does not create an estate in the land to which it relates but only makes an act lawful which would otherwise be unlawful.’  All lessees and tenants necessarily have exclusive possession of the demised premises.  Some licensees have exclusive possession; some do not.  Contractual licences do not constitute equitable interests in the land, and consequently do not bind a successor in title of the original grantor.

However, a licensee with a right to occupy land has a sufficient interest to be entitled to maintain an action for trespass if it is necessary to do so in order to give effect to his rights under the licence.”

38.  From this passage, it is clear that a licensee does not enjoy any estate in the land.  However, that does not necessarily mean that he has no right whatsoever, at least he has sufficient interest to maintain a claim for trespass to give effect to his right under the licence.  Hence, the question in the present case is that, assuming the 3^rd Defendant is just a licensee, whether he has sufficient interest to defend a claim for trespass by the Plaintiff.

39.  In this regard, Mr. Szeto submits that as adverse possession is only a personal defence available to the relevant squatter only, a licensee of that squatter with no interest in the land cannot rely on the licence to defend a claim for trespass by the paper owner.  However, I have great reservation about such argument.  As illustrated by the Privy Council’s decision in SzeTo Chun Keung, even a squatter who occupies the land for a short while can rely on the occupation of the land by a previous squatter in defending a claim by the paper owner.  In such case, why a licensee of a valid adverse possessor cannot similarly defend such a claim by the paper owner?  Logically, I cannot see the distinction between the two, in particular a squatter who just occupies the land for a short period of time can hardly be described to have any interest in the land.  In my judgment, the key is that, as pointed by the Law Lords in SzeTo Chun Keung, the title of the paper owner had been extinguished after he was dispossessed for 20 years.  He had lost his right over the land, and it does not matter whether a claim for trespass is made against a squatter or a licensee of that squatter.  Hence, it is very arguable that the licensee of a valid adverse possessor does have sufficient interest to defend a claim for trespass by the paper owner.

Other reasons why summary procedure is not appropriate

40.  At this stage, I should perhaps try to summarise the position as follows.  As mentioned above, it is arguable that the Grandson had acquired the possessory title to the Land by way of adverse possession when he started to occupy the Land after the death of his Grandfather, and so the Grandson was able to grant a lease for someone else to occupy the Land after the death of the Grandfather in 1987.  Further, there is a triable issue as to whether 3^rd Defendant is now occupying the Land as a lessee.  Even if the 3^rd Defendant is just a licensee, it is quite arguable that it has got sufficient interest to defend a claim for trespass by the Plaintiff.  In such circumstances, it is not appropriate for the court to allow the Plaintiff to recover possession of the Land by way of summary procedure.

41.  Even if I were wrong on the aforesaid analysis, there is also another reason as to why the court should not resolve this case by way of O. 113 application.  Assuming that the Grandson had no right to grant the lease in 1999, he must have acquired such right by way of adverse possession when he occupied the Land himself for 20 years after the death of his Grandfather.  It is trite law that a squatter can occupy the land through its licensee, and so the Grandson had acquired the interest in the Land in December 2007 by the latest.  If the court were to rule against the 3^rd Defendant at this stage and were to find that it is not a valid tenant, there is nothing to prevent the Grandson to grant a fresh lease to the 3^rd Defendant now, and as a result a possession order by the court does not serve any meaningful purpose.  This is particularly the case as the Grandson has made an affirmation supporting the 3^rd Defendant’s defence in this application.  Unless the court finally adjudicates the case involving a determination of the rights of all the relevant parties, the dispute will still continue.  Just like the court in an O. 14 application can grant a defendant leave to defend for some other reasons apart from establishing a meritorious defence, I am of the view that the court in the present case should likewise allow the 3^rd Defendant to put forward its defence at a proper trial.  The continuation of this action as if the same has been commenced by writ would also facilitate the joinder of the Grandson as an additional party in the proceedings, and the declaratory relief to be granted after a proper trial would then be binding on all the parties involved.  Based on all these reasons, I refuse the Plaintiff’s application for a summary order for possession.

42.  The parties agree that, if the court rules in favour of the 3^rd Defendant, the present case should proceed as if the same has been commenced by writ.  I therefore make the following order nisi that:

(i) the application for a summary order for possession of the Land under O. 113 be dismissed;

(ii) the case do proceed as if the same has been commenced by writ;

(iii) the Plaintiff do file and serve the Statement of Claim within 14 days from the date when this order is made absolute;

(iv) the 1^st and 3^rd Defendants do file and serve the Defence within 14 days thereafter;

(v) costs of the O. 113 application be costs in the cause of the action with certificate for counsel.

The order nisi shall be made absolute 14 days after the handing down of this decision.