Hui Fu Keung Christopher v. Wong Sui Sum

DCCJ 4358/2013

CIVIL ACTION NO. 4358 OF 2013

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JUDGMENT

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Background

1.The defendant, Wong Sui Sum (“Wong”), is the registered owner of a property known as Lot No 1083 in Demarcation District No 6, Tai Po, New Territories (“the Lot”). A 2-storey house was built inside the Lot and is known as No 169, Kam Shan Village, Tai Po (“the House”).

2.The plaintiff, Hui Fu Keung Christopher (“Hui”), is now claiming that he has adversely possessed the House since October 1996. Having passed 12 years, by virtue of section 7 of the Limitation Ordinance, Hui now claims that Wong’s title to the House has been extinguished in October 2008.

3.Hui resided at the 1^st floor of the House since about 1959. At that time, the owner and the landlord was Miu Tak, who assigned the Lot to Lam Koon Tai (“Lam”) in 1967. In 1988, Lam passed away. Lam had 2 adopted daughters: Wong and Ng Suk Yee (“Ng”). Lam left a will dated 30 July 1981 and bequeathed the Lot to Wong. The probate of Lam’s will was granted on 23 July 2009. Ng was the executrix. By an assent dated 19 November 2012, Wong became and is still the registered owner of the Lot.

4.Wong was originally able to collect rent from Hui after Lam passed away. Since October 1996, Hui ceased to pay any rent. Wong and Hui had different version as to the reason for the cessation of payment of rent but it is not disputed that Hui continued to occupy and use the House until today.

The plaintiff’s case

5.Hui testified that he started residing at the House since his childhood. At that time, it was his mother who liaised with the landlord. In a gist, his family rented the 1^st floor of the House since about 1959. He knew that his mother paid the rent (or license fee) to the landlord. Due to lapse of time, he was unable to tell exactly the amounts of the rental payment in different periods of time. Still, he agreed that all rental sums up to September 1996 were fully paid.

6.In about 1984, his mother passed away. His sister Hui Hau Chun (“Hui’s sister”) was in charge of paying the monthly rent. He said that he would also contribute some money to Hui’s sister as family expenses. In about 1990, the occupier of the ground floor of the House left. He then agreed with a representative of the landlord that he should pay fees for using the 1^st floor but at the same time was also allowed to use together the ground floor concurrently. In other words, since then, upon payment of $500 per month, he was allowed to use the entire House.

7.He (and his wife) paid the last and final rental payment to Wong in late 1996 for the month of September 1996. He said that Wong saw his wife in late 1996 and demanded for an increase of monthly rent from $500 to $2,400. At that time, he did not see Wong and it was his wife who told him that there was a demand for increase in rent. However, at all times, he and his wife refused. He thought that such an extorting increase in rents was similar to blackmail. So, despite Wong made the similar request in several occasions afterwards, they refused. From October 1996 onwards, he and his wife ceased to pay any rent as revenge.

8.He said that he and his family started to adversely possess the House since October 1996 and continued to use and enjoy the House more or less the same as before. He would lock the House to avoid public entry. He also emphasized that the rates and utilities bills were addressed to him or his family members. He spent money in repairing the House. He and his family would also place various domestic chattels and items in the House and its vicinity. He and his family would use the address of the House as their correspondence address. The utmost important act of adverse possession, according to him, was that he ceased to pay rent since October 1996. In his view, Hui’s sister was one of his family members who adversely possessed the House with him. In 2001, Hui’s sister passed away. Effectively, he and his wife occupied the entire House since 2001.

9.He said that he (and his family members) did not make any representation to Wong that he would pay rent upon Wong became the registered owner. So, he (together with his family members) had already adversely possessed the House for more than 12 years before the commencement of this action.

10.He also said in about late 2010, he did not promise to move out from the House. He pointed out that his family resided there for many years and therefore it is impossible for him to abandon the House easily.

11.He admitted that in 2013 he mentioned to Wong that his friend was interested in buying the House. In this regard, he emphasized that he did not say that he wanted to buy the House himself.

The defendant’s case

12.Wong testified that Lam would collect rents from those renting or occupying the House during her lifetime. The 1^st floor of the House was rented to Hui’s sister and the ground floor of the House was rented to some other people. After Lam’s death, she continued to rent the House to them and collected rent.

13.In about June 1992, she agreed to let the ground floor of the House at $500 per month to Hui as a tenant, who was also responsible for payment of the rates. The monthly rent of the 1^st floor of the House was adjusted to $215 per month at that time.

14.In the middle of 1996, she informed Hui’s sister and Hui’s wife that she would increase the monthly rent of the House to a level in line with the then market rent. In reply, both Hui’s sister and Hui’s wife said that they would not be able to afford the rent if the increase was too great. It was finally agreed that she would apply to the Commissioner for Rating and Valuation for an increase of rent. Upon application, the certified rent of the ground floor of the House was $2,416 and the 1^st floor of the House was $2,419 (“the new rent”).

15.In September 1996, she intended to collect the new rent from Hui’s wife for the ground floor of the House and from Hui’s sister for the 1^st floor of the House. However, both of them paid the old rent of $500 and $215 respectively. She then said that she would collect the new rent starting from the following month. Hui’s wife and Hui’s sister agreed.

16.In October 1996, when she came to the House intending to collect the new rent, Hui refused to pay on the ground that she was not the registered owner of the House. She explained that application for the grant of the probate was underway and she was the sole beneficiary of the House. In reply, Hui said, “when you become the real owner, I will pay the rent to you”. On that occasion, Hui’s sister was there and also refused to pay the rent upon the same ground as relied on by Hui. Hui’s sister said, “I follow the meaning of my brother.”

17.Thereafter, she went to the House intending to collect the new rent in November 1996, sometime after the Chinese New Year in 1997, in the summer of 1997, in the year end of 1997 and in May 1998. In each occasion, Hui or his wife’s reply was basically the same, ie, only after her name been registered in the Land Registry then she could collect rent. In those occasions, she also wanted to collect the new rent from Hui’s sister. However, Hui’s sister was either not at home or would say that “I would follow the meaning of my brother.” In the circumstance, Hui or Hui’s wife made a total of 6 representations to her and Hui’s sister also made 2 representations to her that the rental payment of the House would be settled upon her name being registered in the Land Registry (“the Representations”).

18.Then, she did not go to collect rent anymore for years. The application for the grant took a long time and finally Ng was granted the probate in July 2009. In December 2009, solicitors then acting for her and Ng sent a letter to Hui instructing him to pay rent. Hui did not reply.

19.In January 2010, she and Ng went to the House and demanded the Hui’s family either to pay rent or to move out. In reply, Hui’s wife said that she had to talk with Hui. In March 2010, she went to the House again and made the same demand. Hui’s wife, upon hearing that the probate was granted, said that she would verify it with the Land Registry. In August 2010, she went to the House again and on that occasion, Hui’s wife said that Hui was not able to pay the rents in arrears. She offered to waive all the rents on condition that Hui’s family needed to move out. Hui’s wife agreed on condition that Hui’s family would be allowed 3 months to move out. Wong agreed.

20.In mid-November 2010, Hui’s wife asked for one additional month to move out and she agreed. In January 2011, she went to the House to talk with Hui. Hui said he would move out but had to think about the matter. In March 2011, she went to the House and demanded Hui to move out but Hui replied that she was not the registered owner of the House and refused to move out.

21.By an assent dated 19 November 2012, Ng assented to the vesting in, and assigned unto, her as the legal owner of the Lot.

22.In September 2013, at a meeting outside the House, she asked Hui in what circumstance he would move out. She also demanded for the payment of the outstanding rent. Hui, again, said that he had to check with the Land Registry first. But Hui added that even if she was verified to be the owner, he would not move out. Then, her solicitor sent 2 letters both dated 4 November 2013 to Hui and Hui’s sister demanded for payment of the outstanding rent.

23.On 11 November 2013, she and her brother-in-law Wu Shu Yee (“Wu”) went to the House and saw Hui. In that occasion, Hui expressed his intention of purchasing the House. Later, Wong talked about that with Ng. Then, she and Ng went to the House on 16 November 2013 with intent to discuss the sale of the House. In that occasion, Hui said that he had no money to purchase the House and it was his friend who wished to purchase it.

24.She emphasized that by reason of the Representations, she was led into belief that she could collect all the rent by the time when her name was registered in the Land Registry. She therefore did not agree that Hui had adversely possessed the House.

25.Both Ng and Wu also testified in court to support the case of Wong.

Issue of trial

26.The core question was under what circumstance did Hui cease to pay any rent since October 1996.  In particular, did Hui and his family members make the Representations?

27.Further, as Wong was not a legal owner of the House until 2012, could Hui start adverse possessing the House since 1996?

The legal principle of adverse possession

28.It is trite law that a person claiming to be in adverse possession must be shown to have both possession and the actual intention to possess and treat the land as his own, to exclude all others including the true owner (See Wong Tak Yue v Kung Kwok Wai (No. 2) (1997-1998) 1 HKCFAR 55, at 68E-J; Tang Tak Hong v Cheung Yat Fuk [2002] 3 HKLRD 743 at 745 (paragraph 6)).

29.These requirements are question of fact (seeWong Tak Yue at 69A).

30.As to the intention to possess a land, Slade J in the well-known case of Powell v McFarlane (1979) 38 P&CR 452 at pages 471 to 472  said:

‘ (4) …… What is really meant, in my judgment, is that the animus possidendi involves the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow.

The question of animus possidendi is, in my judgment, one of crucial importance in the present case. An owner or other person with the right to possession of land will be readily assumed to have the requisite intention to possess, unless the contrary is clearly proved. This, in my judgment, is why the slightest acts done by or on behalf of an owner in possession will be found to negative discontinuance of possession. The position, however, is quite different from a case where the question is whether a trespasser has acquired possession. In such a situation the courts will, in my judgment, require clear and affirmative evidence that the trespasser, claiming that he has acquired possession, not only had the requisite intention to possess, but made such intention clear to the world. If his acts are open to more than one interpretation and he has not made it perfectly plain to the world at large by his actions or words that he has intended to exclude the owner as best he can, the courts will treat him as not having had the requisite animus possidendi and consequently as not having dispossessed the owner.’

Analysis

31.According to the statement of claim, Hui was claiming adverse possession against Wong for the Lot, not only for the House. At the commencement of trial, Mr Wong, counsel for Hui, confirmed that Hui was only claiming adverse possession of the House, not the whole Lot.

32.It is common ground that in October 1996, Wong was not yet the legal owner of the House. It would be inconvenient, but not impossible, for Wong to evict Hui and Hui’s sister. All Wong required to do was to ask Ng to take appropriate action. Although they might not know what exactly needed to be done, they should have known that some legal action was possible. They could have sought legal advice to ascertain how to collect rents and/or to evict Hui and Hui’s sister, if needed.

33.The monthly rents of the House were not substantial. At the outset, it might not be cost effective to take legal action. Therefore, it is understandable that Wong might not even want to bother Ng to take immediate actions to recover the outstanding rents and/or to evict Hui and Hui’s sister. However, as time passed, the outstanding rent became more and more. If Hui and Hui’s sister did not make the Representations, I cannot understand why Wong did not ask Ng to commence legal action. But for the Representations, I am unable to think of any reason why Wong would simply cease to press Hui and Hui’s sister to pay for the rents. I am not persuaded that Wong would simply do nothing to recover the rents, which she thought she was entitled to. From the viewpoint of Wong, unless Hui and Hui’s sister agreed to pay rent in due course, I fail to see any reason for her, with the assistance by Ng, not to take appropriate legal action.

34.Further, at that material time, Hui and Hui’s sister should have known that they had no reason not to pay rent to the owner of the House. They were only tenants of the House despite they resided at the House, or at least the 1^st floor of the House, for many years. In 1996, the best way to delay payment of the new rent was to challenge Wong’s legal title. I therefore find it reasonable for Hui and Hui’s sister to make the Representations to pacify Wong that they would pay rent by the time when Wong became the registered owner.

35.It was also unreasonable for Hui and Hui’s sister to take “revenge” to Wong by refusing to pay any rent at all and started adverse possession when Wong demanded for an increase in rent. At that material time, Hui and Hui’s sister could not have predicted for how long Wong, or other person, was needed to become the “new” registered owner of the House. At that time, they should have known that they needed to pay rent and in my view, their primary concern was to delay the payment of the new rent. I do not accept that they had any intention to start adverse possessing the House.

36.Wong answered question directly. Her version was logical and reasonable. I accept her evidence. On the other hand, Hui’s evidence was unreasonable and I do not accept his evidence.

37.In the circumstance, I find that the 6 Representations had been made.

38.In fact, apart from ceasing to pay rent, there is no evidence to suggest that Hui and Hui’s sister had done anything peculiar to adversely possess the House since October 1996. Hui said that he would lock the House and kept the keys. That was, obviously, an act for personal security and, per se, not sufficient to assert ownership.

39.Hui also said that he paid the bills for utility and the rates. Mr Chan, solicitor appearing for Wong, submitted that not all utilities of the House are registered in the name of Hui or Hui’s family member and pointed out that 3 electricity bills was in the name of “Yik Tak Yee”. However, these 3 electricity bills were respectively dated 28 October 2011, 30 December 2011 and 30 October 2013, ie after the 12 years limitation period counting from October 1996. In the circumstance, I do not consider the 3 electricity bills would prejudice Hui’s case. However, it is not uncommon for a tenant to pay those bills and I do not accept that those payments were sufficient to assert ownership.

40.Hui and his family members used the House as their correspondence address. Hui also produced some receipts to substantiate that he had paid for repairing or renovating the House. Hui also said that his family placed various domestic chattels and items in the House and in its vicinity within the Lot. Taking all the circumstance, what Hui and his family members did was consistent with having a permission from Wong to use the House. Hui resided at the House for years and it would be quite natural for him and his family members, in the capacity of a tenant, to keep the keys of the House. It would be normal for them to use the address of the House as their correspondence address and to place some domestic chattels and items in the House and its vicinity. Putting to the highest, save and except ceasing to pay rent, Hui and his family members were simply using and occupying the House in the same way as what ordinary tenants would do.

41.Solicitors for Hui also sent a letter dated 11 November 2013 to the solicitors for Wong alleging that Hui had adversely possessed the Lot (and therefore also the House). That letter was sent immediately before the commencement of this action and it, in my view, cannot advance Hui’s case.

42.As I said, I do not believe the evidence of Hui and accept the evidence of Wong. I find that Hui failed to prove that he had intention to adversely possess the House.

43.Both parties also disputed as to what happened in 2010 and in 2013. Although Hui denied that there was any oral promise to move out from the House in 2010 and also denied that he had expressed any interest in purchasing the House in 2013, I do not believe him.

44.In December 2009, solicitors acting for Ng and Wong wrote a letter to Hui demanding him to pay rent. I find that was a reasonable reaction of Ng and Wong because probate of Lam’s will was granted to Ng in July 2009. Hui denied having received the letter but I do not trust him.

45.Naturally, Ng and Wong would not simply do nothing subsequent to the solicitors’ letter. I therefore accept their evidence that they visited the House in 2010 and 2011. At that time, Wong was still yet to be the registered owner. In that circumstance, Hui and his wife, despite originally promised to move out but subsequently made use of the same excuse to continue to reside at the House was, in my view, more probable than not.

46.Ng testified in court to support Wong. She persuaded me as an honest and reliable witness. Ng even frankly admitted in court that during trial she had lunch with Wong but emphasized that she did not talked about this case with Wong during lunch. She was unshaken under cross examination. I accept what she said.

47.I find that in 2010, Hui and his wife had promised to move out. It was because Wong was not yet the registered owner, Hui, again, made use of that as an excuse in refusing to move out.

48.Both parties also disputed as to what happened in 2013. In this regard, I accept the evidence of Wong, Ng and Wu as to what happened in 2013. Their case seems to be more reasonable and logical. Wong became the registered owner in 2012. Thereafter, she could commence actions against Hui in her personal capacity. At that time, her visits to the House were reasonable. Hui should have known that Wong could sue him. It was quite reasonable for Hui, in order to delay the eviction or payment of rent, to make up further excuse. I think that it was more probable than not that Hui did mention that he, and subsequently became “his friend”, was interested in purchasing the House.

49.Wu testified that at the material time he was accompanying Wong to visit Hui. Obviously, his attendance was to assist Wong. He could concentrate on the dialogue between Wong and Hui. He was able to recall what happened. I believe what he said.

50.Taking all the evidence into account, I accept Wong’s case and reject Hui’s case. I find that Hui’s allegation that he had an intention to possess the House since October 1996 was unbelievable. I accept Wong’s evidence that Hui (as well as Hui’s sister) had made the Representations and that was the reason why Wong did not take action to collect rent and/or to evict Hui and Hui’s sister at the material times. Wong was led into belief that she could collect rents upon her name been registered in the Land Registry. I also accept that in late 2010 to early 2011, Hui (and his wife) had agreed to move out the House.

51.I do not believe that Hui would have any intention to adversely possess the House. It is true that Hui and Hui’s sister did not pay rent for years but I find that they were able to do so upon the Representations. At that time, they were merely intending to delay the payment but not intending to adversely possess the House.

52.To conclude, I am not persuaded that Hui was able to prove that he and his family members had any intention to adversely possess the House.

53.In view of my finding, the claim shall be dismissed. It becomes academic but for the sake of completeness, I shall also deal with the submissions made by both parties in respect of when should be the relevant time started to run if (which is not my finding) Hui had intention to adversely possess the House.

54.Lam’s will clearly states that :-

“3. I direct that all my just debts and funeral and testamentary expenses and all estate duty payable in respect of my estate shall be paid by WONG SUI SHUM absolutely…

4. I DEVISE AND BEQUEATH my properties [including the House] unto my Trustees UPON TRUST for the said Wong Sui Sum absolutely.

……

9. The aforesaid devices and bequests…… are made in favour of the said Wong Shi Sum conditional upon the said Wong Sui Sum to comply with clause 3 aforesaid.”

55.Obviously, the will stipulates that Wong could succeed the House under the condition of payment of Lam’s debts and funeral and testamentary expenses.

56.Mr Wong referred me to Cook Yin Ping v Arthur Mo Wan Cheung and others, HCMP 2436/2011, unreported (21 January 2014, per DHCJ B Chu (as she then was)) and submitted that for interpreting the will, I should take into account the intention of Lam, the language of the will and all the circumstances, including that Wong was one of the closest persons of Lam. He further submitted that, pursuant to the will, Wong shall acquire all the beneficial interests in the House immediately upon Lam’s death without any condition because :

(1)Lam intended that the House should be bequeathed to Wong in any event as Lam did not say who the new beneficiary of the House should be if Wong failed to comply with clause 3 of the will;

(2)Even the gift of the House should “lapse” if Wong failed to comply with clause 3 of the will, the House should fall into the residue of Lam’s estate, which was all bequeathed to Wong again; and

(3)Wong was the major beneficiary under the will. Lam’s wishes was doing justice between Wong and Ng so that Wong would take more share than Ng, who got a smaller share but was free from payment obligation.

57.Mr Wong therefore submitted that upon the true construction of the will, Lam only imposed a personal or moral obligation on Wong to pay off all the debts and expenses but did not impose a “condition”.

58.In reply, Mr Chan submitted that a trust was created as the wording in clauses 3, 4 and 9 of the will conforms to the usual wording for declaring a trust. Wong’s interest in the House was only a beneficial interest. He therefore submitted by reference to section 10(2) of the Limitation Ordinance, time did not start to run in October 1996.

59.I must say that Mr Wong was speculating the wishes of Lam when she made the will. The starting point of the inquiry is to deduce Lam’s intention by giving the words of the will the meaning that they naturally bear, having regard to the contents of the will as a whole. I accept the submission of Mr Chan that Lam’s will created a trust of the Lot to be held by Ng as trustee for Wong with the condition upon her compliance with clause 3 of the will. The wording used in the will was plain and obvious, leaving no ambiguity. Wong was required to pay off all the relevant debts and other necessary expenditure before she could succeed the House. If she failed to do so, Ng, in the capacity of an executrix, might have to sell the House to pay off those debts. Therefore, Wong might not be able to succeed the House.

60.So, I find that Wong only possessed a beneficial interest in the House at the outset. Wong became the registered owner of the Lot (and therefore also the House) in 2012.

61.Mr Chan submitted that section 9(2) of the Limitation Ordinance is a relevant section in this proceedings. It provides that,

“If a person entitled to the preceding estate or interest, not being a term of years absolute, was not in possession of the land on the date of the determination thereof, no action shall be brought by the person entitled to the succeeding estate or interest after the expiration of 12 years from the date on which the right of action accrued to the person entitled to the preceding estate or interest, or 6 years from the date on which the right of action accrued to the person entitled to the succeeding estate or interest, whichever period last expires.”

62.The learnt editors in Preston and Newsom on Limitation Actions (4^th ed) said as follows,

“The principle that time does not run against an owner of a future interest until the interest falls into possession was preserved by the Limitation Act, s.6” (p 41)

63.Section 9 of the Limitation Ordinance is modelled on section 6 of the Limitation Act 1939.  As Wong was entitled to the succeeding estate by virtue of the will, no action shall be brought by Wong after 6 years from the date on the right of action accrued to her. The assent was dated 19 July 2012 and the right to recover the Lot therefore accrued to Wong since then and she had 6 years (ie, up to 2018) to recover the Lot.

64.Pursuant to section 10(2) of the Limitation Ordinance, where any land is held upon trust and the period prescribed by the Ordinance has expired for the bringing of an action to recover the land by the trustees, the estate of the trustees shall not be extinguished if and so long as the right of action to recover the land of any person entitled to a beneficial interest in the land either not accrued or has not been barred by the Ordinance.

65.It is indisputable that Wong paid the outstanding rates and government rent in respect of various lots in the estate of Lam on 12 August 2008. Mr Chan contented to treat that date (ie prior to the date of assent) as the date of accrual of Wong’s right of action and submitted Wong’s right of action would not be barred until 11 August 2014.

66.The Lot was held on trust by Ng and Wong was a beneficiary. In the circumstance, no matter time started to run at the time of the assent (ie 19 November 2012) or upon payment of the outstanding rates and government rent (ie 12 August 2008), Hui’s alleged adverse possession could not succeed in any event because Wong’s counterclaim was commenced in January 2014.

Conclusion

67.In the circumstance, I shall dismiss the claim of Hui and enter judgment for Wong. I have asked both parties the amount of the outstanding rents and/or mense profit to be paid in case I find in favour of Wong. Both parties agreed that Hui shall pay mesne profits of $158,400 ($4,800 x 33) up to 31 August 2015 and thereafter at $4,800 per month until the date of delivery of vacant possession.

Orders

68.In the circumstance, judgment be entered for the defendant as follows :-

(1)An order that the plaintiff do stop occupying and to deliver vacant possession of the House;

(2)The plaintiff do pay the defendant mesne profit of $158,400 up to 31 August 2015 and thereafter at $4,800 per month, with interest at judgment rate from the date of judgment until satisfaction.

69.The plaintiff’s claim be dismissed.

Costs

70.Costs should follow events.  On a nisi basis, the plaintiff do pay costs to the defendant of this action, including any costs reserved, to be taxed if not agreed. The plaintiff’s own costs be taxed with the Legal Aid Regulation. This order nisi for costs becomes absolute 14 days after the date hereof unless any party applies to the court for varying the order.

Mr Paul Wong, instructed by Hon & Co, for the plaintiff

Mr Chan Hon Yee Alex, of Chui & Lau, for the defendant