The Incorporated Owners of Fuk Wing Building v. Ma Hing Ching

DCCJ 2356/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2356 OF 2015

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JUDGMENT

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INTRODUCTION

1.This is the plaintiff’s claim for adverse possession over a portion of a store room located on the ground floor of a building in Fuk Wing Street, Sham Shui Po, Kowloon.

2.The plaintiff is the incorporated owners of the building.

3.The defendant is the registered owner of the store room.

PHYSICAL LAYOUT

4.The building was constructed in the late 1970’s (the “Building”).  It comprises primarily residential flats.  On the ground floor, there are four shop spaces and two store rooms.  The latter are generally referred to in this action as “Store No 1” and “Store No 2”.  “Store No 2” is the subject-matter of the present dispute.  It measures about 110 square feet.  I shall call it the “Store Room” below.

5.The plaintiff is not claiming adverse possession over the whole of the Store Room.  It claims only a portion of it, which measures about 40 square feet. 

6.The layout of the ground floor is material to the present dispute.  Annexed to this judgment is a plan attached to the amended statement of claim.

(a)   The front entrance of the Building is in Fuk Wing Street.

(b)   The entrance leads to a narrow corridor.

(c)   At its end, the corridor opens up to a horizontal lobby space.

(d)   As shown in the plan, the lobby and the corridor together form a “T” shape, with the lobby forming the horizontal line and the corridor the vertical line.

(e)   There is a lift in the lobby. 

(f)    If one stands in the lobby facing the lift, one sees two doors on both of its sides.  The door on the left leads to Store No 1 and the one on the right the Store Room.

(g)   Each of the store rooms appears in the plan as a rectangle with a smaller rectangle carved out at its bottom right hand corner. The carved out area is taken up by the lift, in the case of Store No 1, and a staircase, in the case of the Store Room.  Thus, in the plan, the two store rooms each appears in an inverse (or upside-down) L-shape. 

7.The plaintiff claims adverse possession over the shaded area.  Since it is the front part of the Store Room which adjoins the lobby, it has been referred to in this action as the “Front Portion”.  I shall call the remaining part, which is slightly bigger in size, the “Back Portion”. There is no other exit out of the Back Portion save via the Front Portion. 

8.It is common ground that a metal gate had been erected where the Front Portion adjoins the lobby since the late 1970’s.  I shall call it the “Front Gate”.  In 2009, the Building underwent a large-scale renovation.  The Front Gate was replaced by a glass door.

9.Between the Front Portion and the Back Portion stands another metal gate.  It is not entirely clear when it was installed.  It is some time in the 1980’s.  It will be called the “Back Gate” below, even though it is in fact in the middle of the Store Room.

10.Based on the layout, one can immediately see that anyone who wants to go to the Back Portion must, first, enter via the Front Gate, then walk past the Front Portion, and, finally, enter via the Back Gate.

OUTLINE OF THE PARTIES’ CASES

11.In gist, the plaintiff’s case is that the Front Portion has been used exclusively as the management office of the Building ever since the Building was occupied in the late 1970’s.  It was put to such use, initially, by the management committee of the Building and, subsequently upon the incorporation of the plaintiff in April 1980, by the plaintiff.  The use has been continuous up to the present day.  The plaintiff had all along believed by mistake that it owned the Front Portion.

12.The defendant’s late mother, Mrs Ma, purchased the Store Room from the developer in November 1983 and became its legal owner. She passed away in 1998.  The defendant is her third son.  He inherited the property and, in 2009, was registered as the legal owner.

13.In gist, it is the defendant’s case that since 1983 his family (the “Ma Family”) has been using the whole of the Store Room, including the Front Portion and that it is only with the consent of the Ma Family that the plaintiff has been allowed to make some use of the Front Portion since around 1985.

THE PLAINTIFF’S CASE

14.At trial, the plaintiff called two witnesses:-

(a)   Ms Li Wai Ha – she has lived in the Building since 1999.  From 2003 to 2005, she was a member of the management committee and the secretary of the plaintiff.  And, since 2005, she has been its chairlady;

(b)   Mr Cheung Yat Yin – he has lived in the Building since about 1977 (save that there was a period of a few months in the early 1990’s when he was working in mainland China).  From 1994 to 2005, he was the chairman of the plaintiff.

15.Together, the witnesses were able to put forward the plaintiff’s case of how the Front Portion has been used exclusively as the management office from the late 1970’s up to the present day.

From the late 1970’s

16.Cheung recalled clearly that when he moved in to reside at the Building in 1977, the management office was already located at the Front Portion.  The caretaker was stationed there.  Its set up was like that of a typical management office, including desk, chairs, stationery and storage cabinets.

17.In these proceedings, the plaintiff has produced some ledger records showing that in December 1983, there was an expense item of $330 for “one desk and four chairs for the management office” and another item of $104.50 for “tile glue for floor at management office” (both my translation and my emphasis).  These are, contends the plaintiff, contemporaneous documents which directly support its case.

18.In the 1980’s, meetings of the management committee would be held at the Front Portion.  In fact, Mrs Ma, being one of the members, had also attended meetings held there.  Since Cheung became the chairman, with a view to saving costs, many of the management committee meetings would be held at the Front Portion.

19.After Mrs Ma’s acquisition of the Store Room, the plaintiff has continued its use of the Front Portion under the mistaken belief that the it was owned by the plaintiff.  No one could gain access to the Front Portion unless authorised by the plaintiff.

20.Meanwhile, Mrs Ma had used the Back Portion for storage purpose.  She operated a hawker food stall, which was located quite close to the Building.  According to some of the long-time residents of the Building, Mrs Ma had never used the Front Portion.  Mrs Ma had a key to the Front Gate so that she could gain access to the Back Portion.  Such use was allowed by the plaintiff.  However, it does not know how she had got hold of the key in the first place.

21.Starting from about 1985 or 1986, a folding table and some chairs would be set up in the lobby area outside Store No 1. The caretaker would sometimes be stationed there so as to keep an eye on the front entrance of the Building.  Notwithstanding this arrangement, the Front Portion has remained to be the management office.

From the early 1990’s

22.In the early 1990’s, Mr Lam Chiu Yuen (“Lam”), Mrs Ma’s son-in-law, took over the food stall from Mrs Ma.  Since then, it had been Lam who used the Back Portion for storage purpose.  He also had a key to the Front Gate.

23.Lam would ask his suppliers to deliver goods (for his food stall) to the Building.  Given the limited space in the Front Portion, the plaintiff did not allow these deliveries to be kept in the Front Portion.  Li said that the arrangement, to which Lam agreed, was to put them temporarily in the lobby area or the staircase which is located right next to it.  Lam would collect the goods and transfer them to the Back Portion in the evenings.

24.Li recalled clearly that when she moved into the Building in 1999, the management office was already in the Front Portion.  She gave the same description as Cheung – see paragraph 16 above.

The alleged theft in 2008 and the renovation in 2009

25.In June 2008, there was a suspected theft incident in the Front Portion.  Li had ordered some cat food on the internet and had it delivered to the Front Portion.  When she went there to pick it up later, she found that one can was missing from the package.  After some investigation, she suspected that it was Lam who had taken it.  The following day, Lam returned the can to her.  In her witness statement, Li said that Lam “impliedly admitted” that he had taken the can without her approval.

26.Following the incident, the management committee resolved to take back Lam’s key to the Front Gate, given the seriousness of the incident.  Lam did not raise any objection.  From then on, whenever Lam wanted to go inside the Back Portion and if the caretaker was not on duty, he would need to contact either Li or another member of the committee, Madam Lau, both of whom were assigned to keep the key.  Li said that both she and Madam Lau felt annoyed by this as Lam often requested either one of them to open the Front Gate at some inconvenient time, such as six o’clock in the morning.

27.The Building underwent a large-scale renovation from March 2009 to January 2010.  As is common in this type of renovation, the plaintiff engaged a firm of consultants for this purpose and invited tenders for the works.  It entered into a renovation contract with the selected contractor in November 2008 (the “Renovation Contract”).  I shall have to come back to this later in more detail.

28.The Front Portion was also renovated.  The Front Gate was replaced by a glass door.  The walls were plastered and painted and the floor tiles replaced.  Hanging cabinets and floor cabinets were installed. The photographs included in the trial bundles show clearly that after the renovation, the Front Portion is set up as a small office in a style typical of a management office in similar old buildings in Hong Kong.  The flat top of the floor cabinet is used as a desktop, on which equipment such as telephone and CCTV are placed.

29.The costs of the renovation were borne by the plaintiff. 

30.After the renovation, Lam continued to access the Back Portion via the Front Portion.  In order to avoid the trouble of having to let him in each time and given that Lam had repeatedly asked for a key, the plaintiff eventually gave him a key to the glass door so that he could access the Back Portion without seeking help from the plaintiff each time.  Lam verbally promised Li that he would never take anything away from the management office again.

31.In other words, there was a long period of time of around nine months (ie, from June 2008 to March 2009) during which Lam had to seek the plaintiff’s permission each time he wanted to access the Back Portion.

32.Li also explained at trial that as part of the services provided by the plaintiff, where there are couriers or packages sent to the residents, the plaintiff would allow them to be stored temporarily in the Front Portion.  Usually the owners would collect them upon their return to the Building.

33.Then, out of the blue, on 29 April 2015, the defendant showed up at the management office and claimed that the Front Portion belonged to him.  He put up a notice on the glass door demanding that the plaintiff vacate the Front Portion.  Never before had anyone from the Ma Family made claim of ownership of the Front Portion.

34.It was only after conducting land searches on the Store Room and seeking legal advice that the plaintiff came to know that Mrs Ma had been and the defendant is indeed the legal owner of the Front Portion.

35.In support of its case, the plaintiff also relies on the fact that all along, there is a separate electricity meter installed at the Front Portion.  The electricity charges have been paid by the plaintiff.

36.The plaintiff’s case is that both the plaintiff and the Ma Family, including Mrs Ma and the defendant, were under the mistaken belief that the Front Portion belonged to the plaintiff.  Harbouring under such misapprehension, the plaintiff had been in exclusive possession of it for well over 30 years, counting from 1983.  The plaintiff contends that the defendant’s title to the Front Portion has therefore been extinguished.

THE DEFENDANT’S CASE

37.I now turn to the defendant’s case.

38.The defendant is one of six siblings.  He has two elder brothers and three younger sisters.

39.At trial, he called five witnesses:-

(a)   the defendant himself;

(b)   Ma Sim Ngor – the eldest sister;

(c)   Ma Yuk Ngor – the middle sister;

(d)   Lam – Yuk Ngor’s husband; and

(e)   Ma Yuk Chu – the youngest sister.

40.In March 1978, Mr and Mrs Ma purchased a flat on the fourth floor of the building (the “Flat”).  Initially, the second eldest brother and his newly-wed wife lived there.  In the following year, the couple moved out and the rest of the Ma Family, except the eldest brother, moved in.

The witnesses’ connection to the Building and the food stall

41.Mr and Mrs Ma had been operating an open-air food stall in the vicinity of the Building.  In November 1983, Mrs Ma purchased the Store Room directly from the developer to store the paraphernalia of the food stall there.  She obtained from the developer the key to the Front Gate. 

42.Amongst the children, two of the daughters had been involved in the food stall business.

(a)   Yuk Ngor worked at the food stall.  She and her husband later took it over from Mr and Mrs Ma.

(b)   Yuk Chu started her first job in 1985.  At that time, she would also help out at the food stall on Saturdays.  That arrangement stopped in about 1998 when her own job became more demanding.

43.Beginning from the early 1980’s, the siblings, one by one, moved out of the Flat.  Sim Ngor moved out in November 1980 when she got married.  Yuk Ngor was next when she married Lam in May 1981.  Then followed the defendant’s departure in 1987.  Lastly, Yuk Chu moved out in December 1992 when she got married.

44.However, even after moving out, the daughters’ evidence was that they paid regular visits to the Building to see their parents, at least once a month.  They did so until Mrs Ma sold the Flat in 1998.  She passed away in that year.  Mr Ma passed away in the following year.

45.In 1991, Lam and Yuk Ngor took over the food stall.  They operated it for about a year.  From 1992 to 1994, they rented out the business to another person.  From 1995 onwards, they took back the business when the food stall was relocated to a municipal building.  Lam and Yuk Ngor retired in December 2015 and emigrated to Taiwan.  They have lived there since then.

46.Given the above, at trial, the witnesses together were able to put forward the defendant’s case regarding the use of the Front Portion from the early 1980’s onwards.

From the early 1980’s

47.Before Mrs Ma’s acquisition in 1983, the Store Room was vacant.  It was not used as a management office, as alleged by the plaintiff. 

48.In fact, there was never a management office proper (not until, at least the renovation in 2009 – as to which see paragraph 28).  A folding table and a folding chair would be put in the lobby area just outside Store No 1 and that was where the caretaker would be stationed when on duty since from there he would have a good view of those passing through the front entrance of the Building.

49.The Ma Family had been using the entire Store Room, including the Front Portion, since its acquisition.  None of them was under any mistaken belief that the plaintiff was its owner.

50.In fact, it was Mr Ma who allowed the caretaker to take rest in the Front Portion and place a few things there.  In about 1985, he gave a key to the Front Gate to the caretaker.  The witnesses all recalled that in that year, there was a conversation between Mr and Mrs Ma at a family dinner about this arrangement.  Also, at around that time, Mr Ma arranged for the Back Gate to be installed so as to separate the Front Portion from the Back Portion.

51.It is the recollection of the witnesses (all except the defendant) that from about 1985 to 1995, the parents kept a number of things in the Front Portion, including a few birdcages, a wooden cabinet, a handcart and one or two long benches.  In this regard, the defendant relies on a photograph taken in December 1992.  The occasion was Yuk Chu’s wedding.  The shot was taken of the wedding couple, who, seen on the left-hand side of the picture, were about to come out from the lift, and Mr Ma, seen in the middle, was in the lobby just in front of them.  In the background on the right-hand side was the Front Portion and one can see in there three birdcages hanging from a horizontal stick which appeared to have been mounted close to the ceiling.

52.Yuk Ngor recalled that some of the stools and tables used at the food stall were stored at the Back Portion.  At that time, the food stall licence only permitted a certain number of stools and tables to be used.  The family often kept more stools and tables than were permitted since they wanted to do more business. From time to time, the police would confiscate some of the stools and tables.  On those occasions, Yuk Ngor would need to take the extra stools and tables from the Back Portion to the food stall.  Once they paid the fine and recovered the confiscated stools and tables from the police, they would move the extra ones back to the Back Portion.  That is why Yuk Ngor could recall now what the Front Portion was like at that time.

53.Similarly, Yuk Chu, who worked part-time at the food stall in the mid-1980’s, had to go to the Back Portion to get food stuff and other things for the food stall.  And that is why she could recall what was inside the Front Portion at that time.

From the early 1990’s

54.In 1991, Lam and Yuk Ngor took over the food stall business from Mr and Mrs Ma.  From 1992 to 1994, the food stall was let to an outsider to operate.  The Store Room, together with the keys to the Front Gate and the Back Gate, were also passed on to that person.

55.When Lam and Yuk Ngor took back the business and the Store Room in November 1995, the birdcages and the wooden cabinet were no longer in the Front Portion.  Instead, there were a wooden table and a folding chair.  Both belonged to the plaintiff and were used by the caretaker.  He would take them out to the lobby for use whilst on duty and move them back to the Front Portion after work.

56.From then onwards, it would usually be Lam who would go to the Store Room to store or retrieve things for use at the food stall.  He would ask his suppliers to make deliveries (eg, lunch boxes, tea leaves and instant noodles) directly to the Front Portion.  In the evenings, he would move them inside the Back Portion.

57.At trial, Lam denied that he ever needed the consent of anyone from the Building or the plaintiff to do so.

The alleged theft in 2008 and the renovation in 2009

58.In respect of the alleged theft in June 2008, Lam’s version is that on that day, Tsit Wing Coffee delivered some sample cans (including luncheon meat and canned milk) to the Front Portion.  When he moved them to the Back Portion in the evening, he took by mistake a can of cat food as well.  When he was later told by Li that it was hers, he immediately returned it.  At that time, the incident did not make a big impression on him since it was only a small matter and was resolved there and then. 

59.Lam denied that he had given the key to the Front Gate to Li as a result of the incident or for any other reason.  He denied Li’s version of events.  Given that he had kept his key all along, he had never had to request Li or Madam Lau (or the caretaker) to allow him access to the Front Portion at any time.

60.Around the time when the Building was undergoing renovation, Li approached Lam saying that the plaintiff would replace the Front Gate by a new door at the plaintiff’s costs.  Lam therefore asked the defendant, as the latter is the legal owner.  The defendant had no objection and Lam passed on the answer to Li.  However, after the renovation was completed, it transpired that not only the Front Gate was replaced, the inside of the Front Portion was also renovated.  Lam reported this to the defendant. Given that the renovation was already done and the Ma Family was not asked to bear any costs, Lam did not say anything to Li or anyone of the plaintiff.

61.In about April 2015, the defendant decided to sell the Store Room.  At his request, on 29 April 2015, Lam posted a notice on the Front Gate demanding the plaintiff to vacate the Front Portion and remove all its belongings.  There was a telephone call between Lam and Li shortly afterwards in which, amongst other things discussed, Li offered to purchase the Store Room in the sum of about $500,000 to $600,000.  No deal was concluded in the end. 

62.In sum, the defendant’s case is that none of the Ma Family was ever under any misapprehension that the Front Portion belonged to the plaintiff.  Since Mrs Ma acquired the Store Room from the developer in 1983, the Ma Family, primarily through Mrs Ma and, subsequently, Lam, had had full and unrestricted access to, and had made use of, the Front Portion as they wished.   Further, it was only with the consent of the Ma Family that the plaintiff was allowed to make limited use of the Front Portion.

63.The defendant further contends that such consent having been withdrawn from 1 May 2015 and the plaintiff having failed to vacate the property, it has been trespassing the Front Portion.  The defendant therefore counterclaims damages.

(a)   First, on 10 May 2015, the defendant entered into a provisional sale and purchase agreement for the sale of the Store Room at a price of $950,000 and the defendant received a sum of $100,000 as deposit from the purchaser.  Given the plaintiff’s refusal to move out, the defendant had no choice but to repudiate the agreement.  As a result, he suffered loss of (i) compensation paid to the purchaser on about 29 May 2015 in the sum of $100,000; and (ii) compensation paid to the estate agent on about the same day in the sum of $19,000.

(b)   Second, mesne profits arising from the plaintiff’s unlawful use of the Front Portion from 1 May 2015 onwards.

ISSUES IN DISPUTE

64.It is not disputed by the defendant that if established, the plaintiff’s factual case gives rise to a valid claim for adverse possession in respect of the Front Portion.  This is because the plaintiff would have shown both factual possession and the requisite intention to possess.  Further, as a matter of law, an incorporated owners, being a separate legal personality, is capable of acquiring a possessory title by way of adverse possession: see Shine Empire Ltd v Incorporated Owners of San Po Kong Mansion [2006] 4 HKLRD 1 at paras 35-36.

65.Conversely, it is also common ground that if the defendant’s factual case is established, the plaintiff’s claim must fail.

66.The present dispute is therefore essentially one on facts.  The outcome will turn on whose factual account the court finds to be more credible.  On a number of matters, the parties have put forward opposite accounts of events.  For instance, did Lam return the key to the Front Gate to Li, after the incident of the missing can in 2008?  Did Lam, as a result, have to ask Li or Madam Lau to open the Front Gate for him when the caretaker was off duty? 

67.On these points, logically speaking, given the totally opposite accounts, at least one of the witnesses was not telling the truth (or the whole truth) in his or her testimony. 

68.In assessing the credibility and reliability of the witnesses and the parties’ respective cases, the court ought to evaluate the competing evidence against the backdrop of undisputed and indisputable facts.  It should consider whether a party’s case is inherently plausible or implausible.  The relevance of any contemporaneous documents purportedly relied on should be assessed carefully and they should be afforded due weight should the relevance be established.  The demeanour of the witnesses may also be relevant.

ANALYSIS

69.I would make two preliminary remarks on the evaluation of the evidence in the present action.

70.First, one immediately notable feature of this case is that the relevant events in dispute span over the past four decades. At trial, Cheung, giving evidence for the plaintiff, recalled events which date back to 1977 when he first resided in the Building.  The witnesses from the Ma Family sought to recount events from the early 1980’s. 

71.The memory of such dated events is likely to be hazy (assuming that they can be recalled in the first place).  If there exist contemporaneous documents or a milestone event happens to have happened at around the relevant time, this may help jog the witness’s memory and he may be able to recount the events with more confidence and accuracy.  Otherwise (and in the absence of any other special reason), it would be quite unrealistic to expect a witness to be able to recall the details or the exact dates of those long past events with precision. 

72.Two general observations follow.  First, where the evidence of a witness turns out to be inaccurate, in particular on dates or details of events, it may not necessarily be a reliable indicator that he is lying.  Conversely, where a witness somehow manages to recall specific and minute details of old events, without the aid of documents or in the absence of any special reason, it may be legitimate for the court to treat such evidence with some caution.  But these are of course general observations, which should not dictate in a definitive way how the evidence should be assessed.

73.Secondly, given that the events took place a long time ago and over a long time span, the court would give due regard and afford significant weight to any contemporaneous documents which purport to corroborate a party’s case or otherwise has a bearing on the issues in dispute.  In the present case, I consider that the following contemporaneous documents are relevant:-

(a)   The ledger records kept by the plaintiff, in particular those in December 1983 – see paragraph 17 above;

(b)   The wedding photograph of Yuk Chu taken in December 1992 – see paragraph 51 above;

(c)   The Renovation Contract entered into in 2008 – see paragraph 27 above; and

(d)   The photographs taken of the Front Portion post-renovation – see paragraph 28 above.

74.When viewed on its own, it can be said that each party’s case is not inherently improbable and there is no significant inconsistency within it.  However, having considered, weighed and evaluated the conflicting evidence before me and comparing the relative strengths of the two cases, I come to the view that, on a balance of probabilities, the defendant’s case is more credible.  I now set out the matters which in my view are significant in the evaluation process (but I would stress at the same time that none of these matters, when looked at on its own, is conclusive on the issue of credibility).

First, it seems more inherently improbable than not that Mrs Ma had made a mistake about what she was purchasing

75.The primary factual premise of the plaintiff’s case is that when Mrs Ma purchased the Store Room in 1983, she made a mistake that she was only buying the Back Portion.  Her children then “inherited” her mistake and have since treated the Front Portion as belonging to the plaintiff. The defendant’s case is of course that no such mistake was ever made by any member of the Ma Family.

76.There was no witness who was able to give evidence on the circumstances in which Mrs Ma purchased the Store Room. However, in assessing the inherent probabilities (or improbabilities) of Mrs Ma making a mistake as to what she had bought, I take into account the following undisputed or indisputable facts:-

(a)   Mrs Ma bought the Store Room first-hand, ie, directly from the developer.  One would expect that the developer would have had accurate and correct information about it, eg, its layout, boundary and size.

(b)   The land search records show that the consideration was $40,000.  It was not a small sum of money in 1983.  One would expect a purchaser acting reasonably would have done some due diligence before committing to the purchase.

(c)   When she purchased the Store Room, Mrs Ma was already residing in the Building.  One would expect that she would have physically inspected it before the purchase.

(d)   She had intended to use it for storage purposes in relation to the food stall.  One would expect that she would have given some thought as to whether it was fit for that purpose – eg, whether it was big enough.  (This may be contrasted with a purchaser who buys for passive investment purpose and may not pay as much attention to the practical use of the property.)

77.Against the above background, it is hard to imagine why Mrs Ma would have made a mistake about what she was buying.  In the absence of any suggestion of a positive reason why a mistake would have been made, it seems to me that it is more inherently improbable than not that she was mistaken. 

78.It should be borne in mind that the Front Portion measures roughly 40 square feet.  As such, it actually takes up a significant part of the Store Room, which itself only measures about 110 square feet.  Here, we are not dealing with a large property in which case it may be more likely that a tiny part of it may be overlooked. 

79.Furthermore, when Mrs Ma purchased the Store Room, the Front Gate was already there.  In other words, the whole of the Store Room was an enclosed area.  If she had thought that she was only buying the Back Portion, she must have been conscious at that time that she was buying a “landlocked” unit since there was no way out of the Back Portion save via the Front Portion, which was locked by the Front Gate.  How likely would it have been for Mrs Ma to still go ahead and buy it?  I think it would have been very unlikely, given that she intended that she would access it almost on a daily basis.

80.It was suggested by the plaintiff that Mrs Ma might have made the mistake given that both she and her husband were illiterate.  However, the objective fact here is that notwithstanding their illiteracy, the couple ran their own food stall business apparently making a decent living out of it and were able to raise a family of six children.  On that front, they at least seemed to be reasonably competent people.  I do not think that the fact that they were illiterate would have contributed to the alleged mistake.

Secondly, the ledger records relied upon by the plaintiff are equivocal

81.The plaintiff relies on the ledger records in December 1983 as contemporaneous documents, which go to support its allegation that at that time, the Front Portion had been used as the management office.

82.In my view, those records are equivocal on this issue since the reference to “management office” does not really tell which part of the ground floor was indeed the management office.  It could mean the Front Portion, as alleged by the plaintiff.  Alternatively, it could be a reference to the lobby area outside Store No 1, which the defendant alleges has been the management office of the Building.

Thirdly, the wedding photograph relied upon by the defendant corroborates his case and is inconsistent with the plaintiff’s

83.The wedding photograph taken in December 1992 clearly and directly corroborates the defendant’s case that the Ma Family had used the Front Portion to store a number of things, including Mr Ma’s birdcages.

84.It is sometimes said that a picture is worth a thousand words.  I think the wedding photograph is a good illustration of this. As described in paragraph 51 above, one can see three birdcages in the place where the Front Portion was supposed to be.  There is a “permanent” look to those birdcages.  I say this because the birdcages were hung on a horizontal stick (part of which is visible in the photograph) which was mounted near the ceiling of the Front Portion.  One can reasonably deduce that the birdcages were not being placed there temporarily as there was a set up (in the form of the horizontal stick) for them to be hung up from the ceiling.

85.It is true that the photograph does not tell us whose birdcages they were.  Nonetheless, it is consistent with and corroborates the defendant’s case that Mr Ma kept his birdcages in the Front Portion.

86.On the other hand, it runs contrary to the plaintiff’s case, which says that the Front Portion was used exclusively as the management office.  That use would not normally account for the presence of birdcages.  It immediately begs the question – who did those birdcages, which seemed to have been habitually hung there from the ceiling, belong to?  There was no satisfactory explanation or theory put forward by the plaintiff.  As such, the situation shown by the photograph is hard to reconcile with the plaintiff’s case.

Fourthly, the Renovation Contract casts doubt on the plaintiff’s allegation that it had all along believed that it owned the Front Portion

87.The Renovation Contract was entered into by the plaintiff and the contractor in November 2008.  It was a voluminous document, comprising different sections.  It was said to be a lump sum contract.  In the bill of quantities, there were listed 15 main items, with each of them further sub-itemised in precise details.  The number of units and the unit price for each sub-item were filled out in handwriting.  The bill was 27 pages long. Item 13 was entitled “Renovation of Ground Floor Lobby” (my translation) and covered a comprehensive list of sub-items of works to be carried out at the lobby.  For instance, the replacement of the front entrance gate of the Building was listed as item 13.12.

88.Yet, as pointed out by Mr Ross MY Yuen, counsel for the defendant, there was no mention at all of the Front Portion and the works to be carried out there.  There was no mention of the replacement of the Front Gate by the glass door.  Nor was there any reference to the cabinets to be installed there.

89.When asked about this glaring omission in the Renovation Contract, Li’s initial reply was that the works to be done at the Front Portion were included elsewhere, eg, in sub-item 7.1 (painting of internal wall).  But it was plainly an inadequate answer.  When further pressed on this point, she suggested that the Renovation Contract could not include everything and that the design and colour of the materials could only be decided after the commencement of the renovation.  This was not a satisfactory answer either.  The bill was supposed to include everything so that the parties would know precisely the scope of the works and could thus come up with a lump sum figure for the whole project.

90.Then, Li revealed for the first time in these proceedings that she only discussed with the contractor about those items, such as glass door and cabinets after the renovation works were commenced, some time between March and November 2009.  She also disclosed that the contractor volunteered to renovate the Front Portion at no cost, save that the cost of the raw materials for the cabinets would be borne by the plaintiff.

91.The plaintiff’s case is that it has always treated the Front Portion as its property and its intention had all along been to renovate it as part of the overall renovation project.  Logically speaking, if that had been the case, there would have been no plausible reason why the Front Portion works were not specifically spelt out in the Renovation Contract. The omission is remarkable and suggests that the opposite was the case, namely, that there was no intention to do any renovation works in the Front Portion when the overall project was being planned.  The omission is more consistent with the situation that the Front Portion renovation was only an afterthought. This casts serious doubt on the credibility of Li’s evidence in this respect.

Fifthly, the defendant has a convincing explanation for the inherent improbability of his case

92.After the renovation, the Front Portion has in effect be turned into a mini office, fitted with cabinets and office equipment.  Like the wedding photograph, the photographs disclosed in this action showing what it looks like post-renovation speak volumes.  I think anyone looking at those photographs would think that it just looks like what a typical management office would look like in similar buildings in Hong Kong (in other words – a tiny and compact space fitted with basic renovation). 

93.When assessing the inherent plausibility of the defendant’s case, one question would immediately come to mind – if the defendant indeed had full knowledge of his ownership of the Front Portion and, following what his late parents had done, continued to allow the caretaker to put a few things there, why would he have allowed the plaintiff to effectively renovate the entire Front Portion and turn it into a management office?

94.In cross-examination, Lam explained that he had been told by Li only about the replacement of the Front Gate before the renovation works commenced.  For the other works, he only found out after they were completed.  The defendant’s position then was that since the works were done and if Lam, the actual user of the Store Room, said that they did not affect him, then the defendant did not have any problem.

95.In my view, the plausibility and credibility of the position taken by the defendant needs to be assessed against the following facts, which are not in serious dispute:-

(a)   Although the defendant was the owner of the Store Room, he did not use it personally.

(b)   Instead, Lam was the “user”.  He used the Store Room for the limited purpose of storing and retrieving things for the food stall.  He did not spend much time there.

(c)   The defendant was not asked to make any contribution to the renovation costs of the Front Portion.

96.Lam said that the new set up did not affect how he used the Store Room.  I consider that when viewed in context, the defendant’s position makes sense and is not inherently improbable.  At first blush, one would ask why the defendant would allow or did not complain afterwards about the extensive renovation works carried out in his property without his prior consent.  However, in my view, his position is plausible, given that the works did not affect the defendant in financial terms and has not affected Lam in its practical usage.

97.Different people may react differently in a given situation.  The defendant’s inaction in this case is not so extraordinary such as to render it unbelievable.

Sixthly, the queries raised on the defendant’s case do not give rise to any serious doubt

98.At trial, Mr Patrick Siu, counsel for the plaintiff, tried to challenge the credibility of the defendant’s case in a number of ways.  I do not propose to deal with them at length.  The complaints are generally minor in nature. 

99.First, at trial, the defendant elected not to call Ma Sik Ngor, who was a neighbour of Mr and Mrs Ma and resided at the Building from 1983 to 1997.  She has signed a witness statement for the defendant.  She is not related to the Ma Family.  Mr Siu invited the court to draw an adverse inference against the defendant for failing to call Ma Sik Ngor, who, unlike the other witnesses, could be regarded as an independent witness. 

100.The witness statement of Ma Sik Ngor is brief, containing only four paragraphs.  In fact, as accepted by Mr Siu, only one of them, which is to the effect that Mr Ma had made use of the Front Portion by placing his birdcages and other things there, is relevant.  On the other hand, to substantiate this point, the defendant has already put forward direct evidence – namely, the oral testimony of four witnesses (ie, Sim Ngor, Yuk Ngor, Lam and Yuk Chu) and contemporaneous document in the form of Yuk Chu’s wedding photograph.  In the circumstances, I consider that there is very little room for an adverse inference to be drawn against the defendant.  And, even if drawn, that does not materially prejudice the defendant’s overall case.

101.Secondly, Mr Siu remarked on a number of inaccuracies and inconsistencies in the defendant’s evidence.  For instance, both Lam and Yuk Ngor confirmed definitively in their oral evidence that they emigrated to Taiwan on winter solstice in 2015.  Yet, in their written statements, both said that they retired from the food stall business in January 2016.  For the reasons set out in paragraphs 70 to 72 above, I do not consider that these inaccuracies are material or are of such a nature as would cast serious doubt on the witnesses’ credibility.

102.Thirdly, Mr Siu highlighted that all the siblings were able to recall specifically in their cross-examination that the dinner conversation between Mr and Mrs Ma about allowing the caretaker to rest in the Front Portion took place in 1985.  He submitted that it was unlikely that they could recall the exact year in which a conversation took place.  As mentioned above, it is not realistic for a witness to be able to recall events which took place many years ago.  For that reason, I agree that the insistence by all the siblings that the conversation took place in 1985 does stand out to be slightly odd.

103.However, I note that in their witness statements, they did say that the conversation took place in “about” 1985.  In addition, Yuk Chu mentioned that it was around the time when she started to work.  So perhaps it may be the reason why she could recall.  While I accept that I should take into account this point in my evaluation of the witnesses’ credibility, in the overall scheme of things, I do not find that it gives rise to any serious doubt on their case.

Decision on liability

104.On the whole, having weighed the inherent probabilities (and improbabilities) of the parties’ respective cases, evaluated the evidence against contemporaneous documents and looked at all the relevant matters in the round, I find, on a balance of probabilities, that the account put forward by the defendant and his witnesses of the events which took place from 1983 to 2015 is a truthful account.  Where the plaintiff’s account of events is in conflict with it, it must be rejected. 

105.In gist, I find as facts that neither the plaintiff nor any member of the Ma Family had made any mistake as to the ownership of the Front Portion, whether in 1983 or afterwards.  The plaintiff’s use of the Front Portion had all along been with the consent of, initially, Mrs Ma and, subsequently, the defendant (which consent was revoked in April 2015).

106.On the facts as found, the plaintiff’s claim must fail.

The defendant’s counterclaim

107.The plaintiff’s position is that if its claim for adverse possession fails, it accepts that it has been trespassing the Front Portion since 1 May 2015 and that it is liable to pay mesne profit from that date onwards at the agreed sum of $3,000 per month.

108.As to the counterclaim for damages arising out of the repudiation of the provisional sale and purchase agreement, the plaintiff argues that the losses are not foreseeable and that the defendant had been reckless to have proceeded with the sale before the ownership issue was resolved.

109.I reject that argument.  The defendant was entitled to deal with his property as he wished.  On the facts as found, there was no legal basis for the plaintiff to remain in possession after the defendant had revoked his consent.  There was nothing reckless about the defendant’s decision to go ahead with the sale.  The plaintiff should have vacated the property.  It hadn’t and must now compensate the defendant for his losses.  I find the losses to be reasonable.

Orders

110.For the above reasons, I dismiss the plaintiff’s claim.

111.On the counterclaim, I making the following orders:-

(a)   the plaintiff do deliver vacant possession of the Front Portion to the defendant.

(b)   The plaintiff do pay the defendant (i) mesne profits at the rate of $3,000 per month from 1 May 2015 up to the date of this judgment; and (ii) further mesne profits at the same rate up to the date when vacant possession is delivered up.

(c)   there be judgment in favour of the defendant in the sum of $119,000.

(d)   By agreement, the defendant shall have interest on item (b)(i) at 1% above prime rate per annum from a day which is half way between 1 May 2015 and the date of the judgment.  I shall fix it to be 1 June 2016.

(e)   Interest shall accrue on item (c) from 29 May 2015 to the date of judgment at 1% above prime rate up to the date of judgment.

112.I further make an order nisi that the plaintiff do pay the defendant’s costs of the action and the counterclaim, to be taxed if not agreed, with certificate for counsel.

Mr Patrick Siu, instructed by SK Lam, Alfred Chan & Co, for the plaintiff

Mr Ross MY Yuen, instructed by Ng, Au Yeung & Partners, for the defendant