Civil Action2012

JADE’S REALM LTD v. DIRECTOR OF LANDS for and on behalf of THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

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HCA 1509/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1509 OF 2012

____________

BETWEEN
	JADE’S REALM LTD	Plaintiff
and
	DIRECTOR OF LANDS for and on behalf of THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION	Defendant

____________

Before: Hon Ng J in Chambers

Date of Hearing: 7 August 2014

Date of Judgment: 19 January 2015

_______________

J U D G M E N T

_______________

Introduction

1. There are before this court two applications by the Plaintiff.

2. First, by summons dated 13 December 2013, the Plaintiff seeks to strike out paragraph 12(2)(e) of the Amended Defence under RHC O18 r 19(1)(a) on the ground that it discloses no reasonable defence. Paragraph 12(2)(e) of the Amended Defence reads as follows:

“Further or alternatively, the title of the colonial Hong Kong Government over the land in the New Territories, of which the Lots form part, was only for a 99-year term under the Peking Convention from 1 July 1898 to 30 June 1997. Whatever period of adverse possession that the Plaintiff’s predecessors-in-title managed to accumulate against the colonial Hong Kong Government, the same came to an end upon expiry of the 99-year term on 30 June 1997. It is averred that any period of adverse possession that the Plaintiff’s predecessors-in-title and the Plaintiff have accumulated since 1 July 1997 is less than the required 60 years.” (“99-year term argument”)

3. Second, by summons dated 23 July 2014, the Plaintiff seeks a determination of the following issues of law under RHC O 14A r 1:

(1) Whether, as a matter of municipal law of Hong Kong, the “title” of the colonial Hong Kong Government over land in the New Territories was for a term of 99 years expiring on 30 June 1997.
(2) Whether, in respect of unleased Government land situated in the New Territories, any period of adverse possession under section 7 (1) of the Limitation Ordinance accumulated prior to 1 July1997, insofar as the same falls short of 60 years, needs to be counted afresh since 1 July 1997.
(collectively “Two Questions”)

Background

4. The background of this case and the parties’ competing contentions have been summarized in a judgment of this court handed down on 9 January 2015 (“Judgment”) and shall not be repeated here. For ease of comprehension, suffice it to say that the principal allegation of the Plaintiff is that its predecessors-in-title of Lots Nos. 355 and 356 in DD 214 (“the Lots”) and itself have been in adverse possession of a piece of Government land in DD 214 (“Land”) in Nam Wai, Sai Kung, New Territories which adjourns the Lots “since not later than 1937 and further the colonial Hong Kong Government and the Hong Kong SAR Government have been dispossessed of the same, or have abandoned any claim to the Land”: paragraph 10 Amended Statement of Claim.

5. In the prayer for relief, the Plaintiff claims inter alia a Declaration that the Defendant’s title of and in the Land has been extinguished by virtue of the Limitation Ordinance.

6. The 99-year term argument is pleaded by the Defendant as one of the responses to the Plaintiff’s claim of adverse possession of the Land.

Striking Out Application

7. It is well-established that the court should exercise its summary power to strike out any pleading only in plain and obvious cases. The court should not decide difficult points of law in striking out proceedings. The claim or defence must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim or defence to succeed before the court will strike it out: Hong Kong Civil Procedure 2015 Vol. 1 para. 18/19/4.

8. Section 7(1) of the Limitation Ordinance, Cap. 347, stipulates that:

“No action shall be brought by the Crown to recover any land after the expiration of 60 years from the date on which the right of action accrued to the Crown or, if it first accrued to some person through whom the Crown claims, to that person.”

9. Put it simply, the 99-year term argument runs like this:

(1) As a matter of Hong Kong law, the title of the Colonial Hong Kong Government, or, strictly speaking, the British Crown, over New Territories land was a leasehold title of a 99‑year term, expiring on 30 June 1997 (“1^st Limb”).
(2) Whatever period of adverse possession the Plaintiff's predecessors-in-title had managed to accumulate against the Colonial Hong Kong Government or the British Crown as lessee of the Land came to an end on 30 June 1997 when the lease itself expired (“2^nd Limb”).

10. If both limbs of the 99-year term argument are valid, then the period of adverse possession over the Land by the Plaintiff’s predecessor-in-title vis-à-vis the Colonial Hong Kong Government or the British Crown would not count against the HKSAR Government - it must be counted afresh from 1 July 1997 and, obviously, such period is far less than 60 years. Putting it in another way, for the purpose of section 7(1) of the Limitation Ordinance, the right of action which accrued to the Colonial Hong Kong Government to recover the Land is different from the right of action which accrued to the HKSAR Government – such right only first accrued to the latter on 1 July 1997 when it began to manage all land within the HKSAR as State Property under Article 7 of the Basic Law. Again, self-evidently, much less than 60 years have elapsed since the right of action to recover the Land first accrued to the HKSAR Government on 1 July 1997.

11. Hence, whichever way one puts it, the Plaintiff’s claim that the HKSAR Government’s title of and in the Land has been extinguished by the Limitation Ordinance fails.

12. In Winfat Enterprises (HK) Co Ltd v AG [1984] HKLR 32, the Court of Appeal, after examining the Peking Convention of 9 June 1898, the Order-in-Council of 20 October 1898, the two Governor’s proclamations of 9 April and 12 July 1899, the New Territories Regulation Ordinance (No. 12 of 1899) which came into force on 18 April 1899, sections 2 and 13 – 15 of the Land Court (New Territories) Ordinance (No. 8 of 1900) which came into force on 28 March 1900, sections 2, 13 ‑ 15[1] of the New Territories Land Court Ordinance (No.18 of 1900) which repealed and re-enacted Ordinance No. 8 of 1900 and came into force on 23 July 1900, section 14 of the New Territories Regulation Ordinance (No.34 of 1910) and section 8[2] of the New Territories Ordinance, Cap. 97, came to this conclusion at 51E-F:

“Whatever the position with regard to interest in land may have been, between the assumption by the Crown of sovereignty over the New Territories on 1^st July 1898, and the coming into force of the ordinance of No. 8 of 1900 on 28^th March 1900, it seems to us that, as far as domestic law is concerned, all land in the New Territories became the property of the Crown, for the period of 99 years specified in the Peking Convention, by virtue of s. 15 of that Ordinance.”

13. The Court of Appeal’s decision was affirmed by the Privy Council: see [1985] 1 AC 733. At 745A-B, Lord Diplock observed that:

“When the New Territories were ceded, the land became on 1 July 1898 the property of the British Crown for the 99-year period of the cession. It was declared to be so by the Land Court (New Territories) Ordinance 1900 (No. 8 of 1900).”

14. This case, in my view, is authority for the following propositions:

(1) As far as Hong Kong law is concerned, all land in the New Territories had been vested in the British Crown by statute, the first of which was section 15 of Ordinance No.8 of 1900 which was re-enacted by section 15 of Ordinance No. 18 of 1900.
(2) As a matter of Hong Kong law, the interest of the British Crown or the British Crown in right of the Colonial Hong Kong Government in New Territories land was a leasehold interest for a term of 99 years from 1 July 1898.

15. In my judgment, the 1^st Limb of the 99-year term argument is supported by high authorities binding on this court and must be accepted as valid for the present purpose. For completeness, it was also accepted as valid by Deputy High Court Judge L Chan (as he then was) in Chau Ka Chik Tso & Ors v the Secretary for Justice unrep.; HCA 10670 of 2000; 30 December 2009. At paragraph 229, the learned Judge said:

“The intention of these enactments [New Territories Order in Council, section 15 New Territories Land Court Ordinance 1900, section 14 New Territories Regulation Ordinance No. 34 of 1910, section 8 New Territories Ordinance] was to incorporate the New Territories as part of the then British Colony of Hong Kong from 23 July 1900. But I cannot see any intent in the enactments to vest the New Territories in the British Crown in perpetuity as for the rest of the colony. I do not read the dropping of the reference to the term in the Peking Convention as a sufficient manifestation of intent of the legislature to treat the New Territories as having been vested in the British Crown in perpetuity. Though the Peking Convention was no part of the domestic law of Hong Kong, it was a treaty that the British Crown had to observe. There is no evidence that the British Crown did not observe the convention. The British Hong Kong Government also did not conduct itself as if the New Territories had been so vested in the British Crown but not just for the period specified in the Convention…”

16. The 2^nd Limb of the 99-year term argument is also supported by Chau Ka Chik Tso & Ors v the Secretary for Justice supra. At paragraph 226, Deputy High Court Judge L Chan recited the defendant’s following submission with approval:

“226. If the occupation of the DAs by the plaintiffs and their predecessors amounted to adverse possession, then the title of the British Hong Kong Government to the DAs would have been defeated by the plaintiffs and their predecessors at the latest by November 1984. The defendant however submitted that the title of the British Hong Kong Government over land in the New Territories was only a 99‑year interest under the Peking Convention running from 1 July 1898 to 30 June 1997. Upon expiry of this interest, the reversionary interest of the Chinese Government fell into possession on 1 July 1997. When the reversionary interest fell into possession, the limitation period started to count afresh. This submission appears to be correct. But it is disputed by the plaintiffs…” (emphasis added)

17. After dismissing the plaintiffs’ contentions based on the New Territories Order in Council, section 15 New Territories Land Court Ordinance 1900, section 14 New Territories Regulation Ordinance No. 34 of 1910, section 8 New Territories Ordinance at paragraph 229 (quoted above), the learned Judge then dealt with the plaintiffs’ various other submissions based on Paragraph 3(5) and Annex III of the Joint Declaration, Articles 8, 18, 105 and 160 of the Basic Law, the Hong Kong Reunification Ordinance etc. and concluded that none of them assisted the plaintiffs in that case. Of particular importance for the present purpose is the Judge’s observations at paragraphs 235 – 237, as well as 245 – 246 which I find persuasive:

“235. The plaintiffs also referred to the Reunification Ordinance which recognized that rights and liabilities of the British Crown or the British Hong Kong Government, which were vested or accrued before 1 July 1997, will continue and will be actionable on and after 1 July 1997 so as to effect a seamless transition of holding of property in Hong Kong. They disputed the defendant’s proposition that the HKSAR has the right to recover the DAs which accrued on 1 July 1997. They in particular referred to section 30 of the Reunification Ordinance which provides:
‘(1) For the avoidance of doubt, it is declared that all property, rights and liabilities vested in or belonging to the Crown or the Government of Hong Kong immediately before 1 July 1997 have been on and from that date, subject to the Basic Law, vested in or transferred to the Government of the HKSAR…
…
(5) In this section-
‘Crown’ (官方) means the Crown in right of the Government of Hong Kong.’
236. However, this section of the ordinance only provided for the inheritance by the HKSAR Government of all rights and liabilities of the British Hong Kong Government. The interest of the British Hong Kong Government over the New Territories was derived from the Peking Convention and it had expired on 30 June 1997. It did not devolve upon the HKSAR Government. Though the leases of New Territories land had been extended by the Extension Ordinance, there was a change of lessor from the British Hong Kong Government to the HKSAR Government on 1 July 1997. There was of course the desire to ensure a seamless transition of all legal rights and obligations including property rights from the old regime to the new one, but it was not an extension of the expired interest into the new regime. The rights of the HKSAR Government to the new leases in the New Territories are derived from Article 7 of the Basic Law.
237. Article 7 of the Basic Law provides:
‘Article 7
The land and natural resources within the Hong Kong Special Administrative Region shall be State property. The Government of the Hong Kong Special Administrative Region shall be responsible for their management, use and development and for their lease or grant to individuals, legal persons or organizations for use or development. The revenues derived therefrom shall be exclusively at the disposal of the government of the Region.’
…
245. However, this argument [that the Plaintiffs’ rights to a possessory title under the previous laws do continue to be valid and be recognized and protected by the Government of the HKSAR under Article 160 of the Basic Law] is only valid if the rights of the British Crown in the New Territories had, despite the Peking Convention, continued after 30 June 1997…The interests of the British Crown in the New Territories expired on 30 June 1997. The interest of the plaintiffs in the DAs likewise ended on this day. Article 160 is to preserve the legal validity of rights and obligations of the previous regime, not to extend rights and obligations which expired at the resumption of sovereignty by the Chinese Government.
246. The plaintiffs also submitted that there should be no distinction in the application of the Limitation Ordinance to the New Territories on the one hand and to Hong Kong Island and New Kowloon on the other. They referred to the defendant’s stance that the British Hong Kong Government’s interest in land in the New Territories ended on 30 June 1997 and did not continue thereafter. They said that it produced a different result for adverse possession against the Government in the New Territories from that in the Hong Kong Island and New Kowloon…However, I am of the view that the difference in the result of adverse possession in the New Territories from that for the rest of the HKSAR is not the result of any distinction in the application or interpretation of the Limitation Ordinance. The difference came about because of the different tenure of the British Crown in the New Territories from that in the rest of Hong Kong.” (emphasis added)

18. It should be noted that the actual decision of Deputy High Court Judge L Chan was reversed on appeal. But, as recorded in paragraph 1 of the judgment of Rogers V-P, the Plaintiffs’ argument based on adverse possession was abandoned: [2011] 2 HKLRD 387, 390-1. As a result, the validity of the 99-year term argument was not directly examined by either the Court of Appeal or the Court of Final Appeal: see (2011) 14 HKCFAR 889.

19. It seems to this court that the acceptance by Deputy High Court Judge L Chan of the 2^nd Limb of the 99-year term argument is sound in principle.

20. As explained by Lord Hoffmann NPJ in Chan Tin Shi & Ors v Li Tin Sung & Ors (2006) 9 HKCFAR 29 at [16], [17] and [20]:

“16. .…adverse possession by a squatter for the period of limitation will bar the right which the person entitled to possession has to recover the land by action. This principle is reflected in s.7(2) of the Limitation Ordinance:
‘No action shall be brought by any…person to recover any land after the expiration of [20] years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person…’
17. As is plain from the language of the Ordinance, adverse possession does not affect the rights of other persons having interests in the land which do not entitle them to possession. In the case of land subject to a lease, the person entitled to possession is the lessee. The freeholder has no right to possession until the lease comes to an end. Adverse possession by a squatter may therefore bar the remedy of the lessee but will not affect the right of the freeholder to claim possession when the lease falls in.
…
20. It follows from these well established principles that when the period of limitation expired, the lessee of the land occupied by a squatter was barred by s.7(2) from bringing proceedings for possession and his title was, as against the squatter, extinguished by s.17. This did not however affect the interest of the government, against which time could not commence to run while the leasehold interests subsisted. As between the government and the lessees, the lease continued to subsist, notwithstanding the expiry of the limitation period. It follows that if the Extension Ordinance had not been passed the government would have been able, by virtue of its superior interest, to claim possession from the squatter when the lease expired in 1997.” (emphasis added)

21. It follows from Chan Tin Shi & Ors v Li Tin Sung & Ors supra that, as a matter of legal principle, any period of adverse possession over land in the New Territories prior to 30 June 1997 accumulated against the Colonial Hong Kong Government or the British Crown would count only against them, and no one else, for the purpose of the Limitation Ordinance. It was only as from 1 July 1997, after the British Crown’s leasehold interest in New Territories land had ceased, that the land reverted back to the Chinese Government who then has become entitled to possession of it as against inter alia squatters, past and present.

22. My aforesaid view is in no way undermined by the arguments put forward by Mr Chong.

23. At paragraph 12 of his skeleton, Mr Chong submits that “The result of the aforesaid enactments [New Territories Order in Council of 1898, New Territories (Land Court) ordinance of 1900, New Territories Regulation Ordinance of 1910] are that all unleased Crown land in the New Territories was considered by Hong Kong law as being vested in the Crown in perpetuity as if they had originally formed part of the colony albeit ‘…during the term specified in the Convention…’. This is the effect of the Order in Council and domestic legislation but not the result of a landlord and tenant relationship having been established involving the colonial Hong Kong Government as a tenant.” (emphasis added)

24. I do not accept this argument. With respect, the argument that all unleased Crown land in the New Territories was vested in the Crown “in perpetuity albeit during the term specified in the Peking Convention” is a contradiction in terms and is completely illogical. The argument is also contrary to the clear authority of Winfat Enterprises (HK) Co Ltd v AG supra.

25. At paragraph 15 of his skeleton, Mr Chong, after reciting section 8 of the New Territories Ordinance, submits that “The change of the material wordings of the statute and the deliberate removal of the phrase ‘during the term specified in the said Convention’ constituted an implied repeal of the earlier statutes directly on this point and, in the premises, the effect of s.8 of the New Territories Ordinance 1911 was that the vesting of all land (inclusive of unleased Crown land) in the Crown in perpetuity would be unrestricted and unqualified (by the 2^nd Convention of Peking of 1989 as to duration).” At paragraph 16 of his skeleton, Mr Chong submits that this construction is fortified by section 8 of the 1998 New Territories Ordinance.

26. I do not accept this argument. With respect, Mr Chong is merely repeating the same argument raised by the plaintiffs in Chau Ka Chik Tso & Ors v the Secretary for Justice supra and rejected by Deputy High Court Judge L Chan at paragraph 229. Like the learned Judge, I cannot discern any intent in the New Territories Ordinance to vest the New Territories in the British Crown in perpetuity as for the rest of Hong Kong. Nor do I read the dropping of the reference to “the term specified in the Peking Convention” as a sufficient manifestation of the Legislature’s intent to treat the New Territories as having been vested in the British Crown in perpetuity.

27. To conclude, as this is a striking out application, it is not necessary for this court to come to a firm and final view on the validity of the 99-year term argument. Suffice it to say, in my judgment, the Plaintiff has failed to show that the argument is obviously unsustainable, unarguably bad or that it is impossible for this argument to succeed. In these circumstances, the Plaintiff’s first application fails.

O 14A Application

28. The Defendant’s objections to the application are three-fold:

(1) first, the application is barred by RHC O 77 r 7 (1)(c);
(2) second, the use of O 14A procedure is inappropriate in the circumstances of this case;
(3) third, the Court ought not, in the exercise of its discretion, make a determination under O 14A.

29. The first objection is straightforward.

30. RHC O 77 r 1(1) provides:

“(1) These rules apply to civil proceedings to which the Crown is a party subject to the following rules of this Order.”

31. By virtue of section 2 of Schedule 8 of the Interpretation and General Clauses Ordinance, Cap. 1, as amended by section 6 of the Hong Kong Reunification Ordinance, any reference to “the Crown” should be construed as a reference to the “Government of the Hong Kong Special Administrative Region”.As a result, the phrase “civil proceedings to which the Crown is a party” means “civil proceedings to which the Government of the Hong Kong Special Administrative Region is a party”.

32. Further, RHC O 77 r 1 (2) provides:

“(2) In this Order
‘civil proceedings to which the Crown is a party’ has the same meaning as it has for the purposes of Part V of the Crown Proceedings Ordinance (Cap. 300) by virtue of section 2 (4) of that Ordinance.”

33. Section 2(4) of the Crown Proceedings Ordinance, Cap. 300 (“CPO”) extends the definition of “civil proceedings to which the Crown is a party” as follows:

“Any reference in Part IV or V of this Ordinance to civil proceedings by or against the Crown, or to civil proceedings to which the Crown is a party, shall be construed as including a reference to civil proceedings to which the Secretary for Justice, or any Government department, or any officer of the Crown as such, is a party.” (emphasis added)

34. In these proceedings, the Plaintiff is suing “Director of Lands for and on behalf of the Government of the Hong Kong Special Administrative Region” as Defendant. Hence, these proceedings are ex facie civil proceedings to which “the Crown” ie the Government of the Hong Kong Special Administrative Region, alternatively, “any officer of the Crown” ie the Director of Lands is a party. Either way, the rules under RHC O 77 are applicable to the present proceedings.

35. RHC O 77 r 7(1)(c) provides that “No application shall be made against the Crown …

“(c) under Order 14A, rule 1 in any proceedings by or against the Crown.”

36. Mr Mok submits that r 7(1)(c) is an absolute bar against the making of an Order 14A application in the present proceedings. I agree.

37. In his supplemental skeleton, Mr Chong submits that RHC Order 77 “was made as a procedural rule concerning ‘Crown Proceedings’ ”. Whilst since 1 July 1997, reference to the “Crown” is deemed to be a reference to the “HKSAR Government”, CPO only applies to proceedings against the HKSAR Government in its “official capacity” and it is only in such proceedings that CPO confers certain privileges on the HKSAR Government. He submits the present proceedings are not “Crown Proceedings” in that the HKSAR Government is sued in its “private capacity as landowner” and this is the reason for the Plaintiff to sue the Director of Lands as the HKSAR Government’s land agent.

38. I do not agree. While it is true that the rules under Order 77 are devised to give effect to the CPO (see Hong Kong Civil Procedure 2015 Vol. 1 paragraph 77/0/2 and section 30 CPO), I am not persuaded that proceedings covered by Order 77 are limited to proceedings against the HKSAR Government in its “official” capacity.

39. First, Mr Chong’s submission is unsupported by authorities.

40. Second, Mr Chong’s submission is unsupported by the wording of the CPO.

41. For instance, in section 2(2) of CPO, “civil proceedings” are defined so as to exclude “proceedings of a nature such as in England are taken on the Crown side of the Queen’s Bench Division of Her Majesty’s High Court of Justice” - in other words, proceedings concerning criminal and prerogative jurisdiction: Wong Tsz Jam v Commissioner of Police [2008] 5 HKLRD 164 at [44] – [46]. There is nothing in section 2(2) which further excludes from the ambit of CPO proceedings against the HKSAR Government in its “private capacity as landowner”.

42. Similarly, section 10 of CPO provides:

“Subject to the provisions of this Ordinance, all such civil proceedings by or against the Crown as are mentioned in the First Schedule are hereby abolished, and all civil proceedings by or against the Crown in the Supreme Court[3] shall be instituted and proceeded with in accordance with rules of court.”

43. Again, the section does not draw a distinction between civil proceedings against the HKSAR Government in its “private capacity as a landowner” as opposed to its “official capacity”.

44. Lastly, civil proceedings against the Crown for the recovery of land is specifically dealt with under Proviso (b) of section 16 (1) CPO which states: “the court shall not make an order for the recovery of the land…but may in lieu thereof make an order declaring that the plaintiff is entitled as against the Crown to the land”. Ex hypothesis, such proceedings are apt to include proceedings in which the Crown is sued in its capacity as “landowner” for otherwise, it is difficult to see how proceedings can be instituted to recover land from the Crown at all.

45. For all these reasons, I am satisfied that RHC O 77 r 7(1)(c) is applicable in the present case and bars the application under O 14A. On this ground alone, the Plaintiff’s application should be dismissed.

46. The Defendant’s second and third objections can be dealt with together.

47. RHC O 14A(1) provides:

“(1) The Court may upon the application of a party or of its own motion determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that–
(a) such question is suitable for determination without a full trial of the action; and
(b) such determination will finally determine (subject only to any possible appeal) the entire cause or matter or any claim or issue therein.” (emphasis added)

48. As Rogers VP observed in Netwell Properties Ltd v JCG Finance Co Ltd [2004] 2 HKLRD 138 at [6]:

“...the Order 14A procedure is one to determine a question of law or construction of a document which arises in an action where the question is suitable for determination without a full trial of the action and the determination would finally determine the entire cause or matter of the claim. If there is a dispute as to the facts, it is difficult to see how judgment can be entered in favour of a claimant. Where a claimant seeks judgment under Order 14A the facts would have to be based on either established facts or agreed facts. As set out in the Hong Kong Civil Procedure 2002 Vol. 1 at pp. 178-179 at paragraph 14A/2/4, there should be no hypothetical facts and where the issues of fact are interwoven with the legal issues raised, it will be undesirable for the court to split the legal and factual determination, for to do so would in effect be to give legal rulings in vacuo or on a hypothetical ruling, which the court will not do.” (emphasis added)

49. In my view, the Two Questions are not suitable for determination without a full trial, and a determination of the Two Questions will not finally determine the entire cause or matter nor even an issue therein.

50. As can be seen from paragraphs 11 to 17 of the Judgment, the parties are in dispute on inter alia (i) the correct boundaries of the Lots, and hence, the correct delineation of the Land; and (ii) the time(s) from which the Plaintiff’s predecessors-in-title commenced the alleged adverse possession of the Land or parts thereof. These are factual disputes which can only be resolved at trial. Unless and until these factual disputes are resolved, it is not possible to finally determine the core issue raised in paragraph 12 of the Amended Defence ie whether the Plaintiff and its predecessors-in-title have been in adverse possession of the Land for 60 years so as to extinguish the HKSAR Government’s title to the Land.

51. Further, even with the resolution of these factual issues and the determination of the Two Questions, it is still not possible to finally determine the core issue of adverse possession, a fortiori, the whole cause or matter resulting in a judgment in favour of the Plaintiff or the Defendant.This is because, as submitted by Mr Mok in his skeleton, subsumed within this issue of adverse possession are the following sub-issues raised in paragraph 12(2) of the Amended Defence ie:

(1) Whether the Plaintiff's predecessors-in-title have acknowledged the HKSAR Government's title in respect of the Land.
(2) The dispute as to the time(s) when the Houses and Structures were built.
(3) Whether the occupation of some of the Houses and Structures was allowed by the Squatter Control Unit.
(4) The 99-year term argument.

52. In my judgment, determination of the Two Questions now:

(1) will not finally determine all the sub-issues under adverse possession;
(2) will not result in a final determination of the cause or matter of the Plaintiff’s claim since adverse possession is only one of the five principal issues in these proceedings; and
(3) will likely lead to appeals, more delay and expenses than if the whole matter is to be decided in one go at trial.

53. In this regard, I would respectfully echo the words of Recorder Ma SC (as he then was) in Rockwin Enterprises Ltd v Shui Yee Ltd [2003] 3 HKC 174 at paragraph 25(a):

“The court can take an overall view of the matter to see the context in which the question arises. If the court is of the view that there would not be a great saving of time or costs in determining the question...this would be a factor against adopting the O 14A procedure. For example, if the question involves an issue that is not determinative of the action or is but one of many issues or which may at the end of the day be an academic one, a court may well not embark on a determination under O 14A. In such situations, it may be that a determination by the court leading possibly to appeals at two further levels, will result in more delay and expense to the parties than if the whole matter was decided at one go at trial.”

54. In my view, there is little saving of time or costs in determining the Two Questions under the O 14A procedure. Instead, given the potential importance of the questions, for this court to do so may well lead to appeals to the highest level resulting in substantial delay in the resolution of the entire cause or matter and expenses to the parties. That is clearly inimical to the objectives of the O 14A procedure as well as the objectives of the Rules of High Court in inter alia promoting a sense of reasonable proportion and procedural economy in the conduct of proceedings and ensuring the resources of the Court are distributed fairly.

55. In these circumstances, even if I am of the view that O 77 r 7(1)(c) is not an absolute bar to the O 14A application, I would, in the exercise of my discretion, decline to determine the Two Questions under O 14A.

Disposition and Costs order nisi

56. This court hereby dismisses the two summonses of the Plaintiff.

57. There shall be an order nisi that costs be to the Defendant, to be taxed if not agreed, with certificate for Counsel and paid forthwith.

	(Peter Ng)
	Judge of the Court of First Instance
	High Court

Mr K M Chong, instructed by Deacons, for the plaintiff

Mr Y C Mok, instructed by Secretary for Justice, for the defendant

[1]Section 15 in both Ordinance No. 8 of 1900 and Ordinance No. 18 of 1900 reads: “All land in the New Territories is hereby declared to be the property of the Crown, during the term specified in the convention of the 9^th day of June 1898, hereinbefore referred to, and all persons in occupation of any such land, after such date as maybe fixed by the Governor by notification in the Gazette, either generally or in respect to any specified place, village, or district, shall be deemed trespassers as against the Crown, unless such occupation is authorized by grant from the Crown or by other title allowed by the court under this ordinance, or by license from the Governor or from some government officer having authority to grant such license, or unless a claim to be entitled to such occupation has been duly presented to the court and has not been withdrawn or heard and disallowed.”

[2]Section 8 reads: “All land in the New Territories is hereby declared to be and to have been from the 23^rd day of July 1900, the property of the Crown, and all persons in occupation of any such land shall be deemed to be trespassers as against the Crown, unless such occupation is authorized by grant from the Crown, or by other title allowed under this ordinance, or by licence from the Governor or from some Government officer having authority to grant such licence.”

[3] ie The High Court of the HKSAR.

96615-EN-2015-01-09

JADE’S REALM LTD v. DIRECTOR OF LANDS for and on behalf of THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

HTML content

HCA 1509/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1509 OF 2012

____________

BETWEEN
	JADE’S REALM LTD	Plaintiff
	and
	DIRECTOR OF LANDS for and on behalf of THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION	Defendant

____________

Before: Hon Ng J in Chambers

Date of Hearing: 18 June 2014

Date of Judgment: 9 January 2015

_______________

J U D G M E N T

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Introduction

1. This is the Defendant’s application by summons dated 18 November 2013 (“Summons”) for specific discovery and inspection of two categories of documents pursuant to RHC Order 24. The documents sought were set out in the Schedule to the Summons (“Schedule”). The application is supported by the Second Affidavit of Man Lai Ki Vickie dated 18 November 2013 (“Man 2^nd”). No affidavit in opposition has been filed by the Plaintiff.

The Plaintiff’s pleaded case

2. As pleaded by the Plaintiff, the Hong Kong Government[1] was and is the owner of a piece of land in DD 214 (“Land”) in Nam Wai, Sai Kung, New Territories. For identification purpose, the Land is shaded yellow on a plan annexed to the amended Statement of Claim now replaced by the 8^th Schedule (“8^th Schedule Plan”).

3. By a Block Crown Lease dated 27 March 1907, Lot Nos. 355 and 356 in DD 214 (“the Lots”) were granted to one Yau Chiu Wa and others who were members of the Yau Clan. Through a chain of assignments, the Plaintiff became the registered owner of the Lots on 7 September 2007 and has remained so ever since. For identification purpose, the Lots are shaded pink on a plan annexed to the amended Statement of Claim now replaced by the 9^th Schedule (“9^th Schedule Plan”). The Lots adjourn the Land and are completely surrounded by it.

4. The Lots and the Land (collectively as “Enclosed Area”) are delineated by a stone wall traced purple (“Stone Wall”) on a plan annexed to the amended Statement of Claim now replaced by the 10^thSchedule (“10^th Schedule Plan”).

5. As pleaded in paragraph 8 of the amended Statement of Claim, between 1907 and 7 September 2007, a number of houses and structures (“Houses and Structures”) had been “constructed, completed and rebuilt” by the Plaintiff’s predecessors-in-title and the Plaintiff on the Enclosed Area. For identification purpose, the Houses and Structures are shaded green on the 10^th Schedule Plan.

6. On the Plaintiff’s case, the Stone Wall was built in or about 1937 by the then registered owners of the Lots and members of the Yau Clan. Since not later than 1937, the Enclosed Area has been in the exclusive possession of and enjoyed by the Plaintiff’s predecessors‑in‑title and the Plaintiff as a single tenement.

7. It is further the Plaintiff’s case that, despite changes in ownership, the predecessors-in-title of the Plaintiff continued to possess exclusively the Enclosed Area and incur money and money’s worth in the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures. Further, since 7 September 2007, the Plaintiff has continued and still continues to occupy the Enclosed Area and incur money and money’s worth in the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures.

8. Lastly, the Defendant is said to be estopped from denying the Plaintiff’s title of and in the Land on the ground that the construction, maintenance and repair works on the Enclosed Area were done openly but the Defendant had stood by and acquiesced in the improvements to the Land and the Lots by the predecessors-in-title of the Plaintiff and the Plaintiff itself.

9. In the prayer for relief, the Plaintiff claims inter alia:

(1) a Declaration that the Defendant’s title of and in the Land has been extinguished by virtue of the Limitation Ordinance;
(2) a Declaration that the Plaintiff has acquired a squatter’s title to the Land;
(3) a Declaration that the Lots are as identified in the 9^thSchedule Plan;
(4) a Declaration that the Plaintiff has acquired a proprietary interest in the Land, the Stone Wall and all buildings and structures thereon and that the Defendant is estopped from exercising the Government’s right therein.

10. The Plaintiff has also put forward a number of alternative cases with regard to the locations of the Lots and the Land. For identification purpose, these locations are colour-shaded on the plans annexed to the amended Statement of Claim now replaced by the 11^th, 12^th and 13^th Schedules. In the prayer for relief, the Plaintiff claims similar Declarations with regard to the Land and the Lots so identified.

The amended Defence and Counterclaim

11. The Defendant disputes the Plaintiff’s claims on a number of grounds. For the present purpose, this court needs only mention five.

12. First, the boundaries of the Lots are not as set out in the plans annexed to the amended Statement of Claim. Rather, they are as indicated on a plan annexed to the amended Defence and Counterclaim now replaced by Schedule E (“Schedule E Plan”).

13. Second, there were acknowledgments of the Government’s title to the Land by the Plaintiff’s predecessors-in-title, including Madam Chu Kit Ha (“Madam Chu”), at various times between 1962 and 2006, so that the limitation period should be deemed to commence only on the dates of the acknowledgements pursuant to section 23 of the Limitation Ordinance.

14. Third, the Defendant disputes the time when the Houses and Structures referred to in paragraph 8 of the amended Statement of Claim were erected. The Defendant’s pleaded case, at paragraph 10(A) of the amended Defence and Counterclaim, is that they were first seen on the dates set out below and identified on a plan annexed to the amended Defence and Counterclaim now replaced by Schedule G (“Schedule G Plan”).

Area Date
E1a (Structure No. 1[2] in BLUE) 11 June 1972
E1b (Structure No. 1 in ORANGE) 6 February 2004
E2a (Structure No. 2) 27 December 1956
E2b (Structure No. 2) 3 October 1972
E3 (Structure No. 3) 19 February 1963
E4 (Structure No. 4) October 1974
E5 1959
E6 3 October 1984
E7a 27 July 2008
E7b 22 November 2007

15. Fourth, the occupation of some of the Houses and Structures ie Structures Nos. 2, 3 & 4 was allowed to continue with the Government’s consent or licence consequent upon a territory-wide stock-taking survey on squatting structures in 1982 by the Squatter Control Unit of the Housing Department and, for that reason, was not adverse.

16. Fifth, the Plaintiff has acquired no proprietary interest in the Land. Nor is the Government estopped from exercising its rights over or taking any action in relation to the Land: in particular, the Defendant did not stand by or acquiesce in the investments in or improvements to the Houses and Structures by the Plaintiff’s predecessors-in-title and the Plaintiff.

17. In its amended Counterclaim, the Defendant counterclaims for:

(1) a Declaration that the boundaries of the Lots are as set out in the Schedule E Plan;
(2) an Order for the delivery of vacation possession of the Land to the Government; and
(3) mesne profits for the Plaintiff’s wrongful use and occupation of the Land since September 2007.

The amended Reply and Defence to Counterclaim

18. By its amended Reply and Defence to Counterclaim dated 12 December 2013, the Plaintiff joins issue with the Defendant. At 15, the Plaintiff said it further relied upon the oral representation (“Oral Representation”) described in Schedule 3 thereof made by the Defendant, her servant or agent, to the Plaintiff’s solicitors Messrs. Wong, Hui and Co. “of intention not to take enforcement action in respect of the Land Lots or against any structures on the Land Lots or in the Land which were instrumental in the Plaintiff’s decision to purchase the Land Lots. In the premises, the Plaintiff has acted to its detriment by relying upon such representation and the Defendant is estopped from enforcing her rights.”

19. Schedule 3 reads:

“1. Immediately prior to entering into a provisional sale and purchase agreement with its predecessor-in-title for the purchase of the Land Lots, the Plaintiff, through its solicitor, one Allen Che (“Mr Che”) of Wong, Hui & Co, contacted the Defendant on at least one occasion, that occasion being on the morning of 25 June 2007, by attending at the offices of the Defendant in Sai Kung, enquiring into the possibility of the Government or the Defendant taking enforcement action against the Land or any structure erected on the Land Lots and/or the Land as the Plaintiff would be concerned as to whether it would have quiet enjoyment should it complete the sale and purchase.
2. Mr David PH Wong of Wong, Hui & Co reported back to the Plaintiff by email on the evening of 25 June 2007 in respect of Mr Che’s meeting with the Defendant’s officers and advised that Mr Che had attended at the District Lands Office, Sai Kung that morning and that, in response to Mr Che’s informal enquiry, the Land Executive in charge of land control had told Mr Che that he was not aware of any existing or planned land control action at the Land Lots or the structures on Government land in their immediate vicinity.
3. Based upon the oral representations of the Defendant (without which the Plaintiff would not have proceeded with the purchase), the Plaintiff executed the Provisional Sale and Purchase Agreement in respect of the Land Lots and the Land on 27 June 2007, completed the purchase of the Land Lots on 7 September 2007 and incurred substantial money and money’s worth in the renovation and decoration of the Land Lots and the Land.” (emphasis added)

The Legal Principles

20. I shall first remind myself of the principles which are germane to the present application.

(1) There is no jurisdiction to make an order for specific discovery under RHC O 24 r 7 unless there is sufficient evidence or prima facie case that: (a) the documents or classes of documents exist which the other party has not disclosed; (b) the documents relate to a matter in issue in the action; and (c) the documents are in the possession, custody or power of the other party.
(2) Once it is established that those three prerequisites for jurisdiction do exist, the court has a discretion whether or not to order discovery.
(3) The Court will not make an order unless the discovery sought is necessary either for disposing fairly of the cause or matter or for saving costs.
(4) The Peruvian Guano test remains the test of relevance. A document is relevant if:
(i) it is reasonable to suppose that it contains information which may, not must, either directly or indirectly enable the party requiring the same either to advance his own case or to damage the case of his adversary; or
(ii) it is a document which may fairly lead the party to a train of inquiry which may have either of those two consequences.
(5) For the purpose of discovery, the pleadings have to be looked at broadly.
(6) The order must identify with precision the documents or categories of documents which are required to be disclosed, for otherwise the person giving discovery may find himself in serious trouble for swearing to a false affidavit, even though doing his best to give an honest disclosure.
(7) Notwithstanding the PeruvianGuano test, “fishing” is not allowed, and discovery should not be oppressive.
(8) The respondent may answer an application for specific discovery by an affidavit stating that he does not have the documents, and this will be conclusive at the interlocutory stage.
See: Hong Kong Civil Procedure 2015 Vol. 1 para. 24/7/1; Berkeley Administration Inc v McClelland [1990] FSR 381 at 382-3; Lee Nui Foon v Ocean Park Corp (No 1) [1995] 2 HKC 390 at 391-3; Paul’s  Model Art GMBH v UT Ltd [2006] 1 HKC 238 at paragraphs 24 & 32; Tai Fook Futures Ltd v Cheung Moon Hoi Jeff [2006] 4 HKC 81 at paragraphs 33 to 35; Billion Lead Investment Ltd v. Union Joyce Ltd. unrep.; HCMP 2145 of 2011; 14 December 2012; at paragraph 16; Jade’s Realm Ltd. v Director ofLands unrep.; HCA1509 of 2012; 10 June 2014; at paragraph 21.

The Documents sought

21. I now return to the Schedule.

Paragraph (1) Documents

22. Paragraph (1) of the Schedule reads:

“Messrs. Wong, Hui & Co. (“Wong Hui”)’s conveyancing files with respect to the sale and purchase of Lot Nos. 355 and 356 in D.D. 214 (the “Lots”) by the Plaintiff from Treasure Island (Asia) Limited (“Treasure Island”) completed on 7 September 2007 (“the Completion”), containing documents in relation to … the search on the title of the Lots conducted by Wong Hui for the Plaintiff, requisitions on the title made by Wong Hui against Treasure Island, replies to such requisitions from Treasure Island and/or its solicitors and Wong Hui’s legal advice to the Plaintiff on the title of the Lots and on the alleged oral representations set forth in Schedule 3…”.

23. In order to properly understand the purpose and ambit of this request, it is necessary to refer to the Provisional Sale and Purchase Agreement dated 27 June 2007 (“ProvisionalAgreement”) between Treasure Island and two directors of the Plaintiff. By the Provisional Agreement, the subject matter of the sale was not just the Lots but also Treasure Island’s rights, title and interest in and to:

(1) “any other land within the boundaries of the walls surrounding the [Lots]”; and
(2) “the walls of the boundaries to such land and all structures and buildings on the [Lots] and within the said boundaries”.

24. At least as far as the “structures and buildings” are concerned, their inclusion in the Provisional Agreement appeared to have been prompted by the advice given by Wong Hui to Mr Simon Deane of the Plaintiff in an email dated 20 June 2007 at paragraph 4.2 where it was stated that “The subject matter of the sale and purchase must include the various structures erected on Government Land”.

25. Mr Chong, for the Plaintiff, resists this request on three grounds viz. the documents in question are (i) privileged; (ii) irrelevant; and (iii) there is no evidence to show that the same exist, given that the Plaintiff has made substantial discovery of documents.

26. The Plaintiff’s possession, custody or power over the documents in Wong Hui’s conveyancing files is not in dispute. Indeed, the Plaintiff has disclosed in its List of Documents filed on 13 December 2012 (“Main List”) inter alia a copy of the email dated 25 June 2007 from Wong Hui to its director Mr Simon Deane (“25 June email”) and in its Supplemental List of Documents filed on 2 December 2013 (“Supplemental List”) inter alia (i) at Section G, email correspondence among Treasure Island, the Plaintiff, Wong Hui and the estate agent dated from 4 to 27 June 2007 and a copy of the Provisional Agreement; (ii) at Section H, correspondence between Wong Hui and Treasure Island’s solicitors between 9 July and 7 September 2007, as well as one letter from Wong Hui to the Plaintiff dated 25 June 2008 enclosing the aforesaid inter‑solicitors correspondence.

27. I shall deal with the three grounds in reverse order.

28. As far as ground (iii) is concerned, Mr Mok for the Defendant submits that there is no question this category of documents exists.

29. I agree.

30. It is well-established that, in order to discharge their duty as solicitors for the Plaintiff, Wong Hui would have to investigate Treasure Island’s title to the Lots, the Land and the Houses and Structures and advise the Plaintiff accordingly. Matters canvassed by such title investigations would likely include the proper boundaries of the Lots, whether Treasure Island’s title to the Lots, the Land and the Houses and Structures was satisfactory and whether the Land and the Houses and Structures, in so far as they are situated outside the boundary of the Lots, would be liable to enforcement actions by the Government.

31. While the Plaintiff has disclosed the 25 June email, it is inconceivable that Wong Hui’s investigation on title would consist of only one “informal” inquiry with a Land Executive at the District Lands Office, Sai Kung prior to the Provisional Agreement. Given that Mr Simon Deane, director of the Plaintiff, is a solicitor himself, it is also inconceivable that the Plaintiff would be satisfied with Wong Hui’s investigation on title if it only consisted of one such “informal” inquiry. A fortiori, when the purchase price payable by the Plaintiff to Treasure Island was HK$19.8 million, not an insignificant sum by any measure.

32. It is common practice for conveyancing solicitors to keep in a file contemporaneous correspondence with clients, contemporaneous correspondence with the solicitors on the opposite side, requisitions on title, answers to requisitions, attendance notes and so on which would be the best evidence of the work done by the solicitors in the discharge of their duty to clients. Of course, it varies from solicitor to solicitor as to how detailed the file is kept but the maintenance of such a file cannot reasonably be disputed. In so far as I can ascertain from the face of the Main List, the Supplemental List and the documents in the hearing bundles, the Plaintiff has not disclosed (i) drafts or engrossed copies of the formal Sale and Purchase Agreement or the Deed of Assignment; (ii) its communications with Wong Hui after 27 June 2007; (iii) Wong Hui’s attendance notes (which would record their contact/ conversation with the Plaintiff, Treasure Island’s solicitors and the Sai Kung District Lands Office); or (iv) documents containing Wong Hui’s advice on title.

33. Importantly, as submitted by Mr Mok, the clearest sign that the Plaintiff has made incomplete discovery is that there was a change of the subject matter of the sale after the signing of the Provisional Agreement:

(1) As I said in paragraph 23 above, in the Provisional Agreement, the subject matter of the sale was not just the Lots, but also included Treasure Island’s rights title and interest in and to any other land and all structures within the boundaries of the Stone Wall.
(2) However, as revealed in the 1-page enclosure to a fax message from Wong Hui to Treasure Island’s solicitors dated 7 September 2007, the description of “The Property” at page 7 of the formal Sale and Purchase Agreement, and hence the subject matter of the sale, was confined to the Lots only.

34. If that was the case, it is likely that there would be negotiations and communications between Treasure Island and the Plaintiff leading to their agreement to revise the subject matter of the sale, as well as communications between the Plaintiff and Wong Hui recording the Plaintiff’s instructions concerning the change. Given that it was Wong Hui’s original advice that the “structures and buildings” erected on Government Land must be included in the Provisional Agreement, it is also likely that the Plaintiff would have sought and obtained Wong Hui’s advice on the change to the subject matter of the sale. None of these have been disclosed by the Plaintiff.

35. In these circumstances, I am satisfied that there is a prima facie case that Paragraph (1) documents exist which the Plaintiff has not fully disclosed.

36. As far as ground (ii) is concerned, Mr Chong submits at paragraph 16 of his Skeleton that it is difficult to see how discovery of Paragraph (1) documents would assist in the resolution of the issues arisen from the plea of Oral Representation and estoppel.

37. With respect, I do not share Mr Chong’s difficulty.

38. In light of the original subject matter of the sale in the Provisional Agreement, the subsequent change to the description of “Property” in the formal Sale and Purchase Agreement, as well as the Plaintiff’s pleas of adverse possession, Oral Representation and estoppel, in my view, documents in Wong Hui’s conveyancing files would prima facie be relevant to the following matters :

(1) What rights, if any, did Treasure Island have or claim to have over the Land and the Houses and Structures within the Stone Wall in respect of which it purported to sell under the Provisional Agreement ?
(2) What inquiries have Wong Hui made to verify the existence of such rights which Treasure Island purported to sell ?
(3) What was Wong Hui’s advice to the Plaintiff concerning such rights which Treasure Island purported to sell ?
(4) Whether in response to Mr Che’s “informal enquiry” on 25 June 2007, the Land Executive at the District Lands Office, Sai Kung, did make the Oral Representation ?
(5) If the Land Executive did make the Oral Representation,
(i) what “land control action” was meant to be encompassed by the representation ?
(ii) did it amount to a representation that the Government would refrain indefinitely from taking any legal action in relation to the Land and the Houses and Structures;
(iii) was it intended to be relied on by the Plaintiff ?
(iv) what was Wong Hui’s advice to the Plaintiff concerning the status of such “informal enquiry” and the effect of the Oral Representation ?
(v) did the Plaintiff in fact rely on the Oral Representation in entering into the Provisional Agreement ?
(6) Whether Wong Hui have made further inquiries the District Lands Office, Sai Kung, after the signing of the Provisional Agreement on 27 June 2007 and if yes, the result of such further inquiries and what was Wong Hui’s advice to the Plaintiff in relation thereto ?
(7) What prompted the change in the subject matter of the sale after the signing of the Provisional Agreement on 27 June 2007 ?
(8) Whether the Plaintiff continued to rely on the Oral Representation after 27 June 2007 in completing the sale and purchase and incurring money on the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures ?

39. In my judgment, it is reasonable to suppose that Wong Hui’s conveyancing files would contain information which may directly or indirectly enable the Defendant to damage the Plaintiff’s case on Oral Representation and estoppel or may fairly lead the Defendant to a train of inquiry which may do so.

40. Take one simple example. In a letter dated 20 June 2008 from Wong Hui, as solicitors for the Plaintiff, to the Lands Department, it was stated that the Plaintiff had “acquired a possessory title over the area of Government land currently enclosed by a wall” and that “According to in depth enquiries” made before completing the purchase in September 2007, “this portion of land has, for well over 60 years, been enclosed and used for the exclusive use and enjoyment of the previous owners of the Lots”. Such statements made by Wong Hui on behalf of the Plaintiff may or may not be entirely correct, but unless contemporaneous documents evidencing such enquiries are disclosed, it will be difficult for the Defendant to assess the veracity of such statements. Suppose the files contain attendance notes evidencing further or “formal” inquiries made by Wong Hui with the District Lands Office, Sai Kung after 27 June 2007. The answers given to such “formal” inquiries may disclaim or qualify the Oral Representation said to have been made in the morning of 25 June 2007 or otherwise shed light on the plea that the Plaintiff had relied on the Oral Representation in completing the sale and purchase and incurred money on the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures.

41. Take another example. Suppose the files contain communications between Treasure Island and the Plaintiff after 27 June 2007 which explained the change to the subject matter of the sale. Such communications may reveal that Treasure Island disclaimed any possessory title to the Land, that part of the Houses and Structures situated outside the boundary of the Lots or simply the Plaintiff questioned whether, apart from the Lots, Treasure Island had any rights to sell. If so, such communications would clearly be relevant to whether the Plaintiff did rely and reasonably relied on the Oral Representation in proceeding to completion and continue to incur money on the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures.

42. For these reasons, I am satisfied that Paragraph (1) documents are prima facie relevant to the matters in issue as stated in paragraph 38 above and, subject to the question of privilege, should be disclosed.

43. I now come to the question of privilege.

44. Mr Chong submits in paragraphs 16 and 17 of his skeleton that “legal advice [given by Wong Hui] falls within the category of class of documents privileged from discovery” and “It is absurd to suggest that discovery of communications between solicitor and client (the report from Messrs Wong Hui & Co aforesaid) would mean waiver of all documents falling with the privilege. It is well-settled law that waiver of one privilege document is not waiver of the rest.”

45. It is well-established that legal professional privilege (“LPP”) is a fundamental human right long established in the common law. In Hong Kong, LPP is constitutionally guaranteed by Article 35 of the Basic Law: Goldlion Properties Ltd v Regent National Enterprises Ltd. [2006] 1 HKLRD 793; Akai Holding Ltd v Ernst & Young (a Hong Kong firm) [2009] 12 HKCFA 649; Secretary for Justice v Florence Tsang Chiu Wing & Ors unrep.; FACV No. 5 & 6 of 2014; 6 November 2014; Ma CJ, Ribeiro, Tang & Fok PJJ, Spigelman NPJ.

46. It is also not in dispute that prima facie LPP would have attached to a large number, though not necessarily all, of Paragraph (1) documents, either because they convey legal advice from Wong Hui to the Plaintiff or they contain information and a specific request from the Plaintiff to Wong Hui for legal advice: Balabel v Air India [1988] Ch 317. As stated by Taylor LJ in Balabel v Air India at 330, the test is “whether the communication or other document was made confidentially for the purposes of legal advice”.

47. The critical question, for the present purpose, is whether the privilege which would have attached to such of those Paragraph (1) documents has been waived by the Plaintiff.

48. As far as express waiver is concerned, the test is as stated by Lord Bingham of Cornhill CJ in Paragon Finance Plc v Freshfields [1999] 1 WLR 1183 at 1188C:

“A client expressly waives his legal professional privilege when he elects to disclose communications which the privilege would entitle him not to disclose. Where the disclosure is partial, issues may arise on the scope of the waiver....But the law is clear. While there is no rule that a party who waives privilege in relation to one communication is taken to waive privilege in relation to all, a party may not waive privilege in such a partial and selective manner that unfairness or misunderstanding may result.” (emphasis added)

49. That passage was quoted by Woo V-P in Goldlion Properties Ltd v Regent National Enterprises Ltd. at paragraph 35 with approval.

50. But privilege may also be waived other than expressly. The question here is whether a party who chooses to waive privilege in relation to some documents should be obliged to disclose other documents so as to prevent the court and his opponent from being given only a partial picture.

51. In this regard, the following observations by Mustill J (as he then was) in Nea Karteria Maritime Co v Atlantic & Great Lakes Steamship Corp. [1981] Com. LR 132, 138 (referred to in paragraph 21 of Goldlion Properties Ltd v Regent National Enterprises Ltd.)are pertinent:

“Where a person is deploying in court material which would otherwise be privileged, the opposite party and the court must have the opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood.” (emphasis added)

52. At paragraph 48, Woo V-P observed that:

“Fairness on the opposite party has been the basis for the courts to hold for a waiver of the privilege: see Derby & Company Ltd v Weldon (No. 10) [1991] 1 WLR 660, Burnell v BTC [1956] 1 QB 187 and Wing Fai Construction Co Ltd v Benefit Holdings; unrep.; HCA No. 810 of 2003)”.

53. Of similar effect are the observations by Elias J (as he then was) in Brennan v Sunderland City Council [2009] ICR 479 at [62] & [67]:

“62. We begin with the observation that the underlying principle here is fairness. We agree with Mr Engelman that it is also inconsistency – waiving where it suits and claiming privilege where it does not – but the test for determining whether there is such inconsistency as would warrant a finding of waiver is fairness.
…
67. However, in our view, the answer to the question whether waiver has occurred or not depends upon considering together both what has been disclosed, and the circumstances in which disclosure has occurred. As to the latter, the authorities in England strongly support the view that a degree of reliance is required before waiver arises, but there may be issues as to the extent of the reliance. Ultimately, there is the single composite question of whether, having regard to these considerations, fairness requires that the full advice be made available. A court might, for example, find it difficult to say what side of the contents/effect line a particular disclosure falls, but the answer to whether there has been waiver may be easier to discern if the focus is on the question whether fairness requires full disclosure.” (emphasis added)

54. Applying the test of fairness, this court is of the firm view that fairness dictates that there should be full discovery of Paragraph (1) documents albeit that they contain privileged communications between the Plaintiff and Wong Hui for the purposes of legal advice. The reasons are these.

55. This court has already referred to paragraph 15 as well as Schedule 3 of the amended Reply and Defence to Counterclaim. It is clear that the Plaintiff has relied on the result of the “informal” inquiries made by Wong Hui with the District Land Office, Sai Kung, and communicated to it on 25 June 2007 in support of its pleas of Oral Representation, reliance and estoppel. In other words, the Plaintiff has deployed part of its communications with Wong Hui to advance its own case in the present action.

56. However, from the other privileged communications disclosed by the Plaintiff, it is likely that Wong Hui’s inquiries with the District Land Office were not confined to the general “informal” inquiries recorded in the 25 June email, but would include another kind of inquiries viz. more “specific” inquiries in relation to the Lots which could be conducted with Treasure Island’s authorization and which might be more fruitful for the Plaintiff: see email dated 21 June 2007 from Wong Hui to the Plaintiff. Further, in light of Wong Hui’s duty as solicitors for the Plaintiff in the conveyancing transaction and for the reasons set out in paragraphs 30‑31 above, it is most unlikely that Wong Hui’s inquiries and investigation on title would completely cease after the email on 25 June 2007. If that is the case, then prima facie there would be further communications between Wong Hui and the Plaintiff after 25 June 2007 which contained the former’s advice on title.

57. Adopting the reasoning of Woo V-P in Goldlion Properties Ltd v Regent National Enterprises Ltd. at paragraph 59, it seems to me that it would create unfairness to the Defendant if the Plaintiff were to be allowed to deploy the disclosed portions of Wong Hui’s advice to its advantage but to claim privilege in respect of the advice given after 27 June 2007 unless Wong Hui’s advice in its entirety is disclosed to the Defendant and the court to ensure that there is no "cherry picking”. This unfairness is all the more critical since on the Plaintiff’s own case, it relied on the Oral Representation not merely in entering into the Provisional Agreement on 27 June 2007. Its case is that it relied on the Oral Representation in completing the sale and purchase in September 2007 and in incurring money thereafter in the maintenance of the Stone Wall and the House and Structures. Hence, Wong Hui’s inquiries and investigation on title and their advice to the Plaintiff after 27 June 2007 would directly impinge upon the veracity of the Plaintiff’s case of reliance on the Oral Representation.

58. If, as submitted by Mr Mok, Wong Hui had subsequent to the 25 June email advised the Plaintiff that the District Land Office’s response to “informal” enquiries could not be relied upon or taken as firm indication that no future enforcement actions would be taken by the Government, it would be grossly unfair to the Defendant if the Plaintiff were allowed to cherry‑pick and withhold such advice on the ground of privilege. Indeed, it would be a gross travesty of justice if the Plaintiff were so allowed.

59. To conclude, for the above reasons, I would reject all the Plaintiff’s grounds of opposition and allow this part of the application.

Paragraph (2) of the Schedule

60. Paragraph (2) of the Schedule reads:

“A full set of the negotiations, communications and correspondences exchanged between Treasure Island and the Plaintiff in relation to the sale and purchase of the Lots and pertaining to the matters covered by Document No. 134 of the Plaintiff’s List of Documents filed on 13 December 2012, namely, the “Project Summary in relation to renovation work on 98 Nam Wai, including surveys showing fish farm dated 11 September 2006, by Treasure Island (Asia) Limited” dated 1 January 2009.”

61. As clarified by Mr Mok in court, what the Defendant seeks in the first part of Paragraph (2) ie “A full set of the negotiations, communications and correspondences exchanged between Treasure Island and the Plaintiff in relation to the sale and purchase of the Lots”are contemporaneous communications between the Plaintiff and Treasure Island which recorded the Plaintiff’s efforts in investigating title from Treasure Island in 2007. According to Mr Mok, from the documents already disclosed by the Plaintiff, it would appear that the Plaintiff had made some investigations on “what happened on the ground”, so to speak.

62. As to the second part of Paragraph (2) ie the matters covered by Document no. 134 (“Project Summary”), Mr Mok submitted that they would encompass investigations on the rights of Treasure Island, if any, in relation to the Land and the enforcement action taken by the Government. One such enforcement action was mentioned in the Project Summary ie a Building Order no. CWP/S1/93566/03/NT which had been withdrawn on 3 October 2006. Mr Mok stressed to this court that while the Project Summary was dated 1 January 2009 ie well after completion of the sale, what was sought was not negotiations, communications etc between the Plaintiff and Treasure Island in relation to the obtaining of the Project Summary from Treasure Island, but in relation to the matters covered by it.

63. The Defendant resists this part of the application on the ground of irrelevance and that there is no evidence to show that Paragraph (2) documents exist which have not been disclosed.

64. Again dealing with the two grounds in reverse order, I am satisfied that prima facie the Plaintiff had made efforts in investigating title from Treasure Island prior to completion in September 2007 and there exist written communications between the Plaintiff and Treasure Island recording the same which have not been fully disclosed.

65. A number of examples have been given in Mr Mok’s skeleton. Take Document 144, for instance, which is a reply email dated 11 June 2007 from Mr Billson of Treasure Island to the estate agent which referred to inter alia “the brief”. Neither the preceding email from the estate agent to Treasure Island nor “the brief” has been disclosed. Take Document 147 as another example which is an email dated 13 June 2007 from Mr Simon Deane of the Plaintiff to Mr Billson of Treasure Island. The email referred to “copy materials attached that you sent to us” on the basis of which Mr Deane asked for the status of the boundary correction regarding the Lots and whether the Government acknowledged that they included the new boundaries. The Plaintiff has not disclosed the “copy materials attached” or the covering email from Mr Billson to Mr Deane. Lastly, Document 155 is an email dated 14 June 2007 from Mr Deane to Mr Billson. Its first paragraph reads: “All the points about boundaries are coming out now with the valuations from the banks, including CITIC and BOC”. Neither the valuations from the banks nor the points about the boundaries as raised by them have been disclosed.

66. As far as relevance is concerned, in my view, the Plaintiff’s negotiations and communications with Treasure Island up to completion in September 2007 would shed light on inter alia what rights, if any, did Treasure Island have or claim to have over the Land and the Houses and Structures within the Stone Wall in respect of which it purported to sell under the Provisional Agreement and the cause for the change to the subject matter of the sale. Further, the Plaintiff’s own efforts in investigating the boundary of the Lots and Treasure Island’s title to the Land and the Houses and Structures would at least be relevant to the questions (i) whether the Plaintiff did rely on the Oral Representation in not just entering into the Provisional Agreement, but in completing the sale and incurring money on the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures and (ii) whether it was reasonable for the Plaintiff to do so.

67. For the above reasons, I am satisfied that there should be an order for discovery and inspection in terms of the 1^st part of Paragraph (2) ie “A full set of the negotiations, communications and correspondences exchanged between Treasure Island and the Plaintiff in relation to the sale and purchase of the Lots”.

68. In my view, an order for discovery and inspection in terms of the 2^nd part of Paragraph (2) is redundant and unjustified. It is redundant in so far as matters covered by the Project Summary are also covered by the contemporaneous negotiations, communications and correspondences exchanged between Treasure Island and the Plaintiff in relation to the sale and purchase. It is unjustified in so far as the Project Summary also contains details of the renovation works carried out by Treasure Island’s contractor between November 2006 and April 2007, as set out in section 4.0 thereof. Details of such renovation works have no or only minimal relevance to the issues in this action. Further, it is my view that discovery of documents pertaining to such works e.g. Treasure Island’s contract with the contractor, invoices and receipts etc which are, strictly speaking, within the 2^nd part of Paragraph (2), is unnecessary for disposing fairly of the cause or matter or for saving costs.

Disposition and Costs Order nisi

69. In the exercise of its discretion, this court hereby allows the Defendant’s application and grants an order in terms of paragraphs 1 and 2 of the Summons, save and except that Paragraph (2) of the Schedule to the Summons should be limited to the 1^st part as indicated in paragraph 67 above.

70. There shall be an order nisi that costs be to the Defendant, to be taxed if not agreed, with certificate for 1 Counsel and paid forthwith.

	(Peter Ng)
	Judge of the Court of First Instance
	High Court

Mr K M Chong, instructed by Deacons, for the plaintiff

Mr Y C Mok and Ms Teresa Wu, instructed by Secretary for Justice, for the defendant

[1] The term is intended to include the Colonial Hong Kong Government before 1 July 1997 and the Government of the Hong Kong SAR on and after 1 July 1997.

[2] Structure 1 in the Schedule G Plan is the Stone Wall.

93464-EN-2014-06-10

JADE’S REALM LTD v. DIRECTOR OF LANDS FOR AND ON BEHALF OF THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

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HCA 1509/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1509 OF 2012

____________

BETWEEN
	JADE’S REALM LTD	Plaintiff
and
	DIRECTOR OF LANDS for and on behalf of THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION	Defendant
____________

Before: Hon Ng J in Chambers

Date of Hearing: 23 May 2014

Date of Judgment: 10 June 2014

_______________

J U D G M E N T

_______________

Introduction

1. This is the Plaintiff’s application by summons dated 13 December 2013 (“Summons”) for specific discovery, inspection and taking copies of seven categories of documents pursuant to RHC Order 24 rules 7, 11 and 11A. The documents sought were set out in the Schedule to the Summons. The application is supported by the Fourth Affidavit of Simon Richard Deane dated 13 December 2013 (“Deane 4^th”), the Fifth Affidavit of Simon Richard Deane dated 2 May 2014 (“Deane 5^th”) and the Second Affidavit of Chong Chew Then (Mr. Deane’s wife) dated 2May 2014 (“Chong 2^nd”).

2. Before I turn to the Schedule itself, it is necessary to give a brief synopsis of the parties’ pleaded cases so that the application can be more easily understood.

The Plaintiff’s pleaded case

3. As pleaded by the Plaintiff, the Hong Kong Government[1] was and is the owner of a piece of land in DD 214 (“Land”) in Nam Wai, Sai Kung, New Territories. For identification purpose, the Land is shaded yellow on a plan annexed to the amended Statement of Claim now replaced by the 8^th Schedule (“8^th Schedule Plan”).

4. By a Block Crown Lease dated 27 March 1907, Lot Nos. 355 and 356 in DD 214 (“the Lots”) were granted to one Yau Chiu Wa and others who were members of the Yau Clan. Through a chain of assignments, the Plaintiff became the registered owner of the Lots on 7 September 2007 and has remained so ever since. For identification purpose, the Lots are shaded pink on a plan annexed to the amended Statement of Claim now replaced by the 9^th Schedule (“9^th Schedule Plan”). The Lots adjourn the Land and are completely surrounded by it.

5. The Lots and the Land (collectively as “Enclosed Area”) are delineated by a stone wall traced purple (“Stone Wall”) on a plan annexed to the amended Statement of Claim now replaced by the 10^thSchedule (“10^th Schedule Plan”).

6. As pleaded in paragraph 8 of the amended Statement of Claim, between 1907 and 7 September 2007, a number of houses and structures (“Houses and Structures”) had been “constructed, completed and rebuilt” by the Plaintiff’s predecessors-in-title and the Plaintiff on the Enclosed Area. For identification purpose, the Houses and Structures are shaded green on the 10^th Schedule Plan.

7. On the Plaintiff’s case, the Stone Wall was built in or about 1937 by the then registered owners of the Lots and members of the Yau Clan. Since not later than 1937, the Enclosed Area has been in the exclusive possession of and enjoyed by the Plaintiff’s predecessors‑in‑title and the Plaintiff as a single tenement.

8. It is further the Plaintiff’s case that, despite changes in ownership, the predecessors-in-title of the Plaintiff continued to possess exclusively the Enclosed Area and incur money and money’s worth in the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures. Further, since 7 September 2007, the Plaintiff has continued and still continues to occupy the Enclosed Area and incur money and money’s worth in the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures.

9. Lastly, the Defendant is said to be estopped from denying the Plaintiff’s title of and in the Land on the ground that the construction, maintenance and repair works on the Land and the Lots were done openly but the Defendant had stood by and acquiesced in the improvements to the Land and the Lots by the predecessors-in-title of the Plaintiff and the Plaintiff itself.

10. In the prayer for relief, the Plaintiff claims inter alia:

(1) a Declaration that the Defendant’s title of and in the Land has been extinguished by virtue of the Limitation Ordinance;
(2) a Declaration that the Plaintiff has acquired a squatter’s title to the Land;
(3) a Declaration that the Lots are as identified in the 9^thSchedule Plan;
(4) a Declaration that the Plaintiff has acquired a proprietary interest in the Land, the Stone Wall and all buildings and structures thereon and that the Defendant is estopped from exercising the Government’s right therein.

11. The Plaintiff has also put forward a number of alternative cases with regard to the locations of the Lots and the Land. For identification purpose, these locations are colour-shaded on the plans annexed to the amended Statement of Claim now replaced by the 11^th, 12^th and 13^th Schedules. In the prayer for relief, the Plaintiff claims similar Declarations with regard to the Land and the Lots so identified.

The amended Defence and Counterclaim

12. The Defendant disputes the Plaintiff’s claims on a number of grounds. For the present purpose, this court needs only mention five.

13. First, the boundaries of the Lots are not as set out in the plans annexed to the amended Statement of Claim. Rather, they are as indicated on a plan annexed to the amended Defence and Counterclaim now replaced by Schedule E (“Schedule E Plan”).

14. Second, there were acknowledgments of the Government’s title to the Land by the Plaintiff’s predecessors-in-title, including Madam Chu Kit Ha (“Madam Chu”), at various times between 1962 and 2006, so that the limitation period should be deemed to commence only on the dates of the acknowledgements pursuant to section 23 of the Limitation Ordinance.

15. Third, the Defendant disputes the time when the Houses and Structures referred to in paragraph 8 of the amended Statement of Claim were erected. The Defendant’s pleaded case, at paragraph 10(A) of the amended Defence and Counterclaim, is that they were first seen on the dates set out below and identified on a plan annexed to the amended Defence and Counterclaim now replaced by Schedule G (“Schedule G Plan”).

Area Date
E1a (Structure No. 1[2] in BLUE) 11 June 1972
E1b (Structure No. 1 in ORANGE) 6 February 2004
E2a (Structure No. 2) 27 December 1956
E2b (Structure No. 2) 3 October 1972
E3 (Structure No. 3) 19 February 1963
E4 (Structure No. 4) October 1974
E5 1959
E6 3 October 1984
E7a 27 July 2008
E7b 22 November 2007

16. Fourth, the occupation of some of the Houses and Structures ie Structures Nos. 2, 3 & 4 was allowed to continue with the Government’s consent or licence consequent upon a territory-wide stock-taking survey on squatting structures in 1982 by the Squatter Control Unit of the Housing Department and, for that reason, was not adverse.

17. Fifth, the Plaintiff has acquired no proprietary interest in the Land. Nor is the Government estopped from exercising its rights over or taking any action in relation to the Land: in particular, the Defendant did not stand by or acquiesce in the investments in or improvements to the Houses and Structures by the Plaintiff’s predecessors-in-title and the Plaintiff.

18. In its amended Counterclaim, the Defendant counterclaims for:

(1) a Declaration that the boundaries of the Lots are as set out in the Schedule E Plan;
(2) an Order for the delivery of vacation possession of the Land to the Government; and
(3) mesne profits for the Plaintiff’s wrongful use and occupation of the Land since September 2007.

The amended Reply and Defence to Counterclaim

19. By its amended Reply and Defence to Counterclaim dated 12 December 2013, the Plaintiff joins issue with the Defendant.

The issues

20. Mr Chong submits, and this court is content to adopt with slight modification, the following are the principal issues which emerge from the pleadings:

(1) Whether the Plaintiff has been in adverse possession of the Land for a period of not less than 60 years and, hence, the title of the Government therein has extinguished (“the Adverse Possession Issue”) or whether the Plaintiff’s predecessors-in-title have acknowledged the Government’s title in the Land (“the Acknowledgment Issue”).
(2) Whether the Land has been encroached upon by the Plaintiff and its predecessors-in-title for the statutory period so that the Plaintiff would be entitled to hold it until the expiry of the existing terms of the Lots (“the Encroachment Issue”).
(3) Whether, by investing money and money’s worth in the Land by the Plaintiff and its predecessors-in-title, the Plaintiff has acquired a proprietary interest in the Land and the Government is estopped from recovering the same (“the Proprietary Estoppel Issue”).
(4) Whether, by reason of its dealings with the predecessors-in-title of the Lots and the Land, the Government has abandoned the restrictive building covenant in the Government Lease (“the Abandonment of Covenant Issue”).
(5) What are the correct boundaries of the Lots (“the Boundary Issue”).

The legal principles

21. I shall first remind myself of the principles which are germane to the present application.

(1) There is no jurisdiction to make an order for specific discovery under RHC O 24 r 7 unless there is sufficient evidence or prima facie case that: (a) the documents or classes of documents exist which the other party has not disclosed; (b) the documents relate to a matter in issue in the action; and (c) the documents are in the possession, custody or power of the other party.
(2) Once it is established that those three prerequisites for jurisdiction do exist, the court has a discretion whether or not to order discovery.
(3) The Court will not make an order unless the discovery sought is necessary either for disposing fairly of the cause or matter or for saving costs.
(4) The order must identify with precision the documents or categories of documents which are required to be disclosed, for otherwise the person giving discovery may find himself in serious trouble for swearing to a false affidavit, even though doing his best to give an honest disclosure.
(5) Where discovery is sought in relation to a class of documents, it is important that the class should not be defined or described too widely, and should not be defined so as to include documents which are not relevant.
(6) Despite the Peruvian Guano test for relevance, “fishing” is not allowed, and discovery should not be oppressive.
(7) Statements in a party’s affidavit of documents are conclusive e.g. on the question whether he has or has had any documents other than those disclosed, as to their relevancy or as to the grounds stated in support of a claim for privilege from production.
(8) The respondent may answer an application for specific discovery by an affidavit stating that he does not have the documents, and this will be conclusive at the interlocutory stage.
See: Hong Kong Civil Procedure 2014 Vol. 1 para. 24/7/1; Berkeley Administration Inc v McClelland [1990] FSR 381 at 382-3; Lee Nui Foon v Ocean Park Corp (No 1) [1995] 2 HKC 390 at 391-3; Paul’s Model Art GMBH v UT Ltd [2006] 1 HKC 238 at paragraphs 24 & 32; Tai Fook Futures Ltd v Cheung Moon Hoi Jeff [2006] 4 HKC 81 at paragraphs 33 to 35.

22. On the question of oppression, Mummery J had this to say in Molnlycke AB v. Proctor & Gamble (No 3) [1990] RPC 498, 503:

“An order may be refused on the ground that it is unduly oppressive to the party giving discovery. The court takes account of such considerations as the value of the discovery to the person seeking it and the burden imposed on the party giving it, with a view to restricting the volume of documents and the labour and expense involved to that which is necessary for fairly disposing of the issues in the case.”

23. After the introduction of the CJR, the court must give effect to the underlying objectives of the rules when exercising its powers under RHC Order 24. In Sunny Tadjudin v Bank of America unrep., HCA 322 of 2008, 22 December 2011, Deputy High Court Judge M Chan (as she then was) observed at paragraph 7:

“In deciding whether any document relates to a matter in question in the action, whether any document is or has been in the possession, custody or power of a party, and whether discovery of a document sought is necessary either for disposing fairly of the cause or matter or for saving costs, the Court should always bear in mind the objectives of cost effectiveness, expeditious disposal of cases, proportionality, procedural economy and ensurance of fairness between the parties.”

24. A similar sentiment was expressed by Deputy High Court Judge Lok in HSBC Private Bank (Suisse) SA v. Mission Bridge Limited unrep. HCA 406 of 2008, 18 June 2012 at paragraph 16:

“Following the CJR, the increasing emphasis is for the court to limit discovery in the context of its duty actively to manage the case.”

The Documents sought

25. I now return to the Schedule.

Paragraph 1 of the Schedule

26. Paragraph 1 of the Schedule seeks:

“All correspondence, emails, memoranda, notes, plans, notices, agreements and other documents (to the extent not already disclosed by the Defendant) between the following departments of the Government and the owners of the property now known as 98 Nam Wai Road, Sai Kung (“Property”) between 16 February 1981 and 31 October 2006 in relation to the Government’s dealings with the Property and its owners in connection with the fish farm business operating at the Property, including but not limited to all internal emails, memoranda, notes and other correspondence passing within each Government department and between them including but not limited to the following:
(a) the Hong Kong Housing Authority and its predecessor departments;
(b) the Lands Department;
(c) the Building Authority and its predecessor departments;
(d) the Fire Department and its predecessor departments;
(e) the Food and Environmental Hygiene Department and its predecessor departments;
(f) the Food and Health Bureau and its predecessor departments;
(g) the Planning Department and its predecessor departments.” (emphasis added)

27. In Mr Chong’s skeleton submissions for the Plaintiff, these documents are said to relate to the Government’s dealings with the Plaintiff’s predecessors-in-title viz Mr Chu Poon Shin (“Mr Chu”) and his daughter Madam Chu (collectively “the Chus”) concerning theuse of part of the Land for their fish farm business. The request is for the period from 16 February 1981 to 31 October 2006: 16 February 1981 was the date when Mr Chu became registered owner of the Lots while 31 October 2006 was the date when Madam Chu disposed of the Lots. Although the same is not evident from the Plaintiff’s affidavits in support, Mr Chong told this court the fish farm business was in operation during this period. Apparently, the Plaintiff uses the term “Property” in the Summons to refer to the Lots.

28. The basis of the Plaintiff’s request is set out in Deane 4^th at paragraph 7:

“The reason the Plaintiff requests discovery of the paragraph 1 documents is that I am informed by my wife, Chong Chew Then, and verily believe that from her interviews conducted with Madam Chu Kit Ha (“Madam Chu”) (who was involved in operating the fish farm business at the Property during the period from 1981 to 2006) that there were extensive dealings and correspondence between her and the fish farm business and Government Departments in relation to the operation of the business during the period that it was open. These dealings and correspondence included regular visits and checks by the Fire Department and the Food and Environmental Hygiene Department (and/or its predecessors) to ensure the safety and hygiene of the business and dealings with the Lands Department and Building Authority in relation to extension and improvement works carried out by Madam Chu and her previous owner to the house at the Property (including the addition of a second storey). None of the documents relating to the safety and hygiene of the fish farm business has been discovered and I believe that only some of the documents have relating to the dealings between the Lands Department and Building Authority in relation to extension and improvement works have been discovered by the Defendant... Hence, it is much more likely that the Defendant has them. All these documents relate to the issue of liability in relation to the Plaintiff’s claim against the Defendant in this action.” (emphasis added)

29. Mr Chong, relying on the fact that the Defendant has disclosed some documents relating to the Government’s dealings with Madam Chu on the fish farm business, submits that the Defendant has impliedly conceded their relevance. Mr Chong further submits that the documents sought to be disclosed forms part of a chainof correspondence/exchange between the various Government Departments and Madam Chu and/or her solicitors, and should be disclosed.

30. In the view of this court, that is a non-point. The fact that the Defendant has disclosed some documents only means those documents actually disclosed are accepted by the Defendant (or rather its legal advisers) as relevant. It cannot, without more, mean those documents not disclosed are also relevant.

31. Ifthe Plaintiffhad put the documents disclosed by the Defendant before this court and if Mr Chong can demonstrate to this court that what has been disclosed and what the Plaintiff now seeks in paragraph 1 of the Schedule indeed form a chain of correspondence/ exchange between the Government Departments and Madam Chu and/or her solicitors, then perhaps he may have a point.

32. However, the fact is that documents disclosed by the Defendant have not been put before this court - what is exhibited to Deane 4^th and hence before the court is simply (i) the 3 lists of documents filed by the Defendant in this action; and (ii) correspondence between the parties’ solicitors on the adequacy or otherwise of the Defendant’s discovery. No efforts, genuine or otherwise, have been made by the Plaintiff or its legal team to demonstrate to this court.

(1) the existence of a chain of correspondence/exchange between the various Government Departments and Madam Chu and/or her solicitors throughout the entire 25-year period from February 1981 to October 2006;
(2) the relevance of the alleged chain of correspondence/exchange between the various Government Departments and Madam Chu and/or her solicitors, as a class of documents, to the issue(s) in the proceedings.

33. As far as existence is concerned, Mr Chong submits at paragraph 17 of his skeleton submission that, given the documents disclosed by the Defendant in its 2^nd Supplemental List of Documents coupled with Chong 2^nd as to what Madam Chong had been told by Madam Chu, the existence of the documents sought in paragraph 1 of the Schedule has been shown and proved.

34. With respect, that is a non sequitur.

35. To start with, it is unclear to this court how one can just look at a list of documents and infer that more documents are in existence and have not been disclosed. If the documents themselves have been put before the court, and those documents, on their face, refer to some other documents, then an inference that more has yet to be disclosed might be drawn. But that is not the case here.

36. Further, little weight can be placed on Chong 2^nd as to what she has been told by Madam Chu. The reasons are these.

37. In Chong 2^nd, Madam Chong said she had 2 telephone conversations with Madam Chu and had been told that (i) the Police, the Food and Environmental Hygiene Department, the Health Department and the Fire Department often paid visits to the fish farm to ensure the “cleanliness and safety/security of the [fish farm] business” because it was an important supplier of food to the local restaurants - their visits were to ensure the operation was not going to cause a health problem; and (ii) Madam Chu had added a storey to the house on the Property and subsequently a demolition order was served in 2003 – she had spent a lot of time visiting government officials to resolve the case.

38. However, Madam Chu denies she has ever given Madam Chong the above information. In a letter dated 28 January 2014 from Madam Chu’s solicitors Messrs Liu Chan & Lam (“LCL”) to the Plaintiff’s solicitors, LCL said at page 2:

“In Paragraph 5 of his Affidavit, Mr. Deane said that Madam Chu had ‘indicated’ to his wife Madam Chong Chew Then that she (Madam Chu), Mr. Aaron Chan, EMS. and our firm had had many and regular dealings with several Government departments in relation to the fish farm at the Property from 1981 until 2006 and in relation to building works that she carried out to the Property from 1999 until 2006. Madam Chu categorically denies having made such an indication. Madam Chu does not know Madam Chong and had not told her much about the Property. ” (emphasis added)

39. As far as relevance is concerned, one simple example can illustrate the difficulties of the Plaintiff’s case. Suppose for the sake of argument there are correspondence between the Fire Department and the Food and Environmental Hygiene Department on the one hand and the Chus on the other. In all probabilities, these correspondence, if exist, would only be concerned with the safety and hygiene of the fish farm business. How these correspondence can conceivably relate to the issues in the proceedings which are adverse possession, acknowledgments of the Government’s title, occupation with Government’s consent since 1982 and so on is unclear from Mr Chong’s skeleton submission.

40. But that is not all.

41. If one reads paragraph 1 of the Schedule carefully, one will find that the Plaintiff is in fact seeking three different classes of documents:

(1) all correspondence, emails etc. between all Government Departments (including but not limited to the seven identified) and the Chus (“Class 1”);
(2) internal emails, memoranda etc. within each Government Department (including but not limited to the seven identified) (“Class 2”); and
(3) internal emails, memoranda etc. between each Government Department (including but not limited to the seven identified) (“Class 3”);
from February 1981 to October 2006 in connection with the fish farm business.

42. As far as Classes 2 and 3 are concerned, there was no attempt by the Plaintiff to demonstrate to this court why these internal emails, memoranda etc. within any Government Department or between any two (or more) Government Departments during the 25‑year period, if exist, are relevant to any of the issues in the proceedings.

43. Take another example: emails, memoranda etc. within the Fire Department. Common sense dictates that these internal emails, memoranda etc., if exist, would only be concerned with the Fire Department’s own area of responsibility ie issues of fire safety of the Structures used in connection with the fish farm business. If the Plaintiff seeks specific discovery of these documents, it has to demonstrate why they are also relevant to questions of adverse possession, acknowledgments of the Government’s title, consent and so on. On this question, Mr Chong’s skeleton submission is silent save for the fact that the Defendant has disclosed some documents relating to the Government’s dealings with Madam Chu on the fish farm business.

44. In the view of this court, if the Plaintiff chooses to cast the net so wide as to encompass documents “which are now or, have at any time been, in the possession, custody, control or power of any department, agency, bureau, division or arm”[3] of the Government for the entire 25‑year period in question and which are not demonstrably relevant to the issues in this case, it runs the risk of its request being considered a fishing exercise, oppressive, not necessary for disposing of the case fairly or for saving costs and inimical to the objectives of cost effectiveness, expeditious disposal of cases, proportionality, procedural economy and ensurance of fairness between the parties under the CJR. That is how this court considers paragraph 1 of the Schedule.

45. For these reasons, this part of the application fails.

Paragraph 2 of the Schedule

46. Paragraph 2 of the Schedule seeks:

“Those of the documents numbered (1) to (173) (inclusive) referred to in the left hand column of, and elsewhere in, the 104 pages of ‘Minutes’ discovered by the Defendant’s solicitors in their letter to the Plaintiff’s solicitors of 29 August 2013 not disclosed by the Defendant in her Second Supplemental List of Documents filed on 6 December 2013, and all other internal memoranda/notes of the Hong Kong Housing Authority/Lands Department up to the present day in relation to the Property and its owners”.

47. This paragraph actually encompasses two sub-categories of documents ie:

(1) Documents numbered (1) – (173) referred to in the 104‑page “Minutes” disclosed by the Defendant’s solicitors in their letter dated 29 August 2013 (“Minutes Documents”); and
(2) Other internal memoranda and notes of the Hong Kong Housing Authority and Lands Department in relation to the Lots and their owners up to the present (“HA/LD Internal Memo”).

48. The basis of the Plaintiff’s request is set out in Deane 4^th at paragraph 8:

“In the Defendant’s solicitors letter of 6 December 2013, they say that relevant undisclosed documents have either already been disclosed, are irrelevant or are privileged, yet provide no details of which ones have already been disclosed, which ones are irrelevant and why and which ones are privileged and why. These documents may relate to the issue of liability in relation to the Plaintiff’s claim against the Defendant in this action.” (emphasis added)

49. There is no further explanation of the relevance of these numbered documents in either Deane 4^th or Deane 5^th.

50. Regarding the Minutes Documents, the Defendant’s stance, as explained in the Affirmation of Chung Ka Wah Lawrence (“Chung 1^st”) is that most of them have already been disclosed under its 2^ndSupplemental List of Documents dated 6 December 2013 and it has a valid explanation for the non-disclosure of the remaining ones:

(1) Some of the documents referred to in the Minutes were not disclosed on 6 December 2013 because they have already been disclosed previously either by the Plaintiff or the Defendant.
(2) A total of 8 items of the documents are irrelevant to the present proceedings.
(3) The remaining documents are subject to legal professional privilege.

51. Regarding those documents already disclosed by the parties one way or another, Mr Chong does not press for them.

52. Regarding the 8 documents said to be irrelevant, Mr Chong complains that the Defendant has failed to explain the factual basis on which they are said to be irrelevant. He therefore asks this court to make an order for their discovery on the ground that they form part and parcel of the Minutes disclosed. Mr Chong submits that as a matter of law, “a document referred to in adiscovered documentis deemed to be relevant until the contrary is shown”: Ormerod, Grierson & Co. v. St. George’s Ironworks (1906) 95 L.T. 964; Irish Agricultural Society v. M’Cowan (1913) 47 Ir. L.T. 20; Kent Coal Concessions v. Duguid [1910] 1 KB 904.

53. This court has considered the authorities cited by Mr Chong but does not regard them as supportive of the breadth of the legal proposition put forward.

54. Irish Agricultural Society v. M’Cowan supra was an action of slander in which the financial position of the plaintiffs was one of the issues. The plaintiffs had included in their affidavit of documents their balance sheet but not the documents on which it was compiled. The Court ordered the plaintiffs to make a further and better affidavit on the ground that the admission of the former to be relevant necessarily involved an admission that the latter was also relevant.

55. Similarly, in Kent Coal Concessions v. Duguid supra, the plaintiff company, in pursuance of an order for discovery, had made an affidavit disclosing its directors’ reports and balance sheets which on their face were derived from books of account belonging to the plaintiff company. The English Court of Appeal held the plaintiff was bound to disclose such portions of the books of account as related to the matters set out in the balance sheets and directors’ reports on the ground that the balance sheets were worthless without the books from which they had been made up and once the balance sheets were admitted to be relevant, so much of the books as was the foundation of the balance sheets was also admitted to be relevant.

56. In the present case, the Plaintiff has not attempted to explain to this court how the Minutes or the 173 numbered documents referred to in them relate to the issues in the action. The Plaintiff has not attempted to argue that the 8 documents in issue are the foundation of the Minutes without which the Minutes would be worthless or unintelligible. The Plaintiff has not even placed the Minutes before this court – it was only upon the request by this court at the hearing that the Plaintiff provided a few pages of them to this court - the few pages simply show that numbered documents appear on their face, period. They are not self-explanatory; nor are the numbers dotted around those pages. At the end of the day, this court is left with a bald assertion from the Plaintiff that all the numbered documents form part of the Minutes, they are deemed to be relevant and should be disclosed.

57. In the view of this court, the fact that certain documents are referred to in the Minutes disclosed does not without more mean they are relevant to the issues in the action. The relevance of a document is fact‑sensitive and there should be no room for the application of any doctrine of “deemed” relevance as suggested by the Plaintiff. The burden remains on the Plaintiff to establish a prima facie case that those documents not disclosed by the Defendant relate to a matter in issue in the action.

58. The matter can also be tested this way.

59. It is well-established and has long been the practice that a party is entitled to cover up parts of a disclosed document which he considers to be irrelevant. If, as common sense dictates, parts of a disclosed document can be considered irrelevant to the issues in the action, there is no reason why documents referred to in a disclosed document (or some of them) cannot. It would be otherwise if the court is satisfied from the documents disclosed, from anything in the Plaintiff’s or the Defendant’s affidavits, or necessarily from the circumstances of the case that the documents withheld by the Defendant in the present case are relevant to the issues in the action. But this court is not so satisfied.

60. Regarding the request for the privileged documents, it suffers the same deficiency as the request for the 8 documents ie the Plaintiff has not attempted to explain to this court how they relate to any issues in the action – it merely relies on the fact that they are referred to in the Minutes disclosed.

61. Further, it is well-established that a statement on oath as to the ground given in support of a claim for privilege is conclusive and the party seeking discovery could not adduce evidence to show that the statement is insufficient or is untrue: Hong Kong Civil Procedure 2014 Vol. 1 para. 24/7/1. In the present case, Mr Deane of the Plaintiff is not suggesting that Mr Chung lied when he claimed the documents in question were subject to legal professional privilege. Nor is he suggesting that Mr Chung has proceeded on a misconception of the law. Mr Deane is simply saying without sight of the documents, it is impossible for him to verify the claim for privilege. That, in the view of this court, is hardly sufficient to “override” the Defendant’s claim to privilege.

62. Lastly, regarding the HA/LD Memo, Mr Chong’s submission consists of these two paragraphs:

“42. This category does not add anything further than the documents referred to in the Minutes concerning the Government’s dealing with the Land Lots save and apart from internal documents explaining how the correspondence came into existence.
43. Should they form part and parcel of documents concerning any of the 5 issues, it is submitted that, irrespective of P’s present application, D would, nevertheless, be obliged to discover the same under the system of voluntary mutual discovery.”

63. There is no further explanation in Mr Chong’s skeleton submission as to what “correspondence” he was referring to in paragraph 42, exactly which of these internal documents explain how such correspondence “came into existence” and in what respects these internal documents are able to explain “how the correspondence came into existence”. In the view of this court, the Plaintiff has not even begun to demonstrate the relevance of the HA/LD Memo to any matter in issue in the action or their discovery is necessary for the fair disposal of the cause or matter or for saving costs.

64. Moreover, the Plaintiff has not placed any temporal limit to its request for the HA/LD Memo. Strictly speaking, if this court were to accede to the request, the Defendant will have to dig into the whole database of the Housing Authority and the Lands Department from inception up to the present day to search for records relating to the Property and its owners. In the view of this court, this part of the Plaintiff’s application is clearly oppressive and fishing.

65. For the above reasons, this part of the application fails.

Paragraphs 3, 4 and 5 of the Schedule

66. These three paragraphs can be dealt with together as they all seek a specific document from the Defendant ie a letter from the Hong Kong Housing Authority to Madam Chu dated 25 February 2004 (para. 3); a Notice under section 6(1) Land (Miscellaneous Provisions) Ordinance posted by the Hong Kong Housing Authority on the Property on 25 February 2004 (para. 4); the response by the Lands Department to a letter from LCL dated 3 June 2005 (para. 5).

67. The Defendant’s response in correspondence and subsequently confirmed on oath (in the form of Chung 1^st) is in substance the same - it does not have the document, whether original or copy, after search. On the authorities, this is a sufficient answer to the Plaintiff’s application for specific discovery: Hong Kong Civil Procedure 2014 Vol. 1 para. 24/7/1; Tai Fook Futures Ltd v Cheung Moon Hoi Jeff supra.

68. While the Plaintiff asserted in paragraphs 9 to 11 of Deane 4^th that this is difficult to believe, with respect to Mr Deane, his belief is irrelevant for the present purpose: courts, in the exercise of their discretion, do not make an empty order for specific discovery: Berkeley Administration Inc v McClelland [1990] FSR 381 at 382-3.

69. Further, with regard to paragraph 5 of the Schedule, it is pointed out by the Defendant that LCL’s letter dated 3 June 2005 was addressed to the Housing Department and not the Lands Department. The Defendant submits and this court agrees that the Plaintiff has failed to show the Lands Department has in fact replied to LCL’s said letter. In other words, the Plaintiff has failed to show a prima facie case of “existence” of the document sought in the first place.

70. For these reasons, this part of the application fails.

Paragraph 6 of the Schedule

71. Paragraph 6 of the Schedule seeks:

“Copies of all correspondence, emails, memoranda, notes, plans, notices, agreements and other documents passing between the Lands Department and the Hong Kong Police in relation to the Lands Department’s enforcement action against the Property on 20 and 21 August 2012 and all records, memoranda and notes of the Lands Department and the Hong Kong Police in relation to such action”.

72. In paragraph 12 of Deane 4^th, Mr Deane said:

“…In particular, I believe Police records of the enforcement action may be relevant to a consideration of the Defendant’s conduct of the enforcement action…These documents are relevant to the issue of liability and quantum in relation to the Plaintiff’s claim against the Defendant in this action.”

73. To start with, this court has difficulty understanding why the Defendant’s conduct of the enforcement action in August 2012 is said to be an issue in the action. On the parties’ pleaded cases, it is common ground that the Lands Department did take enforcement action at the Property (and/or the Land surrounding it) on or about 21 August 2012. It is also not disputed by the Defendant that the Lands Department did carry out or attempt to carry out certain demolition works to the structures, most notably the iron gate on the site. The only issue between the parties is whether this was lawful land control action pursuant to the Land (Miscellaneous Provisions) Ordinance, Cap 28, which in turn depends on whether the Plaintiff can establish a squatter’s title to the Land: see paragraph 24 of the amended Statement of Claim and paragraph 19 of the amended Defence and Counterclaim.

74. If and in so far as the Plaintiff is seeking to find out whether the Police has recorded anything which suggests the land control action was or might have been unlawful, this is clearly fishing and not necessary for disposing of the case fairly or for saving costs.

75. This court also has difficulty understanding how the documents sought are relevant to the issue of quantum of the Plaintiff’s claim for damages. According to the particulars of damages pleaded in paragraph 25 of the amended Statement of Claim, the Plaintiff is seeking from the Defendant the costs of reinstatement of the iron gate and the Stone Wall. It is inherently improbable that the Lands Department and the Police would discuss such matters in their exchanges but the bottom line is that the burden is on the Plaintiff to show a prima facie case of relevance and the Plaintiff has failed in this regard.

76. The Defendant’s short answer to this request is that other than a handful of memos and emails which have been disclosed, it does not have any other documents relating to the enforcement action: paragraphs 67 and 69 Chung 1^st. On the authorities, this is a sufficient answer to the Plaintiff’s application for specific discovery: Hong Kong Civil Procedure 2014 Vol. 1 para. 24/7/1; Tai Fook Futures Ltd v Cheung Moon Hoi Jeff supra.

77. For these reasons, this part of the application fails.

Paragraph 7 of the Schedule

78. Paragraph 7 of the Schedule seeks:

“All internal emails between staff within Government departments and between different Government departments relating to the Government’s dealings with the Property and its owners from 1 January 1999 to 21 August 2012 other than those emails that have already been disclosed”.

79. From its wording, this paragraph substantially overlaps with Classes 2 and 3 [4] of Paragraph 1 of the Schedule, save that the period in question has changed from February 1981 – October 2006 to January 1999 – August 2012. According to Mr Chong, January 1999 was the time when the fish farm business under the control of Madam Chu was in “active operation”.

80. In paragraph 13 of Deane 4^th, Mr Deane, after complaining that the Defendant has only disclosed a few emails during the period in question when there should have been many more, said:

“…These documents relate to the issue of liability in relation to the Plaintiff’s claim against the Defendant in this action.”

81. In the view of this court, this request suffers the same deficiency as the request under Paragraph 1 of the Schedule. There was no attempt by the Plaintiff to demonstrate to this court the existence of these internal emails other than those already disclosed or why these emails within any Government Department or between any two (or more) Government Departments during the 13‑year period, if exist, are relevant to any of the issues in the proceedings.

82. Again, if the Plaintiff chooses to cast the net so wide as to encompass documents which would clearly be irrelevant to the issues in this case, for instance, internal emails among staff of the Fire Department or the Health Department, it runs the risk of its request being considered a fishing exercise, oppressive, not necessary for disposing of the case fairly or for saving costs and inimical to the objectives of cost effectiveness, expeditious disposal of cases, proportionality, procedural economy and ensurance of fairness between the parties under the CJR. That is how this court considers paragraph 7 of the Schedule.

83. For these reasons, and for reasons stated in relation to Paragraph 1 of the Schedule, this part of the application fails.

Disposition and Costs Order nisi

84. In the exercise of its discretion, this court hereby dismisses the Plaintiff’s application. There shall be an order nisi that costs be to the Defendant, to be taxed if not agreed.

	(Peter Ng)
	Judge of the Court of First Instance
	High Court

Mr K M Chong, instructed by Deacons, for the plaintiff

Ms Teresa Wu, instructed by Secretary for Justice, for the defendant

[1] The term is intended to include the Colonial Hong Kong Government before 1 July 1997 and the Government of the Hong Kong SAR on and after 1 July 1997.

[2] Structure 1 in the Schedule G Plan is the Stone Wall.

[3] See para.1 of the Summons.

[4] See paragraph 41 above.

94079-EN-2014-05-29

JADE’S REALM LTD v. DIRECTOR OF LANDS for and on behalf of THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

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HCA 1509/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1509 OF 2012

____________

BETWEEN
	JADE’S REALM LTD	Plaintiff
	and
	DIRECTOR OF LANDS for and on behalf of THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION	Defendant

____________

Before: Hon Ng J in Chambers

Dates of Hearing: 16 April 2013, 4 March & 22 May 2014

Date of Judgment: 29 May 2014

_________________________

J U D G M E N T

_________________________

Introduction

1. This is an application by the Defendant by summons dated 7 March 2013 for an order under RHC Order 29 rule 2 that:

“The Defendant or such officers as may be authorised by the Defendant from time to time with or without equipment be authorised to enter upon and inspect Lot Nos. 355 and 356 in DD 214 and the adjoining Government land (including any land in dispute) together with any building erected thereon…”

2. The application is opposed by the Plaintiff.

3. The first hearing of the application took place on 16 April 2013. It was adjourned sine die with leave to the parties to file evidence in support of / opposition to the application. On the same day, this court ordered there should be a split trial of liability and quantum of damages, with the issue of liability to be determined first before a Judge and the issue of quantum to be heard by a Master.

4. The matter was restored before this court on 4 March 2014 whereupon it was further adjourned to enable the parties to prepare a common set of plans (collectively “the Common Plans”) to replace the existing ones annexed to the amended Statement of Claim and the amended Defence and Counterclaim.

5. Eventually,

(1) the plans attached to the amended Statement of Claim at Schedules 1, 2, 4, 5, 6 & 7 are replaced by those in Schedules 8, 9, 10, 11, 12, & 13.
(2) the plans attached to the amended Defence and Counterclaim at Schedules A, B & D are replaced by those in Schedules E, F & G.

The Plaintiff’s case

6. As pleaded by the Plaintiff, the Hong Kong Government[1] was and is the owner of a piece of land in DD 214 (“Land”) in Nam Wai, Sai Kung, New Territories. For identification purpose, the Land is shaded yellow on a plan annexed to the amended Statement of Claim now replaced by the 8^th Schedule (“8^th Schedule Plan”).

7. By a Block Crown Lease dated 27 March 1907, Lot Nos. 355 and 356 in DD 214 (“the Lots”) were granted to one Yau Chiu Wa and others who were members of the Yau Clan. Through a chain of assignments, the Plaintiff became the registered owner of the Lots on 7 September 2007 and has remained so ever since. For identification purpose, the Lots are shaded pink on a plan annexed to the amended Statement of Claim now replaced by the 9^th Schedule (“9^th Schedule Plan”). The Lots adjourn the Land and are completely surrounded by it.

8. The Lots and the Land (collectively as “Enclosed Area”) are delineated by a stone wall traced purple (“Stone Wall”) on a plan annexed to the amended Statement of Claim now replaced by the 10^th Schedule (“10^th Schedule Plan”).

9. As pleaded in paragraph 8 of the amended Statement of Claim, between 1907 and 7 September 2007, a number of houses and structures (“Houses and Structures”) had been “constructed, completed and rebuilt” by the Plaintiff’s predecessors-in-title and the Plaintiff on the Enclosed Area. For identification purpose, the Houses and Structures are shaded green on the 10^th Schedule Plan.

10. On the Plaintiff’s case, the Stone Wall was built in or about 1937 by the then registered owners of the Lots and members of the Yau Clan. Since not later than 1937, the Enclosed Area has been in the exclusive possession of and enjoyed by the Plaintiff’s predecessors-in-title and the Plaintiff as a single tenement.

11. It is further the Plaintiff’s case that, despite changes in ownership, the predecessors-in-title of the Plaintiff continued to possess exclusively the Enclosed Area and incur money and money’s worth in the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures. Further, since 7 September 2007, the Plaintiff has continued and still continues to occupy the Enclosed Area and incur money and money’s worth in the maintenance, repair and reconstruction of the Stone Wall and the Houses and Structures.

12. In the prayer for relief, the Plaintiff claims inter alia:

(1) a Declaration that the Defendant’s title of and in the Land has been extinguished by virtue of the Limitation Ordinance;

(2) a Declaration that the Plaintiff has acquired a squatter’s title to the Land;

(3) a Declaration that the Lots are as identified in the 9^th Schedule Plan.

13. The Plaintiff has also put forward a number of alternative cases with regard to the locations of the Lots and the Land. For identification purpose, these locations are colour-shaded on the plans annexed to the amended Statement of Claim now replaced by the 11^th, 12^th and 13^th Schedules. In the prayer for relief, the Plaintiff claims similar Declarations with regard to the Land and the Lots so identified.

The Defendant’s case

14. The Defendant disputes the Plaintiff’s claims on a number of grounds. For the present purpose, this court needs only mention four.

15. First, the boundaries of the Lots are not as set out in the plans annexed to the amended Statement of Claim. Rather, they are as indicated on a plan annexed to the amended Defence and Counterclaim now replaced by Schedule E (“Schedule E Plan”).

16. Second, there were acknowledgments of the Government’s title to the Land by the Plaintiff’s predecessors-in-title at various times between 1962 and 2006, so that the limitation period should be deemed to commence only on the dates of the acknowledgements pursuant to section 23 of the Limitation Ordinance.

17. Third, the Defendant disputes the time when the Houses and Structures referred to in paragraph 8 of the amended Statement of Claim were erected. The Defendant’s pleaded case, at paragraph 10(A) of the amended Defence and Counterclaim, is that they were first seen on the dates set out below and identified on a plan annexed to the amended Defence and Counterclaim now replaced by Schedule G (“Schedule G Plan”).

Area
Date
E1a (Structure No. 1[2] in BLUE)
11 June 1972
E1b (Structure No. 1 in ORANGE)
6 February 2004
E2a (Structure No. 2)
27 December 1956
E2b (Structure No. 2)
3 October 1972
E3 (Structure No. 3)
19 February 1963
E4 (Structure No. 4)
October 1974
E5
1959
E6
3 October 1984
E7a
27 July 2008
E7b
22 November 2007

18. Fourth, the occupation of some of the Houses and Structures ie Structures Nos. 2, 3 & 4 was allowed to continue with the Government’s consent or licence consequent upon a territory-wide stock-taking survey on squatting structures in 1982 by the Squatter Control Unit of the Housing Department and, for that reason, was not adverse.

19. In its amended Counterclaim, the Defendant counterclaims for:

(1) a Declaration that the boundaries of the Lots are as set out in the Schedule E Plan;
(2) an Order for the delivery of vacation possession of the Land to the Government; and

(3) mesne profits for the Plaintiff’s wrongful use and occupation of the Land since September 2007.

The application

20. Under RHC O 29 r 2 as well as under its inherent jurisdiction, the court may make an order for the inspection of property in the possession of a party to the cause or matter. The power to order inspection is discretionary and will be exercised to “secure a just and proper trial of the issues” in the case: Laguna Properties Limited v. New Trend Investment Limited unrep. HCA 19128/1998, 13 May 2004 at [9] per Tang J (as he then was).

21. The important question is thus: what are the issues in this case the “just and proper” resolution of which will be assisted by a site inspection ?

22. The parties’ pleaded cases have already been summarized above.

23. In his Affidavit dated 30 April 2013, Mr Tse Wai Kin, a senior Land Surveyor of the Lands Department, said this in support of the application:

“13. For the purpose of verifying the extent of suspected unauthorized occupation on the [Government] Land, the Defendant conducted ground survey of the houses and structures erected on the Lots and the [Government] Land in November 2008.

14. It appears that the extent of the houses and structures on the Land Lots as pleaded by the Plaintiff and as set out in the 4^th Schedule[3] of the Statement of Claim is different from that as surveyed by the Defendant in November 2008 and that as revealed from the relevant aerial photographs taken between 2008 and 2012.

15. In order to consider the Plaintiff’s pleaded case in respect of the extent of the houses and structures as shaded green in the 4^th Schedule of the Statement of Claim, it is my opinion that access to the site …is necessary.” (emphasis added)

24. At paragraph 7 of his Second Affidavit dated 20 June 2013, Mr Tse reiterated that:

“…a site inspection is necessary in order for the Defendant to consider the Plaintiff’s pleaded case in respect of the houses and structures as shaded green in the 4^th Schedule of the Statement of Claim…For the avoidance of doubt, the Defendant is not saying that the site inspection is to be conducted to determine the correct boundaries of the Land Lots right away. Its purpose is to verify the Plaintiff’s case with regard to its claims made in paragraphs 8 to 13 of the Statement of Claim.” (emphasis added)

25. In support of the application, Ms Wu, at paragraphs 22 and 25 of her skeleton arguments dated 14 May 2014, submits that

(1) the Defendant is entitled to inspect the extent of the Houses and Structures pleaded by the Plaintiff in the amended Statement of Claim and as identified and shaded green in the 10^th Schedule Plan (“1^st Ground”);
(2) the Defendant cannot come to a view on the quantum of mesne profits if the court does not allow inspection, the result of which is that the Defendant will not be able to commence any mediation with the Plaintiff, contrary to the objectives of the CJR (“2^nd Ground”).

26. Regarding the 1^st Ground, it is unclear from Ms Wu’s submissions exactly why the Defendant is “entitled” to inspection, given the power to order inspection is essentially a case management power and is discretionary.

27. In the view of this court, not only is the Defendant not “entitled” to inspection, the Defendant has not even made out a case that it is “just and proper” to make an order for inspection. The reasons are these.

28. First, as noted in paragraph 10 above, the Plaintiff’s pleaded case on adverse possession is based on the exclusive possession of the Enclosed Area by the Plaintiff’s predecessors-in-title and the Plaintiff continuously since 1937. In the course of the hearing, this court asked and Ms Wu accepted that there is no dispute between the parties as to the location of the Stone Wall as such. Ms Wu also indicated to this court that there is no dispute that the area within the Stone Wall ie the Enclosed Area consists of the Lots and the Land. If so, it would mean that as far as the location and extent of the Enclosed Area is concerned, there is no issue between the parties – they only differ on the location of the Lots within the Enclosed Area.

29. However, as pointed out by the Plaintiff’s expert, Dr Conrad Tang,it is not possible for a field survey to identify the correct boundaries of the Lots now because there are no currently existing ground features which correlate to the features shown on the Plan (known as the DD Sheet) contained in the Crown Lease. This is accepted by Mr Tse. As evident from Ms Wu’s skeleton submissions, the Defendant is not suggesting that site inspection is necessary or feasible in order to determine the correct boundaries of the Lots.

30. Second, as noted in paragraph 17 above, the Defendant’s pleaded case is not that the Houses and Structures pleaded in paragraph 8 of the amended Statement of Claim and shaded green in the 10^thSchedule Plan do not exist or are not located within the Enclosed Area – its case is simply that they were first seen on divers dates between 1956 and 2008. There is no suggestion by the Defendant that a site inspection can shed light on when the Houses and Structures were first erected, let alone first seen. It is also difficult to see how a site inspection can verify the Plaintiff’s pleaded case that, between 1907 and 7 September 2007, the Houses and Structures had been “constructed, completed and rebuilt” by the Plaintiff’s predecessors-in-title and the Plaintiff on the Enclosed Area.

31. Third, a comparison between the Plaintiff’s 10^th Schedule Plan with the Defendant’s Schedule G Plan suggests that the locations of the Houses and Structures on both plans appear to be the same. When asked about this in the course of the hearing, Ms Wu frankly accepted that was the case and this court had not misread the plans. If so, as far as their pleaded cases are concerned, there is no issue between the Plaintiff and the Defendant as to the location of the Houses and Structures within the Enclosed Area either.

32. Fourth, while Mr Tse claims to have found a discrepancy between the extent of the Houses and Structures identified in the plan annexed as the 4^th Schedule[4] of the Statement of Claim and that as revealed from (i) a survey by the Defendant in November 2008 and (ii) aerial photos taken between 2008 and 2012, there is no explanation from him as to what that discrepancy is or why it is necessary to conduct a site inspection, given that the Defendant had already carried out a survey and obtained the relevant aerial photos. There is also no explanation from Ms Wu as to the relevance of the discrepancy to the Plaintiff’s or the Defendant’s pleaded case.

33. As this court sees it, the Defendant is bound by its pleaded case. On its pleaded case, there is no dispute between the parties as to the location of the Houses and Structures within the Enclosed Area. In any event, the exact location of the Houses and Structures within the Enclosed Area is irrelevant to the Plaintiff’s claim for adverse possession of the Land within the Enclosed Area or the Defendant’s defences. For these reasons, the 1^st Ground fails.

34. Regarding the 2^nd Ground, given the order for split trial, it seems to this court prima facie premature to order inspection now with a view to facilitating the assessment of mesne profits when the court has yet to adjudicate upon the Plaintiff’s alleged liability for trespass on the Land. There is no answer to this in Ms Wu’s skeleton argument.

35. Further, while it is desirable that disputes between the parties can be resolved by mediation, it does not vitiate the need for the Defendant to demonstrate to this court that (i) there are disputes on liability which call for a site inspection, (ii) it is “just and proper” to allow a site inspection so that a meaningful mediation on liability can proceed. This the Defendant has utterly failed to do. In particular, the Defendant has failed to provide any explanation as to why the parties cannot proceed to mediate on liability issues first, leaving aside the question of mesne profits at a later stage, if at all. In these circumstances, the 2^nd Ground also fails.

Disposition and Costs Order nisi

36. For the above reasons, this court is not minded to exercise its discretion in favour of allowing a site inspection. The Defendant’s application is dismissed.

37. There shall be an order nisi that costs be to the Plaintiff, with certificate for counsel.

	(Peter Ng) Judge of the Court of First Instance
	High Court

Mr K M Chong, instructed by Deacons, for the plaintiff

Ms Teresa Wu, instructed by Secretary for Justice, for the defendant

[1] The term is intended to include the Colonial Hong Kong Government before 1 July 1997 and the Government of Hong Kong SAR on and after 1 July 1997.

[2] Structure 1 in the Schedule G Plan is the Stone Wall.

[3] Now replaced by the 10^th Schedule.

[4] Now replaced by the 10^th Schedule.

Area	Date
E1a (Structure No. 1[2] in BLUE)	11 June 1972
E1b (Structure No. 1 in ORANGE)	6 February 2004
E2a (Structure No. 2)	27 December 1956
E2b (Structure No. 2)	3 October 1972
E3 (Structure No. 3)	19 February 1963
E4 (Structure No. 4)	October 1974
E5	1959
E6	3 October 1984
E7a	27 July 2008
E7b	22 November 2007