虛雲和尚紀念堂有限公司 v. 甘百利投資有限公司 and Another

HCA 2806/2015

[2018] HKCFI 718

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2806 OF 2015

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J U D G M E N T

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INTRODUCTION

1.This is my judgment on two preliminary issues the details of which will appear below.  As this judgment involves only points of law and as counsel for the parties who have appeared before me made their written and oral submissions in English, I have decided to write this judgment in English, save and except for the quotations in Chinese.

2.In this action, there are three parties, namely, the plaintiff, the 1^st defendant (甘百利投資有限公司) (“KPL”) and the 2^nd defendant (or “佛觀”). The plaintiff’s claim against both defendants is for declarations relating to entitlement to land and is based on its alleged right allegedly acquired by adverse possession.  KPL has failed to acknowledge service of the Writ and has not appeared to take part in the proceedings.  The 2^nd defendant has filed an Amended Defence and Counterclaim in which he counterclaims against the plaintiff for possession of land allegedly being unlawfully occupied by the plaintiff together with mesne profits and interest thereon and, against the KPL, for a declaration and a vesting order relating to land based on his own alleged adverse possession of the same.

3.The land in question are plots of land in a vast expanse on a hill called Fu Yung Shan (芙蓉山) in Tsuen Wan.

4.I shall describe the parties, the pleadings and the land in greater detail below.

THE PARTIES

5.The plaintiff is a limited company apparently formed in memory of a deceased Buddhist monk by the name of 虛雲和尚 (“Xu Yun”) and for religious purposes.

6.KPL, as its name suggests, is an investment company.

7.The 2^nd defendant is also a Buddhist monk of advanced years.

HCMP 4032/1996

8.Apparently, disputes relating to land entitlement in Fu Yung Shan between various parties have been going on for many years.  In HCMP 4032/1996 (“HCMP 4032”), KPL as plaintiff sued three parties: the 1^st defendant were 「佔用人」 (unspecified occupiers), the 2^nd defendant was 「佛觀」 (the 2^nd defendant in the present case) and the 3^rd defendant was 「佛道修明協進會有限公司」 which is not a party in the present proceedings.

9.The trial Judge, Chung J, handed down a Judgment (“the Judgment”) on 26 July 2006 and made an Order also dated 26 July 2006 which was subsequently amended and filed on 18 April 2011 (“the Amended Order”).

10.Both the plaintiff and the 2^nd defendant have referred to and relied on the Judgment and the Amended Order in the present proceedings.

11.I shall refer to the Judgment and the Amended Order in greater detail below.

THE PRELIMINARY ISSUES

12.After I had perused the pleadings and the documents in the trial bundles, the Judgment and the Amended Order, I came to the preliminary view that both the plaintiff’s claim and the 2^nd defendant’s counterclaim might be seriously problematic.

13.In the circumstances, at the commencement of the trial, I invited Counsel for the parties to consider the trial of preliminary issues first before launching into the substantive trial of the action.  After having conferred together, both Counsel agreed that that would be a sensible course to adopt and formulated two preliminary issues which were then approved by me.

14.I therefore made an Order pursuant to Order 33, rule 3 of the Rules of the High Court for the two preliminary issues to be tried first.

15.The two preliminary issues as formulated by Counsel and approved by me are as follows:

“ 1. First, whether all necessary parties are before the Court regarding both the Plaintiff’s claim against the 1^st Defendant, and the 2^nd Defendant’s counterclaim against the 1^st Defendant; and

2. Second, whether the Court has jurisdiction to grant the relief soughtby the 2^nd Defendant against the Plaintiff in light of the Judgmentof Chung J and his Amended Order in HCMP 4032/1996 both dated 26.07.2006 and in light of the circumstances of the present case.”

16.I heard submissions by Counsel on the two preliminary issues (“Preliminary Issues” or, singly, “Preliminary Issue”) and reserved my Judgment.  I ordered that the substantive trial be adjourned pending the handing down of my Judgment when I will also give directions for the further conduct of the proceedings.

THE PLEADINGS IN THE PRESENT PROCEEDINGS

17.The pleadings are all in Chinese.  I shall summarise the relevant allegations and claims as contained therein below.

The Statement of Claim

18.When the Statement of Claim was filed, the plaintiff was actingin person, despite the fact that it was a limited company.  It was signed andconfirmed to be true by a person called 「釋照月」who I believe is a monk representing the plaintiff.  The plaintiff is now represented by Mr Ken To of Counsel on the instructions of Messrs K B Chau & Co.

19.When the Statement of Claim was filed, there was only one defendant, namely, KPL.  The subject of the claim are two lots of land in Fu Yung Shan, namely, a part of DD 453 Lot 1137 RP (“Lot 1137 RP”) and a part of DD 453 Lot 1204 (“Lot 1204”) as shown coloured yellow in the copy plan annexed to the Statement of Claim and marked Annexure A whichI annex hereto also as Annexure A.  I shall refer to the part coloured yellowin Annexure A as “the Disputed Land”.  It can be seen from Annexure A that the Disputed Land forms only a small part of the two much larger pieces of land, Lot 1137 RP and Lot 1204, which are adjacent to each other.

20.Paragraph 3 pleads that KPL is the registered owner of the Disputed Land.

21.Paragraph 4 refers to the highly respectable status of Xu Yun, the incorporation of the plaintiff, the building of a pagoda and a hall and other buildings in memory of Xu Yun over the Disputed Land and adjacent lots since the 1960’s and the history of trespasses committed by various parties in relation to the same.

22.The pleading then goes on to plead that, for the reasons set out above, the plaintiff has acquired possessory rights over the Disputed Land and it claims against KPL the following relief in the prayer:

「 1. 根據《時效條例》347章第7條第2點，被告已經失去收回土地的權利。

2. 我方是DD453 LOT1137RP的部份地段業權和DD453 LOT1204的部份地段業權(即附圖A，著黃色部份) 的合法土地擁有人。

3. 法庭釐清被告在DD453 LOT1137RP的部份業權和DD453 LOT1204的部份地段業權及在土地註冊署的擁有權。

4. 所有就我方成為合法土地擁有人的法律程序，說明及負擔。」

23.It is to be noted that, in the Statement of Claim, there is no pleaas to how the alleged possession of the Disputed Land was acquired adversely against anyone.  In other words, there is no plea that the possession of the Disputed Land was without the consent of or against the will of the lawful owner or someone who was entitled to the possession thereof.

24.It will also be noted that the 2^nd defendant was subsequently joined as a party to the proceedings.  Right at the beginning of the hearing, Mr To indicated that the plaintiff would be seeking to amend the Statement of Claim to claim relief against the 2^nd defendant.  On the second day of the hearing, however, Mr To informed me that his instructions were not to apply to amend the Statement of Claim at all.  Thus, there is no claim by the plaintiff against the 2^nd defendant on the pleadings.

The Amended Defence and Counterclaim of the 2^nd defendant

25.As stated above, KPL did not acknowledge service of the Writ and has not appeared at all to take part in the proceedings.  Only the 2^nd defendant has appeared and his Amended Defence and Counterclaim as signed by Mr Thomas Lai of Counsel on the instructions of Messrs Leung Kin & Co has been filed.

26.The Defence refers to some alleged historical facts as follows:

(i)   In 1944, the 2^nd defendant came to Hong Kong from Mainland China.  He got to know a monk by the name of 「幻波法師」 (“Huan Bo”) and whose original name was Ng Kai Pak.  He began to follow him.

(ii)   Huan Bo had an uncle called Ng Shiu Man who thought that Huan Bo was doing great religious work as a Buddhist monk and decided to assist him.

(iii)   Ng Shiu Man bought plots of land, including Lot 1137 (of which Lot 1137 RP formed a part) and Lot 1204, and encouraged monks (including the 2^nd defendant) to build temples and halls on such land.

(iv)   With the consent of Huan Bo and Ng Shiu Man, the 2^nd defendant and other monks began to build various religious buildings on Ng Shiu Man’s land in the 1950’s.

(v)   On 21 March 1951, on the advice of Huan Bo, Ng Shiu Man handed Lot 1204 over to the 「佛道修明協進會」 (which from its name appears to be the unincorporated predecessor of the 2^nd defendant in HCMP 4032) for religious purposes. Later in 1994, a monk by the name of 「明德法師」passed the management of the 「佛道修明協進會」to the 2^nd defendant. 

(vi)   By the Judgment and the Amended Order, Chung J had conferred rights over land (including the Disputed land) to the 2^nd defendant.

(vii)   If the plaintiff had been occupying and using the Disputed Land, it would only have been with the consent granted by the 2^nd defendant and/or the 「佛道修明協進會」.

(viii)   The 2^nd defendant had on numerous occasions demanded that the plaintiff should cease to occupy the Disputed Land but the plaintiff has refused to do so.

(ix)   The plaintiff had been served with the papers in HCMP 4032 but had deliberately refused to take part.  Hence, an issue estoppel has arisen against the plaintiff by the Judgment and the Amended Order.

27.The Counterclaim is based mainly on the Judgment and the Amended Order and the 2^nd defendant counterclaims the following relief in the prayer:

「 (1) 對原告人，即時交還上述相關的佔用土地，及支付非法佔用土地的賠償金及利息。

(2) 對第一被告人，要求法庭書面栽 [裁] 決 (declaration) 有關地段的業權已經因Limitation Ordinance s.17終止 (title extinguished) 。並頒令vesting order有關地段的業權歸第二被告人所有，以便在Land Registry登記註冊。

(3) Further or other relief

(4)     Costs 」

Summary of the relief claimed in the pleadings

28.It is clear from the Statement of Claim that the plaintiff is claiming as against KPL as the registered owner a declaratory order of right over the Disputed Land which declaratory order is intended to be registered inthe Land Registry.  If granted and so registered, it will almost be equivalent to a judgment in rem regarding property rights.

29.It is equally clear from the Counterclaim that the 2^nd defendant isasking for the same relief as against KPL.  He goes even further by actually asking the court to make a vesting order vesting the Disputed Land in him which he wants to register in the Land Registry.

30.The 2^nd defendant further claims as against the plaintiff possession of the Disputed Land and other incidental relief.  In order to do this, the 2^nd defendant must prove his own entitlement to the Disputed Land.

31.As said above, in both regards, the 2^nd defendant is relying on the Judgment and the Amended Order.

32.I shall next examine the Judgment and the Amended Order to see what exactly was decided by Chung J and what exactly was the relief granted by him.

THE JUDGMENT AND THE AMENDED ORDER

The Judgment

33.I deal first with the Judgment.  I have already referred to the parties in HCMP 4032 in paragraph 8 above.

34.In paragraph 1, Chung J stated that the subject of the proceedings were four pieces of land in Fu Yung Shan, including Lot 1204 and Lot 1137 RP.

35.In paragraphs 3 and 4, the learned Judge said that the plaintiff, KPL, alleged that it became the owner of the subject lots in 1980 and asked the court to evict the defendants therefrom as trespassers.

36.In reciting part of the evidence of the defendants, in paragraphs 7 – 11, the learned Judge set out the allegations of the 2^nd defendant therein (ie, 「佛觀」who is also the 2^nd defendant in the present proceedings) which are similar to what is pleaded in the Amended Defence and Counterclaim of the 2^nd defendant referred to in paragraph 26 above.

37.In paragraph 13, the learned Judge began to deal with the devolution of title relating to, inter alia, Lot 1137 RP, as alleged by the defendants.  This is in accord with the Land Registry record which I am going to examine hereinbelow.

38.In paragraph 22, on the question of credibility and reliability of the evidence, the learned Judge preferred that of the 2^nd defendant and not that of KPL’s witness, a hand-writing expert.

39.In paragraphs 39 – 47, the learned Judge set out his findings on the claim by KPL as follows:

「 39. 本席認定，要裁決第二被告人可否確立有關“所有權上不容反悔法”的抗辯，必須考慮涉案物業的業權擁有人，曾作出的承諾的性質。而與此相關的事實為：―

(1) 伍少文自約1940年代起(以1204號地段而言，則自1950年12月起) 將涉案物業用以傳揚佛法之用，並容許僧侶、修道人等等在其上蓋建佛堂、廟宇；

(2) 伍少文在1951年3月21日將1204號地段的業權，送贈給幻波大師及其他幾人，作傳揚佛法之用。幻波法師及其他幾人，自此之後容許僧侶、修道人等等，繼續佔用涉案物業。

40. 在此情況下，本席認定，涉案物 [業] 的業權擁有人(包括伍少文、幻波法師及黃法明) 曾作出的承諾，不單是給予佔用人一項准用約 (licence)，而已是涉及涉案物業的業權。故此，有關的“所有權上不容反悔法” 承諾，相對於業權承繼人 (即是黃法明，岑瑋瑜及原告人) 而言，具約束力。

41. 此外，依前第31段所述的原因，上述業權承繼人，即使已合法地取得所有權，亦非“有值代價的任何其後真誠買方”。

42. 第二被告人曾在1944至1945年，1948至1952年及1965年至現今期間，佔用涉案物業，更在1951年初，在涉案物業蓋建佛廟，並將之用作居住、修行之用 (見前第9段) 。

43. 基於上述各點，本席認定，第二被告人已成功確立有關“所有權上不容反悔法”的抗辯理據。

44. 原告人是在1980年2月才購入涉案物業。第二被告人 (及其他被告人) 在此之前，是得到涉案物業的業權擁有人的承諾或准許，佔用涉案物業。

45. 適用於本訴訟的《時效條例》第 7(2) 條述明：―

“ 自有關訴訟權在任何其他人方面產生的日期起計滿20年後，他不得提出收回土地的訴訟……”。

46. 原告人在1996年已開展本訴訟。故此，第二被告人未能確立有關“逆權管有”的抗辯理據。

結論

47. 基於以上各點，原告人的申索，應被撤銷。

反申索

48. 最後，由於第二被告人並未提出充分的證據，證明原告人確曾涉及或參與破壞廟宇等侵權行為，辯方的反申索亦應被撤銷。」

40.As I understand the Judgment, the findings of the learned Judge can be summarised as follows:

(i)   The owners of the land (including Ng Shiu Man, Huan Bo and Wong Fat Ming) had made promises to the occupiers.  What was given to the occupiers was not just a licence but property rights of the subject land were involved.  [It is to be noted that Chung J did not specify what kind of “property rights” were involved.] Hence, there was a proprietary estoppel binding on the successors-in-title (ie Wong Fat Ming, Sham Wai Yue and KPL).  (Judgment §40)

(ii)   For the reasons set out in paragraph 31 of the Judgment (which dealt with the suspicious features of some title documents), the abovementioned successors-in-title, although they had obtained title, were not “subsequent bona fide purchasers for value”.  (Judgment §41)

(iii)   The 2^nd defendant had succeeded in his defence of proprietary estoppel.  (Judgment §43)

(iv)   KPL only purchased the land in question in February 1980.  Prior to that, the 2^nd defendant and the other defendants had already got the promise or permission from the owners to use the land.  As section 7(2) of the Limitation Ordinance specified a limitation period of 20 years and KPL already instituted proceedings in 1996, the defence of adverse possession was not available to the 2^nd defendant.  (Judgment §§44 – 46)

(v)   Thus, the claim by the plaintiff for trespass and possession must be dismissed.  (Judgment §47)

(vi)   Regarding the counterclaim of the 2^nd defendant, as he did not adduce sufficient evidence to prove that KPL was involved in or had taken part in acts of damaging or occupying the temples, the counterclaim of the defendants should also be dismissed.  (Judgment §48)

The Amended Order

41.I now examine the Amended Order the relevant part of which reads as follows:

「 現命令如下：

1. 撤銷原告人的申索及撤銷第二及第三被告人的反申索。

2. 被告人可合法佔用荃灣芙蓉山丈量約份第453約地段第1204號、丈量約份第453約地段第1136號及其增批部份及丈量約份第453約地段第1137號餘段。上述物業的業權人及其業權承繼人不得對被告人行使其所有權。

3. 宣告黃法明並非荃灣芙蓉山丈量約份第453約地段第1204號、丈量約份第453約地段第1136號及其增批部份的六份之三業權及丈量約份第453約地段第1137號餘段的業權擁有人。

4. 宣告倚1971年12月17日的送贈契而獲得業權的岑瑋瑜未能有效地成為荃灣芙蓉山丈量約份第453約地段第1204號、丈量約份第453約地段第1136號及其增批部份的六份之三業權及丈量約份第453約地段第1137號餘段的業權擁有人。

5.  宣告倚1980年2月13日轉讓契而獲得業權的原告人未能有效地成為荃灣芙蓉山丈量約份第453約地段第1204號、丈量約份第453約地段第1136號及其增批部份的六份之三業權及丈量約份第453約地段第1137號餘段的業權擁有人。」

42.Thus, besides dismissing the plaintiff’s claim and the counter­claim of the 2^nd and 3^rd defendants, Chung J also granted the following relief: 

(i)  An order that the defendants could lawfully occupy the lots of land in question and that the owner(s) and his (their) successors-in-title could not exercise all their rights against the defendants.

(ii)  A declaration that Wong Fat Ming was not the owner of Lot 1204, three-sixths of the interest in Lot 1136 and its Extension, and Lot 1137 RP.

(iii)  A declaration that Sham Wai Yue, who relied on the Deed of Gift dated 17 December 1971, had not validly become the owner of Lot 1204, three-sixths of the interest in Lot 1136 and its Extension and Lot 1137 RP.

(iv)  A declaration that the plaintiff, who relied on the Deed of Assignment dated 13 February 1980 to say that it had acquired title, had not validly become the owner of Lot 1204, three-sixths of the interest in Lot 1136 and its Extension and Lot 1137 RP.

43.Thus, it is to be noted as follows:

(i)  The learned Judge only found for the defendants on their defenceagainst the claim for possession by the past and present owners of the land in question.  This must be on the basis of the proprietary estoppel found by the learned Judge in favour of the defendants.  The learned Judge did not go further to make a declaration to the effect that the title of the any of the owners had been extinguished or that the defendants had become the owners of the land in question.

(ii)  The learned Judge made declarations to the effect that Wong Fat Ming and Sham Wai Yue (Wong Fat Ming’s daughter) had not validly become the owners of the land as specified in relation to them.

(iii)  The learned Judge made a declaration to the effect that despite the Deed of Assignment of 1980 relied on by KPL, it had not validly become the owner of the land as specified in relation to it (which included the Disputed Land in the present proceedings).

44.Regarding point (i) in paragraph 43 above, the court was perfectly entitled to do what it did, namely, just make a finding that a trespasser had a good defence against a claim for possession by the owner without going further to find that the trespasser had acquired title to the land in question.  This is clear from Snell’s Equity (33^rd Edition) at §12‑050 on page 351 and §12‑052 on page 352:

“ (e) Possible forms of relief. It is clear that the relief given in a proprietary estoppel case may take a wide variety of forms. On the approach suggested here, the court should choose the form of relief best suited to the basic aim of ensuring that B does not suffer a detriment, subject to the proviso that, in some cases, it may not be unconscionable for A to leave B to suffer some detriment. In some cases, particularly those where B is simply relying on an estoppel by representation, this aim may be achieved simply by recognising a defence for B against A’s claim to assert a right. Where B has successfully made out an acquiescence or promise-based claim in response to A’s attempt to gain possession, however, it may be unsatisfactory for a court simply to deny A’s claim without clarifying the nature of B’s right: in contrast to the representation-based strand of proprietary estoppel, such claims impose a liability on A, correlating to a rightof B, and simply denying A possession will leave the nature of B’s right uncertain. Depending on the facts of the case, the right thus acquired by B may be only a personal right against A (suchas a right to receive money, or a licence to make some use of A’s land) or A may instead be ordered to give B a property right, for example by transferring a freehold to B, or granting B a lease, charge or easement. It is possible for terms to be imposed on such a grant so that, for example, B has to pay A for the land to be transferred to B. The court may also order that A holds particular property on trust, on particular terms giving B some beneficial interest. It is also possible for a court to order that A must, at A’s option, either grant B a lease, or pay B the value of that lease. This remedial flexibility is to be welcomed, as it ensures that the right arising as a result of an acquiescence or promise-based proprietary estoppel can be effectively enforced, but it should not obscure the fact that, as discussed at para. 12‑046, the extent of B’s right is not determined solely at the court’s discretion.”

“ (b) The acquiescence and promise-based strands: position after a court order in B’s favour. If C acquires A’s land, or a right in relation to A’s land, after a a court order has been made in B’s favour, the effect of B’s right on C will depend simply on the nature of that right: it it is a proprietary right, it is capable of binding C; if it is a personal right it cannot, in itself, bind C. It should make no difference, it is submitted, that B’s right arose through proprietary estoppel, rather than by any other means. So if, for example, A was simply ordered to pay a sum of money to B, or to allow B a licence, there seems to be no reason why C should come under any duty to B simply as a result of C’s acquisition of a right in the land to which the proprietary estoppel claim related. Conversely, if A was ordered to grant B a property right, such as an easement, then C will be prima facie bound by B’s right, but will also be able to rely on the relevant priority or registration rules in an attempt to show that he or she in fact took free form B’s right.” [emphasis added]

45.I do not know whether there was any application before Chung Jto make an order granting a proprietary interest in the land to the defendants. I can only assume that since the original Order made in 2006 was amended by the Court in 2011, the Amended Order must have been carefully worked out.  It may be that the 2^nd defendant may decide to go back before Chung J in HCMP 4032 for the Amended Order to be further amended.  That, however, is not a matter for me.  The fact is that no proprietary interest hasbeen conferred on the 2^nd defendant by the Amended Order.  I must abide bysuch fact.  This will of course have a bearing on the 2^nd defendant’s position in the present proceedings.

46.Regarding point (ii) in paragraph 43 above, it will be relevant when I come to examine the Land Registry records in considering the question of devolution of title.

47.Regarding point (iii) in paragraph 43 above, the learned Judge has made a declaration to the effect that, despite its reliance on the Deed of Assignment of 1980 whereby it had purchased the land in question, KPL had not validly become the owner of the land in question, including the Disputed Land.

48.The Amended Order has been registered against both Lot 1137 RP and Lot 1204 in the Land Registry in the Incumbrances section.  This is something which I cannot ignore but which I must take into account in dealing with the present case.

THE LAND REGISTRY RECORDS RELATING TO LOT 1137 RP AND LOT 1204

49.I now come to examine the relevant Land Registry records.

Lot 1137 RP

50.From the Land Registry records produced, I can trace the devolution of title on paper as follows:

(i)  Ng Shiu Man became the first owner by a New Grant in relation to the whole of Lot1137.

(ii)  In 1952, regarding Lot 1137 RP, the following persons became owners as follows:

(a)       Ng Kai Pak (Xu Yun)               (2/6)

(b)       Wong Fat Ming                        (1/6)

(c)       Chan Yuet King                        (1/6)

(d)       Tang Yuet Han                         (1/6)

(e)       Sui Yee                                     (1/6)

(iii)  In 1964, Mak Ying as the executor of Tang Yuet Han became the owner of her 1/6 share.

(iv)  In 1965, Wong Fat Ming succeeded to the 2/6 shares of “Ng Kai Pak alias Ng Shiu Man”.  Thus she came to hold on paper altogether 3/6 shares.  (It will be noted from the above that Ng Kai Pak and Ng Shiu Man were actually different persons and this was dealt with in the Judgment.)

(v)  In 1971, Pun U Hung as the administrator of Chan Yuet King became the owner of her 1/6 share.

(vi)  In 1971/1972, Pun Yuk Fun and Chan Lai Kwun became the owner of the 1/6 share of Chan Yuet King by assignment by Pu U Hung.

(vii)  Eventually, in 1979, after some intermediate title documents had been executed, Pun Yuk Fun became the sole owner of the 1/6 share originally belonging to Chan Yuet King.

(viii)  In 1971, Sham Wai Yue Agnes became the owner of Wong Fat Ming’s 3/6 shares by assignment by her.

(ix)  In 1980, KPL became the owner of the 3/6 shares of Wong Fat Ming by purchase from Sham Wai Yue Agnes.

(x)  In 1982, KPL became the owner of the 1/6 share of Pun Yuk Fun by purchase from her.

51.As mentioned above, the Amended Order has been registered under the Incumbrances section.

52.It is important to note that the original 1/6 share of Li Sui Yee does not appear to have been touched at all.  It has certainly not been purchased by KPL in 1980 or subsequently.

53.It should also be borne in mind that, although Chung J in the Amended Order made a declaration against KPL in relation to the 13 February1980 Assignment whereby KPL bought the interest of Sham Wai Yue Agnes, he did not seem to have dealt with the Assignment in 1982 whereby KPL bought Pun Yuk Fung’s interest.

Lot 1204

54.I now trace the devolution of title on paper in relation to Lot 1204.  The Land Registry records show as follows:

(i)  Ng Shiu Man became the first owner by a New Grant.

(ii)  In 1965, Wong Fat Ming became the owner by succession to “Ng Pak Kai alias Ng Shiu Man”.

(iii)  In 1971, Sham Wai Yue Agnes became the owner by assignment by Wong Fat Ming.

(iv)  On 13 February 1980, KPL became the owner by purchase from Sham Wai Yue Agnes.

55.Again, as noted above, the Amended Order has been registered under the Incumbrances section.

THE FIRST PRELIMINARY ISSUE

56.I now come to deal with the first Preliminary Issue, first, in relation to plaintiff’s claim.

57.It is quite clear that not all the necessary parties are before the court for the purpose of determining the rights of parties in relation to the Disputed Land:

(i)  As noted in paragraph 52 above, the 1/6 interest of Li Sui Yee does not appear to have devolved on or been acquired by anyone.  In order for any declaration to be made regarding the Disputed Land, she must be made a party.  She has not been.

(ii)  Secondly, regarding the plaintiff’s claim against KPL, it is advanced on the basis that it is the lawful owner of the Disputed Land by virtue of the fact that it is registered as the owner in the Land Registry.  The court, however, cannot ignore the Amended Order which is also registered against the Dispute Land as an incumbrance. Chung J made a declaration that, despite the Assignment of 13 February 1980, KPL had not validly become the owner of the Disputed Land.

58.For the above reasons, as presently constituted, there is no possibility of the plaintiff succeeding on its claim for a declaration of entitlement to the Disputed Land. 

59.I next consider the position about the 2^nd defendant’s counterclaim.

60.So far as his claim for a declaration against KPL is concerned, the same considerations as set out in paragraph 57 above would apply as in the case of the plaintiff.

61.There is equally no possibility of the 2^nd defendant succeeding on his claim for a declaration of entitlement to the Disputed Land and for a vesting order in the Counterclaim as presently constituted.

THE SECOND PRELIMINARY ISSUE   

62.I now deal with the second Preliminary Issue.

63.In order for the 2^nd defendant to be able to sue the plaintiff for recovery of possession of the Disputed Land, he must allege and prove his entitlement to the Disputed Land, either as an owner or as an adverse possessor.

64.The legal position is very clearly set out in a passage in The Law of Real Property by Megary & Wade (8^th Edition) in §§4‑003 to 4‑004 on pages 86 – 87 as follows:

“ 2. Possessory title. Title to land at common law is not always derivative. It is possible for an entirely fresh title to be created, conferring a new fee simple estate. This occurs where land is acquired by adverse possession under what is now the Limitation Act 1980. All that is relevant at this point is that under that Act, as under its predecessors back to 1833, the remedy and title of a dispossessed owner of unregistered land are normally extinguished after the land has been in adverse possession for 12 years. The Act does not transfer the dispossessed owner’s estate to the adverse possessor. It merely extinguishes the earlier title, leaving the adverse possessor free from any claims under it. He then has a new and independent freehold title, based upon his own possession. Here, therefore, is an example of a non-derivative title, based primarily on the fact of possession, but protected by statute againstthe former owner. An investigation of this phenomenon, and of its history, will explain the essential nature of title, the strong links between possession and ownership, and the legal foundations of the fee simple estate.

By way of example, if S (squatter) wrongfully takes possession of land belonging to O (owner), O immediately acquires a right of action against S for recovery of the Land. If O takes no action, in 12 years (normally) his right of action becomes barred and his title extinguished by limitation. S can no longer be disturbed by O, and as against the rest of the world S is protected by the fact of his possession. Possession by itself gives a good title against all the world, except someone having a better legal right to possession.

This last proposition is fundamental to the concept of title to land.  If the occupier’s possession is disturbed, for example by trespass or nuisance, he can sue on the strength of his possession and does not have to prove his title.  It follows that the person disturbing the occupier’s possession cannot attack his title, if he admits his possession; in the language of pleading, a defendant sued for trespass in such a case cannot plead jus tertii(that the land belongs to some third party, not to the claimant).  As against a defendant having no title to the land, the occupier’s possession is in itself a title.  But if the defendant himself lays claim to the land by a title of his own, he may of course plead his own title and so put the claimant’s title in issue.  He is then alleginga title not in a third party but in himself.  Accordingly he may show title in a third party if he himself claims through the third party, e.g. as purchaser, tenant or licensee.”     [emphasis added]

65.From the Judgment and the Amended Order, it would appear that Chung J had recognised and acknowledged the adverse possession of the Disputed Land by the 2^nd defendant and his right to continue in possession even against the owners of the plots of land, including the Disputed Land.  Thus, irrespective of the question as to whether all the necessary parties were before the court in HCMP 4032, there is in existence a finding in the Judgment and the Amended Order of the fact of adverse possession of the Disputed Land by the 2^nd defendant.

66.In the abovementioned circumstances, despite the findings by Chung J as summarised in paragraphs 40 and 43 above and the fact that he did not go further to declare that the title of the (present and previous) ownershad been extinguished or made an order conferring title on the 2^nd defendant,the 2^nd defendant can still rely on his possessory right to counterclaim againstthe plaintiff for possession of the Disputed Land.  This will not be in conflictwith the findings and declarations made by Chung J in the Judgment and the Amended Order.

67.Hence, on the second Preliminary Issue, I find that the court does have jurisdiction to grant the relief sought by the 2^nd defendant against the plaintiff.

CONCLUSION

68.I therefore rule on the two Preliminary Issues as follows:

(i)  On the first Preliminary Issue

(a)   Not all the necessary parties are before the court regarding the plaintiff’s claim against the 1^st defendant (KPL).

(b)  Not all the necessary parties are before the court regardingthe 2^nd defendant’s counterclaim against the 1^st defendant (KPL).

(ii)  On the second Preliminary Issue

The court does have jurisdiction to grant the relief sought by the 2^nd defendant against the plaintiff in the Counterclaim in light of the Judgment and the Amended Order and in light of the circumstances of the present case.

69.Having said the above and, for the avoidance of doubt, whether the 2^nd defendant would have succeeded or would succeed against the plaintiff on his Counterclaim as presently constituted is a different question on which I do not express any view, because it is outside the scope of the two Preliminary Issues.

70.I give the following directions on the further conduct of the present proceedings:

(a)   The parties are at liberty to restore the present proceedings by application to the court.

(b)  Before any date is fixed for the substantive trial, there must be at least one case management conference before a Master/Judge at which the Master/Judge has to be satisfied that the case is ready to proceed to trial.

71.I take the view that the fairest order for costs to be made in all the circumstances is that the costs for the trial of the Preliminary Issues be costs in the cause of the substantive trial.  I therefore make a costs order nisi to such effect.

Mr Ken To, instructed by KB Chau & Co, for the plaintiff

The 1^st defendant was not represented and did not appear

Mr Thomas Lai, instructed by Leung Kin & Co, assigned by Director of Legal Aid, for the 2^nd defendant

Annexure A