Yu Fung Co Ltd v. Olympic City Properties Ltd and Another

CACV 165/2017 & CACV 166/2017

(HEARD TOGETHER)

[2018] HKCA 323

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 165 OF 2017

(ON APPEAL FROM HCMP NO 1084 OF 2008)

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AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 166 OF 2017

(ON APPEAL FROM HCA NO 3104 OF 2015)

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______________________

(HEARD TOGETHER)

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J U D G M E N T

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Hon Lisa Wong J (giving the judgment of the Court):

Appeals before court

1.Before the court are the appeals by Yu Fung Company Limited (“Yu Fung”), the plaintiff in HCMP 1084/2008 (“1^st Action”) and the 2^nd defendant in HCA 3104/2015 (“2^nd Action”), against the decisions made by Deputy High Court Judge Keith on 10 March 2017[1]:

(1)  in the 1^st Action, upon the summons issued by Madam Cheung Chui Kwan Event (“Madam Cheung”) on 6 January 2016 (“Joinder and Stay Summons”), ordering:

(a)  Madam Cheung to be joined as a party to the 1^st Action (“Joinder Order”);

(b)  a stay of execution of the writ of possession issued in the 1^st Action on 26 October 2015 (“Writ of Possession”) in respect of Flat D, 20/F, Profit Mansion, 17-29 Fei Fung Street, Kowloon (“Flat”) until Madam Cheung’s claim to possessory title to the Flat by adverse possession made in the 2^nd Action has been determined or until further order (“Stay Order”);

(c)  on a nisi basis that Yu Fung shall pay Madam Cheung the costs of the Joinder and Stay Summons, to be taxed if not agreed; and

(2)  in the 2^nd Action, dismissing Yu Fung’s summons dated 26 January 2016 (“Strikeout Summons”) to strike out Madam Cheung’s statement of claim and to dismiss the 2^nd Action and ordering on a nisi basis that Yu Fung shall pay Madam Cheung the costs of the Strikeout Summons, to be taxed if not agreed.

2.In place of these orders, Yu Fung contends that:

(1)  Madam Cheung’s statement of claim in the 2^nd Action should be struck out and the 2^nd Action should be dismissed;

(2)  alternatively, the 2^nd Action and all proceedings therein should be stayed except the enforcement of any costs orders subsisting upon the determination of Yu Fung’s appeal relating to the 2^nd Action;

(3)  pursuant to the Joinder Order, Madam Cheung should be at liberty to contest or apply to set aside the Writ of Possession in the 1^st Action as between her and Yu Fung; and

(4)  that Madam Cheung should pay Yu Fung’s costs of these appeals and of the applications below.

Background facts

3.Mr Lai Ming Tak (“Mr Lai”) was the owner of Flat C, 4/F, Wing Cheong Building, 27-29 Fei Fung Street, Kowloon (“Old Flat”).  By and pursuant to various instruments signed by Mr Lai and one Full Country Development Limited (“Full Country”) in September and October 1992, Mr Lai gave up and moved out of the Old Flat in return for inter alia a then unspecified unit in the new building to be re-developed by Full Country on inter alia the land on which Wing Cheong Building stood.  None of the instruments signed between Mr Lai and Full Country were registered at the Land Registry.

4.Then, in late 1996, Mr Lai was given the keys to the Flat by Full Country.  Mr Lai moved into the Flat by the end of June 1997 after renovating the same.  Mr Lai was however not assigned the Flat by Full Country.

5.In fact, unknown to Mr Lai, Full Country assigned away the Flat in June 1997.  To cut a long story short, the legal title to the Flat eventually ended up in the name of Olympic City Properties Limited (“Olympic”) by an assignment dated 18 September 1997, on which date Olympic also executed a first legal charge over the Flat (“Charge”) in favour of Yu Fung (which is a licensed money lender) to secure the repayment of a loan of HK$2,900,000 (“Loan”) lent by Yu Fung to Olympic to purchase the Flat. 

6.In breach of the terms of the Charge, Olympic had assigned the Flat to one Hebei Investment Limited (“HIL”)[2] on 2 January 1998 without Yu Fung’s knowledge or consent. 

7.Olympic had defaulted in making repayment of the Loan to Yu Fung since 18 November 1997. 

8.On 10 June 2008, Yu Fung commenced the 1^st Action against Olympic[3] pursuant to Order 88 of the Rules of the High Court (Cap 4A) (“RHC”) to recover the outstanding principal and interest under the Loan and to enforce the security over the Flat contained in the Charge.

9.A copy of the originating summons in the 1^st Action was posted up at the metal gate of the Flat on the same date it was issued.  Upon sight of the originating summons, Mr Lai sought legal advice.  Upon his ex parte application made on 7 July 2008, Mr Lai was added as the 2^nd defendant to the 1^st Action on 10 July 2008 on the basis of his claim that he had a prior equitable interest in the Flat to which any purchaser or mortgagee of the Flat would be subject because he had always been in actual occupation of the Flat and they had actual or at least constructive notice of his occupation and interest.

10.By a letter dated 8 April 2010 from Yu Fung’s solicitors to Mr Lai’s solicitors, Yu Fung sought particulars of Mr Lai’s claim that he had been residing at the Flat with his family by asking for the names of the persons who were in possession of the Flat and their relationships with Mr Lai.  According to Yu Fung, there was no reply to this letter.

11.On 10 October 2011, Yu Fung issued a notice of appointment (“Appointment Notice”) for the hearing of the originating summons in the 1^st Action.  Yu Fung first made a claim against Mr Lai as a person claiming to be in possession of the Flat in the Appointment Notice without seeking leave to amend the originating summons.[4]

12.After obtaining the hearing date of 29 November 2011, on 10 October 2011, Yu Fung caused a “Notice to Occupant” addressed to all occupants of the Flat to be posted up at the metal gate of the Flat, urging any occupant of the Flat who intended to oppose or make representations in the 1^st Action to apply to be joined as a defendant and to personally appear before the Master on 29 November 2011.  This was done pursuant to Order 10, rules 4(2)[5] and 5(1)[6] of the RHC.

13.At the hearing before the Master on 29 November 2011, judgment was entered in favour of Yu Fung against Olympic for the amount of the principal and interest outstanding under the Loan (which stood at HK$8,642,079.74 up to and including 7 October 2011).  The proceedings for vacant possession of the Flat as between Yu Fung, Olympic and Mr Lai were directed to continue as if begun by writ.

14.The trial of the claim for possession of the Flat took place before Deputy High Court Judge Simon Leung on 26 and 28 November 2013.  Only Yu Fung and Mr Lai appeared and were represented.  Olympic took no part.  

15.The only case then ran by Mr Lai was that he had been in adverse possession of the Flat since June 1997 so that the limitation period for action for possession of the Flat against him had expired by the time Yu Fung first made a claim against him for possession of the Flat in the Appointment Notice (i.e. in October 2011).

16.Madam Cheung came into the picture as a witness for Mr Lai.  For that purpose, she made a witness statement on 31 January 2013, in which she gave as her address an address in Hunghom.   According to that witness statement, Madam Cheung started to be Mr Lai’s part-time assistant in his work as a fortune-teller in about 1992.  Beginning from early 1997, she supervised the decoration works at, and bought furniture, electrical appliances and curtains etc for, the Flat.  She assisted Mr Lai in moving into the Flat after the decoration works completed in around July or August 1997.  However, when Madam Cheung testified in court, she claimed to have in fact moved in with Mr Lai at the Flat in 1997, and that she had not disclosed such fact in her witness statement because she was too embarrassed to disclose that they had lived together without being married.

17.By a judgment dated 30 July 2015, Deputy Judge Leung found that Mr Lai was in adverse possession of the Flat since June 1997 when Full Country assigned the Flat without his knowledge to Olympic’s predecessor-in-title, which means that the 12-year limitation period would have expired in June 2009.  It is already mentioned above that Yu Fung first made a claim against Mr Lai for possession of the Flat in the Appointment Notice (on 10 October 2011).  Notwithstanding that, Yu Fung’s claim for possession against Mr Lai was deemed to have commenced on 10 June 2008 when the originating summons in the 1^st Action was issued by virtue of s 35(1)(b) of the Limitation Ordinance (Cap 347) (“LO”).  That section applies to relate the relevant limitation period back to the date of commencement of the 1^st Action even though Mr Lai was joined as a party subsequently.  In other words, Yu Fung’s claim against Mr Lai for possession of the Flat was deemed by s 35(1)(b) to have been commenced before the expiration of the 12-year limitation period had run out.  Mr Lai’s limitation defence failed.  Judgment was entered in favour of Yu Fung.  Mr Lai was required, among other things, to give Yu Fung vacant possession of the Flat within 60 days (“Possession Order”).  There was no appeal from that judgment. 

18.Mr Lai did not give up possession of the Flat. On 26 October 2015, Yu Fung obtained the Writ of Possession to enforce the Possession Order under Order 45, rule 3(1)(a) of the RHC.  The Writ of Possession followed Form 66 in Appendix A to the RHC and was addressed to the bailiff as follows under the heading and title of the 1^st Action:

“WHEREAS in the abovenamed action it was on the 30^th day of July 2015 adjudged, inter alia, that the 1^st Defendant Olympic City Properties Limited and the 2^nd Defendant Lai Ming Tak Tommy Alexander do give the Plaintiff Yu Fung Company Limited possession of the land and premises known as Flat D, 20^th Floor, Profit Mansion, No 23 Fei Fung Street, Kowloon and costs of the action, including any costs reserved, to be taxed if not agreed.

It is required that you do enter the said land and premises and cause the Plaintiff to have possession of it.

And it is also required that you indorse on this writ immediately after execution thereof a statement o the manner in which you have executed it and send a copy of the statement to the Plaintiff or to Messrs. Gallant Y.T. Ho & Co., Solicitors for the Plaintiff.” (emphasis added)

19.On 2 November 2015 and 4 January 2016, the bailiff caused to be posted up at the metal gate of the Flat a “Notice to Occupants to Quit” (“NTQ”), requiring possession of the Flat to be delivered to Yu Fung on 9 November 2015 and 11 January 2016 respectively.  Each such notice also contained a statement that “[a]ny occupier who claims a right to remain on the [Flat] should make application to the High Court without delay.”

20.In fact, Madam Cheung had already re-surfaced.  By a letter dated 19 August 2015 from her solicitors to Yu Fung’s solicitors, Madam Cheung indicated her intention to oppose any application to vacate her from the Flat and to apply to the court for title to the Flat based on adverse possession.

21.However, instead of raising her claim for adverse possession of the Flat by intervening in the 1^st Action, on 30 December 2015, Madam Cheung issued the writ of summons in the 2^nd Action, claiming for declarations that HIL and Yu Fung’s title (or that of their predecessors-in-title through which they claim title) to the Flat has been extinguished by virtue of ss 7(2) and 17 of the LO and that Madam Cheung had acquired a good and indefeasible possessory title to the Flat and is accordingly entitled to be registered as the owner of the Flat.  Madam Cheung so claims on the ground of her own adverse possession of the Flat.  It is pleaded that she is, and has at all material times been, Mr Lai’s “common law wife”; that she and her family members (notably Mr Lai) have been “in successive, continuous and exclusive control and possession” of the Flat since about June 1997; and that the relation-back principle embodied in s 35(1)(b) of the LO does not apply to her case.

22.Although Madam Cheung did subsequently on 6 January 2016 (which was 2 days after the second NTQ) apply to be joined in the 1^st Action, the joinder was sought solely for the purpose of seeking a stay of execution of the Writ of Possession.

23.Madam Cheung has chosen to pursue her claim for adverse possession of the Flat in the 2^nd Action, and not the 1^st Action, admittedly to avoid the operation of the relation-back principle in s 35(1)(b) of the LO.  See paragraph 8 of Madam Cheung’s statement of claim in the 2^nd Action.

24.Yu Fung responded by taking out the Strikeout Summons on 26 January 2016.

Issues and rulings below

25.The issues raised before and decided by Deputy Judge Keith were:

(1)  whether it was too late for Madam Cheung to raise a claim to a right to occupy the Flat by reason of the Henderson v Henderson principle[7] in the wider sense[8] with Yu Fung contending that Madam Cheung should have applied to intervene in the 1^st Action when Mr Lai applied to be joined as a defendant thereto;

(2)  if not, whether Madam Cheung’s claim was arguable with Yu Fung contending, in reliance on Tsang Foo Keung and Key Kwong Development Ltd v Chu Jim Mi Jimmy [2015] 6 HKC 200 at [48]-[51] (per Chow J), that Madam Cheung has occupied the Flat as Mr Lai’s licensee and not in her own right;

(3)  if so, in which proceedings should Madam Cheung’s claim be litigated and determined, the 1^st Action (as contended by Yu Fung) or the 2^nd Action (as contended by Madam Cheung).

26.The learned Judge held that:

(1)  It was not too late for Madam Cheung to raise a claim to a right to occupy the Flat.

(a)  First, Madam Cheung’s explanation (which was disputed by Yu Fung) that it was not until the 1^st Action was far advanced that she knew of Yu Fung’s claim therein; that even then she was not advised that she ought to apply to join those proceedings; and that it was not until after judgment had been handed down that she was advised thatshehas a right to occupy the Flat independent of that of Mr Lai raised factual issues which could not be decided on affidavits.

(b)  Second, in light of what Ribeiro J (as the Permanent Judge then was) said in Wing Hang Bank Ltd v Tsang Sze Yin,HCMP 689/1998, unreported, 30 December 1999, at [10], Madam Cheung was not obliged to take affirmative action in the way Mr Lai did if remaining in the shadows would improve her chances of establishing adverse possession of the Flat for the requisite length of time.

(2)  There is no threshold test of arguability for the joinder of an occupier of property contesting a mortgagee’s entitlement to possession of the property (Wing Hang Bank Ltd v Tsang Sze Yin at [10]).

(3)  While Madam Cheung could have litigated her right to occupy the Flat in the 1^st Action, she was not bound to do so.  Godfrey Lam J’s decision in Chan Kwok Chu (trading as Ho Kee Motors Service) v Gotland Enterprises Ltd, HCA 282/2016, unreported, 6 January 2016 was distinguishable in that the 1^st Action was not brought against Madam Cheung who was not a party to such action and the Possession Order made therein was not, and could not have regarded as having been, made against Madam Cheung.

Rival contentions and issues on appeal

27.Although ground (3) of each of Yu Fung’s notices of appeal mentions and relies on the extended doctrine of res judicata, Yu Fung does not actually seek to preclude Madam Cheung from raising her claim for adverse possession of the Flat altogether, on the ground that it would be an abuse of process.  Rather, according to Yu Fung, the abuse lies in the commencement of fresh proceedings (i.e. the 2^nd Action) for the pursuit of such claim.

28.It is contended on behalf of Yu Fung that where a mortgagee of landed property has obtained an order for possession against the mortgagor and a person claims the right to remain in possession, the only proper course for such claimant is to apply to intervene and be joined as a defendant to the proceedings in which the mortgagee has obtained the order for possession so as to have his claim tried as between himself and the mortgagee in the context of his application to set aside the order for possession as against himself (but not in respect of any other defendants against whom judgment may have been properly entered).

29.Yu Fung so contends because, in this case, the Possession Order has proceeded to enforcement by the issue of the Writ of Possession.  The Writ of Possession operates in rem as a direction to the bailiff to enter the Flat and cause Yu Fung to have possession of it by turning out everyone he finds in the Flat, whether or not they have been parties to the 1^st Action.

30.On the other hand, Madam Cheung maintains that her claim for adverse possession of the Flat could have, but needs not have, been asserted in the 1^st Action.  She does not accept Yu Fung’s characterisation of the Writ of Possession.  What ultimately confers on Yu Fung the right to possession of the Flat is the Possession Order.  The Writ of Possession is but a means to enforce the Possession Order.  It is therefore necessarily in personum in nature binding only the named defendants to the 1^st Action.  Yu Fung had never made any claim for possession of the Flat against her despite and even after her testimony at the trial of the 1^st Action that she had been residing in the Flat with Mr Lai since 1997.

31.The resolution of this appeal therefore boils down to one issue only, namely, whether Madam Cheung is bound by the Writ of Possession so that she must have it set aside as against herself, which she can only do by applying to join as a defendant to, and raising her claim for adverse possession of the Flat in, the 1^st Action. 

Writ of possession for enforcement of order for possession under Order 113

32.We will start by looking at a writ of possession issued to enforce an order for possession made in proceedings under Order 113 by owners to recover land from squatters and trespassers, the nature and effect of which seems settled.

33.In Hong Kong, such a writ of possession is required by Order 113, rule 7(2) to be in Form 66A in Appendix A to the RHC which is, insofar as it is material for present purpose, as follows:

“To the bailiff ………………… :

Whereas it was on the ……. day of …………..………. 20……… ordered that the plaintiff A.B. do recover possession of [describe the land recovery of which has been ordered] ……. :

It is required that you enter the said land and cause A.B. to have possession of it.” (emphasis added)

34.There is a clear line of authorities on the nature and effect of such a writ of possession.

35.The writ of possession was originally a common law writ.  As a common law remedy, it did not act in personum against the defendant but operated in rem against the land by requiring the sheriff to recover possession for the plaintiff by evicting from the land any persons who were there and to deliver possession of the same to the plaintiff.  See Manchester Corporation v Connolly [1970] 1 Ch 420 (CA) at 428H-429B (per Lord Diplock); In re Wykeham Terrace, Brighton, Sussex ex parte Territorial Auxiliary and Volunteer Reserve Association for the South East [1971] Ch 204 at 207B-C and 209E (per Stamp J); and McPhail v Persons, Names Unknown [1973] 1 Ch 447 at 458B and F (per Lord Denning MR).

36.In Hong Kong, in Chan Kwok Chu, supra, the plaintiff squatter commenced the action in 2015 against the defendant owner for a declaration that he had acquired possessory title of certain land by adverse possession after he had been evicted from that land under a writ of possession which was issued to enforce an order for possession obtained by the defendant owner in earlier proceedings that it had instituted in 2003 under Order 113.  Godfrey Lam J held that the plaintiff’s separate independent action for declarations of his possessory title in extinguishment of the defendant’s title and for delivery of possession etc was impermissible and an abuse of process because it was incompatible with the writ of possession, which was an authority to the bailiff to enter the land and cause the owner to have possession of it by turning out any squatter found on the land including the plaintiff.  If the writ of possession was to be challenged, it had to be challenged in the defendant’s earlier possession action itself.  See [24], [25], [27] and [28].

37.Deputy Judge Keith was referred to, but distinguished, Chan Kwok Chu on the basis that the incompatibility between the new action and the writ of possession arose because the plaintiff squatter, though not specifically named, had been a party to the owner’s earlier Order 113 proceedings so that the writ of possession - which had been issued following an order for possession in those proceedings - had to be treated as having been issued against the plaintiff squatter in Chan Kwok Chu.  This was so because other than various named defendants, the defendant owner in Chan Kwok Chu had also joined unnamed “persons in occupation of the land” as the 4^th defendant to its earlier Order 113 proceedings.  As the plaintiff squatter was then an unnamed person in occupation of the land, he was included in the 4^th defendant.  In contrast, in the instant case, Madam Cheung had not been a party the 1^st Action at all so that the Possession Order could not be regarded as having been made against her.

38.We respectfully disagree with the Judge on his reading of Chan Kwok Chu.  The crux of Godfrey Lam J’s reasoning can be found at [24]:

“A person in Mr Chan’s position, who is an occupier of land and finds there are proceedings for possession against his interest to which he is not a party, should apply to take part in those proceedings. This is plain from the nature of the writ of possession. It is a direction to the bailiff to enter the land and cause the plaintiff to have possession of it: see Form no. 66 in Appendix A to the Rules of the High Court. It is an authority under which any squatter may be turned out at once: McPhail v Persons, names unknown [1973] 1 Ch 447, 458F. The bailiff turns out everybody he finds on the premises, even though they are not parties: R v Wandsworth County Court, ex parte Wandsworth London Borough Council [1975] 1 WLR 1314, 1319B.” (emphasis added)

And then at [28]:

“What Mr Chan cannot do is to start a separate independent action, as he has now done, seeking a declaration of his own possessory title, a declaration of the extinguishment of Gotland’s title, an order for delivery of possession and an injunction to restrain Gotland from entering the disputed land or erecting any structures on it. That would be incompatible with the writ of possession on the strength of which Mr Chan had been evicted by the bailiff of this court. If that writ is to be challenged it is to be challenged in the possession action itself.” (emphasis added)

39.It is clear from the words underlined that the incompatibility which made the action before Godfrey Lam J an abuse of process arose, not from the fact that the plaintiff squatter had been a party to the defendant’s earlier possession proceedings in the sense that the 4^th defendant thereto included anyone who was in occupation of the land, but from the operation of the writ of possession in rem as a direction to the bailiff to evict any squatters found on the land at the time of execution of the writ of possession.

40.That a writ of possession can be carried into effect to remove a squatter who has not been a party to the proceedings and who is therefore not bound by the order for possession being enforced by the writ of possession is well established and illustrated by, for example, Reg v Wandsworth County Court ex parte Wandsworth London Borough Council [1975] 1 WLR 1314. 

41.In that case, a London borough council applied to a county court under Order 26 rule 1 of the County Court Rules 1936 (as amended)[9] for an order for possession of a house owned by it.  A couple (Mr and Mrs Heron) were named as the occupiers.  At the hearing, 2 more persons (Mr Denne and Mr McGrath) turned up and were joined as defendants at their own request.  An order for possession was made in favour of the council.  Pursuant to that order, a warrant for possession was issued in County Court Form 401.[10]  On arriving at the house to execute the warrant, the bailiffs found that another squatter who had not been a party to the county court proceedings (Mr Chorley) and his family were in occupation of the house.  The bailiffs were instructed by the registrar of the county court not to evict Chorley, but to await further proceedings being brought by the council against Chorley.  Upon the council’s application, an order for mandamus was granted against the registrar to execute the warrant for possession against all persons occupying the council’s house.

42.Lord Widgery CJ (with whom Milmo and wien JJ agreed), after citing what Stamp J said in In re Wykeham Terrace, supra, at 209D-E and what Lord Denning MR said in McPhail v Persons Unknown, supra, at 458D-G, concluded at 1318H-1319C:

“I have come to the conclusion that there never has been any authority for the proposition that the bailiffs, when enforcing a warrant for possession, must refrain from evicting some person whom they find upon the premises merely because that person was not a party to the proceedings. I should have been astonished if it were so now since the enactment of Ord. 26 of the County Court Rules, because, as Milmo J. pointed out in argument, the answer, I think, is not that Ord. 26 has altered the law in this respect. It seems to me it has always been the law that the sheriff, when lawfully enforcing a warrant for possession, turns out everybody he finds on the premises, even though they are not parties.” (emphasis added)

43.Wiltshire County Council v Frazer (No 2) [1986] 1 WLR 109 provides another illustration.  There, the sheriff executed a writ of possession and obtained for the plaintiffs possession of their land in enforcement of an order for possession granted under Order 113 of the Rules of the Supreme Court against 66 named defendants and other persons unknown.  Two years later, a number of persons including 2 of the named defendants to the Order 113 proceedings were found again to be occupying the plaintiff’s land.  The plaintiff’s ex parte application for leave to issue a writ of restitution (a further writ in aid of the writ of possession) was refused on the ground that such a writ could only issue if all those then unlawfully occupying the land could be shown also to have been in unlawful occupation when the original order for possession had been made.  The plaintiffs’ appeal was allowed.

44.It was held by Simon Brown J at 112G-113A:

“Mr. Birts here argues, to my mind convincingly, that the writ of restitution, being a supplementary writ in aid of execution, and in particular in aid of the writ of possession, should be held to share the characteristics of the writ of possession. Thus it ought not to be confined to use only against trespassers whom the landowner can prove to have been upon the premises at the date when possession was first ordered or taken. Were it otherwise, its value would be drastically emasculated. Indeed, its use could be entirely frustrated in cases such as this by the inclusion of a single fresh squatter amongst many who may have returned to the site, or indeed, frustrated merely by the landowners’ likely inability to prove the contrary. I agree with these submissions. I accordingly rule that a writ of restitution is available and may be executed against others than those who were on the premises at an earlier stage of the initial possession process.” (emphasis added)

45.In summary, as stated by Stamp J in In re Wykeham Terrace, supra, at 209E, the bailiff acting pursuant to a writ of possession will be bound to “turn out those he finds upon the land whether they are bound by the judgment or not” (emphasis added).

46.That being the case, a squatter in possession of the land at the execution of a writ of possession who asserts against the landowner a right to remain in possession, regardless of whether he has been a party to the proceedings or otherwise bound by the order for possession being executed, can so assert only by applying to intervene in the proceedings in which the order for possession was made and the writ of possession was issued. 

47.This is clear from Minet v Johnson (1890) 63 LT 507 in which the plaintiff sued, and obtained judgment in default against, Johnson to recover possession of a house, without knowing that the house was in fact being occupied by Hartley who was unaware of the proceedings and did not claim to be in possession through Johnson.  Pursuant to a writ of possession, the sheriff turned out Hartley.  Upon Hartley’s application, it was ordered that the judgment for possession and subsequent proceedings be set aside insofar as it concerned Hartley and that the plaintiff should go out of any possession obtained by reason of or under such judgment.  However, such order was to take effect only if Hartley should elect to be added as a defendant to the action.

48.As said by Godfrey Lam J in Chan Kwok Chu, supra, at [28] (see paragraph 38 above), if the writ of possession is to be challenged, it is to be challenged in the proceedings in which it was issued.

Writ of possession for enforcement of order for possession under Order 88

49.As summarised in paragraph 30 above, Mr Jonathan Chang (with Mr Martin Ho), counsel for Madam Cheung, seeks to distinguish the abovementioned authorities by separating the writ of possession from the order for possession being enforced by it.  He focuses on the latter and stresses that an order for possession in a mortgage action under Order 88 is necessarily in personum and does not bind non-parties.

50.In support, reliance is placed on Stamp J’s judgment in In re Wykeham Terrace, supra, at 209D-H:

“It is a truism that an order or judgment of this court binds only those who are parties to or attending the proceedings in which the order or judgment is given or made. This principle is blurred where the action is an action for the recovery of land by reason of the process by which the judgment is executed. The sheriff acting pursuant to a writ of possession will be bound to turn out those he finds upon the land whether they are bound by the judgment or not. But judgment and the execution of the judgment are two different things, and much of the argument which has been addressed to me in this case, I think, ignores that distinction. It is no doubt correct that if I were to grant the relief which the applicants seek upon this present application and order that the persons in occupation do deliver possession of the premises and that the applicants be at liberty forthwith to issue a writ of possession the trespassers would be turned out and in that sense the order would be binding upon them. But as a matter of law an order that the plaintiffs do recover possession of the premises binds only the parties to the proceedings: which these trespassers are not. That this is so appears clearly from Minet v Johnson (1890) 63 L.T. 507, where the plaintiff in proceedings against Johnson obtained judgment in default of appearance. The sheriff in pursuance of a writ of possession ejected Hartley who was, in fact, in possession. The decision of the Court of Appeal in that case that the judgment must be set aside and also the writ of possession, but only so far as it affected Hartley, who was to be put in the same position as if he had been let in as a defendant against whom judgment had not been obtained, is clear authority for the proposition that an order that the plaintiff do recover possession is no different in this respect from any other judgment and binds only the parties to the proceedings. It is not a judgment which affects all the world or which affects the land.” (Madam Cheung’s emphasis)

51.What Stamp J said should be put in context.  In In re Wykeham Terrace, the applicants which held the freehold of certain premises could not establish with certainty the identity of the trespassers who had entered and took possession of the premises and were therefore unable to begin legal proceedings against named persons either by writ or summons inter partes.[11] They issued an ex parte originating summons and moved the court for an order for possession and leave to issue a writ of possession.  Stamp J was explaining in the passage cited why the application should be dismissed on the principle that a judgment in proceedings to which there is no party other than the applicant cannot bind anybody.

52.There can be no doubt that an order for possession granted in proceedings under Order 88 is itself personal in nature, binding only those specifically named or joined as defendants.

53.However, the 1^st Action has moved past the making of the Possession Order with the issue of the Writ of Possession in execution of the Possession Order.  What the court is now concerned with is the nature and effect of the Writ of Possession.

54.It is worthy of note that, despite the different recitals, the actual executive command to the bailiff contained in a writ of possession in Form 66 (which is for the enforcement of an order for possessions made other than in proceedings under Order 113 and with which the Writ of Possession in this case conforms) is the same as that contained in Form 66A (for the enforcement of Order 113 orders for possession).  It is: “It is required that you enter the said land and cause A.B. to have possession of it.”

55.The court has not been shown any precedent to the effect that the nature and effect of a writ of possession would vary according to the judgment or order for possession to be enforced by it or the proceedings in which it is issued.

56.In any event, any such proposition is, in our view, unsound. 

57.It presupposes that an order for possession made in a mortgage action under Order 88 is different, in nature and effect, from one made in possession proceedings under Order 113. 

58.However, an order for possession under the latter type of proceedings is no less personal in nature and effect.  In this regard, it will be recalled that in In re Wykeham Terrace, supra, Stamp J refused to make an order for possession in an ex parte claim by landowners to recover possession of their premises from squatters who they could not identify and therefore did not join, precisely because such an order was personal and would bind only those who were parties to the action.  That being the case, it should not be made in the absence of any defendant, especially when the applicants’ purpose was to use such the personal possession order to obtain a writ of possession which would operate in rem to turn out those in possession who were not be bound by the order for possession.

59.In case reference is made to the procedural device under Order 113 for the joinder as defendants those described generally as persons in occupation whose identities are unknown to the plaintiff, the availability of such device merely saves a landowner from being deprived of relief simply because of his inability to specifically identify and name the trespassers to his property, as happened in In re Wykeham Terrace.  The existence and use of this device does not alter the personal nature of the order for possession.

60.And the bailiff executing a writ of possession issued to enforce an Order 113 order for possession turns out all persons he finds in occupation not necessarily because all such persons (named or unnamed) have been joined as defendants, but because of the operation of the writ of possession in rem against the land.  This is apparent from the authorities referred to in paragraphs 40 to 44 above, in which a writ of possession was executed to evict persons who had not been joined as defendants to the possession proceedings (Reg v Wandsworth County Court) and in which a writ of restitution was issued to turn out persons who were not even in occupation when the original writ of possession was issued and executed (Wiltshire County Council v Frazer (No 2)).

61.So analysed, we cannot see any distinction in principle between an order for possession made in a mortgage action under Order 88 and one made in possession proceedings under Order 113 in terms of their nature and effect.  It follows that there should not be any consequential distinction between a writ of possession for the enforcement of an Order 88 order for possession and one for the enforcement of an Order 113 order for possession.  In either case, as expounded by Stamp J in In re Wykeham Terrace, supra, at 209D-E, although the judgment of the court binds only those who are parties to the proceedings in which the judgment is given, the principle becomes blurred where the action is an action for the recovery of land by reason of the process by which the judgment is executed, as the bailiff acting pursuant to a writ of possession will be bound to turn out those he finds upon the land whether they are bound by the judgment or not.

62.And it is precisely because an order for possession made in a mortgage action in which delivery of possession of the mortgaged property is claimed, though personal in nature, may affect occupiers who have not been joined as defendants through the issue and execution of a writ of possession that the rules of court contain the following provisions to ensure that no adverse order will be made against such occupiers without them being heard:

(1)  Order 88, rules 5(4) and 6(4) which require the affidavit in support of the originating summons or the summons for leave to enter default judgment in a mortgage action begun by writ to give particulars of every person who to the best of the plaintiff’s knowledge is in possession of the mortgaged property;

(2)  Order 10, rules 4(2) and 5(1) which require a copy of the originating summons or writ by which a mortgage action with a claim for delivery of possession is commenced to be posted in a conspicuous place on or at the entrance to the premises or land;

(3)  Order 15, rule 10 which allows the addition as a defendant to an action for possession of land any person not a party to the action who is in possession of the land.  An order for joinder may be made even after judgment has been signed and execution issued.

63.Parallel provisions for the giving of notice of Order 113 proceedings to, and the joinder of, occupiers who have not been joined as defendants can be found in Order 113, rules 4(2) and 5.

64.The requirement under Order 45, rule 3(2) and (3) for leave of the court for the issue of a writ of possession (which would not be granted unless it is shown that every person in actual possession of the land has received such notice of the proceedings as appears to the court sufficient to enable him to apply to the court for any relief to which he may be entitled) does not apply where the judgment or order for possession was given or made in a mortgage action to which Order 88 applies.  This is so because in a mortgage action, by virtue of the operation of Order 88, rules 5(4) and 6(4), the position of every person in occupation is supposed to be known before an order for possession is made.  See DBS Bank (Hong Kong) Ltd v Ngai Yim Shing [2005] 2 HKLRD 740 at 745B-D (per Johnson Lam J as the Vice President then was).

65.Similarly, Order 113, rule 7(1) dis-applies Order 45, rule 3(2) in relation to an order for possession under Order 113.  The reason is that in Order 113 proceedings, every occupier (whether named as a defendant or not) will have had due notice of the proceedings before any order for possession is made.  See Hong Kong Civil Procedure 2018, Volume 1, §113/8/11.

66.For these reasons, we have come to the conclusion that the Writ of Possession operates in rem and binds Madam Cheung.  If she says that she should not be evicted from the Flat because she has acquired possessory title to the same by her adverse possession, she has to apply to have the Writ of Possession set aside as against herself on the strength of such claim.  And the forum for her to do so is the 1^st Action in which the Writ of Possession was issued in the first place.

67.In this connection, we should mention Wing Hang Bank Ltd v Tsang Sze Yin, supra.  In that case, mortgage proceedings by the plaintiff bank had resulted in an order for possession of a flat being made in default of appearance of the original 2 defendants and a writ of possession being made and issued.  A woman by the name of Shing Oi Woon (who had not been a party and who found out about those proceedings upon being served by the bailiff with a “Notice to Occupiers” in preparation for the execution of the writ of possession) claimed to have a beneficial interest in the flat by virtue of a resulting trust of which the plaintiff bank had been sufficiently put on notice.  She obtained leave to intervene in, and was named as the 3^rd defendant to, the mortgage proceedings.  She then applied by summons to set aside the order for possession and the writ of possession.  Such application was dismissed by the Master apparently because Madam Shing had not satisfactorily explained why the default judgment had been allowed to be entered and/or established that her claim to remain in possession had a real prospect of success.  Ribeiro J, following inter alia Minet v Johnson, In re Wykeham Terrace and McPhail v Persons Unknown, said at [9]:

“A line of authorities shows that in cases like the present, the proper approach is for the person claiming the right to remain in possession to apply to be joined as a defendant and to have his claim tried as between himself and the purchaser or mortgagee claiming possession. The substantive rights are determined in the context of the intervener’s application to set aside the order for possession against himself (but not in respect of any other defendants against whom judgment may have been properly entered) …” (emphasis added)

68.Deputy Judge Keith was referred to Wing Hang Bank Ltd v Tsang Sze Yin but did not think that Ribeiro J was saying that intervening in the existing proceedings was necessarily the only proper approach.

69.On the analysis set out above, contrary to the Judge’s view, intervening in the proceedings in which the writ of possession was issued is necessarily the only proper approach for someone in Madam Cheung’s position.

70.Counsel for Madam Cheung questions why she is obliged to take a course which would lead to her being deprived of a limitation defence as a squatter, which is asserting her claim for adverse possession in the 1^st Action.  The short answer is that it is because she is bound by the Writ of Possession which was issued in the 1^st Action.

71.In the premises, we order as follows:

(1)  Yu Fung’s appeal against the dismissal of the Strikeout Summons be allowed. 

(2)  The statement of claim in the 2^nd Action be struck out and the 2^nd Action be dismissed on the ground of abuse of process.

(3)  Madam Cheung be given leave to apply in the 1^st Action to set aside the Writ of Possession as between her and Yu Fung.

(4)  The Stay Order be varied to the extent that execution of the Writ of Possession be stayed pending the determination of Madam Cheung’s application in the 1^st Action to set aside the Writ of Possession (if made) or until further order.

(5)  Madam Cheung is to pay Yu Fung’s costs of these appeals and of the applications below, to be taxed if not agreed on a party and party basis with a certificate for 2 counsel for the hearing of the appeals.

Mr Jonathan Chang and Mr Martin Ho, instructed by Dundons, for the interested party in CACV 165/2017 and the plaintiff in CACV 166/2017

Mr Ambrose Ho SC and Mr Joseph Vaughan, instructed by Gallant, for the plaintiff in CACV 165/2017 and the 2^nd defendant in CACV 166/2017

The 1^st and 2^nd defendants in CACV 165/2017 were unrepresented and absent

The 1^st defendant in CACV 166/2017 was unrepresented and absent