Yau Wo Hing Ltd v. Ho Chi Kan and Others

DCMP 2743/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2743 OF 2014

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JUDGMENT

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Background

1.The plaintiff, as owner, brought an action for possession of land (“the Land”) known as: -

(a)   Section E of Lot No 888 in DD 83;

(b)  Section C of Lot No 889 in DD 83.

The Land is situated at Ma Liu Shui San Tsuen, Fanling, New Territories.

2.The 1^st to 3^rd defendants (“the defendants”) raised a counterclaim of adverse possession in respect of a portion of land within Section C of Lot No 889 in DD 83.  The defendants claimed that they had occupied the portion of land since 1998.

3.Originally, the area counterclaimed by the defendants included the following areas: -

(a)   The area right in front of their house, allegedly enclosed by fences and a lower white gate;

(b)  The area between the white gate and the two door posts;

(c)   The area outside the two door posts.

4.On the first day of the trial, the defendants conceded and abandoned their counterclaim for adverse possession of area (b) and area (c) mentioned above.  The defendants confirmed that they only claimed for the coloured area as per their revised plan attached to their written opening submissions as Revised Annex B.

5.After the trial, the defendants conceded further and abandoned the ox-horn protruding parts in the Revised Annex B (“the Disputed Land”). 

6.The defendants claimed that since 1 November 1998, they have been in possession of the Disputed Land as a garden, storage and car park. 

7.The defendants’ residence adjoins the Disputed Land and is known as the Remaining Portion of Lot No 889 in DD 83 (“Lot 889 RP”). 

8.Ying Wang Tong was and is the sole owner of Lot 889 RP by virtue of a conveyance on sale dated 28 May 1963 (with Wan Yau Kwong as the then registered manager and Wan Yau as the present registered manager).

9.The issue in dispute is whether the defendants could establish adverse possession for more than 12 years from 1 November 1998, alternatively 12 years before the Originating Summons filed on 10 October 2014 on the Disputed Land. 

Chronology of Events

10.The chronology of events is as follows: -

Date	Event(s)
11 October 1978	The plaintiff became the sole registered, legal and beneficial owner of the Land.
1978 - 1980s	The Land remained vacant and unoccupied.
25 July 1989	Au Yeung Chung Yee (“Au Yeung”, the 3rd witness for the defendants) allegedly purchased Lot 889 RP in DD 83 (“the House”), the adjacent land to the Disputed Land.
	Au Yeung allegedly put up fence surrounding the Disputed Land.
1 November 1998	A contract (“the Contract”) was signed by Au Yeung and the 1st defendant (“D1”) purported to sell the interest of Au Yeung to D1.
	D1 and his family members moved into the House.  They then started the occupation of the Disputed Land.
Around 2002	Erection of brick wall together with two doorposts at the exit of the Disputed Land.
	Mr Tso, neighbour to the south, intruded into part of the Land, took away a portion. Mr Tso placed a container on part of the Land.
2006	A typhoon blew down the small gate (“the Gate”).
2007-2008	Afterwards, a big gate was installed connecting the two doorposts.
2008	D1 changed the payer’s particulars on demand for rates from Au Yeung to D1.
6 September 2009	Letter written and signed by Au Yeung as authorized person authorizing D1 to apply for postal address.
2009	A postal address 40A was assigned to the House.
10 October 2014	The plaintiff filed an Originating Summons to seek possession (O 113, RDC).
22 October 2014	Au Yeung by a letter issued through solicitors claimed adverse possession.
10 November 2014	Au Yeung personally attended and represented to the court to apply to join as a defendant.

11.As to the other portions of land, no other person has applied to join in as defendant. 

LEGAL PRINCIPLES

12.Paragraphs 24 to 30 of the case Nam Ching Wun, a mentally incapacitated person by her next friend and daughter Lo Suet Yung Conny v Tsun Un Pawn Shop also known as Tsun Yun Pawn Shop with Tang Yam Wan as Trustee by Yeung Fook Mui and Tang Ying IP (or Yip) as Administrators of the Estate of Tang Pui King alias Tang Yum (or Yam) Wan alias Tang Kin Cheung, deceased and others, HCA 2151/2008 (unreported) provide a succinct summary of the legal principles: -

“24. …… To establish possessory title based on adverse possession, the squatter must be shown to have both factual possession of the suit lot and the requisite intention to possess (animus possendendi) for the whole of the relevant period.

Factual possession

25. In Powell v McFarlane & anor, Slade J said as follows:

‘(3) Factual possession signified an appropriate degree of physical control. It must be a single and conclusive possession, …… The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed. …… but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so.’

Exclusivity

26. Possession must be single and exclusive, and the person in actual possession has effective control of the land. Lord Hope in J A Pye (Oxford) Ltd & anor v Graham & anor said as follows:

‘70. The general rule ……, is that only one person can be in possession at any one time. Exclusivity is of the essence of possession. …… Once possession has begun, …… his possession is presumed to continue. But …… it can …… be lost when it is given up or discontinued. When that happens, possession can be acquired by someone else. ……’

Permission/license

27. Possession is never adverse if it is enjoyed under lawful title, so if a person occupies/uses land under licence of the paper title owner, he is not in “adverse possession” against the paper title owner. In Moses v Lovegrove, Romer LJ contrasted adverse possession with “permissive possession or possession as of right”, ie whether from the position of the occupier his right to occupation is derived from the owner in the form of permission, agreement or grant.

Intention to possess

28.   Wong Tak Yue v Kung Kwok Wai & anor (No 2) said that:

‘The requisite intention to possess has been referred to …… under its Latin tag ‘animus possidendi’.  I shall refer to it simply as the intention to possess. As Slade J observed in Powell v McFarlane …… at pp 471-472, the intention to possess requisite for adverse possession:

… 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 process of the law will allow.’

This has several consequences: (a) the occupier must intend to exercise exclusive control for his own benefit but need not have a conscious intention to exclude the true owner, and it is enough that he intends to exclude the owner “as best as he can” or “so far as reasonably practicable and so far as the process of the law allows”. (b) an intention to own the land or intention to acquire ownership is not required for establishing animus possidendi, and (c) animus possidendi can be established even if the occupier mistakenly believes himself to be owner of the land.

Burden of proof

29.   Both factual possession and intention to possess are questions of fact to be determined by assessing all the circumstances, including the inherent probabilities of the case.  The burden of proof is on the party claiming adverse possession, and the evidence he has to adduce must be compelling.  But this does not alter the standard of proof, and all it means is that the evidence adduced must be of such a quality/nature that, if accepted on the balance of probabilities, is sufficient to establish both factual possession and intention to possess. Slade J in Powell said at p 472 as follows:

‘…… where the question is whether a trespasser has acquired possession …… the courts will, in my judgment, require clear and affirmative evidence …… If [the occupier’s] 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.’

Self-serving statements

30.   Li CJ observed at p 69 in Wong Tak Yue as follows:

‘Where the occupier has made self-serving statements as to what was his intention, whether during the period of occupation or when challenged in legal proceedings, the courts should approach them with some skepticism. The courts would scrutinise the circumstances in which they were made and would given them such weight if any as they may deserve. Conversely, where the occupier has made statements as to what was his intention and such statements are against his interest, the courts would usually accord to them considerable weight.’

Bolton Metropolitan BC v Musa said self-serving evidence by the squatter as to his subjective intention is “…… hardly ever likely to be of assistance”, and ordinarily the relevant intention is inferred from the squatter’s actions in the light of all the circumstances affecting the land.”

ASSESSMENT OF CREDIBILITY OF THE WITNESSES AND ANALYSIS OF EVIDENCE

Evidence of Mr Lau Man Lung Stephen (“Lau”)

13.Lau is the plaintiff’s witness. His evidence is not much in dispute and is not relevant to the issues in dispute.  The crux of this case depends on whether the defendants could establish adverse possession on the Disputed Land. 

Evidence of D1

14.I do not accept the evidence of D1. His evidence was inconsistent and confusing.  He was confused as to the year he built the wall and the door posts.  At first, he said it was 2002, then changed to 2001.  He said he could see the door posts on the aerial photo dated 24 September 2001, although the brick wall on the aerial photo was not clear.  Upon cross examination, he changed again and said it was the end of 2002.  On the following day, he clarified with the assistance of some other photos that the date should be around the end of 2001 and the beginning of 2002, before the lunar new year.  If that is the case, he should not say earlier that he could see two door posts on the aerial photo dated 24 September 2001.

15.D1’s evidence was inconsistent as to whether there was a gap between the Gate and the flower bed.  The drawing he made (produced and marked as Exhibit D-1) indicated that there was a 4 feet gap between the Gate and the flower bed, and he drew a tree on that location.  There was no fence but a kennel and a tree to block the entrance of strangers, and the kennel was not movable.  He even said that he was not aware of the necessity to enclose the gap.  However, on the next day, he produced Exhibit D-4, another drawing made by him at home with clear dimensions.  There were clear differences between Exhibits D-1 and D-4.  An irregular mesh metal fence connected to the Gate was marked in Exhibit D-4.  He then denied that he used the kennel to block the entrance of strangers.  The irregular fence was in fact not visible from the photographs.  According to the evidence of the 3^rd defendant (“D3”), the entire old fence on that side was removed after the building of the brick wall.  I do not accept the presence of irregular fence as described in Exhibit D-4 and find that D1 is not a reliable witness.

16.As to whether he occupied the Disputed Land under the license of his brother-in-law, D1 gave different versions of answers.  He once agreed that the content of the Contract had been explained to him.  He was only licensed to use the Disputed Land.  Later he recanted his position and said it was sale and purchase of the House and the Disputed Land.  He had the experience of purchasing a private property in the past.  He should have known that the Contract he signed was not an ordinary contract for sale and purchase of property.  The transaction was not done through solicitors and the documents were not stamped. 

17.On the issue as to why D1 stated on the application for postal address for the House on 6 September 2009 that Au Yeung was the applicant and he was only the authorized person, D1 explained that there was an agreement between Au Yeung and him that Au Yeung’s name would be used for dealing with third party, as all the utility deposits were still under the name of Au Yeung.  However, it is noted that in February 2008, D1 changed the name on the demand for rates from Au Yeung to himself.  Actually, the purpose of such agreement is incomprehensible.  Later D1 gave a different explanation.  He said that the name of Au Yeung was used for the application of the postal address because Au Yeung possessed a post box earlier.  I find such explanation not convincing.  D1 himself possessed the letter box No 903 since 1999, and the letter for allocation of postal address was sent to his post box No 903.  D1 failed to provide clear and affirmative evidence to show to the world his intent to possess.

Evidence of D3

18.I do not accept the evidence of D3 relating to the gap mentioned above.  His evidence was not consistent.  At first, D3 claimed there was a wooden fence, but he changed to say that it was made of bamboo, and such bamboo fence could be seen in the photos on page 348 of the trial bundle.  He subsequently changed his evidence again that it was a metal fence.  Upon being questioned that the alleged fence could not be seen from the photos, he finally admitted that there was in fact no metal fence, but only some boards to block the gap.

Evidence of Au Yeung

19.I do not accept the evidence of Au Yeung.  He vehemently denied having attended the District Court on 11 October 2014 to apply to join as defendant.  But the court record clearly showed that he attended court in person and his identity card number was registered.  The order which was drafted in Chinese also clearly stated so.  He claimed through his solicitor on the letter dated 11 October 2014 that he had occupied portion of the Land (including the Disputed Land) and had treated the same as his own for over 30 years.  The allegation was not true.

20.In his witness statement, Au Yeung said that he purchased the property and put up metal and wooden fences around the Land.  But in his oral evidence, he said that he only repaired and maintained the fences.  He said that in 1989, he was just twenty something and was a boy who had no experience and did not know that he should ask for the title deeds when he purchased the House and the Disputed Land.  But in fact he was 32 at that time and married with a daughter.  He also negotiated the price and successfully reduced it from $200,000 to $160,000.  His excuse of inexperience and ignorance was unsound. 

Animus Possidendi

21.The main issue in this case is whether the defendants have the requisite intention to possess.

22.D1 signed the Contract with Au Yeung on 1 November 1998.  The terms of the Contract were as follows: -

“1. Party A is willing to sell to Party B a part of the property situates at D.D. 83, LOT No. 889 R. P. in Ma Liu Shui San Tsuen, Fan Ling. The said property includes one house by 37 feet and 14 feet = 518 square feet, front covered shelter by 37 feet and 11 feet = 407 square feet, and rear covered shelter by 37 feet and 12 feet = 444 square feet.

2. The parties stipulate the price be cash HK$300,000.00. Upon full payment on signing of contract from Party B to Party A, the said property's ownership belongs entirely to Party B.

3.     Party A is willing to lend, for indefinite period, the covered land and the remaining land totaling around 2500 square feet to Party B for use until the resumption of the said land by the government.”

23.The original terms in Chinese were as follows: -

“1. 甲方願意將座落粉嶺馬料水村D.D. 83, LOT No. 889 R.P. 部分物業出賣与乙方, 該物業包括屋宇壹間37 英尺長乘14 英尺濶 = 518 英方尺，前有蓋蓬37 英尺乘11 英尺濶 = 407 英方尺，及後有蓋蓬37 英尺乘12英尺濶 = 444 英方尺。

2. 雙方訂明價錢爲現金港幣叁拾萬元正。簽合約時乙方全部款項付清給甲方，該物業權完全歸乙方擁有。

3. 甲方願意將有上蓋之地及餘地共約2500 英方尺無限期借与乙方使用直至政府收回該地爲止。”

24.Mr Siu, counsel for the plaintiff, submitted that: -

“18. Au Yeung purported to sell the houses on Lot 889 RP to the 1^st Defendant as evidenced by the words “sell” (“出賣”) the said property (“該物業”). The said property (“該物業”) was clearly and accurately defined as those 3 parts on Lot 889 RP in clause 1, totally 1369 ft², as opposed to 2500 ft².

19. In stark contrast, Au Yeung lent (“借与”) the covered land (有上蓋之地) and the remaining land (餘地) totaling around 2500 ft² to the 1^st Defendant for his use. The 2500 square feet could not only refer to the 3 parts on 889 RP in clause 1 which added up only to 1369 square feet. The 1^st Defendant admitted that the 2500 ft²included the house on Lot 889RP as well as the Disputed Land.

Contractual Licence to use the 2,500 ft² of land, including the Disputed Land

20. It is respectfully submitted that clause 3 of the 1998 Contract created a contractual licence between Au Yeung and the 1^st Defendant. With the express term of lend for an indefinite term until the resumption of land by the government, once can readily see that the contractual licence is a continuing licence, instead of a fixed term licence.

21. Further, it is very important to note that there is no complaint of non est factum by either Au Yeung or the 1^st Defendant. They simply alleged that the term “借与 (lend to)” expressly stated at clause 3 of the 1998 Contract simply meant to them “sale and purchase in any way （總之就係買賣）”. They both even alleged that all land in Hong Kong belongs to the government, hence the term “借与” meant to them “sale and purchase”.

22. In alleging that they genuinely held such belief that “借与 (lend to)” simply meant to them “sale and purchase”, they completely failed to explain why a different term “出賣 (sell)” was used in clause 1 of the 1998 Contract in the first place.

23. It is submitted that the choice of the words is deliberate here. The Disputed Land was lent to the 1^st Defendant under a continuing contractual licence. The 1^st Defendant knew very well that the Disputed Land was lent to him by Au Yeung, as opposed to the houses constituting 1,369 ft² which was for sale. This contention is further supported by the following reasons: -

a. had it only been a simple outright sale of the Disputed Land and those 3 parts of Lot 889 RP in clause 1, the parties would have simply disposed of such transaction in clause 1 by encompassing the Disputed Land and those 3 parts on Lot 889 RP together, making the total saleable area to a total of 2,500 ft² in clause 1, instead of a total saleable house area of 1,369 ft²;

b. had the parties really intended to sell the Disputed Land, there would not be any need to further stipulate that the Disputed Land was lent to the buyer “for use” (“借与乙方使用”). It would be a matter of course and it went without saying that the buyer of the land be entitled to use the land. It would be superfluous to mention the area of 2,500 ft² was lent to the 1^st Defendant for his use.

c. the 1^st Defendant admitted that when he signed the 1998 Contract, he was given the contract for sale and purchase of house (“the 1989 Contract”) which was entered into by Wan Yuk Yan and Au Yeung. Hence, he was alerted not only once, but twice, that the 2,500 ft² land was lent for use until the government resumed the land.

24. It is important to bear in mind that the intention of the parties should be objectively assessed by the words expressed on a contract against the background: Chitty on Contract, 32^th Edi, 2015, para 13-042 - 13-045, at pp 1038-1040. It is neither here nor there that the contracting parties personally or subjectively think that the meaning of the express term was one way or the other. His subjective belief about the meaning of the express terms of a written contract is generally inadmissible evidence. The Court shall ascertain the meaning of the express term of a written contract objectively.

25. It is respectfully submitted the deliberately differentiation of house(s) with house area (該物業包括屋宇...) of 1,365 ft² for sale under clause 1 and the “covered land and remaining land (上蓋之地及餘地)” of 2,500 ft² which was lent for use, is a very clear term that the Disputed Land within the 2,500 ft² was just lent for use. Further, the meaning of “出賣与乙方 (sold to Party B) and “借与乙方使用 (lent to Party B for use)” is self-evident. There is no room for ambiguity.”

25.Mr Siu further submitted that when D1 applied for the postal address for the House and the Disputed Land, he stated in the letter that he was authorized by Au Yeung to do it.  It indicated that D1 was licensed by Au Yeung to occupy the Disputed Land.  D1’s action in drafting the letter to apply for a formal postal address and the way how D1 responded to the present proceedings, clearly showed that the D1 acknowledged Au Yeung's superior right.  This was reinforced by Au Yeung's assertion of adverse possession for about 30 years, engaging solicitors to act on behalf of himself and his conducts of appearing in the present proceedings before Master S P Yip on 10 November 2014.

Decision relating to Animus Possidendi

26.I accept Mr Siu’s submissions.  The choice of words in the Contract was deliberate.  It gave a distinction as to the House and the land.  The land (including the Disputed Land) was only lent for use and the terms indicated that the vendor therein had no right to sell the land.  D1 said that Au Yeung had briefed him about the background and sold him whatever rights he had.  Au Yeung had signed a contract with the same terms except the price, therefore both of them were under a license to use the land.  Anyway, the content of the Contract was clear and D1 could read it himself. It is also his oral evidence that he occupied the Disputed Land under the license of Au Yeung.  Adopting the principle that the court should give weight to statement against his own interest, and in view of the terms of the Contract, I find that D1 occupied the Disputed Land under a license. 

27.D1 also failed to explain as to why Au Yeung was named as the applicant when he applied for the postal address in 2009, and Au Yeung authorized him to process the application.  That is a clear act that the defendants did not regard themselves as the owner.  Such act, on the other hand, is consistent with Mr Siu’s submission that D1 occupied the Land under the license of Au Yeung.

28.Au Yeung once applied to join as a defendant in this case.  He attended court’s hearing in person and instructed solicitors.  D1’s evidence was vague as to whether he knew about Au Yeung’s act.  He admitted passing the legal documents to Au Yeung to handle the case.  As they were in close relationship, I find that despite D1’s vague evidence, D1 knew Au Yeung’s purported claim to be the Adverse Dispossessor and allowed him to do so.  Such act again is not consistent with D1’s claim of intention to possess.

29.I have taken into account that D1 built the brick wall at his own costs.  However, In the circumstances, I find that D1 failed to provide compelling evidence to prove the requisite intention.

Continuous and Exclusive Factual possession

30.It is not in dispute that the defendants enjoyed possession of the Disputed Land since 1998, after D1 signed the Contract.  The issue is whether the possession is continuous and exclusive. 

31.There were fences around the Disputed Land. Such fences include the Gate, which was a small wooden gate.

32.Mr Siu submitted that: -

(a)   the defendants had put forward various versions of what they had factually possessed and that affected their credibility;

(b)  there existed a 4 to 5 feet gap outside the flower bed and next to the Gate.  The enclosure was not complete;

(c)   there was a lacuna of enclosure after typhoon in about 2006.  As a result of the typhoon, a tree fell on the Gate and caused the Gate to collapse. During the period between the collapse and the complete installation of the iron gate, there was no gate capable of preventing others entering the Disputed Land.  That period should be 2 to 3 days at least. Mr Siu submitted that continuity of exclusive possession is necessary to establish adverse possession.  Once there is a lacuna of un-enclosure, the limitation period against the true owner starts afresh.

33.Mr Boyton, counsel for the defendants, submitted that: -

(a)   the defendants fenced off the Disputed Land, cultivated on it, replaced part of the fence with brick/cement wall, were clear acts of exclusive possession;

(b)  even if there was a gap, which was not admitted, it did not affect the exclusive possession of the defendants, as “factual possession signified an appropriate degree of physical control, not absolute”.

(c)   as to the lacuna period during the collapse of the Gate, the existence of the Gate, still showed that the Disputed Land was enclosed.

Reason of Decision relating to Exclusive Possession

34.I do not accept the evidence of the defendants relating to the gap and the fence.  On the evidence before me, I find that there was a gap between the flower bed and the Gate.  After the building of the brick wall in 2002, the metal fence near the gap was dismantled.

35.However, I accept Mr Boyton’s submission that the possession need not be absolute.  The Disputed Land is situated at the remote area of the New Territories.  Enclosure of most of the area would be sufficient.  I find that the gap was blocked by trees and the kennel.  It can be seen from the photos that the area near the gap was full of plantations.  There was also metal fence near the gap.  I find that D1 had sufficient physical control and exclusive possession of the Disputed Land.  However, in view of my above findings, the area enclosed by D1 should be reduced from the area shown by the Revised Annex B.  The area outside the gap should not be regarded as having been possessed by D1.

36.I find that the collapse of the Gate for a few days did not affect the continuity of the occupation period.  It would be unreasonable to regard the time required to repair the Gate as the break of continuity of occupation.

37.The 2^nd defendant (“D2”) deliberately did not give evidence in the trial with the understanding that her witness statement would not be accepted as evidence.  There was no evidence as to her intention.  D3 occupied the Disputed Land with the permission of D1.  He lacked the intent to dispossess.  I dismiss D2 and D3’s claims.

38.As to the time for building the wall and the door posts, I find that the two door posts and the wall were built at the same time in around the end of 2001 and the beginning of 2002.

Conclusion

39.In the circumstances, I make the following orders: -

(a)   Vacant possession of the Land be delivered to the plaintiff within 4 months from the date hereof;

(b)  All illegal structures built on the Land be demolished and/or removed within 4 months from the date hereof at the costs and expenses of D1;

(c)   D1, D2 and D3 do pay agreed damages in the sum of $17,070 ($11,380 + $5,690) to the plaintiff;

(d)  Before the dismantle of the illegal structures, D1, D2 and D3 do pay mense profit to the plaintiff a sum to be agreed; if the parties fail to agree, there be liberty to apply;

(e)   D1, D2 and D3’s counterclaim be dismissed;

(f)    There be order nisi that D1, D2 and D3 are jointly and severally liable to pay the plaintiff’s costs, including reserved costs, with certificate for counsel, to be taxed if not agreed.  Unless application for variation is made within 14 days from the date hereof, this costs order shall become absolute 14 days thereafter.

40.I thank counsel for their assistance.

Mr Stanley C K Siu, instructed by Wong Kwan & Co, for the plaintiff

Mr David Boyton, instructed by David Y W Man, for the defendants