Wong Wing Yiu v. Bell Investment Co Ltd and Another

HCMP 1606/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1606 OF 2016

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REASONS FOR JUDGMENT

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I Introduction

1.The 1^st defendant (“D1”), a Hong Kong limited company, was the developer of a commercial/residential development situate at Nos 525-543, Nathan Road, Kowloon known as Bell House (“Building”). D1 was incorporated on 22 August 1962. Its last annual return was filed in 1985. The Companies Registry’s document index revealed the following:

(a)   a court order by DHCJ Fung dated 14 June 2005 in HCMP927/2005 that D1 (that appeared to have been previously dissolved) be restored to the register of the Companies Registry pursuant to section 291(7) of the Companies Ordinance Cap 32 (“CO”);

(b)   a S 291 information sheet dated 26 October 2007 stating that pursuant to section 291(5) of the CO notice had been published in the Gazette on 26 October 2007, and at the expiration of 3 months from the date thereof the name of D1 would, unless cause was shown to the contrary, be struck off the register of the Companies Registry and D1 would be dissolved; and

(c)   a S 291 information sheet dated 19 December 2007 stating that “Consideration for striking off as stated in the Information Sheet(s) Re. Striking Off dated 26/10/2007 has been discontinued”.

It therefore appeared that to date D1 remained a live company capable of being sued.

2.The Building was a multi-storey building completed in/about 1969 comprising basement area, 27 shops on the ground floor, the 1^st to 3^rd floors for non-domestic use, and the 4^th to top floors for residential use.

3.The present proceedings concerned Room 1515, 15^th Floor, Bell House, Nos 525-543, Nathan Road, Kowloon (“Property”). At first blush, the land search records in respect of the Property raised some concern since the names of all owners of the Building were set out in the section on “Owner Particulars”. By Nie’s 2^nd Aff referred to in paragraph 10 below, it was clarified that D1 was the sole legal/beneficial owner of the Property:

(a)   The Building stood on All That pieces or parcels of land registered at the Land Registry as Kowloon Inland Lot no 754 (“Old Lot”).

(b)   The Old Lot was vested in D1 for the residue of the term of 75 years commencing from 1 January 1898 held from the Crown under and by virtue of a Crown Lease dated 31 January 1928 (“1^st Lease”).

(c)   D1 constructed the Building on the Old Lot, and for the purpose of sale, the Old Lot and Building were notionally divided into 304316 equal undivided parts or shares under a “Deed of Mutual Covenant” dated 26 May 1972 (“DMC”). Under the DMC, 370 equal undivided parts or shares were allocated to the Property.

(d)   D1 sold certain flats/shops in the Building to various owners by way of assignments, and such owners held undivided shares in the Old Lot together with exclusive right to the use, occupation and enjoyment of their individual shops/flats. Consequently, the residue of the term of the 1^st Lease was held by the owners who were tenants-in-common each holding undivided shares in the Old Lot and of and in the Building (“Owners”).

(e)   Due to the imminent expiry of the 1^st Lease, the Owners negotiated with the government for surrender of their respective right, title and interest of and in the Old Lot and of and in the Building, and to take up a new grant for a period of 150 years from 1 January 1898.

(f)   By a “Surrender” dated 24 November 1972, the Owners surrendered to the Crown their respective right, title and interest of and in the Old Lot and of and in the Building.

(g)   By a “Conditions of Re-Grant” dated 24 November 1972, the government re-granted to the Owners a lease for a term of 150 years from 1 January 1898 in respect of Kowloon Inland Lot No 10188 (“New Lot”), which was the same piece or parcel of ground formerly registered at the Land Office as the Old Lot upon which the Building had been erected.

(h)   The Owners entered into a “Supplemental Deed of Mutual Covenant” dated 24 November 1972, and clause 1 thereof provided each Owner shall be deemed to be a tenant-in- common in unequal shares in respect of the New Lot / Building with all other Owners, and to hold equal undivided shares as set out in the First Schedule thereto (“1^st Schedule”). The 1^st Schedule showed D1 held 370 equal undivided shares in the Old Lot (which became the New Lot) being the Property.

4.In a nutshell, the plaintiff (“P”) claimed to have adversely possessed and to have acquired possessory title over the Property.

II  Procedural history

5.On 23 June 2016, P commenced the present proceedings by originating summons (“OS”) against D1 for inter alia (a) a declaration that P has been in adverse possession of the Property for a continuous period of 12 years immediately prior to the commencement of the present proceedings, and by virtue of the provisions of the Limitation Ordinance Cap 347 (“LO”) any rights and interests of D1 or of its successor-in-title or any person deriving title to the Property from D1 or its successor-in-title in respect of the Property had been extinguished, and (b) a declaration that P had acquired title to the Property. On the same day, P filed his own affirmation (“P’s 1^st Aff”), affidavit of Albarillo Rema S (“Albarillo Aff”) and affidavit of Reton Delia E (“Reton Aff”) in support of the OS. On 7 July 2016, P’s solicitors served the OS, P’s 1^st Aff, Albarillo Aff and Reton Aff on D1 by leaving them at its registered office.

6.On 5 August 2016, P filed a Notice of Appointment to Hear Originating Summons (“1^st Notice”).  On 8 August 2016, P’s solicitors served the 1^st Notice on D1 by ordinary post to its registered office.

7.On 8 September 2016, P filed a summons inter alia for leave to (a) add Chiang Kwok May (“D2”) as the 2^nd defendant in the present action and to add a claim against him for a declaration that a sale and purchase agreement between D1 and D2 and dated 21 June 1963 (registered at the Land Registry against the Property) (“SPA”) “does not affect and has no effect on the Property and such ancillary and or consequential directions as the Court may consider appropriate”, and (b) file supplemental affirmation(s) in support of P’s claim. On the same day, P filed the affidavit of P’s solicitor Kevin Kin Kwok Nie (“Nie”) in support of such summons. On 9 September 2016, Recorder Winnie Tam SC granted the reliefs sought in the summons.

8.On 21 September 2016, P filed the Amended OS (“AOS”) by adding a claim against D2 for inter alia a declaration that the SPA did not affect and had no effect on the Property and such ancillary and/or consequential directions as the court might consider appropriate. On 22 September 2016, P’s solicitors served the AOS on D1 by leaving it at its registered office.

9.On 14 October 2016, P filed a Notice of Appointment to Hear Amended Originating Summons (“2^nd Notice”). On 14 October 2016, P served the 2^nd Notice on D1 by ordinary post to its registered office.

10.On 3 December 2016, P filed Nie’s 2^nd affirmation in support of the AOS (“Nie’s 2^nd Aff”). On the same day, P served Nie’s 2^nd Aff on D1 by leaving it at its registered office.

11.At the hearing on 12 December 2016, I granted inter alia the following orders (“12/12/16 Order”):

(a)   leave for P to discontinue his claim against D2 with no order as to costs;

(b)   leave for P to file/serve further supporting affidavit within 14 days;

(c)   leave for D1 (if so desired) to file/serve affidavit in opposition within 14 days thereafter;

(d)   leave for P to file/serve affidavit in reply within 7 days thereafter; and

(e)   the 2^nd Notice be adjourned to be heard on a day to be fixed.

12.On 20 December 2016, P filed his 2^nd affirmation (“P’s 2^nd Aff”) and Nie’s 3^rd affirmation (“Nie’s 3^rd Aff”) in support of the AOS. On 19 December 2016, P served P’s 2^nd Aff and Nie’s 3^rd Aff on D1 by ordinary post to its registered office.

13.On 28 December 2016, P served a sealed copy of the 12/12/16 Order on D1 by ordinary post to its registered office. On 30 December 2016, P filed a Notice of Appointment for Adjourned Hearing of Amended Originating Summons (“3^rd Notice”). On the same day, P served the 3^rd Notice on D1 by ordinary post to its registered office.

14.D1 did not file any acknowledgment of service or any affidavit evidence in opposition.

15.The 3^rd Notice came before me for hearing on 23 February 2017 (“Hearing”). D1 did not appear at the Hearing. I am satisfied all appropriate steps had been taken to notify D1 of the present proceedings and of the Hearing, and I am further satisfied there had been valid service of the relevant documents on D1.

III.  Legal principles: declaratory reliefs and summary determination

16.An originating summons is an originating process and is normally dealt with in open court. However, it has been said that if an application is made for summary determination of a matter, the hearing can take place in chambers (see Hong Kong Civil Procedure 2017 Vol 1 para 28/9/1 at pp 682-683). Here, P asked for summary determination of his claim in the AOS against D1 as he had filed full affidavit evidence in support of the AOS and D1 did not appear to contest his claim. Given such matters and bearing in mind the Hearing was open to the public (albeit in chambers) so that justice was seen to be done in the public eye, I was prepared to hear the 3^rd Notice and AOS in chambers.

17.As regards P’s claim for declaratory reliefs by summary determination, the relevant principles are set out in paragraphs 13-20 of my judgment in Law Yuk Fong v Man Chung Wai & anor HCA2195/2015 (unreported, 16 January 2017), which I will adopt but not repeat here. Although the discussion in Law Yuk Fong concerned granting of declaratory reliefs in an application for default judgment in legal actions commenced by writ of summons, I find the reasoning/approach explained therein apposite to an application for summary determination of claim for declaratory reliefs (as the case here).

IV.  Legal principles: adverse possession

18.I have also set out the general legal principles on adverse possession in paragraphs 22-34 of Law Yuk Fong which, again, I will adopt but not repeat here.

V.  P’s claim

19.P claimed that on/about 24 November 1972 his wife Madam Cheng Kok Bo (“Cheng”) purchased Flat 1706 (and Flat Roof), 17^th Floor, Bell House (“Flat 1706”) as their matrimonial home. On/about 14 July 1982, Cheng purchased Flat 1709, 17^th Floor, Bell House (“Flat 1709”). On/about 12 September 1985, P purchased Flat 1707, 17^th Floor, Bell House (“Flat 1707”). On/about 14 March 2008, P and Cheng (“Wongs”) purchased Flat 1708, 17^th Floor, Bell House as joint tenant (“Flat 1708”).

20.The Wongs had 3 children, ie Wong Tin Yin Danny (“Danny”), Wing Tin Chue Derik (“Derik”) and Wong Kwan Yee Disaree. Cheng passed away on 20 March 2010. P applied for and obtained a grant of letters of administration dated 24 June 2010 in respect of Cheng’s estate. Since Cheng’s demise, P lived at Flat 1706 whilst his children and their families lived at Flats 1707, 1708 and 1709.

21.Cheng used to be a professional Cantonese opera singer/ performer. Apart from stage performances, Cheng also recorded albums and taught Cantonese opera signing. As a result, Cheng maintained a substantial collection of Cantonese opera costumes, headgear and accessories. Pursuant to traditional customs, they were stored in/about 20 large Chinese teak trunks (“Trunks”). The Trunks were stored at the Wongs’ matrimonial home after their marriage, but there was not enough space so some of them were kept at the home of Cheng’s sister.

22.When the Wongs moved to the Building in/about 1972, they came to know a Uncle Chan who was then in his late 60s (“Uncle Chan”). Uncle Chan was a cleaner/garbage collector of the Building.  When the Wongs went out for dinners and night snacks, they often took leftover food for Uncle Chan.  Uncle Chan also liked Cantonese opera, so he used to chat with Cheng who occasionally gave him tickets to attend her performances.

23.In/about 1988, Cheng employed a Filipino domestic helper called Albarillo Rema S (“Rema”). The Wongs lived at Flat 1706 which was about 700 sq ft in size and had 3 rooms. Rema resided there and did household chores. Derik and Danny resided at Flat 1709, and Rema did household chores for them too.

24.Sometime after the lunar new year in/about 1991 P asked Uncle Chan whether any other flat in the Building was for letting as he needed space to store the Trunks. Later, Uncle Chan told P he had the keys to many unsold units and P could use the Property rent-free for storage purpose unless and until the owner found out or someone moved in.  Uncle Chan brought P to inspect the Property which was vacant with no decoration or furniture, but had telephone, electricity and water services. P did not know or pay attention to the utilities’ accounts were in whose name. The Wongs found the Property suitable for their purpose, so Uncle Chan gave P a set of keys for the Property and a key to the Property’s letterbox so P could settle the utilities’ bills.  Uncle Chan told P they would have to move out of the Property as soon as possible if D1 found out about their use of the Property.

25.P said Uncle Chan never spelt out how the Wongs should use the Property or asked them about their occupation of the Property. P had the impression Uncle Chan did them a favour because Cheng occasionally gave him free tickets to attend her performances. P was aware Cheng gave Uncle Chan some tea money each month in gratitude for his kind help.

26.Cheng was pleased with the arrangements. After P got the keys to the Property, Cheng hired movers (and with the help of Rema) to transport the Trunks from their matrimonial home and from her sister’s home to the Property. Rema also helped some workers to clean the Trunks. When that was done, P suggested and Cheng agreed Rema could also move her belongings to the Property to free up more living space at Flat 1706. So Cheng instructed Rema to (and Rema did) move some of her belongings to the Property, and to clean the Property once in a while (which was not difficult as there was no furniture there).  Thereafter, P settled the electricity and water charges in respect of the Property.

27.Sometime after the lunar new year in/about 1992, Rema asked Cheng (who told P) for a bigger bed to sleep over at the Property as her bed was too small and her living space in Flat 1706 was too cramped. As the Wongs were satisfied with Rema’s services, P told Cheng to let Rema do as she wanted. After Cheng told Rema so, Rema slept over at the Property. Rema noted there were already telephone, water and electricity services when she moved to the Property, but there was no water heater in the bathroom, so she returned to Flat 1706 to take her meals/showers. She also used Flat 1706 as her mailing address. 

28.P recalled that Uncle Chan left D1’s employment in/about 1993, and thereafter he lost contact with Uncle Chan whom he last saw in 1993.

29.In/about mid-1993, P consulted Nie[1] about some commercial matters and also outstanding bills payable to his construction business called Wing Bo Building Constructions Company Limited. P mentioned to Nie how he came to occupy the Property and asked Nie the legal implications of such occupation (as P thought that after Uncle Chan’s departure no one would know he was not the “true owner” of the Property). Nie explained to P the legal concept of adverse possession, and P learnt that if he continued to occupy the Property and to treat it as his own to the exclusion of the world at large for not less than the statutory period prescribed by law, he could claim possessory title over the Property or at least defend any claim by the paper-title owner to evict him. P thought he could so occupy the Property as his own, and continued to do so by regarding himself to be and representing to the world at large that he was the owner of the Property.

30.Sometime in/about 1995, Cheng also employed Rema’s niece Reton Delia E (“Delia”) as domestic helper.  Delia arrived in Hong Kong in/about the summer of 1995. At first Delia stayed at Flat 1706, but shortly afterwards Delia asked Rema to seek Cheng’s permission for her to sleep over at the Property so they could keep each other company. So Rema asked Cheng who agreed and said it was up to them. Cheng bought a new bed for Delia’s use at the Property, and Delia then moved to the Property. Delia noted there were already telephone, water and electricity services when she moved to the Property.

31.In/about mid- to late 1995, the Wongs lightly furnished the Property with sofa and curtains, water heater, kitchen stove and air-conditioning. As P was in the construction business, he arranged for his own workers to clean/whitewash the Property and to install air-conditioner and bathroom fittings (so he was unable to produce receipts for such works). P also changed the front door lock and installed a metal gate for the Property. But P could not find the receipts for relevant appliances due to lapse of time.

32.As far as P was aware, Rema and Delia were satisfied with such arrangements.  They seldom cooked at the Property for they took their meals with the Wongs. But Cheng allowed them to bring their friends to the Property for gatherings on their off days, and they would prepare food there, but their friends were not permitted to stay overnight at the Property.

33.Upon his sons’ advice, P changed the accounts for government rates, electricity and water to his personal name since 2004. P produced a number of documents all in respect of the Property as listed in the schedule to this Judgment (“Schedule”) to support his claim.

34.P explained he expended funds to renovate/decorate the Property in 1995 because he regarded himself as the owner of the Property and could eventually claim possessory title. He openly carried out such renovation/decoration works. Further, the Building’s Management Office (“MO”) also appeared to regard P as the owner of the Property as evident from (a) items 1-2 of the Schedule that showed the MO addressed P as owner of the Property, ie “1515室業户(黄榮耀先生)”, and (b) item 6 of the Schedule that showed P was the registered payer in respect of the Property since 20 May 2004. P also paid for all utilities/outgoings in respect of the Property, and it appeared third parties (eg the government, MO and later the Building’s incorporated owners (“IO”)) also regarded P as the owner of the Property.

35.In/about 2010, Cheng passed away. P gave away her Cantonese opera costumes, headgear and accessories to her students/friends to free up space at the Property. P also became the employer of Rema and Delia, and they continued to serve P to date.

36.P claimed he obtained possession and made exclusive and continuous use of the Property for storage purposes and for Rema’s/Delia’s use ever since he received the keys from Uncle Chan in August/September 1991. P further claimed he had used (and for all intents and purposes he had regarded) the Property as his own property and had expended money to decorate, furnish and maintain the same as the owner thereof without interruption/objection by D1 at any time whatsoever and without demand by D1 or MO to vacate the Property.

VI.  Discussion

37.Here, D1 failed to give notice of intention to defend and/or to file any affidavit evidence. On the materials before the court, it was plain that P/Cheng had been in continuous and uninterrupted occupation of the Property since 1991 either for storage of the Trunks and/or by use/ occupation of their domestic helpers (ie their employees/agents). There was no evidence of any claim to title by D1 or any other person since then.

38.However, I note that P/Cheng was let into possession of the Property in/about 1991 by Uncle Chan, and at the time Uncle Chan told them and they knew they could occupy and use the Property unless and until the paper-title owner found out or someone moved in. Two things were of note here. First, P’s possession at that time was “permissive possession” as they were let into the Property by Uncle Chan. Although D1 might not know about this or might not have agreed, it must be remembered the relevant animus was not that of the paper-title owner but was to be viewed from the position of the occupier. Secondly, P’s possession at that time did not exclude D1 as owner because he went into possession of the Property on the accepted understanding with Uncle Chan he would leave as soon as possible if the paper-title owner found out or someone else moved in (eg D1’s successor-in-title, tenant or licensee). In my view, there was no dispossession at that stage.

39.However, I agree with Mr Ho, counsel for P, that the position was different in 1995. By 1993, Uncle Chan left D1’s employment and could no longer be contacted. P had in mind the possibility of acquiring possessory rights/interests over the Property, and sought legal advice on this. Armed with knowledge and understanding of the concept of adverse possession and with such purpose in mind, P thereafter openly used/occupied the Property as if he was the owner thereof. The Wongs allowed Delia to move over to the Property, and regarded the Property as if it were an extension of their home at Flat 1706 being quarters for their domestic helpers. More significantly, P carried out renovation/decoration, changed the lock of the front door and added a metal gate for the Property in/about 1995.[2] Neither D1 nor Uncle Chan (who by then had already left) had the keys to the door/gate for access to the Property. As time went by, P was regarded by the MO/IO and other third parties as the owner of the Property, and P conducted himself as such by paying all relevant charges/outgoings in relation to the Property and taking progressive steps to change the accounts to his name.

40.I am satisfied that since 1995 the nature of P’s occupation of the Property (either by storage of Cheng’s Trunks or use/occupation by the Wongs’ domestic helpers) had changed, and such use/ occupation reflected an intention to exclusively occupy the Property against D1 and the world at large.

41.In the circumstances, I find P had established factual possession over the Property for not less than 12 years before the commencement of the present proceedings. I am also persuaded P and his family/helpers had occupied and used the Property exclusively since 1995, and since then he had the requisite intention to adversely possess the Property. Hence P had established possessory title over the Property against the paper-title owner D1.

VII.  Conclusion

42.Accordingly, at the Hearing, I granted the following order:

(a)   a declaration that D1’s title, interest and/or rights in and/or over all that 370 undivided parts or shares of 304316 parts or shares of and in the New Lot together with the exclusive right to use possession and enjoyment of the Property (“Subject Property”) has been absolutely extinguished by virtue of section 17 of the LO;

(b)   a declaration that P has been in adverse possession of the Subject Property for a period of no less than 12 years prior to the commencement of the present proceedings, and has thereby acquired and is entitled to possessory title, interest and/or rights in and/or over the Subject Property; and

(c)   there be no order as to costs of the present proceedings and of this application.

Mr Leon Ho, instructed by Dundons, Solicitors, solicitors for the plaintiff

The 1^st defendant, acting in person and absent

Schedule

1. a Chinese receipt dated 17 November 2005 for $14,050.00 issued by the MO for payment  of fire safety facilities repairs in 1997 ($1,000.00), flushing water pipe repairs in 1999 ($550.00), WR2 electricity repairs ($12,500.00);

2. a Chinese receipt dated the 17 November 2005 issued by the MO for management fees from February 1996 to September 2005;

3. a letter from PCCW Limited dated 11 April 2014 certifying P was its registered customer for telephone services since 1 May 2006;

4. a letter from CLP Power Hong Kong Limited dated the 14 April 2014 confirming P was the holder of the electricity account since 5 August 2006;

5. a letter from the Water Supplies Department dated 28 May 2014 confirming the water account was in P’s name since 18 July 2006;

6. a letter from the Rating and Valuation Department dated 15 April 2014 confirming P was the registered payer since 20 May 2004;

7. various rates demand notes addressed to P for the 4^th quarter in 2015 and the 1^st and 2^nd quarters in 2016;

8. payment notice for water charges addressed to P for the period from 21 January to 22 May 2015;

9. electricity bills addressed to P for the periods from 4 December 2015 to 3 February 2016 and from 4 February to 6 April 2016;

10. telephone bills addressed to P issued on 5 August 2015, 5 November 2015 and 5 February 2016; and

11. management fee receipts addressed to P for October and November 2015, December 2015, January 2016, and February and March 2016.